Jefferson: Banking institutions are more dangerous to our liberties than standing armies

Jefferson's self-styled protégé (who Jefferson himself wanted little to do with), Andrew Jackson, shared this paranoia about central banks, and eventually destroyed the 2nd Bank of the United States. His actions thrust the nation into an extended depression, which more or less persisted for the following two decades.

If it were up to Jefferson, we'd all be farmers today, and manufacturing would be done elsewhere. Of course, manufacturing is off-shored anyway nowadays, so perhaps he was just far ahead of his time...

Matthew:

Your post resonates on many levels. I never figured you for an elitist Hamiltonian! Another take on the Second USB (in fact Jackson's take, and the take of the majority of Americans' at the time), is that it was analogous to the lobbyists of today: a small circle of well-off people manipulating large funds to effect the electoral process against the interests of farmers and mechanics and, and this is key, against unestablished entreprenuers. I would also like to note that during that particular "extended depression" (I suppose that means 1828-1840), the US economy became a world powerhouse. Many business people supported Jackson.

Chuck in Houston

Matthew:

Also, as I've probably said one way or another on DCP ad nauseum, the current demographics of Red and Blue in the US today are almost the perfect inverse of 1832 (if not 1860). I don't really understand that but I think it is worth pondering.

Chuck in Houston

Chuck, you might want to learn a bit more about the crisis that Old Hickory's actions set in motion:

http://en.wikipedia.org/wiki/Panic_of_1837

http://en.wikipedia.org/wiki/History_of_central_banking_in_the_United_States

I don't agree with the thrust of many of Hamilton's policies, but the fact is that his vision of a central bank was ultimately prescient. When Abraham Lincoln was forced to take his stand for Union, he was forced to create a new central bank, to replace the one that Old Hickory destroyed.

Corruption is as old as society itself. So long as human beings remain imperfect, corruption will be with us. Our way has always been the way of checks and balances, of regulation, and not that of destruction of institutions, institutions that while imperfect, ultimately convey stability.

Matthew:

My view on these sorts of events is that "success has a thousand fathers and failure is an orphan." 2BUS also is in part to blame, again from Wikipedia:

"To fight back, Biddle decided to shrink the money supply and cause a recession in 1834 to force Jackson to accept a re-charter bill. The Bank demanded that old loans be repaid. It made no new loans."

http://en.wikipedia.org/wiki/Nicholas_Biddle_(banker)

Looking at the 1837 panic article, it looks more like the Specie "Golden Eagle" issue promoted by Jackson (I wonder if that is why he is on the twenty-dollar-bill?) was more to blame than withdrawing the deposits from 2nd BUS. On the issue of whether or not 2nd BUS was corrupting politics, in a way analogous to today's lobbies, I am relying on Remini.

I will post this and get back to your second link.

Chuck in Houston

Matthew:

To me, the underlying Jefferson-Jackson argument against centralized banking is a bit of an anachronism: today's globalized financial institutions and secure communications technologies place today's central banking arrangements in a qualitatively different position with respect to facillitating and regulating finance. The sense in which I see the Jefferson-Jackson bank position being relevant today has more to do with lobbies, campaign finance, and pork-barrel spending than with regulating or facillitating monetary and fiscal policy. By the way, again relying on Remini, Jackson was not against federal initiatives on internal improvements per se, but rather against the potential of pork-barrel abuse or the federal selection of picking winners, which indeed was prescient.

Chuck in Houston

Also, as I've probably said one way or another on DCP ad nauseum, the current demographics of Red and Blue in the US today are almost the perfect inverse of 1832 (if not 1860). I don't really understand that but I think it is worth pondering.

Noticed that too.

For a long time, the Republicans were the party of business, emancipation, and freedom. The Democrats were the party of slavery, racism, and social conservatism.

It's now the complete opposite. The Democrats are the party of the former slaves rather than the slaveowners, and the Republicans picked up religious extremism.

And while the Democrats, in both their past and present forms, do the better job of speaking up for the have-nots, the Republicans have somehow managed to steal much of that "we care for the average Joe Sixpack" mantra too, accusing the Democrats of being beholden to immigrants and the liberal elite. (Never mind that the Republicans have done far more evil with their own favorite immigrant demographics.)

I really don’t know if Naomi is really a fake activism all I can say is that we need to strive very hard to survive into these economic downturns. I know we have still many problems to face up but for now can we just revived first our economy? Having bad economy makes our lives more miserable. Well, you must be wondering what could be the future waiting for American economy, ever heard of the Beige Book? The Beige Book is a semi annual report made by Federal Reserve's central banks that gives a sketchy report or our economy. It isn't completely concrete, so you don't have to worry about getting a no fax cash advance to pick up a copy. It isn't exactly all kittens and rainbows, but the newest one says that the decline is slowing. Still, the credit market is dreadful. The figures for manufacturing, the retail sale industry, and commercial real estate are horrid, but things aren't dipping as fast as they were. It doesn't mean you shouldn't look into mortgage loan modification because of a not as bad Beige Book report.

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