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IS SOMEBODY YOU KNOW AND LOVE GRADUATING FROM COLLEGE OR HIGH SCHOOL? Make sure they have essentials for a bright future as they start down the path of life: A GOOD EDUCATION GOOD EATING HABITS A DECENT PAIR OF SHOES COMPASS & MAP and, most importantly, A SUBSCRIPTION TO Ite e a bse www.texasobservenorg 512-477-0746 [email protected] existed between the Bank of the United States and the government. Brands describes its initial public offering, in Hamilton’s day: “Thirty members of Congressmore than a third of the total membership, and half of those who voted in favorbecame charter shareholders:’ Biddle, however, thought government finance too important to be left to the people: “We believe that the prosperity of the Bank and its usefulness to the country depend on its being entirely free from the control of the officers of the Government, a control fatal to every bank which it ever influenced?’ A product of the emerging West, Jackson saw Eastern capital behind every bank column and determined to rid the democracy of money changers. As Brands recounts: “Jackson believed the Bank undermined democracy by creating a monopoly of money. Of the Bank’s twenty-five directors, only five were answerable to the people. The rest served the interests of capital:’ He withdrew the government’s money and vetoed the bank’s charter extension. Biddle retaliated by tightening the money supply and driving the country into the depression of 1837. He scoffed at Jackson’s threats \(“It has all the fury of a chained panther biting the bars of his cage. It is really a manifesto of sional markers. In the end, though, the national bank was broken, or as Jackson railed: “The government will not bow to the monster?’ Jackson’s agrarian capitalism, which included an unsolicited bid for Texas, lasted only until the Civil War, which Brands describes as a victory for central bankers and bond dealers. He writes: “The planters lost their slaves; the capitalists won control of the national government. The capitalists created a national currency, a national tax code, a national banking system, and a national system of credit …” Brands’ conclusions cast Gettysburg in the guise of a hostile takeover. Lincoln might have preferred to save the Union with eloquent proclamations and pithy letters to his generals. But by December 1861, the Union was insolvent. To prosecute the war, Lincoln was forced to take the U.S. off the gold standard and issue an early form of junk bonds. Jay Cooke’s genius, according to Brands, was “to convert bond sales from a wholesale business to a retail one.” Cooke and his agents practically sold them door to door. Cooke believed in the Union cause and may well have been a war profiteer with a human face. But he also belongs in the pantheon of private contractors, from the Revolution’s Robert Morris to Halliburton in Iraq, who have outsourced American wars with rigged bids and hidden commissions, all taken in the name of patriotism. he Civil War shaped the economic argument in the United States for the next 50 years, a contest between the interests of Wall Street and those of the West. The battle for the American bank account divided those who put their full faith and credit in paper money from those who believed in gold. The gold standard was a legacy of the California rush and the British Empire, which, like the United States today, thought banks \(or at least a reserve during Reconstruction, American paper money was redeemable against a fixed ratio to gold. \(Higher prices for gold drove down the value of the dollar, helping exporters; weaker gold in relation to But gold, despite its magical luster, was still a commodity, like pork bellies, and vulnerable to corners and manipulation, something practiced with gusto during the administration of Ulysses Grant. By the 1870s, the altruistic Civil War bond salesmen had become railroad speculators and political insiders. They included Jay Gould, who attempted to corner gold. Brands describes his motives: “His immediate purpose was what he had said all along: to depress the dollar enough to get the crops moving and keep his railcars full.” In this instance, the financially gullible Grant smelled a rat and sold off government gold reserves, breaking the bubble. The ensuing panic of 1873 again emphasized the Hamilton-Jefferson MAY 18, 2007 THE TEXAS OBSERVER 25