Apologies for the distortion on the audio podcast! Not sure what that oddity is!August 7, 2025
[This is Part 3 of a 5-part series on the hidden history of money and power, continuing from “Knights Templar and Kings Created Financial Systems More Sophisticated Than Your Bank.”]
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”
— Attributed to Thomas Jefferson (though likely apocryphal, the sentiment was real)
Andrew Jackson’s chosen epitaph: “I Killed The Bank.” His war on central banking would unleash forces that still shape America today. Photo: The Hermitage
Andrew Jackson vs. Second Bank of the United States
Andrew Jackson was dying. The year was 1845, and the seventh President of the United States had one final decision to make: what words would mark his grave for eternity? He had been a war hero, the victor of New Orleans. He had expanded democracy, crushed nullification, and removed Native Americans from their lands. But when asked what epitaph should crown his tomb, Jackson chose three words: “I Killed The Bank.”^[1]
Not “I saved the Union.” Not “I defeated the British.” The achievement Jackson wanted remembered above all others was his destruction of the Second Bank of the United States - America’s central bank. To modern ears, this seems bizarre. Why would killing a financial institution rank above military victories and political triumphs?
Because Jackson understood something most Americans have forgotten: the battle over who controls money creation is the battle over who controls the republic. Every other political question - taxation, regulation, welfare, warfare - is downstream from monetary control. The power to create money is the power to shape society. And in 1830s America, that power was held by a private corporation run by and for the elite.
Jackson’s war against the Bank would trigger the first great economic depression in American history. His victory would spawn a chaotic era of “wildcat” banking that made the name synonymous with fraud. Yet he died considering it his greatest achievement. Was he a prophetic hero who saved democracy from financial aristocracy? Or a reckless populist whose ignorance crashed the economy?
The answer matters because America is still fighting Jackson’s war. The Federal Reserve, created in 1913, is essentially the Third Bank of the United States - a private-public hybrid that Jackson would have recognized and despised. The battle lines remain identical: democratic control versus technocratic management, public purpose versus private profit, Main Street versus Wall Street. To understand why American politics perpetually returns to these themes, we need to understand the monetary insurgency that defined the republic from its birth.
Colonial Scrip: Currency That Sparked a Revolution
The American Revolution is typically framed as a tax revolt - “no taxation without representation” and all that. But Benjamin Franklin, who understood money better than most founders, told a different story. In 1764, he identified the true cause of colonial prosperity and the real reason for revolution.^[2]
The American colonies had faced a perpetual money shortage. Gold and silver flowed back to England to pay for manufactured goods, leaving colonists with no medium of exchange. Their solution was revolutionary: they created their own currencies. Colonial governments issued paper money - “bills of credit” or “colonial scrip” - to pay for public works and military defense. This money wasn’t borrowed from banks. It was spent directly into circulation, debt-free.^[3]
Pennsylvania’s system, championed by Franklin, was particularly sophisticated:
* The colonial government issued paper money as loans for land purchases
* Borrowers paid back the loans over time, removing money from circulation
* This created a stable, controlled money supply
* No banks profited from money creation
* No interest accrued to private parties^[4]
“In the Colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one.”
— Benjamin Franklin to British officials, 1763
The system worked brilliantly. The colonies experienced unprecedented prosperity. Franklin noted that there were no poor houses and no beggars - everyone who wanted work could find it because there was sufficient money to facilitate exchange.^[5]
Then came the Currency Act of 1764. The British Parliament, under pressure from London merchants and the Bank of England, prohibited colonies from issuing their own currencies. All taxes and debts had to be paid in scarce gold and silver or in Bank of England notes. The colonial economy crashed almost immediately.^[6]
Franklin was explicit about the consequences:
“The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the prime reason for the Revolutionary War.”^[7]
Think about that. The American Revolution - the foundational event of U.S. history - was sparked not by a tax on tea but by a prohibition on monetary sovereignty. The colonists were willing to remain British subjects as long as they controlled their own money. When that control was removed, revolution became inevitable.
Hamilton’s Bargain: First Bank of the United States
The monetary question that sparked the Revolution immediately divided the new nation. On one side stood Thomas Jefferson and the agrarians, who envisioned America as a decentralized republic of small farmers. On the other stood Alexander Hamilton and the merchant class, who wanted America to become a commercial empire. Their battlefield was the proposed Bank of the United States.^[8]
Hamilton’s plan, submitted to Congress in 1790, was audacious. The federal government would charter a private corporation with exclusive privileges:
* Monopoly on holding government deposits
* Power to issue paper notes as currency
* Tax exemption on its operations
* Limited liability for its shareholders
* 20-year charter guaranteeing these privileges^[9]
The Bank would be 80% privately owned, with only 20% government ownership. Yet it would handle all federal finances and effectively control the money supply. Hamilton argued this would stabilize the currency, facilitate commerce, and establish American credit abroad.^[10]
Jefferson saw it differently. In a prescient letter to Washington, he warned:
“The incorporation of a bank and the powers assumed by this bill have not, in my opinion, been delegated to the United States by the Constitution… To take a single step beyond the boundaries thus specially drawn around the powers of Congress is to take possession of a boundless field of power.”^[11]
The philosophical divide was profound. Hamilton wanted concentrated financial power to build a strong nation-state. Jefferson feared that concentrated financial power would destroy republican government. Hamilton promised efficiency and growth. Jefferson warned of corruption and aristocracy.
Washington sided with Hamilton. The First Bank of the United States was chartered in 1791, headquartered in Philadelphia with branches across the nation. Foreign investors, primarily British, owned a majority of its stock. The bank that American colonists had rebelled against now effectively controlled American finance.^[12]
Jackson’s Crusade: Democracy vs. the Power of Money
By the time Andrew Jackson assumed the presidency in 1829, the Second Bank of the United States (chartered in 1816 after the First Bank’s charter expired) had become the most powerful institution in America. Its president, Nicholas Biddle - a brilliant, aristocratic Philadelphian - wielded more economic power than any elected official.^[13]
Biddle controlled:
* 20% of all bank loans in America
* The flow of credit to every region
* The value of every state bank’s currency
* The ability to create booms or busts at will^[14]
He wasn’t shy about using this power. When critics challenged the Bank, Biddle would restrict credit in their districts, causing local depressions. When politicians supported the Bank, credit flowed freely. He famously boasted: “I can remove all the constitutional scruples in the District of Columbia. Half a dozen presidencies, a dozen cashierships, fifty clerkships, a hundred directorships, to worthy friends who have no character and no money.”^[15]
Jackson, the rough-hewn frontier general, saw Biddle’s Bank as everything wrong with America - a corrupt monopoly enriching Eastern elites at the expense of Western farmers and workers. His critique went beyond economics to fundamental questions of democracy:
“The bank is trying to kill me, but I will kill it! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out!”
— Andrew Jackson to a delegation of bankers, 1834
The confrontation escalated when Biddle, confident in his power, applied for early renewal of the Bank’s charter in 1832 - an election year. He calculated that Jackson wouldn’t dare veto it and risk economic turmoil during his re-election campaign. He calculated wrong.^[16]
Jackson’s veto message of July 10, 1832, is one of the most important documents in American political history. It reads like a populist manifesto:
“It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes… When the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society — the farmers, mechanics, and laborers — who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.”^[17]
Jackson didn’t just veto the recharter - he went to war. After winning re-election in a landslide (interpreting it as a mandate to destroy the Bank), he began removing federal deposits and placing them in state-chartered “pet banks.” Biddle retaliated by contracting credit nationwide, creating an artificial recession to force Jackson to relent. Jackson held firm.^[18]
The Catastrophe of Victory
Jackson won. The Bank’s charter expired in 1836, and Biddle’s institution shrank to a state-chartered bank that failed within five years. But Jackson’s victory unleashed forces he hadn’t anticipated. Without the central bank’s regulatory influence, state banks went wild. The number of banks exploded from 329 in 1829 to 788 by 1837. Paper money in circulation increased by 50%. Speculation in Western lands reached manic proportions.^[19]
Then Jackson made a fatal error. Alarmed by the speculation, he issued the “Specie Circular” in 1836, requiring payment for federal lands in gold or silver only. This pricked the bubble catastrophically. Banks couldn’t redeem their notes for specie. Credit collapsed. The Panic of 1837 plunged America into its first great depression, with unemployment reaching 25% in some cities.^[20]
The aftermath was everything Jackson’s enemies predicted:
* Hundreds of banks failed, wiping out savings
* States defaulted on bonds, destroying American credit abroad
* Unemployment persisted for seven years
* Political backlash destroyed Jackson’s Democratic Party dominance^[21]
Jackson’s war on the Bank had succeeded too well. In destroying centralized financial power, he had also destroyed financial stability. The lesson seemed clear: modern economies needed central banks. The only question was whether they would serve public or private interests.
Free Banking: The Wild West of Money
The period from 1837 to 1863 is known as the “Free Banking Era,” though it was neither free nor particularly good at banking. With no federal oversight, banking became a state-by-state experiment in monetary chaos. The results ranged from innovative to insane.^[22]
The statistics tell the story:
* Over 1,600 different banks issued their own currencies
* More than 7,000 different types of state bank notes circulated
* Counterfeiting was so common that “Counterfeit Detectors” - weekly publications listing fake bills - became bestsellers
* The same $5 note might be worth $5 in one state, $4.50 in another, and nothing if the issuing bank had failed^[23]
The term “wildcat banking” emerged from this era. Unscrupulous operators would:
* Charter a bank in a state with lax regulations
* Print beautiful bank notes promising redemption in gold
* Locate the bank in wilderness areas where wildcats outnumbered customers
* Circulate the notes as far from the bank as possible
* Disappear before anyone attempted redemption^[24]
“The receiver of a bank bill had to be perpetually vigilant lest he be stuck with the worthless paper of a broken bank, a counterfeit, or a bill whose value was withering away because of the excessive distance from the issuing bank.”
— Bray Hammond, Banks and Politics in America
Yet the era also saw genuine innovations:
* The Suffolk Bank of Boston created a regional clearing system that stabilized New England currencies
* New York’s Safety Fund System pioneered deposit insurance
* Louisiana required banks to hold specie reserves equal to one-third of liabilities
* Some states experimented with state-owned banks serving public purposes^[25]
The Free Banking Era proved both sides of the monetary debate correct. Yes, decentralized banking could foster innovation and local autonomy. But it also enabled fraud, instability, and inefficiency that held back economic development. The question wasn’t whether America needed a better monetary system, but who would control it.
Lincoln’s Revolution: Greenbacks Solution
The Civil War created the crisis that transformed American money forever. When Confederate guns fired on Fort Sumter in April 1861, the federal government faced immediate financial catastrophe. The war would cost $3 million per day - more than the entire federal budget of previous years. New York banks, which held the government’s gold reserves, suspended specie payments in December 1861. The Union was effectively bankrupt.^[26]
Treasury Secretary Salmon P. Chase faced impossible choices:
* Borrow from banks at 24-36% interest (financial suicide)
* Tax the North into submission (political suicide)
* Print paper money (economic heresy)^[27]
Enter Colonel Edmund Dick Taylor, an Illinois businessman and friend of Lincoln, with a radical solution: have the government issue its own currency, backed not by gold but by the full faith and credit of the United States. No borrowing from banks. No interest payments. Just print the money needed to save the Union.^[28]
The banking establishment was horrified. The Associated Banks of New York, Philadelphia, and Boston demanded the government borrow gold at whatever interest they demanded. An editorial in the London Times revealed international banking’s fears:
“If this mischievous financial policy which has its origin in North America during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.”^[29]
Despite fierce opposition, Congress passed the Legal Tender Acts beginning in February 1862. The U.S. Treasury began issuing “United States Notes” - paper money that was legal tender for all debts public and private. The public called them “Greenbacks” for their distinctive green ink.^[30]
The Greenbacks were revolutionary:
* First federal paper currency since the Continental Congress
* Created debt-free by government spending
* Not redeemable in gold or silver
* Backed only by law and confidence
* Directly challenged banks’ monopoly on money creation^[31]
Bankers Strike Back, 1863 AD
The banking establishment’s counterattack was swift and sophisticated. They couldn’t openly oppose funding the Union war effort, so they attacked indirectly:
* The National Banking Acts (1863-1864): Sold as creating a uniform national currency, these acts actually created a new banking cartel. National banks could issue currency, but only by purchasing government bonds. This forced the government to borrow what it could have created.^[32]
* Greenback Limitation: Bankers lobbied successfully to limit Greenback issuance to $450 million - enough to help win the war but not enough to threaten their monopoly. The vast majority of war financing still came through interest-bearing bonds sold to banks.^[33]
* The “Crime of 1873”: After the war, banking interests pushed through legislation that:
* Ended the minting of silver dollars (demonetization)
* Put America on a gold standard
* Required Greenbacks to be retired from circulation
* Concentrated monetary power in Eastern banks that controlled gold^[34]
* The Long Depression (1873-1879): The contraction of currency caused a devastating depression. Farmers who had borrowed paper dollars now had to repay in scarce gold. Foreclosures swept the nation. The money power had its revenge.^[35]
“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy.”
— Abraham Lincoln, 1864 (shortly before his assassination)
Jekyll Island Conspiracy
The battle between democratic and private money control culminated in November 1910 on a private island off the Georgia coast. Six men, representing a quarter of the world’s wealth, gathered in absolute secrecy to design a new central bank for America. Their cover story? A duck hunting trip.^[36]
The conspirators included:
* Nelson Aldrich: Senate Republican leader, father-in-law to John D. Rockefeller Jr.
* Frank Vanderlip: President of National City Bank (Rockefeller)
* Henry Davison: Senior partner at J.P. Morgan
* Charles Norton: President of First National Bank (Morgan)
* Benjamin Strong: Lieutenant to J.P. Morgan
* Paul Warburg: German banking scion, partner at Kuhn, Loeb & Co.^[37]
They traveled in Aldrich’s private rail car, used first names only, and pledged absolute secrecy. Vanderlip later wrote:
“There was an occasion, near the close of 1910, when I was as secretive, indeed as furtive, as any conspirator… Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.”^[38]
Their plan was brilliant in its deception:
* Name it the “Federal Reserve” to sound governmental
* Create regional banks to appear decentralized
* Include government appointees to seem public
* But ensure private banks controlled the boards
* And guarantee profits through interest on money creation^[39]
The Federal Reserve Act passed in December 1913, during Christmas recess when many opponents were absent. Congressman Charles Lindbergh Sr. warned:
“This Act establishes the most gigantic trust on earth. When the President signs this bill, the invisible government by the Monetary Power will be legalized… The worst legislative crime of the ages is perpetrated by this banking and currency bill.”^[40]
Federal Reserve Pattern Perfected
The creation of the Federal Reserve completed a pattern repeated throughout American history:
* Democratic Innovation: Colonists create public currencies, states issue Greenbacks
* Crisis Emerges: Wars, depressions, or panics create urgency
* Private Solution: Bankers offer to “help” by taking control
* Temporary Becomes Permanent: Emergency measures become institutionalized
* Democratic Alternatives Forgotten: Public money options are erased from memory
The Fed was sold as preventing the bank panics that plagued the 19th century. Yet its first two decades saw:
* The Depression of 1920-21 (worse than any 19th-century panic)
* The Great Depression of 1929-39 (the worst economic catastrophe in history)
* Proof that centralized private control could be more dangerous than decentralized chaos^[41]
Greenbacks’ Ghost
Today, few Americans know their currency’s history. They don’t know that:
* The colonists’ monetary sovereignty sparked the Revolution
* Lincoln printed debt-free money to save the Union
* Every attempt at public money was destroyed by private banking
* The Federal Reserve is a private corporation with shareholders
* There are alternatives to debt-based currency
The battle Jackson started isn’t over. Every financial crisis revives the same questions:
* Why do private banks profit from public money creation?
* Why is all money created as debt?
* Who controls the controllers?
* What would democratic money look like?
Modern Monetary Theory, public banking movements, and cryptocurrency all echo the Greenback tradition - a radical idea that money should serve the public, not rule it. The elites who gathered at Jekyll Island understood they were designing a system of control. The question is whether Americans will rediscover what Jackson, Lincoln, and the colonial revolutionaries knew: that monetary sovereignty and political sovereignty are inseparable.
“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”
— Abraham Lincoln, Senate document 23, 1865
[This investigation continues in Part 4: “Money Miracle They Killed: Wörgl and the Alternatives That Worked” - exploring successful monetary experiments that were forcibly shut down because they threatened established financial power.]
Footnotes
^[1]: Remini, Robert V., Andrew Jackson and the Bank War (Norton, 1967), p. 173. Jackson personally chose this epitaph in 1844, a year before his death.
^[2]: Franklin’s testimony before British officials: Sparks, Jared, ed., The Works of Benjamin Franklin, Vol. 4 (1840), pp. 428-429.
^[3]: Colonial monetary systems: Nettels, Curtis P., The Money Supply of the American Colonies Before 1720 (University of Wisconsin Press, 1934), pp. 202-285.
^[4]: Pennsylvania’s land bank: Schweitzer, Mary M., “Economic Regulation and the Colonial Economy: The Maryland Tobacco Inspection Act of 1747,” Journal of Economic History, Vol. 40, No. 3 (1980), pp. 551-569.
^[5]: Franklin on colonial prosperity: Pennsylvania Gazette, April 11, 1764.
^[6]: Currency Act impact: Ernst, Joseph Albert, Money and Politics in America, 1755-1775 (University of North Carolina Press, 1973), pp. 85-127.
^[7]: Franklin quote from: The Writings of Benjamin Franklin, ed. Albert Henry Smyth, Vol. 9 (1907), p. 231.
^[8]: Hamilton-Jefferson divide: Chernow, Ron, Alexander Hamilton (Penguin, 2004), pp. 344-361.
^[9]: Hamilton’s bank plan: “Report on a National Bank,” December 13, 1790, in The Papers of Alexander Hamilton, Vol. 7, pp. 305-342.
^[10]: Bank ownership structure: Cowen, David J., The Origins and Economic Impact of the First Bank of the United States (Garland, 2000), pp. 67-89.
^[11]: Jefferson to Washington, February 15, 1791, in The Papers of Thomas Jefferson, Vol. 19, pp. 275-280.
^[12]: Foreign ownership: Hammond, Bray, Banks and Politics in America from the Revolution to the Civil War (Princeton University Press, 1957), pp. 144-145.
^[13]: Biddle’s power: Govan, Thomas Payne, Nicholas Biddle: Nationalist and Public Banker (University of Chicago Press, 1959), pp. 178-210.
^[14]: Bank’s economic control: Catterall, Ralph C.H., The Second Bank of the United States (University of Chicago Press, 1903), pp. 183-246.
^[15]: Biddle quote from: Schlesinger, Arthur M., Jr., The Age of Jackson (Little, Brown, 1945), p. 81.
^[16]: Early recharter strategy: Remini, Bank War, pp. 82-83.
^[17]: Jackson’s veto message, July 10, 1832, in Richardson, James D., ed., Messages and Papers of the Presidents, Vol. 2, pp. 576-591.
^[18]: Deposit removal: Bourne, Edward G., The History of the Surplus Revenue of 1837 (Putnam’s, 1885), pp. 18-42.
^[19]: Banking explosion statistics: Fenstermaker, J. Van, The Development of American Commercial Banking: 1782-1837 (Kent State University, 1965), Appendix A.
^[20]: Panic of 1837: Rezneck, Samuel, “The Social History of an American Depression, 1837-1843,” American Historical Review, Vol. 40, No. 4 (1935), pp. 662-687.
^[21]: Depression statistics: Lepler, Jessica M., The Many Panics of 1837 (Cambridge University Press, 2013), pp. 167-203.
^[22]: Free Banking overview: Rockoff, Hugh, “The Free Banking Era: A Reexamination,” Journal of Money, Credit and Banking, Vol. 6, No. 2 (1974), pp. 141-167.
^[23]: Currency chaos: Mihm, Stephen, A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States (Harvard University Press, 2007), pp. 234-267.
^[24]: Wildcat banking: Dwyer, Gerald P., Jr., “Wildcat Banking, Banking Panics, and Free Banking in the United States,” Federal Reserve Bank of Atlanta Economic Review (December 1996), pp. 1-20.
^[25]: State innovations: Bodenhorn, Howard, State Banking in Early America: A New Economic History (Oxford University Press, 2003), pp. 184-217.
^[26]: Civil War costs: Gates, Paul W., Agriculture and the Civil War (Knopf, 1965), p. 93.
^[27]: Chase’s dilemma: Niven, John, Salmon P. Chase: A Biography (Oxford University Press, 1995), pp. 243-267.
^[28]: Taylor’s proposal: Davis, Andrew McFarland, The Origin of the National Banking System (Government Printing Office, 1910), pp. 24-35.
^[29]: London Times editorial, 1865, quoted in: McGrane, Reginald C., Foreign Bondholders and American State Debts (Macmillan, 1935), p. 42.
^[30]: Legal Tender Acts: Mitchell, Wesley C., A History of the Greenbacks (University of Chicago Press, 1903), pp. 44-117.
^[31]: Greenback features: Unger, Irwin, The Greenback Era: A Social and Political History of American Finance (Princeton University Press, 1964), pp. 15-40.
^[32]: National Banking Acts: Davis, Origin, pp. 89-134.
^[33]: Greenback limitation: Congressional Globe, 37th Congress, 2nd Session, pp. 884-890.
^[34]: “Crime of 1873”: Weinstein, Allen, Prelude to Populism: Origins of the Silver Issue (Yale University Press, 1970), pp. 8-32.
^[35]: Long Depression: Rendigs, Fels, American Business Cycles, 1865-1897 (University of North Carolina Press, 1959), pp. 85-112.
^[36]: Jekyll Island meeting: Griffin, G. Edward, The Creature from Jekyll Island (American Media, 1994), pp. 1-23.
^[37]: Participants: Vanderlip, Frank A., From Farm Boy to Financier (Appleton-Century, 1935), pp. 210-219.
^[38]: Vanderlip quote: Ibid., p. 213.
^[39]: Federal Reserve structure: Warburg, Paul M., The Federal Reserve System: Its Origin and Growth (Macmillan, 1930), Vol. 1, pp. 58-127.
^[40]: Lindbergh quote: Congressional Record, Dec. 22, 1913, Vol. 51, pp. 1446-1447.
^[41]: Fed’s early failures: Friedman, Milton, and Anna J. Schwartz, A Monetary History of the United States, 1867-1960 (Princeton University Press, 1963), pp. 299-419.
