Jackson's Victory in the "Bank War" but the Money Power Strikes Back: Monetary Reform and the 2028 Election 1.6
1.1 A Bankrupt Nation (Click HERE).
1.2 The Historic Theft of the Sovereign Power of Money Issuance by the Money Power (Click HERE)
1.3 American Constitutional Confusion (Click HERE)
1.4 Monetary Wars Begin in the U.S.: 1795-1832 (Click HERE)
1.5 President Andrew Jackson Defeats the Money Power; How the "Bank War" Anticipated Today's Monetary Reform Movement (Click HERE)
The articles in this series leading up to the 2028 election are not intended to be a complete American history. Many readers will want to have additional background. For this I recommend my own book Our Country, Then and Now, published by Clarity Press in January 2024. The best resource I know of for the era from 1800 through the 1830s is Arthur Schlesinger Jr.'s "The Age of Jackson." With all due respect, I think it fair to say that most works on American history are written by and for the Money Power or, at best, exclude or distort key information. The two works cited above are not Money Power apologies. Schlesinger was JFK's personal historian. I view JFK as one of our country's true "people's presidents," which was why the Money Power got rid of him. Now to resume our story. For previous installments, see A Bankrupt Nation, The Historic Theft of the Sovereign Power of Money Issuance, American Constitutional Confusion, Monetary Wars Begin in the U.S: 1795-1828, and President Andrew Jackson Defeats the Money Power; How the "Bank War" Anticipated Today's Monetary Reform Movement
1.6 Jackson's Victory in the "Bank War" but the Money Power Strikes Back: Monetary Reform and the 2028 Election 1.6
John Jacob Astor's Drug Money—the Richest Man in America: The career of John Jacob Astor (1763-1848) offers a good illustration of the path to riches of an early American wheeler-dealer through tapping the resources of the untamed continent, manipulating the financial system run by the Second Bank of the United States, and riding the wave of British imperialism in China.
John Jacob Astor was a German-born American businessman, merchant, and real estate investor who became the first multimillionaire in the U.S. Born in Germany, Astor immigrated to New York City in 1784 with $25 in his pocket and training as a butcher and musical instrument maker. He made a fortune in the fur trade, founding the American Fur Company in 1808. Gaining a near-monopoly on furs, he established Fort Astoria in Oregon in 1811, which he sold to British interests during the War of 1812.
When U.S. government bond prices dropped during the war, Astor directed a Boston broker to borrow funds at 2% per month to buy the bonds low and sell them at a profit after the peace. This included sales of U.S. government bonds in the London market in exchange for sterling bills he invested in the U.S. Astor also repeatedly utilized American bank credit, includiong through the Second Bank of the United States, where he engaged in inside trading as both a major stockholder and a bank director.
Astor was the first American merchant to join in the British-pioneered Chinese opium trade, smuggling cheap Turkish opium into China for fantastic profits. His China trade profits (furs, sandalwood, opium, tea) were reinvested, while a customs-duty deferral he obtained from the U.S. government (9–18 months/no interest) gave him interest-free working capital. In 1834, he sold his trading interests and invested his capital in buying up large tracts of undevelopedManhattan real estate. At his death in 1848, he was the wealthiest person in the U.S.
Many more American merchants got rich in the Chinese opium trade. The names of these early American drug dealers included the Russells, the Perkinses, Bryant and Sturgis, John Perkins Cushing and the Forbes family, Warren Delano, Jr. (maternal grandfather of Franklin D. Roosevelt), Benjamin Chew Wilcocks, and the Low family, whose fortune later funded Columbia University's Low Memorial Library. Among the wider circle of Boston Brahmins to benefit from the opium trade were the Adamses, Cabots, Coolidges, Lodges, Lowells, Peabodys, and Saltonstalls.
These and other entrepreneurs invested their profits from opium in railroads, banks, insurance companies, and textile mills. The Chinese paid for opium with silver bullion which came to dominate U.S. commerce during what was called the "Silver Period." Silver traded in the financial markets at ratios to gold of 15.5 to 16-1, with gold mounting a major comeback by the 1830s.
Laundering of drug money remains a major source of the Money Power's bank capital today worldwide, just as it did in the days of John Jacob Astor and the Second Bank of the United States. On October 13, 2026, the U.S. Treasury fined Bank of America $1.21 billion — the third-largest penalty in Treasury history — for failing to report over $5 billion in suspicious transactions, including activity linked to Chinese money laundering networks and Mexican cartel/drug-related laundering.
Returning to Jackson's Victory: Unlike the American drug dealers, the much larger number of farmers, laborers, small merchants, and craftsmen who voted to elevate Andrew Jackson to the presidency, backing him up with Democratic Party majorities in Congress, were not having such a good time of it. The working classes believed they were being cheated by paper money and the "gambling economy."
The fact was that "…in the larger economic picture, all the stable income classes had to stand by helpless and impotent during the unpredictable rise and fall of prices on the ebb and flow of [bank] credit." Jackson saw the speculators in bank paper as "stock-jobbers, brokers, and gamblers." A letter to the House Ways and Means Committee stated that it is "the duty of every government so to regulate its currency as to protect this numerous class [i.e., "the mechanic and the laborer"], as far as practicable, from the impositions of avarice and fraud." (Arthur Schlesinger, Jr., Age of Jackson, p.121)
Jackson and his supporters saw it as essential that the monetary system shield working people from the business cycles of inflation and depression. In order to achieve this, they aimed to withdraw from the banks "the privilege of note issue;" i.e., their ability to create money "out of thin air" through their now-customary practice of fractional reserve lending. Bank privilege, then, became the battleground of most of the next century, a period encompassing the early Industrial Revolution, the Civil War and Greenback era, the rise of the gold standard, the creation of the Federal Reserve followed by World War I, and the Great Depression. The first major salvo was Jackson's Bank War.
When Jackson removed the federal money from the Second Bank of the United States, leading to its demise, "The Boston Post put it in the same class as Christ's expelling the money-changers from the Temple." (Ibid, p.102) Missouri Senator Thomas Hart Benton, Jackson's staunchest congressional ally, called it "the success of the right through God and the people." (Prof. Robert Remini, Andrew Jackson and the Bank War, P.149) After his triumph, Jackson wrote to Vice-President Martin Van Buren, "The golden calf may be worshipped by others, but as for myself I will serve the Lord." (Ibid, p.154-155)
Jackson described the battle as "whether the people shall govern, or whether they shall be governed [by] Bank monopolies and corrupt aristocrats." (Ibid, p.158) Jackson had a keen political sense of the nature of the opposition. Anticipating the tactics of today's Deep State, which is entirely an instrument of the Money Power, Jackson wrote, "Creating divisions among the people…is one of the artifices essential to the success of the few over the many." (Ibid, p.157)
Jackson's was an epochal victory over the Money Power, which had been gradually taking over the Western world for centuries and which by now had made the Bank of England its world headquarters. Using a relatively small reserve of gold and silver at controlled prices, the Bank's main business line had become to crank out paper banknotes with minimal backing to finance Britain's military assaults on the European, Asian, and African continents. This was how the British Empire came into existence, with gold gradually displacing silver as the metal of choice.
The most powerful family behind the Bank of England were the Rothschilds, who also dominated price-setting in the world's gold markets from 1809 to 2004. British Prime Minister and author Benjamin Disraeli famously wrote, "The world is governed by very different personages from what is imagined by those who are not behind the scenes," referring to the Rothschild's covert influence. (Coningsby, or The New Generation Book IV, Chapter 15).
But the U.S. had broken away from the Empire and its "behind the scenes" controllers through the American Revolution, the War of 1812, and now repudiation of Hamilton's corrupt central banking system implemented through the First and Second Banks of the United States.
Until President Andrew Jackson's Bank War, Hamilton's system had lodged ownership, oversight, and control of U.S. finances in structures literally owned by the elite of Great Britain, the Netherlands, and a handful of America financiers located chiefly in Philadelphia, New York, and Boston. It was the careers of individuals like John Jacob Astor that exhibited the tenor of the times.
Now the system was about to change. But how? And would the changes prove permanent or ephemeral?
"Hard-Money": It was now intended to be a hard-money system—specie—gold and silver, with some copper thrown in—but not exclusively, as prejudiced critics still claim today. When Jackson and his men decided against their own version of a Third Bank of the United States, it was also to be a state-chartered banking system.
The theory was set forth by an editor and economist little known today—William M. Gouge, author of A Short History of Paper Money and Banking in the United States—a respected work still read and studied in academia—who was brought into the Treasury Department to help guide the program.
Jackson's objective "was gradually to reduce the circulation of paper by forbidding deposit banks to issue small notes and by refusing such notes in payment for taxes, until all such notes under twenty dollars would be eliminated and 'thus a metallic currency be insured for all the common purposes of life while the use of bank notes would be confined to those engaged in commerce.'" (Age of Jackson, p.116)
Note that while paper checks had been introduced into commerce in the U.S. in 1784, they were not commonly used until after the Civil War. Before then, business was carried out using paper money issued by the Second Bank, while it existed, and/or state-chartered banks otherwise. But this money fluctuated in value or became worthless if the issuing bank failed by making ill-advised loans to speculators who could not repay.
What Jackson and the Democrats wanted was coinage of fixed and reliable value to be the exclusive medium of exchange and store of value for all business conducted by ordinary people in the course of daily life—and by the federal government in conducting its own business.
Of course, the problem with hard-money was the same factor that ensured its value—scarcity. It was also susceptible to hoarding by whichever banks were able to draw in deposits of money from other banks then present them to those same banks for redemption. The scarcity of specie continued to be a problem until it began to be relieved by discoveries of gold and silver in the western territories—particularly California—after the Mexican War, leading to the opening of a second U.S. Mint in San Francisco in 1854.
"Pet" Banks and Land Speculation: But the question of hard-money vs. paper was overtaken by crisis. It was now the state banking system that became the depository for federal government revenues after Jackson removed them from the Second Bank. Jackson initially distributed federal deposits to seven state banks in October 1833. The number of these "pet banks" increased to 23 by the end of 1833 and eventually grew to around 90 by 1836.
But the Money Power was lying in wait. With no central bank to influence credit, the pet banks expanded lending aggressively. Bank-issued paper money nearly doubled from $61 million to $120 million, with the money supply growing at a 30% annual rate. This fueled a massive land speculation bubble. Public land sales jumped from 2 million acres in 1829 to 12.5 million in 1835, with land prices rising about 28% in three years.
Disgusted by speculators using inflated or worthless state bank currency to drain the federal land reserve, Jackson now issued the famous Specie Circular on July 11, 1836. This executive order mandated that payments for federal lands over 320 acres be made exclusively in gold or silver coin (specie) rather than paper money. The requirement officially took effect on August 15, 1836. Public land sales, which had peaked at over 20 million acres in fiscal year 1836, now plummeted. By December 1836, sales in key western states like Illinois and Indiana had fallen roughly 75%. Land prices also crashed as total sales dropped to about 5.6 million acres in fiscal 1837.
British Capital Contraction Triggers the Panic of 1837: But a much bigger problem was brewing. With the Industrial Revolution now underway, British investors backed by the Bank of England had become the major source of investment capital in Great Britain for construction of railroads, canals, and factories, as well as for shipbuilding and imperial expansion. British capital had also become an essential resource for U.S. industrialization as well, including the vast expansion of cotton cultivation in the American South with its large and growing slave population. Virginia in particular had become a slave-breeding center for workers to be "sold South."
The Panic of 1837 would have been called a "depression" today. Lasting six years, it was the worst to befall the U.S. until the Great Depression of the 1930s. Most historians—and polemicists—still blame the Panic of 1837 on President Andrew Jackson and his Bank War. But the fact is that it was European banks—primarily British—that played a key role in both fueling the boom and triggering the bust.
What is never acknowledged is that it was firms like Baring Brothers and the Rothschilds which financed American trade by accepting bills drawn on Liverpool cotton sales and discounting state bonds issued for canals and railroads. By 1836, foreign holdings of American securities reached roughly $200 million — perhaps a quarter of all outstanding U.S. debt and bank equity.
Most critically, the Bank of England saw its own specie reserves fall to just £4 million causing it to raise its interest rate from 3% to 5% beginning in August 1836. The directors blamed the large volume of American securities purchased in London. Raising the cost of borrowing now reversed the flow of British capital into the U.S. and led British creditors to demand repayment by American borrowers in hard currency for financing new exports.
This is precisely the same action taken by the Bank of England in 1929, when a sudden increase in interest rates led to recall of margin lending to U.S. speculators in the stock market. Next came the crash, followed by the Great Depression and eventual world war.
In late 1836, the sudden tightening drained specie out of American banks. New York deposit bank reserves fell from $7.2 million in September 1836 to $1.5 million by May 1837, leaving these banks unable to redeem their notes in specie. Next, British demand for American cotton fell sharply in early 1837, collapsing the credit structure that had been built with cotton as collateral.
With nine U.S. states and one territory defaulting on their debts in the early 1840s, European banking houses — led again by Baring Brothers — hired agents to pressure state legislatures into repayment, effectively exercising control over American state finances that the federal government tacitly had no means of opposing.
In short, British banks were the trigger. Their credit expansion helped fuel the speculative boom, and their sudden credit contraction in 1836–37 was the immediate catalyst that turned a domestic overextension into a full-blown panic.
But the ingredients for recovery were in place with growing industrialization. Railroads were expanding, smelting of pig iron was advancing, and the machine tool and the metalworking industries were taking off. Coal was replacing wood as the nation's major source of heat and agricultural machinery was enhancing farm productivity, including on the South's cotton plantations. The Erie Canal had brought boom times to New York, with the nation's population increasing by more than one-third during the 1840s. This included hundreds of thousands of Irish refugees fleeing the potato famine. So the panic came to an end by 1840-41, but not without immense suffering, particularly among unemployed people in the growing American cities.
The Federal Government Scrambles to Make Ends Meet: Under President Jackson, the government had paid off the national debt entirely by 1835 and, even with the 1836 Specie Circular, ran large budget surpluses in 1835–1837, largely from land sales. That surplus (~$37 million) was distributed to the states in installments beginning January 1837.
In November 1836, Vice-President Martin Van Buren of New York was elected president on the Democratic Party ticket. Incredibly, the newly-formed Whig Party ran four different regional candidates in order to deny Van Buren election and throw the decision into the House of Representatives as had happened in 1824 when the House selected John Quincy Adams over Andrew Jackson.
The Whig candidates were William Henry Harrison, the western candidate and War of 1812 hero, who finished second with 73 electoral votes; Hugh Lawson White, the southern candidate from Tennessee, who received 26 electoral votes; and Daniel Webster, the New England candidate from Massachusetts, who received 14 electoral votes. Willie Person Mangum, an independent candidate in North Carolina, received 11 electoral votes.
Van Buren beat them all by riding on Jackson's triumphs, winning the popular vote, and receiving 170 electoral votes.
But with the Panic of 1837, President Andrew Jackson's hard-money aspirations were now kaput, with Martin Van Buren and his administration left holding the bag. In the meantime, the U.S. government scrambled just to make ends meet. The government had no means of setting national economic policy and no mechanisms of relieving financial distress for individuals or families. Faced with the crisis, the best President Martin Van Buren could do was protect federal government revenues from going down with the sinking financial ship.
When the Panic of 1837 hit, federal revenue fell roughly 50% (from about $50 million to about $25 million), and a $12 million deficit replaced the prior $20 million surplus. The national debt — which had been zero — came back, rising from about $337,000 on January 1, 1837, to about $3.3 million by January 1, 1838, rising to roughly $5.25 million by the end of Van Buren's term in 1841.
Van Buren's response was to cut spending—federal expenditures fell from ~$30.9 million in 1836 to ~$24.3 million by 1840—and issue $10 million in Treasury notes to keep the government solvent, rather than institute new taxes to compensate for falling customs duties. He stopped further surplus distributions to the states and pushed enactment of an Independent Treasury to keep federal money out of failing banks. So the budget deficits were a consequence of the revenue collapse, not of Van Buren's fiscal philosophy — he was actively trying to get back to a balanced budget.
In responding to the Panic of 1837, Van Buren managed the worsening condition of federal finances by adhering to a policy of strict economy and frugality. He focused on trying to maintain a balanced budget by cutting federal spending on internal improvements and ensuring the government remained solvent without borrowing from the banks.
Van Buren never tried to address falling government revenue by directly spending money into circulation using open-ended Treasury Notes as Madison had done during the War of 1812. Instead, the U.S. national debt was reintroduced at first as short-term expedient. The debt rose from approximately $336,958 in January 1837 to about $5.25 million by the end of Van Buren's four-year term.
Van Buren's method was a hybrid. The Treasury Notes were not put into circulation as currency but were still issued as interest-bearing paper to pay government expenses (bills, customs duties, etc.), meaning the Treasury handed them to its creditors in lieu of specie. But they were treated as short-term debt instruments to be quickly redeemed, not as a medium of exchange. Van Buren had no intention of creation a permanent public debt as Hamilton tried to do with the First Bank of the United States, imitating the Bank of England.
By end of 1838, less than $8 million in notes were outstanding, including interest. By the end of 1839, under $3 million was still unredeemed. The notes were in denominations of $50 and above, which further limited their use as everyday currency, but because the government paid its creditors with them, they did circulate to some degree in the economy.
One particular note issue by Secretary Levi Woodbury (about $850,000) was endorsed with a promise of immediate repurchase in specie, and members of Congress complained those were "dangerously close to currency" This underscores how carefully Van Buren walked the line between using the notes as a fiscal tool and letting them become a de facto paper money, while illustrating Congress's subservience to the Money Power which only wanted to lend paper money into existence.
Van Buren's main structural reform was taking steps to implement the Independent Treasury system, which he proposed in a special session of Congress in September 1837. This system aimed to "divorce" the government from the banking system by storing federal funds in government-controlled vaults, thus removing them from the state-chartered pet banks and isolating public money from private speculation or use as a banking system lending reserve.
Although his proposal faced strong opposition from both Whigs and conservative Democrats, the Independent Treasury Act was eventually passed in 1840. The legislation was repealed during the Harris/Tyler administration but reinstated under President James K. Polk. The Independent Treasury system effectively separated federal fiscal operations from private banking control, a system that remained in place until the Federal Reserve Act of 1913.
Like President Andrew Jackson's Bank War, the Independent Treasury was another assault on the Money Power. Half-a-century earlier, Alexander Hamilton had tried to marry the Money Power to the fledgling U.S. government through the First Bank of the United States and other measures favorable to the financial interests. Now, in 1840, successive presidents from Thomas Jefferson onward through Martin Van Buren, with even Federalist-leaning John Quincy Adams not standing in the way, had succeeded in casting the money changers out of the Temple of the America republic.
Battles had been won, but there were more to come, even to this day, despite the Money Power's apparent total victory through the Federal Reserve system.
August Belmont Arrives in the U.S.: As the economy was crashing in 1837, not everyone had to tighten their belts. For those individuals with money to spend, it was a field day for purchasing assets for pennies on the dollar, which is always one of the main results of financier-instigated recessions and depressions. Among the beneficiaries were the large extended Rothschild family of Britain, France, and Germany—and their friends.
From Our Country, Then and Now: "In 1837, a banker named August Schönberg arrived in the U.S. to represent Rothschild interests during the panic that commenced that year. Schönberg changed his name to August Belmont…Over the next several decades, Belmont became a prominent figure in American society, including politics, culture, and even horseracing. Belmont also became one of the principal power brokers of the Democratic Party, and we'll hear more about him when we discuss the Civil War." (p.57)
The Rothschilds' New York agent, J.L. & S.I. Joseph & Co., had suspended payments under liabilities of roughly $7 million in March 1837, just weeks before Belmont arrived. The firm's failure was one of the triggering events of the Panic of 1837 and left the Rothschilds without a U.S. correspondent until Belmont stepped in to found August Belmont & Co. at 78 Wall Street. Belmont had been apprenticed to the Rothschilds' firm in Frankfurt, Germany, and was the first of several German Rothschild associates to set up operations in the U.S.
During the Panic of 1837, August Belmont utilized the credit of the Rothschild banking house to purchase numerous distressed assets at severely depressed prices, for sometimes as low as ten cents on the dollar.
These assets purchased at cut-rate prices included state bank notes and securities from collapsed institutions; commodities, including sugar, cotton, and tobacco, which were produced using slave labor and had seen prices plummet due to market saturation and credit tightening; real estate and personal property, including land and urban lots that had lost commercial value during the crash; and commercial paper and debt instruments, acquired from creditors who had gone broke from debtors unable to pay.
The Rothschild houses in London and Paris supported Belmont's machinations. Resale of American cotton and tobacco flowed through the Rothschild houses in London, Paris, and Vienna, with London the primary cotton market and Paris/Vienna the key tobacco markets. Profits on cotton alone have been estimated at 50-100% of cost. Frankfurt, Belmont's original base, functioned more as a financial hub than a commodity destination.
Within two years of his arrival in the U.S., August Belmont was a millionaire, with the Rothschild financial empire becoming tightly intertwined with American banking and business, including inroads into public finance through state and local governments, and even representing the federal government in its own financial dealings abroad. The Rothschilds and similar operators had literally spent centuries creating the financial and legal infrastructure, information networks, and systems of apprenticeship and training needed to move large quantities of credit and credit among the financial hubs of Europe and would now apply the same systems and procedures to the U.S. Few Americans could escape the spider's web.
Later, the prominent names of Rothschild associates arriving on American shores included Jacob Schiff of Kuhn, Loeb, who was instrumental in financing the Bolshevik Revolution in Russia, and Paul Warburg, who helped write the legislation for the Federal Reserve. The primary U.S. figure working with the Rothschilds to dominate American finance was J.P. Morgan, whose father Junius had begun working with the Rothschilds in London decades earlier. By the early years of the 20th century the secure walls of the financial fortress had been breached by another American family whose name would soon be writ large in the annals of accumulation, exploitation, and war—the Rockefellers.
Still, the Rothschilds, now led by August Belmont, represented what was arguably the first modern node of the Money Power in moving to take control of the U.S. during the late 19th and early 20th centuries. Even so, Americans fought back, with another hard-fought victory coming with President Abraham Lincoln's implementation of the famous Greenbacks.
Stand by for our next episode on the Civil War and beyond.
Research for this article has been facilitated by Brave AI.
Richard C. Cook is a retired U.S. federal analyst with extensive experience across various government agencies, including the U.S. Civil Service Commission, FDA, the Carter White House, NASA, and the U.S. Treasury. He is a graduate of the College of William and Mary. As a whistleblower at the time of the Challenger disaster, he exposed the flawed O-ring joints that destroyed the Space Shuttle, documenting his story in the book "Challenger Revealed." After serving at Treasury, he became a vocal critic of the private finance-controlled monetary system, detailing his concerns in "We Hold These Truths: The Hope of Monetary Reform." He served as an adviser to the American Monetary Institute and worked with Congressman Dennis Kucinich to advocate for replacing the Federal Reserve with a genuine national currency. See his new book, Our Country, Then and Now, Clarity Press, 2023. Also see his Three Sages Substack. He is a Research Associate of the Centre for Research on Globalization (CRG).
"Every human enterprise must serve life, must seek to enrich existence on earth, lest man become enslaved where he seeks to establish his dominion!" Bô Yin Râ (Joseph Anton Schneiderfranken, 1876-1943), translation by Posthumus Projects Amsterdam, 2014. Also download the Kober Press edition of The Book on the Living God here.
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