"It is curious that people tend to regard government as a quasi-divine, selfless, Santa Claus organization. Government was constructed neither for ability nor for the exercise of loving care; government was built for the use of force and for necessarily demagogic appeals for votes." ~ Murray Rothbard
The Money of Cannibalism
There are people in this world who tell us that the Federal Reserve System is a kind of criminal operation, and that we should return to a gold-based currency. Do we need such an alternative? Are they joking? Or, are they engaged in an attempt to avert the extinction of the American people?
Many people regard government as little more than a band of pirates and robbers. Some people regard it in less gentle terms. They all seek to avoid its rapacity; and some seek to improve or abolish it. One of the most common practices that people employ to avoid the reach of pirates is to use cash for as many of their transactions as possible. These people imagine that they do a noble thing, that they deprive pirates of strength. They do no such thing. Instead, they give their own strength to pirates and they embrace a most hideous--but well-concealed--practice.
Let us briefly review the history of banking in this country. For the first 70 years of this country, bank notes were issued against gold by private banks. It has been estimated that, by the time of the Civil War, there had been 7,000 private issues of bank notes, of which 5,000 had failed. While there were countless reasons for these failures, probably the largest category of failures could be accounted for by the bankruptcy laws and the inherent corruption of government. In other words, many of the failures were intended. The process would follow this pattern: the looters would
- a. establish a 'bank,' take in gold as deposits and issue bank notes against the gold;
- b. take two or three percent of the gold and distribute it to judges, prosecutors and politicians;
- c. remove another 50 to 70 percent of the gold from the reach of the 'law' but still under the control of the looters and then
- d. declare 'bankruptcy.'
The judges, prosecutors and politicians, of course, would know exactly how to 'express their appreciation' for the presents received from the looters. (This practice may be applied in other kinds of business; the Enron debacle follows this pattern exactly.)
Although many or most of these bank failures were facilitated by government policies, in 1863 the federal government pretended to offer a solution with the National Banking Act, 12 Stat. 665. This Act among other things,
- a. created a bank note issued by the U. S. Treasury through private banks known as 'national banks' and
- b. imposed a ten percent duty on all private bank notes.
The national banks would obtain the Treasury bank notes by depositing ' U. S. bonds' with the U. S. Comptroller of the Currency and, in exchange, would receive currency equal in value to 90 percent of the market value of the U. S. bonds. The bonds were still owned by the banks but possessed by the Comptroller. Hence, the U. S. Treasury continued paying six per cent interest to the banks while the banks were required to pay to the U. S. Treasury two percent per year on the currency obtained by the banks. And so, for every $100 of bonds deposited with the Comptroller, the banks would earn six per cent on $100 and pay two percent on $90.
This opportunity to earn interest on otherwise non-interest earning gold reserves and the ten per cent duty on private bank notes practically eliminated all private bank notes within a few years. What's more, the Act had the effect of making U. S. government debt, instead of gold, the security, or reserves, for all American currency and bank deposits. In other words, American currency lost its gold backing in 1863 ' not 1933, as most people believe.
A bank note is a promissory note: It means that, the one issuing the note is receiving credit from whoever is holding the note. Thus, when I give a gold coin to a bank and receive a bank note in exchange, I am lending a gold coin to the bank ' if the bank note is issued by the bank. If the bank note is issued by the U.S. Treasury, I am lending a gold coin ' I am providing credit, to the U. S. Treasury. When I buy a pair of shoes with the bank note, the shoemaker is now providing credit to the bank, or the U.S. Treasury.
Thus, when we hold a bank note, we give our credit ' our strength ' to the bank, or government, that issued the note. We give the bank, or government, our strength to use for good, or evil.
When Congress mandated that U.S. bonds, instead of gold, be used as bank reserves, Congress centralized credit into the hands of the U.S. Treasury. This was done 15 years after the publication of The Communist Manifesto, in which it was explained that one of the conditions required to destroy private property in a country was the 'centralization of credit in the hands of the state by means of a national bank with State capital and an exclusive monopoly' to issue bank notes. The National Banking Act was pushed thru Congress by Thaddeus Stevens, a former lawyer for the New Harmony Society, a communistic society in which the communist manifesto was developed and from which Karl Marx learned, thru Robert Owen and Frederich Engels, what he was hired to write. 
The National Banking Act was substantially amended and enlarged in 1913. We know this piece of legislation as The Federal Reserve Act, 38 Stat. 251. Hence, the Federal Reserve Act is nothing less than the enabling legislation for the fifth plank of the Communist Manifesto. Can we condemn the Federal Reserve System on grounds more substantial than the fact that we can label it with the pejorative 'communist?' We can if we wish to avoid annihilation.
As noted, the National Banking Act and now the Federal Reserve Act mandate that no paper currency can circulate in this country except that which has been issued against U.S. government obligations (or negligible amounts of 'private' obligations which are ultimately guaranteed by the U.S. government). Congress has mandated that, if there is to be a paper currency in this country, there must be government debt: if the U. S. government were debt free, there could be no currency. Hence, the demand for currency is the demand for more government debt.
What are the practical consequences of this? Government debt is a two-sided coin, with the events of each side separated by five, 20 or even 100 years. The events associated with the first side are the borrowing of money by the government and disbursing it to special interest groups. The event associated with the second side is the imposition of taxes upon future generations to retire the debt.
Government debt, in other words, is the process by which one generation of people financially cannibalizes its children, and generations of grandchildren to come. It is done without the consideration, without the comprehension and without the consent of those upon whom the burdens are imposed, and, with no benefits accruing to them. If this financial cannibalization is to succeed ' if government debt is to be retired, it requires the utter annihilation of the rights, property and lives of Americans yet to come on the scene.
In other words, through the enabling legislation for the fifth plank of the Communist Manifesto, that is, the Federal Reserve Act, Congress has mandated the total annihilation of the American people. Congress has created a situation where, if we want a circulating currency ' if we want economic activity perceptibly greater than Stone Age conditions, we must financially cannibalize our children ' as prior generations have done to us. The demand for Federal Reserve notes is nothing less than the demand for financial cannibalism.
We must repeat this, the demand for FR notes is the endorsement of cannibalism. We can invent all the excuses we want in order to justify the use of cash ' but none will change its nature; none will avert its consequences.
If we believe the government is evil, we contradict ourselves by using its currency. Justice requires that we search for means to withdraw our support of such a government. If we desire to deprive it of strength, we must minimize our use of cash and use a gold-denominated currency whenever possible.
How shall we color the activity that requires a man to financially cannibalize his children as the price of his temporary, and miserable, survival? We cannot; for, there is no word in human language that can provide an adequate hue of evil, or black, to such activity.
What can we do? There are two main things that must be done: 1) repudiate the dollar; that is, repudiate the debt that cannibalizes us and our children; and 2) hunt those people, who thrive on cannibalism, to the ends of the earth, and methodically prosecute them ' with due process ' and see what happens.
As to the first, repudiation of the dollar/debt consists of organizing trading networks of businesses and people who want to trade with a gold-backed currency. Until a better man comes along, I'm willing to serve as a clearinghouse of information for such a network. For those interested, please tell me what services or products you offer, along with contact information.
As to the second, it calls for another revolution, and I explain our right to do so peacefully and legally in my book, The Lost Right.
1. The Mystery and the Fraud, included in The American Inquisition by Anthony Hargis
2. Taxation with Representation, included in A Tale of Two Bribes by Anthony Hargis