24. januar 2009

The Beginning of the United States Of America

The history of Wall Street is long

A little from the beginning of Wall Street:

Originally there were 13 colonies in America. They were called New England and were colonies of England. Here they used their own money. There were several, they were called ‘colonial script’ and everything went very well. There had been international disagio-problems, but that could not explain, what was planed to happen now. When the colonists made their money themselves, they were apple to control the purchasing power. The English bank managers did not like that, they wanted to control the monetary-system like they did in England. So they introduced their monetary system and decreased the amount of money to about one half. Now the happy living in the colonies was totally changed. Unemployment and poverty were the result. The rage was turned against the Englishmen and the War Of Independence started. Two of the leading figures behind this revolutionary war were the experts of finance Robert Morris and Alexander Hamilton. The later became Finance Minister under George Washington. It was not a good idea to try fund the war with England by tax-collecting, because taxation always hamper people. The French participation was financed (with Necker as an adviser) by loans too (1,2 billon Frcs). Necker was much more a clever man of finances than he was a skilled and wise statesman.

For this reason and for another reason the authorities let money-emission do the work to get the war that was wanted by few. They issued Government Paper and other instruments of debt of the bearer types. They sold them to ordinary, good citizens, who bought them for their true money earned by hard working. They sold paper money via the federal government, the single states and municipalities. When the war had ended, they also gave some of the paper and a little real money to the home-coming soldiers. The value of the papers depended of the possibility of the state to be solvent and of it could/would honour them to an acceptable course. While the time passed the most did not count on the paper, so they used it as wallpaper and labels. But with Hamilton as Finance Minister something was planned to happen. The single states (in America) made paper money to an amount of 210 mill. and The Union 360 mill. dollars under The War Of (In)dependence. Then the paper dollard had to fall. In 1779 you could exhange 38 paper dollars with 1 silver-dollar, the year after 100 and in 1781 some times 1000 paper-dollars for 1 silver dollar. Then they were drawn back, and for 100 dollars you got 5 dollars of interest-bearing certificates. Only a little returned, because they had been use practically as mentioned.

The first time the passing of the new law, that was know only by a few, failed, but in 1790 Thomas Jefferson returned from France, where had been American ambassador in Paris and adviser for the French revolutionaries. With his help they succeded as planned in America. Now the law could come to reality – 14 years after the Declaration Of Independence? The Congressmen listened to the proposal with deepest surprise, but the speculators that had planned it from the start did not.
The papers should be honoured to nominal value, and the debt of the single states should be paid by the federal government too. Now the speculators hurried out in the country to buy paper quietly from the people who did not know the law-proposal. Alexander Hamilton wrote til George Washington that he long ago had learnt that the public opinion was of no value. The money to buy the paper came from new Government Paper sold to the same people 25 years (one generation) after the war.

In this way the citizens paid the cost of war, and the paid to be ruled in the future. Wadsworth, who was a member of The Congress for Connecticut, transmitted the ships to the South States to buy all the paper, they could get. The rumours told about unjustifiable manoeuvres ‘behind the scene’. They were told so loudly that the New Yorker newspaper Daily Advertiser even calculated, what the different speculators could foresee to earn, if the law passed through.

This calculations showed that Robert Morris would pocket $18 mill. (in the years 1790-1792), Jeremiah Wadsworth $9 mill. and Governor Clinton $5 mill. Fisher Ames and Christopher Gore were also members of the syndicate. The enthusiasm was as you will understand on the boiling point in coffeehouses of Wall Street, where the speculators had their headquarter.
The only thing that was missing was to enclose the admission to the growing activity in Wall Street. Too much publicity, and too much public participation could damage the speculation, and do it too uncertain for the participants. This was not managed ‘in the right way’ (nearly the same) until after The Civil War 1861-1865. The War Of Independence should rather have been called the War Of Dependence instead. 

Based upon the movie ‘John Adams’ and among other things upon Robert Warshows Wall Street, Copenhagen 1933


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    Pingback af All Posts on http://Danmark.Wordpress.com « Danmark — 17. marts 2009 @ 21:40

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