Gary North on current economic affairs and investment marketsGary North -- Specific Answers
HomeContact MeTell a FriendText SizeSearchMember Area
Gain immediate access to all of our current articles, the question-and-answer forums, dozens of free books, and article archives. Click here for details on how to join.

About This Site
Academic Gaps
Capitalism and the Bible
Christian Economics
Clichés of Protectionism
College Finances
Debt Management
Ellen Brown: Critique
Federal Reserve Charts
Gary North's Free Books
Get Published Here!
Gold Price & My Report
Keynes Project
One Lesson
Price Index (U.S.A.)
Questions for Jim Wallis
Remnant Review
Social Security/Medicare
Sustained Revival
Tea Party Economist
U.S. Debt Clock
Yield Curve
Your YouTube Channel
Gary North's Miscellany
Budgeting for Wealth
Business Start-Up
Career Advancement
Digital Tools
Education That Works
Evernote: Free Notes
Federal Reserve Policy
Fireproof Your Job
Goal-Setting for Success
Great Default
Inheritance Strategies
International Investing
Investment Basics
Job and Calling
Keynesian Economics
Marketing Case Studies
Precious Metals
Real Estate
Safe Places
State of the Economy
Stocks and Bonds
Study Habits
Video Channel Profits
Members' Free Manuals
Our Products
Contact Me
Tell a Friend
Text Size
Your Account
My 100% Guarantee
Privacy Policy
Terms of Use

This site powered by MemberGate
home | Tea Party Economist | Abraham Lincoln and the Federal Rese . . .

Abraham Lincoln and the Federal Reserve System: A Forgotten Connection

Gary North - September 24, 2013
Printer-Friendly Format

There are people who say that Abraham Lincoln opposed central banking. The opposite is true.

Lincoln ran for the legislature in 1832 as a supporter of Henry Clay and what Clay called the American system: high tariffs, federal money to build public works projects, and a central bank.

Clay was the main supporter in Congress of the Second Bank of the United States. The Bank had been chartered by the federal government in 1816. The charter was good for twenty years. It would expire in 1836. Clay tried to get the Bank re-chartered early, in 1832. Congress sided with Clay, but President Jackson vetoed the bill. Clay did not have enough votes to override the veto.

Clay vowed to defeat Jackson that fall. He got the nomination of the National Republicans, who had lost in 1828 with John Quincey Adams on the ticket. Jackson had won in 1828. Clay made the Bank the major political issue of the 1932 election. Jackson was overwhelmingly re-elected, defeating Clay.

Lincoln also lost.

Clay in 1833 helped form the Whig Party. Lincoln was elected to Congress as a Whig in 1846 for one term.

There were two traditions in the United States in 1832: the Jeffersonian and the Hamiltonian. In the election of 1832, the two traditions clashed self-consciously. Until Lincoln's inauguration in 1861, the Jeffersonian tradition was dominant in the United States. After that, only Grover Cleveland was self-consciously Jeffersonian.


This serves as background to the little-known story of the man whose ideas led to the Federal Reserve System, an immigrant named Paul Warburg. He was from a distinguished banking family in Germany. He married the daughter of the founder of Kuhn-Loeb, and he became a major figure in that investment bank, beginning in 1902, the year he arrived in the United States.

He favored the creation of a central bank along the lines of national European central banks. He began promoting this in 1902. He publicly promoted it in early 1907, just before the banking panic. He wrote "Defects and Needs of Our Banking System," New York Times, January 6, 1907. The timing made him a key figure in the six-year debate debate over the creation of a central bank.

His great opportunity came in 1910. It was made available to him by the Republican Senator from Rhode Island, Nelson Aldrich, widely known as John D. Rockefeller's Senator. (His grandson was named after him: Nelson Aldrich Rockefeller.) Following the Panic of 1907, Aldrich had been named the chairman of the Congressionally established National Monetary Commission. He led a team to Europe to study European national banks. That made him a convert. He used his influence in 1910 in the National Monetary Commission to promote the idea. In 1910, he invited Warburg to attend a secret meeting on Jekyll Island in Georgia in November, where half a dozen men hammered out the basics of the Federal Reserve Act. They represented both Rockefeller and J. P. Morgan. Warburg was the brains of the group.

In January 1911, Warburg had an article published in the Proceedings of the Academy of Political Science in the City of New York, Vol. 1, No. 2. The title: "A United Reserve Bank of the United States." It was part of a symposium: "The Reform of the Currency." In the final three paragraphs, pages 340-42, Warburg wrote this.

There is no good reason why the existing banks should oppose it. Wherever a central bank has been established the vested interests at first tried to prevent its creation. They saw only the danger of a change in business conditions which, though bad in general, had been profitable to them. They recognized only later that by the change they were enabled to transact their business in safety and that therefore they could do a much larger business. There is not one of these countries, in which opposition ran high against a central bank, where today a move to do away with the central-bank system would meet with the slightest support. Neither the socialist nor the capitalist would dispense with it; it has become one of the fundamental parts of the economic life of modern nations, like the telegraph or the railroad.

Would it be repugnant to the so-called American spirit? Is it an un-American institution? Our opinion is that it is a slur and a slander upon the American people to say that they are morally or politically so utterly unfit that they cannot afford to adopt a system for which Russia, Japan, the Balkan States, and some of our South American sister republics, have proved adequately prepared and which even China is seriously thinking of establishing in the near future. We believe that the people will wake up to the humiliation of present conditions and that they will demand in no uncertain voice a thorough modernization of our system. We are inclined to think that ignorance about what a central bank would really mean has been more responsible for the popular antagonism to such a system than has the ghost of Andrew Jackson. Good American citizens, who lived two generations nearer than we do to the dissolution of the last Bank of the United States, and were more familiar with its history than are the people of today, did not consider it an un-American institution. In this respect Abraham Lincoln's first political speech, which he delivered at New Salem in 1832, may be of interest. He said:

"Friends and Fellow-Citizens:

"I am plain Abe Lincoln. I have consented to become a candidate for the legislature. My political principles are like the old woman's dance-short and sweet. I believe in a United States Bank; I believe in a protective tariff; I believe in a system of internal improvements, and I am against human slavery. If on that platform you can give me your suffrages, I shall be much obliged. If not, no harm done, and I remain respectfully yours, ABE LINCOLN."

It is seventy-seven years ago that this simple man from the woods, with his never-failing instinct, laid down this remarkable program, of which only one single part, "a United States Bank", remains to be carried out. Let us hope that it will be the pride of our generation to have achieved this step in the onward march of the United States.

Aldrich's version of the bill did not pass, but the Democrats' version, almost identical, passed in late December, 1913, just before the Christmas break. Wilson signed it into law that same day. The third plank of Lincoln's 1832 platform was finally the law of the land.

Printer-Friendly Format

 Tip of the Week
Sign up for my free
Tip of the Week
Verification Characters:    Type     K  R  H  4  U     here   

Tip of the week archives
On what this icon
means, and how it
can help you,
click here
 Q & A Forums
General Q&A Forum
Advertising and Resumés
American History Topics
Backyard Food Gardening
Banking and Politics
Blog Sites and Web Sites
Books Worth Reading
Bumper Sticker Slogans
Business Forum
Buying Smart
Christian Service Forum
College -- The Cheap Way
Education Alternatives
Food Storage
For Women Only
GNC Benefits
GNC Testimonials
Gold and Silver
Great Default Forum
Health and Diet
Health Insurance
Investments Forum
Iran War
Job, Calling, and Career
Leadership Development
Legacy Building
Less Dependent Living
Local Political Action
Non-Retirement Forum
One Good Idea
Police State
Public Speaking
Real Estate Forum
Remnant Review Forum
Safe Places Forum
Taxation Policy
Typographical Errors
Video Production Basics

Reality Check
 Discussion Forum
Search Discussion

Recent Forum Posts
• Cashing in 401k??
• Rare Coins vs. Gold
• ETrade Dumping Global Trading
• The New World Order Just Got a Wake-Up Call
• Are rates rising or falling ?
• The Next Market Crash article
• Gary, what IS your long term investment outlook?
• Trailer parks as a sound investment
• Prices for US treasuries headed south?
• Copper
• Negative interest rates
• Looking for educational material
• Safe currencies to hold
• Benjamin Graham?
• A Motif masochist investor asks
• Buy or Rent for a Young Family
• Raising Rent
• Financing vehicles
• Sell or Rent with Recession on the Horizon
• VA Home Loan
• House flippers are back with Wall St help
• Is there a large brokerage you recommend.
• Ever hear of Exit Realty?
• What commission do you think a broker should get?
• Capital gains
• Developing a mobile home park
• Word press plug in
• Rent controls in mass inflation:where to go?
• How to calculate ROI for a rental property?
• How should I sell a house?
• Let's not make a deal!
• US Pop update: 78% pop decline by 2025 !
• Price Book- End of America
• Time to leave America while you still can ?
• Impact Fees for New Florida Residents
• New Hampshire and Florida
• Ecuador and PR
• Survivor library
• Missle Silo converted to Condos
• Does the South suck?
• Moving TO the US?
• No City for Old People
• Will you die getting to your bug out location?
• teaching English overseas - some questions
• The state with the most Liberty
• Kurzweil on Financial Times
• Why is this fantasy world stuff?
• One change could help saving for retirement
• Forced retirement - lump sum - legal work
• Moving Retirement Funds
• Sudden Wealth Advice
• Sudden Wealth Advice
• Question on Traditional Pensions
• advice on how do I interact with my older parents?
• Do You Sincerely Want to Be Rich? Why?
• Req. For No 401(k)/Other Pensions via Relocatio
• Cashing out 401K to pay student debt?
• SS @ 62 and still working
• Desolation or Prosperity?
• I take it Retirement Armageddon is not available
• LinkedIn Help Needed
• Personality test URL, help please
• Lexis-nexis style research on individuals
• Template for Creating Online Courses
• Cost of war
• Fine for refusing to bake a cake for gay couple
• TPP trade bill whats the senate bill number?
• Free Screening: The Greenhouse of the Future
• Learning to program
• A Way to Brew Morphine Raises Concerns Over Regula
• New McDonald’s In Phoenix Run Entirely By Robots
• Video: Trumpet-Like Sounds, Worldwide
• This just in ...
• No kidding?
• Osama and me article
• Loyalty
• Small business loans
• Metrics for growth of online education?
• How to best build email list of High Net Worths
• Competing where no one wants to
• A Low-Cost Weekend Business to Retire Into
• Questions for small business owners
• Leasing Question
• New Motor Technbology
• MBA programs that get you where you want to go
• a different marketing - using academia
• Video Interview Equipment
• Beginner Business Structure
• Apply 80/20
• Good Recruiting wins Championships = $$$