Historical Error #6: She Deliberately Skipped Over an Important Quotation from Franklin on the "Continentals"

Gary North

A standard lawyer's trick is to conceal evidence from the jury. This trick rests on the hope that the opposing lawyer has not seen the original document, and will not expose the trick. Ellen Brown made a tactical error. I know what she concealed.

She is defending the disastrous experiment in paper money during the American Revolution. The continental currency issued by Congress was pure fiat money. It fell to zero value before the war ended. Still she defends it.

She quotes a letter from Franklin. Here, she makes a blooper that boggles the imagination: "Franklin wrote from England during the war. . . ."

Folks, Franklin was not in England during the war. Had he been in England, he would have been imprisoned in the Tower of London. There was a revolution going on. He was in France. I am quoting from the 4th printing oif her book. Not one of her readers spotted this blooper and warned her. So, she got caught by me. This sort of thing is always embarrassing to any author who expects to be taken seriously. But I digress.

Here is what she quotes:

The whole is a mystery even to politicians, how we could pay with paper that had no previously fixed fund appropriated specifically to redeem it. The currency as we manage it is a wonderful machine. [Web of Debt, p. 43]

To this, she added the following: the scrip "evoked the wonder and admiration of foreign observers, because it allowed the colonists to do something that had never been done before. They succeeded in financing a war against a major power, with virtually no "hard" currency of their own, without taxing the people (p. 43). In short, this was something (war) for nothing (no taxes). A miracle of paper money!

She does not tell us where Franklin's statement appeared. I think there is a reason for this silence. Someone might find the original and read all of it. I did. It was easy. Anyone can use Google to search for a direct quotation. I found it in two minutes. It appears in Volume 8 of Jared Sparks's 19th-century collected works of Franklin. It was a letter to Samuel Cooper (22 April 1789). [Update: Oct. 19, 2010: this was a typo. It was 1779.]

Read what Franklin wrote before he got to the brief passage that lawyer Brown decided to present to the jury (her readers). Does this sound like no taxation?

I received your valuable letter by the Marquis de Lafayette, and another by Mr. Bradford. I can only write a few words in answer to the latter, the former not being at hand. The depreciation of our money must, as you observe, greatly affect salary men, widows, and orphans. Methinks this evil deserves the attention of the several legislatures, and ought, if possible, to be remedied by some equitable law, particularly adapted to their circumstances. I took all the pains I could in Congress to prevent the depreciation, by proposing first, that the bills should bear interest; this was rejected, and they were struck as you see them. Secondly, after the first emission, I proposed that we should stop, strike no more, but borrow on interest those we had issued. This was not then approved of, and more bills were issued. When, from the too great quantity, they began to depreciate, we agreed to borrow on interest; and I proposed, that, in order to fix the value of the principal, the interest should be promised in hard dollars. This was objected to as impracticable; but I still continue of opinion, that, by sending out cargoes to purchase it, we might have brought in money sufficient for that purpose, as we brought in powder, &,c. &,c.; and that, though the attempt must have been attended with a disadvantage, the loss would have been a less mischief than any measure attending the discredit of the bills, which threatens to take out of our hands the great instrument of our defence.

The Congress did at last come into the proposal of paying the interest in real money. But when the whole mass of the currency was under way in depreciation, the momentum of its descent was too great to be stopped by a power, that might at first have been sufficient to prevent the beginning of the motion. The only remedy now seems to be a diminution of the quantity by a vigorous taxation, of great nominal sums, which the people are more able to pay, in proportion to the quantity and diminished value; and the only consolation under the evil is, that the public debt is proportionably diminished with the depreciation; and this by a kind of imperceptible tax, every one having paid a part of it in the fall of value that took place between the receiving and paying such sums as passed through his hands. For it should always be remembered, that the original intention was to sink the bills by taxes, which would as effectually extinguish the debt as an actual redemption.

It is clear that lawyer Brown's high opinion of the Revolution's paper money was not shared by Franklin.

He did not share her high opinion of taxation by inflation, what he called "a kind of imperceptible tax."

He did not share her hostility to "hard dollars."

She neglected to tell her readers that Congress finally promised to pay off the debt-based paper money with "real money."

Lawyer Brown wrote this book in terms of an assumption: her readers would never go to Google to verify her quotations. This reader did.

You are a member of the jury. What is your verdict so far?

As for "no taxation," read the assessment of Professor Ben Baack, one of the leading experts on the finance of the American Revolution.

Inflation continued as Congress and the states dramatically increased the rate of issuance of their currencies. At the same time the British continued to pursue their policy of counterfeiting the Continental dollar. In order to deal with inflation some states organized conventions for the purpose of establishing wage and price controls. With few contributions coming from the states and a currency rapidly losing its value, Congress resorted to authorizing the army to confiscate whatever it needed to continue the war effort.

Finally, on page 48, she writes: "The Founding Fathers were so disillusioned with paper money that they simply omitted it from the Constitution." What's that? Disillusioned? When the paper money let them defeat the British with no taxation? The currency that generated "wonder and admiration"?

I begin to think that she cannot follow her own arguments. I know I can't.

Keep reading. Her case for government-issued fiat money gets much weaker, which may seem hard to believe at this point.

She has offered a rebuttal to this argument. I have replied to her rebuttal here:

http://www.garynorth.com/public/7132.cfm

For a detailed critique of Ellen Brown's economics, go here:

http://www.garynorth.com/public/department141.cfm