March 6, 2016
Two hundred years have passed since president Jefferson wrote this (excerpted) letter. Not only have we not acted to reduce the risk of total collapse of our financial system, it’s far worse than he could have possibly imagined -and there’s no relief in sight. Today our largest private employer is a retailer, not a manufacturer as in 1950. Among other things, that means that well-paying middle class jobs for men no longer exist to generate the tax revenue the government should and could have. As a result, the combination of accumulated liabilities and risks far exceed the combined resources of the Federal Government and the Federal Reserve, a private bank, which cannot continue to create money from thin air indefinitely. Heed! Do whatever must be done to save this last remnant of our democracy from the jaws of the plutocratic monster. The day of reckoning is fast approaching and we’re running out of time.
Excerpt, Letter to Colonel Charles Yancey
Monticello, January 6, 1816
Like a dropsical man calling out for water, water, our deluded citizens are clamoring for more banks, more banks. The American mind is now in that state of fever which the world has so often seen in the history of other nations. We are under the bank bubble, as England was under the South Sea bubble, France under the Mississippi bubble, and as every nation is liable to be, under whatever bubble, design, or delusion may puff up in moments when off their guard. We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth. It is vain for common sense to urge that nothing can produce nothing; that it is an idle dream to believe in a philosopher’s stone which is to turn everything into gold, and to redeem man from the original sentence of his Maker, “in the sweat of his brow shall he eat his bread.” Not Quixot enough, however, to attempt to reason Bedlam to rights, my anxieties are turned to the most practicable means of withdrawing us from the ruin into which we have run. Two hundred millions of paper in the hands of the people, (and less cannot be from the employment of a banking capital known to exceed one hundred millions,) is a fearful tax to fall at haphazard on their heads. The debt which purchased our independence was but of eighty millions, of which twenty years of taxation had in 1809 paid but the one half. And what have we purchased with this tax of two hundred millions which we are to pay by wholesale but usury, swindling, and new forms of demoralization. Revolutionary history has warned us of the probable moment when this baseless trash is to receive its fiat. Whenever so much of the precious metals shall have returned into the circulation as that everyone can get some in exchange for his produce, paper, as in the revolutionary war, it will experience at once an universal rejection. When public opinion changes, it is with the rapidity of thought. Confidence is already on the totter, and every one now handles this paper as if playing at Robin’s alive. That in the present state of the circulation the bank should resume payments in specie, would require their vaults to be like the widow’s cruse. The thing to be aimed at is, that the excesses of their emissions should be withdrawn as gradually, but as speedily, too, as is practicable, without so much alarm as to bring on the crisis dreaded. Some banks are said to be calling in their paper. But ought we to let this depend on their discretion? Is it not the duty of the legislature to avert from their constituents such a catastrophe as the extinguishment of two hundred millions of paper in their hands? The difficulty is indeed great: and the greater, because the patient revolts against all medicine. I am far from presuming to say that any plan can be relied on with certainty, because the bubble may burst from one moment to another; but if it fails, we shall be but where we should have been without any effort to save ourselves. Different persons, doubtless, will devise different schemes of relief. One would be to suppress instantly the currency of all paper not issued under the authority of our State or of the General Government; to interdict after a few months the circulation of all bills of five dollars and under: after a few months more, all of ten dollars and under; after other terms, those of twenty, fifty, and so on to one hundred dollars, which last, if any must be left in circulation, should be the lowest denomination. These might be a convenience in mercantile transactions and transmissions, and would be excluded by their size from ordinary circulation. But the disease may be too pressing to await such a remedy. With the legislature I cheerfully leave it to apply this medicine, or no medicine at all. I am sure their intentions are faithful; and embarked in the same bottom, I am willing to swim or sink with my fellow citizens. If the latter is their choice, I will go down with them without a murmur. But my exhortation would rather be “not to give up the ship.”