Thursday, May 23, 2013

John Kenneth Galbraith's "The Age of Uncertainty: The Rise and Fall of Money"

Continuing with the posts featuring John Kenneth Galbraith's 1977 documentary and book, The Age of Uncertainty, Episode 6 The Rise and Fall of Money:

Here Galbraith gives us a brief history of money. In the companion volume, he devotes a section to Andrew Jackson's successful fight with the Bank of the United States, the chief institution of the Money Power, i.e., concentrated wealth:

[Bank of the US President Nicholas] Biddle lacked the tact that the rich and successful have since developed greatly and which has perhaps become second nature. On public occasions he compared his power as President of the Second Bank of the United States with that of the President of the United States. When asked by a Senate committee if he had ever abused his financial power, he praised his own restraint. Although very few of the small banks "might not have been destroyed" by his discipline, "none has ever been injured." This allowed Jackson to thunder back: "The President of the Bank has told us that most of the State banks exist by its forbearance."

The historic showdown came in 1832. Early that year the friends of the Bank in Congress led by Henry Clay - Clay was also from the frontier but the forces of civilization had worked their way - renewed the charter of the Bank. Jackson responded with a stinging veto. The presidential election was then fought on the issue. Biddle had the money, and he had been generous with loans to congressmen, senators and the press. ... Andrew Jackson had the votes. He won, and the Second Bank of the United States was defeated. Biddle then got it a Pennsylvania charter but power is often a onetime thing. Very soon he went broke. The smaller local banks were to remain free from serious restraint in many of the states for a century. [my emphasis]
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