How the British Started Wall Street Panics and Depressions With Economic Warfare
The British had a long track record of using the London Bank Rate — rediscount rate of the Bank of England — for financial and economic warfare against the United States. The periodic “Panics” and “Depressions” of the nineteenth century were more often than not caused by deliberate British sabotage.
In the Panic of 1837, the stage had been set for depression by outgoing President Andrew Jackson’s and Secretary of the Treasury Roger Taney’s abolition of the Second Bank of the United States, by their cultivation of the state “pet” banks, by their imbecilic Specie Circular of 1836, which demanded gold payment to the federal government for the purchase of public lands, and by their improvident distribution of the Treasury surplus to the states.
London’s ultimate weapon turned out to be the Bank of England bank rate. With all the American defenses sabotaged, the Bank of England sharply raised its discount rates, sucking gold specie and hot money liquidity back across the Atlantic, while British merchants and trading houses cut off their lines of credit to their American customers. In the resulting chaos, not just private banks and businesses went bankrupt, but also the states of Mississippi, Louisiana, Maryland, Pennsylvania, Indiana, and Michigan, which repudiated their debts, permanently impairing US credit in the world. Internal improvements came to a halt, and the drift towards secession and civil war became more pronounced.
The Panic of 1873 resulted from a British-directed effort to ruin the banking house of Jay Cooke and Company, which had served Lincoln and his successors as a quasi-governmental agency for the marketing of United States Treasury securities and railroad bonds during and after the Civil War. The Cooke insolvency had been preceded by a massive dumping of US stocks and bonds in London and the rest of Europe. This was London’s way of shutting down the Civil War boom that Lincoln’s protectionism policies had made — instead, a long US depression followed.
The Panic of 1893 was prepared by the 1890 “Baring Panic” in London, caused by the insolvency of Barings Bank, the same one which went bankrupt and was sold off in the spring of 1995. In the resulting depression, the US Treasury surplus was reduced to almost nothing, and a budget deficit loomed.
Using this situation as a pretext, British speculators drove the exchange rate of the dollar down to the point where owners of gold began exporting their gold to London. Treasury gold stocks dipped below $100,000,000, and then kept falling to $68,000,000 and US national bankruptcy threatened.
In response to this crisis, subversive President Grover Cleveland gave control of the US public debt to the New York banking houses of Morgan and Belmont, themselves British agents of influence. Cleveland “Sold Out to Wall Street” by selling US gold bonds to Morgan and Belmont at reduced prices, with the taxpayers picking up the tab — Morgan and Belmont promised to “use their influence” in London to prevent further British “Bear Raids” against the US dollar and gold stocks. All of this caused another long depression.
Tags: Andrew Jackson, Bank of England, Bear Raids, Belmont, British, Civil War, Depressions, Grover Cleveland, Jay Cooke, London Bank Rate, Morgan, Panic of 1837, Panic of 1873, Panic of 1893, Panics, Sabotage, Sold Out to Wall Street, Treasury Gold Stocks, Treasury Surplus