I’m admonished by my trusty Public-banking Google group that I should not spend more time on this, but since you seem to have put so much work into it, I thought I would give it a day’s effort.
You suggested that one of my alternatives was to do a book revision. I have done that; in fact, I have done THREE formal revisions and four informal revisions (i.e. by submitting updated pdfs to Lightning Source, the print on demand publisher, without changing ISBNs). You seem to be relying on an old edition. So my first point would be, you should base your critique on the latest available edition (4th edition 2010).
I’ve done a detailed response to your itemized list of 31 errata, below. I found a few that were useful; thanks for those. I’ll incorporate them in my next revision. I will take out all the challenged quotes, not just qualify them, since they’re so controversial. It won’t change my argument, which isn’t based on what famous people said or didn’t say.
The book is 565 pages long and contains 40 pages of endnotes in fine print. I drew from my sources. I could not check the source of every source; in fact they generally didn’t give sources. Of your list, I found perhaps four that were valid. Four in 565 pages I think is a remarkably good track record. I have no proof reader, no staff, the book is self-published, and I did much of my own formatting, which was a serious challenge. What you’re not noticing is what a really good read it is; many people have said so. That took a LOT of work. I was trying to make economics exciting and understandable for the average reader, and I believe I did that. You could put decades into footnotes and fact-checking and you would just be wasting your time if you didn’t come up with prose people wanted to read.
Despite what you think, I care very much about being accurate. That’s why your errata list was the first thing I zeroed in on. That’s also why I’ve done seven revisions in three years, and why I spent six years writing Web of Debt in the first place. I would have spent longer – I enjoyed putting those puzzle pieces together – but the financial dyke broke in June 2007 and it was publish or watch the economy perish. I was in print two weeks later.
That’s the beauty of self-publishing by print on demand. I can fix the errata you have done yeoman’s work collecting – the ones I think are valid — for a total cost of $40 ($75 if I change the ISBN), and the revision will be ready in two weeks. But I’ll give you a few more weeks first, till you tire of this subject, since you seem to be prepared to keep at it. Some writers are professors with 150 students they can assign to check their footnotes. The Lord sent me you. Thanks!
Here is your list and my response:
Here is what I wrote, giving an endnote for reference: “He is quoted as saying in a talk at the University of Texas in 1927: [etc.]” (p 2) He IS quoted as saying that, by many people. Google gives 68,000 results.
Here is what I wrote, and I believe it is correct:
It would be several decades before Jefferson realized that the villain was not paper money itself. It was private debt masquerading as paper money, a private debt owed to bankers who were merely “pretending to have money.” Jefferson wrote to Treasury Secretary Gallatin in 1815:
The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and bankers pretending to have money, whom it could have crushed at any moment.
Jefferson wrote to John Taylor on May 28, 1816:
I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
Jefferson wrote to John Eppes in 1813, “Although we have so foolishly allowed the field of circulating medium to be filched from us by private individuals, I think we may recover it . . . . The states should be asked to transfer the right of issuing paper money to Congress, in perpetuity.” He told Eppes, “the nation may continue to issue its bills [paper notes] as far as its needs require and the limits of circulation allow. Those limits are understood at present to be 200 millions of dollars.”6
Here is what I wrote, which I believe is true; I agree he was a reluctant Greenbacker:
The Greenback system was not actually Lincoln’s idea, but when pressure grew in Congress for the plan, he was quick to endorse it. . . . He took the revolutionary approach because he had no other real choice. The government could either print its own money or succumb to debt slavery to the bankers.
I did not say that. You have mischaracterized my statement, and your link does not show that they paid any taxes.
[I will expand on this to respond to your post of October 20. The implication of your statement is that the Pennsylvania government simply printed fiat money to pay for its budget. My point was that Pennsylvania did something different from the Northern colonies that ran into trouble: it funded itself by setting up a publicly-owned bank, which LENT money and charged a reasonable interest on it. (I consider this the ideal solution -- local publicly-owned banks. My next article, hopefully to be posted by the end of the week, is on how we can solve our current credit problem in this way.) I said in the section you quoted, "The loan office was the province's chief source of revenue." You argue that Pennsylvania scrip was not "money" because the British crown did not recognize it as money. The Merriam Webster online dictionary defines "money" as "something generally accepted as a medium of exchange, a measure of value, or a means of payment." To the Pennsylvania colonists, it was money.]
That quote is not in my 4th edition. I had to restructure the whole chapter to take it out, but I did it, in the interests of accuracy. In fact I had to restructure two whole chapters, a total nightmare; but I did it. I actually think I’ve spent too much time on details — I should be writing another book – but like you, I find it interesting.
Ignoring a negative statement? Please! And the statement you cite is from 1789. The statement I was quoting in their favor was made during the Revolutionary War. We all know they went bad by the end of the war. I also said that one problem with the Continentals was that they weren’t all issued as legal tender; many were issued as debt. So at the end of the war, there was a debt owed. On Franklin being in France rather England, point taken; I’ll add that to my errata file, thanks.
I responded to this earlier. Here is what my text says:
“President John Adams is quoted as saying, ‘There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.’”
He IS quoted as saying that, by many people. Bing returns 1,870,000 results when queried with that quote, all of the earliest results, at least, attributed to John Adams.
That’s not what I said. I was explaining why Jews historically wound up the “bankers.” Christians were forbidden to charge interest at all, while Jews were forbidden only to charge interest to “brothers”, meaning other Jews. They COULD charge interest to Christians. This is from Wikipedia:
The Hebrew Bible regulates interest taking. Interest can’t be charged to Jews but only to non-Jews.
Deuteronomy 23:20 Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest.
Deuteronomy 23:21 Unto a foreigner thou mayest lend upon interest; but unto thy brother thou shalt not lend upon interest; that the LORD thy God may bless thee in all that thou puttest thy hand unto, in the land whither thou goest in to possess it.
You make an interesting point that it’s not in the New Testament. Apparently the prohibition only began in the Middle Ages. I see in the Catholic Encyclopedia:
The canonical laws of the Middle Ages absolutely forbade the practice. This prohibition is contained in the Decree of Gratian, q. 3, C. IV, at the beginning, and c. 4, q. 4, C. IV; and in 1. 5, t. 19 of the Decretals, for example in chapters 2, 5, 7, 9, 10, and 13. These chapters order the profit so obtained to be restored; and Alexander III (c. 4, “Super eo”, eodem) declares that he has no power to dispense from the obligation. Chapters 1, 2, and 6, eodem, condemns the strategems to which evenclerics resorted to evade the law of the general councils, and the Third of the Lateran (1179) and the Second of Lyons (1274) condemn usurers. In the Council of Vienne (1311) it was declared that if anyperson obstinately maintained that there was no sin in the practice of demanding interest, he should be punished as a heretic (see c. “Ex gravi”, unic. Clem., “De usuris”, V, 5).
It is a curious fact that for a long time impunity in such matters was granted to Jews. The FourthCouncil of the Lateran (1215), c. 27, only forbids them to exact excessive interest. Urban III, c. 12, “De usuris” (V. 19) and St. Louis in twenty-three of his regulations extended the prohibition to theJews. With the exception of c. 27 of the Fourth Council of the Lateran, we know of no canon lawwhich takes into consideration the question of moderate interest; and canon law nowhere states distinctly that interest is, under any circumstances whatsoever, contrary to justice.
Okay, I missed that point. But to call my ignorance “astounding” is still a bit of an exaggeration. My book has sold 23,000 copies, and nobody has pointed that out before.
Here is what I wrote:
In Mandarin China, where paper money was invented in the ninth century, this sort of fiat currency funded a long and prosperous empire.
I did not “make that up,” as you suggest in your note. In fact I haven’t made anything up. I always draw from sources. I may have sometimes misread them, or my sources may have been wrong, but I actually did quite exhaustive research for this book, and I’ve corrected errors in subsequent revisions – more revisions than most books run to, certainly in 3 years. You have a degree in history. I have degrees in English and law. You’ve got a head start. I’m doing my best here. What I lack in historical training I make up for in writing skills.
Anyway, here’s what Wikipedia says under “China.” I don’t think it contradicts my statement. I did not say China’s paper money was not inflationary; I said it funded a long and prosperous dynasty. The population doubled; they needed to inflate the money supply to match:
The Song dynasty was the first government in world history to issue paper money and the first Chinese polity to establish a permanent standing navy. Between the 10th and 11th centuries, the population of China doubled in size. This growth came about through expanded rice cultivation in central and southern China, and the production of abundant food surpluses.
Within its borders, the Northern Song Dynasty had a population of some 100 million people. The Song Dynasty was a culturally rich period for philosophy and the arts. Landscape art and portrait painting were brought to new levels of maturity and complexity after the Tang Dynasty, and social elites gathered to view art, share their own, and trade precious artworks. Philosophers such as Cheng Yi and Chu Hsi reinvigorated Confucianism with new commentary, infused Buddhist ideals, and emphasized a new organization of classic texts that brought about the core doctrine of Neo-Confucianism.
Your argument in your link is:
If an IOU is a receipt for payment in money — coins — then is the IOU fiat money?” If your answer is “no,” then it agrees with my answer.
I disagree with your premise. ALL fiat money is paid by the government as a receipt for something delivered to the government. What else is the government going to do with it but pay for something? A “receipt” is not an “IOU.” It’s an acknowledgment of value received. If it’s used as a currency, the receipt can then be traded in the marketplace for other goods and services.
You’re quoting from an old edition. My current edition says:
Nathan Rothschild, who controlled the Bank of England after 1820, is quoted as declaring:
I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man who controls Britain’s money supply controls the British Empire, and I control the British money supply.
This is quite true, as you note; you got 40,000 hits on it yourself.
That quote has been omitted from my 4th edition, after it was pointed out to me that it was apocryphyal.
This is what I wrote:
Opposition to the First U.S. Bank was led by Thomas Jefferson, the country’s third President; while opposition to the Second U.S. Bank was led by Andrew Jackson, the country’s seventh President. (p 73)
I was talking about the Second U.S. Bank with Jackson, not the First. On Jefferson, this is from Wikipedia:
The establishment of the bank also raised early questions of constitutionality in the new government. Hamilton, then Secretary of the Treasury, argued that the Bank was an effective means to utilize the authorized powers of the government implied under the law of the Constitution. Secretary of State Thomas Jefferson argued that the Bank violated traditional property laws and that its relevance to constitutionally authorized powers was weak.
I was, as I said in my earlier response, trying to make economics interesting, and for that I was using imagery from the Wizard of Oz. I tried to open every chapter with a quote from that story, and my opening quote for this chapter was this; I agree it was a bit of stretch applying it to Jefferson and Jackson, but I was running out of quotes (I had 47 chapters) –
WHILE CONGRESS DOZES IN THE POPPY FIELDS:
JEFFERSON AND JACKSON SOUND THE ALARM
The Scarecrow and the Tin Woodman, not being made of flesh, were not troubled by the scent of the flowers. “Run fast,” said the Scarecrow to the Lion. “Get out of this deadly flower bed as soon as you can. We will bring the little girl with us, but if you should fall asleep you are too big to be carried.”
– The Wonderful Wizard of Oz,“The Deadly Poppy Field”
I disagree with your conclusions, and I believe I have cited plenty of authorities for my position in that chapter. See, e.g., the section beginning on p 86 titled “Did Greenbacks Cause Price Inflation?”
Your link quotes this:
Lincoln is quoted as saying, “The wages of men should be recognized as more important than the wages of money.” [Web of Debt, p. 85]
Your link then acknowledges that 800+ references quote him as so saying, so he obviously is quoted as saying that. The sentence would be neither more nor less true if Lincoln said it. It stands on its own merits. It is true, and that was the point I was making. Money should be issued in return for wages, not to non-producing middlemen.
Your own entry makes my case. You quote a letter from Lincoln saying, “He accepted the third and final issue of these fiat bills, but he sent a letter to Congress, in January 1863, in which he expressed his “sincere regret that it has been found necessary to authorize an additional issue of United States notes.”
Why did he find it necessary? Because otherwise they were going to be paying 24-36% interest on a crippling debt. I acknowledged that debt was also used to fund the war. I wrote:
Greenbacks were not the only source of funding for the Civil War. Bonds (government I.O.U.s) were also issued, and these too increased the money supply, since the banks that bought the bonds were also short of gold and had no other way of paying for the bonds than with their own newly-issued banknotes. The difference between the government issued Greenbacks and the bank-issued banknotes was that the Greenbacks were debt-free legal tender that did not have to be paid back. (P 86)
You cite some 1993 source which says:
Did people believe that the government would eventually redeem Greenbacks for gold? As Unger [1964, p.16] noted, “Little had been said on the subject of redemption when Congress debated the Legal Tender” issue. However, all the available evidence indicates that the public believed that at some future date, convertibility would be reinstated, and all Greenbacks would be redeemed in gold.
The cite acknowledges that redemption was not discussed. The fact that “all the available evidence was that the people believed” something does not mean that the notes were not pure fiat money. They bore no promise to redeem in gold.
I’ve said he is “quoted as” saying that and have given my historical source.
Point taken. I’ll fix that in my next revision.
I was already alerted to that. Garfield is no longer mentioned in my book.
Your link is bad.
What are you claiming I said, it had no price inflation or there was no inflation of the money supply? Here is how my text reads, and I believe it is correct (a modest price inflation is not considered “troublesome”):
During that time, the money supply has mushroomed to about 25 times its original size; yet the economy has not been troubled by price inflation, and it has remained prosperous and stable.6
Nothing in your comment refutes my point. You conclude, “The Populists wanted their share of government loot. They wanted big government for their interests.” Quite right! Government of the people, by the people, for the people. That is the very definition of “populism” – “for the people”!
I acknowledged that it was of questionable derivation. Here is what I wrote (p 105):
A document called “The Bankers Manifesto of 1892” suggested that it was all part of a deliberate plan by the bankers to disenfranchise the farmers and laborers of their homes and property. This is another document with obscure origins, but its introduction to Congress is attributed to Representative Charles Lindbergh Sr., the father of the famous aviator, who served in Congress between 1903 and 1913.
I don’t see where I allegedly made that point, or that you have refuted it. You write:
Ellen Brown repeats the Left-wing myth of the exploiting corporations of late 19th-century America.
In 1934, these international bankers and businessmen were labeled the “Robber Barons” by Matthew Josephson in a popular book of the same name. The Robber Barons were an unscrupulous lot, who “lived for market conquest, and plotted takeovers like military strategy.” John D. Rockefeller’s father was called a snake-oil salesman, flimflam man, bigamist, and marginal criminal — never convicted but often accused, of crimes ranging from horse theft to rape. He once boasted, “I cheat my boys every chance I get, I want to make ‘em sharp.” Once the Robber Barons had established a monopoly, they would raise prices, drop the quality of service, and engage in unfair trading practices to drive other firms out of business.[Web of Debt, p. 117]
Then you say, “First, Rockefeller’s father was not a robber baron.” So? I didn’t say he was, I said he was the father of one. And that doesn’t refute my statement that Matthew Josephson called that group Robber Barons in his book. I’m just reporting.
Then you simply give a difference of opinion among historians, citing a source which says:
Today’s history textbooks typically depict the Industrial Revolution in the United States as a period dominated by “robber barons”–unscrupulous businessmen who earned vast fortunes on the backs of weary workers and naïve consumers.
Challenging this view is Dr. Burt Folsom, a professor of history at Hillsdale College in Michigan. Too often, he says, textbooks fail to distinguish between what he calls “economic entrepreneurs”–self-made industrialists whose hard work and ingenuity helped make the United States the superpower it is today–and “political entrepreneurs”–well-connected businessmen who used their political clout to extract money and privileges from taxpayers while contributing little to economic progress.
So you’ve got your sources with their opinions and I’ve got mine. Whether mine is myth or yours is is a matter of debate.
Ellen Brown’s Web of Debt is filled with bogus quotations. She likes to make things up. She thinks something really ought to have happened, so she writes that it did happen.
The meetings between Norman and Strong were very secretive, but the evidence suggests that in February 1929, they concluded that a collapse in the market was inevitable and that the best course was to let it correct “naturally” (naturally, that is, with a little help from the Fed). They sent advisory warnings to lists of preferred customers, including wealthy industrialists, politicians, and high foreign officials, telling them to get out of the market. Then the Fed began selling government securities in the open market, reducing the money supply by reducing the reserves available for backing loans. The bank loan rate was also increased, causing rates on brokers’ loans to jump to 20 percent. [Web of Debt, p. 143]
Your point that “She likes to make things up” is simply not true. I start with research – an overwhelming amount of research – and I try to knit it into a consistent, readable, understandable book. I see I did misquote my source in one place, and I will correct it in my next revision; but it was not an intentional error. My error was in assuming that “Bank of England” and “Federal Reserve” meant their heads, Montague and Norman. Other than that, I track my source, G. Edward Griffin, pretty much word for word. Griffin says:
There is circumstantial evidence that the Bank of England and the Federal Reserve had concluded, at a secret meeting in February of 1929, that a collapse in the market was inevitable and that the best action was to let nature take its course. (p 503)
The rest of the story you quote is drawn from my sources quite accurately. The sources are these: 5. G. E. Griffin, “The Creature from Jekyll Island,” pages 423-26, 502-03; S. Zarlenga, “The Lost Science of Money,” pages 546-48.
You challenge my quote as unsupported, then give this supported quote, which so far as I can see says the same thing:
Here is an interview that he gave to PBS in 2000. There is a transcript.
At all times, the Federal Reserve had the power and the knowledge to have stopped that. And there were people at the time who were all the time urging them to do that. So it was, in my opinion, clearly a mistake of policy that led to the Great Depression.
Then you show a chart of the money supply from 1929 to 1939 and quote me as saying:
Yet on page 151, she writes: “In the Great Depression, labor again rusted into nonproductivity, due to a lack of available money to oil the wheels of production.” Give me a break! Look at the chart!
I have looked at the chart. It shows that the money supply did not get back up to 1929 levels until 1938. So where is the error there? The money supply had collapsed, and it took all that time to get back to where it was earlier.
“National socialism” was a political party. I was talking about an economic policy. In any case, I don’t see that your sources say otherwise than that it worked. They say it was military spending at the end of the 1930s that kept the economy going, but I was writing about the early 1930s, and there are many sources that I cite supporting my point. You write:
Ellen Brown adds this:
While Hitler clearly deserved the opprobrium heaped on him for his later military and racial aggressions, he was enormously popular with the German people, at least for a time. [Web of Debt, p. 235.]
Her message: Hitler was a man of the people! She wants the United States to follow his lead . . . but only in economic policy, of course. Not the concentration camps. Not the war.
She does not draw the obvious conclusion, namely, that the centralized power of the government over money, business, and labor was basic to the power which that government imposed over the Jews and other minorities. It is almost as if his racial tyranny and military aggression were completely divorced from his economic views and the government’s economic policies.
I addressed this in my earlier response: tyranny and military aggression are NOT necessary corollaries of governments using their own national credit power to get their economies going again. They did not result in Australia, New Zealand, Canada, Guernsey, or the American colonies when that economic policy was pursued.
My section on that currently reads as follows, and I believe it is accurate:
The Weimar financial crisis began with the crushing reparations payments imposed at the Treaty of Versailles. Hjalmar Schacht, who was then currency commissioner for the Republic, complained:
The Treaty of Versailles is a model of ingenious measures for the economic destruction of Germany. . . . [T]he Reich could not fi nd any way of holding its head above the water other than by the inflationary expedient of pr inting bank notes.
Michael Hudson is an economist who has studied hyperinflation extensively. He asserts that “every hyperinflation in history stems from the foreign exchange markets. It stems from governments trying to throw enough of their currency on the market to pay their foreign debts.”10
That was the precipitating cause of the Weimar financial collapse, but there was more. Zarlenga writes that Schacht proceeded in his 1967 book The Magic of Money “to let the cat out of the bag, writing in German, with some truly remarkable admissions that shatter the ‘accepted wisdom’ the fi nancial community has promulgated on the German hyperinfl ation.”11 Schacht said that it was chiefly the privately owned Reichsbank that was pumping new currency into the economy.
I don’t see that you’ve disputed that validity of what I said. This is what my text says:
As usual, the crisis was blamed on the government frantically issuing money; and in this case, the government’s printing presses were indeed running. But the country’s radical devaluation was still the fault of speculators, and it might have been avoided if the government had used its printing presses in a more prudent way. . . .
According to a statement by the Zimbabwe central bank, the hyperinflation was caused by speculators who charged exorbitant rates for US dollars, causing a drastic devaluation of the Zimbabwe currency. [Web of Debt, pp. 246-47]
We both have our sources. Mine disagree with yours on the cause; you haven’t shown that yours are more legitimate than mine.
Here is a 1909 book about gold prices from 1890 to 1907, the economically depressed period I was writing about –
Gold’s price rose in terms of wheat, which is what the farmers cared about and what I was referring to. Of course it stayed stable in terms of the “dollar,” because the dollar was backed by gold! If you can always trade a dollar in for a dollar’s worth of gold, the value of gold is always going to be the same, no? But that’s not going to stabilize prices for farmers.
My quote is:
The drawbacks of limiting the medium of exchange to precious metals were obvious as soon as the Founding Fathers decided on a precious metal standard at the Constitutional Convention, when the money supply contracted so sharply that farmers rioted in the streets in Shay’s rebellion.
I take your point on the dates, but my overall point is still correct. Shays’ Rebellion WAS about a contracting money supply, which occurred when paper money could not be used in the payment of taxes. Wikipedia says of Shays’ Rebellion –
Seeking debt relief through the issuance of paper currency and lower taxes, they attempted to prevent the courts from seizing property from indebted farmers by forcing the closure of courts in western Massachusetts.
They wanted to be able to use their paper money to pay taxes, and the “elitists” at the Constitutional Convention insisted on using only precious metals. That’s not my word. Leonard Richards writes in “Shays’s Rebellion: The American Revolution’s Final Battle” (University of Pennsylvania press 2002):
Rufus King and the other sponsors of the Constitution thus faced an uphill battle at the Massachusetts ratifying convention. Not only did they have to confront old enemies, they lacked popular support. They spoke for a document that began with “We the People,” but it was not the “people” who had demanded a new national government. Instead, the Constitution was the handiwork of a small segment of governing elite, and everyone knew it. . . . Every critic, it seemed, envisioned the “little people” being stomped on by “the well-born,” “the great men,” and “the aristocracy.” (Pp 147-48)
Paper money was the money of the people. Gold was the money of the elite, and gold prevailed. The “little people” obviously did not have it; so for them the money supply had shrunk radically, and depression ensued.
That’s all the time I’d better give to this. ForeclosureGate beckons!