Part IV of IV—A Brief History of World Credit & Interest Rates • 1775 – Present The World Revolution | Armstrong Economics

As with most wars, noble motives are usually portrayed in some slogan that attempts to hide the true underlying financial incentives. The English Crown’s attempt to control and prevent irresponsible paper money issues among the Colonies, was a major cause of the Revolution. Of course, England for nearly 70 years, practiced extracting gold and silver from the Colonies in payment for taxes, leaving the colonists with less valuable coppers as well as a large barter system. Some argue that the Crown had left so little hard currency within the Colonies that it had forced them to issue paper currency. But if we look at the first two specific accusations, as set forth in The Declaration of Independence, we find that they centered on the paper money question. The first deals with the King’s refusal to give “assent” (consent) to laws permitting additional paper money issues. The second accuses the King of forbidding his Governors to pass laws on the issue of paper money for emergency purposes without obtaining his consent before hand.

“He has refused his Assent to Laws, the most wholesome and necessary for public good. “He has forbidden his Governors to pass laws of immediate and pressing importance unless suspended in their Peration till his assent should be obtained; and when so suspended he has utterly neglected to attend to them.”

With the breaking of ties with England, the Colonies began to issue paper money like the floodgates had just been opened. Backing was, of course, not there. In fact, on one paper currency issue in 1778 in Georgia, reference to its backing of the currency was plainly stated on its face. The notes stated that they were payable or redeemable from the proceeds of properties confiscated from Tories. Gold, silver and even copper coins disappeared completely from circulation once the war began. Paper money began to be printed for decimal coinage denominations as well. At first the money circulated freely and with support of the people. However, in 1777 what would become one of economic history’s most drastic examples of paper money depreciation began. Below are the official exchange rates as published by each Colony and the Federal Government. These rates were used for $1 worth of gold or silver as originally valued in 1775. However, it should be pointed out that those who held Continental Currency were, for the most part, unable to exchange them even at the official rates. Eventually, holders of this currency received nothing in return which prompted the saying, “not worth a Continental.”

Continental Cur $40.00 for $1 April 1780
N.Y. & Conn $40.00 for $1 April 1780
South Carolina $52.50 for $1 May 1780
Mass., NH & RI $100.00 for $1 June 1781
New Jersey $150.00 for $1 May 1781
Penn. & Delaware $225.00 for $1 May 1781
Maryland $280.00 for $1 June 1781
North Carolina $800.00 for $1 Dec 1782
Virginia $1000.00 for $1 Jan 1782
Georgia $1000.00 for $1 Feb 1785

Despite the fact that the Continental Currency ceased to circulate in April 1780 and the official exchange rate was set at $40 to $1, holders of this currency were unable to redeem it. Yet Continental Currency became a form of speculation. Even though the Articles of Confederation had promised payment, it was not until seven years later when the Constitution of the United States in 1787 recognized that there was an obligation to redeem these otherwise worthless scraps of paper. By October of 1787, Continental Currency was being traded at the going rate of $250 for $1 in gold. This meant that the 1780 official rate had further depreciated raising the value of gold from $800 an ounce in 1780 to $5,000 an ounce in 1787 in terms of Continental dollars.

The government was in no position to exchange the Continental Currency at any rate. The economy and lack of faith were simultaneously taking a nosedive straight down. Eventually, gold peaked in late December 1790 but only after Congress passed an Act on August 4th, 1790. This Act provided a means for refinancing debts and from October 1st, 1790 to September 30th, 1791, Congress agreed to redeem $100 in currency for $1 in bonds of indefinite maturity. Through this method of dealing with the worthless currency, Alexander Hamilton, Secretary of the Treasury averted a prolonged U.S. economic depression.

Many people refrained from exchanging their Continental Currency for bonds that paid 6% interest because the Act of 1790 provided that the currency would still be redeemed and that it was not mandatory to exchange it for bonds. The bonds were eventually paid in 1813 and those who held their currency in hopes of getting something more than a 1% return on what they had, received nothing!

Depending upon where you were and what colonial currency you held, the exchange rate between paper currency and one ounce of gold varied from $800 to $10,000 per ounce. Despite Ben Franklin’s early warning in his publication of 1729, “A Modest Enquiry into the Nature and Necessity of Paper Currency,” America’s game with paper-economics was far from over. Before this experience with credit and money would end with the British Depression of 1815, many new economic theories would emerge from great men such as Adam Smith in his publication, “The Wealth of Nations.” In 1809 a pamphlet entitled, “The High Price of Bullion a Proof of the Depreciation of Bank-Notes” was published by a London broker named David Ricardo who was 37 at the time. This pamphlet eventually established Ricardo as a major economic theorist who became influential in shaping the 19th Century.

The final years in late 1700’s were filled with turmoil and speculation along with rising interest rates and inflation to varying degrees worldwide. In the United States, the year 1786 was marked by Shays’ Rebellion in Massachusetts during September. The uprising was aimed to prevent further foreclosures of farms in the country’s continuing economic depression that had followed the war and the debt crisis that resulted from the deep depreciation of the currency. State militia at the time prevented seizure of the Springfield arsenal in confrontation with over 800 armed farmers. This rebellion did succeed in having the state supreme court adjourn without returning indictments against the farmers. However, the entire affair only served to bring the attentions of the state to the severity of the depression at the time.

As economic hardship continued along with financial uncertainty, Benjamin Franklin was moved to write in a letter to a French acquaintance in which one of his immortal sayings was given birth – “Nothing is certain but death and taxes.” During 1791, the U.S. money markets collapsed following the failure of some land companies organized by the famous New York speculator William Deur. The failure of his land scheme to settle the Ohio Valley resulted in a $5 million loss to New York investors, which was equal to the total value of all the real estate in New York City at the time. Speculation had been quite rampant in numerous ventures and shares. United States bank script, originally offered for $100, had risen to $195 on the New York market but crashed back to $110. Alexander Hamilton authorized the Bank of New York to step in and buy government bonds and debt in an effort to inject cash into the system and lower interest rates.

By 1796, France suffered ruinous inflation as her assignats (currency) of 1790 declined in the face of nearly 2000% inflation within the past six years. Flour rose dramatically from 40 cents a bushel in 1790 to over $5 in 1796. Wood advanced from $4 a cartload to $250 while a pound of soap jumped from 18 cents to $8. Eggs, which had cost 24 cents a dozen in 1790, soared to $5. Interest rates in France skyrocketed. The 5% rentes of the government fell in price driving the effective yield on government debt to 40% on average. The implied yield of French government securities began to ease somewhat dropping back to 30.1% in 1798. But in 1799 there was some renewed fear and the implied yield rose once again to 34% as the price of government securities declined.

This devastating inflation in France led to the French Revolution which brought Napoleon to power. In 1800, Napoleon immediately reduced government spending and established the Banque of France. The implied yield on government debt issues (5% rentes) declined back to 16.28% in 1800 and continued to fall to 9.3% in 1801, 9% in 1802 and finally down to 8.8% in 1803. Napoleon was proclaimed emperor in May 1804 after selling the Louisiana lands to the United States in 1803 for $15 million in an effort to raise capital to fund his military ambitions.

In 1806, Europe was engulfed in war with Napoleon. The Holy Roman Empire that had existed since the year 800 came to an end on July 12 under French auspices. Napoleon occupied Berlin and placed his older brother on the throne in Naples while his younger brother assumed the throne in Holland. Britain announced a blockade of Europe that sent U.S. commerce falling by 66%. President Jefferson introduced a bill to exclude many British goods in retaliation.

In 1807 a British man-of-war fired upon the U.S. frigate Chesapeake and removed four alleged deserters. President Jefferson closed U.S. ports to all armed British vessels. By 1810, duties on U.S. customs fell to $6 million as a loss of trade with Britain and France drastically reduced revenue to half that of its 1806 level. That same year, a bullion report issued by the British government economists established the “intrinsic value” theory of money. Bank notes may be useful as a medium of exchange, however the notes must bear a definite ratio to the amount of coin and bullion in the vaults. The report proclaimed that government cannot create money, which is in reality, a token of labor performed. Government can acquire money only through taxation or by borrowing. For government to issue irredeemable paper money is to violate the sanctity of contracts, to cheat creditors, to increase prices and to disrupt business. Largely the economic theory that was published that year supported Smith and Ricardo.

By 1812 Napoleon invaded Russia and the beginning of a series of defeats caused Napoleon to retreat from Russia on October 19th. The British defeated Napoleon’s forces in Spain during July of that year. Despite these events, interest rates in France declined to their lowermost level of 5.98% in 1808. Confusion over Britain’s 1807 ban on U.S. imports eventually forced the US to declare war on Great Britain as an economic depression widened due to the serious loss of trade with Europe.

Interest rates in the United States on long-term government bonds had declined from the 8% high of 1799 down to their lowest level of 6.02% in 1802. The peak in British government interest rates came in 1798 at 6.35% and had also declined to their lowest point of 3.8% in 1802.

The Rothschilds began to become quite prominent during the early nineteenth century. Back in 1801 the German moneylender Meyer Amschel Rothschild, 58, became financial adviser to the landgrave of Hesse-Casal. Rothschild served as an agent of the British Crown in subsidizing European opposition to Napoleon. In 1812, the Duke of Wellington was financed with gold coin smuggled south by the eight sons of Meyer Rothschild. With no language other than Yiddish, the Rothschilds used fake passports, false names, disguises, and bribes to elude the French in what became one of the great international loans of modern times. One of the sons, Nathan Meyer Rothschild, 38, established a banking house in London. In 1815, he used carrier pigeon reports from Belgium that advised him of Napoleon’s defeat at Waterloo. Rothschild depressed the price of British consols by selling aggressively short on London markets. He then used his agents to buy the consols back at distressed prices and when the news reached London of the British victory, prices soared reaping himself a huge fortune as consols rose in price from 61 to 72.

By 1814, Europe’s 22 years of war came to an end along with America’s 3 year War of 1812. In the aftermath, depression began to set in moving into 1815. British government interest rates fell from 5.49% in 1814 down to their lowest level of 3.56% in 1817. The first U.S. Panic of 1818 was initiated in part by the failure of the Baltimore branch of the second Bank of the United States. The U.S. entered an economic depression in 1818 that had led to appeals by U.S. manufacturers for higher protective trade tariffs. The depression became worldwide sparking political repression in Spain, Latin America and Great Britain as illustrated by the Peterloo Massacre which was a public appeal to reform the tax laws. Britain instead passed laws banning public speaking and private training in the use of firearms. In Spain the infamous Spanish Inquisition was put to an end as the result of revolution. In Greece a war of independence broke out in 1821 that continued into 1831. Mexico declared independence from Spain in 1821 and Guatemala and Peru soon followed. Riots appeared in Ireland and the Ashanti War broke out in 1822 in Africa. Brazil proclaimed independence in 1822 from Spain and in 1823 the Monroe Doctrine was proclaimed in the U.S. that opposed European influence in the Western Hemisphere. In 1823 France invaded Spain and the Burma Wars involving Britain emerged in 1824. By 1830 cries were being heard from the south within the U.S. for secession. Clearly, war broke out in the aftermath of economic hardship as history had so often revealed.

In 1837, the United States entered another economic depression following the failure in March of the New Orleans cotton brokerage firm of Herman Briggs & Company in the wake of yet another wild speculative boom. Inflated land values, speculation and wildcat banking contributed to the crisis which became known as the “Hard times” of 1837-1843. New York banks suspended payments in gold on May 10th and financial panic ensued. At least 800 U.S. banks suspended gold payments in total and 618 banks failed before the year was out. Gold completely disappeared from circulation and employers were forced to pay their help with what became commonly referred to as a “shinplater” which was private bank currency of dubious value and far too often outright counterfeit. Over 39,000 Americans went bankrupt loosing some $741 million as the depression reduced many to starvation. The depression spread to Britain and the rest of Europe as well. Congress authorized the issue of U.S. treasury notes not to exceed $10 million on October 12th in a move to help ease the devastating economic financial crisis. By 1839 the depression had not improved very much. Within the next few years, the states of Pennsylvania and Maryland defaulted on their bond issues.

As the U.S. debt crisis expanded, interest rates soared once again. From the 4.25% yield on government securities, which had been the low established back in the 1820’s, government yields rose to 6.14% by 1842. Eventually, government yields declined falling back to 4.02% in 1853. But the Panic of 1857 succeeded in sending government yields back up to the 4.81% level by 1858.

In California, the gold rush of 1849 had brought unbelievable levels of inflation and some outstanding records in interest rates as far as American history is concerned. The gold rush only complicated the transition from Mexican to American ownership at the time and a speculative bubble had developed going into the Panic of 1857. Cattle prices in particular multiplied rapidly at times reaching 400% gains or more depending upon the locality. The Mexican cattle rangers of Southern California became extremely wealthy overnight and borrowed against the substantial rise in land values. Interest rates up until 1854 were COMMONLY trading at the 60% level per annum with some isolated historical records illustrating 96% rates per annum. The creditors were some Eastern Yankees but mainly the Swiss, German and French financiers. Needless to say when the bubble burst, the large Mexican cattle ranchers went bankrupt losing vast portions of land that ended up in the hands of some wealthy families that lasted well into the 20th century.

With tensions remaining high in the East, U.S. government interest rates remained well above the 4% level. As the Civil War began, government yields in the North rose to levels in excess of 7% by 1861. Interest rates rose sharply during the Civil War but they did not reach the extreme levels that had been established during the War of 1812. This was largely due to the strong financial position in the North combined with heavy issues of non-interest-bearing legal tender currency called “greenbacks” – a term referring to the lack of backing other than the green ink on the reverse side of the note.

The greenbacks were traded as if they were a commodity on the New York Stock Exchange relative to gold. So although interest rates did not reach new highs – currency depreciation did! A gold panic struck in 1864 sending the value of the greenback down by nearly 80%. Another gold panic struck in 1869 which prompted the coining of the term “Black Friday” as gold soared once again and the stock market crashed.

Meanwhile, the Confederacy also used paper money to finance up to 60% of their war expenditures and 5% was funded through taxation while only 30% were actually raised through the sale of bonds. Initially, Confederate government bonds were floated in 1861 bearing an 8% yield. With some military successes under their belt, the issue of 1862 saw government bond yields decline to 6%. However, Confederate currency began to depreciate significantly. From the 100-par level of December 1861, the trading range of the Confederate bonds in 1862 was 103-104. The 1863 trading range moved to 109-200 illustrating a 50% depreciation in the currency. The Confederate government began to restrict the purchase of its bonds according to the issue date of the currency itself. Notes issued prior to April 20, 1863 could be used toward the purchase of 8% bonds, but after August only 7% bonds. From August 1863 thereafter, paper currency was no longer valid in the purchase of government bonds at all.

In 1864, the Confederate government forced the population to convert the currency into 4% yielding bonds by imposing a taxation rate of 10% per month on anyone holding large bills that had not been converted. The Confederate government issued a 6% bond backed by cotton at 8 pence per pound, which became known as the “Cotton Loan” issues. Of course the South lost the war and all Confederate currency, notes and bonds became worthless.

The Panic of 1873 in the U.S. was aided when Jim Fisk, the leading member of the gold ring from 1869, was killed by Edward Stokes. In the aftermath, it came to be known that Fisk had been raiding the treasury of the Erie Railroad. The famous Wall Street banking house of Jay Cooke & Company failed on September 18th creating what became known as “Black Friday” on the stock exchange. On September 19th, the stock market tumbled fiercely forcing the New York Stock Exchange to close for 10 days. By year-end, over 5,000 business firms failed while tens of thousands came close to starvation as soup kitchens opened in New York. But the financial panic was not limited to the United States. Panic also struck in Vienna during May 1873 causing European investors to withdraw capital from the United States as panic spread to other European nations.

Interest rates in the United States had risen moving into 1873. The yield on government securities moved back to the 5% level following a low of 4.07% in the wake of the Panic of 1869. Municipal bond yields rose to 5.58% while high grade railroad bond yields jumped to nearly 6.5%. Interest rates on French 3% rentes moved up to 5.25% in 1873 while British 3% consols moved up moderately to 3.21%. Interest rates in Switzerland moved up on an annual average basis from 3.22% in 1868 to 5.34% by 1873 while extreme intraday highs reached 7%. German interest rates at the Reichsbank moved up from the 1867 low of 4% to as high as 6% in 1873 but this was still significantly below the levels of 1866 when German rates topped at 9%. The discount rate officially rose in Belgium from the 2.5% low in 1867 to as high as 7% in 1873 but Dutch rates for the same period rose from 2.5% up to only 6.5% in 1873.

The economic depression in the United States following the Panic of 1873 continued well into 1878. Nearly 10,500 U.S. business firms failed in the process. In 1879, the United States resumed specie payments for the first time since 1861 in an attempt to help boost foreign trade and bring an end to the economic depression.

Following the major depression of the 1870’s, additional serious panics still inflicted the world economy in 1881, 1890, 1893, 1895, 1896, 1899, 1901, 1903, 1907, 1914, 1920 and 1929. Depression took place during 1883-1885, 1893-1894, 1896-1897, 1920-1921 and the Great Depression of 1929-1939. Periods of prosperity were the Gold Resumption Prosperity of 1879-1883, the Railroad Prosperity of 1886-1893, the 1895 Recovery, the Corporate Merger Movement of 1899-1903, the 1905-1907 Recovery, 1915-1919 World War I Boom, the New Era of Prosperity 1922-1929, also known as the Great Bull Market and the Roaring 20’s, and at last the 1940-1944 World War II Boom.

Although interest rates remained highly volatile during the later part of the nineteenth century, the shift in capital concentration was clearly underway. Each new panic that sent interest rates higher found U.S. peaks significantly lower than those in Europe with the exception of Britain. Government yields reached their lowest level on a global basis going into 1900 and private corporate rates began to command premiums well above those of government. This was not the case during the later part of the eighteenth century and certainly not during the early part of the nineteenth century.

By the mid twentieth century, capital continued to shift from Europe in the direction of the United States. Now even British rates were at a premium to those of America. As the inflation increased following World War II, capital concentration in the United States peaked by 1966 and began a trend of disbursement throughout the world. As capital concentrated in Switzerland on the back of excessively rising world taxation, Swiss rates became the lowest in the industrialized world. The sharp rise in interest rates following the birth of the world floating exchange rate system in 1971 began a clear and decisive new trend that was normal by all historical standards as the shift in capital flows began to realign national wealth on a global scale.

The lessons of history have a lot to offer us. To governments, history warns of the perils that await fiscal irresponsibility. Clearly, a little debt or the excessive use of credit now and then is not dangerous to the financial future of any nation. But when such irresponsibility continues without a view toward the future, that nation will perish in financial ruin. Thus far no nation or empire has ever resisted the temptation of credit. The question that history has left mankind is simply when will we ever learn from the mistakes of our past? When man borrows against his future income, he robs himself of the fruits of his own labor.


Source: 1775 – Present The World Revolution

Part II of IV—A Brief History of World Credit & Interest Rates • 500 A.D. – 1690 A.D. The Fall of Rome to End Dark Ages | Armstrong Economics

The fate of the Roman Empire of the West had been cast with the sack of Rome in 410 AD by the Goths followed by the Vandals in 455 AD. What was once Rome was divided with the Franks in Gaul (France), Visigoths in Spain, Angles, Saxons and Jutes in Britain and theOstrogoths followed later by the Lombards in Italy. However, the barbarians had long admired Roman culture and subsequently became civilized. Much of the Roman culture and monetary system was thereby retained. While many of these new barbarian states continued to mint coinage in Roman style and denomination, eventually gold began to disappear from the money supply to be replaced by silver coinage in the form of a denier, denaro, phenig and penny all taking their name from the old Roman denarius.

The Byzantine Empire was certainly not immune to crisis concerned debt. The moneylenders and moneychangers were quite unpopular. They were forbidden to hold public office as time went by. The empress Sophia in 567 A.D. summoned the moneylenders before her and confiscated all agreements to, and pledges of, debt thereby simply forgiving all debts – a move that was obviously welcomed by the populace.

By the year 622, the Arab nations were on the rise. They had conquered Egypt, Syria and Persia and in 669 they took Asia Minor by storm. In 698, the Arab armies captured even Carthage and followed with an invasion of Spain in the year 711. The Arab goal to conquer the balance of Europe was finally thwarted at the Battle of Tours in 732. Nevertheless, the Arabs controlled the Mediterranean, which had essentially cut off all trade in Western Europe. The economy diverted to one of agriculture and mercantilism died a quite death. Cut off from world trade, the Latin tongue began to disappear and the emergence of independent languages began throughout Western Europe.

This was the atmosphere that history has labeled the “Dark Ages” and while coinage existed, the lack of commerce and increased hoarding had seriously reduced circulation. It was the rise of Charlemagne that brought light to this dark period in man’s history. Much of the circulating currency was still old Roman coins. Charlemagne brought forth a great monetary reform that has survived into our present day. He introduced the “denier” which was a silver coin eventually referred to as a penny. Twelve of these silver pennies equaled one “sou” which later became known as a shilling in many parts of Europe. Twenty shillings equaled one pound.

The Capitularies of Charlemagne, circa 800 A.D., also dealt with the issue of credit. Undoubtedly, this legal code had been highly influenced by the severe inflationary trends and debt crises that had plagued the final years of the Roman Empire. The charge of interest on loans was strictly forbidden. It was during this period when the evils of excessive debt were viewed not only as destructive socially but as a sin under church law known as usury. Any exception to this view on charging interest remained highly controversial for the following thousand years well into the Middle Ages.

The tenth century was a period of slow advance. While much of central Europe did not benefit, the Venetians gained major concessions in trade from Constantinople and the uptrend in trade brought with it wealth. Moneylenders in Venice were actually respected while banking facilities re-emerged out of the need to finance maritime ventures. The Vikings began to settle back into the position of traders rather than raiders and secure a dominant role in maritime trade between Northern Europe and the Mediterranean. Meanwhile, the Arab power, that had dominated the previous century and brought about the Dark Ages in Western European culture, gave way to decay. By the eleventh century, the Europeans were pushing the Arabs out of Sicily and Sardinia. By 1096, the First Crusade had re-established Italian dominance in the Mediterranean once again.

Nonetheless, the eleventh century was not void of its speculations and inflations. Currency was in a constant state of confusion and the practice of debasing the precious metal content, which had been absent in the West since the final days of Rome, reappeared. Merchants became wealthy enough that they emerged as the new bankers capable of lending to the king. The economic power of Venice had continued to expand and more sophisticated financial transactions, such as insurance, began to emerge.

Records of interest rates in Western Europe during this time are hard to find. When transactions were recorded, most have not survived unlike the clay tablets of Babylon. But documents have survived largely beginning with the late twelfth century. Of the evidence that has emerged, again we find that interest rates were rather high in poor nations, such as Britain, and significantly lower in the major trading nations. Although interest rates in Britain were 43% per annum or much higher, it must be kept in mind that long-term loans were not the norm. Interest rates were typically quoted on a weekly basis – 2 pence on the pound per week (43 1/3% per annum). This was the going rate for the best-secured loan. Those with poor collateral or credit were paying 80-120% per annum.

The thirteenth century was an age of accelerated economic expansion. The Mongol conquest of Asia played the final role in destroying the Arab Empire. This also opened the door for trade with China and it was the era of Marco Polo. Genoa rose to challenge Venice and Florence emerged as the strong international banking center. But even in the thirteenth century, the credit of merchants and landowners was viewed to be much better than that of government. Nobles were on the decline and much of the land became freehold.

Interest rates to a prince were often 30-40% as in the case of the Emperor Frederic II. Legal limits on interest rates began to rise once again. In Modena, the maximum rate was set at 20% while in Milan and Genoa the maximum rate was established at 15%. The trading cities remained quite wealthy and the legal maximum rates of interest were typically much less. In Verona, the maximum rate was 12.5% while in Sicily it was set at 10%. The maximum legal rate in Britain, however, remained at 43 1/3%. Germany perhaps had the highest during this period – 173%.

The prosperity of the thirteenth century brought with it inflation and speculation once again. Commodity speculating was common and many bankers participated with depositor’s funds. Currency was still being debased and new gold coinage was struck in Florence (florin) and in Venice (ducat). Economic prosperity had reached it peak.

The fourteenth century brought with it the Hundred Years War and the Black Plague. Both the kings of England and France defaulted on their national debts and most of the banks in Italy went broke. Financial chaos had become so widespread that in Venice, the bankers were forbidden from speculating in commodities and the government required that two fifths of all deposits be invested in the public debt. The world economy was in severe decline. Interest rates during the fourteenth century rose dramatically. Italy often charged 50% on loans to the once prosperous Netherlands and questionable loans demanded rates of interest as much as 100% per annum.

The fifteenth century was one of transition and expansion. The early part of this century still suffered from periodic plagues and the evils of unsound finance. But the wealth of nations also began to shift. Both the Dutch and English began to emerge as important international traders. In the central part of Europe, the cities of Geneva, Augsburg and Nuremberg rose in importance serving as the trade bridge between the new economic powers of the Dutch and English linking them with the Italians. Florence regained her glory and the Medici Bank of that city became the largest in Europe with branch offices scattered throughout Europe and into Northern Africa and Levant. Venice, however, continued to lead in trade ahead of Genoa.

Contemporary writers of the era have recorded much of the atmosphere. Once again this century brought forth the re-emergence of the capitalist. These were individuals who were extremely wealthy and no longer needed to be merchants or traders. They profited as moneylenders and were held in high esteem once again. This set the tone for a new age of capitalism. Trade was no longer the main goal – everyone wanted to acquire more money instead of land. This was a similar atmosphere that had existed in Socrates day. Nations sought new gold deposits more so than trade, which resulted in wars that were often fought for financial consideration.

The credit of government or the crown was still very dubious. In both France and England loans to the crown were forced upon the people who were paid no interest whatsoever. This quickly laid the foundation for greater organized taxation that followed in the centuries thereafter. Those who were willing to lend to the crown did so at high rates of interests. Charles VIII of France was reported to have paid 42% to 100% on a loan to the Genoa banking house of Sauli to fund his invasion of Italy after the Medici refused.

Commercial business rates declined from the 10-12% range in Italy down to 5%-8%. The emergence of local savings and loans known as “montes pietatis” were formed in many towns beginning around 1462. The montes pietatis were intended to provide much more reasonable rates charging 6% in comparison to the normal pawn rates of 32.5%-43.5%. Some pawnshops during this period were legally limited to 20% as was the case in Florence.

The sixteenth century was a powerful period in time. This was the century that opened the world leading with the discovery of the Americas. But the vast hoards of precious metals brought back from the Americas created sharp increases in inflation. Commodity prices rose dramatically – nearly 300% during 1550 to 1620. England, Spain and France all competed for dominance in the Americas and in Europe. This rapid rise in inflation and the loss of a monopoly on trade through the Mediterranean caused a decline in Italian influence. Royal debtors defaulted on the Italian banks and Italy was on its way toward becoming a second class economic power.

Despite the fact that usury laws still prevailed in church doctrine, the expansion of debt was prolific. Much of the debt was incurred for war. There were but only 25 years during this century when large-scale wars in Europe were absent. Local towns and cities had gained in credit worthiness and when funds ran out, the crown exploited the credit of the towns and cities sending most of them into financial ruin.

There was a sufficient quantity of debt issued from around Europe that the first major exchange emerged in Antwerp. The exchange grew to 5000 members and bills of exchange, bonds, demand notes, deposit certificates and credit instruments of all sorts were traded back and forth daily. An exchange emerged trading commodities in Antwerp and the city became the new financial capital of Europe with hundreds of ships visiting its port each day.

The ravages of debt were soon to worsen. Antwerp was forced into default by the unsound finances of the Spanish Crown in 1570. In 1576, unpaid Spanish mercenary armies sacked Antwerp and the exchange was destroyed. The marauding armies also sacked Rome and financial chaos grew. The financial turmoil in Italy and Spain, combined with the surge in inflation, aided greatly in creating the Protestant Reformation.

The French & Spanish Defaults
During the seventeenth century, the practices of unsound finance finally took their toll. The Crowns of Spain and France defaulted on all their debts and they destroyed their Italian and German bankers in the process. In fact Spain defaulted on her debts in 1607, 1627 and again in 1649. Despite the seemingly rich gold and silver flows coming from the New World, everything had been pledged as collateral often five to ten years in advance. All the gold and silver flowed straight to the Genoa bankers and the Spanish money supply became greatly debased and reduced to a mere copper standard.

The Spanish default destroyed the Fuggers who had risen during the sixteenth century to be perhaps the largest banker up until that time. They were located in Augsburg and had been the first great German bankers with a reported capital base of 5 million guilders. This once great banking establishment was completely ruined by the defaults of Spain.

The French defaults were also dramatic. There were two main periods of severe debt crisis in France in 1589 and 1648. The crisis of 1648 essentially destroyed the remaining Italian bankers – primarily Florentines. An exchange in Paris had emerged in 1639 where credit instruments traded regularly. The French government “rentes” (perpetual loans) traded rather well until the debt crisis of 1648. The French finances were again reformed where interest rates on previous government notes was arbitrarily reduced to 5% while other perpetual notes were simply paid off at a fraction of the previous agreements.

Out of this turmoil, the Dutch gained independence from Spain. The southern provinces had been given to Spain in 1598 as a dowry for the daughter of Philip II who history recalls as Isabella. Quickly after independence, the Dutch built a trading empire instituting new rules and banking practices that would serve as a model for other nations decades later. Germany went through the Thirty Year’s War (1618-1648) which was largely a struggle between Protestant and Catholic factions. This kept Germany as a collection of small states and the demise of the Fugger banking house more or less sealed the fate of Germany during this period in time.

England was ruled by the Stuarts and practiced reasonably sound finance in comparison to that of France and Spain. Gresham had revised the finances of the British government actually instilling a sense of honor to finance. His famous law for which he is best known, bad money drives out good, struck at the heart of depreciating currencies through debasement. Another major advantage of Britain was that it stayed away from foreign moneylenders for the most part. This helped to concentrate wealth within the domestic economy. However, England had practiced the art of forced loans to the Crown so one should not look upon England as a well managed affair during this period. Debts began to rise but the practice of forced loans came to an end under Charles II during the last quarter of this century.

The phrase most commonly used for two people going out to dinner when each party pays their own way is “going dutch.” This saying has its roots in the seventeenth century. The small Dutch Republic fought wars against England and France. The French actually invaded Holland but were defeated when the Dutch opened the dikes. But a large part of the success of the Dutch was owed to their efficient credit system within which even the government enjoyed honorable status and low interest rates.

The efficient Dutch government brought much faith and prosperity. There was more capital in Holland than borrowers. Speculation emerged as always whenever capital has concentrated to such an extent. The first stock market trading emerged in Amsterdam in 1613. Debt issues began trading on the exchange in 1672. Of course one has to mention the famous Tulip Speculation. The highest recorded price paid for a single tulip bulb took place in 1636 for the incredible sum of 4600 florins. In 1985 U.S. dollars, this would be close to $460,000 using gold at $400 per ounce.

The financial transformation of Britain came with the revolution of 1688. Previously, the Stuarts and Tudors restricted and controlled affairs. England never had a significant bank, exchange or organized money market and its national debt was never organized either. As capital began to concentrate during the later part of the seventeenth and primarily during the eighteenth century, prosperity and the emergence of the capitalist developed.

Prior to the revolution of 1688, banking began to evolve in the form of goldsmiths. These chaps quickly began to learn what the Italian bankers had discovered more than a hundred years before that only a small portion of the deposits needed to be retained to cover withdrawals. The large part of the deposits could be lent for interest or invested. Goldsmiths began to pay interest on deposits once this was discovered. But still many of the most prominent goldsmiths were ruined when Charles II suspended all payments on his debts to them in 1672.

Nonetheless, English banking contributed to the evolution of the industry. Checks were known to have been used dating as far back as the 1670’s. Receipts for deposits of gold with the goldsmiths circulated as paper money transferring assets from one person to another without physically handling the gold. The charging of interest had been considered to be a sin under the Catholic Church doctrine. Most Italian bankers got around this through clever means of disguising the interest as foreign exchange fees or transfer costs. In Britain, however, there were legal limitations on how much interest could be charged, but there were no laws against usury. Therefore, the receipts and contracts of debt circulated much more freely since they were drafted in British pounds rather than in some confusing foreign exchange contango.


Source: 500 A.D. – 1690 A.D. The Fall of Rome to End Dark Ages

The Visigoths in Gaul •

Of all the barbarians entering the Roman Empire in Late Antiquity, the Visigoths were among the first to forge a successor-kingdom. Scholars disagree as to the early nature of this fledgeling polity, but the result is clear: the centre of the first barbarian kingdom in the 5th century came to be located at Toulouse.

Source: The Visigoths in Gaul

Return of the Yellow Vests – France #GILETSJAUNES

APT31 Unleashing Malware Attacks Worldwide


Suspected attribution: China

Target sectors: Multiple, including government, international financial organization, and aerospace and defense organizations, as well as high tech, construction and engineering, telecommunications, media, and insurance.

Overview: APT31 is a China-nexus cyber espionage actor focused on obtaining information that can provide the Chinese government and state-owned enterprises with political, economic, and military advantages.


Attack vectors: APT31 has exploited vulnerabilities in applications such as Java and Adobe Flash to compromise victim environments.

Diversity and the Death of Labor – National Justice/Eric Striker


Bombshell leaked emails showing that Amazon strikebreakers uses racial diversity to ensure workers at Whole Foods never unionize only confirms taboo research showing that multiculturalism destroys civic cohesion and engagement of all kinds. 

Unionized workers — and their threat to strike — is a massive threat to executive bonuses and a companies stock value. America’s plutocrats are the wealthiest in the world, even as living standards for the majority decline.

According to Amazon’s internal documents, more racially homogenous stores, which is usually codeword for white, have higher rates of sales, but tend to be “hot spots” for the threat of unionization. In other words, it’s not even totally economic, but also a question of power. Jeff Bezos would rather sell fewer products than have to negotiate any conditions with his workers.  

Diversity and the Death of Labor 

On this front, white workers are alone. The left today prioritizes liberal concepts of “diversity” far above the common man’s economic interests. In their discourse, self-described socialists will rely on Cato Institute studies showing immigration improves GDP to dismiss the Hecksher-Olin-Samuelson (HOS) model that shows immigration inevitably weakens labor’s bargaining power. What do self-described “socialists” think of legalizing child labor, which would also boost GDP? The libertarian ghouls at Cato support this too

The work of elite Jewish globalists like Ruth Milkman (2006) has been highly influential in articulating the theory that labor unions should support open borders legislation in order to legalize and organize migrants. According to advocates of this strategy, which the AFL-CIO has embraced since the 1990s, mass immigration is not something modern nation-states can do anything about (proven to be a lie by recent COVID-19 border closings around the world), so unions must adapt to mitigate the impact of illegal immigrant labor and guarantee a future as an institution.

The promised mass organizing of immigrants never materialized. Instead the withering away of solidarity caused by scab labor and increased diversity in the West has been a major factor in the free fall of union membership. As the AFL-CIO changed its tune on immigration, working class political power simultaneously declined. The Democratic Party now ignores working people and embraces its role as a puppet of Wall Street and Silicon Valley donors.

The only alternative for white labor is the GOP, which despite owing its electoral success to this demographic, doesn’t want it.  

Leftists would argue that the failure of their “internationalist”/globalist theory is because of white privilege and racism — exclusion of immigrants, rather than changing their socially conservative internal culture to encourage them to join up. But the actual correlation is the other way around: the more pro-immigration organized labor is, the weaker it gets. 

According to Julie Watts’ 2002 study of labor attitudes, Immigration policy and the challenge of globalization: Unions and employers in unlikely alliance, countries withunions with strong communist and anarchist backgrounds like Spain and France were some of the most eager to embrace a pro-immigration position. Today, union membership in Spain has essentially collapsed to lower rates than even the United States. France, another nation where labor supports open borders, has experienced something similar, with its unions struggling for relevance even as Yellow Vest discontent swept through the streets. 

The excuse communists and left-liberals make is that labor power in Europe was destroyed during the 2008 financial crisis. Yet Iceland, which suffered one of the worst financial meltdowns in Europe during the same period, continues to lead the world in labor union participation at 92%. What is Iceland’s secret? Up until 2018, it was one of the most racially homogenous countries on earth, with virtually no immigration for 1,000 years. 

Rather than learning and adapting to real world conditions, the left has only moved the goalposts further and further to rationalize its cosmopolitan, neo-liberal first principles. At The Baffler, a “socialist” journal that pays authors $900 per piece, the Jewish author Jamie Marchant took to attacking the idea of economic nationalism more broadly. According to the full-time academic, tariffs and trade agreements that protect American workers are also racist and unions should stop lobbying for them because they take jobs from workers in Mexico. This insane inversion of common sense is predicated upon the idea that nations have no moral right to ensure capital serves its people first — how convenient for “global citizens” like Jeff Bezos. 

The Kosher Third Position 

As the Bernie moment subsides and the left comes to terms with being a vehicle for the political will of the elite, there is a rising intellectual movement composed of “national conservatives” and Catholic integralists taking hold on the peripheries of the Republican party looking to take white workers for another ride.

Figures like Marco Rubio, Josh Hawley and Matt Gaetz represent the political incarnations of these ideas. These men want to run for president in 2024. 

The journal encapsulating this rising tendency is American Affairs, which often publishes intellectual works that transcend left and right. 

By and large, the prominent voices at American Affairs endorse corporatism/solidarism — the pro-worker economic ideology of Benito Mussolini, the original Falangists and Adolf Hitler. But there’s one catch: all of its advocates are avowed “anti-racists,” and in very recent times, increasingly Jewish. 

On the front page of the publication, we see the work of Jews with spotty histories as neocons or Zionists, like Compass’ Oren Cass, Blue Labour’s Maurice Glasman, Matt Stoller, and David P. Goldman. They are on the record as being hostile to anything even resembling “white nationalism,” in spite of the fact that the people they are talking about in their research today are by and large white.

The editor of the ostensibly Trumpian journal, Julius Krein, wrote an opinion piece days after the 2017 Charlottesville march claiming to have “regretted” voting for Trump after the president made the point that there was violence on “both sides.” The op-ed was nothing more than an “Antifa” rant. 

Researcher Michael Dawson’s 1994 work studying the importance of race in developing a “linked fate” — collective consciousness — demonstrates that unity through blood and soil is the easiest and most efficient way to bring individuals together. Without a linked fate, individual workers do not feel compelled to sacrifice as individuals for a group — something every successful labor union has instilled in its militants. 

There is an argument to be made that America, as a multi-racial country, must encourage cross racial labor organizing to some degree. The problem with pro-worker post-liberals, whether Catholic Integralists like Adrian Vermeule and Sohrab Ahmari or Yoram Hazony endorsed “national conservatives” flirting with Fascist ideas is that they actively attack any white advocacy whatsoever. 

In a recent article criticizing these figures, paleo-conservative Scott Greer made the point that what animated Trump’s election in 2016 was a web of issues — preserving the European identity of the United States being a huge one. Instituting a Catholic theocracy is…a much tougher sell. 

Any industrial policy or attempt at reviving America’s civic institutions will fail at launch without the racial question taken into consideration, as the anti-solidarity specialists at Amazon do. It’s not a zero-sum game to us, but it is to the phony right. If every race has a right to wield the power of ethno-nationalism in the fight over resources in America. 

If America is going to work, we need racial syndicates side by side with class-based ones. If whites are denied this by their self-selected leaders, then they are no friends of white workers.