Uploaded on Wednesday 16 July, 2014 to the money trust
The first major financial crisis in the United States
The nascent republic of the United States of America was just two decades old when it experienced its first, serious, economic slump. The Panic of 1796-1797 happened as a direct result of speculation gone wrong in real estate. Because the U.S. dollar had depreciated so much in value and precious metals were not readily available, the investment of choice for the wealthy was to buy up property.
The U.S. economy was, from the onset, interconnected with European nations, in large part with the United Kingdom of Great Britain. The Bank of England, whilst it had no control over the U.S. money supply, held some influence over the U.S. economy, particularly so when foreign money reached its shores. Europeans, as well as American citizens, had investment portfolios in the United States.
Prior to the Napoleonic Wars of 1803-1815, in the latter part of the eighteenth century, skirmishes between Great Britain and France wreaked havoc and instability in the marketplace. With people anticipating an imminent war against France, confidence in the British pound waned and people demanded, on masse, that their money be converted into gold by their bank wherein they held their deposits. The British pound was on the gold standard which gave the bearer the right to convert his money into gold on demand.
The big problem was that the Bank of England's stock of bank notes far exceeded its gold supplies at the converted rate, and the astonishing truth of it all is that a concept known as fractional reserve lending makes it legal for banks to print money in excess of what it holds in assets; but when the system goes wrong, it really goes wrong, and on the 25th of February, 1797, Parliament in London hurriedly came to the rescue by passing the infamous Bank Restriction Act of 1797 in order to protect the banks from insolvency. This piece of legislation enabled the Bank of England to withhold specie payments, i.e. suspend the issuance of gold coinage in return for bank notes.
The economic troubles in Great Britain caused a ripple effect on the American continent, intensifying the panic which began in 1796 after a land speculation bubble popped.
Ellen Hodgson Brown, President & Founder of the Public Banking Institute (PBI) and author of such books as "The Web of Debt", The Public Bank Solution", addresses the PBI 2012 conference in Philadelphia.
Victoria Grant, seen here aged 12 years old, addresses the first annual Public Banking Conference in Philadelphia, PA. Her father and she discovered that the debt money system was what was wrong with the Canadian economy and decided to do something about it.
The Bank of North Dakota was established by legislative action in 1919 to promote agriculture, commerce and industry. North Dakota is the only state to have escaped the credit crisis. For every year since 2008, it has run a budget surplus and it has the lowest unemployment figures in the US, the lowest default rate on its loans and the lowest foreclosure rate.
Mike Krauss, Chairman of the Pennsylvania Project, puts forward his proposal, based on the success of the Bank of North Dakota, to create a Public Bank for the state of Pennsylvania. Such a move would free the state from the clutches of the Fed, reduce the debt burden, boost investments and serve the public interest.
Most people hold the view that their bank deposits are safe with the big commercial banks, however, this assumption is not based on the facts. This video features official government documents detailing information that should sound anyone's alarm bells [edited].