The United States Attempt Central Banking

By Probs Cheatin | Probs Cheatin | 10 Mar 2022

Before we enter the beginning of the 19th century, we are going to take a temporary break from the chaos in Europe and turn our attention back to the Americas during and after the American Revolutionary war. At this stage, the 13 colonies were tasked with the design and layout of societal laws, systems of government, and economic structures. The Treaty of Paris, which officially ended the Revolutionary battles with Great Britain didn’t come until 1783 and during the start of the war, the Confederacy didn’t have a federal body of law. The Founding Fathers knew they couldn’t wait long to have a formally recognized system of rules for their citizens and they had to act fast.


When we think about law in the United States, the first thing our minds generally go-to is the Constitution. However, there was a brief period where there was a different Law of the land. In June 1776, the same month the Second Continental Congress created a committee to write the Declaration of Independence, a group was created with the duty of manifesting the first legal and governmental framework proposed inside of the United States, the Articles of Confederation.

At the time, philosophers and leaders of revolutionary efforts around the world believed that constitutions were necessary and vital pieces of legal foundation that nations required in order to function efficiently and effectively. Without them, the nation’s elite and Money Changers would be able to freely fashion their own laws, steal wealth legally, and wage wars without the citizen’s consent.

This has occurred throughout history, there are legends of ancient kings putting laws on stone 100 feet above the city, so nobody can read them. It was illegal for slaves to read and write because if they were literate, they could read and write new laws. To the Founding Fathers, having a body of commandments that every citizen (white males at the time) could fall back on to hold others accountable was absolutely essential.

In the case of slavery and other human rights violations, these founding documents were the credentials used to push those movements forward and should continue to be referenced or added to, as we seek to reclaim our rights and wealth that has been stolen from us for generations, including those travesties that occurred during slavery, but also going farther back, to the beginning that we talked about, where we have been robbed of our wealth for millennia.

The ratification of the Articles of Confederation occurred in 1777, only one year after the Declaration of Independence was approved by the Second Continental Congress in 1776. The process did not complete, however, until 1781 because of Maryland and Virginia’s land and territory disputes, which eventually were settled when Maryland signed the document and made large compromises.

Many opponents and loyalists to Great Britain were startled at the idea of the United States declaring its freedom from a nation without having any form of federal government assist in the operation of the newfound nation. However, the people of the 13 colonies felt the independent states were running themselves just fine and executing commerce successfully. During the time between the start of the war and the signing of the new document, the colonies were self-governing states that created their own body of laws and rules for commerce. However, with the new Articles of Confederation, all 13 states of the Union were in agreement on being United. With this agreement, the 13 colonies formally changed their name and the first article of the new document read, “The stile of this confederacy shall be 'The United States of America.'”.

The document did help with the progress of the United States, but it lacked the ability to effectively delegate powers to certain forms of government. One of the great detriments to the United States at this time was the Continental Congress turning to issue paper money called continentals. This would be the United States' first attempt at creating a central bank, but the idea wasn’t very well thought through because Congress did not have the ability to levy taxes. Consequently, there was no demand for the continentals, because the people didn’t have any specific reason to hold the bills and they were widely ignored because the States used their own currency. Nonetheless, Congress continued to print the Continentals, and if the supply of something increases while the demand stays the same or decreases it loses value. In monetary terms, inflation occurs and the Continental paper dollars would return you less in real terms month after month. Although this system didn’t have nearly as many powers as a typical central bank today and lasted only a brief time, this was the first attempt at the United States to create a centralized form of banking and the end game seems to be the same.



During the Revolutionary war, the Continental Congress appointed one of their Delegates George Washington to be the General of the Army. Washington had grown up in the Virginia colony with wealthy plantation owners as parents. His success during the French and Indian war that gained Great Britain large pieces of territory led him to great prominence and fame throughout the United States and Europe. In addition, Washington married a widow of a wealthy landowner and as a result, was able to take control of large pieces of property for himself and rise in social standing throughout the nation. Washington, like other Americans before the war, was extremely discouraged and frightened by the oppression of Great Britain and became more politically active. In 1774, he was selected to represent Virginia in the Continental Congress and only a year later with the Battle of Concord and Lexington in 1775, Washington knew he had to go into combat one more time. He was unanimously voted to be the Commander and Chief of the Continental Army and the congress had selected his cabinet. Notably, his Colonel would be named Alexander Hamilton.

The United States would go on to win the war and Great Britain officially recognized its independence in 1783 with the Treaty of Paris. After the treaty, Washington would step down from being Commander and Chief of the Army which was an action that was recognized domestically and internationally as a symbol that the new republic could thrive with the correct leadership in place. However, the United States was still very young. The new country was in massive debt, had no money to pay it off, and was disorganized politically and economically. The Founding Fathers had to come up with innovative ideas fast.

Although the Articles of Confederation had been active since 1781, the document was proving to be ineffective. The document's greatest accomplishment from the United States point of view was claiming 5 states and including Michigan and parts of Minnesota, Ohio, Illinois, and Wisconsin. George Washington understood that the major issue behind the United States was that it had no currency to facilitate the movement of the economy or pay back debts, Pauline Maier states, “The Continental Congress could print money but it was worthless. Congress could borrow money, but couldn't pay it back” (Maier 2010, pp. 11–13).

In addition, foreign countries around the world were suppressing the economic activity of the new nation. Pirates were robbing ships full of goods that were being transported to and from Europe and further the issue, the Articles of Confederation didn’t provide a strong central government or any authority for bodies of government to make nationwide, meaningful changes. Ultimately John Green says from Crash Course states, “The Articles government was a complete disaster for one reason: It could not collect taxes”. In other words, the government could not create a demand on the fiat currency it was created out of thin air. With no money and no structure, the United States and George Washington believed that a new document was needed to organize the activity within the country. After several meetings to revise the failing Articles of Confederation, in 1788 only one decade after the document was created, the Founding Fathers came up with a new document called the Constitution which is the same Constitution, with some amendments, that is still known and used today over 200 years later.

The Constitution. The Supreme Law of the Land. Inside of the document contained seven Articles, 10 amendments or the Bill of Rights, and a closing paragraph. Originally the document had no header or title, so the general name given was “A Frame of Government”. The document is influenced by a number of influential western thinkers that date back to as old as Ancient Greek and as recent as Montesquieu, the Frenchmen we discussed earlier who was living during the Founding Fathers' lifetime.


(original copy of the U.S. Constitution)

The structure of the document is pretty simple. It has a beginning, a middle, and an end like any other story. The preamble is a single sentence and it reads,

“We the People of the United States, in order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense. promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

This single sentence would become one of the most famous lines in all of American political history. Articles I-III establish the duties of Congress, the president, and court systems which reflect the Legislative, Executive, and Judicial branches of American government. The next four articles are important but aren’t as widely cited as the first three and therefore won’t be discussed.

Only a year later in 1789, Washington was on his way to New York City after unanimously being elected by the electoral college to be the first President of the United States of America and begin stepping into the most important role of his life. John Adams, who had come in second place in the polls would be named the first Vice President of the United States. Throughout 1789, Congress established many administrative departments that would serve under the executive umbrella of Washington. One of the most important positions that Congress had established was the Secretary of the Treasury, because of the massive debts and worthless paper money that was plaguing the nation's economy. Hamilton would be the one in charge of correcting this broken system and attempting to bring prosperity to the newly formed country. 

The broken system Washington inherited was his main emphasis throughout his first term, and with Madison as his Secretary of Treasury, they worked closely on different resolutions to what they believed was a complex issue. What was Hamilton’s solution? Om 1791 Hamilton wrote his First Report on Public Credit and suggested For the new Federal Government to assume all of the debts of various states, establish a mint that could print new money that was backed by a strong central government, impose taxes on federal goods that were sold in the country and most importantly, charter the First Bank of the United States for 20 years that would end in 1811 and be up to the Congress if they were to recharted the bank. This institution was a government-chartered, privately owned bank, owned mostly by foreigners, that was allowed to loan money to the government and allowed to operate in various states.

This idea wasn’t met without tremendous opposition. After all, the United States was severely in debt, to begin with, they had worthless money, so how would they afford to pay off the various State debts that were owed? Hamilton proposed that the bank would loan the government $2,000,000 that could be used by the United States to buy stock in the bank. An additional $8,000,000 would be funded by private foreign investors, and because of the rise and prominence of the Barings (A British Banking family we will discuss later) and Rothschilds in Europe during this time, many believe they had a large hand in the deal, but the names were never revealed.

The main goal of the bank in the words of Hamilton in his First Report on the Public Credit was, “That an adequate provision for the support of the Public Credit, is a matter of high importance to the honor and prosperity of the United States”. Hamilton believed that being able to borrow and loan money out to foreign countries was the primary vector that would determine the success of the United States.


(1790: Hamilton, First Report on Public)

As previously mentioned, the idea of a privately owned central bank wasn’t met without serious opposition from other prominent Founding Fathers who helped articulate the Constitution and Declaration of Independence, Thomas Jefferson, and James Madison. These two men believed the creation of a privately-owned central bank, and the establishment of a mint was unconstitutional because it took the power of commerce away from Congress, who had the power specifically enumerated in the Constitution. Instead of having the states and citizens control the money inside of the country, a small group of centralized Money Changers would now be able to manipulate the economy at their will. The creation of a privately owned central bank would also create a precedence that allowed the federal government to bypass congress to have uncontrollable and undefinable powers for the indefinite future. Even if this specific authority wasn’t explicitly explained in the constitution, the 10th amendment explains that any power or duty not specifically given to the federal government in the constitution is to be decided by the states. Meaning if something isn’t in the constitution, the people are the ones who decide the law.

Regardless of the heated debates between Hamilton and Jefferson and Jefferson stating that Central Banks would be used “as an engine for speculation, financial manipulation, and corruption.” (Hitchens, Christopher, 2005), All the bills passed through Congress and George Washington signed them into law. Without recognizing it, the United States citizens were being misled into believing a new currency would solve all their problems, but now citizens were being held captive to an economic system that would fail to bring them equity, justice, or liberty, the very things that were promised to them in earlier documents.

The foreign investors who were able to purchase the shares before they were available to the public were able to acquire the shares for 25$ each. Days later the demand for the newly formed central banks stocks was so great, the price reached over 300$. Presumably, the seed investors dumped on the secondary market and the price of all securities in the market began to tank. Attempting to stop the bleeding of the market, Hamilton authorized the State of New York to issue $150,000 more in debt to stabilize the price of the First Bank and the rest of the market quickly responded. Only weeks in, the citizens of the United States were feeling the pain a privately owned central bank had on their economy and everyday lives.

Not even a year later in March 1792, a more serious panic took place when another unexpected rise in the price of securities was occurring rapidly in December 1791. As this rise in prices was occurring, two businessmen in America were planning on creating a new bank that would loan out money and compete with the Bank of New York. Their scheme was to borrow large sums of money from the First National Bank, then use that money to buy US Government Bonds. Therefore, the supply of the Government debt securities would severely decrease, raising the prices. The two Money Changers also realized that the demand for the debt securities was extremely high because many American citizens relied on them for the periodic interest payments, they received to pay off their loans. The scheme ultimately failed, but the arrangement being made public combined with the US national debt far exceeding reasonable ranges for the time caused large-scale bank runs in 1792. These bank runs led to many citizens being left without money to withdraw and therefore defaulted on their loan payments. Those who defaulted had to give up the property they pledged as collateral to the Money Changers who were the ones responsible for the price manipulation that caused the speculation and drop in the market to occur in the first place.

Later that year, the election of 1792 was occurring and George Washington would be up for replacement during his second term. After careful consideration, near retirement, and begging from many of his colleagues, Washington decided to run again and continue his presidency during the struggling times of the United States. Washington once again unanimously won the electoral college and John Adams would go on to serve as vice president for another 4 years.

Washingtons' second term was primarily focused on foreign affairs during the French revolution and attempting to keep the United States neutral during the overseas engagement. In addition, he had a focus on establishing a sturdy political and economic environment before he left office. Although there were no formal rules for the President to be restrained to two four-year intervals, Washington feared he would set precedents of extreme power and lifetime terms that would be abused by future presidents. So, when the elections of 1796 came around after the economy began to stabilize, Washington formally declared that he would not be running for the presidency again.

In George Washingtons' famous farewell address, he concentrates his speech on persuading the American people and government to stay out of foreign affairs, partisanship, and excessive borrowing. These three things, Washington believed, would lead to the failure of the new nation. However, over the years the American people did not listen and quickly the political system became dangerous, ineffective, and threatening to the common classes when the very next election saw political parties being represented on the ballots.

In 1796, for the first time in American politics, there would be a presidential election with two new nominees. John Adams and Thomas Jefferson. The federalists and those who wanted a more centralized government were represented by John Adams. The Democratic-Republicans, who sought less government intervention and more power to the individual states were represented by Thomas Jefferson. It would be a hard-fought battle, but at the end because of the loyalty to Great Britain and Washington, John Adams would become victorious and go on to serve as the Second President of the United States, with Thomas Jefferson operating as his vice president.

Adam’s presidency was mostly riddled with the question of supporting or resisting the French Efforts in their revolution. Jefferson and his party did not support monarchy’s, therefore strongly supported the French rebellion, while the Federalists supported Great Britain in their war efforts against the French. This led to divisive politics during Adam’s presidency and at the end of 4 years, the United States managed to stay out of war, but the American people wanted a new leader.

In the elections of 1800, there was a tie between Thomas Jefferson and another candidate named Aaron Burr. With the tie, the vote went to the House of Representatives where Thomas Jefferson won the vote because his political party represented a supermajority in the House of Representatives and would become the Third President of the United States. This presidency would go on to be a vital one. With the turn of the 1800 century, the United States planned on becoming a dominant nation, they had a central bank, a steady economy, a body of laws, and their election system seemed to be going smoothly. Next, for Thomas Jefferson was increasing the economic production of the United States. How would he do that? He would have to involve Money Changers.




If you want to read more and be part of the journey go to or visit my



Thank you everyone for your support!



How do you rate this article?


Probs Cheatin
Probs Cheatin

I love decentralization and human coordination. I started investing in crypto in March 2021, so I'm a newbie. Please check out my website for the latest posts, merch, free crypto courses, community, and more!

Probs Cheatin
Probs Cheatin

Decentralization, Human Coordination, Bankless and Sovereignty

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.