Satan's Bank Notes: A Brief Look At Fiat Currency

I read an interesting piece in History Today discussing several drawbacks of paper currency- other than the obvious. The article was about the rise of paper money in the UK which was met with more than just a little resistance, as one could naturally expect. It was called "filthy rags" as well as "Satan's Bank Notes" in a pamphlet published anonymously (likely to avoid prosecution). It was a scathing critique of the Bank of England... without ever mentioning it by name.

Near London’s ’Change there is a house,
(To name it I’m unwilling)
Where RAGS are sold, and for each Pound
John Bull gives twenty shillings.

Prior to the late 18th Century Britain, like the rest of the civilized world, was on the gold standard. The gold standard was particularly popular with the poor who felt slighted being paid in worthless pieces of paper. One of the problems cited as the problem with paper (fiat) money was the ease with which it was forged. Radical journalist William Cobbett wrote that it wasn't money at all, only worthless scraps of paper, unlike specie (gold) that was preferred by working people. Thomas Paine, famous for his pamphlet, Common Sense, described paper currency as "suspicion asleep."

The paper money issued was supposed to be redeemable for gold but by 1821, the Bank of England didn't have enough gold to make the swaps... The Royal Navy had to resort to hijacking Spanish ships to refill the Royal coffers. Of Course there was no way to hijack enough gold to meet the demand, so the Treasury did the only thing it could... took Britain off the gold standard. To ensure "safeguards" for the new currency (I don't believe I even have to point out worthless at this point), they made criticizing the fiat money an imprisonable offense not to mention overt threats of physical violence... It was a case of like it or lump it (quite literally).

Looking back that far in history, to put things in their proper context, England had not long ago fought the war with the American Colonies- a very expensive undertaking. Then it was war against France and Napoleon- once again expensive. England had amassed an enormous debt (to people that didn't want payment in worthless paper money). Cobbett puts things in their proper perspective...

"The people were poor, Cobbett reasoned, because they had to pay crippling levels of indirect taxation on everyday items to pay down the exorbitant interest on the debt. Worse still, the many wars waged by the British in the 18th century had created a class of idle creditors who were able to enrich themselves by charging high levels of interest which the government was forced to to agree to finance its costly wars.

But the real scandal in Cobbett’s view was that these debts, contracted in paper money and thus hugely inflated in value, would have to be settled at some point in specie. In other words, theoretical debt would have to be paid off in real money, thus further inflating the value of the debt. It was deeply unfair, so the reasoning went, that a debt contracted in paper at, say the value of £10,000, would now be worth £100,000 because of the higher value of gold. Whose pockets would this hit? The taxpayer."

Who was England in debt to? Reading the last two paragraphs ought to be a clue. The people that loaned England (not to mention France) the money necessary to fight them. Whenever one wants to uncover the scoundrels responsible for problems of this nature one only has to follow the money... In this case to the Rothschilds. It was they who financed both sides in the wars (as they have in every war since)... and who picks up the tab? The taxpayer (I feel like capitalizing Taxpayer- they deserve it).

The article goes on to talk about the ease with which paper currencies were counterfeited and the "safeguards" (that word again) taken to prevent it over the years, but I think we covered the most important aspects- from an historical perspective that is. Although the article deals primarily with the UK, when it comes to money, as England goes, so goes the world.

http://www.historytoday.com/matthew-roberts/satans-bank-note?utm_source=Weekly+Newsletter&utm_campaign=350c8cb1ae-EMAIL_CAMPAIGN_2017_09_20&utm_medium=email&utm_term=0_fceec0de95-350c8cb1ae-471965&mc_cid=350c8cb1ae&mc_eid=3baee69ef0

GIF by @papa-pepper