How The Occupy Wall Street Movement Really Began (With The Loss Of Populist Capital and the Crime of 1873)
by Richard Ravarino
This is part I, of a three part series
“DOWN WITH CAPITALISM”, one sign read, the next “WALL STREET PUNISHES THE PEOPLE”, “BANKERS LIE!” stated yet another. As the angry crowd turned the corner from Pearl Street, onto Wall Street, the churning of their feet was halted almost imperceptibly, really it was more of a cascade of undulating energy that whispered to the people “danger”.
As the anti-establishment populist march continued cautiously forward, the full-assembly of the fifth precinct of New York police stood in their way, billy-clubs being thumped into their gloved fists in warning. This seemed to enrage the crowd as picket signs soon became weapons as the crowd drove a wedge into the waiting police. As skulls cracked on both sides and arrests were made of supposed “ring leaders”, thus ended one of the bloodiest events of 1873. . . Yes, 1873.
1873 was the year that the American government in its infinite wisdom, stopped recognizing silver as money, leading to one of the greatest monetary crises of our history that nobody ever talks about. But the true story of how this came to be, is just the first chapter in how the British banking system, acquired beachheads in the American finance system, to move us towards a one world government (yes, even then).
Some aspects of this story seem almost incredible. Others seem frighteningly familiar. To those I offer wisdom from George Santayana, “Those that fail to learn from the lessons of the past, are condemned to repeat the same failures”, and also the writings of Milton Freidman and Andrew Gause.
How far have we fallen in our understanding of monetary policy?
Well, following the passage of the bill “The Fourth Coinage Act” of 1873, rioting like this was commonplace throughout the states, much in the same way the “Occupy Wall Street” movement has started today and both have taken place due to similar marketplace dynamics.
To call the whole lot of them “stinking, no good, freeloaders” is to ignore what happened leading up to the rise of the “Occupy” movements. But to get there, we need some historical perspective.
In the Winter of 1873, Sir Edward Seyd (a reclusive English banker) arrived from London with a trunk, which holdings were rumored in value at over $500,000, set on influencing congress.
This influence saw its way into committee chambers, into the dark corners of congressional chambers, where bills could be redrafted away from public scrutiny, or even a safe distance away from fellow congressmen familiar with the bill, as drafts had been kicked around the hill for months prior to final vote and passage.
It was classic bait and switch, in the days leading up to the vote, the congressman that knew of the act (and had read portions of it) only knew of changes to the coinage structure that were supposed to occur, (to make us more like the European currencies of the time: cast on 1/5’s rather than 1/4’s of a $20 one oz. gold demonination. As an aside, the only living legacy to this original bill was a $4 gold piece, the 1879 Stella (as five Stellas, would have made up one ounce – or a $20 equivalent).
So outside of this strange singular curiosity of a coin, what was the real purpose of the “Coinage Act of 1873″?
As the bill’s passage moved into law, it did so quietly and without fanfare. The press said nary a word except to words to wonder of the $5 coins demise and the new coming $4 pieces.
How the true text of this new law was kept quiet, as long as it was, is still a mystery to modern scholars although most blame the power of the “money trust”. Because this short period directly after the bill’s passage into law, left only a 90-day window in which silver dollars could be returned to the bank, in exchange for gold coin at the government fixed rate pricing. After that, the government would not recognize silver as legal tender, nor the fixed rate of exchange.
This left the vast majority of Americans holding silver currency, without even knowing they should be exchanging these coins for gold, or risk losing quantitative value of their silver coin.
In truth, most Americans couldn’t even afford to hold gold. A $5 gold coin was roughly the equivalent of $550.00 in today’s dollars, when bread could be bought for $.02 per loaf and a lb. of prime beef was a mere $.08. This is why the bi-metallic silver standard was held up by farmers and town merchants alike as the “people’s currency” and why it’s sudden loss, would destroy much of the wealth in grassroots America.
The Loss Of The Bi-metallic standard.
A single silver dollar, or a $20 gold piece. . . This had been the standard of the United States for over 100 years. As a matter of fact, this was something of a global standard at the time, as equal amounts of old Spanish silver/gold were involved in early American trade. Keep in mind, even the British Pound itself, is known as the Pound “Sterling”. But this was a standard that the British wanted to see crushed, as they pushed back for a single mono-metallic, gold standard.
This is not to ignore the Lincoln greenback, or even other banker issued currencies that were circulating at the time, but it is the demonetization of silver in the American marketplace, that led to a great consolidation of wealth into largely a “banker” class and the soon to be “debtor” class that would wallow in the despair of lost wealth, or at least fair money, that later paved the way for the Federal Reserve banking system.
The knock on the bi-metallic standard was, of course, lack of uniformity.
When Alexander Hamilton pegged silver to gold at a 15:1 rate, in 1792 (the original U.S. Coinage Act) this made for some rough conversions from silver to gold, or vice versa. Surely, there was a disconnect (by today’s terms) between one $20 (1) ounce gold piece and 15 Silver ounces, each worth a dollar each. But for 100+ years it worked just fine, for the people of this country and it worked to the advantage of the working class, giving the average man greater buying power for his piece of silver, than the banker’s gold.
This fixed rate of exchange, although blamed by many historians as being too easily manipulated, rarely moved, if ever. Granted, in the time between the founding of our country and the first coinage act (16 years), it moved as high as 18:1 and as low as 12:1. But between the first coinage act and the repeal of silver as money (81 years), it never moved more than a single point, from 15:1-16:1. So this idea of manipulation is clearly banker hysteria, especially when compared to today’s “helicopter” Ben Bernanke’s antics of market manipulation.
According to the numismatic historian Andrew Gause, “The removal of silver from monetary system caused a deflationary surge in consumer prices. Prices actually fell year over year (over 1% annually) for nearly 20 years, after demonetization of silver, because you had fewer monetary units, chasing a greater supply of consumer goods.”
Gause continues, “So the value and price of goods continually fell and the folks that owed money, primarily the new ‘debtor classes’, started suffering under the weight of these payments, because unlike the circumstances today where we can encourage folks to get into debt, to buy tangible assets because you’ll be able to pay off the debt with dollars that are worth substantially less, those victims of the ‘Crime of 1873’ found themselves on the other side of that equation – paying off their debts with dollars that were worth substantially more.”
Normally this might be considered a good thing, until you consider who controlled the vast amount of these dollars – the banks.
In an environment of falling prices and great monetary strength, a merchant who was just holding par with the previous year, was still losing great deals of money as the price of goods shrank and yielded less monetary rewards vs. the rising cost of his debts. . . And dollars.
The Congressional Record.
Make no mistake, this was a banker’s coup, and by the time the ink was dry on this dastardly bill, the now free floating value of silver was tumbling. As the cries went out from the people to their congressmen in Washington, impassioned pleas were heard from the floors of the House of Representatives and the U.S. Senate, but Mr. Seyd’s money had been well spent and as is usual in congress, a repeal lacked the muster to get past the squeaky wheels on the house floor.
In August of 1873, with the price of silver sliding past a now 20:1 ratio with gold, Representative John Morgan Bright, Democrat of Tennessee spoke of the Act, to his fellow congressmen, “This bill was passed by fraud in the house, never having been printed in advance, being a substitute for the printed bill, never having been read at the clerk’s desk, the reading having been dispensed with by an impression, that the bill made no material alteration in the coinage laws.”
“It was passed without discussion, debate being cut-off by operation of the previous question. It was passed to, my certain information, under such circumstances, that the fraud escaped the attention of some of the most watchful, as well as the ablest statesman in congress of our time.”
“Aye Sir, it was a fraud! That smells to heaven! It was a fraud that will stink in the nose of posterity and fore which some persons must give account in the day of retribution.”
Sound familiar? “You have to vote on the bill, so that you can read the bill” – Nancy Pelosi. It’s amazing how far back some of these tactics go, but they worked then, just as they work now. Despite complaints of chicanery, fraud and deception as many that were familiar with the original “un-doctored” bill, were powerless to change the new law, post civil war America was, once again, left up in arms.
The Occupy Movement
Bringing us back to today’s “occupier’s” the similarities are consistent with 1873, in that what happened victimized a large sector of the American economy – some would argue (and I’d say correctly – the majority). They would argue that they no longer had (by extension) the monetary/credit supply they did just days earlier. Bank’s simply stopped lending. The Federal Reserve would later refer to this hick-up as a “corrective action”, but it was this “hick-up” that caused a crash in not only the housing market, but major retailers closing their doors and going bankrupt.
With the sudden close of thousands of big box retailers and the entire housing sector of the economy collapsing at once, this put strain on the surrounding finance markets and then the collapse of both banking institutions and institutions of high finance, like Lehman Brothers and Merrill Lynch. And of course, the infamous Fannie and Freddie. . . Not to mention the insurance markets being rattled from Swiss controlled UBS and American controlled AIG.
This single “corrective action”, devastated the lives of millions in this country. It removed vast numbers from the roles of the middle class, replacing six figure incomes, with mid five figure incomes and may have permanently cancelled the “American Dream” for future generations as they graduate from colleges and universities to jobs that pay no better than many uneducated Americans can find. For those not so fortunate, it left them unemployed and many even homeless.
The only other time in American history that this recent “recession” can be compared to is that Summer that started in 1873. Not only by the devastation left in its wake, but by the vertical integration of wealth, because make no mistake about it. . . The result of a contraction of a monetary supply is not less wealth, but a concentration of it, in fewer hands. Can anyone say, the 1%?
So the highly educated ““stinking, no good, freeloaders” that may have stormed your city centers this last fall (and are sure to return the streets this Summer) have reason to be upset – Even if they don’t understand exactly what has happened to them, or what has just happened – again.
TOMORROW in Part II of the Crime of the Century: THE POPULIST MOVEMENT: William Jennings Bryan and his “Cross of Gold”, Frank L. Baum and The Wonderful Wizard of Oz.