Abraham Lincoln's Monetary Policy

Senate document 23, Page 91. 1865.

Preface and Postscript
by Michael Rowbothham
from his Grip of Death (1998)


Preface

At the end of the civil war, President Abraham Lincoln produced his justification for the government creation of money. His Monetary Policy is one of the world's great political declarations; a masterpiece of succinct advocacy and irrefutable justice. In it, he notes the inadequacy of gold and silver, and consequent need for an additional means of exchange. It proclaims the right and duty of government to create such currency, and supply this to the economy free of debt through government spending, thus reducing the need for taxation. Wages are declared to be a higher priority than bank interest, and the economy is to be protected from the "vicious currency" of banks. The creation and supply of money, he defined "not only the supreme prerogitive of government, but it is the government's greatest opportunity".

Lincoln's Monetary Policy is included here in its entirety.


Monetary Policy (1865)

Money is the creature of law, and the creation of the original issue of money should be maintained as the exclusive monopoly of national government. Money possesses no value to the state other than that given to it by circulation.

Capital has its proper place and is entitled to every protection. The wages of men should be recognized in the structure of and in the social order as more important than the wages of money.

No duty is more imperative for the government than the duty it owes the people to furnish them with a sound and uniform currency, and of regulating the circulation of the medium of exchange so that labour will be protected from a vicious currency, and commerce will be facilitated by cheap and safe exchanges.

The available supply of gold and silver being wholly inadequate to permit the issuance of coins of intrinsic value or paper currency convertible into coin in the volume required to serve the needs of the People, some other basis for the issue of currency must be developed, and some means other than that of convertibility into coin must be developed to prevent undue fluctuation in the value of paper currency or any other substitute for money of intrinsic value that may come into use.

The monetary needs of increasing numbers of people advancing towards higher standards of living can and should be met by the government. Such needs can be met by the issue of national currency and credit through the operation of a national banking system. The circulation of a medium of exchange issued and backed by the government can be properly regulated and redundancy of issue avoided by withdrawing from circulation such amounts as may be necessary by taxation, re-deposit and otherwise. Government has the power to regulate the currency and credit of the nation.

Government should stand behind its currency and credit and the bank deposits of the nation. No individual should suffer a loss of money through depreciation or inflated currency or Bank bankruptcy.

Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by taxation and otherwise, need not and should not borrow capital at interest as a means of financing government work and public enterprise. The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government's greatest creative opportunity.

By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts, and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.

Abraham Lincoln, Senate document 23, Page 91. 1865.


Postscript by Michael Rowbotham

It is noteworthy that Lincoln issued this statement of his monetary policy in 1865, just before the end of the civil war. A matter of weeks later, he was assassinated. As the publication date and whole tenor of the document show, Lincoln's intention was to advance his monetary policy, based upon the government creation of money, and apply it more fully after the war. The motive behind Lincoln's assassination has never been established, and is usually attributed to the deranged actions of a lunatic. However, it has been speculated many times that Lincoln's death was connected with the fact that such a monetary policy as he was proposing, if pursued effectively, would have signalled the end of the banking and money power in the United States, and very rapidly everywhere throughout the developing world. Once that one government was seen to be capable of supplying its nation's monetary needs, others would certainly have followed. The power and profit which national debts and widespread private industrial debts provided to the would's most shadowy and powerful elite - bankers and financiers - would have soon vanished.
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From Michael Rowbotham, The Grip of Death: A Study of Modern Money, Debt Servitude, and Destructive Economics (Jon Carpenter Publishing, 1998), pages 220-221


Bill Totten http://www.ashisuto.co.jp/english/index.html