Chapter Nineteen: Greenbacks and Other Crimes

The causes of the Civil War shown to be economic and political, not the issue of freedom vs. slavery; the manner in which both sides used fiat money to finance the war; the important role played by foreign powers.

In the previous chapter, we saw how the American continent had become a giant chess board in a game of global politics. The European powers had been anxious to see the United States become embroiled in a civil war and eventually break into two smaller and weaker nations. That would pave the way for their further colonization of Latin America without fear of the Americans being able to enforce the Monroe Doctrine. And so it was that, within a few months after the outbreak of war between North and South, France landed troops in Mexico and, by 1864, had installed Maximilian as her puppet monarch. Negotiations were begun immediately to bring Mexico into the war on the side of the Confederacy. England moved her troops to the Canadian border in a show of strength. America was facing what appeared to be a checkmate from the powers in Europe.

Russia Aligns with the North

It was a masterful move that possibly could have won the game had not an unexpected event tipped the scale against it. Tsar Alexander II — who, incidentally, had never allowed a central bank to be established in Russia — notified Lincoln that he stood ready to militarily align with the North. Although the Tsar had recently freed the serfs in his own country, his primary motivation for coming to the aid of the Union undoubtedly had little to do with emancipating the slaves in the South. England and France had been maneuvering to break up the Russian empire by splitting off Finland, Estonia, Latvia, Poland, Crimea, and Georgia. Napoleon III, of France, proposed to Great Britain and Austria that the three nations immediately declare war on Russia to hasten this dismemberment.

Knowing that war was being considered by his enemies, Tsar Alexander decided to play a chess game of his own. In September of 1863, he dispatched his Baltic fleet of war ships to Alexandria, Virginia, and his Asiatic fleet to San Francisco. The significance of this move was explained by Russian-born Carl Wrangell-Rokassowsky:

No treaty was signed between Russia and the United States, but their mutual interest, and the threat of war to both, unified these two nations at this critical moment. By dispatching his Baltic Fleet to the North American harbors, the Tsar changed his position from a defensive to an offensive one. Paragraph 3 of the instructions given to Admiral Lessovsky by Admiral Krabbe, at that time Russian Secretary of the Navy, dated July 14th, 1863, ordered the Russian Fleet, in case of war, to attack the enemies’ commercial shipping and their colonies so as to cause them the greatest possible damage. The same instructions were given to Admiral Popov, Commander of the Russian Asiatic Fleet.

The presence of the Russian Navy helped the Union enforce a devastating naval blockade against the Southern states which denied them access to critical supplies from Europe. It was not that these ships single-handedly kept the French and English vessels at bay. Actually there is no record of them even firing upon each other, but that is the point. The fact that neither France nor England at that time wanted to risk becoming involved in an open war with the United States and Russia led them to be extremely cautious with overt military aid to the South. Throughout the entire conflict, they found it expedient to remain officially neutral. Without the inhibiting effect of the presence of the Russian fleet, the course of the war could have been significantly different.

The beginning of the war did not go well for the North, and in the early years, the outcome was far from certain. Not only did the Union army face repeated defeats on the battlefield, but enthusiasm from the people at home was badly sagging. As mentioned previously, at the outset this was not a popular war based on humanitarian principle; it was a war of business interests. That presented two serious problems for the North. The first was how to get people to fight, and the second was how to get them to pay. Both problems were solved by the simple expediency of violating the Constitution.

The Emancipation Proclamation

To get people to fight, it was decided to convert the war into an anti-slavery crusade. The Emancipation Proclamation was primarily a move on the part of Lincoln to fan the dying embers of support for the Rich-man’s war and the poor-man’s fight, as it was commonly called in the North. Furthermore, it was not an amendment to the Constitution nor even an act of Congress. It was issued, totally without constitutional authority, as the solitary order of Lincoln himself, acting as Commander-in-Chief of the armed forces.

Preservation of the Union was not enough to fire men’s enthusiasm for war. Only the higher issue of freedom could do that. To make the cause of freedom synonymous with the cause of the North, there was no alternative but to officially declare against slavery. After having emphasized over and over again that slavery was not the reason for war, Lincoln later explained why he changed his course and issued the Proclamation:

Things had gone from bad to worse until I felt we had reached the end of our rope on the plan we were pursuing; that we had about played our last card, and must change our tactics or lose the game. I now determined upon the adoption of the emancipation policy.

The rhetoric of the Proclamation was superb, but the concept left a great deal to be desired. Bruce Catton, writing in the American Heritage Pictorial History of the Civil War explains:

Technically, the proclamation was almost absurd. It proclaimed freedom for all slaves in precisely those areas where the United States could not make its authority effective, and allowed slavery to continue in slave states which remained under Federal control … But in the end it changed the whole character of the war and, more than any other single thing, doomed the Confederacy to defeat.

The Proclamation had a profound impact on the European powers as well. As long as the war had been viewed as an attempt on the part of a government to put down rebellion, there was nothing sacred about it, and there was no stigma attached to helping either side. But now that freedom was the apparent issue, no government in Europe — least of all England and France — dared to anger its own subjects by taking sides against a country that was trying to destroy slavery. After 1862 the chance that Europe would militarily intervene on behalf of the Confederacy rapidly faded to zero. On the propaganda front, the South had been maneuvered into a position which could not be defended in the modern world.

Converting the war into an antislavery crusade was a brilliant move on Lincoln’s part, and it resulted in a surge of voluntary recruits into the Union army. But this did not last. Northerners may have disapproved of slavery in the South but, once the bloodletting began in earnest, their willingness to die for that conviction began to wane. At the beginning of the war, enlistments were for only three months and, when that period was over, many of the soldiers declined to renew. Lincoln faced the embarrassing reality that he soon would have no army to carry on the crusade.

Raising Armies on Both Sides

Historically, men are willing to take up arms to defend their families, their homes, and their country when threatened by a hostile foe. But the only way to get them to fight in a war in which they have no perceived personal interest is either to pay them large bonuses and bounties or to force them to do so by conscription. It is not surprising, therefore, that both methods were employed to keep the Union army in the field. Furthermore, although the Constitution specifies that only Congress can declare war and raise an army, Lincoln did so entirely on his own authority.

The Northern states were given an opportunity to fill a specified quota with volunteers before conscription began. To meet these quotas and to avoid the draft, every state, township, and county developed an elaborate bounty system. By 1864, there were many areas where a man could receive more than $1,000 — equivalent to over $50,000 today — just for joining the army. A person of wealth could avoid the draft simply by paying a commutation fee or by hiring someone else to serve in his place.

In the South, the government was even more bold in its approach to conscription. Despite its cherished views on states’ rights, the Confederacy immediately gathered into Richmond many of the powers and prerogatives of a centralized, national government. In 1862 it passed a conscription law which placed exclusive control over every male citizen between the ages of eighteen and thirty-five into the hands of the Confederate President. As in the North, there were important loopholes. The owner or overseer of twenty slaves, for example, could not be called into military service. In all fairness, it must be noted that many did not take advantage of this exclusion. In contrast to the North, soldiers perceived that they were fighting for the defense of their families, homes, and property rather than for an abstract cause or for a cash bounty.

Rebellion in the North

When conscription was initiated by Lincoln in 1863, people in &he North were outraged. In New York’s Madison Square, thousands of protesters marched in torch parades and attended anti-Lincoln rallies. Historian James Horan describes the mood: When caricatures of the President were lifted above the speaker’s stand, hisses rose to fill the night with the noise of a million angry bees, Federal troops eventually had to be called in to put down Itfitidraft riots in Ohio and Illinois. In New York City, when the first names of the draft were published in the papers on July 12, mobs Stormed the draft offices and set fire to buildings. The riots continued for four days and were suppressed only when the federal Army of the Potomac was ordered to fire into the crowds. Over a thousand civilians were killed or wounded.

After the passage of many years, it is easy to forget that Lincoln had an insurrection on his hands in the North as well as in the South. The shooting of a thousand civilians by soldiers of their own government is a tragedy of mammoth proportions and it tells much about the desperate state of the Union at that time. To control that insurrection, Lincoln ignored the Constitution once again by suspending the right of Imbeas corpus, which made it possible for the government to imprison its critics without formal charges and without trial. Thus, under the banner of opposing slavery, American citizens in the North, not only were killed on the streets of their own cities, they were put into military combat against their will and thrown into prison without due process of law. In other words, free men were enslaved so that slaves could be made free. Even if the pretended crusade had been genuine, it was a bad exchange.

How to get people to pay for the war was handled in a similar fashion. If the Constitution could be pushed aside on the issue of personal rights and of war itself, it certainly would not stand in the way of mere funding.

It has often been said that truth is the first casualty in war. To which we should add: money is the second. During the fiscal year ending in 1861, expenses of the federal government had been $67 million. After the first year of armed conflict they were $475 million and, by 1865, had risen to one billion, three-hundred million dollars. On the income side of the ledger, taxes covered only about eleven percent of that figure. By the end of the war, the deficit had risen to $2.61 billion. That money had to come from somewhere.

Income Taxes and War Bonds

The nation’s first experiment with the income tax was tried at this time; another violation of the Constitution. By today’s standards it was a small bite, but it was still an extremely unpopular measure, and Congress knew that any additional taxes would further fan the flames of rebellion.

Previously, the traditional source of funding in time of war had been the banks which simply created money under the pretense of loaning it. But that method had been severely hampered by the demise of the Bank of the United States. The state banks were anxious to step into that role; but, by this time, most of them had already defaulted in their promise to pay in specie and were in no position to manufacture further money, at least not money which the public would be willing to accept.

American banks may have been unable to supply adequate loans, but the Rothschild consortium in Britain was both able and willing. It was during this time that the Rothschilds were consolidating their new industrial holdings in the United States through their agent, August Belmont. Derek Wilson tells us: They owned or had major shareholdings in Central American ironworks, North American canal construction companies, and a multiplicity of other concerns. They became the major importers of bullion from the newly discovered goldfields.

Belmont had placed large amounts of Rothschild money into the bonds of state-sponsored banks in the South. Those bonds, of course, had fallen in value to practically zero. As the war shifted in favor of the North, however, he began to buy up as many additional bonds as he could, paying but a few pennies on each dollar of face value. It was his plan to have the Union force the Southern states at the end of the war to honor all of their pre-war debt obligations — in full. That, of course, would have been a source of gigantic speculative profits to the Rothschilds. Meanwhile, on the northern side of the Mason-Dixon Line, Belmont became the chief agent for the sale of Union bonds in England and France. It was rumored that, when Belmont called on President Lincoln and personally offered Rothschild money at 27 Vi percent interest, he was rudely thrown out of the office. The story is doubtful, but it represents a larger truth. Profiting from war and placing money on both sides of the conflict were exactly the kind of maneuvers for which the Rothschilds had become famous throughout Europe and were now practicing in America.

In the North, the sale of government bonds was the one measure for raising funds that seemed to work. Even that, however, with the lure of compounded interest to be paid in gold at a future date, failed to raise more than about half the needed amount. So the Union faced a real dilemma. The only options remaining were (1) terminate the war or (2) print fiat money. For Lincoln and the Republicans who controlled Congress, the choice Was never seriously in doubt.

The precedent had already been set during the War of 1812. At that time, Secretary of the Treasury, Albert Gallatin, had abrogated the Constitutional ban against bills of credit by printing Treasury notes, most of which paid interest at 5.4 percent. The money was never declared legal tender, and that probably was the basis on which it was defended as constitutional.

The Greenbacks

By the time of the War Between the States, however, all pretense at constitutionality had been dropped. In 1862, Congress authorized the Treasury to print $150 million worth of bills of credit and put them into circulation as money to pay for its expenses. They were declared as legal tender for all private debts but could not be used for government duties or taxes. The notes were printed with green ink and, thus, became immortalized as greenbacks. Voters were assured that this was a one-time emergency measure, a promise that was soon broken. By the end of the war, a total of $432 million in greenbacks had been issued.

The pragmatic mood in Washington was that a constitution is nice to have in times of peace, but an unaffordable luxury in war. Salmon P. Chase, for example, as Secretary of the Treasury, strongly endorsed the greenbacks which were issued under his direction. They were, in his words, an indispensable necessity. Eight years later, as Chief Justice of the Supreme Court, he declared that they were unconstitutional. Had he changed his mind? Not at all. When he endorsed them, the nation was at war. When he declared them unconstitutional, it was at peace. It was merely another example of the universal trait of all governments in time of war. That trait was presented in a previous section as the premise of the Rothschild Formula: The sanctity of its laws, the prosperity of its citizens, and the solvency of its treasury will be quickly sacrificed by any government in its primal act of self-survival.

The pressure for issuance of greenbacks originated in Congress, but Lincoln was an enthusiastic supporter. His view was that:

Government, possessing power to create and issue currency and credit as money and enjoying the right to withdraw currency and credit from circulation by taxation and otherwise, need not and should not borrow capital at interest … The privilege of creating and issuing money is not only the supreme prerogative of the government but it is the government’s greatest creative opportunity.

It would appear that Lincoln objected to having the government pay interest to the banks for money they create out of nothing when the government can create money out of nothing just as easily and not pay interest on it. If one ignores the fact that both of these schemes are forbidden by the Constitution and is willing to tolerate the plunder-by-inflation that is the consequence of both, then there is an appealing logic to the argument. The politicians continue to have their fiat money, but at least the banks are denied a free ride.

Lincoln’s Mixed View of Banking

It is apparent that Lincoln had undergone a change of heart regarding banks. Early in his political career, he had been a friend of the banking industry and an advocate of easy credit. As a member of the Whig political party in the 1830s — before becoming a Republican in his campaign for the Presidency — he had been a supporter of Biddle’s Second Bank of the United States. During his famous debates with Senator Stephen Douglas, one of the points of contention between the two was that Lincoln defended the Bank and advocated its reestablishment. Furthermore, after becoming President, he took the initiative in requesting Congress to reestablish central banking.

Lincoln appears to have been inconsistent, and one gets a gnawing feeling that, in his effort to finance an unpopular war, he sometimes found it necessary, like Salmon Chase and other politicians of the time, to anesthetize his personal convictions and do whatever was required to meet the exigencies of governmental survival.

One thing, however, is clear. Regardless of Lincoln’s personal views on money, the greenbacks were not pleasing to the bankers who were thereby denied their customary override on government debt. They were anxious to have this federal fiat money replaced by bank fiat money. For that to be possible, it would be necessary to create a whole new monetary system with government bonds used as backing for the issuance of bank notes; in other words, a return to central banking. And that was precisely what Secretary Chase was preparing to establish.

Greenbacks and Other Crimes

In 1862, the basic position of the bankers was outlined in a memo, called The Hazard Circular, prepared by an American agent of British financiers and circulated among the country’s wealthy businessmen. It said:

The great debt that capitalists will see to it is made out of the war must be used as a means to control the volume of money. To accomplish this the bonds must be used as a banking basis. We are now waiting for the Secretary of the Treasury to make this recommendation to Congress. It will not do to allow the greenback, as it is called, to circulate as money any length of time, as we cannot control that. But we can control the bonds and through them the bank issues.

The National Banking Act

On February 25, 1863, Congress passed the National Banking Act (with major amendments the following year) which established a new system of nationally-chartered banks. The structure was similar to the Bank of the United States with the exception that, instead of one central bank with power to influence the activities of the others, there were now to be many national banks with control over all of them coming from Washington. Most banking legislation is sold to the public under the attractive label of reform. The National Banking Act was one of the rare exceptions. It was promoted fairly honestly as a wartime emergency scheme to raise money for military expenses by creating a market for government bonds and then transforming those bonds into circulating money. Here is how it worked:

When a national bank purchased government bonds, it did not hold on to them. It turned them back to the Treasury which exchanged them for an equal amount of United States Bank Notes with the bank’s name engraved on them. The government declared these to be legal tender for taxes and duties, and that status caused them to be generally accepted by the public as money. The bank’s net cost for these bonds was zero, because they got their money back immediately. Technically, the bank still owned the bonds and collected interest on them, but they also had the use of an equal amount of newly created bank-note money which also could be loaned out at interest. When all the smoke and mirrors were moved away, it was merely a variation on the ancient scheme. The monetary and political scientists had simply converted government debt into money, and the bankers were collecting a substantial fee at both ends for their service.

The one shortcoming of the system, at least from the point of view of the manipulators, was that, even though the bank notes were widely circulated, they were not classified as lawful money. In other words, they were not legal tender for all debts, just for taxes and duties. Precious-metal coins and greenbacks were still the country’s official money. It was not until the arrival of the Federal Reserve System fifty years later that government debt in the form of bank notes would be mandated as the nation’s official money for all transactions — under penalty of law.

The National Banking Act of 1863 required banks to keep a percentage of their notes and deposits in the form of lawful money (gold coins) as a reserve to cover the possibility of a run. That percentage varied depending on the size and location of the bank but, on an average, it was about twelve percent. That means a bank with $1 million in coin deposits could use approximately $880,000 of that ($1 million less 12%) to purchase government bonds, exchange the bonds for bank notes, lend out the bank notes, and collect interest on both the bonds and the loans. The bank could now earn interest on $880,000 loaned to the government in the form of coins plus interest on $880,000 loaned to its customers in the form of bank notes. That doubled the bank’s income without the inconvenience of having to increase its capital. Needless to say, the bonds were gobbled up just as fast as they could be printed, and the problem of funding the war had been solved.

Another consequence of the national banking system was to make it impossible from that date forward for the federal government ever to get out of debt. Please reread that statement. It is not an exaggeration. Even friends of central-banking are forced to admit this reality. Galbraith says gloomily:

Rarely has economic circumstance managed more successfully to confound the most prudent in economic foresight. In numerous years following the war the Federal government ran a heavy surplus. It could not pay off its debt, retire its securities, because to do so meant there would be no bonds to back the national bank notes. To pay off the debt was to destroy the money supply.

As pointed out in a previous section, that is essentially the situation which exists today. Every dollar of our currency and checkbook money was created by the act of lending. If all debt were repaid, our entire money supply would vanish back into the inkwells and computers. The national debt is the principal foundation upon which money is created for private debt. To pay off or even greatly reduce the national debt would cripple our monetary system. No politician would dare to advocate that, even if surplus funds were available in the Treasury. The Federal Reserve System, therefore, has virtually locked our nation into perpetual debt.

The Hidden Cost of War

The third consequence of the National Banking Act will come as no surprise to anyone who has survived the previous pages of this book. During the war, the purchasing power of the greenbacks fell by 65%. The money supply increased by 138%. Prices more than doubled while wages rose by less than half. By that mechanism, Americans surrendered to the government and to the banks more than half of all the money they earned or held during that period — in addition to their taxes.

Financial conditions in the South were even worse. With the exception of the seizure of about $400,000 in gold from the Federal mint at New Orleans, almost all of the war was funded by the printing of fiat money. Confederate notes increased in volume by 214% per year, while the volume of all money, including bank notes and check-book money, rose by over 300% per year. In addition to the Confederate notes, each of the Southern states issued its own fiat money and, by the end of the war, the total of all notes was about a billion dollars. Within the four-year period, prices shot up by 9,100%. After Appomattox, of course, Confederate notes and bonds alike were totally worthless.

As usual, the average citizen did not understand that the newly created money represented a hidden tax which he would soon have to pay in the form of higher prices. Voters in the Northern states certainly would not have tolerated an open and honest tax increase of that magnitude. Even in the South where the cause was perceived as one of self defense, it is possible that they would not have done so had they known in advance the true dimension of the assessment. But especially in the North, because they did not understand the secret science of money, Americans not only paid the hidden tax but applauded Congress for creating it.

On June 25, 1863, exactly four months after the National Bank Act was signed into law, a confidential communique was sent from the Rothschild investment house in London to an associate banking firm in New York. It contained an amazingly frank and boastful summary:

The few who understand the system [bank loans earning interest and also serving as money] will either be so interested in its profits or so dependent upon its favors that there will be no opposition from that class while, on the other hand, the great body of people, mentally incapable of comprehending, … will bear its burdens without complaint,

Lincoln’s Concern for the Future

Lincoln was privately apprehensive about the Bank Act, but loyalty to his Party and the need to maintain unity in time of war compelled him to withhold his veto. His personal view, however, was unequivocal. In a letter to William Elkins the following year he said:

The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until the wealth is aggregated in a few hands, and the republic destroyed.

In reviewing Lincoln’s role throughout this painful chapter of history, it is impossible not to feel ambivalence. On the one hand, he declared war without Congress, suspended the writ of habeas corpus, and issued the Emancipation Proclamation, not as an administrative executive carrying out the wishes of Congress, but as the Commander-in-Chief of the armed forces. Furthermore, the Proclamation was not issued out of humanitarian motives, as popular history portrays, but as a maneuver to generate popular support for the war. By participating in the issuance of the greenbacks, he violated one of the most clearly written and important sections of the Constitution. And by failing to veto the National Bank Act, he acquiesced in the delivery of the American people back into the hands of the international Cabal, an act which was similar in many ways to the forcible return of captured runaway slaves.

On the positive side, there is no question of Lincoln’s patriotism. His concern was in preserving the Union, not the Constitution, and his refusal to let the European powers split America into a cluster of warring nation-states was certainly wise. Lincoln believed that he had to violate part of the Constitution in order to save the whole. But that is dangerous reasoning. It can be used in almost any national crisis as the excuse for the expansion of totalitarian power. There is no reason to believe that the only way to save the Union was to scrap the Constitution. In fact, if the Constitution had been meticulously observed from the very beginning, the Southern minority could never have been legally plundered by the Northern majority and there likely would have been no movement for secession in the first place. And, even if there had been, a strict reading of the Constitution at that point could have led the way to an honorable and peaceful settlement of differences. The result would have been, not only the preservation of the Union without war, but Americans would be enjoying far less government intervention in their daily lives today.

With Malice Toward None

There is one point that is clearly on Lincoln’s side. While his political compatriots were howling for economic vengeance against the South, the President stood firmly against it. With malice toward none was more than a slogan with him, and he was willing to risk his political survival on that one issue. The reason he had vetoed the Wade-Davis emancipation bill was because it would have applied a lien against Southern cotton at the end of the war to the benefit of New England textile manufactures. The cotton also would have been taken as security to pay off Southern debt which had been contracted before the war, thus providing the funds to buy back at face value all of the bonds which had been purchased at discount by Rothschild’s agent, August Belmont. Such defiance of the financiers and speculators undoubtedly required great courage.

But the issue ran deeper than that. Lincoln had offered a general amnesty to any citizen in the South who would agree to take a loyalty oath to the Union. When ten percent of the voters had taken such an oath, he proposed that they could then elect Congressmen, Senators, and a state government which would be recognized as part of the Union once again. The Republicans, on the other hand, had incorporated into the Wade-Davis bill the provision that each seceded state was to be treated like a conquered country. Political representation was to be denied until fifty-one percent, not ten percent, had taken an oath. Former slaves were given the right to vote — although women had not yet gained that right even in the North — but, because of their lack of education and political awareness, no one expected them to play a meaningful role in government for many years to come. Furthermore, those taking the oath had to swear that they had never taken up arms against the Union. Since almost every able-bodied white male had done so, the effect would have been to deny the South political representation for at least two generations.

Under Lincoln’s amnesty policy, it would not be long before the Republicans would be overwhelmed in Congress by a large majority of Democrats. The Democrats in the North were already gaining strength on their own and, once they could be joined by the solid block of Democrats from the reunited South, the Republicans’ political and economic power would be lost. So, when Lincoln vetoed the bill, his own Party bitterly turned against him.

Running throughout these cross-currents of motives and special interests were two groups which found it increasingly to their advantage to have Lincoln out of the way. One group consisted of the financiers, Northern industrialists, and radical Republicans, all of whom wanted to legally plunder the South at the end of the war. The politicians within that group also looked forward to further consolidating their power and literally establishing a military dictatorship. The other group was smaller in size but equally dangerous. It consisted of hothead Confederate sympathizers — from both South and North — who sought revenge. Later events revealed that both of these groups had been involved in a conspiratorial liaison with an organization called the Knights of the Golden Circle.

Knights of the Golden Circle

The Order of the Knights of the Golden Circle was a secret organization dedicated to revolution and conquest. Two of its better known members were Jesse James and John Wilkes Booth. It was organized by George W. L. Bickley who established its first castle in Cincinnati in 1854, drawing membership primarily from Masonic lodges. It had close ties with a secret society in France called The Seasons, which itself was a branch of the Illuminati. After the beginning of the war, Bickley was made head of the Confederacy’s secret service, and his organization quickly spread throughout the border and Southern states as well.

In the North, the conspirators were seeking to seize political power and overthrow the Lincoln government. In fact, the Northern anti-draft riots mentioned previously were largely the result of the planning and leadership of this group. In the South they tried to promote the extension of slavery by the conquest of Mexico. 5 In partnership with Maximilian, the Knights hoped to establish a Mexican-American empire which would be an effective counter force against the North. In fact, the very name of the organization is based on their goal of carving an empire out of North America with geographical boundaries forming a circle with the center in Cuba, and its circumference reaching northward to Pennsylvania, southward to Panama.

In 1863 the group was reorganized as the Order of American Knights and, again the following year, as the Order of the Sons of Liberty. Its membership then was estimated at between 200,000 and 300,000. After the war, it went further underground and remnants eventually emerged as the Ku Klux Klan.

John Wilkes Booth

One of the persistent legends of this period is that John Wilkes Booth was not killed in Garrett’s barn, as generally accepted, but was allowed to escape; that the corpse actually was that of an accomplice; and that the government, under the firm control of War Secretary Edwin M. Stanton, moved heaven and earth to cover up the facts. On the face of it, that is an absurd story. But, when the voluminous files of the War Department were finally declassified and put into the public domain in the mid 1930s, historians were shocked to discover that there are many facts in those files which lend credence to the legend. The first to probe these amazing records was Otto Eisenschiml whose Why Was Lincoln Murdered? was published by Little, Brown and Company in 1937. The best and most readable compilation of the facts, however, was written twenty years later by Theodore Roscoe. In the preface to this work, he states the startling conclusions which emerge from those long-hidden files:

Of the immense 19th century literature that exists on Lincoln’s assassination, much of the writing treats the tragedy at Ford’s theater as though it were Grand Opera … Only a few have seen the crime as a murder case: Lincoln dying by crass felony, Booth a stalking gunman leading a gang of primed henchmen, the murder plot containing ingredients as base as the profit motive. Seventy years after the crime, writers were garbling it with a dignity it did not deserve: Lincoln, the | stereotyped martyr; Booth, the stereotyped villain; the assassination avenged by classic justice; conspiracy strangled; Virtue (in the robes of Government) emerging triumphant, and Lincoln belonging to the ages.

But the facts of the case are neither so satisfying nor so gratifying. For the facts indicate that the criminals responsible for Lincoln’s death got away with murder.

Izola Forrester was the granddaughter of John Wilkes Booth. In book entitled This One Mad Act, she tells of discovering the secret records of the Knights of the Golden Circle which had been carefully wrapped and placed in a government vault many decades ago and designated as classified documents by Secretary Stanton. Since the assassination of Lincoln, no one had ever been allowed to examine that package. Because of her lineage to Booth and because of her credentials as a professional writer, she was eventually permitted to become the first person in all those years to examine its contents. Forrester recounts the experience:

It was five years before I was able to examine the contents of the mysterious old package hidden away in the safe of the room which contained the relics and exhibits used in the Conspiracy Trial … ] would never have seen them, had I not knelt on the floor of the cell five years ago and seen into the back of the old safe where the package lay. It is all part of the odd mystery thrown about the case by the officials of the war period — the concealment of these documents and articles, and the hiding away of the two flakes of bone with the bullet and pistol. What mind ever grouped together such apparently incongruous and macabre exhibits?…

Here at last was a link with my grandfather. I knew that he had been a member of the secret order founded by Bickley, the Knights of the Golden Circle. I have an old photograph of him taken in a group of the brotherhood, in full uniform, one that Harry’s daughter had discovered for me in our grandmother’s Bible. I knew that the newspapers, directly following the assassination, had denounced the order as having instigated the killing of Lincoln, and had proclaimed Booth to have been its member and tool. And I was reminded again of those words I had heard from my grandmother’s lips, that her husband had been the tool of other men.

An interesting comment. One is compelled to wonder: The tool of what other men? Was Forrester’s grandmother referring to the leaders of the Knights of the Golden Circle? To agents of European financiers? Or was it to conspirators within Lincoln’s own Party? We shall probably never know with certainty the extent to which any of these groups may have been involved in Lincoln’s assassination, but we do know that there were powerful forces within the federal government, centered around Secretary of War Stanton, which actively concealed evidence and hastily terminated the investigation. Someone was protected.


It is time now to leave this tragic episode and move along. So let us summarize. America’s bloodiest and most devastating war was fought, not over the issue of freedom versus slavery, but because of clashing economic interests. At the heart of this conflict were questions of legalized plunder, banking monopolies, and even European territorial expansion into Latin America. The boot print of the Rothschild formula is unmistakable across the graves of American soldiers on both sides.

In the North, neither greenbacks, taxes, nor war bonds were enough to finance the war. So a national banking system was created to convert government bonds into fiat money, and the people lost over half of their monetary assets to the hidden tax of inflation. In the South, printing presses accomplished the same effect, and the monetary loss was total.

The issuance of the Emancipation Proclamation by Lincoln and the naval assistance offered by Tsar Alexander, II, were largely responsible for keeping England and France from intervening in the war on the side of the Confederacy. Lincoln was assassinated by a member of the Knights of the Golden Circle, a secret society with rumored ties to American politicians and British financiers. Tsar Alexander was assassinated a few years later by a member of the People’s Will, a Nihilist secret society in Russia with rumored ties to financiers in New York City, specifically, Jacob Schiff and the firm of Kuhn, Loeb & Company.

As for the Creature of central banking, there had been some victories and some defeats. The greenbacks had for a while deprived the bankers of their override on a small portion of government debt, but the National Banking Act quickly put a stop to that. Furthermore, by using government bonds as backing for the money supply, it locked the nation into perpetual debt. The foundation was firmly in place, but the ultimate structure still needed to be erected. The monetary system was yet to be concentrated into one central-bank mechanism, and the control was yet to taken away from the politicians and placed into the hands of the ankers themselves.

It was time for the Creature to visit Congress.