StrikingViking
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- Feb 28, 2018
From "Wall Street, Banks, and American Foreign Policy" By Murray N. Rothbard:
The first major investment-banking house in the United States was a creature of government privilege. Jay Cooke, an Ohio-born business promoter living in Philadelphia, and his brother Henry,editor of the leading Republican newspaper in Ohio, were close friends of Ohio U.S. Senator Salmon P. Chase. When the new Lincoln Administration took over in 1861, the Cookes lobbied hard to secure Chase the appointment of Secretary of the Treasury. That lobbying, plus the then enormous sum of $100,000 that Jay Cooke poured into Chase's political coffers, induced Chase to return the favor by granting Cooke, newly set up as an investment banker, an enormously lucrative monopoly in underwriting the entire
federal debt.
Cooke and Chase then managed to use the virtual Republican monopoly in Congress during the war to transform the American commercial banking system from a relatively free market to a National Banking System centralized by the federal government under Wall Street control. A crucial aspect of that system was that national banks could only expand credit in proportion to the federal bonds they owned – bonds which they were forced to buy from Jay Cooke.
Jay Cooke & Co. proved enormously influential in the post-war Republican administrations, which continued their monopoly in under-writing government bonds. The House of Cooke met its well-deserved fate by going bankrupt in the Panic of 1874, a failure helped along by its great rival, the then Philadelphia-based Drexel, Morgan & Co.
And Chase was the man put in final authority regarding the legitimacy of state bonds; and everyone thinks it's perfectly legit when he rules against them. Heck, the entire Chase Manhattan Bank was named after him in honor of his mass-conquering of the free-trade banking system into a federalized monopoly, with massive interest-rates of more than double returns on savings (as is the wont of all monopolies); and the Federal Reserve "banks-only" discount-window cornucopia, and resulting crash weren't far behind... along with the subsidized banking-insurance that gave the government more power to fix what it broke (because that never goes wrong).
So connecting the dots, we see that the "Cooke and Chase" story was just one more point in the Big Picture of the federal Leviathan power-grab that the Founders warned us about.
The first major investment-banking house in the United States was a creature of government privilege. Jay Cooke, an Ohio-born business promoter living in Philadelphia, and his brother Henry,editor of the leading Republican newspaper in Ohio, were close friends of Ohio U.S. Senator Salmon P. Chase. When the new Lincoln Administration took over in 1861, the Cookes lobbied hard to secure Chase the appointment of Secretary of the Treasury. That lobbying, plus the then enormous sum of $100,000 that Jay Cooke poured into Chase's political coffers, induced Chase to return the favor by granting Cooke, newly set up as an investment banker, an enormously lucrative monopoly in underwriting the entire
federal debt.
Cooke and Chase then managed to use the virtual Republican monopoly in Congress during the war to transform the American commercial banking system from a relatively free market to a National Banking System centralized by the federal government under Wall Street control. A crucial aspect of that system was that national banks could only expand credit in proportion to the federal bonds they owned – bonds which they were forced to buy from Jay Cooke.
Jay Cooke & Co. proved enormously influential in the post-war Republican administrations, which continued their monopoly in under-writing government bonds. The House of Cooke met its well-deserved fate by going bankrupt in the Panic of 1874, a failure helped along by its great rival, the then Philadelphia-based Drexel, Morgan & Co.
And Chase was the man put in final authority regarding the legitimacy of state bonds; and everyone thinks it's perfectly legit when he rules against them. Heck, the entire Chase Manhattan Bank was named after him in honor of his mass-conquering of the free-trade banking system into a federalized monopoly, with massive interest-rates of more than double returns on savings (as is the wont of all monopolies); and the Federal Reserve "banks-only" discount-window cornucopia, and resulting crash weren't far behind... along with the subsidized banking-insurance that gave the government more power to fix what it broke (because that never goes wrong).
So connecting the dots, we see that the "Cooke and Chase" story was just one more point in the Big Picture of the federal Leviathan power-grab that the Founders warned us about.
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