An Introduction to the American System Economic History 101 for Canadians

By Pascal Chevrier

The British system of political economy has kept Canada underdeveloped and consequently under populated, it is time to learn from the real American System and remedy this double edged deficiency at once.

As old Europe is being shred to pieces by the City of London-based world financial Empire, let us reflect on the avenues readily available and constructible which may yet provide humankind with a better prospect than the presently ongoing Greek hecatomb[1]. Whenever humanity has been faced by great perils, and two presumably practical options were presented to the population, each of which differing merely in their divergent paths leading straight to a common hell, mental sanity asserted itself in those few who chose the “unpractical” third option, and saved the day! That fact is made clearer when it is understood that neither the austerity policies of the British Empire, nor the banks’ bailouts were ever designed to ameliorate the lives of their ‘beneficiaries’, be they nations, states or cities [2].

Exactly the contrary is in fact true. It has been the intention of the Anglo-Dutch financial empire to destroy the very possibilities of actual recovery of nations, such that bail out and new austerity regimes have been created… for the bailouts have saved not the real economy, (jobs, industry, agriculture etc…), but merely the toxic speculative debt associated with the parasitical derivatives cancer which has grown to hyperinflationary proportions. This simple truth will assert itself painfully, to Canadians, if we allow the new imperial strategy of bail-ins [3] to be implemented. Contrary to popular belief, the Canadian political landscape is not immune to these snake-oil medicines, nor the fascist regimes of control which are being set up now in preparation for the financial meltdown.

The question presents itself: where are we heading? Where is the leadership that is urgently required to put us out of reach of this abominable fate? It is up to you, the reader, to answer such a vital question. And to this end, in order to work our way out of this present infernal descent into the financial maelstrom, we must look at the revolutionary genius of Alexander Hamilton (1757-1804), first Treasury Secretary of the United States. The elementary exposition of the necessity for a reinstatement of the Glass-Steagall Act both in the U.S.A., Europe and Canada has been fully elaborated in previous issues of the Canadian Patriot. What I wish to reiterate to the reader here, is the next step that follows Glass-Steagall: the establishment of a Hamiltonian credit system. But first, let us briefly summarize the enemy’s strategy.

The Imperial Counter-Revolution

To understand the full impact of Hamilton’s crafting of the American System of Political Economy in the years following the American Revolution, we must look at a later date and let the enemy expose his view: In his 1877 will [4] Lord Cecil Rhodes wrote that he wanted his inheritance to be used in order to recover the lost colony of the United States and have a consolidated one world Anglo-Saxon Empire in order to crush the ambition of non-Anglo Saxon races from developing their sovereign nations utilizing the American model as was the trajectory of that time. The date of the will, written twelve years after Lincoln’s victory over the British-backed Southern Confederacy, shapes the context in which it was written, and shall reveal an interesting paradox in the minds of many Canadians. This popularly-held belief assumes that:

1) there has always been an imperial intention on the part of our southern neighbour to consume us, while;

2) our true interests lie in our allegiance to the mother country of Great Britain who guides us only in symbolic form having granted us independence and “responsible government” long ago and;

3) America was founded as a free market-oriented imperialist nation modelled on the thinking of Britain’s Adam Smith.

8-d-carey HamiltonThe continued perpetuation of this popular three-fold belief over generations can only be explained by the simple fact that we have been lied to. Now it is time to set the record straight: There is no “American Empire”. There are only dumb Americans who get co-opted to the British Imperial world vision. This was not a mystery for 19th century statesmen. In the shrewd words of American system economist Henry C. Carey writing in 1856:

“Two systems are before the world; the one looks to increasing the proportion of persons and of capital engaged in trade and transportation, and therefore to diminishing the proportion engaged in producing commodities with which to trade, with necessarily diminished return to the labour of all; while the other looks to increasing the proportion engaged in the work of production, and diminishing that engaged in trade and transportation, with increased return to all, giving to the labourer good wages, and to the owner of capital good profits… One looks to pauperism, ignorance, depopulation, and barbarism; the other in increasing wealth, comfort, intelligence, combination of action, and civilization. One looks towards universal war; the other towards universal peace. One is the English system; the other we may be proud to call the American system, for it is the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world.” [5]

In other words: the Imperial system versus the Republican system, sometimes similar in form, yet incompatible in substance and function.

The inner echelons of the British Empire have never accepted the fact of America’s 1776 independence nor America’s establishment by Benjamin Franklin and Alexander Hamilton, of an anti-monetarist system of political economy. Cecil Rhodes’s words transcribed above reflected the intentions of the British oligarchy since they understood very well the difference between the two systems. Instead of examining their own self-destructive axioms, the British Empire would rather plot the takeover of the young American republic by hook or by crook. They dreaded the mighty Union because its very existence meant the annihilation of their sunset-less Empire! The inspiration which the U.S. model of government and economic system was providing around the world forecasted the inevitable overthrow of their decrepit feudal monetarist system. In response to this dynamic of progress unleashed globally after Lincoln’s victory, political assassinations, wars, austere economic policies and more were all used with the intention of co-opting the American institutions in order to keep the world from attaining the means necessary to establish their true independence and freedom.[6]

Contrary to popular belief, the real cause of the American War of Independence was never the refusal to pay a tax on “British” tea, but rather a refusal to submit to European despotism and austerity measures such as the ones Europe is still subjected to today. In the words of the young Alexander Hamilton: “They endeavor to persuade us …that our contest with Britain is founded entirely upon the petty duty of three pence per pound on East India tea, whereas the whole world knows it is built upon this interesting question, whether the inhabitants of Great Britain have a right to dispose of the lives and properties of the inhabitants of America, or not.[7]

It is now time to answer the big question: What is this American system which has shaped so much of our history, and yet which nobody seems to know very much about?

The Massachusetts Bay Precedent

Since its establishment in 1620, the colony of Massachusetts had benefited from a Charter which permitted its inhabitants to organize a colonial government which they entirely controlled. Great Britain’s political turmoil across the 8-d-Gov Winthropocean contributed to nearly seventy years of de facto independence. In addition to their government and courts the Colonial Authority also issued a paper currency called the Colonial Scrip and the pine tree shilling which provided for the basic functions of society: agriculture, industry and infrastructure. In a few years, the Saugus Iron Works outpaced many times similar iron works of Britain! What was increasingly becoming recognized to the dread of the British oligarchy, was that Massachusetts was no longer under the control of the British system. The colony was already on the course to becoming a sovereign republic through its attainment of relative political and economic independence.

In 1688, the Dutch financial Empire took over Britain and crowned their champion, William of Orange, as the new king of the Isle in a coup known today as “the Glorious Revolution”. Immediately after this coup, the financial elites reconsolidated themselves and asked for the return and repeal of the Massachusetts Bay Charter which allowed the colony its high level of autonomy. After loud protests and a heated fight, the Charter was revoked, but for the cause of freedom, this was but an interlude. This event and its effects were forecasted long before by Massachusetts’ Governor John Winthrop, who said in 1638;

“Lastly, if our patent be taken from us, (whereby we suppose we may claim interest in his Majesty’s favour and protection,) the common people here will conceive that his Majesty hath cast them off, and that hereby they are freed from their allegiance and subjection, and thereupon will be ready to confederate themselves under a new government, for their necessary safety and subsistence.[8]

True Freedom or Free Market?

It is not coincidental that in 1776, the same year which the American Revolution was being launched, the British imperial propaganda machine published a book by a plagiarist named Adam Smith (1723-1790) called The Wealth of Nations. The8-d-Adam Smith true purpose of this book was not to describe a new economic theory as Smith claimed, but rather to win back the colonies economically, in the advent the rebelling colonists would militarily win their independence. In direct opposition to the leaders of the American Revolution, Smith’s system was based explicitly on the belief in a non-existent world where all players are equal, intentions had no existence, oligarchical interests did not exist and money ruled under the mantra of “buy cheap and sell dear”. The entire system of wealth was to be regulated not by nation states, the general welfare, or intentions regarding the future, but rather by mysterious “forces” caused by diminishing supplies and increasing demand, moved by what Smith dubbed his “invisible hand”.

Friedrich List (1789-1846), the great German economist and follower of the American system said of Adam Smith’s chef-d’oeuvre: “He has entirely forgotten what the title of his book “Wealth of Nations”, promised to treat. Not taking into consideration the different state of power, constitution, wants and culture of the different nations, his book is a mere treatise on the question: How the economy of the individuals and of mankind would stand, if the human race were not separated into nations, but united by a general law and by an equal culture of mind?”[9]

8-d-ListMore than thirty years before List could write these lines, Alexander Hamilton had designed a refutation of the British “invisible hand” dogma and freed the newly formed Union of the British financial yoke. The political independence had been established with the 1776 Declaration of Independence, but Hamilton knew that the war would not be completely won by canons and guns. Hamilton wrote [when where]:

 “It is by introducing order into our finances-by restoring public credit-not by winning battles, that we are finally to gain our object. It is by putting ourselves in a condition to continue the war not by temporary violent and unnatural efforts…that we shall in reality bring it to a speedy and successful one.” [10]

Indeed, Washington’s Continental army was poorly supported by the Congress and Hamilton was organizing its leadership to revive the colonial credit system of the 17th century Massachusetts Bay Colony in a more advanced form. He would write several letters to James Morris on the need to establish a bank through which national credit could be organized for such a purpose. Even though the war first had to be won militarily, Hamilton fully understood that without such an economic architecture, the independence of the republic would be short lived!

What is economics?

Today, the student of economics is easily perplexed by all the hogwash algebra, and complex financial scams used to return high profits to shareholders in our “globalized” marketplace. Before we speak of hedge funds, dark pools, CDO’s, MBS’s, we must first ask a primary question: Does society truly benefit from these practices? Not only that, but who actually produces what is needed to feed, house, employ, train our people? If these questions are asked, you soon realize that those financial institutions which we put our trust into to make the economy move, are NOT real sources of wealth at all. Rather, institutions such as Wall Street and the City of London actually deprive producers of the means to produce and diminish mankind’s ability to create new wealth by promoting a sick logic of debt slavery and speculation. Under the London-Wall Street system, production is also destroyed by the artificial creation of new “demands” such as “green energies” which shepherd the foolish victims into modes of thinking which cause them to destroy themselves.6-a- derivatives bubble

Even though it can be argued that a small portion of these “too big to fail” financial institutions are remotely involved in some productive activities useful to society, it is demonstrable that such productivity were always possible without them. The reality is that this system as a whole is nothing more than monetarist junk, not worthy of being associated with the name “economic science”.8-d-anti entropy cones

On the contrary, in his 1984 textbook on physical economy, So You Wish To Learn All About Economics?  American system economist Lyndon LaRouche explained at length what it means to be truly productive. LaRouche begins by asking “where does humanity’s capacity to increase his productivity arise?” The answer to this very simple question can only be answered after a necessary investigation into the concepts of technological progress and the increase of energy flux-density of systems, as both concepts are at the root of all of human progress going as far back as we know.

The metric which must be used to discover if a society is progressing or regressing is not to be found in either “Gross National Product” or the changes in that society’s “carbon footprints”, but rather, in that society’s Potential Relative Population Density[11] measured per capita and per square kilometer. This is the function of a real economic science! When this does not increase at a faster rate than the baseline requirements of the system as a whole, the system collapses.

The disease that grips our society today can be traced back to the same oligarchical class which Alexander Hamilton and the American revolutionaries fought against. Where the oligarchy has always promoted the subduing of mankind’s ability to act wilfully on the future, by trapping him in the sensory prison of the illusory “present”, true economics is a matter of shaping a better future and not of selling “futures” [12]!

Program for an American Republic

‘‘To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients, by which the wealth of a nation may be promoted.’’

-Alexander Hamilton, Report on Manufactures, 1791 [13]

Before going further, we must establish that the real essence Goodness or Evil shaping changes in economics, while first being visible as shadows expressed by the increase or decrease of the Potential Relative Population Density,  can finally be discoverable in the primary intention of a policy’s author. In the case of Hamilton, the Goodness of his policy could not be clearer. In the entirety of his reports, and life’s mission, Hamilton is dedicated to the cherishing of the powers of the human mind more than the pursuit of material possessions and pleasures which he establishes as the source and raison d’être of wealth creation. The creation and consumption of material goods are only Good in the mind of Hamilton, if they stimulate the activity of mind by “multiplying the objects of enterprise”. This is the root of the modern republican tradition as stipulated in the Declaration of Independence: ‘‘We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed…’’ The notion of General Welfare enshrined in the Federal Constitution of the United States of America (1789) made the American System a totally new type of organization of Man dedicated to the Happiness of its citizens and posterity.[14]

Here are the three points which summarize what became known as the American system, initially elaborated in depth in each of Hamilton’s reports [15] :

High Protective Tariffs such that no dumping of cheap goods would be ever again be allowed (as was the infamous practice of British East India crushing of young manufacturing potentials across North America for centuries). The nascent manufactures had to be protected and nurtured allowing each the means to create prosperity and procure each citizen with the articles necessary to advance the common prosperity.

A National Bank to provide and regulate the amount of public credit circulating in the Union and for specific projects tied to national improvements.

Internal Improvements: The great projects that built the United States from coast to coast (Canals, Roads, Railroads, Agriculture, Manufactures, Infrastructure, …). That is the idea that the best of all technologies are supported by the physical budget of credit emission and are used to improve the labor of all.

Hamilton’s strong conception of the need to guide economic policy with an eye to the whole, as more than the sum of its parts through national improvement programs is clearly written in his Report on Manufactures:

“There can certainly be no object, more worthy of the cares of the local administrations; and it were to be wished, that there was no doubt of the power of the national Government to lend its direct aid, on a comprehensive plan. This is one of those improvements, which could be prosecuted with more efficacy by the whole, than by any part or parts of the Union.” [16]

Which price is right?

Another aspect of the monetarist fraud called the “invisible hand” popularly believed today involves the simple matter of prices. Who will decide the price of things if not the free market?” asks the ideologue. What does the “free market” know about growing food or iron work? Thankfully no mention in the U.S. Constitution is made of the free market. It is the Congress of the United States which is the elected body that has the role of determining the value of coin and therefore has an impact on prices in relation with the credit being emitted by the National Bank. Read Article I Section 8 for yourself and you will see quite clearly that the current system practiced by Wall Street in America is not only illegal, but that the original American System was intended to have a constantly improving effect on the General Welfare:

“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…

To borrow money on the credit of the United States;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”

This power that Congress has been given is extraordinary compared to the old feudal system where private bankers and sometimes kings decided of the value of things and people… If the system Hamilton created had not been sabotaged repeatedly [17] then slavery both inside and outside of America would not have re-emerged today. It was the view of these American system economists that the value of men and women would increase because their minds will be more apt to make discoveries of principles and develop an age of reason. This is and always has been the American System. Everything else being peddled in its name is a fraud.

What Canadians must reflect upon…

As exposed in the Imperial Myth of Canada’s National Policy, both the 1867 Confederation of Canada and the 1878 Canadian National Policy[18] were only a hollow shell of the national policy established earlier by Alexander Hamilton, then being spread across the world. The real intention of the Canadian National Policy was to prevent the collaboration of Canada with the United States by creating a Northern Confederation which had neither the General Welfare of its population at heart nor the institutional means to develop the territory, to wit; the present state of Canada’s embarrassingly low population relative to its vast undeveloped landmass!

If Canada is to survive the onrushing economic collapse and contribute something meaningful towards the establishment of a new financial architecture vectored around progress, then it is imperative that we 1) shed the shackles of  Americano-phobia and 2) boot out the Malthusian, xenophobic intentions that were at the roots of MacDonald’s National Policy. We need a Hamiltonian revolution in our conception of economics. With the tools of a National Bank and public credit, our enormous potential will be unleashed.

The urgent development of our very large North American continent, from the North Pole to the southern tip of Mexico, 8-d-JFK Nawapaawaits us. And if we do not supply the efforts to collaborate with our neighbours, and reorganize the water cycles, for example through the NAWAPAXXI design, we know that great catastrophes are looming in the near term future. It is time for us, Canadians, to reach a higher level: to be simultaneously proud patriots of our country and active citizens of world: because the governing intention of civilization must finally become the General Welfare for all human beings, instead of the maintenance of a master-slave system of zero technological growth.

The City of London delenda est!

8-d- Appendix- New Credit System Bank of Canada

End notes

[1] What Greek bailout? 98.5% went straight to the banks www.larouchepac.com/node/27555 (and none to the real economy)

[2] The city of Detroit, Michigan filed for Chapter 9 bankruptcy on July 18th 2013

[3] A “Tax upon people’s savings” or more simply said, pure theft! See the Canadian Economic Action Plan 2013, p.144-45.

[4] Cecil Rhodes, Confessions of Faith, 1877

[5] CAREY, Henry Charles, The Harmony of Interests: Agriculture, Manufacturing, and Commercial, 1851.

[6] Today’s Malthusians, led by the Queen of England, are asking for a return to old “green” technologies, war and pestilence in order to bring the world population from 7 to 1 billion people.

[7] HAMILTON, Alexander, Full Vindication, 1774, p.1.

[8] Taken from Graham Lowry’s How the Nation was Won, p.11.

[9]  LIST, Friedrich, Outlines of American Political Economy, Böttiger, 1996, p.21.

[10] Hamilton’s letter to Superintendent of Finance, Robert Morris. April 30th, 1781.

[11] See Lyndon LaRouche’s So You Wish To Learn All About Economics?, 1984 Chapter 2.

[12] Under the new world derivatives bubble (created in 1987 by Sir Alan Greenspan), futures have become bets on insurance tied to non-existent commodities or securitized debts which themselves have no real existence or payability.

[13] Alexander Hamilton, Report on the Subject of Manufactures, 1791

[14] The fight Hamilton waged to obtain a Constitution that would uphold this conception of a framework based on Natural Law as been compiled in what is known as The Federalists Papers.

[14] See Hamilton’s Reports to Congress: On the Subject of Public Credit (1790), On the Subject of a National Bank (1790), and on Manufactures (1791).

[15] ibid

[16] The first National Bank Charter was permitted to expire in 1811, by the treachery of President Andrew Jackson the second National Bank also expired in 1836. No true National Bank ever came back into being after this.

[17] See Matthew Ehret-Kump, The Imperial Myth of Canada’s National Policy, The Canadian Patriot #8. August 2013