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Abraham Lincoln and the Federal Reserve System: A Forgotten Connection

Written by Gary North on September 25, 2013

There are people who say that Abraham Lincoln opposed central banking. The opposite is true.

Lincoln ran for the legislature in 1832 as a supporter of Henry Clay and what Clay called the American system: high tariffs, federal money to build public works projects, and a central bank.

Clay was the main supporter in Congress of the Second Bank of the United States. The Bank had been chartered by the federal government in 1816. The charter was good for twenty years. It would expire in 1836. Clay tried to get the Bank re-chartered early, in 1832. Congress sided with Clay, but President Jackson vetoed the bill. Clay did not have enough votes to override the veto.

Clay vowed to defeat Jackson that fall. He got the nomination of the National Republicans, who had lost in 1828 with John Quincey Adams on the ticket. Jackson had won in 1828. Clay made the Bank the major political issue of the 1932 election. Jackson was overwhelmingly re-elected, defeating Clay.

Lincoln also lost.

Clay in 1833 helped form the Whig Party. Lincoln was elected to Congress as a Whig in 1846 for one term.

There were two traditions in the United States in 1832: the Jeffersonian and the Hamiltonian. In the election of 1832, the two traditions clashed self-consciously. Until Lincoln’s inauguration in 1861, the Jeffersonian tradition was dominant in the United States. After that, only Grover Cleveland was self-consciously Jeffersonian.


This serves as background to the little-known story of the man whose ideas led to the Federal Reserve System, an immigrant named Paul Warburg. He was from a distinguished banking family in Germany. He married the daughter of the founder of Kuhn-Loeb, and he became a major figure in that investment bank, beginning in 1902, the year he arrived in the United States.

He favored the creation of a central bank along the lines of the national European central banks. He began promoting this in 1902. He publicly promoted it in early 1907, just before the banking panic. He wrote “Defects and Needs of Our Banking System,” New York Times, January 6, 1907. The timing made him a key figure in the six-year debate debate over the creation of a central bank.

His great opportunity came in 1910. It was made available to him by the Republican Senator from Rhode Island, Nelson Aldrich, widely known as John D. Rockefeller’s Senator. (His grandson was named after him: Nelson Aldrich Rockefeller.) Following the Panic of 1907, Aldrich had been named the chairman of the Congressionally established National Monetary Commission. He led a team to Europe to study European national banks. That made him a convert. He used his influence in 1910 in the National Monetary Commission to promote the idea. In 1910, he invited Warburg to attend a secret meeting on Jekyll Island in Georgia in November, where half a dozen men hammered out the basics of the Federal Reserve Act. They represented both Rockefeller and J. P. Morgan. Warburg was the brains of the group.

In January 1911, Warburg had an article published in the Proceedings of the Academy of Political Science in the City of New York, Vol. 1, No. 2. The title: “A United Reserve Bank of the United States.” It was part of a symposium: “The Reform of the Currency.” In the final three paragraphs, pages 340-42, Warburg wrote this.

There is no good reason why the existing banks should oppose it. Wherever a central bank has been established the vested interests at first tried to prevent its creation. They saw only the danger of a change in business conditions which, though bad in general, had been profitable to them. They recognized only later that by the change they were enabled to transact their business in safety and that therefore they could do a much larger business. There is not one of these countries, in which opposition ran high against a central bank, where today a move to do away with the central-bank system would meet with the slightest support. Neither the socialist nor the capitalist would dispense with it; it has become one of the fundamental parts of the economic life of modern nations, like the telegraph or the railroad.

Would it be repugnant to the so-called American spirit? Is it an un-American institution? Our opinion is that it is a slur and a slander upon the American people to say that they are morally or politically so utterly unfit that they cannot afford to adopt a system for which Russia, Japan, the Balkan States, and some of our South American sister republics, have proved adequately prepared and which even China is seriously thinking of establishing in the near future. We believe that the people will wake up to the humiliation of present conditions and that they will demand in no uncertain voice a thorough modernization of our system. We are inclined to think that ignorance about what a central bank would really mean has been more responsible for the popular antagonism to such a system than has the ghost of Andrew Jackson. Good American citizens, who lived two generations nearer than we do to the dissolution of the last Bank of the United States, and were more familiar with its history than are the people of today, did not consider it an un-American institution. In this respect Abraham Lincoln’s first political speech, which he delivered at New Salem in 1832, may be of interest. He said:

Friends and Fellow-Citizens:

“I am plain Abe Lincoln. I have consented to become a candidate for the legislature. My political principles are like the old woman’s dance-short and sweet. I believe in a United States Bank; I believe in a protective tariff; I believe in a system of internal improvements, and I am against human slavery. If on that platform you can give me your suffrages, I shall be much obliged. If not, no harm done, and I remain respectfully yours, ABE LINCOLN.”

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16 thoughts on “Abraham Lincoln and the Federal Reserve System: A Forgotten Connection

  1. Lincoln was a big government liberal who hated the Constitution when it didn't allow him to do what he wanted to do.

  2. Rabelrouser says:

    In the course of study about the central banking system and the way it has manipulated the economy to the point of where we are today; I offer those who want a greater understanding about lincoln's desires to centralize all government through a banking cartel.
    Go to http://nebraskarepublic.org/
    Very interesting and completely factual. it will allow you to have a greater understand of the building blocks upon which todays governmental structure was designed and built.
    But, you HAVE to want to Know the truth.

  3. You have exposed the true reason for the 'Civil War'. The south started to print and coin their own currency, and Lincoln absolutely opposed it because he wanted total centralized control of the currency, as HE started the OCC (Office of the Controller of the Currency). He WAS the central banker. Slavery was a 'false flag' of his day to justify the war.

  4. I'm only 43, and yet I remember being taught as a child that the Civil War was about "preserving the Union", not about slavery. (What was never asked was "Why should the Union be preserved?", of course.) Yet, I expect that any school child today will have been taught very firmly that the war was about slavery and only slavery.

    Not a Civil War scholar, but my understanding now is that nobody at the time thought it was really about slavery. The South was in it to get out from under radically unfair tariffs. The North was in it to keep the tariffs in place. I'd never heard about the South printing/coining their own money, but that would certainly be enough to enrage the Northern monied interests.

    As I understand it, slavery was only played up late in the war in order to keep the Europeans from becoming involved. Yes, it was an issue all along, but it was a minor issue for both sides. The North was interested in not allowing slavery to spread into new territories, but NOBODY with power in the North was interested in taking slavery away from the Southern states.

  5. Lincoln was truly a “big-government ideologue” and a great orator – not unlike the guy that’s now in the White House.

  6. To further prove your point, the Confederacy had a Constitution modeled after the US Constitution except that the Confederacy's Constitution abolished slavery upon the death of the existing slaves whereas the US Constitution did not. Lincoln knew this before he caused the war to erupt by occupying another country's territory (Fort Sumter). The war was purposefully caused by Lincoln and the Norrtheastern interests for their nefarious business profits.

  7. Much too harsh on Lincoln. He was a great thinker and labored in his mind over ideas and policy. Unfortunately, today's President doesn't fret and worry nearly as intensely – unless it's his jump shot or golfing handicap. It's more of a show and lack of substance with today's politicians.

  8. "Much too harsh on Lincoln."

    LOL! Actually, not nearly harsh enough.

  9. You are so right about Lincoln which is why he was so much in a hurry to go to war with the South which was to preserve a strong central government more than the Union itself. He was an early "progressive" as were some of the other abolitionists.

  10. Buckeye Libertarian says:

    I would also recommend The Creature from Jekyll Island: A Second Look at the Federal Reserve by G. Edward Griffin. Here again, you HAVE to want to Know the Truth.

  11. Lincoln got the approval, and the praise of Karl Marx .Too harsh on Lincoln?People like to believe fairy tale story made up by the court historians not the naked truth

  12. Bob Marshall says:

    Most people don't want to know the truth. it would be too hard to accept in many cases. books such as THE UNSEEN HAND and the books by G.Edward Griffin and Judge Andrew P. Napolitano are read by people who are capable of critical thinking and sound reasoning. More than 187 countries have central bank today. Iran, Syria, North Korea and Cuba doesn't yet. Again, Read the book, THE UNSEEN HAND by A. Ralph Epperson and find out why neither Russia, China or members of the communist eastern bloc countries had resort to stealing technology from the United States among hundreds of other facts few Americans seem to know. It was given to them by the U.S. government starting with Woodrow Wilson. as for the United nations the U.S. has no intentions of getting out nor could even if the wanted to. 95% of Russian technology came from the U.S. government. Russia has the military power it has today because of the U.S. governments assistance. chapter 16 of this book, THE FEDERAL RESERVE: Congressman Lindbergh warned the American people that the Federal Reserve Act'…established the most gigantic trust on earth. When the president signs this act, the invisible government by the money power…will be legitimized. the new law will create inflation whenever the trust wants inflation. From now on, depressions will be scientifically created." 187 countries under the U.N. charter have Rothschild and Rockefeller controlled central banks. Standing in their way is Syria, Iran, Cuba and North Korea.

  13. Lincoln issues Greenbacks, gets shot dead;
    Kennedy issues U.S. Dollars, gets shot dead.

  14. Can you provide a link to this provision of the Confederate Constitution regarding ending slavery? I have read it before and do not remember that.

  15. Lincoln's unconstitutional war against the South was not initiated over slavery. The Emancipation Proclamation was not written until 1863, almost 2 years after the war had begun, and only had to do with slaves in the territories in the South occupied by Union forces. Lincoln's excuse for invading the South was preservation of the union. That doesn't hold water either since no such power is given to the president. Secession is not addressed in the Constitution and is not a federal issue. Secesson is a right reserved to the states and the people–and still is. The 10th Amendment clearly states: "The power not delegated to the United States by the Constitution [read Federal Government] not prohibited by it to the States, are reserved to the States respectivly, or to the people.

    Lincoln had no compassion for the black race. According to Lincoln's speeches, written before he was President, he stated he was not in favor of making blacks equal with whites, and did not think he ought to interfere with the states who practiced slavery. He believed the final solution was having all free blacks deported out of the country to special designated colonies. Also, he supported the passage of the "Ghost Amendment" which would have made slavery perpetual in the states where it was legal. The amendment would have become the 13th amendment had it not been for the war and the secesson of the southern states.

  16. Lincoln was a frickin' turd. He regularly used the N word. The historical revisionists idolize this piece of hubris. Expansion of Federal Powers was his goal. Just like the Impostor TOTUS we have today.