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Today, Central banks are unequivocally the most powerful institutions the world has ever seen. Their significance far outweighs the power and influence of any federal, state, or local government; any legislative, judicial or executive branch on any country, continent, or piece of land. In the last article, we briefly talked about how a group of undisclosed shareholders purchased direct ownership in the central bank in England. However, I feel we need to go into more detail surrounding the British empire to properly explain how one of the most powerful institutions in the world was conceived. After all, the British empire was the shell casing to the lead bullet of the Bank of England and would go on to stretch through multiple continents and numerous centuries to become the largest and most powerful empire the world has ever seen, controlling over 1/3 of the civilized population at its peak. So how did they get there?
During the early 1500s, England was still in the early stages of trying to expand its vast empire and had not yet acquired its close neighbors Ireland, Wales, or Scotland. After seeing the success of Columbus and the Spanish who set sail in 1492, King Henry VII hired an Italian voyager named John Cabot. Cabot’s goal was to sail west and attempt to find another seabound trading route to Asia. Instead, he discovered Newfoundland in present-day Northern Canada. However, after his second trip to the Americas, he went missing and his remains and body were never found. So, the attempts to conquer land and power had fallen short under the hands of King Henry VII. His son Henry VIII, did successfully unite Wales under the English throne, a small piece of land on the west coast of England, and offered them representation in government settings.
(Modern Day Map of United Kingdom)
However, Wales did not satisfy the English and when Elizabeth, King VIII’s daughter became Queen Elizabeth I in 1558, she had her goals set on bigger accomplishments. In general, Elizabeth I was one of the most influential figures in giving Britain the ability to call itself an empire. During the English protestant Reformation of the 16th century, the Church of England split its ties with Rome by diverging from the Roman Catholic Church and the Pope. This change in religious culture severely hurt the relationship with countries surrounding England, especially Spain and France, because of their deep ties to the Roman empire. When Queen Elizabeth I took the throne in the late 1500’s she actively encouraged and paid for attacks on Spanish ships, deliveries, and ports in an effort to establish the Atlantic Slave Trade controlled by the British Empire. War was never officially declared between Spain and England, but the tensions from this event carried on for years into the future. During the time, England tended to lag behind their foreign counterparties in economic success because their adversaries were having massive victories in colonizing land overseas. The people of England felt they were revolving in a hamster wheel going nowhere, while the rest of the world was growing and expanding.
The tides for England began to turn when Queen Elizabeth I was able to sequester major farmland in Scotland, which had a large, hardworking population combined with vast and fertile land. The farms steadily grew into English villages and eventually, by the early 16th century, England had control over the land and people within Scotland.
Queen Elizabeth continued her attempts to expand England by making concentrated efforts to conquer overseas land and sponsored several voyages to the Americas, similar to their foreign counterparties. Although many of the conquests came back unsuccessful, such as the ineffective stints in setting up territory in the modern-day United States, England able to gain land in contemporary Newfoundland. Yet, this still wasn’t enough for the English people and the Money Changers were willing to shed other people’s blood and lives in order to have successful trading branches set up throughout the world to constantly generate wealth.
More real strides toward England becoming an empire occurred when James VI of Scotland, became King of England in 1603 and would be thereafter be known as King James I. The kingship of James would further the rapport between Scotland and England and would bring Scotland closer to being fully encapsulated under the English crown. Once this was complete, England could focus on spreading its culture and establishing its influence on the rest of the world.
The first thing King James focused on, was reconciling his relationship with Spain. Being from Scotland, where the people mostly followed the Catholic religion, James was able to relate easily to the leaders and people of Spain who followed Catholicism very closely. Only one year later in 1604, the Treaty of London was signed which put an end to the armed engagements between England and Spain and finally created a path for peace between the two countries. Next, England turned their view toward bigger goals, and so began the colonization of the Americas.
There had been many colonies already established in the modern-day United States since the founding of the Americas by Europeans in 1492 when the Spanish Christopher Columbus stepped foot somewhere in the Caribbean. By the time the English had made an attempt in the early 1600’s Spain, France and Portugal had already established permanent colonies within the Americas, so the English were behind the 8-ball. King James understood this and in 1606 gave permission for English companies to create lasting communities in the Americas. Only one year later, the city of Jamestown, named after the King himself was established as a permanent settlement in modern-day Virginia.
Side Note: The settlement of Jamestown was set up by John Smith, who was famous for his exploration and positive relationships with the Native Americans. During one harsh winter, James had been attempting to get food from nearby Native American tribes. After constant rejection, Smith had come to the point of threatening physical violence. In response, the leaders of the Powhatan tribe had come up with a plan to execute Smith. A famous Native American, who John Smith had garnered a strong relationship with named Pocahontas, warned him of the imminent danger and he was able to plan around the attack and escape without being harmed. End of Side Note.
In order to take over, the settlements in the new America’s the English had to overthrow or work out deals with the Native Americans that were in the area and had been established for years. After learning how to successfully grow tobacco and sugar and learning other methods for high productivity from the natives, some regions began to flourish and trade openly with strong relationships with the Native Americans. However, the increase in tobacco production and trading with Englishman didn’t prevent all disputes with the resident tribes, and after countless fights between the English and different native communities, the company that established Jamestown went bankrupt and the English empire started their expansion by taking control over the population, policies, and land of Virginia.
During England’s conquest of America, they also came across the Island of Bermuda and considered it part of Virginia, giving them a strategic stopping point in the Atlantic Ocean, England created the city of New London inside of Bermuda, which is considered the third permanent settlement of England in the United States, and the United Kingdom still controls the island of Bermuda to this day.
https://www.bermuda.com/where-is-bermuda/ Flight Times)
The English throne began to see success stories arise out of the Americas. The profits and gold the businesses were generating inside of the newly discovered land prompted the English to continue to invest in voyages to shape their economic and political influence around the world. Establishing different trading stations throughout different geographical locations was one of the main strategies the English deployed in order to garner respect from their foreign competitors.
One of the most famous undertakings occurred in 1620 when James I was still King, a group of English Calvinist Protestants were fighting for independence from the Church of England and boarded a ship named the Mayflower. This ship transported the English Pilgrims from their home in Great Britain to what they saw as virgin land and an opportunity to escape religious persecution in America. The puritans of the Mayflower landed in Cape Cod, Massachusetts, and shortly after, with the help of Native American tribes, built sufficient shelter and plots of farmland to create a town. When the buildings were erect and the crops began to sprout, they named the area the Plymouth colony. With the help of nearby Native American tribes and local English settlements, Plymouth was able to withstand the brutal weather conditions and begin to understand the terrain to create a system for sustainable agricultural production and became the second permanent English settlement in the Americas.
Shortly after King James I died in 1625 his son, Charles, became King Charles I. Charles was young, ambitious, and eager to advance the success of England with his new position at the helm of the throne. After seeing his father’s success in the Americas, Charles I wanted to recreate his father’s success and he had his sights on the Caribbean. After several failed attempts to create a permanent colony, the crown sponsored a private company to establish lodging on the island of Barbados in 1627, and the young king had a realization that he uncovered an immense opportunity to produce a new cash crop, sugar.
Once again, the England government's profits from the sugar production in the Caribbean inspired even further adventure deeper inland and across more islands. For the next 50 years, the British Empire had gained control over a number of islands in the Caribbean including St. Kitts, Antigua, Nevis, Montserrat, the Bahamas, Jamaica, the Caiman Islands, Tortola, Anegada, Virgin Gorda (Tortola, Anegada, and Virgin Gorda are now known as the British Virgin Islands).
Most of these locations were taken by force, either from the native inhabitants or from the other European colonists who had occupied the land previously. There was bloodshed between forces of the money changers and the underprivileged, where both front lines were made up of the impoverished who, at the whim of the money changers, fought each other over the privilege for the money changers to own and profit from the land. The labor at first consisted mostly of indentured servants, who weren’t necessarily slaves, but would sell themselves into slavery in order to pay off debts, make a living or just have a place to live. As the 16th century went on, the sugar-producing islands of the Caribbean became more profitable and the English found it more efficient to purchase slaves from Africa, where there would be permanent ownership equivalent to property, for the remainder of the slave’s life.
Meanwhile, in the modern-day United States, King Charles, and the English government were attempting to capture the momentum of Jamestown and Plymouth by expanding their influence and control over the newly formed territories of the Americas. Simultaneously, Flocks of English citizens were risking their lives to escape the religious persecution of England and in doing so, made the 3,470 miles (5,585 kilometers) trip in a wooden boat across one of the most dangerous oceans in the world.
The combination of the English government's desire to control the land and its citizen's desire to escape the harassment occurring on the mainland led to England rooting out the previous occupants in the Americas such as the Dutch, Spanish and Native Americans. In doing so, the English created concentrations of certain religious groups that began to the harbor in certain eastern American cities. Through the early 1600s, massive immigration took place from England into today's United States, and the city of Plymouth was best known for the puritans or pilgrims, that originally came from the mayflower and were primarily Calvinist Protestants. Maryland became a hub for those who practiced Roman Catholicism. Connecticut consisted mainly of Congregationalists, while Rhode Island was a fair mix of all religions. These first immigrants laid the foundation for the religious and cultural makeups that would form the society in those areas in the United States, today.
Getting away from English foreign affairs for a second, we should take some time to look at what was happening domestically. From 1642 to 1651 the English found themselves in the midst of three civil wars between three different nations. The states of England, Scotland, and Ireland were actively fighting over government strategies, religious prosecution, and monetary manipulation. The three countries were struggling to identify consensus on which entity should govern the rest and what strategy or form of government should be implemented to garner the most success for the mass population. Overall, there were two main views on how the country should be running. The Royalists (Cavaliers) were wealthy money changers and nobles that supported King Charles and his policies. The Parliamentarians (Roundheads) were supporters of a constitution-based government system, that relied on parliament to have a separation of powers.
Overall, in the 9-year span, there were 3 different civil wars with a brief switching in power from the king to the parliament. The civil wars ended with King Charles I being executed in public by the Roundheads who were led by Oliver Cromwell, who filled the power vacuum that had arisen. Because of the sudden inflow of power, Cromwell didn’t generate a constitution-based government that was centered around a republic but instead imitated an authoritarian dictatorship. Luckily for the citizens in 1658, only a year after Cromwell had come to power, he passed away from illness and never had the opportunity to realize his tyrannical dreams.
Only two years later in 1660, the parliament had decided to restore power to King Charles’s son, Charles II, making him King Charles II. So, after 4% of the population dying to war-related incidents during the 9-year span of civil wars, the English found themselves in the same position they were in almost 20 years earlier when the civil wars began, with slightly more land.
According to history, King Charles II was a slightly better king than his father, producing some innovation in society and better conditions for the lower and middle classes. However, he had no legitimate kids and therefore direct bloodline to kingship. Because of this, his brother King James II was made his rightful heir. After failing as a king, the English parliament ordered that James II’s oldest daughter Mary and husband William of Orange take over the throne, becoming Queen Mary II and King William III.
This was monumental for two reasons. First, King James II had a rightful heir in a son, but the parliament choose to go around the lasting tradition of the monarchy. Second, the parliament made the new King and Queen sign a bill of rights in 1689, which made it so the throne needed permission from the parliament in order to create or destroy a law. This bill is still in place today and set the foundation for many of the laws that are found within the bill of rights in the Constitution of the United States, such as the right to bear arms. It's interesting to think that it took a bribe of power for the common people to get basic human rights enacted. We should never let them go, only add. However, we should also be wary of when the government tells us that they are granting us rights or safety, but in reality, it’s the complete opposite.
During this time in England, the advancement of philosophy and scientific reasoning was exploding and I want to briefly highlight four people that pushed society, labor, and knowledge forward during the 1600s and allowed innovation of information and thinking to take place. The four important philosophers that led the effort to achieve greater equity, scientific reasoning, and an understanding of life were Thomas Hobbes, John Locke, Isaac Newton, and Francis Bacon. These four men led to a change that would go on to limit the power of central government and religious institutions and increase our scientific and technological understanding of the world. As a result of these efforts, these four people returned the power of information and knowledge to individuals. That way, our society would be able to progress forward because now the masses will be able to understand philosophy, science, government, literature, and more.
The first two truth-seekers, Thomas Hobbes and John Locke had nearly polar opposite views from each other, but their literature and interpretations of the world led to the massive progression of modern western civilization.
Hobbes was most famous for his work titled, Leviathan. In this literature, Hobbes comes to the conclusion that without government, citizens would have no concept of how to act or produce an economically successful life. Hobbes also went further to add when speaking of life without a powerful central government,
“In such condition, there is no place for industry; because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving, and removing, such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short”
You can see that Hobbes was a strong supporter of the Monarchy during his life and he expressed that through his writing. Hobbes also had other very valuable contributions to our society today in various other topics of life, math, science, law, religion ethics, and more, but on his beliefs about government, I don’t believe Hobbes realized it would reach the level of toxicity it has today.
(The frontispiece of the book Leviathan by Thomas Hobbes; engraving by Abraham Bosse)
John Locke was another philosopher who, like Hobbes, had valuable contributions to many walks of life. Locke is known for being the “Father of Liberalism” because of his commitments to the lower and middle classes that were prone to suffering during the time Locke was alive. One of Locke’s most profound philosophical thoughts involved self-identity and consciousness during his creation of his Theory of Mind. Locke hypothesized our minds were like a tabula rasa (a blank slate) and the vehicle for change is life imprints that affect our minds and form our emotional intelligence, mindfulness, and ultimately our society. Locke argued that our understanding and perceptions of life were derived solely from the experiences we’ve encountered since birth. Many of Locke’s social views are paramount to the conservatism and liberalism political views that are held within the United States today and many of his thoughts are clearly shown in the Constitution and Declaration of Independence created by the American Revolutionaries.
The next two philosophers I want to briefly discuss are Francis Bacon (22 January 1561 – 9 April 1626) and Isaac Newton (25 December 1642 – 20 March 1767). Bacon is considered the “Father of Empiricism” which is the main argument Hobbes uses in his beliefs through his literature. Bacon is also responsible for creating the scientific method, which is the method we all learned in our 7th-grade science class about how we should approach tough issues. Bacon was a major contributor to math and science and actively contributed to our current western philosophy through his beliefs. Some historians believe that Francis Bacon wrote most, if not all of the plays that are attributed to William Shakespeare, which would make his contributions to art, culture, and writing unforgettable. Instead of following the crowd and being obsessed with religion, Bacon was obsessed with believing that our sensory experiences in life are what determines our fate and nothing else. Throughout his life, Bacon served as an advisor to the English crown and his works became the basis for teaching centuries later.
Isaac Newton was another Englishman that is famous for his work in math, science, and more. Newton is widely credited by the scientific community as being the greatest scientist and mathematician in the history of the world. In general, Newton advanced every subject that he touched including calculus, astronomy, and religion. Perhaps Newton’s single greatest accomplishment was his literature, Principia which was published on July 5th, 1687. In this journal, Newton defined gravity in addition to laying out the three laws of motion while also proving his laws with mathematical formulas. The three laws are as follows,
Law 1. A body continues in its state of rest, or in uniform motion in a straight line unless acted upon by a force.
Law 2. A body acted upon by a force moves in such a manner that the time rate of change of momentum equals the force.
Law 3. If two bodies exert forces on each other, these forces are equal in magnitude and opposite in direction
Together, these four men laid critical foundations to western civilization in addition to advancing European politics, math, and science that would accelerate growth and expansion around the world and help England become the most powerful empire in the world.
Okay, now we can go back to talking about the foreign policy of England. We were discussing how England had just taken control over numerous American colonies and cash crop-producing islands in the Caribbean. In addition, England just got out of a civil war where a monarchy was restored with a bill of rights, that acted as a separation of powers.
Because of the constant state of war England found itself in and the rapid expansion that was taking place across the globe in English territories in the middle of the 17th century, the government found it very difficult to get more out of the economy than it was already producing. Because of the vast industrial, agricultural, and labor needs of the crown, England was tumbling further and further into debt with foreign countries and themselves. The growing nation found it increasingly problematic to obtain affordable loans to pay for its expansion of military operations and conquest of the world. On top of the increasing costs of expansion, the English found themselves in the middle of another long and bloody war that is now referred to as the Nine Years' War or War of the Grand Alliance from (1688–1697). the war was fought between a European alliance of countries that represented England and the Holy Roman Empire against the Nation of France.
Meanwhile, in the Americas, England was attempting to cut the costs of expansion and the wars it found itself in. One of the primary methods for doing this was straying away from indentured servants and leaning more into the transatlantic slave trade, where the English became much more active in the triangle trade and according to Nicholas Canny writes in The Oxford History of the British Empire: Volume I: The Origins of Empire, “In the British Caribbean, the percentage of the population of African descent rose from 25 percent in 1650 to around 80 percent in 1780, and in the Thirteen Colonies from 10 percent to 40 percent over the same period (the majority in the southern colonies)”.
In the Triangle trade, the Europeans would make their way to Africa, where they would negotiate European goods for enslaved Africans. The Europeans would then ship the slaves to the Caribbean and Americas, where they would work on plantations that grew cash crops like tobacco and sugar. Next, The Americas and Caribbean would ship the sugar, tobacco, rum, and taxes due to Europe and in our case the English crown. So as time went on England became more and more involved with the slave trade and the government and money changers who were in control found it to be extremely profitable.
(Author SimonP at en.wikipedia)
For many years this trading triangle was a successful business model for the English. From the blood, sweat, and souls of the slaves and the large quantities of high-quality, low-cost labor from the poor, the Money Changers and European governments were able to garner considerable amounts of wealth. However, as previously mentioned the expenses and costs of having a multi-continental empire and limited control over the monetary policy was stifling the English government spending capacity and they were responsible for the military being an effective instrument in the growth of their kingdom. The French had a navy that was far superior in terms of manpower, technology, and pure magnitude when contrasted with the rest of the world and England, who hadn’t been able to garner a strong naval standing up to this point when compared to the rest of the world. King William III knew it and in 1690 the English suffered a massive naval defeat in the Battle of Beachy Head to the French.
With this defeat, the tides of the world turned forever when Charles Montagu, a political advisor to William the III devised the bill to charter the Bank of England, the charter would give a list of undisclosed investors the right to own the bank which had the exclusive ability to issue banknotes with limited liability and have control over all of the government’s assets and obligations. As a result, ?1.2 million was raised in under two weeks with more than half of the money being used on the military efforts. (Bagehot, Walter (1873). Lombard Street : a description of the money market. London: Henry S. King and Co.). As the saying goes, there are no winners in war, but the English were able to take greater control over the land in Scotland and Ireland, increased the size of their military prowess, and boosted their fragile economy. What was the cost? The Bank of England, a private and central bank, gained the ability to issue money against the debt which boosted the English’s ability for political, economic, and societal advantage over the rest of the world. Not only that, it set precedents for the amount of control and power a small group of people can have over a nation and eventually a planet and as civilizations became more advanced and saw the power the central bank had in England, they wanted a taste of the power, generational wealth and influence they were witnessing.
To quickly recap, the English empire was overexpanding into new territories and taking over land by force from native inhabitants or the other European countries. The English then used slaves to produce vast amounts of labor and goods that could be shipped back to England and taxed. In order to cut costs, the English were large participants in the African Slave Trade and took drastic measures to reduce their costs. As the cost of expanding into several continents was becoming tough to afford, simultaneously religious prosecution and poverty led to many wars that further drained England’s economy and infrastructure. These wars became so expensive along with the cost of trying to run the world that the English created a privately owned central bank, that would allow Money Changers to profit from the issuance of money that didn’t exist, at interest. After the creation, the Bank of England would go on to serve as the archetypal central bank that other nations have copied over the centuries to try and replicate the power and influence in an attempt to garner more wealth for themselves.
