“Who are those guys?”
- Butch Cassidy
Okay, so modern banking is a scam designed to fatten the rich at the expense of the poor. But how did it get that way?
Since its inception, banking has been crooked. The first banks appeared in ancient Egypt, Babylonia and Greece, where wealthy farmers and tradesmen deposited gold and silver in local temples for safekeeping. Pagan priests would loan the gold to needy families at rapacious interest rates and then split the proceeds with the depositors. Families that could not repay their loans were jailed, executed or sold into slavery. The church – which was also the government – grew exponentially rich, along with the depositors.
Banking grew in complexity during the Roman Empire, when the fortunes of war were deposited in private banking institutions, which were allowed to do what they pleased with the wealth as long as they helped finance further conquests. Private banks in Rome also helped finance the construction of roads, aqueducts, monuments and temples; laborers and soldiers were paid in salt, a valuable commodity at the time. (It is from this practice that we get the word “salary.”) If ever a private banker in ancient Rome got into hot water with his customers, all he had to do was finance a monument to the Caesar of the moment and the uprising would be quelled.
The middle ages saw the next great leap forward in banking with the advent monastic orders of knighted crusaders, most notably, the Knights Templar, who used stolen riches to expand their ranks and curry favor with the Papacy. Like the other monastic orders at the time of the crusades, the Knights Templar, or Knights of the Temple of Solomon, began in earnest, taking vows of celibacy and poverty. Their name was derived from the portion of Jerusalem they occupied after the Muslims had been driven out in the early 12th century. Legend had it that the mosque al-Aqsa in Jerusalem had been built on the site of the original Temple of Solomon. Since this was the quarter they inhabited during their occupation of Jerusalem, they began calling themselves the Poor Fellow-Soldiers of Christ and the Temple of Solomon. Over the centuries, this name was shortened to the Knights of the Temple of Solomon, then later, Knights Templar.
The Knights Templar took their orders directly from the Pope and obeyed no other laws. This appealed to many noblemen despite the vows of celibacy and poverty, not to mention the harsh and dangerous existence led by the Knights Templar. Noblemen from all over Europe campaigned for admittance to the Knights Templar, offering their vast riches and land holdings as dowries. As a result, the Knights Templar grew in wealth and power, acquiring stately manors and immeasurable riches. They also gained a reputation as unparalleled stalwarts when it came to guarding their wealth.
At this point in history, wealthy noblemen had no method for protecting their riches from bandits and thieves other than to guard it themselves, which hindered other activities. Since the Knights Templar were already guarding their own vast riches, it would take no extra effort for them to guard other people’s riches, too. Before long, it became common practice for noblemen throughout Europe and the Middle East to give their riches to the Knights Templar for safekeeping. Soon, even governments adopted the practice: England even turned over a portion of the crown jewels to the Templars’ able watch.
The Templars quickly added other financial services to their repertoire, including debt and tax collection, loans and even cargo and passenger shipping. They issued notes to depositors who then traded the notes rather than transferring the actual gold and jewels. Thus was born the advent of paper money.
After nearly 200 years, the Knights Templar had grown richer and more powerful than most of the countries in Europe. More importantly, they had grown more powerful than the Vatican, a development that did not sit well with then Pope Clement V, who ordered the arrests of all the Knights Templar and the redistribution of their wealth, most of which went to Templar rivals, the Knights Hospitaller, who, rather than banking, had established what might be called the first hotel chain.
The early modern period saw the emergence of Jewish banking establishments. Since Christian doctrine forbade the collection of interest, and since most other professions were off limits to Jews, banking and money trading became primarily Jewish occupations.
In medieval times, just about every kingdom, duchy or realm had its own coinage, usually bearing a likeness of the duke or prince in power. A nobleman traveling from one kingdom to the next – often a distance of less than a hundred miles – would be compelled to have with him the coin of the realm. After all, the duke or prince in one province would be most offended indeed to see the face of his neighboring rival stamped on a coin. So, some method had to be devised that would ensure that travelers had the proper coinage in their purses. Local Jews, familiar with the various regional coins and their values, would often trade one coin for another for a small fee. Over the years, these small fees would add up, and the clever and thrifty moneychanger might, on occasion, find himself with a small fortune.
Oftentimes, these small fortunes were used to buy passage from Europe to Jerusalem, where the Arabs looked upon Jews with less disfavor than their European counterparts. Other times, however, moneychangers would stay put, using their wealth to curry favor with the local monarch. Frequently, this entailed financing a war or building an addition to the castle. The moneychanger would provide the necessary funds in exchange for later repayment plus interest, or, as in most cases, increased freedom. In the aptly named Dark Ages, the average Jew’s activities were severely restricted. A small loan to the local duke might earn letters of transit, which, despite the Jew’s low social standing, would be required to be honored by any local subject who wished to keep his head.
This is precisely the method Mayer Amschel Rothschild used to deliver his family from the Jewish slums of Frankfurt, Germany to the pinnacle of the now famous Rothschild banking house. In 1743, the year Rothschild was born, Jews were not even allowed surnames unless one was given to them by a local official. In the place of surnames, many Jews took the name of the house in which they were born. As this was before the advent of numbered address systems, most houses had a sign or plaque differentiating their house from the ones around it. Rothschild means Red Shield in German. Mayer Rothschild, therefore, means simply Mayer from the house with the Red Shield.
Mayer Rothschild was a trinket shop owner and moneychanger who collected rare and discontinued coins as a hobby. The local landgrave, Elector William I, shared Rothschild’s interest in rare coins and invited the young moneychanger to his castle to compare collections. Rothschild handled himself skillfully, offering several rare coins as a gift to the wealthy landgrave. Soon, Rothschild was named Elector’s financial agent.
Elector William I had made a fortune renting out his famed Hessian fighting men to kingdoms all over Europe. When his cousin, a Danish prince, requested a large loan for a war he was losing, Elector William I found himself in a quandary. He knew the loan would never be repaid in full, since the cousin would cite family ties as justification for reneging on the loan. He knew also that denying the request would do irreparable harm not only to familial relations, but also to the fragile political balance of the time. The clever Rothschild came to his rescue, devising a plan that would both preserve the delicate political situation and insure repayment of the loan. Rothschild concocted a scheme whereby the Danish prince would get the money without knowing who it came from. He would therefore be bound by honor to repay the loan.
This was Rothschild’s breakthrough. Not only did the stunt earn him permanent letters of transit for him and his family, it also laid the groundwork for a continent-wide messenger service that would surpass those of all the kingdoms of Europe. This service was used widely for many decades to come, since it was faster and more confidential than any other such service then in existence. What’s more, the confidentiality did not extend to the Rothschilds themselves; by reading the messages being sent via their service, the Rothschilds were finely attuned to the political and financial activities of all of Europe. This arrangement led eventually to the Rothschilds’ virtual takeover of the British stock market and, therefore, their ascension to European aristocracy.
Mayer Rothschild’s five sons went on to form the largest banking conglomerate in the world, with branches in London, Paris, Vienna, Naples and Frankfurt. Their immense wealth and influence deeply affected the political landscape for many decades. The Rothschild’s achievements include the building of the Suez Canal, the Cape Town to Cairo railway, the formations of Rhodesia and Israel, and the rise of the De Beers diamond concern, to name just a few. The Rothschild’s influence had diminished significantly by the 20th century. The rise of Hitler forced them out of Germany and Austria; the annexation of Naples by Italy brought a halt to the Naples branch of the bank; and the emergence of national banks in England and France greatly reduced their influence in those countries. But the Rothschilds’ effect on the contemporary political topography can still be deeply felt. The current Rothschild generation is active in philanthropy, the arts and politics. Their impact cannot be overstated.
- Butch Cassidy
Okay, so modern banking is a scam designed to fatten the rich at the expense of the poor. But how did it get that way?
Since its inception, banking has been crooked. The first banks appeared in ancient Egypt, Babylonia and Greece, where wealthy farmers and tradesmen deposited gold and silver in local temples for safekeeping. Pagan priests would loan the gold to needy families at rapacious interest rates and then split the proceeds with the depositors. Families that could not repay their loans were jailed, executed or sold into slavery. The church – which was also the government – grew exponentially rich, along with the depositors.
Banking grew in complexity during the Roman Empire, when the fortunes of war were deposited in private banking institutions, which were allowed to do what they pleased with the wealth as long as they helped finance further conquests. Private banks in Rome also helped finance the construction of roads, aqueducts, monuments and temples; laborers and soldiers were paid in salt, a valuable commodity at the time. (It is from this practice that we get the word “salary.”) If ever a private banker in ancient Rome got into hot water with his customers, all he had to do was finance a monument to the Caesar of the moment and the uprising would be quelled.
The middle ages saw the next great leap forward in banking with the advent monastic orders of knighted crusaders, most notably, the Knights Templar, who used stolen riches to expand their ranks and curry favor with the Papacy. Like the other monastic orders at the time of the crusades, the Knights Templar, or Knights of the Temple of Solomon, began in earnest, taking vows of celibacy and poverty. Their name was derived from the portion of Jerusalem they occupied after the Muslims had been driven out in the early 12th century. Legend had it that the mosque al-Aqsa in Jerusalem had been built on the site of the original Temple of Solomon. Since this was the quarter they inhabited during their occupation of Jerusalem, they began calling themselves the Poor Fellow-Soldiers of Christ and the Temple of Solomon. Over the centuries, this name was shortened to the Knights of the Temple of Solomon, then later, Knights Templar.
The Knights Templar took their orders directly from the Pope and obeyed no other laws. This appealed to many noblemen despite the vows of celibacy and poverty, not to mention the harsh and dangerous existence led by the Knights Templar. Noblemen from all over Europe campaigned for admittance to the Knights Templar, offering their vast riches and land holdings as dowries. As a result, the Knights Templar grew in wealth and power, acquiring stately manors and immeasurable riches. They also gained a reputation as unparalleled stalwarts when it came to guarding their wealth.
At this point in history, wealthy noblemen had no method for protecting their riches from bandits and thieves other than to guard it themselves, which hindered other activities. Since the Knights Templar were already guarding their own vast riches, it would take no extra effort for them to guard other people’s riches, too. Before long, it became common practice for noblemen throughout Europe and the Middle East to give their riches to the Knights Templar for safekeeping. Soon, even governments adopted the practice: England even turned over a portion of the crown jewels to the Templars’ able watch.
The Templars quickly added other financial services to their repertoire, including debt and tax collection, loans and even cargo and passenger shipping. They issued notes to depositors who then traded the notes rather than transferring the actual gold and jewels. Thus was born the advent of paper money.
After nearly 200 years, the Knights Templar had grown richer and more powerful than most of the countries in Europe. More importantly, they had grown more powerful than the Vatican, a development that did not sit well with then Pope Clement V, who ordered the arrests of all the Knights Templar and the redistribution of their wealth, most of which went to Templar rivals, the Knights Hospitaller, who, rather than banking, had established what might be called the first hotel chain.
The early modern period saw the emergence of Jewish banking establishments. Since Christian doctrine forbade the collection of interest, and since most other professions were off limits to Jews, banking and money trading became primarily Jewish occupations.
In medieval times, just about every kingdom, duchy or realm had its own coinage, usually bearing a likeness of the duke or prince in power. A nobleman traveling from one kingdom to the next – often a distance of less than a hundred miles – would be compelled to have with him the coin of the realm. After all, the duke or prince in one province would be most offended indeed to see the face of his neighboring rival stamped on a coin. So, some method had to be devised that would ensure that travelers had the proper coinage in their purses. Local Jews, familiar with the various regional coins and their values, would often trade one coin for another for a small fee. Over the years, these small fees would add up, and the clever and thrifty moneychanger might, on occasion, find himself with a small fortune.
Oftentimes, these small fortunes were used to buy passage from Europe to Jerusalem, where the Arabs looked upon Jews with less disfavor than their European counterparts. Other times, however, moneychangers would stay put, using their wealth to curry favor with the local monarch. Frequently, this entailed financing a war or building an addition to the castle. The moneychanger would provide the necessary funds in exchange for later repayment plus interest, or, as in most cases, increased freedom. In the aptly named Dark Ages, the average Jew’s activities were severely restricted. A small loan to the local duke might earn letters of transit, which, despite the Jew’s low social standing, would be required to be honored by any local subject who wished to keep his head.
This is precisely the method Mayer Amschel Rothschild used to deliver his family from the Jewish slums of Frankfurt, Germany to the pinnacle of the now famous Rothschild banking house. In 1743, the year Rothschild was born, Jews were not even allowed surnames unless one was given to them by a local official. In the place of surnames, many Jews took the name of the house in which they were born. As this was before the advent of numbered address systems, most houses had a sign or plaque differentiating their house from the ones around it. Rothschild means Red Shield in German. Mayer Rothschild, therefore, means simply Mayer from the house with the Red Shield.
Mayer Rothschild was a trinket shop owner and moneychanger who collected rare and discontinued coins as a hobby. The local landgrave, Elector William I, shared Rothschild’s interest in rare coins and invited the young moneychanger to his castle to compare collections. Rothschild handled himself skillfully, offering several rare coins as a gift to the wealthy landgrave. Soon, Rothschild was named Elector’s financial agent.
Elector William I had made a fortune renting out his famed Hessian fighting men to kingdoms all over Europe. When his cousin, a Danish prince, requested a large loan for a war he was losing, Elector William I found himself in a quandary. He knew the loan would never be repaid in full, since the cousin would cite family ties as justification for reneging on the loan. He knew also that denying the request would do irreparable harm not only to familial relations, but also to the fragile political balance of the time. The clever Rothschild came to his rescue, devising a plan that would both preserve the delicate political situation and insure repayment of the loan. Rothschild concocted a scheme whereby the Danish prince would get the money without knowing who it came from. He would therefore be bound by honor to repay the loan.
This was Rothschild’s breakthrough. Not only did the stunt earn him permanent letters of transit for him and his family, it also laid the groundwork for a continent-wide messenger service that would surpass those of all the kingdoms of Europe. This service was used widely for many decades to come, since it was faster and more confidential than any other such service then in existence. What’s more, the confidentiality did not extend to the Rothschilds themselves; by reading the messages being sent via their service, the Rothschilds were finely attuned to the political and financial activities of all of Europe. This arrangement led eventually to the Rothschilds’ virtual takeover of the British stock market and, therefore, their ascension to European aristocracy.
Mayer Rothschild’s five sons went on to form the largest banking conglomerate in the world, with branches in London, Paris, Vienna, Naples and Frankfurt. Their immense wealth and influence deeply affected the political landscape for many decades. The Rothschild’s achievements include the building of the Suez Canal, the Cape Town to Cairo railway, the formations of Rhodesia and Israel, and the rise of the De Beers diamond concern, to name just a few. The Rothschild’s influence had diminished significantly by the 20th century. The rise of Hitler forced them out of Germany and Austria; the annexation of Naples by Italy brought a halt to the Naples branch of the bank; and the emergence of national banks in England and France greatly reduced their influence in those countries. But the Rothschilds’ effect on the contemporary political topography can still be deeply felt. The current Rothschild generation is active in philanthropy, the arts and politics. Their impact cannot be overstated.
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