[PDF]Lost Science Of Money

LOST SCIENCE
OF MONEY


The Mythology Of Money -
The Story Of Power


Stephen A. Zarlenga


American Monetary Institute
Box 601, Valatie, NY 12184
http://www.monetary.org
ami@taconic.net


Zarlenga, Stephen A.

THE LOST SCIENCE OF MONEY

The Mythology Of Money - The Story Of Power
Stephen A. Zarlenga


Includes Chapter Endnotes, Bibliography,
and Index.


Copyright 2002 by the

American Monetary Institute Charitable Trust
First English printing in September 2002
Printed in the United States of America.


All rights are reserved. No portion of this book may
be stored or reproduced, by any process or technique,
without the express written consent of the publisher.


Although written in English, this book was first
published in German in mid-1999 by Conzett Verlag
of Zurich, Switzerland, under the title:

“Der Mythos vom Geld - die Geschichte der Macht”
(The Mythology of Money - The Story of Power)
This first English edition is expanded and updated.


American Monetary Institute
P.O. Box 601

Valatie, NY 12184
ami@taconic.net
http://www.monetary.org


To my mother Lauretta and my father Dino


The Tower of Hercules at La Corufiha, Spain, said to be the oldest continuously operated
lighthouse site in the Western World. Here in June 1984, the author learned of the
death of his father, and promised to carry out a task in his memory. This book fulfills a
part of that pledge.


A view from the author’s Battery Park
apartment in lower Manhattan in May
1991, just after the first Gulf War.
Looking past the south tower of the old
World Trade Center, up Liberty Street,
the road was like a dark canyon, but at
its end was the New York Federal
Reserve Bank, basking in sunlight. Its
structure dominated and confined the
subdued roadway below. At that
moment the author realized it was time
to concentrate on this work.


Dedication

Preface

Acknowledgments

Introduction

1. The Origins Of Money Systems


2. Rome’s Bronze Nomisma:
Better Than Gold


3. A Monetary View Of Rome’s Decline
4. Re-Instituting Money In The West


5. The Crusades End Byzantium’s
Monetary Dominance


6. Renaissance Struggles For
Monetary Supremacy


7. The Scholastics -
The Moral Economists


8. 1500 - History’s Pivot: Power Shifts


From The Mediterranean To The North Sea


109


131


151


177


207


9. The Rise Of Capitalism In Amsterdam
10. Transferring Capitalism To England
11. Hatching The Bank Of England


12. Political Economists: Priesthood Of
The Bankers Theology


13. The Usury Debate Continues


14. U.S. Colonial Moneys


15. The Money Power vs. The Constitution


16. U.S. Government Money
Compared To Private Money


17. The Greenbacks:
Real American Money


18. 19th Century Monetary Crimes -
The Great Deflations


19. Triumph Of The Bankers -


Establishment Of The Federal Reserve


20. The Federal Reserve System
Wrecks America


227


251


277


305


335


361


389


433


453


479


507


535


21. Germany’s 1923 Hyper-Inflation
Under a Private Central Bank


22. International Monetary Organizations
23. The European Monetary Union

24. Proposals For U.S. Monetary Reform
List of Illustrations

Selected Bibliography


Index


575


603


629


651


688


691


708


PREFACE


The final words of our last chapter were written on Labor Day at
Oak Street Beach in Chicago. A week later on September 11, 2001, New
York’s World Trade Center was attacked.

That event, the world has been repeatedly told, “changed every-
thing.” To the author, however, rather than a changed world, it seemed
more a case of our gaining a greater realization or understanding of what
the world had already been allowed to become.

But since the book hadn’t gone to the printer, as the illustrations
were still being assembled, there was the opportunity to see if indeed
changes were called for. We added a few notations in the Introduction,
also in the section on Islamic monetary traditions, and the new European
Monetary System. Several paragraphs were added to the reform propos-
als in Chapter 24, to analyze some of the dangers the attacks pose for
temporary interference with our Bill of Rights and our constitutional
Republic, and thus the prospects for monetary reform.

The events of September 11th, and the potential for further attack,
do not alter the book’s thesis, or monetary concepts and history present-
ed. Rather, those horrendous, inhuman acts and threats show all the more
strongly the pressing need for security, which can only be brought about
through a strong long term commitment to justice. And that includes -
even depends on - a just monetary system.

The matters we discuss in this book have direct impact not only on
our daily lives, but on the direction our civilization will take. That can
still be in our hands, if we choose to make it so.


ACKNOWLEDGMENTS


Two persons deserve special recognition for helping to bring this
book into existence. The support and encouragement of Dr. Lucienne De
Wulf, through years of research and early drafts, made it possible for the
concepts to be developed and written. Also, Dr. Jurg Conzett’s support
of research of the American Monetary Institute, and his decision to pub-
lish this work in German, provided the essential push needed to get the
book completed.

Special thanks go posthumously to Robert de Fremery who always
stood ready to give the benefit of his decades of valuable study and
experience on the reform of our nation’s money system.

And I salute Alexander Del Mar, the great monetary historian,
whose writings of a century ago provided the necessary keys to redis-
covering the lost science of money.

Wendy Fuller of the Chatham Public Library greatly facilitated the
on-going research, tirelessly obtaining the hundreds of works requested
through the Interlibrary loan system. This small Carnegie Endowment
library could borrow books from many of our nation’s best university
libraries, and on the rare occasions when they didn’t have a particular
monetary source book, West Point Military Academy usually did.

The facilities of the N.Y. Research Library were essential to the
commencement of this work; the Palatine Public Library helped sub-
stantially at its conclusion.

Sincere thanks go to those who assisted in the production, printing,
and funding of this book: Frank Shannon, Victoria Besterman, Lee
Ponsler, David Gineris, Ayana Brooks, Bobby Fisher, Ron Heyman,
Sonia Ortiz, Maria Myers, Jim Catalano, Lewis Coleman, George and
Irene Romero, Ole and Suzy Mackeprang, Willie Kanies, Louisa Maudr,
Lynn Yost, Marc Van Riper, David Hershey, Rob Willems, James Fencil,
and especially Takis Kalogroulis.

I’m indebted to David E. Cassel for his valuable editing assistance;
to Jesse DeGroodt, Dr. Lucienne De Wulf and Dr. Lewis Coleman for
reading the manuscript and making helpful suggestions; to Cybéle De
Wulf for photo selections; and to Dolores Grande for the index. Of
course this work’s presentation, including any errors and omissions, are
my responsibility alone.

Stephen A. Zarlenga
Kinderhook, New York
March 21, 2002


"Universal historians will be valuable only
when they can reply to history’s essential question:
What is power?”


“History can only be explained by introducing
a power which they apparently do not recognize.”


Leon Tolstoy, War and Peace


MONETARY AWARENESS
IS THE CRUCIAL MISSING ELEMENT


To begin understanding how the world’s power structure operates as
we enter the third millennium, citizens must first become aware of cer-
tain monetary concepts.

On a national level the behavior of the stock exchanges in the late
1990’s appeared to break free of any connection to the real world. As if
by magic, wealth and power were quickly and effortlessly amassed and
concentrated, as never before, into the hands of a small part of the pop-
ulace. At the same time growing numbers of normal working people
were placed under greater financial stress, falling behind into debt or
even bankruptcy. Such developments threaten American Democracy,
especially when they occur together.

While financial promoters hailed the coming of a “new era” of ever
rising share prices, it was clear to many that something was seriously
wrong - but exactly what was it? When the markets began to falter, peo-
ple were vaguely aware of a monetary cause of the predicament and just
before September 11, 2001, the Federal Reserve Chairman’s image alter-
nated between “hero” and “rogue,” depending on who was asked.

While September 11th was a tragedy for most good people around
the world, it has also provided some with a convenient “cover story” to
take the blame for the results of flawed systems and policies - dilemmas
that were fast coming home to roost anyway.

However, these problems go beyond the shortcomings of any indi-
vidual and are rooted in the false structure of our monetary system. To
understand how America is currently mis-ruled requires that we under-
stand the real monetary causes of the difficulties. To solve them will
require that our money system be based in law - not in lies.


On a global level, organizations such as the International Monetary
Fund, the World Bank, and the World Trade Organization, long assumed
to be serving the financial needs of mankind, have come under attack by
youthful demonstrators, charging that their real intent in promoting
“globalization” is not to serve but rather to ensnare humanity in a type of
perpetual bondage. Statistics do support their charges.

Yet on both the national and international levels, meaningful criticism
should also present a better alternative to the present monetary regime and
its tendency to consider mankind as so many economic units. To formu-
late such alternatives we must first examine the nature of money.


MONEY IMPACTS EVERYTHING

The effects of a flawed money system are not limited to economics,
and while monetary knowledge can lead to wiser decisions on personal
investments, society’s preoccupation with speculation is itself a symp-
tom of the wider disease.

Since the monetary question directly impacts all areas of human
activity, in order to make real progress towards justice, a clean environ-
ment, a sound energy policy, decent health care and retirement systems,
and greater real freedom of choice and action for the citizenry requires
the monetary problem to be addressed and solved first.

International developments also demand such knowledge. In Europe
the formation of the European Community is among the most important
geopolitical events of recent centuries, on the magnitude of the original
formation of the United States, and is bound to affect world events far
into the future.

A major part of this new political reality is the merging of Europe’s
national moneys into a single currency - the Euro. Although the media
concentrates on the political and economic aspects of the European
Union, history indicates that the monetary area will be of paramount
importance in shaping the European Community.


PRIMARY IMPORTANCE OF THE MONETARY POWER

The secular power in society is exercised largely through its mone-
tary and banking system. While much attention is focused on the elec-
tions of presidents, prime ministers, and representatives, the real out-
comes in society, such as whether there will be general economic justice,
or whether some groups will get special privileges, are often quietly
determined by the structure of the society’s money system.

These monetary decisions will most directly impact citizens’ daily


lives, more so than the activities of Congress, the President or the
Judiciary. Monetary decisions determine how money is made available
in the community and who gets it - whether it finances industry and
more environmentally friendly production and much needed infrastruc-
ture, or goes into speculation and other forms of corruption. It will
determine levels of employment and unemployment, incomes, interest
rates, and much more. It will shape health care and education and even
the arts. It will continue to determine whether the home population is
protected from biological and other attack, or is left to fend for itself.

Depending on their structure and implementation, monetary institu-
tions are in a position to do great good or harm to the society they are
supposed to serve. Citizen awareness can affect how these institutions
are formed and run. Since beginnings often determine the long range
functioning of institutions, it would be best if such knowledge can devel-
op and influence the European Monetary Union in its formative stages.

But even if this awareness requires more time to mature, it can still
be applied later, should the money system falter and require structural
reform. That’s the monetary task we face in America today.


OUR THESIS

The thesis of this book is that a main arena of human struggle is over
the monetary control of societies and that this control has been and is
now exercised through obscure theories about the nature of money. If it
had to be summarized in one sentence, it is that by misdefining the
nature of money, special interests have often been able to assume the
control of society’s monetary system, and in turn, the society itself.
Describing how this has been done historically will make these concepts
clear and vital, and hopefully sweep aside the mystification in which
money has been purposely shrouded. Guidelines for monetary reform
are then presented, to end the private control of monetary systems and
instead assert the public societal role to control money under the rule of
law, rather than the whims of men.


THE MAIN OBSTACLE - THE MYSTIFICATION OF MONEY

A major problem to understanding money is that, because so much
power is exercised through monetary systems, those who control the
systems and receive special benefits have protected those privileges by
shrouding the monetary concepts in secrecy and confusion.

These smoke screens, applied for centuries, have actually caused
many of the principles of the science of money to be lost, as various arts


and sciences disappeared during the dark ages. These principles are lost
to the general public, and to many in the economics profession, some of
whom have further confused the monetary picture.


MONETARY HISTORY HAS BEEN IGNORED

The mystification process succeeded largely because of the domi-
nant method economists have used to study money. From Adam Smith
to the Austrian School, they’ve placed too much emphasis on theoretical
reasoning - logical argumentation - rather than on direct observation.
Furthermore, they’ve tried to exclude considerations of morality from
their theorizing. About a century ago, the great monetary historian
Alexander Del Mar wrote:

“As a rule political economists...do not take the trouble to study the
history of money; it is much easier to imagine it and to deduce the prin-
ciples of this imaginary knowledge.”!

That this tendency has continued up to the present is confirmed by
the self-admitted methods of Ludwig Von Mises, who in The Theory of
Money and Credit, one of the bibles of the Austrian School of
Economics, wrote:

“The proof of a theory is in its reasoning.”

That might make sense if he were discussing mathematics, but not
economics. Von Mises actually attacked historical research:

“Knapp, as one of the standard bearers of historicism in political
economy, had thought that a substitute for thinking about economic
problems could be found in the publication of old documents.”

Knapp had launched his own verbal salvo in the introduction to his
State Theory of Money:

“I hold the attempt to deduce [the nature of money] without the idea
of a state to be not only out of date, but even absurd.” (p. vii)

The combatants in this struggle don’t stop at sarcasm, but sometimes
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