Borrowed Power: The Impact of Foreign Capital on a Country’s Destiny

The First Bank & the War of 1812

When the First Bank’s charter expired in 1811, the U.S. lost its central credit hub at exactly the moment war broke out. What did that tell contemporaries about the link between a nation’s financial infrastructure and its ability to wage (and win) war?

With a national bank, a country can easily raise funds in international markets by selling debt or loosening banking restrictions, which allows for printing money without causing a significant increase in inflation. However, without a national bank at its disposal, the young United States relied on the goodwill of various states to raise taxes. Each state was expected to contribute voluntarily to the federal government to support the war effort. Unfortunately, states in the North, such as Massachusetts, offered little to no support because they did not back the war, leaving the U.S. to fight without assistance from one of its wealthiest states.

The closure of the First National Bank of America appears to have been a contributing factor to the poor economic performance of the United States during the War of 1812.

Could the powerful European financiers of the late 18th century have quietly shaped the story we tell about banking? Casting themselves as indispensable architects of national prosperity? That familiar narrative that casts the national bank as a crucial element of government set the stage for President James Madison’s surprising change of heart in 1816. After the conclusion of the War of 1812, he signed into law the creation of the Second Bank of the United States, despite having significant reservations among his closest allies. Some argue that the war might not have begun if the First National Bank had not been established. They contend that its expiration in 1811 was a setback for European financiers, who then had new motivation to create financial turmoil in the young country, ultimately leading to the War of 1812.

Could influential European financiers, who were already experts in traditional credit systems, have discreetly guided Hamilton and his fellow founding fathers toward adopting a financial model similar to Britain's? It is well known that U.S. citizens of that era were highly skeptical and wary of British influence following the Revolutionary War. Throughout his life, Hamilton faced accusations that he was acting as an agent for renowned European banking interests. The timing and intensity of his support for banking raise important questions: could these moneylenders from London and Amsterdam have subtly encouraged America’s founders to establish a central bank? And in doing so, might they have sought to extend their influence across the Atlantic?

After the decline of the Federalist Party in the early 1800s, Thomas Jefferson emerged as a prominent leader in America. Under his influence, support for a national bank diminished significantly. Jefferson opposed centralized control over the nation and strongly advocated for the freedom of American citizens. He feared that a powerful bank could misuse its capital to exploit the nation’s resources for its own selfish interests, rather than serving the needs of the American people. Thus, the expiration of the bank's charter was intended to preserve America's economic independence.

Could America have truly prospered without European capital underwriting its first national bank?

In the aftermath of the Revolutionary War, the creation of a national bank, backed by overseas financiers, offered the young Republic something it had never seen before: a mechanism for coordinated economic policy across all thirteen states. This dream became a reality in the famous “dinner table bargain” between Alexander Hamilton and Thomas Jefferson. Over cocktails, they struck a deal that would:

• Consolidate War Debts. The federal government would establish a national bank, primarily funded by European capital, to buy up all unpaid war debts from each state government. This would encompass claims from both speculators and the bounties promised to Revolutionary War veterans. These debts would be combined into a single tradable asset, creating an incentive for the states to join the new Union under the written Constitution.

• Tie investors’ fortunes to America. By selling these debt bonds on international markets, the Bank ensured that European creditors had a direct stake in the nation’s success.

• Anchor the capital city. In exchange for supporting the Bank Bill, the seat of government (The White House) was sited on the Potomac—between Virginia and Maryland—to bolster Southern influence in federal affairs, a concession Jefferson would later regret.

Without European funding to establish this institution, the United States may not have achieved the fiscal unity or external confidence needed to stabilize its currency, implement a profitable tariff policy to increase treasury revenues, and create a shared national identity. Yet that very reliance sowed seeds of dependence—a paradox the Republic would wrestle with for decades to come.

Considering these factors, it's almost impossible to imagine an America thriving without the institutions and policies we often take for granted today. One thing is clear: without a national bank, America would have developed very differently, less prosperous, less innovative, producing and consuming far less. As a result, average life spans would be shorter, and infant mortality rates would be higher. Yet, paradoxically, the nation would still be “free and independent.”

I can't help but wonder whether Thomas Jefferson would have endorsed this vision, where the health and prosperity of citizens lagged behind even modest European standards, merely to uphold his lofty ideals. Although Jefferson placed a high value on liberty, I doubt he would have appreciated a decline in quality of life that could have resulted from rejecting the financial support that his own Treasury gained through the national bank.

How do newly independent states resist when dependence seems to be their only option?

In an ideal world, nations could develop freely without interference from exploitative financiers who attach themselves to the inevitable success of resource-rich countries.

A rational and free-thinking individual understands that people generally act in their own best interests. With this perspective, we can see that parasitical financiers do not prioritize a nation's financial independence; instead, they perceive this independence as a threat to their own interests. Consequently, it is reasonable to expect these financiers to use their considerable power to position themselves as the primary financial supporters of a new nation, whether through direct force or coercion.

With limited resources and mounting pressure, many leaders choose concession—but at what long-term cost to autonomy?

Endurance Over Resistance: A Look At Japan

Given that this new nation will likely lack the resources to resist such influence, it is understandable that its leaders may concede to this power. Resistance may drain more energy from the nation than it could hope to gain, especially since these financiers possess resources that far exceed the nation’s own.

The question then becomes: how can a nation achieve true freedom when it seems unable to escape the influence of parasitical financiers who might eventually control every aspect of its economy by manipulating the capital that flows through it? One potential answer is to bide your time. The Japanese serve as a compelling example. Their cultural traditions emphasize honor, integrity, and an unwillingness to concede defeat, even viewing death as preferable to surrender. During World War II, this belief contributed to some of the most horrific human atrocities in history, including the dropping of atomic bombs that killed hundreds of thousands of people in an effort to subdue the resilient Japanese spirit.

It seems that Japan learned a valuable lesson, as they have since aligned closely with America's needs. They have coordinated with the U.S. on global financial policy, purchasing much of America's debt and allowing the country to continue funding itself and thriving without resistance, until recently, that is, as America's debts have become increasingly unsustainable.

Now that America's debts have reached an unsustainable level and the nation is significantly overextended, it is showing signs of weakness. This situation is rebalancing the scales, as Japan, being one of America's largest creditors, now holds substantial control over its debt. Consequently, Japan has the ability to influence America's economic decline by selling the debt at a discount, raising interest rates, and eroding confidence in America's economic power.

What Japan and other countries in similar situations will do with this new power remains to be seen. However, as America faces new global competitors like China, Russia, and India, it may be in Japan's and other countries' best interest to coordinate with America's competitors (Russia, China, India, Saudi Arabia etc) rather than America itself. This article conveys two crucial lessons. First, it emphasizes the importance of pragmatism over idealism, the U.S. would not exist if it were to stick to the puritan ideals that birthed it. Second, it highlights that universal law, or God's law, always prevails; you cannot obtain something for nothing, and eventually, the debt will come due.

The Cycle of Debt & the Cosmic Perspective

The debt instruments used to finance America's growth have led to unprecedented prosperity. However, a significant vulnerability of this superpower is humanity's failure to rise above primal needs. This struggle drives us to seek something for nothing, prompting reliance on credit cards, financing growth through debt, and printing money to quickly address problems instead of pursuing more sustainable, long-term solutions.

The future is inherently more uncertain than the present, which makes it less valuable to us and contributes to a cycle of prosperity that is driven by debt. Historically, this pattern has always led to crises when economic bubbles burst and confidence in our ability to repay debt falters, resulting in periods of decline and even dark ages.

One day, humanity may realize that it is in our best interest to look beyond the short term. We should study our ancestors and understand that the path we are currently following might seem beneficial at first, but it often leads to catastrophic consequences. We have yet to experience a world with sustainable growth that doesn't reverse itself every century or so, when global economic stability collapses due to unsustainable debt levels.

In such a world, we would not witness the fall of great empires like Rome, Byzantium, Egypt, or Babylon. Instead, we would see cooperation among these societies, resulting in a compounding of their strength and power across economic, political, social, and spiritual realms. As humanity advances in efficiency, this progress would enhance all aspects of life.

Embrace Bitcoin’s Decentralized Future

A new world of possibilities is emerging right now. The direction taken by the new superpowers will likely dictate the future of humanity. Our current advancements present us with the opportunity to ascend to unprecedented heights or to completely destroy ourselves. We have faced these crossroads before—this is at least the second, if not the third time, or more. It’s as if we are characters in a grand story watched by a higher power, with many possible outcomes. Civilizations across the universe may be observing closely as we navigate these challenges.

What I know for certain is that the possibility for a new world and a sustainable future for humanity exists. It is up to each individual to use their God-given rational abilities and make the right decisions to help shape the best path forward for humanity. The choice is ours, and the power lies within us.