by Jeff Matthews

Of Government, Banks and Corporations

The current financial times bring much distrust of government and its relations with banks and corporations.   And for good reason.   Government is but a tool for them.  This is nothing new, nor is the recent bail-out anything new.

Thomas Jefferson and William Giles had something to say on the topic in the 1820’s, when John Adams was U.S. Secretary of State and setting his eyes on the Presidency.   Giles wrote a letter to the American people.   In it, he noted that Adams was corrupt.   He stated how Adams took $100,000 of the Treasury’s money and deposited it with Metropolis Bank, a local bank in which Adams sat on the board of directors.

Giles wrote:

Now, I would ask, with what propriety, or from what motive, the Secretary of State recently drew about 100,000 dollars out of the public treasury – or, what is the same thing, out of the Branch Bank at Washington, where the money was deposited to the credit of the Treasurer of the United States – and placed it in the Bank of the Metropolis?   …. But why, it will be asked, should the Secretary of State be thus friendly disposed to the Bank of Metropolis?   I answer – he has been a dealer in stocks in the local banks, and is now, and has for some time, been a Director in the Bank of the Metropolis.

…. Indeed it is a solemn fact and, upon record that the public treasure of the nation does some how or another, find its way into almost every local banking institution, and many of them rotten to the core, where individual public agents happen to be either Presidents, Directors, or Stockholders; or connected with said Presidents, Directors and Stockholders of said institutions.

Jefferson subsequently wrote in a letter to Giles:

You ask my opinion of the propriety of giving publicity to what is stated in your letter, as having passed between Mr. John Q. Adams and yourself.  Of this no one can judge but yourself.  It is one of those questions which belong to the forum of feeling.  This alone can decide on the degree of confidence implied in the disclosure;  whether under no circumstances it was to be communicated to others?  It does not seem to be of that character, or at all to wear that aspect.  They are historical facts which belong to the present, as well as future times.  I doubt whether a single fact, known to the world, will carry as clear conviction to it, of the correctness of our knowledge of the treasonable views of the federal party of that day, as that disclosed by this, the most nefarious and daring attempt to dissever the Union, of which the Hartford convention was a subsequent chapter;  and both of these having failed, consolidation becomes the fourth chapter of the next book of their history.  But this opens with a vast accession of strength from their younger recruits, who, having nothing in them of the feelings or principles of ’76, now look to a single and splendid government of an aristocracy, founded on banking institutions, and moneyed incorporations under the guise and cloak of their favored branches of manufactures, commerce and navigation, riding and ruling over the plundered ploughman and beggared yeomanry.  This will be to them a next best blessing to the monarchy of their first aim, and perhaps the surest stepping-stone to it.

If Jefferson is contrasting “the feelings or principles of ’76” with “a single and splendid government of an aristocracy, founded on banking institutions, and moneyed incorporations,” then, we might as well ask what were “the feelings or principles of ’76?”  It seems Jefferson is saying that the feelings and principles of ’76 were a common desire during the founding generation to limit the influence of aristocracy, banks and powerful corporations.   It seems that Jefferson, at least as he recalls those feelings and principles, was acknowledging the existence of a “class warfare” that current Republicans now deride.  His concern was that the nation was headed in the direction of an aristocracy which would be “riding and ruling over the plundered ploughman and beggared yeomanry.”  Under Jefferson’s view, the class war was being waged from the top-down, where the aristocracy aimed to ride rough-shod over the working class.

Aside from the “class-envious” liberals out there and a handful of libertarian-minded people who oppose a national state of oligarchy by powerful banks and corporations, are there any feelings or principles of ’76 held by the right?  Consider some of the ideas Jefferson expressed as to how to deal with this problem in a letter he wrote to James Madison in 1785:

The property of this country [France] is absolutely concentrated in a very few hands, having revenues of from half a million of guineas a year downwards. These employ the flower of the country as servants, some of them having as many as 200 domestics, not laboring. They employ also a great number of manufacturers and tradesmen, and lastly the class of laboring husbandmen. But after all there comes the most numerous of all classes, that is, the poor who cannot find work. I asked myself what could be the reason so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are undisturbed only for the sake of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be labored.  I am conscious that an equal division of property is impracticable, but the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree, is a politic measure and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise. Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labor and live on. If for the encouragement of industry we allow it to be appropriated, we must take care that other employment be provided to those excluded from the appropriation. If we do not, the fundamental right to labor the earth returns to the unemployed. It is too soon yet in our country to say that every man who cannot find employment, but who can find uncultivated land, shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state.

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Does the above writing sound like someone who is all too concerned with protecting the private property rights of Goldman-Sachs?   Perhaps when Jefferson writes elsewhere about the importance of private property, he is talking about the property rights of those people who he referred to above as “the most precious part of a state.”

In summary, when looking back to Jefferson and the principles of ’76, it would help to properly frame history as it actually existed.   Our founders did not go to war to preserve the sacred property rights of an aristocracy.   They went to war to crush the aristocracy and its miserable influence.   Now, here we are, 235 years later, and we have an aristocracy that has grown so large in size and influence, that it has the power to collapse the economies of the entire world and wreak havoc all throughout the middle classes.   Give that some thought…

Jeff Matthews [send him email] is a practicing attorney in Houston. He graduated from the University of Texas, School of Law in 1993 and was licensed that year.

Copyright © 2011 by Permission to reprint in whole or in part is gladly granted, provided full credit to the author and this website is given.

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