William Bramley/The Gods of Eden/23

William and Mary Have a War

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Upon his assumption of the British throne, William III quickly undertook to erect the same institutions in England as those which had been established by his dynasty in Holland: a strong parliament with a weakened monarchy and a central bank operating on an inflatable paper currency. William and his queen, Mary II, also promptly launched England into expensive wars against Catholic France.

The man chosen to organize the English central bank under William III was a mysterious Scottish adventurer named William Paterson, of whom very little was apparently known. The British House of Commons (parliament) was at first reluctant to accept Paterson's central bank scheme, but relented as the British national debt continued to skyrocket from the conflicts launched by the very warlike William III. The paper money system with its built-in inflation was touted as the way to finance the costly wars. Taxes were already as high as they could reasonably go and so the House of Commons felt that it had no alternative but to institute the scheme. The Bank of England was thereby born and warfare could continue, just as war could continue in Holland after the Bank of Amsterdam had been created there. The Bank of England has been labeled by some economists the "Mother of Central Banks." It became the model for all central banks which followed it, including the central banks of today. Under the Bank of England scheme, the central bank was to be the nation's primary bank, and it would lend exclusively to the national government. The central bank's entire purpose was to put the government into debt and to be the government's major creditor. The central bank's notes would be lent to the government and those notes would then circulate as a national currency. This would cause the nation and its people to rely on those notes as money. The establishment of the Bank of England caused Britain to go deeply into debt to a monetary elite (the "paper aristocracy") which could then influence the use of the nation's resources. This is the modus operandi of every central bank today.

Like most modern central banks, the Bank of England was a privately-owned or privately-operated bank with quasi-governmental status. In accordance with Paterson's plan, the financiers who pooled their resources to create the Bank of England received approval from the government to issue gold and silver notes in a quantity many times exceeding the financiers' pooled holdings. The standard practice of bankers during that period was to issue notes four to five times in excess of their precious metals. The Bank of England, however, issued an incredible multiplication of 16 2/3. The British government agreed to borrow those notes and honor them as legal money for use in its purchases. The government accepted this plan because the government was not required to repay the initial loan, only the interest on the loan. Would not the Bank of England lose money on such a deal?

Not at all.

The face value of the loan notes were many times in excess of the value of the actual assets on which the notes were based. The interest on the loan in just one year surpassed the total value of the precious metals of the Bank of England! Specifically, the financiers had put together a total base of 72,000 pounds of actual gold and silver. By issuing notes valued at 16 2/3 times the base, the bank was able to make a loan to England of 1,200,000 Pounds in paper money. The yearly interest rate was 8 1/3%, which equaled 100,000 Pounds. This amounted to a profit of 28,000 Pounds, or 39% in just one year! Twenty-two years after the Bank of England was established, an identical bank was set up in France in 1716. The founder of the French version was John Law, who became the Finance Minister of France. Law has been dubbed the "Father of Inflation" for his efforts. This title is not accurate, of course, because the practice of inflation had begun earlier. However, the spectacular inflation which occurred in France after Law's central bank was nationalized gave Law the dubious, honor of the title.

As the son of a goldsmith-turned-banker, John Law was an interesting character in many ways. He was deeply devoted to the schools of Brotherhood mysticism that were behind many of the important social changes occurring in his time. Biographer Hans Wantoch, writing in his book Magnificent Money-Makers, describes Law as "one of the last of the alchemist-mystics, of the astrologers who were dying out in the time of Voltaire, but in his pursuit of the stone of wisdom he invented inflation." Another interesting fact is that Law was a Scotsman with an obscure background, just like his earlier counterpart in England, William Paterson. The Scottish link between Law and Patterson may be significant when we later review evidence that Scotland was an important center of secret, but far-reaching, Brotherhood activity in Europe.

Law had played upon France's justifiable paranoia of England in order to convince the French government to establish a central bank identical to that of Britain. The warfare which had earlier been instigated by William III was causing a serious drain on the French treasury. Law's proposal seemed an attractive solution and so it was finally adopted.

At first, the new French currency issued under Law's plan appeared to revitalize the French economy. This happened because the banknotes could be redeemed for coins in which the people had faith. After the Bank of France became nationalized, however, it issued a severe overabundance of notes, not just a careful and gradual increase. People quickly realized that there were far more paper notes in circulation than there were coins to back them up. The result was a shattering of popular confidence in the notes and a consequent upheaval of the French economy. The Glorious Revolution of 1688 not only gave us the Bank of England, which is still Great Britain's central bank today, it also gave us England's current royal family: the House of Windsor. The House of Windsor is directly descended from the royal family of German Hannover, which had intimate ties to the House of Orange and to other German principalities in the treacherous marry-and-overthrow clique. After William III of Orange/England died, his sister Anne was seated on the British throne. By prior arrangement, upon Anne's death, the British throne was relinquished by the Orange family to the rulers of the German state of Hannover, who had also earlier married into the British Stuart family. Hannover's first elector [prince], Duke Ernest Augustus (1629-1698), had married a granddaughter of England's King James I. As was true with the House of Orange, the Hannoverian nuptials to the Stuart family did not legally entitle any of the Hannoverians to sit on the British throne, but with the overthrow of James II by the Whigs and House of Orange, the rules were changed to suit the victors.

The first Hanoverian king to take the British throne was George Louis, who became George I of England. George I could not speak English and he viewed England as a temporary possession. He continued to devote most of his attention and care to his German homeland. As generations of Hanoverians ascended to the British throne, they became permanently entrenched in British society. The Hanoverians provided England with all of its monarchs through 1901, and Hanoverian descendants from Queen Victoria's side have furnished the rest all the way up until today. During all of that time, the dynasty continued to maintain strong ties to other German noble families. During the first century and a half of Hanoverian rule in England, for example, the British Hanoverian kings married only the daughters of other German royal families. Not surprisingly, there was widespread opposition in England to the Hanoverians after they took over. Many Englishmen understandably felt that German monarchs had no business reigning over British subjects. Anti-Hanoverian factions arose seeking to put the Stuarts back on the throne of England. Because of this, the Hanoverians decided not to allow a large standing army of native Britons, fearing they might stage a coup. Instead, whenever England required a large number of troops, the Hanoverians used money from the British treasury to rent mercenaries from their German friends and from their own German principality of Hannover, all at a most handsome fee. The greatest number of mercenaries were provided by the royal family of Hesse, which had close and friendly ties to the German House of Hannover. A curious aspect of the mercenary arrangement is that some important members of those German families, especially from Hesse, later emerged as leaders of a new type of Freemasonry which had been created to topple the Hanoverians from the English throne!

Before we study this remarkable situation, we should look to see what was happening with Freemasonry at that time. Major changes were unfolding that were about to make Freemasonry the single largest branch of the Brotherhood network.