Deep Empire: Merchants of Misery

The expansion of Britain’s nascent empire was made possible by financial institutions – banks, trading houses and insurance companies, primarily based in the City of London.

This period saw countless numbers of merchant ships laden with muskets and cannons, crossing the Atlantic to Africa where the slave traders, having gone beyond merely kidnapping slaves with their private mercenary armies, would inveigle African tribal leaders into exchanging war captives in return for weapons of mass destruction. Eventually in this African arms race, all pretence of self-defence was discarded and tribes engaged in raiding purely for slaves. The human produce of this perpetual destabilisation was shackled in holds and transported to the Americas under the cruellest conditions in human history. There slaves were sold on to the slave owners who worked them to early death, or a fate worse than one, on their plantations. The world’s first slave society in service to a nation’s capitalist industry. The fruit of this shameful labour – sugar, tobacco and cotton, was then shipped to Britain to complete the vicious triangle.

At the heart of the international trade in human cargo, was the reliance on bills of credit. Slave traders, planters, sugar barons, arms dealers and maritime insurers, all relied on paper contracts written in human blood. As no banks existed in England until the mid-17th century, merchant traders in London, Bristol and Liverpool stepped in to become the bankers of the slave trade and the first lords of capitalism.


These first merchant bankers had evolved from goldsmiths who issued receipts for the gold and silver coins deposited with them for safekeeping. These receipts were the origin of today’s bank notes, and soon became the preferred medium of exchange. Observing that only a few customers would withdraw their precious metals at any given time, these early bankers began creating more receipts than the amount of gold and silver coins that they held in reality. They then lent out these excess receipts and charged interest on them.

It should come as no surprise that they quickly became very wealthy and very powerful. It should also come as no surprise, to economics students at least, that all this extra paper money chasing the same amount of goods and services resulted in price inflation.

It is important to note that the goldsmiths who created this excess paper money and their cronies that they bestowed easy credit upon were not harmed, as they could spend this new money before this price inflation occurred to reflect the increased number of receipts in circulation. People outside these privileged circles were not so lucky and effectively paid a hidden, heavy tax through this process of wealth de-distribution as the gap between rich and poor widened at an unprecedented rate.

The only check upon this fraudulent activity occurred when some borrowers or depositors demanded, rather than the paper receipts, more real gold or silver than was available in the vaults. The game was up as word spread and everybody queued up to reclaim their coins. This “Run on the Bank” resulted in its collapse and a corresponding deflation in prices as the paper receipts became worthless and the value of real gold and silver increased to reflect its true scarcity.

Overtime the proto-bankers observed this pattern of boom and bust and recognised that it was related to their own activity. Their cynical eyes saw that to prevent price inflation resulting from their surplus paper money chasing the same amount of goods and services required a compensating greater amount of goods and services to prolong the boom.

The burgeoning slave trade fitted the bill. Slave traders provided the services and slaves the goods. Unbridled credit requires unbridled economic expansion to prevent collapse.

A monopoly on slaves and gold granted to the Royal African Company in 1660, enabled the City of London merchants and the royal Stuart family to dominate trade by the end of the 17th century, overtaking the Portuguese, Spanish and Dutch. Three of today’s four horsemen of perfidious Albion – Lloyds, Barclays and HSBC played a prominent role in this trade in fellow human beings.

In collusion with the ruling powers of the day, royalty, aristocracy and government officials, the merchant bankers devised a means to develop, expand and sustain this scam in perpetuity. This first required the establishment of a central bank.

The Bank of England was established in 1694 when these financial oligarchs convinced King William III that it was necessary to rebuild his navy, which had previously suffered a disastrous defeat. The Bank lent out £1.2 million in newly created paper money at interest of 8% to the grateful monarch. He used it to finance his navy and army, which in turn waged wars to secure overseas possessions, including the slave routes and colonies. This monopoly on money creation was the beginning of the ever-expanding public debt-based money system we are at the mercy of to this day. The interest on this fraudulent debt would be paid by taxing the public, transferring wealth from the poor to the financial elite.

Its grand title served as a façade to deceive the public. In truth it was privately owned by stockholders. The Bank, acting not only as the government’s bank but also the banker’s bank, enabled this powerful collection of private, financial interests, the very same who owned the stock of the bank, paid for by the slave trade, to engage unhindered in their rapacious ways. Now, booms and busts, whilst presented to the public as chaotic and unpredictable phenomena, could be organised to the benefit of this institutionalised fraud and to the detriment of the unprivileged masses.

During the boom phase, paper money was created and distributed first to the chosen few within the protected inner-circle who then used to it buy goods of worth, companies, real estate and the like. As this new money entered circulation, prices of goods and services rose higher. To sustain this phase as long as was deemed necessary, the Bank of England could act to prevent bank runs by supplying the necessary gold and silver to protect any member bank collapsing.

Now the financial interests could bring about the bust phase in a controlled manner, on their own terms. The cronies would begin selling off their goods of worth, companies, real estate and the like which had increased in price, and then trade in their paper money for real gold and silver at the banks. These insiders then sat back and watched as the banks called in loans and people struggled to pay off their debts with increasingly scarce paper receipts. If it should happen that a run on a bank occurred, and the Bank of England did not wish to bail it out, it was allowed to collapse. The limited liability of these banks allowed the shareholders, who may well have participated in hollowing it out, to simply walk away and start again elsewhere, like the “Bust Out” that gangsters employ today.

Now, after this purging of price inflation, the cycle could begin anew as the cronies could buy up goods of worth, companies, real estate and the like which had reduced in price due to scarcity of money supply and a new boom phase was initiated.

This enhanced profit and insulation from intentionally inflicted woe enabled the merchant bankers to rule global trade from their base in the City of London.

Remarkably, this methodology still holds sway today in scarcely modified form.

Deep Empire Part 2: Fathers of the Revolution

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