In France, Rousseau’s social order was introduced in early June 1793 and lasted until July 1794, when the Reign of Terror ended. After a series of revolutions in the 19th century, the social order regained state validity.

Next week, I will discuss the religious ideas behind the two forms of contract theory. It will become clear that these ideas contradict the Christian faith. This was most evident during the Progressive Era (1896-1923) in the United States.

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Since that time, renowned economists have given much thought to the significance of the phenomenon of inflation. There are numerous books on this important subject, both advocating and opposing it. One of the main motivations for pushing inflation is the consideration of forcing all countries in the world, including the population of one’s own country, to bear the costs of war against their will. To achieve this goal, the mechanisms used by William III in his war against King Louis XIV of France were modified so that no country in the world could protect itself from financial exploitation. Few things could be more important than understanding the processes that lead to inflation.

How did this magical system of money creation come about? After the Middle Ages, the state derived most of its revenue from taxes. In addition to having direct access to the wealth of their subjects, rulers also wanted to create their own money. Before the invention of paper money, there was only one way to create money. Since the state had secured a monopoly on minting and issuing coins made of precious metals, it was able to reduce the value of the coins by using base alloys. The disadvantage of this method was that the debasement had to remain a one-time process in order to avoid arousing the suspicion of the population. The continuous increase of the money supply had to be ensured by other means. The state apparatus, controlled by a powerful upper class, required enormous sums of money from the treasury to cover its expenses. Prestigious buildings such as palaces, government buildings, and universities consumed scarce resources, while the construction of warships and the maintenance of a mercenary army required even greater sums.

The first municipal exchange bank to achieve legendary status was the Amsterdamsche Wisselbank, founded in 1609 by a group of Dutch merchants to solve the problems of coinage. The Dutch learned from the Italians that the most successful banks could combine the best features of paper and gold currencies. And so it was:

In Amsterdam, the bank accepted domestic and foreign coins, weighing and valuing them according to their purity. In return, it issued credits or bank money, a form of paper money that represented the intrinsic value of the coins’ metal content rather than their face value.

Paper money was invented by the Chinese and used there since the 7th century, but there was a danger that was closely linked to the advantages of bank money. In the mid-17th century, continental banks began the long-unrecognized practice of creating money. The temptation to issue too many notes was irresistible. Probably as early as 1656, the Amsterdam Wisselbank had secretly crept into the practice of issuing money by lending deposits that used the same money twice. Rupert J. Ederer has pointed out this fateful fact:

The Wisselbank finally ushered in a new monetary age. A wonderful new power had arisen, probably equal to the possibilities of the discovery of coinage. For more than a hundred years, the bank literally created money without being discovered.

In doing so, the Wisselbank created the first significant innovation in the history of money since the invention of coinage by Gyges of Lydia in the 8th century B.C. Seeing their hated trading rival Holland rise to become a world trading power inspired the English to adopt the same system, albeit almost a century later.

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If this mechanism of warfare based on deliberate deception is exposed and abolished, wars will cease from one day to the next. But those who profit from wars will do everything in their power to prevent this from happening. This is the real story behind what is currently happening in Ukraine and the Middle East.

When William of Orange, King of the Netherlands, ascended the English throne in 1689 as William III with his wife Mary, he faced an almost insoluble problem. His greatest desire was to wage war against Louis XIV of France, but his treasury was empty.

At this opportune moment, the Scottish adventurer William Paterson (1658-1719), representing a group of financiers, approached Charles Montague, 1st Earl of Halifax (1661-1715), one of the four members of the so-called Whig Junto, and submitted a remarkable plan to Parliament. Despite his shady past - he was rumored to have been a pirate - he soon gained the confidence of a group of merchants from the City of London, and together they approached the government with an extraordinarily ingenious proposal. Since that time, the way wars are fought has changed fundamentally, and wherever military conflicts are fought today, they are fought in the same way. To understand this new mechanism of war, it is important to know how it came about.

To strengthen the power of the government and to pursue an imperialist foreign policy, the English Whig Party sought colonies for the English crown, trade advantages, raw materials, and export markets. The French empire stood in the way of these ambitions and was defeated in a war that lasted for decades. The British war policy swallowed up huge sums of money and threatened to drive England into financial ruin. Since the government had lost its credit rating during the Civil War, it was politically impossible to raise enough money by selling more government bonds. The preferred solution was to raise taxes. But even that was blocked because England had just emerged from a long civil war that had broken out because King Charles I wanted to expand his taxing powers. With private bankers refusing to lend the new government money to finance the immense tasks of government, particularly the procurement of war material and the recruitment of an army, King William III was forced to take the drastic measure of suspending payments from the treasury. The consequences were to be monumental. Only two decades after confiscating the coin gold of the scriveners (financiers), the new government virtually destroyed the private deposit business in one fell swoop. At the same time, it lost any possibility of borrowing for state business. But now there was the threat of endless wars with France. Since France was the most powerful and richest country in Europe at the time, a long war with the House of Bourbon would certainly have cost the English enormous sums, which the king could not afford. Where was the government going to get the money for that?

In 1693, a committee of the House of Commons was charged with devising a plan to finance the war against France without resorting to the usual sources of government revenue. A brilliant plan was devised to get an endless amount of money into their own hands to invade and plunder other countries. Part of the cost of the war was then paid with this loot, called reparations; but only part, because the war profiteers pocketed the most valuable loot.

The sleight of hand is called “super-imperialism by inflation.”

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In the mid-17^th century, three wars broke out between the two leading maritime powers: England and the Netherlands. The final decision as to which nation would dominate world trade was made during the Dutch invasion of England in the fall of 1688. Four hundred sixty-three ships, loaded with twenty thousand soldiers, crossed the English Channel. Following the overthrow of the English monarch, they sailed up the Thames to London. Would the Dutch king have succeeded in defeating the English with comparatively few casualties if James II of England had not been betrayed by a group of English landed gentry, the Whig Junto?

Willem of Orange did not invade England with his army and hope for the best. He and his representatives had conspired with leading English dissidents for some time. This ensured that he would encounter minimal resistance from James II’s forces. Furthermore, prominent members of England’s politically and economically influential classes supported his cause. Disappointment with James II—who vehemently opposed the political dominance of financiers—was so great among England’s bankers and merchants that many of them helped finance Willem’s invasion. As a result, some 200,000 pound sterling flowed into Willem’s coffers in just six weeks, from July to August of 1688. A conspiracy within the Navy was intended to ensure that Willem encountered minimal resistance when crossing the English Channel. Arthur Herbert, 1^st Earl of Torrington, an English admiral and politician whom James II had replaced with the Catholic Roger Strickland, defected to Willem’s side that summer. Herbert was to lead the Dutch invasion force. He also persuaded many ship captains, who had previously been under his patronage, not to fight against Willem. Ultimately, however, the fruits of the conspiracy were never put to the ultimate test, as unfavorable winds prevented the English fleet from leaving the mouth of the Thames to attack the Dutch. Dissatisfied nobles in northern England also conspired to secure the north of the kingdom for Willem. However, unfavorable winds prevented Willem’s large war fleet from sailing up the east coast to join forces with the dissidents. Instead, the fleet sailed down the English Channel.

Willem brought with him a considerable number of disgruntled English and Scottish exiles, including “resentful nobles, dismissed members of Parliament, traitors, spies, rebels, republicans, officers, and unruly clergymen.” Among them were the Lords Cardross, Leven, and Macclesfield, as well as the philosopher of liberalism, John Locke. These dissatisfied Englishmen and Scots drew upon the resources of a man who was the head of a foreign state. He was married to the heir to the English, Scottish, and Irish thrones, and he was third in line to the throne himself. The goal was to subject the three kingdoms to foreign rule and free them from the perceived tyranny of a Catholic king, which was in line with the wishes of the Whig Party, the majority of whom were British Protestants who wanted to introduce the financial system of Amsterdam bankers into England.

What was the purpose of the invasion of England—later dubbed the “Glorious Revolution”—by its greatest commercial rival in trade with the Far East and in establishing a global colonial empire? The result was the violent and treacherous imposition of an entirely new world order. Referred to as a “revolution,” the invasion was the decisive triumph of anti-Christian, greedy liberalism in the guise of Protestantism and laissez-faire. It marked the transition from a monarchical form of government to the rule of international financial power. The monumental consequences this would have for the subsequent period, up to the present day, are outlined in my book, The Greed for Gold and Glory.

The turbulent years leading up to the Dutch invasion of England are portrayed in the feature film “The Admiral: Battle for Europe.” From a Dutch perspective, the film is relatively faithful to history, aside from the negative portrayal of the “evil” Calvinists. It is intended for an audience interested in the effects of mercantilism in the mid-17^th century.

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World Federation: The Ecumenical Agenda is an excellent work which informs us of the past and gives us much to consider for the future. Erdmann writes of the era when World War I was approaching and a number of influential people gave thought to what could possibly abolish war and solve most of the world’s social ills. Following the Great War it was determined by many that only a “new world order” could accomplish such a feat. With the signing of the Treaty of Versailles many felt the seeds for the next world war were planted and, as the next twenty years demonstrated, they were correct.

Something had to be done about war and its lasting devastation. A new world order was urgently needed but standing in its way was the issue of nationalism. John Foster Dulles, the principle mover behind the new world order, believed the “solution [lay] in the abolition of the entire concept of national sovereignty and the unification of the world into a single nation. All boundary barriers are thus automatically leveled” (p. 115). Leading the charge in establishing such a world order would have to be Great Britain. The British Empire had the most “excellent and refined qualities of humankind” (p. 53), and “British imperialism and the spread of social welfare were fundamental to the continuous existence of the British way of life” (p. 53).

If a new world order was to be established, the British Empire, along with the United States, would have to lead (pp. 45-47, 77-84), nationalism would have to be abolished and a world commonwealth would have to be established, a commonwealth which would unite the nations of the earth into a confederacy similar to the design used in establishing the United States (pp. 95-101). However, politicians and governments could not accomplish this goal alone; something even more powerful was needed—the church. If the church could be convinced that by creating a new world order in which war, poverty and injustice were eliminated, and that they were also ushering in the kingdom of God, then the church would gladly join hands with politicians to bring about such a world society. It was Dulles’ goal “to motivate the churches to become actively involved in building a global society” (p. 119; see also pp. XII; 86-87).

The Federal Council of Churches was on board as became clear in their Social Creed of 1932. One leader stated, “We are coming to see that the kingdom of God in Christ’s conception never means anything less than a righteous human society […]. He has come not alone to save people out of the world and fill them for a far-away heaven, but to make a heaven here. He has come not to patch up human society and make the world a little less intolerable for men, but to make all things new and create a new social order” (p. 208).

By downplaying doctrine (p. 418) and “applying the principles of socialism […] the kingdom of God on earth would be set up according to the ecumenical ideal” (p. 419). The kingdom of God, having been stripped of all biblical and theological distinctives, now was virtually identical to the new world order and its political and social agenda.

But just as national sovereignty was a detriment to a new world order, so too an exclusivist Christianity would deter the coming of the kingdom of God. It was therefore necessary to recognize that “the moral, or natural, law is revealed through other religions, and can be comprehended by all men, so that it is a force far more universal than any particular religion” (p. 189). Since dogmatic beliefs were incompatible with ecumenical unity they were laid aside in favor of the Social Gospel as expressed in the Social Creed of 1932. The true mission of the church according to the Federal Council of Churches was to build the kingdom of God on earth (pp. 195, 197, 202-203, 213). Saving of souls from sin was replaced with saving the world from war, poverty, unemployment and injustice. In order to accomplish this the world religions would have to be involved but, just as Britain and America led the political charge, so too Christianity would lead the religious charge.

Thus, between the World Wars a liberal postmillennial view of the kingdom of God dovetailed with a political push for a new world order. This led to the formation of the World Council of Churches in 1943 to build God’s kingdom through the Social Gospel (p. 387). On the political front the United Nations Organization was formed in 1945 to bring about a one world government (pp. 404-406).

The ambitious goals behind these two organizations have never been realized although they continue to be the heartbeat of many political and religious leaders. Most recently, within Christianity the emergent church movement has re-energized the postmillennial liberal attempt to establish the kingdom of God on earth through a social agenda. Using virtually the same verbiage, methods and propaganda, emergent leaders are indoctrinating a whole new generation with an unbiblical understanding of the kingdom of God and the mission of the church. To read Erdmann’s book is to be forewarned of what is transpiring today.

World Federation: The Ecumenical Agenda is an excellent historical study of all the events described above (and much more) during the first half of the twentieth century. It is a scholarly work with extensive footnotes for the researcher. The book will inform you of the past and prepare you for the present and future. I recommend it highly.

Erdmann, M. (2022): World Federation: The Ecumenical Agenda (Verax Vox Media), 389 pages, ISBN: 978-1737348306, price: 9,99 USD (Kindle Edition), 29,90 € (paperback); 37,90 USD (hardcover)

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Martin Erdmann’s two-volume work, The Metamorphosis of Liberalism, is an in-depth analysis of the development of liberalism throughout history and its adaptation to changing social and political realities.

Who is the author?

Dr. Erdmann has an academic background. He studied theology at Columbia International University, the University of Basel, and the University of Aberdeen. He earned his doctorate in church history at Brunel University London and later completed his habilitation in dogmatic theology at Gáspár Károli University in Budapest. He was the head of the New Testament department at the Basel Non-State Theological University and taught at Patrick Henry College in Virginia. He authored a study on ethical issues in nanotechnology for the University Hospital of Basel and has been the director of the Verax Institute since 2003.

What are the books about?

In this two-volume work, the historian and theologian examines the theoretical foundations and practical implications of liberalism, tracing the shift from classical to progressive liberalism in light of the Christian faith. “Even in religious matters, reason retains certain powers.” He focuses primarily on intellectual developments in the United States.

The books are divided into thematic chapters, each addressing a specific aspect of liberal ideology and its evolution. Erdmann begins with the Reformation’s impetus for a liberal social order, then provides a historical introduction tracing the origins of liberalism in the 17^th and 18^th centuries. He places particular emphasis on the philosophical contributions of John Locke and Adam Smith. He then examines the evolution of liberalism from the Enlightenment through industrialization to modern globalization. Through this examination, the reader can see how the core principles of liberalism—freedom, individuality, and the market economy—have adapted to the challenges and crises of each respective era. “Neither transcendentalism nor deism achieved the same degree of penetration into the key areas of American culture as social Darwinism.”

A central theme of the book is the tension between classical liberalism, which emphasizes individual freedom and minimal state intervention, and modern liberalism, which considers social justice and state regulation necessary as well. The author demonstrates that both describe the current civil religion. “Christians are called upon to abandon their trust in God and serve the new world order.” Ultimately, both approaches disregard God in their core tenets, which is why they must be understood as a frontal assault on Christianity. “This spiritualized philosophy is essentially a religion that deifies human beings.”

Chapter ten is particularly noteworthy. The first nine chapters provide context to help readers understand the tenth chapter, in which the author presents the administrative state as the end product of progressive liberalism. Erdmann argues that the future will bring only a more consistent implementation of the development that has already begun, giving rise to the administrative state. “We no longer live in a republican democracy governed by a constitution, but rather, in a romantic democracy guided by entirely different political principles.”

Erdmann’s work impresses with its ability to explain complex theoretical concepts in an accessible way without sacrificing depth or precision in scholarly analysis. He draws on a wide range of historical and contemporary sources to support his argument and repeatedly draws parallels to the current political situation (nearly 40 pages of references).

Who should read this book?

The author addresses students and scholars of political theory, history, and philosophy, as well as readers interested in politics. Those interested in history will also find valuable insights into the development of liberalism. Professionals, such as politicians and journalists, can benefit from Erdmann’s well-founded analyses to gain a better understanding of current political debates. General readers without an academic background will be drawn in by Erdmann’s accessible writing style, but they must bring perseverance, active engagement, and genuine interest to the text.

What are the critical points?

The complex theoretical concepts and in-depth analysis may be difficult for readers without prior knowledge of political theory and history to understand. However, the first 25 pages provide a tabular comparison of the key tenets of classical and progressive liberalism and biblical Christianity. Reading and reflecting on this content first will help you follow the central thread of the work. Nevertheless, the extensive analysis may overwhelm some readers, impairing readability and flow. Including summaries and clear key points at the end of each chapter or taking a more concise approach could help readers process the content more effectively.

Why should one read this work?

This two-volume work is a valuable resource for anyone interested in political theory and history. The author presents the development of one of the most influential ideologies of the modern era in a comprehensive and accessible manner. The book challenges readers to view liberalism not merely as a static ideology but as an active force that leads to poverty, loss of freedom, and ultimately, war. This perspective is particularly important at a time when political and social structures worldwide are undergoing transformation. Christian readers will recognize the anti-Christian themes foreshadowed in Scripture. “It is our responsibility to turn away from sin and place our hope and lives in Jesus Christ as our Lord and Savior.” In the meantime, we must patiently endure any trials that come our way. God has ordained this time for us. He has called us to bear witness in an age when evil grows ever worse in the name of ‘progress’ and ‘freedom.’ Let us not be ensnared by this world and its machinations. The Lord truly rewards those who persevere in faith.”

The volumes:

· Erdmann, M. (2024): The Metamorphosis of Liberalism (vol. 1), Verax Vox Media, 315 Seiten, ISBN: 979-8988514060, price: 28,80 USD

· Erdmann, M. (2024): The Metamorphosis of Liberalism (vol. 2), Verax Vox Media, 337 Seiten, ISBN: 979-8988514084, price: 28,90 USD

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Why I Wrote About Reflexive Law In Technocracy Rising (2015)

Posted By: Patrick Wood

The most misunderstood facet of Technocracy is Reflexive Law. I have asked many lawyers (even Constitutional scholars) to explain it to me over the last 11 years, and not one could answer. The legal community is clueless. Perhaps you, as a layperson, can understand why we have lost almost every legal battle in the last 30 years. It’s time to restate my case: Reflexive Law is not substantive law, case law, or administrative law. – Patrick Wood Editor.

The central argument made in Technocracy Rising was that Reflexive Law is not merely one legal theory among many. It is the precise legal system required by Technocracy because it replaces substantive law, democratic accountability, and fixed constitutional limits with process-driven governance administered by institutions, experts, corporations, and networked regulators.

That identification was correct then, and the intervening years have only made it more obvious. The language of sustainability, stakeholder governance, resilience, innovation, transition finance, and digital modernization has supplied a moral veneer, but the underlying legal mechanism remains the same: power migrates away from legislatures and electorates toward self-regulating systems that are supervised, but rarely constrained, by public authority.

This is why Reflexive Law matters so much.

It is not just a technical legal doctrine. It is the jurisprudence of managed society. It tells the state not to command directly, but to induce self-adjustment in corporate, financial, environmental, and technological subsystems. It tells regulators not to draw bright-line prohibitions, but to create frameworks, incentives, reporting obligations, and adaptive procedures through which the regulated parties learn to govern themselves. It tells the public that outcomes no longer matter as much as compliance with approved processes. Once that shift occurs, law ceases to be a barrier and becomes a transmission belt.

That is why the theory fits Technocracy with such precision. Technocracy has always sought rule by calibrated systems rather than by representative institutions. It prefers metrics over morals, administration over politics, and managed adjustment over open contestation. Reflexive Law gives that ambition a legal form. It transforms law from a command backed by sovereign authority into a procedural environment in which approved actors internalize policy goals and then certify their own conformity to them.

The result is an order in which experts, institutions, and transnational corporations are empowered to set the terms of governance while the population is left to navigate systems it did not design and cannot effectively challenge.

The United Nations and its legal theorists saw this utility long ago. Sanford Gaines explicitly described Reflexive Law as a legal paradigm for Sustainable Development, arguing that it works by specifying procedures for regulated entities to follow while declining to define a required substantive outcome in advance. That single admission is extraordinarily revealing. Sustainable Development, as operationalized through Reflexive Law, does not chiefly govern by immutable law. It governs by iterative procedure, by mandated consultation, by disclosure, by stakeholder processes, and by institutional adaptation.

In other words, it is a legal architecture tailor-made for a technocratic order that seeks continuous social steering without the inconvenience of overt political responsibility.

This is also where mercantilism enters the picture. Mercantilism is often misremembered as nothing more than state protectionism, bullion hoarding, or imperial trade policy. In reality, it was a system in which politically connected commercial actors received legal privileges, monopoly rights, and financial protections from state power in exchange for helping administer economic empire.

It was never simply the state dominating the market. It was the fusion of state authority with privileged private networks. The merchant class did not abolish political sovereignty; it colonized it. The state granted charters, monopolies, armed protection, and monetary favors, while private companies extracted wealth through trade, finance, and colonial control.

That is why my friend Martin Erdmann’s work is so important, and why his influence must be acknowledged. Erdmann was my original mentor in cracking Technocracy because he helped expose the long historical continuity behind systems that many analysts still treat as separate phenomena.

His argument in The Greed for Gold and Glory (2025) is that mercantilism was never abolished; it was relocated, refined, and internationalized through successive financial centers, culminating in the modern City of London and its offshore satellites. That insight illuminates the whole present moment.

Once mercantilism is understood not as a dead doctrine but as a mobile operating system of power, Reflexive Law appears in its proper role: the contemporary legal mechanism that allows mercantilist structures to function under modern conditions.

Erdmann traces the pattern across Venice, Spain, France, Amsterdam, London, and eventually the Anglo-American financial world, arguing that the extractive mechanism retained its essential shape even as its outward forms changed. The recurring elements were oligarchic control, privatized money creation, monopoly privilege, state-backed enforcement, and ideological narratives that justified unequal access to power. That list should sound familiar, because it maps directly onto the architecture of modern Technocracy. The names have changed, the rhetoric has changed, and the tools have changed, but the legal-political structure is remarkably consistent.

The City of London stands at the center of this continuity. Erdmann’s reviewer describes the square mile as a self-governing financial district with ancient charters, its own taxes, its own police, and a constitutional status unlike ordinary democratic jurisdictions. In parallel, commentary on the City’s offshore empire characterizes it as a command center for global wealth routing through Crown Dependencies and associated jurisdictions that operate through special legal arrangements and regulatory latitude.

This is not an accidental quirk of British history. It is a living example of semi-autonomous financial sovereignty embedded within, but not fully subject to, the nation-state.

Here the connection to Reflexive Law becomes unmistakable. Reflexive Law is regulation of self-regulation. The City of London is the institutionalization of self-regulation at financial scale. Its power lies not only in accumulated capital, but in its ability to shape the norms, procedures, and legal environments through which capital circulates.

The City does not merely ask governments for freedom from rules. It asks for a collaborative, process-based, growth-oriented regulatory culture in which regulators and industry jointly construct the conditions of oversight. That is reflexive governance in action.

The City of London Corporation’s 2025 report Regulating for Growth made this orientation explicit. It called for a cultural shift in financial regulation, emphasizing that regulators, government, and industry should align around competitiveness and growth. This is a classic reflexive move.

The regulator is no longer a sovereign external authority drawing hard legal boundaries. Instead, the regulator becomes a partner, facilitator, and adaptive supervisor working inside the same procedural ecosystem as the regulated firms. Once regulation is framed this way, the legal system no longer restrains mercantile ambition; it optimizes it.

This is how Reflexive Law has greased the skids for mercantilism. It dissolves the old public-private distinction without ever publicly admitting that it has done so. Under substantive law, monopoly, fraud, conflicted self-dealing, and political favoritism can at least be named and prohibited. Under reflexive governance, these problems are translated into matters of disclosure, risk management, stakeholder engagement, resilience planning, or best-practice reporting.

The offense is no longer exploitation itself, but failure to follow process. As long as the right procedures are observed, the underlying transfer of power can continue.

The genius of this arrangement, from the standpoint of elite institutions, is that it appears modern, humane, and adaptive. It speaks in the language of sustainability rather than empire, inclusion rather than monopoly, innovation rather than enclosure. But the structural logic is the same mercantilist logic that Erdmann documented: privileged financial actors receive legal protection, procedural autonomy, and political access, while the broader society bears the downstream costs.

Reflexive Law does not create mercantilism out of nothing. It updates mercantilism for an era in which open monopoly charters would provoke public resistance.

The move into blockchain ledgers and tokenized assets shows this with exceptional clarity. The Bank of England has stated that it is prioritizing systemic stablecoins, tokenized collateral, and the Digital Securities Sandbox as key pillars of the United Kingdom’s digital financial future. The sandbox is designed to let firms test issuance, trading, and settlement of securities on distributed ledger systems under a controlled regulatory framework. This is reflexive law translated into digital finance.

Rather than the legislature first setting a comprehensive body of fixed rules, public authorities create a bounded experimental zone in which market actors, regulators, and technologists learn together and adapt as they go.

The phrase “learn as we progress,” used in connection with the Digital Securities Sandbox, should be read as more than harmless technocratic language. It is a succinct summary of reflexive governance. Law is no longer a prior limit. It becomes an iterative accompaniment to financial experimentation. Market infrastructure firms test models; regulators observe; standards emerge through practice; and the entire process is presented as prudent innovation management.

Yet the effect is to permit the gradual legalization of new forms of asset control, payment intermediation, and ledger-based ownership before a democratic public has meaningfully understood what is being built.

Payment tokenization and asset tokenization are often sold as neutral efficiency upgrades. In practice, they create the technical substrate for an unprecedented merger of financial surveillance, programmable compliance, and asset fractionalization. Regulated stablecoins can become settlement instruments.

Tokenized collateral can circulate through wholesale markets. Sovereign debt, private credit, real estate interests, and fund shares can all be represented as ledger entries that move inside tightly governed digital systems. The blockchain ledger is frequently marketed as decentralizing, but under the emerging institutional model it is better understood as a synchronized record-keeping infrastructure administered by approved intermediaries within approved rule sets.

That matters because mercantilism has always depended on privileged control over the channels of exchange. In the older era, those channels were sea lanes, chartered companies, ports, bullion flows, and central banking franchises. In the present era, the channels are payment rails, custody systems, digital identity frameworks, settlement networks, and tokenized asset registries. Whoever writes the rules for those channels possesses mercantilist power, even if the rhetoric is post-national and the branding is technological.

Reflexive Law is the lubricant that makes this transition possible. Instead of asking whether tokenization should be permitted in a substantive constitutional sense, reflexive governance asks how it should be piloted, supervised, risk-assessed, and aligned with innovation goals. Instead of debating whether payment systems should become programmable tools of policy, reflexive governance asks how resilience, interoperability, and compliance guardrails can be optimized.

Instead of prohibiting concentration, it manages concentration procedurally. Instead of denying mercantilist privilege, it digitizes mercantilist privilege.

This is exactly why the City of London is so important in the story. The City has long served as an incubator for legal and financial arrangements that operate at some remove from ordinary democratic scrutiny. Its offshore networks, legal services, and market infrastructures make it uniquely suited to host the transition from analog mercantilism to digital mercantilism.

When the Bank of England, City institutions, global law firms, and market participants gather around tokenization, what is being built is not a populist financial commons. It is a new enclosure system, one capable of wrapping assets, payments, and compliance functions into highly legible, highly governable digital frameworks.

One should be very clear about the political theory embedded in this change. The older liberal model at least pretended that law stood above commerce and that government derived legitimacy from public consent. Reflexive Law abandons both assumptions in practice. It assumes that complex systems cannot be governed by command, only by adaptive procedures. It assumes that expert-managed coordination among regulators, firms, NGOs, and transnational bodies is superior to parliamentary struggle or constitutional adjudication. It therefore gives the commanding heights of society to those best positioned to participate in procedural governance: major institutions, not ordinary citizens.

This is why Sustainable Development and ESG were never merely moral campaigns. They were governance technologies. The point was to relocate authority from explicit legislation to standards, disclosures, audits, frameworks, reporting systems, and transnational councils. Once that infrastructure exists, it can be attached to finance, energy, property, supply chains, digital identity, and eventually tokenized assets.

The legal architecture does not need to seize everything directly. It only needs to make participation in economic life contingent on compliance with managed procedures.

Mercantilism thrives in exactly that environment because mercantilism is not threatened by proceduralism. It feeds on it. The more governance becomes complex, transnational, and data-driven, the more advantage flows to large actors with legal departments, compliance teams, lobbying access, and privileged relationships with regulators. Small competitors, local communities, and politically unconnected citizens are pushed outward. They face rule systems they cannot negotiate and technical standards they did not help write.

That is how monopoly reappears without calling itself monopoly.

Erdmann’s historical contribution is to remind readers that this pattern is old. The governing families, the extractive mechanisms, and the legitimating ideologies persist across centuries even when the institutional forms evolve. The East India Company had a charter, a flag, and cannon. The modern system has sandboxes, stablecoins, ESG frameworks, and distributed ledgers. But the functional resemblance is too strong to ignore. In both cases, privileged private actors operate inside state-protected legal arrangements that expand commercial control while claiming to serve a civilizational mission.

The mission statement has changed from spreading empire to saving the planet, modernizing finance, or democratizing access. That rhetorical shift is significant, but it should not distract from the mechanics. Mercantilism has always required an ideology noble enough to mask extraction.

Today, Reflexive Law provides the legal script through which that ideology is operationalized. It converts aspirations into procedures, procedures into standards, standards into market permissions, and market permissions into durable institutional power.

Seen in that light, the current enthusiasm for tokenized real-world assets, programmable payments, and blockchain settlement is not a break with history. It is the continuation of a very old story. Assets are being translated into digital claims that can be monitored, partitioned, pledged, and exchanged with unprecedented granularity. Payments are being drawn into infrastructures designed for conditionality, traceability, and integrated supervision.

Financial law is being softened into experimental governance so that these transformations can proceed under the banner of innovation. The legal bloodstream carrying all of this is reflexive rather than substantive.

That is why identifying Reflexive Law as the legal system of Technocracy was not only defensible, but necessary. It named the jurisprudential form of a broader civilizational shift. Without that term, many observers could see the rise of stakeholder capitalism, ESG, transnational governance, and programmable finance, but could not explain why these developments so often bypassed democratic accountability while retaining the aura of legality.

Reflexive Law explains the bypass. It shows how law can be used to hollow out law, how process can replace principle, and how regulation can become the method by which power immunizes itself from political challenge.

It also clarifies why the City of London remains so pivotal. The City is not simply a financial center among others. It is a historical node where mercantile privilege, offshore legal engineering, monetary innovation, and political exceptionalism have long converged. In the age of blockchain finance, that legacy does not disappear. It mutates. The same jurisdictional genius that once managed Eurodollars and offshore entities can now help manage tokenized securities, digital collateral, and regulated stablecoin ecosystems.

Reflexive Law supplies the adaptive legal machinery; the City supplies the institutional habitat.

The result is an emerging order in which mercantilism no longer needs explicit imperial language. It can operate through sustainability mandates, innovation sandboxes, public-private councils, and distributed ledgers. It can claim transparency while concentrating control. It can promise access while enclosing participation. It can praise decentralization while consolidating governance in the hands of approved nodes and approved issuers.

This is mercantilism rendered elegant, digitized, and morally laundered.

For that reason, the original identification stands stronger than ever. Reflexive Law is the legal operating system of Technocracy because it enables managerial control without admitting sovereignty, coercion without explicit command, and social transformation without democratic consent. It also functions as the modern legal grammar of mercantilism because it lets privileged commercial actors write and inhabit the procedures through which wealth, rights, and assets are organized. Martin Erdmann’s historical work helps reveal the continuity; the City of London demonstrates the institutional persistence; blockchain ledgers and tokenization reveal the next theater of deployment.

What lies ahead, then, is not merely a legal debate but a civilizational one. If substantive law continues to yield to reflexive frameworks, and if reflexive frameworks continue to be fused with digital finance, then the future of property, payment, and economic participation will be governed less by public law than by institutional protocol.

That is the endpoint toward which Technocracy has always inclined: you will own nothing and be happy. (See my just-released book, The New Economics of Technocracy: You Will Own Nothing)

Shame on the legal community (lawyers, judges, and academia) for ignoring Reflexive Law in the first place, and letting it poison the legal system in America.

Endnotes

Martin Erdmann, The Greed for Gold and Glory (Worthington, OH: Verax Vox Media, 2025). https://www.amazon.de/dp/B0GDFXX647?binding=hardcove

Sanford Gaines, Reflexive Law as a Legal Paradigm for Sustainable Development, Buffalo Environmental Law Journal, Vol. 10, No. 1, 2002. https://digitalcommons.law.buffalo.edu/belj/vol10/iss1/1/

Buffalo Environmental Law Journal, Reflexive Law as a Legal Paradigm for Sustainable Development, Vol. 10, Iss. 1. https://digitalcommons.law.buffalo.edu/belj/vol10/iss1/1/

Wageningen University, Refining Reflexive Environmental Law by Nature and Nurture, 2024. https://edepot.wur.nl/657820

Unbekoming Substack, The Greed for Gold and Glory — Dr. Martin Erdmann, April 16, 2026.

Lies are Unbekoming

The Greed for Gold and Glory — Dr. Martin Erdmann

The square-mile financial district at the heart of Greater London is not part of the United Kingdom. The City of London Corporation governs itself under charters older than the Norman Conquest, collects its own taxes, runs its own police, and the reigning monarch must request permission to enter. Since 1957 it has operated as the command centre of a sta…

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a month ago · 84 likes · 16 comments · Unbekoming

Unbekoming Substack, Interview with Dr. Martin Erdmann, April 17, 2026.

Lies are Unbekoming

Interview with Dr. Martin Erdmann

Dr. Martin Erdmann is a church historian and theologian who has spent decades doing something most academics won’t touch. Across more than 3,000 pages of published work on mercantilism, progressivism, liberalism, world federation, and technocracy, he traces a single argument: that Western civilisation replaced the biblical covenant with a social contrac…

Read more

a month ago · 75 likes · 11 comments · Unbekoming

General History, Britain’s Offshore Tax Havens: How London Controls the Global Flow of Wealth, January 29, 2025. https://general-history.com/britains-offshore-tax-havens-how-london-controls-the-global-flow-of-wealth/

LSE, The City of London and Its Tax Haven Empire, August 17, 2025. https://www.lse.ac.uk/lse-player/the-city-of-london-and-its-tax-haven-empire

City of London Corporation, City of London Corporation Urges a Culture Shift in Financial Regulations to Regulate for Growth, July 2, 2025. https://news.cityoflondon.gov.uk/city-of-london-corporation-urges-a-culture-shift-in-financial-regulations-to-regulate-for-growth/

City of London Corporation, Regulating for Growth: A Cultural Shift for a Competitive UK, July 6, 2025. https://www.cityoflondon.gov.uk/supporting-businesses/economic-research/research-publications/regulating-for-growth

Sasha Mills, Shaping the UK’s Digital Financial Future, Bank of England Speech at the Tokenisation Summit, January 28, 2025. https://www.bankofengland.co.uk/speech/2025/january/sasha-mills-speech-at-the-tokenisation-summit

Bank of England LinkedIn, Sasha Mills Outlines Innovation Priorities for Tokenisation, January 28, 2026. https://www.linkedin.com/posts/bank-of-england_at-the-tokenisation-summit-sasha-mills-outlined-activity-7422575494530756617

Bank of England, UK Stablecoin and Tokenisation Plan, Yahoo Finance, January 29, 2026. https://uk.finance.yahoo.com/news/bank-of-england-uk-stablecoin-tokenisation-plan-105513598.html

Bank of England, Building Tomorrow’s Markets: The Digitalisation of Finance, Speech by Sasha Mills, City Week, July 1, 2025. https://www.bankofengland.co.uk/speech/2025/july/sasha-mills-keynote-address-at-city-week-2025

A&O Shearman, Sustainability and ESG in 2026: UK and EU Regulatory Priorities, January 28, 2026. https://www.aoshearman.com/en/insights/financial-services-horizon-report-2026/sustainability-and-esg-in-2026

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The Charter

On 25 April 1694, the English Parliament passed a law with a title that told the truth before the politics buried it: *An Act for granting to their Majesties several Rates and Duties upon Tunnage of Ships and Vessels, and upon Beer, Ale and other Liquors: for securing certain Recompenses and Advantages, in the said Act mentioned, to such persons as shall voluntarily advance the Sum of £1,500,000 towards carrying on the War against France.*¹

A Scottish promoter named William Paterson had brought the scheme to a committee of the House of Commons the year before. The English Crown was broke, its credit poor, emerging from half a century of civil war. It could not raise taxes — the civil wars had been fought partly over that question — and it could not borrow enough from private savers to fight France. Paterson’s group proposed a different arrangement. They would form a bank. The bank would issue new notes. The notes would be lent to the government. The government would pay interest on the loan from earmarked taxes on ships, beer, and spirits.²

The arrangement had one feature that mattered more than any other. The money the bank lent did not exist before the loan was made. It was created by the act of lending.

Paterson said so openly. “The Bank hath benefit of interest on all moneys which it creates out of nothing.”³ The words are from 1694. Sir Edward Holden, founder of the Midland Bank, repeated them in December 1907, and Carroll Quigley observed that the principle “is, of course, generally admitted today.”⁴

When the subscription opened on 21 June 1694 at Mercer House, King William III and the Whig parliamentarians crowded in. More than a million pounds was raised in twelve days.⁵ By 27 July the books were open with the inscription Laus Deo in London — praise to God in London — and the Bank of England was in business. Within two years it had issued £760,000 in notes against £36,000 in cash, gone insolvent, and been permitted by act of Parliament to suspend its obligation to redeem notes in gold while continuing to collect from its own debtors.⁶ Its notes immediately fell to a 20 percent discount. By 1697 Parliament had prohibited any competing corporate bank from being established in England, and counterfeiting Bank of England notes had been made a capital offence.⁷

This is the hinge. Every major financial arrangement that followed — Hamilton’s Bank of the United States in 1791, the Federal Reserve in 1913, the dollar standard after 1971, the Eurodollar market that emerged in 1957 and now dwarfs the regulated banking system — is a variation on 1694. A private institution creates money. It lends that money to a state. The state pledges an earmarked revenue stream to pay interest. The state receives political cover, prestige, and something it could not obtain by direct taxation: the ability to finance wars, empires, and bailouts without asking its population to pay up front.

Mercantilism — the economic system that produced 1694 — never ended. It was renamed, and then it was relocated. Its current address is the City of London, the Crown Dependencies, the British Overseas Territories, and their affiliated jurisdictions on the U.S. Atlantic and Gulf coasts. The arrangement is recognisably the one Paterson proposed, now operating at planetary scale.

Venice: Where the Template Was Written

Most general histories devote little space to Venice. Martin Erdmann suggests the reason is that much of Venice’s history is one sordid event after another. But Venice prevailed economically and militarily for more than 1,200 years, was the centre of the early modern book trade with over a hundred publishers, and supplied the political template that every subsequent mercantile empire copied.⁸

The Venetian oligarchy pursued a trade policy that was exclusive in every sense: trade routes required authorisation; state regulations were elaborate; the government itself was involved in trading companies; monopolies on specific goods were maintained by law.⁹ The city-state ruled through executive committees, above all the Council of Ten, and its ruling doctrine was summarised by Pope Pius II: something is just if it serves the state’s interests; something is pious if it expands the empire.¹⁰

What Venice built was a specific machine. Its financiers centralised the gold and silver trade and ran public mints. By 1310 the precious metals trade was the dominant sector in Venice. Venetian banks deprived monarchs across Europe of control over coinage and currency.¹¹ Twice a year, fleets of up to thirty ships sailed under naval escort from Venice to the Levant loaded with silver, returning with gold. The profits on this trade exceeded the usurious interest rates the Venetian banks charged at home — and they charged those too.¹²

After 1255, Henry III of England could no longer pay his debts to Venetian bankers, known in northern Europe as Lombards. He had borrowed at rates between 120 and 180 percent to finance foreign wars. When the Lombards went bankrupt on English insolvency, it triggered a European economic crisis — part of the chain of events that culminated in the Black Death.¹³ In the midst of the chaos, the Venetians encouraged their ally Edward III to make war on France, beginning the Hundred Years’ War. The Wars of the Roses followed.

By the early 16th century Venice had been militarily contained. In December 1508, France and Austria assembled the League of Cambrai — France, Spain, Germany, the Papacy, Milan, Florence, Savoy, Mantua, Ferrara — to destroy the republic. At Agnadello in April 1509 Venetian mercenaries were defeated by the French, and Venice lost most of the territory it had accumulated over eight centuries. Rapid diplomacy allowed the city-state to survive, but its oligarchs drew the lesson. The lagoon city was no longer defensible. Plans were laid to relocate.¹⁴

The Council of Ten selected the Netherlands and the British Isles. The Giovani party in Venice abandoned reconciliation with the Habsburgs and the Vatican and worked toward a military alliance with England and Holland. Wealthy Venetians played a documented role in establishing the Dutch East India Company in 1602 and the Amsterdamsche Wisselbank in 1609.¹⁵ In 1603 the Venetians and Genoese took over the administration of James I’s finances and transferred their methods to the British East India Company.¹⁶ The Republic of Venice itself survived until 1797, when the French Revolutionary armies finally dissolved it. But the substance of Venice — its oligarchs, their capital, their methods — had left for the North Atlantic two centuries earlier.

The template that arrived in Amsterdam and London consisted of these elements: a ruling merchant-financier class; a state whose coercive apparatus was available for commercial use; chartered trading companies with armies and navies of their own; central banks that concentrated precious metal and issued credit on top of it; a political doctrine that equated the interest of the oligarchy with the interest of the state; a willingness to sell anything to anyone regardless of consequence; and a diplomatic posture that played rivals against each other while quietly acquiring the substance of their power. Roger Crowley, historian of the Venetian empire, notes that Venice claimed the right to sell anything to anyone regardless of intended use; slaves and war materiel were sold to the enemies of the Byzantine Empire on which Venice’s wealth depended.¹⁷

When people described as “paranoid” or “conspiratorial” draw a line from the Council of Ten to the institutions that run 21st-century finance, they are not inventing the line. They are tracing a documented migration. The oligarchs moved. They took their methods with them. Professional historiography has at times made this difficult to see by treating each national form of mercantilism — Spanish, Dutch, French, English — as a separate case study. The forms are variations on a structure that was already complete in Venice by 1300.

Amsterdam and the Crown: The First Relocation

The Dutch iteration moved faster and more violently than the Venetian original had. Between 1602 and 1795, the Dutch East India Company (VOC) sent 4,785 ships to Asia carrying over 2.5 million tons of goods; the British East India Company, over the same period, sent 2,650 ships and carried 500,000 tons.¹⁸ The VOC was a chartered company with the authority to wage war, seize territory, and hold slaves. Its settlements, military fortresses, and captured goods belonged to the company and its investors, not to the Dutch government. Its army and navy reported to a governor-general and an Indian Council.¹⁹

The Amsterdamsche Wisselbank, founded in 1609, was the first central bank in the modern sense — a bank that held the bullion of the commercial city and issued deposit credit against it, with the credit circulating as a more reliable medium of payment than the debased coinage of the time. It worked. By the middle of the 17th century Amsterdam was the financial centre of Europe, and the Dutch had driven the Portuguese from most of their Asian trading posts and established colonies in the Americas.²⁰

England watched. The First Anglo-Dutch War (1652–54), fought over the Navigation Act of 1651, was a deliberate attempt to break Dutch middleman trade. The Navigation Act prohibited the import or export of goods between Asia, Africa, the Americas, and England except on English ships with captains and crews at least three-quarters English.²¹ Adam Smith, who was no friend of mercantilism, noted the Act’s effect with clinical precision: it did not increase England’s trade but redirected it, substituting long-distance trade for domestic trade, and it served its purpose by weakening the Dutch.²² The Dutch, exhausted by wars against Louis XIV and by the taxes those wars required, ceded commercial primacy to England by the Peace of Utrecht in 1713.

The transfer was not only commercial. In 1688 the Whig oligarchy in England, joined by the merchants and financiers of the City of London, decided that the Catholic Stuart dynasty was insufficiently committed to the new capitalist-mercantilist order and replaced it. They invited William of Orange, the Dutch stadtholder, to invade. He arrived with 463 warships and 20,000 soldiers and took the throne as William III. The English Whig propagandists — Daniel Defoe, John Locke, Jonathan Swift, all well paid for their services — called the coup the Glorious Revolution.²³

The event that the textbook presents as a victory for constitutional liberty was, in its immediate effects, the opposite. Seats in Parliament were openly for sale within a few years. The Hunting Bill of 1692 restricted the independent livelihoods of working-class people. A sweeping transfer of Crown lands to large landowners at token prices or by direct confiscation gave the Whig class the estates that still constitute the core holdings of the English landed gentry. The traditional property rights of the rural peasantry — already eroded by three centuries of enclosure — were dissolved. Property rights became absolute for the new holders, and laissez-faire replaced the older Stuart policy of regulating wages and prices and protecting peasants from eviction.²⁴

The 1694 Bank of England charter followed five years later. It was not an isolated event. It was the capstone of a regime change.

The Mechanism

A medieval goldsmith accepted gold on deposit and issued paper receipts. The receipts were claims on specific quantities of gold held in the vault. Over time the goldsmith noticed that depositors rarely all claimed their gold at once. It became possible to issue more paper receipts than there was gold in the vault, lend the excess receipts out at interest, and collect the income stream while keeping only a fraction of the claimed gold in reserve. Murray Rothbard, tracing the development in The Mystery of Banking, observes that this fractional-reserve operation is indistinguishable in substance from embezzlement: the receipts are warehouse receipts; issuing more of them than there is grain in the warehouse is fraud when any other warehouse does it.²⁵

What the Bank of England charter added was the sovereign state’s protection of this operation. The state would accept the Bank’s notes in payment of taxes, which created a floor under demand for the notes. The state would prohibit competing banks. The state would, when pressed, simply permit the Bank to suspend redemption in gold while continuing to demand redemption from its own debtors.⁶ In exchange, the Bank would finance the state’s deficits by creating new money out of nothing, lending it to the Treasury, and collecting interest from the taxpayer forever.

Quigley, writing in 1966, described the mechanism precisely:

The creation of paper claims greater than the reserves available means that bankers were creating money out of nothing … orders and checks drawn against deposits by depositors and given to third persons were often not cashed by the latter but were deposited to their own accounts. Thus there were no actual movements of funds, and payments were made simply by bookkeeping transactions on the accounts. Accordingly, it was necessary for the banker to keep on hand in actual money (gold, certificates, and notes) no more than the fraction of deposits likely to be drawn upon and cashed; the rest could be used for loans, and if these loans were made by creating a deposit for the borrower, who in turn would draw checks upon it rather than withdraw it in money, such “created deposits” or loans could also be covered adequately by retaining reserves to only a fraction of their value. Such created deposits also were a creation of money out of nothing.²⁶

A bank with a 2 percent reserve requirement can lend out fifty times the money deposited with it. That process quietly transfers purchasing power from people who hold money — wage earners, savers, pensioners — to people who receive the newly created loans, which in the modern era means the state, the largest corporations, and the financial sector itself. Keynes observed that debasing a currency is the most subtle and certain way to overturn the existing social order, and that perhaps one person in a million could diagnose what is happening.²⁷

This is the machine that 1694 legalised. What followed was the machine being moved, expanded, hidden, and exported.

Hamilton’s Transplant, 1791

After the American Revolution, the men who had fought England over taxation and trade restriction proceeded to replicate England’s financial architecture. The Bank of North America, chartered in 1781 under the Articles of Confederation, was explicitly modelled on the Bank of England. It received the monopoly privilege of having its notes accepted at par with specie in all federal and state tax payments. No other bank was permitted to operate. In return, it created money and lent most of the new money to the federal government, on whose debt the taxpayer would pay principal and interest.²⁸ When its notes depreciated outside Philadelphia, the Bank hired people to dissuade holders from redeeming them — a measure, as Rothbard dryly notes, scarcely calculated to improve long-run confidence.²⁹

The Bank of North America collapsed as a central bank within two years. The mercantilist party regrouped. Under the new Constitution ratified in 1788, Alexander Hamilton — a disciple of Robert Morris, the Philadelphia financier who had promoted the first attempt — pushed through the First Bank of the United States in 1791. Its design was Bank of England in miniature: a 20-year charter; notes legally redeemable in specie but kept at par by the federal government’s acceptance of them in taxes; the Bank serving as depository for federal funds; monopoly of national charter for the duration.³⁰

Hamilton’s reasoning was explicit. In his 30 April 1781 letter to Morris he argued for protective tariffs, a central bank, property taxes, poll taxes, and high government debt. He argued that virtually unlimited borrowing by the Treasury would benefit the public. He wrote that “Great Britain is indebted for the immense efforts she has been able to make, in so many illustrious and successful wars” to precisely this arrangement.³¹ Douglas Adair, a former editor of the Federalist Papers, described Hamilton’s method:

With devious brilliance, Hamilton set out, by a program of class legislation, to unite the propertied interests of the eastern seaboard into a cohesive administration party, while at the same time he attempted to make the executive dominant over the Congress by a lavish use of the spoils system. In carrying out his scheme, though he personally was above corruption, Hamilton transformed every financial transaction of the Treasury Department into an orgy of speculation and graft in which selected senators, congressmen, and certain of their richer constituents throughout the nation participated.³²

The First Bank of the United States duly inflated. It issued millions of dollars of paper pyramided on two million in specie, lent $8.2 million to the federal government by 1796, and drove wholesale prices from an index of 85 in 1791 to 146 in 1796 — a 72 percent increase. The three commercial banks that had existed at ratification became twenty-eight by 1800 and one hundred and seventeen by 1811, a fourfold increase in a decade.³³ The Jeffersonians let the Bank’s charter expire in 1811 by one vote. A Second Bank of the United States was chartered in 1816, fought to the death by Andrew Jackson in the 1830s, and wound down. The United States spent the next seventy-seven years without a central bank, though with a proliferating system of state banks that collectively performed many of its functions.

The interval ended on Jekyll Island, Georgia, in December 1910. What filled the gap between Hamilton’s defeat in 1811 and Jekyll Island a century later was the rise of an international banking network whose central node was a single family.

The Rothschild Bridge

Meyer Amschel Rothschild was born in the Frankfurt ghetto in 1743, a generation after the Bank of England was chartered. He established five sons in five European capitals — Nathan in London, James in Paris, Salomon in Vienna, Carl in Naples, Amschel in Frankfurt — and built them into what Quigley calls the greatest of the nineteenth-century banking dynasties.³⁴ The family’s innovation was structural. Five branches in five sovereignties, each legally independent, each coordinating through private family correspondence, each able to move capital across borders that sovereigns could not cross. A state could default. A Rothschild branch in that state would survive, because the capital had already moved elsewhere.

The machinery that the Bank of England had built in one country, the Rothschilds built across all of Europe at once. Quigley describes their methods and those of the other great private banking houses — Baring, Lazard, Erlanger, Warburg, Schroder, Seligman, Mirabaud, Mallet, Fould — as sharing five characteristics: they were cosmopolitan and international; they were close to governments and particularly concerned with government debt, including foreign government debt in poor-risk areas like Egypt, Persia, Ottoman Turkey, Imperial China, and Latin America; their interests were almost exclusively in bonds rather than goods, because they admired liquidity and regarded commitments to commodities or real estate as the first step toward bankruptcy; they were fanatical devotees of the gold standard and of deflation, which they called “sound money”; and they were devoted to secrecy and the secret use of financial influence in political life.³⁵

The Napoleonic Wars were the pivot. Erdmann notes that among the credit innovations that let England outlast France was Rothschild capacity to transfer funds across European countries to pay English forces and their allies.³⁶ Quigley goes further: the Bank of England credit system was England’s “chief weapon” in the victory over Napoleon in 1815. Napoleon, “as the last great mercantilist, could not see money in any but concrete terms, and was convinced that his efforts to fight wars on the basis of ‘sound money,’ by avoiding the creation of credit, would ultimately win him a victory by bankrupting England. He was wrong.”³⁷ The credit system of 1694 defeated the last mercantilist emperor, and the Rothschilds were the principal agents of that credit.

After Waterloo, the family’s position consolidated. In 1819 the Rothschilds entered the board of regents of the Bank of France, where their name remained for the next century and a quarter.³⁸ They underwrote war debts, peace settlements, railways, and industrial expansion across the continent. They were, Quigley observes, “a constant, if weakening, influence for peace” through the 1830s and 1840s, because constant war was injurious to commercial capitalism and they preferred the steady interest on reconstruction debt.³⁹

The American bridge ran through a man called George Peabody. In 1835, with loans from the Brown Brothers and Nathan Mayer Rothschild, Peabody founded a banking house in London.⁴⁰ Nineteen years later Junius S. Morgan joined as partner. After Peabody’s death the firm passed entirely to the Morgans. Junius’s son, John Pierpont Morgan, moved the bank to America and renamed it J.P. Morgan & Co. Following the 1907 Wall Street Crash — the crash Jekyll Island was convened to prevent from recurring — the reconstituted firm gained control of a significant portion of the American financial and industrial system.⁴¹ Quigley’s summary of the transition is one line: “In this system the Rothschilds had been preeminent during much of the nineteenth century, but, at the end of that century, they were being replaced by J.P. Morgan whose central office was in New York, although it was always operated as if it were in London (where it had, indeed, originated as George Peabody and Company in 1838).”⁴²

The baton passed from London to New York, but the firm and the methods were continuous. The men who drafted the Federal Reserve Act on Jekyll Island were not outsiders seizing the machinery. They were the machinery’s new custodians.

Jekyll Island, 1910

The meeting was secret. It was hosted by Senator Nelson Aldrich, a Rockefeller kinsman. The participants were Frank Vanderlip of Rockefeller’s National City Bank, Paul Warburg of Kuhn, Loeb & Co. who had come from Germany to promote central banking, Henry Davison of J.P. Morgan & Co., and Charles Norton of the Morgan-controlled First National Bank of New York. They drafted what became, with modifications, the Federal Reserve Act of 1913.⁴³

Rothbard describes the structural consequence:

In the first place, the banking system was transformed so that only the Federal Reserve Banks could print paper notes. The member banks, no longer able to print cash, could only buy it from the Fed by drawing down deposit accounts at the Fed. The different reserve requirements for central reserve city, reserve city, and country banks were preserved, but the Fed was now the single base of the entire banking pyramid.⁴⁴

The average reserve requirement for all American banks before the Fed was 21.1 percent. Under the 1913 Act it was cut to 11.6 percent, then to 9.8 percent in June 1917.⁴⁵ Between December 1913 and January 1920, total bank demand deposits rose from $9.7 billion to $19.1 billion; total currency and demand deposits from $11.5 billion to $23.3 billion. Member bank deposits grew by 250 percent while non-member deposits grew by a third — the impetus was unambiguously from the centre.⁴⁶

Quigley, writing from inside the establishment he was describing, noted that the central bankers were themselves not the substantive powers. They were agents of the investment bankers who had raised them up. Benjamin Strong, the first Governor of the Federal Reserve Bank of New York and the man who actually ran American monetary policy from 1914 until his death in 1928, came from Bankers’ Trust — a bank created by the Morgans. He was persuaded to take the Fed job by Henry Davison, a partner at J.P. Morgan & Co., and Dwight Morrow, another Morgan partner.⁴⁷ Quigley wrote:

The substantive financial powers of the world were in the hands of these investment bankers (also called “international” or “merchant” bankers) who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful, and more secret than that of their agents in the central banks.⁴⁸

In 1694 a private bank had been chartered to create money for the state. In 1913 a cartel of private banks was chartered to create money for the state. The essential arrangement was identical. The scale and the protective camouflage had grown.

1971: The Gold Window Closes

The Federal Reserve Act had included a concession to its critics: the dollar would be redeemable in gold, at $20.67 per ounce. Roosevelt broke the domestic gold standard in 1933, devaluing the dollar to $35 per ounce, confiscating private gold holdings, and burying the metal at Fort Knox.⁴⁹ The international gold standard — under which foreign governments and central banks could still convert dollars to gold at $35 — survived the Second World War and was formalised as the dollar’s role in the Bretton Woods system negotiated in 1944.

The war in Vietnam killed it. The Korean War had been financed by the Fed monetising federal deficits, transferring the cost from current taxpayers to future bondholders. The Vietnam escalation after 1964, combined with the Johnson administration’s Great Society domestic spending, produced balance-of-payments deficits the United States could not plausibly cover with its gold reserves. France and Germany began cashing in their surplus dollars for U.S. gold on what approached a monthly basis. By March 1968 the American gold stock had fallen to the $10 billion floor beyond which the Treasury had privately signalled it would suspend further sales. The London Gold Pool was disbanded. Central banks informally agreed to stop converting their dollar inflows into gold.⁵⁰

On 15 August 1971 Nixon made the embargo official. Hudson’s analysis of what happened that day is among the most important passages in post-war economic history:

Three years later, in August 1971, President Nixon made the gold embargo official. The key-currency standard based on the dollar’s convertibility into gold was dead. The U.S. Treasury bill standard — that is, the dollar-debt standard based on dollar inconvertibility — was inaugurated. Instead of being able to use their dollars to buy American gold, foreign governments found themselves able to purchase only U.S. Treasury obligations … As foreign central banks received dollars from their exporters and commercial banks that preferred domestic currency, they had little choice but to lend these dollars to the U.S. Government. Running a dollar surplus in their balance of payments became synonymous with lending this surplus to the U.S. Treasury. The world’s richest nation was enabled to borrow automatically from foreign central banks simply by running a payments deficit.⁵¹

Rothbard’s assessment was simpler: Nixon declared national bankruptcy.⁵²

The standard account presents the abandonment of gold as a technical adjustment forced by changing economic circumstances. Hudson’s account, drawn from his years as a balance-of-payments analyst on Wall Street, is that the United States had discovered something better than gold. It had discovered that the imperial power could impose its own debt on the world as the primary reserve asset. The bigger the American deficits grew, the more dollars accumulated abroad; the more dollars accumulated abroad, the more foreign central banks were structurally compelled to recycle them into Treasury securities. The United States could therefore run any deficit it chose, and the rest of the world would finance it.

This is the 1694 arrangement at planetary scale. A central institution — now the Federal Reserve and the U.S. Treasury together — creates money, lends it to the sovereign, and extracts interest from the population that uses the money. The population being taxed through this arrangement is no longer England. It is the world.

Keynes’s observation that perhaps one person in a million could diagnose what was happening applies with particular force to the period after 1971. Most educated people in 2026 cannot describe the mechanism. The inflation they have lived with their entire lives is treated as a natural phenomenon, like weather. It is not. It is a transfer.

The Relocation: Eurodollars, 1957

While the dollar standard was being constructed above the waterline, a parallel relocation was happening below it. The agent was the City of London. The instrument was the Eurodollar market.

In June 1955 staff at the Bank of England noticed odd trades at Midland Bank — the bank now part of HSBC. Midland was taking U.S. dollar deposits unrelated to any commercial transaction, and offering interest rates higher than U.S. regulations permitted. A Bank of England official called in Midland’s chief foreign manager for a chat. Shaxson records the Bank of England’s internal conclusion: “We would be wise, I believe, not to press the Midland any further.”⁵³

In 1957 the British government, trying to shore up the pound after the Suez humiliation, raised interest rates and imposed controls on overseas lending in sterling. London banks responded by shifting their international lending from sterling into dollars, using the unregulated market that Midland had opened. The Bank of England made a decision: the transactions had not taken place in the United Kingdom for regulatory purposes. Since they had not taken place in the United Kingdom, no other authority could reach in to regulate them either. London banks began keeping two sets of books — one for onshore transactions where at least one party was British (regulated), one for offshore transactions where neither party was British (not regulated).⁵⁴

A new market had been born. Shaxson calls it “no more than a bookkeeping device,” but observes that it would change the world.⁵⁵

The Soviet Union, anxious that its dollar holdings in New York could be frozen if the Cold War turned hot, began holding dollars in London instead — the first Moscow Narodny deposit in 1957 was only a few hundred thousand dollars. By late 1959 the Eurodollar market held $200 million. By the end of 1960 it held $1 billion. By the end of 1961 it held $3 billion.⁵⁶ Kennedy’s 1963 Interest Equalization Tax, designed to discourage dollar outflows, succeeded only in driving Wall Street lending offshore to London. Henry Alexander of Morgan Guaranty understood what had happened: “This is a day you will remember. It will change the face of American banking and force all the business to London.”⁵⁷

The Eurobond market followed in 1963 — unregulated offshore bearer bonds whose holder owned them, with no records kept. A Bank of England memo from that year captures the posture: “However much we dislike hot money, we cannot be international bankers and refuse to accept money.”⁵⁸

Federal Reserve vice-chair James Robertson identified the architecture early: the emerging Euromarket centres in the Bahamas and Cayman were not branches in any meaningful sense. “They are simply desk drawers in somebody else’s desk.”⁵⁹ When American regulators pressed the Bank of England for action, the response, epitomised by one senior official, was: “It doesn’t matter to me whether Citibank is evading American regulations in London. I wouldn’t particularly want to know.”⁶⁰

In 1986 Margaret Thatcher ordered the Bank of England to stop regulating the City of London’s financial markets altogether. This was the Big Bang. Tim Congdon, one of the City’s own spokesmen, observed at the time that the Big Bang was “a sideshow to, indeed almost a by-product of, a much Bigger Bang which has transformed international finance over the last 25 years.”⁶¹ The Bigger Bang was the Eurodollar market. The Big Bang was the moment the British government stopped pretending to regulate what was happening within its own sovereign space.

The Spiderweb

What emerged between 1957 and 1986 is the structure the reader now lives inside without knowing it. Shaxson’s term for it is the British spiderweb.

The inner ring: the three Crown Dependencies — Jersey, Guernsey, the Isle of Man. The U.S. publication Tax Analysts estimated conservatively in 2007 that these three islands alone hosted about $1 trillion in potentially tax-evading assets. Jersey’s offshore deposits were $800 billion in mid-2009.⁶²

The intermediate ring: the fourteen British Overseas Territories, the last surviving outposts of the formal empire. Cayman, Bermuda, British Virgin Islands, Turks and Caicos, Gibraltar.⁶³ Between them they have a quarter of a million inhabitants and host a significant fraction of global finance. The Cayman Islands is the world’s fifth largest financial centre, with eighty thousand registered companies, over three-quarters of the world’s hedge funds, and $1.9 trillion on deposit — four times as much as in all the banks in New York City. It has, at the time Shaxson wrote, one cinema.⁶⁴

The Caymans are nominally independent. In reality the British Queen appoints the Governor, who presides over a locally elected cabinet but retains control of what matters — defence, internal security, foreign relations, the police commissioner, the auditor general, the attorney general, the judiciary. The final court of appeal is the Privy Council in London. MI6 is highly active. The local legislators have no meaningful power over the money.⁶⁵

The outer ring: independent states with deep historical links to British finance — Hong Kong, Singapore, the Bahamas, Dubai, Ireland, and newer entrants. New offshore centres continue to be established. Ghana announced one in 2006 with assistance from Barclays. Botswana is setting up another. Vanuatu was established by the British government in 1971, nine years before its independence.⁶⁶

In a 2009 study, Jason Sharman attempted to set up forty-five secret front companies using the internet and the seedy offshore advertisements in airline magazines. Seventeen companies agreed without checking his identity. Four of those were in classic havens like Cayman or Jersey. The other thirteen were in OECD countries — seven in Britain and four in the United States.⁶⁷ The offshore system is no longer primarily about palm-fringed islands. The two most important secrecy jurisdictions in the world are Manhattan and London. The United States, by the Tax Justice Network’s own Financial Secrecy Index, is the world’s most important secrecy jurisdiction. Britain ranks lower partly because the British spiderweb has been formally decomposed into the Crown Dependencies and Overseas Territories, each counted separately.⁶⁸

A 2008 U.S. Government Accountability Office report found that Citigroup had 427 tax haven subsidiaries, of which 290 were in the British spiderweb. Morgan Stanley had 273, of which 220 were in the British zone. News Corporation had 152, of which 140 were in the British zone. Enron, before its bankruptcy, had 881 offshore subsidiaries: 692 in the Caymans, 119 in Turks and Caicos, 43 in Mauritius, 8 in Bermuda. All in the British spiderweb.⁶⁹

In 2008 the Cayman Islands reported to the IMF $750 billion in portfolio assets. Ordinary accounting would require the other side of the balance sheet — deposits and obligations — to match. Instead the Caymans reported $2.2 trillion in liabilities: three times the assets. The discrepancy is not an accounting error. It is the visible shadow of funds that have been moved offshore and have not been accounted for onshore.⁷⁰

The system has a function. Shaxson summarises it cleanly: the offshore system has been responsible, discreetly, for the greatest ever shift of wealth from poor to rich, and it undermines democracies by offering the wealthiest members of society escape routes from tax, from financial regulation, and from other normal democratic controls.⁷¹ By the Tax Justice Network’s estimate, somewhere between $21 and $32 trillion sits in offshore jurisdictions.⁷² This is not the domain of celebrity tax-dodgers. The major users are the largest banks and multinationals.

What Mercantilism Is

Mercantilism is not an economic theory about gold and trade balances that Adam Smith refuted in 1776. It was never that. Smith himself understood this:

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.⁷³

Smith saw the system for what it was: a deliberate arrangement in which the coercive power of the state was captured by commercial interests and used against consumers, peasants, colonial subjects, and foreign producers in equal measure. The “favorable balance of trade” was always a cover story. The real arrangement was the machinery the cover story protected.

That machinery has six components. First, a central bank that creates money and lends it to the state, protected by state prohibition of competitors. Second, chartered corporations with state-backed monopolies — the BEIC and VOC historically, the Wall Street megabanks and tech monopolies now — whose private interests are treated as identical with the national interest. Third, a tax system whose actual function is to underwrite interest on permanent state debt, which can never be repaid because repaying it would dissolve the bank that created it. Fourth, a labour force made available to the system by the destruction of prior forms of self-sufficiency — through enclosure in 17th-century England, through deindustrialisation and debt servitude in 21st-century America. Fifth, military and police capacity sufficient to enforce all of this at home and, when necessary, abroad. Sixth, offshore jurisdictions within which the capital of the beneficiary class can escape the regulations and taxes the rest of the population is made to bear.

Every element of this structure was present in Venice by 1300. Every element was transferred to Amsterdam and London by 1700. Every element survived the passage from British Empire to Commonwealth after 1945. Every element is running in 2026, operating through dollar reserves, Eurodollar markets, offshore secrecy jurisdictions, and a central banking system that no longer pretends to any discipline beyond its own political convenience.

Erdmann argues that mercantilism also has a religious dimension — that the system occupies the architectural position religion used to occupy, commanding total loyalty, demanding financial sacrifice, and offering its own eschatology of progress.⁷⁴ Whether one accepts that frame or not, the structural claim holds without it. Mercantilism is an arrangement in which a merchant-financier class captures state power and uses it to extract rents from the population the state nominally serves. It was the arrangement in 1300. It was the arrangement in 1694. It is the arrangement today.

What Venice Looks Like in 2026

The Cayman Islands has one cinema and hosts three-quarters of the world’s hedge funds. Jersey holds about $800 billion. The Caymans report liabilities three times their assets without explanation. Citigroup has 427 tax haven subsidiaries. The Federal Reserve has unlimited power to create dollars, and every dollar created is eventually held by a foreign central bank that has no choice but to lend it back to the U.S. Treasury by buying U.S. debt. The United Kingdom’s economy is, in substantial part, the administrative cost of running the spiderweb on behalf of capital that is nominally independent of it.

William Paterson told the truth in 1694. The Bank hath benefit of interest on all moneys which it creates out of nothing.

The Doge has been replaced by the governor of a central bank. The Council of Ten has been replaced by the boards of the investment banks Quigley identified — the Morgans, the Rockefellers, the Kuhn-Loebs and their 21st-century successors — that select the central bankers and then speak through them. The Venetian fleet has been replaced by the spiderweb of jurisdictions, none of them individually visible, that collectively handle a significant fraction of global finance. The slaves of the Venetian islands have been replaced by the wage-dependent populations of Europe, America, and the former colonies, all of whom pay the interest on state debts they never voted to incur and inflation they cannot track.

Pope Pius II in the 15th century said of the Venetians that something was just for them if it served the state’s interests, and pious if it expanded the empire. That doctrine is the operating principle of every Western finance ministry, every central bank, every multinational bank headquartered in the City or on Wall Street.

Venice was not destroyed in 1797 when the French revolutionary armies entered the lagoon. Its oligarchs had left two centuries earlier, with their capital, their methods, their doctrine, and their appetite. They set up in Amsterdam and London. They chartered a bank in 1694. In 1957 a handful of trades at Midland Bank gave them a new jurisdiction outside any regulator’s reach. In 1971 they persuaded Washington to make the world’s reserve currency a claim on nothing but the American state’s willingness to issue more of it. In 1986 they told the Bank of England to stop regulating them altogether.

They are still here. The address is 1 King William Street and Grand Cayman and Wall Street and Geneva and Singapore. The charter is still in effect.

The arrangement was never dismantled. It was moved.

References

1. Martin Erdmann, The Greed for Gold and Glory (hereafter GGG), 245, citing the text of the Bank of England Act 1694.

2. Murray N. Rothbard, The Mystery of Banking, 2nd ed. (Auburn: Ludwig von Mises Institute, 2008) (hereafter MoB), ch. XII; GGG, 243–45.

3. Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan, 1966) (hereafter T&H), quoting William Paterson at the charter of the Bank of England, 1694.

4. T&H, same passage, citing Sir Edward Holden, 18 December 1907.

5. GGG, 245–47; MoB, ch. XII.

6. MoB, ch. XII. By end 1696 Bank of England notes outstanding were £765,000 against £36,000 in cash.

7. MoB, ch. XII.

8. GGG, 19; and Erdmann interview, citing inter alia W.H. McNeill, Venice: The Hinge of Europe, 1081–1797 (Chicago, 2009); Roger Crowley, City of Fortune: How Venice Won and Lost a Naval Empire (London: Faber, 2012); John Julian Norwich, A History of Venice (New York: Vintage, 1989).

9. GGG, 20.

10. Pope Pius II, quoted by Erdmann, interview with Unbekoming, April 2026.

11. GGG, 28, citing Frederic C. Lane and Reinhold C. Mueller, Money and Banking in Medieval and Renaissance Venice (Baltimore: Johns Hopkins University Press, 1985), vol. 1.

12. GGG, 28–29.

13. GGG, 30.

14. GGG, 30–31.

15. GGG, 32.

16. GGG, 35.

17. GGG, 20, citing Crowley, City of Fortune, 22.

18. GGG, 74.

19. GGG, 75–76.

20. GGG, 72–73.

21. GGG, 101.

22. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book IV, ch. 2, quoted at GGG, 102.

23. Erdmann interview with Unbekoming, April 2026; GGG, chapter on the Glorious Revolution.

24. Erdmann interview; GGG, 103–08 on enclosure and the Hunting Bill.

25. MoB, ch. VII on deposit banking and embezzlement.

26. T&H, section on credit creation and the founding of the Bank of England.

27. John Maynard Keynes, The Economic Consequences of the Peace (London: Macmillan, 1919), ch. VI; cited by Erdmann in interview.

28. MoB, ch. XV; GGG, 314.

29. MoB, ch. XV.

30. MoB, ch. XV.

31. Alexander Hamilton, letter to Robert Morris, 30 April 1781, quoted at GGG, 314–17.

32. Douglas Adair, quoted at GGG, 317, citing William Graham Sumner, Alexander Hamilton.

33. MoB, ch. XV.

34. T&H, section on the Rothschilds as the greatest of the nineteenth-century international banking dynasties, with branches in Vienna, London, Naples, Paris, and Frankfurt.

35. T&H, section on the five common characteristics of the international merchant-banking houses: cosmopolitanism, concern with government debt, bond-preference over commodities, devotion to the gold standard, and commitment to secrecy.

36. GGG, section on Rothschild credit transfers across European states during the Napoleonic Wars.

37. T&H, section on the Bank of England credit system as England’s “chief weapon” in the victory over Napoleon in 1815 and on Napoleon as “the last great mercantilist” attempting to fight on “sound money”.

38. T&H, section on the Bank of France board of regents, noting Rothschild entry in 1819 and the family’s continued presence into the twentieth century.

39. T&H, section on the Rothschilds as “a constant, if weakening, influence for peace” through the 1830s and 1840s, preferring steady interest on reconstruction debt to the disruption of war.

40. GGG, 348, on George Peabody’s 1835 founding loans from Brown Brothers and Nathan Mayer Rothschild.

41. GGG, 348, on the Peabody-to-Morgan succession and the post-1907 consolidation of American financial and industrial power in J.P. Morgan & Co.

42. T&H, section on the nineteenth-to-twentieth-century transition, noting that the Rothschilds “were being replaced by J.P. Morgan whose central office was in New York, although it was always operated as if it were in London (where it had, indeed, originated as George Peabody and Company in 1838).”

43. MoB, ch. XV on the Jekyll Island meeting of December 1910.

44. MoB, ch. XVI.

45. MoB, ch. XVI, citing Phillips, McManus, and Nelson, Banking and the Business Cycle (New York: Macmillan, 1937).

46. MoB, ch. XVI.

47. MoB, ch. XVI on Benjamin Strong’s Morgan connections.

48. T&H, section on the investment bankers and their control of central banks in the 1920s.

49. MoB, ch. XVII.

50. Michael Hudson, Super Imperialism: The Origin and Fundamentals of U.S. World Dominance, 2nd ed. (London: Pluto Press, 2003) (hereafter SI), ch. on the end of Bretton Woods.

51. SI, ch. on August 1971 and its aftermath.

52. MoB, ch. XVII.

53. Nicholas Shaxson, Treasure Islands: Dirty Money, Tax Havens and the Men Who Stole Your Cash (London: Vintage, 2012) (hereafter TI), ch. 4, citing Bank of England internal memo, 1955.

54. TI, ch. 4.

55. TI, ch. 4.

56. TI, ch. 4.

57. TI, ch. 4, quoting Henry Alexander of Morgan Guaranty.

58. TI, ch. 4, citing Bank of England memo, 1963.

59. TI, ch. 4, quoting James Robertson, vice-chair of the Federal Reserve.

60. TI, ch. 4, quoting a senior Bank of England official.

61. TI, ch. 4, quoting Tim Congdon, 1986.

62. TI, ch. 5 on the spiderweb’s inner ring; Martin A. Sullivan, “Offshore Explorations: Jersey,” Tax Notes, 23 October 2007.

63. TI, ch. 5 on the intermediate ring.

64. TI, ch. 5 on the Cayman Islands.

65. TI, ch. 5.

66. TI, ch. 5 on the outer ring.

67. Jason Sharman, cited in TI, ch. 9 on the ease of setting up secret front companies.

68. Tax Justice Network, Financial Secrecy Index, cited in TI, ch. 9.

69. U.S. Government Accountability Office, “Large U.S. Corporations and Federal Contractors with Subsidiaries in Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions,” December 2008, cited in TI, ch. 5.

70. Philip R. Lane and Gian Maria Milesi-Ferretti, “Cross-Border Investment in Small International Financial Centers,” IMF Working Paper 10/38, February 2010, cited in TI.

71. TI, preface.

72. Tax Justice Network estimates cited in TI, ch. 9.

73. Adam Smith, Wealth of Nations, Book IV, ch. 8, quoted at GGG, 64.

74. Erdmann interview with Unbekoming, April 2026, on the civil religion thesis.

A Book Review

Unbekoming

May 4, 2026

The square-mile financial district at the heart of Greater London is not part of the United Kingdom. The City of London Corporation governs itself under charters older than the Norman Conquest, collects its own taxes, runs its own police, and the reigning monarch must request permission to enter. Since 1957 it has operated as the command centre of a stateless offshore network — the Eurodollar market, the Crown Dependencies of Jersey and Guernsey, the Cayman Islands, Hong Kong — which by 2008 handled more than half of all international stock transactions, seventy percent of Eurobonds, and fifty-five percent of global IPOs. Martin Erdmann’s The Greed for Gold and Glory, published in December 2025 by Verax Vox Media after four years of research, argues that this arrangement is the present-day operating core of a system first perfected by Venetian oligarchs in the thirteenth century. The book runs to 489 pages with a twenty-eight-page bibliography. Its argument is that mercantilism was never abolished; it was successively relocated.

Erdmann traces the pattern across seven centuries and six capitals. Venice developed the template — a closed oligarchy of merchant families, state-granted trade monopolies, privatised money creation, and extraction backed by naval force. Spain inherited the form and ruined itself on American silver. France under Colbert industrialised it into state economic planning. Amsterdam refined the banking machinery. London scaled the whole apparatus globally through the British East India Company, the Bank of England, and the Royal Navy. Across the Atlantic the Boston merchant dynasties — Perkins, Cabot, Forbes, Higginson — imported the template and financed the young American republic on slaving voyages and the Chinese opium trade. When the British Empire dissolved after 1945, the City of London did not dissolve with it; it re-engineered itself through offshore Eurodollars, the Crown Dependencies, and the post-1986 deregulated banking regime into a financial sovereignty larger than anything Venice commanded. Erdmann’s claim is that the governing families, the extractive mechanism, and the ideology that legitimises it have held their shape across every one of these transitions.

The author is not writing from outside the academy. Erdmann holds a doctorate in modern church history from Brunel University London, a habilitation in systematic theology from Károli Gáspár University in Budapest, and spent five years as senior scientist at the University Hospital in Basel researching the ethical implications of nanotechnology. His method throughout the book is documentary. Claims are anchored to archive.org scans of nineteenth-century monographs, Acts of Parliament reproduced in full, published merchant correspondence, Masonic lodge records, the Federalist Papers, and contemporary financial journalism, most notably Nicholas Shaxson’s Treasure Islands, which appeared in 2011 after serialisation in the New Statesman and which established the modern offshore map. Readers inclined to verify any particular claim can generally do so in a few minutes at the cited source. The evidence for each individual step is publicly filed and largely uncontested in its specifics; what provokes is the pattern the evidence forms once assembled.

The 1694 founding of the Bank of England anchors the book’s economic argument. The Scottish financier William Paterson — rumoured in his own time to have been a pirate — approached the Whig Junto with a proposal on behalf of a group of City of London merchants. The group would lend the Crown £1.2 million at eight percent interest to fund the ongoing war against France. In return, Parliament would grant their joint-stock company the privilege of issuing banknotes: a private licence to create money. Albert Feavearyear’s The Pound Sterling documents that the original subscribers were not drawn in by the eight percent yield. They were drawn in by the opportunity to become the first private institution in English history legally authorised to coin credit. The Act of 1694 remains publicly available, and its long title states the purpose without decoration — to raise funds towards carrying on the war against France. Voting rights required £500 in shares at a time when £50 was a solid middle-class annual income, and directorships required £2,000, which excluded ninety percent of shareholders and effectively the entire non-Whig English population. The sovereign right to issue money, previously in the hands of a monarch at least nominally answerable to his subjects, passed permanently into private hands answerable to no one.

The chapter on the Boston opium syndicate is the book’s most uncomfortable for an American reader. Between roughly 1789 and 1840, a small circle of Boston Brahmin families — Perkins, Cabot, Lowell, Forbes, Cushing, Sturgis, Higginson — built fortunes of a scale that still shapes American philanthropy, academia, and political life by trafficking Turkish and Bengal opium into China in defiance of Qing law. Erdmann traces the genealogies with the care of a family-office auditor. Thomas H. Perkins controlled roughly half of American trade with China in the 1830s; his nephew John Perkins Cushing ran operations in Canton from the age of sixteen; Robert Bennet Forbes, orphaned and raised by Perkins, became managing director of the merged Russell & Company opium syndicate in 1840. The profits flowed home into the Lowell textile mills, whose cotton came from southern slave plantations, into the publishing house D. Appleton & Company, into Baring Bank in London, and into the endowments of institutions whose names are still spoken with reverence. Erdmann calls the 1619 Project misguided propaganda. The troubling historical fact it gestures at, however, is real: the early American economy was substantially built on piracy, slavery, and the drug trade, and the families who built it remained at the commanding heights of American life long after those particular trades became unmentionable in polite company.

The 1787 Constitutional Convention is handled in a similar register. Drawing on Charles Beard’s 1913 An Economic Interpretation of the Constitution of the United States — a work once standard in American political science and quietly marginalised in recent decades — Erdmann documents that the fifty-five delegates swore lifelong oaths of secrecy, excluded the press, placed the meeting room on the second floor to frustrate eavesdropping, and in several cases exceeded the authority their states had given them. Several states had expressly forbidden their delegates from drafting a new constitution. The delegates drafted one anyway. The ratification threshold of nine states directly contradicted the Articles of Confederation then in force, which required unanimity for amendment. Beard demonstrated that every delegate belonged to the creditor class, that the Articles had devolved financial regulation to the individual states, and that federal bonds held by the delegates and their associates totalled $75 million in a nation of fewer than four million people — bonds that could only be redeemed at face value through a new central government with the power to tax. Erdmann does not claim Beard’s thesis is the whole story of the Founding. He claims it is the suppressed half of the story, and that its suppression in favour of a purely philosophical account is itself evidence of how the system has always protected its own origin myths.

The book’s most demanding material, which Erdmann himself warns his readers requires patience, concerns the spiritual infrastructure beneath the economic one. Chapters four and five trace the Kabbalistic, Hermetic, and Rosicrucian lineage running through the Royal Society, the rebuilding of London after the Great Fire of 1666, Isaac Newton’s alchemical and anti-Trinitarian writings, and the Masonic networks that organised the American Revolution out of Boston’s Green Dragon Tavern. The specifics are documented: Christopher Wren’s St. Paul’s Cathedral laid out with ten domes corresponding to the Sephirot of the Kabbalistic Tree of Life; Nicholas Hawksmoor’s London churches incorporating obelisks, pyramids, and cubes drawn from pre-Christian esoteric sources; the lodge memberships of George Washington and essentially all of his general staff; the Saint Andrew Lodge in Boston functioning as the operational planning centre for the Sons of Liberty. Erdmann does not argue that every Enlightenment figure was a secret occultist. He argues that a coherent esoteric worldview — the belief that fallen humanity could be restored to Edenic perfection through sacred geometry, universal science, and eventually the alchemical creation of credit money from nothing — supplied the ideological fuel for the projects that built the modern West. He writes as a Christian theologian, which he does not disguise. Readers unfamiliar with the framework are asked to withhold judgment until the pattern has been assembled across the whole book. For those willing to make that investment, these chapters supply an answer to a question most economic histories cannot answer: why credit money, loaned into existence from nothing, became the central organising fact of the modern economy.

The Greed for Gold and Glory will not be reviewed in the Financial Times. It belongs to a small body of serious independent scholarship — Shaxson on offshore banking, Carroll Quigley on the Anglo-American establishment, Beard on the Constitution — that has attempted to map territory mainstream economic history has left blank. Erdmann’s distinctive contribution is a documentary account of what the men who built the system actually believed they were doing, drawn largely from their own published writings. The full edition is not short and does not reward hurried reading. It asks the reader to follow a seven-century argument across seven densely subdivided chapters and several thousand footnotes, and to accept by the end that the system under which we currently live was not an accident of Enlightenment progress but the deliberate construction of identifiable families pursuing identifiable ends over a very long time. An abridged edition by Beate Gsell exists for readers who want the argument without the full documentary apparatus; both are available on Amazon. Readers who have long suspected that the official explanations of how the world actually works do not quite fit the facts will find in Erdmann the documentary record they have been looking for. It is worth the four years he spent writing it.

With thanks to Dr. Martin Erdmann.

The Greed for Gold and Glory (2 book series) Paperback Edition

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In his best-selling book Our Country, Josiah Strong made the following point clear: “America is to become the right hand of God in the struggle against the ignorance, oppression, and sin that prevail in the world.” Strong was referring to the belief of Neo-Protestantism, which states that the United States is a “Redeemer Nation” and has a unique role in the world assigned to it by God. The Anglo-Saxon race was destined to spread across the earth. The belief among many Americans in their—as they saw it—divine calling was a mixture of various, sometimes contradictory, ideas and impulses. American historian Ernest Lee Tuveson wrote a book about the concept of the United States as a “Redeemer Nation.” The subtitle, “The Idea of America’s Millennial Role,” is also well-chosen. In it, Tuveson explores the Neo-Protestant objective to reshape the political, economic, and social fabric of every nation, whether through voluntary consent or imperialist conquest. The final chapter of the book is titled “The Ennobling War.” In the Preface the author sets the thematic tone of his main argument, which is then explored in the body of the text:

Just at the turn of the century the statesman-historian Albert J. Beveridge, speaking in the United States Senate, stated the purpose and calling of the American nation as follows:

“God has not been preparing the English-speaking and Teutonic peoples for a thousand years for nothing but vain and idle self-contemplation and self-admiration. No. He made us master organizers of the world to establish system where chaos reigned. He has given us the spirit of progress to overwhelm the forces of reaction throughout the earth. He has made us adept in government that we may administer government among savage and senile peoples. Were it not for such a force as this the world would relapse into barbarism and night. And of all our race He has marked the American people as His chosen nation to finally lead in the redemption of the world.”

Here, in capsule form, are the elements of the idea I have called “the redeemer nation.” Chosen race, chosen nation; millennial-utopian destiny for mankind; a continuing war between good (progress) and evil (reaction) in which the United States is to play a starring role as world redeemer – surely such an idea must be religious in origin; and so, I shall try to show, it is.

Josiah Strong appealed to his readers’ consciences with forceful words, arguing that modern history was unfolding much more rapidly than in earlier times. As striking evidence, he pointed to the astonishing improvements in communication, transportation, and modern science. He was also impressed by the rapid spread of “great ideas.” “The progress of the Western world is gathering speed like a falling body.”

American Protestants envisioned their national destiny as both cosmopolitan and ethnocentric. In a frequently cited passage, Strong reflected on the ethnocentrism of his fellow Americans. Ethnocentrism is a form of nationalism in which one’s own nation is viewed as the center of the world and superior to other peoples. Delighted by the idea that God had chosen the Protestant Anglo-Saxons as his ideal type to give the peoples of the earth a uniform appearance, Strong asked:

Is there any doubt that this race is destined to take the possessions of weaker races, assimilate others, and transform the rest to the point that humanity literally adopts Anglo-Saxon characteristics?

He was convinced that God made America the center of His rule to fulfill these three tasks.

Although he believed that English-speaking Protestants, chosen by God to bear the eternal principle of liberty, held a privileged position among the inhabitants of the earth, Strong was candid enough to admit that he saw further advantages in the racial composition of Americans. He believed that the fact that many Americans had origins in other countries did not detract from Anglo-Saxon superiority; rather, it would make America stronger because the mixture of many ethnic groups within its borders would produce an even superior race. America’s calling was to spread a moral way of life to all the peoples of the earth. Therefore, this nation was duty-bound to bear responsibility for the world’s continuous progress. Strong argued that the primacy of Protestant Anglo-Saxons in the United States was important because it was the indispensable prerequisite for saving all of humanity. “Our appeal,” Strong stated, “is not America for America’s sake, but America for the world’s sake.”

It must be made clear that the belief of Neo-Protestantism bears no resemblance to biblical Christianity. Instead, it presents itself as a missionary movement aiming to establish progressivism à la Jean-Jacques Rousseau as the world’s dominant civil religion. Since Josiah Strong’s mobilisation campaigns, many Christians have unfortunately been misled by an apparently Christian call to global mission, supporting an initiative that could not be more detrimental to their faith.

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We are willing to admit that all other nations act out of self-interest. As for ourselves, however, we believe that we act solely out of altruistic motives. Although we have not elevated ourselves to the status of the “Christ of the Nations,” as revolutionary France did, we saw ourselves during the last war as at least the “Sir Galahad of the Nations.” [This term is often used metaphorically to describe someone who is absolutely righteous, brave, and beyond reproach.] So, if the American sees himself as an idealist while the foreigner sees him as a dollar-chaser, perhaps the explanation lies in the fact that the American judges himself by his feelings, while the foreigner judges him by his deeds.

In America, by the time of President Wilson, the notion had long been widespread that arrogant and callous elites in old Europe were oppressing the common people. Order had to be restored there and elsewhere. Thomas Jefferson was a pioneer of this view. However, ever since George Washington warned of the dangers of entangling alliances, the desire for a strong American presence abroad had largely been kept in check. By the beginning of Theodore Roosevelt’s presidency, the desire for a prominent U.S. role in international affairs had overcome earlier restraint. Woodrow Wilson reinforced the drive toward the military defeat of totalitarian states, not to pursue the U.S.’s selfish national interests, but to “serve humanity,” as he said. Because America had a special moral status, Wilson proclaimed, it was called upon to do good in the world. In a 1914 Independence Day speech, Wilson declared that even before the outbreak of World War I, it was America’s duty to serve “the rights of humanity.” He explained that the flag of the United States was “not merely the flag of America, but the flag of humanity.” In the insightful essay “Savior Nation: Woodrow Wilson and the Gospel of Service,” American history professor Richard M. Gamble thoroughly examined Woodrow Wilson’s conception of America as a servant of humanity.

Irving Babbitt pointed out that those who refused to join Wilson’s “humanitarian crusade” were warned they would “break the heart of the world.” Babbitt retorted: “If the hard old world had ever had a heart in Wilson’s sense, it would have been broken long ago.” He added that Wilson’s abstract and sentimental rhetoric revealed a temperament diametrically opposed to that of a true statesman. His ostentatious humanitarian idealism made Wilson not only inflexible and uncompromising, but also bellicose and bloodthirsty.

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In his June 18, 1991 speech at the Aspen Institute in Berlin, then-U.S. Secretary of State James Baker reiterated one of the defining principles of democratism when he stated that U.S. foreign policy should not solely serve American interests, but rather “universally applicable ideals of the Enlightenment.” Baker advocated for a “Euro-Atlantic community stretching from Vancouver, Canada, to Vladivostok, Russia.” “This community can only be achieved on a democratic basis.” Despite the enormous size and political and cultural diversity of the region he described, he did not hesitate or question the United States’ willingness or ability to undertake such a monumental task. Rather, the United States should promote “shared [...] universal values” in these regions and “indeed all over the world.” The U.S. military should use all its power to realize these nearly unlimited political ambitions.

A draft of a Pentagon planning document that was leaked to the New York Times expressed the forceful enforcement of global political and ideological ambitions even more clearly and pointedly. Drafted under the supervision of Paul Wolfowitz, then Under Secretary of Defense, it addressed the military requirements of the United States in the post-Cold War era and defined the goal of a world in which the United States would be the sole and uncontested superpower. In a March 8, 1992, New York Times article titled “U.S. Strategy Plan Calls for Insuring No Rivals Develop,” Patrick E. Tyler wrote that the United States must assume “the primary responsibility” for combating grievances “that threaten not only our interests but also those of our allies or friends, or that could seriously destabilize international relations.” American global dominance was presented as a means of spreading democracy and open economic systems. U.S. military power was to be so overwhelming that rivals would not dare question American will. While this vision of the future may have seemed like an expression of a boundless quest for power and control, many commentators considered it entirely plausible. For example, the Wall Street Journal praised the draft in an editorial advocating for a “Pax Americana.”]

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The new proponents of Rousseau’s civil religion use the term “democracy“ as an umbrella term for the kind of political regime they wish to establish worldwide. This refers not to republican democracy but to romantic democracy, as described in The Social Contract. “Romantic” refers to the Romantic era. According to them, only this definition of democracy corresponds to a universal moral imperative and is legitimate. Therefore, the introduction of “democracy” in countries where it does not yet exist should be the primary foreign policy goal of Western nations, especially the United States. Many scholars, including political scientist James David Barber of Duke University, refer to this aspect of Rousseauist ideology as “democratism.” In 1990, he wrote the following:

The United States should rise to the occasion and take the lead in the global democracy movement. […] We have made democracy work here, and now we must do the same wherever we can. This will require difficult and costly measures, but it is a responsibility we must accept.

After circulating in academic circles for many years, “democratism“ gained journalistic and political significance in the 1980s. The concept was strongly represented in the national security and foreign policy councils of the Reagan and Bush Sr. administrations. Following the collapse of Soviet communism, adherents of this movement increasingly anticipated an era in which the United States could dominate the world in the name of universal principles. Great zeal and the desire to wield American power flooded the media, government, and political debates. A notable example of this mindset came from columnist and television commentator Ben Wattenberg in 1988 when he wrote that the prospects for exporting American values were favorable. “Never before has a nation’s culture been so widespread and influential.” Wattenberg also pointed out that “there is finally a global language, namely the American one.”

The argument that the United States and its values were a model for all peoples was driven by the will to power, which sometimes struggled to maintain its ideological façade. Wattenberg aspired to nothing less than U.S. world domination: “It is quite clear what the global community needs: probably a supreme policeman, but in any case, a powerful global organizer. Someone has to do it. We are the only ones who can.” With unshakable determination, he summed up his political conviction: “Remember what America’s goal is: A unipolar world is fine if America is the only power.”

For more details on Jean-Jacques Rousseau, as well as the origins and impact of Romantic democracy, see my book, The Triumph of Progressivism: A Religious Quest for an Ideal Society.

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¹³ The God of Abraham, Isaac and Jacob, the God of our fathers, has glorified His servant Jesus, the one whom you delivered and disowned in the presence of Pilate, when he had decided to release Him. ¹⁴ But you disowned the Holy and Righteous One and asked for a murderer to be granted to you, ¹⁵ but put to death the Prince of life, the one whom God raised from the dead, a fact to which we are witnesses. (Acts 3:13-15)

The fundamental tragedy of the Western world is that, by the end of the 18^th century, French revolutionaries had rejected “Christianity” in favor of an ungodly civil religion. I am not claiming that Roman Catholicism during the Ancien Régime—the era of Bourbon rule—was biblical Christianity. I am merely stating that it was regarded as such. The term “civil religion” first appeared in 1762. Jean-Jacques Rousseau popularized it in his book The Social Contract. Civil religion emerged during the French Revolution, when Maximilien de Robespierre was appointed to the Committee of Public Safety in July 1793. This marked the beginning of the Jacobins’ Reign of Terror, designed to introduce and consolidate Rousseau’s “Romantic Democracy” in France. It is called “romantic” because it supplanted republican democracy during the Romantic era.

The French Jacobins consciously decided to advocate a new social order that glorified war as the supreme duty of their civil religion while despising Christianity, the religion of peace, and persecuting its followers to death.

In the chapter on civil religion in his book The Social Contract, Jean-Jacques Rousseau wrote that, above all else, religion has a responsibility to serve the social and political aims of the government. Most importantly, religion must promote the fundamental unity of the state. Its raison d’être lies in its ability to bring about and maintain this unity through the necessary measures. Taking these criteria into account, the possibility that Christianity could become the optimal civil religion must be rejected. “For as a religion, Christianity is entirely focused on the spiritual and concerns itself exclusively with heavenly matters. This world is not the Christian’s home.” There are even more serious objections to Christianity:

Christian charity does not allow a person to think only occasionally of their neighbors. […] Christianity preaches nothing but subservience and dependence. […] True Christians are created to be slaves. They are aware of this but are not overly bothered by it because, in their eyes, this brief life has little value.

It cannot be overlooked that Rousseau despises the true humanity of the Christian faith. In his view, the greatest virtues of Christianity are evil traits. Despite its merits, a society composed of Christians would never be the strongest or most enduring. Even if it were perfect, it would lack unity. The indifference that Christian thought shows toward secular law and the nation’s values would destroy the unity that is indispensable in a state. The subservient spirit that Christianity embodies would prevent the true flourishing of a martial spirit. Rousseau wrote:

Compare these noble people, consumed by a burning, glorious love of country, with the Christians. Imagine if your Christian republic were to face Sparta or Rome. They would be defeated, crushed, and destroyed before they knew what had happened.

The ancient Romans were heroic warriors only until they adopted Christianity. “Once the cross supplanted the eagle, Roman bravery vanished entirely.” Due to its pacifism, belittling of the state, and focus on the individual rather than the citizen, Christianity must be replaced by a religion that embodies the national enthusiasm the state needs. The ruler of the country must establish a civil religion and define its articles of faith.

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Robert Nisbet, a conservative American professor of sociology, regarded the state as an artificial construct that stood in opposition to traditional societies. The state arose from competing claims to power during violent conflicts. Nisbet recognized that in times of war, the territorial extent and totalitarian authority of the state increase the most.

As a state grew in power, it often did so at the expense of the kinship system. Homer illustrated this in his epic poem, the Iliad. The epic likely depicts the great difficulties of Greek society in the second half of the 8th century BCE. The grave problem facing the Athenians at that time stemmed from the conflict between their centuries-old kinship system and the urgent demands of war. Ultimately, the state prevailed in this confrontation. The statesman Cleisthenes of Athens (c. 570 BCE–after 507 BCE) abolished the intimate relationship of kinship everywhere. In its place came the polis (city-state) and individualism. Thus, the oligarchic government in Athens overcame the traditional basis of political authority held by the kinship system.

In this respect, Roman history resembled Greek history. A conflict arose between the “patria potestas,” the sacred and inalienable sovereignty that families held over their own affairs, and the “imperium militiae,” the power that was conferred upon military commanders over their troops. When the Empire replaced the Republic, the state overpowered traditional kinship structures. When Augustus was anointed “Pontifex Maximus” (high priest), civil and religious life became united under his supremacy. The “Institutiones Iustiniani” (Emperor Justinian’s legal code) established that the sovereign is the sole source of law. There was no higher power above him. Nisbet describes the waning authority of the Roman family during that period: “By the fifth century, the two forces of centralization and atomization had crushed the once-proud Roman family.”

The rediscovery of the “Institutions of Justinian“ during the Early Modern period (ca. 1450/1500-1789) influenced the renewed militarization of society, which inevitably led to war. This created an opportunity for the state to seize more power at the expense of traditional societies. Under the harsh conditions of war, intermediary institutions, such as families, religious communities, and cultural societies, had to subordinate themselves to the state. Robert Nisbet notes: “Only by penetrating traditional social authorities all the way down to the individual citizen, who was now subject to it, was the state able to assert its own authority.” Individual citizens had to pledge their allegiance first and foremost to the state rather than to their kin. They received their national identity solely from the state. War instilled in citizens an intense sense of community. Sociologist Nisbet observed: “It is the kind of community that arises through the emergence of an emergency. It is reinforced by shared values and emotions that run deep within the human psyche.” However, this new sense of community replaced the previous one, which had been valid and effective until then. Social innovations supplanted traditional customs. Over time, the state evolved from an exclusive military alliance into an institutional power controlling almost all aspects of human life.

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President Grover Cleveland recognized the growing influence of American imperialists seeking overseas colonies in the capital’s political corridors. During his second term from 1893 to 1897, he thwarted the imperialists’ various attempts to annex Hawaii. When Cuba—a country of constant unrest—was struck by another uprising in February 1895, Cleveland pursed a moderate policy at first, but changed his stance over time.

Initially, the U.S. government tried to protect American-owned plantations in Cuba from revolutionary attacks. To avert the immediate danger, they backed the Spanish. At the same time, they pressured the colonial rulers to grant the Cubans a certain degree of autonomy to accommodate their desire for independence. This two-pronged diplomatic approach cast a long shadow over subsequent U.S. foreign policy. In the years that followed, Americans frequently acted as mediators in foreign military conflicts, presenting themselves as an impartial “third power.” They claimed to have no interest other than resolving bloody conflicts in underdeveloped countries. In reality, however, they exploited the tense situations in those countries to their own advantage.

In the fall of 1895, U.S. Secretary of State Richard Olney concluded that Spain would not prevail in the war against the Cuban revolutionaries. Given the important trade relations between the United States and Cuba, which Edwin F. Atkins, a multimillionaire sugar plantation owner, had established through his leadership, the Cleveland administration shifted its policy toward the Caribbean island radically. Atkins, a Boston native, had maintained a close friendship with Olney, also a Bostonian, for many years. As a partner of J. P. Morgan & Co., Atkins represented the interests of the firm, which certainly tipped the scales in this decision. Behind the scenes, the American government began advocating for Cuban independence. The fact that this course of action would ultimately lead to war with Spain was apparently not worth considering. They embarked on a confrontational course with Spain, fully aware of the inevitable outcome. However, it would take another three years before the Spanish-American War broke out.

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In Santo Domingo, the capital of the Dominican Republic, France endured violent riots by American troops. In 1893, the Santo Domingo Improvement Company, a consortium of New York bankers, took over the country’s debt from a Dutch corporation and acquired the right to collect customs revenues to pay it off. The following year, a French citizen was murdered on the island in the Caribbean. The French government threatened to use force if no compensation were paid for this assassination. The only available funds were the Dominican customs revenues. The U.S. government dispatched a warship to the region to intimidate the French and prevent them from seizing the customs revenues.

The worst crisis of that period occurred from 1895 to 1896. During this time, the U.S. government nearly provoked a war with Great Britain over a territorial dispute between Venezuela and British Guiana on the northern coast of South America. Four years later, in April 1899, a firsthand account of some of the dangers that emerged during the Venezuela Affair appeared in the journal American Historical Review under the title “The Search for the Venezuela-Guiana Boundary.” The author, George L. Burr, headed the American delegation sent to South America to conduct the negotiations. According to Burr’s account, a minor incident nearly led to a military conflict between England and the United States.

The border dispute between the independent Latin American state of Venezuela and the British Crown Colony of British Guiana had been ongoing for more than 50 years. Neither side was inclined to accept the other’s claim. The conflict smoldered beneath the surface until gold was discovered in territory claimed by Venezuela. Suddenly, in 1895, the British laid claim to the territory. The government in Caracas devised a clever plan to turn the tide in its favor. They piqued American interest in the gold fields by offering Washington generous mining concessions. However, to accept this lucrative offer, Venezuela had to eliminate Britain’s political influence once and for all.

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The main focus of the aggressive expansion of the 1890s was Latin America. Great Britain was the main enemy to be defeated. The British dominated foreign investment in this vast region. In 1894, Bankers’ Magazine published a remarkable series of articles that set the tone for the remainder of the 19^th century. The authors concluded that conquering the South American market was worth great sacrifice if it reduced the influence of Great Britain and Germany significantly.

From 1895 to 1897, Secretary of State Richard Olney promoted an imperialist policy for the United States. After leaving the State Department, he summarized the policy he had initiated in a public communiqué. The traditional isolationism George Washington enjoined upon his country in his Farewell Address was now over. The time had come for America to assume a dominant position among the world’s great powers. One important requirement for the country’s commercial interests was opening larger markets for American products in other countries, particularly in Latin America. Banker J. Pierpont Morgan committed Olney, his close friend of many years, to this imperialist policy.

To carry out their warmongering plans, Cleveland and Olney proceeded to mobilize the U.S. military, aiming to deprive Great Britain of its markets and trade bases in Latin America. The British had supported a rebellion against the Brazilian monarchy and therefore established a blockade of Rio de Janeiro. In violation of international law, the U.S. Navy forcibly broke the blockade in 1894. To ensure the rebellion’s failure, the U.S. Navy stationed warships in Rio de Janeiro’s port for months.

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After the 1890 elections, Republican leaders began using a new form of propaganda. The Republicans had adopted a new stance on foreign military adventures. This was immediately reflected in the second half of President Benjamin Harrison’s term. In 1891, Secretary of the Navy Benjamin Tracy made a statement that would become increasingly well-known in the years to come. He advised the then-insignificant nation as follows: “To attain a preeminent position among the nations, colonies are the best aid.” In the winter of 1891-92, President Harrison allowed a street brawl between Chileans and American sailors in the Chilean port city of Valparaíso to escalate into a war with Chile. In his annual message to Congress, he wrote that he wanted to avenge an “insult to the uniform of the United States.” Only the conciliatory stance of the Chilean government prevented a military conflict.

At the 1892 National Convention, the Republican Party officially adopted a militaristic foreign policy aimed at acquiring colonies. The party platform that year committed the party to “the realization of the Republic’s manifest destiny in the broadest sense.” Apparently, the Republican Party leadership hoped to gauge how the old slogan of a warfare policy would resonate with Republican voters who could recall its military significance in earlier years. As a precaution, the platform did not lay out any specific policies, but over the course of 1892, some Republican newspapers began to drum up public support for a concrete step toward realizing America’s “manifest destiny”: the annexation of the Hawaiian Islands. This archipelago was located 2,000 miles off the coast, but it was closely linked to America economically and culturally.

The annexation itself was not the main focus. The Republican leadership primarily viewed it as the first step toward a broader overseas expansion policy. According to the New York Tribune, the official newspaper of the Republican Party, the annexation of Hawaii would help the United States overcome its traditional reluctance to expand its power or territory since the islands were located off its coast. According to the Philadelphia Press, the annexation would “familiarize the public with the acquisition of other territories.” While not the most spectacular example of America’s new strength on the international stage, the annexation of Hawaii was the most that the Republicans could accomplish in the short term. Encouraged and supported by the Harrison administration, a handful of pro-annexation Americans overthrew Hawaii’s native government in January 1893. A month later, just under two weeks before leaving office, President Harrison signed an annexation treaty with the leaders of the coup. The next day, the agreement was submitted to the Senate and approved two days later by the Republican-controlled Foreign Relations Committee in an expedited procedure. The new Republican foreign policy vigorously pursued the goal of overseas territorial expansion. Although the newly elected President Grover Cleveland withdrew the treaty, the European powers noticed that after a century of continental isolation, the United States was asserting its long-dormant power—if not under the Democrats, then certainly under the Republicans. By the end of 1892, the European powers had replaced all their legations in Washington with embassies, signaling that they had taken note of the United States’ ambitions to become a global power.

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The disastrous elections of 1890 left the Republican oligarchy in a serious dilemma. Although voters had rejected the party leaders’ policies, the leaders never intended to change—let alone abandon—their policies favoring high protective tariffs. These policies were the main pillar of their power over the Republican Party. However, at that moment, the Republican oligarchy’s goals—securing their power through corrupt tariff privileges and governing the country through electoral victories—were at odds with one another. For the Republicans, the sky had suddenly darkened—and it seemed as though it would grow even darker. The Democrats made significant gains, wresting control of the House of Representatives from the Republicans. This shift was largely due to the economic downturn triggered by the Panic of 1890 and the unpopularity of the McKinley Tariff. Many viewed the tariff as favoring industrialists over consumers. During this election cycle, the Populist Party established itself as a significant third force, winning seats in the House of Representatives.

James Gillespie Blaine (1830-1893), the Republican Secretary of State, pointed the way out of the dilemma. Blaine believed that the renewal of the Republican Party, the restoration of its former power and glory, and the reestablishment of an acceptable national goal could indeed be achieved. To do so, however, party leaders would have to embark on a course far more daring than protectionism and far more consequential for the future of the country. Most Republican leaders were prepared to brave the difficulties. An aggressive foreign policy, even if it served no national interest, promised to solve all major problems at once. For one thing, it would fundamentally change the country’s image. An electorate concerned about the economy would turn its attention to the spectacle of American power and military action overseas. The electorate’s preference for the Republican form of government would be diluted and distorted by jingoism, and its political energies would be absorbed by the problems and turmoil overseas. There were other advantages for the party as well. As the future apostle of national greatness and defender of national honor abroad, the Republican Party could regain its former role as the party of the Union. It could also convince future generations of what older supporters believed: that the Republican Party is “not a faction, not a group, not a wing, but a synonym for patriotism, another name for the nation.”

Such a policy faced enormous challenges. On the one hand, it represented a radical departure from the country’s traditions, which were shaped by the immense authority of the Founding Fathers. On the other hand, it marked a complete reversal of the Republicans’ own party traditions. Prior to the Civil War, Republicans had strongly criticized a aggressive foreign policy, branding it as one of the most abhorrent deceits of the reviled “slaveholders” of the South. Above all, however, the policy found no support at home, neither among ordinary citizens nor in the business community. There was no demand for it, no practical necessity, and, given America’s geographical location, few opportunities to pursue it. Nevertheless, the Republican Party surmounted these considerable impediments to its desired war policy and supplanted the original republic with an emergent empire, a feat reserved for President William McKinley a few years later.

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