March 2017 | Salem House Press

Salem Secret Underground Used in Writing Wicked Charms by Janet Evanovich

March 9, 2017 admin1 Comment

Look Who is Reading Salem Secret Underground…

Imagine my surprise when I am reading an author who has sold million of copies of her various series when…she references by book Salem Secret Underground: The History of the Tunnels in the City! My book was used to create the background to her tale! Kind of cool.

Here she first mentions the tunnels in Salem based on my research…

Elias Hasket Derby Jr. conscripted a militia in response to Jefferson’s orders for the local militias to help collect his new custom duties. This militia would instead of collecting duties dig 3 miles of tunnels to smuggle through.

Then she mentions the tunnels under the old Naumkeag Trust/Eastern Bank building on Essex Street I used to give tours in…

Here are the pictures of that bank…

The author is Janet Evanovich, aided by Phoef Sutton in Wicked Charms which is set in Salem and Marblehead.

Also thanks to Carol J. Perry for given thanks in her book Tails, You Lose which she based her research on “Salem Secret Underground“! Also my family name “Dowgin” is in her latest book.

Evanovich even mentions the fictional shed with the tunnel below it from Carol’s Tails, You Lose.

It would be cool to find out who references Sub Rosa in the future. There is a lot of nitty gritty details to American history you never heard or thought of in it….Image so much coming from little old Salem.

Sub Rosa available on Amazon.com.

Buy your copy today. The Sequel to the hit book that everyone digs, Salem Secret Underground!

New Tunnel Finds

March 8, 2017 adminLeave a comment

TUNNELS IN SALEM AND BEYOND

Through the years since Salem Secret Underground has been written I have kept looking for new homes that are connected. Sometimes when I find them they come with funny stories. There was a home on Northey Street that housed a woman who was a horrible cook. Next door was an excellent cook. They would meet in the tunnel in between the houses and the one woman would deliver home cooked meals for her neighbor. These were passed off as her own.

Around the corner on Woodbury Court I met a family that had a tunnel running ¾ of the length of their home that was used to smuggle to and from the North River. The only thing blocking the entrance was a tall hill of sand. There was this great kid who would light up every time he would see me. I was that guy who told him he had a pirate tunnel in his basement. I kept hoping he would take his sand shovel and dig the entrance open…

Other times I would just schedule an appointment to see a house that was on the market. Several real estate agents would hand me their info and I would go and investigate the basements of these homes. Sometimes the agent forgot to bring the keys to the basement. When they did not I would get images of these sealed up ways. I found more houses on Oliver, Andrew, Federal, and Chestnut Streets. Sometimes I just confirmed homes I speculated about in the first book. With each confirmation I got to make updates to the book. Salem Secret Underground was a living book, it changed from week to week, or month to month for seven years.

In one of those houses I confirmed on Pickman Street had turned one of the tunnels into a bomb shelter. All of the stored water from the 40’s or 50’s were still in large wine bottles. Where the addition was added in the back there was a well in the basement where they used to drop gold fish into. This property was on the edge where Collins Cove used to be on the corner of Milk and Pickman streets, so the tunnel in the back of the house was flooded.

I have been under the chapel in Greenlawn Cemetery. We filmed those tunnels for a documentary. Another documentary on the tunnels airs on YouTube and Winthrop Cable. A tunnel led 20 feet from the basement heading southeast under the old greenhouse. A greenhouse, I wonder if it was the one Elias Hasket Derby Jr. sold in 1811 that was part of the Derby Mansion on Derby Square. The tunnel is blocked off at a staircase. This tunnel at one time was lit by electricity, much like the one coming out of the old Naumkeag Trust building on Essex Street. Heading Northwest from the basement is a long corridor leading to a chamber that used to house corpses in the winter. Now its stalls houses weed whackers. There is another tunnel leading south. Next to it is a toilet that had a ton of bricks dropped on it. I hope no one was using it at the time. One tunnel leads to Orne’s Point.

Other Tunnels in the Nation

There are many tunnels in Georgetown, another Peabody hunting ground. On the 3300 Block of O Street Col. Alf Heidberg found an arched tunnel when digging out the basement for a bomb shelter. He lived there in the 50’s. His wife’s second husband was General Douglas MacArthur. Also the Halcyon House in Georgetown has what they call a slave tunnel which is haunted. Plus, Healy Hall Georgetown University.

Then the Water Street Custom House and under Federal Hill in Baltimore. This was the town Peabody moved to before he left for London.

Then the most interesting is Joseph Bonaparte’s mansion in Bordentown, NJ off of the Delaware. He moved to NJ in 1815 buying 1,800 acres in town. He was once king of Spain and Naples when his brother loomed over Europe. In 1816 he built his mansion Point Breeze that burned to the ground in 1820, but not before creating a paradise. An avid gardener Bonaparte installed a park on the grounds which was the forerunner to Central Park that he kept open to the public. The park was improved with trees, twelve miles of bridle paths and carriage drives, and an arched brick causeway across a man-made lake was constructed, all at a cost believed to be over $300,000 (over four and a half million in today’s dollars).

Many powerful people would visit his home. One was Stephen Girard. Stephen Girard who purchased most of the stocks of The First Bank of the United States when it lost its charter opened his own bank known as Girard’s Bank in the same building. He underwrote 95% of the loans to pay for the War of 1812. He then became a major stockholder and director of The Second Bank of the United States in Philadelphia along with Joseph Story. Girard bought Joseph Bonaparte a 16 oar barge to row his guests up the river.

Henry Clay Sr. had just took the last room in the City Hotel in NYC when Bonaparte arrived in America. Clay just returned from the signing the Treaty of Ghent to end the War of 1812. Upon hearing Joseph was in the hotel he offered him his dinner and suite. This was the beginning of their friendship. Could of Clay brought Daniel Webster and John Quincy Adams to Point Breeze. All have known to visit, but at the same time? If they did indeed visit together, I wonder if they compared the quality of his tunnels to the ones in Salem?

Then the Hoosac Tunnel outside of Fitchburg, MA in 1819. Originally proposed as a canal to connect Boston to Upstate New York via the Deerfield River on the east of the Hoosac Range and the Hoosic River on the west. That project was shelved, and later reborn as part of the new Troy and Greenfield Railroad. The project was nicknamed “The Great Bore” by future Supreme Court Justice Oliver Wendell Holmes Jr., who said he’d like to “wall up a dozen lawyers at one end of the tunnel and put a good fee at the other.” One of which is the lawyer Elias Hasket Derby III. He was the lawyer for the Fitchburg Railroad. His father might have engineered long tunnels, Junior was set to make huge tunnels. The Hoosac was built after Derby received a loan for $650,000 to build it. His other railroad from Boston to New Bedford was the Old Colony. The Old Colony rail will soon be restored as a commuter rail by my friend Adam who is working on the engineering plans for the State.

I looked up this reference after an acquaintance in the basement of an old underground smuggling train station now called Opus Underground in Salem. He had mentioned walking in long tunnels in Fitchburg and ending up under a grocery store. Also Fitchburg State University has a tunnel leading from Palmer House through the new Hammond Campus Center second level to the Thompson Hall’s basement. Thompson Hall was the original building built in 1896 that the college was housed in at its beginning. It is much like the Loring Mansion (St. Chretienne Academy) now part of Salem State University South Campus with the tunnel leaving the basement through the side of the hill to the old girls high school.

Here are some of their pictures:

To find out more and other fabulous stories about how Salem, MA shaped American History read Sub Rosa by Christopher Jon Luke Dowgin published by Salem House Press.

Here is a List of Those Who Paid for Derby’s Tunnels

March 8, 2017 adminLeave a comment

Smugglers of Salem

In 1801 Elias Hasket Derby Jr., King Derby, extended the old tunnel system in town. The plethora of the extensions to the system he engineered was paid for by the Salem Common Fund Subscribers in the 19^th century. These are tunnels familiar to Webster and Adams.

The Salem Common Subscriber Fund was a project brought about by Elias Hasket Derby Jr. disguised as a beatification program. A subscription was collected from 159 citizens of Salem, equaled to $2,500 ($35,855.80 roughly today), to on paper take down the hills, grade the common, fill in the 5 ponds and the river, add a whitewash fence, and some poplars. The sum fell short and an additional fund was created to pay for the project with 66 more subscriptions. Some who had paid for the first would contribute again. Afterward many ship captains would build grand Federalist mansions around the park removing the industrial feel that pervaded earlier. No longer the tanneries, rope walks, foundries, and bakeries dotted the Common.

Elias Hasket Derby Jr. would rise up as General Derby of Salem’s local militia. He would use these men to carry out the work. Previous the local militia had fallen to disorganization. So what occurred to inspire Derby to reorganize them? Thomas Jefferson.

Thomas Jefferson had won a silent revolution in 1800 which limited the aristocratic tendencies of the Federalist Party. With Jefferson there was the hope of moving away from the seaboard into the country and buying a farm. Once you were a property owner you would have the ability to have a vote. To help for the interior improvements Jefferson imposed new duties on imports. A move not much favored in Salem.

To help collect these duties Jefferson had asked the local militias to aid the custom agency in their collection. So Elias, General Derby, housed the militia in Wakefield Place on the location of the Hawthorne Hotel and had them set to work in the Common. They did indeed carried out the plan that was above board, but they did much more below.

Under the guise of a beautification program this militia dug a series of tunnels around the Common and hid the dirt in the ponds and the river that led to Collins Cove. The tunnels would connect the new Federalist mansions through their fireplace arches or holes in their basements. So these 159 merchants could smuggle goods from their wharf, to store in their homes, push to their stores, and bring the proceeds into the vaults connected to the tunnels. If they did not want to sell their goods in town, there was an underground railroad station provided by George Peabody, the progenitor of J.P. Morgan.

These subscribers included state and federal Senators and Congressmen, half the custom agency, local mayors, the founder of the New England Medical Review Journal, and families related by marriage or business to the Derbys, Peabodys, and Crowninshields. Later the tunnels would connect the homes of a Secretary of the Navy, an Associate Superior Court Justice, the financier behind Daniel Webster, a Secretary of State, and one of the most famous men to be murdered in the 19^th century, and more…

Benjamin Crowninshield (1772-1851)

Director of The Second Bank of the United States Boston and Philadelphia, Secretary of the Navy, Senator, Collector of the Port of Marblehead, belonged to a family of merchant-seamen in his native Salem, Massachusetts. Served with Thomas H. Perkins as directors of the bank in Boston.

He was a partner in his father’s firm, George Crowninshield & Sons and its successors, a business that prospered during the War of 1812 but dissolved in 1817. Crowninshield was elected to the Massachusetts House of Representatives in 1811 and to the state senate the following year. President James Madison appointed him Secretary of the Navy late in 1814. Although at first declining the position, Crowninshield soon consented and remained in office until his resignation in 1818.

Thereafter he returned to his business pursuits, having been elected president of the Merchants Bank of Salem in 1811. Board members Joseph Story (another director The Second Bank of the United States in Philadelphia and Boston), John Dodge, and Stephen White. Joseph Story replaced him as president of Merchant Bank when he became Secretary of the Navy in 1815. He was president of the following companies and institutions: The East India Marine Society, for 16 years ; (His grandfather was its first president); the Salem Lead Company (where Joseph Dixon got lead for his #2 pencils); the Association for the Relief of Aged and Destitute Women, for 19 years; and the Salem Savings Bank. He was a member of the Board of Aldermen in 1859. He was active and prominent in church work, and was for many years superintendent of the Sunday School of the East Church (Where the Witch Museum stands today), later called the Second Unitarian Church.

He reentered the political arena with election to the Massachusetts House in 1821, Crowninshield became a director of The Second Bank of the United States in 1822 and remained connected to that institution until its charter expired in 1836. He sat in the United States House of Representatives, 1823–31, where he aligned himself politically with John Quincy Adams. In 1833 Crowninshield served one final term in the Massachusetts House before retiring to Boston, where he died.

George Crowninshield & Co.

Benjamin’s brother’s company founded by their father George Crowninshield.

Jacob Crowninshield

Representative in U.S. Congress. Spits up blood in session and dies 5 days later in 1808. The once family lawyer Joseph Story will usurp Benjamin Crowninshield from the seat. Many strange deaths surround Story and his brother-in-law Stephen White. Jacob brought the first elephant to America. He did not understand how much an elephant could drink on board ship, so he preserved what was left for the sailors. In turn he gave her all of the beer on the ship. Once at port in NYC she was slightly pink from the alcohol. Pink elephants…Later the Stoned Elephant, Old Bet,would travel the country drinking bottles of beer she would uncork to drink for a nickel. A dime and she would drink the whole keg.

William “Billy” Gray Jr.

Started in Elias Hasket Derby Sr.’s counting house. He moved the Sun Tavern which was Benjamin Brown’s old house to the corner of Liberty and Essex Street. On the spot he will build his fine mansion that would become the Essex House hotel after he makes his leave to Boston. William Brown was also a loyalist who lost his property on Derby Square. Lucy Brown would retain it so her father-in-law Elias Hasket Derby Sr. could build his wife the grand mansion there.

After supporting Jefferson in the Embargo Act and keeping the sailors in town who suffered from it well fed, he was forced to remove to Boston. During such time the country was poor and needed volunteers to gather subscriptions to build ships. Gray and Derby Sr. were behind the efforts to raise the money for the Salem Beverly Bridge, the aqueduct from Danvers with Joshua Ward, and for the USS Essex in 1799. During the War of 1812 David Porter would be captain of the ship.

In his first biography Porter would tell of his genocides of native people in the Pacific and the massacres of English sailors on whaling ships on the Pacific during the War of 1812. Then the Navy will rewrite his biography and gloss over these facts.

Yes your history was correct, the War of 1812 was fought on the Atlantic and the west coast of North America was English, Russian, and Spanish. Admiral Farragut who served under Porter would later go on an massacre natives following his example.

He was appointed a director to the Boston Branch of The Second Bank of the United States in 1815. Previously he was a director in The First Bank of the United Sates with George Cabot. In 1817 Gray was President of Discounts and Deposits of the Boston Branch. Also he was an agent to sell shares with Essex Junto Israel Thorndike and Thomas H. Perkins for the bank. His apprentice Joshua Bates would become a partner in Baring Brothers Bank who was also connected to associate director Thomas H. Perkins. Bates would purchase large amount of shares for his English bank. William Gray Jr. would continue on to a be a senator from Boston and die the richest man in New England.

John Treadwell (1738-1811)

Moved to Salem where he became a state senator and judge of the Court of Common Pleas.

Joseph Waters

Appointed Navy agent to build the frigate Essex with Enos Briggs the master builder.

William Prescott Jr. (1762-1844)

William Prescott Jr. was a representative from MA who attended the 1814-15 Hartford Convention. Prescott was the only child of American Revolution leader Colonel William Prescott, who served at Bunker Hill in 1775. William Prescott, Jr., graduated from Harvard in 1783, and then taught at Brooklyn, Conn. and later at Beverly, MA. He passed the bar exam in 1787 after studying law in Beverly with Nathan Dane. Dane had taught Daniel Webster at Dartmouth. Webster and Dane attended the secessionist Hartford Convention with him. Prescott founded a law practice in Beverly.

In 1789, he moved his practice to Salem where he became a well-known attorney. He represented Salem for several years in the MA Legislature. He was elected a state senator by the Federalist Party in 1806 and 1813. He twice declined a seat on the bench of the Supreme Court of Massachusetts. In 1808 he moved to Boston and was for several years a member of the Governor’s Council. In 1815 he became a fellow of the American Academy of Arts and Science.

His son William H. Prescott became a well known historian and traveling partner to John Quincy Adams in Europe. In Europe he met Queen Victoria, Robert Peele, and the Duke of Wellington. Prescott was Justice of the Peace with Stephen White and Daniel Webster in Boston in 1835.

In 1849 spoke to Daniel Webster to keep Nathaniel Hawthorne’s post in the Custom House. He was on the original board of the Perkins School for the Blind with Israel Thorndike, William Balch Parker, Thomas H. Perkins, and Benjamin Pickman. Many were members of the Salem Common Subscriber Fund. If you were going to make secret tunnels in Boston, I guess it would be great to have a building of blind people not knowing what you were doing…

In America he met Zachary Taylor and James Polk, two presidents that would die from Typhoid. As a friend of Daniel Webster, I wonder if he had access to Polk and Taylor’s food… He did sit next to Taylor and feigned off suggestions about a history of the Mexican War in which Taylor was a hero in 3 months before Taylor was to die of Typhoid. Before he dined with Taylor he was at Henry Clay Sr.’s table. This was in April of 1850. Right before visiting Taylor, Prescott would suffer a stomach ailment before traveling. I believe Taylor might have been ill after his visit, but he would not catch the Typhoid that killed him until July 4^th.

William Carlton

Salem Register was a Republican-Democratic paper that ran against the Salem Gazette which was a Federalist paper. Rev. William Bentley and Joseph Story wrote in it. It started in 1800 and ran till 1911 with different names. The press that was used to print it was paid for by the Crowninshields. He chided the town Federalist for not supporting John Adams enough after the Essex Junto jumped ship to Hamilton. His newspaper led to the failed congressional campaign of the Essex Junto’s leader Timothy Pickering against Jacob Crowninshield of the Stoned Elephant fame.

He was jailed for libel under the times of the Alien & Sedition Acts for statement against it’s drafter Timothy Pickering stating it was hard to believe he did not take bribes from the British. He was sentenced to 2 months in prison and 2 years of bonds that secured his silence. He was a hard drinker in poor health and jail did not help matters any. He succumbed to the stress of 2 more Federalists suits and fines. A fine for having his print shop open on a Sunday. Then another libel suit from Timothy Pickering. All of this would lead to his death 2 years after being released from jail. His wife followed soon afterward. Democratic-Republicans tried to alter the state libel law in 1804 but failed.

Benjamin Webb

1851 director of Merchants Bank when it resided in his building. Owned the Sun Tavern, the tavern the smugglers drank and dined in. Currently the offices of the Peabody Essex Museum on Essex Street.

Isaac Osgood

Brewer. Alexander Hamilton petitions congress to grant him a loan for brewing malt liquors. Could he be a member of Essex Junto and provide them with their ale? On the government cuff?

Joshua Ward

Member of the Salem Marine Society. Married Edward Augustus Holyoke’s daughter. His mother was a Derby. He lent rooms in his home to the Essex Lodge once they reestablished themselves after the Revolutionary War. The Mason George Washington would stay in his home on the second floor and walk through his tunnel to the Stearns Building which held the Assembly Hall where a party was given in his honor where the Fountainside Diner resides now on the corner of Washington and Essex. His house was built on the site of Sheriff Curwin’s home in which he was buried under the stairs until his wife could pay off the lien on his body. Ward was also a distiller.

Abel Lawrence

Distillery was in Lawrence Place. A place not haunted but filled with spirits. He was the 4^th captain of the Essex Cadets. He was the Master Mason after Joseph Hiller in the Essex Lodge. His home was across the street from the Lodge and Joshua Ward House. He provided the Mason’s strong drink with duty free molasses…when Ward ran out he just had to run across the street.

Israel Dodge

Another distiller.

John Norris

Left fortune to Andover Theological Institution. Distiller…

Jonathan Hodges

You guessed it… distiller. Father of Benjamin Hodges who founded the Salem East India Marine Society. The society that started the Peabody Essex Museum.

Nehemiah Adams

Wood worker who burned down 3 shops. One on the Common that burned down in 1798. Maybe he drank too much fire water from the group above. His son was Nehemiah also. He was a pastor and writer. Many of Senior’s furniture was moved into the Winterthur House after Frank Crowninshield marries Louisa Dupont around WWI. Frank owned Benjamin Crowninshield’s house on Peach’s Point Marblehead. The house is gone but the chasm from the ocean they would smuggle under the house remains.

Joseph Hiller (147-1817)

Appointed from 1789 to 1802 as Collector of Customs for Salem and Beverly MA in Salem MA. First Master of the Essex Lodge after the Revolutionary War. Lodge met in Joshua Wards House. Silversmith and watch maker. His father performed electrical experiments near the Old Meeting House in Boston and was a silversmith as well. Married Margaret Cleveland.

Rev. Charles Cleveland (1772-1872)

Father of Charles Dexter Cleveland, was born in Norwich, Connecticut. Introduced by an uncle to Salem. He would fulfill his seaman apprenticeship around the Cape of Good Hope. He later served as a deputy collector at the Salem custom house until 1802. He would step down the same year Joseph Hiller was removed from his post.

Charles next became a clerk in Charlestown for seven years and subsequently launched his own brokerage business in Boston, Massachusetts. He changed careers again to become a senior partner in the dry-goods firm of Cleveland & Dane from 1822 until 1829. Charles then returned to working as a broker for approximately five years, which he followed with his complete abandonment of the business world in order to devote himself full time to charitable works.

In 1816 he organized the Society for the Moral and Religious Instruction of the Poor at his home. He also labored to collect funds for a mission-house, which was dedicated in May 1821 and in 1830 became a missionary to the Boston poor. Charles received a license to preach in 1835 and was ordained an evangelist on July 10, 1838. Throughout his life, Charles, who eventually became known as “Father Cleveland,” continued to engage in charitable works, including serving as the Chaplain at a House of Correction for both men and women. Rev. Charles Cleveland died on June 5 1872, just sixteen days short of reaching his one-hundredth birthday. He was the granduncle of President Grover Cleveland.

Penn Townsend

Privateer in the war of 1812. Owned the Alexandria from Maryland with Joseph J. Knapp Sr. and Joseph White. Also the Helen and the Dolphin from Georgetown with Joseph “Jr.” White and Joseph J. Knapp Sr. Owned a few ships without the Whites but with Joseph J. Knapp Sr. His ties were closer to the Knapps than the Whites because he owned 3 more ships with Joseph J. Knapp Sr. without any of the Whites. He was a Mason and a 2^nd Lieutenant on a revenue cutter for the Boston Custom House.

John Gibaut

Collector for the port of Gloucester.

Henry Prince

Bought the Derby House and the West India Good Shop in front of it. His son was a captain of a revenue cutter in the harbor.

James Cheever

Jefferson appointed official in the Custom House.

Elijah Haskell

One arm custom inspector.

Henry Tibbets

Inspector of Customs.

Bartholomew Putnam

Surveyor of Port who lived where the East Church was built. Now the Salem Witch Museum.

Edward Augustus Holyoke (1728-1829)

Third President and founding member of the American Academy of Arts & Sciences. He was president of the Massachusetts Medical Society which created the New England Journal of Medicine which he penned several articles for. He was the first dean of Harvard Medicine. He trained close to 40 doctors. He started the 2^nd savings bank in the country. An early proponent of inoculation against smallpox, it is estimated he vaccinated 600 persons during his career against the dreaded disease. Traveling by horseback, chaise, or on foot, Holyoke over the next 80 years would cover an estimated one-and-a-half-million miles and make approximately a quarter-of-a-million house calls.

He was a founder of both the Social and Philosophical libraries in Salem, and was a driving force in the merger of these two institutions into the Salem Athenaeum in 1810 that also proffered by the Irish chemist’s library that Bowditch loved. He was also an incorporator of the Essex Historical Society, later the Essex Institute, in 1821.

Also he looked like my grandmother in drag. My grandmother and him share the succession of Edward’s in their family trees, originate from the same area of England, and both were in the medical profession as my grandmother scored best in her nursing school. So if there is reincarnation, my grandmother beat me to town. I showed his painting in the Essex Institute to my father, he was skeptical. My mother, the daughter-in-law, mouth dropped and she said in a gasp, “Oh Shit! She is back!”

Jonathan Waldo & Son

Apothecary owner in the Stearns Building. Major in second Cadets. Renovated Fort Pickering with brick arched corridors. Later uses this experience to help engineer a new tunnel system using brick arches over granite flat tops. Grand Uncle to Ralph Waldo Emerson.

Benjamin Lynde Oliver Jr. (1760-1835)

The Rights of an American Citizen: With a Commentary on State Rights, and on Constitution and Policy of the United States 1832…authored. Physician. Andrew Oliver was his father. His siblings were Peter and Sarah. Studied law under Joseph Story. 1813 tutored Hawthorne. Could have been MA Superior Court Justice and was an excelled chess player. His mansion was built by Justice Lynde whose son would live in it as well before Oliver. It was erected in 1700 taken down in 1836. Dr. Benjamin Lynde lived in that house next till he died in 1835. His estate sells his organ to St. Peter’s Church. Oliver’s Hollow or Cellar, only thing remaining, was standing on the corner of Liberty and Essex from 1836-1844.

That cellar they filled and made a garden of it. Kids used it as cut across from Essex to Liberty. John Kinsman buys it after Oliver and builds the first Lynde Block…3 stories.

Mary Oliver

Dies 1807. Her son is Dr. Benjamin Lynde Oliver. It was a family affair, these tunnels…

Peter Oliver

Deranged 1821 and gives estate to Col. Abel Lawrence, head Mason, distiller, and another smuggler.

Samuel Webb

Deranged silversmith.

Walter Bartlett

Deranged auctioneer. Is there a pattern…

Joshua Orne

The site where City Hall is on his lot. One of many buildings in town connected to tunnels. Joseph Cabot, gives up the house he inherited through the Orne’s to build City Hall. Cabot changes the name of Orne’s Point to the Cabot Farm I believe. A place of many tunnels and the brickyard that built them. Timothy Pickering bought 200,000 bricks in one order from there.

John James Scobie

Master mariner turned dry goods merchant from Scotland marries Jonathan Mason’s daughter. Had dry goods store in the Wakefield Place connected to the tunnels on the location of the Hawthorne Hotel.

Amos Hovey

Also had a dry goods company in Wakefield Place and prospered from the tunnels connected to the building. A military man who owned a warehouse on Union Wharf.

John Norris

Norris hired Jonathan Goodhue. Later Goodhue & Co. were confidential correspondents of Baring Brothers.

Nathaniel Bowditch (1773 – 1838)

An early American mathematician remembered for his work on ocean navigation. Serendipity aided Bowditch’s autodidact study inasmuch as he found himself able to use the eminent Irish chemist Richard Kirwan’s library; a privateer from Salem known as the Pilgrim had intercepted the ship carrying the library between Ireland and England and brought the library back to Salem in June 1791.

In 1795, Bowditch went to sea on the first of four voyages as a ship’s clerk and captain’s writer. In 1799 elected to the Academy of Arts and Sciences. His fifth voyage was as master and part owner of a ship. Following this voyage, he returned to Salem in 1803 to resume his mathematical studies and enter the insurance business. In 1804, Bowditch became America’s first insurance actuary as president of the Essex Fire and Marine Insurance Company in Salem.

By 1819, Bowditch’s international reputation had grown to the extent that he was elected as a member of the Royal Societies of Edinburgh and London. He also was a member of the Royal Irish Academy.

In 1823, Bowditch left the Essex Fire and Marine Insurance Company to become an actuary for the Massachusetts Hospital Life Insurance Company in Boston. There he served as a “money manager” for wealthy individuals who made their fortunes at sea, directing their wealth toward manufacturing. Towns such as Lowell, MA prospered as a result.

Bowditch’s move from Salem to Boston involved the transfer of over 2,500 books, 100 maps and charts and 29 volumes of his own manuscripts.

Bodwitch is often credited as the founder of modern maritime navigation; his book The New American Practical Navigator first published in 1802, is still carried on board every commissioned U.S. Navy vessel.

Daniel Hathorne

Mason. Father of Nathaniel Hawthorne. Dies at sea in 1805. Same year subscriber David Patten dies at sea.

William Manning

Nathaniel Hawthorne’s uncle and benefactor. Owned the stage coach company in town. His brother Robert owned the nursery near Orne’s Point. This Dutch Colonial cottage was built by Nathaniel Hawthorne’s maternal uncle Robert Manning for his widowed sister, and Nathaniel lived there with his mother after his graduation from Bowdoin College. The cottage was then across and down the street from its present location, adjacent to Manning’s own house and famous nursery, orchard and garden which is part of Greenlawn Cemetery now.

Richard Manning

Another uncle of Hawthorne. Money lender, captain, and justice of the peace. His house was removed to build the Phillip’s School which was the location for Hocus Pocus scene in which the kids burn the witches in the furnace. My neighbor used to teach in that school. After knowing her for 15 years I realized that she was retired longer than I was alive…

Jonathan Gardner Jr. (1755-1821)

Founder of the Salem Marine Society that still retains their clubhouse on top of the Hawthorne Hotel. A property sold to Frank Poor of Sylvania to fulfill his wishes to have a hotel for his business clients in town. They received the Franklin Building which was once called Wakefield Place from the drug lord Thomas H. Perkins.

Jonathan was a privateer during the French Indian War and commander of minutemen in the Revolutionary War. His ancestor Joseph Gardner died in the Great Swamp Fight during the King Phillip War and his widow Ann Downing will marry Simon Bradstreet, governor, and move the Gardner home from Gloucester across the street where I wrote a few books. Ann would become America’s first poet.

Jonathan Gardner Jr. would suffer financial losses and sells 2 properties that were connected to the tunnels in town to Joseph White who would be murdered in the second house he purchased.

John Watson

Maternal great-grandfather of the Parker Brothers. I used to live on his old farm lot and found a marble his great-grandsons could of played with. Beacon Street was once East Watson Street. One of the many properties he had owned off Bridge Street.

Joseph Knapp Sr.

Sons will be hanged for the murder of Joseph White. The game Clue will include rope as a murder weapon to represent his innocent sons hanging. Also the lead pipe is for the real murderer’s weapon Stephen White used and the Scottish dagger his accomplice and blackmailer used to stab White 17 times producing no bloodstains on the sheets in the bed his uncle was murdered in. Knapp will try hanging himself during his son’s trial. His wharf was Union Wharf. He had bought the murdered man’s ship the Revenge years before. He had owned many ships with Joseph White and his nephews. Then the Pirate Phillips took the ship Revenge. An insult Joseph White could not stand for, as a widower he treated that boat as his only child and was jealous that Knapp had a child who would continue his name. As well as White’s other business partner Richard Crowninshield Sr. had insulted him. His son will be found in his cell hanging from a low window with his knees almost on the ground. One of Richard Crowninshield’s sons would be hanged for White’s murder and two of Knapp’s sons.

Joseph White

His murder is the premise of the Parker Brother’s version of Clue. The rooms of his mansion appear on the board and the secret passages represent the tunnels leaving the house. He was Salem’s first privateer, a man who loved revenge, and a slave trader who would sell anyone of any color. Owned many shares in The Second Bank of the United States his nephew Stephen will inherit. Once partner to Joseph Knapp Sr. and Richard Crowninshield Sr.

Benjamin Hodges

Was a master of the Essex Lodge of Masons. He was the first president of the Salem East India Marine Society, the society whose collection is part of the Peabody Essex Museum now. His father’s house on the corner of Orange and Essex Street had a tunnel running from the Derby House and another down to Union Wharf which is Pickering Wharf today. The trapdoor in the kitchen might be the last open connection to the vast tunnels in town.

Also the distance between his house and the Derby’s is the length between his house and Brigg’s and Silsbee’s mansion on the Common. The same distance from Silsbee’s to Cook-Kimball and David Lord’s houses on Pickman Street. Two mansions of great size will be built next to each other all over Salem separated by that distance. The size of the mansions would be used to hide the extra purchases of the bricks to go that stretch.

Most members of the Salem East India Marine Society were members of the Salem Marine Society. A friendship that still continues for if you want liquor at the Peabody Essex East India Marine Hall you have to have it supplied by the hotel below the Salem Marine Society’s clubhouse.

Joseph Vincent

First Steward of renewed Lodge in the Joshua Ward House. Elias Hasket Derby Jr. Senior Warden. William Bentley Junior Warden. Joseph Hiller Master Right Worshipful and Head of Customs. Vincent owned a ropewalk on the Common next to Thomas Brigg’s ropewalk. If the project called for it they would join ropes from one ropewalk to the other as they did when they made the rope for the anchor of the USS Essex. Grand parties would be held in the Common for the rope walks and buffets would be stretched the grand distance of their establishments for their employees. First brought Henry Clay Sr. to New England to discuss the economic advantages of hemp over jute or sisal in making rope for riggings. This visit might of introduced him to John Quincy Adams who he serves under as Secretary of State. He was a Revolutionary War Hero. His son Joseph K. Vincent becomes a judge in Idaho.

Jeduthan Upton Jr.

Upton was exchanged for another prisoner and returned to Salem, Mass. on July 9, 1813. Marries Jessie Smith’s daughter. Smith was the last of Washington’s bodyguards to die.

Israel Williams

First captain of Friendship. Captain of the Cadets.

Aaron Waite

Partners with Jerthmael Pierce in the ship Friendship. Their wharf was off the old North Street Bridge. Carlton’s bridge washed up against their wharf from Felt Street during the Great High Tide.

Jerthmael Pierce

Partner in Pierce & Waite

Samuel Skerry

Kicked in head by a horse in 1808 in his 36^th year.

Nathaniel West

Suffered one of the worst divorces in history. He wished he was kicked in the head by a horse instead.

To find out more and other fabulous stories about how Salem, MA shaped American History read Sub Rosa by Christopher Jon Luke Dowgin published by Salem House Press.

The New Deal, Some Heros, and Some Scandals

March 8, 2017 adminLeave a comment

Little Known Truths…

In January 1932, 25,000 jobless men from Pennsylvania (Cox’s Army) marched to Washington to petition Congress and Hoover to start a job program. Hoover, fearing Communist agitation, ordered an investigation. The investigation discovered that the march was financed by Andrew Mellon. One way he financed the march was by offering free gas at all of his Gulf gas stations to the protestors so they could drive to the Capitol. McFadden then pressured President Hoover to remove him as Secretary of the Treasury. Then Mellon became Ambassador to the Court of St. James. Mellon married a daughter of a large stockholder in Guinness. He later divorces her after she had an affair with a British soldier…among many others. Prior to Prohibition Mellon was a large stockholder in what was the country’s largest distillery.

On July 17, 1932 thousands of WWI veterans converged on the capitol to set up tent camps and demanded immediate payment of bonuses due them according to the Adjusted Service Certificate Law of 1924. Since America’s founding we have always been remised about paying our troops. Remember the Pennsylvania Mutiny of 1783 and the storming of Philadelphia? What about the Newburgh Conspiracy? The worst atrocities to our soldiers happened when we had a national bank.

Soldiers of WWI were to be paid $1 for every day of service at home and $1.25 for overseas with a cap of $500. Harding and Coolidge had fought against any instant payment scheme. Veterans were able to take out loans against their certificates beginning in 1927. By June 30, 1932, more than 2.5 million veterans had borrowed $1.369 billion when they marched on Washington. There were 3,662,374 Adjusted Service Certificates issued, with a combined face value of $3,638,000,000 (2010: $43.7 billion). Congress established a trust fund to receive 20 annual payments of $112 million that, with interest, would finance the 1945 disbursement of the $3.638 billion for the veterans. Meanwhile, veterans could borrow up to 22.5% of the certificate’s face value from the fund; but in 1931 it was raised to 50%. Being it the Great Depression, many probably got behind in payments, sold them at depreciated values, and continued to pay interest on the loans.

Retired Marine Corps Major General Smedley Butler, one of the most popular military figures of the time, visited their camp to back their effort and encourage them. On July 28 Washington ordered the veterans removed from all government property. Washington police, created during the September 11^th riots, met with resistance, and two veterans were wounded and later died. President Herbert Hoover then ordered General Douglas MacArthur to command the infantry and cavalry supported by six tanks led by General Paton of Hamilton, MA to attack the veterans of WWI. They were driven out with their wives and children and their shelters and belongings burned.

The veterans fled across the Anacostia River to their largest camp, and President Herbert Hoover called an end to it. MacArthur ignored him and attacked. He claimed it was an attempt to overthrow the government; 55 veterans were injured and 135 arrested. They were attacked with tanks, bayonets, tear gas, and bullets. Afterward they would march to state line to state line after being removed by authorities.

“I served in all commissioned ranks from second lieutenant to Major General. And during that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street and for the bankers. In short, I was a racketeer for capitalism. I suspected I was just part of the racket all the time. Now I am sure of it,” said Major General Smedley Butler. He received 16 military medals, 5 for valor, one of 19 men to receive the Medal of Honor twice. He wrote the 1935 exposé that linked business and the military titled War Is A Racket. He served in Honduras, Nicaragua, Mexico and Haiti (earning his Medals of Honor in Mexico and Haiti). Loved by his troops for his care of them he became the youngest Major General in the marines at 48.

“In the World War [I] a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War….How many of these war millionaires shouldered a rifle?”

In 1934 the House Un-American Activities Committee called Butler to expose a coup against the government. Later it was called the Business Plot. He had been recruited by a group of wealthy Pro-Fascists who had hoped to use him in a coup against President Franklin D. Roosevelt. The heads of Chase Bank, GM, Goodyear, Standard Oil, the Dupont family, Felix Warburg, N.M. Rothschild & Sons, J.P. Morgan, and Senator Prescott Bush was believed to behind it. Felix Warburg was married to Jacob Henry Schiff’s daughter and he owned Kuhn, Loeb, & Co. They would claim Roosevelt’s failing health would be the cause they engage the coup and would make Butler “Secretary of General Affairs”, while Roosevelt would have assumed a figurehead role.

In 1785 Mayer Amschel Rothschild shared a 5 story house to engage in his gold enterprise called “The Green Shield” which he shared with the Schiff family. Schiff and Rothschild families were linked since their beginnings.

Butler went along, gathering intelligence about the plot, and took it to Congress. Butler’s assertions were not aggressively pursued, and the matter was largely dismissed. However, an internal report to Congress from House Un-American Committee confirmed the veracity of the plot. Some thought it came about because on June 5, 1933 Roosevelt took us off the gold standard nullifying the right of creditors to demand payment in gold.

In 1954 when the CIA led a coup against Arbenz government in Guatemala it was Assistant Secretary of State for Latin American Affairs John Moors Cabot who led it. He was a president of United Fruit also. Árbenz continued social reforms which included a minimum wage law, increased educational funding and near-universal suffrage that Arévalo’s started. The social reform policies, as well as instituting land reform, which sought to grant land to peasants who had been victims of debt slavery while United Fruit owned the country. America also sent in troops when Cabrera was overthrown. Nine years later Jorge Ubico took over and worked with United Fruit to keep the population down leading to executions, massacres, and forced labor. Conditions in Guatemala were so deplorable that Herbert Norman Schwarzkopf Sr. refused to help extend the police state in this nation.

Back in 1889 Andrew Preston’s Boston Fruit Company merged with Minor Cooper Keith to from United Fruit Company which is now Chiquita Brands International. Henry Cabot Lodge, a descendant of the Salem smugglers and Essex Junto, was a director. Cameron Forbes, a relation to Thomas H. Perkins, would also be a director. Thomas Dudley Cabot would become president. Thomas Jefferson Coolidge Jr. would become president as well after his father helped the company incorporate in NJ. Thomas’ grandfather was Joseph Coolidge who was part of Russell & Co.

Another forgotten hero was Henry Agard Wallace. Now you black and white film lovers might know him indirectly. The greatest Robert Riskin and Frank Capra films were based on him. Gary Cooper in Meet John Doe and Jimmy Stewart in Mr. Smith Goes to Washington. Even Wallace’s guru’s interest in Tibetan mysticism is in Lost Horizon.

Henry Agard Wallace started as Secretary of Agriculture for President Franklin Delano Roosevelt in 1933. He convinced farmers to hold back on yields to increase their prices to fight foreclosures during the Great Depression. He provided food stamps and school lunches. He created programs for land-use planning, soil conservation, and erosion control. He promoted research to combat plant and animal diseases, to locate drought-resistant crops and to develop hybrid seeds in order to increase yields. His plans helped commercial farming right down to subsistence farming.

His father Henry Cantwell Wallace had that same post under Harding and Coolidge. When he was little George Washington Carver lived with them because he could not live at the dorm at Iowa State University when he was a student and then an instructor. He taught Wallace a lot on nature walks and on the farm before he went to the Tuskegee Institute when Wallace was 8. After attending Iowa State College at Ames Wallace will go on to make a fortune with his High-Bred Corn company in 1926.

In the 1930’s the Roosevelts and Wallace met the mystic and artist Nicholas Roerich who had formed a distinct practice of Theosophy called Living Ethics. Roerich co-wrote the scenario for Igor Stravinsky’s 1913 avant garde ballet The Rite of Spring. Before meeting Wallace and the Roosevelt’s he traveled to Tibet and in 1930 published a book, Shambhala: In Search of the New Era, a collection of traditional legends of Tibetan Buddhism. Roerich lobbied for the protection of the world’s cultural, scientific, and artistic monuments from the ravages of war, a cause Wallace, along with such luminaries as Albert Einstein, George Bernard Shaw, and H.G. Wells, among others, enthusiastically adopted. Franklin Delano Roosevelt was involved with Asian religions and mythology through the influence of his mother. I wonder if his grandfather brought these predilections back to his family while he was selling opium in China.

A lot of the New Deal could be based on attitudes in a book called The Glory Road that Roosevelt introduced to Wallace. The Glory Road description says “the experience of the human race as it has tried to follow the road of truth while at the same time building up for itself a structure of civilization that will yield material wealth.” Many times these men would talk and write to each other while crafting New Deal legislature about concepts within the book. It was an informal guide or Bible to their actions.

In 1940 Wallace was elected Vice President on Roosevelt’s third term. Many southern conservative Democrats disliked him as, “the hopelessly utopian, market-manipulating, bureaucracy-breeding New Deal.” They discredited him as a mystic. In many ways he was Jimmy Stewart in Mr. Smith Goes to Washington.

Wallace was appointed chairman of the Board of Economic Warfare and of the Supply Priorities and Allocation Board in 1941 which became important during WWII. He but heads with Jesse H. Jones who was the Secretary of Commerce. One belief he had that went against Jones was that Latin American rubber production could be increased if the living standards were raised to reduce the incidence of chronic malnutrition and malaria increasing productivity. With the United States funding half the cost of these programs, Jones thought he was nuts.

On May 8, 1942, Wallace delivered The Price of Free World Victory speech to the Free World Association in NYC. The speech, delivered during the darkest days of the war, came to be known as “the century of the common man.” It was a retort of Republican bonesman publisher of Time and Life magazines, Henry Luce’s call for an “American Century”. For Wallace the war was a conflict between the slave states and the free world.

“The concept of freedom, extraordinary emphasis on the dignity of the individual,” but only recently had it become a reality for large numbers of people. “Democracy is the only true political expression of Christianity,” he declared, adding that with freedom must come abundance. “Men and women can never be really free until they have plenty to eat, and time and ability to read and think and talk things over.”

The Idea of the Common Man and his speeches and the meek inheriting the Earth were central points to Riskin’s and Capra’s Meet John Doe. Unfortunately John Does demise in the film was inspired by real life.

During Roosevelt’s 4^th election Wallace was on his ticket again and held great sway during the first day of the National Democratic Convention. A scene right out of Meet John Doe, large crowds gathered to support Wallace with banners and cheers…then it all went wrong. The convention was abruptly ended because the event was deemed a fire hazard. By the next day democratic party bosses rallied against him and gained the vote for Henry Truman. Wallace became Secretary of Commerce.

A month later Roosevelt dies during the war and the bombs are dropped on Japan. On the atom bomb Wallace said, “as long as the United States makes atomic bombs she will be looked upon as the world’s outstanding aggressor nation.” He thought the nuclear program should be controlled by civilian agencies and not military. In a speech delivered on April 12, 1946, Wallace distanced himself from the United States’ former wartime allies, stating that “aside from our common language and common literary tradition, we have no more in common with Imperialistic England than with Communist Russia” He did not like England and he once praised Russia. Unfortunately that praise led to his downfall when he realized Russia made a fool out of him after they hid the fact he visited a forced labor camp.

He was the last of Roosevelt’s administration to be replaced. William Averell Harriman would replace him as Secretary of Commerce.

During his campaign against Truman for presidency he came in 4^th of 4 with 2% of the vote and founded the Progressive Democratic Party. He also was riled through the press for some time afterward to the point the only person who was hated more than him was Lucky Luciano..

Some of the things that ruined him politically was his opposition to the Cold War and racial segregation coupled with his support of labor unions, national health insurance, public works jobs and women’s equality. If there was not a fire hazard Hiroshima would have withstood. At the end of the war the Japanese were sending their first born male children from their wealthy families to commit suicide as kamikazes to save face. They had to soon surrender since their resources were spent. All they asked for was the ability to continue to worship their Emperor as a god. So there was no reason to have dropped the two bombs on them.

The Depression ended during WWII when the government helped fund the training of several integrated workers in factories and France was defeated in Germany forcing the allies to buy goods from America. Wallace and FDR kept America going till this had happened. Neither would be able to be in a position of power to see the Depression or the War end in its most beneficial stance, but the branches of the tree that took root in Salem were there to shape the nation to their needs…

To find out more and other fabulous stories about how Salem, MA shaped American History read Sub Rosa by Christopher Jon Luke Dowgin published by Salem House Press.

So How Does the Federal Reserve Work

March 8, 2017 adminLeave a comment

George Peabody in Salem MA — How is Your Money Made….

Do You Know Jack ….?

The U.S. Treasury looks for loans by selling Treasury Bonds Bills, Notes, and Securities. They sell these to primary dealers. A primary dealer is a bank or securities broker-dealer who can trade directly with the Federal Reserve after purchasing Treasury Bonds or Securities or sell them to the public. They also make bids or offers on open market operations and provide information to the Fed’s open market trading desk. They consult with U.S. Treasury and the Fed about the budget deficit and implementing monetary policy. Primary dealers can work at the Treasury because of their expertise in the government debt markets, but the Federal Reserve avoids a similar revolving door policy.

The trading between primary dealers, called inter-dealer trading. Located on floors 101 to 105 of One World Trade Center was Cantor Fitzgerald, the single largest inter-dealer broker, who alone controlled 25% of the volume in securities. On 9-11 $500 billion in repos and $80 billion in securities had been traded but the settlement instructions were burned Fed regulators worked many long, over-time hours to accomplish to salvage records of these sales.

All of the top ten dealers in the foreign exchange market are also primary dealers, and between them account for almost 73% of foreign exchange trading volume. Who are the primary dealers whose job is to distribute U.S. Debt? Daiwa Securities and Mizuho Securities distribute the debt to Japanese buyers. BNP Paribas, Barclays, Deutsche Bank, and RBS Greenwich Capital (a division of the Royal Bank of Scotland) distribute the debt to European buyers. Goldman Sachs, and Citigroup account for many American buyers. Most of these firms compete internationally and in all major financial centers. Citigroup was First City National Bank which was influential in the early formation of the Federal Reserve during the period of Stillman and Fifi’s divorce years. After the 2008 Financial Collapse the Federal Reserve set up the Primary Dealers Credit Facility (PDCF), whereby primary dealers could borrow at the Fed’s discount window using several forms of collateral including mortgage-backed loans.

The Primary Dealers today are:

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
SG Americas Securities, LLC
TD Securities (USA) LLC
UBS Securities LLC
Wells Fargo Securities LLC

J.P. Morgan and Morgan Stanley & Co. continue George Peabody’s tradition today selling state securities abroad. They also follow his steps to make a perfect panic. Both corporations were fined for orchestrating the 2008 Financial Scandal among other crimes recently. The largest fine only equaled about 13% what they could make in one year.

The Bank of Nova Scotia is rumored to have been robbed after September 11^th when World Trade Center Building 4 was compromised. The long tunnel that was converted over from a PATH way that serves as its entrance was in the film Die Hard 3. Although in the film it was the Federal Reserve NY branch and New York City Water Tunnel #3.

Wells Fargo is owned by Kuhn, Loeb & Co. and linked by the Schiffs to N.M. Rothschild & Sons.

Who prints the Federal Reserve notes? Crane & Company. Winthrop Murray Crane was an advisor to Presidents Theodore Roosevelt and William Howard Taft, and served as a political mentor to Calvin Coolidge who gave his firm the contract.

Stephen Crane was the first in the Crane family to make paper. “The Liberty Paper Mill” opened in 1770. They sold currency-type paper to engraver Paul Revere, who printed the American Colonies’ first paper money. Crane embed parallel silk threads in banknote paper to denominate notes and prevent counterfeiting in 1844. In 1879, Crane grew when Winthrop M. Crane won a contract to deliver U.S. currency paper to the Bureau of Engraving and Printing in Washington, D.C. In 1922, Crane & Co. incorporated, with Frederick G. Crane elected as president. Dixon also came up with an anti counterfeiting practice.

What is the discount window and how do banks profit?

When the government needs money for their budget they print Treasury Bonds, Bills, and Notes. The Primary Dealers buy them and sell them to the Federal Reserve, other nations, and large corporations. At other times the Federal Reserve sells the securities to the Primary Dealers. The Primary Dealers buy them from Treasury Automated Auction Processing System (TAAPS). The dealers who bid on the largest amount of the debt with the lowest yield wins the portion they bid on. They then sell these to the Federal Reserve at a higher yield.

Then the Federal Reserve prints new money and digitally increase their accounts. They then lend this money to banks throughout the nation at a higher yield. On top of that they hold 10% of all the money they sell to the banks. Example…The Federal Reserve prints up $10 billion in new bills, and they credit an additional $90 billion in readily liquefiable accounts. So you think it stops there with $100 billion, but you would be wrong…

Now all of that extra $100 billion enters banking reserves. So your bank borrows a million. They now have $900,000 to lend out. Ten percent of what they borrowed is held by the fed who pays them 2.5% interest. Yes the Fed pays your bank 2.5% interest for borrowing money. Now your bank makes more money that enters circulation. They can lend out $10 million. So if they issue you a loan and you make a purchase, the buyer receives the money from the bank and now it enters circulation when they make purchases. So, in a fractional reserve banking system, like the Fed, new loans actually create even more new money. With a legally reserve ratio of 10%, the new $100 billion in bank reserves could potentially result in a nominal monetary increase of $1 trillion by all the banks lending out 10 times the money they borrowed.

Then you have inflation. It only starts with the government spending more than they receive in taxes and other funds. They are like the fleas on Norwegian Brown Mice that bite you, the Federal Reserve and the bankers are the ones who really spread the plague.

It is a slight of hand. The government didn’t raise your taxes, it just stripped your buying power of every dollar. Every year it gives you an invisible pay cut. Crafty fingers are no longer needed to pick pocket you.

So who owns the debt? Well there is public debt and intergovernmental holdings. On November 7, 2016, debt held by the public was $14.3 trillion or about 76% of the previous 12 months of GDP. Of that debt 55% is held by state and local pensions and mutual funds. The remaining 24% is held by foreign government and investors. $1.5 Trillion is held by China and $1.25 Trillion is held by Japan. Third is Ireland who owns $271 million. Go figure the Cayman Islands is fourth. Brazil is Fifth and the United Kingdom is 8^th.

The Bank of England’s plan escaped them? The nation they fought during the Opium War usurp them in holdings of our national bank. Well Americans sold a lot of Opium to them too, but in truth it probably was the old New England shipping families and bankers who continued their trade of shipping goods over manufacturing that have did us in.

The yield on 10 year Treasury Notes set the Federal Fund Rate that sets the PRI or Primary Rate Interest for banks. Also there is overnight and 9 month lending through the Discount Window. Depending on a bank’s liquidity and trust they can borrow at the primary or secondary credit rate. The Primary Rate is 1% higher than the Federal Fund Rate. A bank borrows from the Federal Reserve overnight to remain liquid during internal or external disturbances like transferring money between their internal accounts and external accounts with other banks. So say a bank borrows $10 million overnight the Federal Reserve can create $100 million more until the debt is paid. Also banks can borrow at a seasonal rate which is closer to the Federal Fund Rate for a week or 30 days. Plus the Discount Window can act as lender of last resort during emergencies to prevent bank runs.

Repos? The Federal Reserve buys $1 billion repo to inject reserves today from a bank to pay back tomorrow. Under such arrangement the bank promises to buy it back. So imagine they borrow $1 Billion, another one tomorrow and an additional one the next day, $3 billion will have been injected, but $2 billion will have expired by the third day. Bank reserves are only $1 billion above previous levels, since the first repurchase agreement expired on the second day, the second one expired on the third day and so on.

So in short that is how money is created out of thin air.

To find out more and other fabulous stories about how Salem, MA shaped American History read Sub Rosa by Christopher Jon Luke Dowgin published by Salem House Press.