For almost 200 years after the nation’s founding in the Declaration of Independence, the U.S. could brag about having the world’s strongest long-term currency, with hardly any inflation until the 1960s, the decade when President Lyndon B. Johnson took silver out of our coins. Then, Nixon closed the gold window in 1971. This debasement of our currency was a natural outgrowth of excessive spending by LBJ and by every President and Congress of both major political parties in the 60 years since then.
At the time of our nation’s birth, however, all of our major Founding Fathers spoke glowingly of gold and silver. They had struggled with inflation caused by paper “Continentals,” which flooded the nation then. At one point, in 1779, General George Washington wrote to John Jay, our future first Chief Justice, in a plea for sound money, “A wagon load of money will scarcely purchase a wagon load of provisions.”
Meanwhile, the man most responsible for writing the Declaration was no less eloquent about gold. The Declaration’s author, Thomas Jefferson, said, “Paper is poverty … it is only the ghost of money and not money itself.” Later on, as President in 1802, he wrote to Albert Gallatin, his Treasury Secretary, saying, “Specie (gold and silver coin) is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.”
In retirement, during the War of 1812 and the inflation which followed, Jefferson became even more outspoken in his call for gold and restraints on banks. Writing to John W. Eppes in 1813, Jefferson said:
“If the debt which the banking companies owe be a blessing to anybody, it is to themselves alone, who are realizing a solid interest of eight or ten per cent on it. As to the public, these companies have banished all our gold and silver medium, which, before their institution, we had without interest, which never could have perished in our hands, and would have been our salvation now in the hour of war; instead of which they have given us two hundred million of froth and bubble, on which we are to pay them heavy interest, until it shall vanish into air … The truth is that capital may be produced by industry and accumulated by economy but jugglers only will propose to create it by legerdemain tricks with paper.”
After the war’s end, Jefferson didn’t give up the fight, as he wrote to John Taylor, in 1816, “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around (them) will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”
John Adams was the man most responsible for convincing Jefferson to write the Declaration of Independence and later, in 1787, Adams wrote to Jefferson in Paris, “All the perplexities, confusion, and distress in America arise not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit, and circulation.”
Thomas Paine, famous for saying “Give me liberty or give me death,” also spoke eloquently about gold:
“Gold and silver are the emissions of nature: paper is the emission of art. The value of gold and silver is ascertained by the quantity which nature has made in the earth. We cannot make that quantity more or less than it is, and therefore, the value, being dependent upon the quantity, depends not on man. Man has no share in making gold or silver; all that his labors and ingenuity can accomplish is to collect it from the mine, refine it for use and give it an impression or stamp it into coin…. Nature has provided the proper materials for money: gold and silver, and any attempt of ours to rival her is ridiculous.”
All these forces came together in our Constitution, drafted by James Madison, writing: “Congress shall have Power … To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.” (Article 1, Section 8), and “No State shall... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.” (Article I, Section 10).
As our 250th national birthday approaches, maybe some politicians ought to look to gold, not paper!
Dr. Mike Fuljenz, founder of Universal Coin & Bullion in Beaumont, Texas, is a leading coin expert and market analyst whose insightful writing and consumer advocacy have earned major honors from the ANA, PNG, NLG and the Press Club of Southeast Texas. McNeese State University awarded him an honorary doctorate of humane letters in 2015.
