“Sooner or later we must abandon the pretense that we can eat our cake and have it, that we may have money on deposit ready to be withdrawn at any moment, and at the same time loaned out in a thousand diverse enterprises, and recognize that the only assurance of liquidity of bank deposits is to have the actual money waiting on the depositor at whatever moment he may appear. This would not mean the extinction of credit, nor the disappearance of lending institutions. But it would mean the divorcement of credit from the money mechanism, the cessation of the use of credit instruments as media of exchange. It would mean the disappearance of the most insidious form of fictitious credit. We could still have investment banking providing credit at long term, and bill brokers and finance companies, providing credit at short term; but such credit would not be the transfer of a fictitious purchasing power drawn from the reservoirs of a banking system whose own sources derive from the use of the bank check; the credit available would be true credit that is, the transfer of actual, existing wealth in exchange for wealth to be created and returned at a future time. Such credit would not be inflationary, as is bank credit, for every dollar made available as purchasing power to the borrower would be the result of the abstinence from the exercise of purchasing power on the part of the lender; it would be merely the transfer of purchasing power, not the creation of purchasing power by fiction” (Money, The Human Conflict [Norman: University of Oklahoma Press, 1934], pp. 178, 273).
Professor F.A. Hayek, in his Monetary Nationalism and International Stability (New York: Longmans, Green, 1937), was highly sympathetic to 100 percent gold, and demonstrated, in some excellent analysis the superiority of 100 percent gold to the mixed, fractional-reserve gold standard and to independent fiat moneys. In the end, he apparently set aside the proposal because of the difficulties of bank evasion; moreover, he concluded, rather inconsistently, by considering the ideal monetary system as directed by an international central bank, with the gold standard as only second best. Robbins, while discussing 100 percent money, was more sympathetic to free banking under a gold standard. Lionel Robbins, Economic Planning and International Order (London: Macmillan, 1937). pp. 269-305. In recent years, Hayek has abandoned the gold standard completely on behalf of a composite-commodity standard: “A Commodity Reserve Currency,” in his Individualism and Economic Order (Chicago: University of Chicago Press, 1945), pp. 209-19. Since Hayek’s major reason for the shift is that the total supply of gold is not flexible enough to change when demanded (and since, even in his earlier work Hayek wrote of a “rationally” determined total supply of world money, regulated by an international monetary authority), it is clear that Hayek does not see that no specific total supply of money is better than any other, and that therefore no government manipulation of the supply is desirable.
[47] For an eloquent plea for using pure units of weight for money instead of national names, see Jean-Baptiste Say, A Treatise on Political Economy, New American ed. (Philadelphia: Grigg and Elliot, 1841), pp. 256ff. Say also favored a freely fluctuating market between gold and silver.
More recently, Everett R. Taylor has advocated private coinage of gold and silver, and a 100 percent gold dollar, while another writer, Oscar B. Johannsen, has favored private coinage and free banking under a gold standard. Taylor, Progress Report on a New Bill of Rights (Diablo, Calif.: privately published, 1954); Johannsen, “Advocates Unrestricted Private Control Over Money and Banking” Commercial and Financial Chronicle (June 12, 1958): 2622ff.
[48] See Barnard, Metric System of Weights and Measures, and Henry B. Russell, International Monetary Conferences (New York: Harper, 1898), p. 61.
[49] Mises, The Theory of Money and Credit, pt. 4; and Henry Hazlitt, Return to Gold (New York: Newsweek, 1954).
[50] Clarence Philbrook, “‘Realism’ in Policy Espousal,” American Economic Review (December 1953): 846-59.
Table of Contents
Cover Image
Title Page
Copyright
Contents
I. Introduction
II. Money in a Free Society
1. The Value of Exchange
2. Barter
3. Indirect Exchange
4. Benefits of Money
5. The Monetary Unit
6. The Shape of Money
7. Private Coinage
8. The "Proper" Supply of Money
9. The Problem of "Hoarding"
10. Stabilize the Price Level?
11. Coexisting Moneys
12. Money Warehouses
13. Summary
III. Government Meddling With Money
1. The Revenue of Government
2. The Economic Effects of Inflation
3. Compulsory Monopoly of the Mint
4. Debasement
5. Gresham's Law and Coinage
a. Bimetallism
b. Legal Tender
6. Summary: Government and Coinage
7. Permitting Banks to Refuse Payment
8. Central Banking: Removing the Checks on Inflation
9. Central Banking: Directing the Inflation
10. Going Off the Gold Standard
11. Fiat Money and the Gold Problem
12. Fiat Money and Gresham's Law
13. Government and Money
IV. The Monetary Breakdown of the West
1. Phase I: The Classical Gold Standard, 1815-1914
2. Phase II: World War I and After
3. Phase III: The Gold Exchange Standard (Britain and the United States) 1926-1931
4. Phase IV: Fluctuating Fiat Currencies, 1931-1945
5. Phase V: Bretton Woods and the New Gold Exchange Standard (the United States) 1945-1968
6. Phase VI: The Unraveling of Bretton Woods, 1968-1971
7. Phase VII: The End of Bretton Woods: Fluctuating Fiat Currencies, August-December, 1971
8. Phase VIII: The Smithsonian Agreement, December 1971-February 1973
9. Phase IX: Fluctuating Fiat Currencies, March 1973-?
Index
Case for the 100 Percent Gold Dollar
Contents
Preface
Introduction
Money and Freedom
The Dollar: Independent Name or Unit of Weight?
The Decline from Weight to Name: Monopolizing the Mint
The Decline from Weight to Name: Encouraging Bank Inflation
100 Percent Gold Banking
Objections to 100 Percent Gold
Professor Yeager and 100 Percent Gold
The 100 Percent Gold Tradition
The Road Ahead
Notes
What Has Government Done to Our Money? Page 16
