George Washington: Dollars of Silver, Dollars of Gold

398px-Sideview_of_George_Washington_Statue_at_Mt_Rushmore

Mt. Rushmore, Side Wikipedia

 

George Washington, for whom the nation’s capital is named, centered around its most spectacular monument, is known as the Father of our Country.  Justly so.

In addition to commanding the under-provisioned Continental Army he was called upon as a trusted and beloved figure to preside over, and lend his prestige to, the Constitutional Convention and, then, as first president of the United States.  Washington was a unifying figure and an astute manager of his cabinet and of the affairs of the new national government.

Those of us of a certain age were raised with the story that young Washington threw a silver dollar across the Potomac River.  That proves to be a colorful legend.  The Mount Vernon Ladies Society which maintains his estate states at its website :

Did George Washington throw a silver dollar across the Potomac River

No. This myth is often told to demonstrate his strength. The Potomac River is over a mile wide and even George Washington was not that good an athlete! Moreover, there were no silver dollars when Washington was a young man. His step-grandson, George Washington Parke Custis, reported in his memoirs that Washington once threw a piece of slate “about the size and shape of a dollar” across the Rappahanock River near Fredericksburg, Virginia. The Rappahannock River at the site of the Washington family homestead today measures only 250 feet across, a substantial but perhaps not impossible distance to throw.

But although he didn’t throw a silver dollar across the Potomac, he favored gold and silver money and was cognizant of the hazards of paper money.  The records of his thinking about monetary policy are spare.  During the Revolution, in April 1779,  Washington wrote to John Jay, president of the Continental Congress,

"In the last place, though first in importance, I shall ask, is there any thing doing, or that can be done, to restore the credit of our currency? The depreciation of it is got to so alarming a point that a wagon-load of money will scarcely purchase a wagon-load of provisions.”

And November 5, 1786, just before the Constitutional Convention, Washington wrote to James Madison,

A letter which I have just received from Genl Knox, who had just returned from Massachusetts (whither he had been sent by congress consequent of the commotion in that State) is replete with melancholy information of the temper & designs of a considerable part of that people. among other things he says, "there creed is, that the property of the United States, has been protected from confiscation of Britain by the joint exertions of all, and therefore ought to be the common property of all. And he that attempts opposition to this creed is an enemy to equity & justice, & ought to be swept from off the face of the Earth." again "They are determined to annihilate all debts public & private, and have Agrarian Laws, which are easily effected by the means of unfunded paper money which shall be a tender in all cases whatever."

It therefore is unambiguous that Washington understood how paper money depreciates, and how bad a thing for society this is. Washington selected his aide-de-camp from the Revolution, the charming, but controversial, Alexander Hamilton, as his secretary of the treasury.  And Hamilton was a supporter of gold and silver money and an opponent of paper money.

Hamilton represented the industrial (and centralizing) spirit in America.  He was opposed, and bitterly, by Jefferson, Madison and Monroe, who represented the agrarian and decentralizing spirit in America.  Washington succeeded in balancing these two factions.

Hamiltonian Federalists and the Jeffersonians were committed to real money — silver and gold money — and hostile to inconvertible paper money. Hamiltonians and Jeffersonians were united, under Washington, on this key point.

Under its first president, and for a long time after, America’s political leadership was unequivocally committed to prosperity-inducing dollars of silver and dollars of gold.

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