Thomas Jefferson: “Paper is Poverty. It is only the ghost of money, and not money itself”


At a White House dinner honoring Nobel Prize winners, in 1962, John F. Kennedy said, "I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered together at the White House, with the possible exception of when Thomas Jefferson dined alone."


Rudolph Evans' statue of Jefferson. Source: Wikipedia

Jefferson is remembered for many things — of which the Declaration of Independence, the founding of the University of Virginia, the Virginia Statute of Religious Freedom, his presidency of the United States, and the Louisiana Purchase are highlights.  Jefferson also is well remembered for his passionate opposition to his colleague in the Washington cabinet Alexander Hamilton.

Perhaps because it was not a subject of controversy, however, Jefferson’s stand for honest money — money defined as, and currency convertible into, precious metals — is not so well remembered.  That said, it was an area where he and Hamilton obviously were in accord.   Between the end of the American Revolution and the beginning of the Constitutional Convention, Jefferson wrote to E. Carrington, in 1788:  "Paper is poverty.  It is only the ghost of money, and not money itself."

His papers show that Jefferson’s opinion of paper money did improve with time.   Representative samples:

"Paper money is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted."  … "Paper is already at a term of abuse in these States, which has never been reached by any other nation, France excepted, whose dreadful catastrophe should be a warning against the instrument which produced it." …  "The unlimited emission of bank paper has banished all Great Britain's specie, and is now, by a depreciation acknowledged by her own statesmen, carrying her rapidly to bankruptcy, as it did France, as it did us, and will do us again, and every country permitting paper money to be circulated, other than that by public authority, rigorously limited to the just measure for circulation."  … "When I speak comparatively of the paper emission of the old Congress and the present banks, let it not be imagined that I cover them under the same mantle.  The object of the former was a holy one; for if ever there was a holy war it was that which saved our liberties and gave us independence.  The object of the latter is to enrich swindlers at the expense of the honest and industrious part of the nation."  — To J.W. Eppes, 1813

"The errors of that day cannot be recalled.  The evils they have engendered are now upon us, and the question is how we are to get out of them?  Shall we build an altar to the old money of the Revolution, which ruined individuals but saved the Republic, and burn on that all the bank charters, present and future, and their notes with them?  For these are to ruin both Republic and individuals. This cannot be done.  The mania is too strong.  It has seized, by its delusions and corruptions, all the members of our governments, general, special, and individual."  To John Adams, 1814

"M. Say will be surprised to find, that forty years after the development of sound financial principles by Adam Smith and the Economists, and a dozen years after he has given them to us in a corrected, terse, and lucid form, there should be so much ignorance of them in our country; that instead of funding issues of paper on the hypothecation of specific redeeming taxes (the only method of anticipating, in time of war, the resources of times of peace, tested by the experience of nations), we are trusting to the tricks of jugglers on the cards, to the illusions of banking schemes for the resources of the war, and for the cure of colic to inflations of more wind." To M. Correa, 1814

"Even with the flood of private paper by which we were deluged, would the treasury have ventured its credit in bills of circulating size, as of fives or ten dollars, &c., they would have been greedily received by the people in preference to bank paper.  But unhappily the towns of America were considered as the nation of America, the dispositions of the inhabitants of the former as those of the latter, and the treasury, for want of confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and pretenders to be moneyholders, whom it could have crushed at any moment.  Even the last half-bold, half-timid threat of the Treasury showed at once that these jugglers were at the feet of the government.  For it never was, and is not, any confidence in their frothy bubbles, but the want of all other medium, which induced, or now induces, the country people to take their paper; and at this moment, when nothing else is to be had, no man will receive it but to pass it away instantly, none for distant purposes."  To Albert Gallatin, 1815

"Not Quixotic enough to attempt to reason Bedlam to rights, my anxieties are turned to the most practicable means of withdrawing us from the ruin into which we have run.  Two hundred millions of paper in the hands of the people (and less cannot be from the employment of a banking capital known to exceed one hundred millions), is a fearful tax to fall at haphazard on their heads.  The debt which purchased our Independence was but of eighty millions, of which twenty years of taxation had, in 1889, paid but the one-half.  And what have we purchased with this tax of two hundred millions which we are to pay, by wholesale, but usury, swindling, and new forms of demoralization?"  To Charles Yancey, 1816

"We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth.  It is vain for common sense to urge that nothing can produce but nothing; that it is an idle dream to believe in a philosopher's stone which is to turn everything to gold, and to redeem man from the original sentence of his Maker, "in the sweat of his brow shall he eat his bread."  To Charles Yancey, 1816

"That paper money has some advantages, is admitted.  But that its abuses also are inevitable, and, by breaking up the measure of value, makes a lottery of all private property, cannot be denied.  Shall we ever be able to put a constitutional veto on it?"  To Dr. Josephus B. Stuart, 1817

Jefferson exonerated the use of paper money as a regrettable necessity of the American Revolution — a “holy war…which saved our liberties and gave us independence.” A comparable exoneration readily may be extended to the use of the greenback by President Lincoln to save the Union during the Civil War. Jefferson indicted the use of paper money by the bankers of his day as a device to enrich swindlers at the expense of the honest and industrious part of the nation.

Jefferson’s charge anticipates a thread of anti-elitism in American history, bubbling up with Andrew Jackson and, today, with the Tea Party Patriots and of Occupy Wall Street.  It is not difficult to guess where Jefferson’s sympathies would lie were he alive today.

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