What is a gold dollar?

Discovering the truth behind what a gold dollar standard is and isn't.

Let’s dispel some confusion as to how the gold standard works in practice. Some still believe that it involves carrying around purses full of gold coins. That’s a funny misconception.

When my father, born in 1910, was a young man the circulating currency said “gold certificate.” He could walk into any bank with a $20 bill, tender that, and walk out with a $20 gold coin weighing just about an ounce. That’s a gold dollar. It was very rare that people would prefer a gold dollar to a gold certificate. A gold dollar was heavy and inconvenient. That said, your right to demand a gold dollar for your money kept the money honest, as good as gold.

 

There was a saying back then, “an honest day’s pay for an honest day’s work.”  And it was nicely reinforced by honest money: the gold dollar.

 

When I, born in 1952, was a young man the dollar bill said “silver certificate.”  On occasions such as birthdays I might be given a handful of silver dollars rather than dollar bills. A silver dollar was just more impressive than a paper one. Circulating change such as dimes and quarters also were made of silver. There was something hefty and impressive about silver dollars, some of which, the Peace Dollar, had an Art Deco Lady Liberty, some, older ones – having remained in circulation since the late 19th century—had a more matronly figure of Liberty.

 

The dollar then – exchangeable into a silver dollar—had a lot of buying power.  Penny candy cost…a penny.   A comic book cost a dime or twelve cents.  Now comics cost $3!  While it didn’t have the value of a gold dollar of my father’s era you could feel the heft and dignity of it.  Like my father before me I didn’t cart around coins to make purchases.  But if I wished to I could.   People’s ability to exchange currency for silver helped to keep the money honest.

 

My own children have to make do with “Federal Reserve Notes.” Savant James Grant wittily has dubbed this, “faith-based money,” backed, as it is, only by “the full faith and credit of the United States.”  There’s  another way to think about it.  My children can take a dollar bill into any bank and receive, in return, four quarters. These quarters are made mostly from copper alloyed with nickel, base metals.

 

So a progression, or more aptly, a regression can be noted:  from the gold dollar, to the silver dollar, to the base metal dollar. Metaphorically it is almost a kind of reverse alchemy. This represents a debasement of the standard. The value of the dollar has eroded by some 95% from the day my father was born until today.  For the most part it has been a slow process of erosion rather than a dramatic event.  That said, history records that the gold dollar held its value – over centuries—and under the gold dollar. History records that with the gold dollar the economy grew, on balance, more steadily and robustly than it has since the last remnants of the gold standard were repudiated on August 15, 1971.

 

The gold standard, the gold dollar, were not perfect. No human institution can be perfect. And yet, the evidence is abundant that the economy and society under the gold dollar, honest money, thrived in ways that those who have lived only under the “Base Metal Standard” hardly may imagine. There are good reasons to believe that the gold dollar is the least imperfect of all monetary standards that have been tried.

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The Most Important Thing Holding Up the US Dollar

by Ron Paul

Today’s economic conditions reflect a fiat monetary system held together by many tricks and luck over the past 40 years. The world has been awash in paper money since removal of the last vestige of the gold standard by Richard Nixon when he buried the Bretton Woods agreement — the gold exchange standard — on August 15, 1971.

Since then we’ve been on a worldwide paper dollar standard. Quite possibly we are seeing the beginning of the end of that system. If so, tough times are ahead for the United States and the world economy.

Yellen’s Missing Jobs

March 31, 2014

The new Federal Reserve chairman, Janet Yellen, gave a policy speech today at Chicago, where, in a startling gesture, she mentioned three working individuals by name — Jermaine Brownlee, Vicki Lira, and Doreen Poole. They lost their jobs the Great Recession and have been struggling ever since. It was a refreshing, even affecting demarche by Mrs. Yellen, who has made a return to full employment a public priority. She underscored her sincerity by telephoning Mr. Brownlee and Ms. Lira and Ms. Poole before delivering her speech.

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The Rueffian SynthesisJohn D. Mueller

Publisher's Note: Originally released in June/July of 1991, this detailed report discusses Jacques Rueff's economic theories and applies them to modern economic events.

By John D. Mueller

Who Was Jacques Rueff?

... Trained in science and mathematics at the Ecole Polytechnique, Rueff devoted his first theoretical work to showing that the same scientific method applies to “moral” or “social” sciences like economics as to the physical sciences (Des Sciences Physiques aux Sciences Morales, 1922). In both cases, he pointed out, individual acts can be “indeterminate,” but the pattern of large numbers of individual acts can be predicted as a matter of probability. And so in economics no less than physics, as he later wrote, “A scientific theory is considered correct only if it makes forecasting possible.”

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Excerpts From:


by Lewis E. Lehrman

"Forerunners of man lived upon the planet several million years ago. But the unique, modern, social order of man – civilization – emerged only four to five thousand years ago. Historical and archaeological evidence suggests that the institution of money evolved coterminously with civilization. From the standpoint of the 100,000-year history of Homo sapiens, civilization and money are but young and fragile reeds. Today their very existence is threatened by financial disorder."

Learn More

 

Passing Pesos

Kathleen Packard  |  Apr 16, 2014
The New York Times’ Jonathan Gilbert reported: “Argentines endured price rises of nearly 30 percent last year, according to an unofficial index published by opposition politicians; the government, which has been accused of manipulating economic data in the past, claims inflation reached only 10.9 percent in 2013. In 2014, inflation...

From Virgil to Keynes to Krugman

Ralph J. Benko  |  Apr 15, 2014
Virgil, in Book 3, line 56 of the Aeneid, Polymnestor kills Polydorus. Engraving de Bauer for Ovid's Metamorphoses reflecting upon the the treacherous murder of Polydorus: Quid non mortalia pectora cogis, Auri sacra fames? Fell lust of gold!  abhorred, accurst! What will not men to slake such thirst? (translated by John Conington) The phrase "auri sacra...
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Jacques Rueff, a key figure in European economic circles from the 1930s until the 1970s, was, first and foremost, an...
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Oct 10, 2011
Key Monetary Writings
John D. Mueller

The Chaos Congress Caused by Ending and How it Will Restore the Gold Standard

From the Heritage Foundation “Conference on a Stable Dollar: Why We Need It and How to Achieve It.”...
VIEW KEY MONETARY WRITINGS
 
Prosperity Through Gold
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Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

The Gold Standard Now
Board of Advisors:


Senior Advisors

Sean Fieler, James Grant,
Steve Hanke, John D. Mueller,
Lawrence Parks, Judy Shelton,
Lawrence H. White

Senior European Advisor
Paul Fabra

Advisors
Jeffrey Bell, Ralph J. Benko,
Andresen Blom, Frank Cannon,
Rich Danker, Brian Domitrovic,
Charles Kadlec, Christopher K. Potter,
John Tamny and Frank Trotta

In Memoriam
Professor Jacques Rueff
(1896-1978)

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