Jon Meachan wrote a TIME cover story this summer entitled “Keeping the American Dream Alive.” Meacham knows history, especially that of America’s Founding, but he did not cover an important part of the American Dream – keeping the purchasing power of one’s savings. It is a dream as old as the nation – as old as the phrase “not worth a Continental,” referring to the depreciated value of the new nation’s currency during and after the American Revolution. .
The situation worsened after the Treaty of Paris was signed in 1783 ending the war with Britain. In 1785, George Washington wrote Richard Henry Lee: “I never have, and I hope never shall hear, any serious mention of a paper emission in this State—yet such a thing may be in agitation—Ignorance & design are productive of much mischief—the first, is the Tool of the latter, and are often set to work as suddenly as unexpectedly—those with whom I have conversed on this subject, in this part of the state, reprobate the idea exceedingly.
Alexander Hamilton, Washington’s secretary of the Treasury, understood the importance of a strong national currency. He wrote: “For when the credit of a country is in any degree questionable, it never fails to give an extravagant premium, in one shape or another, upon all the loans it has occasion to make. Nor does the evil end here; the same disadvantage must be sustained upon whatever is to be bought on terms of future payment.
From this constant necessity of borrowing and buying dear, it is easy to conceive how immensely the expences of a nation, in a course of time, will be augmented by an unsound state of the public credit.
To attempt to enumerate the complicated variety of mischiefs in the whole system of the social economy, which proceed from a neglect of the maxims that uphold public credit, and justify the solicitude manifested by the House on this point, would be an improper intrusion on their time and patience.
In so strong a light nevertheless do they appear to the Secretary, that on their due observance at the present critical juncture, materially depends, in his judgment, the individual and aggregate prosperity of the citizens of the United States; their relief from the embarrassments they now experience; their character as a People; the cause of good government.
Washington and Hamilton: words to live by. The gold standard: a system to run a nation.