The Grover Cleveland Library's website features both President Cleveland's progressive nature...
Campaign Poster, 1888, for Cleveland-Thurman ticket,
courtesy of Wikipedia
... and his confident support for the gold standard.
Grover Cleveland, a progressive in the truest sense of the word.... was the last of the Jeffersonian presidents (1885-1889, 1893-1897). Before that, as Mayor of Buffalo, he helped fight the corrupt political machine, or “ring” as it was then known, and its patronage and pork barrel politics. In a campaign speech, he said, “It is a good thing for the people now and then to rise up and let the office holders know that they are responsible to the masses.” Cleveland was so successful fighting the machine that he was elected Governor of New York in 1882. Cleveland’s Jeffersonian philosophy as President was described by historian John V. Denson:
Cleveland stood for sound money and the gold standard, and he was opposed to the protective tariff. He advocated the increased respect and sovereignty of the States as a check on the power of the central government. Cleveland generally supported the ideas of a limited federal government and the strict construction of the constitution, a free-market economy, and the separation of banking from government.
Certain prominent, doctrinaire, left-leaning public intellectuals show relentless hostility to the gold standard. That said, and as President Cleveland demonstrates, there is no inherent tension between progressive political ideals and the gold standard.
Indeed, the gold standard's ability to foment a climate of equitable prosperity may be as crucial to the effectiveness of social democrats as it is to classical liberal republicans. It is a policy option by nature as appealing to Democrats as to Republicans.
As Cleveland himself once said, "I would rather the man who presents something for my consideration subject me to a zephyr of truth and a gentle breeze of responsibility rather than blow me down with a curtain of hot wind."
Hillary Clinton is a Democratic Party titan, co-chair of a powerhouse philanthropy, former Secretary of State and United States Senator, and former FLOTUS (First Lady of the United States), among other things. It is interesting that, in 1999, while First Lady, Mrs. Clinton made some Remarks at the Sorbonne referencing the world monetary system.
Secretary Clinton courtesy of Wikipedia
She reportedly stated that
“We have lived with the benefits, for 50 years now, of the agreements that were made at the end of WWII, coming out of Bretton Woods to create new financial architectures. Today, we have outlived the usefulness of that particular set of arrangements. And we now have to face up to creating a new architecture that will help us tackle runaway global capitalism’s worst effects; ensure social safety nets for the most vulnerable; address the debt burden that is crushing many of our poorest nations.”
These are remarks atypical for a First Lady.
They clearly signal a keen intellect -- implicitly referencing the world monetary and financial system's importance for the economy. They candidly present her commitment to social democracy.
They elide the fact that while Bretton Woods' World Bank and IMF persist, its fundamental architecture of a gold-exchange standard unilaterally was abrogated by the United States on August 15, 1971.
More to the point, while pointing to noble objectives they do not address what "new architecture" she might have in mind. They are just the opening for a conversation that gold standard proponents, should she resume her public career, very much should welcome.
Gold Dinar with image of standing Caliph, ca. 695 AD
Courtesy of the British Museum
Financier and author James G. Rickards wrote a 2012 best selling book, Currency Wars: The Making of the Next Global Crisis. Politico's Mike Allen described it as “One of the most urgent books of the fall.” Rickards wrote:
“[T]he lab’s Warfare Analysis Laboratory, [is] one of the leading venues for war games and strategic planning in the country. … It was for this purpose, the conduct of a war game sponsored by the Pentagon, that about sixty experts from the military, intelligence, and academic communities arrived at APL on a rainy morning in the late winter of 2009. … [T[he only weapons allowed would be financial — currencies, stocks, bonds, and derivatives. The Pentagon was about to launch a global financial war using currencies and capital markets instead of ships and planes?”
Rickards' projected currency war would not be the first such in history.
As part of his policy to unify the various regions under Islamic rule, Abd al-Malik ibn Marwan (685-705CE) introduced the first Umayyad gold coins at a time of discord between the Umayyads and Byzantines over the merits of Islam and Christianity. The early coins were struck either in 691 or 692; the Byzantine emperor was angry and refused to accept the new Arab gold currency, renewing the war between the Arabs and the Byzantines.
The new Islamic currency that was first coin to carry an Arabic inscription.... On... the reverse, the Byzantine cross was replaced by a column placed on three steps topped with a sphere. In the margin surrounding the design the testimony of Islam was written in Arabic: "In the name of God, there is no deity but God; He is One; Muhammad is the messenger of God."
The Byzantine emperor Justinian II responded to this challenge by striking a new solidus with the head of Christ on the obverse and on the reverse an image of himself robed and holding a cross.
Caliph Abd al-Malik's response was to issue a new dinar in 693. ... Once more, the Byzantine emperor responded by striking a new coin similar to that of the Arabs, which greatly displeased Abd al-Malik. ... After he introduced this coin, Abd al-Malik issued a decree making it the only currency to be used throughout Umayyad lands. All remaining Byzantine and Arab-Byzantine pieces were to be handed to the treasury, to be melted down and re-struck. Those who did not comply faced the death penalty.
"[T]he Byzantine emperor was angry and refused to accept the new Arab gold currency, renewing the war between the Arabs and the Byzantines." History shows that the first actual currency war took place over a thousand years ago. Will there ever be another?
Only time will tell.
Two eminent monetary scholars, Michael V. White and Kurt Schuler -- as noted in an earlier posting -- published in a 2009 issue of the Journal of Economic Perspectives as Retrospectives: Who Said “Debauch the Currency”: Keynes or Lenin?
"Comrade Lenin Cleanses the Earth of Filth"
Russian Propaganda Poster Courtesy of Wikipedia
It contains more remarkable observations than a simple resolution of the controversy among historians as to whether Keynes's attribution to Lenin that “the best way to destroy the capitalist system [is] to debauch the currency” was authentic. It contains a putative description of "a plan for the annihilation of the power of money in the world.”
A report of an interview with Lenin was published on April 23, 1919, by the Daily Chronicle in London and the New York Times. Dated April 22 and cabled from Geneva, the article claimed to be based on “authentic notes of an interview with Vladimir Ulianoff Lenin, the high priest of Bolshevism, which were communicated to me by a recent visitor to Moscow.” Attributed to the Chronicle’s unnamed “Special Correspondent,” the visitor was also unidentified. One section of the article recorded: “Lenin is obsessed at present by a plan for the annihilation of the power of money in the world.” A long series of quotations attributed to Lenin began as follows:
Experience has taught us it is impossible to root out the evils of capitalism merely by confiscation and expropriation, for however ruthlessly such measures may be applied, astute speculators and obstinate survivors of the capitalist classes will always manage to evade them and continue to corrupt the life of the community. The simplest way to exterminate the very spirit of capitalism is therefore to flood the country with notes of a high face-value without financial guarantees of any sort.
Lenin's savage statements toward money may have been a blend of ignorance and rationalization. White and Schuler: "the underlying rationale for the argument was subsequently explained by the historian E. H. Carr in a brief memorandum for Fetter (1977, p. 78): 'None of the Bolsheviks wanted, or planned, inflation. But, when that happened (since the printing press was their main source of revenue) they rationalized it ex post facto by describing it as (a) death to the capitalists and (b) a foretaste of the moneyless Communist Society.'"
The Panic of 1907
The Panic on Wall Street, image courtesy of Wikipedia
was described, in part, by the Wikipedia this way:
The panic of 1907 occurred during a lengthy economic contraction—measured by the National Bureau of Economic Research as occurring between May 1907 and June 1908. The interrelated contraction, bank panic and falling stock market resulted in significant economic disruption. Industrial production dropped further than after any previous bank run, while 1907 saw the second-highest volume of bankruptcies to that date. Production fell by 11%, imports by 26%, while unemployment rose to 8% from under 3%. Immigration dropped to 750,000 people in 1909, from 1.2 million two years earlier.
Since the end of the Civil War, the United States had experienced panics of varying severity. Economists Charles Calomiris and Gary Gorton rate the worst panics as those leading to widespread bank suspensions—the panics of 1873, 1893, and 1907, and a suspension in 1914. Widespread suspensions were forestalled through coordinated actions during both the 1884 and the 1890 panics. A bank crisis in 1896, in which there was a perceived need for coordination, is also sometimes classified as a panic.
The frequency of crises and the severity of the 1907 panic added to concern about the outsized role of J.P. Morgan which led to renewed impetus toward a national debate on reform. In May 1908, Congress passed the Aldrich–Vreeland Act that established the National Monetary Commission to investigate the panic and to propose legislation to regulate banking. Senator Nelson Aldrich (R–RI), the chairman of the National Monetary Commission, went to Europe for almost two years to study that continent's banking systems.
The resultant legislation, based on the report of the National Monetary Commission, was designed to create a central banking authority. The findings of the Commission, however, in no way contemplated that the central bank would be operating other than in the context of the classical gold standard which had served America, and the world, very well.
That development would come later.
Keynes, writing from Britain, (gloating) would describe the drift away from gold in his 1924 Tract on Monetary Reform:
"Whilst economists dozed, the academic dream of a hundred years, doffing its cap and gown, clad in paper rags, has crept into the real world by means of the bad fairies--always so much more potent than the good--the wicked ministers of finance."