Sir Robert Bruce Cotton, courtesy of Wikipedia
Sir Robert may have been one of the most important librarians who ever lived.
But his greater claim to fame may be a speech on "Alteration of Coin" he presented to the Privy Council in 1626.
His urgent eloquence on behalf of the integrity of money is unsurpassed:
SINCE it hath pleased this Honourable Table to command, amongst others, my poor Opinion concerning this weighty Proposition of Money, I most humbly crave pardon, if with that Freedom that becomes my Duty to my good and gracious Master, and my Obedience to your great Command, I deliver it so up.
I cannot (my good Lords) but assuredly conceive, Honour, Justice, and Profit. that this intended Project of infeebling the Coin, will trench both into the Honor, the Justice, and the Profit of my Royal Master very far.
All Estates do stand Magis Famâ quam Vi, as Tacitus Honour. saith of Rome: And wealth in every Kingdom is one of the essential Marks of their Greatness: And that is best expressed in the Measure and Purity of their Monies. Hence was it, that so long as the Roman Empire (a Pattern of best Government) held up their Glory and Greatness, they ever maintained, with little or no Change, the Standard of their Coin. But after the loose times of Commodus had led in Need by Excess, and so that Shift of Changing the Standard, the Majesty of that Empire fell by degrees. And as Vopiscus saith, the steps by which that State descended, were visibly known most by the gradual Alteration of their Coin; and there is no surer Symptom of a Consumption in State, than the Corruption in Money.
What renown is left to the Posterity of Edward I. Edw. I. in amending the Standard, both in Purity and Weight from that of elder and more barbarous times, must stick as a blemish upon Princes that do the contrary.VI. Thus we see it was with Henry VI. who, after he had begun with abating the Measure, he after fell to abasing the Matter; and granted Commissions to Missenden and others to practise Alchimy to serve his Mint. The extremity of the State in general felt this Aggrievance; besides the Dishonour it laid upon the Person of the King, was not the least Advantage his disloyal Kinsman took to grace himself into the Peoples Favour, to his Sovereign’s Ruine.
VIII. When Henry VIII. had gained as much of Power and Glory abroad, of Love and Obedience at home, as ever any; he suffered Shipwreck of all on this Rock.
Eliz. When his daughter Q. Elizabeth came to the Crown, she was happy in Council to Amend that Error of her Father: For, in a Memorial of the Lord Treasurer Burleigh’s hand, I find that he and Sir Tho. Smith (a grave and learned Man), advising the Queen, that it was the Honour of her Crown, and the true Wealth of herself and People, to reduce the Standard to the ancient Parity and purity of her Great GrandfatherIV.King Edw. IV. And that it was not the short ends of Wit, nor starting holes of Devices, than can sustain the Expence of a Monarchy, but sound and solid Courses: For so are the words. She followed their Advice, and began to reduce the Monies to their elder goodness, stiling that Work in her first Proclamation Anno 3. A Famous Act. The next Year following, having perfected it as it after stood; she tells her People by another Edict, that she had conquered now that Monster that had so long devoured them, meaning the Variation of the Standard: And so long as that staid Adviser lived, she never (though often by Projectors importuned) could be drawn to any shift or change in the Rate of her Monies.
To avoid the Trick of Permutation, Coin was devised, as a Rate and Measure of Merchandize and Manufactures; which if mutable, no Man can tell either what he hath, or what he oweth;Justice. no Contract can be certain; and so all Commerce, both publick and private, destroyed; and Men again enforced to Permutation with things not subject to Wit or Fraud.
The Regulating of Coin hath been left to the care of Princes, who are presumed to be ever the Fathers of the Common-wealth. Upon their Honours they are Debtors and Warranties of Justice to the Subject in that behalf. They cannot, saith Bodin,Bodin. alter the Price of the Monies, to the Prejudice of the Subjects, without incurring the Reproach of Faux Monnoyeurs. And therefore the Stories term Philip le Bell, for using it, Falsificateur de Moneta. Omnino Monetæ integritas debet queri ubi vultus noster imprimitur,Theodoret the Goth. saith Theodoret the Goth to his Mint-Master, Quidnam erit tutum si in nostra peccetur Effigie? Princes must not suffer their Faces to warrant Falshood.
Mirror des Justices. Although I am not of opinion with Mirror des Justices, the ancient Book of our Common-Law, that Le Roy ne poit sa Mony Empeirer ne amender sans l’assent de touts ses Counts, which was the greatest Council of the Kingdom; yet can I not pass over the Goodness and Grace of many of our Kings (as Edw. I. and III. Hen. IV. and V. with others, who out of that Rule of this Justice, Quod ad omnes spectat, ab omnibus debet approburi, have often advised with the People in Parliament, both for the Allay, Weight, Number of Pieces, rate of Coinage and Exchange): and must with infinite Comfort acknowledg, the Care and Justice now of my good Master, and your Lordships Wisdoms, that would not upon information of some few Officers of the Mint, before a free and careful Debate, put in execution this Project, that I much (under your Honours Favour suspect, would have taken away the tenth part of every Man’s due Debt, or Rent already reserved throughout the Realm, not sparing the King which would have been little less than a Species of that which the Roman stories call Tabulæ novæ, from whence very often Seditions have sprung: As that of Marcus Gratidianus in Livy, who pretending in his Consulship that the current Mony was wasted by Use, called it in, and altered the Standard; which grew so heavy and grievous to the People, as the Author saith, because no man thereby knew certainly his Wealth, that it caused a Tumult.
Profit.In this last part, which is, the Disprofit this infeebling the Coin will bring both to his Majesty and the Common-wealth, I must distinguish the Monies of Gold and Silver, as they are Bullion or Commodities, and as they are Measure: One the extrinsick Quality, which is at the King’s pleasure, as all other Measures to name; the other the intrinsick Quantity of pure Mettal, which is in the Merchant to value. As there the Measure shall be either lessened or inlarged, so is the quantity of the Commodity that is to be exchanged. If then the King shall cut his Shilling or Pound nominal less than it was before, a less proportion of such Commodities as shall be exchanged for it must be received. It must then of force follow, that all things of necessity, as Victual, Apparel, and the rest, as well as those of Pleasure, must be inhaunced. If then all Men shall receive in their Shillings and Pounds a less proportion of Silver and Gold than they did before this projected Alteration, and pay for what they buy a rate inhaunced, it must cast upon all a double Loss.
What the King will suffer by it in the Rents of his Lands, is demonstrated enough by the Alterations since the 18 of Edw. III. when all the Revenue of the Crown came into the Receipt Pondere & Numero, after five Groats in the Ounce; which since that time, by the several Changes of the Standard is come to five Shillings, whereby the King hath lost two third parts of his just Revenue.
In his Customs, the Book of Rates being regulated by Pounds and Shillings, his Majesty must lose alike; and so in all and whatsoever Monies that after this he shall receive.
The profit by this Change in Coinage, cannot be much nor manent. In the other the loss lasting, and so large, that it reacheth to little less than yearly to a sixth part of his whole Revenue: for hereby in every pound tale of Gold there is seven Ounces, one penny weight, and 19 Grains loss, which is 25l. in account, and in the 100l. tale of Silver 59 Ounces, which is 14l. 17s. more.
And as his Majesty shall undergo all these Losses hereafter in all his Receipts; so shall he no less in many of his Disbursements. The Wages of his Soldiers must be rateably advanced as the Mony is decreased. This Edward the Third (as appeareth by the account of the Wardrobe and Exchequer) as all the Kings after were enforced to do, as oft as they lessened the Standard of their Monies. The prices of what shall be bought for his Majesties Service, must in like proportion be inhaunced on him. And as his Majesty hath the greatest of Receipts and Issues, so must he of necessity taste the most of Loss by this device.
It will discourage a great proportion of the Trade in England, and so impair his Majesties Customs. For that part (being not the least) that payeth upon trust and credit, will be overthrown; for all men being doubtful of diminution hereby of their personal Estates, will call in their Monies already out, and no man will part with that which is by him, upon such apparent Loss as this must bring. What danger may befal the State by such a sudden stand of Trade, I cannot guess.
The Monies of Gold and Silver formerly coined and abroad, being richer than these intended, will be made for the most part hereby Bullion, and so transported; which I conceive to be none of the least inducements that hath drawn so many Goldsmiths to side this Project, that they may be thereby Factors for the Strangers, who by the lowness of minting (being but 2s. Silver the pound Weight, and 4s. for Gold; whereas with us the one is 4s. and the other 5s.) may make that Profit beyond-sea they cannot here, and so his Majesties Mint unset on work.
And as his Majesty shall lose apparently in the alteration of Monies a 14th in all the Silver, and a 25th part in all the Gold he after shall receive; so shall the Nobility, Gentry, and all other, in all their former setled Rents, Annuities, Pensions, and Loans of Mony. The like will fall upon the Laborers and Workmen in their Statute-Wages: and as their Receipts are lessened hereby; so are their Issues increased, either by improving all prices, or disfurnishing the Market, which must necessarily follow: For if in 5 Edw. 6. 3. Mariæ, and 4. Elizabethæ, it appeareth by the Proclamations, that a Rumor only of an Alteration caused these effects, punishing the Author of such reports with Imprisonment and Pillory; it cannot be doubted but the projecting a Change must be of far more consequence and danger to the State, and would be wished that the Actors and Authors of such disturbances in the Common-wealth, at all times hereafter might undergo a Punishment proportionable.
It cannot be held (I presume) an Advice of best judgment that layeth the Loss upon our selves, and the Gain upon our Enemies: for who is like to be in this time the greater Thriver? Is it not visible, that the Stranger that transporteth over Monies for Bullion, our own Goldsmiths that are their Brokers, and the forein Hedg-minters of the Netherlands (which terms them well) have a fresh and full Trade by this abatement? And we cannot do the Spanish King (our greatest Enemy) so great a Favour as by this, who being the Lord of this Commodity by his West-Indies, we shall so advance them to our impoverishing; for it is not in the power of any State to raise the price of their own but the value that their Neighbour Princes acceptance sets upon them.
Experience hath taught us, that the enfeebling of Coin is but a shift for a while, as Drink to one in a Dropsie, to make him swell the more: But the State was never thoroughly cured, as we saw by Hen. the Eighth’s time and the late Queens, until the Coin was made rich again.
I cannot but then conclude (my Honourable Lords) that if the Proportion of Gold and Silver to each other be wrought to that Parity, by the Advice of Artists, that neither may be too rich for the other, that the Mintage may be reduced to some proportion of Neighbour Parts, and that the Issue of our Native Commodities may be brought to overburthen the entrance of the Forein, we need not seek any way of shift, but shall again see our Trade to flourish, the Mint (as the Pulse of the Common-wealth) again to beat, and our Materials, by Industry, to be a Mine of Gold and Silver to us, and the Honour, Justice, and Profit of his Majesty, (which we all wish and work for) supported.
The prolific AEI writer James Pethokoukis recently devoted a blog, A return to the gold standard. Please, stop. Here's a much better idea. to criticizing the gold standard (and promoting Scott Sumner's proposal to have the "central bank target the path of nominal GDP through a market mechanism."). The posting promptly drew 4 comments, all critical of Pethokoukis's analysis.
There are several factual errors in Pethokoukis's column.
It is troubling to discover him reprising a discredited myth: "(And there is the fact that the gold standard played a key role in causing the Great Depression.)" As Sen. Daniel Patrick Moynihan famously quipped, in a debate with James Buckley, "Everyone is entitled to his own opinion, but not his own facts." And since the gold standard had not been in effect for over a decade preceding the Great Depression, to posit it as a fact is, simply, wrong (and wrongheaded).
Of greater concern is the authority which, by hyperlink, Pethokoukis relies upon for this statement. In a 1990-1991 paper by (then) Professor Ben Bernanke and (still) Prof. Harold James, to which this links, makes a distinction which Pethokoukis, for unfathomable reasons, blurs:
The gold standard—generally viewed at the time as an essential source of the relative prosperity of the late nineteenth and early twentieth centuries— was suspended at the outbreak of World War I. Wartime suspension of the gold standard was not in itself unusual; indeed, Bordo and Kydland (1990) have argued that wartime suspension, followed by a return to gold at prewar parities as soon as possible, should be considered part of the gold standard's normal operation. Bordo and Kydland pointed out that a reputation for returning to gold at the prewar parity, and thus at something close to the prewar price level, would have made it easier for a government to sell nominal bonds and would have increased attainable seignorage. A credible commitment to the gold standard thus would have had the effect of allowing war spending to be financed at a lower total cost.
Possibly for these reputational reasons, and certainly because of wide-spread unhappiness with the chaotic monetary and financial conditions that followed the war (there were hyperinflations in central Europe and more moderate but still serious inflations elsewhere), the desire to return to gold in the early 1920s was strong. Of much concern however was the perception that there was not enough gold available to satisfy world money demands without deflation. The 1922 Economic and Monetary Conference at Genoa addressed this issue by recommending the adoption of a gold exchange standard, in which convertible foreign exchange reserves (principally dollars and pounds) as well as gold would be used to back national money supplies, thus "economizing" on gold. Although "key currencies" had been used as reserves before the war, the Genoa recommendations led to a more widespread and officially sanctioned use of this practice (Lindert 1969; Eichengreen 1987).
"The classical gold standard of the prewar period functioned reasonably smoothly and without a major convertibility crisis for more than thirty years. In contrast, the interwar gold standard, established between 1925 and 1928, had substantially broken down by 1931 and disappeared by 1936. An extensive literature has analyzed the differences between the classical and interwar gold standards. This literature has focused, with varying degrees of emphasis, both on fundamental economic problems that complicated trade and monetary adjustment in the interwar period and on technical problems of the interwar gold standard itself.
Indeed, that the "interwar gold standard" (or, more precisely stated, gold-exchange standard) was the chief culprit behind the Great Depression, is an assessment propounded most persuasively and consistently by the late 20th century's greatest proponent of the classical gold standard, Prof. Jacques Rueff.
To blur the distinction (as Bernanke and James did not) between the classical and inherently unstable gold-exchange standard is, at best, sloppy work. This is not a mere academic quibble. The key proponents, in the policy discourse, are not, as Pethokoukis states, from "among the libertarian followers of Ron and Rand Paul." With great respect both for Dr. Paul and Senator Paul, Dr. Paul never introduced gold standard legislation during his tenure in the House (he advocated competitive currencies instead), and neither has Senator Paul (who has focused most of his legislative attention, thus far, on a valiant crusade to protect civil liberties).
The proponents of the gold standard, while fully supportive of a sensible Hayekian case for competing currencies, right now focus around prescriptions for the restoration of a classical gold standard. And the agenda of the classical gold standard proponents does not include abolition of the Fed. (That is a prescription from which even Dr. Paul, in practice, backpedaled.)
Of greatest concern is this column's aspersion of the Centennial Monetary Commission "to explore reforming the Fed, including possibly re-instituting a gold standard."
The legislation chartering such a Commission calls for conducting an empirical study of six different monetary policies. Its franchise, of course, includes the gold standard as one of these six. The gold standard correlates tightly with some of the best, if not the very best, economic growth in American and world history. The Commission's charter also enumerates, for study, "nominal gross domestic product targeting (both level and growth rate)."
NGDP targeting is precisely what Pethokoukis proposes as the "new gold standard." To denigrate a Commission constituted to conduct a methodical study of various monetary regimes including the one which he himself propounds as superior shows little confidence on his part that NGDP targeting is likely to withstand rigorous scrutiny. If Pethokoukis really is confident in the superiority of having "the Fed create NGDP futures contracts, pegging them at a price that would rise at 5% per year" as the superior monetary protocol then it behooves him to take a constructive role in encouraging the formation of an authoritative public body in which his claims for NGDP targeting -- as well as claims for other regimes -- can be rigorously examined and assessed.
The BBC reports
Inti, the Incan Sun God, from the flag of Argentina, courtesy of Wikipedia
The Incas revered gold as the sweat of the sun and believed that it represented the sun's regenerative powers. All gold belonged to the ruler of the empire, the Inca himself, who claimed to be descended from the sun god. Llamas were the Incas' most important domestic animal, providing food, clothing and acting as beasts of burden. They were also often sacrificed in large numbers to the gods.
When confiscating all privately held gold, to become property of the government, then, President Franklin Roosevelt was, all unknowingly, echoing the political doctrine of the late Incan civilization and the pagan doctrine attributing to gold regenerative powers.
And in formulating New Deal programs such as the Agricultural Adjustment Act, it appears that the president was anticipated by the practices of ancient Incan imperial nobility.
Constitution.org provides an extensive and thoughtful Memorandum of Law by Larry Becraft, Esq., of Huntsville, Alabama, on Article I, Section 10, clause 1 of the US Constitution.
Sir William Blackstone courtesy of Wikipedia
One of many interesting matters the Memorandum treats is Blackstone's Commentaries, a book that was a fixture in the offices of lawyers of an earlier era (including that of this writer and his father before him).
The common law represented the legal consensus organically developed over centuries and preceded the often artificial statutory enactments which also have the force of law (but not always the common law's common sense). Becraft:
One of the most significant expositions of the common law of England, and therefore the heritage of American law, consists
of Sir William Blackstone's Commentaries on the Laws of England. In Blackstone's exhaustive treatment of the common law,
he aptly stated the common law concerning money:
"Money is an universal medium, or common standard, by comparison with which the value of all merchandize may be ascertained: or it is sign, which represents the respective values of all commodities. Metals are well calculated for this sign, because they are durable and are capable of many subdivisions: and a precious metal is still better calculated for this purpose, because it is the most portable. A metal is also the most proper for a common measure, because it can easily be reduced to the same standard in all nations: and every particular nation fixes on it its own impression, that the weight and standard (wherein consists the intrinsic value) may both be known by inspection only.
The Freeman, in 1977, published an article on John Witherspoon, president of what would become Princeton University, and on Witherspoon's Essay on Money.
John Witherspoon, courtesy of Wikipedia
This article remains extremely pertinent.
John Witherspoon: Disciple of Freedom
MAY 01, 1977 by ROBERT G. BEARCE
"There is not a single instance in history," declared Rev. John Witherspoon in 1776, "in which civil liberty was lost, and religious liberty preserved entire. If therefore we yield up our temporal property, we at the same time deliver the conscience into bondage."¹ Speaking as a minister, Rev. Witherspoon understood the inseparable tie between political freedom and spiritual freedom. Like John Adams and Patrick Henry, he was an outspoken Patriot, advocating independence from Great Britain.
Dr. Witherspoon is remembered mainly for his tenure as President of the College of New Jersey (Princeton) and for having been the only clergyman to sign the Declaration of Independence. His truly important contribution to American liberty and independence, though, was revealed by his stalwart labors as a member of the Continental Congress. Elected in 1776, he served his last term in 1782. During this period, he attempted to bring sound economic wisdom to Congressional deliberations. Unfortunately for the struggling Thirteen States, his astute views and timely admonitions were often rejected. Consequently, America had to fight both the British Army and the evils of inflation and price-fixing.
Eighteen years after the War for Independence was finally won, Witherspoon published his Essay on Money, "As a medium of commerce; with remarks on the advantages and disadvantages of paper admitted into general circulation."2 This excellent work gives hindsight, insight, and foresight into economic problems—the same problems faced by the United States in the 20th century.
As a rugged Scotsman by birth, Rev. Witherspoon had an appreciation for gold. His distaste for printed bills was founded upon firm economic judgment, and he was ready to defend precious metals.
"It is likely some will say, What is the intrinsic value of gold and silver? They are not wealth; they are but the sign or representative of commodities. Superficial philosophers, and even some men of good understanding not attending to the nature of currency, have really said so. What is gold, say some, the value is all in the fancy; you can neither eat nor wear it; it will neither feed, clothe nor warm you. Gold, say others, as to intrinsic value, is not so good as iron which can be applied to many more useful purposes.”
"These persons have not attended to the nature of commercial value, which is a compound ratio of its use and scarceness. If iron were as rare as gold, it would probably be as valuable, perhaps more so. How many instances are there of things, which, though a certain proportion of them is not only valuable, but indispensably necessary to life itself, yet which from their abundance have no commercial value at all.”
"Experience," he warns, "has every where justified the remark, that wherever paper is introduced in large quantities, the gold and silver vanishes universally. The joint sum of gold, silver, and paper current, will exactly represent your whole commodities, and the prices will be accordingly. It is therefore as if you were to fill a vessel brimfull, making half the quantity water and the other oil, the last being specifically lightest, will be at the top, and if you add more water, the oil only will run over, and continue running till there is none left.
"How absurd and contemptible then is the reasoning which we of late have seen frequently in print, viz, the gold and silver is going away from us, therefore we must have paper to supply its place. If the gold and silver is indeed going away from us, that is to say, if the balance of trade is much against us, the paper medium has a direct tendency to increase the evil, and send it away by a quicker pace."
How absurd and contemptible would Witherspoon have found it that the greatest contemporary apologist for paper money, Prof. Paul Krugman, is a Princeton professor, and the greatest generator of fiduciary currency, Federal Reserve chairman Ben Bernanke, preceded his federal service in an academic career at Princeton?