Monday, June 13, 2011

Bonus Library: Jefferson, Constitution & Coinage Act

Ancient but still true

Thomas Jefferson: 
(1791) "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. This issuing power should be taken from the banks and restored to the people to whom it properly belongs. If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country."
(1811) "The system of banking [is] a blot left in all our Constitutions, which, if not covered, will end in their destruction... I sincerely believe that banking institutions are more dangerous than standing armies; and that the principle of spending money to be paid by posterity... is but swindling futurity on a large scale."
US Constitution
Article 1, Section 10 No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainderex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
US Coinage Act of 1792
Provides for a US Mint which stamped silver and gold coins, invoked the death penalty for anyone found to be debasing money. 

Full text at 

Gold de facto (1834), Gold Standard Act of 1900
Library of Economics & Liberty: The United States, though formally on a bimetallic (gold and silver) standard, switched to gold de facto in 1834 and de jure in 1900 when Congress passed the Gold Standard Act. In 1834, the United States fixed the price of gold at $20.67 per ounce, where it remained until 1933. Other major countries joined the gold standard in the 1870s. The period from 1880 to 1914 is known as the classical gold standard. During that time, the majority of countries adhered (in varying degrees) to gold. It was also a period of unprecedented economic growth with relatively free trade in goods, labor, and capital.

Abraham Lincoln, 1865
Senate Document 23, page 91:
"I have the Confederacy before me and the bankers behind me, and for America I fear the bankers most." When Abraham Lincoln was assassinated he was preparing to abandon international finance and set up an American central bank with the ability to issue currency controlled by Americans. His assasin, John Wilkes Booth, was simply a pawn of foreign finacial interests.

Federal Reserve Act of 1913

Wikipedia: The Plan called for the establishment of a National Reserve Association with 15 regional district branches and 46 geographically dispersed directors primarily from the banking profession. The Reserve Association would make emergency loans to member banks, print money, and act as the fiscal agent for the U.S. government. State and nationally chartered banks would have the option of subscribing to specified stock in their local association branch. It is generally believed that the outline of the Plan had been formulated in a secret meeting on Jekyll Island in November 1910, which Aldrich and other well connected financiers attended.

Since the Aldrich Plan essentially gave full control of this system to private bankers, there was strong opposition to it from rural and western states because of fears that it would become a tool of certain rich and powerful financiers in New York City, referred to as the "Money Trust".

Executive Order 6102
Gold demonetized, April 5, 1933
Wikipedia: Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933, all but a small amount ofgold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67 per troy ounce. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($167,700 if adjusted for inflation as of 2010) or up to ten years in prison, or both. Most citizens who owned large amounts of gold had it transferred to countries such as Switzerland.More here.

Gold Reserve Act of 1934
Wikipedia: The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury.

Wikipedia: Made gold clauses unenforceable, and changed the value of the dollar in gold from $20.67 to $35 per ounce. This price remained in effect until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus abandoning the gold standard for foreign exchange (see Nixon Shock).

Bretton Woods conference, July 22 1944
Wikipedia: The conference was held from 1-22 July 1944, when the agreements were signed to set up the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and the International Monetary Fund (IMF).
As a result of the conference, the Bretton Woods system of exchange rate management was set up, which remained in place until the early 1970s.

US Coinage Act of 1965
Signed by Lyndon Johnson, terminates the original legislation signed by George Washington 173 years earlier (carrying the death penalty) enabling the US Treasury to eliminate the silver content of all currency. 

Full text at

Nixon Shock
August 15, 1971: Nixon ends the Gold Standard, fiat currency era begins

Library of Economics & Liberty (New York Times): President Nixon officially announces the end of the gold standard system of monetary policy for international exchange of gold deposits in an evening address to the country. Nixon’s move to sever the link between the dollar’s value and gold reserves effectively ends the Breton Woods system of monetary exchange and changes the dollar to a “floating” currency whose value is to be determined largely by market influences. Nixon’s decision results from a run on gold exchanges and rampant speculation in gold markets in Europe, and he changes the US monetary policy after receiving advice from Treasury Secretary John Connally, Under Secretary for Monetary Affairs Paul A. Volcker, and others in a special working group. The dollar becomes a fiat currency, causing a brief international panic before other countries follow suit and also allow their currencies to “float.”

Smithsonian Agreement, December 1971
Wikipedia: Meeting in December 1971 at the Smithsonian Institution, the Group of Ten signed the Smithsonian Agreement. In the Agreement, the countries agreed to appreciate their currencies against the United States dollar.

Although the Smithsonian Agreement was hailed by President Nixon as a fundamental reorganization of international monetary affairs, it quickly proved to be too little and of only temporary benefit. The gold value of the dollar was realigned again in 1973, from $38.02 to $42.22. In addition, further devaluation of the dollar occurred against European currencies.

Legal ownership
Individual ownership of gold legalized on January 1, 1975

Alan Greenspan: 
"The abandonment of the gold standard made it possible for the welfare statists (government bureaucrats) to use the banking system as an unlimited expansion of credit. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation... Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process."

No comments: