This page has been archived and commenting is disabled.

A Portrait Of The Classical Gold Standard

Tyler Durden's picture




 

Submitted by Marcia Christoff-Kurapovna via The Mises Institute,

"The world that disappeared in 1914 appeared, in retrospect, something like our picture of Paradise," wrote the economist Cecil Hirsch in his June 1934 review of R.W. Hawtrey’s classic, The Art of Central Banking (1933). Hirsch bemoaned the loss of the far-sighted restraint that had once prevailed among the "bankers' banks" of the West, concluding that modern times "had failed to attain the standard of wisdom and foresight that prevailed in the 19th century."

That wisdom and foresight was once upon a time institutionalized throughout an international monetary culture — gold-based, wary of credit, and contemptuous of debt, public or private. This world included central banks including the Bank of England, the Bank of France, the Swiss National Bank, the early Federal Reserve, the Imperial Bank of Austria-Hungary, and the German Reichsbank. But the entrenched hard-money ideology of the time restrained all of them. The Bank of Russia, for example, which once required 50 percent to 100 percent gold backing of all notes issued, possessed the second largest gold reserves on the planet at the turn of the twentieth century.

"The countries that were tied together in the gold standard system represented to a not inconsiderable degree a community of interest in and responsibility for the maintenance of economic and financial stability throughout the world," recounted Aldoph C. Miller, member of the Federal Reserve Board from 1914 to 1936, in The Proceedings of the Academy of Political Science, in May 1936. "The gold standard was the one outstanding symbol of unity and economic solidarity which the nineteenth century world had developed."

It was a time when "automatic market forces," as economists of the day referred to them, prevailed over monetary management. Redeemability of money in (fine) gold ensured, within limits, stability in foreign exchange rates. Credit was extended only as far as reserve ratios would allow, and central banks were required to keep fixed reserves of gold against notes-in-circulation and against demand deposits.

When Markets Dominated Monetary "Policy"

Gold flows regulated international price relationships through markets, which adjusted themselves accordingly: prices rose when there was an influx of gold — for example, when one country received a debt payment from another country (always in gold), or during such times as the California or Australian gold rushes of the 1870s. These inflows meant credit expansion and a rise in prices. An outflow of gold meant credit was contracted and price deflation followed.

The efficiency of that standard was not impeded by the major central banks in such a way that "any disturbance of economic or financial character originating at any point in the world which might threaten the continued maintenance of economic equilibrium was quickly detected by foreign exchanges," Miller, the Federal Reserve board member, noted in his paper. "In this way, the gold standard system became in a very real sense a regime or rule of economic health, a method of catching economic disturbances in the bud."

The Bank of England, the grand master of them all, was the financial center of the universe, whose tight handle on its credit policies was so disciplined that the secured the top spot while not even holding the largest gold reserves. Consistent in its belief that protection of reserves was the chief, and only important, criterion of credit policy, England became the leading exporter of capital, the free market for gold, the international discount market, and international banker for the trade of other countries, as well as her own. The world was in this sense on the sterling standard.

The Bank of France, wisely admonished by its founder, Napoleon, to make sure France was always a creditor country, was so replete with reserves it made England a 500 million franc loan (in 1915 numbers) at the onset of the World War I. Switzerland, perhaps the last "19th-century-style" hold-out today with unlimited-liability private bankers and strict debt-ceiling legislation, also required high standards of its National Bank, founded in 1907. By the 1930s that country had higher banking reserves than the US; the Swiss franc was never explicitly devalued, unlike nearly every other Western nation’s currency, and the country’s domestic price level remained the most stable in the world.

For a time, the disciplined mindset of these banks found its way across the Atlantic, where the idea of a central bank had been long the subject of hot debate in the US. The economist H. Parker Willis, writing about the controversy in The Journal of the Proceedings of the Academy of Political Science, October 1913, admonished: "The Federal Reserve banks are to be 'bankers' banks,' and they are intended to do for the banker what he himself does for the public."

At first, the advice was heeded: in September 1916, almost two years after its founding on December 23,1913, the fledgling Fed worked out an amendment to its gold policy on the basis of a very conservative view of credit. This new policy sought to restrain "the undue and unnecessary expansion of credit," wrote Fed board member Miller, in an article for The American Economic Review, in June 1921.

The Bank of Russia, during the second half of the nineteenth century steered itself through the Crimean War, the Russo-Turkish War, the Russo-Japanese War, impending Balkan wars — not to mention all that was to follow — and managed to emerge with sound fiscal policies and massive gold reserves. According to The Economist of May 20, 1899, Russian holdings were 95 million pounds sterling of gold, while the Bank of France held 78 million sterling worth. (Austria-Hungary held 30 million sterling worth of gold and the Bank of England 30 million sterling worth of both gold and silver.) "Russia up to the very moment of rupture [with Japan, 1904–1905], was working imperturbably at the progressive consolidation of her finances," reported Karl Helfferich of the University of Berlin, at a meeting of The Royal Economic Society [UK] in December 1904. "Even in years of industrial crises and defective harvest, her foreign trade showed an excess of exports over imports more than sufficient to compensate payments sent abroad. And, as guarantee her monetary system she has succeeded in a amassing and maintaining a vast reserve of gold."

These banks, in turn, drew on the medieval/Renaissance and Baroque-era banking traditions of the Hanseatic League, the Bank of Venice, and Amsterdam banks. Payment-on-demand "in good and heavy gold" was like a blood-oath binding the banker-client relationship. The transfer of credit "did not arise from any such substitution of credit for money," noted Charles F. Dunbar, in The Quarterly Journal of Economics of April 1892, "but from the simple fact that the transfer in-bank saved the necessity of counting coin and manual delivery of every transaction."

Bankers were forbidden to deal in certain commodities, could not make loans or create credit for the purchase of such commodities, and forbade both foreigners and citizens from buying silver on credit unless the same amount in cash was in the bank. According to Dunbar, a Venetian law of 1403 on reserve requirements became the basis of US banking law on the deposits of public securities in the late 1800s.

After the fall of bi-metallism in the 1870s, gold continued to perform monetary functions among the main countries of the Western world (and the well-administered Bank of Japan). It was the only medium of exchange and the only currency with unrestricted legal tender. It became the vaunted "measure of value." Bank currency notes were simply used as auxiliary to gold and, in general, did not enjoy the privilege of legal tender.

The End of An Era

It was certainly not a flawless system, or without periodic crises. But central banks had to act in an exceptionally prudent manner given the all-over public distrust of paper money.

As economist Andrew Jay Frame of the University of Chicago, writing in The Journal of Political Economy, in January 1912, noted: "During panics in Britain in 1847 and 1866, when cash payments were suspended, the floodgates of cash were opened [by The Bank of England], the governor sent word to the street that solvent banks would be accommodated, and the panic was relieved." Frame then adds: "However, this extra cash and the increased loans that went with it were very quickly put to an end to avoid credit expansion."

The US was equally confident of its prudent attitude. Aldoph Miller, writing of Federal Reserve policy, remarked: "The three chief elements of the policy of a central bank or system of reserve holding institutions are best disclosed in connection with the attitude towards 1) gold 2) currency 3) credit." He noted proudly: "The federal reserve system has met [these] tests on the whole with remarkable success."

But after World War I, a different international landscape was left behind. England had been displaced as the center of international finance; the US and France emerged as the chief post-war creditor countries. The mechanism of the gold standard to which depreciated currencies could be related no longer existed. Only the US was left with a full gold standard. England and France had a gold bullion standard and other countries (Germany, primarily) had a gold-exchange standard.

A matrix of unbalanced trade relationships began to saturate the international economy. Then, with so many foreign countries attendant upon its speculative boom, the US manipulated its own domestic credit policies to ease credit and exchange-standard controls. This eventually culminated in an international financial crisis of 1931. Under Bretton Woods (1944), the gold standard was effectively abandoned: domestic convertibility was illegal and the role of gold was very constrained in favor of the dollar.

"It was, at least in theory, simple enough in the old days," wrote a wistful W. Randolph Burgess, head of the New York Federal Reserve, in 1938. "In the present strange new world, where the old gold portents have lost their former meaning, where is the radio beam which the central banker may follow? What is the equivalent of gold?"

The men of his era and of the late nineteenth century understood the meaning of such a question and, more importantly, why it is one that must be asked. But theirs was a different world, indeed — one without "QE," ZIRP," or "Unknown Knowns" as fiscal policy. And there were no helicopters, either.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 05/11/2015 - 21:39 | 6083383 SafelyGraze
SafelyGraze's picture

cargo cult members built airplanes out of bamboo, but that didn't bring back the Flying People with all the food and goodies

we are in a cargo cult

we have a societal memory of storing physical objects, whether metal or IOU's, in a "bank"

but there there is nothing to store anymore

and the "bank" is now a bamboo reconstruction of the thing that used to actually fly

 

Mon, 05/11/2015 - 21:40 | 6083386 j reuter
j reuter's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.jobs-review.com

Mon, 05/11/2015 - 22:24 | 6083502 MonetaryApostate
MonetaryApostate's picture

Obviously insanely expensive masions, helicopter, private jets, yachts, and Picasso's are the new gold standard...

Mon, 05/11/2015 - 22:28 | 6083515 Dickweed Wang
Dickweed Wang's picture

Get the fuck out of here Roto J Reuter.  Go sell your shit on beforeitsnews.com . . . . .

 

Tue, 05/12/2015 - 04:57 | 6084037 stacking12321
stacking12321's picture

great comment, safelygraze.

but, clearly, the problem is that we aren't waving our fan-shaped leafs hard enough, giving the flying people with goodies a signal to land.

another round of QE ought to do it, though.

 

Tue, 05/12/2015 - 06:26 | 6084108 ZH Snob
ZH Snob's picture

can the world ever return to monetary sanity?  not by choice, but by devastating, hard experience with the failure of fiat.

then, it will be the natural mindset to trade something real for something real.  after the debt bubble bursts and trillions of paper wealth are vaporized no one will want to hear about credit expansion and leveraged buyouts, and all the harvard boys will have to go out and find honest work.

Mon, 05/11/2015 - 21:40 | 6083385 MarketAnarchist
MarketAnarchist's picture

I can't wait to see peoples faces when they realize paper currency is valueless.

Mon, 05/11/2015 - 22:06 | 6083456 Budnacho
Budnacho's picture

But....but... I have DIGITS on PAPER.....

 

 

Tue, 05/12/2015 - 03:53 | 6083976 CognacAndMencken
CognacAndMencken's picture

 

 

The United States won the Revolutionary War and its very independence because of paper currency (the Continental) - I'd say that has quite a bit of value.  

The problem is not paper currency; the problem is the mismanagement of paper currency by political charlatans, and an utterly ignorant population who continually elect them.    

Tue, 05/12/2015 - 06:32 | 6084117 Bendromeda Strain
Bendromeda Strain's picture

"Not worth a Continental"

Tue, 05/12/2015 - 07:03 | 6084153 MarketAnarchist
MarketAnarchist's picture

the continental was backed by gold.

Checkmate.

Tue, 05/12/2015 - 11:13 | 6084998 CognacAndMencken
CognacAndMencken's picture

 

 

I would encourage you to educate yourself before you embarrass yourself.

 

http://www.masshist.org/collection-guides/view/fao0005

 

https://mises.org/library/revolutionary-war-and-destruction-continental

 

The problem with the Continental was that it was counterfeited by the Brits, with the very intention of destroying the currency.  We don't have that problem to that degree today.  

 

 

 

 

Wed, 05/13/2015 - 05:40 | 6088589 MarketAnarchist
MarketAnarchist's picture

" In January 1777, $1.25 of Continental Currency could purchase $1 in specie (gold or silver coins). By January 1781, it took $100 in Continentals to obtain $1 in hard money. "

That's from your own link.   


It was backed by gold, and the government, like all governments, printed more of them to fund itself. The British also took advantage and printed them as well.  

 

 

Sun, 05/17/2015 - 21:56 | 6104447 CognacAndMencken
CognacAndMencken's picture
You obviously don't understand what "backed by gold" means.  Paper currency that is backed by gold means the value of the paper bill is PEGGED to a very specific quantity of gold.  That quantity does not fluctuate.  The holder of that paper bill can redeem that bill for a very specific quantity of gold.   I find this ignorance about simply economic and monetary beliefs to be rampant among libertarians.  You guys are very passionate about your beliefs, yet you truly have no idea what you're talking about, including topics that are very elementary.     
Tue, 05/12/2015 - 00:18 | 6083508 Ham-bone
Ham-bone's picture

Why Gold and gold alone (ok, silver too) is Money...all else is simply currency.

The Fed's Backdoor QE - Central Bank Currency Swaps?

Article details those nations with Fed swap lines vs those without...and guess which group of foreigners is buying all the US Treasury debt...

http://econimica.blogspot.com/2015/05/the-feds-backdoor-qe-central-bank.html

Tue, 05/12/2015 - 00:18 | 6083752 Unknown User
Unknown User's picture

Money has value because on the bills it says “this note is legal tender for all debts public and private”.  In other words, money has value by government decree and government’s enforcement of that decree. This is true regardless of what money is made of.

Tue, 05/12/2015 - 04:50 | 6084033 striped-pad
striped-pad's picture

I used to believe that, and economics text books state that modern money is fiat money i.e. has value because the government says so.

It's actually not true. Modern money is not fiat, but promise-backed. For every, say, dollar which exists, entitling the holder to a dollar's worth of goods and services, there is a corresponding debt somewhere obliging someone to (produce and) sell a dollar's worth of goods and services.

The system is managed by the private banks. They also underwrite the losses: if the person who borrowed the money into existence fails to repay, the bank which it borrowed from loses some of its capital, meaning that the owners have to forego an equal amount of claim on goods and services. Banking is a form of insurance - banks ensure the value of money.

The problem comes when the amount of capital in the bank isn't enough to cover the defaults. Then it is insolvent, the owners (shareholders) get nothing, and some of the deposits or bonds get bailed-in. There simply aren't enough assets (money owed to the bank by borrowers) to pay the liabilities (deposits and bonds).

Mon, 05/11/2015 - 21:52 | 6083419 A82EBA
A82EBA's picture

gold in brl up 45% since 2011

Mon, 05/11/2015 - 21:55 | 6083430 Dragon HAwk
Dragon HAwk's picture

you need some standard to compare every currency against.. gold fills that function, but they're not letting it do it's job.. so we will let 3 million FX  traders do it, and keep reaping profits, dragging everybody's value down..  makes perfect sense       /s

Mon, 05/11/2015 - 22:06 | 6083457 GRDguy
GRDguy's picture

The real problem is the amount of lyin', cheatin',  stealin' and killin' that bein' tolerated.  If you think this ok, ask a Native American how that worked out for them.  The old middle class is going away the same way because most are defenseless and ignorant (naive) about what's being done to them.

Mon, 05/11/2015 - 22:13 | 6083474 Dragon HAwk
Dragon HAwk's picture

Beer for My Horses...  Willie Nelson.

  somebody got away, somebody didn't get too far...

 

Mon, 05/11/2015 - 23:07 | 6083614 Arnold
Arnold's picture

I'm going to hold my Confederate Script just a bit longer.

Mon, 05/11/2015 - 22:28 | 6083513 Dre4dwolf
Dre4dwolf's picture

The problem is the current paradigm does not rely on the approval or acquiescence of the public to continue its poor behavior.

When a govt does not need its people to pay taxes (because it has a central bank that will fund it indefinitely) said govt no longer needs the approval of the people whom it seeks to govern.

Nowadays taxes do not serve any real funding purpose for govt, it is simply a tool used to execute authority over the masses.

If you do not agree with the govt, or if you cause the govt distress, they will simply use the IRS and "taxes" to shut you up or get rid of you, they dont want your tax money so that they can spend it, they want it so that they can use trumped up "debts" as an executioners axe.

We pay "tribute" to govt, not "taxes".

 

We are colonized and forced to pay tribute as a show of obedience, the good slave is allowed to continue operating, the bad slave quickly has his / her business shut down by the irs . . .  ^^ . . . its just like the hunger games more or less , without the games 

or entertainment, that comes later I guess, after they practice a few times with their "Jade Helm" type war-games.

 

Mon, 05/11/2015 - 22:22 | 6083485 Dre4dwolf
Dre4dwolf's picture

My only problem with the gold standard is, who is counting the gold, weighing the gold, checking the gold for purity/coin shaving.

 

The primary problem with FIAT is that the central bank and its member banks (JP Morgan, Chase, Citi , BoA etc....) have the power to counterfeit FIAT credits and notes at will (every loan made under fractional lending is funded with counterfeit bank notes/credits of account) the money only exists as fictitious book entries.... which leaves the would be borrower paying back money that never existed.

This creates market fluctuations (fraud in the markets) and disrupts pricing mechanisms from natural equilibrium sending wrong signals to the market place that leads to over-production and or poor investment...

 

A gold standard ideally places limits on such dubious "loan" mechanations, but still is flawed in the sense that whoever counts the gold can counterfeit the gold (put more gold on ledger than actually is in the vaults).

Which brings us back to square one, the gold standard inevitably through fraud and corruption becomes a FIAT system , just with the added bonus of partial backing of gold.

Its a step in the right direction, but inevitably the bankers will not be able to resist the temptation to counterfeit bank notes and a crisis will emerge (because of their crimes) and threaten the stability of the worlds economies (yet again).

 

The problem is not "money"

The problem is "banks" and the "business" of "banking".

 

The entire system needs to be replaced with encryption, computers, servers, and must run as open software on the web.

It must be a banking Artificial Intelligence software.... free from human influence.

A system "by the numbers" because "numbers dont lie".

All loans should be made with money that first must actually exist.

 

This kind of a system, free from the corrupting grips of banker elitists who feel entitled to all our money will allow a new Golden Age to emerge.

or

We can stick to the mistakes of the past and keep repeating the same horrifying crisis after crisis so that bankers can have MMMOOOOOREEE over and over...

 

The choice is quite literally the general public's to make.

--------

 

That being said, the supreme governing factor of the planet is not the constitution, not government, not police, but quite literally the money.

The power of money, trumps all authority, because given sufficient funds, all authority can be bought.

If govt can not grow itself through fraud and counterfeiting, than you will always have a govt that the people support (through funds they generate for the purpose of governance) opposed to officials pressing print to fund their corrupt agendas.

 

 

Tue, 05/12/2015 - 02:56 | 6083930 crazytechnician
crazytechnician's picture

You have clearly heard of bitcoin , which solves this exact set of problems.

Mon, 05/11/2015 - 22:24 | 6083503 Dickweed Wang
Dickweed Wang's picture

The Bank of Russia, for example, which once required 50 percent to 100 percent gold backing of all notes issued, possessed the second largest gold reserves on the planet at the turn of the twentieth century.

Dr. Jim Willie has said for at least a year that all the bullshit going on between the "west" and Russia is about Russia trying to get the massive amount of gold back from the western banks that was lent to them by Czar Nicholas at the beginning of the last century.  Given that the fuckers (i.e. the western banksters and their political minions) lie about everything, and based on Dr. Willie's past credibility on other "conspiracy theory" sounding claims, I have a feeling he just might be spot-on on that issue . . . .

Mon, 05/11/2015 - 22:24 | 6083505 Usurious
Usurious's picture

its almost as if the 'Great Society/Vietnam War' knew that Nixon would close the gold window.......

welfare & warfare........all by BANKSTER design

Mon, 05/11/2015 - 22:47 | 6083559 Saucy-Jack
Saucy-Jack's picture

Why no articles from FOFOA?

Freegold is coming...

All other talk of gold systems is blah, blah, blah.

Mon, 05/11/2015 - 22:53 | 6083566 Kirk2NCC1701
Kirk2NCC1701's picture

It is true that Paper Money (a form of Tertiary Wealth) does not retain its purchasing power over long time. 

But it is also true that Real or Precious assets (a form of Primary Wealth) have their price vary over time, due to natural forces of economics and malicious forces of manipulation. 

Therefore, since no single asset class or type is immutable from said forces, the real question then is: "Which ones are likely to be the best for me for my Time Window of interest?"

Anybody who tells or steers you otherwise, has either questionable competence or a questionable agenda. 

Mon, 05/11/2015 - 22:55 | 6083580 Zero guest
Zero guest's picture

All history and no attempt made to paint the practical implementation of a classical gold standard in the current environment.

There is not enough gold on earth above or underground to coin enough for all the people on this planet. Even if the unit of coinage was the size of a BB you simply could not make enough to properly fund the world economy.

Gold is used to make computers and there are probably uses we do not even undestand yet, I don't think we need it getting lost in the couch.

It belongs right where it is, in bank vaults and the hands of collectors who value it.

Tue, 05/12/2015 - 00:02 | 6083661 AIIB
AIIB's picture

I'm gonna take a wild guess here and say that this is all ANYONE needs to know about gold...

 

AIIB

Vote up!

15
Vote down!

0

"In 1971, the US abruptly went off the gold standard" (while Kissinger was Secretary of State & advising Nixon on many affairs, & Volcker, first guy in, went on the Rothschilds payroll right after leaving the FED)

 

...and in a weird 325 million to one (NOT)coincidence, all the money counterfeitting FED CHAIRS since that moment have been jews, and hundreds of jew paper billionaires have appeared out of nowhere in the process...

 

http://www.timesofisrael.com/worlds-jewish-billionaires-worth-combined-8...

 

Simply amazing!

 

Perhaps MORE amazing are the number of denial 'junks' I'll get for this post (even if it's only one)

 

What's even more amazing than that is that I've been kicked off of ZH 12 times for repeating this FACT (with zero justification other than to imagine it's 'too close for comfort' for some people, NOTWITHSTANDING being factual)...

 

OH Wait... Unless you consider...

 

"They're (Greenspan, Bernanke, Yellen), "'Luciferian' NOT Jewish" (SMG)... & "More blind hatred" paraphrase (CH1),.. As if 2+2=4 is 'blind hatred' of the number 5...

 

are viable responses to the debate... 

 

Here... Here 4 ALL of you mathematically challenged 'do-gooder' sychophants out there I'll help you to extrapolate...

 

- NORMALLY ~ A 'KENTUCKY DERBY' longshot in a 20 horse race goes off at 50-1 or so... So, these probalities would be like 6 (six) '50-1' longshots coming in... IN A ROW... in a race where only 2 or 3 50-1 longshots have EVER won this race in 140+ years {which out dated THE FED TENURE by more than 50%]

 

Happens ALL THE TIME I guess...

Tue, 05/12/2015 - 00:45 | 6083785 talisman
talisman's picture

No rational person trusts fiat money backed by extinct "fulll faith and credit",
so whats left??? beads and cowrie shells??

Tue, 05/12/2015 - 01:25 | 6083829 bid the soldier...
bid the soldiers shoot's picture

****

THE PORTRAIT OF DORIAN GOLD

A brilliant retelling of the Wilde classic with a twist.

Instead of Gray's portrait getting older, whilst Gray himself stayed young and desirable, in the ZH version Gold himself acquired the warts and wrinkles of age, while the portrait of Gold remained the same -- attractive and appealing for all time.

The same as it is for you and me.

Tue, 05/12/2015 - 04:20 | 6084000 Batman11
Batman11's picture

Even gold and silver have their mad "money printing" moments.

The discoveries of huge gold and silver reserves in South America by the Spanish was the precious metal backed equivalent of today's QE.

"Money printing" in the trillions caused by a random find of precious metals.

 

The digital currencies have it, with an open sourced program that all can verify, that limits currency creation.

Gold and silver discoveries are just random events and not the sort of thing you should pin currencies to.

 

Tue, 05/12/2015 - 06:33 | 6084118 shouldvekilledthem
shouldvekilledthem's picture

Bitcoin is the only viable solution.

Tue, 05/12/2015 - 12:18 | 6085224 gcjohns1971
gcjohns1971's picture

This article contains two factual errors:

1) The Bank of England's "tight handle on its credit policies" did not in fact secure it "the top spot while not even holding the largest gold reserves."  It was the British Empire's domination of trade routes through the Royal Navy that did it.

2) It was not WWI, as popularly believed, that toppled the Pound Sterling from currency reserve status.  Britain, and many other Western banks, had been excessively creating credit since the 1840's in pursuit of empire.  By 1900 the end was in sight.  This is why the panic of 1907 happened.

Shortly, the Panic of 1907 was a synthetic panic initiated in London for the explicit purpose of bankrupting the US to secure the dominance of the several families over the US while saving Rothschild interests in Britain through the establishment of a credit-expansionary US Central bank.

It was not two traders attempting to corner the copper market that caused the crisis, despite historical assertions to the contrary.

In fact, the panic of 1907 was initiated in London as follows:

1) British shipping companies accepted bullion payment and/or notes for shipping the fall harvest to European markets for sale.  This caused an annual outflow of Gold to Europe that normally reversed as soon as gold was received upon sale of the harvest.

2) Payment of Gold for the harvest was delayed (because they hadn't the gold to pay). 

3) The notes written into shipping industry for transporting the harvest were called for good delivery early, before any payment had been made for the harvest.  This further drained gold from the US banking system.

4) Notes floated in Wall Street for trading in the global markets through London were called... such as those used to attempt to corner the copper market.

 

Notice that all four activities relied upon particular British privileges as A) the Reserve Currency, B) The main trade transport nation, or C) The global finance market.

ONLY London could have done it.

Meanwhile, US Secretary of the Treasury, Leslie Shaw - had spent the last two years relieving large NYC and Chicago banks of the requirement to redeem notes in Gold.   Prior to entering politics Shaw had been a banker working for Rothschild-owned banks.  Shaw was a great supporter of European-style credit expansionary central banking.  He resigned in 1907 and left to work as president of the Carnegie foundation. (SOME PAYOFF!)

In 1910 the famous meeting at Jekyll island occurred, with representatives from the Rockefellers, Morgans, Carnegies, Rothschilds, and the bank of england.  It was certainly a conspiracy.  Whether the benefit of the conspiracy went to the conspirators or to US Society at large I will bypass. You can decide for yourself.

COINCIDENTALLY, in 1910 Colonel House, thought by many to be a long term Rothschild agent due to his banking ties and primary schooling in an English school attended by Rothschilds, contacted the then former President of Princeton, Woodrow Wilson, became fast friends, primary advisor, and principle aid in the Presidential election of 1910.

Tue, 05/12/2015 - 20:31 | 6087463 Ethical_Money
Ethical_Money's picture

1) A fixed or slowly growing money supply relative to population growth allows the old to loot the young as additional workers increase faster than the money supply thus driving down wages.

2) A fixed or slowly growing money supply relative to potential real economic growth encourages risk-free money hoarding, ie. why risk one's money when it grows more valuable doing nothing?   But progress requires investment, not money hoarding, so a fixed or slowly growing money supply is likely to reduce real economic growth.

3) The problem with banks is that they are priviledged by government, not that they don't use gold for reserves. So let's abolish those privileges, including the ability of central banks to create fiat(!) and the banks' default monopoly on the risk-free storage of and transactions with fiat because we lack a Postal Savings Sevice (or equivalent) for those services.

In any case, inexpensive fiat is the ONLY ethical money for government debts else the taxation authority and power of government is misused to benefit special interests such as gold owners, at the expensive of everyone else.  

We can solve the problem with banks and potential overspending by government but the solution is ethics not shiny metals.

 

Do NOT follow this link or you will be banned from the site!