13 August 2012

To Counterfeit is Death

The American Colonial economy depended largely on foreign coins, barter, and commodity money. In 1690, the Massachusetts Bay Colony issued the first Colonial currency denominated in British shillings, pounds, and pence. Other colonies soon began to issue their own paper currency. In 1764, the British declared Colonial currency illegal. An incessant warfare was waged against American money. Its coinage defied the Royal prerogative; it was the money of treason.

The History of Money by Jack Weatherford, 1997
The mint building, which was started well before the Capitol or White House, became the first public building constructed by the new government of the United States.

Gold and The Gold Standard by Edwin Walter Kemmerer, Princeton, 1944
About the beginning of the fourth century B.C., Dionysius, Tyrant of Syracuse, who had borrowed heavily from his citizens and was being hard pressed for repayment, directed that all the coins in the city should be brought to him, under penalty of death. He then restamped the coins and gave to each drachma the value of two drachmas. By this debasement he was enabled to pay off the original loan and, at the same time, repay the money that he had ordered brought to the mint.

Fiat Money Inflation in France by A.D. White, 1914
A.D White LL.D. [Yale, St. Andrews and John Hopkins], Ph.D. [Jena], D.C.L. [Oxford], Late President and Professor of History at Cornell University
The Convention decreed that any person selling gold or silver coin, or making any difference in any transaction between paper and specie, should be imprisoned in irons for six years. Later in September 1793, the penalty for such offences was made death, with confiscation of the criminal’s property. To reach the climax of ferocity, the Convention decreed in May 1794, that the death penalty should be inflicted on any person convicted of “having asked, before a bargain was concluded, in what money payment was to be made.”

From the early reluctant and careful issues of paper we saw, as an immediate result, improvement and activity in business. Then arose the clamor for more paper money. At first, new issues were made with great difficulty; but, the dyke once broken, the current of irredeemable currency poured through was soon swollen beyond control. It was urged on by speculators for a rise in values by demagogues who persuaded the mob that a notion, by its simple fiat, could stamp real value to any amount upon valueless objects. As a natural consequence a great debtor class grew rapidly, and this class gave its influence to depreciate more and more the currency in which its debts were to be paid.

As these knots of plotting schemers at the city centers were becoming bloated with sudden wealth, the producing classes of the country grew lean. In the schemes and speculations put forth by stockjobbers and stimulated by the printing of more currency, multitudes of small fortunes were absorbed and lost while a few swollen fortunes were rapidly aggregated in the larger cities. Nor was this reckless and corrupt spirit confined to business men; it began to break out in official circles, and public men who, a few years before, had been thought above all possibility of taint, became luxurious, reckless, cynical and finally corrupt. The artful plundering of the people at large was bad enough, but worse still was this growing corruption in official and legislative circles, enough to cause widespread distrust, cynicism and want in faith in any patriotism or any virtue.

History of Monetary Systems by Alexander Del Mar, 1895
The Emperors of Rome controlled the emissions of European money for thirteen centuries, and the kings and dukes for nearly four centuries afterwards; whilst the usurers have held it, to the present time, for about two centuries. It is not too much to say that during these two centuries greater monetary changes have been made and more losses have been occasioned to the industrial classes of the European world than were made by all the degradations and debasements of the Imperial and regal periods put together. Monetary systems have been changed from gold to silver, from silver to gold, and from both silver and gold to paper; ten thousands of worthless banks have been erected, thousands of millions of worthless notes have been issued, and the entire products of industry have been seized and perverted to the enrichment of a class, who know only how to scheme, to undermine and to appropriate the earnings of mankind.

No comments: