Quotes On Gold
After careful thought is given to some of the following notable quotes on gold, be sure to also read the relevant articles on our Notable Articles page and the information on our What Is Money page.
On the question of whether gold is money, Alexander DelMar relates the following in his book The Science of Money:
. . .The Mixt Moneys case [of 1604] decided that Money was a Public Measure, a measure of value, and that, like other measures, it was necessary in the public welfare that its dimensions of volume should be limited, defined and regulated by the State. The whole body of learning left us by the ancient and renascent world was invoked in this celebrated dictum: Aristotle, Paulus, Bodin and Budelius were summoned to its support; the Roman law, the common law and the statutes all upheld it; "the State alone had the right to issue money and to decide of what substances its symbols should be made, whether of gold, silver, brass, or paper. Whatever the State declared to be money, was money” . . .
1935 statement by Frank Vanderlip, former President of the National City Bank of New York, and one of the seven original authors of Federal Reserve Act:
What is it we want of our currency? . . . We want a dollar that will, in the language of the President, “not change its purchasing and debt paying power during the succeeding generation” . . . What are the points to be taken into consideration? First and foremost, that Congress should assume the responsibility laid on it by the Constitution of regulating the value of money. We now know that a given weight of gold is not an unchanging standard of value. That fact is dawning slowly on the most conservative and obstinate minds.
In his 1913 book Banking, Currency and the Money Trust, then Congressman Charles A. Lindbergh (Sr.) puts the
issue of tying gold to money this way:
Creating money out of commodities like gold and silver and legislating value into them by making them legal tender is the worst possible policy and the greatest limitation placed upon advancing civilization. It would be the same principle, though not in degree, as would be the printing and giving of legal tender paper money by the government to persons who give no consideration in return. Neither gold nor any other metal or commodity should be stamped with a value and made legal tender. Commodities may properly be stamped with their quality and weight so that stamp may be accepted as proof thereof. After that they may be used as exchange in commerce on their own commercial merits. Neither person nor property is entitled to any specially conferred governmental privileges. To coin metal and make it legal tender gives a special value to metal which enables those possessing it to take undue advantage of the rest of us. . . If gold is worth all they claim for it, it needs no extra function. If, on the other hand, it is not able to retain its present relative value without being legal tender, then that is positive proof that it should not be made legal tender. In the one case it is unnecessary, in the other case it is unjust.
Today, the IMF owns more gold than any central bank, and together the central banks and the IMF control 2/3's of the world's gold. Bill Still, "The Money Masters".
By monopolizing this [gold] commodity the moneyed classes have got Nature by the throat and the community under their heels. . . Compared with this process, usury is mere child's play. Alexander Del Mar, The Science of Money
From The Two Faces of Money:
In addition to relatively limited supplies of gold when compared to goods and services within an economy, we have the fluctuating purchasing power of gold. Thoren and Warner provide some historical insight using U.S. government and other official statistics to measure the purchasing power of gold as measured against U.S. wholesale prices. For example, they show that the actual purchasing power of gold went from $100 in 1896 – when its market price per troy ounce was $20.67 - to $30.10 in 1920, just 24 years later – when its market price remained at $20.67 per troy ounce. In 1933 the purchasing power of gold jumped from $70.40 to $100.40 in just one year. By 1970 it had reached a low of $36.70, then jumped - in ten short years - to $386.30 in 1980, at which time gold's market price reached an all time high of $850. One short year later in 1981, gold's purchasing power dropped again to $197.60 and its market price went to $501. Hardly a stable unit for measuring the value of goods and services OR for storing savings, unless you are enlightened enough to know when to buy on the lows.
Selected quotes from Money: Whence It Came, Where It Went by John Kenneth Galbraith:
[After a discussion of the manner in which the Coinage Act of 1873 demonetized silver and made gold the de facto money standard, Galbraith says. . .] In 1900 cosmetic regulation affecting coinage and notes further affirmed the commitment to gold. In consequence, some purists date the adoption of the gold standard to this year. In fact, its victory was already won. p102
Inflation could occur on a gold standard. p131
As noted, between the end of 1914 and the end of 1917, the gold stock in the United States almost doubled. . . The United States faced an inflation caused by gold. p142
The First World War marked the beginning of the end of the international gold standard - of the single world currency that, at whatever pain, gold had been. Not again was there a reasonably workable distribution of gold stocks between the industrial countries - mostly, and for many years, there was a plethora in the United States and paucity everywhere else. Efforts at revival were made in the decade of the twenties in Britain, France and the other industrial countries. Except in the United States and briefly in France no major country again looked at its gold and felt secure. None more than briefly allowed citizens to exchange their paper or bank deposits into gold. p147
The tendency, indeed a principal purpose, of the gold standard was to unite the economic performance and policies of nations. p148
Galbraith also explains that Gresham's Law applied to more than just gold or silver -with some surprising results (and lessons?). Thus,
In both Britain and Germany as [World War II] proceeded, the ration coupons became the decisive currency. Everyone or almost everyone could obtain the requisite pounds or marks; it was the availability of a ration ticket that determined whether or not a purchase, almost any purchase, could be made. [NOTABLY and] . . .In contrast with the more traditional means of exchange, the ration ticket is, with privileged exceptions, available to all in equal amounts. p254
(For more on Gresham's law see Chapter IX of the 1894 book by Arthru Kitson The Money Problem).
This excerpt from the conclusion of The Money Problem by Arthur Kitson provides further insight:
Evidence of the use of ideal money is furnished from experience, in this and other countries, by the inconvertible note currency. 'Governments,'says Francis Walker, 'have frequently issued paper money without adequate provision for its redemption in gold and in silver, without such redemption, in fact, taking place, and sometimes without redemption being promised, and yet that paper money has circulated as rapidly as gold or silver would have done, has been taken as freely in exchange for commodities and services, and even in some instances has maintained an actual value equal to that of the amount of the precious metals to which it was nominally equivalent.'
The paper money of Massachusetts, for the greater part of the period 1690 to 1710; the paper money of Russia for the twenty years following 1768; the so-called continental currency of the American Revolution, for a year and more after the first emission; the paper money of Prussia for no inconsiderable period of time, all circulated freely, even without discount in specie.'
And again he says: 'The so-called greenbacks of the American Civil War, never, from 1862 to the close of 1878, lost their currency in the smallest degree. At their price they were always taken readily, eagerly. Men never sought to avoid their use by taking gold at a premium, or by resorting to barter or credit.' This last statement is remarkable, owing to the fact that the United States Government dishonoured this currency by the famous or rather infamous exception clause, refusing to accept it in payment for duties and customs.
Also this excerpt from another book by Arthur Kitson, published in 1917 called Trade Fallacies, beginning on page 22:
The supreme economic factor is production, not finance. Finance is merely the artificial aid to production and exchange.
The Financial Factor presents itself from two distinct and entirely opposite and conflicting standpoints. The one is the bankers and moneylenders, and the other is the producers. To the banker, money presents itself as a valuable commodity from which he must needs draw dividends in the shape of interest. Hence cheapness in money is as hateful to the moneylender as cheap clothing is to the sweater.
For this reason the banking interests have waged unceasing warfare against State Banking and what they term 'cheap money expedients'. Moreover, the histories of cheap currency experiments have mostly been written by bankers, their employees, or hired professors, who have invariably presented the subject from this interested class's point of view. It is for this reason that so much importance has been attached to gold for currency purposes. Its scarcity, its dearness, gives weight to the demand for high interest charges.
On the other hand, the producer regards money more from the standpoint of its utility - his interests require the cheapest form obtainable - consistent with its ability to perform its work.
Finally, Galbraith offers a telling quote attributed to Churchill by Arthur M. Schlesinger, Jr. in his book The Coming of the New Deal:
Now out of office . . .Churchill said it was wrong to tie policies to the 'rarity or abundance of any commodity [such as gold]' and 'quite beyond human comprehension' that this should be done out of love for France. p210
For an important discussion of "Standard of Value" in terms of gold, silver and other commodities see Chapter VI of the 1894 book The Money Problem by Arthur Kitson.
For important insight into the remainder of Galbraith's (and other economists') discussion of gold and international finance, read the very short volume titled Promise to Pay: An Inquiry into the Modern Magic of High Finance by R. McNair Wilson, first published in 1934, revised, 2nd edition in 1964 - and still relevant in understanding money and the role of gold in "high finance" today.