This iconic phrase has been applied and misapplied many times, and originates from a Mark Twain novel. Its origin is complicated, but is worthy as an attention-grabber.
Yes, there is gold in Alaska, lots of it. I gave a forlorn chuckle when years back some environmentalist, eager to halt resource development, said, “Just about all the gold on earth has already been mined.”
Like most of what the eco-freaks tell us, that is complete RUBBISH.
We could use another gold rush. Hey, there used to be so many of them. What happened?
Fiat currency, Abe Lincoln, Salmon Chase, the Federal Reserve, Woodrow Wilson, FDR, LBJ and Richard Nixon are what happened. They slowly moved us off the constitutionally-mandated gold-and-silver standard. Not quite all at once, but gradually, like that boiling frog we hear so much about. In the effort at returning us to fiscal responsibility that Trump is performing, he – and the rest of us – will find that it will be long and difficult, and must perhaps be done gradually, like was the unraveling.
Specie may be defined as precious minerals, such as gold, silver, platinum, nickel, and copper. Trump is not actually trying to return us to specie-based money, but only trying to make paper currency less promiscuous. It is like bubble-gum trading cards. If they are rare, they have some value, but very little if they are not. The dollar’s value will keep dropping as long as The Fed printing presses keep rolling.
Aside from the countless ways our misnamed Civil War sliced up the Constitution, the appearance of so-called Greenbacks got resistance in the anti-Lincoln press. The cartoon below says much. The voice balloons are small, but worth reading. Secretary of Treasury Salmon P. Chase (his first name pronounced as a derivative of “Solomon”), seen turning out paper money on an endless mill wheel, could finance the war only by producing paper money, as a temporary IOU to be redeemed later. The fact that the notes would far exceed the nation’s reserves seemed immaterial in the desperate effort to keep the union glued.
In 1896 we had a very hot and intellectually high-brow debate about currency. Gold was valued at $16 an ounce. The standard American dollar had been set at one ounce of silver back in the 1790s, so the value of silver was 1/16 that of gold. Wages and prices were very low in the 1890s. This caused a depression, because our gold reserves were so low, what with a growing population due to immigration and birth rates.
What made money so scarce was the policy of refusing to coin more silver than at a 16-to-1 ratio. That meant that for every 10 million dollars worth of gold in the treasury, the government would coin no more than 160 million dollars of silver. President Grover Cleveland, a truly constitutional president, refused to allow more silver to be minted.
The Democratic Party, at that time the historically “less government” party, was smoldering with discontented farmers and laborers. William Jennings Bryan took the Democratic convention by storm with his “Cross of Gold” speech, which ended with the electrifying, “You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold!”
Bryan’s booming voice has been likened to a resonant pipe organ hitting the lowest notes and vibrating the rafters. The convention went berserk, rushing the podium, carrying the 36-year-old Bryan about the floor on their shoulders for an hour, brushing aside all the other potential presidential nominees. It is Bryan who began the process of the Democratic Party switching from being the “strict constructionist” party, to the liberal/socialist model of today.
The Republicans countered with William McKinley, and the fact that he advocated the continued gold standard likely has something to do with the mountain’s persistent name and Alaska’s early gold-discovery culture. Bryan was accused of threatening the nation with – INFLATION!
But would it? Bryan was not advocating endless printing of paper money. Yes, Bryan was a so-called “progressive,” and that term’s meaning has not changed much. It means “ultra-liberal” and just about everything they advocate is socialist, and therefore dangerous.
ALASKA WATCHMAN DIRECT TO YOUR INBOX
Because the U.S. treasury was awash in silver, Bryan was simply calling for a “free and unlimited coinage of silver at the current value of 16 to 1.” According to this theory, the value of silver would remain the same, but there would simply be more of it in circulation, wages would rise and the depression of the 1890s would end. But gold standard advocates said that the value of silver would drop, along with the value and purchasing power of a dollar, and prices would rise.
Imagine that! People were not worried about too much paper money being reckless, but too much specie!
Gold, like its poor cousin silver, is true wealth. The reason that gold rushes existed is similar to what happened in the cattle drives after the misnamed Civil War. Food is also wealth, and if there is a market for it, its value will increase. Americans were largely chicken and pork eaters until the great cattle drives, assisted by railroads and the novel existence of enormous cities with voracious appetites, came into being. An abundance of food does not decrease its vital importance, only its affordability.
We never got to find out. McKinley defeated Bryan, and in the years to come gold was discovered in the Klondike, Nome, Fairbanks, South Africa and Australia. Gold supplies worldwide became plentiful. McKinley brushed by the 1900 election re-match against Bryan with the slogan, “The Full Dinner Pail.”
But the Federal Reserve came into being in 1913, World War I in 1914 and the New Deal in 1933. Please note that Wilson and FDR, who brought us these dubious innovations, were … “progressives.”
In part 2, we will discuss that deflation, which is what we suffered from in the 1890s, has certain advantages, and as the gold rushes have proved, a continuously increasing gold supply would never create inflation.
The views expressed here are those of the author.
