Whoever controls the volume of money in any country is absolute master of industry and commerce. James A. Garfield, 20th President, 1881
Here’s a whole course in economics, or maybe even a degree, in one sentence.
On April 5, 1880 a proposal was made on the floor of the U.S. House of Representatives stating that, “…all currency whether metallic or paper…necessary for the use and convenience of the people should be issued, and its volume controlled by the government, and not by or through the bank corporations of the country; and when so issued should be full legal-tender in payment of all debts, public and private.” Garfield rose to speak and began, “…it is one of those mixed propositions that has some good things in it…but the good things are used to sugar coat over what, in my judgement, is most pernicious. (deceptive) …It would convert the Treasury of the United states into a manufacturer of paper money…this scheme surpasses all the centralism and all the Caesarism that were ever charged upon the Republican Party in the wildest days of the (Civil) war or in the events growing out of the war.” We pause here to attempt to clarify “centralism” and “Caesarism” and the “wildest days of the recent (civil) war” of fifteen years hence. On the surface, Centralism in banking was intended to stabilize the U.S. economy by establishing a uniform currency and strengthening the federal government by facilitating long distance trade and prevent inflation by regulating the practices of state banks. Opponents countered by citing lack of oversight and regulation of a central bank and the potential for corruption and favoritism to a small number of speculators by appropriating public money for risky private investments, which, among other things, would violate the principle of equal opportunity. In referring to “Caesarism”, Garfield refers to a practice of the Caesars (rulers) of the Roman empire, who arbitrarily commanded the value of money (coins) to be diluted to create the appearance of having more wealth. A coin originally was worth its weight in gold or silver. Over time, less of the precious metal was available so the same coin was minted with only 50% gold/silver and gradually fell to only 5% gold/silver content. This practice led to inflation, rising prices due to the lesser value of money, civil unrest when the populace could not pay for basic goods, and eventually contributed to the downfall of the empire.
In the “wildest days” of the Civil War, the Union attempted to finance the war effort partly through the sale of bonds and tariffs and income tax. Money raised through these methods fell short of the needed funds. Secretary of the Treasury, Salmon Chase and President Lincoln persuaded congress to approve the printing of $450 million in unbacked, except by the government’s promise, paper money, called, “Greenbacks.” The accepted value of a greenback fluctuated wildly during the war compared to the value of gold. They were not always accepted as valid payment. Now, in 1880, the bill is presented which proposes that the government be able to pay back its war debts using printed money with no value behind it. It would allow “the government” to control the volume of money being circulated and used by society, without having the corresponding amount of gold or silver behind it. In the short term, Garfield saw it as a dishonest way to make repayments. In the long term, he saw too much potential for political manipulation and corruption. He continues, “…the money to be manufactured at the treasury is to be called part of these (national) resources. Print it to death-that is the way to dispose of the public debt, says this resolution.” “‘This monster’, as he calls it, is put out at this moment (six months before the next Presidential election) to test the courage of the two political parties…All I have to say for one is, meet and throttle it; in the name of honesty, in the name of public peace and prosperity, in the name of the rights of individual citizens of this country against centralism, worse than we ever dreamed of, meet it and fight it like men. Let both parties show their courage by meeting boldly and putting an end to its power for mischief.” The bill was defeated and Garfield was elected President in the following election, only to be shot on July 2, 1881 and died on September 19,1881, only six months into his term. The Federal Reserve Bank having the power to “manufacture money” was eventually commissioned on December 23, 1913 under President Woodrow Wilson.
Financial Catechism and History of the Financial Legislation of the United States, p. 223... By S. M. Brice,
Whoever controls the volume of money in any country is absolute master of industry and commerce.
ReplyDeleteJames A. Garfield, 20th President, 1881
Here’s a whole course in economics, or maybe even a degree, in one sentence.
On April 5, 1880 a proposal was made on the floor of the U.S. House of Representatives stating that, “…all currency whether metallic or paper…necessary for the use and convenience of the people should be issued, and its volume controlled by the government, and not by or through the bank corporations of the country; and when so issued should be full legal-tender in payment of all debts, public and private.”
Garfield rose to speak and began, “…it is one of those mixed propositions that has some good things in it…but the good things are used to sugar coat over what, in my judgement, is most pernicious. (deceptive) …It would convert the Treasury of the United states into a manufacturer of paper money…this scheme surpasses all the centralism and all the Caesarism that were ever charged upon the Republican Party in the wildest days of the (Civil) war or in the events growing out of the war.”
We pause here to attempt to clarify “centralism” and “Caesarism” and the “wildest days of the recent (civil) war” of fifteen years hence.
On the surface, Centralism in banking was intended to stabilize the U.S. economy by establishing a uniform currency and strengthening the federal government by facilitating long distance trade and prevent inflation by regulating the practices of state banks.
Opponents countered by citing lack of oversight and regulation of a central bank and the potential for corruption and favoritism to a small number of speculators by appropriating public money for risky private investments, which, among other things, would violate the principle of equal opportunity.
In referring to “Caesarism”, Garfield refers to a practice of the Caesars (rulers) of the Roman empire, who arbitrarily commanded the value of money (coins) to be diluted to create the appearance of having more wealth. A coin originally was worth its weight in gold or silver. Over time, less of the precious metal was available so the same coin was minted with only 50% gold/silver and gradually fell to only 5% gold/silver content. This practice led to inflation, rising prices due to the lesser value of money, civil unrest when the populace could not pay for basic goods, and eventually contributed to the downfall of the empire.
In the “wildest days” of the Civil War, the Union attempted to finance the war effort partly through the sale of bonds and tariffs and income tax. Money raised through these methods fell short of the needed funds. Secretary of the Treasury, Salmon Chase and President Lincoln persuaded congress to approve the printing of $450 million in unbacked, except by the government’s promise, paper money, called, “Greenbacks.” The accepted value of a greenback fluctuated wildly during the war compared to the value of gold. They were not always accepted as valid payment.
ReplyDeleteNow, in 1880, the bill is presented which proposes that the government be able to pay back its war debts using printed money with no value behind it. It would allow “the government” to control the volume of money being circulated and used by society, without having the corresponding amount of gold or silver behind it. In the short term, Garfield saw it as a dishonest way to make repayments. In the long term, he saw too much potential for political manipulation and corruption.
He continues, “…the money to be manufactured at the treasury is to be called part of these (national) resources. Print it to death-that is the way to dispose of the public debt, says this resolution.”
“‘This monster’, as he calls it, is put out at this moment (six months before the next Presidential election) to test the courage of the two political parties…All I have to say for one is, meet and throttle it; in the name of honesty, in the name of public peace and prosperity, in the name of the rights of individual citizens of this country against centralism, worse than we ever dreamed of, meet it and fight it like men. Let both parties show their courage by meeting boldly and putting an end to its power for mischief.”
The bill was defeated and Garfield was elected President in the following election, only to be shot on July 2, 1881 and died on September 19,1881, only six months into his term.
The Federal Reserve Bank having the power to “manufacture money” was eventually commissioned on December 23, 1913 under President Woodrow Wilson.
Financial Catechism and History of the Financial Legislation of the United States, p. 223...
By S. M. Brice,