Until 1862, the United States had only twice issued dollars which were not redeemable into gold. Those times were during the Revolutionary War, and the War of 1812. Both times, the wars were paid for with paper money, not convertible into gold. Both of those times, the un-backed dollars became worthless. The old expression, “Not worth a continental” comes from the fact that the dollars issued during those two times were called “Continentals,” which were printed endlessly, and became absolutely worthless, as did the German Reichsmark after WW I. Wheelbarrows full to buy a loaf of bread, or colorful wallpaper perhaps.
This lesson in history was about to be repeated again, 150 years ago, when Lincoln started a war between the states, commonly called the “Civil War.” As an aside, that war was not popular in the North or the South. Lincoln started the draft, imprisoned objectors, and removed guaranteed Constitutional civil rights from northern citizens who protested when the order was given to re-supply Ft. Sumpter, beginning that horrible war costing lives of 610,000 husbands, brothers and sons, in both the North and South, plus many tens of thousands injured. 3.3 million men served in that war, both Confederate and Union soldiers, which was about one in ten citizens. For years after that war, thousands of impoverished, crippled veterans, whose legs, arms, and feet had been amputated in battlefield hospitals, swarmed cities in both North and South, begging for handouts. The national debt rose from $64 million to $2.8 billion just between June 30, 1860, and September 1, 1865. (The National Debt is now over $21 trillion). The North sold more than $2 billion in bonds, which like the greenbacks, became worthless. The South had printed and used Confederate dollars to pay for their side of that abominable war, and like greenbacks, confederate bills and bonds became worthless. Actually, genuine Confederate dollars today, command face value or even more by antique currency collectors. Maybe the South did rise again, at least a little bit.
At the beginning of that blot on American history, U.S. currency still functioned under Alexander Hamlilton’s ‘Coinage Act’ of 1792, which had established the U.S. dollar equal to 24.74 grains of pure gold ($19.39 per Troy ounce), or 371.25 grains of pure silver, making a gold-silver ratio of 15 to 1. Congress changed the ratio slightly in 1834 to make gold $20.67 per ounce, making the ration 16 to 1, which price remained until 1932, except during the War Between the States, known as the ‘Greenback era.’ Greenbacks actually stayed around until 1878, and there was a lot of speculating on them by financiers.
The U.S. mints produced gold coins until 1933. FDR’s Gold Reserve Act of January 30, 1934, required all privately held gold, to be turned into the fed, and exchanged for paper money. A year earlier, in 1933, by executive order # 6102, it became a felony for U.S. citizens to own or trade gold, believe it or not. What was even more criminal by FDR, when he commanded all gold to be turned in, the price was still $20.67 per ounce, but shortly after that, he raised the price to $35 per ounce, thereby screwing millions of citizens out of probably hundreds of millions of dollars. It wasn’t until 1975 that Americans could freely own gold. The last silver coinage produced by U.S. mints was in 1964, and the last copper pennies were made in 1982. Beginning in 1986, the U.S. mint began producing 1 oz Silver Eagles, which are more expensive than other 1 oz coins, and especially our 28 cents over spot, beautiful 1 oz coins, which can be seen on our web site. Why are Silver Eagles so expensive, and are they worth it? They are expensive, because they are made by the U.S. government, which can do nothing efficiently, first of all, and secondly, the mint employees are union members. Does that explain it? Gold Eagles, whose metal is 80 times as expensive as silver, are close in price to other gold coins, even though they are still made by union government employees. The huge difference in gold price over silver, covers the labor cost.
An old Bob Wills song, titled “Time Changes Everything,” is true in all sorts of subjects, and dollars are no exception. Just like all the wars we have fought, some great, and some stupid, such as Vietnam, Iraq, and Afghanistan, thanks to George Bush, they have all cost a lot, and literally all have been fought with un-backed money, created by printing presses or computer entries. Korea was fought the same way, and it still has not been officially over as of today. World War Two doubled consumer prices in just four years, and America spent $7 trillion in the mid east. Vietnam and Korea saw over 50,000 American deaths each, plus huge consumer price increases due to those conflicts being financed by increasing public debt, caused by un-backed dollars to pay for them. Will the printing cease now that Trump is President? Probably not, but hopefully it will slow down appreciably, thanks to federal hiring freeze, tax reductions, regulation removals, etc. Think about the fact that the Federal Reserve thinks a 2% inflation rate each year is desirable! This means that the Fed thinks a 2% dollar depreciation a year and a 2% consumer price increase is just fine. Huh? How about a zero inflation rate, as America had for 150 years, other than war years? Meantime, we still have gold and silver real money for 1% over actual wholesale, including delivery, with no advertising, huge office expenses, brochure printing and other stuff, hidden, and added to price. – Don Stott 1-888-786-8822