It was about eight years after the Civil War ended, which war cost the North a million dollars a day to fight. The North won, but there was no income, as everyone was broke, and couldn’t pay taxes. There was no gold in its treasury, and all they had were silver coins as real money, which could not pay the bills. In 1862, Lincoln had signed the ‘Legal Tender Act,’ which gave birth to the fist national currency, which almost immediately became known as the ’greenback.’ The South lost the war, and had its confederate money printed in blue ink, so as to differentiate it from the North’s green ink. Both had become worthless, as did the German reichsmark after WW I, and all three, as every other nation in history, printed its un-backed money to pay the bills, and the more printed, the less they became worth, until all become worthless. The U.S. dollar has lost probably more than 95% of its value and purchasing power in the last hundred years, and it will eventually lose the remaining small value, till it equals all the other waste paper ‘money’ In history.
In the four years of WW II, the war was fought with debt which could never be repaid, and in that short time, the dollar lost 50% of its value. A Plymouth cost $650 before that war and $1400 after, as an example.
President Lincoln, as have many other nations, including America during WW II, decided to sell ‘Treasury Bonds,’ which is a loan to the issuer of the bond, at interest, and a promise to pay the loan back, when the government or industry becomes solvent again. The first issue of Lincoln’s treasury bonds, in the amount of $6.2 million, went on the market, and almost instantly, a quarter of them were bought by Philadelphian Jay Cooke, who bought so many bonds, that Lincoln put him in control of all bond sales. The commissions from the bond sales, plus other investments, made Cooke a very wealthy man, who had banks in New York, Philadelphia, and of course Washington D.C. Cooke became, probably America’s wealthiest man, similar to today’s Elon Musk.
All this time, a new railroad was being built, which would connect the Missouri River to Tacoma Washington. The Northern Pacific, which according to then President Ulysses Grant, was ‘vital to America’s economic growth.’ Cooke’s banks, quietly invested heavily in the Northern Pacific.
At the same time, America was still having a terrible time with the remaining Indians, and from a report leaked to the press, the Indians outnumbered the U.S. troops in several battles, five to one, at a huge cost of dead and wounded soldiers. Thousands of renegade Indians, armed with repeating rifles, headed by Chief Crazy Horse and Sitting Bull, were making mince meat of U.S. Army troops. The Indian war was costing the treasury dearly, plus Yellow Fever was raging across the nation. The public didn’t think that was at all good for America’s future.
The press, at the same time also leaked that the Cooke banks were heavily invested in Northern Pacific, which had just declared that it was broke. On September 18th, Jay Cooke was notified of a run on his banks, and thousands were running to the Cooke banks to get their money out. Cooke couldn’t possibly meet the demand for instant cash.
Today, you say that a bank run couldn’t possibly happen, because we have all banks insured by the FDIC. Are there still printing presses in existence? Unless there is a shortage of trees, all financial collapses, due to inflation caused by many things, but as Stott’s Law says, “The more of anything there is, the less they will be worth,” and this includes un-backed paper currencies, and totally un-backed bit-coins, which will eventually be the granddaddy of all collapses. Is Ft. Knox now empty? How could there possibly be enough gold in the entire world, to back the trillions of dollars now in existence? Is a Ft. Knox exploration and the Epstein flight records being kept a secret? Guess why?
So many bonds were sold in 1873, that there were no buyers left, and they collapsed. Jay Cooke & Company collapsed, and its demise had catastrophic effects on the nation. Other banks began closing. The price of treasury bonds collapsed, and the stock market declared a ten day holiday. Thousands of Americans lost their jobs, as factories went out of business.
In 1875, the Congress passed the “Specie Resolution Act,” which required the government to partially repay the greenback holders, back the dollar with gold and a slow recovery began. What become to be called the ’long depression,’ took several years to recover. The price of gold didn’t change during the panic of 1873, because as in every other commodity, its price is set by the cost to produce it, be it flour, peanut butter, motor oil, or real estate. It costs close to the spot price of gold and silver to explore, mine, smelt, mill, manufacture, transport, etc. Did you know that gold ore has no evidence of it having gold? It has to be assayed to find out if it’s got gold in it. Ore that shows a bit of gold, is called “High Grade,’ and is very collectible. Gold and silver in 1875, and in 2025, after you pay us our 1% including shipment, are the one simple cost of permanent net worth insurance.
don@coloradogold.com 970-249-4646