Verlag Johannes Müller - Articles, Authors

Daily Bell: You pointed out to us previously that the "Constitution left it to the market to determine the rate at which the gold eagle would be tariffed in terms of the standard silver dollar. The Coinage Act of 1792, championed by Alexander Hamilton, the Secretary of the Treasury, established an official bimetallic gold/silver ratio at 15 to 1. This was price-fixing and as such unconstitutional." Did Hamilton know what he was doing? Did he realize he was destabilizing the US currency?

Antal Fekete: Hamilton was not a friend of the ideal of limited government. He wanted to enlarge the power of the federal government at the expense of state governments. He may not have realized that he was destabilizing the dollar, but he certainly believed in the omnipotence of the federal government to make his bimetallic ratio stick. Well, it did not and, as they say, the rest is history.

Daily Bell: You told us, "Historically money is not the creature of the state. It is the creature of the market in promoting gold as the most marketable substance on Earth over the millennia." It is probably safe to say that you don't believe along with assorted Gesellians and Brownians asserting that money is the province of the state and it cannot exist absent government control. True?

Antal Fekete: Yes and no. Comparable in importance to the invention of the wheel was the invention of the gold coin in the fifth century B.C. It made gold payments possible by tale. The expression ‘paying by tale’ means counting out gold coins rather than weighing them − a clumsy procedure by comparison. Paying by tale is made possible by the government’s guarantee to strike gold coins to exact standards, and its willingness to absorb losses due to wear and tear – much the same way as it absorbs the cost of keeping the highways in good working order. The original meaning of ‘legal tender’, before advocates of monetary duress distorted it beyond recognition, was that the weight of the gold coin must fall within the range of established tolerance standards. Legal tender gold coins were those the weight of which complied with the standard. Legal tender gold coins were accepted at face value when paid out by tale, even if they were slightly under-weight. Coins that fell outside of the tolerance standards were not legal tender. They were accepted, but only by weight, not by tale. It can be seen that the involvement of the government in minting and circulating gold coins was an essential one, and we haven’t even mentioned how the government was supposed to deal with counterfeiters. But at this point government involvement must stop. In particular, the decision as to how many new gold coins ought to be put into circulation was not up to the government to make. It was up to the people. If they thought that there were not enough gold coins, then they could do something about it. They would take new gold from the mines, or old gold from jewelry to the Mint and get the same gold back in coined form, ounce-for-ounce. The right to regulate the money supply was the prerogative of the people, not of the government or of the banks.