Miscellaneous History of Money
It is common to hear people refer to Federal Reserve Notes, Greenbacks, and paper money as, “That darned worthless stuff.” That is all well and good; however, even if gold or silver were to be the monetary system there are many points that never get discussed. Important things. Here is a non-comprehensive miscellaneous history of money to highlight some of those important topics.
There are stone tables from 1100 B.C. where one King was complaining to another about the diluted content of a gold payment he received.
Money can be about anything, the Romans used salt as money.
Some sources say the Chinese first used paper/bark money.
The Mongols used an ingenious system called “Warehouse Receipts” since their empire covered a vast territory. Items were placed in a warehouse in one location, the Mongol was issue a receipt, and he could travel thousands of miles and use the Warehouse Receipt as money. And one of their conquered territories ministers in Persia evolved the concept of paper money.
The Spanish diluted their silver coin to create more money to finance the Reconquista of Iberia and drive the Muslims out. The Pope issued an edict which said to the effect, “Quit doing that.” The Spanish Kings did not listen and they created their own financing to do what they wanted to do; tough lesson on morality.
Corrugated ridges were minted onto coins to prevent people from shaving them.
“The Fable of the Bees” (1706) observed since a portion of every monetary system is spent on vice and immorality, that an increase in a monetary system also increases the money available for vice and immorality. An important thing to understand for those wanting a huge monetary system.
Benjamin Franklin made a living off of printing paper money for Philadelphia in the 1730’s. He observed paper money was useful up to a certain point.
Samuel Adam’s father and he owned a Land Bank in the late 1740’s. The British closed it down and the Adam’s almost lost their own farm after they finished paying everyone off. It is understandable Sam Adams was piqued with the British.
The British were pro-Gold and pro-Silver in the 1750-60’s. They passed many laws to suppress colonial paper money. There was not much gold and silver in the American colonies during this time.
“Our plan is commerce, and that, well attended to, will secure us the peace and friendship of all Europe; because it is the interest of all Europe to have America a free port. Her trade will always be a protection, and her barrenness of gold and silver secure her from invaders.” – Thomas Paine – “Common Sense”
There was serious debate during the Federal Convention of 1787 whether to allow paper money. The framers decided against that and mandated that States only make silver and gold legal as a payment of debts. Unfortunately they also allowed Congress to accrue debts; and our entire monetary system is obscenely now based off of debt.
The Mint Act of 1792 defined what quantities of gold, silver and copper would make up American coin. They also mandated the Death Penalty for forgery in that act.
There was so little gold and silver in America that in 1806 and 1834 the USA monetized foreign countries coins.
In the Congressional Journals, ever year Congress had to write off money due to gold and silver lost during the poor minting process during that era.
EIGHTEENTH CONGRESS. Sess.I. CH. 32. 1824.
For incidental and contingent expenses, and repairs, cost of machinery, and for allowance of wastage in the gold and silver coinage of the mint, seven thousand seven hundred and seventy-five dollars.
EIGHTEENTH CONGRESS. Sess.II. CH. 13. 1825.
For incidental and contingent expenses, and repairs, cost of machinery, and for allowance of wastage in the gold and silver coinage of the mint, seven thousand seven hundred and seventy-five dollars .
NINETEENTH CONGRESS. Sess. I. CH. 13. 1826.
For incidental and contingent expenses, and repairs, cost of machinery, and for allowance of wastage in gold and silver coinage of the mint, seven thousand seven hundred dollars.
In Texas in the 1930’s it was the art of criminal to cut a silver dollar into five quarters. Talk about fractionalizing something.
Vast amounts of gold and silver began to be discovered in the western USA starting in the 1840’s.
That was still not enough to finance the War Between the States and paper money (greenbacks) were issued by the North and South. These were honorably discharged and withdrawn from public use by 1872.
During the late 1800’s the practice of Fractional Reserve Banking began to become commonplace. Compared with Mongol “Warehouse Receipts”, cutting five quarters from a dollar, and coin shaving…issuing more of thing that is in reserve…or in the warehouse…sounds criminal.
In 1911, Alfred Crozier in “U.S. Money vs. Corporate Currency” noted that many banks were routinely breaking the law.
Not being prosecuted emboldened the Bankers to go “all in” and create the Federal Reserve. They had already tried once with the Aldrich Plan and the “National Reserve Association.” This led to the infamous Jekyll Island meeting; gangsters all.
That cannot be overstated…if we have prosecutors who will not prosecute equally against all law breakers…the common person can’t but help to feel rebellion in their hearts.
The Federal Reserve Act had a 20 year Sunset Clause; that was revoked in 1928, since then the Federal Reserve has existed unchecked.
It is widely recognized the Federal Reserve was the cause of the Great Depression which had effects all over the world. America was still in distress when WWII started 13 years later.
The Gold Confiscation Act of 1933…I mean the Gold Reserve Act of 1933…is so abominable its infamy stands on its own.
The Bretton Woods Act forebade individuals to exchange their paper money for gold or silver; reserving that right for Countries only.
In the 1950’s the USA paid a 30% subscription in gold to the IMF; wonder how much of that Gold was confiscated from honest US citizens in 1933? That is also an aspect of the Cold War that goes unmentioned…our USA military was protecting its investment in the IMF and World Bank.
Nixon broke the Breton Woods agreement in 1972. Interestingly, the reason he did so was due to France attempting to siphon off American gold, was outlined as an example in the Breton Woods Agreement but the two countries were Britain and France.
In 1974 there was an attempt to apply fiscal responsibility to the USA with the “Budget Control Act of 1974.” This prudent clause was what was abandoned:
That subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof ‘$______’.’’, with the blank being filled with a dollar limitation equal to the appropriate level of the public debt set forth pursuant to section 301(a)(5) of the Congressional Budget Act of 1974
There have been many attempts to apply financial regulation and there have been many financial scandals since then. And there has been the rise of the Petro-Dollar.
In 2014 the “Acceptable Amount of Public Debt” clause from the “Budget Control Act of 1974” was abandoned.
In 2020, the policy of Universal Basic Income purports to give everybody some money so they can spend it and make the stores happy. Wonder why no one ever thought of that before? I’m sure the guy in Texas in 1830’s cutting five quarters out of a dollar was just trying to make store owners happy by the increase of business. Yeeeah, right.
There are many nuances to each of the items listed above. Money is a rich topic.
The above list is to provide a foundation for more articles on money to come.
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I’d bet that most of us WWII boomers can recall the first time we saw a $100.00 bill….C Notes were rarely called for back then and were rare…It’s not a happy development when larger and larger bills gain currency..
Thanks Neil, if no one ever gives observations like this no one will ever know anything.