advertisement 1
advertisement
SEARCH:
Monday, June 18th, 2018                                                 SUBSCRIBE TO OUR RSS FEEDrss feed

Concerning Inflation

Published by on July 23, 2015

Concerning Inflation thumbnail

by Garet Garrett

NO ONE WOULD be so absurd as to propose that you might restore a nation’s prosperity by changing its weights and measures. Suppose the Government should say, on behalf of the wheat farmer, to increase his income, “Hereafter the half bushel shall be the legal full bushel”; and on behalf of the cotton grower who sells his product by the pound, “Hereafter eight ounces shall be the legal pound”; and on behalf of industry, “Hereafter eighteen inches shall be the legal yard and every other weight and measure is halved”; and on behalf of labor to increase wages, “Hereafter thirty minutes shall constitute the hour.” What would happen? Prices per bushel, per pound, per yard, wages per hour, and so on, would immediately fall until relations were again as they were before, nobody by that result could be made either rich or poor, and the economic state of the nation would be the same as it was….

Except, first, that all who were so lucky as to have made contracts beforehand to deliver wheat at a certain price per bushel, or cotton at a certain price per pound, or cloth at a certain price per yard, by being able to tender half a bushel for a full bushel, half a pound for a full pound, or half a yard for a full yard, would profit at the expense of those who were obliged by the decree to receive everything in half measure for full price, and thus wealth would be transferred in an arbitrary political manner from buyer to seller; but this could happen only once.

Come now to the universal measure, the one wherein the dissimilarities of all physical weights and measures – bushels, yards, pounds, gallons and feet – are reduced to a single expression for purposes of exchange – come, that is, to money – and somewhat less than half our total common sense is at any moment ready to depart from us, and it happens that once in a generation that even more of it is dangerously is dangerously on the verge.

If a senator should propose a law to increase everybody’s income and so restore prosperity by halving all weights and measures, it would be understood that he was not serious. But they may hold themselves out to be champions of the oppressed, fighting for a new deliverance, who propose to change the money measure by decree, saying, “Hereafter fifty cents shall be equal to one hundred, half a dollar shall be a legal dollar,’ in order that everybody may have twice as many dollars and so be able to buy, consume and enjoy twice as much.

Wherein there is any difference between halving every physical kind of weight and measure and halving the value of money measure it is only that the delusion comes upside down. In the first case, which we know to be preposterous, prices fall until all relations are again as they were. In the second case, the money measure being halved, prices rise. Every seller receives more money and, correspondingly, every buyer pays more money, until presently all relations are restored and by this magic the economic state of a nation is not changed at all, except again…..

First, that all who are so lucky as to owe money are immediately benefitted at the expense of those to whom money is due, the creditor being obliged by law to receive as payment in full the exact number of dollars that he loaned, notwithstanding the fact that the value of the dollar has been halved by decree. Thus there is an arbitrary transfer of wealth from creditor to debtor by political fiat, which can happen once, and…..

Second, that with the value of money, the money standard itself, subject to change by political decree, there is chaos in the world of credit and capital, no obligation or contract has a definite meaning, all borrowing and lending must be loaded with a charge for hazard, and this charge may be ruinous to civilized business.

With that strange kind of panic running in Germany and merchants barring their doors against people clamoring to exchange marks for goods of any kind on any terms, a professor became suddenly aware of what the uproar was about, rushed hatless to his bank and drew out his whole fortune. He then stood in the street with a quarter of a million paper marks in his hand, trying to think what he should do with them. He must spend them, and quickly. He understood that. Minute by minute their value was less. But what should he buy? His bewildered glance fell on a saddler’s window. The sight of a saddle hanging there started in his mind the reminiscence of a boyhood wish, which had been to ride; and with that he ran to the saddler’s shop. Then again, as if it were a dream, he stood in the street with a saddle in his arms, and that incongruous object represented his own and his wife’s inheritance and all their years of thrift and self-denial together for the security of a high-born academic family.

Do you remember the gold certificate? That was the yellow-paper money in multiples of the ten-dollar denomination that used to turn up among the green bills in your pocketbook. It was a very special kind of paper money, redeemable by the United States Treasury in gold. On the face of it, you read: “This certifies that there have been deposited in the Treasury of the Treasury of the United States of America ten dollars in gold coin payable to the bearer on demand.” It might be for twenty, one hundred, one thousand. This, you see, was simply a receipt for actual gold dollars, like a receipt for so many bushels of wheat; and as the law stipulated that a gold dollar should be of a certain weight and fineness, the holder of one of these certificates was the actual owner of a specific amount of gold. The certificate was his absolute title to it.

It was the finest, safest, most beautiful paper money in the world. Wherever you went in the whole world, it was accepted as actual gold, and was much preferred over the actual gold because it was so much easier to carry. Here the faith was, first, that the gold itself was in the United States Treasury, dollar for dollar, according to the receipt; second, that the American gold dollar would never in any way be debased; and, third, that the United States Treasury always and without question honor the receipt. No one could imaging a time when the United States Treasury would refuse to honor its own receipt for actual gold intrusted to its keeping.

Well, but since March 6, 1933, it has been unlawful for an American citizen these certificates in his possession. By decree of the President, it is unlawful. And now, if you should go to the United States Treasury, saying, “Here is your receipt for gold; it is mine and I want it,” you would not get the gold that belongs to you by right of title; more than that, if your certificate should amount to more than one hundred dollars you would be subject to prosecution, fine and imprisonment merely for having that gold title in your hand.

The United States Treasury does not refuse to honor its receipt for gold because the gold is not there. The gold is there in the vault, just as the certificate says it is. It refuses to give you the gold because a law has been passed saying the President by decree may reduce the gold content of the dollar one-half. That is, by decree he may say, “Hereafter fifty cents shall be a dollar.” That is the devaluation we are talking about. The gold content of the dollar is reduced one-half, by law or by decree, then, perhaps, you may take your gold certificate to the Treasury and demand the gold dollars without fear of arrest or imprisonment, but if you get your dollars, to the exact number specified on the certificate, you will get only half as much gold. Your Government will keep the other half.

All the same, this was an unimaginable thing to happen, and it is a terrific blow to everybody’s faith in the integrity of money.

To move the inflation law authorizing the President to print three billions of fiat paper money and to halve the gold content of the dollar, several ideas were acting together. Almost the only idea was the one of necessity. There was no necessity for this country either to abandon the gold standard or to debase the currency. It is perhaps the only instance in modern times of a country doing it deliberately. England was obliged to do it. Here there was plenty of gold.

When the dollar had greatly fallen, one of the unexpected problems that awkwardly appeared was what to do with the new gold produced in this country. The America gold-mining industry is very important. Since it was illegal to possess gold, illegal to buy or sell it at a statutory price of $20.67 an ounce. But if he did this he lost money because he received $20.67 in paper dollars worth one-third less than gold. If he could sell his gold in Canada for Canadian dollars, or in London for pounds sterling, or in Paris for francs, then, by converting Canadian dollars, British pounds, or French francs back into American dollars on the international money market, he could realize at least ten dollars more per ounce than the United States mint would give him for it. But to export gold was forbidden. Therefore, it had to be smuggled out; there began to be sold in this country a bootleg market for gold.

Nevertheless, the problem somehow had to be solved; and it was solved in the most absurd way. The President, by decree, authorized the United States Treasury to receive the total output of American gold on commission, sell it on the open gold markets of other countries, and give the American gold miner the proceeds….. And thus it was that the United States Treasury, in the capacity of an agent, began to receive the total output of the American gold-mining industry and to sell it away in foreign countries for the account of the American citizens who had produced it, but who were not permitted to keep it or sell it at home….

Aside from any ethical considerations, the procedure, on its merits, was mad. But so are all procedures of inflation. If you ask why the Government itself does not buy the gold at its true value, paying the premium in paper dollars, the answer is that if it did, the illusion of rising values would be damaged in exactly the same way as by an open gold market.

People could no so easily continue to deceive themselves about what was happening. That values had been rising was an appearance only, produced by the fact that the value of paper money had been falling. But the Government thought it was more important to protect this appearance than to keep in this country the gold we mine out of our own ground.

The intermediate way is to speculate. A shrewd, imaginative minority will buy imperishable commodities, such as cotton, copper, tin and rubber, because these will rise in price as the value of money falls; others will buy unlimited dividend-paying shares, and some will go heavily into debt to buy equities of any kind, even real estate, with the idea that when money is very much cheaper they will pay off the debt and have the equities clear. It was in that way that a few men made prodigious fortunes in the German inflation. One who had been able, at the beginning of it, to borrow marks enough to buy the whole of Berlin might then, at the end of it, for as little as one thousand dollars in gold, have bought the same number of marks to pay off what he had borrowed and so have owned Berlin clear at a net cost of one thousand dollars.

In 1926-27-28, people had plenty of money, more than they ever had before; and they were prosperous, but not for that reason. They were not prosperous because they had plenty of money; they had plenty of money because they were prosperous. Proof is that at the very lowest of the depression there was actually more money of all kinds – more gold, silver and paper money – than in those years of high prosperity.

Every owner of a corporation bond is a creditor. Every owner of a government bond, a city or county bond, is a creditor. Every owner of shares in a building-and-loan association is a creditor. Every owner of a bank deposit is a creditor. Every owner of a life-insurance policy is a creditor. These will all be victims of inflation, and they are millions.

November 4, 1933

Related Articles:

Readers' Comments





  • Forgotten victim
  • Literature, US News »

    Homeless Jack on “Grabbing Some Pussy”

    November 7, 2016

    Homeless Jack on “Grabbing Some Pussy” thumbnail

    We discovered this piece scrawled on some foolscap left on our doorstep, an all-lower-case Kerouac-style stream of consciousness rap, and offer it as we found it. by H. Millard trump is an american original and a throwback to the days when americans were bursting with confidence and energy and the sheer joy of freedom and […]

    Africa, History »

    ‘The Choice of Achilles’: John Alan Coey Against the New World Order

    January 3, 2013

    ‘The Choice of Achilles’: John Alan Coey Against the New World Order thumbnail

    by T.R. Bennington AS EVER, BUT ESPECIALLY in our present state of civilizational malaise, there is a need for figures with the power to inspire — men who in less confused and cynical times would have been unabashedly described as heroic. One such figure is Corporal John Alan Coey, a young soldier who has perhaps […]

    Science »

    Quarter of Americans Convinced Sun Revolves Around Earth

    March 2, 2015

    Quarter of Americans Convinced Sun Revolves Around Earth thumbnail

    “DOES the Earth go around the Sun, or does the Sun go around the Earth?” If you answered the latter, you’re among a quarter of Americans who also got it wrong, according to a new report by the National Science Foundation. A survey of 2,200 people that was released Friday revealed some alarming truths about […]

  • Reader’s Comments

  • Categories

  • Archives

  • Pages

  • Login / Register / RSS

  • Vintage Mercury »

    Jailbirds

    June 7, 2017

    Jailbirds thumbnail

    by Jim Tully; from The American Mercury, September, 1928; transcribed by Kevin I. Slaughter THE jail room was thirty-five feet long, twenty-five feet wide, and seven feet high. In this large cage were fifty prisoners. Some had been sentenced and were serving jail terms; others awaited trial, or removal to the penitentiary. The floor was of […]

    Opinion »

    The Old Right and the Antichrist

    June 7, 2017

    The Old Right and the Antichrist thumbnail

    by Richard Spencer (pictured) The following address was given to the H.L. Mencken Club’s Annual Meeting; November 21-23, 2008. BEFORE William F. Buckley settled on writing God and Man at Yale in 1951, the 25 year-old had something quite different in mind as a debut volume. Buckley planned, and may have begun drafting, a book caustically […]

    Literature »

    The Fame of a Dead Man’s Deeds Audio Book: Last Contact

    May 3, 2018

    <em>The Fame of a Dead Man’s Deeds</em> Audio Book: Last Contact thumbnail

    by Bradford L. Huie for The American Mercury TODAY WE PRESENT THE FINAL installment of our audio book series based on the biography of William Luther Pierce, The Fame of a Dead Man’s Deeds by Robert S. Griffin, read by Vanessa Neubauer. (ILLUSTRATION: Portrait of Dr. William L. Pierce by S.M. Casper) Click here for all […]

  • Names and Topics



  • FEATURED ARTICLES

    Literature »

    The Fame of a Dead Man’s Deeds Audio Book: Pierce on Hunter

    November 26, 2017

    <em>The Fame of a Dead Man’s Deeds</em> Audio Book: Pierce on Hunter thumbnail

    by Bradford L. Huie for The American Mercury VANESSA Neubauer’s latest audio book reading — chapter 19 of Robert Griffin’s The Fame of a Dead Man’s Deeds — consists of Dr. William Luther Pierce’s own thoughts about his second novel, Hunter. (ILLUSTRATION: portrait section of illustration from an oil painting by Will Williams) Click here for all the chapters […]

    Frank Audio Books, History »

    New Audio Book: The American Mercury on Leo Frank – Judge Leonard Roan’s Charge to the Jury

    November 25, 2017

    New Audio Book: The American Mercury on Leo Frank – Judge Leonard Roan’s Charge to the Jury thumbnail

    THIS WEEK we present our final installment of our audio books on the subject of the 1913 trial of Leo M. Frank for the strangling and sex murder of his 13-year-old sweatshop employee, Mary Phagan. Today we hear the words of Judge Leonard Strickland Roan (pictured) in his charge to the jury, exactly as they […]

    Literature »

    The Fame of a Dead Man’s Deeds Audio Book: Hunter

    November 19, 2017

    <em>The Fame of a Dead Man’s Deeds</em> Audio Book: Hunter thumbnail

    by Bradford L. Huie for The American Mercury TODAY as we join Vanessa Neubauer’s latest audio book reading — chapter 18 — of Robert Griffin’s The Fame of a Dead Man’s Deeds we learn about Hunter, William Luther Pierce’s second novel. Hunter is a follow-up to Pierce’s famous The Turner Diaries, and Dr. Pierce considered it to be the more […]

    Frank Audio Books, History »

    New Audio Book: The American Mercury on Leo Frank – Dorsey’s Closing Arguments, part 6

    November 19, 2017

    New Audio Book: The American Mercury on Leo Frank – Dorsey’s Closing Arguments, part 6 thumbnail

    THIS WEEK we present the sixth and last audio book installment of prosecutor Hugh Dorsey’s closing arguments in the 1913 trial of Leo M. Frank (pictured) for the strangling and sex murder of his 13-year-old sweatshop employee Mary Phagan. In this dramatic conclusion, you hear the words that the jury heard, the words that would […]

    Literature »

    The Fame of a Dead Man’s Deeds Audio Book: To West Virginia

    November 12, 2017

    <em>The Fame of a Dead Man’s Deeds</em> Audio Book: To West Virginia thumbnail

    by Bradford L. Huie for The American Mercury THIS WEEK in Vanessa Neubauer’s new audio book reading — chapter 17 — of Robert Griffin’s The Fame of a Dead Man’s Deeds we learn why William Luther Pierce moved the main office of his White revolutionary organization, the National Alliance, from the Washington, DC area to the forest-covered […]

    Frank Audio Books, History »

    New Audio Book: The American Mercury on Leo Frank – Dorsey’s Closing Arguments, part 5

    November 10, 2017

    New Audio Book: The American Mercury on Leo Frank – Dorsey’s Closing Arguments, part 5 thumbnail

    THIS WEEK we present the fifth and next-to-last audio book installment of prosecutor Hugh Dorsey’s closing arguments in the 1913 trial of Leo M. Frank (pictured) for the strangling and sex murder of his 13-year-old sweatshop employee Mary Phagan. Even more than 100 years later, we are still feeling the repercussions of this case — […]

    Literature »

    The Fame of a Dead Man’s Deeds Audio Book: Bob Mathews

    November 5, 2017

    <em>The Fame of a Dead Man’s Deeds</em> Audio Book: Bob Mathews thumbnail

    by Bradford L. Huie for The American Mercury TODAY WE bring you the story of Dr. William Pierce’s encounter with White revolutionary Robert Mathews (pictured), in Vanessa Neubauer’s new audio book — chapter 16 — of The Fame of a Dead Man’s Deeds. Click here for all the chapters of this book that we’ve published so […]

    Frank Audio Books, History »

    New Audio Book: The American Mercury on Leo Frank – Dorsey’s Closing Arguments, part 4

    November 3, 2017

    New Audio Book: The American Mercury on Leo Frank – Dorsey’s Closing Arguments, part 4 thumbnail

    VANESSA NEUBAUER’S audio book reading from the 1913 Leo Frank case this week is the fourth part of prosecutor Hugh Dorsey’s closing arguments. Leo Max Frank (pictured with his wife Lucille in happier times) was ultimately convicted of murdering his 13-year-old pencil factory employee, Mary Phagan, in a case which set the stage for Jewish-Gentile […]

    Literature »

    The Fame of a Dead Man’s Deeds Audio Book: Alexander Solzhenitsyn

    October 29, 2017

    <em>The Fame of a Dead Man’s Deeds</em> Audio Book: Alexander Solzhenitsyn thumbnail

    by Bradford L. Huie for The American Mercury TODAY WE bring you Vanessa Neubauer’s new audio book — chapter 15 — of The Fame of a Dead Man’s Deeds, which discusses Dr. William Pierce’s exploration and critique of the work of the great Russian intellectual Alexander Solzhenitsyn. Click here for all the chapters of this book that […]

    Frank Audio Books, History »

    New Audio Book: The American Mercury on Leo Frank – Dorsey’s Closing Arguments, part 3

    October 27, 2017

    New Audio Book: The American Mercury on Leo Frank – Dorsey’s Closing Arguments, part 3 thumbnail

    THIS WEEK’S audio book presentation on the 1913 Leo Frank case is the third (of six) parts of prosecutor Hugh Dorsey’s closing arguments. His arguments, along with the evidence in this case, were ultimately successful — and Jewish pencil factory superintendent Leo Frank (pictured) was convicted of murdering 13-year-old Mary Phagan, his sweatshop employee. Frank […]