bobbyw24
03-31-2010, 04:17 AM
by Bob Murphy
In the wake of Ron Paul's straw-poll victory at the CPAC convention, neoconservative author David Frum told CNN's readers that a return to the gold standard was both undesirable and impossible.
Frum and I have gone back and forth on the gold standard in the past, and I don't want to repeat those arguments. In the present article I'll raise new objections focused just on Frum's latest attack on the gold standard.
Frum Confuses Americans With FDR
After downplaying the significance of Ron Paul's win at CPAC, Frum concedes that many Americans have taken to Paul's message of tying the dollar back to gold. Frum thinks that such a quaint view ignores American history. He writes,
G.K. Chesterton observed that you should never pull down a fence until you understand why it was put up.
So let's rediscover why it was that Americans abandoned the gold standard in the first place.
In the first place, it's a bit ironic to use a quip from G.K. Chesterton – the epitome of a wise conservative in the true sense of the word – to support the New Deal's uprooting of the gold standard, which Frum himself acknowledges was considered a bulwark of Western civilization.
In any event, it's very odd to say that "Americans abandoned the gold standard." Let's recall the actual events: Gold was originally the voluntary, market-chosen money (along with silver). Americans were willing to hold paper notes denominated as "dollars" only because they were originally legal claims entitling the bearer to a specified weight of gold (or silver).
Then, in 1933 the newly sworn in President Roosevelt voided Uncle Sam's contractual obligations. He further required that all Americans turn in their gold under threat of imprisonment and a $10,000 fine. It was not even legal for Americans to tie clauses of contracts to the world price of gold, until the 1970s.
It wasn't even the case that FDR campaigned on a pledge to end the dollar's tie to gold. Indeed, one of Herbert Hoover's bitter complaints was that FDR caused unnecessary chaos in the financial markets after his election in November 1932 by not explaining what his gold policy would be during Hoover's lame duck session. (In those days new presidents were not sworn in until March 4.)
There are many ways of describing the above history, but "Americans abandoned the gold standard" would not be high on my personal list. By the same token, if a Texan were complaining about outrageous federal taxes, I wouldn't say, "Hey, you should recall why America retained the Confederacy."
David Frum, Keynesian Economist
Let's explore Frum's explanation of why "America" abandoned the gold standard in the early 1930s:
http://www.lewrockwell.com/murphy/murphy167.html
In the wake of Ron Paul's straw-poll victory at the CPAC convention, neoconservative author David Frum told CNN's readers that a return to the gold standard was both undesirable and impossible.
Frum and I have gone back and forth on the gold standard in the past, and I don't want to repeat those arguments. In the present article I'll raise new objections focused just on Frum's latest attack on the gold standard.
Frum Confuses Americans With FDR
After downplaying the significance of Ron Paul's win at CPAC, Frum concedes that many Americans have taken to Paul's message of tying the dollar back to gold. Frum thinks that such a quaint view ignores American history. He writes,
G.K. Chesterton observed that you should never pull down a fence until you understand why it was put up.
So let's rediscover why it was that Americans abandoned the gold standard in the first place.
In the first place, it's a bit ironic to use a quip from G.K. Chesterton – the epitome of a wise conservative in the true sense of the word – to support the New Deal's uprooting of the gold standard, which Frum himself acknowledges was considered a bulwark of Western civilization.
In any event, it's very odd to say that "Americans abandoned the gold standard." Let's recall the actual events: Gold was originally the voluntary, market-chosen money (along with silver). Americans were willing to hold paper notes denominated as "dollars" only because they were originally legal claims entitling the bearer to a specified weight of gold (or silver).
Then, in 1933 the newly sworn in President Roosevelt voided Uncle Sam's contractual obligations. He further required that all Americans turn in their gold under threat of imprisonment and a $10,000 fine. It was not even legal for Americans to tie clauses of contracts to the world price of gold, until the 1970s.
It wasn't even the case that FDR campaigned on a pledge to end the dollar's tie to gold. Indeed, one of Herbert Hoover's bitter complaints was that FDR caused unnecessary chaos in the financial markets after his election in November 1932 by not explaining what his gold policy would be during Hoover's lame duck session. (In those days new presidents were not sworn in until March 4.)
There are many ways of describing the above history, but "Americans abandoned the gold standard" would not be high on my personal list. By the same token, if a Texan were complaining about outrageous federal taxes, I wouldn't say, "Hey, you should recall why America retained the Confederacy."
David Frum, Keynesian Economist
Let's explore Frum's explanation of why "America" abandoned the gold standard in the early 1930s:
http://www.lewrockwell.com/murphy/murphy167.html