Tag Archive for Gresham’s Law

A Brief Monetary History Of The United States: Part II

Today we bring you Part II of “A Brief Monetary History of the United States” from the Ron Paul Monetary Policy Anthology. The full series can be found at the following links:

  • Part I – Colonial Money and the Coinage Act of 1792
  • Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
  • Part III – Government Begins to Monopolize Currency
  • Part IV – The Legal Tender Cases and the “Crime of ’73”
  • Part V – The Rise of the Fed
  • Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
  • Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
  • Part VIII – The 1980s to the Great Recession and on to the Future
  • First and Second Banks of the United States

    First Bank of the United States Building

    First Bank of the United States Building

    The First Bank of the United States was established in 1791 as a national central bank. One of the justifications behind the establishment of the Bank was to combat the supposed scarcity of money and to facilitate commerce through the expansion of credit. The national bank proposal ignored the true cause of specie scarcity, which was the legal overvaluation of one form of money over another. Whenever money was given legal tender status and a fixed legal value, Gresham’s Law took hold and gold or silver vanished from circulation. What proponents of central banking really wanted was an enlarged and eased issuance of credit, especially to the federal government, believing that easy credit was the path to economic prosperity.

    A Brief Monetary History Of The United States: Part I

    On this Throwback Thursday, we’ll run the first part of “A Brief Monetary History of the United States” from Ron Paul’s Monetary Policy Anthology. Subsequent sections of that history will run every Thursday for the next several weeks. If you haven’t downloaded the anthology yet, you ought to do so. The anthology is a compilation of Congressman Paul’s tenure as Chairman of the Subcommittee on Domestic Monetary Policy, including his exchanges with Ben Bernanke, the transcripts of his monetary policy hearings, transcripts of the “Tea Talk” lecture series, and additional commentary from prominent economists from the Austrian School such as Bob Murphy, Tom Woods, and Jesus Huerta de Soto.

    The installments in this monetary history series can be found here:

  • Part I – Colonial Money and the Coinage Act of 1792
  • Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
  • Part III – Government Begins to Monopolize Currency
  • Part IV – The Legal Tender Cases and the “Crime of ’73”
  • Part V – The Rise of the Fed
  • Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
  • Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
  • Part VIII – The 1980s to the Great Recession and on to the Future
  • A BRIEF MONETARY HISTORY OF THE UNITED STATES

    “Those who cannot remember the past are condemned to repeat it.” – George Santayana

    I. INTRODUCTION

    To avoid repeating the mistakes of the past and to provide for a more prosperous future, the lessons of history must be both explored and understood. This is no less true for something used in everyday life: money. The present monetary regime did not appear overnight. Rather, it is the result of centuries of concerted action, much of which has been forgotten by history. The following pages are intended to provide the reader with a brief yet relatively comprehensive introduction to the history of money and monetary policy in the United States from the late-18th century to the present. While not an all-inclusive look at American monetary history, this section covers the main historical events that have led to the current U.S. monetary system. If America seeks to achieve a sound and stable economy, it is necessary to examine the history of money in the United States and its evolution over time.