For almost 200 years after the nation’s founding in the Declaration of Independence, the U.S. could brag about having the world’s strongest long-term currency, with hardly any inflation until the 1960s, the decade when President Lyndon B. Johnson took silver out of our coins. Then, Nixon closed the gold window in 1971. This debasement of our currency was a natural outgrowth of excessive spending by LBJ and by every President and Congress of both major political parties in the 60 years since then.
At the time of our nation’s birth, however, all of our major Founding Fathers spoke glowingly of gold and silver. They had struggled with inflation caused by paper “Continentals,” which flooded the nation then. At one point, in 1779, General George Washington wrote to John Jay, our future first Chief Justice, in a plea for sound money, “A wagon load of money will scarcely purchase a wagon load of provisions.”
Meanwhile, the man most responsible for writing the Declaration was no less eloquent about gold. The Declaration’s author, Thomas Jefferson, said, “Paper is poverty … it is only the ghost of money and not money itself.” Later on, as President in 1802, he wrote to Albert Gallatin, his Treasury Secretary, saying, “Specie (gold and silver coin) is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.”
In retirement, during the War of 1812 and the inflation which followed, Jefferson became even more outspoken in his call for gold and restraints on banks. Writing to John W. Eppes in 1813, Jefferson said:
“If the debt which the banking companies owe be a blessing to anybody, it is to themselves alone, who are realizing a solid interest of eight or ten per cent on it. As to the public, these companies have banished all our gold and silver medium, which, before their institution, we had without interest, which never could have perished in our hands, and would have been our salvation now in the hour of war; instead of which they have given us two hundred million of froth and bubble, on which we are to pay them heavy interest, until it shall vanish into air … The truth is that capital may be produced by industry and accumulated by economy but jugglers only will propose to create it by legerdemain tricks with paper.”
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