Wednesday, June 30, 2010

Government once took sound money seriously

In the beginning the United States government made a good faith effort to establish a sound currency. The Coinage Act of 1792 established a mint and held it responsible for coining money according to rigorous standards. Gold Eagles, for example, were to "contain two hundred and forty-seven grains and four eighths of a grain of pure, or two hundred and seventy grains of standard gold." What we call pennies were to "contain eleven penny-weights of copper."

And what if the mint failed to produce coins of this caliber? Section 19 of the Act addresses this situation:
Penalty on debasing the coins

And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.
Can you imagine the Fed being threatened with death if it debauched the fiat currency it has monopoly power over? The Founders understood what we do not, that civilization itself depends on sound money.