“Since Ron Paul has raised the issue of the gold standard, and is being treated like some kind of visitor from Mars for having mentioned the subject at all, we need to know more about the true American heritage of the gold standard. This is why I’m personally very fired up that the Mises Institute has brought back William Gouge’s Short History of Money and Banking, which I first read while working for Ron in his congressional office.
Gouge lived from 1796 through 1863 and was involved in all the great debates on banking in the 19th century. His book is a major attack on all inflationary finance, and reading him underscores just how universal are the lessons on money and banking — universal in the sense that they apply in all times and all places.
Back in the 19th century, there were many people who wanted inflation: bankers, debtors, and the government. What a surprise! Who has an interest in sound money? Consumers, savers, and liberty-loving citizens. This is the essential conflict. Are we going to have a monetary regime rooted in robbery, or one rooted in honesty? Gouge was on the side of honesty, and he inspires us today.
Coming a few decades later, but along the same lines, is Charles Holt Carroll’s Organization of Debt Into Currency. This is one of those books that develops a hard-core cadre of fans. When we started reprinting these great American economic classics, people began to ask us: what about Carroll? Well, here it is, and once you get into the book, you realize why Rothbard and George Reisman and so many others swear by it. He patiently explains the difference between money and debt and how the government goes about sowing confusion about what is what.
Now, Ron Paul stands in this tradition of thinkers in every way. Even on the campaign stump, he speaks about the evil of fiat money and Fed management of the nation’s money stock. In a true sense, he says, we’ve put a cartelized gang of central planners in charge of the good that constitutes half of every economic exchange, and we are paying the price in terms of declining purchasing power, exchange-rate chaos, rampant debt, and growing crises in sector after sector.
Is there a way out? Most certainly! It goes by the name of gold. Make the dollar as good as gold and you eliminate the inflation problem and the business cycles that go along with it. Here is the great secret of the gold standard. The problem is not that it is unviable from the perspective of economics; the problem is that there are many people allied against it: the big banks, the creditor class, and government. You see, gold would provide a hard-core anchor for liberty.
Under the right form of the gold standard, government could no longer spend with impunity or run up debt without limit. The resources it spent would have to be raised the old-fashioned way.
It behooves every American to read Ron’s book, really his manifesto on the topic. It is called The Case for Gold. He covers 19th-century monetary history and discusses several plans for instituting a gold standard.”