Gold and Silver: The Story Behind The Story

By: Douglas V. Gnazzo | Sat, Jul 1, 2006
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Introduction

Recently some quotations, purportedly taken from Wikipedia, the on-line encyclopedia, discussing the Gold Standard, the Crime of 1873, and the Bland-Allison Act, also known as the Coinage Act of 1878, appeared in a certain gold investment Precious Metal's Market Timing newsletter, as apparently being the correct historical facts concerning the above-mentioned events.

We are of the opinion that the information, regardless of wherever it originated - was incorrect and therefore misleading. We may very well be wrong, and if we are, we apologize and invite corrections and other's opinions.

All things gold are very important to us, especially its monetary history, therefore, we would like to present what we believe is the correct information on the above-referenced events of our monetary history.

If there is to be any chance for positive change of our presently debased and near worthless paper fiat monetary system, it is imperative to first understand its past history: what actually occurred, why it occurred, how it occurred, and by whom did it occur.

To know where one is headed, it helps to know where one is, and from where one has come. The future comes from out of the present - the present from out of the past, as one continuum: what some refer to as the eternal now. Time is but the measurement of change - and change is ever fleeting - gone before it is.

We ask for the reader's patience and indulgence, as the elite's intelligentsia have purposefully made this topic appear complicated and involved - when it truth it is quite simple, as truth usually is. To see how simple this topic is, view the following graphic that in a minute's time, depicts the history of our monetary system: View Flash Intro.

There are those, however, who would rather the truth not be known; and there are the innocent who know no better, and accept the unacceptable. We hope to dispel the first - and to aid the second: in whose camp we place those that wrote and printed the disinformation, which was unbeknownst to them as such. It was an honest mistake.

We will start with the quotation of the first paragraph, followed with comments. We have taken the liberty of breaking down the original paragraph into three shorter sections to aid in the simplification of the issues under review.

Subsequently, we will deal with the remaining paragraphs in future papers. This is a subject most dear to us - as it involves issues affecting the return to Honest Money. It is in the pursuit of Honest Money (Gold & Silver Report) that this rejoinder heralds.

"The Crime of 1873 placed the United States on the gold standard, which replaced the bimetallic (silver and gold) standard that had been created by Alexander Hamilton. Many of the poorer citizens saw this as a crime, and silver agitation began.

The Bland-Allison Act, as it came to be known, was passed by Congress on February 28, 1878. It did not provide for the free and unlimited coinage of silver demanded by Western miners, but it did require the United States Treasury to purchase between $2 million and $4 million of silver bullion from mining companies in the West.

The silver coins that were to be minted would be legal tender for all debts, like gold. These coins, however, were quite heavy, so the government applied their gold certificate strategy to the silver. Suppose that there were five silver dollars in the treasury. The government would print a $5 Silver Certificate against the dollars, providing a somewhat easier medium of exchange. The idea was kept, and Series 1878 was printed in denominations of $10 to $1000." [1]

The first paragraph under consideration reads: "The Crime of 1873 placed the United States on the gold standard, which replaced the bimetallic (silver and gold) standard that had been created by Alexander Hamilton. Many of the poorer citizens saw this as a crime, and silver agitation began."

We will begin with the issue expressed by "... which replaced the bimetallic (silver and gold) standard that had been created by Alexander Hamilton." Alexander Hamilton was the first Secretary of the Treasury. He was largely responsible for the original Coinage Act of 1792.

The last section of the The Coinage Act of 1792 reads:

Section 20. And be if further enacted, That the money of account of the United States shall be expressed in dollars, or units, dimes or tenths, cents or hundredths, and the milles or thousandths, a dime being the tenth part of a dollar, a cent the hundredth part of a dollar, a mille the thousandth part of a dollar, and that all accounts in the public offices and all proceedings in the courts of the United States shall be kept and had in conformity to this regulation. [2]

The most important wording of the section is "that the money of account of the United States shall be expressed in dollars, or units". In keeping with the Constitution, the unit of account (money) of the United States is expressed in dollars. Now we need to find the definition of a dollar.

Section nine of the Coinage Act of 1792 states:

Section 9. And be it further enacted, That there shall be from time to time struck and coined at the said mint, coins of gold, silver, and copper, of the following denominations, values and descriptions, viz.

EAGLES -- each to be of the value of ten dollars or units, and 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.

HALF EAGLES -- each to be of the value of five dollars, and to contain one hundred and twenty-three grains and six eighths of a grain of pure, or one hundred and thirty-five grains of standard gold.

QUARTER EAGLES -- each to be of the value of two dollars and a half dollar, and to contain sixty-one grains and seven eighths of a grain of pure, or sixty-seven grains and four eighths of a grain of standard gold.

DOLLARS OR UNITS -- each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver. [3]

We have taken the liberty of highlighting the most important part of section nine - the one that defines a dollar as:

"DOLLARS OR UNITS -- each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver."

The dollar is a weight of silver: 371.25 grains of pure silver, to be of the value of the current Spanish milled dollar. There is no mention of a gold dollar, and one did not exist. It was not until the Coinage Act of 1849 (DownloadPDF-180K) that a gold one-dollar coin existed.

From The Coinage Act of 1849

Notice that the statute reads: "and gold dollars, each to be of the value of one dollar or unit".

Recall from the Coinage Act of 1792 that a dollar is a specific weight of silver, which means that although there was now a gold coin of the value of one dollar - the dollar was still a specific weight of silver - the silver dollar.

Further on in the Coinage Act we read:

Section 11. And be it further enacted, That the proportional value of gold and silver in all coins which shall by law be current as money within the United States, shall be fifteen to one, according to quantity in weight, of pure gold or pure silver; that is to say, every fifteen pounds weight of pure silver shall be of equal value in all payments, with one pound weight of pure gold, and so in proportion as to any greater or less quantities of the respective metals. [4]

Section eleven declares that gold and silver in all coins shall exchange at the ratio of fifteen to one, which established a bimetallic system of coinage - not a bimetallic standard.

The standard is the silver standard.

The standard and the system of coinage are two distinct entities and should not be confused as being the same.

Next, the quotation reads: "the Crime of 1873 placed the United States on the gold standard." To better understand the alleged crime, it is best to review the Coinage Act of 1873, which is the supposed perpetrator of the said offense.

COINAGE ACT OF 1873

In the Coinage Act of 1873, Congress for the very first time stated that gold coins of the "one dollar piece", which contained 23-22/100 grains of fine metal - "shall be the unit of value."

As previously shown, however, the dollar of the Constitution and the Coinage Act of 1792 was a specific weight of silver - the silver dollar.

Without a Constitutional amendment to change the original standard, the Coinage Act of 1873 that purports to effect such change, is without question - unconstitutional.

Any statute or law must be in pursuance of the Constitution to be part of The Supreme Law of the Land - if it is not; it is null and void, as if it never occurred.

The act also stopped the minting of silver dollars, which is undeniably an unconstitutional act. Only a constitutional amendment can authorize such change.

On the face of it, it would appear that the Act of 1873 demonetized silver coinage, albeit unconstitutionally; and placed the gold dollar as the new standard. Appearances, however, can be deceiving - and this one is as deceptive as they come.

A close inspection of the Coinage Act of 1873 reveals that someone went to great lengths of subtlety to cover their butt regarding the legality and constitutionality of the act. The following wording is craftily employed within the text:

"...This act shall not be construed to affect any act done, right accrued, or penalty incurred, under former acts, but every such right is hereby saved", even if such "acts done" and "rights accrued" were "inconsistent" with the 1873 Act. [5]

All of which means that at the time, we were technically (statutorily) on the silver standard, but practically (in usage) on the gold standard.

Therefore, although the powers-that-be were trying to make it appear, through illusion and delusion, that silver had been demonetized - in truth it had not. In point of fact: we are still on the silver standard today, whether it is adhered to or not - as any law not in pursuance of the Constitution is null and void - as if it never occurred.

However, such false beliefs or lies, when told often enough, for long enough - end up becoming the accepted state of how the general public perceives things to be.

Such was the exact purpose of those that were manipulating the appearances, by the various changes of debasement implemented throughout our monetary history - starkly showing that our monetary policy has devolved, not evolved, and that unseen hands were guiding the perfidy of it all.

As we can see, the ploy has worked quite well, as before us we have an experienced gold newsletter writer, and an online encyclopedia, both misunderstanding the finer points of the history of US monetary theory and practice.

They are not at fault. The elite moneychangers who have perpetrated the lie are at fault. When all is weighed in the balance - it is they who will be shortchanged, as the circle remains unbroken.

By Whose Design

Of interest in regards to the Coinage Act of 1873, which arguably has the infamous distinction of being the first unconstitutional coinage act passed by Congress, is the question as to who was the guiding hand behind the act?

The answer: Senator John Sherman. Nevertheless, was he under the influence of others, and if so - by whom?

The second paragraph quoted in the article under question reads:

"The Bland-Allison Act, as it came to be known, was passed by Congress on February 28, 1878. It did not provide for the free and unlimited coinage of silver demanded by Western miners, but it did require the United States Treasury to purchase between $2 million and $4 million of silver bullion from mining companies in the West." [6]

COINAGE ACT OF 1878

The Coinage Act of 1878, also known as the Brand-Allison Act, authorized Congress to restore the coinage of the standard silver dollar of the weight of 371.25 grains of silver, and to make it legal tender, as stated in the Act of 1837. The first section of the act accomplished these tasks.

However, there were some most curious additions written into the statute. The Act mandated that Congress was to purchase the silver, in specific amounts, and on a monthly basis.

This is not free coinage as established in the Constitution and the Coinage Act of 1792. Moreover, it begs the question: buy the silver with what?

BRAND-ALLISON ACT of 1878

"Be it enacted . . . That there shall be coined, at the several mints of the United States, silver dollars of the weight of four hundred and twelve and a half grains Troy of standard silver, as provided in the act of . . . [January I8, I837] . . . on which shall be the devices and superscription provided by said act; which coins together with all silver dollars heretofore coined by the United States, of like weight and fineness, shall be a legal tender, at their nominal value, for all debts and dues public and private, except where otherwise expressly stipulated in the contract. And the Secretary of the Treasury is authorized and directed to purchase, from time to time, silver bullions at the market price thereof, not less than two million dollars worth per month, nor more than four million dollars worth per month, and cause the same to be coined monthly, as fast as so purchased into such dollars.... And any gain or seigniorage arising from this coinage shall be accounted for and paid into the Treasury, as provided under existing laws relative to the subsidiary coinage: Provided, That the amount of money at any one time invested in such silver bullion, exclusive of such resulting coin, shall not exceed five million dollars....

SEC. 2. That immediately after the passage of this act, the President shall invite the governments of the countries composing the Latin Union, so-called, and of such other European nations as he may deem advisable, to join the United States in a conference to adopt a common ratio between gold and silver, for the purpose of establishing, internationally, the use of bimetallic money, and securing fixity of relative value between those metals; such conference to be held at such place, in Europe or in the United States, at such time within six months, as may be mutually agreed upon by the executives of the governments joining in the same, whenever the governments so invited, or any three of them, shall have signified their willingness to unite in the same. The President shall, by and with the advice and consent of the Senate, appoint three commissioners, who shall attend such conference on behalf of the United States, and shall report the doings thereof to the President, who shall transmit the same to Congress.

SEC. 3. That any holder of the coin authorized by this act may deposit the same with the Treasurer or any assistant treasurer of the United States, in sums not less than ten dollars, and receive therefore certificates of not less than ten dollars each, corresponding with the denominations of the United States notes. The coin deposited for or representing the certificates shall be retained in the Treasury for the payment of the same on demand. Said certificates shall be receivable for customs, taxes, and all public dues, and, when so received, may be reissued." [7]

The Switch

According to the Coinage Act of 1878, the government held title to the silver, and had paid for it with the issuance of government debt or notes - which means that We The People were indebted and obliged to pay the tab.

Such is very different from the constitutional free coinage system that provided a government mint, whereby silver and gold bullion were coined: silver and gold that was already owned and the private property of individuals who brought the metals to the mint to be deemed honest weights and measures, and stamped accordingly.

Section fourteen of the act reads:

Section 14. And be it further enacted, that it shall be lawful for any person or persons to bring to the said mint gold and silver bullion in order to their being coined; and that the bullion so brought shall be there assayed and coined as speedily as may be after the receipt thereof, and free of expense to the person or persons by whom the same shall have been brought. And as soon as the said bullion shall have been coined, the person or persons by whom the same shall have been delivered, shall upon demand receive in lieu thereof coins of the same species of bullion which shall have been so delivered, weight for weight, of the pure gold or pure silver therein contained. [8]

Not only were the rules of ownership of the silver changing hands (government now held title as opposed to private citizens) but now there were also minimal and maximum limits as to the amount of silver to be purchased by the Treasury.

At the lower limit was $2,000,000 worth of silver per month, giving a yearly total of $24,000,000. Adding the $5,000,000.00, the act was allowed to ever hold in bullion at any one time, before minting into coin; a minimal limit of $29 million of silver was thus possible.

This effectively meant that the Treasury, when and if it wanted to, could limit the minting of silver to $29 million dollars.

In addition, the yearly production of silver at this time was almost twice this amount. This placed the fox in charge of guarding the hen house.

Powers Never Granted

The Treasury was ostensibly granted control of the limits of the supply and demand factors of silver, and hence the price of silver. The Constitution never granted Congress this power.

THIS IS NOT HOW FREE MARKETS ARE SUPPOSED TO WORK.

Without doubt, this was not in keeping with free coinage of the Constitution. Why would the Treasury do this? Cui Bono? The plot thickens: the waters are becoming clouded and murky.

In section two, the act authorized the President to confer with foreign governments to adopt a common ratio between gold and silver, for the express purpose of establishing an international monetary system.

The idea of an international monetary system is most curious, as the Constitution does not mention it anywhere. By what authority was the Coinage Act of 1878 granted the right to confer a power not even mentioned - let alone granted, in the Constitution. For a more detailed discussion see: Honest Money, Part III: Coinage Acts from 1834-1900.

In section three, the act stated that the Treasury was to issue silver certificates for not less than ten standard silver dollars. This was the first issuance of silver certificates, and arguably an unconstitutional act of emitting bills of credit.

Nowhere does the Constitution grant Congress the power of acting as a deposit bank.

The Guiding Hand

As always, Senator Sherman raised more questions then he answered. For instance: why did Sherman, while Secretary of the U.S. Treasury in 1878, authorize the sub-treasury department (a dept. of the U.S. government that held federal deposits) to become a member of the Clearing House Association, which was the organization of the major national banks of the elite moneyed powers; knowing as he did, that the Clearing House Association did not accept silver dollars or silver certificates in settlement of balances due from member banks?

Another example: why did Secretary Sherman, in late 1878, issue an executive order to various ports of the United States, directing them to accept as payment for duties on imports, both Treasury Notes and U.S. Notes - knowing that the Act of 1862 that issued them - prohibitedsuch?

It would appear, that unseen hands were providing guidance - but towards what end? Cui Bono remains the question of the millennium.

Recognition Ipso Facto

The act did once again formally recognize silver as the standard; however, it always was - and still is - the standard.

All subsequent acts are simply the precursors for a new world order: of money and power - and by causal effect: of the human condition known as destiny. That which even the gods - as destiny's children, must obey.

The art of illusion and delusion was the preferred weapon of choice, as the ever subtle, ever destructive changes kept adding up, slowly draining the lifeblood from Honest Money - the hard currency system of the Constitution: Gold and Silver Coin and nothing else.

The third and last section of the first paragraph of the quotation under review reads:

"The silver coins that were to be minted would be legal tender for all debts, like gold. These coins, however, were quite heavy, so the government applied their gold certificate strategy to the silver. Suppose that there were five silver dollars in the treasury. The government would print a $5 Silver Certificate against the dollars, providing a somewhat easier medium of exchange. The idea was kept, and Series 1878 was printed in denominations of $10 to $1000." [9]

The reference to weight alludes to the fact that the act called for silver certificates to be issued for a minimum of $10 dollars, which would equate to 10 one ounce silver dollars; hence the wording "providing a somewhat easier medium of exchange".

Other than this, the paragraph appears innocuous. Nonetheless, appearances are most deceptive - like shadows of the night. That which remained unsaid, is most important in understanding both the act and the event(s) surrounding the act.

Hence next week we will offer a version explaining the silver certificates and their ramifications not often told - usually because unknown, occasionally because of fear - of the shadows of the night.

We are reminded of the saying of one who knew from whence he spoke:

"Death is a joke to me as I am the death of death."
Babaji
[203 AD - present]

Come visit our new website: Honest Money Gold & Silver Report
And read the Open Letter to Congress

COMING SOON: A REQUEST FOR AN AUDIT OF US GOLD RESERVES

[1] Precious Metal's Market Timing by Ron Rosen
[2] Coinage Act of 1792
[3] Coinage Act of 1792
[4] Same
[5] Coinage Act of 1783
[6] Precious Metal's Market Timing by Ron Rosen
]7] Same
[8] Coinage Act of 1792
[9] Precious Metal's Market Timing by Ron Rosen

 


 

Douglas V. Gnazzo

Author: Douglas V. Gnazzo

Douglas V. Gnazzo
Honest Money Gold & Silver Report

Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

Douglas V. Gnazzo © 2005-2013
All Rights Reserved Without Prejudice

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