A view from America …
Published yesterday at RealClearMarkets, as South Carolina’s voters went to the polls.
Two candidates – Newt Gingrich and Ron Paul – are campaigning on the gold standard. Polling, including for South Carolina, shows the gold standard to be a powerful vote getter as my colleague Andresen Blom and I pointed out recently in Roll Call. Both Gingrich and Paul supported gold long before it was cool – each with a record of meaningful support that goes back at least a quarter century.
As it happens, South Carolina has an exceptionally rich history when it comes to an aversion to pure paper money … like Federal Reserve Notes. South Carolina sent four delegates to the Constitutional Convention. History unequivocally shows that all four were anti-paper and pro-gold – and that at least two of them led the fight to use the Constitution to shut the door against paper money.
In the Constitutional Convention Pierce Butler, a distinguished South Carolinian and delegate, seconded the motion to strip the federal government of the power to issue paper money. Madison recorded:
Mr. BUTLER. remarked that paper was a legal tender in no Country in Europe. He was urgent for disarming the Government of such a power.
Brigadier General Charles Coteworth “C.C.” Pinckney, also a delegate to the Constitutional Convention from South Carolina, famously, while a prisoner of war, said: “”If I had a vein that did not beat with the love of my Country, I myself would open it. If I had a drop of blood that could flow dishonorable, I myself would let it out.” He was an important member both of the Philadelphia convention and in South Carolina’s ratifying convention.
Here, at the South Carolina ratification debate, is what Gen. Pinckney had to say about paper money:
With regard to Mr. Lowndes’s question ‘What harm had paper money done?’ General Pinckney answered, that he wondered that gentleman should ask such a question, as he had told the house that he had lost fifteen thousand guineas by depreciation; but he would tell the gentleman what further injuries it had done – it had corrupted the morals of the people; it had diverted them from the paths of honest industry to the ways of ruinous speculation; it had destroyed both public and private credit, and had brought total ruin on numberless widows and orphans.
Charles Pinckney, C.C.’s cousin, Senator and Member of the House of Representatives, 37th governor of South Carolina, progenitor of 7 South Carolina governors, had this to say in South Carolina ratifying convention:
If we consider the situation of the United States as they are at present, either individually or as the members of a general confederacy, we shall find it extremely improper they should ever be intrusted with the power of emitting money, or interfering in private contracts; or, by means of tender-laws, impairing the obligation of contracts.
I apprehend these general reasonings will be found true with respect to paper money: That experience has shown that, in every state where it has been practised since the revolution, it always carries the gold and silver out of the country, and impoverishes it–that, while it remains, all the foreign merchants, trading in America, must suffer and lose by it; therefore, that it must ever be a discouragement to commerce–that every medium of trade should have an intrinsic value, which paper money has not; gold and silver are therefore the fittest for this medium, as they are an equivalent, which paper can never be–that debtors in the assemblies will, whenever they can, make paper money with fraudulent views–that in those states where the credit of the paper money has been best supported, the bills have never kept to their nominal value in circulation, but have constantly depreciated to a certain degree.
John Rutledge, who served as the fourth South Carolina delegate to Philadelphia, spoke at a special session of the South Carolina legislature in September 1785 called by the governor to address a debt crisis:
as not wishing to waste time ‘in fruitless and unavailing discussion of’ paper money schemes that ‘could answer no good purposes, whatever.’ He called an emission of paper currency ‘ludicrous, because it was not in their power to establish funds for its redemption.’ Depreciation was inevitable. There ‘could not possibly be … any public benefit from such a scheme.’
South Carolina has a noble heritage when it comes to fighting paper money and standing for constitutional money with integrity: gold and silver. Are its citizens still made of the same stuff as Pierce Butler, John Rutledge, and Charles and CC Pinckney?
We now know the result: a decisive victory for Gingrich (though a disappointing fourth place for Paul).