Thomas Tooke

The Evil of the Empire money — monometallic British Gold Standard — Down with the Gold standard.

In Deflationary Period of 1872 to 1896 on May 12, 2012 at 12:43 am

While this blog is not favorable to irresponsible fiat monetary system but sympathetic to responsible paper money (Hong-Kong), there is a bit of misconception about the Gold Standard which floats around today that it is was a perfect system before 1913.

We clearly prefer the bimetallic standard on this blog which is closer to denationalized money, at least it is much more neutral. The demonetization of Silver was largely deflationary as Friedman famously described.

Here what Kemmerer wrote in 1920.


The general wholesale price level expressed in terms of gold fell about 41 per cent in the United States from 1872 to 1896. In other words, if one calls the gold dollar of 1872 a 100 per cent dollar in its purchasing power, the dollar in 1896 was 170 per cent dollar. Debtors, therefore, whether they were farmers paying money on farm mortgages, householders trying to pay off mortgages on their homes, corporations or governmental units with bond issues of some years´standing, were being called upon to meet their obligations, principal and interest, in money of greater value than that which they had originally borrowed. The purchasing power of a gold dollar was increasing on an average about 2 1/4 per cent a year (measured geometrically). The farmer´s mortgage remained unchanged in the amount of dollars called for, principal and interest, but the rise in the value of the dollar caused the farmer to receive continually declining prices for his wheat, cattle, and other products. Appreciation in the value of the dollar, therefore, or a falling level of prices worked much injustice to the debtor classes and this injustice was the most important item in the indictment bimettalists brought against the gold standard.



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