3

It is a known fact that some of the founding fathers wanted to limit the power of the federal government.

I have heard it said on the History Channel that one of the ways they did this was by implementing a gold standard.

Given the enormous effort placed into formulating the Constitution, why was the gold standard not a part of it?

closed as primarily opinion-based by Pieter Geerkens, Tyler Durden, CGCampbell, Gwen, Kobunite Sep 24 '15 at 13:15

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

  • 2
    "It has been said..." by whom? Did any of the constitution's framers espouse such a view? – Semaphore Sep 23 '15 at 4:55
  • 4
    How do you know it was "really legit"? The Pseudohistory Channel may be right twice a day, but an anonymous conspiracy gold bug making unsubstantiated statements on it has no place in any serious inquiry into actual history. The United States did not truly go on a gold standard until 1873. – Semaphore Sep 23 '15 at 5:16
  • 2
    Aside from the points that Semaphore makes, there are hundreds of ideas that didn't make it into the constitution - look at the number of proposed amendments that were proposed as a condition of acceptance and then rejected. – Mark C. Wallace Sep 23 '15 at 8:48
  • 3
    @TylerDurden Asking about the psychology/motivations of dead people? That's not important in history? – DrZ214 Sep 23 '15 at 20:09
  • 1
    @TylerDurden What someone or some people who are dead may have been thinking is not a matter of opinion when there are plenty of writings left behind by them and their friends. The founding fathers and many other historical figures fall into this category. – DrZ214 Sep 23 '15 at 22:12
13

Basically, the Pseudohistory Channel or whoever you heard this from is simply wrong. Rather than a gold standard, the framers of the US Constitution tried to introduce a bimetallic standard - that is, a monetary standard based on both gold and silver. The Constitution states:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

- Article I, Section 10, Clause 1 of the United States Constitution

While this applies to the States only, on the federal level, the Coinage Act similarly established a bimetallic dollar with both gold and silver coins. That efforts were made on both state and federal levels to introduce bimetallism demonstrates where early American preference lies.

The founders did not create a gold standard for the new republic, and thus there was no reason why they should have stipulated one in the Constitution.


Why Bimetallism?

This reflects the temperaments and philosophies of those who drafted the Constitution favouring bimetallism over either gold or silver singly. As the prominent economist Francis Amasa Walker wrote:

The third element of the silver party in the United States ... comprises the convinced bimetallists of the country; men who believe, with Alexander Hamilton and the founders of the republic, that it is best to base the circulation upon both the precious metals. These men are bimetallists because they believe that that system will at once avoid the evils of a strict money supply, secure an approximate par-of-exchange between gold countries and silver countries, and promote stability of value in the money of the commercial world.

- Walker, Francis Amasa. International Bimetalism. New York: Henry Holt, 1896.

The bimetallist champion, Alexander Hamilton, first Secretary of the Treasury, famously reported that:

Upon the whole it seems to be most advisable, as has been observed, not to attach the unit exclusively to either of the metals because this cannot be done effectually without destroying the office and character of one of them as Money, and reducing it to the situation of a mere merchandise.

- Report of the Scretary of the Treasury on the Establishment of a Mint. May 5, 1791.


1873

A mono-metallic, gold standard was introduced only much later by the Coinage Act of 1873. For obvious reasons none of the Founding Fathers had anything to do with it.

  • 1
    Article 1, Section 10, Clause 1 is a limit on the States, not on the Federal government. It has no effect on the Coinage Act; the Federal government can make any money they want. – Schwern Sep 23 '15 at 7:05
  • @Schwern I didn't say it applied to the Federal Government. I said the founders tried to introduce bimetallism (citing the contract Clause as evidence), and accordingly Congress passed a bimetallic coinage act. – Semaphore Sep 23 '15 at 7:08
  • 1
    @BAR I think you're reading far too much into it. Again, the Contract Clause is a restriction on the States, not the Federal govt. It basically says "we don't trust States with printing money, so they have to pay their debts with hard currency". – Schwern Sep 23 '15 at 7:15
  • 1
    @MarkC.Wallace I don't understand your last point - bimetallism doesn't seem contradictory with a strong central bank. Note that my answer isn't arguing fiat vs commodity money but only that the early US went for bimetallism over monometallic standards. – Semaphore Sep 23 '15 at 9:04
  • 2
    @Semaphore - you are correct. The longer I think about this question, the more I'm convinced that the false assumptions embedded in the question make the answer complex. Your answer is correct, but I think a full answer needs to address the both the potential monetary standards available, the British monetary standard, the relationship between money, federalism, and executive power, and the process of the drafting of the constitution. I don't think I have enough time. – Mark C. Wallace Sep 23 '15 at 11:39
-3

To the founding fathers real money had to be gold or silver. Unbacked paper money was temporary ways to raise money for the government, by making people pay taxes with them, basically like government bonds. At most you use it for internal trade. To trade with other nations, you needed hard money based on gold or silver. There was no debate about this in the constitutional convention becasue they didn't see fiat money becoming the standard liek today. So they didn't bother putting in the constitution either.

  • 1
    IMHO merely being wrong isn't sufficient grounds to delete a post. However, everything past the first paragraph is both off-topic and as a Christian myself, I found borderline offensive (presuming to speak for me). So I'm "improving" the answer by editing away that part. – T.E.D. Sep 25 '15 at 17:49
  • 2
    The first sentence is inconsistent with the extensive use of fiat money throughout the colonial period. Rhode Island pursued a policy of intentional inflation as a defense against speculators. Hamilton argued in favor of a large national debt. I think the bulk of trade through the pre-revolutionary period was in tobacco bonds. The assertions simply don't match historical reality. – Mark C. Wallace Sep 25 '15 at 18:16

Not the answer you're looking for? Browse other questions tagged or ask your own question.