Thursday, October 15, 2009

Government's Money Monopoly (I)

As the Four Horsemen of America’s financial apocalypse—Obama, Reid, Pelosi, Bernancke—and their aider and abettor foot soldiers in the Democrat Congress shovel money into failing enterprises and pet organizations, run colossal deficits, borrow from Chang to pay Pedro, debase the American dollar, and cook the books, I have been reminded of a project I undertook nearly thirty years ago.

As a constitutional lawyer, I wondered how the Constitutional Convention of 1787 somehow produced the monopoly over "money" the United States government arrogated unto itself.

So I wrote a book on the subject. Entitled "Government’s Money Monopoly", it opens with how money was debased beginning in 534 B.C. and ends with the infamous “Gold Clause Cases” of 1935, demonstrating how along the way the Constitutional text’s delegated power to Congress to “coin money and regulate the value thereof” morphed into federal programs such as rescue-your-pals-on-Wall-Street, how-to-use-stimulus-not-to-stimulate, cap-the-producers, and others too absurd t0 name. (The book is still available at Barnes & Noble. Click HERE.)

Here is the Table of Contents:

Foreword

Introduction

Part I. Conception

1. Monetary Debasement in Early Times.

2. Money in Colonial America.

3. Money and the Constitutional Convention

Part II. Birth

4. The Bank Controversy

5. John Marshall and Monetary Power

6. M’Culloch v. Maryland

Part III. Majority

7. Legal Tender: The Acts and the Cases

8. Hepburn v. Griswold (Legal Tender I)

9. Knox v. Lee (Legal Tender II)

10. Juilliard v. Greenman (Legal Tender III)

Part IV. Maturity

11. Ling Su Fan

12. Noble State Bank v. Haskell

13. Gold Clause Cases

Conclusion

Notes

Index

I was fortunate to have noted libertarian thinker Dr. Murray M. Rothbard provide the Foreword. His words could have been written today. (The Foreword appears below in courier font.)

Inflation is recognized as our number one economic problem. Most economists now realize, after decades of Keynesian obfuscation, that the cause of inflation is a chronic increase in the supply of money, and that money is totally under the control of the federal government and its Federal Reserve System. The public, too, is beginning to wake up to this vital fact.

Unfortunately, most economists have trained themselves, for over a century, to be technicians who cannot question the fundamental political institutions of our society. Hence, their proposed cure for inflation is to exhort the Federal Reserve to use its power wisely and to refrain from printing money beyond the point that they feel to be viable. In this way, economists avoid facing the next crucial question: How did government get to be the sole issuer and regulator of money and banking? Is this part of the natural or divine order, or has the world once been different? Has there ever been a free monetary system?

As a constitutional lawyer, Henry Mark Holzer is free from the self-imposed blinders of the economics profession. In this highly valuable book, he gathers together the fundamental documents of American monetary history to show how we got into our present monetary mess. He shows conclusively that government dictation over our money, far from being a natural state of affairs, violated the basic principles on which Americans fought their Revolution against Great Britain. Holzer demonstrates that shortly after America was established, the government takeover of money was engineered by Alexander Hamilton and ensconced into our law by his disciple, Chief Justice John Marshall. And that this take-over trampled upon the principle of individual rights which had been enshrined in the Declaration of Independence and on which America had been founded. He also shows strikingly that the Hamilton-Marshall doc­trine was extra-constitutional, and was based squarely on the Old World doctrine of absolute State sovereignty which had been so repugnant to the American revolutionaries. To Americans, the people, in their individual capacities, and not the government were supposed to be “sovereign."

From then on, it was all downhill, and the accelerating seizure of power by government and the suppression of rights proceeded with little fundamental opposition until the culminating nationalization of gold and the dollar by Franklin Roosevelt in 1933.

Economics, politics, and moral principles are interrelated, and this connection is neglected at our peril. As Holzer points out, inflation cannot ultimately be cured unless government is at last completely separated from the issuance of money and from the business of bank­ing, and this will not be done until we renew our original reverence for the rights of each individual. Holzer's suggested constitutional amendment to separate money and state is a rousing standard for all lovers of liberty and sound money, and for all opponents of infla­tion, to rally around.

Professor Holzer has performed an inestimable service to scholar­ship and to everyone who wishes to learn how we got into the mire of permanent inflation. If he is heeded by enough people, he will have performed an important service to us all.

MURRAY N. ROTHBARD
New York, N. Y. June, 1981