With the island of Cyprus and the European Union being very much in the news these days, I am reminded of a few lines I wrote in my book, “The Art of Clear Writing,” dealing with the lingering echoes of California’s Gold Rush which can still be heard today. Some analysts are talking about a return to the gold standard. They believe this approach may settle the monetary uncertainty which continues to plague the EU. The concept behind the gold standard is simple enough: a pledge by the government to redeem dollars for gold, thus insuring the value of the currency. However, experiments with the gold standard seem not to have worked out for whatever country has tried it.
In the light of these events, the lines I wrote to illustrate narrative paragraphing continue to be relevant:
“The lingering echoes of California’s 1849 gold rush can still be heard today.
It was a watershed event in America’s economic history, starting innocuously enough with the discovery of gold at John Sutter’s sawmill near Sacramento, California. Pandemonium reigned with the spread of news as the influx of gold seekers into California swelled to a crescendo. Outsiders from all over the world poured into California; they sailed around South America, crossed Panama, and swarmed in from other parts of the world as well. San Francisco mushroomed from a sleepy little village to a boom town virtually overnight.
The huge supply of gold that was ultimately generated provided riches for the United States. The enormous amount of gold now available enabled the U.S. Mint to add two new gold coins, the gold $1 coin and a large, heavy $20 coin (Double Eagle). California became the “golden” state.
So began a new worship of money. The discovery of gold paved the way for the transition of pastoral America to manufacturing America and the institution of the gold standard – paper money backed by gold and free convertibility of currency into gold. The price of gold was pegged at $20 per ounce.
But the gold standard worked to the disadvantage of indebted farmers, who favored bimetallism (as did Alexander Hamilton), and the minting of silver coins to create cheap money. Their struggle with depressed crop prices in the late nineteenth century was aggravated by a shortage of money and an escalation of the farmer-banker conflict.
Banker J. Pierpont Morgan was a strong advocate for the gold standard. But to William Jennings Bryan, the Democratic nominee for president in 1896, Morgan was a Pontius Pilate who nailed starving farmers to a cross of gold. The agrarian fanatical hatred for the gold standard was reflected in Bryan’s famous speech at the 1896 Democratic Convention, when he concluded that “mankind shall not be crucified on a cross of gold.”
America eventually departed from the gold standard in 1933 when President Franklin D. Roosevelt, responding to the depression, impounded all the country’s gold. In 1971, because of a serious cash flow crisis, President Richard Nixon permanently closed the gold window by decreeing that the U.S. would not exchange gold for dollars for anyone.
With the departure of the gold standard came the untrammeled printing of money by the U.S. and other nations. This creation of easy money (fiat money, i.e., money created by government decree) leading to excessive spending and the resulting budget deficits arguably have directly contributed to the sovereign debt crisis plaguing Europe today. Some analysts are now calling for a hardening of currencies and a return to the gold standard.”
Thus, the landscape of today’s financial world can truly be said to be a reflection of its rocky beginning.
The foregoing quote and other clear writing guidelines and techniques may be found in my book, which is available on amazon.com in print and on Kindle Books. The book and my two Civil War articles are featured on my website located at agregardie.com.
Copyright © 2013. Arnold G. Regardie. All rights reserved.