The Road Not Taken
“Two roads diverged in a yellow wood…” it begins. And it ends with the bittersweet and equivocal observation,
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.
The peregrinations of individual men and of whole nations are not dissimilar.
On every occasion of political and economic crisis but one in her history, America has come to the point where “two monetary roads diverged in a yellow wood”—and has taken the wrong road.
That unique occasion was the ratification of the Constitution in 1788. For—
• The Constitution adopted a scientific monetary unit—the “dollar”, a coin containing 371.25 grains of pure silver; and a companion coinage, denominated “eagles”, containing gold valued at the free-market exchange rate with silver.
• The Constitution withheld from the General Government the power to “emit bills”—which was the term of art at that time for paper currency. Any kind of “bills”, whether redeemable or irredeemable in precious metals; or whether or not designated “legal tender”.
• The Constitution prohibited the States from “emit[ing] Bills”. Again, any and every kind of “Bills”. And,
• The Constitution prohibited the States from “mak[ing] any Thing but gold and silver Coin a Tender in Payment of Debts”—thereby reserving to the States the power to “make gold and silver Coin a Tender in Payment of Debts”.
This was (and remains) a system legally just, politically astute, economically sound, and socially responsible, because it tends especially to benefit the common man, who typically holds much of his real wealth in money or the simplest claims payable in money (such as bank deposits).
Yet every other time since 1788, America has stumbled down the wrong monetary road. Not, however, “the road less traveled by”—for that would have been the road laid out according to constitutional principles—but instead “the road most traveled by”, the road that essentially every modern nation has taken. The road which has “diverged” from monetary units actually composed of silver and gold, honestly weighed. The road which has settled instead upon monetary units consisting of debt and administered through fraud: The first false step, to redeemable paper currency; then to redeemable paper currency declared to be legal tender; then to irredeemable paper currency declared to be legal tender; and even, as from 1933 to 1974, to the prohibition of the private ownership of gold altogether. And to make matters worse, now the central bank and the government treasury responsible for emitting the latest of these “bills of credit”—which have turned out to be “bills of discredit”, because of the Ponzi nature of their emission—have demanded, and will continue to demand, serial “bail outs” from common Americans, in order to keep the paper pyramids from collapsing.
Today, America finds herself once again lost in “the yellow wood” of monetary chaos, at a point where “two roads diverge[ ]”—
One road leads to “more of the same”—“monkey business as usual”, as it were, both politically and economically—aimed at propping up domestic as well as foreign zombie banks; subordinating the United States Treasury to the cabals of private financial power-brokers in New York and London; and, one may be assured, expanding the fraud of irredeemable legal-tender paper currency to the supra-national level, with a new “global currency” which will surely strip America of her economic sovereignty, and likely will attenuate if not eliminate her political sovereignty, too.
We must not be enticed down that wrong road by the illusion that we can convince Congress to reinstitute some kind of traditional “gold standard” that pulls the Federal Reserve System from the pit of its own incompetence, profligacy, and criminality, by somehow returning Federal Reserve Notes to redeemability in gold
My “Cross of Gold” address to this audience in October of 2010 said all that needs to be said against the substance of proposals of that kind. Of course, I shall be the first to commend the proponents of such plans for their patriotism, imagination, courage, and optimism. But, as General Sosobowski reputedly said when General Browning reviewed the plan for the ultimately disastrous Operation Market Garden: “I am thrilled that your great Field Marshall Montgomery has devised such a plan. I promise you that I shall be properly ecstatic if it works.”
Operation Market Garden failed because it was directed along the wrong road. I doubt that any plan to return Federal Reserve Notes to redeemability in gold will work, either—in any sense of the word “work” that will serve the American people’s interests. Even if such a plan could be put into practice, it would merely bring this country back to 1932—and those who have studied monetary history will recall that 1932 was followed by 1933.
That brings us to the other road. “The road not taken” yet, but which must be taken soon. The road that leads to
• honest, fully constitutional, and economically sound monetary units tied directly and inextricably to the free market;
• political “checks and balances”, in the form of decentralization of monetary authority, and control of their own money by the people themselves; and
• the retention and even strengthening of America’s national sovereignty and independence.
This is the road leading, not to salvaging the Federal Reserve System, but instead to walking away from it, through the adoption by each State of an alternative so-called “electronic currency” consisting of gold and silver, in which definite and fixed weights of precious metals are the only monetary units.
This can be done, because
(1) The present economic crisis has made some such action absolutely imperative.
(2) The present political crisis excludes any such action being taken by Congress.
(3) The States enjoy the constitutional authority to act.
(4) The people and public officials in the States are, slowly but surely, becoming aware that, if anything is to be done in their interests, they must do it themselves.
(5) The plan for an alternative “electronic currency” is fully workable—arguably, it is the only plan that can be made to work in time—
• Adoption of an alternative “electronic currency” by the States does not depend upon agreement or assistance from—or, indeed, any involvement whatsoever on the part of—Congress, the Treasury, the Federal Reserve System or other central banks, the major commercial banks either domestic or foreign, the big Wall-Street financial houses and speculators, or any of the other usual suspects in the political-cum-economic fraud that passes for national and international “monetary policy” today.
• Adoption of an alternative “electronic currency” establishes constitutional and scientific monetary units of gold and silver, immediately interchangeable with each other on the basis of the exchange rate between the precious metals in the free market.
• An alternative “electronic currency” avoids all of the problems that inhere in the use of coinage: namely, that
(i) Neither the United States nor any other country provides “free coinage” of gold or silver; and none is likely to do so in the foreseeable future.
(ii) The United States and foreign coins that are available are insufficient to make a coinage scheme work, particularly in that there are not enough different, especially low, denominations for use in average day-to-day commerce.
(iii) A State cannot safely rely on private mints to generate new coinage. For private mints will not be able to partake of any governmental immunity, by being made parts or agents of State government, because the States cannot themselves coin money—i.e., if the private mints could claim the immunity, then the prohibition would come into play. And without such immunity, the private mints would be exposed to “Bernard von Nothausing”, so none will start up without some previous judicial protection—which means a lengthy period of litigation, the outcome of which is likely to be negative in the decidedly unfriendly “federal courts”.
(iv) There exist no “gold and silver coinage banks” available to handle coinage on deposit, for transfers by checks, and so on; and banks in the Federal Reserve System cannot be expected to set up special gold and silver accounts. So businesses especially, as well as average citizens, will find the use of coinage very inconvenient.
(v) Bullion is perfectly assimilable on a constitutional basis to coin if the government provides or adopts some certification of amount and purity at least equivalent to the certification of amount and purity that inheres in official coinage. And, in any event, as to all “Payment[s] of Debts” that come within a State’s reserved power under Article I, Section 10, Clause 1 of the Constitution, a State can make actual “gold and silver Coin” the only final “Tender”, but can arrange that creditors can be paid with “electronic currency” at an appropriate premium, so that very few would ever opt for coins.
• An alternative “electronic currency” can be installed in at most 30, 60, or 90 days from passage of the enabling legislation, by using “off the shelf” technology that has already been thoroughly proven in the marketplace.
(6) A proper plan for an alternative “electronic currency” adopted and proven in one State can be taken up in short order in every other State. Indeed, once adopted in one State, it will be adopted in others, because the full force of the market will be behind it.
(7) An alternative “electronic currency” is satisfactory not only for intrastate and interstate commerce, but also for international trade. So its adoption will occasion the least possible disruption in the markets for real goods and services.
(8) This plan does not disperse our relatively meager forces, because the selfsame proposal can be promoted in each State—yet it also does not put all of our eggs into one basket, because there are 50 different baskets, in at least one of which the plan will likely prove successful.
(9) An objection frequently offered to this plan is that rogue officials in the General Government will attempt to enforce some statute of Congress—whether now on the books or to be specially enacted for the purpose—that prohibits or inhibits the States from adopting an alternative currency. Under the circumstances of accelerating economic crisis and civil unrest that will form the context in which an alternative currency will be adopted, however, the General Government will prove to be a paper tiger.
• First, if the General Government threatens or attempts to enforce some such statute against a State, the State can bring the case into the original jurisdiction of the Supreme Court, under Article III, Section 2, Clause 2 of the Constitution. In that event, it is most unlikely that the Justices would dare to take upon themselves the responsibility for interfering with a rearrangement of America’s monetary affairs that could save the people from a crushing economic collapse. They could, of course, correctly rule that the Court has already decided that the States retain the governmental authority to adopt their own currencies, whether of gold or silver coin or of bullion. See Lane County v. Oregon, 74 U.S. (7 Wallace) 71 (1869). Perhaps more likely is that—in the manner of Pontius Pilate that has always best suited them—the Justices will wash their hands of the matter entirely by ruling that the case presents a so-called “political question”: namely,
(i) The General Government has its monetary powers—to coin and to borrow money—and through the exercise of these powers the power to create a monetary and banking system. And it has done so.
(ii) The States enjoy an explicitly reserved power to “make gold and silver Coin a Tender in Payment of Debts”, and through the exercise of that power can create their own alternative monetary system. And they have done so.
(iii) These two systems serve as “checks and balances”, one against the other—limiting the States in what they can do, but preserving for them the ability to protect their people against an incompetent and imprudent Congress.
(iv) The ultimate “check and balance” is the people themselves, who can choose, in the market, which monetary system they want to use. And, therefore,
(v) The Judiciary cannot tell the people which level of government to support in this matter. Case dismissed.
Were the Justices to rule that the people cannot protect themselves against economic catastrophe by choosing their own form of currency, issued by their own State governments under a power constitutionally reserved to the States, their blunder would signal the end of the Judiciary’s authority in this country. The American people will not sit down resignedly to eat cat food in cold and squalor because five political appointees in black robes tell them they must do so, in order to enable the banks and Wall Street speculators to continue to loot this country. Rather, the people will adopt President Andrew Jackson’s view: “Justice Marshal has made his decision; now let him enforce it!”
• Second, concerns are often raised about the General Government’s employment of onerous tax regulations to inhibit the use of gold and silver as alternative currency. Because any tax-enforcement process must go through the courts, however, it will ultimately collapse on the grounds just stated. Long before that happens, however, any tax problems will be obviated by a political accommodation: namely,
(i) The States will agree to have their people keep two sets of books: one in Federal Reserve Note values, the other in the alternative gold and silver “electronic currency”.
(ii) The General Government will agree to create a system of dual tax returns, consisting of a “paper return” for transactions conducted in paper, bank-deposits, and base-metallic coinage; and a “specie return” for transactions conducted in gold and silver. And
(iii) Taxpayers will then pay their taxes on their paper transactions in paper, and on their specie transactions in specie.
The General Government will accept this arrangement, because, if it refuses, it will find itself bereft of any real tax revenues when the Federal Reserve System collapses. Only by cooperating with the States in the adoption and use of an alternative currency of gold and silver will the General Government financially survive. (And, of course, if it does not survive financially it will not survive politically, either.)
In sum, the plan for adopting an alternative “electronic currency” is workable constitutionally, technically, and politically. That being so, as America approaches the point at which “[t]wo roads diverge[ ] in a yellow wood”, the moment of her greatest opportunity arrives.
But so, too, approaches the moment of her greatest danger.
The plan of the Powers That Be is, by hook or by crook, to maintain the terminally ill Federal Reserve System on life-support until a new “global currency” can be introduced. So any proposal for returning Federal Reserve Notes to apparent redeemability in gold could play right into their hands.
As turmoil in the markets and in the streets intensifies, the Powers That Be may very well agree with reformers that something must be done to stabilize the monetary and banking systems. They could very well offer what appears to be a compromise, in the form of a new internationally controlled currency, to be stabilized with some kind of gold “backing”. After all their years of effort, heretofore rewarded only by failure, reformers will be desperate for something than can be labeled “success”—and might therefore accept such a proposal, imagining that they have finally won the battle for sound money. In fact, they will have been led, as little children, down the wrong road once again.
For, when the new “global” financial institutions and currency are firmly in place, with sufficient supra-national political and economic authority, the Powers That Be will remove any gold “backing” from the “global currency”, just as they did with Federal Reserve Notes. Once again, 1933 will follow 1932, and with a vengeance.
The plan for a State alternative “electronic currency” promises the best, if not the only, means by America can avoid this pitfall. An alternative “electronic currency” can be set up in each State throughout the United States without any involvement of, let alone support for, the Federal Reserve System. And an alternative “electronic currency” cannot possibly be diverted or converted into a scheme for a “global currency”—unless the Powers That Be agree to adopt fixed weights of gold and silver as the only “global” monetary units, and to treat everything else, not as money, but only as mere debt. Which, one can be assured, they will never voluntarily do.
So, in the endeavor to secure sound money, we must remain unequivocal, uncompromising, adamantine—“extreme” in the manner that truth and justice are always and necessarily “extreme”:
• We must demand real money, not a bastard currency consisting of debt.
• We must demand scientific money, the composition of which can be verified or falsified anywhere in the world according to the selfsame standards—not political money, the composition of which depends upon the whims of politicians, bankers, and speculators whom the average American would not trust to take his automobile to Jiffy Lube for an oil change.
• We must demand economically sound money, consisting of fixed weights of gold and silver, the quantity of which the free market determines through “free coinage”—not paper chits only “redeemable in” or “backed by” gold or silver. As soon as we hear the words “currency redeemable in gold” or “currency backed by gold” we should recognize that we are exposing ourselves, if not to fraud, then certainly to the fallibility and faithlessness of politicians, bankers, and speculators. And therefore,
• We must demand constitutional money. Even if redeemable in gold, the Federal Reserve Note is not constitutional money. It is not a “dollar”. It is not even “lawful money”, because according to the very statute defining it, it is to be “redeemed in lawful money”. Self-evidently, the thing to be redeemed and the thing that redeems it cannot be the very same thing.
Finally, what America faces where these “[t]wo roads diverge[ ]” is not, at base, a monetary problem. It is not even an economic problem. It is a political problem. After all, the free market is a governance mechanism, controlled by the people. Sound money is a governance mechanism, controlled by the people. And the Federal Reserve System is most assuredly a governance mechanism—but one designed to manipulate money and thereby skew the workings of the free market, for the benefit of special-interest groups antagonistic to the people.
America suffers from the disease of unsound money—and all its increasingly serious sequelae—because all too many among her people have largely abdicated self-government. The alternatives are not, as ultra-libertarians profess to believe, “government” (presumably bad) and some species of “liberty” largely divorced from “government” (presumably good). Within society, sovereignty is never is abeyance. If Americans do not govern themselves, they will not enjoy “liberty”, but surely will be governed by others—and in a manner not at all to their liking.
The establishment of an alternative currency is the first step down that road “less traveled by” towards America’s recovery of monetary, then economic, then political self-government. Let us not stumble at the turning-point.
Dr. Edwin Vieira is IAI’s Distinguished Senior Fellow in Jurisprudence and Constitutional and Monetary Law.
This is the complete text of an address presented in part to the Committee for Monetary Research and Education, Fall Meeting, 20 October 2011, at the Union League Club, New York City]. It was address was originally published originally at NewsWithViews.comon November 8, 2011.
The opinions published here are those of the writer and are not necessarily endorsed by the Institute.
