Why we should go to a Gold Coin Standard
                                     by
                                Lazarus Long

        We should stop tinkering with the economy and engaging in fiscal
        shell games. The country is, despite the false hopes continuously
        produced by the governments of the day, bankrupt. True we might, by
        selling off every concievable asset, pay off the national debt, but
        then we would still have the enormous sum of the total provincial
        debt to deal with.

        What is needed, is a drastic cure. What I propose is the return to
        an honest currency, one that makes it difficult for governments to
        play the shell game. We should set the value of our currency on a
        set weight of gold. Say, a one dollar coin containing 2.50 grains
        of gold. Of course this coin would be too small a size for convenient
        usage. The coinage issued in gold would therefore be restricted to
        larger denominations (possibly $50, $100 and $200) and the currency
        of day to day usage either be alloy coins or notes. These would be
        issued only to the limit of actual gold in possession of the
        government. If the government had a gold inventory of 1 billion
        dollars worth of gold, that is the limit of currency that would
        be in circulation. Individual citizens and corporations that hold
        gold would be allowed to sell gold to the government or have the
        mint strike that gold into coinage by paying the true cost of
        striking the coin but no higher.
        "When a country is on the gold standard, the so-called price for gold
        is the number of dollars an ounce of gold will coin into. That is
        not a market price in itself but because the government is such a
        big buyer of gold, it effectively sets the market price for gold
        for other uses".(Donald L. Kemmmerer, Nov. 1974. Committee for
        Monetary Research & Education, Centre for Strategic and
        International Studies, Georgetown University)

        This would necessitate a major change in the way governments would
        have to operate. It would no longer be a simple matter of "cranking
        up the printing press" to increase the money supply. For it to do
        that, the government would have to recall the gold coins that are
        in circulation and restrike them with less gold in them. A recall
        of that type would be noticeable and people could thwart the
        government by hoarding. In a sense the people who purchase or
        acquire the true gold coins, those of the larger denominations,
        would have the power to keep the state honest.

        Gresham's Law comes into play very quickly in a gold standard
        economy.... if the people feel that the government or market is out
        of step, they cease using the paper currency and demand gold. This
        sends a clear signal that credit expansion is becoming overheated.

                           Arguments against gold

        Some people will argue that going to a gold standard would cause
        economic hardship.

        Historically, this has not been the case. Sweden had depressed
        periods along with her inflation from 1917-1924, but enjoyed a return
        to prosperity in 1924 when she returned to gold. The U.S. returned to
        the gold coin standard in 1879 and prosperity increased immediately.


        Returning to gold would stifle growth.

        The historical record suggests otherwise. From 1879 - 1914, when
        the U.S. was on a gold coin standard, it enjoyed tremendous
        economic growth. More infrastructure was developed (mainly by
        private companies) and heavy industry quadrupled it's production.
        This was also a time, when despite not having to pay an income tax,
        hundreds of trusts and philanthropical foundations were setup and
        performed with privately held funds much of what the governments of
        today borrow to do.

        All in all, there is much compelling evidence to support the return
        to an honest currency. Let us hope that a future government will be
        honest with us and take us out of the shell game and put us on a
        gold standard.

        File as USEGOLD1.TXT