The Republican Platform and the Mainstreaming of the Gold Standard

The most interesting plank in the draft GOP platform is the "creation of a commission to 'consider the feasibility' of returning the U.S. dollar to the gold standard 'to set a fixed value' for the currency." Gold has become more popular recently as a financial crisis causes turmoil all over the world.

Ralph Benko
August 27, 2012
Forbes

The most interesting — because powerful and not widely anticipated — plank in the draft GOP Platform scheduled to be voted on tomorrow calls for, according to a Bloomberg, “creation of a commission to ‘consider the feasibility’ of returning the U.S. dollar to the gold standard ‘to set a fixed value’ for the currency.”

The dogmatic Left is going into full “Sound Money Derangement Syndrome.” Reuters captured leading Birkenstock School economist Brad DeLong in full seizure: “Brad DeLong, a Berkeley economics professor who served as a Treasury official during the Clinton administration, said (of Paul Ryan’s commitment to a rule-based monetary policy): ‘Quite frankly it is terrifying. Price stability is one goal of macroeconomic management, but only one goal: there are others. To command the Federal Reserve to pursue price stability alone is to create the preconditions for macroeconomic disaster.’”

The Financial Times’ lede on the gold plank was “The gold standard has returned to mainstream U.S. politics for the first time in 30 years….” Last January Bill McGurn, a well-respected and entirely mainstream financial columnist, wrote in the staid Wall Street Journal calling a new gold commission one of the best ideas of the campaign, telling candidate Romney to steal it:

“Steal their best ideas. Mr. Gingrich has done precisely that with Ron Paul by calling for a commission to study the gold standard. Mr. Romney could easily do the same, echoing Mr. Paul’s call for an honest dollar….”

Contemporaneously, in the mainstream conservative media The American Spectator, former Wall Street Journal and equally well-respected columnist George Melloan published a long, thoughtful essay, Let’s Return to the Gold Standard:

“Gold pretty much dropped out of the monetary debate during the 20-year dollar hiatus, but it is back now with a vengeance as prices rise and securities markets are roiled by the massive global overhang of sovereign debt.

The time is ripe for Mr. Lehrman’s new book. That’s because it goes well beyond making a persuasive case for a return to the gold standard and provides a detailed road map for how to get there.”

Opponents of the gold standard have attacked and will again attack good money — and especially gold — as “outside the mainstream.” That may be true for academic economists but it is simply not so for the rest of us. Rasmussen polled 1000+ voters last October, and its data revealed that hefty pluralities of almost all demographics — and a majority of Blacks — approve of the gold standard. Historically speaking, sound money in general and gold in particular represent very mainstream opinion.

2012 is by no means the first time that the gold standard has been addressed in political platforms. The GOP Platforms for Reagan’s 1980 and 1984 victories argued that “The severing of the dollar’s link with real commodities in the 1960s and 1970s, in order to pursue economic goals other than dollar stability, has unleashed hyper-inflationary forces at home and monetary disorder abroad, without bringing any of the desired economic benefits. One of the most urgent tasks in the period ahead will be the restoration of a dependable monetary standard….” In 1984: “A dollar now should be worth a dollar in the future. This allows real economic growth without inflation and is the primary goal of our monetary policy…. The Gold Standard may be a useful mechanism for realizing the Federal Reserve’s determination to adopt monetary policies needed to sustain price stability.”

In Eisenhower’s 1952 presidential election the GOP Platform called gold “the standard of the most enlightened nations of the Earth.”

Further back, William Jennings Bryan’s show-stopping “cross of gold” speech won him the 1896 nomination. It did not, however, win him the presidency. That went to William McKinley, who campaigned forthrightly for the gold standard on a GOP platform.

The nomination of Bryan caused a rift among Democrats. Party members loyal to Grover Cleveland created a schism party. Its platform reaffirmed gold:

“assuring the most stable standard, and especially the best and safest money for all who earn a livelihood by labor or the product of husbandry. They cannot suffer when paid in the best money known to man, but are the peculiar and most defenseless victims of a debased and fluctuating currency, which offers continual profits to the money changer at their cost.”

In indicting the gold standard as “out of the mainstream” the Left, showing its fashionable alienation from core American values, takes a jackhammer to much of Mt. Rushmore … and other of America’s iconic founders. Anti-paper-money stalwarts include such weirdos as George Washington, John Adams, Thomas Jefferson, James Madison, Alexander Hamilton, Thomas Paine, and John Marshall. Paper money had very few, and no distinguished, defenders.

The great rivals Jefferson and Hamilton were in agreement as to the evils of paper money. Jefferson, in 1813, wrote to J.W. Eppes:

“Paper money is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.” … “Paper is already at a term of abuse in these States, which has never been reached by any other nation, France excepted, whose dreadful catastrophe should be a warning against the instrument which produced it.” …

Hamilton, the architect of the American financial system (setting a monetary and financial climate for great prosperity) wrote, in 1791, to Congress in his Report of the Secretary of the Treasury on the Subject of a Mint:

[The Secretary] is unable to distinguish an operation of this sort, from that of raising the denomination of the coin; a measure which has been disapproved of by the wisest men in the nations in which it has been practised, and condemned by the rest of the world. …. The consequence … is to degrade the money unit; obliging creditors to receive less than their just dues — and depreciating property of every kind….

The Resolutions Committee of the Republican National Convention has performed a great service to the republic. Its call for a commission to study the feasibility of returning the U.S. dollar to the gold standard appeals to the coveted Independents very much, not to mention parts of the Democratic voter base. It also calls directly to the GOP’s base of mainstream conservatives, tea partiers, libertarians, and supply siders.

A gold commission has been embraced by very mainstream financial journalists. The gold standard has been praised by many more, such as Forbes.com’s own Steve Forbes, by Forbes.com opinion editor John Tamny, by New York Sun editor Seth Lipsky, and by political journalistic heavyweights such as William Kristol, among others).

Those who attack sound money and gold as “out of the mainstream” demonstrate themselves as residing within an intellectually incestuous ivory tower. The gold standard’s alarmist critics, not the GOP delegates, are out of touch with political, economic, and historical reality. A call for a gold commission is great politics and great policy. Gold is going mainstream.

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