John Ralston Saul Quotes
Money is not real. It is a conscious agreement on measuring value.
Saul, John Ralston. The Doubter's Companion: A Dictionary of Aggressive Common Sense. Free Press, 1994, p. 215.
Economists they world over have differed as to how critical it was to have a money supply that is based on a gold standard or other precious metal. United States history has had a dispute over whether the money should be backed by gold or silver. Finally, under the Richard M. Nixon administration, the United States went off the gold standard and American money ever since is only backed by the ‘full faith and credit’ of the United States. Some politicians like Paul believe this is a poor policy since it allows governments to control their own money supply irrespective of their gold or silver holdings. Paul goes further than most and sees freedom itself dependent on a precious metal standard. Most politicians disagree.
At the time, a bank note—paper money issued be a private bank—was not backed by any gold or silver and was not insured bym the government. A bank could print as much as they wanted, so it was always worth less as the further you were from the particular issuing bank, the less you could get your bank note, because no one knew whether or not the issuing bank would redeem the note or even be in existence. So every private bank note had diminished value for the public. However, carrying gold and silver around and making change for precious metals was difficult and often impractical. So people used banknotes. The same thing happens with credit cards today. The merchant has to pay a fee to the credit card company and the bank and therefore charges us more for whatever we buy. But most consumers and merchants are willing to pay the difference to obtain the convenience of the credit card,
The very act of printing money created a debt—at the time and until the Nixon Administration which went off the gold standard—the government owed the gold or silver and the spicie—the printed money—was a promissory note.
There has always been a fear of inflation and currency debasement by governments. Since ancient times, rulers issued coins and when they were made of cheap metals like copper or iron, the ruler could mint as much as he wanted and when he did so the value went down. By using only precious metals, gold and silver, for coins, there would be a natural restraint on government. Garfield was one of those who believed that we should always have money of gold and silver. The United States would use that principle for the next century even backing its paper money with gold and silver. In the Nixon administration the United States abandoned the gold standard. Today, it is the ability of a country to produce things that maintains value of paper money which has been supplanted in many cases by electronic money.
This is the first major history of banks written in the United States.
The same argument can be made against the modern paper money supply. What Jefferson and most of the founding fathers, with the exception of Alexander Hamilton. did not realize was that the major stability of any kind of money was not only the silver or gold that backed it but the political and legal stability of the nation and the size of its productive economy. Where Jefferson was right however is that all these banknotes at the time were issued by local private banks. The Government had no responsibility for paper money and had no knowledge of how much paper money any bank issues and whether or not they had any silver to back it up. Banks didn’t trust other bank’s notes and would only redeem them at a discount. A $10 note from a South Carolina bank might only be worth $7 in New York and $6 in Boston. The early American monetary system was a mess.
John Ralston Saul CC OOnt is a Canadian writer, political philosopher, and public intellectual. Saul is most widely known for his writings on the nature of individualism, citizenship and the public good; the failures of manager-led societies; the confusion between leadership and managerialism; military strategy, in particular irregular warfare; the role of freedom of speech and culture; and critiques of the prevailing economic paradigm. He is a champion of freedom of expression and was the International President of PEN International, an association of writers. Saul is the co-founder and co-chair of the Institute for Canadian Citizenship, a national charity promoting the inclusion of new citizens. He is also the co-Founder and co-Chair of 6 Degrees, the global forum for inclusion. Saul is also the husband to the former Governor General Adrienne Clarkson, making him the Viceregal consort of Canada during most of her service (1999-2005).
