Specie Quotes
He was against paper money. At the time, any bank could issue its own paper money or “banknotes”. However other banks would not redeem the banknotes for the full amount; they would “discount” the note. Usually, the further away the bank was from the original bank, the more discount they took. Interstate commerce was almost impossible. Alexander Hamilton, Jefferson’s nemesis, had a much more modern point of view and fortunately his view prevailed. Paper money could only work if it was issued by a central bank with no discounting by other banks. The paper money had to be “legal tender”.
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.
The sentence was actually drafted by Secretary of the Treasury Salmon Chase.
What Franklin Delano Roosevelt began, President Nixon would in 1971 complete by removing America from the gold standard entirely and ending fixed rates of exchange. There have been those in government who did not understand the modern economics of money and who believed that currency had to have a fixed rate of exchange for gold or silver otherwise it was worthless. Roosevelt had to deal with them as did Nixon later. Even into the 21st century when it had been amply demonstrated that the best currency in the world was the United States dollar precisely because it was backed up by the full faith and credit of the United States Government, there were those who complain that United States money is not sound currency and argue for the return of the gold standard.
This quotation came into play in 2011 when the Tea Party tried to cause the US to default on its debts rather than raise the debt ceiling. Even their unsuccessful attempts caused much loss of confidence for America the world over, violating McKinley’s principle.
Specie is a word for paper money. Such political artifices were well known in More’s time, and yet still exist in many countries.
The Union government had resorted to printing Greenbacks {619940} to finance the war. However, that left two different U. S. currencies in circulation, and speculators soon began buying one and selling the other as the Greenback ‘market’ flourished or sank with the results of each battle. This caused substantial economic dislocation in the Northern Economy and was thought to be of great help to General Lee’s war effort. Lincoln had little charity toward the speculators.
The Register was one of the most widely circulated journals of early America and Niles one of the most popular and influential journalists. Banks at the time could print their own paper money—unregulated by anyone. Often then did so knowing full well that if all the paper money they issued were presented for redemption they could not possible pay, as there was by the resolution of the bank directors not enough gold and silver to redeem all the money. Although few national leaders approved of the practice, it would have then been unthinkable and considered unconstitutional for the Federal government to interfere with a private bank’s right to print money or issue promissory notes regardless of the backing. See John Adams {615650} for a similar view.
America had a difficult early history with money—especially paper money which had been issued by private banks but were trusted by few. Paper money had for the first time had been issued by the Federal Government during the Civil War. Many saw it as a wartime measure but not a good practice to follow. Garfield, along with many other leaders thought that it was not constitutional for Congress to issue paper money. Others prevailed as the need for a lighter and more practical form of currency was necessitated by a growing economy. Coins for large transactions between businesses especially was very awkward when chests of coins had to be delivered to pay for cattle, produce or manufactured goods at the wholesale level.
Arguing that the gold standard is ordained by God:
