In anthropology, a “fetish” is an object believed to have magical powers. A rabbit’s foot, a horseshoe, a lucky coin: these are “fetishes,” material things supposedly animated by magic power. They can ward off bad times.
Historically, when Americans talked about the gold standard, they often talked about it as magical. Gold would make bad people good, banish false values, and restore virtue to the republic. Paper money enabled lies and false promises: gold restored honor. A letter to the Pennsylvania Gazette in 1787 lamented “dirty” paper money. “At the sight of a dirty paper bill think—how many hearts has this worried? What number of dirty actions has it done? … Away with all worthless paper money; the source of all daily corruption and misery; let gold and silver restore solid integrity, pure innocence, and splendid honor.” [1. Pennsylvania Gazette (22 August 1787) ]
Gold would banish evil because it was “God’s money,” insisted DeBow’s Review in 1860. DeBow’s claimed that “all attempts to depreciate it by alloy, or to compel the use of a paper or any other substitute, have resulted in disastrous failure…The surgeon or the anatomist who attempts to invent a substitute for the blood, is not a whit more presumptuous and charlatanic than the statesman who endeavors to force into circulation any other currency in place of the precious metals.” Money was natural, like blood. [2. “Money As An Institution,” Debow’s Review 29.1 (July 1860): pp 21-25]
Although the Bible frowns on worshiping golden idols, gold’s fans often came very close. In 1874 New York Senator Jacob Cox claimed of gold: “preciousness, cohesiveness and divisibility belong to gold as to no other element,” and “God has hardened it in the millions of years in which the mountains come and go like the rainbow. It is as true as its burnished source, the sun.”[3. Congressional Record, 43rd Congress, 1st Session, (Ap 7 1874) 2880] God had made gold to be money.
If not connected to nature or deities, gold appeared as a symbol of civilization and progress itself. “The history of money and the history of the civilization of the human race are intertwined,” argued “A Currency Primer.” “Gold is the standard of civilization and Christianity,” insisted another gold tract: “As Mexico adheres to the implements of which the farmers of the United States discarded fifty years ago, so does it adhere to a standard of value [silver] which this country…discarded in 1834.” Advanced races used gold. [5. Josiah Patterson quoted in Sound Currency: A Compendium… v. II (Oct. 1 1895) 446]
In the 1890s, gold partisans could not resist making racial comparisons. An 1892 pamphlet argued that “fair tests of the state of civilization in any country” included “the kind of money it uses;” and that only the poorer nations of the world used silver. “Congress cannot cause us to be born again, and into the Hindu, Chinese, Japanese or even into the Mexican or South American silver–handling type,” it concluded. Gold money was a genetic predisposition, a biological “type.” [6. J. Howard Cowperthwait, Money, Silver and Finance (NY 1892) 18; 22] “What prevents Congress from legislating the value of a dollar?” asked “a financial catechism” of 1895: Is it the Constitution? “Not the Constitution of the United States,” came the answer, “but the constitution of man.” [7. Frederick Perry Powers, “A Financial Catechism,” in Sound Currency v. II (May 1895) p. 3.]
Fantasies of gold’s “racial” or genetic value translated into real effects. By 1903, American workers on the Panama canal were segregated by task and by pay into two groups—white workers, known as “gold” workers, took their pay in gold, working on the “gold roll,” while black workers, the “silver workers” on the “silver roll,” took silver coins home. Gold and silver workers used separate restrooms; they ate and slept in segregated quarters. “If white Americans are needed, I think we should employ them on the gold roll,” wrote one canal official: “the silver roll was not created for [white] Americans any more than the gold roll was created for negroes.” Gold money was for white people: its superiority mirrored theirs. [8. http://www.archives.gov/publications/prologue/1997/summer/panama-canal.html.]
The gold standard was never simply about money: it was always encumbered by other social anxieties about the negotiability of things and people in daily life. It was always about other standards, standards of civilization or conduct, the line separating us from them.
Gold enthusiasm waxes and wains. In the 1950s, the Daughters of the American Revolution were mocked when they claimed liberals had stolen all the gold in Fort Knox, and demanded Truman conduct a recount.[9. New York Times Mar. 28 1951 p. 24] (Ron Paul recently demanded the same thing). In the James Bond film Goldfinger, love of gold is shown as a version of evil megalomania and sexual perversity. By the 1970s, even the Wall Street Journal regarded the gold standard as a relic of earlier times.
Modern gold bugs rarely advance overtly racialized arguments for gold, but they tend to invest it with magical properties in much the same way some Americans did in 1787. Or they see it as the magic antidote to generalized social decline.
“The country’s going to hell faster than when Roosevelt was in charge,” declares the fatherly, avuncular trader Lou Mannheim at the start of Oliver Stone’s Wall Street: “Too much cheap money sloshing around the world. Worst mistake we ever made was letting Nixon get off the gold standard.” Cheap money equals cheap people: Mannheim watches as the working class climber, Bud Fox, gives up his corrupt ambitions and gaudy pretensions returns to his proper place in the lower classes.
“Tune into Glenn Beck’s Fox News show or his syndicated radio program,” wrote Stephanie Mencimer in Mother Jones, and you’ll soon learn about the precarious state of the US dollar, a currency on the verge of collapse due to runaway government spending, a ballooning national debt, and imminent Zimbabwe-style hyperinflation.” [8. http://motherjones.com/special-reports/2010/05/glenn-becks-golden-fleece]
As Richard Hofstadter noted about the paranoid style, in the rhetoric of the gold standard we are always at the brink of Armageddon. Like the conspiracy theorist, the gold bug:
traffics in the birth and death of whole worlds, whole political orders, whole systems of human values. He is always manning the barricades of civilization. He constantly lives at a turning point. Like religious millenialists he expresses the anxiety of those who are living through the last days and he is sometimes disposed to set a date for the apocalypse.
Wes Vernon, blogging at RenewAmerica.com, suggests that in a second Obama administration, “the Dark Years will spread around the planet and could collapse the human future for decades, even centuries.” He describes looters in the streets and families citizens huddled behind steel bars as roving gangs terrorize the countryside. See also here, or here, or just google “Obama, gold inflation, collapse.”
Thus the popularity of gold buying among conservatives, who often similarly want to endow gold with magical personal properties. Fox news host Brian Kilmeade endorses gold trader Rosland Capital. Kilmeade tells their customers “Gold is pure. Much like the motives, principles, and traditions of the men who founded our fine country.”
RenewAmerica references Craig R. Smith, who draws out the lurid scenario of apocalyptic collapse in his new book Crashing the Dollar. Smith, co-author, with Swift-boater Jerome Corsi, of Black Gold Stranglehold, is Chairman of SwissAmerica Trading, another gold investment firm. He sells gold as “morally-correct money” and notes “Today the U.S. dollar is on the same trajectory as Obama’s approval ratings, which have fallen one-third — from 65% to 45% — the lowest level since the election.” [1. Craig R. Smith and David Bradshaw, “Morally-Correct Money for the 21st Century” (Sep. 4 2009); online at http://www.swissamerica.com/article.php?art=09-2009/200909041235f.txt.] Gold is the opposite of an African American president: “morally-correct,” naturally valuable and uninflated, it barricades civilization itself. Smith says:
Let’s be brave enough to tell the truth here…America’s economy has been skyjacked. And it appears that the big-government crazies at the controls aim to crash the economy and the dollar. They aim to bring about a ‘fundamental transformation’ of the world in ways that will destroy everything America’s founders made, every individual freedom our . . . Constitution enshrines, every opportunity our children were supposed to have in a free society.
It’s not just about gold.
Since colonial times there’s been a tension between political forces that want inflation, easy credit and loose money, and political forces that want stable prices and a “naturally” limited money supply. There are arguments for both, and it’s not easy to resolve these two camps. Gold bugs made many of the same arguments in 1787 that they make today. Compare Smith’s language to economist Amasa Walker’s 1887 comments, referenced here and in full here.
Gold bugs see more than just prices at stake: they tend to see paper money as a violation of the natural order, and gold as the restoration of all that’s virtuous. It’s never just about prices: it’s almost always about the wrong kind of people being in charge.
And that rhetoric screens the class interests at work. Deflation really helps those with money. It drives down wages. It raises interest rates. It generally stagnates economic growth. But that’s not a bad thing if you’ve already grown big. Craig R. Smith’s apocalyptic arguments go hand in hand with his business selling gold. Maybe he believes that Obama’s presidency heralds the end of civilization as we knew it. Maybe he’s just cynical.
It is certainly possible that the United States could collapse tomorrow, and paper money suddenly lose all value. It’s possible a comet will strike the earth, or the rapture will loft the chosen to heaven. Plagues, catastrophes, disasters: we’re all only an inch away. It’s true that if paper money suddenly collapses, gold will probably have value, but so will guns and bullets, and canned beans, and power tools, and whiskey, and clothes and really any commodity that has value today. Gold is just a commodity. Stockpile it if you like, and wait eagerly for the apocalypse. Or stockpile the beans, and watch the gold guy try to eat gold.
[…] Update: More on gold language […]
These are great posts! Every time you use the phrase “Gold Bug,” I think of the Edgar Allan Poe short story. But I suppose that too would be a good example of the concerns over the switch from gold to paper money.
Wow, between Lou Mannheim, Fox News broadcasters, and nineteenth century racist crackpots, you’re really taking on the best of the gold bugs’ arguments here!
The nineteenth century guys I quote are not “racist crackpots:” in their time they were the leading business men of their day–one of the was Cleveland’s Secretary of the Treasury.
There are more reasonable arguments for gold, I suppose, but the rhetoric of the gold standard, historically, has been substantially as shown. It’s not the whole substance of gold standard arguments, but rhetoric like this has been a consistent part of the gold standard position
Yes, and many free silverite Populists also employed a lot of anti-Semitic rhetoric in trying to drum up support from Protestant farmers, and I’m sure a lot of early twentieth century progressives advocated establishment of the Fed in the same breath with prohibition and eugenics. I’m just not sure what that has to do with anything other than an analysis of their rhetoric, though.
I have some confidence that I will do better trading some gold for some beans that vice versa. The thought that an ounce of gold won’t buy an ounce of beans doesn’t seem likely. And gold, unlike beans, doesn’t rot on the shelf.
On the other hand, anonymous commodity money, like gold or silver, carries a great deal of interchange risk. I certainly wouldn’t relish living in a world where physical gold is the primary medium of exchange. I would need to be armed most of the time.
For all that, in a time of extreme economic volatility when the Chinese seem intent on having the key currency, it is hard to imagine holding what wealth one has in dollars is a good way to preserve buying power. And that is all I seek.
It seems like a reasonable bet that gold and silver will remain fair proxies for the price of commodities. But there’s risk of a price collapse – we each have to think that through and place our bets accordingly.
Your brief history of human idiocy regarding gold is interesting but I’m not sure it’s relevant to a balanced view of gold as a store of value. The alternatives seem to be other currencies, stocks, commodity futures or treasuries. Of those I think gold is probably the best. The day may come when growth returns whereupon the calculation changes.
Silverites were drawn to antisemitic rhetoric for the same reason as gold bugs–they believed in a “real, natural standard of value. They just added a silver fetish to the gold fetish. If there were silverites around now I’d write about them.
The interesting group is the greenbackers, who often tended to support racial equality because they saw value and identity not as natural, but as a socially derived.
Of course this only describes general tendencies–not all gold bugs believed exactly the same thing.
Does it matter? Well, does the history of any idea mattter? I’d say yes, but then, I’m a historian. It seems to me that lbertarianism has never shed the essentialist thinking that shows up in the people I quoted. It just shows up now as a constant emphasis on natural law. That seems relevant to me
[…] This post was mentioned on Twitter by TU Cultural Studies, Mike O'Malley. Mike O'Malley said: The rhetoric of the gold fetish: http://theaporetic.com/?p=996 Bad craziness […]
Funny, when I read Gold Bug I think of Cars and Trucks and Things that Go.
These are great posts. I’m learning all sorts of stuff, and it’s pretty painless!
Didn’t Whitehead suggest that one of the human animal’s big problems was “misplaced concreteness?” We really want to project “value” onto something concrete – something that we can hold in the palm of our hand. Money is the way we turn a value into a number. What really is the worth of an hour I spent ten years ago? It’s gone. But I suppose money is a necessary illusion for the hairless monkey clan.
Paul Simon put it well:
I have a number in my head
Though I don’t know why it’s there
When numbers get serious
You see their shape everywhere
Dividing and multiplying
Exchanging with ease
When times are mysterious
Serious numbers are easy to please
Take my address
Take my phone
Call me if you can
Here’s my address
Here’s my phone
Please don’t give it to some madman
Hey hey, whoa whoa
Numbers swirling thick and curious
You can cut them with a knife
You can cut them with a knife
Two times two is twenty-two
Four times four is forty-four
When numbers get serious
They leave a mark on your door
A telephone is ringing in the hallways
When times are mysterious
Serious numbers will speak to us always
That is why a man with numbers
Can put your mind at ease
We’ve got numbers by the trillions
Here and overseas
Hey hey, whoa whoa
Look at the stink about Japan
All those numbers waiting patiently
Don’t you understand?
Don’t you understand?
So wrap me
Wrap me do
In the shelter of your arms
I am ever your volunteer
I won’t do you any harm
I will love innumerably
You can count on my word
When times are mysterious
Will always be heard
When times are mysterious
Serious numbers will always be heard
And after all is said and done
And the numbers all come home
The four rolls into three
The three turns into two
And the two becomes a
P.S. I agree with your comment that the “essentialist” dogma lingers on with the Libertarians – a group I hold in broad contempt.
However, one thing that a strict adherence to a commodity money standard enforces is economic growth limited to the increase in a very hard to get money supply. Note I said “strict.” Naturally the holders of the gold will quickly start issuing notes in excess of their holdings and we’ll be right back to a reserve system with paper money.
The gold bugs claim that no fiat currency has every lasted is hard to contest. Their claim that a gold based money system is stable is total nonsense. Money and stability don’t mix – unless you’re Swiss.
This post is great now that I am viewing it as an historical perspective rather than a sniping expedition. I tend to think of the current political scene as insane. The history you provide shows me that we’ve been crazy for a long, long time. Of course I’m nuts too. I believe that things should make sense.
Some time ago, I needed to buy a car for my business but I didn’t have enough cash and couldn’t buy something. Thank goodness my mother adviced to try to take the business loans at creditors. Thence, I did that and was satisfied with my short term loan.
Great post about gold. Being an amateur songwriter, I got a bit inspired by it and wrote a song about gold picking up on some of your ideas. I hope you don’t mind.
See http://www.7trappor.com/2010/12/gold.html for lyrics and a lead sheet.
“We’ve used it for ages
It always will be
The noblest of wages
As far we can see
They say it is God’s money
So honorably pure
So precious and shiny
It has such allure
It is gold
Making your heart turn cold
Touch it and you are sold
All feelings put on hold
All the things you’ve been told
All they say will enfold
Don’t you see you’ve been fooled
It’s only a metal
Yet still so much more
One day it will settle
You hide if from big brother
You hide it from all
So you won’t be bothered
When everything falls
It is gold…
The same old story
The magic past
It’s coming here at last
We’re going faster
Only one way
That we can save the day
It’s gold… “
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[…] and bring down civilization with it. Often this is invoked in a kind of taunting way: just wait and see what your paper money buys you when the market disintegrates! And takes all your pretty suppositions with it! Ayn Rand’s thick and cartoonish Atlas […]
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I’d be very grateful if you could elaborate a little bit further.
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