Gold Coins & Civilization
These men argued that the dollar was "better than gold," reasoning that it was not gold that gave the dollar its value, but it was the dollar that gave value to gold because the U.S. Treasury was willing to pay 35 of its paper dollars for an ounce of gold. (The hypocrisy and emptiness of this argument were rudely exposed in 1968, when the interna- tional price of gold soared above $35 an ounce in spite of all the maneuvers, manipulations, threats, and intrigues employed by the U.S. government to prevent it.) In the original conception of coinage, the state seal upon the metal was intended solely as a guarantee of weight and purity. The coin itself was still just a commodity—a commodity of convenience to be traded for commodities of necessity or desire. But it was not long before it occurred to the subtle mind of man that the seal of the state, with all the power and wealth and glory it signified, was adding a new intangible value to the recognized intrinsic value of the metal itself. For the state, whether representing the single will of an emperor or king or the collective will of an assembly or mass, possesses the power of fiat—the monopoly of the legal use of force. It can not only ask that the citizen respect the value it puts on its coins, but it can presume to have the authority and power to compel him to accept it. If this latter view is accepted as valid, the intrinsic value of money becomes secondary or even irrelevant.
For 25 centuries man has sought to master the economic and social revolution begun by this transmutation of gold into coin, and coin into the ultimate money, and money into a function of The Color of Gold 51 government. But his successes have been few. The philosophic division between the views of money as an actuality and money as a convention remains unresolved today. But what is significant is that historically the record of man’s outstanding successes has been written when the monetary supremacy of gold was recognized and encouraged, and his most colossal failures have resulted from trying to manufacture the illusion of wealth from the promises and threats of the state.