Gold Coins of the World
So far in history every attempt to eradicate the ties that have bound men to gold for 4,000 years has ended in disaster. Gold, Fiat Money, and Gresham’s Law Ever since the Babylonian success, many other nations and groups of nations, at fortuitous periods in their history, have recognized that one of the primary advantages in the use of gold as money is its merit as a measuring device; it becomes a standard of value with which all other forms of wealth and all promises of wealth can be compared. Gold has all the attributes that would be required of a perfect value standard: it is highly prized for its own attractive nature, it is virtually imperishable, it is expensive in terms of the effort required to extract it from nature and refine it, and it is sufficiently scarce to be considered rare—but still avail- able enough to be widely used.
All that is necessary to maintain a “gold standard," with all the advantages of economic stability it offers, is that the face value and the intrinsic gold value of the monetary unit be kept identical. This is the essence of pure com- modity money, and its ideal expression was found in gold coins of fixed value and unvarying purity. But the Western mind is restive under restrictions of any sort and our history is replete with attempts to abandon the ancient "cross of gold.” Since the glories of Imperial Rome, we have been en- thralled by the apparent majesty and power of the state (particu- larly those who have had a part in the wielding of that power). It is regrettable but perhaps understandable that this apparently limitless power of the state, its right of fiat, should at times appear 52 HOW TO INVEST IN GOLD COINS to be not merely the guarantor and regulator of money, but its actual creator. What a dream! If the state could actually create money by the mere exercise of its will, Brazil and Chile, presently buried under their mountains of fiat paper notes, would be among the richest countries in the world, while Switzerland with its 100 percent gold-backed currency of limited circulation would be one of the poorest. Only a very few times in the history of the West have men been so bold as to dare to cut completely and openly the link between money and gold, and when they did the results have been cata- strophic.
Most of the rulers of the world’s empires, whether absolute monarchs or populist politicians, have had the good sense to recog- nize that the fiat powers of the state depend eventually on a willing- ness to use brute force—and that naked force is, in the long run, the weakest basis for power. Confidence in its honesty and integrity, on the other hand, is the strongest type of power that a government can possess. (Switzerland has survived intact much longer by re- lying on honor than Germany has by believing in force.) There- fore, royal embezzlers, mountebank politicians, and academic theorists alike have been far more apt to introduce their fiat money schemes by subterfuge than by direct edict.