Presidents’ Day is intended to honor our greatest presidents: George Washington, Abraham Lincoln, Thomas Jefferson, and Theodore Roosevelt. These are the presidents on the face of Mount Rushmore. Other presidents considered to be great included Woodrow Wilson, Franklin Roosevelt, JFK, and – in the eyes of some – Ronald Reagan. But it’s liberal historians who rank the presidents and they rarely give much credit to those presidents that actually sought to live up to their oaths of office: to protect and defend the Constitution of the United States of America. With that in mind, this Presidents’ Day edition of Silver Monthly will examine the monetary policies of some of the best and worst presidents in the history of the United States.
George Washington is the one “great” president that almost no one will argue. He led the revolutionary forces, accepted the office of president without political party affiliation, and then stepped down peacefully at the end of his second term, setting a precedent for his forty-plus successors. But the truth is that Washington’s backers constituted the Federalist faction, and Washington himself appointed the proto-Keynesian Alexander Hamilton as Secretary of the Treasury. Washington, although hesitant, signed into law the act that created the Bank of the United States – the predecessor of today’s Federal Reserve. He also signed the First Coinage Act, which established America’s disastrous experiment with bimetallism.
As a private citizen, Thomas Jefferson was among the most eloquent spokesmen for sound money in the history of civilization. As president, however he did nothing to defeat the Bank of the United States. Instead, that fell on the shoulders of Andrew Jackson.
Andrew Jackson is famous for defeating the Bank of the United States, which he described as a “monster.” He vetoed the bill that would have re-charted the Second Bank of the United States, listing these as the reasons for his veto:
- It concentrated the nation’s financial strength in a single institution,
- It exposed the government to control by foreign interests,
- It served mainly to make the rich richer,
- It exercised too much control over members of Congress,
- It favored northeastern states over southern and western states,
- Banks are controlled by a few select families.
While Jackson’s presidency was not without its flaws, his heroic opposition to central banking is to be celebrated on Presidents’ Day.
Martin Van Buren
Here is a little known president who is seen by free-market economists as perhaps the best in the nation’s history, at least as applied to money and banking. Following the Panic of 1837, Van Buren didn’t do what nearly all of his successors have done – he didn’t seek to regulate or bail out the banks – no, Van Buren called for the radical separation of banking and the state, altogether! While this wasn’t achieved, Van Buren did help create the closest thing to free banking the U.S. has ever seen.
“Honest Abe” is seen by many as our nation’s greatest president, but many libertarian scholars rank him among the worst. There are many reasons for this, but one of them has to do with his monetary philosophy. Lincoln hated the gold standard and thought that the government should be able to print “greenbacks” and force citizens to accept them as if they were gold. He did this to help fund his unpopular Civil War, and the long-term results of this were devastating to the cause of sound money.
Grover Cleveland was the last of the classically liberal presidents. He was an ardent advocate of sound money. However, during Cleveland’s era, there was a split among Democrats: The Democratic Party had always been “the party of the people,” whereas the Republican Party had been the party of business. In the early days, Democrats understood that sound money was in the interest of the people, and that fiat money was in the interest of bankers. However, following Lincoln’s greenback monetary expansion, the return to the gold standard – and subsequent contraction of the money supply – was very hard on many working people, especially farmers in the Western part of the U.S. These people became known as the populists, and they advocated a program of systematic inflation to help ease the debts of the working class.
The split between classical liberals and populists within the Democratic Party made it impossible for the party to field a winning presidential ticket. Classical liberals would rather support a Republican than an inflationist like William Jennings Bryan, and populists nominated their own third-party challengers if they didn’t like the Democrat on the ballot. Thus, in 1912, the Democrats found a compromise candidate who was neither a classical liberal nor a populist – he was Woodrow Wilson – and in fact, he was every much of a Republican as his two opponents in that election, William Howard Taft and Theodore Roosevelt. Thanks to the election of Woodrow Wilson, the Federal Reserve Act was passed – historians say that Democrats in Congress would have never supported it had a Republican president been in office.
Franklin Delano Roosevelt
FDR suspended the gold standard, revalued gold, confiscated the people’s gold, and made it illegal to own gold. Many historians view him as a top three president with Lincoln and Washington, but for these reasons, he belongs in the bottom three with Lincoln and Woodrow Wilson.
John F. Kennedy
Kennedy’s presidency was cut short by an assassin’s bullet, so we don’t really know what kind of president he may have become. What we do know is that he planned to challenge the Federal Reserve and have the U.S. Treasury Department issue silver certificates. Some allege that his had something to do with his assassination. What we do know is that he was killed in 1963, and in 1964, all silver content was removed from U.S. coins. The move towards full-fledged fiat money was on.
On August 15, 1971, Richard Nixon “closed the gold window” and severed the last remaining tie between gold and the U.S. dollar. He also infamously quipped, “We’re all Keynesians now.”
Gerald Ford didn’t do much as president – but for that, he should be celebrated! One thing he did do is make it legal for Americans to own gold again, so he certainly deserves credit there.
“The Gipper” styled himself as a true conservative and someone who studied the Austrian economist Hayek, but this was mostly actor’s bluster. Although Reagan did call for a commission to study the reimplementation of the gold standard, the findings of the commission were predetermined – a young congressman named Ron Paul was one of two dissenting votes, arguing that we did indeed need the gold standard back. No president since Reagan has given gold a second thought.
The Constitution is clear – only gold and silver are to be used as legal tender. The president swears an oath to protect and defend the Constitution. Therefore, every president since Richard Nixon has been in violation of his oath on this if no other basis. In 2012, we should demand a president that lives up to this oath – or not vote for a president at all.