In their infinite regression, some GOP lawmakers in Topeka have introduced bills in both chambers to make gold and silver, in coin or bullion or presumably as nuggets clawed from the ground, legal tender.
This at first seems like a bad joke, the kind of proposal that would have television pundits at news desks far away shaking their heads at the strange doings in Kansas and quipping, “There’s gold in them thar bills.”
If only we could be that lucky.
This level of fringe only used to come from the likes of various anti-government whack jobs, paramilitary types, doomsday preppers or former Texas Congressman Ron Paul, who perennially advocated for a return to the gold standard. But now the fringe has become the surrey, and the wind that comes sweepin’ down the plain don’t smell sweet.
Welcome to 2024, where bad ideas that have been germinating for more than a generation in the rotting soil of trickle-down economics and stale Tea Party libertarianism have finally taken root. But these ideas aren’t just dumb, they’re dangerous.
None of the bad ideas spewing forth from GOP-dominated state capitols are original, but simply recycled versions of the kind of regressive politics that has plagued us ever since we were able to stand up on our hind legs and debate whether it was better to divide the winter’s food in equal shares or allow the strongest to have the most because, after all, Oog is a job creator.
Somebody has to butcher those mammoths.
We came close to having a flat tax in Kansas, something that harkened back to the failed Brownback experiment in state economics. We avoided it this time because the GOP-controlled House couldn’t summon the required two-thirds majority to override Gov. Laura Kelly’s veto.
After Roe fell, Kansas was the first in the nation to put abortion rights to a vote. In August 2022 Kansans soundly defeated the idea of removing reproductive rights from the state constitution by a margin of about 3-2. The amendment to change the constitution came, of course, from the GOP-dominated Legislature.
If every bad idea were put to common sense and the will of the people, Kansas would be a better place to live. But there have been no state referendums on expanding Medicaid, legalizing recreational marijuana, or saving the state’s dwindling water supplies out west, all of which found broad popular support in the Fall 2023 “Kansas Speaks” survey.
Kansans’ feeling about precious-metals-as-money wasn’t included in the survey because frankly it’s not something most of us think about. If you do, then you’re probably a dealer in bullion and silver rounds, a historian who knows the chaos of bimetallism, or lost in the radical fringe that believes most of our economic woes are caused by fiat money.
But those two Kansas bills, and more like them over the years in other red states, are warning signs. They signal a lack of trust in the Federal Reserve, the central banking system in the U.S., and a Class 5 Full Roaming economic anxiety. When people get scared, they look to hard money to get them through hard times.
The quest for gold and silver (to be kept in some kind of state-run Fort Knox) to triumph over paper money backed by the full faith and credit of the United States should be setting off alarm bells. It hasn’t gotten much media attention because there are too many other pressing things to report and, besides, the history of money is complicated.
What is money, anyway?
The shortest answer is that money is anything that can be used as a medium of exchange. Gold, silver, tulips, cigarettes, bank notes, you name it. In the early history of colonial America, the Spanish-minted silver coin known as “Pieces of Eight” was common. To make change, the coin was cut into eight pieces, or bits, which is why a quarter is still known as two bits today.
The U.S. monetary system began with dollars based on a bimetallic standard, with gold being worth 15 times that of silver, according to a Congressional Research Service report. Because the rest of the world valued gold a little more dearly, most of our gold was bought by others, leaving us with a de facto silver standard. In 1834, adjustments to the exchange rate and the discovery of new ore deposits devalued gold, resulting in less circulating silver. During the Civil War, the government went to a fiat money standard not backed by any precious metal, but returned within a few years to a bimetallic standard. We switched to the gold standard from 1900 to 1933, when the government nationalized the gold supply and for a long while outlawed private ownership. From 1934 to the 1970s, we had a quasi-gold standard, which was finally abandoned as linking the currency to the value of gold was difficult to maintain.
Since then, we’ve had fiat money.
The current bills in Kansas echo the anxiety and uncertainty, and the fight between the affluent and the rest of us, of past times. William Jennings Bryan articulated this struggle in one of the most powerful political appeals in American history, delivered in the “Cross of Gold” speech at the 1894 Democratic convention at Milwaukee.
Bryan was a supporter of Free Silver, a Populist movement toward bimetallism that was seen as a way to improve the economy for working people instead of making it easier for the government to trade with foreign powers.
“There are two ideas of government,” Bryan intoned. “There are those who believe that if you will only legislate to make the well-to-do prosperous their prosperity will leak through on those below. But the Democratic idea, however, has been that if you legislate to make the masses prosperous their prosperity will find its way up through every class which rests upon them.”
I’ve never been much of a fan of Bryan, considering he was a religious fanatic whose candle winked out shortly after he displayed his ignorance during the Scopes trial. But I give the old boy credit for his politics, because he recognized the dangers of organized wealth.
There’s something about precious metals that has always driven people a bit mad. Consider Lamar Hunt, the owner of the K.C. Chiefs and much else, who in the 1980s along with his brothers attempted to corner the world’s silver market, but wound up bankrupt when the market collapsed. On the other end of the spectrum, there are the eternally hopeful metal detectorists who delight in finding pre-1965 quarters and dimes, when U.S. coins were still minted with at least 90% silver.
I will confess to being among the latter, having dragged my wife, Kim, to just about every old park and playground in eastern Kansan to wave a beeping electronic gadget over the grass hoping for the big find. We uncovered plenty of old coins, but in several years of treasure hunting our haul never equaled more than a hundred bucks worth. But it was a fun way to spend a summer afternoon. Puzzled that we never found more, Kim told me that first of all, I was impatient and not a good treasure hunter, and second of all, we spent too much time at playgrounds and children have notoriously little money to lose.
We’ve also panned for gold in the mountains of Colorado and found a little, but the work was hard, demanded specialized knowledge, and in the end paid less than a minimum wage job. Others were better at it, especially those willing to move large amounts of earth. Seems I just wasn’t cut out to be a prospector.
The danger of relying on hard money is its volatility in the market, the very thing that made U.S. economic policy so chaotic in the 19th century.
As I write, the market price of one ounce of gold is $2,048. It peaked in 1980 at about $2,500 in inflation-adjusted dollars. Although gold generally increases in value, it is subject to the price volatility of other commodities. Silver also peaked in 1980, at $141 (it’s currently at $22.80). What was driving the peak in precious metals 40 years ago? Double-digit inflation.
In other words, economic anxiety.
There has probably been no more economically anxious individual in American history than William “Coin” Harvey, a Free Silver advocate long after the cause was lost.
Harvey was an author and political activist who believed the way to American prosperity was the unlimited coinage of silver into money and campaigned for Bryan. In 1900, disillusioned, he left politics and bought some land near Rogers, Arkansas, for a resort. But as his pessimism about the world deepened, he planned a pyramid-shaped monument that would be a time capsule to carry knowledge to future generations.
“The pyramid was the last gasp of the wisdom Harvey had hoped to share with the world — which, not having taken root in his own time, he believed would bear fruit for other society on the road to modernism,” wrote Oliva Paschal in 2011 in Latham’s Quarterly. “Free silver was all but dead, and Populism with it.”
Harvey, who died in 1936, aged 84, never finished his pyramid.
Three years later, the U.S. Army Corps of Engineers dammed the White River, flooding much of Harvey’s resort, Monte Ne, beneath the newly created Beaver Lake.
Harvey is seldom remembered today, but I’ll bet he would be right at home advocating for states adopting gold and silver to be used as legal tender. While Kansas lawmakers are toying with the idea, at least one state — Texas, of course — already has a bullion depository.
It’s located about 30 miles outside of Austin and, according to the Texas Comptroller’s official website, is an agency of the state. Any U.S. citizen or resident can use the depository, and plans are in place to allow for depositors from other nations in the future. It’s been open since 2018.
The Houston Chronicle, in a piece updated in 2021, said the depository was essentially a bust — used by few and expensive for the state to run.
The proposed Kansas legislation also calls for establishing a gold depository to be run by a third party and investing the state treasurer with the authority to regulate the state’s digital asset-backed gold currency system. The Kansas Bankers Association and the Kansas Credit Union Association opposed the House bill, citing concerns about complexity and how state law might rub against federal banking regulations.
There may be gold in this proposed legislation, but it’s fool’s gold.
Max McCoy is an award-winning author and journalist. Through its opinion section, the Kansas Reflector works to amplify the voices of people who are affected by public policies or excluded from public debate. Find information, including how to submit your own commentary, here.
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