Libertarian Land Philosophy:
Man's Eternal Dilemma
Oscar B. Johannsen, Ph.D.
BOOK II: Exchange and Money
Chapter 2 - Money
The purpose of this chapter is to derive a definition or concept of
money which would be applicable in any society, primitive as well as
civilized, and in any time period. As money is one of the central
elements of this study, it is important that it be precisely defined
for if it is not, then the superstructure built upon a loose and vague
concept will be faulty.
As the reader has learned, money evolved because coincidences of
desires do not ordinarily exist among men having goods to exchange.
The employment of a specific good -- money -- as a medium to
facilitate exchanges eliminated many intermediary barters which would
otherwise be required.
History shows and logic confirms that an article becomes money
because of many factors, such as its desirability for uses other than
to assist exchanges; its durability, and even the nature of the
community. In a seafaring area it could be fishhooks; in upland areas
it could be an agricultural tool. While at first a number of articles
might be utilized, eventually a particular one would become the
article in common use. This would be the medium of exchange, that is.
the money of the community.
The commodities which have served as money testify to the imagination
and needs of men. At times, tobacco, furs, skins, cattle, cowrie
shells, copper, silver and gold have been used.
The economic history of the United States is an excellent study of
the development of money from crude to sophisticated forms. In
America's rapid change from a primitive to a highly developed
civilization, the evolution of money, which in other parts of the
world probably took thousands of years, was largely telescoped into a
short period of time.[1]
The Indians must have attained a relatively high level of culture
because the American colonists discovered that the Indians had
developed a fairly sophisticated form of money -- wampum. This was
native aboriginal jewelry, but it was by no means crude. If one will
visit a museum, he will find that wampum is exquisitely made and
consists of blue and white beads which were made from whirls of
periwinkle shells. Holes were bored in the beads which were then
strung on fibers of hemp, or on tendons taken from forest animal meat,
or else embroidered on pieces of deerskin to form girdles or belts, as
ornaments and charms. The shell cylinders were about 1/8th of an inch
in diameter and about 1/4 inch long. It required the work of a skilled
artisan to bore the cylinders with a primitive stone drill and then
long wearisome hours were spent polishing them on stones. The finished
product was beautiful and does not suffer by comparison with jewelry
today.
For many years wampum was the money of both the Indians and the
American colonists and was essential for helping effect the exchange
of goods easily and efficiently. As late as 1662, much of the revenue
of New Netherlands was in wampum. However, the colonists also utilized
many other commodities to act as mediums for facilitating indirect
exchange. In 1631, Massachusetts passed a law that corn could be used
in the payment of debts, and the colonists generally permitted taxes
to be paid in commodities. Wheat, rye and barley were permitted in
Massachusetts, and Rhode Island permitted beef, pork and peas to be
used. It is stated that a student, who later became the President of
Harvard College, paid his bill in 1649 with "an old cow". In
the South, tobacco was used in Virginia for almost two centuries
beginning about 1619. Near the end of the 17th century, one man's
estate was said to be worth 131,044 pounds of tobacco. Commodities
such as oats, bacon, dried fish, tallow, butter, cheese. sugar,
brandy, whiskey and even musket balls were often used as money in
colonial days.
Within the past generation, it is said that salt is used as a medium
of Exchange; brick tea in Siberia, Turkestan, Mongolia and Tibet; with
black and white shells in the Solomon Islands. During and after World
war I, oilcloth, wood, porcelain and leather were used in Germany, and
iron money was used in Belgium, Italy and Germany.[2]
Inasmuch as most of the early colonists were poor, they brought with
them little or none of the metallic money which was being used in
Europe at that time. Therefore, they developed their own money.
However, with the expansion of trade, particularly with the West
Indies, foreign money began to enter America. As there was extensive
trade between the West Indies and the Spanish mainland, the islands in
the Caribbean Sea had plenty of Spanish coins. These coins infiltrated
the American colonies as a result of trade as well as the piratical
operations of the buccaneers who preyed on Spanish galleons. By the
end of the 17th century, the West Indies was the principal source of
this metallic money. Thus, most of the coins circulating in America
were Spanish and Portuguese rather than English. The famous Spanish
silver dollar of eight reals, or pieces of eight, popularized in
Robert Louis Stevenson's "Treasure Island". was the original
of our American dollar and came to America through the Caribbean
trade. This dollar was made into eight parts which could be divided up
or 'bitten off', as it was said. If a quarter of it was 'bitten off',
it was called 'two bits'. To this day, 'two bits' is slang for 25
cents in the United States. Other coins entered the country as
pistols, doubloons, crusadoes and guineas.
The article which is used as money tends to have certain
characteristics. It must be highly prized by people due to its
capability to satisfy some desire of men other than the desire to
employ it in exchange. It need not be universally desired, but wanted
by enough people so the few who are indifferent to it do not affect
its usefulness as money. Cigarettes served as money in parts of
Germany right after World War II when conditions were chaotic.
Non-smokers accepted the cigarettes as readily as smokers when they
knew they could exchange them for goods.
The article must be relatively scarce because scarcity combined with
almost universal desirability tends to give it a high preference
rating in people's eyes. It is not surprising, therefore, that when
the production of commodities such as tobacco is very great that these
commodities cease to be used as money.
Physically, the article should be durable, portable, divisible,
homogeneous and recognizable. Durability insures that wear and tear is
not excessive in hand to hand exchange. Portability enables it to be
carried easily. Divisibility assures that it can be used for a whole
range of exchanges. Homogeneity insures that its quality is the same
throughout, and obviously recognizability is a necessity.
If an article possessed all the characteristics enumerated, men could
be reasonably certain they could exchange it for goods. They would not
be absolutely certain but sufficiently so that they usually would not
need worry over its acceptability. Almost invariably, the kind of
money in use tends to go from the more or less perishable commodities
to the almost imperishable metals. In the American colonies, while
they utilized perishable goods, such as wheat, rye, and dried fish
because they had to, these articles were not as desirable as
commodities composed of materials which would decompose slowly, such
as the metals. Thus, the colonies were always quite anxious to get
'hard money', as metallic coins are called.
Historically, it is known that many societies which used perishable
commodities subsequently replaced them by agricultural implements and
household tools, as spades, basins and axes. Then, usually came
ornaments. At first glance, the use of ornaments may appear
surprising. Why should money consist of something as useless, in a
practical sense, as a part of a necklace or bracelet, when an article
as useful as an ax could be employed?
Psychologists may some day give us a definitive answer. We do know,
however, that ornamentation is a very important facet of human life
for primitive as well as civilized people. Natives adorn themselves
and dress up their crude tools almost as soon as they invent them. So
important are ornaments to primitives that anthropologists and traders
bring trinkets as gifts to the chiefs to gain their good will.
Probably, the love of ornamentation is so innate that it is as
natural as breathing. Men and women give ornaments to those they
admire, award medals to their heroes, woo the opposite sex with
jewelry, and wear amulets to ward off evil. They express their
veneration of God by expensive and exquisite ornaments which are
placed on altars and they wear beautiful religious jewelry.
Earrings, bracelets and necklaces have been used as ornaments for
thousands of years and have, no doubt, been used in indirect exchange
for as many years. We know that rings and other jewelry were formed so
as to be able to be used as money. Many were molded to a definite
weight and were almost coins. The Bible stated that Rebecca received
'a golden earring of half a shekel weight and two bracelets for her
hands of ten shekels weight of gold.' (Genesis, Chapter XXIV, Verse
22). This is evidence that ornaments were designed so they could be
utilized as money.
To this day, money and ornaments are often interchanged. Probably as
a result of thousands of years or persecution. the Jewish people have
developed an exquisite taste for jewelry and usually wish to obtain
much of it. By so doing, they not only satisfy their desire for
ornamentation but they have a mobile form of wealth which they can use
in the event they are persecuted and forced to flee to some other
land. If the new country's money is gold, then in their gold jewelry
they have that nation's money, although not in the form in which it is
circulated.
The round and square pieces of metal strung on bracelets and
necklaces were often used as money. This probably led to the minting
of solid round pieces of metal, such as our coins are today. This is
all conjecture. It is based on what appears to be reasonable
assumptions plus information, sketchy though it is, of primitive
money. Records obviously do not exist detailing the gradual changes in
the kinds of money used. With but few exceptions, historical
information on money starts when coins were already in existence.
Coins as we know them today date back 3000 years. In the West, the
first known examples occurred in Lydia. an ancient maritime province
of West Asia Minor, where in about the 8th century B.C. stamped pieces
of electrum were produced. This is a natural alloy of silver and gold,
and some of the coins are still in existence. Electrum was not too
satisfactory, however, as the two metals varied considerably in
mixture. Subsequently, it was abandoned for a system of gold and
silver coins. King Crosus of Lydia, the symbol to this day of enormous
wealth, substituted coins of pure gold and silver for electrum in the
sixth century B.C. Ancient writers, as Xenophanes and Herodotus.
believed that coins were invented by the Lydians, but there is proof
that there was coinage before their time.
There is evidence that Greek merchants of ancient Ephesus in Asia
Minor struck the first gold coins around 800 or 700 B.C. In Babylon
and Phoenicia it is said that 'metal ingots bearing the stamp of the
merchant who cast them passed by weight and became the basis of a
highly developed banking and credit system'.[3]
In Babylon, ingots of copper or silver were stamped by merchants with
a mark which indicated their weight and fineness. It is believed the
Greek States were the first to put their seals on pieces of metal
certifying that the metal was of a certain weight and fineness.
Probably no one invented coins. They most likely evolved as a result
of using ornaments for money.
As civilization grows there appears to be a gradual progression from
the baser metals to the more precious ones. Bronze and copper might be
used first, to be superseded by silver and then by gold. Today, either
silver or gold is the money of most countries, although the laws of
most nations restrain the use of such metals, particularly gold, in
attempts to substitute what is known as 'paper money'. (This will be
discussed subsequently.)
Silver has most of the characteristics of a good money. It is almost
universally desired as jewelry and flatware, as well as for industrial
uses, such as photography. It has all the physical characteristics
desired, although it is not as easy to recognize because other metals
have a sheen which is silvery. Its main defect is that it is much more
plentiful than gold. For the United States, where commercial
transactions involve huge quantities of goods, to use silver as its
money would mean that cumbersome quantities of silver would need be
exchanged. China, however, where business transactions are not as
large nor as complex as those of the United States, is probably better
off with silver as its money than gold. Silver is the real money of
China, although it is used surreptitiously since the present
government forces 'paper-money' into use.
The tendency is to utilize a metal which is in keeping with the
standard of living and height of civilization attained. Without any
conscious deliberation, people tend to use metals which are apparently
of successively greater desirability and scarcity as civilization
advances. Copper seems to have been supplanted by silver in ancient
Greece and then by gold. In most countries, a similar progression
appears to have occurred. If civilization declines, no doubt, a
regression will occur. Instead of gold, silver will be used, and then
if civilization declines still further, probably copper and bronze.
(Parenthetically, it might be pointed out that although tokens are not
money, yet their quality may at times be an indication of the state of
the civilization. In the United States, tokens for the most part have
been of silver. But now that America is retrograding from the heights
it reached, they are of copper and nickel.)
Gold is nearly the perfect money. It is desired almost universally by
everyone, savage as well as civilized. Combine this with its scarcity
and the physical characteristics which a money requires, and we have a
metal which it is difficult to surpass for use as money.
That it is scarce is shown by the fact that despite the thousands of
years that it has been produced, and despite the constant search for
it during all these years, the amount in existence is estimated to be
only about two billion ounces or about 80,000 tons (Troy weight). Most
of this was produced since the discovery of America. The world's
average production of gold annually outside of Russia is over 41
million ounces or about l700 tons. Contrast this with the world's
average annual production of steel of over 650,000,000 tons.
The physical properties of gold meet every test for a good money. It
is practically indestructible. Gold ornaments and coins have been
discovered which were produced thousands of years ago. The gold amulet
gracing a lovely young woman today may have once been worn by some
gracious lady of Biblical days. Gold is malleable, that is, it is
capable of being hammered or rolled without breaking, so it can easily
be divided into units of almost any size. So malleable is it that a
gold piece which is the size of a silver half dollar can be rounded
into a thin sheet covering 100 square feet, and it is so ductile that
an ounce can be drawn into a wire about fifty miles long. Though its
fineness may vary, it can be controlled and fine gold is homogenous in
every respect. It has a characteristic luster and does not tarnish,
which is one of silver's defects. It is portable. Since gold has these
characteristics, in addition to being scarce and highly desired, it is
hardly surprising that it has become the money of so many societies
down through the ages.
There is nothing sacrosanct about gold. People might have chosen some
other metal. but certainly today the psychology and desires of the
people are such that gold suits them best.
As people started to use metal coins, questions would arise in their
minds, such as what was the degree of purity of the metal comprising
the coin, or how much actual silver or gold did the coins contain? Few
would have the requisite skill or knowledge of the proper techniques
to determine such questions. This would inhibit the use of coins in
the bartering of goods. Eventually, it must have occurred to someone,
possibly a reputable merchant, to place his stamp or insignia on his
coins guaranteeing that they were of a specific degree of purity.
Finds which have been unearthed of little globules with a variety of
stamps suggest that they were private issues, such as might be
expected of merchants. It is known that gold ingots bore the seal of
merchants, temples and townships.
Probably not long afterwards, the thought occurred to someone to
indicate not only the quality of the coin but also its weight. Thus
was born the coin, such as we have today, with a stamp on its face
which indicates its weight as well as its quality. The $20 gold piece
issued by the United States Government, with its insignia of the
Government, meant that it was composed of gold 9/10th fine, and
weighed 516 grains (a little over an ounce).
According to the Encyclopedia Britannica, 'A coin may be defined as a
piece of precious metal stamped with some mark or inscription showing
that it is issued by some authority which guarantees its weight and
purity.'[4]
The coin does not need be one of the precious metals, as silver or
gold. Thus, by eliminating the word 'precious' from the above, we will
have a workable definition of a coin. It should be noted that coins do
not have to be issued by a government, but rather by some authority.
This could be a government, but it could also be a bank, a
corporation, or even an individual.
In most societies, not only coins but ingots are money. Although the
use of ingots may have preceded the use of coins, it could very well
have been that ingots, such as are in use today, developed when the
business of merchants reached heights which would have required large
quantities of coins for exchange purposes. To avoid the necessity of
counting coins, it would be much easier to have an ingot or bar of
metal, the equivalent of a hundred or more coins.
A study of monies of the past show that they are:
First: Articles of wealth, as fishhooks or coins.
Second, Articles which because of their intrinsic qualities are
desired almost universally in a particular society and thus usable
as a means of indirect barter.
Third: Compared to other goods, they have a relatively high
preference in the eyes of people. This is due to their great
desirability and also to their scarcity.
Fourth: At a particular time and place, they are the commonly used
articles for indirect barter.
These facts have led to the following definition:
Money is an article of wealth which at a particular time and place is
commonly used as a medium of exchange.
Not all the points listed have been explicitly included. For example,
no mention is made of money's relatively high preference in comparison
with other goods. This is implicit in the fact that the article is
used as money. In addition, what is ordinarily, though erroneously,
classified as 'paper-money' is obviously not money under this
definition. While the paper is an article of wealth, it is not the
paper which makes it prized by people. It is the words inscribed on it
which have meaning to people and makes them willing to accept it.
Subsequently. it will be shown that 'paper-money' consists of either
receipts or promises to pay money, and that it is an unfortunate error
to designate them as money. For the present, it is sufficient if it is
recognized that money is an article of wealth, as a metal coin, and
that it is never a piece of paper no matter how beautifully it is
engraved nor how fine the paper on which it is printed.
Certain points might be stressed:
First : The definition is based on the nature of the thing itself;
what it does. An attempt has been made to enunciate a definition
without being verbose.
Second: Questions of legality are of no concern because a concept of
money must encompass the medium of exchange which is used in all
societies, whether they have governments or not. The definition must
be as universal as one in physics, i.e.. true at all times and under
all circumstances.
Third: people and only people create a medium of exchange and they do
it quite unconsciously as they attempt to exchange the goods they
possess for the goods they desire. Time and again governments have
tried to foist on their citizens something which they want the people
to use as money. If. however, the people will not accept it, then it
does not become that country's money, and the government must adopt
the medium the people have selected. The old Czarist government in
Russia in the 19th Century wanted to make platinum money, but when the
people were reluctant to use it and utilized as little as possible in
their daily transactions, the government found it expedient to drop
the idea.
Fourth: There is only one medium of exchange at a time, not two or
three. If gold is the money in use, then any silver and copper coins
which circulate are tokens related in some way to gold.
Fifth: Money does not entitle men to other articles of wealth. It is
often stated that money is a claim on the wealth of the community.
This is not true. Ownership of money does not entitle one to the
wealth of some other person. Money is the most marketable commodity in
the community, and therefore the likelihood is great that it can be
more easily exchanged for the things men want than any other
commodity. Nonetheless, the exchange desired may not be accomplished.
A stationer's newspapers belong to him. If he does not wish to sell
one to an individual he does not have to. During wars, when goods are
rationed, people become acutely aware that money is not a claim on the
nation's goods for at those times legally they cannot purchase many
goods unless they also have the necessary ration coupons.
Sixth: Money usually is not capital. As has been explained, capital
is an article of wealth which is being used to produce more wealth. It
is a tool, as a hammer, a factory, or a blast furnace. Money,
certainly in modern society, is not a tool. It does not produce more
wealth. It merely helps the exchange of goods.[5]
Seventh, Although money in modern society is not capital, it is an
article of wealth. It must be wealth in order to be money. It is used
for exchange purposes precisely because of its usefulness to men for
purposes other than exchange. Money may be composed of almost any
conceivable material and in almost any form. In most modern countries
it has been gold, and the shape in which it circulated is in coins of
different size and in bars and ingots. It is this writer's contention
that one of the great errors in monetary literature is to classify as
money such items as banknotes, demand deposits, time deposits and
tokens. These items are related to money in some fashion, but they are
not money.[6]
While the reader may appreciate that there is validity in limiting
the definition of money to an article of wealth, such as a coin or an
ingot, which serves as a medium of exchange, nonetheless he may still
feel that the definition should encompass other functions. However,
the purpose of a definition is to enable all to have clearly in mind
what is meant when the term in question is used. A saw may be utilized
for other functions than sawing wood. It might be employed by some
deft musician as an instrument on which to play tunes. Should this
function be included in its definition?
Money may be used as chips in games of chance. It may be used as a
paperweight. Should these functions be included in its definition?
Money may also be used as a means of making rough comparisons and
calculations in the exchange of goods. It may also be employed as a
means by which one saves wealth until one wishes to exchange it. It is
because of these last two functions that money ordinarily is defined
not only as a medium of exchange but as also being a measure and store
of value.
Money is a medium of exchange. That is what makes it money. The fact
that certain calculations are made with it and that people save it
comes from the fact that it is money. But that does not make it a
measure of value. (Subsequently, it will be shown that it is not a
measure nor store of value inasmuch as value cannot be measured nor
stored. Value is a subjective concept existing in the minds of men.)
A query which is often raised is whether there is sufficient money in
the world, which, in turn, usually means is there sufficient gold?
This question misses the point. Only people make an article money.
They adopt a commodity as money which best suits them. If there is not
enough of a particular commodity, they will turn to another one. It is
a matter of indifference to them whether copper, silver, gold, or any
other commodity is employed as money. After all, men did not originate
money because they really wanted it. They had to establish it because
coincidences of desires did not exist among those wishing to exchange
goods. People want certain goods in return for the goods they possess.
Money merely makes it so much easier for them to effect this exchange.
Why then use gold if there is not enough available? Men would not
insist on it. Instead, they would use something else.
Parenthetically, it might be pointed out that inasmuch as people are
relatively indifferent as to what money is, it has been mistakenly
assumed that pieces of paper, such as banknotes, can be considered to
be money and will do the job as effectively as a commodity. The sad
history of inflation is more than enough evidence that such is not the
case. People are indifferent as to whether gasoline or water is
required to fuel the engines of their cars since all they are
interested in is transportation. However, the fact that they are
indifferent does not mean that they can use water in an engine.
Similarly, pieces of paper such as banknotes, cannot effectively act
as a medium of exchange, although this fact is not apparent because it
seems as though they do. However. it also seems as though the sun
rotates around the earth.
Brief mention of the present money of the United States may be of
interest. Under the authority of the Gold Reserve Act of January 30,
1934, the President of the United States in a proclamation (48 Stat
1730) on January 31, 1934 defined a 'dollar' as 13.714 grains of pure
gold. A grain is a weight. There are 480 grains in a Troy ounce. By
dividing 480 grains by 13.714 grains per dollar, one arrives at 35
dollars. This is why people say the 'price' of an ounce of gold is
$35.00. Actually $35.00 becomes a synonym for an ounce of gold. The
important point to remember is that a "dollar" is defined as
13.714 grains of pure gold, or 1/35th of an ounce of pure gold. Thus,
when something is purchased for a dollar, the buyer is exchanging
1/35th of an ounce of pure gold for the article.[7]
To most people the word 'dollar' conjures up some nebulous concept of
value, but actually as the President's proclamation indicates it is
just a weight of gold. The names of many of the monies of the world
indicate weights and resulted from the fact that people would barter a
certain weight of their money for the goods they desired. The English
pound is an excellent example of this. Although it was never coined as
a pound, it was composed of 240 silver pennies which equaled a pound
weight of silver. Thus, when people purchased say, 100 pounds of sugar
for an English pound they were exchanging 100 pounds of sugar for a
pound of silver. What probably happened is that while at first people
might have said. 'I will give you a pound of silver for 100 pounds of
sugar', gradually they dropped oft the words 'of silver' and merely
said I'll give you a pound and it was understood that they meant 'a
pound of silver'.
The word dollar unfortunately gives no conception of weight for it
comes from 'Joachimst(h)aler', a silver coin first struck in 1519
under the direction of the Count of Schilick in Germany. It bore a
likeness of St. Joachim. from which its name was derived. Gradually
'Joachimst(h)aler' was corrupted into 'Thaler', or 'doler', · or
'dolar', and finally 'dollar', which came to mean a silver coin.
The United States Government does not coin any dollars or multiples
at the present time. The only coins in existence are those coined
before the redefinition of the dollar in 1934. when its definition was
changed from 23.22 to 13.714 grains of pure gold. The most familiar
coin is the old $20 gold piece. Instead of minting coins now, the
Government mints ingots of gold. These ingots are exchanged only with
other governments or the central banks of other countries. The fact
that ingots are minted and exchanged indicates that actually the money
of the United states is gold and not paper, as most believe.[8]
Recapitulation
Money is a commodity which almost everyone wants in order to make the
exchange of goods easier. It is the most marketable commodity in the
community. In exchanging money for goods, men are bartering a specific
good called money for the goods they want. Money does not consist of
beautifully engraved pieces of paper on which some government has
printed words. Today, money in most countries is gold. This is true
even though almost all governments, by one means or another,
discourage the use of gold as money and instead practically force the
people to resort to credit transactions in order to effect exchanges.
Money is an article of wealth which at a particular time and place is
commonly used as a medium of exchange.
NOTES
- This writer is indebted to the
work of Roy A Foulke, "The Sinews of American Commerce"
from which much of the historical material is taken.
- Sinews, p. 30
- Elgin Groseclose, 'Money and
Man', p.9
- Encyclopedia Britannica, 1952
Edition, Vol. XVI , p. 616 (Numismatics)
- In primitive societies, money
might be a tool, as fishhooks, but almost invariably it is an
article of consumption. When unusual circumstances occur, as in
war periods, and a society's money is· not available, the
tendency is to use some consumptive article, as cigarettes,
temporarily as money. For all practical purposes, then, it can be
stated that money is a form of consumptive wealth.
- Much of the perplexity
surrounding money is caused by erroneous fundamental concepts. Of
course, a person can define a word to mean anything he wishes.
However, if the definition is too broad, or too narrow, then as
the analysis progresses, confusion will develop which will
probably lead to mistaken conclusions. Probably, the test of a
definition is how useful it is in solving the problem being
studied.
- After the above was written,
on December 18, 1971, the President announced that Congress would
be asked to re-define the dollar to be 1/38th of an ounce of fine
gold (12.632 grains of fine gold). Subsequently Congress passed
the necessary legislation. On February 12, 1973, the President
announced that the dollar would be re-defined to be l/42.22 of an
ounce of fine gold (11.368+ grains of fine gold) , and the
necessary legislation was subsequently enacted.
- On December 31, 1974, citizens
of the United States were once again permitted to own gold
bullion. This meant that a free market in gold had been
established. However, the government did everything it could to
discourage people from acquiring gold. Technically, its definition
of the dollar is still 1/42.22 of an ounce of gold, or as it is
usually put the official 'price' of gold is $42.22 per ounce. On
January 6, 1975, it sold at public auction 753,600 ounces of gold
at an average 'price' of $l65.65 an ounce. Thus, in effect, it
proclaimed to the world that it would not redeem its circulating
non-interest bearing debts (its paper-dollars) at the official
figure of 42.22 paper dollars for an ounce of gold. By this
action, it acknowledged in the marketplace that these debts would
not be honored at par.
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