Taking a Cue from Karl Marx

The Price of Gold

By Robert Ringer

For many centuries, there existed well established private coin minters. People would bring their gold to a private minter of high repute, who would then form the gold into coins and stamp each one with its official seal (which included a guaranteed designated weight). For this service, the minter would charge a fee, as would any other service business adding to the price of gold.

It is important to point out that in establishing the price of gold, in different countries, various terms were used for certain designated gold weights. The word "dollar" came to be used in America for 1/20th of an ounce of gold. Thus, the dollar was not money; it was simply the name given to a certain quantity of gold. Other countries used words like franc and mark to describe various weights of gold.

Gold warehouses came into existence to accommodate people who did not want to be burdened with carrying gold around to make their purchases. Like the warehouser of any other product, the operator of a gold storage facility would agree to store someone's gold for a set fee, and would give the owner of the gold a receipt for his merchandise. Whenever the owner desired to redeem his gold, he would simply bring in his receipt, and the warehouse keeper would hand it over to him.

These early warehouses were the first "banks." Their deposits were gold, and the receipts they gave to the gold's owners could be used as a substitute for money in most transactions. The receipts were acceptable to the sellers of goods and services to the degree that the sellers had faith in the integrity of the warehouse keeper — i.e., to the degree that they believed the receipts could be converted into gold on demand.

But private minters and warehousers were a problem for governments. Throughout history, and particularly modern history, governments have realized that the most essential step toward gaining control over their people was to establish monopolistic control of the country's money system and the price of gold, and the existence of private minters and warehousers makes this impossible.

Karl Marx, in The Communist Manifesto, made this very clear when he said that one of the most important aspects of achieving control was "centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly."

Until a government can eliminate private minters and gold warehousers, it cannot use the money system to achieve the kind of control made possible through a monopoly. In this country, the government has done it by following the same pattern of "creeping control" it has used in all other areas of our lives.

The first step toward this ultimate goal was Article I, Section VIII, Clause V of the Constitution, which allowed Congress "to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures." So as early 1789, just thirteen years after the British had been overthrown, new power seekers were beginning to take control.

This is one of the earliest indications of how men of power would operate under the experimental democracy set up by our founding fathers - i.e., they would achieve control gradually, over a long period of time.

The new government recognized that the rugged colonial individualists were too independent to tolerate abrupt tyranny. So Article I, Section VIII, Clause V was a subtle way to open the door for the government's entrance into the money business — a seemingly harmless act that led to controlling the price of gold. Incredible as it may seem today, this first step only allowed government to compete with other minters and warehousers.

In Part IV of this article, I'll explain how our government went from being a mere competitor to achieving a total monopoly over the nation's money supply.

Previous - Money II - The Shoemaker and the Hatmaker: Medium of Exchange

Next - Money IV - Whose Money is it Anyway: The Federal Reserve System

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