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Francisco d’Anconia on Money
Dave Weigel made a great catch the other day: he notes that Paul Ryan has said that his views on monetary policy are based on Francisco d’Anconia’s speech in Atlas Shrugged.
Aside from revealing just how much of a Rand fanboy Ryan is — urban legend, my foot — this is interesting because that 23 paragraph speech isn’t just a call for the gold standard; it’s a call for eliminating paper money and going back to gold coins.
This had me wondering: when was the last time the economy actually ran on specie, rather than notes?
Bear in mind that paper money has been in widespread use for a long, long time. Originally these were often notes from private banks, like the $10 (“dix”) note from the Citizen’s Bank of Louisiana that may have given rise to the term “Dixie” for the south. There’s an extensive, mostly positive discussion of bank notes in Adam Smith’s Wealth of Nations. But when did the notes become dominant over coin?
Well, the Millennial Edition of Historical Statistics of the United States (subscription required) has some data. As I read it, as of 1813 there was only $7 million worth of coins in the hands of the U.S. public, versus $52 million in bank notes. So even two centuries ago, we were already a paper-money economy.
And this means that Ryan wants to turn the clock back two centuries, not one.
Aside from revealing just how much of a Rand fanboy Ryan is — urban legend, my foot — this is interesting because that 23 paragraph speech isn’t just a call for the gold standard; it’s a call for eliminating paper money and going back to gold coins.
This had me wondering: when was the last time the economy actually ran on specie, rather than notes?
Bear in mind that paper money has been in widespread use for a long, long time. Originally these were often notes from private banks, like the $10 (“dix”) note from the Citizen’s Bank of Louisiana that may have given rise to the term “Dixie” for the south. There’s an extensive, mostly positive discussion of bank notes in Adam Smith’s Wealth of Nations. But when did the notes become dominant over coin?
Well, the Millennial Edition of Historical Statistics of the United States (subscription required) has some data. As I read it, as of 1813 there was only $7 million worth of coins in the hands of the U.S. public, versus $52 million in bank notes. So even two centuries ago, we were already a paper-money economy.
And this means that Ryan wants to turn the clock back two centuries, not one.
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