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Out of the Pit 263<br />
WarII the ratio steadily declined to 14 1/2 per cent in 1960, 11.3 per cent<br />
in 1970, and approximately 8 per cent last year."<br />
Chairman Irving H. Sprague of the Corporation also expressed his<br />
concern, noting that in 1969 there were under supervision as "problem<br />
banks" no bank with deposits in excess of $ 1 billion and only two with<br />
over $100 million deposits, but in 1979 five banks with deposits in excess<br />
of $1 billion were in trouble and 30 with deposits of $100 million to $1<br />
billion.<br />
Still another monetary misconception is that the supply of precious<br />
metals is inadequate to serve as money. It was upon the cry of metal<br />
famine, in fact, that the euphemism arose of the need to "economize<br />
gold 1<br />
' by creating fiat paper. Yet relative to production no metal is in<br />
greater supply. It is reliably estimated-and the figures are commonly<br />
used in the reports of the Director of the Mint-that some 40 per cent<br />
ofall the gold mined since the discovery ofAmerica is still visible-with<br />
probably much more in private hoards andjewelry. For most commodities<br />
a visible supply ofover a year's production is enough to depress the<br />
market.<br />
The fact is that the precious metal supply will always be adequate to<br />
the demand for use in transactions, for the amount ofthe metal required<br />
to make an exchange will adjust itselfto the value ofthe exchange. Ifthis<br />
seems a bit esoteric we may note that at $350 an ounce, the market price<br />
ofgold in 1979, an ounce ofgold would pay the cost oftravel by air from<br />
New York to London and return-a purchasing power of gold unprecedented.<br />
At $400 an ounce, a price toward which the market was climbing<br />
as this was written, the gold held by the Treasury (acquired, incidentally,<br />
at $20.67 an ounce} would be sufficient to put a reserve of 100 per cent<br />
bdtind the total circulatIon, and thereby permit a return to a gold or<br />
gold-certificate currency.<br />
A final and major misconception to be mentioned is that sovereign<br />
majesty is sufficient to gull a, pubLic into complacency over its hypocrisies,<br />
sophistries, and outright fraud. The scriptural admonition "Be sure your<br />
sins will find you out"applies to institutions as well as individuals. Eventually<br />
a defrauded people will turn against their government as they did<br />
in France in 1789 and in Iran in 1979.<br />
Let us list some of these official immoralities:<br />
(1) The enactment of a monetary system that permitted the· issuance<br />
ofpaper currency redeemable in gold to an extent oftwo and a·halftimes<br />
the amountof gold held to redeem the paper. A comparable case would'
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