The Freeman 1972 - The Ludwig von Mises Institute

1972 A CLOSER LOOK AT GOLD '543There's Plenty of GoldThe argument that there is "nolonger enough gold for monetarypurposes" is one of the more absurdarguments that has beenmade against the return to themonetary use of gold. The UnitedStates could start minting goldagain within the very short timerequired to prep,are the dies.Plenty of gold could be deliveredto the mints from the mines nowkept idle by governmental restrictions.Any seigniorage chargedshould not exceed the actual mintingcosts. As to the relation of thenew gold coins to the huge heapsof paper money now in circulation,the problem could be easilycircumvented· simply by omittingany designation of value on thecoins and employing the familiarweights and fineness of the quartereagles, half eagles, eagles anddouble eagles. The double eagles,for example, might bear the inscription"516 GRAINS, 900FINE" instead of the erstwhile"TWENTY DOLLARS." As in previousgenerations, the deliverers ofgold to be minted would be chargeda small fee for minting costs andthe gold pieces would be theirs tokeep or put into commerce.Striking gold coins without anydesignations of value on them is aprocedure that was not only usedin previous centuries, but also inrecent decades. Consider the followingexamples: Beginning in1921, Mexico had struck goldpieces so~ewhat larger than theU.S. double eagle. The Mexicanpieces are known as the "centenario"because they originallycommemorated the centennial ofthe Republic. For years thesepieces were struck in large quantitieswith the designation of 50Pesos. By 1943, however, the designationhad become meaninglessbecause of the considerable depreciationof the value of theMexican paper and silver currency.In 1943 the centenario appearedwithout the usual inscriptionof 50 Pesos but with aninscription describing the weightand fineness, the really importantfactors. There are many variationson the procedure. GreatBritain, for example, struck over30 million sovereigns between1957 and 1966 for overseas trade.These continued to bear no designationof value, just as all modernsovereigns (since 1816) had bornenone.Market Sets the ValueIf the government were to resumethe striking of gold pieces,as it should without delay, itwould be easy to determine whatdesignation of value, if any, wereto be put on them after supply anddemand had established a price interms of other media. For purely