If the United States were to adopt a gold standard, how would it be done?
A road map would be helpful.
Dramatic writers seem to imply that gold will suddenly be revalued to $10,000 a troy ounce (or put your figure here) and any present owner of bullion will be in the chips for life.
But would it really work that way?
Would a gold standard come like a lightening bolt?
There is only one precedent in U.S. history of the country adopting the gold standard.
What might surprise people is that this process took 35 years.
While gold and silver were money after the federal Constitution went into effect and a federal government formed in 1789, the country was not on a gold standard.
That fact alone might surprise people, but this will have to be a story for another day.
The process of going on a gold standard occurred in the United States at the conclusion of the Civil War in 1865.
Getting the federal budget under control and countering the wartime inflation was a long-term undertaking.
It took 14 years for the country to officially restore the equality of value between gold, silver and federal paper money. That simply meant that whatever form of money you had, you could then exchange it for another form at the same price, dollar for dollar. For much of the 14 years leading up to 1879, gold carried a premium price when expressed in terms of paper money. Silver also carried a premium for a briefer time period.
When this money parity was achieved, a long political battle began as to what would be a logical conclusion to this monetary restoration effort and that ultimately led to the adoption of the gold standard officially in 1900.
Much as now, many Americans were interested in the topic and a long period of political debate occurred with gold being an electoral issue.
Opposing the gold standard then were people who were in debt, mostly farmers and other regular people with the usual jobs and small business owners of the Midwest and South.
They opposed the Eastern bankers who favored the gold standard.
Times sure have changed, haven’t they?
You might remember William Jennings Bryan, the silver tongued prairie populist who delivered the famous “Cross of Gold” speech in 1896 from your reading of history.
His defeat by William McKinley in the 1896 Presidential election sealed the deal for the gold standard.
In short, adopting the gold standard was something that was chewed on for a very long time before Americans voted for a President pledged to make it so.
I imagine that proponents of gold as a Presidential campaign issue today will wonder if we have the same luxury of time that our forebears had.