Book Review: What Has Government Done to Our Money?

“What Has Government Done to Our Money” by Murray N. RothbardThis slim book (just 119 pages of main text in this edition) was originally published in 1963 when the almighty gold-backed United States dollar was beginning to crack up under the pressure of relentless deficit spending and money printing by the Federal Reserve. Two years later, as the crumbling of the edifice accelerated, amidst a miasma of bafflegab about fantasies such as a “silver shortage” by Keynesian economists and other charlatans, the Coinage Act of 1965 would eliminate sliver from most U.S. coins, replacing them with counterfeit slugs craftily designed to fool vending machines into accepting them. (The little-used half dollar had its silver content reduced from 90% to 40%, and would be silverless after 1970.) In 1968, the U.S. Treasury would default upon its obligation to redeem paper silver certificates in silver coin or bullion, breaking the link between the U.S. currency and precious metal entirely.

All of this was precisely foreseen in this clear-as-light exposition of monetary theory and forty centuries of government folly by libertarian thinker and Austrian School economist Murray Rothbard. He explains the origin of money as societies progress from barter to indirect exchange, why most (but not all) cultures have settled on precious metals such as gold and silver as a medium of intermediate exchange (they do not deteriorate over time, can be subdivided into arbitrarily small units, and are relatively easy to check for authenticity). He then describes the sorry progression by which those in authority seize control over this free money and use it to fleece their subjects. First, they establish a monopoly over the ability to coin money, banning private mints and the use of any money other than their own coins (usually adorned with a graven image of some tyrant or another). They give this coin and its subdivisions a name, such as “dollar”, “franc”, “mark” or some such, which is originally defined as a unit of mass of some precious metal (for example, the U.S. dollar, prior to its debasement, was defined as 23.2 grains [1.5033 grams, or about 1/20 troy ounce] of pure gold). (Rothbard, as an economist rather than a physicist, and one working in English customary units, confuses mass with weight throughout the book. They aren’t the same thing, and the quantity of gold in a coin doesn’t vary depending on whether you weigh it at the North Pole or the summit of Chimborazo.)... [Read More]

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