In 2017, these minuscule gold particles were extracted from a Colorado stream. (Reflector Kansas/Max McCoy)
Some GOP lawmakers in Topeka, in their unending retreat, have proposed proposals in both houses to produce legal tender out of gold and silver, whether in the form of coinage, bullion, or, most likely, as ground-caught nuggets.
At first glance, this sounds like a terrible joke—the kind that would make TV experts at distant news desks shake their heads in disbelief at Kansas’ peculiar practices and say, “There’s gold in them thar bills.”
If only we had that kind of luck.
Only a few anti-government whack os, paramilitary types, doomsday preppers, and former Texas congressman Ron Paul, who consistently pushed for a return to the gold standard, used to represent this level of fringe. However, the fringe has now given way to the surrey, and the wind that sweeps across the plain no longer smells pleasant.
Welcome to 2024, where awful ideas have finally taken hold after more than a generation of germination in the decomposing soil of tea party libertarianism and trickle-down economics. However, these concepts are not only foolish, but also harmful.
All of the bad ideas coming out of GOP-dominated state legislatures are just rehashed versions of the same kind of regressive politics that have dogged us ever since we learned to walk upright and discussed whether it was preferable to divide the winter’s food equally among all or to give the strongest people the most because, after all, Oog creates jobs.
Those mammoths need to be killed by somebody.
In Kansas, we nearly implemented a flat tax, evoking memories of the disastrous Brownback experiment in state economics. This time, we were spared it because the veto issued by Governor Laura Kelly could not be overridden by the GOP-controlled House with a two-thirds majority.
Kansas was the first state in the US to put abortion rights up for referendum following the Roe decision. By a margin of almost 3-2, Kansans decisively rejected the proposal to strike reproductive rights from the state constitution in August 2022. Naturally, the GOP-controlled Legislature was the source of the proposed constitutional amendment.
Kansas would be a better place to live if common sense and the will of the people were applied to every stupid plan. However, no state referendums have been held on Medicaid expansion, recreational marijuana legalization, or the preservation of the state’s declining western water supplies—all of which had strong public support according to the Fall 2023 “Kansas Speaks” survey.
Since most Kansans don’t give precious metals much thought, their opinions regarding them as money weren’t included in the study. If you do, you’re either an extreme fringe member who thinks fiat money is mostly to blame for our economic problems, a trader in bullion and silver rounds, or a historian who understands the turmoil of bimetallism.
But those two proposals from Kansas, along with others that have been similar throughout the years in other red states, are red flags. They indicate a Class 5 Full Roaming economic worry as well as a lack of confidence in the US central banking system and the Federal Reserve. People turn to hard money to help them get through difficult times when they are afraid.
Alarms should be raised by the desire for gold and silver (to be stored in a state-run Fort Knox) to surpass paper money that is guaranteed by the full confidence and credit of the United States. The history of money is complex, and there are simply too many other urgent stories to cover, so it hasn’t received much media coverage.
Columnist Max McCoy gathered this assortment of silver coins. (Reflector Kansas/Max McCoy)
Anyhow, what exactly is money?
The simplest explanation is that anything that may be used as a means of exchange qualifies as money. You name it: gold, silver, bank notes, cigarettes, tulips, etc. The Spanish-minted “Pieces of Eight” silver coin was widely used in early colonial America. A quarter is still worth two bits since the currency was chopped into eight pieces, or bits, to produce change.
According to a Congressional Research Service study, the U.S. monetary system started with dollars based on a bimetallic standard, where gold was valued fifteen times more than silver. The majority of our gold was purchased by outsiders as the rest of the world thought gold was slightly more valuable, leaving us with a de facto silver standard. Changes in the exchange rate and the finding of new ore discoveries in 1834 caused the value of gold to decline, which reduced the amount of silver in circulation. The government switched to a fiat money standard during the Civil War that was not backed by any precious metal, but it quickly went back to a bimetallic standard. From 1900 until 1933, when the government nationalized the gold supply and for a considerable amount of time prohibited private possession, we were on the gold standard. We had a quasi-gold standard from 1934 until the 1970s, but it was eventually abandoned because it was difficult to keep the value of the currency tied to that of gold.
We have used fiat money ever since.
The fear and uncertainty of the past, as well as the conflict between the wealthy and the rest of us, are echoed in Kansas’s present measures. When William Jennings Bryan made his “Cross of Gold” address at the Democratic convention in Milwaukee in 1894, he summarised this conflict in one of the most potent political appeals in American history.
Bryan was a proponent of Free Silver, a populist push toward bimetallism that aimed to help working people’s economy rather than facilitate government trade with other nations.
Bryan reiterated, “There are two ideas of government.” Some people think that if laws are exclusively passed to benefit the wealthy, the wealthy will eventually trickle down to the poor. However, the Democratic theory has been that if laws are passed to increase the prosperity of the majority, then those laws would eventually trickle down to every class that depends on them.
William Jennings Brian, a statesman and politician. (Library of Congress)
Bryan has never really appealed to me because he was a fervent religious follower whose light went out soon after he showed his ignorance during the Scopes trial. However, I commend the elderly man for his political acumen, as he saw the perils associated with organized wealth.
Precious metals have always made people a little crazy for some reason. Take Lamar Hunt, the owner of numerous businesses including the Kansas City Chiefs, who tried to corner the global silver market with his siblings in the 1980s but went bankrupt when the market crashed. Conversely, there are the endlessly optimistic metal detectorists who get great satisfaction from unearthing pre-1965 dimes and quarters, when at least 90% silver was still used in the minting of US coins.
I’ll admit that I’m one of the latter, having taken my wife, Kim, to virtually every abandoned park and playground in eastern Kansas in the hopes of making the big discovery by waving a beeping electronic device over the grass. Though we spent several years treasure hunting, we never found more than a hundred dollars’ worth of antique coins. However, it was an enjoyable way to pass a sunny afternoon. Kim, perplexed as to why we never turned up any more, explained to me that, in the first place, I was impatient and not a very good treasure hunter; in the second place, we spent too much time in playgrounds, where kids are known to have little money to lose.
In the Colorado highlands, we have also panned for gold and discovered a little amount, but the task was difficult, required specific expertise, and ultimately earned less than a minimum wage job. Some were more adept at it, particularly those who weren’t afraid to shift a lot of ground. It seems that being a prospector wasn’t my calling.
Hard money’s market volatility, which contributed to the chaos of 19th-century American economic policy, poses a risk to reliance on it.
The current market value of an ounce of gold is $2,048 as I write. At roughly $2,500 in inflation-adjusted dollars, it reached its peak in 1980. Despite its tendency to appreciate in value, the price of gold is influenced by the volatility of other commodities. At a height of $141 in 1980, silver also reached its current value of $22.80. Why did precious metals reach their pinnacle forty years ago? double-digit growth in prices.
Put another way, financial concern.
William “Coin” Harvey was an economic apprehensive person in American history who continued to support Free Silver even after the movement was defeated.
Harvey was a political activist and author who supported Bryan on the grounds that the unrestricted monetaryization of silver was the key to American prosperity. Disillusioned, he abandoned politics in 1900 and purchased land for a resort close to Rogers, Arkansas. However, as his disillusionment with the world grew, he devised a monument in the shape of a pyramid that would serve as a time capsule, preserving knowledge for posterity.
According to Oliva Paschal’s 2011 article in Latham’s Quarterly, “The pyramid was the last gasp of the wisdom Harvey had hoped to share with the world— which, having taken root in his own time, he believed would bear fruit for other society on the road to modernism.” “Free silver was virtually extinct, and Populism followed.”
Harvey never completed his pyramid; he passed away in 1936 at the age of 84.
After three years, the White River was dammed by the US Army Corps of Engineers, which resulted in the creation of Beaver Lake and the flooding of a large portion of Harvey’s resort, Monte Ne.
Although Harvey is little acknowledged in modern times, I have no doubt that he would be enthusiastically supporting the idea of states using gold and silver as legal money. Legislators in Kansas are kicking around the concept, but at least one state already has a bullion depository: Texas, naturally.
Situated approximately thirty miles from Austin, the Texas Comptroller’s official website states that it is a state agency. The depository is open to all citizens and residents of the United States, and arrangements are being made to eventually accept deposits from foreign countries. It opened for business in 2018.
According to a 2021 update from The Houston Chronicle, the repository was effectively a bust, used by very few people, and costly for the state to operate.
The proposed Kansas legislation also gives the state treasurer the power to oversee the state’s digital asset-backed gold money system and establishes a third-party gold depository. The House bill was opposed by the Kansas Bankers Association and the Kansas Credit Union Association due to their worries regarding its complexity and potential conflicts with federal banking laws caused by state law.
This proposed legislation might contain gold, but it’s fool’s gold.