"Gentlemen," so Sir Isaac Newton is supposed to have said when speaking of the basic requirements of a science, "you must describe your unit."

The trouble with money these days is that nobody can describe what a monetary unit is. Ben Rogge says that "if the dog eats it, it’s dog food." John Exter regards most modern currencies as "I owe you nothings." Dogs may eat nothings, but when such a diet is continued they demand more and more as they find themselves wasting away. Food units, even of the stuff they feed to dogs, must be of a certain caloric value, which re-quires unchangeable units of measurement.

The case for gold — or for some other relatively scarce metal of certain weight and fineness — would seem to be irrefutable, yet the politicians and the professoriate continue to turn deaf ears to gold "maniacs" and "fanatics." They refuse to see that all that these "maniacs" are asking for is something that is describable. Otherwise the world must be turned over to guesswork, which means, in practice, to the speculators.

In a world without monetary certainty the best minds will go into the manipulative arts, and production will inevitably suffer. Things may be fine for the manipulators until the dogs begin really to starve and go berserk. At a certain point of canine unruliness the country that has left the gold standard far behind it will discover that it must go over to the gun standard, and then we will have 1984.

We could, if we would listen to reason, avoid the social wreckage that must come with a final inflationary crisis. The voice of reason speaks in Gold Is Money, a collection of essays edited with an introduction by Hans F. Sennholz (Greenwood Press, Westport, Connecticut). Here we have nine economists addressing themselves to the plight of a world that is trying to get along without any standards of monetary measurement, and they could bring order out of chaos if there were anybody of influence to listen. Amusingly enough, the volume is offered without stating any price on the jacket. Maybe the publisher is afraid he will take a beating if he takes the current dog food in payment for it.

The Plight of the Dollar

Much of the book is historical. It begins, however, in medias res with G. C. Wiegand’s "The Plight of the Dollar," a lugubrious chronicle of what happened in the Bretton Woods post-World War II period when the American dollar dropped “almost three-fourths of its domestic purchasing power," while the various paper currencies in the rest of the world "lost, on an average, over 85 per cent of their value."

The U.S. didn’t quite cut itself completely from the gold standard during these years, for foreign governments could, up to August of 1971, take settlements in gold at the risk of hurting the ever-enlarging amounts of "Eurodollars" owned by their own citizens. Fears of triggering a depression kept demand for gold at a minimum, but forbearance couldn’t go on forever. So the Bretton Woods era came to an end when Nixon closed the gold window, and the dollar witnessed its first devaluation.

The dogs in America during the Bretton Woods era thought they were doing well. They consumed the available dog food without the same concern for savings and investment that animated the Germans and the Japanese. Where the Americans saved six to eight per cent of their disposable income, the Germans saved twelve to fifteen per cent, and the Japanese twenty to twenty-five per cent.

Competition from Abroad

Somewhere in the mid-Sixties Germany and Japan, along with some other countries, began to out-produce the U.S. And our balance‑of-payments deficits naturally grew slowly and steadily. The "tail of the dog" (a misleading term even for a country on a dog food standard) that is represented by U.S. foreign trade may not amount to much statistically, but, since it accounts for huge quantities of fuel and metals, which are basic to a manufacturing economy, the dog won’t live very long unless he can wag the foreign trade tail vigorously.

We are still in medias res with Murray Rothbard’s "Gold vs. Fluctuating Fiat Exchange Rates," Hans Sennholz’s "No Shortage of Gold," and Henry Hazlitt’s "To Restore World Monetary Order." With John A. Sparks’s "The Legal Standing of Gold — Contract Versus Status," we dip back a bit, to the world described by Sir Henry Maine, who saw the history of mankind as a progression from status to contract. Donald Kemmerer bites off the whole nineteenth and early twentieth centuries in his "The Role of Gold in the Past Century." Gary North’s subject is "Greenback Dollars and Federal Sovereignty 1861-1865." Then we come to antiquity, real antiquity, with Rousas John Rushdoony’s "Hard Money and Society in the Bible." The future is left to Arthur Kemp’s "Is the Gold Standard Gone Forever?” which is pessimistic for the short run but nonetheless reminds us that "forever" is a long time.

I have no real quarrel with the sequence of the essays, but it could be significant that I found myself reading Rousas Rushdoony’s essay on the Biblical law even before taking on Hans Sennholz’s introduction. The Bible, like Sir Isaac Newton, was strong for measurement. It spoke, in Leviticus 19:35-37, of money not in terms of coinage, but as weight. "Ye shall do no unrighteousness in judgment, in meteyard, in weight, or in measure."

Biblical Standards

The Biblical man who falsified measures and weights was a "corrupter of judgment," and "vile, wicked and abominable in a very high degree." When David gave Ornal some money for a place, it was "six hundred shekels of gold by weight." Biblical law forbade "fractional reserve," and considered any departure from a metallic standard as "fraud and counterfeiting, and as part of a broader pattern of apostasy and moral collapse." When, after the fall of Rome and the coming of the Dark Ages, the prelates and rulers of Europe needed money, they were fortunate to have Jewish merchants and money-lenders around who had continued to read the Old Testament.

As long as the nations deal in "I Owe You Nothings," there is a good case for Milton Friedman’s championship of floating exchange rates. Fixed rates can only result in black market transactions when all is guesswork anyway. However, Murray Rothbard really scores when he says "the idea of a market only makes sense between different entities, between different goods and services, between, say, copper and wheat, or movie admissions. The idea of a market makes no sense whatever between units of the same entity: between, say, ounces of copper and pounds of copper." When the pound, the franc, the dollar and the mark once represented certain stated weights, they were different in name only. It would be silly to "float" basically identical things.

The Friedmanite position makes short-term sense in a guesswork world in which some countries may be inflating their "I Owe You Nothings" faster than others. But it is no real cure in a world that is unable to invoke a solid unit of measure when dealing with politicians. Hazlitt’s prescription is the best for the moment: let people own gold and they will soon have a de facto world currency that will begin to call the inflating politicos on the carpet everywhere.