Book Review: James Ledbetter’s ‘One Nation Under Gold’ – Forbes

Gold bullion bars sit following casting at the Rand Refinery Ltd. plant in Germiston, South Africa, on Wednesday, Aug. 16. 2017. Photographer: Waldo Swiegers/Bloomberg

James Ledbetter, the editor of Inc. magazine, recently published a weird and wonderful book, One Nation Under Gold: How One Precious Metal Has Dominated the American Imagination For Four Centuries. The gold standard is one of my areas of persistent interest. I have published around a million words touching on it here at Forbes.com and elsewhere. So, I read it avidly and with great pleasure.

More to the point, two campaign-trail comments show that Donald Trump is, at least, a strong sympathizer with the gold standard. The gold standard may yet come to matter. If so, getting it right will be crucial. And One Nation Under Gold will be a real asset in getting it right.

Ledbetter’s book is, for the most part, extraordinarily good on the history, politics, and culture. On the policy side, not so much. He cannot be blamed for reporting the conventional wisdom and missing the real, mostly behind-the-scenes, policy tick-tock. That is a minor blemish on a great book. He also shows flashes of occasional brilliance on the policy side.

The book is wildly entertaining as well as informative. It consequently drew wide attention in the mass media, with significant exposure by the New Yorker, NPR, Fortune, Quartz, the Wall Street Journal, and elsewhere. Deservedly so.

Why “weird and wonderful?” Mostly, Ledbetter is a first-rate reporter with a nose for unearthing great stories. He delivers great and often outré stories in abundance.

Steve Forbes, a great and eloquent gold standard champion, says half in jest and whole in earnest that if you get stuck between two chatty bores on a transcontinental flight just offer to explain monetary policy to them. They will promptly dive into their In Flight magazines. Ledbetter is never boring and also displays a comely ambivalence toward the gold standard, sometimes dismissing it as antiquated and fringe while more than occasionally throwing out hints of admiration or at least fascination.

You likely will be fascinated. I was.

One Nation Under Gold does not have the depth and granularity of Liaquat Ahamed’s Pulitzer Prize winning monetary history Lords of Finance: The Bankers Who Broke the World. Lords of Finance is the best extant history of the decline and fall of the gold standard. That said, Ledbetter has written a delightful book, one that succeeds in capturing, among other things, much of the loopiness that has undeservedly tarnished the reputation of the true gold standard.

One Nation Under Gold really commences with the early beginnings of America. (It is not quite clear to which “fourth” century its subtitle refers.) He commences with a complaint by one George Washington in 1779 as to how the issuance of paper money caused him great financial injury. Washington had more indictments of paper money than that, as did almost all of the other Founders.

Ledbetter: “It is almost impossible to overstate the dislike that most of the Founding Fathers, and indeed most of the American ruling class, had for paper money in the late eighteenth and early nineteenth century. The currencies issued by most states depreciated to the point of being worthless.” That depreciation left an indelible impression.

Madison devoted the second paragraph of Federalist 44 to indicting paper money:

The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity. The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it.

In consequence, the writers of the Constitution explicitly, in Article 1 Section 10, stripped all monetary powers from the States. The reference therein to gold and silver Coin merely meant that the States were doubly-forbidden from printing paper money. (It worked.)

Later on in the book, Ledbetter archly observes that “[President Lyndon] Johnson’s desperate gold strategy proved once again that when America needs to choose between its wars, it’s sense of foreign supremacy, economic well-being, and gold-backed currency, it’s gold that always gives way.”  This is somewhat astute but not entirely correct.

The gold standard is part of the infrastructure of equitable prosperity (nationally and internationally). It is not a suicide pact and not designed to constrain economic growth. Rather the opposite. And yes, the gold standard, always, is an early casualty of war. If in the existential extremity of war the gold standard must be temporarily sacrificed for reasons of war finance … so be it.

The Founders were pragmatists. In the Constitutional Convention of 1787 the framers stripped the federal government of the explicit power to issue the hated paper money. (The language, and power, removed from Article I Section 8, clause 2 was “and emit bills,” which meant to issue scrip, currency not defined by and convertible to gold.) Yet in that debate George Mason, for example, “observed that the late war [of Independence] could not have been carried on, had such a prohibition existed.”

For this and other reasons no direct prohibition on the federal government’s issuing paper money was placed in the Constitution. The power was withheld but not forbidden, leaving a little wiggle room. To criticize the gold standard as vulnerable to the demands of war is myopic.

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