'The Case for Gold,' by Ron Paul Some notes
by Sam Selikoff March 24, 2012
There was heavy suspension of payments in the 19th century, so even though there wasn’t a central bank, there was lots of inflation via the FRB system.
“Brokers” emerged whose business was solely to get notes from one bank and bring them to another bank, forcing payment in specie. This kept banks somewhat honest, until the federal gov outlawed brokers.
Wild Cat banks were banks that had offices located in the back country, making it difficult for people to find them in order to redeem their notes in specie.
The Suffolk bank was a “private central bank” which regulated specie redemption in Boston before the Civil War.
1933 Roosevelt took US off the gold standard. Banks were already closing. Britain had already gone off, as well as France and Germany. Roosevelt confiscated all private gold bullion & money. Said it would be temporary. The Gold Bloc - the remaining countries that were still on the Gold standard - held a conference and pleaded with Roosevelt to go back to gold. Roosevelt rejected their proposals, saying the US was seeking “a kind of dollar which a generation hence will have the same purchasing and debt-paying power as the dollar value we hope to maintain in the near future.” 7 months later, the dollar devalued by 40.9%!
All countries stored their gold at the Fed, due to political instability in the inter-war period. In 1944, political leaders met in Bretton Woods, NH and instituted the gold exchange. A dollar was 1/35 an ounce of gold; foreigners could exchange dollars for gold, Americans could not. Fed reassured foreigners “the dollar was as good as gold.” Of course, Fed kept inflating, and foreigners took advantage of this reassurance, redeeming their dollars for gold. Gold flowed out of the US.