Trends

GOLD IN YOUR FUTURE?

Recent developments appear to be bringing closer the day when Americans will have the financial security of being able to own gold—legally. In last fall's presidential election, the platforms of the Republican Party, the American Party, and the Libertarian Party all supported gold legalization. Both the National Committee to Legalize Gold and the National Taxpayers Union testified before the Republican platform committee in support of the right to own and exchange gold. The platform ended up endorsing "the right of American citizens to buy, hold, or sell gold…as soon as…feasible."

That day of "feasibility" may not be as far off as it would seem. In November the congressional Joint Economic Committee's subcommittee on international exchange and payments got headlines for endorsing gold legalization after the passage of international monetary reforms. The "reforms" consist of making Special Drawing Rights (SDRs) acceptable in lieu of gold in all transactions between the IMF and its member countries. Once this move (which is probably inevitable) takes place, the committee stated, "All prohibitions on the purchase, sale, and holding of gold by American citizens should be promptly abolished." The committee is convinced that once SDRs become accepted between governments, gold will become "just another metal," and that allowing Americans to buy and sell gold would be "a major step in that direction."

Meantime, in Canada, the forces of the free market are again outracing the politicians. On 15 November the Winnipeg Commodity Exchange began trading in the world's first market in gold futures. Initially the exchange is offering five contracts: January, April, July, and October 1973, and January 1974. The contract unit is a 400-troy-ounce gold bar, 995 parts per 1000 of fine gold (the same as the London gold market standard). Investors will have to put up in cash $2800 of the approximately $25,000 value of the contract (based on a gold price of $62.80 per ounce), giving substantial leverage. The big question that remains is whether Americans will be able to trade in the Winnipeg market. The U.S. Treasury considers trading in gold futures to be equivalent to owning gold. It recently announced that American companies may provide brokerage services in the Winnipeg market, so long as they act only as brokers, and "take reasonable measures to assure that non-U.S. citizens with whom they transact business aren't acting on behalf of U.S. citizens." But who is to define "reasonable"? Winnipeg Exchange chairman Robert Purves considers gold futures contracts to be legally analogous to stock certificates in gold-mining companies—which are perfectly legal for Americans to own. He has been quoted as saying that he "definitely expects" U.S. investors to be trading in gold futures. The next move, apparently, is up to American investors.

SOURCES:
• "Is GOP's Gold Plank Really Gold?" BUSINESS WEEK, 26 August 1972.
• "Panel Urges Repeal of Law Against Gold Possession," UPI (Washington), 19 November 1972.
• "Gold Futures Trading to Begin in Winnipeg This Week," Patrick Wallace, WALL STREET JOURNAL, 13 November 1972.
• "A Future in Gold," TIME, 18 September 1972.

AND POT TOO?

In quick succession near the close of the year, two highly-respected organizations joined the chorus in favor of ending the marijuana prohibition. First to make the announcement was Consumers Union, the nation's largest and most effective product-testing organization. Stating that "marijuana is here to stay," CU urged complete legalization of the use, cultivation, and sale of marijuana. Taking what appears to be a pragmatic stand, CU urged that marijuana be treated the same way as alcohol, because "no conceivable law enforcement program can curb its availability." On the other hand, CU consistently urged that all persons now serving prison terms for marijuana possession be freed.

In addition, the organization's just-released report looked into hard drugs, and recommended that drug addiction cease to be a crime, so that all addicts would be able to receive narcotics legally. The report correctly points out that, aside from the narcotics' addicting power, "the other disastrous effects of narcotics addiction—on mind, body, and society—are primarily the result of laws and policies."

The really big surprise came from NATIONAL REVIEW, which headlined its 8 December issue: "The Time Has Come: Abolish the Pot Laws." Its lead article, by Richard C. Cowan, urged American conservatives to take the lead in working for repeal of the marijuana laws, citing both moral and practical arguments. Cowan's article was followed by a critique entitled "What's the Rush?" by James Burnham, who grudgingly admitted that he favors "decriminalization" of marijuana, but no further. This was followed by a short, ill-tempered diatribe by Prof. Jeffrey Hart, which includes the following conservative gem: "Now I don't care much for all that 'free society' rhetoric. No reference to marijuana occurs in the First Amendment." The commentaries were concluded on an upbeat note, however, by editor William Buckley, who pointed out that none other than Barry Goldwater has supported legalization of pot since 1969. Buckley reviewed the Hart and Burnham comments, found them wanting, and stated that he finds Mr. Cowan's case for legalization "not merely plausible, but overwhelming…I flatly agree with him." The conservative movement will never be the same.

SOURCES:
• "Repeal of 'Pot' Laws Urged by Consumer Unit," LOS ANGELES TIMES/WASHINGTON POST, 28 November 1972.
• "American Conservatives Should Revise Their Position on Marijuana," Richard C. Cowan, NATIONAL REVIEW, 8 December 1972.

TROUBLE FOR STATE UNIVERSITIES

A new financial blow is about to hit the country's tax-supported colleges and universities, according to an Associated Press story. In most state university systems, students who are "residents" of the state (i.e., those whose parents live in the state and pay taxes there) pay little or no tuition, while "nonresident" students pay tuition—often on a par with that of private schools. All of that may soon change as a result of the 26th Amendment, which extended voting rights to 18-year-olds. Since passage of the Amendment, there has been an increasing trend by the states to treat 18-year-olds as citizens, particularly in California, where the legislature extended full adult citizenship to 18-year-olds. But, once 18-year-olds are legally adults, their residence is no longer determined by where their parents reside. Hence, collecting "nonresident" tuition will be impossible.

The impact of this change of status is just beginning to dawn on the education bureaucrats. The National Association of State Universities and Land Grant Colleges and the American Association of State Colleges and Universities have just completed a survey of 400 four-year member colleges. The schools jointly enrolled 463,357 nonresident students last fall, and received over $329 million in nonresident tuition, over and above what these students would have paid as residents. Reviewing these figures, the study's author, Dr. Robert F. Carbone of the University of Maryland, stated that "the effect on higher education budgets will be staggering."

The public universities haven't yet thrown in the towel, but are waiting for the inevitable to be established in court. Already an Alabama court has held that if a student is a state resident for one purpose (e.g., voting), then he is a resident for all other purposes. A federal court in New Mexico overturned a newly-passed law that defined as nonresidents for purposes of tuition all students who had not graduated from a New Mexico high school. And a U.S. district court has ordered the University of Connecticut to refund the tuition differential to two students who claimed residency based on voter registration. Carbone neatly summed up the long-term effects of such decisions: "If nonresident tuition is declared illegal, it is likely that the institutional response will be to increase the fees of all students to cover lost income. Clearly, this expediency would strike a telling blow to the low-tuition principle upon which public higher education in America has been built." That it would, and in the process, it would help to re-establish a competitive marketplace in education, in place of the tax-subsidized system so dear to the bureaucrats' hearts.

SOURCES:
• "Youths' Rights Imperil College Tuition System," Associated Press (Washington), 29 September 1972.
• "Residency Laws Force a Tuition Crisis," BUSINESS WEEK, 23 September 1972.

UP THE IRS

According to the National Taxpayers Union (NTU), two new court rulings have greatly increased taxpayer standing in disputes with the Internal Revenue Service. The first ruling, from the Seventh Circuit Court of Appeals, affirms the right of citizens to invoke normal constitutional guarantees in dealings with the IRS. For example, a citizen may now plead the 5th Amendment to avoid furnishing the IRS with information which could result in either civil or criminal liability. The second ruling gives citizens the right to examine the IRS's internal guidelines for dealing with taxpayers, and to know how the IRS allocates audit manpower between large and small taxpayers. This information has not yet been made available, despite the court ruling, because the IRS is charging Mr. Philip Long, who brought the suit, for the cost of Xeroxing the guidelines. This is no small sum, since the table of contents alone runs to over 1000 pages, according to the NTU.

SOURCE:
• "Two Court Rulings Greatly Increase Taxpayer Standing," DOLLARS AND SENSE, September 1972, p. 3.

HOSPERS YES, NIXON NO!

When Electoral College members met on December 18, 1972, to cast their ballots, a lifelong Republican, Roger Lea MacBride of Charlottesville, gave his vote to the Libertarian Party candidates, John Hospers and Toni Nathan. A REASON subscriber, MacBride recently donated REASON gift subscriptions to three libraries in response to REASON's special Election Day offer. MacBride's vote gave Hospers only 16 less electoral votes than George McGovern. Final tally, which won't be made official until January 6, looks like: Nixon, 520; McGovern, 17; Hospers, 1.

SOURCE:
• "Nixon's Landslide Pared by One Vote," LOS ANGELES TIMES, 19 December 1972.