Charles Curley's call for a new U.S. gold coinage [June] is interesting but, I fear, not very practical. In the first place, the U.S. Mint is in no great hurry to go along. Collectors have been trying for years to get the government to mint a gold subsidiary coin (one whose bullion is worth less than face value—and, in this case, considerably less) for the bicentennial. No deal. The United States Government is as committed as ever to the permanent demonetization of gold.
But even were this not the case, I don't see it as a real possibility that such a coin would ever find much use as actual money. Especially when there is all that crummy paper that can be used in its place. True, not making the coin legal tender would prevent it from being hoarded for bullion. But what about the coin collectors? There are ten million of us in the United States and my guess is every one of us will want one—or more. And so a heavy numismatic premium would quickly attach to each specimen, thereby driving it out of circulation.
So why did gold circulate in the old days? Primarily because there wasn't anything else, and so it was financially unrealistic for most people to collect gold coins on a major scale (I estimate that the average weekly wage for a factory worker employed today were the U.S. on a gold standard, assuming one dollar equal to 1½ grams fine gold—the legal mass when U.S. gold coins were last actually minted—would be about $2.50 or 50¢/day, with commensurate prices for all other goods).
I don't think people realize just how underpriced gold really is. But I think I can offer some idea. In the entire history of the United States, approximately 4½ billion dollars (again, at 1½ grams to the dollar) in gold was coined by the mint. Today, there is about $70 billion in paper floating around plus $100 billion in paper in the hands of other governments. So the total obligations of the U.S. Government in just backing up its paper alone come to almost 38 times the entire amount of gold ever actually coined! And this doesn't even take into account all the check-book money that has been created as a result of bank credit expansion.
Thus, were the government to announce tomorrow that we were going back to a pure gold standard and abolishing the paper, the price of gold would have to rise to well over $750/oz. troy.
Of course, this isn't going to happen, and I hope no reader will conclude that I am saying so. What I am saying is this: as long as something with as much economic clout as the United States Government wishes gold to not be a major money, it won't be. True, the gold will be around long after the paper has turned to ashes, but by then the United States will be referred to as "that ancient empire."
A much better idea would be for Mr. Curley or some other enterprising individual to start making his own coins along the lines Mr. Curley has suggested. Of course, the SS insists you don't call them coins or imply that they are sanctioned by Uncle Sam. But there is no law that says you cannot make "medals" or operate as did the private coining companies of the gold rush days, selling your coins for what they will buy.
Robert B. Crim
Mr. Curley replies: In reply to Mr. Crim, I should first point out that four years ago, gold legalization, "wasn't very practical." Big deal. My intention was to get the ball rolling. Would Mr. Crim care to send a letter to his Congressmen, Messrs. Sarasin, Weicker & Ribicoff? He might also try his Congressional neighbor, Stewart McKinney, who is on the House Banking and Currency Committee. Incidentally, I have a copy of Hatfield's bill for a numismatic coin (S 1712), and it is quite different from my proposal. Mr. Hatfield's coin, in my opinion, bids fair to become another 'Eisenhower dollar disaster,' and is in any case a subsidy for coin collectors, not an effort at monetary reform.
If every coin collector in the U.S. bought a von Mises and a Jefferson, they would lock up about 15 million ounces, or just over two years production of Krugerrands at present rates. Of course the initial premium would be high; it is on any coin. It would come down as more coins are minted. I paid a 14% premium for my first batch of Krugerrands. Now the premium is down to about 3%. However, I'm not complaining—the coin would now sell for 3½ times what I paid for it.
I'm not sure that the von Mises would circulate much at all either, but even if not, it would still be a very liquid investment, and, like the Krugerrand, would be acceptable to any seller if you were to offer it. However, as inflation gets worse, I expect to see gold clause contracts, and price changes pegged to gold. The von Mises, if common enough, could become the numeraire instead of simply one ounce of gold, and from that, it would start to circulate.
As for Mr. Crim's calculations, I should point out that they presuppose a universe in which it is possible to formulate a correct econometric model. In other words, Mr. Crim is falling into the old econometric fallacy, and apparently has not read von Mises. Gold, like any other commodity or service, is worth exactly what people are willing to pay for it. I would be happy to supply Mr. Crim with all the gold he wants at $750 an ounce. A commodity or service can only be spoken of an 'overvalued' or 'undervalued' when government price maxima or minima distort the market.
If someone wants to produce private 'coins', they are welcome to it. Donald McLaughlin, formerly President and Chairman of Homestake Mining Co., has suggested that Homestake pay its dividends in such a gold coin. Several South African gold mines are considering the idea (it has tax advantages for British share holders). I certainly would like to see this done, and will accept them for subscriptions to The Charles Curley Letter. —C.R.C.
The June issue provides much valuable information and insight into current problems. There is one thing, however, that I find disappointing in the tone of David Bergland's article. Although the defensive techniques of low-profile tax resistance are useful, for the time being, the use of loopholes in tax law does not serve the true libertarian end of eliminating taxation. As loopholes are noticed, legislators will attempt to plug each one. The range and effectiveness of available defensive tactics will decrease (the aplomb of Browne notwithstanding), and the proslavery intellectual climate will not soften. If active tax resistance is not fostered, we will never radicalize enough people to make constructive changes.
Bergland implies that writings encouraging anti-tax activism are irresponsible. I think this is wrong, if for no other reason than that they are psychologically satisfying to their consumers. It is typical for libertarians to regard the IRS and its lackeys as common thieves and murderers, and to want to react accordingly. There is little inner gratification in playing hide and seek games with criminals. It is more satisfying to hold them in contempt, to feel superior, and to dream of giving them what they deserve. It is natural that we develop Ragnar complexes. Playing parlor games with looters becomes frustrating; we don't win, and in the long run we most likely lose.
There are really three general ways to approach the problem. Loophole tactics is one. The heroics of Bray, Scott and Kellems is a sort of middle-of-the-road, compared to the third, which I will only mention here: physical force, skillfully used, in self-defense. The thought of striking back has a lusty, romantic relish to it, not to mention the probability that the whole situation will eventually reduce to this in practice. For the present, anyway, courses of action involving leakproof containers, concrete, and deep bodies of water should at least furnish interesting and emotionally engaging thought experiments.
HIT THE SPOT
I want to thank Charles R. Curley for his letter ["Letters", June] in which he gave a question which he asks of arch-conservatives and libertarians who oppose amnesty for draft evaders (and which, he states, has gone unanswered): "What is your stand on the question of amnesty for gold bullion owners?"
I wasn't able to answer it either. In fact, it caused me to undergo the quickest change of mind I have ever experienced on an important issue. It did so by making clear to me the principle underlying both questions of amnesty.
My thanks to Mr. Curley and I hope he hasn't copyrighted the question because I am now using it myself. (It's still unanswered.)
Robert O. Baures
IN THE LONG RUN…
Ronald Reagan (interviewed in the July REASON) said, in a recently reported speech, "If the present trend continues, the free enterprise system will cease to exist within 25 years." Note that Reagan's statement implies that "the free enterprise system" presently exists. It implies that the status quo of socialism-welfarism-fascism is actually "free enterprise." His utterance suggests to me that Reagan, the self-styled "libertarian-conservative," is really just another (unhyphenated) conservative ("One inclined to preserve the statist quo"). Now, if Reagan wishes to traverse the country posturing as a "libertarian" or a defender of "free enterprise," I cannot prevent him from doing so. But I can, and do, console myself with the knowledge that if the present trend continues, Ronald Reagan will cease to exist within 25 years.
Baldwin Park, CA
Congratulations on your interview with Ronald Reagan.
Now we know!—Reagan is no libertarian—and looking at his spending record, he's no conservative either. Just another welfare-warfare statist.
You omitted to mention one of the real gems of the Reagan Administration—support for the Federal Earth Resources Technical Satellites (ERTS). How does he equate THAT with individualism and freedom?
Antony C. Sutton
THE SHADOW KNOWS
I have discovered another one of those "grey areas" which Governor Reagan forgot to mention: the dark grey shadow he casts on the good name of libertarianism every time he applies that label to himself.
State College, PA
There is of course nothing inherently the matter with interviewing a statist like Ronald Reagan in a libertarian magazine [July]. But there is something the matter with the rather deferential manner in which Mr. Klausner conducted this interview, Two points need to be made:
(1) In two crucial places in the interview Reagan tried to blur principles which were mostly, if not totally, antagonistic: that of conservatism versus libertarianism, and force versus voluntarism. Why didn't Mr. Klausner press Reagan with questions concerning the enormous differences, both philosophical and historical, between conservatism and libertarianism, and why didn't he challenge Reagan's stupid attempt to demonstrate that "voluntarism does get into a kind of force and coercion"?
One might overlook these points as mere oversights, but Mr. Klausner's questions concerning Reagan's "individualism" [!!??!!] and whether Reagan would support a Libertarian party candidate in 1976 tend to indicate that he really believes Reagan to be at least a quasi-libertarian. But what could Reagan, who supports victimless crime laws, taxation, and an interventionist foreign policy, have in common with a party and a philosophy that opposes these??
(2) Equally important, why didn't Mr. Klausner ask Reagan questions about many of his statist policies in the political arena? I am referring to his almost 100 percent support of Nixon during the Watergate scandal, his notorious conduct while governor of California in the "People's Park" incident, and his attempt, also while governor, to prevent Eldridge Cleaver from speaking at Berkeley?
These are meant as serious, not rhetorical questions, and they deserve serious answers. In a magazine entitled REASON Mr. Klausner is under an obligation to explain to libertarians why he treated Ronald Reagan so timidly.
Long Island City, NY
MR. KLAUSNER replies: One of our primary objectives in conducting the interview with Ronald Reagan was to publish his views on a wide variety of issues, so that readers could judge for themselves how close Reagan comes to libertarianism. As pointed out in the introduction to the interview, although he has used the term "libertarian" to describe his position, Reagan's record in office, while generally conservative, is not particularly libertarian. Because of strict time constraints on our interview, we did not have time to go into all the areas we had planned to. Nevertheless, in the interview Reagan clearly indicated his belief in the need for paternalistic government control in many areas—despite his claim that he doesn't believe "in a government that protects us from ourselves"—and he conceded that "government's only weapons are force and coercion" after he had indicated his view that "our government…is a voluntary approach." Although Reagan espouses the rhetoric of individualism and takes profreedom positions in certain areas, I am surprised that reader Shapiro would think that I believe Reagan to be a quasilibertarian, in the face of the many statist positions that Reagan expressed in the interview which flatly contradict his generally libertarian premises. —M.S.K.
Murray Rothbard has recently written that "What has been happening so swiftly in Indochina can only be exhilarating to any libertarian." But what actually happened in Viet Nam was that brutal murderers took control of a territory and inflicted on its residents a regime of terror and repression. In the process other persons, somewhat less brutal and repressive, were replaced as governors of that territory.
If libertarians are to be "exhilarated" whenever such a process occurs, then I suppose we should be overjoyed at what has gone on recently in Portugal—and ecstatic over the prospect of a similar displacement in Italy, Spain, France, Western Germany, Belgium, Great Britain, and, even more so, in the United States.
Perhaps Mr. Rothbard meant that our exhilaration should be confined to only the demise of the existing interventionist regime, that it should not extend to the replacement of the existing government by an even more repressive one. However, the prospects of overthrow of a repressive regime by a more libertarian one are, strictly speaking, nil.
Mr. Rothbard delights in what he calls the "death of a State." But the existential reality which calls states into being never dies. Let us quit kidding ourselves. Brute force is an imperishable feature of life as we know it. "State" in the classical Western tradition is the name for a device designed to keep such force under control, so that liberty may exist. Of course states have tended generally to become instruments themselves of immoral force. Perhaps they always will. But one thing is certain. The disappearance of what we call "State" will not involve also the disappearance of force. It will involve the disappearance of any reasonable chance to contain force—and for the free society to survive.
Mr. Rothbard presumes too much in saying that "What has been happening so swiftly in Indochina can only be exhilarating to any libertarian." Many with libertarian credentials equal or superior to his will disagree. I at any rate am not exhilarated. On the contrary, no event of the past generation has grieved me more than has the fall of South Viet Nam to the worst gang of murderers the world has ever known.
Someone needs to demonstrate apodictically (as the Master used to say) that the traditional law-state is indispensable to the free society, that free contracting for law and order services cannot be thought through to a noncontradictory conclusion, and that, therefore, contemporary hankering for "private-property anarchy" is chimerical (to say the least). If and when that job is done, it will no longer be possible for anyone correctly to call himself both an anarchist and a libertarian, and the one area of serious disagreement I have with Mr. Rothbard will disappear.
NAIVE AND RECKLESS
A word about Rothbard's July "Viewpoint": asinine. How can libertarians rejoice in the fall of the Thieu and Lon Nol regimes? They did not fall to a grassroots revolution but to forces armed, trained and supplied by an extraterritorial predator-state. That is not a blow against imperialism—it is a vindication of it! Thieu and Lon Nol were dictators, yes, but of the petty despot kind; free exchange between individuals could still take place on a limited basis. The new regimes are unquestionably worse; they intend—have already begun—to recast their entire social structures in an ant-hill collectivist mold, controlling thought as well as deed.
In comparing a run-of-the-mill dictatorship such as that of Lon Nol, Thieu, Franco or Peron to that of ideological or racial fanatics such as Mao, Hitler or the new Saigon and Phnom Penh regimes, the former is preferable (assuming one must live in a dictatorship). A rational mind can find ways to survive in the former; it will surely be extinguished in the latter.
I can see no cause for rejoicing in the replacement of petty despots by totalitarian fanatics. Rather, I mourn for the people of Viet Nam and Cambodia, for the past few decades of their history and especially for the past few months of it. Prof. Rothbard is brilliant in economics and domestic affairs; but as for foreign policy, he is naive and reckless.
Dr. F. Paul Wilson
AFTER THE FALL…WHAT?
So Murray Rothbard thinks what has happened recently in Indochina "can only be exhilarating to any libertarian." ["Viewpoint," July 1975] His reason for feeling exhilaration is that two states have collapsed: South Vietnam and Cambodia. I readily agree with Rothbard that neither of those states was a paragon of libertarian virtue, but—as he pointed out in his article—the vacuum left by their demise was filled almost instantly by individuals representing other states, easily as insidious as their predecessors. Also, has Rothbard forgotten the tremendous cost in innocent lives required to bring about the downfall of those states? Where in all this chaos and carnage are there grounds for exhilaration?
The point of Rothbard's column seems to be that one should derive pleasure merely from observing the destruction of a state, regardless of how it is done, or of what takes place afterwards. This type of thinking reflects the shallowness of many libertarians, who are so preoccupied with bringing down the State, that they fail to give serious thought to what type of society they wish to erect amid the ruins.
Little thought has been given to making libertarianism a social movement, instead of simply a political one. The idea prevails among libertarians that once the State is dismantled and the market freed, utopia will have been reached. But, all the free market does is allow you to make choices; it doesn't tell you which ones to make. Society could be free, and people might still beat their dog, practice chauvinism and racism, immerse themselves in cheap goods and passing fads, dictate to their children, kill themselves smoking, and worship God and Ayn Rand. The market for liberty, is also potentially the market for stupidity.
I have observed for instance, that most libertarians envision their future utopia as a giant Macys wherein they may sate themselves with electric toothbrushes and can openers, paper plates, candied apples, booze, and Cadillacs. Their rationale for the free market seems to be that it will make everyone rich, not that it will provide latitude for new lifestyles and the growth of human culture and diversity.
The Libertarian Party's ad for its national convention, in the same issue of REASON, documents this consumerist attitude. The agenda includes, boat rides around Manhattan, and bus tours of the same area; also closed-circuit coverage of the convention, instant replays of motions and voting results, and receptions, all of which will be located in the Statler Hilton Hotel.
If libertarians wish to achieve a new society, they must concern themselves with more than the merely political and economic. They must inquire into those values that make life worth living, regardless of the political situation.
Steven D. Kimball