Bicentennial: Last rites for the Gold Standard

I opened this in GD, not because it’s a debate, but because I know it could be debated. I don’t know much about “economic history” or economics (and, IMHO, neither do economists, or they would always agree, and they’d always be right), and I have a couple of questions about some details that I read in an article on money and the gold standard that appeared in a local newspaper. I’d like to know the sources for these points if these are verifiable.

Here goes:

Before the 20th centure, the US dollar was defined as 23.22 grains of gold. (Where is this defined?)

Although FDR revoked citizens’ ability to redeem paper notes for gold, foreign claimants still could until Nixon revoked that in 1971. As a result, oil prices began to rise. (I thought that oil prices started rising as a result of the Yom Kippur War/Arab oil embargo.)

Although we were off the gold standard by then, there was still language in the US Code that valued gold at $42.22 per troy ounce. In 1976, “someone” removed that language, and not by any Act of Congress. (Who can go in and just “modify” US Code.)

It’s amazing, the stuff that people will try to pass off as fact, in forums where they know they’re safe from being challenged by people who actually know a few facts and know how to put them together.

This is off the subject, but I used to see a lot of this in the fundamentalist community, where traveling ‘experts’ would give seminars in conservative churches about how the earth was really only 10,000 years old, and the liberal scientific establishment was covering up the lack of evidence for evolution. (Up until spring of '98, I taught at an evangelical Christian college in central Appalachia.)

Getting back to the matter at hand, (a) you’r right about oil prices not going up until 1973, then skyrocketing with the Arab oil embargo that followed the Yom Kippur War, and (b) only the U.S. Congress can change the U.S. Code, and only by legislation to that effect passing both houses and being signed by the President (or overriding his veto if the Prez vetoes).

Unless, of course, the Supreme Court declares a law unconstitutional, but that unquestionably wasn’t the case with the valuation of the dollar.

Mjollnir wrote:

Weeeelllll … not quite.

Before the Act of June 28, 1834, one U.S. Dollar was defined as 27.5 grains of 900-fine gold. (This works out to 24.75 grains of pure gold – 900 fine means 90.0% by weight. A “grain” is 1/480th of an ounce Troy.)

Between 1834 and 1934, one U.S. Dollar was defined as 25.8 grains of 900-fine gold. In 1933, FDR, acting on emergency powers granted him by Congress, outlawed private ownership of bullion gold except by jewelers. In 1934, he re-defined the Dollar as 15.375 grains of 900-fine gold, and began paying off the national debt in these new, smaller “dollars”. This is almost, but not quite, the same thing as printing free money.

Note that 15.375 grains of 900-fine gold contains 13.8375 grains of pure gold, or to only slightly more than 1/35th of an ounce Troy. This is where the famous “$35 per ounce” price for gold came from in the Old Days.

The gold definition of the U.S. Dollar was re-defined twice more in the 1970s, before the country went off the Gold Standard entirely. Note that the definition of a U.S> dollar as about 3/4 ounce Troy of silver was not changed at all during this time.

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