Orthodox economic theory asserts
that the disappearance of silver from the economic lexicon was due, at least in
the United States, in large measure to the abundance of silver, and its
consequent debasement. Professor Fekete offers a more interesting and compelling
theory by charging the collapse of silver to an international banking cartel
seeking to obtain a stranglehold on the world’s money supply.
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| Comstock Miners c. 1885 |
We should note that Dr Fekete is
not your standard issue conspiracy theorist – a label from which he explicitly
attempts to disassociate. He is a highly distinguished mathematician by métier and
monetary scientist by avocation, having established – without conscious effort –
the field of what we at the The American Chronicle call auroeconomics, in conjunction with a renaissance in
Austrian economics, a flame kept alive by the Ludwig Von Mises Institute, among others.
In fact, Fekete offers an
experiment to his hypothesis which would potentially prove or disprove his
speculation. He outlines the data analysis required to verify his theory in his article which we cite in our
References section. We urge our more scholarly readers to inspect it. It is this scientific and scholarly approach which earns Fekete our undying admiration.
However, leading up to this
experiment, Fekete presents a fascinating case for the collusion of
international banksters in demonetizing silver which precipitated the
evaporation of its value. The primary predicate for these collusions was that banksters
found gold an easier target to manipulate since its mining and availability
were in fewer hands than silver. As a rarer substance, its stores and mines,
as well as its value, would be easier to manage .
While Fekete avoids examining the
reasons for seeking such control, we do not. There has long been a cabal of
plutocrats and intellectuoids who seek to control the world because they believe
themselves to be smarter than everyone else, and should thus dictate their
lives. Having accumulated so much wealth, what else is there to do but control
men’s souls?
According to the establishment
economists, silver’s price collapsed due to its over abundance, particularly in
the United States, such as that found in the fabled Comstock Lode in Nevada.
Since silver was now too plentiful, it lost one of its primary characteristics
as money – namely that its price was no longer inelastic. As such silver as
money went the way of the dodo bird even if it took nearly a century until 1965
to accomplish.
Fekete notes two alternate,
possibly synchronous, events explaining the collapse of the price of silver and
its subsequent demonetization. One is the Franco Prussian war of 1871 in which
the victor Germany demanded and received from France 1 billion dollars worth of
gold. This hoarding of gold anticipated the last closing of any mints to the
free mintage of silver by the Latin Monetary Union in 1878.
Ten years earlier, in 1868, the
first shot against silver in America was fired when Senator John Sherman – the same man
who gave us the Sherman Anti-Trust Act – proposed legislation demonetizing
silver. Although unsuccessful at first, demonetization occurred through Coinage
Act of 1873 which closed the mint to the free coinage of silver.
During the same period, the
Resumption Act of 1875 authorized the retirement of Greenbacks by redemption in
gold specie beginning in 1879. Those controlling the levers of power conspicuously avoided
redemption in silver, which would have maintained bi-metalic money. Seeing the
divergence – most likely through engineering it – certain banksters began a 10 year
program of reconfiguring their assets from silver to gold.
This is the point at which Fekete
introduces his experiment of measuring the standard deviations of various gold
and silver spreads to see if causality can be identified in the banksters’
actions by measuring prices of commodities and mining shares.
Debts once contracted in silver would
now be payable in gold, thus extracting a pound of flesh from the debtor – in this
case the Confederate mortgagor, among others. With silver demonetized, its demand quickly
waned while that of gold sharply rose. The sudden demonetization of silver both
in Europe and in America would explain the deflationary tendencies associated
with the gold standard because heretofore the majority of wealth was held in
silver given its greater availability.
The friction between the gold bugs and the common man came to a head in the presidential campaigns of William Jennings Bryan - truly a man of the people - who deplored this cross of gold on which the multitude were being crucified.
Fekete notes that the
unconstitutional closure of the mint to silver was ostensibly a protective
measure to preserve the mint’s supplies of gold since they was under constant
pressure due to arbitrage in America and overseas – particularly India and
China – where silver had a greater value. But this explanation is a snow job
designed to confuse rather than explain. The deliberate actions of politicians
and banksters suggest a more duplicitous operation of defrauding large groups
of peoples of their wealth. The elimination of the false ratio between gold and silver would have handily rectified the price discrepancy which motivated the arbitrage trade.
While we have omitted some
important aspects to Fekete’s dissertation, we have presented enough to whet
some readers’ appetites – we hope. The main point is that the opening of the
western silver mines did not precipitate the collapse of silver prices – rather its
legal demonetization was the causal factor – both in America and Europe.
Reference
Antal Fekete, The Silver Saga, November 30, 2012, http://professorfekete.com/
Copyright 2013 Tony Bonn. All rights reserved.
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