A Historical Look at Which Presidents Supported a Gold Coin Standard
There was a time in the United States when money meant something real. The gold coin standard, based on the substantial intrinsic value of precious metals, meant that gold coins were exchanged for goods and services.
Today, we rely on fiat currency, which has no inherent value but is only worth something because the government arbitrarily says that it is. However, since the U.S. was founded, having a gold coin standard has made a lot of sense to many Americans. Some presidents agreed while others fought against it.
In this piece, we’ll share with you the history of the gold standard and the positions of some of our greatest presidents as it respects their opinion and support of a gold coin standard.
In the early days, from the ratification of the U.S. Constitution in 1789 to the beginning of the Civil War in 1861, Americans could exchange their paper currency for gold or silver, which they were based on. This often included gold for the higher denominations and silver for the lower.
The truth is a couple of centuries ago, the public wasn’t much interested in transacting in paper money. Although they sometimes paid in commodities, they mainly bought and sold all they needed with silver or gold coins. This bimetallic standard was complicated by the fact that silver was at times overvalued and gold undervalued. Thus, silver remained in circulation while gold was hoarded.
The early presidents were more concerned about whether to establish a national bank. George Washington settled the debate between Alexander Hamilton and Thomas Jefferson, setting up the First Bank of the United States as the country’s monetary authority.
Later, when John Adams was president, the U.S. ended foreign coins other than the Spanish silver dollars being used as legal tender. Then, during the War of 1812, the U.S. stopped specie payments – payments in actual gold or silver – through the end of the war.
When Andrew Jackson became president, the gold coin standard was a hot topic for him. He signed the Specie Circular of 1836, which said gold would be paid for all federal debts. Jackson was wholeheartedly against the national bank and felt that its money was helping the rich get richer at the expense of the poor.
Jackson supported the use of gold coins. In fact, he proposed eliminating all paper denominations less than $20. As he left office, Jackson spoke out against paper money. He warned that fiat currency would likely cause economic insecurity and instability.
Van Buren, Jackson’s successor, agreed with Jackson and supported a gold coin standard, even though both silver and gold coins were in use at the time. After the gold rush began, though, the supply of gold increased and went down in value, while silver remained high in comparison. Silver coins then began to be taken out of circulation and hoarded by the public. The bimetallic standard stayed in effect until Franklin Pierce put into place a classical gold standard, although for only a short time.
Abraham Lincoln was a great president in many respects, but his monetary policies were not the best. Perhaps in desperation to fund the Civil War, Lincoln’s administration switched the nation’s currency to paper money, called greenbacks. Inflation was rampant, and many people distrusted these new banknotes. Yet, until the war was over and Lincoln was no longer president, there was no gold coin standard.
The Road Back to Specie Payments
President Andrew Johnson had an opportunity to set the nation back on course for a gold exchange standard. However, he refused to sign the bill. Instead, President Ulysses S. Grant signed a bill that indicated this would happen within five years.
Specie payment was restored in 1879 while Rutherford Hayes was president. Greenbacks could now be exchanged for gold or silver.
Of all the U.S. presidents in history, Grover Cleveland may have been the most committed to the gold coin standard. It was his pet issue, both in his presidential campaign and during his presidency. During his first term in office, Cleveland defended the gold standard against members of his own party who wanted to abolish it. He increased the Treasury’s gold reserves before he left office.
However, Benjamin Harrison changed things up when he took over the presidency. He signed a bill for the U.S. to buy silver and issue treasury notes. He let the amount of gold in the treasury reserve dwindle.
Cleveland, elected for a second term, came back into the White House, ready to defend the gold coin standard once again. Thus, the Sherman Silver Act was repealed, and gold was once again the basis of the money supply. After Cleveland’s second term ended, no other president again took up the cause for a gold coin standard.
Shortly after the 19th century ended, Theodore Roosevelt called for more paper money in smaller denominations. He and others, including William Howard Taft, who would take on the presidential role in 1909, declared that there should be more elasticity in the monetary system.
Franklin Roosevelt, the Great Depression, and Gold
Let’s step back to the beginning of the gold standard. From the 1830s until 1900, despite all the arguments and shifts in policy, the United States was actually on a gold coin standard. The only exceptions were during war, such as in World War I, when the government imposed an embargo on exports of gold.
Then, from 1900, laws that supported the gold standard went into place. By 1913, the law demanded that the government reserves hold an amount of gold equivalent to 40 percent of the value of the paper currencies issued.
At this point, two important things happened. First, the Great Depression struck the country beginning in 1929. People began hoarding gold in response to the many bank failures.
Then, Franklin Delano Roosevelt was elected president. Fearing runs on banks as people rushed to exchange their paper money for gold, Roosevelt denied banks the ability to pay out or export gold.
Later, on April 5, 1933, the president proclaimed that all U.S. citizens must turn in gold coins and gold certificates of over $100 for paper money by May 1 of that year. When the executive order was passed, the price of gold was at $20.67 per ounce. By 1934, the government increased the value of gold to a fixed price of $35 per ounce, essentially debasing the dollar by 75%.
That price held, along with remnants of the gold bullion standard, until 1971. That was when President Richard Nixon closed the gold window, severing the link between gold and the dollar. This prevented foreign central banks from exchanging their dollars for gold. While we were still technically under the gold standard from 1933 to 1971, only international trade of dollars to gold was accepted from the Federal Reserve.
The United States was the last country on the gold standard, and as of this writing, no country has issued currencies in terms that are redeemable for physical gold.
Ford’s Glimmer of Hope
The gold coin standard never came back, but something happened in President Ford’s presidency that changed the situation a bit. As we previously discussed, in 1933 Roosevelt had outlawed individuals from owning, buying, or selling gold.
However, in 1974, Ford signed a bill allowing people to once again buy, sell, and hold physical gold. Since 1974, billions of dollars have been invested in gold coins and bullion by the public. While it’s still no longer possible to exchange paper money for gold (outside of a private transaction), millions of Americans value and understand the importance of gold.
Trump’s Fascination with Gold
By all accounts, former President Donald Trump is supportive of a gold standard. In fact, he’s previously made comments that he thought a return to the gold standard was a great idea. Not only has he made positive comments in reference to a gold standard, but a couple of his actions over the years have supported this position.
Trump famously accepted three kilo gold bars from APMEX as a security deposit on space that they leased at one of Trump’s properties in 2011. In terms of gold, this is roughly 96.5 ounces. The price of gold at that time was approximately $1,800 an ounce, which translates to $174,000 for the three bars. Obviously, anyone that did not realize the value of gold wouldn’t have made such a bold move.
While president, Trump nominated Judy Shelton for the Federal Reserve Board of Governors in 2020. Shelton is a vocal supporter of the gold standard. Unfortunately, her nomination was blocked by the Senate, so we weren’t successful in infiltrating the Federal Reserve with pro-gold standard members.
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