Jefferson on Banking
Jason Kuznicki on Oct 30th 2006
In reading the Adams-Jefferson letters, I was surprised by the following statement by Thomas Jefferson:
I have ever been the enemy of banks; not of those discounting for cash; but of those foisting their own paper into circulation, and thus banishing our cash. My zeal against those institutions was so warm and open at the establsihment of the bank of the U.S. that I was derided as a Maniac by the tribe of bank-mongers, who were seeking to filch from the public their swindling, and barren gains. [Jefferson to Adams, Jan 14, 1814, p 424 of Cappon, ed.]
Any student of American history can tell you that Jefferson mistrusted banks. I had thought, though, that he mistrusted banks because he mistrusted credit, much as Andrew Jackson would later do. I was quite surprised, then, to read that his chief objection to banking was that it would introduce paper money in place of sound currency based on gold, and that he rounded out this letter by complaining of the inevitable inflation that banks would bring.
I am not nearly so well-read in Jefferson as some of the other members of this blog, so I welcome their comments on this question. What else did Jefferson believe about banking, credit, and money? Where can I read further?
Filed in The Boardroom, The Bureau
Jefferson was the father of the US dollar–the silver dollar that is. He even consulted Sir. Isaac Newton’s assays of world coinage in trying to determine how much silver should be in the new dollar so that it would be interchangeable with the Spanish milled dollar or piece of eight. It was banker Hamilton who advocated a gold coin as the standard money unit in the US. Jefferson was victorious and while gold coins were minted per the mint and coinage act of 1792, they bore no demonination and were intended by Jefferson–who as Secretary of State controlled the mint–to be valued by the market in terms of silver dollars. This explains why the US Constitution contains two references to dollars, even before the first coinage act was passed. As Jefferson put it in referring to the Spanish milled dollar, it is a known coin already ciruculating widely among us.
By the way, if you have access to a library with copies of the early Journals of the Continental Congress, you’ll find that two different committees were established to report on how much silver ought to be contained by a US dollar in order to make it equal in value to the milled dollar.
Hope this clarifies and tweeks your interest in further research into Jefferson’s ideas on money–which were derived from John Locke’s treatise on raising the value of money circa 1694. Paradoxically, Karl Marx also liked Locke’s monetary ideas and cited him more than a dozen times in Das Kapital.
Rick Johns
[...] libertarians have hated corporatism for centuries, as Jefferson did. Nor is the twentieth exempted. Here’s Ludwig von Mises, often considered the most important [...]