Synopsis by Conspiracy Nation
(Based on *Coin's Financial School* by William Harvey (1895))

When  demonetization  of  silver took place (1873), the supply of
primary money was reduced  by  about  one-half, and the half that
was demonetized became credit money.  At  this  point  there  was
very little supply of primary money (gold) compared to (1) credit
money,  (2)  checks,  drafts,  etc.,  payable  on demand, and (3)
notes, bonds, etc., payable in the future.  (See categories 1, 2,
and 3, CN 11.06.)

All property gradually  declined  in  value  as compared to gold.
(Gold rose in value, as compared to property.)  The  decline  was
painfully  steady.   These  conditions  caused  new  debts  to be
contracted  to  pay  old  debts,  and  the  volume  of  new debts
increased rapidly.  Money began to be  borrowed  on  property  as
collateral.   Falling  prices  continued  -- there was not enough
*real* money behind the credit  money, the checks and drafts, and
the notes and bonds.  Borrowing continued.  By  1890,  notes  and
bonds -- debt -- in circulation had grown enormously.  Every town
and  city  felt  the  weight  of  debt.   Farms  were  mortgaged.
Property  in the cities was nearly all mortgaged.  A panic began.
An unprecedented  financial  storm  was  now  on  the country; it
involved not only categories (1), (2), and (3), but primary money
itself was involved under the enormous strain placed upon it.

During  the  last  30   years  (1865-1895),  our  South  American
republics have been  getting  deeper  and  deeper  into  debt  to
England,  and during the last 25 years these debts have been made
payable in gold.  At the present time they must pay England $2 in
silver for each $1  (gold)  owed.   So  that  a bond for $100,000
executed by them when silver and gold were at a parity, must  now
be  met  by  the payment in principal of $200,000 in their money.
That is -- to raise the  $100,000 in gold, they must sell 200,000
of their silver dollars.

We are now (1895) an ally of England in depressing the  price  of
silver  and enhancing the value of gold.  *We* are paying England
200 million dollars annually in  gold  in the payment of interest
on our bonds, and to meet this annual interest *we* are giving up
about 400 million dollars in property that  is  required  in  the
market to secure the 200 million in gold.

The  value  of  the property of the world, as expressed in money,
depends on what money is made of, and how much  money  there  is.
(QUALITY  and  QUANTITY.)  If the quantity of money is large, the
total value of the property  of the world will be correspondingly
large (inflation) as expressed in dollars or money units.  If the
quantity of money is small, the total value of  the  property  of
the  world  will  be correspondingly reduced.  [CN:  Inflation is
*not* caused by rise in pay; it  is caused by rise in quantity of
money.  Note current stock market inflation, caused  by  rise  in
quantity  of  money.   In the past 6 years, ca.  1991-1997, M3, a
broad measure of  the  money  supply,  has  gone  up  by about 20
percent.  According to *The Wall Street Underground*, "...the Fed
is  supplying  enormous  amounts  of  credit  liquidity  to   the
markets...   You  can  see this in the huge increase in the money
supply.  As measured by M2  and  M3,  money supply is the largest
it's ever been.  It is growing by record amounts."]

Until  1873,  the  primary money of the world was both silver and
gold -- at a parity.   Then  came  the  abandonment of the use of
silver as primary money by the United States, followed  by  other
major nations.  (England demonetized silver in 1816.)  The demand
for gold became greater; silver was thrown aside.  The purchasing
power  of gold increased; prices declined.  [CN:  Prices declined
because the quantity of primary money had been cut in half.]

Our daily expression is  that  wheat  or  some other property has
declined so much.  It would be a more  intelligent  understanding
of  the  situation  to  say  that  the gold crop of the world had
appreciated in value.

Suppose you  keep  adding  gold  to  the  dollar,  until it takes
one thousand grains to make a legal  *unit*  or  dollar.   Go  on
making  it larger until you have all the gold in the world in one
thousand *units*, or  dollar  pieces.   Suppose  you  owed a note
calling for $100 payable in gold -- how could you pay it?   Think
of the property that would have to be slaughtered to get it.

When you reduce the number of primary dollars (or, in the current
situation, the number of  Federal  Reserve Notes), you reduce the
value of property as expressed in dollars, and make it that  much
more  difficult  for debtors to pay their debts.  And yet this is
the  kind  of  injustice  that  was  committed  when  silver  was
demonetized.  It struck down one-half  the number of dollars that
made up our primary money and standard of  values  for  measuring
the values of all property.

It  is  commonly known as THE CRIME OF 1873.  A crime, because it
has confiscated millions of dollars  worth of property.  A crime,
because it has made thousands of paupers.  A crime, because it is
destroying the honest yeomanry of the land, the  bulwark  of  the

It is one of the wonders of the world -- how the people have been
so  slow in grasping the financial problem -- in learning what it
is that measures values, and  that  the  lesson should have to be
learned through an experience so bitter.

                       -+- Afterword -+-

Many years  after  1895,  William  H.  Harvey, a.k.a.  "Professor
Coin," was living  in  Arkansas.   In  1924  he  was  building  a
130-foot  high concrete pyramid on a peak in the Ozark Mountains.
The center  of  the  pyramid  was  designed  "to  preserve at its
center, for the benefit of the  archaeologists  of  10,000  years
from  now,  a  document  telling why American civilization fell."
(*Our Times* by Mark Sullivan. New York: Scribner's, 1926.)

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