Originally posted on Thursday, June 13th, 2013
The Freeman, in 1977, published an article on John Witherspoon, president of what would become Princeton University, and on Witherspoon’s Essay on Money.
John Witherspoon, courtesy of Wikipedia
This article remains extremely pertinent.
John Witherspoon: Disciple of Freedom
MAY 01, 1977 by ROBERT G. BEARCE
“There is not a single instance in history,” declared Rev. John Witherspoon in 1776, “in which civil liberty was lost, and religious liberty preserved entire. If therefore we yield up our temporal property, we at the same time deliver the conscience into bondage.”¹ Speaking as a minister, Rev. Witherspoon understood the inseparable tie between political freedom and spiritual freedom. Like John Adams and Patrick Henry, he was an outspoken Patriot, advocating independence from Great Britain.
Dr. Witherspoon is remembered mainly for his tenure as President of the College of New Jersey (Princeton) and for having been the only clergyman to sign the Declaration of Independence. His truly important contribution to American liberty and independence, though, was revealed by his stalwart labors as a member of the Continental Congress. Elected in 1776, he served his last term in 1782. During this period, he attempted to bring sound economic wisdom to Congressional deliberations. Unfortunately for the struggling Thirteen States, his astute views and timely admonitions were often rejected. Consequently, America had to fight both the British Army and the evils of inflation and price-fixing.
Eighteen years after the War for Independence was finally won, Witherspoon published his Essay on Money, “As a medium of commerce; with remarks on the advantages and disadvantages of paper admitted into general circulation.”2 This excellent work gives hindsight, insight, and foresight into economic problems—the same problems faced by the United States in the 20th century.
As a rugged Scotsman by birth, Rev. Witherspoon had an appreciation for gold. His distaste for printed bills was founded upon firm economic judgment, and he was ready to defend precious metals.
“It is likely some will say, What is the intrinsic value of gold and silver? They are not wealth; they are but the sign or representative of commodities. Superficial philosophers, and even some men of good understanding not attending to the nature of currency, have really said so. What is gold, say some, the value is all in the fancy; you can neither eat nor wear it; it will neither feed, clothe nor warm you. Gold, say others, as to intrinsic value, is not so good as iron which can be applied to many more useful purposes.”
“These persons have not attended to the nature of commercial value, which is a compound ratio of its use and scarceness. If iron were as rare as gold, it would probably be as valuable, perhaps more so. How many instances are there of things, which, though a certain proportion of them is not only valuable, but indispensably necessary to life itself, yet which from their abundance have no commercial value at all.”
“Experience,” he warns, “has every where justified the remark, that wherever paper is introduced in large quantities, the gold and silver vanishes universally. The joint sum of gold, silver, and paper current, will exactly represent your whole commodities, and the prices will be accordingly. It is therefore as if you were to fill a vessel brimfull, making half the quantity water and the other oil, the last being specifically lightest, will be at the top, and if you add more water, the oil only will run over, and continue running till there is none left.
“How absurd and contemptible then is the reasoning which we of late have seen frequently in print, viz, the gold and silver is going away from us, therefore we must have paper to supply its place. If the gold and silver is indeed going away from us, that is to say, if the balance of trade is much against us, the paper medium has a direct tendency to increase the evil, and send it away by a quicker pace.”
How absurd and contemptible would Witherspoon have found it that the greatest contemporary apologist for paper money, Prof. Paul Krugman, is a Princeton professor, and the greatest generator of fiduciary currency, Federal Reserve chairman Ben Bernanke, preceded his federal service in an academic career at Princeton?