“The monetary system; that greatest of all dispensers of equity or inequity” – Alexander Del Mar
Alexander Del Mar was born in New York City, the son of Sephardic Jewish parents who had immigrated to the United States in the early 19th century. His family was of some means, as they were able to send their son to England to be tutored privately before he was educated formally at NYU, and the Madrid School of Mines in civil and mining engineering respectively. It was Del Mar’s interest in the nature of money however, that inspired his early career in financial journalism which blossomed in the mid-19th century. He wrote for several newspapers on the subject of financial and monetary issues of the day, but it was the disruption of the Civil War that propelled him to take a more active interest in the American financial system.
During wartime, it is common for nations to suspend sound money standards in favor of a more “flexible” currency––typically fiat paper currency. The Civil War was no exception to this rule, as Lincoln’s administration issued “greenbacks,” a form of fiat paper currency which the government of the United States proclaimed as legal tender. As with all fiat paper currencies, inflation pushed asset prices and the cost of living higher for Americans living in the Union. Del Mar, having been well-versed in the arcane studies of monetary history firmly realized what was happening, as many of his compatriots struggled to understand why they were paying higher prices for everything while their wages stagnated.
Seeing Americans struggle financially was something that bothered Del Mar greatly, and he wasn’t about to sit by idly while it happened. He knew that the best way to warn people about the destruction of their purchasing power was by publishing a small pamphlet or book that your average person would find accessible. In 1864, he published a short book entitled, The Great Paper Bubble; Or, the Coming Financial Explosion, in which he attempted to explain the growing financial crisis that was occurring along with the Civil War itself. Knowing that the monetary system was mysterious to most people, Del Mar didn’t set out to bore them with it’s intricacies, rather, he started The Great Paper Bubble, as a dialog between New Yorkers sitting on a street car––something most people could relate to. As the car moved from stop to stop, the passengers discussed their financial struggles and one character in the story who is called “countryman” explains to the crowd the reason for their financial trepidations.
This “countryman,” was a personification of Del Mar himself, who explained, “When you compel people to take your paper money, they are obliged to part with their property or their labor at less than its value, and the profits go into the pockets of a few speculators and capitalists [in this case he simply means holders of specie]… If you want to keep yourselves from being ruined, you must return to gold and silver. Hard cash is the poor man’s friend.” In other words, though the individual might not be able to challenge the government to go back onto a sound money standard, they did have the ability to put themselves on a gold and silver standard.
Alexander Del Mar’s devotion to the link between sound money and freedom eventually led him to become the foremost expert on the history of money in late 19th century America. This is no exaggeration as he wrote over 10 books on the subject, including his 477 page opus A History of the Precious Metals from the Earliest Times to the Present (1901). Because of his widely known expertise on matters of money and the precious metals, Del Mar was selected to be on a commission to investigate the causes of the financial Panic of 1873, which eventually became widely known as the Crime of 1873, as the U.S. government used the crisis to demonetize silver. Del Mar’s commission protested against demonetization, but to no effect.
Ostensibly, the reason for the crisis was that there were new deposits of silver discovered in the West which would have inflated the money supply at a time when many of the farmers were in debt. The banks feared that the value of their loans would decrease as debtors could more easily pay them off in cheaper, and more abundant silver dollars. To the bankers, the solution to this problem was simple: demonetize silver in favor of a gold standard most of which was held by the banks anyway. This would be a significant coup for the financial powers as they could simultaneously enhance the value of their loans but more importantly further concentrate their monetary power in the hands of the big banks.
Del Mar recognized the demonetization of silver for what it truly was, one of the most significant power grabs in American history. Being an advocate of bimetallism, and understanding silver’s important role in protecting human freedom, Del Mar railed against the government and banks, and spent the next several decades launching an intellectual assault against those who would seek to control the monetary system. In 1885, he coauthored a paper with N. P. Hill, and William A. Phillips entitled, “Should Silver Be Demonetized?” Del Mar explained that the demonetization of “…say two hundred millions of silver dollars is to destroy one-fifth of the measure of value, and to undermine to this extent the basis of all contracts and bargains made since these silver dollars were coined; and this solely to the profit of the banks and other capitalists.” Not only would it enrich the already rich, “More than this, it will practically relegate the future control of money to the banks, whose interests, at times, will lend them to as wild an inflation as now it invites to a ruinous contraction.” Del Mar explained that the reason that silver should not be demonetized was because it was one of the last remaining checks on the large financial interests: “They already have absolute control over their own notes, they have secured a large proportion of the gold coin and are trying to monopolize it all, and they are increasing their reserves of greenbacks which are payable in coin. The only portion of the money of the country not amenable to their control is the silver dollars; and this explains their hostility to them.” Del Mar went as far as to suggest that if silver was demonetized, that it could lead the United States to “a return to the State bank system and investment in seven per cent. securities,” or in other words, a central bank.
Recognizing the constriction of private interests on the money supply of the nation, Del Mar recommended that the best course of action would be for the government to take over the prerogative of issuing money away from the banks. He warned that “there will be no settlement of the laws relating to money until the government assumes control of it; and this is what should be done without further delay. The interests of society demand a precise, a stable, an equitable measure of value and the government alone can furnish one.” Unsatisfied with simply voicing his support for silver, Alexander Del Mar also sought to undermine the interests of those who sought it’s demonetization by exposing their strategies in committing financial crimes in prior eras. In his 1899 work, Bankers & Other Rogues: A Brief History of Monetary Crimes, Del Mar revealed how monetary duplicity had been responsible for some of the most atrocious assaults on freedom known to humanity.
In 1894, he took a more activist approach to restoring the rightful place of silver in the monetary system in his support for the Republican Silver Party. The Silver Party had split from the Republicans on the issue of Free Silver, which aimed to remonitize the metal. As the silver interests began to coalesce around Democrat William Jennings Bryan, who was known for his famous “Cross of Gold” speech in his campaign of 1896, Del Mar publicly voiced his support for the populist presidential candidate.
During the nineteenth century, it would be difficult to find someone in the United States who was a more staunch supporter of silver and freedom than Alexander Del Mar. To Del Mar, party affiliation wasn’t as important as assuring monetary integrity. If the Democrats espoused a sound money platform, Del Mar supported their candidate. If the Republicans did so, he supported theirs. This is because Del Mar obviously knew that while party platforms changed, the connection between silver and human freedom was a universal constant.
There is however, one final and important thing that needs to be considered here when it pertains to Alexander Del Mar. In January 1911, Del Mar publicly renounced his entire life’s work in a speech before a meeting of monetary scholars which was published in the journal Academy of Political Science in the City of New York. Del Mar spoke of his “conversion,” to his “newly found faith” in the private banking system. He described his decades of prior belief in sound money controlled by the government as his “former and mistaken ones,” of which “These ancient beliefs I now renounce with contrition.” Sounding like a defeated soldier, he went on to say “I surrender them to the future writers on money. I shed with them the regretful tear of a controverted penitent.” Del Mar concluded his speech by stating that “Yea, the joy of conversion is sweet, and none can share or imagine it’s delights until after he has listened to a few modern, up-to-date, politico-economical discourses on the advantages of “national” bank supremacy.” Anyone reading Del Mar’s bizarre repudiation of his life’s work, would have thought he was either drunk, or there must have been an invisible noose around his neck and a trap door waiting to be sprung underneath him by someone in the audience with their hand on the lever. Well, it just so happens that it may have been the latter, as sitting in the audience that day was none other than Paul Warburg, and Nelson B. Aldrich who had just returned from a trip to Jekyll Island, Georgia a few months earlier to plan the creation of the Federal Reserve.
All sources cited in .pdf version of paper below: