The Free Market 2, no. 6 (Winter 1984)
Capitol Hill Gold Standard Conference A Special Report to Institute Members
The Ludwig von Mises Institute’s premier conference was held in Washington, D.C., on November 16–17, 1983. “The Gold Standard: An Austrian Perspective” was the first event of its kind. Not only was it the first academic conference ever held in the United States on the gold standard, but it took place on Capitol Hill.
The audience consisted of Institute members; Congressional, Cabinet, and White House staffers; Members of Congress; public policy advisors; journalists, scholars, students, and business people. 212 people registered for the entire conference, but more than 400 participated in one part or another.
Session I
The first day of the conference began at 11:30 am outside the magnificent (and recently restored) Caucus Room in the Cannon House Office Building, adjacent to the U.S. CapitoI.
Registration, with sandwiches and soft drinks, was first. Then, after making a few welcoming remarks, Institute director Lew Rockwell called on Session I chairman, Dr. Richard H. Timberlake, professor of finance at the University of Georgia, and noted authority on the Federal Reserve.
The first speaker was Dr. Murray N. Rothbard, professor of economics at New York Polytechnic, and editor of the Institute’s Journal of Austrian Economics. He outlined the early history of the gold standard, why the Founding Fathers chose it, and the special interests who promoted central banking in our country’s early days.
Next came Dr. Roger Garrison, assistant professor of economics at Auburn and the Institute’s associate director for academic affairs. He refuted the monetarist arguments that a gold standard would “cost” too much. In fact, of course, it is fiat paper money that imposes unacceptable costs on the economy: inflation, recessions, and depressions. A commentary on Dr. Garrison’s paper followed from Dr. Leland Yeager, professor of economics at the University of Virginia.
After a break, Mr. Maxwell Newton, financial editor of the New York Post, discussed “The Fed: Handmaiden of Tyranny.” Mr. Newton, a native of Australia who studied economics at Cambridge University, condemned the Federal Reserve for a “social revolution” that now has almost as many Americans living off government as working in the private sector. Increasing interest in such Misesian ideas as the gold standard he called “extremely encouraging.”
Dr. Stephen O. Morrell, former senior economist at the Atlanta Fed and now associate professor of economics at Auburn, commented on Mr. Newton’s presentation.
Perhaps the highlight of the first day was the debate that followed after a second break: “Gold vs. Paper,” featuring Congressman Ron Paul, a member of the national advisory board of the Institute, and]. Charles Partee, member of the Board of Governors of the Federal Reserve System.
This debate — which was taped, like the entire conference, by the Voice of America for worldwide broadcast — was an exciting one indeed. Congressman Paul vigorously defended the gold standard as the only monetary system consistent with morality, liberty, and prosperity, while Mr. Partee — not surprisingly — defended the Federal Reserve and its control of the money supply. In the judgment of the audience — if not some of the national media people present — Congressman Paul was the easy winner.
Later that evening a gala reception in the Caucus Room hosted by Ambassador William MiddendorfII — a former student of Professor Mises’ — introduced the Mises Institute to Washington, D.C., and honored Congressman Paul for his help in the Institute’s founding, as well as his outstanding support of the free market and sound money, for which he received the first Ludwig von Mises Award.
Session II
Session II, which began early on Thursday morning, was chaired by Dr. Don Bellante, professor of economics at Auburn.
The first paper was given by Richard Ebeling, postdoctoral fellow in Austrian economics at New York University, on the pathbreaking work of Ludwig von Mises in monetary theory, especially as regards the gold standard. It was Professor Mises who demonstrated that money was an institution of the free market, not government, and that only gold and silver — not fiat paper — is free-market money. Central banking and its inevitable inflation — he proved — causes the business cycle with its recessions and depressions. Only a gold standard brings monetary order, as versus government-created chaos with paper money.
A commentary was provided by Mr. George Selgin, doctoral fellow at NYU and the first student to receive a Mises Institute Fellowship.
Then Dr. Lawrence H. White, assistant professor of economics at New York University, talked about “Free Banking and the Gold Standard?’ Only a gold standard, he showed, is compatible with non-inflationary, competitive, consumer-oriented, free-enterprise banking.
There followed a panel discussion on the gold standard featuring Drs. Michael Montgomery and Pamela Brown, instructors in economics at Auburn, and Mr. Donald Boudreaux, graduate student in Auburn’s PhD program and a Mises Institute Fellow.
Lunch had been originally scheduled for the Gold Room of the Rayburn House Office building. But the tremendous response to the conference meant that a larger room was needed — the Banquet Hall of the Rayburn Building.
At the luncheon, Congressman Paul talked about “The Political and Economic Agenda for a Real Gold Standard?’ When Congressman Paul was called away for a series of votes in the House of Representatives, Lew Rockwell asked Dr. Augustin Navarro — famed Misesian economist who had traveled from Mexico City to attend the conference to discuss the situation in his native country. Dr. Navarro explained how economic collapse must result — as it has in Mexico — from extensive government intervention in the economy and paper money inflation.
The highlight of the luncheon, however, was a moving and eloquent telegram from Mrs. Ludwig von Mises, wishing success to the conference, which was read by Institute board member Burton S. Blumert.
Session III
The final session of the conference was chaired by Dr. Robert E Hebert, professor of economics at Auburn and head of the department.
First, Dr. Joseph Salerno, assistant professor of economics at Rutgers University, discussed the gold standard and the international monetary system. Free, extensive, and prosperous trade among the nations of the world is facilitated by a gold standard, while our present monetary system is leading to trade restrictions, international tensions, and a lower standard of living for everyone.
Then Dr. Leonard Liggio, president of the Institute for Humane Studies, gave a rousing talk on the political constituencies for the gold standard in American history. He showed why Americans have always supported hard-money candidates over inflationist ones, if the choice has been made clear. And he also discussed the reasons why this would be true in the future.
The final talk came from Dr. Hans Sennholz, professor of economics at Grove City College and chairman of the department. Dr. Sennholz, who — like the first speaker, Dr. Rothbard — studied under Professor Mises, discussed the untranslated monetary writings of Carl Menger, founder of the”Austrian” school of economics.
Menger was the prime intellectual mover behind his native country’s adoption of a gold standard in 1892, and Dr. Sennholz showed the relevance of this to America’s future.
But — noted Professor Sennholz — he was glad to be speaking at a conference of the Mises Institute of Auburn University rather than one named after Menger. Carl Menger, he said, correctly foresaw in the 1890s how incorrect monetary and economic policies would lead Europe into a disastrous war, a war which would destroy the classical liberal civilization he loved.
Menger, said Dr. Sennholz, responded by giving up, retiring early, and ending his scholarly career thirty years before his death. Professor Mises, on the other hand —despite obstacles and opposition that Menger did not face — was never daunted, but kept on writing, teaching and speaking out for liberty until the day he died. We should pattern our lives after Ludwig von Mises, said Dr. Sennholz.
An Evaluation
“When I first went to work on Capitol Hill five years ago as Congressman Paul’s chief of staff,” said Lew Rockwell, “almost no one outside of Dr. Paul’s office was interested in the gold standard. How times have changed! (And most of the credit goes to Ron Paul.)
“Not a rarity now was the California Congressman who told me that he had been unconcerned about the gold standard in the past, but ‘now I’m here to learn how to make sure we get one? And the Institute has helped accelerate this process. A White House aide said, ‘This is the greatest monetary ammunition our side has ever had,’ The chief of staff of a major Congressional committee said, ‘I think the Mises Institute has made a big difference up here.’
“Said a Treasury Department advisor: ‘I’m impressed that the Federal Reserve sent one of its big guns to defend itself.’ And a noted policy advisor told me the conference had helped to change his mind about gold.
“Will this conference make an immediate difference in policy? No, not after 70 years of Federal Reserve domination. But the Mises Institute has made a real difference in Washington’s intellectual climate on this vital issue. Noted a senior Illinois Congressman: ‘That’s a tremendous achievement. Your members should be very proud.’”
