Faith in dollars

It says here (in the Wall Street Journal), that oil contracts between Saudi Arabia and Red China will now be denominated in Chinese Yuan (whose banknotes feature the portrait of Mao Tse-Tung). This would be similar to intra-European transactions being denominated in old-fashioned Reichsmarks (with portraits of Adolf Hitler), or Roubles (with “Uncle Joe” Stalin on them). Once they, too, were fashionable.

Eventually such currencies become worthless — even to coin and banknote collectors — but through the season of their totalitarian sponsors they are prized.

More so, for instance, than the United States Dollar is becoming, for it is going out of style. It has been “softening” in slow-motion for more than a century. The acceleration of its decline began fifty-plus-one years ago. This was when the U.S. president, Richard Nixon, cancelled the convertibility of the dollar to (a small fragment of) gold. It was one of his radical measures, including price and wage freezes, and surcharges on imports.

The combined effect was to rubbish the Bretton Woods system of international financial exchange. Mr Nixon, a politician, of course promised to “reform” it, but this hasn’t happened yet, and besides, Nixon is dead.

In the days when I still owned my 1911 edition of the Encyclopaedia Britannica, I could visit a time before World War One when the whole planet — or at least those parts which sometimes used money — was on the gold standard. World trade, or “globalization,” was greater, proportionally, then than now. A chart filled several pages, in this encyclopaedia, giving the fixed value of some hundreds of traditional coins, of the many countries and colonies. These could be relied upon to be pretty; I collected as many as I could find.

Dollars were not exclusively king, in those days — the Pound Sterling still enjoyed more prestige, from universal recognition. The British Royal Mint kept offices in Ottawa, and in addition to gold sovereigns they minted Canadian gold into $5, $10, and $20 pieces.

Except for small change (in silver), that is the last we saw of real money. Americans could last glimpse it, perhaps, in photographs of Fort Knox. By the ‘thirties, under F. D. Roosevelt, American nationals were not considered mature enough to own actual gold. Only the State could own it, and only Politicians could own the State. Since, gold has existed chiefly in faith.

I was myself being paid partly in “gold,” to a bank in Hong Kong, when I commanded a salary as a young spark in Asia, a few decades ago. But upon inquiring, I learnt that this was paper gold. By diligent research I was rewarded with the news that the international quantity of paper gold exceeded the amount of the mined gold metal by about twenty times. This discovery was an important step in my (still somewhat na├»ve) understanding of metaphysics.

The world has sincere faith, I realize. Would that its faith were in God.