Gold's price rose in terms of wheat, which is what the farmers cared about and what I was referring to. Of course it stayed stable in terms of the "dollar," because the dollar was backed by gold! If you can always trade a dollar in for a dollar's worth of gold, the value of gold is always going to be the same, no? But that's not going to stabilize prices for farmers.
Shays' Rebellion (1786) took place after the Constitution was ratified (1788).
My quote is:
The drawbacks of limiting the medium of exchange to precious metals were obvious as soon as the Founding Fathers decided on a precious metal standard at the Constitutional Convention, when the money supply contracted so sharply that farmers rioted in the streets in Shay's rebellion.
I take your point on the dates, but my overall point is still correct. Shays' Rebellion WAS about a contracting money supply, which occurred when paper money could not be used in the payment of taxes. Wikipedia says of Shays' Rebellion --
Seeking debt relief through the issuance of paper currency and lower taxes, they attempted to prevent the courts from seizing property from indebted farmers by forcing the closure of courts in western Massachusetts.
They wanted to be able to use their paper money to pay taxes, and the "elitists" at the Constitutional Convention insisted on using only precious metals. That's not my word. Leonard Richards writes in "Shays's Rebellion: The American Revolution's Final Battle" (University of Pennsylvania press 2002):
Rufus King and the other sponsors of the Constitution thus faced an uphill battle at the Massachusetts ratifying convention. Not only did they have to confront old enemies, they lacked popular support. They spoke for a document that began with "We the People," but it was not the "people" who had demanded a new national government. Instead, the Constitution was the handiwork of a small segment of governing elite, and everyone knew it. . . . Every critic, it seemed, envisioned the "little people" being stomped on by "the well-born," "the great men," and "the aristocracy." (Pp 147-48)
Paper money was the money of the people. Gold was the money of the elite, and gold prevailed. The "little people" obviously did not have it; so for them the money supply had shrunk radically, and depression ensued.
That's all the time I'd better give to this. There is much real work to do to save the economy and turn it around. That's the battle I want to fight right now. ForeclosureGate beckons!
First, she begins by saying that gold's price rose in terms of wheat. It did, indeed. She does not explain why. There was a reason: because of the invention of the mechanical reaper in 1834 and the coming of the railroads to the gran farming region in the 1850s, wheat's price fell for the entire period of the gold standard, except during the Civil War, when the gold standard was suspended by Lincoln.
If lawyer Brown had simply consulted Cliffs Notes, she would have understood why wheat prices fell.
Farm production and declining prices. Bringing new lands under cultivation and the widespread use of machinery led to a tremendous increase in farm production. The wheat crop, which became an export staple, grew from 170 million bushels at the end of the Civil War to more than 700 million bushels by the close of the century. Overproduction in the United States and expanded crop production in Argentina, Australia, Canada, and Russia drove agricultural prices down during the same period. Unfortunately, American farmers did not seem to understand how the market operated. When prices fell, the inclination was to plant more, which added to the worldwide surplus and pushed prices still lower.
These words are crucial: "Unfortunately, American farmers did not seem to understand how the market operated." Neither does Ellen Brown.
Second, I said that she got the date of Shays's Rebellion wrong. She dated it after the Constitutional Convention (1787). It took place before (1786-87), and was in fact the #1 cause in getting George Washington to attend the Convention. Had he not attended, there would have been no convention.
She now admits that I was correct: "I take your point on the dates."
How could she have made such a mistake? Simple: she knows very little about American history.
Third, she says that the rebellion was about paper money. Yes, it was, as I pointed out in my original article on Shays's rebellion. But it was not about the non-printing of paper money in 1786. It was about the printing of money during the Revolution: the Continentals. The hyperinflation of that government fiat money (1770s Greenbacks) produced a steep discount of the bonds issued by the commonwealth of Massachusetts to pay the soldiers, of whom Shays was one: a captain. Investors bought them cheap.
Prior to 1786, the governor of Massachusetts, John Hancock, had allowed the people to pay taxes in the state's paper money. He decided not to run again in 1786. The new legislature and governor in 1786 changed the law, demanding tax payments in silver. Why? Because he and the Boston legislators had bought up the discounted notes, super cheap, and then changed the law: the interest payments would now be made in silver. My article on this is here:
Note: I relied on the book she used in her attempt to refute me, Richards's 2002 study. She clearly did not read the book. She also did not understand my summary of the book in my article. She missed Richards's main point: the revolt was not about a lack of paper money. It was about a change in the property tax law. This is why his book is so important. It undermines the standard textbook account of the event, which rely on the deflation argument.
Brown did not understand the book's thesis or its importance. She is a lawyer, not an historian. She is not interested in historical facts. She is only interested in persuading people that they can trust Congress to issue fiat money.
Fourth, she writes: "Paper money was the money of the people. Gold was the money of the elite, and gold prevailed." But gold did not prevail. Silver prevailed. The common currency was silver and remained silver except when Gresham's Law took over and silver went into hoards when it was artificially underpriced by the 16-to-1 ratio law (a price control, which created a shortage if silver coins). That came much later, in the nineteenth century.
With this response, she called off the debate.
That leaves 21 additional criticisms left on the table, unanswred.
* * * * * * * * * *
I offered 31 examples of historical errors in The Web of Debt. She responded to 30 of these. In a few cases, she admitted that I was correct. This case is one of them: the dating of Shays's Rebellion. But in all other cases where she tried to defend herself, she was wrong. I have gone through her responses, case by case.
I identified 52 errors in her book. I have added links to my 30 replies in the 30 original articles to which she responded. You can read everything here:
She had yet to respond to my 21 errors in economic theory. Yet these are the heart of her book's failure. The historical errors are merely examples of her sloppy research.
Ellen Brown has not successfully defended her book. She has now quit trying.
That's all the time I'd better give to this. There is much real work to do to save the economy and turn it around. That's the battle I want to fight right no. ForeclosureGate beckons!
She cannot assess the logic of economic theory. She also does not understand the basics of historical research.
Then, in arguing her case against my criticisms, she has revealed an inability to recognize when her logic looks silly. I have concluded that she would be not be a good lawyer to defend me if I were on trial. She cannot even defend herself.
* * * * * * * * * * *
Then there is Bill Still. He has produced two videos: The Money Masters and The Secret of Oz. They are simply defenses of Greenbackism. Bill Still is Ellen Brown without the footnotes. There is no reason for me to spend any time refuting him. If you refute one Greenbacker, you have refuted them all.
If you want a reliable video on the Federal Reserve System, watch the movie produced by the Mises Institute.
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