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Austrianism in Lawrence of Arabia Yes Lawrence of Arabia is showing on Channel Five, now. I’ve been only half or less paying attention, but I heard this loud and clear:
“Money. It’ll have to be sovereigns. They don’t like paper.”
Said by Lawrence to Allenby, on how to pay the Arabs to fight against the Turks.
He would agree, as would all our mutual friends here.
This is a point of view which is now spreading rather fast.
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I’m in the Arab world (although not Arabia) right now, and they appear to have gone downhill – ie they are using paper.
Michael: I have no way to prove this and I could be totally wrong, but knowing that culture I would not at all be surprised to learn that they are routinely using other media of exchange in “unofficial” settings.
It may come to that in the US, too, but it’s already illegal here.
Despite all the verbage in the FBI’s self-congratulatory press release, I presume that Von NotHaus was simply convicted of violating the federal anti-private coinage law. It couldn’t have been “counterfeiting,” although the release goes to great lengths to describe how his coins contained the word “Dollar” and other indicia which may have resembled US coinage; does anyone seriously think that a gold coin would be valued in trade as equal in value to, or substitutable for, to a US paper dollar? That’s just ludicrous, and surely an element of the crime of “counterfeiting” must be the intent to pass off the counterfeits as official government currency, which he clearly was not doing. And their statement that the power to coin money “was delegated to Congress in order to establish and preserve a uniform standard of value and to insure a singular monetary system for all purchases and debts in the United States” is clearly wrong, as private coinage existed for many decades in this country after ratification of the Constitution. (Private coinage wasn’t made illegal until 1864; thanks for that, too, Mr. Lincoln!)
I think the real issue was that he was trying “to compete with the official coinage and currency of the United States”, which clearly pissed them off. And, of course, they wanted an excuse to steal his gold.
Bernard von NotHaus’ foolish mistake was to call his money a ‘dollar’ (in any form) and use the $ sign. Had he called it a ‘Liberty’, made it look nothing like a US dollar and used some other symbol, it would have been much much harder for members of the official predator class to prosecute him.
Equating Austrianism with financial primitivism is not going to do it any good.
The Saudi Treasury was the personal treasure trove of the King until quite recent times. The Maria Theresa Dollar still circulates quite widely, I believe.
That does not mean that anywhere from Muscat to Mogadishu has been touched by the thought of the Austrian School. Nor does one necessarily have to become a goldbug if one repudiates objective value theories and demand management.
Maybe he should have referred to a Maria Theresa Thaler (Link) instead?
Charlotte: ‘dollar’ is basically English for ‘thaler’.
Alisa, yea, I know, was referring to Lawrence of Arabia, not Guy Herbert, who ‘stole my thunder’. Story of my life.
Gold was always acceptable.
When US Navy officer William Eaton led a mercenary army from Egypt to eastern Libya during the Barbary Pirate War, he kept the force together with regular payments of gold. (Eaton had eight US Marines with him – thus “to the shores of Tripoli”.)
Maria Theresa thalers were very much the thing in Saudi Arabia well into the 1940s and 1950s. A stock of thalers was considered de rigeur for anyone planning to make the haj.
So when the OSS wanted to incite anti-Japanese rebellion among the Moslems of the Dutch East Indies, they offered thalers as a reward – and manufactured them as needed. (I won’t say “counterfeited”, as the coins were made of the correct silver alloy and would have the same bullion value.)
Mine too, Charlotte:-)
I understand that when the SAS are sent behind the lines part of their equipment is a bandolier of gold coins.
I’ve always had a special subinterest in the MTT as part of my broader interest in currency stability and debasement. It’s sort-of the exception that kind-of proves the rule as far as precious-metals-based currency goes.
The OSS manufactured MTT’s indeed, but they cannot really be decribed as ‘counterfeit’ since the MTT was not legal tender in the places that they used them. They were ‘unlicensed’ copies – I suspect that they might have had some trouble getting a license form the Vienna mint in 1943. Indeed, MTT’s ceased to be legal tender in Austria itself sometime in the C19 (I don’t recall when). But by that time, they had assumed a currency life of their own throughout the Levant and the Middle East, and the Austrian government continues to mint them to this very day, and has minted them to order for anyone that asks and can pay the going rate. Many other nations have minted licensed MTTs over the years, but have taken great care to keep to the very-high standards of the original, both as to silver content and quality of mintage. One of the premium design features of the MTT from its inception was the motto rolled into the edge of the coin, which was technically very hard to copy in 1780 and made the coin very resistant to clipping or milling.
MTTs have not been ‘legal-tender’-style currency for a very long time, but rather a semi-private, transnational money, with rates entirely market-based. There hasn’t been a legal tie between the weight of the silver in an MTT and a nominal currency value in any nation that I’m aware of for the best part of a half-century.
llater,
llamas
A good post and mostly good comments.
Guy Herbert has a point when he says that the Arabs of the 1900s did not have a detailed theoretical knowledge of why government fiat money (credit bubble ism) is a bad thing.
However, I do not think that it is what Brian is claiming.
It is not “economic primitivism” to reject government whims (the basis of “fiat” order-edict money) in favour of something real.
By the way a “store house” view of a Treasury is not “primitive” (in the sense of “wrong”) either.
First the American government put its tax revenue in a national bank.
This had terrible consequences – as the national bank used the money for credit bubble pyramid schemes (“monetary expansion”).
Then the American government got rid of the national bank (actually the second of its type) and Andrew Jackson put the money into various competing banks.
“Very advanced”.
Yes AND EVEN WORSE – it led to an even bigger boom and bust crises.
Then President Martin Van Buren created a “primitive” store house “Independent Treasury” where money first had to go in (from taxes and land sales) before it went out (in government spending or paying off debt – although they actually managed to pay off the entire American national debt, how “primitive” of them) and when it the money was not just it (the gold or silver) sat in the vaults.
How primitive – but also the CORRECT THING TO DO.
Of course Martin Van Buren was not an Arab nomad – he was a New York Banker (yes he knew that “bankerism” did not work – on “it takes one to know one” grounds), but his knowledge simply led him to the same place as their “primitive suspicion”.
I am not against money lenders – but they must be lending out money that really exists (i.e. real savings – not credit bubble games).
And when money is lent out it can not (at the same time) be still in the vault – that is why the term “on deposit” is so wildy misleading.
It may be primitive to demand that the laws of logic (such as two parties can not have the same stuff and the same time) be upheld – but it is also CORRECT.
I am not shy of opposing Murry Rothbard when I think he was wrong – but when he argued the modern “financial system” was (at best) wild delusions (people who had reasoned themselves up their own backsides) and (if not intellectual error) than basic fraud and dishonest y- he was correct.
Contrary to a certain English immigrant on Fox Busiess (Stewart Varney) there is no such thing as a “finance economy”.
If finance goes from being “primitive” money lending (i.e. people lending out real savings and not having the money any more till when and IF it is paid back) and tries to become a whole “economy” in its own right…..
Well then we are in “castles in the air” land – an “economy” based on magic pixie dust.
I have spent 30 years denouncing this – and not for any material gain on my part (on the contrary….).
I denounce it because it violates the fundemental laws of reason.
In fact it is worse than believeing in castles in the air and magic pixie dust.