LBJ and the Destruction of American Currency

For the United States, since the nation's founding, gold and silver currency has all but set the stage for political war.  Now, with the government having separated citizens almost completely from precious metals, the state of the American people's freedom has never been more precarious.

Our nation's founders had no illusions about the danger of bank- and government-controlled currency.  See, for example, the following words from Jefferson: 

If the American people ever allow private banks to control the issue of their currency ... the banks ... will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered[.]  I believe that banking institutions are more dangerous to our liberties than standing armies[.]

Nearly a century later, Lincoln spoke with equal criticism of banking:

I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country ... the money power of the country will endeavor to prolong its reign ... until all wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war.  

Fast forward to 1961, when, during the first year of his presidency, Kennedy addressed the Secretary of the Treasury:

On the basis of your recommendation I reached the decision that silver should gradually be withdrawn from the monetary system [Congress and the Nation -- Item 4841961][.]

Noteworthy from that quotation is Kennedy's clear desire to let the record show that he had been strongly encouraged by the Secretary of the Treasury to withdraw silver from U.S. currency.

Following the Bay of Pigs, however, we see Kennedy more determined to trust his own instincts, and on June 4, the president signed Executive Order 11,110.  This document amended EO10289, returning increased power to the Treasury and allowing it to directly issue silver certificates for currency rather than Federal Reserve Notes (which the U.S. uses today).  Kennedy seemed to be reinvigorating America's ties to gold and silver.

The silver certificates were issued as interest-free and debt-free currency backed by silver reserves in the U.S. Treasury -- as opposed to Federal Reserve Notes, which pay interest to the privately held Federal Reserve.  This order led to the issuance of approximately 750 million certificates -- the last time silver certificates were printed.

Then came the presidential succession to Lyndon Johnson -- a watershed moment for the American currency, as Johnson became a cheerleader for a Fed agenda and severed ties between the U.S. dollar and silver.

Just two months after Kennedy's assassination, in his first economic report to Congress, Johnson recommended that America "expedite the release of silver from the coinage."  Johnson discontinued the issuance of silver certificates in 1964, and the process of retiring the outstanding certificates began.  As if that were not damaging enough, Johnson followed with his second major monetary reform in 1965, claiming that "the growing shortage of silver" had to be addressed.

On July 23, Johnson signed the Coinage Act of 1965, smashing the founders' Coinage Act of 1792.  Whereas our Founders instituted the death penalty for debasing the currency of American citizens, Johnson arrogantly justified his move in the name of potential "coin shortages."

Ignorant of financial history dating to ancient Rome (which made the same mistake), Johnson bellowed:

If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.

Johnson could not have been more wrong, and his advice was devastating to those who listened to him.  Indeed, the Coinage Act of 1965 is what makes pre-1965 dimes valuable to this very day.

Public Law #90-29 further authorized an accelerated phase-out of silver backing for Treasury silver certificates.  On a day infamous to American prosperity -- June 24, 1967 -- Johnson commenced a one-year sunset provision on Americans' ability to exchange paper currency certificates for silver metal.  This act would decimate the American middle class in the years ahead, expanding government's ability to take on unsustainable debt while destroying lasting wealth for American workers saving in their own currency.

The law also allowed Johnson's administration to jettison the precious metals that had been acquired since our nation's formation.  In 1967, the Treasury transferred 116 million ounces of silver from the supply that had backed currency certificates into a reserve created to maintain a "fixed price" in silver.  Just two weeks later, Johnson's Treasury abandoned the fixed price agenda, having sold much of America's silver at the self-imposed price of $1.29 per ounce.

Johnson's predecessor may well have foreseen these disasters when he warned his country that, "[t]he complacent and self-indulgent are about to be swept away with the debris of history."  And when looking at the exodus of gold from America, Kennedy foresaw "a dangerous international advantage," according to aide Arthur Schlesinger.

If there is any truth to what the Founders said, then getting real money -- aka gold and silver -- into the hands of the American people is a necessary step to taking America back from our inept government.  As our founders highlighted, when the American people have real money, they have the power that government needs.

Drew Mason is a principal with St. Joseph Partners (, a precious metals boutique that assists clients in sourcing physical gold and silver globally.  Previously he worked on Wall Street for fifteen years after graduating from Wharton.

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