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Civil War Experience 



When the United States set the legal gold content of the 

 dollar at 23.22 grains, it fixed the legal price of gold at $20.67 

 per ounce. 2 During our Civil War the market price of gold 

 rose to $30 to $40 to $50 per ounce and averaged $53.35 per 

 ounce during July 1864. Government officials and loyal folks 

 jumped to the conclusion that these advancing prices were 

 a "nefarious act." The operators were called "gold specu- 

 lators/' "Shylocks," "money-changers/ 7 and "disloyalists." 

 The first reaction was to blame the black-market operators 

 for bidding up the price of gold. It gradually dawned on 

 thinking people that the difficulty was due to the paper 

 money; the greenbacks were depreciating. The market price 

 of gold rose above the legal ceiling price because too many 

 greenbacks were issued. 



Experiences during the Thirties 



During the period between the two great wars there were 

 black markets in currencies in many countries. They were 

 due to the fact that legal prices for gold were not changed 

 with changing market conditions. 



During our bank crisis of 1933 there were millions of black- 

 market operators. Some walked into their local banks and 

 drew out their money. Others walked into the Federal Re- 

 serve banks and drew out the gold; still others transferred 

 money and gold to London. These activities took the United 

 States off the gold standard. It was a violation of law to 

 whisper about the solvency of a bank, but it was done. Some 

 were afraid of the bank; some were afraid of the dollar, and 

 others of the nation. 



Regardless of the tune or the country, when the market 



2 An ounce, 480 grains, divided by 2352 grains to the dollar = 20.67 

 dollars per ounce. 



