{"id":314,"date":"2018-07-31T23:04:41","date_gmt":"2018-08-01T06:04:41","guid":{"rendered":"http:\/\/bruceramsey.net\/?page_id=314"},"modified":"2025-07-20T12:12:38","modified_gmt":"2025-07-20T19:12:38","slug":"jack-metcalf-greenbacker","status":"publish","type":"page","link":"https:\/\/bruceramsey.net\/index.php\/jack-metcalf-greenbacker\/","title":{"rendered":"Jack Metcalf, Greenbacker (1987)"},"content":{"rendered":"\t\t
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\u00a0Jack\u00a0Metcalf was a Republican politician from Whidbey Island who was in the Washington State Senate for many years and finally made it into Congress. He was an odd duck \u2014 deeply conservative, with a populist streak. When I heard that he was a gold bug, I looked into it, and I discovered that he was not that at all, but something much more unusual: a\u00a0<\/i>greenbacker. This was the 1980s, and nobody knew what a greenbacker was. So I wrote about it. This is the amalgam of two stories I had in the Seattle<\/i>\u00a0Post-Intelligencer of October 19, 1987, the day stocks crashed 500 points on Wall Street.<\/i><\/span><\/p>

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\u00a0 \u00a0 \u00a0 \u00a0\u00a0\u00a0The strangest measure on the Nov. 3 ballot is surely Referendum 41, State Sen. Jack Metcalf\u2019s crusade to challenge the legality of Federal Reserve Notes. Metcalf argues that the Constitution\u2019s grant to Congress of the power \u201cto coin money [and] regulate the value thereof\u201d cannot be delegated. The Fed, says Referendum 41, is subject to \u201cno oversight or control by any elected body or official.\u201d\u00a0<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Metcalf, 59, a soft-spoken and earnest Republican from Langley on Whidbey Island, is a former high-school history teacher. His crusade springs straight out of the history books of the 19th century.\u00a0<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0A century ago, an impassioned battle raged over the monetary system. The conflict echoes faintly today in the arguments about interest rates, but in those days it was anything but faint. At stake was whether the nation would restrict the money supply to the amount of gold the government had, or expand it with a lot of new silver or paper dollars. In that struggle the gold people were the conservatives, the \u201cfree silver\u201d people the liberals, and the paper-money people the radicals \u2014 the bank-hating \u201cgreenbackers.\u201d<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Metcalf is a greenbacker.<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0The first greenbacks were issued in the Civil War. To pay for the war, Abraham Lincoln\u2019s Congress authorized the Treasury to print $450 million in United States Notes. They were not redeemable in gold, and traded at a discount to coin. After the war, the government took 15 years to shrink the money supply so it could resume paying gold coin for paper at the old rate.<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0The result was a credit squeeze on farmers. Farm-belt populists, who hated city bankers, started the Greenback Party. They elected 14 congressmen in 1878. Their goals, wrote Milton Friedman and Anna Schwartz in\u00a0A Monetary History of the United States<\/i>, \u201cincluded a plentiful supply of currency, destruction of the \u2018money monopoly,\u2019 elimination of foreign capitalists in the United States, and reduction in the burden of debt.\u201d<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Except for the part about foreign capitalists, those are Jack Metcalf\u2019s goals.<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0In 1879 the dollar became convertible into gold, and the greenbackers faded away. They regrouped in 1892 as the People\u2019s Party, and embraced \u201cfree silver\u201d \u2014 the idea that the government buy silver at a high fixed price and coin it. In 1896 they won over the Democratic Party. Its evangelical nominee, William Jennings Bryan, vowed in his acceptance speech that he would not \u201ccrucify mankind upon a cross of gold.\u201d<\/span><\/p>

Bryan lost, and the dollar remained convertible into gold until 1933. But the gold standard was prone to crises. After the Panic of 1907, Congress created the Federal Reserve System, and after the Crash of 1929, Franklin Roosevelt took the nation off gold. Paper money today is all Federal Reserve Notes.<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Well, almost all. Lincoln\u2019s greenbacks were never fully withdrawn, and an occasional $2 or $100 United States Note, reprinted and reissued, can occasionally be found to this day. Jack Metcalf certainly hasn\u2019t forgotten them. He says they\u2019re the only legal paper money in circulation.<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Metcalf says the only other legal money is coin, because coins are made by the Treasury. In April 1981, at the beginning of his anti-Fed crusade, Metcalf got his name in the news by insisting that a $383 expense check be cashed in Susan B. Anthony dollars. Endorsing his check, he wrote, \u201cIt is hereby noted that in cashing this check I will accept only constitutional, lawful money.\u201d<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Gold advocate Kent Pullen, a Republican state senator from Kent, shuddered. \u201cI said, \u2018Jack, you just undermined all those principles you stood for by accepting those cheap Susan B. Anthony dollars.\u2019 \u201d<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0But Metcalf stands for different principles. He wants to replace the Federal Reserve with a new system under which all money would be created by the Treasury. For tactical reasons, Referendum 41 specifies what it\u2019s against, not what it\u2019s for. Says Metcalf, \u201cI\u2019m not getting into a fight with the gold and non-gold people.\u201d<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0On Sept. 6, 1987, Metcalf held a press conference at the Seattle Sheraton Hotel, where the 1988 presidential nominee of the Libertarian Party, Ron Paul, endorsed Referendum 41. The Libertarians favor a gold standard to preserve the value of currency and limit the power of government.<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Metcalf wants to limit the power of bankers. He wants low interest rates and a lightening in the burden of debt. The Bible, he says, condemns the sin of usury, the charging of an unreasonable rate of interest. \u201cI don\u2019t know when \u2018interest\u2019 ends and \u2018usury\u2019 begins,\u201d he says with earnest deliberation, \u201cbut 10 percent interest is criminal looting.\u201d<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Metcalf was a teenager during the 1930s Depression, and recalls the mass unemployment and suffering that the wise men of the day could not explain. Says he, \u201cI remember my parents saying, \u2018There\u2019s something wrong with the money.\u2019 \u201d<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0He also remembers his first home mortgage, in the 1940s, at 4.75 percent. The 1940s had low rates because Franklin Roosevelt and Harry Truman kept the Fed under the Treasury\u2019s thumb, to support the sale of war bonds. All during World War II, the bank prime rate was stuck at 1.5 percent, and nobody thought of the chairman of the Federal Reserve Board as a power to rival the President.<\/span><\/p>

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0The Fed broke free of the Treasury during the Korean War and raised interest rates. Its power increased as it was called on to fight the inflation of the 1970s. By the 1980s, Fed\u00a0<\/span>Chairman Paul Volcker was considered the second most powerful man in Washington, D.C., and was accused of raising rates so high that it cost Jimmy Carter his re-election.\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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         Volcker\u2019s replacement, Alan Greenspan, has already raised rates. Metcalf reads into this evil omens. \u201cWe\u2019re on the road to a terrible collapse,\u201d he says. \u201cI want to avoid that.\u201d<\/span><\/p>\n

         To get Referendum 41 on the ballot, Metcalf has made allies unusual for a conservative. For years, a key ally was Jim Bender, president of the King County Central Labor Council. Bender was a lunch-bucket populist. He had a column in The Scanner,<\/i>the King County union paper, where he would rail against the banks and high interest rates.<\/span><\/p>\n

         Bender died earlier this year. Labor\u2019s man on the Referendum 41 committee now is Bob Dilger, executive secretary of the Washington State Building and Construction Trades Council in Olympia. \u201cHigh interest rates hurt our members tremendously,\u201d he says.<\/span><\/p>\n

         Referendums are put on the ballot by the legislature. Metcalf has pushed his referendum through a Democratic legislature by making common cause with labor liberals such as Rep. Eugene Lux, Seattle Democrat, who was chairman of the Financial Institutions and Insurance Committee. Another tactic was to cast un-conservative votes, such as the one earlier this year for retroactive unemployment pay for locked-out workers at Lockheed Shipyard. Soon after that, Referendum 41 was passed out of the Senate Financial Institutions Committee chaired by Seattle Democrat Ray Moore.<\/span><\/p>\n

         Through the skillful trading of votes, Metcalf pushed his measure single-handedly through an indifferent legislature. It passed the Senate 36-9 and the House 77-17.<\/span><\/p>\n

         In fact, this is the second time he\u2019s done it. In 1982 Metcalf coaxed his fellow legislators into passing a resolution that the state file a lawsuit challenging the Federal Reserve. Attorney General Ken Eikenberry, a Republican, refused to file it. A lawsuit had no chance to succeed, Eikenberry said, and was a waste of taxpayers\u2019 money. That\u2019s why Referendum 41 instructs the Legislature to hire a private attorney to file the suit.<\/span><\/p>\n

         Metcalf\u2019s position, as laid out in his self-published book, The 200-Year Debate: Who Shall Issue the Nation\u2019s Money?,<\/i>is that the Federal Reserve is \u201ca federally chartered private banking consortium\u201d that keeps money scarce and interest rates high.<\/span><\/p>\n

         It would be hard to find a bank officer who believes this, or a professor of money and banking. But Metcalf believes it.<\/span><\/p>\n

         To be sure, the 12 regional Federal Reserve Banks have some attributes of a private company: They receive no money from Congress, and their employees are not civil service or in the federal pension system. They issue stock to commercial banks like Seafirst and Rainier, and they have private-sector directors. George Weyerhaeuser, for example, is a director of the San Francisco Fed. Also, in telephone directories, the Federal Reserve is listed in the White Pages rather than the government\u2019s Blue Pages.<\/span><\/p>\n

         And the Fed does make a profit by its monopoly on printing paper money. But the profit all goes to the Treasury. Fed policy is set by the Federal Reserve Board, most of whose members are appointed by the President of the United States. The stock owned by commercial banks has no votes.<\/span><\/p>\n

         Is the Federal Reserve controlled by commercial banking interests? Vance Roley, a professor of banking and finance at the University of Washington, says, \u201cThat\u2019s ridiculous.\u201d Roley once worked for the St. Louis Fed. \u201cI attended some board of directors meetings in Kansas City,\u201d he recalls. \u201cI never saw any attempt by commercial bankers to influence the Fed\u2019s actions.\u201d<\/span><\/p>\n

         Economists do take seriously the prospect of politicians influencing the Fed\u2019s actions. A few favor greater control. \u201cI think there is a perfectly good case for saying the Fed should be part and parcel of the Treasury, because the Treasury is going to have every interest in keeping rates down,\u201d says William McDonald Wallace, chief research economist for the Boeing Commercial Airplane Co. Like Metcalf, Wallace recalls the low interest rates during and after World War II, when the Federal Reserve was less independent. \u201cDuring that period we had the highest sustained growth in our history,\u201d he says.<\/span><\/p>\n

         Most economists believe that direct political control of the money supply, which Metcalf\u2019s proposal amounts to, is a recipe for printing-press money. \u201cYou can\u2019t make interest rates low by printing more money,\u201d says Michael Veseth, associate professor of economics at the University of Puget Sound \u2014 and a member of the committee to oppose Referendum 41. \u201cWe have examples of that in the world: Argentina, Brazil.\u201d <\/span><\/p>\n

         Metcalf denies his aim is to create inflation. He just wants to lower interest rates so the little man can get a loan. Nor does he think his referendum odd. \u201cThis is the first time in America,\u201d he says, \u201cthat the people have been asked to vote on the money system.\u201d<\/span><\/p>\n

 <\/span><\/p>\n

\u00a9 1987 The Seattle Post-Intelligencer<\/span><\/em><\/p>\n

         <\/span><\/p>\n

         Referendum 41 got only 35 percent of the vote. But Metcalf kept plugging away. In the Republican sweep of November 1994, on his fourth attempt to get into Congress, he was elected to the House of Representatives. His opponent tried to use his crusade against the Federal Reserve against him, calling him \u201can absolute kook.\u201d Metcalf downplayed his monetary ideas. At 66, he just wanted to go to Washington and balance the budget \u2014 an old idea that voters were ready to support. He was a member of the House from Jan. 1995 to Jan. 2001. He died in 2007.<\/em><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

\u00a0Jack\u00a0Metcalf was a Republican politician from Whidbey Island who was in the Washington State Senate for many years and finally made it into Congress. He was an odd duck \u2014 deeply conservative, with a populist streak. When I heard that he was a gold bug, I looked into it, and I discovered that he was […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-314","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/bruceramsey.net\/index.php\/wp-json\/wp\/v2\/pages\/314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bruceramsey.net\/index.php\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/bruceramsey.net\/index.php\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/bruceramsey.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bruceramsey.net\/index.php\/wp-json\/wp\/v2\/comments?post=314"}],"version-history":[{"count":6,"href":"https:\/\/bruceramsey.net\/index.php\/wp-json\/wp\/v2\/pages\/314\/revisions"}],"predecessor-version":[{"id":1488,"href":"https:\/\/bruceramsey.net\/index.php\/wp-json\/wp\/v2\/pages\/314\/revisions\/1488"}],"wp:attachment":[{"href":"https:\/\/bruceramsey.net\/index.php\/wp-json\/wp\/v2\/media?parent=314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}