By Order of the Fiat

What is the difference between money and currency? Most readers (not in the financial sector) would be surprised that there is a difference, and an important one at that. The short video included in the link  at the end of this article gives an engaging and enlightening explanation of the difference between the two, and how the worldwide economy thrives on its modern monetary systems, which not only make local trade possible, but also exchanges on a worldwide scale.

American Civil War 1861 - 1865

The American Civil War can serve as an excellent example of how nations can live or die by the strengths or weaknesses of their monetary systems. It shows the benefits of a fiat-based currency over a commodity-based one, and what happens when commodities fail, and how counterfeiting and ‘bad cash’ can cause rampant inflation and total governmental collapse. (Quick reminder: A commodity-based currency is money backed by a commodity, such as gold, or cotton. Fiat based, on the other hand, draws it worth from and by the decree of a governing body; ‘fiat’ means ‘let’, or, more formally ‘by order of’.)

Side Note: Is bitcoin, then, a fiat currency? That is an excellent question, and one not simply answered. Technically speaking, a fiat currency is backed by a governing body, who sets its worth and value based not on commodities directly, but rather on the supply and demand and movement of those commodities. Bitcoins, on the other hand, are currently not backed by any government, or regulated or issued by any banks – yet. For now, that makes them something else and continually redefined by use and debate.

During that conflict, the North and the South were roughly equally armed and manned, with the same amount and caliber of soldiers, officers, and weaponry. (In fact, many personnel on both sides had attended the same military academy, West Point, and were often members of the same extended families.) So why did one triumph so decisively over the other? In the end, it was not guns, superior generals, soldiers, or firepower, or even the ‘rightness’ or ‘wrongness’ of each side’s cause; it was, finally, money, or the lack of value thereof.

 

Southern Cotton Plantation

Simply put, the North had a robust industrial economy, which backed a strong, fiat-based currency (called ‘greenbacks’), giving it great wealth. (That was during the 1860s, a time when the government of the North was well able to back its currency.)

Union Greenback

The South’s economy, on the other hand, was old, even ‘ancient’, and agriculturally based, depending on brutal manual labor (slavery), and the constant, steady harvesting of cotton and other cash crops, all at the whim of fickle nature and the physical ravages of war. Its commodity-based currency became worthless by an inability to back it reliably, and rampant (Northern) counterfeiting of Confederate bills, which caused inflation, and made the currency worthless.

Counterfeit Confederate Bill

(One reason is that more of the war took place in the South, often on the very land where the South’s cash crop, cotton, was harvested. Those valuable lands, and their grand old estates, were systematically destroyed by war’s end.) In the end, the South was literally starved into submission, reduced to a bartering system, and making it (confederate currency) worthless, and the butt of jokes to this day.

 

Actual Confederate Bill

What eventually happened to the South is described precisely in the video at 8:31, where aliens effectively destroy the Earth by prohibiting the use of money (thereby rendering it useless, exactly like Confederate commodity-based currency.) The modern, worldwide economy is based on a system of roughly interchangeable currencies. Such a wide-ranging economy would be unwieldy, if not downright impossible, with a bartering system. (Whether fiat-based currency is better than commodity-based is may still be considered debatable.)

Northern Industrial Factory

https://curiosity.com/topics/the-difference-between-money-and-currency-curiosity/

Uncommon Eloquence, Common Cause: Frederick Douglass & Abraham Lincoln

During an age when letter writing was the typical mode of communication for even the shortest distances, the eloquence in those missives, (from the meanest, most pedestrian communiqués to the most important and formal declarations) was a common feature and a common courtesy. This was especially true during times of conflict and national upheaval, such as the Revolutionary War, the War of 1812, and War Between the States. Letters that readily illustrate this fact are still in existence from each of those periods.

 Yet some orators (or writers) managed to stand out and above this practice of ‘common eloquence’, elevating writing to the level of prose so powerful that some of it now ranks as part of the national heritage of American literature. Two such writers of this caliber were the firebrands of their age: Frederick Douglass and Abraham Lincoln.

Douglass and Lincoln had a common goal, but did not always agree on how to achieve it. They also had an unusual and rather uncommon background, one that they shared and which made them brothers of sorts: Frederick Douglass’s father may have been white, and was probably his owner, albeit one who apparently loved and doted on him. (He also most likely arranged for both his escape from slavery, and his education.)

Lincoln had worked as an indentured servant from childhood to young adulthood, a type of bonded servitude, the polite term for slavery, which was used when referring to whites and foreigners of European descent. He was ‘rented out’ by his own father, Thomas Lincoln, for menial, backbreaking labor (such as rail splitting and hog butchering) in rural Indiana, until he was twenty-one. His earnings amounted to thirty-one cents a day, presumably none of which he was allowed to keep.

As an adult, he grew to detest the work and the practice whereby one human being used another to perform endless, backbreaking, menial labor. The memory of that period of his life would eventually inform and influence his opinion of slavery, once he realized abolishing it for all time was, in fact, the only way to bring the country back together. However, at onset of the war, this was, admittedly, not his primary goal; it had originally been the salvation of the Union no matter the cost, with slavery, or without it. There was a time when that choice did not matter to him, where the fate of the Union was concerned.

 Douglass, on the other hand, saw no other option and no course of action other than the instant, ultimate, and complete abolishment of ‘that most peculiar institution’ slavery, including equal treatment and pay for freed blacks enlisted in the Union army.

Herein lay the vast, roiling sea of the differences between them, and what was to become the seed of their eventual respect for each other, and their friendship.

Lincoln had the more difficult challenge before him, convincing a culture that had owned slaves for generations to give up the plantation lifestyle and the considerable wealth that came with it, and the divestiture of their ‘property’ with freedom and full citizenship for persons who had once been held as valuable chattel.

If he proceeded too quickly, the enterprise would be doomed from the start. Even though Douglass knew Lincoln’s reason for erring on the side of caution, he had neither his adversary’s time nor patience to proceed at the beleaguered president’s maddeningly measured pace. Still, Douglass had to admit this himself, after the fact, that Lincoln had been right.

The two, Mr. Frederick Douglass and President Abraham Lincoln, possibly greatest leaders of their time, met on three occasions (in 1863, 1864 and 1865, the same year Lincoln was eventually assassinated), to discuss these most poignant concerns. Each went on to write about those meetings and their common goals. Ultimately, the most powerful voices of the Civil War became, if not the greatest of friends, then great respecters of each other’s ideals, burdens and integrity.

Together, their words forced a nation to free itself from the hideous institution of slavery that had existed from long before the War of Independence until the end of the Civil War.

What the Founding Fathers could not (or would not) address in the Declaration of Independence or the Constitution was left to be hashed out by Lincoln, Douglass, and their contemporaries. The words they left behind on paper bear witness, both silent and thunderous, to a time and place in American history when finally, the lofty ideals espoused so eloquently by the Founders began to be fully (if somewhat reluctantly ) embraced and expanded to include more than just the privileged few. 

The Selected Writings of Douglass (and Others)

The Complete Writings of Abraham Lincoln