As Americans celebrate Independence Day with fireworks and festivities, it’s worth remembering that the ideals of 1776 were more than abstract declarations—they were backed by bold action, including the rejection of debased money and the embrace of gold and silver as the foundation of a free society.
In a special 4th of July edition of the Money Metals podcast, host Mike Maharrey spoke with Lawrence W. Reed (Larry Reed), President Emeritus of the Foundation for Economic Education (FEE), about the forgotten role of sound money in the American Revolution, and why its abandonment today threatens the very liberties the Founding Fathers fought to preserve.
(Interview Starts Around 6:44 Mark)
The Founders' Distrust of Paper Money
The conversation began with a quote by Thomas Paine:
“Money is money and paper is paper. All the invention of man cannot make it otherwise.”
This quote captures the Founders’ deep skepticism toward paper currency.
As Reed explained, the generation that declared independence in 1776 had already learned that unbacked paper money destroys economies and liberties alike. The colonists knew that the most stable and honest form of money throughout U.S. history had always been precious metals—gold and silver.
During the Revolutionary War, Congress began issuing paper Continental dollars to finance the struggle against Britain. Initially manageable, the printing soon spiraled into hundreds of millions, leading to hyperinflation and the now-infamous saying: “not worth a Continental.”
Counterfeit Warfare and the Yorktown Turning Point
Sound money didn’t just play a philosophical role—it was decisive on the battlefield.
One of the most dramatic examples came in 1781, during the Battle of Yorktown—the final major military engagement of the American Revolution. Facing financial collapse and troops on the verge of desertion, George Washington had no way to pay his soldiers.
Paper currency had become worthless.
That’s when Admiral de Grasse of France stepped in—not just militarily, but financially.
With no gold or silver arriving from Mexico, he launched a fundraising campaign in Havana, Cuba, gathering donations of precious metals from Cuban citizens. Their contributions—voluntary and in sound money—enabled Washington to sustain the siege of Yorktown.
Thanks to these gold and silver donations, the Continental Army was paid in real money.
Morale surged. Victory followed.
Sound money quite literally saved the American Revolution.
Constitutional Roots of Sound Money
After securing independence, the Founding Fathers enshrined their hard-won lessons into the U.S. Constitution. Article I, Section 10 bars states from making anything but gold and silver legal tender.
Alexander Hamilton, America’s first Treasury Secretary, established a bimetallic standard, tying the fledgling nation’s currency to physical assets, silver and gold, that couldn’t be printed into oblivion.
Though the U.S. briefly deviated from this principle during the Civil War, the gold standard was restored by 1900, and for a time, America prospered under a stable, honest currency.
That changed in 1913, when Congress created the Federal Reserve, reducing gold backing and centralizing monetary control.
Paper Money as Hidden Taxation
Larry Reed emphasized that fiat money—government-issued paper currency not backed by gold or silver—functions as a hidden form of taxation. It erodes purchasing power, transfers wealth to the politically connected, and undermines savings.
Unlike transparent taxes, inflation silently robs the average American.
These patterns repeat throughout history.
From the monetary chaos of the Civil War to the inflationary spending of World War I, the Great Depression, and the post-2008 bailouts, governments consistently turn to the printing press in times of crisis.
The result is always the same: short-term gain, long-term ruin.
Can Sound Money Make a Comeback?
Despite decades of monetary mismanagement and central bank dominance, there are signs that sound money may be staging a grassroots revival—echoing the spirit of 1776.
Several U.S. states are taking legislative steps to reassert the monetary role of gold and silver. Declaring them legal tender may be symbolic for now, but it’s a step toward currency competition, which the Founders would surely support.
Even more promising, some states are repealing capital gains and sales taxes on precious metals—removing barriers that have long discouraged their use as money. Others are exploring gold-backed electronic payment systems or issuing bullion in transactional sizes, like small coins and bars.
Reed noted that while such changes may seem modest, they mirror the revolutionary thinking of the Founders: decentralization, integrity, and voluntary cooperation.
A true return to honest money may require a national or global crisis, but the groundwork is already being laid.
Global De-Dollarization and Individual Preparedness
This monetary shift isn’t confined to American states.
Around the world, nations are beginning to hedge against the risks of the U.S. dollar, which—despite being the global reserve currency—faces growing doubts.
Central banks in China, Russia, and elsewhere are buying gold at record rates, reducing their dollar holdings, and signaling a long-term retreat from fiat dependence.
With the U.S. now running $2 trillion annual deficits, faith in the dollar is wavering. Should reserve holders flee the dollar en masse, it could trigger a global crisis—ironically validating the very principles the Founders tried to preserve.
Reed urged individuals to follow the example of these central banks by converting part of their savings into gold and silver.
These metals aren’t just crisis hedges—they’re timeless, borderless stores of value that require no trust in politicians or central banks. In a world of financial manipulation and digital control, owning precious metals is a revolutionary act in its own right.
FEE and the Moral Case for Sound Money
Founded in 1946, the Foundation for Economic Education (FEE) carries forward the revolutionary legacy of liberty and honest commerce. Its mission is simple: teach the moral and practical foundations of free markets, limited government, and sound money.
Larry Reed reminded listeners that a system built on gold and silver aligns with moral principles—honesty, integrity, and responsibility.
FEE focuses on educating high school and college students through events, webinars, and online content. FEE.org
Reed also curates his work at LawrenceWReed.com, where readers can explore writings on economics, liberty, and U.S. history.
Misunderstanding Economics: The Short-Term Trap
Asked about the greatest economic misconception among Americans, Reed identified short-term thinking as the root of many fiscal blunders.
People accept inflation and debt so long as it “gets us through” the moment.
This mindset, famously captured by Keynes’s line—“In the long run, we’re all dead”—has eroded fiscal sanity for generations.
Reed also pointed to a moral blind spot: Americans would never steal from their neighbors directly, but many are fine with hiring politicians to do it through taxation and inflation.
This erosion of personal responsibility lies at the heart of unsound economics.
Final Thoughts
As we celebrate the 4th of July, Larry Reed urged Americans not only to enjoy the fireworks, but to reflect on the deeper meaning of Independence Day.
The Revolution of 1776 was not just a break from monarchy—it was a stand for principles: liberty, limited government, and sound money rooted in gold and silver.
“Let’s hope every American does more than simply look at the fireworks, but also thinks about the great ideas that made it all possible,” Reed concluded.
The Founders understood what we must remember: without sound money, freedom cannot endure.
In that spirit, Money Metals is actively working alongside the Sound Money Defense League to help restore the principles of honest currency. Together, they are leading nationwide efforts to eliminate sales and capital gains taxes on gold and silver, while advancing pro-sound-money legislation in dozens of state legislatures.
From recognizing gold and silver as legal tender to opposing central bank digital currencies, their shared mission is to help return America to the monetary values that sustained liberty in 1776—and must sustain it again today.
Originally Published on Money Metals.
