Money Mischief

February 3, 1992
From the Micronesian Yap islands' 12-foot stone ``coins'' to today's paper currencies backed only by fiat, Nobel-laureate economist Friedman ( Free to Choose ) here examines anomalies of world monetary history, including the effect of successive 19th-century gold ore discoveries and refining improvements on U.S. and British tender. He traces American currency's long, contentious gold-silver bimetalist saga, marked by the so-called Congressional coinage ``crime of 1873'' and ending with William Jennings Bryan's unsuccessful ``Cross of Gold'' presidential campaign in 1896. Friedman cites harsh lessons from postwar hyperinflation in many countries and declares that Roosevelt's 1933 silver-buying program may have skewed China's silver-based economy toward eventual communism. Uncontrolled money growth is the cause of inflation, the author stresses, and only monetary reform, despite undesirable side effects like unemployment, can cure it. Abstruse, theoretical and chiefly for the initiate, the book recycles parts of earlier works by Friedman, who himself suggests here that the general reader might wish to skip a particularly challenging chapter.