Murray N. Rothbard wrote The Case for a 100 Percent Gold Dollar in 1962 for In Search of a Monetary Constitution, a Harvard volume edited by Leland B. Yeager, who appears in the essay as an opponent. The Mises Institute reissued it in 2001 as a standalone with a separate 1991 preface. It proposes defining the dollar as a weight of gold and holding a full gold reserve behind every claim payable on demand. Read it for a tight statement of the reserve-contract case, one that separates money, claims and credit and marks where its own argument stops.
Rothbard rests his case on an ethical premise he places beyond technical economics: money is property, and a free-market rule protects its owners against manipulation by the state. Value-free monetary theory, he grants, cannot settle the legal question by itself. He also concedes that a fiat money, once established, can continue indefinitely, and treats that durability as the reason abolition needs advocating. Readers expecting a forecast of collapse will find none in the 1962 text, whose claim concerns who owns money and who may alter the unit.
In the gold-standard period, the dollar was legally a defined weight of gold. Rothbard traces how state monopoly of the mint and legal privileges for bank paper turned that weight into an independent name whose supply the issuer controls. He states that a fixed weight leaves purchasing power free to move with gold's supply and demand. His claim that any nominal money stock can serve exchange assumes prices adjust to it, which says where the market settles and nothing about debtors' losses along the way.
Following Mises, Rothbard separates money from claims to money and both from credit. A loan exchanges a present good for a future one, so the lender gives up his money for a term. A demand deposit or banknote leaves its holder with a present good, because the claim is redeemable at any moment and circulates as money. Any bank issuing more such claims than it holds in gold therefore adds to the money supply, which a lender of saved funds cannot do. Rothbard proposes changing the juristic framework to treat fractional-reserve issue as a breach of bailment, like a warehouse issuing receipts for goods it lacks. One footnote declines to accuse the bankers of his day of conscious fraud, and another, quoting Mises, accepts that the law treats deposits as credit. Calling such banks bankrupt is a liquidity point about meeting every demand claim at once, with no audit of equity behind it.
Full backing leaves lending in place. Banks could still sell debentures and term instruments to savers who part with their money for a period, while depositors would pay fees for custody and payments. Rothbard wants note issue moved from the Treasury and the Federal Reserve to private banks, and coinage left to private mints that charge for it. Competing issuers face discipline because holders can tell one bank's receipt from another's and courts can hold each to its redemption promise. Silver would circulate in parallel at floating rates, with no fixed bimetallic ratio and no compulsory gold monopoly.
Rothbard regards free banking as the best arrangement short of his own, since competition would push reserves toward full cover, yet prefers a legal rule against fraud and records Mises's disagreement. Historical free-banking episodes, on our reading, cannot stand in as trials of the full-reserve rule he proposes. The 1844 Peel Act, in his account of the full-reserve tradition, imposed full cover on notes issued beyond a fixed fiduciary base and left deposits outside it.
Quoting Yeager's 1952 dissertation, Rothbard reads it as favoring independent fiat currencies managed for local stabilization, and he pushes that reasoning toward ever smaller currency areas. A footnote citing a separate 1958 Yeager article records that Yeager himself rejects proliferation down to individual currencies, so the reductio belongs to Rothbard, and readers meet Yeager through his critic's selection. His gold-or-barter rhetoric in that section strains against the earlier concession that fiat can last, though its point about a common medium sustaining the division of labor survives.
The closing section names two polar routes and allows a blend. Deflation would shrink dollar claims to fit the gold stock at $35 an ounce, while redefinition would raise the gold price until the stock covered every claim. Under a pre-1933 gold standard he would have accepted severe deflation for the sanctity of contract, but by 1962 the $35 link applied to foreign governments and central banks alone, so a new definition counts as a fresh starting weight. His tenfold to twentyfold estimate compares the 1962 gold stock with all dollar claims at fixed par and sets no present price. He brushes aside the miners' windfall yet treats years of stimulated mining and disrupted international trade as serious. Mises and Hazlitt would free the gold market before fixing a rate, an order Rothbard rejects because the state held nearly all the gold he wants returned to banks and the public.
A 100 percent gold dollar, Rothbard promises, would eliminate inflation and business cycles once the transition ends, along with the practice of acquiring money at producers' expense. In our judgment, that promise leans on his wider theory of bank credit and the boom, which the essay invokes in compressed form without establishing it. He disclaims any detailed blueprint and asks economists to study the path. Readers must supply the hard parts, such as how existing mortgages and wage contracts would convert and who bears the real burden under each route. The 1991 preface, with its commentary on savings and loans and deposit insurance, belongs to that year and deserves separate judgment.
Choose this essay to learn what a deposit as safe as its named gold would require in contract and property law, and which transition costs its author names without pricing. Expect dense footnotes and the institutions of 1962. What Has Government Done to Our Money? covers commodity origins and the wider history of intervention, while this essay goes deeper on reserve contracts and transition. The 2001 edition remains under copyright, and the publisher hosts it: Original PDF, Mises Institute 2001 edition