EspañolWhen we hear of sound money, the gold standard, and precious-metals investing, various names come to mind: Murray Rothbard, Ron Paul, Doug Casey, Mark Skousen, and Harry Browne. There is, however, one man who can take almost single-handed credit for the 1974 legalization of gold ownership in the United States: James “Jim” Blanchard of New Orleans, Louisiana (1943-1999).
Such were Blanchard’s larger-than-life adventures and advocacy endeavors spanning the globe, his low profile is both a surprise and a shame. I only came across his story fortuitously by living in New Orleans and attending the annual investment conference he started there all the way back in 1971.
The good news is that his outlook on life, gold, and the American dream is preserved in his conversational 1990 autobiography, Confessions of a Gold Bug (much of it dictated).
Futher, his son Anthem, to whom the book is dedicated, is one man who has not forgotten. He is taking on the new frontier of currency, promoting gold-backed digital units through his precious-metals storage company, Anthem Vault.
What makes Blanchard’s story particularly unique is that he was paralyzed in a car accident at the age of 17. Already he had an affection for US history and ideals, but the rehabilitation — including a year in Mexico — catalyzed that by giving him time to read.
He decided to become a history teacher, while pursuing ventures on the side, both political activism and a foray into investment with his own bulletin. Eventually the job gave way entirely to his precious-metals business, and this entrepreneurial rise is the dominant theme in Confessions. He even includes a chapter titled “Your Business Is Your Best Investment.”
Beyond his business prowess, though, there is the story of a man who took on what appeared to be invincible opponents in the US federal government and the Federal Reserve. Blanchard’s innovative civil disobedience and diversified outreach — as a young man ahead of his time — managed to embarrass federal legislators into lifting the ban on private gold ownership.
During President Richard Nixon’s second inauguration, for example, he contracted a plane to fly over the scene with the words “Legalize Gold.” And a friend smuggled in a gold coin from Canada that he displayed at all protests, daring police to arrest him and show the absurdity of the law.
But the legalization effort was just the start. Blanchard yearned for a return to the hard currency set forth in the US Constitution, and free-market capitalism in the nation that he loved. (See Fixing the Dollar Now by Judy Shelton for concise analysis on the breakdown and potential revival of sound money.) In that vein, he brought together both academic leaders and the most prominent gold bugs of the era to brainstorm at his conferences.
From Friedrich Hayek and Milton Friedman to Edward Harwood, a mentor who founded the American Institute for Economic Research in 1933, Blanchard seemingly spared at nothing to attract the top thinkers of the day. In fact, Ayn Rand gave her final speech at his 1981 event, and he writes with poignancy about his meeting with the lady whose novel title became his son’s name.
Of course, a lot has happened since 1990, so much of the later parts of the book have become out of date. One can easily skip his chapter on the various crises of the 1990s, and you’ll have to look elsewhere for new developments such as cryptocurrencies.
But the value in Confessions is not so much in its practical advice for aspiring investors and businessmen. Rather it is in offering inspiration, from a man who has risen from depths to achieve both noteworthy success and a life to be reckoned with. His tales range from Central America to Africa to the Arctic, and one of his unconventional tips for success is “mixing business with pleasure.”
All the while, he wants readers to be aware of what motivates him and of the threats to the American dream. Collectivism is the “root enemy,” he writes, and his example shows how each person can stand as a defiant and proudly self-interested individual. Although he died in the 1990s, his book remains as a gift and invitation — including a long list of recommended publications and organizations — to the next generation, those willing to carry on the banner.
EspañolThe power of ideas to help shape political movements has been grossly underestimated over the years. In truth, some of the largest political transformations in human history have come from ideas that were developed in the secluded confines of an intellectual’s home or in obscure academic institutes. Regardless of the origins, ideas can snowball into powerful vehicles of social change. As Friedrich Hayek noted in one of his most powerful works, Intellectuals and Socialism, the triumph of socialist ideas can largely be attributed to the ideas first put forward by various intellectuals. They began with relatively well-off intellectuals and then made their way to “second-hand dealers” — journalists, scientists, doctors, teachers, ministers, lecturers, radio commentators, fiction writers, cartoonists, and artists — who then spread those ideas to the masses. Intellectuals like Milton Friedman took it upon themselves to reverse this trend and create an environment that was more favorable to free markets. Steadfast in his beliefs in the power of ideas, Friedman knew that big changes usually start out in small venues. It was in Chile where Friedman’s vision was first implemented on a large scale. The results were nothing short of spectacular, as Chile was able to escape a veritable economic collapse and experience an unprecedented boom. Chile’s economic success was no mere coincidence; it was the product of ideas that Milton Friedman put forward in the 1950s. To understand how such a radical change was brought about, one must first look at the origins of the Chicago Boys, the group of Chilean economists that played a pivotal role in the transformation of Chile’s economy during the 1970s and 1980s. The Chicago Boys Under the tutelage of the United States Agency for International Development (USAID), the University of Chicago signed a modest agreement with the Pontifical Catholic University of Chile in the 1950s to provide a group of Chilean students training in economics. In exchange, the University of Chicago would send four faculty members to help the Catholic University build up their economics department. Of these four faculty members, Arnold Harberger would serve as the Chicago Boys' principal mentor. What at first looked liked just another exchange program between universities would play a substantial role in Chile’s economic rise. A Country Mired By Statism At the start of this program, Chile’s economy was in the doldrums. Another victim of Raúl Prebisch’s Import Substitution Industrialization (ISI) policy, Chile had a very loose central banking policy, featured 15 different exchange rates, heavy tariffs, and a number of import and export controls. Subsequent governments maintained the same neo-mercantilist structure up until the 1970s. During this era of economic malaise, the Chicago Boys constructed El Ladrillo (The Brick), a text primarily shaped by economist Sergio de Castro which advocated for economic liberalization in all sectors of the Chilean economy. Sadly, this text was largely ignored at that time. It wasn’t until the presidency of Salvador Allende that the Chicago Boys’ talents would be desperately needed. On the Road to Cuba 2.0 Though democratically elected by a narrow margin in 1970, Salvador Allende was determined to turn Chile into the next Cuba by undermining all of its democratic institutions. Through price controls, arbitrary expropriations, and lax monetary policy, Allende put the Chilean economy on the verge of collapse. By 1973, inflation reached 606 percent and per capita GDP dropped 7.14 percent. Under the command of General Augusto Pinochet, the military deposed Allende’s government. Despite this tumultuous change, the military ruler did not have a clear economic vision for Chile. Enter Milton Friedman Milton Friedman’s visit to Chile in March 1975 proved to be quite fateful. Friedman was on a week-long lecture tour for various think thanks. Eventually, Friedman sat down with the general himself for 45 minutes. Right off the bat, Friedman recognized that Pinochet had very little knowledge of economics. After their meeting, Friedman sent Pinochet a letter with a list of policy recommendations. Friedman was blunt is his diagnosis of Chile’s economy: for the country to recover, it had to truly embrace free-market measures. Ideas Put in Action Cooler heads prevailed and Pinochet let the Chicago School disciples occupy various posts in the military government. In April 1975, El Plan de Recuperación Económica (The Economic Recovery Plan) was implemented. Soon Chile curbed its inflation, opened up its markets, privatized state-owned industries, and cut government spending. By the 1990s, Chile was experiencing the largest economic boom in its history. The numbers don’t lie: A Freedom Fighter A principled libertarian, Friedman criticized Pinochet's repressive political measures. Friedman understood that economic and political freedoms are not mutually exclusive. The principles laid in Friedman’s book Capitalism and Freedom inspired José Piñera, a notable Chilean reformer, to become a part of Chile’s classical liberal revolution. Like Friedman, Piñera understood the link between economic and political freedom. This motivated him to help ratify the Chilean Constitution of 1980. The most classically liberal constitution in Latin America’s history, it established the transition towards free elections and Chile’s return to democracy. Additionally, Piñera was the architect of Chile’s private social security system that empowered millions of workers and has fostered the growth of an ownership society. This model has been exported to dozens of countries abroad and has served as a market-based alternative to government-run pension systems. The “Chilean Miracle” represented the first major triumph against communism during the Cold War. Chile’s classical-liberal revolution subsequently inspired the Thatcher Revolution of 1979 and the Reagan Revolution of 1980. These ideas had resounding effects all over the globe and marked the beginning of the end for Soviet-style models of economic organization. There is still much work to do, as the illegitimate children of Marxist and Keynesian thought still run loose these days throughout Latin America. But one thing is absolutely certain: an idea whose time has come is unstoppable. RIP Milton Friedman.