Thomas Edison: Patents and Paper Money
Posted on 7/24/2018
Thomas Edison is America's most prolific and perhaps best-known inventor. Besides his brilliant knowledge on things like the telegraph, electric lighting and sound, Edison had an opinion on just about everything, including paper money.
|Thomas Edison (ca. 1914) reading next to one of his inventions, the Ediphone, an early home-recording device.
Image courtesy of the Library of Congress.
Edison was born in 1847, at a time when the Industrial Revolution was in full swing and the world around him was adapting to new technologies. It was in the telegraph industry where a young Edison first began tinkering and inventing, learning the skills he would later use to become one of the world's most famous inventors.
By the time Edison passed away in 1931, he had amassed 1,093 US patents, in addition to many international patents. His dedication to his work was equally impressive—receiving at least one patent a year for 65 consecutive years alongside a patent application just two days before he passed away.
Because of his fame and popularity at the time, Edison was often asked about his opinion on different subjects, ranging from his belief in the afterlife (it is alleged that he tried to create a machine to speak to the dead) to his thoughts on current politics (When asked if he thought Calvin “Silent Cal” Coolidge could win the presidency, he answered: “As long as he doesn't talk too much.”). Edison's strong opinions would eventually include suggestions on revamping the US monetary system, largely due to work being done by his close friend Henry Ford.
|Photograph of the Wilson Dam, a major part of the TVA project at Muscle Shoals.
Image courtesy of the Historic American Engineering Record & Tennessee Valley Authority.
In the early 1920s, car manufacturer and industrialist Henry Ford proposed leasing the uncompleted hydro-electric dam at Muscle Shoals on the Tennessee River in Alabama. The US War Department had begun the project during World War I, and engineers estimated a cost of $40 million to complete. At this time, public projects were financed either through raising taxes—which Congress was unwilling to do at the time—or by issuing bonds. For the Muscle Shoals project, the proposal was for 30-year bonds at 4% interest.
Ford and Edison balked at the idea that the US government should have to pay $48 million in interest on top of the $40 million they would have to pay back—all for a project that would benefit the public (the argument being that the hydro-electric dam and accompanying fertilizer plants would create jobs and revitalize the area). Responding to the bond issue, Edison remarked: “Any time we wish to add to the national wealth, we are compelled to add to the national debt.” Edison and Ford hoped that a new monetary system could be created where dollar bills were issued directly to workers and manufacturer, with the money being backed by the goods they produced rather than the gold and silver held in bank vaults.
|US bonds like this Liberty Loan gold bond were used to finance public works projects.
Click image to enlarge.
Ever since the first "greenback" was issued, Americans argued over what was the best way to regulate US currency. The erratic nature of the economy following World War I only heated the debate.
Both Edison and Ford believed the US government should simply issue the currency needed for the Muscle Shoals project. After all, Edison argued, “if the Nation can issue a dollar bond, it can issue a dollar bill.” Rather than have banks profit off the project, Edison believed that the “people who supply the material and do the work” should benefit by having the government issue currency directly to them. Instead of a gold standard, Edison thought currency should be issued directly to workers and manufacturers and be backed by commodities, such as wheat, cotton and other agricultural and manufactured goods.
Edison would eventually create a 15-point plan for a new system in May 1922 entitled “A Proposed Amendment to the Federal Reserve Banking System.” While Edison's plan was never fully realized, and Ford's Muscle Shoals proposal was rejected, their ideas would eventually come to fruition within certain elements of the US monetary system.
The US, for example, practically abandoned the gold standard in 1933 before officially severing the link between gold and the dollar bill in 1971. Meanwhile, Ford's idea surrounding a publicly owned Muscle Shoals project became a centerpiece of the Tennessee River Valley Authority, a federally owned corporation and one of the largest electricity providers in the US.
In addition to the light bulb and Model T, you can now add paper money to the things that you think of when you hear the names Edison and Ford.
|Military Payment Certificate with Edison's depiction. Benjamin Franklin is also depicted conducting his famous "kite experiment."
Click image to enlarge.
Special thanks to the staff at the Edison and Ford Winter Estates for their aid in finding these relevant articles and resources.
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