28 October 2014 No 26 ISSN 1664-7963 Current Concerns PO Box CH-8044 Zurich Current Concerns Switzerland The international journal for independent thought, ethical standards, moral responsibility, Phone: +41 44 350 65 50 Fax: +41 44 350 65 51 and for the promotion and respect of public international law, human rights and humanitarian law E-Mail: [email protected] Website: www.currentconcerns.ch English Edition of Zeit-Fragen National Referendum of 30 November How large should our gold reserves be according to the wishes of the electorate by Dr rer publ Werner Wüthrich Is the popular initiative “Save our Swiss al Bank. – Large parts of the population millions of working hours accomplished Gold” really “unnecessary, harmful and wished the gold reserves to be anchored by the population. This currency poli- utterly undesirable” as Federal Coun- in the Federal Constitution. cy, which was supported by the people, cillor Widmer-Schlumpf and the finan- The Swiss National Bank, the Federal has undoubtedly contributed to the good cial director of the Canton of Zug al- Council and the Parliament learned the name of the Swiss franc and has strength- lege in the “Neue Zürcher Zeitung” from lesson from this vote. They worked out ened the export industry over the years, 8 October 2014? a new proposal. This said in paragraph because Swiss exporters learned to assert 7: “The notes issued must be backed by themselves on the international markets The ongoing discussion about our gold gold and short-term deposits”. – How- even with a strong currency. The can- reserves is not new. Since the Sec- ever, banknotes were not convertible tons were strengthened as well, because ond World War there have been several even then. Various members of the Na- they could not – as they do now – always “gold votes”, which are worthy of being tional Council and the Council of States count on National Bank profits, but relied brought to mind once more. Already in expressed their view that gold should on their own strength. 1949 the situation was politically very serve as a precaution in case of a catas- similar. It concerned a new monetary trophe. The spokesman for the prelimi- Federal Council and Parliament constitution and, in particular, the type nary commission, Renold, explaned this undermine the people‘s will and composition of foreign exchange re- in the National Council on 22 June 1950 Further details are known: The gold re- serves. In collaboration with the Swiss as follows: “To be sure, the notes are not serves remained untouched until a few National Bank, the Federal Council convertible until further notice. Howev- years ago – until a committee of experts and the Swiss Parliament then drew up er, the gold remains associated with the declared them as “excessive” and the Na- a Currency Article for the Federal Con- banknote coverage for widest sections tional Bank in consultation with Govern- stitution, which would leave open the of the population. It is notably the gold ment and Parliament then sold more than question of the composition of foreign standard by which the currency is judged half. They did this, however, without ask- exchange reserves. The proposed Article most often. [...] In the present unbalanced ing the voters whether they agreed to this 39, paragraph 6, was to read as follows: international economic and currency con- sale of national wealth, and without a wide “The Federal Government may declare ditions, it is very important for a country debate with the people, as had taken place the banknotes and other similar mone- to have sufficient gold reserves. [...] And at the beginning of the 1950s. The legal tary units as legal means of payment. It if a country also has, along with these, basis was provided by the new Federal determines the nature and scope of cov- regulations concerning a minimum gold Constitution of 1999, of which the Feder- erage.” Had this article been adopted, coverage, then I think there is a greater al Council had claimed – contrary to facts Parliament could have created the legal guarantee that the gold reserves are fur- – before the vote on it, that it was merely conditions to keep mainly US dollars ther accumulated and kept at an appro- an update without any substantial chang- as reserve currency – which the United priate level”. es. The protest of the people against this States advised the countries participating approach and against the incipient mas- in the Bretton Woods system to do. This Assent to more gold reserves sive gold sales manifested itself not only in was possible because the banknotes were on 15 April 1951 letters from readers, but also in two plebi- no longer convertible in gold. The new On 15 April 1951, 71% of the voters and scites. On 22 September 2002, the elector- monetary constitution was unchallenged all cantons said yes to the new mon- ate blocked the distribution of the sales rev- in Parliament and in the media. The Fed- etary constitution, which again gave enues. They said no to the Government’s eral Council, the National Council and greater weight to gold and thus set the and Parliament’s proposal to bring in the the Council of States approved it almost course for the future. In the follow- money into a Swiss Solidarity Foundation, unanimously. Only the two members of ing 15 years, the National Bank ac- and they also said no to the proposal of a the National Council who were close to cumulated the gold reserves from popular initiative to use the money for the the demurrage movement voted against about 800 tons to 2,600 tons. It bought old-age and survivors’ insurance. it. All the more surprising was the voters’ the gold for 4,500 francs per kilo- reaction on 22 May 1949: 61.5% of the gramme and held on to this valuation Gold reserves instead of risky citizens and 20 ½ of 22 cantons reject- until a few years ago. Economically, currencies ed the proposal. The reason was obvious: Switzerland financed the gold from the Against this background, some citi- The clear majority of voters refused to current account surpluses of those years, zens have started the popular initiative leave the type and composition of foreign since the country exported more goods exchange reserves to the Federal Govern- and services than it imported. These sur- ment, i.e. the politicians and the Nation- pluses were generated by hundreds of continued on page 2 No 26 28 October 2014 Current Concerns Page 2 Will the Swiss vote to get their gold back? by Ron Paul* On November 30th, The Swiss tradition of bank secrecy is in recent years established a currency peg, voters in Switzerland legendary. The reality, however, is that with 1.2 Swiss francs equal to one euro. The will head to the Swiss bank secrecy is dead. Countries such peg’s effects have already manifested them- polls to vote in a as the United States have been unwilling to selves in the form of a growing real estate referendum on gold. keep government spending in check, but bubble, as housing prices have risen dan- On the ballot is a they are running out of ways to fund that gerously. Given the action by the Europe- measure to prohibit spending. Further taxation of their popula- an Central Bank (ECB) to engage in further the Swiss National tions is politically difficult, massive issu- quantitative easing, the SNB’s continu- Bank (SNB) from ance of government debt has saturated bond ance of this dangerous and foolhardy policy further gold sales, markets, and so the easy target is smaller means that it will continue tying its mone- Ron Paul to repatriate Swiss- countries such as Switzerland which have tary policy to that of the EU and be forced to (picture ma) owned gold to gained the reputation of being “tax havens.” import more inflation into Switzerland. […] Switzerland, and to mandate that gold Remember that tax haven is just a term for a The Swiss people appreciate the work make up at least 20 percent of the SNB’s country that allows people to keep more of their forefathers put into building up large assets. Arising from popular sentiment their own money than the US or EU does, gold reserves, a respected currency, and a similar to movements in the United States, and doesn’t attempt to plunder either its cit- strong, independent banking system. They Germany, and the Netherlands, this izens or its foreign account-holders. But the do not want to see centuries of struggle referendum is an attempt to bring more past several years have seen a concerted at- squandered by a central bank. The results oversight and accountability to the SNB, tempt by the US and EU to crack down on of the November referendum may be a bell- Switzerland’s central bank. these smaller countries, using their enor- wether, indicating just how strong popular The Swiss referendum is driven by an mous financial clout to compel them to movements can be in establishing central undercurrent of dissatisfaction with the hand over account details so that they can bank accountability and returning gold to a conduct not only of Swiss monetary poli- extract more tax revenue. monetary role. • cy, but also of Swiss banking policy. Swit- The US has used its court system to ex- zerland may be a small nation, but it is a tort money from Switzerland, fining the Source: Ron Paul Institute for Peace and Prosperity, nation proud of its independence and its US subsidiaries of Swiss banks for alleg- http://www.ronpaulinstitute.org/archives/featured- articles/2014/september/14/will-the-swiss-vote-to- history of standing up to tyranny.