Exclusive Interviews
Hugo Salinas Price on the Nature of Money and Why Silver Should Be Legal Mexican Currency
By Anthony Wile - May 23, 2010

Introduction: Hugo Salinas Price is a successful, retired businessman who lives in Mexico. He has been a follower of the Austrian School of Economics since his youth. He has written three books in Spanish on how and why silver should be instituted as money in Mexico, in parallel with paper money, and numerous related articles in English and Spanish, posted at his website. His organization, the Mexican Civic Association Pro Silver, is actively lobbying the Mexican Congress to approve legislation, which will institute the pure silver "Libertad" ounce as money.

Daily Bell: What is your campaign in Mexico for sound financial policy?

Hugo Salinas Price: I actually avoid discussing "sound financial policy" because one can argue about that 'til the cows come home. During the last 15 years I have devoted my efforts to one single aim, and that is to achieve the monetization of a silver ounce coin currently minted by our Central Bank. This coin has no engraved monetary value and is called the "Libertad" coin; it can very easily be turned into a monetary coin, that is to say, a coin with a monetary value. As such, anyone owning such a coin could, if he or she wished, be able to pay any bill or debt denominated in Mexican pesos.

The monetary value of this coin would be slightly higher than its bullion value; the monetary value would not fluctuate according to the price of the silver ounce, but its monetary value would be raised if the bullion price of silver rose and closed in on the monetary value. The Central Bank would give the coin its monetary value, according to a formula in the proposed legislation.

If the price of silver fell to $1 an ounce, the monetary value of the coin would remain where it was last pegged. (But it would still be better money than any paper or digital money in the world!)

On the other hand, if silver should go to $50 an ounce, this coin would remain in circulation, useable as money, because then its monetary value would be about $57, and stay there until a further rise in the value of bullion silver.

The monetized silver ounce would be an excellent refuge for savings and would attract them irresistibly. You don't need a bank account, you don't even have to know how to sign your name, to invest your savings in this simple and inflation-proof way.

This coin would be better money than the US dollar and I expect many Americans would be wanting to own these "Libertad" ounces once monetization is realized.

Daily Bell: Has Mexico always suffered from an unsound economy? Does Mexico now have a stable political structure?

Hugo Salinas Price: The first question is like asking me, "When did you stop beating your wife?"

Seriously, I think the Mexican economy is sounder than the US economy – which isn't saying too much. The Mexican economy is much less complex than the American economy. Think of the Mexican economy as a low, wide pyramid or mound. The American economy is by comparison a skyscraper. Personally, I don't like to occupy hotel rooms above the 12th story, thinking of the possibility of a fire. Think also of all the things that can go wrong for a skyscraper: a power outage, and you and your family are on the 30th floor. No elevators, no water, no refrigerator…you get the idea. The American economy is vulnerable in ways that the Mexican economy is not.

Mexicans have mostly fully-paid housing – the house may be very modest, such that most Americans would not care to live that way, but – it is paid for! Mortgages are not widespread; during recent years there was an increasing use of mortgages but on the whole, the Mexican population lives in housing that is paid for.

Mexican indebtedness is not as great as in the US; because until recently, 70% of the population did not have bank accounts – which given the behavior of banks in general, is a very good thing.

Mexicans, unlike Americans, are used to bearing with hard times. They can "cope" with situations which would drive an American to despair. We do not have a government that prints the World's money, so we haven't been as coddled by all levels of government, as the American people.

About political stability: I don't think American political stability is stronger than ours. We don't have Tea Parties and we don't think about taking up guns and holing up in our houses. Matter of fact, I think I see a Revolution brewing right in the old U.S. of A. But of course, we can always be the object of "Regime Change" by the Powers That Be in Washington, D.C. It's happened before, though most Mexicans are not aware of the fact that our Glorious Revolution of 1910, was a "Regime Change" Operation, carried out covertly by the U.S., because Mexico was getting too prosperous and inviting European Capital into the country, in preference to American Capital. So, it can happen again – any excuse will do. How about: "The Drug War in Mexico threatens American security"? That ought to do the trick.

Daily Bell: Give us some background on yourself. Where did you grow up? Where did you go to school and how did you get interested in business?

Hugo Salinas Price: I grew up in Mexico City, the eldest of six kids. My father was a Mexican from Monterrey, Mexico. My mother was an American from Bryn Athyn, PA. Our family all spoke both English and Spanish from childhood. We still slip from one language to another when we talk. Most of my friends as a boy were sons of Americans living in Mexico. I went to high school in my mother's home town, which is a religious community, and enjoyed it greatly. I tried three different universities looking for a career, and dropped out of all three. I was particularly unhappy at the famous Wharton School of Business and Finance, at the U. of Pa.

After three strikes I was out and decided, at the ripe old age of 20, that I better get to work and stop wasting money. So, I got a job from my father. Two years earlier, he had set up a small company manufacturing radios and I got the job of manager. So I started at the top and did what I could to stay there! Well, fortunately we had a bright man as engineer, he was a Mexican who had been interested in electronics since he was boy. One day, this man asked me, "Mr. Salinas (no employee of mine has ever called me by my first name) why don't we manufacture TV sets?" I said, "Are you out of your mind? That's a terribly complicated technology; we can hardly make good radios…" But he insisted, "No, we can do it; it's not such a big problem." So I said, "Well, build a sample; if you can build a TV set, I'll give you a new car…"

So we got into TV business, and that saved that tiny company. If we had not done that, in not more than two years we would have gone broke. I didn't realize this until many years later. In 1954 I married; my wife and I fell in love at first sight, she was 15 and I was 18. The very best decision I ever made in my life!

Elektra couldn't sell our sets by selling to retailers – there were a dozen manufacturers offering retailers their goods, with well-known brands; our brand was unknown. So, we went to direct sales.

Once we were in direct sales, we added other household goods to the stuff our salesmen could offer the public. Our salesmen were heroic, they knocked on doors from morning till night, and got us our orders.

In 1959, I began to set up our stores, where salesmen could take their customers to view the merchandise. So that's how we got into retailing. We sold on terms – credit up to 24 months. How to sell on credit – and collect! – was something learned from my father, who learned it from his father. That's what we are still doing today, with about 1,000 stores.

Daily Bell: How big did Elektra get – and was it your biggest achievement in business?

Hugo Salinas Price: Elektra has gotten rather large – stores in Mexico, Guatemala, Honduras, Salvador, Panama, Peru, Brazil and Argentina. (Argentina is the pits, let me tell you.) Elektra owns a bank, which has a very large deposit base among the same people who are its customers. Very solid bank, I am pleased to say. Our Systems department is vast – one of the largest in Latin America. I started up our Systems in 1968, on a ten-year plan to get the company wholly computerized. This finally happened in 1983. We are totally up-to-date in this technology.

Well, my biggest achievement in business happened in 1987, when I was 55. I didn't know it was that, at the time. What happened was that – I got myself out of the way. Elektra had 59 stores, no debt, was running just fine; my eldest son, who was 32, had been working at Elektra for the past seven years, and he knew everything there was to know about it and was much more active and energetic than I; so one fine day, I just up and resigned, to everyone's great surprise. Cancelled all Powers of Attorney, Bank signatures, the works. Son Richard took over that day and – that was the best business decision I ever made!

Daily Bell: Is it easy to build a business in Mexico? Why did you decide to retire from it?

Hugo Salinas Price: Maybe it's hard, maybe it's easy. For those who have the knack, it may be easy. I don't have that knack. Let me tell you I see a family that sells tasty food out of a pick-up truck at around 11 a.m. weekdays; they set up business outside of the building where I have my office. That family pays zero taxes and is raking in money every day, customers galore. A lot of Mexico lives this way, under the taxman's radar, Praise God!

Now why did I decide to retire? I am not really a businessman. I got a job and worked at it "in my fashion" – never got a degree. I enjoyed my work very much, designing radios and TV sets and "Combos", and opening stores. Actually I am more of a thinker than a man of business. I have very few friends. Don't play golf. I have a large library, I like to collect books. I saw that Richard had much more push than I did, that he knew exactly what was going on in the business and more enthusiasm than I about running the business. So, I just handed over the reins. I have never missed not being No. 1. And I never will. It appears that very, very few men are willing to give up being No. 1.

Daily Bell: Does Mexico have a large middle class? If not, why not?

Hugo Salinas Price: No, I guess I would have to say we do not have a large middle class. I am worried that our middle class may begin to contract in numbers, given the world situation of excessive debt everywhere.

Why is our middle class in danger of contracting? First of all, I have to express my opinion that the US middle class that prospered so much after WW II was to a large extent based on an expansion of credit which took place in the US after WW II and up to 2007. So, as that expansion appears to be over, you may see an unpleasant phenomenon take place – people who thought they were in the middle class, reduced to poverty. Present US policies are headed toward that outcome.

The problem for Mexico has been that, as in all countries everywhere, its governments have attempted to stay in power by spending money they don't have in order to get the votes. So this spending hits the value of our money and cancels the savings of those who would make up the middle class. This policy hits us harder than Americans, because our money is not welcome outside of our borders, unlike Americans whose Fed can print up money and allow Americans to export it to buy a lot of nice things all over the world.

Daily Bell: Is Mexico a bifurcated state between upper class and the poor? [If so] why is it?

Hugo Salinas Price: I think that a "bifurcation" – in other words, a division into two – is one of the objectives of Communist agitation: to promote "class consciousness" through envy, mainly. This way of advancing in politics has been going on for centuries. Julius Caesar used it and it worked for him – and he was no Communist.

I can truly say that I do not feel we are in a "bifurcated state" – to promote this feeling is the policy of Chavez in Venezuela, as it has been the policy of Castro in Cuba. My opinion is that there are always and everywhere, rich and poor, but this only becomes a problem when a politician or a political party wants to create the problem for their own advancement. Perhaps we shall face that problem further on – as you well may, yourselves.

Daily Bell: How bad is the drug war in Mexico? Do you think drugs should be made legal?

Hugo Salinas Price: The drug war is mainly between those who are in the drug dealing business and are fighting over territory. But this war also breeds criminals who take up other ways of getting money, by assaulting peaceable citizens. A US President once told a Mexican President: "Mexico is the spring-board for drugs into the US." To which our President at once replied: "If we are the spring-board, you are the swimming pool."

Legalization of drugs would greatly diminish the problem of outlaw drug lords in Mexico – but I mean, legalization in the US. We have a drug war, because drugs are illegal in the US and thus fetch a very high price. Legalize the business in the US and the price of drugs will come down to the price of corn. Mexicans will go back to raising vegetables. Remember, it was Prohibition that made Al Capone rich.

Daily Bell: Is the drug war Mexico's fault, America's fault or both? Is Mexico a failed state?

Hugo Salinas Price: We had marihuana in Mexico when I was a boy. Only a few people indulged in it. Nobody cared if they did. Cocaine was in use in the US in the 30's – Cole Porter wrote it into one of his songs: "I Get a Kick Out of You".

Personally, I blame the artificiality of life in our times – caused by funny money, which distorts all aspects of human life – for the hunger that people feel for drugs, to forget their insecurity.

Mexico a failed state? Not yet, by any means! The US may be a failed state long before Mexico falls into such a condition. If we can monetize a silver coin – and believe me, it is quite possible we shall be able to do this – can a State which has silver money be called a "failed State"? Note well: our politicians are far, far less corrupt than yours! Ron Paul, a noble exception among US politicians.

Daily Bell: Would a more stable currency help Mexico?

Hugo Salinas Price: Undoubtedly. But all currencies in the world are essentially unstable since they are all fiat currencies. There can be true stability only under a gold standard.

Daily Bell: What is your plan for the silver Mexican dollar? What is it called?

Hugo Salinas Price: My plan is to have the Mexican silver ounce monetized, i.e., turned into ready money. It is called the "Libertad". This coin would come into circulation in parallel with paper and digital bank money.

People would then have the option of obtaining this coin for their savings – on which no interest would be paid; unlike deposits in banks on which the banks pay interest, people would save these coins even though they pay no interest. This is as it should be: there is no reason for people to expect interest on their savings, if what they are saving is worth saving.

Policy all over the world today, is to promote consumption. This is total nonsense! Savings must come before, long before consuming.

Families who have savings are happy, satisfied people. They are secure in the knowledge that they have solid savings for emergencies and for their retirement. This makes for a happy nation. And that should be the object of politics.

Daily Bell: Will your plan come to fruition in the near future? Does it have much support?

Hugo Salinas Price: I think there is a good chance it will come to fruition in the near future. We were almost there, late last year. The terrible condition of the world, in monetary terms, is a plus for the silver coin. I have a book out just recently, where I mention all the warnings I made before the present chaos, announcing the coming disaster. The Mexican Congress made a poll of public opinion, last year, and found that 81% of the people want silver money.

We have wide support in the Congress, both Houses. Just yesterday I had a very heartening meeting with one of the leaders, he is all for the measure. He is President of the Mexican College of Economists and influential. I have met with energetic women in the Congress who are all for silver. (Silver is a tradition in Mexico, not yet forgotten.) Yes, there is lots of support. The main opponents are those arrogant individuals who have Post Graduate degrees in Universities such as Stanford, Princeton, Yale, Harvard, etc. who think that what they learned in the US is Gospel Truth. Their minds are closed. Not so the majority of our Congressmen and women, who still enjoy common sense.

Daily Bell: Why did you decide to devote your life to this cause?

Hugo Salinas Price: When I was a boy, I had an excellent man as teacher. He was an Englishman born in the Victorian era. He made us memorize poetry every week. Do you remember this:

"Tell me not in mournful numbers

Life is but an empty dream.

For the soul is dead that slumbers

And things are not what they seem.

"Life is real, life is earnest

And the grave is not its goal.

Dust thou art, to dust returnest

Was not spoken of the Soul" …

"Let us then be up and doing,

With a heart for any Fate.

Still achieving, still pursuing,

Learn to labor and to wait."

Daily Bell: A Psalm of Life by the great poet Henry Wadsworth Longfellow. You are obviously a literary person, as your many articles illustrate. Are you a critic of Mexico as it is?

Hugo Salinas Price: No, I don't think I am a critic of Mexico as it is. Why write about our defects when we are all conscious of them? What I attempt to do is to inspire our people to rise to what they can and should do, and specifically, to inspire them to the greatest possible thing they can do: monetize a silver coin.

Daily Bell: What does Mexico have to do to become a successful state in your opinion? Is America the problem?

Hugo Salinas Price: I wouldn't say that Mexico is an "Unsuccessful State" at all. It has problems which are common to the whole world and which mainly arise from the world's having abandoned real money by stages, beginning in 1909, or 1873 if you want to go back that far, when the US government decreed that the Treasury would no longer continue to accept all the silver offered to it and return it minted into dollars.

I must admit that the US has forfeited its leadership in the world, over which it had such mighty power after WW II, by unwise behavior in the sphere of banking and money. You have an oligarchy in power, actually running the US Government behind the scenes, and they want to retain their power at all costs, even sacrificing the American People to their ends. Together with their brothers in the UK, they are the prime obstacle to a reform and renewal of Finance and Money, to put the world on a path to sustainable prosperity. I believe they have put a rope around their own necks due to their obstination and avarice. The rope is closing in on them – note the rising gold price.

A strong state is a generous state. As the US has become weaker and troubled, it has become easier for people to take out their frustrations on minorities. Thus the illegal immigrants are in for it. The politicians approve of this – it distracts people from thinking about the true causes of their troubles. Not that I blame Arizona for the legislation it is putting into place regarding illegal immigrants. This measure has provoked wrath in Mexico, but the fact is, Arizona is clearly within its rights.

Daily Bell: Is America becoming a failed state?

Hugo Salinas- Price: I don't think so, not yet. But popular discontent may cause a lot of grief in the US. Americans are not used to hardship.

Daily Bell: Are you an Austrian free-market economist?

Hugo Salinas Price: I am an economist without a degree. If I had a degree in economics, I would probably not be an economist. Yes, I consider myself an Austrian economist – but a Neo-Austrian economist. You see, Professor Antal E. Fekete of Budapest, has improved some points of the Austrian theory as left to us by the eminent Ludwig von Mises and Murray Rothbard. He is the founder of a Neo-Austrian School of Economics. Those who have accorded Mises and Rothbard iconic status, don't think there can be any improvement upon their theories. I disagree and I think that Mises, a fine gentleman of my acquaintance when I was young, was great enough to accept well-founded observations which improved upon his basic ideas, without discrediting their underlying value.

Daily Bell: Are free-market economics having an impact in Mexico?

Hugo Salinas Price: Yes, but the impact has not been favorable. Because "free-market economics" was thought up when gold was the only money that existed. Economists of that time could not imagine a world without true money such as we have today!

It turned out that a free market without the gold standard caused the de-industrialization of the US, Britain and Europe – and Mexico, too.

Deindustrialization causes unemployment, of course. Since the deindustrialization occurred while we were trying out "free market economics", the deindustrialization has been blamed on "Free Market Economics", when the real cause was going off the Gold Standard. Very, very few anywhere, see the relationship. I have written briefly about this, in my article, "Gold the Protector and Creator of Jobs."

You see, if we had the gold standard, Americans and Mexicans could simply not buy from countries that did not buy from the US and Mexico in return; that being the case, if the gold standard were reinstated jobs would sprout like mushrooms in a matter of months. Protectionism is only a Band-Aid.

Daily Bell: Where does Mexico go from here?

Hugo Salinas Price: There is going to be terrible turmoil in the world. No one can know what is in store.

Daily Bell: Where do you go from here?

Hugo Salinas Price: This is my last decade! From here, the grave.

Daily Bell: Are you optimistic about Mexico's economy?

Hugo Salinas Price: Not too optimistic – unless we monetize the silver coin. I think it will be a seed from which a multitude of good things will grow, beginning with an awakening of a spirit of confidence and pride in our country.

Daily Bell: Are you optimistic about the West's economy?

Hugo Salinas Price: Without the gold standard, we are at a dead end. A very dangerous place to be.

Daily Bell: Is America headed for a depression or hyperinflation? How about the EU?

Hugo Salinas Price: I think the US is already in a Depression, but the Media are keeping the news from the people. If Bernanke's creation of massive amounts of money ever gains traction by the money filtering down to the people, then inflation will take hold, and Bernanke will not be able to stop it, try as he may. The genie will be out of the bottle!

Europe is in for a bunch of trouble. I do have a suspicion that the EU was deliberately attacked by US Finance. Certainly, Europe dug its own grave with their version of funny money, although they kept up appearances pretty well until given a strong push by the rating agencies. Perhaps the European Monetary Union will fall apart and the euro may disappear as things unravel.

Daily Bell: Will the EU and the euro survive?

Hugo Salinas Price: The euro is a fiat money construct and is destined to fail eventually. The EU was a good idea, but based upon sand. I remember that von Mises wrote that the Austrian Empire, which was a collection of nations with different languages, religions and customs, was held together by the gold coin of the Empire. When that went, the Empire was doomed. I suspect that unless the EU wakes up and initiates a move to a European gold standard, they too are doomed. The buying of gold in Europe is a signal that instead of being fought or ignored, it should form a part of planning for the future of Europe.

Daily Bell: What's the biggest problem in the world economically today?

Hugo Salinas Price: Without a doubt, the enormous "structural problems" which the economists talk about – imbalances of trade, where some countries export lots of stuff and other countries buy quantities of that stuff but have nothing, or little, to sell to the exporting countries – this problem has caused China for instance, to accumulate enormous "reserves" of dollars and euros, while the US and the West in general have lost their industries. This is the main problem in the world today and it cannot be remedied without the gold standard.

Only through the gold standard can the world achieve peace and harmony in economic relationships. Only the gold standard can prevent a huge country like China, from devastating the industries of the "developed world".

Daily Bell: Is that the biggest problem in South America and Central America too?

Hugo Salinas Price: I certainly do think it is the biggest problem today. However, I wouldn't go so far as to say it's the only problem. People have different sets of values, you know. Not everyone everywhere wants to live in a suburban home with two cars, grass in the front yard, two kids that are going to go to college, etc. etc. Strange as it may seem, some people in this world – and they are not a few – prefer to live simple lives, working only when they have to and perhaps as little as possible. "Work" is not such a great thing everywhere. Some people like to be what we call, lazy. They like to take a nap in a hammock after lunch.

So the idea of a world-wide middle class with a similar standard of living must be an illusion founded on misconceptions about people. There is great deal of harm done by "Improvers", who are always thinking of ways to improve upon what people actually want if they are let alone.

Give them sound money, and let each work out his destiny, I say. A couple of years ago, a poll was taken to find out who are the happiest people in the world. Guess what? Mexico was Numero Uno!

Daily Bell: Any English books or articles you have written that you recommend?

Hugo Salinas Price: I have not written any book in English – the readers I write for are Mexicans and I really have no business talking about the rest of the world, including the US. If I translate some of my articles into English, it is because I feel a few people may be interested in what is, after all, a unique project with no similarity to anything being proposed in the rest of the world.

You can find my articles in English at my website, www.plata.com.mx. Thank you so much, for taking an interest in my opinions!

Daily Bell: Thank you.

After Thoughts

Hugo Salinas Price comes across as a thoughtful and gracious soul – someone who truly has the good of his country in mind in many ways. His is certainly a life well-lived. He has built a national Mexican company from the bottom up, provided for his family and then spent his mature years engaged in a great struggle to introduce sound money into the economy of his native land. In fact, given the sensibleness of his endeavor (which grows closer to success in our opinion every year) you would think that his campaign to create a legal and circulating silver dollar in Mexico would already have borne fruit.

Given the shape of the Mexican economy and of paper money in general, Hugo Salinas Price's monetary solution makes sense. Silver is the money of the people, just as gold has traditionally been the money of bankers and the wealthy. Silver has traded in a ratio with gold for millennia, and thus bi-metallism has been the monetary standard of choice for many cultures and countries. Historically, this is provable and seems reasonable to us here at the Bell, but such is the decrepitude of modern understanding of money that the Internet is assaulted a thousand times a day with elaborate monetary plans featuring all kinds of money stuff and strategies.

Essentially, money over the millennia has proven to have four characteristics:

(1) durability (value),

(2) divisibility (malleability),

(3) transportability, and

(4) noncounterfeitability (serviceability)

As free-market economist Murray Rothbard has famously pointed out, money evolved from a competition featuring different kinds of money stuff. Gold and silver (and to a lesser extent copper), precious metals often found together, were not appointed by a committee or king. The market itself determined the choice of money historically – and in fact money has manifested itself in other forms as well – beads, salt, sugar even large, carved rocks. But ultimately and over and over, the market itself has chosen gold and silver as the money of choice.

We have often observed in these modest pages that a gold (or silver) backed currency would prove most attractive if some country were to step forward and issue it. In fact, were Iceland or Greece or some other nation currently struggling with the ruinous ramifications of mercantilist fiat money to simply back the national currency with gold, many difficulties would be reduced or eliminated. (Of course, a country would need to find the gold to begin with, but that is a separate question.)

In the best of all worlds, of course, a country and a ruling class will not mandate the composition of money nor control its circulation. The market itself would decide on the composition of money, the kinds of banking that was demanded and even the level of fractionality with which money would circulate, if any. In fact, money really is a pretty simple issue once the market itself is re-involved. In a laissez-faire money economy, interest rates would fluctuate regionally, no doubt, the supply of money would vary from region to region and even inflation or deflation rates would be variable.

What we have today, of course, is much different. The powers-that-be have taken the various paraphernalia of money – its banks, bills and issuance – and gradually hollowed them out, offering instead an imitation that provides a historical representation but none of the control or value. Even government mints, which used to stamp gold and silver, today work overtime stamping what in the past would have been considered slugs – any kind of non-precious metals.

From our point of view, it is only a matter of time until some nation, some group or even some region re-introduces currency backed by precious metals – or even, as Hugo Salinas Price hopes, circulates the metal itself as a national money. If he has his way, Mexico will be the first major modern country to do this. We wish him well in this important quest. When Mexico does begin to circulate its Libertad, others countries will soon follow. The benefits will be clear and fairly immediate.


Received May 25, 2010

Dear Editors of The Daily Bell

My heartfelt thanks to all who had kind words to say about myself and this plan to monetize a 1 oz. silver coin in Mexico. Thank you so much, Daily Bell, for having spread the news about silver in Mexico to so many people.

Your support and the support of so many of your readers, is powerful motivation to continue in this effort – while so many Mexicans approve of and hope for the realization of the silver project. For those who have questions, I have answers which they will find at my site, www.plata.com.mx. And for those who express doubts – more verse –

"If you can trust yourself when all men doubt you, yet make allowance for their doubting, too…." IF, by Kipling.

My gratitude to all, for your very kind expressions of support.



We thank Hugo Salinas Price on behalf of all those who have read or responded to his interview. We feel most fortunate to have conducted it and urge all who wish to find out more about the Libertad or his thoughts on the subject to visit his website, plata.com.mx

Posted in Exclusive Interviews