Show 0 national topics interpreted by william breckan washington the structure 11 which hl ch we vie know as our currency hns has b been undergoing a epochal change hange in the last few that ls Is in n currency epochal and it seems entirely likely that history will so 0 o record IL it americas departure from the gold standard thit that was ordered by resident president noose elt on april 21 undoubtedly will stand as one of the milestones of this age and it Is a thing constituting a new experience to all excepting a few of the nations millions they and they alone can tell of their own knowledge what happened in the greenback days after the civil war in addition to the action of the president in ordering the count rys currency off of its basis of gold other and equally important phases of the currency changes change have been accomplished in the time which we may later recall as the crisis of 1133 1933 we h liae ne seen the must most extraordinary power ever accorded to a president of the united states delegated by congress to mr air roosevelt so that he can exercise the unlimited powers of a dictator over our currency within a specified range ile he said he considered those powers essential and congress gave them to him without question thus in the space of a few short weeks our nation has FOOD feen its currency structure lifted bodily from the foundation upon which it has rested more than half a century and rebuilt into a fabric of flexibility equaled only by the possible changes in the coat of the chameleon within the range of the limits fixed the resident president hits has been empowered actually to prescribe the value of the money that flint you and I 1 use 0 0 but let us recount the events and understand what has happened anil and see what nhat they portend it that be b possible through a knowledge of the factors embraced since the banking holiday of march the money structure of the country has been imperiled the situation has been watched by ill all nations many of whom nhom hae baie been nerous nerious and frequent signs have appeared that the enormous gold stock la in the united states was art not regarded throughout the world as able to meet the demands should all foreigners forel ners having money in this country decide to withdraw it the president the treasury and the federal reserve board read those signs as dangerous they saw too the tendency of american commodity and security values value to slide further and further down A choice had to be made the president made it by one simple order the president laid an embargo on exports of gold in effect he said the united states government will no longer permit anybody to pay their bills abroad in gold because that Is what happens when no gold exports are allowed that simple order had a broader effect the result of it was th that atthe the dollar in american money measured as it must be alongside of foreign currencies was worth less than when those thoe abroad entitled to receive funds were able to get the gold ir if they wanted it one may consider that the effect Is psychological or however you may describe it yet the end Is the same the law of supply and demand encompasses tile the currency like it dues every other material thing so the president pre decided to allow the dollar to shift for itself in the foreign exchange field dollar down in reaching that con prices up cl plu inn lie he elected to provide protection against further declines temporarily pora rily at least in the prices of farm products of commodities such as iron and the natural mineral resources and of corporation stocks and bonds those prices automatically increased as the value of the dollar measured in exchange of other currencies declined to state it in another fashion nhen ben the president took the currency off the gold standard immediately there was the possibility of a limitless amount of currency being issued it if the currency were on the gold standard itan dard each paper dollar was ins supported by a reserve of 40 per cent in gold and the amount of currency that could be issued issue therefore never could be more than two and a half hair times the amount of gold held in the treasury and federal reserve banks that amount Is 19 in excess of but the tact fact that there is it a topmost limit beyond which currency could not be issued because there Is nut not gold to support it is held beld by the sound money advocates to establish a unit of value of currency which Is not susceptible cep tible of fluctuation that Is the reason they urge retention of the gold standard departure from the gold standard then was a matter of grave concern to them for they bellee the dollars they own will be worth less measured in the commodities the dollars will buy and by the value at which they will be taken in trading rading t with foreign countries on the other hand there were many who were overjoyed when the president withdrew support buri port for the lie do doerr lir which Is the tench way of salu ins that gold would not be paid out in settlement of foreign bills owed by americans it Is mhd contention of this school of thought that the dollar has fluctuated and that the commodities constitute the thing of fixed units of value consequently when sir air roose belts action caused an increase Inere aie in commodity prices this group argued the dollar was and had been too ton dear and ought to be made cheaper similarly they asserted there had been a shortage of currency throughout the depression and that there could never be sufficient currency it if the gold basis were continued this was so they claimed because there was not enough gold in the world to permit retention of a gold backing for each dollar of currency 0 the strength of those favoring a greater amount of currency was increasing numerically free coinage through the last of silver sewal several years rears ca con there were more of them in congress tills oi Is attested by a vote which the 5 senate cuate took on an amendment to permit free and unlimited coinage of silver the amendment was defeated it Is true but the vote showed 33 senators in favor of it compared with vi ith 47 nays days that Is the largest vote polled on the question in more lhnn 30 years in the meantime the president was getting ready for confer conferences eDeeS with the heads of eleven foreign governments on economic and financial questions most alost of those nations were using exactly the same basis of currency as ours became after support for the dollar was withdrawn ile he entered those conferences then on even terms insofar as currency was n m berned rut put the departure from the gold standard caused a need for new legislation nence hence the president analyzed what nhat was needed and asked congress to give him the authority to employ v whatever was needed he appeased the demands of the by I 1 telling elling them to put into the legislation authority for him to use any or all of their several schemes in hie discretion there Is nothing mandatory about them lie ile can use the powers or not as he be chooses or as the pressure of public opinion makes a given course of action seem advisable under the terms of the legislation negotiations are permitted between the treasury and the federal federa I 1 reserve board and the federal reserve banks bank Ilie hereby reby the reserve hanks banks would buy worth of government bonds bonde from ate 0 ow ners the holders would be given cash by the reserve institutions in place of their securities thus banks holding government bonds would he given cash instead of interest bearing bonds and the theory Is that since the cash would n not of bring them a return they would seek to make loans that would provide interest if it works that way it means that the hanks banks would seek to encourage use of money in business enterprises A condition known Rs as an anease easy money market would obtain it Is to be remembered however lerer that the federal reserve banks are q quasi u a a 1 p private r I 1 v a I 1 e As greenbacks Green backs hanks banks it Is were issued ble be for them to refuse I 1 to buy the government bonds in the manner suggested so the law provides that flint tile the treasury may buy in government bonds and pay for them in united states notes just as were issued in the days of the greenbacks green backs after the civil war this would pour lust just of new money into circulation it will have either gold or silver liver hack back of it hut but it remains to be determined which and in what amount so it Is an inflationary provision in the case of purchase by the fell fed era eral reserve banks of the bonds in question the law provides that the federal reserve banks will hold them for a stated period but it if the new money was issued by the treasury to pay the bonds a sinking fund Is s set up to retire the notes it Is provided that fit at least 4 per cent of the outstanding united states notes would he be retired each year through an appropriation pria tion atlon of funds by congress for that purpose our Dur pose another provision of the law allows the president to change the value of the gold dollar under the previous law it was required that flint a gold dollar should contain grains of fine finegold gold or pure gold as we know it the new law however gives the president power to reduce that gold content by as nuch as 50 per cent the third major section of the law allows the president to accept silver from foreign governments in payment of their war debts to tile the united states lie ile Is limited in tills this respect however and may not accept more than in any one year or about one third of the annual pay ments in interest and principal ile lie cannot receive it it if the price Is above SO 50 cents an ounce present quotations are less than that the silver accepted in of war debts Is to be tho basis for the issuing of silver certify cates but there Is no payment t due on these debts until mid june and so it if any of the foreign nations are granted the privilege by the president there can be no currency issued against tile the funds until after june 15 0 1933 W western intern N paper union |