The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1933-05-05
National Topics Interpreted

EpOch0t Change change In the iast
in Currency few weeks On. ,na' =, Is
seems entirely likely that history Will
SO record it. Americas departure
from the "gold standard" that was or
dered by President Roosevelt on April
p undoubtedly will stand as one OF
the milestones of this age, and 1t is
a thing constituting a new experience
to all excepting few Of the nations
millions. They, and they alone, can
tell of their own knowledge what hap
pened in the 'greenback days" after
the Civil war.
In addition to the action of the
President in ordering the country's
currency off of its basis of gold, other
and equally important phases Of the
currency changes have been accom-
plished in the time which we may
later recall as the crisis of 1888. We
have seen the most extraordinary pow
er ever accorded to President of the
United States delegated by congress to
Mr.. Roosevelt so that he can exercise
the unlimited powers Of dictator over
our currency within specified range.
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 seen its cur
rency structure lifted bodily from the
foundation upon which it has rested
more than half century and rebuilt
into fabric of flexibility equaled only
by the possible changes in the coat Of
the chameleon. Within the range Of
the limits fixed, the President has been
empowered actually to prescribe the
value of the money that you and l use.
But let us recount the events and
understand what has happened, and
see what they portend. if that be pos
sible, through a knowledge of the fac
tors embraced. Since the banking
holiday of March, the money structure
of the country has been imperiled;
the situation has been watched by all
udIlOfS, Ilduy VI WhOh nave DCSh
nervous, and frequent signs have ap-
peared that the enormous gold stock
in the United States was not regarded
throughout the world as able to meet
the demands should all foreigners hav-
ing money in this country decide to
withdraw it. The President, the treas
ury and the Federal Reserve board
read those signs as dangerous. They
saw, too, the tendency of American
commodity and security values 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 any
body 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 1t was that the dollar
in American money. measured as 1t
must be alongside of foreign curren-
cies, was worth less than when those
abroad entitled to receive funds were
able to get the gold if they wanted it.
One may consider that the effect is
psychological or however you may de-
scribe it. yet the end is the same. The
law of supply and demand encom-
passes the currency like it does every
other material thing.
So the President decided to allow
the dollar to shift for itself in the for
eign exchange field.
Dollar DoUn, In reaching that con-
p~;ces In clusion, he elected
to provide protec-
ton against further declines, tenn
porarily 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, de-
clined.
To state it in another fashion, when
the President took the currency off the
gold standard, Immediately there was
the possibility of limitless amount
of currency being issued. If the cur
rency were on the gold Standard, each
paper dollar was supported by a re-
serve of 40 per cent in gold and the
amount of currency that could be issued,
therefore. never could be more than two
and a half times the amount of gold
held in the Treasury and Federal Re-
serve banks. That amount is in ex-
cess of $3.0OOOO0.OOO. OF course the
monetary stock of gold in this coun-
try is approximately S4,33O, 100000 but
only about IS per cent of it is held by
the Treasury and Federal Reserve
banks despite the governments de
mand that all citizens holding gold
shall not hoard it but shall turn it in
to the banks and take currency in
stead.
But the fact that there is a topmost
limit beyond which currency could
not be issued, because there is not
gold to support it, is held by the sound
money advocates to establish a unit
of value of currency which is not sus-
ceptible of fluctuation. That is the
reason they urge retention of the gold
standard. Departure from the gold
standard then was matter of grave
concern to them, for they believe the
dollars they own will be worth less.
measured In the commodities the dol
lars will buy and by the value at
which they will be taken In trading
with foreign countries.
On the other hand, there were many
who were oyerjoyed when the Presi-
dent withdrew support for the dollar.
which is the tenchnical way of saying