

How Franklin Roosevelt Secretly Ended the Gold Standard - nh
http://www.bloomberg.com/news/2013-03-21/how-franklin-roosevelt-secretly-ended-the-gold-standard.html

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jackfoxy
Upvoted the OP in order to call attention to what I consider primarily a
propaganda piece by the Bloomberg new service. There was nothing secret about
the executive order <http://en.wikipedia.org/wiki/Executive_Order_6102> ,
except possibly that even the Wikipedia article does not explain in what
manner Congress granted the President (actually the Secretary of the Treasury)
such extraordinary power to confiscate property. That FDR used the Brer Rabbit
strategy to call attention to his ending the gold standard only shows he was a
skilled politician.

> _The recovery from the Great Depression began instantly with Roosevelt’s
> policy shift..._

I think most objective measures do not show recovery from the Great Depression
until the ramp-up of arms production prior to American entry in WWII.

~~~
betterunix
"extraordinary power to confiscate property"

Confiscate property? Gold coins were to be traded for $20.67 per ounce, not
simply taken. No confiscation occurred; the nation simply ended the practice
of using gold currency by taking it out of circulation.

~~~
dreamdu5t
Forcing someone to sell you something isn't trade, it's theft. If I steal your
TV, then give you $5, I still stole your TV.

Confiscating people's property is the act of a despot.

~~~
rayiner
Compensated compensation is explicitly sanctioned in the Constitution.

~~~
bmmayer1
It explicitly mentions _just compensation_. A sub-market price isn't just.

~~~
rayiner
It was traded in at the fixed conversion rate between gold and U.S. dollars.

~~~
notdrunkatall
A rate which was fixed by the buyer, with no protestation allowed by the
seller.

~~~
bmmayer1
Hear hear

------
bitcartel
The article omits an important fact:

The public's gold was exchanged at $20.67 per troy ounce, but months later,
the official price of gold was raised to $35.00 per troy ounce. Essentially,
the public were not properly compensated for turning in their gold.

 _"In 1934, the government price of gold was increased to $35 per ounce,
effectively increasing the gold on the Federal Reserve's balance sheets by 69
percent. This increase in assets allowed the Federal Reserve to further
inflate the money supply."_ [1]

[1] [http://www.history.com/this-day-in-history/fdr-takes-
united-...](http://www.history.com/this-day-in-history/fdr-takes-united-
states-off-gold-standard)

EDIT: The article also fails to mention that _"violation of the order was
punishable by fine up to $10,000 or up to ten years in prison, or both."_
<http://en.wikipedia.org/wiki/Executive_Order_6102>

~~~
shardling
> Essentially, the public were not properly compensated for turning in their
> gold.

I known pretty much nothing about economics or the history here, but I don't
see how this follows. The value of the _dollar_ (in terms of what it would buy
_aside_ from gold) didn't suddenly shift. Are you saying that the shift in the
worth of gold would have happened even if the government hadn't moved off the
gold standard? If so, how is it that the government "set" it? And if not, then
how did folk lose anything?

------
protomyth
"The recovery from the Great Depression began instantly with Roosevelt’s
policy shift, in March 1933"

uhm... no.... more like 1946 - if the recovery had happened before WWII then
we wouldn't have had to ration and do all the massaging to get the economy up
to war production.

~~~
mpyne
Uh, the economy was producing for war in many areas by 1938. Those Naval
battleships at Pearl Harbor didn't simply build themselves, the Army didn't
create millions of rifles out of thin air in 1941, etc.

Rationing was required because the government was directing available
resources to war production, _not_ because the economy was shit. People could
afford food just fine throughout much of WWII, if only the shops had been
allowed to sell it to them.

~~~
protomyth
The rationing and price controls wouldn't have been needed if we hadn't been
in such a hole at the start of the war. We did produce, but our national
production in 1947 was actually 17% higher than in 1941. That is a pretty sad
considering the amount of government war spending.

------
dreamdu5t
The Roosevelt administration also sued farmers who attempted to grow food to
feed themselves, in his insane attempts to control market prices.

 _Filburn was ordered to destroy his crops and pay a fine, even though he was
producing the excess wheat for his own use and had no intention of selling
it._

<http://en.wikipedia.org/wiki/Wickard_v_Filburn>

~~~
hudibras
The Roosevelt administration sued farmers who attempted to grow food in
violation of a law passed by Congress to regulate interstate commerce, in this
case to stabilize crop prices.

The Supreme Court ruled unanimously in _Wickard v. Filburn_ that this was
constitutional.

~~~
uvdiv
The interesting part is how they found "interstate commerce" in chicken feed
which wasn't actually sold and didn't actually leave the state (didn't leave
the farm even):

 _The Court decided that Filburn's wheat growing activities reduced the amount
of wheat he would buy for chicken feed on the open market, and because wheat
was traded nationally, Filburn's production of more wheat than he was allotted
was affecting interstate commerce. Thus, Filburn's production could be
regulated by the federal government._

By this reasoning, even free open-source software is interstate commerce, if
it has a commercial competitor. Imagine a federal law restricting FOSS, as
part of an economic stimulus for the software industry.

(edit: My FOSS analogy is actually too weak! You wouldn't need to distribute
anything. It'd be enough to write your own code, for your personal use, if
this prevents you from purchasing some commercial product).

~~~
hudibras
It's a tricky discussion in this thread because we're mixing together the
questions of "Is this allowed (constitutional)?" and "Is this a good idea?" I
believe that in both the Filburn case and in your hypothetical FOSS example,
that yes, Congress has the power to regulate them.

But that doesn't mean it's a good idea. At some point, the elected
representatives in Congress have to make a law to regulate the interstate
commerce. In Filburn's case, a majority of the democratically-elected
officials in Congress decided that price stabilization of crops was important
enough to restrict growing "private stashes" that weren't going to be sold. If
supporters of Filburn didn't agree with that, then they would have to elect
new representatives to do overturn the law. (Which by the way, will probably
finally happen sometime in the next decade.) But there is zero support in
Congress for restricting FOSS, even when it competes with commercial software.
The benefits of FOSS to all Americans are so obvious that it won't happen.

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jtc331
This is one of the barest forms of propaganda you'll read in a while.

------
richcollins
_This way, he could bring commodity prices back up and maintain them at a
level that would ensure producers a higher standard of living_

A high standard of living is precluded by high commodity prices.

~~~
hga
Case in point: during the Depression the Agriculture Department estimated that
25% of the population was malnourished, something the military confirmed to
their satisfaction during the draft, which later was an input into the Federal
school lunch program.

------
drucken
The article fails to mention that though the US came off the (fixed) gold
standard, convertability of the US$ to gold was retained as part of the
Bretton-Woods system all the way through WWII, through the post-war "Golden
Age of Capitalism" period uptil 15 August 1971 when Nixon unilaterally turned
the US dollar into a fiat currency.

------
vijayboyapati
"The recovery from the Great Depression began instantly with Roosevelt’s
policy shift, in March 1933. He had changed expectations, and begun an
administration that would use money as a tool to bring widespread prosperity
-- rather than serve as a tool of moneyed interests."

This is pure economic propaganda. Anyone with a whit of knowledge of the
period knows that the depression lasted through the entire 30s, with
unemployment remaining very high for the whole decade (it was 19% in 1938)

------
davidw
Gold buggery articles are like one of the four horsemen of the web site
apocalypse. It's one of those quasi-religious subjects that only creates
flames.

------
mark_l_watson
That was an OK article but I think the best current reference on the gold
standard is "Currency Wars: The Making of the Next Global Crisis" by James
Richards. He doesn't so much try to predict the future. Instead he provides a
historical perspective and gives the reader the tools to understand events as
they happen.

