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Seventy-five years ago this month Franklin
Delano Roosevelt was inaugurated as the 32nd President of the United States.
Within days after swearing to uphold the U.S. Constitution, through a
Presidential Proclamation he closed the U.S. Mint to gold. Recall that the
Mint had been established by the Constitution to protect the people’s
right to sound money.
Roosevelt had been elected
on a platform of sound money. Barely in office, he reversed himself. He
grabbed the gold of the people, marked up its value, leaving Federal Reserve
notes in the hands of the people that were to lose 95 percent of their value
during subsequent years. They stand poised to lose their remaining value
before long.
That experience left behind a moral trauma
that returns to haunt us 75 years later even if the establishment, the media,
as well as academia, want us to forget the anniversary. They will not
succeed. Roosevelt’s chickens will not
let them. It has taken the chickens 75 years to come home to roost. Come home
they will with a vengeance. The past 75 years were a period of unprecedented
turbulence in the financial markets. Yet never during those 75 years has the
nation faced a graver monetary crisis than it is facing now. The banking
system of the country threatens to seize up. The credit system is facing a
violent collapse.
You will hear a lot of ad hoc explanations of what has
happened, from subprime mortgages to loose Federal
Reserve monetary policy to profligate government fiscal policy. However, one
explanation you will never hear from the estabishment,
from mainstream economics, or from the media. They will never ever mention
the real culprit, the irredeemable dollar.
The tendency of virtually all businessmen,
legislators, jurors, and even pastors to go with the tide is thoroughly
established. Perhaps such men confuse position and power with wisdom or with
competence in fields where they are not competent. As it stands, not one of
our political leaders, judges, not one captain of business is competent in
the field of money. They do not understand that a monetary crisis, such as
the one threatening the irredeemable dollar right now, could totally wipe out
its value. It is abundantly clear that the United States is in a most
serious trouble as it can no longer produce the goods necessary for survival,
nor can it buy them in the world’s markets, in a high degree because of
its use of irredeemable currency. Worse still, in consequence of embracing
irredeemable currency we have unprecedented dishonesty in government. Standards
of dishonesty in government spreads like cancer throughout the nation, as
support is given by unwise men to the use of such currency.
It is difficult to think of an unsound
monetary practice that has not been embraced in some manner since 1933 by our
modern John Laws of finance. The 18th century Scottish adventurer John Law
should have felt thoroughly at home among the latter-day adventurers at the
helm in the U.S. Treasury and the Federal Reserve.
When the U.S. Mint was closed to gold in
March, 1933, by Roosevelt and the country embarked upon the sea of managed
currency, a very large number of individuals and organizations urged a prompt
return to the gold standard (which, believe it or not, included the Federal
Reserve Board, the Federal Advisory Council, 37 members of the faculty of
Columbia University, and 710 members of the American Economic Association, to
mention but a few).
The question arises as to what has become of
those opposing voices in the intervening years. Why, some were silenced
through bribe and blackmail. They were simply corrupted by a political
movement which they found inexpedient to oppose. The upright individuals
among them, on the other hand, were silenced through attrition and death. They
were not allowed to pass on the torch to the next generation. All knowledge
about gold money was systematically purged from university curricula and from
institutes of advanced studies, replaced by a claptrap of pseudo-mathematical
bunk.
Of course, one may expect groups, usually
controlled by expediency, to shift their position with the changing political
tides. But there is no valid defense that can be offered for men who pretend
to be scientists and who adjust their so-called principles of science in
accordance with the changes of political fashions, or invent fraudulent
differential equations purportedly describing the behavior of money in the
hands of the people.
The monetary policies of the advocates of
irredeemable currency have in the main been those of charlatans. Those who
are passing themselves off today as monetary economists either have not
understood the lessons of the past; or have been willing to junk them in the
interest of expediency, for such personal gains as they may expect to realize
for parroting the official propaganda line.
A deep, searing corruption has afflicted
monetary science during the past 75 years, comparable to Lysenkoism in the Soviet Union, now defunct. The only apparent difference
is that opponents of the enfant terrible of
Soviet genetics, Trofim Denisovich Lysenko, were carted off to the Gulag
Archipelago, never to be heard from again. Still, it may take many decades of
painful effort to overcome the damage caused by Lysenkoism, American style,
that has expunged the once world-famous and respected American monetary
science from the map. The well-being of our nation, nay, of the whole world,
has been seriously undermined by this affliction. Whether the scientists who
know the lessons of the past and the prescriptions suggested by evidence accumulated
over centuries can do anything of importance to correct this sad state of
affairs remains to be seen. The reception of the candidacy of Dr. Ron Paul
does not leave us with a great deal of hope in this regard.
In his book Hell Bent for Election (Garden City, N.J., 1935) James P.
Warburg quotes from a campaign speech given by Roosevelt in Butte, Montana,
on September 19, 1932, as a basis for appraising the man who would violate
his pledge on a matter as important as the people’s monetary standard:
“Remember that attitude and method -
the way we do things, not just the way we say things - is nearly always the
measure of one’s sincerity.”
This self-indicting speech was omitted from
the Published Papers and Addresses of
Franklin Delano Roosevelt compiled by Samuel I. Rosenman, as was
another speech given by Roosevelt in Brooklyn.
I quote Warburg:
‘On November 4, 1932, Mr.Roosevelt made
this striking statement:
“One of the most commonly repeated
misrepresentations by Republicans, including the President, has been the
claim that the Democratic position with regard to money has not been made
sufficiently clear. The President is seeing visions of rubber dollars. This
is only a part of his campaign of fear. I am not going to characterize these
statements. I merely present the facts. The Democratic platform specifically
declares: ‘We advocate a sound currency to be preserved at all
hazards.’ That is plain English.”
That statement could only mean, if it meant
anything to the millions of people who voted for Roosevelt,
a gold standard currency. Is there any defender of the irredeemable dollar,
even among those who try to convey the impression that the majority of people
wanted to abandon the gold standard in 1932, who has the moral courage to
refer to these speeches? Roosevelt further
said:
“The businessmen of the country,
battling hard to maintain their financial solvency and integrity, were told
in blunt language by President Hoover in Des Moines, Iowa, how close an
escape the country had had some months ago from going off the gold standard. This,
as had been clearly shown since, was a libel on the credit of the United States…
No adequate answer has been made to the magnificent philippic of Senator
Glass the other night, in which he showed how unsound was this assertion. And
I might add that Senator Glass made a devastating challenge that no
responsible government would have sold to the country securities payable in
gold if it knew that the promise, yes, the covenant embodied in these
securities, was as dubious as the President of the United States claims it
was.”
I quote Warburg:
‘On March 12, 1933 - a week after
Roosevelt had become President - the United States Treasury issued
$800,000,000 of obligations payable “in United
States gold coin of the present standard of
value” - the same covenant above referred to by Roosevelt
a few days before he was elected.
‘Additional securities were issued
shortly thereafter bearing the same covenant.
‘On May 7, 1933, President Roosevelt in
a radio broadcast to the people announced his intention to repudiate this
covenant.
‘And on June 5, 1933, the covenant was
abrogated by Congress.
‘The point is not whether we agree or
disagree with Roosevelt’s judgment or reasoning. The point is that if
he had such a conviction in regard to the gold clauses and intended to act
upon it, it would seem that the people had the right to know about it before
they were asked to vote.’
The U.S. Mint was reopened to gold after the
hiatus of the Civil War and Reconstruction, on January 2, 1879. In celebrating the
event General James A. Garfield stated in an address delivered in Chicago:
“We shall still hear echoes of the old conflict, such as the
‘barbarism and cowardice of gold and silver’ and the
‘virtues of fiat money’. The theories which gave them birth will
linger among us like belated ghosts, but soon will find rest in the political
grave of dead issues…”
Garfield warned that the ‘periodic
craze’ of fiat paper money might sweep over this country from time to
time. The force of the present episode of craze has apparently never before
been experienced by our people. The end of this great disease is not yet in
sight. If past experience provides any worthwhile lessons, then the ultimate
consequences of our failure to understand the nature of this craze promise to
be extremely painful, involving the greatest monetary and economic
devastation the world has ever seen.
Orval W. Adams, one-time president of the
American Bankers Association, in his article Inflation - The Termite of Civilization wrote in 1956:
‘Open the Mint to gold. Gold is a gift
to the world from an all-wise Creator. There is no substitute. There will
never be any. Without gold as a base for national and international exchange,
civilization could not have emerged from its barter period of the Dark Ages. Gold
is the only insurance against ruthless politicians debasing and corrupting
the world’s exchange and money systems of a free people. I repeat, gold
is a blessing from an all-wise Providence to prevent the tragedy that follows
a debased, corrupted and politically managed medium of exchange. The gold
standard is the automatic watchman on the tower of the government of free
men, to guard against the poison of totalitarianism entering the bloodstream
of sound money.’
On many an occasion was the gold standard
gleefully, albeit prematurely, buried. One such occasion was the
’funeral oration’ before the Chamber of Deputies in Nazi-occupied
Paris, delivered by one of the highest-ranking functionaries of the Nazi
party. He declared ’with deep inner satisfaction’ that ’the
gold standard is now as remote from the realities of life as the philosophy
of the French Revolution: Liberty, Fraternity, and Equality of
men…’
When Roosevelt confiscated our people’s
gold and forced them to accept irredeemable bills of credit in exchange, the
purpose was to provide the government with liberty to do as it pleased with
the product of other men’s labor, while depriving people of the liberty
to insulate themselves from government arbitrariness by converting the products
of their labor into gold if they so desired. In doing so Roosevelt opened
wide the door to government tyranny, which has shown itself in wild
government spending, heavy taxation, radically depreciated currency, a huge
national debt, much socialization and a high and increasing degree of
government management of the economy, even in the suspension of civil rights.
Today a lot of people celebrate the advent of
$1000 gold. In their festive mood people are liable to forget an ominous
consequence of this important milestone. It is the fulfillment of
Roosevelt’s design to deprive people of the liberty to shelter the
fruits of their labor from the claws of the government by converting their
property into gold. At $1000 an ounce, not many people can purchase gold to
protect the fruits of their labor against confiscation.
$1000 gold is a milestone - on the road to
hell.
Antal E. Fekete
Professor, Intermountain Institute of
Science and Applied Mathematics
Missoula,
MT 59806, U.S.A.
DISCLAIMER AND CONFLICTS
THE PUBLICATION OF THIS LETTER IS FOR YOUR INFORMATION AND AMUSEMENT ONLY. THE
AUTHOR IS NOT SOLICITING ANY ACTION BASED UPON IT, NOR IS HE SUGGESTING THAT
IT REPRESENTS, UNDER ANY CIRCUMSTANCES, A RECOMMENDATION TO BUY OR SELL ANY
SECURITY. THE CONTENT OF THIS LETTER IS DERIVED FROM INFORMATION AND SOURCES
BELIEVED TO BE RELIABLE, BUT THE AUTHOR MAKES NO REPRESENTATION THAT IT IS
COMPLETE OR ERROR-FREE, AND IT SHOULD NOT BE RELIED UPON AS SUCH. IT IS TO BE
TAKEN AS THE AUTHORS OPINION AS SHAPED BY HIS EXPERIENCE, RATHER THAN A
STATEMENT OF FACTS. THE AUTHOR MAY HAVE INVESTMENT POSITIONS, LONG OR SHORT,
IN ANY SECURITIES MENTIONED, WHICH MAY BE CHANGED AT ANY TIME FOR ANY REASON.
Copyright
© 2002-2008 by Antal E.
Fekete - All rights reserved
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