Franklin Delano Mussolini by Vin Suprynowicz

In answer to my column of April 10, discussing how the giant and inflationary Ponzi schemes of the central government in Washington City drain the value of our savings, one Herman Gordon of Las Vegas wrote in:

"The April 10 commentary of Vin Suprynowicz ... does beg for a little clarification and correction. ... Vin claims that President Roosevelt ‘pretty much invented inflation as we know it today.’ In some murky way, Vin ties Social Security, Medicare and Medicaid with the fact that prices are much higher today than they were during the New Deal. Why doesn’t it occur to him that prices are higher today in every country in the world? Whether they have social security and minimum wages or not, their prices are higher. Unless Vin has a theory or explanation or some kind of evidence that the United States in the Thirties (which did not yet surpass Great Britain as the leading economic government in the world) could cause inflation worldwide, he ought to more careful about throwing around such accusations. What would be the mechanics for causing such world wide inflation – our purchase of gold, our going into debt, our going out of deficits, our establishing social and economic programs like minimum wages or social security way after other countries, our productivity, our lack of productivity, we imported too much, we exported too much, what, what, Mr. Suprynowicz? ...

"If Vin would pay a little more attention to facts and to ordinary research and maybe some common sense, he would be less apt to broadcast opinions based on misinformation and end up suggesting President Roosevelt a Fascist in the column.

"Some Fascist! Whereas all other Fascist rulers would not abide a newspaper (if any weren’t state-run) that was critical of the government, does Vin know that the majority of newspapers in this country supported Roosevelt’s opponents in all four of his elections?

"And why does he associate Roosevelt with Fascism? Because there was something in Mussolini’s program which was similar to something in Roosevelt’s support of the National Recovery Act, and that something is – look out now, everybody – something to do with government regulating business. Of course, that would mean that all industrialized democracies including the post-Rooseveltian U.S. administrations are fascistic."

I have never quite understood why the mass of unread but always self-righteous socialists feel free to call on me to provide them, uncompensated, with the economic and historical education they have failed to obtain for themselves – except, of course, that they ARE socialists, who believe someone else "owes" them anything they want, and without asking them to so much as bother trotting down to their local tax-supported library to look it up.

But let us begin, at least, the first stage of Mr. Gordon’s evidently long-neglected education.

"During his (1932) campaign, Roosevelt pledged 100 percent support of the gold standard, as did the Republicans. But on March 9, 1933, Congress abdicated its responsibility and gave Roosevelt full discretionary powers over money and banking. He didn’t waste time using them.

"On March 11, 1933, he issued an order forbidding banks to make gold payments. On April 5, Roosevelt ordered all citizens to surrender their gold – no person could hold more than $100 in gold coins, except for collector’s coins. He also made it unlawful to export gold for payment abroad, unless done through the Treasury. The penalty for defying Roosevelt was 10 years in prison and a $250,000 fine. (‘The Great Gold Robbery,’ James Bovard.)

"‘It became clear to governments that they could not afford to allow people to own and keep their gold,’ Murray Rothbard explains. ‘Government could never cement its power over a nation’s currency, if the people, when in need, could repudiate the fiat paper and turn to gold for money.’ (What Has Government Done to Our Money? Murray N. Rothbard.)

"On June 5, 1933, Roosevelt signed a resolution he had introduced in Congress, nullifying the gold clause in all government and private contracts. It meant what it said – that no one had the right to demand payment in gold for any debt. (‘The Last Great Bubble – Counterfeiting the Dollar,’ M. A. Nystrom.) The Constitution says that no state shall ‘make any Thing but gold and silver Coin a Tender in Payment of Debts’ – a clear challenge to the president’s actions. When Roosevelt asked Senator Thomas P. Gore from Oklahoma what he thought of the resolution, the blind statesman replied: ‘Why, that’s just plain stealing, isn’t it Mr. President?’ (‘Economics and the Public Welfare, Benjamin M. Anderson, D. Van Nostrand Company, New York, 1949, p. 319.) Roosevelt succeeded in having the Senator unseated in the 1936 elections.

"On Jan. 30, 1934 Roosevelt signed the Gold Reserve Act into law, which transferred title of the Federal Reserve Banks’ deposits of gold to the U.S. Treasury. ... With this act, Roosevelt completed confiscation of the citizens’ gold.

"As James Bovard observes, ‘Citizens had accepted a paper currency based on the government’s pledge to redeem it in gold at $20 per ounce; then, when Roosevelt decided to default on that pledge, he also felt obliged to turn all citizens holding gold into criminals.’ Roosevelt also condemned them as selfish traitors.

"One day later Roosevelt reduced the gold content of the dollar by 41 percent, raising the price of gold from $20.67 per ounce to $35.00 an ounce. The devaluation resulted in a $2.8 billion ‘bonus’ for the government.

"Government’s policy of debasing our money, which the U.S. Coinage Act of 1792 made punishable by death (Nystrom) hit full stride under Roosevelt. As the world’s reserve currency since 1945, the U.S. dollar has been playing the part of gold in international trade. Almost no one seriously questions fiat money anymore. ...

"Here’s one clue to the answer. Go to ‘How Much is That Worth Today?’ (Economic History Resources) and try a few computations. You’ll find that a dollar in 2001 was roughly equivalent to five cents in 1901. But a dollar in 1901 had the same value as $1.50 in 1801!

"In other words, under a mostly market-driven money system, the dollar actually appreciated in value over the course of the 19th century – a period during which average incomes rose and the population greatly expanded. Under government-controlled fiat money, after nearly a century of war, waste, wealth-theft, and welfare, with many families now needing two incomes to live decently, the dollar today is almost worthless.

"Next time you think government is completely inept, think again." columnist Smith concludes. "To rob so many of so much, while keeping complaints relegated to the lunatic fringe, requires uncommon skill of deception."

How did these actions of the tyrant Roosevelt resemble what Mussolini had done in Italy after 1925 – a connection which our letter-writer Mr. Gordon seems to find absurd, based on the notion that Mussolini wore a different colored suit, or had different tastes in newspapers, or some such "murky" distinction?

Economics professor Timothy D. Terrell asks us, when Roosevelt devalued the dollar from 20 to the ounce of gold to 35 for the ounce of gold overnight (agreeing that "Morally, this was no different than robbery"): "Who got to spend the extra $14.33 per ounce? The federal government, of course. About $4 billion showed up on the government’s books through these accounting shenanigans. Enron and Worldcom have nothing on a government with a printing press.

But, most significantly, "Roosevelt completely missed the real cause of the Great Depression," Prof. Terrell goes on to explain. "He noticed that prices were falling, and figured that falling prices meant that firms were not getting much revenue, and that firms therefore would have to cut the wages paid to employees. Employees would then have fewer dollars to spend, and so the demand for products would be lower. The economy would spiral downward. ... Falling prices were seen as the source of economic problems, rather than a needed correction of deeper problems. ... So, taking a few pages from Mussolini’s fascist reforms in Italy, Roosevelt began to group American industries into cartels. These cartels, called Code Authorities, operated under government supervision and had immense authority. They could set quality, prices, and output quantities for the industry. Lower-priced competition was effectively outlawed.

"This program’s failings are too many to elaborate on here, but John Flynn’s book The Roosevelt Myth would be a good start for someone wanting more on this topic. In brief, the cartelization scheme was economic nonsense. ...

"Mercifully, this program (run as the National Recovery Administration) was ruled unconstitutional by the Supreme Court in 1935. But the monetary side of Roosevelt’s economic strategy was still in place. And, long-term, it would not be difficult to say that the abandonment of the gold standard in the 1930s was more destructive than Roosevelt’s alphabet soup of federal programs.

"When the American people were deprived of their ability to exchange currency for actual, physical gold ... a major check against the government’s propensity to steal had been lost. Less than 40 years after Roosevelt’s momentous first year in office, Nixon eliminated the last vestiges of the gold standard. Just a few years later, the Fed produced such large increases in the money supply that price inflation became a matter of serious concern. Today the effects are still with us. ... Creating money out of thin air, as the Federal Reserve does, destroys the value of savings and transfers wealth into the hands of the state and the state’s friends. ...

"Inflation ... is dangerous both to the economy and to freedom. As Rousas J. Rushdoony pointed out in Roots of Inflation:

"‘Inflation is an act of state, a very highly desirable act of state from the standpoint of politicians and the bureaucracy, because it increases vastly the powers of the state. The rise of the modern totalitarian state has its economic origin in the abandonment of gold coinage for paper money. As the creator of fiat money, of instant money by means of legalized counterfeiting of wealth, the state is always the wealthiest and most powerful force in society.’ "

In our continuing attempt to provide Mr. Gordon with at least a modest summary of the ongoing economic crimes launched by the tyrant Roosevelt, which he declines to look up for himself, let us turn now to well-known historian, author and frequent Wall Street Journal contributor James Bovard (author of the above-cited "The Great Gold Robbery"), who explains the impact of Roosevelt’s gold seizure:

"The refusal to convert paper dollars into gold meant that the government was ‘free’ to flood the country with paper money and sabotage the currency’s value. The stability of the value of currency is one of the clearest measures of a government’s trustworthiness. Before Roosevelt took office, Americans clearly recognized the moral implications of inflation. Vice President Calvin Coolidge had bluntly declared in 1922: ‘Inflation is repudiation.’ Inflation is a tax whereby government prints extra money to finance its deficit spending. The value of money is largely determined by the ratio of money to goods; if the quantity of money increases faster than the increase in the amount of goods, the result is an increase in the ratio of money to goods and an increase in prices. Thus, the government’s printing presses devalue people’s paychecks and effectively allow government to default on the value of its debt.

"The threat of inflation was invoked in the early 1940s to justify imposing payroll tax withholding (protecting people from their own paychecks) and in the 1970s to impose price controls over the entire economy. (Charlotte Twight, ‘Evolution of Federal Income Tax Withholding,’ Cato Journal, Winter 1995.) Apparently, politicians who decide to flood the money supply automatically become entitled to increase their coercion of their victims who hold increasingly worthless currency.

"Since Roosevelt banned citizens from owning gold in 1933 and forced people to rely on the unbacked promises of politicians for the value of their currency, the dollar has lost about 93 percent of its purchasing power. (For information on the deterioration of the dollar’s purchasing power, see the Web site of the U.S. Bureau of Labor Statistics at http://www.bls.gov/cpihome.htm.) The collapse in the dollar’s purchasing power severely disrupted the ability of scores of millions of Americans to plan their own lives and save for retirement," Mr. Bovard continues. "Though inflation has slowed since 1980, the purchasing power of the dollar has fallen by over 50 percent in subsequent years according to the government’s own numbers ... making a mockery of people’s attempts to calculate and save for the future. ...

"Roosevelt’s gold seizure was based on the doctrine that in order for government to save the people, it must be permitted to breach all the promises it made to the people. According to modern conventional wisdom, government has no obligation to do justice or treat any specific individual citizen fairly – instead, government’s only duty is to achieve ‘social justice’ or some other abstraction perfectly suited for evasion."

Since Professor Terrell mentioned columnist John Flynn’s The Roosevelt Myth (Devin-Adair, 1948) above, let’s wrap up Mr. Gordon’s little introductory survey course by turning to page 414 of that most valuable resource on the Roosevelt regime, where Mr. Flynn explains that prior to the Roosevelt regime:

"We lived in a system which depended for its expansion upon private investment in private enterprise. Today we live in a system which depends for its expansion and vitality upon the government. This is a pre-war European importation — imported at the moment when it had fallen into complete disintegration in Europe. In America today every fourth person depends for his livelihood upon employment either directly by the government or indirectly in some industry supported by government funds."

(Flynn was writing in 1948, remember, and last revised his book in 1956. Add today’s substantial federal funding of all the local government youth propaganda camps – "public schools" – not to mention the vast numbers now dependent on the Social Security, Social Security Disability, Medicare, and Medicaid Ponzi schemes, and today that percentage of government leeches should surely be "one in two" – V.S.)

"In this substituted system the government confiscates by taxes or borrowings the savings of all the citizens and invests them in non-wealth-producing enterprises in order to create work," Mr. Flynn continues. "Behold the picture of the American economy today: taxes which confiscate the savings of every citizen, a public debt of 250 billion dollars as against a pre-Roosevelt debt of 19 billions, a government budget of 40 billions instead of four before Roosevelt, inflation doubling the prices and reducing the lower-bracket employed workers to a state of pauperism as bad as that of the unemployed in the depression, more people on various kinds of government relief than when we had 11 million unemployed, Americans trapped in the economic disasters and the political quarrels of every nation on earth and a system of permanent militarism loosely resembling what we beheld with horror in Europe for decades, bureaucrats swarming over every field of life and the President calling for more power, more price-fixing, more regulation and more billions. Does this look like the traditional American scene? Or does it not look rather like the system built by Bismarck in Germany in the last century and imitated by the lesser Bismarcks in Europe?"

What Roosevelt had created, Mr. Flynn brilliantly foresaw in 1948, was "that kind of state-supported economic system that will continue to devour a little at a time the private system until it disappears altogether." In a word: fascism (an economic term the appropriateness of which is in no way refuted by the absence of goose-steeping storm troopers in the streets, nor the willingness of an administration to tolerate some polite and gelded opposition newspapers.)

But should that really be such a surprise? Let us conclude, for today, by looking at what another powerful mid-20th century leader had to say about uncoupling a nation’s currency from gold:

"Gold is not necessary. I have no interest in gold. We’ll build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration." ~ Adolf Hitler

Vin Suprynowicz [send him mail] is assistant editorial page editor of the daily Las Vegas Review-Journal and author of The Black Arrow.