'Taking a Few Pages From Mussolini ...'

by Vin Suprynowicz
by Vin Suprynowicz

Last week, letter-writer Herman Gordon was asking us how the tyrant Roosevelt's theft of America's gold in 1933 caused results similar to what Mussolini had done in Italy after 1925 – a connection which Mr. Gordon seemed to find absurd, based on the notion that Mussolini wore a different colored suit, or some such "murky" distinction.

Economics professor Timothy D. Terrell agrees that Roosevelt's overnight devaluation of the dollar was, "Morally ... no different than robbery," but finds it more significant that "Roosevelt completely missed the real cause of the Great Depression. 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 ... and 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. ... 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. ...

"As Rousas J. Rushdoony pointed out in Roots of Inflation: '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.' "

Thus ends today's reading from professor Terrell.

In our continuing attempt to provide Mr. Gordon with at least a modest summary of the ongoing economic crimes launched by Roosevelt, let us turn now to "The Great Gold Robbery," where well-known historian, author and frequent Wall Street Journal contributor James Bovard 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 ... government's printing presses devalue people's paychecks and effectively allow government to default on the value of its debt. ...

"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. ... 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 concludes.

What Roosevelt had created, author 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. And to think that it all started with Roosevelt stealing the people's gold.

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

May 5, 2005

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

Copyright © 2005 Vin Suprynowicz

Vin Suprynowicz Archives