Gareth Jones

[bas relief by Oleh Lesiuk]



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 Higher Prices and Revival in Trade


In the last two months Franklin D. Roosevelt has made history. 

When he became President he found, 14000,000 people out of work, miners starving in the Kentucky coalfields, hunger even in New York, panic in the Financial centre of Wall Street, and the American banking system wrecked.

Like a gigantic question-mark, dominating the lives of his people, loomed the one-time Almighty Dollar.

Roosevelt seized his opportunity, and step by step made himself dictator of his country.

What would he do with the dollar?

This was the question which worried banker and farmer, trader and worker.  Roosevelt answered it with typical suddenness.  The United States went off the gold standard, and the dollar like the £ after September, 1931, had no longer behind it the backing of gold.  It became a paper dollar.

This week Roosevelt went still further along the path of Financial dictatorship, and the dollar began a new chapter in its history.  For on Wednesday the House of Representatives gave the President power to issue 3,000,000,000 (£600,000,000) of new currency, and to reduce the gold content of the dollar up to 50%.  There is thus an inflation of the dollar.

When the news flashed across America that the dollar was off the gold standard most people with any money left rang up their stockbrokers with the order: “Boy stocks,” and Wall Street woke up.  More shares were sold on the New’ York Stock Exchange in one day than had been sold on any day for three years.


The speculation mania again seized thousands.  Wheat prices sprang up in Chicago. Cotton leapt in price. Farmers and cotton growers sighed with relief for they would get more for their wares.  

What does it all mean?

It means that the dollar will no longer depend on the price of gold.  Up to now anyone could go to a bank and ask for 23 grams of gold for a dollar.  Gold became very expensive in the world, for there was boarding of gold by leading nations, and thus the dollar increased in value.  That meant that one could buy many more goods for a dollar than previously, that is, prices fell.

When prices fell the manufacturer gets less for his goods and often goes bankrupt; the farmer gets less for his wheat and cannot buy from the towns; debtors have to make more goods in order to pay their debts . Thus the burden upon debtors grows.  Now the dollar, like, the pound, will be left to find its true value, since it is divorced from gold.


What will happen ? Will the day on which the United States went off the gold standard “go down in history as marking the end of the depression,” as one American paper says?  It is impossible to say definitely, but the following may happen.

The Inflation Bill passed on Wednesday may lead to a rise of prices in America.  This will certainly stimulate trade, for when manufacturers see raw material going up in price, they buy at once, before the price goes higher.  This encourages new production.

People in America who have money say to themselves: ‘”Prices are going up.  I shall have to buy quickly,” and they start buying clothes, radio .etc, Motor cars, and other goods.  This also increases production.

While more men will be employed, the higher price will make life harder for the unemployed who have little or no cash.  They, however, will have a better chance of getting a job.


America’s going off the gold standard will give American exporters a temporary competitive advantage because it will make dollars cheaper in England and goods made in America cheaper to buy.  America will import fewer goods for it will be dearer for Americans to buy goods for which they have to pay sterling.

If British exporters find new competitors, British debtors will find it easier to pay America, and the greatest debtor is the British Government on the war debts account.  If we have to pay war debts at all, it will therefore be easier to pay in cheaper dollars.

These are come slight indications of possible effects of America going off the gold standard and of the Inflation Bill this week.








Gareth Jones: A Manchukuo Incident



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