63: The British Equalization Account, The American Stabilization Fund, and The American Sterilization Fund
Chapter 63
The British Equalization Account, The American Stabilization Fund, and The American Sterilization Fund
Under the gold standard, imports of gold ease the money market of the importing country. Gold goes from the importing commercial banks to the central bank or (in our case) the Federal Reserve banks, and the commercial banks get additional reserves in exchange for the gold. Gold leaving a country reduces the reserves of the commercial banks. They are obliged to pull down their reserve balances with the central bank in getting the gold for export.
64: The Tyranny of Gold
Chapter 64
The Tyranny of Gold
Gold needs no endorsement. It can be tested with scales and with acids. The recipient of gold does not have to trust the government stamp upon it, if he does not trust the government that stamped it. No act of faith is called for when gold is used in payments, and no compulsion is required.
65: Governmental Coercion and the Value of Money
Chapter 65
Governmental Coercion and the Value of Money
It was prevailing doctrine among economists down to the first World War that governments could not coerce their peoples into accepting at face value a dishonored paper money. But the first World War brought an immense revival and intensification of governmental power. And in the years 1915 to 1918 a good many new techniques of price fixing and control of foreign exchange operations were introduced which tended to prevent transactions which would recognize the depreciation of irredeemable paper money.
66: The Business Rally of 1935-1937 and the Major Crisis of 1937
Chapter 66
The Business Rally of 1935-1937 and the Major Crisis of 1937
The Federal Reserve Index of Industrial Production (old series 1923-1925 = 100) rose from approximately 60 in March, 1933, to 100 in July of 1933; then with the coming of the NRA and the processing taxes dropped to 72 in November of 1933. Partly under the impetus of the President’s spending programme, it rose to 86 in May of 1934, dropping again, however, to 71 in September of 1934. There came a moderate rally to 90 at the beginning of 1935, and then a sagging in the spring to about 86 again.
67: The Causes of the Crisis of 1937
Chapter 67
The Causes of the Crisis of 1937
What caused the major crisis of 1937? Why did the stock market yield so suddenly and so violently? And why did the volume of business and industrial production decline so rapidly?
68: The Stock Market Crash of 1937—A Major Cause of Business Crisis
Chapter 68
The Stock Market Crash of 1937—A Major Cause of Business Crisis
A major factor partly precipitating and certainly intensifying the collapse in industrial activity in the autumn of 1937 and the winter and early spring of 1938, was the sudden break in the stock market and the revelation of an extraordinary weakness in the internal stock market situation. A recapitulation of stock market history following the Supreme Court decision on May 27, 1935, and continuing through 1938 will be useful here.
69: A Verdict on the S.E.C.
Chapter 69
A Verdict on the S.E.C.
S.E.C. versus Congress on Marketability. The concept of the stock market as a broad and active market in which men who need to sell can find buyers and men who wish to buy can find sellers, in which the spread between the bid price and asked price is narrow, a market in which securities can be marketable, encountered definite hostility upon the part of the Securities and Exchange Commission.
70: The Severe Depression, 1937-1938, and the Mild Rally, 1938-1939
Chapter 70
The Severe Depression, 1937-1938, and the Mild Rally, 1938-1939
The winter of 1937-1938 was a period of gloom and apprehension both for the country and for the Administration and the Administration’s supporters in Washington. Efforts were made by close advisers of the President to persuade him to moderate his bitterness toward American business and finance.
71: The Turn in the Political Tide, 1938
Chapter 71
The Turn in the Political Tide, 1938
The wage and hour act represents President Roosevelt’s last successful effort to override a reluctant Congress. Congressional opposition was growing and public opposition was growing. This came out strikingly in the President’s failure in his effort to “purge” the Senate of the Democrats who had opposed him in the Supreme Court fight and in other matters. His one successful effort to purge was in the New York City primary, where he succeeded in defeating for renomination Chairman John J.
72: International Political Relations in the Decade of the Thirties
Chapter 72
International Political Relations in the Decade of the Thirties
The economic crash of 1929-1932 was accompanied, as we have seen, by a breakdown of international credit and by a great intensification of economic nationalism, which, of course, made the breakdown of international credit more complete. If goods could not move in international trade, and if the whole burden of paying debts had to fall on gold, then there was not enough gold available for the purpose, and international debts could not be paid.
