How FDR Destroyed the DollarBy Thomas E. BrewtonUntil 1933, the U. S. dollar was the among the strongest and most  stable currencies in the world.  With the stroke of a pen, President  Franklin Roosevelt torpedoed it.  We are still plagued with the  resulting inflation.All governments lust for taxpayers' money.  The ability to direct the  expenditure of large sums of money confers great political power upon  political leaders.  But the spending requirements that President  Franklin Roosevelt had in mind upon taking office in 1933 were of  extraordinary dimensions.  Inflating the currency, in socialist  theory, was a way to create more money for that end.In the 1920s, after the disillusionment of World War I, socialism  enjoyed great vogue in the United States.  Social Gospel ministers  extolled it, intellectuals lauded it, and popular magazines ran many  favorable articles about it.  In that period, the general public had  no awareness of the horrors then being effected in the name of  socialism in the USSR, and Hitler's National Socialism was still in  the future.It was against that background that Franklin Roosevelt campaigned for  the presidency in 1932 with the promise to give state-planning a  try.  Described in that way, it seemed to be no more than a proposal  to coordinate government spending more effectively.FDR's ideas, however, went much further than that, as demonstrated by  the barrage of government take-over programs enacted immediately  after his inauguration.  His "brain trusters," socialistic Ivy League  professors, were proposing to nationalize the private banks and  agriculture, and to regulate industrial production, prices, and wages  on the model of Mussolini's Fascist state-corporatism.The tenor of the times was flippantly described in "The New Dealers,"  an admiring book written in 1934, the second year of the New Deal.   The author wrote:"To-day, as the New Deal moves slowly towards the nationalization of  the banking system through the social control of credit policies,  there is lamentation in the tents of ... the Wall Street group... For  the monetary controversies of the first year of the Roosevelt  Administration can be understood only an the assumption that there is  a profound struggle between the Government and the bankers for the  control of the American credit system....."The President knew that financing the imposition of socialism and  collectivization of power in Washington would require a huge  expansion of Federal spending power.  Along with that, his "brain  trusters" proposed to inflate prices with the theoretical intention  of giving farmers and workers more spending power.  Inflation, they  assumed, would enable easier debt repayment, force higher wages, and  reduce unemployment.  In practice the results were quite disappointing.Throughout the history of the world, the one universal measure of  value has been gold.  In times of war and economic weakness, people  owning gold have always been able to buy what they needed in exchange  for gold.  Paper currencies, like the present-day U.S. dollar, have  no intrinsic value.  Their worth changes daily with inflation and  foreign exchange dealers' transactions.OPEC, for example, came into existence in large measure because oil- producing countries were being paid fixed prices in dollars, but the  exchange value of the dollar was declining rapidly.  OPEC pushed oil  prices from around $5 to more than $90 per barrel, adjusted for  today's inflation, in the 1970s.To the consternation of everyone outside the New Deal government  cohort, President Roosevelt almost immediately abandoned the gold  standard in order deliberately to produce overnight inflation.In April, 1933, the President issued an executive order that  abrogated gold payment clauses in government and private contracts  and made it illegal for private citizens to keep their gold coins or  to own gold for any purpose other than industrial applications.  He  completed the destruction of the dollar by arbitrarily reducing the  dollar's gold content.Before FDR's executive orders, Federal Reserve currency could be  exchanged at the Federal Reserve banks for gold at a price of $20.67  per ounce.  President Roosevelt ordered that the dollar be devalued  almost 41% by raising the price per ounce of gold to $35.00.  At the  $20.67 gold ratio, one dollar would buy 0.048 ounces of gold.  At the  $35 ratio, one dollar would buy only 0.0286 ounces of gold.The inflation set in motion by FDR's actions has continued without  cease.  The London gold price was $664.95 on February 16, 2007, a de  facto 96.9% devaluation of the dollar vs the price before President  Roosevelt began the devaluation process.  The Consumer Price Index is  now approximately 905% higher than in 1932.Before FDR's inauguration, gold coins minted by the Treasury were in  common use, Federal Reserve paper currency was exchangeable for gold,  and U. S. Treasury debt gave holders the option to take payment in  currency or gold, at a fixed rate.  Moreover, most corporate debt  similarly provided for payment in currency or gold.  This gave the  dollar a fixed value and made it one of the world's strongest  currencies, "as good as gold."In effect, President Roosevelt confiscated 40% of assets in the hands  of individuals, corporations, and banks, without offering any  compensation to them.Needless to say, the President's action was profoundly unsettling to  private individuals, corporations, and to the international banking  community, particularly to central banks which held dollars as part  of their currency reserves.Senator Carter Glass was one of the most financially knowledgeable  and most highly respected figures in Washington (and a Democrat).  He  had sponsored the legislation that created the Federal Reserve in  1913 and later served as Secretary of the Treasury.  Outraged at the  President's actions in 1933, he said, "It's dishonor, sir.  This  great government, strong in gold, is breaking its promises to pay  gold to widows and orphans to whom it has sold government bonds with  a pledge to pay gold coin of the present standard of value.  It is  breaking its promise to redeem its paper money in gold coin of the  present standard of value.  It's dishonor, sir."Oklahoma's Senator Thomas P. Gore put it more bluntly: "Why, that's  just plain stealing, isn't it, Mr. President?"  At the next election,  FDR financed a rival candidate in the Democratic primary and defeated  Senator Gore.To make FDR's perfidy even clearer, he had pledged to support the  Democratic Party's 1932 presidential campaign platform, which  explicitly promised to uphold the existing gold standard for  maintenance of a sound currency.Thomas E. Brewton is a staff writer for the New Media Alliance, Inc.  The New Media Alliance is a non-profit (501c3) national coalition of  writers, journalists and grass-roots media outlets.His weblog is THE VIEW FROM 1776http://www.thomasbrewton.com/Email comments to [email protected]