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An Octogenerian's Blog | President Roosevelt – Money Banks – The Economy (Issue 171)

Lately the news is dominated by discussions relating to the economy. There are talks about the trillion dollar bailout package, banks, Wall Street, loss of income from loss of jobs, loss of homes, and presidential speeches about money. There are speeches by Secretary of Treasury on local, state, federal and global effects of the crashing economy. Most seem to be in a state of confusion relative to what has happened and what is going to happen to the economy. And it’s no wonder, as we listen to all the jackhammer rhetoric; it’s a steady stream of propaganda with a little truth thrown from time to time.

 

Now, I do not claim to have the expertise to clear up the confusion about the economy, but perhaps if we looked at a few commonsense thoughts about money, the free market place, the role of individuals versus political government relative to money, we might be able to sort through some of the maze regarding the economy to begin figuring things out for ourselves.

 

In this connection, I will be quoting the entire text of a message that President Franklin Delano Roosevelt gave a few days after he became president, to Congress, asking for a Bank Law, on March 9th, 1933.

 

I looked up the word, “economy” in the dictionary which states, “Frugal management of money, materials, resources and the like. The practical administration of the material resources of a country, community or establishment; the national economy. The orderly distribution and interplay of parts in a structure or system; the economy in Nature.”

 

Money is a medium of exchange of goods and services. It can be gold, silver, paper, iron or eggs. But usually more acceptable, is to use something of intrinsic value and easy to exchange. For thousands of years gold and silver were the accepted medium because they have intrinsic value. There is a limited amount of gold and silver in the universe, created by nature and cannot be manufactured and man made.

 

Up until 1993, paper was used in lieu of gold and silver, but represented those metals were on deposit backing the paper money. An individual could redeem the paper for gold or silver anytime he chose to do so. After the government removed the gold backing, the paper money stated, silver certificate. In the early 1960’s the silver backing was removed, which meant we used paper printed by the government as a medium of exchange, called fiat money, but in fact worthless paper, nothing backing it.

 

Why do we need money at all?  Fundamentally in a society, of diversified needs, wants and desires, of great variety, it is more convenient to exchange goods and services with an acceptable easy to use medium of exchange.

 

If for example an individual decided to build a house, without the skills to build one, how would he pay the person he contracted to build, without some medium of exchange? If one desires an automobile, how is he going to pay the automobile manufacturer, without an acceptable medium of exchange? Each person has a different set of skills. One may know how to make a suit of clothes, and another may know how to build a house, if you want a loaf of bread, can you grow your own wheat?

 

For obvious reasons, an acceptable easy to use medium of exchange is necessary in a society in order to live. Bartering can be used but has such limitations; it’s a rather impractical method in most cases. We are not self-sufficient beings and dependent upon each other to a certain extent to live and survive.

 

Most are under the mistaken notion; there is equality in the voluntary exchange of goods and services.  In actuality this is not true; exchanges are made because of the inequality in the value system of human nature. For example, when I buy a pair of shoes, and pay the merchant for the shoes, he values the money more than the shoes and I value the shoes more than the money, which can be applied to anything in a system of voluntary exchange of goods and services.

 

If we did not live in a system of voluntary exchange of goods and services, most of us could not stay alive. Therefore exchange is not only desirable but necessary in our economy and the life blood of civilization itself. Accordingly, having an easy to handle, acceptable medium of exchange is necessary.

 

Further in a free market system, one must consider the marketability of a particular thing. If one decides to manufacture widgets, maybe no one wants nor needs widgets. In a free market system, individuals are selective in there exchange of goods and services.

 

Today we face the most serious economic crises this country has ever faced. Our problems began when political government seized a monopoly on the minting of money. Minting of money should be in private hands in the free enterprise, capitalistic system.

 

When government took control of minting, and obtained a monopoly, then removed the backing of gold and silver, and began printing uncontrolled amounts of paper, as the southern saying goes, “They had bought the farm.”

 

When gold and silver was removed from backing the dollar, then the government had ala carte to counterfeit money, the dollar was so debased, it took more and more to get less and less. Like a runaway horse we had runaway inflation.

 

Having total control of the medium of exchange, the government enacted more and more laws to tax and take from workers and earners, more and more until we have reached such a state of living, and conditions, we can’t make our money and month meet the demands placed upon us by political government intervention.

 

So what happens? The economy is crashing and imploding.

 

The government demands more and more in taxes while printing more and more paper, they have decided to return part of it to some and increase taxes of all who work and earn. It’s a squirrel cage syndrome and a power grab, to destroy the once free market system. A pervasive sinister force determined to replace the free market with a system of socialism.

 

 

The capitalistic free enterprise system we once had has been preempted by political government take-over. We hear daily of banks folding and the nationalization of industries. Plus, we hear how the government is redistributing the so-called bailout dollars, in an effort to halt the crashing economy. It appears things have gone full circle the gold and silver was removed as backing of the dollar, more and more paper printed by the government paper mill. Taxes increased the heavy burden of taxes, rules and government regulations, interfering with the free market caused businesses to fail. As business collapsed, the government printed more money to lend back into the economy with interest plus taxes. The society of Americans unable to sustain a free market system burdened with so much heaped upon them by a centralized political government.

 

 

It was in 1933 when President Roosevelt removed the gold backing of the dollar and a few days after elected sent this message to Congress. This is the text of his message as reported by the Associated Press on March 9th, 1933.

 

“TO THE SENATE AND HOUSE OF REPRESENTATIVES”

 

“On March 3rd banking operations in the United States ceased. To review at this time the cause of this failure of our banking system is un-necessary. Suffice it to say that the government has been compelled to step in for the protection of depositors and the business of the nation.

 

Our first task is to re-open all sound banks. This is an essential preliminary to subsequent legislation directed against speculation with the funds of depositors and other violations of trust.

 

In order that the first objective – the opening of banks for the resumption of business – may be accomplished, I ask of the Congress the immediate enactment of legislation giving to the executive branch of the government control over banks for the protection of depositors;  authorizing forthwith to open such banks as have already been ascertained to be in sound condition and other such banks  as rapidly as possible; and authority to reorganize and re-open such banks as may be  found to require re-organization to put them on a sound basis.

 

I ask amendments to the Federal Reserve act to provide for such additional currency, adequately secured, as it may become necessary to issue to meet all demands for currency and at the same time to achieve this end with-out increasing the un-secured indebtedness of the government of the United States.

 

I cannot too strongly urge upon the Congress, the clear necessity for immediate action. A continuation of the strangulation of banking facilities is unthinkable. The passage of the proposed legislation will end this condition, and I trust within a short space will result in a resumption of business activities.

 

In addition, it is my belief that this legislation will not only lift immediately, all un-warranted doubts and suspicions in regards to banks which are 100 per cent sound, but will also mark the beginning of a new relationship between the banks and the people of this country.

 

The members of the new congress will realize, I am confident, the grave responsibility which lies upon me and upon them.

 

In the short space of five days, it is impossible for us to formulate completed measures to prevent the recurrence of the evils of the past.  This does not and should not, however, justify any delay in accomplishing this first step.

 

At an early moment I shall request two other measures which I regard as of immediate urgency. With action taken thereon we can proceed to the considerations of a rounded program of national restoration.

 

Franklin D. Roosevelt

 

The White House

March 9, 1933

 

 

 

 

LET FREEDOM RING

JUST ME AC

 

Email: annecleveland@bellsouth.net

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