Monetary Policies of the United States, 1932-1938

Monetary Policies of the United States, 1932-1938

Monetary Policies of the United States, 1932-1938

Monetary Policies of the United States, 1932-1938

Excerpt

The money and currency measures of the United States Government during the six-year period from early 1932 to early 1938 reflected a succession of changing monetary policies, rather than a single definite, integrated policy. Thus, steps were taken, and not always consciously or consistently, to conserve gold, to increase its monetary value, to permit gold to leave the country, to prohibit it from leaving the country, and to encourage its importation. Some actions were undertaken to stimulate "easy" money, at the same time that others were being taken to prevent a runaway inflation as, for example, the offsetting of gold imports, first by raising reserve requirements, and later by "sterilizing" gold in an "inactive" account of the Treasury.

The silver policies also varied greatly. The Administration at first was willing to tolerate a small increase in the monetary silver stocks through the acceptance of foreign war-debt payments. Then our Government indicated its willingness to "stabilize" the price of silver, as evidenced by the London Conference Treaties. This willingness took concrete form in the Government's subsequent announcement that it would purchase all the newly mined domestic silver. The seeming climax, the step to "nationalize" domestic silver, was capped by the Government's apparent attempt to purchase the whole world's stock of silver, whether needed by other nations for monetary purposes or needed domestically for industrial or other direct consumption purposes. The setting of different prices for each class of silver to be acquired resulted in creating three commodities out of a single, standard commodity. After prosecuting the silver policy vigorously for a year and a half, the Treasury lost some of its erstwhile eagerness, and toward the end of 1937 was purchasing only 20 million ounces of silver per month as compared with almost 100 million ounces in some of the latter months of 1935.

The national bank-note issue was given an enormous fillip . . .

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