The New Monetary System of the United States

The New Monetary System of the United States

The New Monetary System of the United States

The New Monetary System of the United States

Excerpt

By proclamation on January 31, 1994, President Roosevelt established as the monetary unit of the United States a new gold dollar consisting of 15 and 5/21 grains of gold nine-tenths fine, or approximately 41% less in gold than the old gold dollar.

This action restored to the country a monetary system using gold formally as its base after eleven months of confusing monetary conditions during which gold payments were suspended.

The monetary system established by this action is avowedly novel. Based on the Gold Reserve Act of 1934, together with other monetary and banking legislation enacted since March 4, 1933, it involves changes in domestic monetary and banking arrangements that are unique and unprecedented in American monetary development. This legislation gives extraordinary discretionary control over the nation's supply of money and bank credit to the President and the Secretary of the Treasury.

The new monetary and banking system is based on gold but designed in theory to allow the free play of domestic and international financial forces to influence the supply of money and bank credit only to the extent that such freedom contributes to, and does not interfere with, the attainment of national economic objectives. These objectives, the President has stated, are the full employment of the country's productive resources at permanently higher and more stable price levels. Executive control over the supply of money and bank credit is intended to hasten and ensure their attainment.

This form of monetary system is extremely complex, with implications for the economic development of the country beyond any man's ability to perceive. Its ultimate significance and effectiveness will be disclosed only with the passage of time and events.

The present study is intended to contribute to a clearer . . .

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