Sebastian Edwards: American default: The untold story of FDR, the Supreme Court, and the battle over gold
- 5 Downloads
Immediately on assuming the presidency in March 1933, FDR moved to restore confidence in the distressed banking system and, with the implementation of the New Deal, a number of initiatives designed to generate sustained economic recovery were submitted for Congressional approval. At the core of New Deal’s recovery strategy was a commitment to reflate the economy and restore prices to their pre-depression levels. To raise prices quickly, FDR and his advisors believed that the USA must abandon the Gold Standard and devalue the dollar. The departure from gold was a major shock to conservatives who believed that adherence to gold was necessary for international financial stability. In 1931, the UK had been forced to leave the gold standard because the Bank of England had insufficient reserves to defend sterling. The USA, however, had ample bullion reserves and took a policy decision to abandon gold.
Early New Deal monetary policy contained another surprising and highly contentious...