THE WESTERN MAIL
& SOUTH WALES NEWS, May 5th, 1933
War on Unemployment
THE DOLLAR INFLATION
Prices and Revival in Trade
the last two months Franklin D. Roosevelt has made history.
he became President he found, 14000,000 people out of work, miners starving in
the Kentucky coalfields, hunger even in New York, panic in the Financial centre
of Wall Street, and the American banking system wrecked.
a gigantic question-mark, dominating the lives of his people, loomed the
one-time Almighty Dollar.
seized his opportunity, and step by step made himself dictator of his country.
would he do with the dollar?
was the question which worried banker and farmer, trader and worker.
Roosevelt answered it with typical suddenness. The United States went off the gold standard, and the dollar
like the £ after September, 1931, had no longer behind it the backing of gold.
It became a paper dollar.
week Roosevelt went still further along the path of Financial dictatorship, and
the dollar began a new chapter in its history.
For on Wednesday the House of Representatives gave the President power to
issue 3,000,000,000 (£600,000,000) of new currency, and to reduce the gold
content of the dollar up to 50%. There
is thus an inflation of the dollar.
the news flashed across America that the dollar was off the gold standard most
people with any money left rang up their stockbrokers with the order: “Boy
stocks,” and Wall Street woke up. More
shares were sold on the New’ York Stock Exchange in one day than had been sold
on any day for three years.
speculation mania again seized thousands. Wheat
prices sprang up in Chicago. Cotton leapt in price. Farmers and cotton growers
sighed with relief for they would get more for their wares.
does it all mean?
means that the dollar will no longer depend on the price of gold.
Up to now anyone could go to a bank and ask for 23 grams of gold for a
dollar. Gold became very expensive
in the world, for there was boarding of gold by leading nations, and thus the
dollar increased in value. That
meant that one could buy many more goods for a dollar than previously, that is,
prices fell the manufacturer gets less for his goods and often goes bankrupt;
the farmer gets less for his wheat and cannot buy from the towns; debtors have
to make more goods in order to pay their debts . Thus the burden upon debtors
grows. Now the dollar, like, the
pound, will be left to find its true value, since it is divorced from gold.
WHAT MAY HAPPEN
will happen ? Will the day on which the United States went off the gold standard
“go down in history as marking the end of the depression,” as one American
paper says? It is impossible to say
definitely, but the following may happen.
Inflation Bill passed on Wednesday may lead to a rise of prices in America. This will certainly stimulate trade, for when manufacturers
see raw material going up in price, they buy at once, before the price goes
higher. This encourages new
in America who have money say to themselves: ‘”Prices are going up.
I shall have to buy quickly,” and they start buying clothes, radio
.etc, Motor cars, and other goods. This
also increases production.
more men will be employed, the higher price will make life harder for the
unemployed who have little or no cash. They,
however, will have a better chance of getting a job.
going off the gold standard will give American exporters a temporary competitive
advantage because it will make dollars cheaper in England and goods made in
America cheaper to buy. America
will import fewer goods for it will be dearer for Americans to buy goods for
which they have to pay sterling.
British exporters find new competitors, British debtors will find it easier to
pay America, and the greatest debtor is the British Government on the war debts
account. If we have to pay war
debts at all, it will therefore be easier to pay in cheaper dollars.
are come slight indications of possible effects of America going off the gold
standard and of the Inflation Bill this week.