Farewell to Gold

The U. S. Senate chamber was last week embellished with five huge maps hung upon its walls below the galleries by direction of Senator Copeland, who used them to deliver a graphic oration on why the St. Lawrence waterway treaty should not be ratified. But most of last week the maps served as a backdrop while the Senate went through the motions of considering the President's bill to seize the Federal Reserve Banks' gold and create a $2,000,000,000 fund for Treasury exchange operations as preliminaries to devaluation of the domestic dollar.

There was never a doubt about the bill's passage. The slashing attack upon it by a dogged minority was wasted effort from the start. Pennsylvania's Reed for the Republican opposition excoriated the stabilization fund and the power given the Secretary of the Treasury to use it to "stabilize" the government bond market: "It is that dishonest thing, creating an artificial market. . . . When a banker does it we cry 'Jail him!' When the Administration does it we say it's praiseworthy." Delaware's Hastings, using no nicer words, denounced seizure of the Reserve Banks' gold as "legalized robbery." But the very head and front of the opposition was Virginia's Carter Glass.

The Senate's heart, if not its votes, was with the onetime Secretary of the Treasury as he came on the floor, frail and fatigued. He admitted that he was worn out and needed to go to bed.

"I know," he cried, "that the gold dollar, by an utterly invalid and illegal process, for which no human being can find a rational excuse or legal justification, has been devalued abroad, and I know perfectly well that it is going to be devalued at home, and I am not going to waste my time and strength in protesting against it.

"Nor am I going to waste any time in protesting any further against the appropriation by the Government of nearly $4,000,000,000 of gold, not one dollar of which it ever lifted its finger to honestly acquire, not a dollar of it. ... No other civilized nation on the face of the globe has ever seized the gold of its central bank."

Knowing that the bill was fated to pass he concentrated his efforts in trying to have it amended so as to take control of the exchange fund from the Secretary of the Treasury and give it to a committee of experts. Said he:

"Our Secretary of the Treasury is a most estimable young gentleman, worthy, patient, amiable, lovable--without a day's experience as a banker and, so far as I have been able to ascertain, without any knowledge of foreign exchange."

To no avail. The amendment was voted down 54 to 36. The privilege of nearly upsetting the Administration's plans was reserved for Senator Wheeler who offered an amendment requiring the Government to buy up to 750,000,000 oz. of silver until a 16 to 1 price ratio was obtained.* The Wheeler amendment was defeated by just two votes.

Only two amendments were added to the bill: 1) limiting the use of the stabilization fund and Presidential dollar tinkering to three years; 2) giving the President power but not requiring him to issue silver certificates against all silver which the Treasury holds or may acquire. This done the bill passed 66 to 23 with only one Democrat, the indomitable Glass, voting against it. Promptly the House accepted the bill with the Senate amendments.

*This would have boosted silver not to $1.29 an ounce, the old 16 to 1 price but, because the price of gold has risen, to around $2.50 an ounce --higher than silver has been in a century.

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