In answer to my column of April 10, discussing how the giant and inflationary federal Ponzi schemes drain the value of our savings, one Herman Gordon of Las Vegas wrote in:

“I thank you for the April 10 commentary of Vin Suprynowicz, but it does beg for a little clarification and correction. He claims that President Roosevelt installed the Social Security program with a beginning pension of $8 a week ...”

(Actually, I said that when Mr. Roosevelt set up his first federal “old-age relief” program, it promised $8 per week. That was before it got expanded into “Social Security” as we know it. Also please note, below, that the writer seems to believe $25 to $30 per month is a larger figure than $8 per week.)

“... and that ‘Americans could live on $8 a week.’ History as expressed in any respected encyclopedia will tell you that under Roosevelt’s New Deal, Congress passed the first minimum wage law together with a 40-hour week. That minimum wage was 25 cents an hour or $10 a week.” letter writer Gordon continued.

“No one would claim in those days that $10 a week was enough to live on. Most wives with children did not work, and $10 a week was a disaster, even for an unmarried grown man.

“From 1935 (Social Security Act) to 1938 (Fair Labor Standards Act installing minimum wage), the average small family in urban American needed $25 to $30 a month to ‘get along,’ to not require help from the government in the way of ‘relief’ as it was known in those days. Vin’s $8 a week is way off the mark.

“On another subject in the column, Vin claims that President Roosevelt ‘pretty much invented inflation as we know it today.’ In some murky way, Vin ties Social Security, Medicare and Medicaid with the fact that prices are much higher today than they were during the New Deal. Why doesn’t it occur to him that prices are higher today in every country in the world? Whether they have social security and minimum wages or not, their prices are higher.

Unless Vin has a theory or explanation or some kind of evidence that the United States in the Thirties (which did not yet surpass Great Britain as the leading economic government in the world) could cause inflation worldwide, he ought to more careful about throwing around such accusations. What would be the mechanics for causing such world wide inflation -- our purchase of gold, our going into debt, our going out of deficits, our establishing social and economic programs like minimum wages or social security way after other countries, our productivity, our lack of productivity, we imported too much, we exported too much, what, what, Mr. Suprynowicz? ...

“If Vin would pay a little more attention to facts and to ordinary research and maybe some common sense, he would be less apt to broadcast opinions based on misinformation and end up suggesting President Roosevelt a Fascist in the column.

“Some Fascist! Whereas all other Fascist rulers would not abide a newspaper (if any weren’t state-run) that was critical of the government, does Vin know that the majority of newspapers in this country supported Roosevelt’s opponents in all four of his elections?

“And why does he associate Roosevelt with Fascism? Because there was something in Mussolini’s program which was similar to something in Roosevelt’s support of the National Recovery Act, and that something is -- look out now, everybody -- something to do with government regulating business. Of course, that would mean that all industrialized democracies including the post-Rooseveltian U.S. administrations are fascistic.”

Thus endeth Mr. Gordon’s missive.

ROOSEVELT ‘TURNED ALL CITIZENS HOLDING GOLD INTO CRIMINALS’

I have never quite understood why the mass of unread but always self-righteous socialists feel free to call on me to provide them, uncompensated, with the economic and historical education they have failed to obtain for themselves -- except, of course, that they ARE socialists, who believe that someone else “owes” them anything they want, and without asking them to so much as bother trotting down to their tax-supported library to look it up.

But let us begin, at least, with the first stage of Mr. Gordon’s evidently long-neglected education.

At www.strike-the-root.com/columns/Smith/smith21.html, columnist George S. Smith explains (and note that his facts are well footnoted):

“During his campaign, Roosevelt pledged 100 percent support of the gold standard, as did the Republicans. But on March 9, 1933, Congress abdicated its responsibility and gave Roosevelt full discretionary powers over money and banking. He didn’t waste time using them.

“On March 11, 1933, he issued an order forbidding banks to make gold payments. On April 5, Roosevelt ordered all citizens to surrender their gold -- no person could hold more than $100 in gold coins, except for collector’s coins. He also made it unlawful to export gold for payment abroad, unless done through the Treasury. The penalty for defying Roosevelt was 10 years in prison and a $250,000 fine. (‘The Great Gold Robbery,’ James Bovard.)

“ ‘It became clear to governments that they could not afford to allow people to own and keep their gold,’ Murray Rothbard explains. ‘Government could never cement its power over a nation’s currency, if the people, when in need, could repudiate the fiat paper and turn to gold for money.’ (‘What Has Government Done to Our Money?’ Murray N. Rothbard.)

“On June 5, 1933, Roosevelt signed a resolution he had introduced in Congress, nullifying the gold clause in all government and private contracts. It meant what it said -- that no one had the right to demand payment in gold for any debt. (‘The Last Great Bubble -- Counterfeiting the Dollar,’ M. A. Nystrom, www.gold-eagle.com/editorials_02/nystrom022602.html.) The Constitution says that no state shall ‘make any Thing but gold and silver Coin a Tender in Payment of Debts’ -- a clear challenge to the president’s actions. When Roosevelt asked Senator Thomas P. Gore from Oklahoma what he thought of the resolution, the blind statesman replied: ‘Why, that’s just plain stealing, isn’t it Mr. President?’ (‘Economics and the Public Welfare,’ Benjamin M. Anderson, D. Van Nostrand Company, New York, 1949, p. 319.) Roosevelt succeeded in having the Senator unseated in the 1936 elections.

“On Jan. 30, 1934 Roosevelt signed the Gold Reserve Act into law, which transferred title of the Federal Reserve Banks’ deposits of gold to the U.S. Treasury. In exchange, the banks received gold certificates. What did the certificates mean? They meant only that something had been taken from them. They were not a claim against the gold in the Treasury. (Anderson, p. 349.) With this act, Roosevelt completed confiscation of the citizens’ gold.

“As James Bovard observes, ‘Citizens had accepted a paper currency based on the government’s pledge to redeem it in gold at $20 per ounce; then, when Roosevelt decided to default on that pledge, he also felt obliged to turn all citizens holding gold into criminals.’ Roosevelt also condemned them as selfish traitors.

“One day later Roosevelt reduced the gold content of the dollar by 41 percent, raising the price of gold from $20.67 per ounce to $35.00 an ounce. The devaluation resulted in a $2.8 billion ‘bonus’ for the government.

“Government’s policy of debasing our money, which the U.S. Coinage Act of 1792 made punishable by death (Nystrom) hit full stride under Roosevelt. As the world’s reserve currency since 1945, the U.S. dollar has been playing the part of gold in international trade. Almost no one seriously questions fiat money anymore. Fed Chairman Alan Greenspan told a House Financial Services Committee last February that ‘in years past, there’s been considerable evidence that fiat currencies have been mismanaged in general and that inflation has been too often the result . . . [But we’re] learning how to manage a fiat currency . . . . Whether that continues is a forecast which I can’t really project on.’ (‘Paul and Gold -- Greenspan and Enron,’ www.gold-eagle.com/editorials_02/paul030202.html.)

“Has a managed fiat currency enhanced our prosperity?

“Here’s one clue to the answer. Go to ‘How Much is That Worth Today?’ (Economic History Resources, http://eh.net/hmit/ppowerusd/) and try a few computations. You’ll find that a dollar in 2001 was roughly equivalent to five cents in 1901. But a dollar in 1901 had the same value as $1.50 in 1801!

“In other words, under a mostly market-driven money system, the dollar actually appreciated in value over the course of the 19th century -- a period during which average incomes rose and the population greatly expanded. Under government-controlled fiat money, after nearly a century of war, waste, wealth-theft, and welfare, with many families now needing two incomes to live decently, the dollar today is almost worthless.

“Next time you think government is completely inept, think again. To rob so many of so much, while keeping complaints relegated to the lunatic fringe, requires uncommon skill of deception.”

Thus ends our introductory selection from Mr. Smith, in which we see that in 1933, Franklin Roosevelt illegally used executive orders to violate his oath to uphold the Constitution, which gives only Congress the power to regulate the value of money, and further declares that the states shall not be allowed to use anything but gold and silver AS money. (A wise precaution, given that the founding fathers had seen how quickly the fiat paper “Continentals” had become worthless during the Revolution. Remind me again how much gold or silver the CURRENT U.S. government promises to give you in exchange for the “dollar bill” in your pocket?)

Roosevelt arbitrarily revalued the dollar at 35-to-the-ounce of gold, instead of the previous 20-to-the-ounce of gold, making the dollar worth 40 percent less, overnight. (A pensioner who was expected to live on a fixed pension of $40 per month now found the paper so-called “dollar” would actually buy 40 percent less of gold -- and thus, eventually, of anything else -- than when the pension was arranged.)

‘TAKING A FEW PAGES FROM MUSSOLINI ...’

What was the mechanism by which this launched our current hyper-inflation?

at www.kitco.com/weekly/paulvaneeden/feb202004.html, economist Paul Van Eeden explains:

“Between 1934 and 1971, thirty-five dollars were convertible into one ounce of gold, at least for foreigners: Roosevelt made private gold ownership illegal in the United States in 1933. Even though the gold price was fixed during those thirty-eight years, the activity in the gold market during that time has a bearing on its price today.

“Since gold was worth $20.67 an ounce in 1933, what made it worth $35 an ounce in 1934? Nothing. If Roosevelt had a reason for valuing gold at $35 an ounce, I don’t know what it is.

“By 1928 gold coins had virtually disappeared from circulation. Gold was still money, but most of it was held as reserve assets by government treasuries, reserve banks and commercial banks. When Roosevelt devalued the dollar, he began a massive relocation of those gold reserves. As long as gold was worth less than its decreed price of $35 an ounce, foreigners were able to buy gold in their domestic markets for the equivalent of about $20.67 an ounce, ship that gold to the United States, sell it to the Treasury for $35 an ounce, convert their dollars back into local currency and make a handsome 69 percent profit, less insurance and freight. The really neat thing about this trade is that they could do it again, and again, and again until either the US ran out of dollars (unlikely), the rest of the world ran out of gold (it almost happened), the gold price outside the United States increased, or the dollar depreciated sufficiently to make the arbitrage disappear.”

(Here we end today’s comments by Mr. Van Eeden.)

The last suggestion being what finally happened, of course. The Democrats printed so many extra greenbacks that by 1947 -- only 13 years later -- the dollar really WAS worth only 60 percent of its previous value, Mr. Van Eeden concludes.

How did this resemble what Mussolini had done in Italy after 1925 -- a connection which our letter-writer Mr. Gordon seems to find absurd, based on the notion that Mussolini wore a different colored suit, or some such “murky” distinction?

At www.chalcedon.edu/articles/0309/030918terrell.php, economics professor Timothy D. Terrell explains:

“In early 1933, beginning immediately after taking office, Roosevelt closed the banks and started the process of collecting gold from the American people. In January, 1934, after monetary gold was in the hands of the Federal Reserve System, the Gold Reserve Act was passed. This transferred all the gold and gold certificates to the federal government, and ratified the (legally doubtful) presidential proclamations Roosevelt had made during the preceding year.

“Having succeeded in getting his hands on the primary competitor to the unbacked Federal Reserve Note -- gold -- Roosevelt then issued Presidential Proclamation 2072, which devalued the dollar by 59 percent. Morally, this was no different than robbery. Roosevelt had taken in all the monetary gold from the American people, paying for it with Federal Reserve Notes at the rate of $20.67 per ounce. Now, having some assurance that the population was legally unable to exercise a preference for gold over the Federal Reserve currency, he declared that each ounce of gold was worth $35. If this change had been made while the gold was in the hands of the American people, it would still have had a negative effect -- it would create uncertainty and a transfer of wealth from savers to borrowers.

But who got to spend the extra $14.33 per ounce in this case? The federal government, of course. About $4 billion showed up on the government’s books through these accounting shenanigans. Enron and Worldcom have nothing on a government with a printing press.

“Roosevelt completely missed the real cause of the Great Depression. He noticed that prices were falling, and figured that falling prices meant that firms were not getting much revenue, and that firms therefore would have to cut the wages paid to employees. Employees would then have fewer dollars to spend, and so the demand for products would be lower. The economy would spiral downward. It might be unrealistic to say that Roosevelt had thought this through, but a few in his administration undoubtedly did. Falling prices were seen as the source of economic problems, rather than a needed correction of deeper problems. ... So, taking a few pages from Mussolini’s fascist reforms in Italy, Roosevelt began to group American industries into cartels. These cartels, called Code Authorities, operated under government supervision and had immense authority. They could set quality, prices, and output quantities for the industry. Lower-priced competition was effectively outlawed.

“This program’s failings are too many to elaborate on here, but John Flynn’s book ‘The Roosevelt Myth’ would be a good start for someone wanting more on this topic. In brief, the cartelization scheme was economic nonsense. If this succeeded in pushing prices up in some industry, the employees in that industry might see the number of dollars they take home rise. Then they would notice that the dollars didn’t go quite as far as they had hoped, because of course the Code Authorities would have pushed the prices up in other industries as well. And these employees’ bosses would have problems, too, as soon as they attempted to buy equipment and supplies from other cartelizing firms.

“Mercifully, this program (run as the National Recovery Administration) was ruled unconstitutional by the Supreme Court in 1935. But the monetary side of Roosevelt’s economic strategy was still in place. And, long-term, it would not be difficult to say that the abandonment of the gold standard in the 1930s was more destructive than Roosevelt’s alphabet soup of federal programs.

“When the American people were deprived of their ability to exchange currency for actual, physical gold (not just the happy thought that at Fort Knox the government had a lot of it locked away), a major check against the government’s propensity to steal had been lost. Less than 40 years after Roosevelt’s momentous first year in office, Nixon eliminated the last vestiges of the gold standard. Just a few years later, the Fed produced such large increases in the money supply that price inflation became a matter of serious concern. Today the effects are still with us. As the Austrian school of economics would argue, recent stock market bubbles and recessions are as much a product of the Federal Reserve’s money manipulations as they were in the late 1920s and 1930s.

“Creating money out of thin air, as the Federal Reserve does, destroys the value of savings and transfers wealth into the hands of the state and the state’s friends. ...

“Inflation ... is dangerous both to the economy and to freedom. As Rousas J. Rushdoony pointed out in ‘Roots of Inflation’:

“ ‘Inflation is an act of state, a very highly desirable act of state from the standpoint of politicians and the bureaucracy, because it increases vastly the powers of the state. The rise of the modern totalitarian state has its economic origin in the abandonment of gold coinage for paper money. As the creator of fiat money, of instant money by means of legalized counterfeiting of wealth, the state is always the wealthiest and most powerful force in society.’ ”

Thus ends today’s reading from Professor Terrell.

‘COLLAPSE IN THE DOLLARS PURCHASING POWER ...’

Next, at www.fee.org/vnews.php?nid=4344

well-known historian, author and frequent Wall Street Journal contributor James Bovard (author of the above-cited “The Great Gold Robbery”) explains the impact of Roosevelt’s gold seizure:

“The refusal to convert paper dollars into gold meant that the government was ‘free’ to flood the country with paper money and sabotage the currency’s value. The stability of the value of currency is one of the clearest measures of a government’s trustworthiness. Before Roosevelt took office, Americans clearly recognized the moral implications of inflation. Vice President Calvin Coolidge had bluntly declared in 1922: ‘Inflation is repudiation.’ Inflation is a tax whereby government prints extra money to finance its deficit spending. The value of money is largely determined by the ratio of money to goods; if the quantity of money increases faster than the increase in the amount of goods, the result is an increase in the ratio of money to goods and an increase in prices. Thus, the government’s printing presses devalue people’s paychecks and effectively allow government to default on the value of its debt.

“The threat of inflation was invoked in the early 1940s to justify imposing payroll tax withholding (protecting people from their own paychecks) and in the 1970s to impose price controls over the entire economy. (Charlotte Twight, ‘Evolution of Federal Income Tax Withholding,’ Cato Journal, Winter 1995; www.cato.org/pubs/journal/cj14n3-1.html.) Apparently, politicians who decide to flood the money supply automatically become entitled to increase their coercion of their victims who hold increasingly worthless currency.

“Since Roosevelt banned citizens from owning gold in 1933 and forced people to rely on the unbacked promises of politicians for the value of their currency, the dollar has lost about 93 percent of its purchasing power. (For information on the deterioration of the dollar’s purchasing power, see the Web site of the U.S. Bureau of Labor Statistics at www.bls.gov/cpihome.htm.)

The collapse in the dollar’s purchasing power severely disrupted the ability of scores of millions of Americans to plan their own lives and save for retirement,” Mr. Bovard continues. “If someone proposed a law to give government the right to explicitly default by 2 to 3 percent a year on all its debts, the proposal would be widely denounced. Yet, this is what the government has been doing for decades. Though inflation has slowed since 1980, the purchasing power of the dollar has fallen by over 50 percent in subsequent years according to the government’s own numbers (which slightly exaggerate the damage to the dollar), making a mockery of people’s attempts to calculate and save for the future.

“A 1997 study by Congress’s Joint Committee on Taxation found that because of how capital gains taxes are calculated, many citizens are forced to pay taxes on investment ‘gains’ when in reality they have suffered losses due to the deterioration of purchasing power. (Bruce Bartlett, “How Inflation Hikes the Capital Gains Bite,” Washington Times, March 31, 1997.)

“Roosevelt’s gold seizure was based on the doctrine that in order for government to save the people, it must be permitted to breach all the promises it made to the people. According to modern conventional wisdom, government has no obligation to do justice or treat any specific individual citizen fairly -- instead, government’s only duty is to achieve ‘social justice’ or some other abstraction perfectly suited for evasion.”

‘TAXES WHICH CONFISCATE THE SAVINGS OF EVERY CITIZEN ...’

Since professor Terrell mentioned columnist John Flynn’s “The Roosevelt Myth” (Devin-Adair, 1948) above, let’s wrap up Mr. Gordon’s little introductory survey course by turning to page 311 of that most valuable resource on the Roosevelt regime, where Mr. Flynn explains:

“Increase the number of dollars in the pockets of the people without increasing the value of goods on the shelves for sale and you have inflation. The inflation came from the method by which the government financed the war. ... While the prices that merchants charged for goods were watched by (Leon) Henderson’s price police, the prices paid by the government for war materials and war production and war wages were no object. Money was poured out freely. And the money was obtained chiefly from loans made at the banks, the most inflationary kind of money. A nation whose people had been collecting from their wages and profits about 70 billion dollars a year were suddenly collecting 100 billion and then 150 billion and then 200 billion a year, but the number of automobiles and refrigerators and radios and electric irons and the amount of meat and butter and flour and eggs and clothing was less and less. That is what produced the inflation. ...

“The OPA ... of course did not keep prices down. It put out press releases boasting of the price scales that were maintained. But the scarcer goods went into the black markets where prices in the end were far higher than they would have been. ...”

Mr. Flynn’s cataloguing of the absurdity of the Roosevelt mob’s attempt to fix the prices of sugar and meat alone would make a novel -- oh, wait, it already did, and it’s called “Atlas Shrugged.” I simply don’t have room to go into it here.

But later, on page 414, Mr. Flynn notes that prior to the Roosevelt regime:

“We lived in a system which depended for its expansion upon private investment in private enterprise. Today we live in a system which depends for its expansion and vitality upon the government. This is a pre-war European importation -- imported at the moment when it had fallen into complete disintegration in Europe. In America today every fourth person depends for his livelihood upon employment either directly by the government or indirectly in some industry supported by government funds.”

(Flynn was writing in 1948, remember, and last revised his book in 1956. Add today’s substantial federal funding of all the local government youth propaganda camps -- “public schools” -- not to mention the vast numbers now dependent on the “COLA’d” Social Security, Social Security Disability, Medicare, and Medicaid doles, and today that percentage of government leeches should surely be “one in two” -- V.S.)

“In this substituted system the government confiscates by taxes or borrowings the savings of all the citizens and invests them in non-wealth-producing enterprises in order to create work,” Mr. Flynn continues.

“Behold the picture of the American economy today: taxes which confiscate the savings of every citizen, a public debt of 250 billion dollars as against a pre-Roosevelt debt of 19 billions, a government budget of 40 billions instead of four before Roosevelt, inflation doubling the prices and reducing the lower-bracket employed workers to a state of pauperism as bad as that of the unemployed in the depression, more people on various kinds of government relief than when we had 11 million unemployed, Americans trapped in the economic disasters and the political quarrels of every nation on earth and a system of permanent militarism closely resembling what we beheld with horror in Europe for decades, bureaucrats swarming over every field of life and the President calling for more power, more price-fixing, more regulation and more billions.

"Does this look like the traditional American scene? Or does it not look rather like the system built by Bismarck in Germany in the last century and imitated by the lesser Bismarcks in Europe?”

What Roosevelt had created, Mr. Flynn brilliantly prophesied in 1948, was “that kind of state-supported economic system that will continue to devour a little at a time the private system until it disappears altogether.”

In a word: fascism.

And to think that it all started with Roosevelt seizing the people’s gold. Who’d have thunk it?

Let us conclude, for today, by looking at what another powerful mid-20th century leader had to say about uncoupling a nation’s currency from gold:

“Gold is not necessary. I have no interest in gold. We’ll build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration (camp).” -- Adolf Hitler