Our archaic banking and currency system, prolific of panic and disaster under Republican administrations,—long the refuge of the money trust,—has been supplanted by the Federal Reserve Act, a true democracy of credit under government control, already proved a financial bulwark in a world crisis, mobilizing our resources, placing abundant credit at the disposal of legitimate industry and making a currency panic impossible.
President Woodrow Wilson: Address at Sea Girt, New Jersey Accepting the Democratic Nomination for President, September 2, 1916
By the Federal Reserve Act the supply of currency at the disposal of active business has been rendered elastic, taking its volume, not from a fixed body of investment securities, but from the liquid assets of daily trade; and these assets are assessed and accepted, not by distant groups of bankers in control of unavailable reserves, but by bankers at the many centers of local exchange who are in touch with local conditions everywhere.
Woodrow Wilson: Executive Order 2697 - Regulations Relating to the Exportation of Coin, Bullion, and Currency
By virtue of the authority vested in me, I direct that the regulations, orders, limitations, and exceptions prescribed in relation to the exportation of coin, bullion, and currency shall be administered by and under the authority of the Secretary of the Treasury; and upon the recommendation of the Secretary of the Treasury I hereby prescribe the following regulations in relation thereto:
1. Any individual, firm or corporation desiring to export from the United States or any of its territorial possessions to any foreign country named in the proclamation dated September 7, 1917, any coin, bullion, or currency, shall first file an application in triplicate with the Federal reserve bank of the district in which such individual firm or corporation is located, such application to state under oath and in detail the nature of the transaction, the amount involved, the parties directly and indirectly interested, and such other information as may be of assistance to the proper authorities in determining whether the exportation for which a license is desired will be compatible with the public interest.
2. Each Federal reserve bank shall keep a record copy of each application filed with it under the provisions of this regulation and shall forward the original application and a duplicate to the Federal Reserve Board at Washington, together with such information or suggestions as it may believe proper in the circumstances, and shall in addition make a formal recommendation as to whether or not in its opinion the exportation should be permitted.
3. The Federal Reserve Board, subject to the approval of the Secretary of the Treasury, is hereby authorized and empowered upon receipt of such application and the recommendation of the Federal Reserve Bank to make such ruling as it may deem proper in the circumstances, and if in its opinion the exportation in question be compatible with the public interest, to permit said exportation to be made; otherwise to refuse it.
THE WHITE HOUSE,
September 7, 1917.
Woodrow Wilson: Executive Order 2796 - Prescribing Rules and Regulations Under Section 5 of the Trading with the Enemy Act and Supplementing Rules and Regulations Heretofore Prescribed Under Title 7 of the Espionage Act
Republican Party Platform of 1920:
The fact is that the war to a great extent, was financed by a policy of inflation, through certificate borrowings from the banks, and bonds issued at artificial rates sustained by the low discount rates established by the Federal Reserve Board. The continuance of this policy since the armistice lays the administration open to severe criticism. Almost up to the present time the practices of the Federal Reserve Board as to credit control have been frankly dominated by the convenience of the Treasury.
The results have been a greatly increased war cost, a serious loss to the millions of people who, in good faith, bought liberty bonds and victory notes at par, and extensive post war speculation followed to-day by a restricted credit for legitimate industrial expansion and as a matter of public policy, we urge all banks to give credit preference to essential industry.The Federal Reserve System should be free from political influence, which is quite as important as its independence of domination by financial combinations.
Democratic Party Platform of 1920:
A review of the record of the Democratic Party during the administration of Woodrow Wilson presents a chapter of substantial achievements unsurpassed in the history of the republic. For fifty years before the advent of this administration periodical convulsions had impeded the industrial progress of the American people and caused unestimatable loss and distress. By the enactment of the Federal Reserve Act the old system, which bred panics, was replaced by a new system, which insured confidence. It was an indispensable factor in winning the war, and to-day it is the hope and inspiration of business. Indeed, one vital danger against which the American people should keep constantly on guard, is the commitment of this system to partisan enemies who struggled against its adoption and vainly attempted to retain in the hands of speculative bankers a monopoly of the currency and credits of the nation. Already there are well defined indications of an assault upon the vital principles of the system in the event of Republican success at the elections in November.
The non-partisan Federal Reserve authorities have been wholly free of political interference or motive; and, in their own time and their own way, have used courageously, though cautiously, the instruments at their disposal to prevent undue expansion of credit in the country. As a result of these sound Treasury and Federal Reserve policies, the inevitable war inflation has been held down to a minimum, and the cost of living has been prevented from increasing in this country in proportion to the increase in other belligerent countries and in neutral countries which are in close contact with the world's commerce and exchanges.
After a year and a half of fighting in Europe, and despite another year and a half of Republican obstruction at home, the credit of the Government of the United States stands unimpaired, the Federal Reserve note is the unit of value throughout all the world; and the United States is the one great country in the world which maintains a free gold market.
We condemn the attempt of the Republican party to deprive the American people of their legitimate pride in the financing of the war—an achievement without parallel in the financial history of this or any other country, in this or any other war. And in particular we condemn the pernicious attempt of the Republican Party to create discontent among the holders of the bonds of the Government of the United States and to drag our public finance and our banking and currency system back into the arena of party politics.Democratic Party Platform of 1924:
We denounce the recent cruel and unjust contraction of legitimate and necessary credit and currency, which was directly due to the so-called deflation policy of the republican party, as declared in its national platform of June, 1920, and in the speech of acceptance of its candidate for the presidency. Within eighteen months after the election of 1920 this policy resulted in withdrawing bank loans by over $5,000,000,000 and in contracting our currency by over $1,500,000,000.We demand that the federal reserve system be so administered as to give stability to industry, commerce and finance, as was intended by the democratic party, which gave the federal reserve system to the nation.Democratic Party Platforms: Democratic Party Platform of 1928:
(a) The Federal Reserve system, created and inaugurated under Democratic auspices, is the greatest legislative contribution to constructive business ever adopted. The administration of the system for the advantage of stock market speculators should cease. It must be administered for the benefit of farmers, wage earners, merchants, manufacturers and others engaged in constructive business.When our archaic banking and currency system was revised after its record of disaster and panic under Republican administrations, it was a Democratic Congress in the administration of a Democratic President that accomplished its stabilization through the Federal Reserve Act creating the Federal Reserve Board, with powers adequate to its purpose. Now, in the hour of agriculture's need, the Democratic Party pledges the establishment of a new agricultural policy fitted to present conditions, under the direction of a farm board vested with all the powers necessary to accomplish for agriculture what the Federal Reserve Board has been able to accomplish for finance, in full recognition of the fact that the banks of the country, through voluntary cooperation, were never able to stabilize the financial system of the country until the government powers were invoked to help them.Al Smith: Address of Acceptance at the State Capitol, Albany, New York, August 22, 1928:
To accomplish financial stability, the Federal Reserve System was called into being by a Democratic administration.Republican Party Platforms: Republican Party Platform of 1932:
In contrast with the Republican policies and record, we contrast those of the democratic as evidenced by the action of the House of Representatives under Democratic leadership and control, which includes:1. The issuance of fiat currency. 2. Instructions to the Federal Reserve Board and the Secretary of the Treasury to attempt to manipulate commodity prices. 3. The guarantee of bank deposits. 4. The squandering of the public resources and the unbalancing of the budget through pork-barrel appropriations which bear little relation to distress and would tend through delayed business revival to decrease rather than increase employment. Generally on economic matters we pledge the Republican Party: 1. To maintain unimpaired the national credit. 2. To defend and preserve a sound currency and an honest dollar. 3. To stand steadfastly by the principle of a balanced budget. 4. To devote ourselves fearlessly and unremittingly to the task of eliminating abuses and extravagance and of drastically cutting the cost of government so as to reduce the heavy burden of taxation. 5. To use all available means consistent with sound financial and economic principles to promote an expansion of credit to stimulate business and relieve unemployment. 6. To make a thorough study of the conditions which permitted the credit and the credit machinery of the country to be made available, with out adequate check, for wholesale speculation in securities, resulting in ruinous consequences to millions of our citizens and to the national economy, and to correct those conditions so that they shall not recur.
When was the last time you heard Republicans denounce "fiat currency?"
Herbert Hoover: Statement on the Veterans' Bonus, September 14, 1932:
It is unthinkable that the Government of the United States should resort to the printing press and the issuance of fiat currency as provided in the bill which passed the House at the last session of Congress under the leadership of the Democratic Vice-Presidential candidate. Such an act of moral bankruptcy would depreciate and might ultimately destroy the value of every dollar in the United States. It would cause the collapse of all confidence in our Government and would bring widespread ruin to the entire country and to every one of our citizens. Daniel Webster 100 years ago stated: 'He who tampers with the currency robs labor of its bread. He panders, indeed, to greedy capital, which is keen-sighted, and may shift for itself; but he beggars labor, which is honest, unsuspecting, and too busy with the present to calculate for the future. The prosperity of the working classes lives, moves, and has its being in established credit, and a steady medium of payment.' And the experience of every government in the world since that day has confirmed Webster's statement.Herbert Hoover: Address at Madison Square Garden in New York City, October 31, 1932 Another proposal of our opponents which would destroy the American system is that of inflation of the currency. The bill which passed the last session of the Democratic House called upon the Treasury of the United States to issue $2,300 million in paper currency that would be unconvertible into solid values. Call it what you will, greenbacks or fiat money. It was the same nightmare which overhung our own country for years after the Civil War.In our special situation today the issuance of greenbacks means the immediate departure of this country from the gold standard, as there could be no provision for the redemption of such currency into gold. The new currency must obviously go to immediate and constantly fluctuating discount when associated with currency convertible in gold. The oldest law of currency is that bad money drives out the good, for a population--that is, every individual--will hoard good currency and endeavor to get rid of the bad. The invariable effect is the withdrawal of a vast sum of good currency from circulation, and at once the Government is forced to print more and more bad paper currency. No candidate and no speaker in this campaign has disavowed this action of the Democratic House of Representatives. In spite of this visible experience within the recollection of this generation, with all its pitiable resuits, fiat money is proposed by the Democratic Party as a potent measure for relief from this depression. The use of this expedient by nations in difficulty since the war in Europe has been one of the most tragic disasters to equality of opportunity and the independence of man. I quote from a revealing speech by Mr. Owen D. Young upon the return of the Dawes Commission from Europe. He stated: "The currency of Germany was depreciating so rapidly that the industries paid their wages daily, and sometimes indeed twice a day. Standing with the lines of employees was another line of wives and mothers waiting for these marks. The wife grabbed the paper from her husband's hand and rushed to the nearest provision store to spend it quickly before the rapid depreciation had cut its purchasing power in two.
"When the chairman of the syndicate of the German Trade Unions, Herr Grasseman, appeared before the Dawes Commission, I put to him this question: 'What can this committee do for German labor ?'
"I expected the answer to be some one of the slogans of labor: An 8-hour day, old age or disability pensions--something of that kind. Much to my surprise the answer came promptly.
"'What your committee must do for German labor is to give us a stable currency. Do you know,' Herr Grasseman said, 'that for many months it has been impossible for a wage earner in Germany to perform even of his moral obligations ?
"'Knowing that a child was coming to the family at a certain time, there was no way by which the husband, through effort or sacrifice or savings, could guarantee his wife a doctor and a nurse when that event arrived. One, knowing that his mother was stricken with a fatal disease could not by any effort or sacrifice or saving be in a position to insure her a decent burial on her death.
"'Your committee must,' HerrGrasseman added, 'just as a basic human thing, assure us a stable currency 'and thereby insure to the worker that his wages will have the same purchasing power when he wants to spend them as they had when he earned them.'"
Now, I ask, is that a policy consonant with the American system ? It has been proposed by the Democratic Party within 4 months and passed a Democratic House of Representatives. Is that the preservation of equality of opportunity and the protection of men by their government?Ronald Reagan: Question-and-Answer Session With Members of the Sperling Breakfast Group on Domestic and Foreign Policy Issues, February 23, 1983:
Q. Robert Novak, Field Syndicate. Mr. President, after 2 years in office, do you think now, based on your experience in office, that it is, first, desirable and, second, feasible to restore the gold standard while you are President? [Laughter]
The President. I wish I had an answer on that. I must say that is, in economic circles, I know, is one of the great debates that will go on and on. You can point back to history and show that fiat money has never been successful, and in reality, that's what we have is fiat money now. We've had a study that's been going forward on that, and there are many variations of what could be done in partially, let's say, getting metallic money back in circulation.
I can't give you an answer on that, because, as I say, it's something that we're all of us looking at and wondering about. There does seem to be more sentiment against it in this modern day than there is for it.