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1932 › Franklin D. Roosevelt (Democratic) › Restoring the commodity price level (reflation)

Restore commodity prices toward their former dollar value rather than write down all debts

pledge_forwarddirectional_stancecandidate_directevidence A Economy & Fiscal PolicyMoney, Currency & Credit⚡ The Great Depression similar solutions · similar reasoning

Solution

Treat the change in the dollar's commodity value as a problem to be met "straightforwardly": either restore commodity prices to roughly the level of several years earlier, or accept continued defaults and write-downs of debts contracted at the higher level. Method not stated in May; became the "sound money" versus reflation tension of the autumn and of 1933.

Rationale

Obligations assumed at a higher price level are being destroyed by deflation; some economists trace the crisis to "defects in the world's monetary systems."

This is the earliest campaign statement pointing toward the 1933 gold and price-raising policy; it is deliberately two-sided and should be read against the platform's "sound currency" plank.

Statements (1)

1932-05-22 · Oglethorpe University commencement, Atlanta · primarycandidate_direct ✓ verified

It is self-evident that we must either restore commodities to a level approximating their dollar value of several years ago or else that we must continue the destructive process of reducing, through defaults or through deliberate writing down, obligations assumed at a higher price level.

Source: Address at Oglethorpe University in Atlanta, Georgia (1932-05-22)

Follow-through

kept

Roosevelt embargoed gold exports (April 19–20, 1933), accepted the Thomas inflation amendment, declared on May 7 the 'definite objective of raising commodity prices' so debtors could repay 'in the same kind of dollar which they borrowed,' bought gold at rising prices in late 1933, and fixed the dollar at $35 an ounce (Gold Reserve Act, January 1934) — a 41 percent devaluation. Prices rose but did not regain the 1926 level until the war.

Mechanisms

Date	Type	Name	Effect	Consistent?	Source
1933-04-19	executive_order	Gold embargo and suspension of gold exports charted on: Consumer price index (all urban consumers, 1982–84=100) · Monetary gold stock · Producer (wholesale) price index, all commodities (1982=100)	Announced at the April 19 press conference; formalized by Executive Order 6111.	yes	Excerpts from the Press Conference
1933-05-07	message	Second fireside chat: price-raising objective charted on: Consumer price index (all urban consumers, 1982–84=100) · Gross domestic product (nominal, annual) · Monetary gold stock · Producer (wholesale) price index, all commodities (1982=100) · Unemployment rate (BLS, 1948–) · Unemployment rate (NBER series, 1929–1942)	The Administration has the definite objective of raising commodity prices to such an extent that those who have borrowed money will, on the average, be able to repay that money in the same kind of dollar which they borrowed.	yes	Second Fireside Chat
1933-05-12	statute	Thomas Amendment (Title III, Agricultural Adjustment Act) charted on: Consumer price index (all urban consumers, 1982–84=100) · Index of prices received by farmers (1910–14=100) · Producer (wholesale) price index, all commodities (1982=100)	Discretionary powers to devalue the dollar and expand credit.	yes	Statement on Signing the Farm Relief Bill

Assessments

kept William E. Leuchtenburg — Franklin D. Roosevelt: Foreign Affairs | Miller Center

Devaluation was explicitly aimed at reflation.

He scuttled the London Economic Conference in the summer of 1933 and devalued the dollar by removing the United States from the international gold standard.

1932-fdr-restore-commodity-price-level · created by claude-fable-5-1 · review: unreviewed