Ludwig von Mises Quotes
The gold standard makes the money's purchasing power independent of the changing, ambitions and doctrines of political parties and pressure groups. This is not a defect of the gold standard; it is its main excellence.
von Mises, Ludwig. Human Action: A Treatise on Economics. Yale University Press, 1949, p. 474.
This objective finally reached its peak in the Nixon administration when the U. S. went off the gold standard. 75 Years after FDR tried to make the U. S. dollar more resilient, America had been so successful that many foreign governments having the same problem of little or no control over their currency, have pegged their currency to the U. S. dollar, thus gaining our stability.
Most modern economists argue just the opposite. The monetary supply for a growing world population would be insufficient for growth since the supply of gold is extremely limited. The United States was plagued by this problem from its earliest times as its growth was very strong, but there was not enough gold to support the growth. So silver was added, and then during the Civil War where growth rates were very large in the North, paper currency evaded the problem, which returned over the next century until the Nixon Administration—a very conservative one—shocked many conservatives by abandoning the Gold Standard and the U. S. has never returned to it.
Attempting to defend charges that his bank and others were engaged in monopolistic practices:
President Richard Nixon, a conservative Republican did not agree with this view as it was he who led America to abandon the gold standard to back its money.
At the time, there was no United States currency. Private banks in some of the states issued their own money. A dollar from Georgia might only be worth 75 cents in New York.
This is a remarkable quotation in that it proposed exactly what the United States did in the Nixon administration. We went off the gold standard and backed American money with the wealth and “full faith and credit” of the nation and all its assets. It has been the strongest and most sought after currency in the world despite the fact that it is not backed by gold or silver as earlier American currency was.
FDR was then a candidate for the Democratic Vice Presidential Nomination. This statement shocked some of the conservative French and British delegates and officials such as Ramsay MacDonald, Georges Bonnet, and Neville Chamberlain, but economist John Maynard Keynes strongly approved of Roosevelt Roosevelt’s statements. At issue was whether or not the major currency powers should confer frequently and set the international currency exchange rates or should the rates float and be determined at any point by the free market in currency. FDR held the latter view which was opposed to the positions of the conservative banker-oriented delegates from the European counties, However Roosevelt’s statement was considered “harsh” and “vituperative” by the conservatives and the entire conference collapsed over them. FDR admitted that perhaps he had been too strong and blunt in his language. An irony of this quotation is that 80 years later the positions of liberals and conservatives had both flip-flopped. It became the conservatives who adopted the FDR free market for currency exchange while many liberals called for government intervention and agreement on exchange rates to prevent instability.
Roosevelt saw to it that the contents of the telegram was shown to the press. Then this statement was seen by the foreign delegates who viewed themselves as ‘international bankers”. They were outraged and the conference blew up with no significant action taken. Roosevelt was desperately trying to lead America out of the Great Depression which Herbert Hoover had left him with. The dollar had been falling in value since the 1929 crash and one of the likely outcomes of the conference was European and other nations putting a plan together to stop the fall of the dollar. FDR however, wanted the dollar to continue to fall. This would make it harder for Americans by buy imported products, but easier to employ more Americans making products for export. The people hurt most by The Depression did not buy any imported products, and what they needed was food, housing, clothing, education and medical care, none of which would be affected by a weaker dollar and more expensive imports. However, he did not want a political argument with the wealthy and upper middle class who wanted cheaper imports, so some people believe that he made it seem that he had committed a diplomatic blunder and that caused the conference to collapse.
Ludwig Heinrich Edler von Mises was an Austrian School economist, historian, logician and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is best known for his work on praxeology, a study of human choice and action.
