America's Money Machine

17.
Wading in the Big Pond
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THE FEDERAL RESERVE SYSTEM had been designed, as we have
noted, to serve the domestic currency needs ofthis country. At the
time, the people of the United States regarded themselves an insular
power and aloof from the main currents of international-or at least
European-politics.* World War I ended all that. Despite popular rejection
at the polls of President Wilson's policy of European involvement,
including membership in the League of Nations, the circumstances of
trade and finance combined with the ferment of a nascent megalomania
to persuade the American public that their government was the
bellwether among the nations and. that it had world responsibilities to
meet. It was not exactly the sense of "the white man's burden"-the
cliche that had succeeded in almost exhausting British national vitality
within the course of three hundred years, as it had exhausted the Roman
and that of other peoples of history; but it was dangerously close to it.
Thus it came about that although the U. S. continued to remain aloof
politically from European affairs for another two decades, it became more
and more implicated economically. The instrument of this involvement
was the Federal Reserve System.
For this reason we must now turn to some of the events abroad during
the years we have just covered. World War I had left Europe more
exhausted than the U. S. How much of this exhaustion was the dislocations
and confusions caused by war-time inflation, and how much was due
*This, despite the fact that for a hundred years the United States had held a major trading
position in the Pacific, and assumed to exercise a fiat in Latin America.
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