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The New Thermopylae 169<br />
the shell ofaccepted central banking theory that the note issue should be<br />
based upon commercial paper. Like many "temporary" and emergency<br />
measures, it was repeatedly extended, and·eventually made a permanent<br />
part of the Federal Reserve System.*<br />
In May, the House passed the Goldsborough Price Stabilization Bill,<br />
which would have directed the Federal Reserve authorities to use their<br />
power over money and credit to restore and to maintain the pre-depression<br />
price level. However, the bill met opposition in the Senate both from<br />
Republicans and from conservative Democrats like Carter Glass, now a<br />
Senator, and to forestall it, an amendment to the Home Loan Bank bill,<br />
known as the Borah-Glass National Bank Note Expansion Amendment,<br />
was offered as a substitute. This made eligible as security for national<br />
bank notes for a period of 3 years all U. S. Government bonds bearing<br />
interest of 3 3/8 per cent or less-totalling then about $3 billion. This<br />
permitted, on the basis of the bank capital outstanding, an expansion of<br />
about $920 million in the currency.<br />
At the November, 1932, election, the electorate gave a vote of noconfidence<br />
in the Hoover Administration and the Hoover policy; and<br />
shortly thereafter, by runs on the banks throughout thecountry, signalled<br />
an equal distrust of the incoming administration. Franklin D. Roosevelt<br />
stepped forward in the Capitol plaza to take the oath of office in a land<br />
in which every bank and credit institution in the country was in default<br />
and no check was cashable, no promissory note valid, no government<br />
bond or paper redeemable.<br />
Roosevelt, however, held in his hand the power to reopen the banks,<br />
to make money again almost as freely available as- water. He had the<br />
power, through the Federal Reserve System, to manipulate and manage<br />
the money system.<br />
Individualism, as a system ofphilosophy, was about to disappear from<br />
American life under the influence of a new exponent of statism-the<br />
English economist John Maynard Keynes.<br />
*It was extended for another year before Hoover left office, subsequently for another year<br />
with authority to the President to extend it for an additional two years, and became permanent<br />
in the Act ofJune 12, 1945.
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