America's Money Machine

192 PART III / DEBACLE OF AN IDEA
Jr., then governor of the Farm Credit Administration. Roosevelt, however,
took personal charge ofthe program and he seems to have done so
with the enthusiasm of a sports car fan with a new model.
The first offer was set at $31.36, the equivalent ofa 66 cent dollar, and
the idea was to raise the offer by degrees. The committee met daily at the
White House to fix the prices for the day and the amount of the increase
seems to have been a matter ofcaprice. Morgenthau, in his Diary, reports
that Roosevelt one morning suggested a 21 cent increase: "It's, a lucky
number, because it's three times seven."4
OnJanuary 17, 1934, the price of gold had been advanced to $34.45
plus handling charges, at which price it was held. Roosevelt now concluded
that he needed a stronger legislative mandate for his proposed
reform of the currency system and in a message to Congress onJanuary
15 he outlined in comprehensive form the objectives ofthe new monetary
policy. Repeatinglanguage he had used to the London Economic Conference,
he declared his purpose to be that "of arriving eventually at a less
variable purchasing power for the dollar." Although extensive hearings
had been scheduled by the House Committee on Coinage, Weights and
Measures, the leadership pushed the bill through the House by 360 to 40,
with only one day of debate.
Roosevelt's gold buying program in many ways marked the divide
between his earlier policy offiscal conservatism and the outright acceptance
of managed money, fiscal manipulation and government intervention.
It caused the first major shift in his staff of advisers. Dean Acheson
resigned as Under Secretary of the Treasury and was replaced by Henry
Morgenthau,Jr. on November 17. William H. Woodin pleaded his illness
to resign the Secretaryship of the Treasury and was replaced by Morgenthau
onJanuary 1.James P. Warburg and O. M. W. Sprague also retired
from the scene.
In the hearings on the new gold legislation before the Senate Banking
and Currency Committee, the leading testimony from such authorities as
Professor E. W. Kemmerer ofPrinceton, Dr. Benjamin M. Anderson,Jr.,
economist ofthe Chase National Bank ofNew York, and H. Parker Willis,
one of the authors of the Federal Reserve Act, was all highly critical;
nevertheless, the bill passed and was reported on January 30.
The Gold Reserve Act of 1934 transferred to the United States title to
all gold ofthe Federal Reserve System (by giving in exchange gold certifi..
cates); it amended the Act of May 12, 1933 (the Thomas amendment) so
as to provide that thie weight ofthe gold dollar should not be fixed in any
event at more than 60 per cent of the weight then existing. No gold