FDR - Jean Edward Smith [205]
Roosevelt may or may not have agreed. On monetary matters FDR was agnostic. He was amused at the doctrinal intensity of the gold bugs but wary of unleashing a runaway inflation such as the one that had helped destroy the Weimar Republic in Germany. Eventually he came to the conclusion that if the nation was to recover, inflation was inevitable. The gold standard would have to go. Lippmann’s article may have helped. On April 18 Lippmann wrote that the United States faced a choice between keeping up prices at home and defending the gold content of the dollar abroad. “No nation has been able to do both.” If Washington stayed with the gold standard, it would be unable to fund the ambitious relief and public works programs the New Deal had initiated. In Lippmann’s view, there was no question what the president should do.82
That evening Roosevelt summoned his financial advisers to the White House.83 Normally such conclaves began with considerable jocularity and small talk. This time Roosevelt got right to the point. “Congratulate me,” he said. “We are off the gold standard.”84 FDR had made the decision. He wasn’t asking advice. Woodin and Moley had been informed beforehand, but for everyone else the news was a shock. “All hell broke loose,” Moley remembered.85 For two hours the discussion raged, much to Roosevelt’s amusement. James Warburg, then an adviser to the president, called the plan “harebrained and irresponsible.”86 Budget Director Lewis Douglas wailed, “This is the end of Western civilization.”87 FDR was unmoved. The following day he announced the decision to the press. He had come down with a cold overnight and received reporters in his quarters upstairs in the White House. “I have gotten to the point where even a cigarette tastes bad,” he said. After sparring a few rounds with correspondents, FDR broke the news: the United States was off gold. “The whole problem before us is to raise commodity prices. Let the dollar take care of itself. If you want to know the reason why, I think the best exposition of it was by Walter Lippmann yesterday morning.”88 Congress quickly endorsed FDR’s action and enacted legislation abrogating the clauses written into public and private contracts stipulating payment in gold—the so-called gold clauses.* The day after Roosevelt’s announcement, stock prices soared on record volume. In a rare public statement, J. P. Morgan called the retreat from the gold standard “the best possible course under existing circumstances.” Russell Leffingwell wrote FDR, “Your action in going off gold saved the country from complete collapse. It was vitally necessary and the most important of all the helpful things you have done.”89
On May 9, as the legislative calendar moved forward, the first contingent of Bonus Marchers descended on Washington for another attempt to secure early payment of their insurance policies. They also wanted to protest FDR’s Economy Act, which had reduced veterans’ benefits substantially. By the end of the month more than three thousand were on hand. Alerted in advance to the veterans’ arrival, FDR had quarters prepared for them at Fort Hunt, an old Army post across the Potomac near where the Pentagon stands today. Tents, latrines, showers, mess halls, and a large convention tent were ready and waiting when the veterans arrived. The Army provided a never-ending supply of coffee and three hot meals a day; the Medical Corps treated their ills; service dentists fixed their teeth; and the Navy Band played daily concerts. Louis Howe took personal charge of the arrangements. He met regularly with the leaders, arranged conferences for them with senior congressmen and senators, and took them to the White House to meet FDR. Roosevelt was dead set against yielding to the veterans’ demands, but he was determined to give them a full hearing. The breaking point came in late May when Howe took