Every Man a King
In 1937 on this day the 33rd President of the United States Huey Pierce Long abolished the Federal Reserve, announcing that henceforth the Dollar would be backed by gold and not future income tax payments.
Critics had labelled the System an unnecessary and counterproductive interference in the economy.
And also unconstitutional - a majority of states had not endorsed the sixteenth amendment as was falsely claimed by the corporatists who had rushed the Federal Reserve Act of 1913 through Congress two days before Christmas. In effect, the legislation had commissioned a system of privately held, for profit corporations, not a government agency to print fiat money on behalf of the federal government at a fee ultimately paid for by personal income tax.
An ardent critic of the System himself, Long had created the Share Our Wealth program in 1934, with the motto Every Man a King. New wealth redistribution measures would be implemented in the form of a net asset tax on large corporations and individuals of great wealth to curb the poverty and crime resulting from the Great Depression.
Of course contemporary economists were in broad agreement that the System had caused the Great Depression, in Free to Choose, Milton Friedman would write -
The recession only became a crisis when these failures spread to New York and in particular to this building, then the headquarters of the Bank of United States. The failure of this bank had far reaching effects and need never have happened...Only a few blocks away is the Federal Reserve Bank of New York. It was here that the Bank of United States could have been saved.
Indeed, the Federal Reserve System had been set up 17 years earlier precisely to prevent the worst consequences of bank failures...It was all a question of reassuring the public that they could get their money. The Federal Reserve System was there to ensure that this happened by supplying cash to the banks...Why didn't this system prevent The Great Depression after 1929? Because from 1929 to 1930 after the stock market crashed, the Federal Reserve system allowed the quantity of money to decline slowly thereby throttling the monetary structure...If the Federal Reserve had stepped in, bought government securities on a large scale, provided the cash, the depositors would have found that they could've got their money and they would have stopped asking for it...
Despite excellent advice from New York, the system refused to buy government bonds, something which would have provided cash to the commercial banks with which they could have met more easily the insisted demands of their depositors.
Instead, believe it or not, the system stood idly by while banks crashed on all sides. As the head of one of the banks put it, the reserve system had to keep its powder dry for a real emergency.
Long's predecessor, President Woodrow Wilson had himself regretted his authorisation of the Federal Reserve Act of 1913 saying
I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit. We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.
Eight thousand miles away, the German Government had identified a more expediant solution for boosting national reserves - by looting $71m worth of assets in recently-occupied Austria, Czechoslovakia, and Nazi-governed Danzig. During the war, a further $550m was looted, with $223m coming from Belgium and $193m from the Netherlands. To mask these acquisitions, the Reichsbank understated its official reserves.
The Swiss National Bank also received $440m of gold, of which $316m is estimated to have been looted from private citizens, confiscated from victims in the campaign of ethnic cleansing.
In London, the British Government was teetering on bankcruptcy, without a strategic ally and unable to pay for the war effort. But President Charles Lindburgh's Government had neither the inclination, nor the financial resources, to fund the lend-lease program that America's former ally would have needed to survive.
The origination of this post was Aaron Russo's documentary America: Freedom to Fascism (2006).
We are grateful to the Editor, Mr David Atwell for suggesting the climax. The original idea, was that Nazi Gold would be laundered in America, creating a symbiotic relationship between Lindburgh and Hitler's regimes that prevented US entry into the war.
Steve Payne, Editor Today in Alternate History, a Daily Updating Blog of Important Events In History That Never Occurred Today.
Imagine what would be, if history had occurred a bit
differently. Who says it didn't, somewhere? These fictional news items explore
that possibility. Possibilities such as America becoming a Marxist superpower,
aliens influencing human history in the 18th century and Teddy Roosevelt winning
his 3rd term as president abound in this interesting fictional blog.