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American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold
The untold story of how FDR did the unthinkable to save the American economy
The American economy is strong in large part because nobody believes that America would ever default on its debt. Yet in 1933, Franklin D. Roosevelt did just that when, in a bid to pull the country out of depression and get people back to work, he depreciated the U.S. dollar in relation to gold and annulled debt contracts retroactively. American Default is the story of this forgotten chapter in America's history.
Sebastian Edwards provides a masterful account of the economic and legal drama that embroiled a nation already reeling from global financial collapse. It began on April 5, 1933, when FDR ordered Americans to sell all their gold holdings to the government. This was followed by the removal of the country from the gold standard, the unilateral and retroactive rewriting of contracts, and the devaluation of the dollar. Anyone who held public and private debt suddenly saw its value reduced by nearly half, and debtors--including the U.S. government--suddenly owed their creditors far less. Revaluing the dollar imposed a hefty loss on investors and savers, many of them middle-class American families. The banks fought back, and a bitter battle for gold ensued. In early 1935, the case went to the Supreme Court. Edwards describes FDR's rancorous clashes with conservative Chief Justice Charles Evans Hughes, a confrontation that threatened to finish the New Deal for good--and that led to FDR's attempt to pack the court in 1937.
At a time when several major economies are on the brink of default or devaluing or recalling currencies, American Default is a timely account of a little-known yet drastic experiment with these policies, the inevitable backlash, and the ultimate result.
The American economy is strong in large part because nobody believes that America would ever default on its debt. Yet in 1933, Franklin D. Roosevelt did just that when, in a bid to pull the country out of depression and get people back to work, he depreciated the U.S. dollar in relation to gold and annulled debt contracts retroactively. American Default is the story of this forgotten chapter in America's history.
Sebastian Edwards provides a masterful account of the economic and legal drama that embroiled a nation already reeling from global financial collapse. It began on April 5, 1933, when FDR ordered Americans to sell all their gold holdings to the government. This was followed by the removal of the country from the gold standard, the unilateral and retroactive rewriting of contracts, and the devaluation of the dollar. Anyone who held public and private debt suddenly saw its value reduced by nearly half, and debtors--including the U.S. government--suddenly owed their creditors far less. Revaluing the dollar imposed a hefty loss on investors and savers, many of them middle-class American families. The banks fought back, and a bitter battle for gold ensued. In early 1935, the case went to the Supreme Court. Edwards describes FDR's rancorous clashes with conservative Chief Justice Charles Evans Hughes, a confrontation that threatened to finish the New Deal for good--and that led to FDR's attempt to pack the court in 1937.
At a time when several major economies are on the brink of default or devaluing or recalling currencies, American Default is a timely account of a little-known yet drastic experiment with these policies, the inevitable backlash, and the ultimate result.
1 pages, Audio CD
First published January 1, 2018
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Displaying 1 - 25 of 25 reviews
November 8, 2018
An unsatisfactory account of a fascinating forgotten event. It’s a who’s who of the New Deal and I wish it were more focused and more balanced. More monetary theory and more on the constitutionality of the default would have been nice. I want to know more, but this was still very interesting
March 22, 2024
It is tempting to say that American Default is shockingly readable for a book written by an economist. But it is probably more fair to say that it is shockingly readable period. It is a history of the banking crisis around the onset of the Great Depression, the role that devaluing gold played in reversing deflation and reducing the value of debts, and the subsequent legal battle over the abrogation of “gold clauses” in those same debt contracts. It reads like a history but also has a substantial legal element while having insightful and always accurate economics woven throughout.
Sebastian Edwards is an excellent international macroeconomist who has spent most of his career writing about emerging markets, particularly economic disasters in Latin America. Which makes him well prepared to take on the United States’ emerging-market like crisis, the Great Depression.
The story starts with a cascading series of bank failures, the efforts of the outgoing Hoover to address them, and how Roosevelt and his incoming team reacted.
At the same time he traces the attitudes towards the gold standard and macroeconomic policy from a sleeper issue into Congress basically forcing the President’s hand to reinflate, which ultimately required revaluing gold at a higher value per dollar--a step that followed the UK. It is fascinating to read about how much Roosevelt was focused on and even targeting particular commodity prices and how quickly they all moved in proportion to the price of gold—just like the quantity theory of money would say. It is also fascinating to read about how the U.S. dollar behaved vis-a-vis the British pound (which was off the gold standard) and the French franc (which was still on it).
A big part of the economic boost caused by the devaluation was due to reducing the real value of debts, basically borrowers could repay them in cheaper money (or, equivalently, had to sell less cotton or whatever to get the dollars to pay them). But this was the rub: debt contracts had a “gold clause” that they were payable in dollars or gold, much for the same reason that emerging markets borrow in dollars—because it increases the certainty and security of lenders thus enabling borrowers to borrow for longer periods at lower interest rates.
The creditors sued and the case ended up in court litigating government bonds, private borrowing, and other aspects as well. Edwards tells an interesting legal drama of whether the Supreme Court would uphold the gold clause, which would have required debtors to repay about 67 percent more dollars—potentially causing an economic calamity. (In fact, an interesting part of the history is government officials debating whether or not to scare markets so they would go down while the Supreme Court was deliberating in an attempt to scare the Court into ruling against the gold clauses. Another interesting part, which I found personally resonant, was all the discussion of contingency planning for all of the possible outcomes of the case.)
Ultimately the Supreme Court ruled that the government had broken the law by retroactively breaking the gold clauses but that there were no damages because the inflation simply reversed the previous inflation so creditors ended up getting what they would have expected, in real terms, when they first made the loans.
Edwards is not completely convincing when he tries to defend the Roosevelt decision and court upholding it as a one-time necessity for the sake of the economy while simultaneously condemning Argentina for taking similar types of actions (in its case dollar clauses instead of gold clauses). There are more parallels than he admits. He is also not completely convincing in his attempt to make the case relevant to issues today. But ultimately this does not matter, what does is just how interesting this book is—and how much I learned about an aspect of going off the gold standard that I had never known about before.
Sebastian Edwards is an excellent international macroeconomist who has spent most of his career writing about emerging markets, particularly economic disasters in Latin America. Which makes him well prepared to take on the United States’ emerging-market like crisis, the Great Depression.
The story starts with a cascading series of bank failures, the efforts of the outgoing Hoover to address them, and how Roosevelt and his incoming team reacted.
At the same time he traces the attitudes towards the gold standard and macroeconomic policy from a sleeper issue into Congress basically forcing the President’s hand to reinflate, which ultimately required revaluing gold at a higher value per dollar--a step that followed the UK. It is fascinating to read about how much Roosevelt was focused on and even targeting particular commodity prices and how quickly they all moved in proportion to the price of gold—just like the quantity theory of money would say. It is also fascinating to read about how the U.S. dollar behaved vis-a-vis the British pound (which was off the gold standard) and the French franc (which was still on it).
A big part of the economic boost caused by the devaluation was due to reducing the real value of debts, basically borrowers could repay them in cheaper money (or, equivalently, had to sell less cotton or whatever to get the dollars to pay them). But this was the rub: debt contracts had a “gold clause” that they were payable in dollars or gold, much for the same reason that emerging markets borrow in dollars—because it increases the certainty and security of lenders thus enabling borrowers to borrow for longer periods at lower interest rates.
The creditors sued and the case ended up in court litigating government bonds, private borrowing, and other aspects as well. Edwards tells an interesting legal drama of whether the Supreme Court would uphold the gold clause, which would have required debtors to repay about 67 percent more dollars—potentially causing an economic calamity. (In fact, an interesting part of the history is government officials debating whether or not to scare markets so they would go down while the Supreme Court was deliberating in an attempt to scare the Court into ruling against the gold clauses. Another interesting part, which I found personally resonant, was all the discussion of contingency planning for all of the possible outcomes of the case.)
Ultimately the Supreme Court ruled that the government had broken the law by retroactively breaking the gold clauses but that there were no damages because the inflation simply reversed the previous inflation so creditors ended up getting what they would have expected, in real terms, when they first made the loans.
Edwards is not completely convincing when he tries to defend the Roosevelt decision and court upholding it as a one-time necessity for the sake of the economy while simultaneously condemning Argentina for taking similar types of actions (in its case dollar clauses instead of gold clauses). There are more parallels than he admits. He is also not completely convincing in his attempt to make the case relevant to issues today. But ultimately this does not matter, what does is just how interesting this book is—and how much I learned about an aspect of going off the gold standard that I had never known about before.
December 8, 2018
Edwards is a UCLA economics professor. Edwards tells how FDR engineered a default in 1933. FDR did away with the gold standard and made owning private gold illegal. The changes were argued before the Supreme Court.
The book is well written and researched. Edwards made this complex action understandable to the lay person. FDR took the action at the height of the depression. It was looked upon as a desperate measure. The author explains in detail why Roosevelt did what he did and how he did it. I found the discussion about the hearing before the Supreme Court most interesting. Many experts still associate the recovery from the depression directly to the monetary easing of FDR’s gold policies.
I read this as an audiobook downloaded from Audible. The book is nine hours and one minute. Timothy Andres Pabon does an excellent job narrating the book. Pabon is an actor and Spanish & English voice-over artist. Pabon has won the Earphone Award as well as the 2015 Society of Voice Arts and Science Award.
The book is well written and researched. Edwards made this complex action understandable to the lay person. FDR took the action at the height of the depression. It was looked upon as a desperate measure. The author explains in detail why Roosevelt did what he did and how he did it. I found the discussion about the hearing before the Supreme Court most interesting. Many experts still associate the recovery from the depression directly to the monetary easing of FDR’s gold policies.
I read this as an audiobook downloaded from Audible. The book is nine hours and one minute. Timothy Andres Pabon does an excellent job narrating the book. Pabon is an actor and Spanish & English voice-over artist. Pabon has won the Earphone Award as well as the 2015 Society of Voice Arts and Science Award.
February 23, 2019
When it comes to the study of sovereign default, author Sebastian Edwards, a UCLA professor, got his baptism of fire studying the 16 year saga that started with the 2001 Argentinian default. Inevitably, this led him to the much larger, and poignantly similar, US default to all holders of gold-linked dollar debt in 1933.
“American Default” is a blow-by-blow account of how FDR did a Nestor Kirchner and got away with it –just!
The full background is given here. You get profiles of his “brain trust” of advisors (I had no idea where the expression “holy Moley” came from, so that was cool), of the nine supreme court justices, with more emphasis on former presidential candidate chief justice Evans and the leader of the “four horsemen,” James McReynolds than on rock stars Brandeis and Cardozo, and of other important FDR cabinet member and advisors like Woodin, Morgenthau and Warburg.
More than anything else, the author convinced me that FDR 100% made it up as he went along! The main thesis of the book is that the US was taken off the gold standard (and all gold was as good as confiscated) because a Cornell professor of agricultural economics, George Warren, convinced Roosevelt that the depressed price of agricultural commodities could be made to rise again if the dollar was devalued versus gold. It’s not clear FDR totally bought this theory, but God knows he gave it a shot.
A full chapter is dedicated to the vain effort to achieve this goal through direct intervention in the gold market by the president himself, who would mischievously decide the gold price for every day while having breakfast in bed, surrounded by his many advisors.
Not unlike what happened some seventy years later with Quantitative Easing, however, the voodoo seems to have helped the wider economy recover. 100% unlike what happened with mortgages in 2008-09, of course, the main plank of government policy was to violate sanctity of contract, thereby lightening the burden on everyone who had borrowed against gold-linked dollars by more than one third.
What I took away from reading this, basically, is that the biggest issue that legally differentiates the US default of 1933 from the Argentinian restructuring of 2005 (namely that the US default was purely domestic, whereas the Argentines chiefly defaulted on foreigners) not only helped FDR prevail when four plaintiffs took his policies to the Supreme Court, but also perhaps serves to explain why the US remains in a funk ten years after the financial crisis:
In the thirties, the US was prepared to abrogate the right of domestic gold-linked bondholders to a windfall; ten years ago, the Chinese government was made whole on its holdings of Fannie and Freddie, all while the rate of homeownership in the US was allowed to plummet from 69% to 61%.
It’s not that surprising we got Trump, is it?
I’d love to give the book five stars, because it’s clearly a labor of love and it was a genuine page-turner. Except I can’t. I can’t forgive the author his second-rate explanation on page 128 of how the monetary base can move in the opposite direction from M1 and I can forgive even less his ABYSMAL analysis on pages 130-131 of the events that led up to the events he describes.
How can he have delved so deeply into the period starting in 1932 without doing a couple days’ worth of analysis of what went before? As the author himself recounts, FDR’s most famous policy ever, the bank holiday of March 1933, was 100% a legacy policy designed by his predecessors. Minimal research would have been sufficient to establish that Hoover and his cabinet pretty much came up with and to a great extent implemented most of the policies included in the New Deal. They may not have been as daring or innovative (or gloriously unconstitutional!) as Roosevelt, but they did not cause the Great Depression. Its causes were much deeper.
Perhaps a junior wrote pages 128 – 131. Edwards should have read them before going to press. I say that and I remember the “press copy” anecdote he tells so well, and it breaks my heart.
“American Default” is a blow-by-blow account of how FDR did a Nestor Kirchner and got away with it –just!
The full background is given here. You get profiles of his “brain trust” of advisors (I had no idea where the expression “holy Moley” came from, so that was cool), of the nine supreme court justices, with more emphasis on former presidential candidate chief justice Evans and the leader of the “four horsemen,” James McReynolds than on rock stars Brandeis and Cardozo, and of other important FDR cabinet member and advisors like Woodin, Morgenthau and Warburg.
More than anything else, the author convinced me that FDR 100% made it up as he went along! The main thesis of the book is that the US was taken off the gold standard (and all gold was as good as confiscated) because a Cornell professor of agricultural economics, George Warren, convinced Roosevelt that the depressed price of agricultural commodities could be made to rise again if the dollar was devalued versus gold. It’s not clear FDR totally bought this theory, but God knows he gave it a shot.
A full chapter is dedicated to the vain effort to achieve this goal through direct intervention in the gold market by the president himself, who would mischievously decide the gold price for every day while having breakfast in bed, surrounded by his many advisors.
Not unlike what happened some seventy years later with Quantitative Easing, however, the voodoo seems to have helped the wider economy recover. 100% unlike what happened with mortgages in 2008-09, of course, the main plank of government policy was to violate sanctity of contract, thereby lightening the burden on everyone who had borrowed against gold-linked dollars by more than one third.
What I took away from reading this, basically, is that the biggest issue that legally differentiates the US default of 1933 from the Argentinian restructuring of 2005 (namely that the US default was purely domestic, whereas the Argentines chiefly defaulted on foreigners) not only helped FDR prevail when four plaintiffs took his policies to the Supreme Court, but also perhaps serves to explain why the US remains in a funk ten years after the financial crisis:
In the thirties, the US was prepared to abrogate the right of domestic gold-linked bondholders to a windfall; ten years ago, the Chinese government was made whole on its holdings of Fannie and Freddie, all while the rate of homeownership in the US was allowed to plummet from 69% to 61%.
It’s not that surprising we got Trump, is it?
I’d love to give the book five stars, because it’s clearly a labor of love and it was a genuine page-turner. Except I can’t. I can’t forgive the author his second-rate explanation on page 128 of how the monetary base can move in the opposite direction from M1 and I can forgive even less his ABYSMAL analysis on pages 130-131 of the events that led up to the events he describes.
How can he have delved so deeply into the period starting in 1932 without doing a couple days’ worth of analysis of what went before? As the author himself recounts, FDR’s most famous policy ever, the bank holiday of March 1933, was 100% a legacy policy designed by his predecessors. Minimal research would have been sufficient to establish that Hoover and his cabinet pretty much came up with and to a great extent implemented most of the policies included in the New Deal. They may not have been as daring or innovative (or gloriously unconstitutional!) as Roosevelt, but they did not cause the Great Depression. Its causes were much deeper.
Perhaps a junior wrote pages 128 – 131. Edwards should have read them before going to press. I say that and I remember the “press copy” anecdote he tells so well, and it breaks my heart.
August 26, 2018
Edwards is right that most Americans are shocked when they learn that in 1933, the American government defaulted on its debt, refusing to pay the gold the government's contracts explicitly promised. They are even more shocked when they learn that even former private contracts with "gold clauses," and the holding of private gold, were made illegal, and that the U.S. Supreme Court upheld these laws in a nail-biting 5-4 vote in 1935. In truth, this story has been told elsewhere, by Rauchway and Steil and Friedman and Schwartz, but Edwards brings an modern economist's eye to the episode, and tells the story more completely than has been done before.
For one, Edwards shows that President Franklin Roosevelt was obsessed with getting the nation off the gold standard mainly because he wanted to raise the price of farm goods. Every morning he checked the prices of wheat, corn, and especially cotton, like a fever chart of the nation, with the hope that he they would get back to 1926 levels. 12 cent cotton was almost the cynosure of government policy for him. The book also shows how many twists the government took to get off gold, from banning gold export except with licenses in March 9, 1933, then all exports on April 19, and then finally getting Congress to pass a resolution on June 5 annulling all gold contracts. The next year Congress finally decided to allow Roosevelt to devalue the dollar by up to 60%, which he did.
The world watched in disbelief as U.S., which still held 40% of the world's gold, refused to even explain what it intended to do with it, or, for most of 1933, what value it intended to place on it. After all, it was not just the U.S. that was tied to the gold dollar, but many foreign companies and utilities had issued gold-clause dollar bonds, and had to decide what to do. Many foreign nations, who had borrowed from the U.S. in World War I, had to decide whether to pay back the U.S. in new depreciated dollars (like Britain) or in gold-valued dollars (like France), which was a significant decision because the latter could be 60% more expensive than the former.
I wish Edwards spent more time on the final Supreme Court decision itself. He does show that Harlan Fiske Stone's lone concurrence prevented any full majority ruling about whether the laws were truly constitutional. But overall the book covers each episode with brio. It may not be as original as Edwards thinks, but it is quite a story, one with lessons for nation's like Argentina and Greece today.
For one, Edwards shows that President Franklin Roosevelt was obsessed with getting the nation off the gold standard mainly because he wanted to raise the price of farm goods. Every morning he checked the prices of wheat, corn, and especially cotton, like a fever chart of the nation, with the hope that he they would get back to 1926 levels. 12 cent cotton was almost the cynosure of government policy for him. The book also shows how many twists the government took to get off gold, from banning gold export except with licenses in March 9, 1933, then all exports on April 19, and then finally getting Congress to pass a resolution on June 5 annulling all gold contracts. The next year Congress finally decided to allow Roosevelt to devalue the dollar by up to 60%, which he did.
The world watched in disbelief as U.S., which still held 40% of the world's gold, refused to even explain what it intended to do with it, or, for most of 1933, what value it intended to place on it. After all, it was not just the U.S. that was tied to the gold dollar, but many foreign companies and utilities had issued gold-clause dollar bonds, and had to decide what to do. Many foreign nations, who had borrowed from the U.S. in World War I, had to decide whether to pay back the U.S. in new depreciated dollars (like Britain) or in gold-valued dollars (like France), which was a significant decision because the latter could be 60% more expensive than the former.
I wish Edwards spent more time on the final Supreme Court decision itself. He does show that Harlan Fiske Stone's lone concurrence prevented any full majority ruling about whether the laws were truly constitutional. But overall the book covers each episode with brio. It may not be as original as Edwards thinks, but it is quite a story, one with lessons for nation's like Argentina and Greece today.
May 28, 2018
I received a free Kindle copy of American Default by Sebastian Edwards courtesy of Net Galley and Princeton University Press, the publisher. It was with the understanding that I would post a review on Net Galley, Goodreads, Amazon, Barnes and Noble and my fiction book review blog. I also posted it to my Facebook, Twitter, LinkedIn and Google Plus pages.
I requested this book as I am interested in american history and the description made this book sound interesting. This is the first book by Sebastian Edwards that I have read.
The subtitle of this book "The Untold Story of FDR, the Supreme Court and the Battle over Gold" is an adequate description of the contents. It is a well researched book that details the battle by Franklin Delano Roosevelt to take the United States off of the gold standard. The subject has not been adequately covered before to my knowledge and this book addresses that gap. It is an interesting read, but not exactly a page turner.
I recommend this book to anyone who has an interest on how the United States abandoned the gold standard.
I requested this book as I am interested in american history and the description made this book sound interesting. This is the first book by Sebastian Edwards that I have read.
The subtitle of this book "The Untold Story of FDR, the Supreme Court and the Battle over Gold" is an adequate description of the contents. It is a well researched book that details the battle by Franklin Delano Roosevelt to take the United States off of the gold standard. The subject has not been adequately covered before to my knowledge and this book addresses that gap. It is an interesting read, but not exactly a page turner.
I recommend this book to anyone who has an interest on how the United States abandoned the gold standard.
April 3, 2019
As I read the first few paragraphs of the intro, I thought, "Oh, dear! Have I got a book by a crank?" I returned to the dust-jacket to affirm this fellow was a "real economist" then decided to give it a few pages before throwing into the dust bit.
Yay!
Not only is Dr. Edwards not a crank, he is a good writer who does the difficult: tells a story about politico-economics in a fascinating style. If you have any interest at all in the Great Depression, particularly the efforts by FDR to get the economy going by any means possible, one of which was by revaluing (devaluing) the US Dollar, you'll want to read this book. Edwards brings to life FDR and his interactions with his advisors, including the so-called "Brain Trust," as they tried first one thing, then another. My personal visualization (definitely not suggested by Dr. Edwards) is that of a mouse in a maze or, if you prefer, PacMan in his electronic maze of a few decades back.
In any event the reader also meets the then extant US Supreme Court along with a few Senators and Congress-critters. Edwards eventually lets you know what he thinks of some very limited aspects of the actions and inactions of our government, but first he presents some of the thoughts of other notables in the field. The two that I have read are J.M. Keynes and Ben Bernanke. By the way, unless you are a professional economist, don't select Dr. Bernanke's book. It is written for academicians and is quite at the other end of the enjoyable-to-read spectrum from Dr. Edwards' book (doubtless because Bernanke was writing some nine academic papers that were later glued together into a "book").
Dr. Edwards offer opinions on but two things; neither opinion is at all "crank-ish". Rather, both are well reasoned and supported by data, such data as exist. All in all, a short (200 pages) book that is an enjoyable read.
Yay!
Not only is Dr. Edwards not a crank, he is a good writer who does the difficult: tells a story about politico-economics in a fascinating style. If you have any interest at all in the Great Depression, particularly the efforts by FDR to get the economy going by any means possible, one of which was by revaluing (devaluing) the US Dollar, you'll want to read this book. Edwards brings to life FDR and his interactions with his advisors, including the so-called "Brain Trust," as they tried first one thing, then another. My personal visualization (definitely not suggested by Dr. Edwards) is that of a mouse in a maze or, if you prefer, PacMan in his electronic maze of a few decades back.
In any event the reader also meets the then extant US Supreme Court along with a few Senators and Congress-critters. Edwards eventually lets you know what he thinks of some very limited aspects of the actions and inactions of our government, but first he presents some of the thoughts of other notables in the field. The two that I have read are J.M. Keynes and Ben Bernanke. By the way, unless you are a professional economist, don't select Dr. Bernanke's book. It is written for academicians and is quite at the other end of the enjoyable-to-read spectrum from Dr. Edwards' book (doubtless because Bernanke was writing some nine academic papers that were later glued together into a "book").
Dr. Edwards offer opinions on but two things; neither opinion is at all "crank-ish". Rather, both are well reasoned and supported by data, such data as exist. All in all, a short (200 pages) book that is an enjoyable read.
December 19, 2019
The grumpus23 (23-word commentary)
Precedence has been set and other countries will likely use this to restructure their debt at some point in the future. Not good.
Precedence has been set and other countries will likely use this to restructure their debt at some point in the future. Not good.
September 27, 2018
"الإفلاس الأمريكي: القصة غير المروية عن فرانكلين روزفلت والمحكمة العليا والصراع حول الذهب" (American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold)
لسباستيان إدواردز (Sebastian Edwards)
يوثق سيباستيان إدواردز أستاذ الإقتصاد الدولي في جامعة كاليفورنيا لوس أنجلوس ما يمكن إعتباره فعليا إفلاس الحكومة الأمريكية وهي أحداث نسيت وبقيت إلى حد كبير مجهولة في خضم كل ما كتب عن أزمة 1929 وما تبعها من كساد وجهود الرئيس روزفلت للتعافي منه في ما عرف ببرنامج النيو ديل (New Deal).
يروي إدواردز آخر سنوات حكم الرئيس هوفر الذي كان يبدو عاجزا عن فهم ومعالجة أسباب الأزمة الإقتصادية التي حلت ببلده. فقد بقي متمسكا بالحلول النقدية الأرثودوكسية التي تعتمد على ثقة الناس في قيمة الدولار من الذهب رغم الإنهيار الرهيب في الأسعار والإنكماش الإقتصادي الذي صاحبها. في المقابل يصف إدواردز المرشح الرئاسي روزفلت وهو يحاول طوال حملته الإقتصادية مراوغة هوفر وعدم الإلتزام بأي سياسة نقدية لكي يبقي كافة الخيارات مفتوحة لنفسه ولأن فريق مستشاريه يحتوي على إقتصادي واحد وغير مختص في السياسة النقدية.
ثم يروي الكتاب موجة الإصلاحات التي أقرها روزفلت في المئة يوم الأولى، بداية من إعلان عطلة بنكية مطولة لوقف نزيف السيولة، ثم مصادرة الذهب من كل من يملكه وتعويضه بأوراق نقدية، ومنع تصدير الذهب على العموم وإغلاق شباك سحب الذهب على العموم وحصر الحق في القيام بالعمليتين في سلطة الحكومة. ثم تقديم مساعدات للمزارعين مقابل تخفيضهم من الإنتاج (عدم زرع الأراضي أو إتلاف المنتوج) للرفع من أسعار المواد الزراعية. وأخيرا القرارين الذين أعتبرا تخلفا عن سداد الديون وهما خفض قيمة الدولار ب41% مقارنة بالذهب وإلغاء بند المعيار الذهبي من كل عقود الديون العامة والخاصة بصفة رجعية.
يتحدث الكتاب بإسهاب عن تبعات هذا القرار الذي يعتبر نكوثا عن الدين وحيثيات المعركة القانونية المريرة التي خاضتها الحكومات الأجنبية والشركات والبنوك الدائنة ضد مدينيها من الحكومة والخواص وانتهت بقرار غريب من المحكمة العليا التي ساندت قرار الحكومة وتخلت عن مبدأ قدسية العقود. لكن التاريخ في النهاية أنصف روزفلت، فقد أصبحت اليوم السياسة النقدية التوسعية هي الأداة الأولى لمواجهة الأزمات.
أكثر ما يربط تلك الحقبة بواقعنا اليوم هو النقاش الذي يطرحه إدواردز في نهاية الكتاب عن أحقية البلدان في الإعلان عن الإفلاس مستشهدا بحالة الأرجنتين وبلدان أخرى خفضت عملتها وتراجعت عن السداد بالمعيار الأصلي للدين. ويذكر القراء الأمريكيين أنه رغم أن الأمر يبدو غير مطروح حاليا بالنظر للترقيم الإئتماني لحكومتهم، فإن حادثة الإفلاس آتية لا محالة بسبب الإرتفاع الجنوني للدين العام الأمريكي، خاصة منه الإلتزامات غير المسجلة في الدين لدفع كلفة التغطية الإجتماعية.
لسباستيان إدواردز (Sebastian Edwards)
يوثق سيباستيان إدواردز أستاذ الإقتصاد الدولي في جامعة كاليفورنيا لوس أنجلوس ما يمكن إعتباره فعليا إفلاس الحكومة الأمريكية وهي أحداث نسيت وبقيت إلى حد كبير مجهولة في خضم كل ما كتب عن أزمة 1929 وما تبعها من كساد وجهود الرئيس روزفلت للتعافي منه في ما عرف ببرنامج النيو ديل (New Deal).
يروي إدواردز آخر سنوات حكم الرئيس هوفر الذي كان يبدو عاجزا عن فهم ومعالجة أسباب الأزمة الإقتصادية التي حلت ببلده. فقد بقي متمسكا بالحلول النقدية الأرثودوكسية التي تعتمد على ثقة الناس في قيمة الدولار من الذهب رغم الإنهيار الرهيب في الأسعار والإنكماش الإقتصادي الذي صاحبها. في المقابل يصف إدواردز المرشح الرئاسي روزفلت وهو يحاول طوال حملته الإقتصادية مراوغة هوفر وعدم الإلتزام بأي سياسة نقدية لكي يبقي كافة الخيارات مفتوحة لنفسه ولأن فريق مستشاريه يحتوي على إقتصادي واحد وغير مختص في السياسة النقدية.
ثم يروي الكتاب موجة الإصلاحات التي أقرها روزفلت في المئة يوم الأولى، بداية من إعلان عطلة بنكية مطولة لوقف نزيف السيولة، ثم مصادرة الذهب من كل من يملكه وتعويضه بأوراق نقدية، ومنع تصدير الذهب على العموم وإغلاق شباك سحب الذهب على العموم وحصر الحق في القيام بالعمليتين في سلطة الحكومة. ثم تقديم مساعدات للمزارعين مقابل تخفيضهم من الإنتاج (عدم زرع الأراضي أو إتلاف المنتوج) للرفع من أسعار المواد الزراعية. وأخيرا القرارين الذين أعتبرا تخلفا عن سداد الديون وهما خفض قيمة الدولار ب41% مقارنة بالذهب وإلغاء بند المعيار الذهبي من كل عقود الديون العامة والخاصة بصفة رجعية.
يتحدث الكتاب بإسهاب عن تبعات هذا القرار الذي يعتبر نكوثا عن الدين وحيثيات المعركة القانونية المريرة التي خاضتها الحكومات الأجنبية والشركات والبنوك الدائنة ضد مدينيها من الحكومة والخواص وانتهت بقرار غريب من المحكمة العليا التي ساندت قرار الحكومة وتخلت عن مبدأ قدسية العقود. لكن التاريخ في النهاية أنصف روزفلت، فقد أصبحت اليوم السياسة النقدية التوسعية هي الأداة الأولى لمواجهة الأزمات.
أكثر ما يربط تلك الحقبة بواقعنا اليوم هو النقاش الذي يطرحه إدواردز في نهاية الكتاب عن أحقية البلدان في الإعلان عن الإفلاس مستشهدا بحالة الأرجنتين وبلدان أخرى خفضت عملتها وتراجعت عن السداد بالمعيار الأصلي للدين. ويذكر القراء الأمريكيين أنه رغم أن الأمر يبدو غير مطروح حاليا بالنظر للترقيم الإئتماني لحكومتهم، فإن حادثة الإفلاس آتية لا محالة بسبب الإرتفاع الجنوني للدين العام الأمريكي، خاصة منه الإلتزامات غير المسجلة في الدين لدفع كلفة التغطية الإجتماعية.
June 9, 2019
As the subtitle correctly indicates, this is "the untold story of FDR, the Supreme Court and the battle over gold." Prior to WW I, almost all advanced countries were on the gold standard and their currencies traded at a fixed parity to gold. Many countries suspended the gold standard during WW I, and the return to the gold standard after the war was disrupted by changes wrought by the war, debt structures, and ultimately the Great Depression.
The book highlights the world FDR found upon election. The book indicates that frankly, he had no choice but to leave the gold standard. Getting off the gold standard was easier said than done. The U.S. Constitution has extensive provisions limiting the ability of the government to modify contractual obligations, including its own. The book discusses the legal struggle as well as the ideological and financial issues. This material is not well known or often discussed.
Some of the other reviewers would have liked more analysis of the Supreme Court decisions of February 18, 1935. I agree with the author that the pair of decisions was result-driven rather than constitutionally driven. The author compares the decision to Marbury v. Madison, another necessity-based Court decision. Both have had profound consequences, with almost non-existent basis or foundation in law.
If someone wants to read a "different" book that is important, this is definitely the book to read.
The book highlights the world FDR found upon election. The book indicates that frankly, he had no choice but to leave the gold standard. Getting off the gold standard was easier said than done. The U.S. Constitution has extensive provisions limiting the ability of the government to modify contractual obligations, including its own. The book discusses the legal struggle as well as the ideological and financial issues. This material is not well known or often discussed.
Some of the other reviewers would have liked more analysis of the Supreme Court decisions of February 18, 1935. I agree with the author that the pair of decisions was result-driven rather than constitutionally driven. The author compares the decision to Marbury v. Madison, another necessity-based Court decision. Both have had profound consequences, with almost non-existent basis or foundation in law.
If someone wants to read a "different" book that is important, this is definitely the book to read.
October 18, 2019
OK, so this book isn't for everyone, I'm not even sure it was for me. The author makes an interesting case that not so long ago the US government simply reneged on a bunch of its debt contracts, retroactively removing the gold clause (that is, the payment was to be made in gold equivalent) from its outstanding bonds. Who knew?
Why did they do this? The deflation has to do with deflationary pressures, exchange rates, and the monetary system. Not a terribly complicated story, but not a sound byte, either.
Did the Supreme Court go along with this? Yes, but not exactly. Not so long after the "nine old white men" gave the FDR Administration a lifeline on this maneuver, "Black Monday" came along and ruled large swaths of the New Deal unconstitutional.
So what was all of this about? Does it matter today? That's the subject of the book, and the event and conditions surrounding it are so unbelievable that I felt compelled to finish the book. Not exactly scintillating writing or a page-turner of a story, but as far as economic history narratives go, I'm glad I read it.
Have the Greeks dumped the Euro yet?
Why did they do this? The deflation has to do with deflationary pressures, exchange rates, and the monetary system. Not a terribly complicated story, but not a sound byte, either.
Did the Supreme Court go along with this? Yes, but not exactly. Not so long after the "nine old white men" gave the FDR Administration a lifeline on this maneuver, "Black Monday" came along and ruled large swaths of the New Deal unconstitutional.
So what was all of this about? Does it matter today? That's the subject of the book, and the event and conditions surrounding it are so unbelievable that I felt compelled to finish the book. Not exactly scintillating writing or a page-turner of a story, but as far as economic history narratives go, I'm glad I read it.
Have the Greeks dumped the Euro yet?
October 5, 2020
Well told history of Roosevelt’s gold buying program and abrogation of gold clauses in private and public contracts. I’d consider this an interesting legal and political history told by someone well versed in economics as opposed to an economic history as billed. Highly recommended.
Gave me a greater appreciation for the work done by the Hoover Administration in formulating concrete plans and how much of the lauded 100 days success of FDR was reliant on inherited policy infrastructure and much of FDRs policy response was sporadic.
The author ignores much of the research, it seems, when discussing his counterfactual analysis and how investment was depressed below trend (see work of Cole and Ohanian). Further, given the importance of credit disintermediation as impeding recovery, little discussion is made of the impacts on financial institutions from abrogation. He does show that there is no discrete drop upon enactment or resolution of the legal battle.
Gave me a greater appreciation for the work done by the Hoover Administration in formulating concrete plans and how much of the lauded 100 days success of FDR was reliant on inherited policy infrastructure and much of FDRs policy response was sporadic.
The author ignores much of the research, it seems, when discussing his counterfactual analysis and how investment was depressed below trend (see work of Cole and Ohanian). Further, given the importance of credit disintermediation as impeding recovery, little discussion is made of the impacts on financial institutions from abrogation. He does show that there is no discrete drop upon enactment or resolution of the legal battle.
July 18, 2024
This book contains a lot of really interesting details about the great depression, FDR and his executive orders, the gold standard, monetary policy, and the legal cases that challenged these orders. It does a good job of collecting all of these details into a single book that I can use for reference. But, it really falls short on presenting the narrative in a clear concise manner that is easy to follow. The sections of the book jump around from timeline to timeline and from character to character without drawing a clear narrative arch throughout that should have done a better job of keeping the reader engaged. Also the TDS and climate change references had nothing to do with the subject at hand. This could have been a really great book.
October 8, 2025
I was blown away about how much US history this fellow Chilean knows. Unfortunately I could not keep track of the main threads due to the excessive use of unnecessary details (maybe trying to show off mastery of us history?).
Curiously, where the book spends too much ink on anecdotes and microbiographies, it spends almost nothing on educating the reader on the discussed policies and the different mechanisms through which they had an effect. How did reneging on the gold standard led to a 60% devaluation in the dollar? How did this affected inflation? I forgot my macro, and don’t think the general reader should know this either. Similar to this, there were several instances in the book where the author assumes way too much macro/trade knowledge.
Curiously, where the book spends too much ink on anecdotes and microbiographies, it spends almost nothing on educating the reader on the discussed policies and the different mechanisms through which they had an effect. How did reneging on the gold standard led to a 60% devaluation in the dollar? How did this affected inflation? I forgot my macro, and don’t think the general reader should know this either. Similar to this, there were several instances in the book where the author assumes way too much macro/trade knowledge.
August 25, 2018
Very interesting and topical
In 1933, the United States government de facto defaulted on its debt. It did so by reneging on its promise to repay debt in dollars or in gold. In a fascinating book, Edwards traces the events leading up to this step, the debate surrounding it and the eventual cases argued in front of the Supreme Court and the Court's verdicts. Crucially, he points out how this could - theoretically - happen again, and how other countries defaulting can use the US precedent.
On a very minor point, while there are plenty of illustrative charts that help understanding, the exchange rate charts are confusing and mis-labelled. This should be changed.
In 1933, the United States government de facto defaulted on its debt. It did so by reneging on its promise to repay debt in dollars or in gold. In a fascinating book, Edwards traces the events leading up to this step, the debate surrounding it and the eventual cases argued in front of the Supreme Court and the Court's verdicts. Crucially, he points out how this could - theoretically - happen again, and how other countries defaulting can use the US precedent.
On a very minor point, while there are plenty of illustrative charts that help understanding, the exchange rate charts are confusing and mis-labelled. This should be changed.
August 18, 2018
Excellent book, and well written about a largely forgotten episode of American economic history. The book highlights a very exceptional time after the Great Depression and before WWII when a Supreme Court ruling changed the fundamental nature of the American (and arguably global) economy. For the legally minded scholars, this episode of American history sets a precedence for modern sovereign defaults like Argentina.
September 15, 2018
Very well done
The story of one of the major events in economic history. The revaluation of the dollar during the Depression with the consequential political and economic results. Very detailed but still very readable.
The story of one of the major events in economic history. The revaluation of the dollar during the Depression with the consequential political and economic results. Very detailed but still very readable.
February 15, 2019
A useful history of a now long forgotten aspect of teh Great Depression, but with too much effort to contextualise in terms of modern sovereign default (especially Argentina in the early 2000s) and too little regarding the defaults and quasi-defaults of other countries in the 1930s.
April 27, 2020
יכל להיות מאמר מעולה. נופח לספר היסטוריה שלם כי המחבר רצה לכתוב ספר. להגנתו, עיקרי הטיעונים של הספר מופיעים כולם בפרק הראשון. ארצות הברית הגיעה לחדלות פירעון בשנת 1933, והעולם בחר לשכוח.
אנקדוטות מבהילות על רוזוולט לאורך כל הספר.
אנקדוטות מבהילות על רוזוולט לאורך כל הספר.
March 2, 2024
Had no idea of the "gold clause" in most debt contracts. Put simply, contracts until 1934 were indented, or in other words, in real terms. This book highlights the saga of getting rid of this gold clause.
January 5, 2021
Cool underrated story
May 1, 2021
Fascinating and detailed account of how the US economy was set on a course for recovery during the Great Depression.
March 9, 2024
Forgotten history of the end of the gold standard, the breaking of the majority of national contracts, and how to escape Depression. Could’ve been shorter but pretty good.
March 24, 2022
Pretty interesting story mainly because I had no idea it happened. The book got too much into the weeds though.
July 1, 2025
great book
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