Regional President Speech

K. R Bopp 10/2/47 Board Mooting G O L D Chariot Dickens, Nicholas Niokloby Chapter XVI (1833-1839) Hr* Grogfbury, M.P*, after giving N icholas Nickleby a long list of qualifications that a secretary to an M.P* Bust havo and duties ho oust discharge oontinues -- "Besides which,* continued Mr. Gregsbury, "I should expect hia now end then to go through a few figures in the printed tables, and to pick out a few results, so that I sight oobo out pretty well on (tariff) tiaber-duty ques­ tions, end finance questions, snd so ont and I should like his to get up a few little arguments about the disastrous affects of a return to (the gold standard) cash payaents and a Metallic currency, with a touch now and then about the exportation of bullion, and the Xsperor of Russia and bonk notes and all that kind of thing, which it* s only neeessazy to talk fluently about, beosuse nobody under* stands it* Do you take bo?" "I think 1 understand," said Nicholas* Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis V. A. Brown - two volumes to cover 20 years of the operation of the gold standard. (a) Hard to know what to exclude dhS'A 6 (b) Must dogmatic theaiis ny wont h (-^Us fit), IAS<££ /c . «y *■ £**** •'*'<_ ^Z< w ^ Creation of the International Gold Standard Created in that nostalgic, Victorian era - the second half of the 19th Century. A century ago currency systems with few exceptions - U.K. - were on silver or bimetallic standards. England got on gold standard l)y mistake. .£ > <— 1696 Report of John Locke, Sir Isaac Newton and Lord Somers to fix legal ratio at 16:1. iJUjpU In other countries, ratio was 15j:l. In 1816, Lord Liverpool concluded that England was "naturally a gold country", adopted the gold standard, and closed the mints to the free coin­ age of silver. Gradual adoption by other countries until wide­ spread by 1914* Rationale of the Gold Standard (a) Distribution of monetary gold. Country A < qfr«da* / (b) Vorld supply of monetaiy gold. _ , „ _ . „ , / Production G —* M —» P —)- Gold Stocks _ Consumption Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis (c) An abiding faith in the benevolence of this mechanism. 5. The First World War Viewed as temporary aberration. Faith remained. Return to normalcy. 6. Restoring the F&9ade /%/<tC\ (a) England (b) France 7. World Depression and Second Collapse: Reexamination and Loss of Faith , , . .. * . (tu) M ^ j I - ^ ^ ^ — (a) Major miracles that enabled the gold standard to work at all. Aleatory character of industry. California and Australia when world adopted standard, p. Klondike and Rand. Cyanide process. (b) The Ct/H ratio As little as 2-356 in England. A very thin gilt Domestic hoarding. G = H, not G - Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis A - - (c) Role of management Bank of Ehgland aided five times by Bank of France before First World War. (d) Greater demands made of monetary system Depression and unemployment. Elimination of domestic convertibility. (a)— g‘rk «xb £as. tihfi rrnnmnlntn Mnv ftntat mioAewy plij jlclgfaS 'J ™ *" 8. General Conclusions { (a) The 1920’s » A rigid international system is fragile. Cost of international stability may be too great in terms of domestic instability. (b) The 1930's Nationalism is chaos. The rest of the world initially, eventually the country itself, loses. H (c) What is needed is a flexibly^international system. The International Monetary Fund. The International Trade Organization. Establish rules of game. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis The Bevin Proposal in the Light of this Discussion (a) Gold for domestic use (?) So long as there is no domestic circulation of gold, domestic value of currency is determined by quantity in circulation uninfluenced t>y the amount of gold reserve. (b) Gold for international use (?) Then don’t want gold but what it will buy. (c) Sudden statement by believer in short and long-run planning! (d) Basic international need of Britain**? ,/lf 10. What of the Future of Gold? (a) We should eventually try to acquire some goods and services for part of our gold stock. (b) We should be prepared for an influx of Russian atomic physicist gold. Needn’t worry about solvency of Federal Reserve Bank. (c) We should develop positive monetary standards Prices Employment ^ r M i/a <u-y. A r-i* A r‘/- ^ $ Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1947, October 1). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19471002_karl_r_bopp

@misc{wtfs_regional_speeche_19471002_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1947},
  month = {Oct},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19471002_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}