Last Round Up

In Boston last week a spinster poured out a bag of walnuts on a bank counter. A teller smashed them open, found in each pair of neatly glued shells a $5 gold-piece. In Waukesha, Wis., an elderly woman passed a handful of gold-pieces to a bank teller. "They're good," she said. "That's just a little mildew on them. I kept them in a bottle hanging by a string in my well." In Manhattan all one evening the dark cavern of Maiden Lane echoed with unaccustomed footsteps as one after another, clerks, stenographers, women in shawls, fathers carrying children clutching baptismal coins, trudged to the postern of the Federal Reserve Bank. "Gold?" asked two armed guards. A nod, and each figure passed in. Midnight was the deadline for the use of gold coins as legal money.

Thus the U. S. Treasury took away the last gold of the common people. It estimated its receipts since Jan. 1 at $12,000,000. Then, still hungry, the Treasury extended the deadline indefinitely hoping to get more gold. Such were the Treasury's preparations while it waited to. have Congress pass the President's devaluation act (TIME, Jan. 22).

Meantime Congress went through the motions of considering the law. Said Congressman Snell, Republican leader in the House: "About 10% of the members know what effect this gold bill will have and not more than 5% can make an intelligent statement in regard to it." No one in Washington questioned his remark except possibly as an exaggeration of Congressional understanding.

Both Senate and House held hearings. Banker James P. Warburg, Professor Edwin W. Kemmerer, Professor O. M. W. Sprague and several Reserve Bank officials criticized one or several aspects of the President's plans for the dollar. The House Coinage Committee received Father Coughlin of Detroit with open arms, posed with him for pictures, came member by member and whispered in his ear. and attended in awed silence while he declared:

"If Congress fails to carry through with the President's suggestions. I foresee a revolution greater than the French Revolution. It is either Roosevelt or ruin."

In the Senate Banking & Currency Committee Senators Glass, McAdoo and Gore questioned the constitutionality of the whole proceeding, demanded a written opinion from Attorney General Cummings on the right of the Treasury to seize the gold of the Federal Reserve and give gold certificates in payment -- certificates which, when the dollar is de valued, will call for only about half as much gold.

Mr. Cummings delivered a lengthy opinion, citing several decisions of the Supreme Court. His conclusion: "The monetary gold stock may be taken by the Government in the exercise of its right of eminent domain. . . . Congress may make paper money tender for the payment of all debts. . . . The Government may discharge its obligation [for the seized gold] in currency of that type."

Said Mr. McAdoo: "Well, we got our legal opinion."

Said Mr. Glass: "What we got was an illegal opinion."

Mr. Glass then proceeded to call the attention of the Senate to some Supreme Court dicta "which the Attorney General, I suppose, inadvertently omitted." Quoting from the decision in the case of Monongahela Navigation Co. v. U. S. (which Mr. Cummings had referred to), Mr. Glass pointed out that, while the Court had said that Congress might direct the seizure of any property, the question of what shall be paid for that property cannot be determined by Congress but rests with the courts.

Meanwhile the Treasury, having virtually completed its last round up of gold, was eager to get on with the last round up of Congress. It urged passage of the bill within three or four days. Return of capital from abroad had already begun to drive up the exchange value of the dollar in spite of the fact that in four days the Treasury had bought nearly $9,000,000 worth of gold in England. Foreseeing still greater purchases as a possible necessity, the Treasury wanted to get its hands on the $2,000,000,000 exchange "equalization fund" to hold the dollar down.

So after two House committees had quarreled over the honor of reporting on the Administration's bill, that bill, intact except for minor amendments, was brought out on the floor. Debate was limited to three hours. No other amendments were added, and it was passed by a vote of 360 to 40. Only two Democrats and 38 Republicans dared to vote "Nay," although the only argument advanced for it was: "The President wants it passed as it is."

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