Money at Midnight

The 76th Congress and the 32nd President last week really got to grips once more and both were sore--almost as sore as they were two years ago over the Supreme Court. What they fought about this time was the bill to extend the President's power over money, but what they were principally sore at was each other.

There were four main issues involved in the money bill:

1) The purchase of foreign silver. Congress proposed to end this practice and the Administration did not seriously object.

2) The purchase of U. S.-mined silver at above the world price--a subsidy to domestic silver producers. The "economy-minded" Senate proposed to boost the price for domestic silver from 64.64-c- an oz. (world price around 40-c-) to 77.57-c-.

3) Continuation of the stabilization fund (created in 1934 out of a $2-billion paper "profit" from the devaluation of the dollar) which is used to protect the exchange value of the dollar from violent fluctuations during crises.

4) Extension of the President's power to reset the gold content of the dollar as low as 50% of its old value (present value 59-c-). The Administration has not used this power, has no present plans for using it except in some emergency if the pound sterling and the franc should collapse. The Senate proposed to let this power (a threat of inflation) expire--in effect, to take it back into the hands of Congress until it is again needed.

Last fortnight the Senate's hard-money men led by Virginia's Carter Glass killed the section of the bill renewing the President's power to revalue the dollar by getting Key Pittman's silver bloc to join them --the price being 77.57-c- an oz. for domestic silver. In Hyde Park, President Roosevelt hit the ceiling. He accused the hard-money men of returning control of the U. S. dollar to Wall Street's exchange speculators. Secretary Morgenthau announced that U. S. farmers and businessmen had "better start worrying seriously" if the Senate's action stood. Neither announcement improved the Senate's temper. The President returned to Washington from Hyde Park a day early to lead the money fight in person. Only two days remained before midnight June 30, when his money powers expired.

The bill went to House-Senate conference. There Mr. Roosevelt's men contrived a deal with the silver Senators, promised that the Treasury would pay 70.95-c- for domestic silver metal. So with the silverites' consent the dollar devaluation power was restored to the bill. This deal infuriated the hard-money men.

In the House, when the conference report came out, Republicans demanded roll calls to delay matters as the midnight deadline approached. On the Senate side, a grim procession of Republicans filed into Senator Townsend's office, came out resolved to talk the bill to death.

At length the House voted, and the President's men won, 226 to 160. The conference report then arrived in the Senate for final approval. It had to lie untouched for hours while its foes used up time debating the Relief act, which also had to be finished that day. It was dinner time before Senator Wagner, in charge of the money bill, could bring it up.

First, two Democrats, Idaho's Clark and Colorado's Adams, accused the Senate conferees of not trying hard enough to defend the Senate's stand against the President's dollar power. Senator Townsend opened for the Republicans and then Senator Vandenberg asked all factions, who were agreed on the Stabilization Fund's desirability, to pass a separate resolution to preserve it. This suggestion got nowhere. But it and other speeches took up time. In reply to Mr. Roosevelt's outburst at Hyde Park, Mr. Vandenberg said: "I wonder if our distinguished Executive realized precisely what he was saying . . . that when Congress controls money, Wall Street controls it."

At 11:30 p. m., by prearrangement with the Republicans, Democrat Tydings of Maryland, whom Franklin Roosevelt tried to "purge" last year, got the floor. The galleries were packed. Majority Leader Barkley's jaw muscles twitched in angry impotence. Sweetly relishing his revenge, Senator Tydings cried: "Shall we, now that the time limit is expiring, recapture the right vested in the Congress by the Constitution to fix the value of the nation's money? Or shall we give up that power in advance, without an emergency, to the President of the United States, and deprive ourselves of the power, in case of future need, to take action that Congress may deem wise? . . .

"Thirteen minutes from now will be the first of July, and I have a feeling that even in New York the grass will not be growing in the streets. I have a feeling that the banks will open, too."

The Senate clock's hands met. "I note now that it is Saturday morning," purred Senator Tydings. The President's dollar power was gone, and with it the Stabilization Fund, the higher price for silver.

But was the President's power irrevocably dead? Administration men had said it would be, until toward the eleventh hour they produced an opinion from Attorney General Murphy stating that the power might legally rise again, after lapsing, should the Senate pass this money bill later on. Until a weary hour Senators debated this point, finally agreeing to vote on the bill this week.

Significance. The practical issue between the President and Congress last week was out of all proportion to the amount of heat engendered. Under the Gold Reserve Act of 1934, with the approval of the President, the Secretary of the Treasury may purchase gold "in any amounts at home or abroad with any direct obligations, coin or currency of the U. S." The price of gold for all practical purposes determines the exchange value of the dollar. If the Secretary should choose to pay $40 an oz. for gold instead of $35 he would in effect devalue the dollar. If he should choose to change the price daily or hourly he could use the power for much the same purpose as the Stabilization Fund. Therefore when the money bill failed to pass, the Administration was placed in no serious hole, nor did Congress recover any notable power previously delegated. The real issue between the President and Congress was: Who is boss?

The unfinished money bill's provision against further buying of foreign silver last week caused near-panic in Mexico. In the U. S. all foreign bar silver available was rushed to the mints. The world price dropped to 38-c- per oz. (from 43-c- at the first of the week).

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