American Default – The Untold Story of FDR, the Supreme Court, and the Battle over Gold

American Default – The Untold Story of FDR, the Supreme Court, and the Battle over Gold

by SebastianEdwards (Author)

Synopsis

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, he depreciated the U.S. dollar in relation to gold, effectively annulling all debt contracts. American Default is the story of this forgotten chapter in America's history.

Sebastian Edwards provides a compelling 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 abandonment of 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 never approached 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.

$30.31

Save:$2.97 (9%)

Quantity

8 in stock

More Information

Format: Illustrated
Pages: 288
Edition: Illustrated
Publisher: Princeton University Press
Published: 08 Jun 2018

ISBN 10: 0691161887
ISBN 13: 9780691161884

Media Reviews
American Default provides an in-depth look at one of the most important, but often neglected, events in U.S. economic history, the abrogation of bond's gold clauses during the New Deal. Not only does the book provide an excellent discussion of the economics of this event, but it is a really good read because it delves into the personalities and the politics behind this effective default. I highly recommend it. --Frederic S. Mishkin, Columbia University
I thought we knew about American abandonment of gold during the Great Depression. But American Default is an eye-opener. It is astonishing how chaotic were the circumstances and how woefully inadequate was understanding. Everyone interested in the history of gold, the Great Depression, the Greek or the Argentine crises, and in the crises to come should read this book. --Anne Krueger, Johns Hopkins University
American Default is a fascinating and well-written book about the momentous decision to leave the gold standard in 1933. Sebastian Edwards skillfully weaves together the political, economic, and legal aspects of this important episode, with lessons for today. Highly recommended! --Douglas A. Irwin, Dartmouth College, author of Clashing over Commerce: A History of US Trade Policy
A really excellent book. Edwards provides a dramatic and readable account of monumental decisions that changed the course of history. American Default is sure to be a hit. --Michael D. Bordo, Rutgers University
[American Default] is the history of that mighty legal, moral, political and monetary controversy, the effects of which are with us still. . . . [Sebastian Edwards] knowledgably compares the 20th-century American default to Argentina's 2002 abrogation of its dollar denominated debt.---James Grant, Wall Street Journal
Brilliantly told.---Steve Hanke, Forbes
Excellent. . . . A fascinating narrative of FDR's decision to devalue the dollar in 1933-34.---Scott Sumner, EconLog
Edwards ends his admirably accessible and illuminating book with some careful thoughts on recent financial crises around the world, such as those in Argentina and Greece, and shows why US gold cases from 1933 to 1935 are a useful precedent to understand how future such crises may be successfully resolved by hewing carefully to the rule of law. He believes that the cases may even be invoked by lawyers in other national, or international, arenas. If so, those involved will, no doubt, turn to this book for inspiration and guidance.---Benn Steil, Financial World
Edwards analyses the default that followed President Franklin Delano Roosevelt's 1933 decision to devalue the dollar against gold. . . . The story is fascinating and the lessons eternal.---Martin Wolf, Financial Times
Edwards' book is fascinating, well written and enjoyable.---Geoffrey Wood, Central Banking
Author Bio
Sebastian Edwards is the Henry Ford II Professor of International Economics at the University of California, Los Angeles. His books include Toxic Aid: Economic Collapse and Recovery in Tanzania and Left Behind: Latin America and the False Promise of Populism. He lives in Los Angeles.