A plaque remaining from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem.

Above, a 1934 plaque from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem. Discarded as trash in 2006.

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Entry from October 14, 2018
Baloney Dollar

Former New York Governor Al Smith (1873-1944), in an open letter to the New York State Chamber of Commerce published in the December 1933 New Outlook, stated that President Franklin D. Roosevelt’s plans to go off the gold standard would result in “baloney dollars.” “Baloney” was popular slang for something that is nonsense. Smith’s comments received immediate support from Wall Street.

Despite Smith’s “baloney dollars” comment, President Roosevelt’s fiscal plans were advanced.


Wikipedia: New Deal
Monetary reform
Under the gold standard, the United States kept the dollar convertible to gold. The Federal Reserve would have had to execute an expansionary monetary policy to fight the deflation and to inject liquidity into the banking system to prevent it from crumbling—but lower interest rates would have led to a gold outflow. Under the gold standards, price–specie flow mechanism countries that lost gold, but nevertheless wanted to maintain the gold standard had to permit their money supply to decrease and the domestic price level to decline (deflation). As long as the Federal Reserve had to defend the gold parity of the Dollar it had to sit idle while the banking system crumbled.

In March and April in a series of laws and executive orders, the government suspended the gold standard. Roosevelt stopped the outflow of gold by forbidding the export of gold except under license from the Treasury. Anyone holding significant amounts of gold coinage was mandated to exchange it for the existing fixed price of U.S. dollars. The Treasury no longer paid out gold in exchange for dollars and gold would no longer be considered valid legal tender for debts in private and public contracts.

The dollar was allowed to float freely on foreign exchange markets with no guaranteed price in gold. With the passage of the Gold Reserve Act in 1934, the nominal price of gold was changed from $20.67 per troy ounce to $35. These measures enabled the Federal Reserve to increase the amount of money in circulation to the level the economy needed. Markets immediately responded well to the suspension in the hope that the decline in prices would finally end. In her essay “What ended the Great Depression?” (1992), Christina Romer argued that this policy raised industrial production by 25% until 1937 and by 50% until 1942.

Wikipedia: Al Smith
Alfred Emanuel Smith (December 30, 1873 – October 4, 1944) was an American politician who was elected Governor of New York four times and was the Democratic U.S. presidential candidate in 1928.

25 November 1933, Chicago (IL) Daily Tribune, pg. 1, col. 3:
AL SMITH BACKS GOLD BASIS, NOT BALONEY DOLLAR
Prefers Experience to Experiment.
Roosevelt Not Swerved

New York, Nov. 24.—{Special.]—Former Governor Alfred E. Smith broke with the Democratic administration today by making a vigorous disagreement with the Roosevelt monetary policy and taking his stand with hundreds of other businesses and professional leaders lining up against inflation.

“I am for gold dollars as against baloney dollars.” declared Mr. Smith. “I am for experience as against experiment.”

The attitude of Mr. Smith toward the policy of dollar devaluation as carried on by the administration and was expressed in an open letter to the New York state chamber of commerce.

The letter is to be published in the December issue of New Outlook, the magazine in which Mr. Smith is editor in chief. It was written after the chamber had asked Mr. Smith for an expression of opinion on the chamber’s current campaign for sound money.

25 November 1933, New York (NY) Herald Tribune, “Comment in Wall Street,” pg. 19, col. 2:
“Baloney Dollars”
Former Governor Smith’s remarks on “baloney dollars” met, of course, with the instant and warm approval of Wall Street, where Mr. Smith and his picturesque language have long been prime favorites. It was admitted that the leading economists of the Street had never framed in so eloquent language the basis of the argument for a gold dollar as opposed to a commodity dollar. Mr. Smith has proved a more valuable friend of the old economies than any of the economists as because of his ability to say the thing that catches the public’s verbal fancy and sets the mode. The term “baloney dollars,” many persons feared, would be used to the point of tiresomeness in referring to the currency to which economists have given the high sounding name “compensated dollar.” If the compensated dollar is to be shelved there may prove to be no more important factor in its going than the phrase “baloney dollar.” For it takes a hardy currency to prevail against the ridicule and scorn which the term “baloney dollars” conveys.

25 November 1933, Evansville (IN) Press, pg. 2, col. 1:
MONEY ATTACK OF AL SMITH LAUGHED OFF
Reply to “Baloney Dollar” Is Charge That “Even Baloney Is Food”
By Scripps-Howard Alliance
(...)
Senator Norris, referring to Smith’s caustic characterization of “baloney dollars” comments in equally sarcastic vein:

“Even baloney is pretty good food for a starving individual.”

5 December 1933, Daily News (New York, NY), pg. 14, cols. 4-5:
MERCHANT OFFERS BARGAIN SALE IN BALONEY DOLLARS
Farmington, N.H. (U.P.)—Charles W. Floyd, president of the Farmington Chamber of Commerce and clothing merchant, today inserted in a local newspaper an advertisement which read, in part:

“Al Smith says our money is baloney dollars, but Al was defeated at the convention and it may be possible he is just a mite prejudiced. We are gambling he is wrong. For a limited time, we will accept baloney dollars for our good merchandise.”

He then listed “bargains in baloney dollars,” including men’s overcoats for “ten baloney dollars.”

Google Books
Franklin D. Roosevelt:
A Rendezvous with Destiny

By Frank Freidel
New York, NY: Back Bay Books
2009 (Originally published 1990)
Pg. ?:
There was a clamor of disapproval among financiers, economist, and politicians.  Al Smith called the “commodity dollar” the “baloney dollar.”

Twitter
Matt Stoller
@matthewstoller
Replying to @schwarz @TinyRevolution @ryanlcooper
Never trusted that Al Smith guy, called FDR’s ending of the gold standard the creation of “baloney dollars” and endorsed Wall Street in ‘33.
1:00 PM - 7 Aug 2017

Twitter
Dave Dellecese
@davedellecese
Monday rolls around again. Time to make those Baloney Dollars.
10:44 AM - 21 May 2018

Posted by Barry Popik
New York CityBanking/Finance/Insurance • Sunday, October 14, 2018 • Permalink