TLS, two pages, 7.25 x 10.5, personal letterhead, June 1, 1933. Very interesting letter to George Lorimer of the Curtis Publishing Co. in Philadelphia dealing with economics in his post-presidential loss and the Great Depression. In part, “In the face of general press supineness or ignorance, you are about the only person who can save this country from the tragedy of inflation. The story in this week’s issue, “Printing Press Money,” will do more than a thousand debates in Congress. Unfortunately, in the momentary attitude of public mind, an attack from me would do more harm than good. To go off the present gold standard temporarily with the idea of working back onto it later (while it was wholly unnecessary to sound recovery) is one thing. It is a thing we have done before in our history. But to devalue the dollar will be an injury which cannot be repaired in a generation. To accompany it with fiat money will be a debacle. Perhaps Garett would analyze the possibilities of controlling inflation once it is started. It is said that France stopped it at 70%, and Italy at 66%, but it was German reparations and American tourists who supplied the gold on which this was accomplished. My own thought is that with all long term credit paralyzed by the uncertainty of the character of repayment, the Government will be met with the necessity not only to pay the deficit from fiat money, but it will be impossible to renew Government obligations or issue long term bonds, and they will sooner or later need to be met with paper money. Rising prices and wages will increase the deficit faster than taxes. Anything is a deficit in Government, from the point of view of currency issues, which represents an expenditure beyond tax receipts and long term borrowing. Short term borrowing will quickly exhaust itself. On the other side of the argument is the fact of a large gold reserve, a constant trade balance in our favor, which will effectually increase with the tariff effect of debased currency and stimulated exports. Garett could think these factors through, especially in the light of previous experiences, better than anybody.” Hoover than adds the handwritten line “The Germans tried frantically to control it.” He has also crossed out the typewritten “pressed” and replace it with the handwritten “constant.” In fine condition. COA John Reznikoff/PSA/DNA and R&R COA.
