Washington, November 29, 1933.
President Roosevelt will face a sound money bloc in the Congress which assembles in January and the only question today is whether the group will constitute a majority in one or both Houses.
The American Federation of Labor has usually been able to command a majority of the House of Representatives. Its influence in the Senate is considerable. The announcement that the A. F. of L. would oppose unsound monetary policies cannot be construed, as is most of the opposition to the President's program, as being due to Wall Street influence.
Nor can the American Legion, which is also lining up through important spokesmen as against inflation, be accused of Wall Street or big banker influence.
As for the Crusaders--an anti-prohibition organization of nation-wide strength--there is no evidence that it is inspired by the financial interests.
These three organizations have a powerful hold on members of Congress of both parties.
Now let us look at situation inside the Democratic party from a political standpoint. Former Governor Alfred E. Smith of New York commands a substantial following. So does Bernard M. Baruch, though the latter has been influential in party councils rather than in the various state organizations where Al Smith holds sway.
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Then there is another element which is not at all to be overlooked. It is the local chambers of commerce and other organizations which are back of the sound money clubs that are being formed throughout the nation.
If the regular Republicans, who are unquestionably going to oppose inflation, and a certain group of Democrats of the Carter Glass school of thought should combine, there is grave doubt whether the President could get through Congress any measures that really could be classed as inflation.
There is, of course, a widespread use of the word "inflation" to cover various forms of credit expansion, but the issue of greenbacks or other money which is not backed by a metallic reserve is not likely to command a Congressional majority.
The bipartisan groups which are responsive to the various organizations, like the A. F. of L., now coming out against inflation, are bound to prevent the inflationary elements from getting control of Congress.
For a long time the comment of the President's friends has been that inflationary powers were necessary as a "permissive" thing but that the President did not intend to follow such a course. The issue would undoubtedly be crystallized in an attempt to deprive the President of these discretionary powers the moment it is apparent that he intends to exercise them.
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Congress, therefore, instead of being radical and intent on inflation, is likely to have a considerable sound money sentiment which will wish to compel stabilization of the dollar. This is one of the reasons why it has been taken for granted outside the government for the last several days that Mr. Roosevelt would announce a stabilization policy before Congress assembled.
Many members of Congress share the view of Speaker Rainey, who says that the price of gold will be forced up to $41 and ounce and then stabilization will come. For the last several days the price of gold was unchanged, but in the last 24 hours the Treasury has advanced it again. Before stabilization is decided upon, the administration is anxious to have the dollar depreciated as close to 50 cents as possible when measured in terms of gold, but there are many experts here who think that stabilization itself will produce a rebound from a 50-cent level to about 66 cents due to the sudden demand from abroad for dollars on the part of American owners of capital in Europe.
The political horizon is becoming cloudy for the Roosevelt administration and every day sees additional momentum from the sound money side. The President is a skillful analyst of public opinion. He may be expected unquestionably to anticipate the effect of this opposition and bring about a stabilization policy before the revolt against his policies actually comes to a head