Teddy Roosevelt on Printing Money

I'm currently reading a biography of Teddy Roosevelt and it's been a very interesting read. TR was very much pro-big government even though he was a republican. There were very few things he did not feel the federal government was best equipped to handle. That's why I was shocked when I read a quote from TR that occurred in 1907. Let me set the back drop a little first.

Roosevelt was admittedly lost when it came to handling financial crises and therefore depended very heavily on advisers to handle the economy. In 1907, severe economic problems were caused by the lack of a consistent money supply. Everyone agreed the US needed a more flexible money system that would provide better liquidity during crises. Republicans wanted to put more control of the money supply into the hands of bankers and the corporate sector while Democrats wanted government to have all the control (no different than today).

Roosevelt didn't know what to do. He didn't trust corporate America, but also realized that he was inept to handle the situation. So, he turned to one of his advisers, Tom Watson, who urged TR to issue $50,000,000 in greenbacks--notes unsecured by gold or anything else except the government's promise to pay. This was Roosevelt's response:

It seems to me that the trouble about issuing greenbacks as you suggest is that it is like a man temporarily relieving himself by issuing notes of indebtedness. He can do it with safety if he exercises severe self-control; but a government will not permanently exercise such self-control. I have no doubt that $50,000,000 of greenbacks, if it was absolutely certain that no more would be issued, would achieve something of the purpose that you have in mind; but I also believe that most people would think that it foretold an indefinite issuance of greenbacks and that in consequence it would have a frightening effect.

102 years ago...how prophetic!