reacting to what he called the "earthquake in europe," president herbert hooverproclaimed america's steaastnessthe gold standard. but despite official pronouncemen manyuropeans feared that america would be next to devalue itsurrency. inrnational investors rushed to redeem their dollars for gold. boatloads of american gold reserves were sppedverseas. to protect the american banking system, toreserve confidence in the dollar based on the gold standard herbert hoover directed the federaresee system to make changes,changes that would "keep the american dollar ringing true in every city in america and in the world." the fed responded by raising its discount rate foinerananksusup ratof ieres paid to their depositors. the result -- foreign investors earned more interest and were enticed to leave their money in u.s. nks. the strategy worked. confidence in the dollar was restored and the gold drain was plugged. but there were other more serious ramifications. dr. edward bernsinformer principal economist u.s.asury departme. britain was the most important ading country inhe world. if they let the value of