In the Presidential campaign of 1932, Democrat Franklin Delano Roosevelt campaigned lustily about the repeal of alcoholic prohibition, which had existed in America for 13 years. (It was eventually repealed by the 18th Amendment on December 5, 1933). But he never uttered a word about instituting a prohibition on private gold ownership in America, which he stealthily instituted by Executive Order on April 5, 1933, just one month into office – 85 years ago this week. His language was harsh and authoritarian in tone:
“All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve Bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership…
“Whoever willfully violates any provision of this executive order or of these regulations or of any rule, regulation, or license issued thereunder may be fined not more than $10,000, or, if a natural person, may be imprisoned for not more than ten years, or both.”
An exception was made for industrial or professional use, foreign government gold or “gold coins having a recognized special value to collections of rare and unusual coins,” but circulating gold coins were mandated for surrender. In follow-up regulations and speeches, the word “hoarding” was constantly used as a pejorative term for those wanting to hold on to their gold. (Most people would call that “savings.”)
After America’s privately held gold was collected in exchange for the official $20.67 per ounce, the President raised the official price to $35 per ounce the following January (in The Gold Reserve Act of January 30, 1934, drafted on FDR’s birthday), after which he used the profits from gold’s revaluation to help fund his New Deal programs – so there was clearly a “tax collection” angle to his Executive Order.
Amazingly, this gold grab took place without consultation or consent from Congress. It lasted over 40 years without legal challenge. Americans were forbidden to own most forms of gold as it escalated in price from $20.67 to $190 on December 30, 1974, when Americans were finally allowed to own it again.
This was a shameful episode of imperial over-reach in the history of the United States presidency.