Money

Marking the 85th Anniversary of “Gold Prohibition in America”

debt gold investment commoditiesIn 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 (It was eventually repealed by the 18th Amendment on December 5, 1933).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.

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Ivan Berry

And as FDR created his order by fiat, it resulted in all our money being fiat and backed by nothing but the “full faith and credit” of our government and with a little help by Nixon.
Should they (government leadership) wish to extend beyond that historical theft, they can go to the “Bail In” (opposit of Bail Out) and confiscate wealth from the likes of IRAs, bank checking and savings accounts , etc. With retirement accounts like 401Ks and IRAs, all they would need is for the current Congress to change the rules. No Congress is oblidged to continue with legislation from prior Congressional acts.

PaulE

Back then, the vast majority of the public held the notion of “government knows best” in almost all things and could NOT see the confiscation of private wealth, in the form of the gold they owned, for what it truly was. So like good little sheep, the vast majority of the public complied without resistance. Back then Congress had been cowed by FDR, who pretty much ran the country and the directed the economy from the White House for much of his four terms in office. Thankfully after his death, Congress quickly enacted, at least by Congressional standards for quickly anyway, the 22nd Amendment.