Tag Archives: Gold confiscation

The Great Government Gold Heist Of 1933, by SchiffGold

Posted on April 7, 2020 | 1 comment

People buying gold hand over fist might want consider a precedent that’s already been set for the government taking that gold: Franklin Delano Roosevelt’s Executive Order 6102. From schiffgold.com:

Yesterday marked the anniversary of the great government gold heist of 1933 ordered by President Franklin D. Roosevelt.

On April 5, 1933, the president signed Executive Order 6102. It was touted as a measure to stop gold hoarding, but it was in reality, a massive gold confiscation scheme. The order required private citizens, partnerships, associations and corporations to turn in all but small amounts of gold to the Federal Reserve in exchange for $20.67 per ounce.

The executive order was one of several steps Roosevelt took toward ending the gold standard in the US.

With the dollar tied to gold, the Federal Reserve found it difficult to increase the money supply during the Great Depression. It couldn’t simply fire up the printing press as it can today. The Federal Reserve Act required all notes have 40% gold backing. But the Fed was low on gold and up against the limit. By stealing gold from the public, the Fed was able to boost its gold holdings.

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Posted in Banking, Currencies, Debt, Economy, Government, History, Money

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When The U.S. Government Defaulted, by Global Macro Monitor

Posted on May 26, 2018 | Leave a comment

Every gold bug worth his or her salt knows when the US defaulted, but many non-gold bugs are not aware of it. From Global Macro Monitor at macromon.wordpress.com:

One of the most pervasive myths about the United States is that the federal government has never defaulted on its debts. There’s just one problem: it’s not true, and while few people remember the “gold clause cases” of the 1930s, that episode holds valuable lessons for leaders today. – Sebastian Edwards, Project Syndicate,  May 21, 2018

My friend, UCLA professor,  Sebastian Edwards, is out with a must-read summer book, American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold.

 

May24_Edwards

 

Sebastian has also published an excellent synopsis of the the book, Learning from America’s Forgotten Default, on the Project Syndicate (PS) website.   It is an excellent introduction to the subject material but only scratches the surface and should not be a substitute or excuse for not purchasing the book.

Money quotes from the Project Syndicate  piece:  

  • There was a time, decades ago, when the US behaved more like a “banana republic” than an advanced economy, restructuring debts unilaterally and retroactively
  • In April 1933, in an effort to help the US escape the Great Depression, President Franklin Roosevelt announced plans to take the US off the gold standard and devalue the dollar. 
  • …this would not be as easy as FDR calculated. Most debt contracts at the time included a “gold clause,” which stated that the debtor must pay in “gold coin” or “gold equivalent.” 
  • These clauses were introduced during the Civil War as a way to protect investors against a possible inflationary surge.
  • …the gold clause was an obstacle to devaluation. If the currency were devalued without addressing the contractual issue, the dollar value of debts would automatically increase to offset the weaker exchange rate, resulting in massive bankruptcies and huge increases in public debt.
  • Congress passed a joint resolution on June 5, 1933, annulling all gold clauses in past and future contracts.
  • Republicans were dismayed that the country’s reputation was being put at risk, while the Roosevelt administration argued that the resolution didn’t amount to “a repudiation of contracts.”
  • On January 30, 1934, the dollar was officially devalued. The price of gold went from $20.67 an ounce – a price in effect since 1834 – to $35 an ounce.

To continue reading: When The U.S. Government Defaulted

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Posted in Banking, Civil Liberties, Currencies, Debt, Government, History

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Yes, The U.S. Government Can Still Confiscate Gold, by Tom Lewis

Posted on May 6, 2018 | 1 comment

In 1933, President Roosevelt made it illegal for private individuals to own gold. It could happen again. From Tom Lewis at goldtelegraph.com:

04
May

People around the world love gold. It has always been the most reliable hedge against economic uncertainty. Yet few people consider that the government (who is usually responsible for the turndown in the first place), has the authority to seize your gold.

Historically, the government will seize gold when it’s the most valuable, during times when its fiat currency has become utterly devalued. When President Roosevelt made ownership of gold bullions illegal in 1933, the move was preceded by the boom of the Roaring Twenties, then the crash of 1929. Although Roosevelt didn’t call it gold confiscation; he preferred the term “gold hoarding.”

By the 1930s, the US government was facing its most severe financial crisis, and it needed gold (something of value), to stimulate the economy that was running on the fumes of fiat currency. So, it took people’s gold. It was as simple as that. Non-compliance was threatened with severe punishment.

We may be facing another financial crisis, and it might be best to avoid the role of fugitive “gold hoarder.” At this point, it doesn’t make sense for the government to confiscate private gold, as a cashless society will indirectly control peoples finances.

Why would the government seize gold? In 1933, under the 1913 Federal Reserve Act, the dollar had to be backed by 40 percent gold. This would give the Federal Reserve room to print new money when needed. What’s a government to do when it needs to print money, but doesn’t have the gold reserves needed to back it up? It passes an Executive Order making gold ownership illegal but buys up the illegal gold itself. That’s what Roosevelt did. When the government continued to print more money, it declared ownership of silver illegal a year later.

To continue reading: Yes, The U.S. Government Can Still Confiscate Gold

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