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FDR, Thief of America's Gold by Patrick Chkoreff As Franklin D. Roosevelt was inaugurated as president on March 4, 1933, Americans were in a state of panic. Banks were failing every day, and people clamoured by the thousands to withdraw their money. Ordinarily they might have accepted paper money in the form of gold certificates, but people feared that the government might simply resort to printing worthless money to meet the massive withdrawal requests. They didn't want paper. They wanted gold. Furthermore, people who had gold certificates rushed to redeem them for real gold. In 1933, the U.S. dollar had a very precise definition. The government defined the dollar as 23.22 grains of gold. Since there are 480 grains to a troy ounce, this works out to about $20.67 per troy ounce. This meant that if you had a $20 gold certificate, you could redeem it for roughly 1 troy ounce of gold. Each certificate bore this solemn statement: "This certifies that there have been deposited in the Treasury of the United States Twenty Dollars in Gold Coin payable to the bearer on demand." There are two promises here. First, the gold is there waiting for you. Second, you'll get the gold when you demand it. So in March 1933, thousands of people decided to make the government honour its promise. They quickly found out that the government was lying. Just two days after his inauguration, Roosevelt ordered a "bank holiday" closing all the banks in the country from Monday March 6 through Thursday March 9. He proclaimed that there was a "national emergency" caused by "heavy and unwarranted withdrawals of gold and currency" for the purpose of "hoarding." Of course, "hoarding" simply means people holding on to their own money. Roosevelt called it "hoarding" to make it seem like evil or immature behaviour. It was the typical politician's ploy of blaming the government's woes on the people's vices. On March 9, the Senate passed the Emergency Banking Act after very little debate. This gave the Secretary of the Treasury the power to compel every person and business in the country to relinquish their gold and accept paper currency in exchange. The next day, Friday March 10, Roosevelt issued Executive Order No. 6073, forbidding people from sending gold overseas and forbidding banks from paying out gold. Pretty good for his first week in office. But wait, there's more. On April 5, Roosevelt issued Executive Order No. 6102. This was the order to confiscate everybody's gold. It commanded everybody to deliver their gold and gold certificates to the Federal Reserve bank, where they would be paid in paper money. You could keep up to $100.00 in gold, but anything above that was illegal. Gold had become a controlled substance. Possession was punishable by a fine of up to $10,000 and imprisonment for up to 10 years. Now the only people with a claim to gold in the Treasury were foreigners holding dollars. Since he was on such a roll, Roosevelt decided to rip them off too. On January 31, 1934, Roosevelt issued another Executive Order. Here he declared that the dollar was now only 59.06% of its former gold quantum of 23.22 grains. Now the dollar was only worth 13.71 grains of gold. Look at it from the point of view of one of these hapless foreigners. It used to cost you only $20.67 to get a troy ounce of gold. Now it cost you $35.00. The U.S. government, under the dictatorship of Roosevelt, had just stolen 40% of your money. By burglarizing the rest of the world, Roosevelt made the Great Depression even Greater. It was more Global because he had impoverished millions of foreigners, and it was more Persistent because he had ruined the good credit of the United States. Not bad for his first year in office. Some have suggested that FDR had no choice because if he had allowed the "run" to continue, soon there would be no more gold in the U.S. Treasury to back the gold certificates. But how could that be? Each gold certificate certified that there was a certain amount of gold in the Treasury payable to the bearer on demand. The law decreed that $20.67 would get you one troy ounce of gold, which was just sitting there in the vault waiting for you to "demand" it. In his excellent 1935 book Monetary Mischief, George Robinson claims that these gold reserves really did exist. Maybe so, maybe not. Either way, FDR was not honouring the redemption promise. The U.S. was now running a con game, having printed "gold certificates" that in fact could not be redeemed for gold at all. Imagine if e-gold or GoldMoney suddenly began issuing new digital gold grams without having the real gold grams to match them. That would be theft and counterfeiting. Certainly creating even more fictional gold grams would not be the solution to this problem. FDR engaged in theft and counterfeiting as a solution to a problem caused by theft and counterfeiting. A more honest solution would have been to make good on as many gold redemptions as possible, and then begin a massive liquidation of government assets to purchase gold on the open market until all redemptions were made. To avoid the pricing problems of sudden mass liquidations and mass gold purchases, the government might have offered gold bonds to those who would accept them. These bonds would be payable with interest in gold after a fixed time period. To people immediately demanding their gold, the government would have to tell them to wait, and then proceed quickly to round up enough gold to satisfy the request. I'm sure the people would have preferred to hear "hold on, we're getting your money" than "screw you, we're stealing your money." The sale of government assets would include office buildings, vehicles, huge tracts of land, etc. In other words, my solution would be: take every action to make good on all the gold redemptions. Do not steal the gold. Some have said that FDR's actions were necessary because a default on the redemption of paper currency would bankrupt the country, and not just the government, but all private debts as well. But that's just it--the government DID default on the redemption of paper currency, and it did bankrupt the country by deepening the depression and spreading it worldwide. Sadly, it did not bankrupt the government, only the indentured servants we like to call "citizens." (Brother, can you spare a dime?) I must emphasize that when the government devalued the dollar and confiscated gold, they WERE defaulting on their redemption obligations. They didn't magically skirt the underlying hard reality just because some politicians signed some pieces of paper. Some have said that FDR was faced with a dire national emergency, and did the only thing he knew how to do with the powers that had been granted to his new office. To that I say: FDR was not granted these powers. He had no more legal authority to do what he did than my immigrant grandfather had. But that never stopped a president from doing anything to consolidate and maintain power. As a betrayer of the Constitution, FDR ranks right up there with Lincoln, LBJ and Nixon. |
