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By Lawrence W. Reed
\nCATALYST
\nDecember 7, 1941 will forever be remembered as, in the words of Franklin Delano Roosevelt, \u201ca date that will live in infamy.\u201d Another infamous date is April 5, 1933\u2014the day that FDR ordered the seizure of the private gold holdings of the American people. By attacking innocent citizens, he bombed the country\u2019s gold standard just as surely as Japan bombed Pearl Harbor.<\/p>\n
On this 90th anniversary of the seizure, it behooves us to recall the details of it, for multiple reasons: It ranks as one of the most notorious abuses of power in a decade when there were almost too many to count. It\u2019s an example of bad policy imposed on the guiltless by the government that created the conditions it used to justify it. And the very fact of compliance, however minimal, is a scary testimony to how fragile freedom is in the middle of a crisis.<\/p>\n
Suddenly on April 5, 1933, FDR told Americans\u2014in the form of Executive Order 6102\u2014that they had less than a month to hand over their gold coins, bullion and gold certificates or face up to ten years in prison or a fine of $10,000, or both. After May 1, private ownership and possession of these things would be as illegal as Demon Rum. After Prohibition was repealed later the same year, the sober man with gold in his pocket was the criminal while the staggering drunk was no more than a nuisance.<\/p>\n
Hoarding gold was preventing recovery from the Great Depression, FDR declared. Government (which caused the Depression<\/a>\u00a0in the first place) had no choice, if you can follow the logic, but to seize the gold and do the hoarding itself. But of course, the big difference was this: In the hands of the government, huge new gold supplies could be used by the Federal Reserve as the basis for expanding the\u00a0paper money supply<\/a>. The President who had promised a 25 percent\u00a0reduction<\/em>\u00a0in federal spending\u00a0during his 1932 campaign<\/a>, could now\u00a0double<\/em>\u00a0spending in his first term.<\/p>\n What evidence suggested Americans were \u201choarding\u201d gold? Roosevelt pointed to a run on banks that immediately preceded his April 5 seizure decree. Indeed, people were showing up at tellers\u2019 windows with paper dollars demanding the gold that the paper notes promised. But Roosevelt had prompted the bank run himself!<\/p>\n On March 8, three days after succeeding Herbert Hoover as the new President, FDR declared the gold standard to be safe. After all, America\u2019s gold reserves were the largest in the world. Then out of the blue, on March 11, the President issued an executive order preventing banks from making gold payments. The message was clear: In spite of its campaign pledge to protect the integrity of the currency, this was an administration intent on spending and printing like none before. Citizens who wanted to protect their savings and financial assets suddenly had every good reason to find and keep whatever gold they could get their hands on. James Bovard\u00a0writes<\/a>\u00a0in \u201cThe Great Gold Robbery,\u201d<\/p>\n Roosevelt was hailed as a visionary and a savior for his repudiation of the government\u2019s gold commitment. Citizens who distrusted the government\u2019s currency management or integrity were branded as social enemies, and their gold was seized. And for what? So that the government could betray its promises and capture all the profit itself from the devaluation it planned. Shortly after Roosevelt banned private ownership of gold, he announced a devaluation of 59 percent in the gold value of the dollar. In other words, after Roosevelt seized the citizenry\u2019s gold, he proclaimed that the gold would henceforth be of much greater value in dollar terms.<\/em><\/p>\n Dentists, jewelers, and industrial users were allowed to acquire gold to meet their \u201creasonable needs.\u201d If you had a gold tooth, the government did not yank it out. But if you possessed more than $100 in monetary gold (coin or notes denominated in the yellow metal) after May 1, 1933, you were a villainous lawbreaker until private gold ownership was legalized four decades later.<\/p>\n