Gold Confiscation Act of 1933?

Question

On March 9, 1933 Franklin D. Roosevelt (FDR) called Congress in for an emergency session, which would result in the speedy passing of the **Gold Confiscation Act**. According to FDR's Executive Order (6102) the Act would "*provide relief in the existing national emergency in banking, and for other purposes*". The law required all citizens to hand over to the government via the banks almost all gold coins (US and foreign), bullion (bars, nuggets, dust, etc) and gold certificates within a few weeks after the order was issued. A short eight months after the confiscation a new piece of Federal legislation, the **Gold Reserve Act**, was enacted. The Gold Reserve Act revalued gold versus the dollar. In theory, a 1934 $20 gold coin would then be equivalent to 35 paper dollars. This was a substantial difference in that the value of the paper dollar prior to the Gold Confiscation Act was much less. From an historical perspective in what way(s) was the Gold Confiscation of 1933 beneficial or detrimental to U.S. citizens?

Answer 1

Executive Order 6102 was a component of FDRs response to the banking crisis he inherited following his first inauguration, and required all gold coin, bullion and gold certificates be delivered to the federal government because of the ongoing crisis and hoarding of gold. The Executive Order was signed April 5, 1933, and did provide for some exceptions for artists, craftsman, and others requiring gold for specific manufacturing purposes. The logic was that hoarding was stalling economic recovery and worsening the depression. Some components of the restrictions remained in effect until 1974 when it was repealed under President Gerald Ford. The Federal Reserve Act of 1913 required 40% of federal reserve notes be backed by gold and the allowable credit limit had been essentially reached and was stifling the expansion of the supply of money during the depression. The statutory price of gold was raised from $20.67 to $35 effectively devaluing the dollar and expanding the money supply. The Act was modified numerous times but remained in effect as a fixed rate of exchange until "temporarily" revoked in 1971 by Richard Nixon. Since that time the value of gold as well as the dollar has floated based on market value.