I plan on eventually doing full coverage of the many nefarious undertakings in New Deal era policy making, but let’s start it off with an old favorite.
Executive Order 6102 was signed on April 5, 1933, by President Franklin D. Roosevelt “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States”. This power was made possible by the Emergency Banking Act of 1933, a New Deal policy that likely deserves a series of posts all on it’s own.
Many are aware of EO 6102 and its implications on the US markets at the time, but few realize that gold ownership actually remained illegal throughout the entirety of the Bretton Woods agreement which ran from 1944-1971.
“The private ownership of gold certificates was legalized in 1964, and they can be openly owned by collectors but are not redeemable in gold. The limitation on gold ownership in the U.S. was repealed after President Gerald Ford signed a bill to “permit United States citizens to purchase, hold, sell, or otherwise deal with gold in the United States or abroad” with an act of Congress… which went into effect December 31, 1974“
Following this legislation to its logical conclusions…this means that it was actually illegal for US citizens to redeem their USD for gold held by the US treasury under the Bretton Woods system!
Ben and I have often pontificated whether or not the end of Bretton Woods in 1971 came as a big shock to Americans at the time. Having not been alive ourselves, we can only confer in the recollections of others. The general consensus is that nobody really noticed much a difference, if they were even aware at all.
But this actually raises a confusing question. If gold certificates were illegal to own up until 1964 and illegal to redeem until 1974…what exactly was the USD under Bretton Woods if not an illegal to posses legal tender? Was anybody ever prosecuted for owning gold or gold certificates under EO 6102? It seems likely. Was anybody ever prosecuted for holding USD (gold certificates) under EO 6102? Likely not.
Political climate in America is changing rapidly, as the statues of the liberty minded, such as Thomas Jefferson, are pulled down in earnest and when expansionary monetary policy is kicking into 5th gear. What happened once can happen again…but does gold play as important of a role as it once did in global settlement? Surely it still functions as a store of value, but it seems the name of the game today is liquidity. What else could be seized or outlawed? Is your retail brokerage account safe? What about your interest bearing savings account? Your 401k?
These are questions worth asking.
Book of the Month:
-“Years later, Mises would take on the historicists in his book, Theory and History, countering their view that economic theorems are void because they rely on a priori reasoning and that only historical experience is valid. As he wrote: “Such historical experience does not give the observer facts in the sense in which the natural sciences apply this term to the results obtained in laboratory experiments.” He further criticized those “who call their offices, studies, and libraries ‘laboratories’ for research in economics, statistics, or the social sciences” as being “hopelessly muddleheaded.” Mises stated, “Historical facts need to be interpreted on the ground of previously available theorems.”
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