Wednesday, June 5, 2013

Jun 5 (1933) FDR suspends gold standard: "to require payment in gold obstructs the power of the Congress to regulate the value of money"

 Twenty-dollar gold coins, commonly known as Double Eagles, were issued between 1850 and 1933. Production of all gold coins by the government ceased in 1933 after President Franklin Roosevelt issued Executive Order 6260, which largely prohibited the public from acquiring or holding gold.

On this day in 1933, President Franklin Delano Roosevelt signed a Joint Resolution that suspended the gold standard as a means of valuing the currency, allowing the dollar to "float." President Roosevelt and his allies blamed gold hoarding for the 1930s bank failures. They wanted to follow Britain's lead and take the country off the gold standard so they could increase the money supply, and stimulate the economy.

One of his first acts as President was to extended the scope of the Trading with the Enemy Act of 1917 (a law that allows the President to suspend trade with countries hostile to the US) to include the hoarding of gold during peace times.

In April he signed Executive Order 6102 which forbid the "hoarding of Gold coin, Gold Bullion and Gold Certificates within the continental United States" which had the effect of criminalizing the possession of gold by any individual, corporation or partnership. (This ban was not lifted until 1975.)

Lastly, on this day in June he suspended the gold standard entirely. His reasoning is partially contained in the Joint Resolution, excerpted below.

"Whereas the existing emergency has disclosed that provisions of obligations which purport to give the obligee a right to require payment in gold or a particular kind of coin or currency of the United States, or in an amount of money of the United States measured thereby, obstruct the power of the Congress to regulate the value of money of the United States, and are inconsistent with the declared policy of the Congress to maintain at all times the equal power of every dollar, coined or issued by the United States, in the markets and in the payment of debts."

Image is of the Double Eagle coin: Twenty-dollar gold coins, commonly known as Double Eagles, were issued between 1850 and 1933, and became very valuable once production of all gold coins ceased in 1933.

Further Reading

How Frankling Roosevelt Ended the Gold Standard (Bloomberg News)


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Flannery O'Connor

You shall know the truth and the truth shall make you odd.