When the Government Came For Your Gold

“Screw the president!”

This may be something that you have thought at some point about a president. Presidents, for better or worse, have a notable impact on American politics. While a lot of what presidents do like signing bills and holding press conferences might not require a lot of direct action or initiative, Executive Orders are an exception. With the ability to steer the direction of Federal agencies, presidents hold a policy making power not entirely unlike that of the Legislative branch. One such Executive Order, Executive Order 6102, allowed the government to seize privately owned gold, but also had compelling legal and economic justifications. Nevertheless, the order was still seen as rather controversial and has had lasting implications for the United States.

Executive Order 6102, signed on April 5th, 1933, was essentially a mass seizure of gold and a prohibition on gold hoarding. It prohibited “individuals, partnerships, associations and corporations” from holding gold outside of regular circulation and built up a framework to enforce this rule. The order required that all persons turn in their gold coins, bullion, and certificates of ownership to the Federal Reserve by May 1, 1933. The order also required all gold obtained after April 28, 1933 to be handed over within three days of receipt. The order did draw some exceptions for things such as gold owned for legitimate business use, gold held for use in regular trade, amounts owned by individuals amounting to $100 or less, gold held by foreign governments or banks, and gold awaiting export (ucsb.edu). While this may seem like highway robbery, there was a silver (or in this case, gold) lining: people were paid for the gold they turned in. The government structure was there to ease the burden and to ensure successful application of the order.

In order to make Executive Order 6102 feasible, the order laid out government and bank actions to be taken to oversee the application of the order and ensure its success. First, the order required that the Federal Reserve Bank pay people an amount equal to the value of the gold they turned in. Second, any member banks had to turn in gold received to the Federal Reserve Bank of their district in exchange for credit. Third, the order allowed the Secretary of the Treasury to use presidential funds to cover all costs associated with transporting the gold that was obtained. It also allowed the Secretary of the Treasury to make deadline exceptions in cases where transporting gold was deemed to be particularly difficult. Fourth, the order gave the Secretary of the Treasury authority to take necessary steps in order to carry out the order. Fifth and finally, the order established a punishment of a fine of no more than $10,000, up to ten years in prison, or both (ucsb.edu). This may seem harsh, and it may sound like it goes beyond the constitutionally sanctioned powers of the president as prescribed in the U.S. Constitution, so how was FDR able to justify such a bold move?

In the very beginning of the text of Executive Order 6102, Franklin D. Roosevelt cites Section 5(b) of the Trading With The Enemy Act of 1917, as amended under Section 2 of the Emergency Banking Relief Act of 1933. Section 5(b) of the Trading With The Enemy Act of 1917, as amended under Section 2 of the Emergency Banking Relief Act of 1933, states that “During time of war or during any other period of national emergency declared by the President”, the President has the power to regulate “export, hoarding, melting, or earmarking of gold or silver coin or bullion or currency, by any person within the United States or any place subject to the jurisdiction thereof”. Put simply, when there is a war or a national emergency, the president has the power to stop the hoarding of gold (Fraser). A national emergency had been issued due to the severe economic collapse of the Great Depression, so this power of the presidency could be legally evoked, as FDR did with Executive Order 6102. Beyond the clear legal justification, there was an economic reason for the order as well.

This act was not an attempt at overturning another president’s policy, however it was certainly unlike past actions that former presidents had taken. After winning the presidential election in 1932, Franklin D. Roosevelt approached the Great Depression differently than his predecessor, Herbert Hoover. Hoover had believed in a concept known as Trickle Down Economics and believed that the economy would correct itself. FDR, on the other hand, wanted to take a more hands-on Keynesian approach by spending money and raising taxes to create jobs and stimulate the economy. There was a problem however. The government could not get enough money for its programs from just taxes, and its ability to print more was limited. Because of the Federal Reserve Act of 1914, “All Federal Reserve notes (paper money) had to be backed by 40 percent gold owned by the Federal government”. As such, the Federal Reserve needed more gold in order to print more money (Mariotti). Even with that sort of compelling economic justification, the move was still seen as controversial.

How did FDR’s critics react to Executive Order 6102? While Congress was on FDR’s side and helped set the stage for the order, the move was still understandably seen as controversial to some people. Interestingly enough though, most of the opposition was not to the act of seizing gold, but to how payouts were done. Gold certificate owners felt they were being cheated by being forced to “sell” their gold at the set rate of $20.67 per troy ounce, instead of at the rate that the certificate was worth at face value. Because of this, many people were shorted money. This sparked the Gold Clause Cases, four cases all concerning whether the government should have to honor the value of the gold certificate or whether the plaintiffs were only due the $20.67 per troy ounce as dictated by the order. In all four cases, the court ruled to uphold the order and keep the payout at $20.67. Eventually Executive Order 6102 would be lifted in 1974 by President Gerald Ford who had actually been unaware that it was a federal felony to own gold until he “saw sound-money advocate Jim Blanchard on TV raising a bar of gold and asking from his wheelchair: ‘Why can I not own this?’” Thanks to this reversal, you can now legally own gold (Mariotti). You cannot, however, just exchange dollars for gold or vice-versa at a fixed exchange rate as you once could, as what was left of the gold standard was abandoned by President Richard Nixon on August 15, 1971 (history.com). It might have taken 38 years, but FDR’s Executive Order 6102 put the United States Dollar on the path to becoming what it is today, a fiat currency that derives its value not from gold, but from the “full faith and credit” of the United States Government (Chen).

Executive Order 6102 was largely consequential. Before Franklin D. Roosevelt, presidents had taken a comparatively passive approach to leadership. Faced with the horrors brought on by the Great Depression, FDR took the actions he thought were necessary to save the economy, for better or worse. Executive Order 6102 outlawed ownership of gold over $100 in value outside of regular circulation or use in business, required that everyone sell their gold to the government for $20.67 per troy ounce, and set up the government procedure necessary to ensure the viability of the order. While seemingly of questionable constitutionality, Executive Order 6102 was legal due to the president's power to regulate “export, hoarding, melting, or earmarking of gold” as outlined in Section 5(b) of the Trading With The Enemy Act of 1917, as amended under Section 2 of the Emergency Banking Relief Act of 1933 (Fraser). The order was passed in order to allow the U.S. to print more money to fight the Great Depression, and while it faced legal opposition along the way, it was ultimately upheld by the Supreme Court. It was not until 1971 that gold would once again be legal to own in the United States, and even still the U.S. dollar and gold are not interchangeable. For better or for worse, Executive Order 6102 has had a lasting impact on the United States Dollar and the economy which has formed around it.

Work Cited

Chen, James. “Fiat Money.” Investopedia, Investopedia, 18 Feb. 2021,

www.investopedia.com/terms/f/fiatmoney.asp.

“Executive Order 6102-Requiring Gold Coin, Gold Bullion and Gold Certificates to Be

Delivered to the Government.” Executive Order 6102-Requiring Gold Coin, Gold Bullion and Gold Certificates to Be Delivered to the Government | The American Presidency Project, 5 Apr. 1933, www.presidency.ucsb.edu/documents/executive-order-6102-requiring-gold-coin-gold-bullion-and-gold-certificates-be-delivered.

“FDR Takes United States Off Gold Standard.” History.com, A&E Television Networks,

24 Nov. 2009, www.history.com/this-day-in-history/fdr-takes-united-states-off-gold-standard.

Fraser. “Emergency Banking Relief Act.” FRASER, 9 Mar. 1933,

fraser.stlouisfed.org/title/emergency-banking-relief-act-1098.

Steve Mariotti, ContributorSteve Mariotti is the founder of the Network for Teaching

Entrepreneurship (NFTE) and an advocate for entrepreneurs worldwide. “When Owning Gold Was Illegal in America: And Why It Could Be Again.” HuffPost, 7 Dec. 2017, www.huffpost.com/entry/when-owning-gold-was-ille_b_10708196.