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Roosevelt’s Crusade against Gold
Early in the New Deal, Franklin Roosevelt became convinced that to get America out of the Great Depression, the federal government must gain total control over money. The Federal Reserve seemed to have been powerless during the contraction, so Roosevelt asserted the power of the presidency. He began demonizing gold.

Why gold? For centuries, people have viewed gold as the ultimate store of value, something to buy that can help preserve savings when governments depreciate coins and currency. Gold is a beautiful, lustrous metal. It’s durable. It doesn’t break, burn, or corrode. Brilliant gold coins have been recovered from sunken treasure ships after several hundred years beneath the sea. Gold is malleable, and ever since ancient Egypt, people have shaped it into splendid coins, jewelry, and sculpture. Because gold is rare, it has been a far more reliable store of value than paper money, which can be inflated at the whims of politicians. ...

... In his Presidential Proclamation 2039, March 6, 1933, which declared the national “bank holiday,” Roosevelt blamed the banking crisis on gold hoarding. His proclamation cited the legal authority of the Trading with the Enemy Act (October 6, 1917), which provided fines of $10,000 or as many as 10 years in prison for anyone convicted of doing business with an “enemy” of the United States. A subsection of the Trading with the Enemy Act authorized the president to ban transactions involving gold. Presidential Proclamation 2039 made it against the law until March 9, 1933, for any bank to sell gold.

Roosevelt understood that he must apply the full force of federal power to suppress the natural desire for gold in troubled times. The Emergency Banking Act, signed into law March 9, amended the Federal Reserve Act by adding a new subsection (n), which empowered the secretary of the Treasury to demand that all Americans surrender their gold and receive paper money. The following day, Roosevelt issued Executive Order 6073, which made it illegal for Americans to take gold out of the country.

In his first “fireside chat,” delivered on March 12, Roosevelt didn’t say a word about his backstage maneuvering to seize gold. He remarked that “hoarding during the past week has become an exceedingly unfashionable pastime.”

Less than a month later, on April 5, 1933, Roosevelt issued Executive Order 6012, which expropriated privately owned gold. He ordered Americans to surrender their gold to the government by May 1, 1933. Violators would be subject to a $10,000 fine or as many as 10 years in prison.

In his May 7 “fireside chat,” he claimed that if Americans were free to buy gold, there soon wouldn’t be any left, and therefore in the interest of fairness he denied gold to everybody. That was a silly thing to say, since gold markets had flourished around the world for thousands of years. Gold endlessly changed hands. People have obtained gold during the worst wartime conditions when it was forbidden. Resourceful smugglers have defied the death penalty to deliver gold. Journalist Timothy Green reported that a favorite smuggling technique involved “a thin canvas or nylon corset, bearing thirty or more one-kilo bars of gold slotted neatly into rows all around the garment, strapped to the torso.” ...