Milestone 1:
FDR's Executive Order 6102
Serena Prince
Regent University
Prof. Jeff Bajah
September 4, 2022
Milestone 1: FDR's Executive Order 6102
Introduction to Topic
1. Pick a Policy
a. FDR's Executive Order 6102: Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates
2. Explain it and the problem it is supposed to solve and the problem it creates
a. FDR's Executive Order 6102 was enacted to stabilize the economy by confiscating all U.S. citizens’ gold. This greatly upset Americans because, in essence, the government stole from them. It also took the U.S. off the gold standard making our currency fiat money.
3. Broadly outline where you think this project will go.
Project Outline
I. Introduce FDR’s Executive Order 6102
II. Consider the context surrounding this issue:
a. The Great Depression and Bank Failures are what caused Americans to hold onto their gold. These crises were also the reasons in which FDR justified taking drastic measures in stabilizing the economy by confiscating all the gold.
b. What is the status quo?
i. Many politicians and citizens wanted to keep the currency backed by gold.
c. Has public opinion on this issue evolved
i. Generally speaking, a lot of Americans have accepted the fact that we have fiat currency. However, there are still those who see the danger in this fact and prefer to revert back to the gold standard.
III. Who are the interested parties?
a. Federal Reserve—control over the U.S. currency.
b. U.S. Treasury—control over the U.S. currency. With greater gold reserves, they can circulate more money into the economy.
c. Americans because their gold was confiscated and with the subsequent bill FDR passed, it caused their federal notes to drop 40% in value (Court of Appeals, 1936).
d. Gold dealers
e. Business owners
f. Private Banks
IV. Final evaluation and recommendations
a. FDR’s Executive Order was unconstitutional
b. America’s current fiat currency is volatile.
c. America should return to gold-back currency
4. Choose a Format
a. Power Point
5. At least Two Sources I expect to Use:
a. Newman, J. (2021, August 11). How Nixon and FDR used "crises" to destroy the dollar's links to gold |. Mises Institute. Retrieved September 4, 2022, from https://mises.org/wire/how-nixon-and-fdr-used-crises-destroy-dollars-links-gold
b. Roosevelt, F. D. (1933, April 5). 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. Retrieved September 4, 2022, from https://www.presidency.ucsb.edu/documents/executive-order-6102-requiring-gold-coin-gold-bullion-and-gold-certificates-be-delivered
Concept Questions
1. What are the relevant rules guiding the policy?
a. Every U.S. citizen had to hand over all their gold coins, gold bullion and gold certificates to the Federal Reserve by April 28th, 1933. In essence, owning gold became illegal with a few exceptions. Violators could be charged with a fine of up to $10,000 and imprisonment (Roosevelt, 1933; The New York Times, 1933).
2. Are those rules effectively enforced?
a. At the time they were, especially given the penalty of up to $10,000 or 5 to 10 year imprisonment (The New York Times, 1933). Congress codified his executive order in The Gold Reserve Act of 1934 (Congress 1934).
b. The ban on gold ownership was lifted in 1974 under President Gerald Ford by an Act of Congress in Pub. L. 93-373 (1974).
3. Is there a romance – reality disconnect in the policy? In other words, do people seem to expect a much more “public spirited” outcome than is realistic? No.
4. What is the collective action the policy is supposed to accomplish? Or is there one? Is the policy designed to favor some over others? Be sure to distinguish between actual results and rhetoric.
The Executive Order was enacted to stabilize the economy because the bank failures and Great Depression were causing citizens to hoard their gold. By forcing everyone to hand their gold to the Federal Reserve, the Fed would then be able to have enough gold to circulate more money into the economy. This policy favored the Federal Government since they would now have more gold reserves. This disfavored Americans who received federal notes in exchange for their gold that ended up being devalued because FDR declared gold to be worth $35 an ounce after he confiscated it at a value of $20.67 an ounce.
5. Is there a special interests involved? Who? Are they successful?
a. The interested party is the Federal Government, specifically the Federal Reserve and the U.S. Treasury because they received all the gold. It gave them more control over the currency and the ability to print more money. The Federal Government still maintains this monetary power. They were quite successful in acquiring the vast majority of the gold with a few exceptions.
Why is it important to learn about this topic?
This policy took the U.S. off of the gold standard, making our money fiat currency which lowered the value of the dollar and made it more volatile. Additionally, the way in which the President ordered the confiscation of gold is highly controversial regarding its constitutionality as well as the means by which he enforced it. It expanded the power of the Federal Government especially in its financial power. The act also forced private banks to shut down in the bank holiday FDR enacted. Today, the American government still operates with a fiat currency and the Federal Reserve uses this to its benefit by being able to print more money.
References
Congress, U. S. (1934, January 30). Gold Reserve Act of 1934. FRASER. Retrieved September 4, 2022, from https://fraser.stlouisfed.org/title/gold-reserve-act-1934-1085
Court of Appeals. (1936, April 6). Uebersee Finanz-Korporati: 83 f.2d 225 (1936): 3f2d2251237. Leagle. Retrieved September 4, 2022, from https://www.leagle.com/decision/193630883f2d2251237.xml
Newman, J. (2021, August 11). How Nixon and FDR used "crises" to destroy the dollar's links to gold |. Mises Institute. Retrieved September 4, 2022, from https://mises.org/wire/how-nixon-and-fdr-used-crises-destroy-dollars-links-gold
Public Law 93-374-Aug. 14, 1974. Congress.gov. (1974). Retrieved September 4, 2022, from https://www.govinfo.gov/content/pkg/STATUTE-88/pdf/STATUTE-88-Pg445.pdf
Roosevelt, F. D. (1933, April 5). 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. Retrieved September 4, 2022, from https://www.presidency.ucsb.edu/documents/executive-order-6102-requiring-gold-coin-gold-bullion-and-gold-certificates-be-delivered
The New York Times. (1933, April 6). Hoarding of gold. The New York Times. Retrieved September 4, 2022, from https://www.nytimes.com/1933/04/06/archives/hoarding-of-gold.html