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Executive Order 6102 is an
executive order In the United States, an executive order is a directive by the president of the United States that manages operations of the federal government. The legal or constitutional basis for executive orders has multiple sources. Article Two of t ...
signed on April 5, 1933, by
US President The president of the United States (POTUS) is the head of state and head of government of the United States of America. The president directs the executive branch of the federal government and is the commander-in-chief of the United States ...
Franklin D. Roosevelt Franklin Delano Roosevelt (; ; January 30, 1882April 12, 1945), often referred to by his initials FDR, was an American politician and attorney who served as the 32nd president of the United States from 1933 until his death in 1945. As the ...
"forbidding the
hoarding Hoarding is a behavior where people or animals accumulate food or other items. Animal behavior ''Hoarding'' and ''caching'' are common in many bird species as well as in rodents. Most animal caches are of food. However, some birds will a ...
of
gold coin A gold coin is a coin that is made mostly or entirely of gold. Most gold coins minted since 1800 are 90–92% gold (22karat), while most of today's gold bullion coins are pure gold, such as the Britannia, Canadian Maple Leaf, and American Buf ...
, gold bullion, and
gold certificates Gold certificates were issued by the United States Treasury as a form of representative money from 1865 to 1933. While the United States observed a gold standard, the certificates offered a more convenient way to pay in gold than the use of coin ...
within the continental United States." The executive order was made under the authority of the
Trading with the Enemy Act of 1917 The Trading with the Enemy Act (TWEA) of 1917 (, codified at and et seq.) is a United States federal law, enacted on October 6, 1917, that gives the President of the United States the power to oversee or restrict any and all trade between the ...
, as amended by the
Emergency Banking Act __NOTOC__ The Emergency Banking Act (EBA) (the official title of which was the Emergency Banking Relief Act), Public Law 73-1, 48 Stat. 1 (March 9, 1933), was an act passed by the United States Congress in March 1933 in an attempt to stabilize t ...
in March 1933. The limitation on gold ownership in the United States was repealed after President Gerald Ford signed a bill legalizing private ownership of gold coins, bars, and certificates by an Act of Congress, codified in , which went into effect December 31, 1974.


Rationale

The stated reason for the order was that hard times had caused "hoarding" of gold, stalling economic growth and worsening the depression as the US was then using the
gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the l ...
for its currency. On April 6, 1933, ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...
'' wrote, under the headline ''Hoarding of Gold'', "The Executive Order issued by the President yesterday amplifies and particularizes his earlier warnings against hoarding. On March 6, taking advantage of a wartime statute that had not been repealed, he issued
Presidential Proclamation A presidential proclamation is a statement issued by a US president on an issue of public policy and is a type of presidential directive. Details A presidential proclamation is an instrument that: *states a condition, *declares a law and require ...
2039 The 2030s (pronounced "twenty-thirties"; shortened to the '30s) is the next decade in the Gregorian calendar that will begin on 1 January 2030, and will end on 31 December 2039. Plans and goals * NASA plans to execute a crewed mission to Mars be ...
that forbade the hoarding 'of gold or silver coin or bullion or currency', under penalty of $10,000 fine or ten years' imprisonment or both." The main rationale behind the order was actually to remove the constraint on the Federal Reserve preventing it from increasing the money supply during the depression. The
Federal Reserve Act The Federal Reserve Act was passed by the 63rd United States Congress and signed into law by President Woodrow Wilson on December 23, 1913. The law created the Federal Reserve System, the central banking system of the United States. The Pani ...
(1913) required 40% gold backing of Federal Reserve Notes that were issued. By the late 1920s, the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
had almost reached the limit of allowable credit, in the form of Federal Reserve demand notes, which could be backed by the gold in its possession (see Great Depression).


Effects

Executive Order 6102 required all persons to deliver on or before May 1, 1933, all but a small amount of
gold coin A gold coin is a coin that is made mostly or entirely of gold. Most gold coins minted since 1800 are 90–92% gold (22karat), while most of today's gold bullion coins are pure gold, such as the Britannia, Canadian Maple Leaf, and American Buf ...
, gold bullion, and
gold certificates Gold certificates were issued by the United States Treasury as a form of representative money from 1865 to 1933. While the United States observed a gold standard, the certificates offered a more convenient way to pay in gold than the use of coin ...
owned by them to the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
in exchange for $20.67 () per
troy ounce Troy weight is a system of units of mass that originated in 15th-century England, and is primarily used in the precious metals industry. The troy weight units are the grain, the pennyweight (24 grains), the troy ounce (20 pennyweights), and th ...
. Under the
Trading with the Enemy Act of 1917 The Trading with the Enemy Act (TWEA) of 1917 (, codified at and et seq.) is a United States federal law, enacted on October 6, 1917, that gives the President of the United States the power to oversee or restrict any and all trade between the ...
, as amended by the recently passed
Emergency Banking Act __NOTOC__ The Emergency Banking Act (EBA) (the official title of which was the Emergency Banking Relief Act), Public Law 73-1, 48 Stat. 1 (March 9, 1933), was an act passed by the United States Congress in March 1933 in an attempt to stabilize t ...
of March 9, 1933, a violation of the order was punishable by fine up to $10,000 (), up to ten years in prison, or both. The order specifically exempted "customary use in industry, profession or art," a provision that covered artists, jewelers, dentists, sign-makers, etc. The order also permitted any person to own up to $100 in gold coins, a face value equivalent to of gold valued at approximately $10,000 in 2020. The same paragraph also exempted "gold coins having recognized special value to collectors of rare and unusual coins", which protected recognized gold coin collections from legal seizure and likely melting. The price of gold from the Treasury for international transactions was then raised by the
Gold Reserve Act The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury. It also prohibited the Tr ...
to $35 an ounce (). The resulting profit that the government realized funded the
Exchange Stabilization Fund The Exchange Stabilization Fund (ESF) is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention. This arrangement (as opposed to having the central bank intervene directly) allows the US ...
, established by the 1934 Gold Reserve Act. The regulations prescribed in the executive order were modified by Executive Order 6111 on April 20, 1933, both of which were ultimately revoked and superseded by Executive Orders 6260 and 6261 on August 28 and 29, 1933, respectively. Executive Order 6102 also led to the extreme rarity of the
1933 Double Eagle The 1933 double eagle is a United States 20-dollar gold coin. Although 445,500 specimens of this Saint-Gaudens double eagle were minted in 1933, none were ever officially circulated, and all but two were ordered to be melted down. However, 20 ...
gold coin. The order caused all gold coin production to cease and all 1933 minted coins to be destroyed. About 20 illegal coins were stolen, leading to an outstanding
US Secret Service The United States Secret Service (USSS or Secret Service) is a federal law enforcement agency under the Department of Homeland Security charged with conducting criminal investigations and protecting U.S. political leaders, their families, and ...
warrant for arrest and confiscation of the coin. A legalized surviving coin sold for over $7.5 million in 2002, making it one of the most valuable coins in the world.


Prosecutions

Numerous individuals and companies were prosecuted related to Roosevelt's Executive Order 6102. The prosecutions took place under the subsequent Executive Orders 6111, 6260, 6261 and the Gold Reserve Act of 1934. There was a need to strengthen Executive Order 6102, as the one prosecution under the order was ruled invalid by Federal Judge
John M. Woolsey John Munro Woolsey (January 3, 1877 – May 4, 1945) was a United States district judge of the United States District Court for the Southern District of New York. He was known "for his brilliant and poignantly phrased decisions", including severa ...
, on the grounds that the order was signed by the President, instead of the
Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
as required. The circumstances of the case were that a New York attorney named Frederick Barber Campbell had one deposit at
Chase National Bank JPMorgan Chase Bank, N.A., doing business as Chase Bank or often as Chase, is an American national bank headquartered in New York City, that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and fina ...
of over of gold. When Campbell attempted to withdraw the gold, Chase refused, and Campbell sued Chase. A federal prosecutor then indicted Campbell on the following day (September 27, 1933) for failing to surrender his gold. Ultimately, the prosecution of Campbell failed, but the authority of the federal government to seize gold was upheld, and Campbell's gold was confiscated. The case was cause for the Roosevelt administration to issue a new order under the signature of the Secretary of the Treasury, Henry Morgenthau, Jr., Executive Orders 6260, 6261, related to the seizure of gold and the prosecution of gold hoarders. A few months later, Congress passed the Gold Reserve Act of 1934, which ratified Roosevelt's orders. A new set of Treasury regulations was issued providing civil penalties of confiscation of all gold and imposition of fines equal to double the value of the gold seized. Prosecutions of US citizens and noncitizens followed the new orders, with a few notable cases: Gus Farber, a diamond and jewelry merchant from San Francisco, was prosecuted for the sale of thirteen $20 gold coins without a license. Secret Service agents discovered the sale with the help of the buyer. Farber, his father, and 12 others were arrested in four American cities after a sting operation conducted by the Secret Service. The arrests took place simultaneously in New York and three California cities: San Francisco, San Jose, and Oakland. Morris Anolik was arrested in New York with $5,000 in U.S. and foreign gold coins; Dan Levin and Edward Friedman of San Jose were arrested with $15,000 in gold; Sam Nankin was arrested in Oakland; in San Francisco, nine men were arrested on charges of hoarding gold. In all, $24,000 in gold was seized by Secret Service Agents during the operation. David Baraban and his son Jacob owned a refining company. The Barabans' license to deal in unmelted scrap gold was revoked and so the Barabans operated their refining business under a license issued to a Minnie Sarch. The Barabans admitted that Minnie Sarch had nothing to do with the business and that she had obtained the license so that the Barabans could continue to deal in gold. The Barabans had a cigar box full of gold-filled scrap jewelry visible in one of the showcases. Government agents raided the Barabans' business and found another hidden box of US and foreign gold coins. The coins were seized and Baraban was charged with conspiracy to defraud the United States. Louis Ruffino was one individual indicted on three counts purporting to violations of the
Trading with the Enemy Act of 1917 The Trading with the Enemy Act (TWEA) of 1917 (, codified at and et seq.) is a United States federal law, enacted on October 6, 1917, that gives the President of the United States the power to oversee or restrict any and all trade between the ...
, which restricted trade with countries hostile to the United States. Eventually, Ruffino appealed the conviction to the Circuit Court of Appeals 9th District in 1940; however, the judgment of the lower courts was upheld based on the President's executive orders and the Gold Reserve Act of 1934. Ruffino, a resident of Sutter Creek in California-gold country, was convicted of possessing 78 ounces of gold and was sentenced to 6 months in jail, paid a $500 fine, and had his gold seized. Foreigners also had gold confiscated and were forced to accept paper money for their gold. The Uebersee Finanz-Korporation, a Swiss banking company, had $1,250,000 in gold coins for business use. The Uebersee Finanz-Korporation entrusted the gold to an American firm for safekeeping, and the Swiss were shocked to find that their gold was confiscated. The Swiss made appeals, but they were denied; they were entitled to paper money but not their gold. The Swiss company would have lost 40% of their gold's value if they had tried to buy the same amount of gold with the paper money that they received in exchange for their confiscated gold. Another type of ''
de facto ''De facto'' ( ; , "in fact") describes practices that exist in reality, whether or not they are officially recognized by laws or other formal norms. It is commonly used to refer to what happens in practice, in contrast with ''de jure'' ("by la ...
'' gold seizure occurred as a result of the various executive orders involving bonds,
gold certificate Gold certificates were issued by the United States Treasury as a form of representative money from 1865 to 1933. While the United States observed a gold standard, the certificates offered a more convenient way to pay in gold than the use of coi ...
s and private contracts. Private contracts or bonds that were written in terms of gold were to be paid in paper currency instead of gold although all of the contracts and the bonds proclaimed that they were payable in gold, and at least one, the fourth
Liberty Bond A liberty bond (or liberty loan) was a war bond that was sold in the United States to support the Allied cause in World War I. Subscribing to the bonds became a symbol of patriotic duty in the United States and introduced the idea of financi ...
, was a federal instrument. The plaintiffs in all cases received paper money, instead of gold, despite the contracts' terms. The contracts and the bonds were written precisely to avoid currency debasement by requiring payment in gold coin. The paper money which was redeemable in gold was instead irredeemable based on ''Nortz v. United States'', . The consolidated
Gold Clause Cases The ''Gold Clause Cases'' were a series of actions brought before the Supreme Court of the United States, in which the court narrowly upheld restrictions on the ownership of gold implemented by the administration of U.S. President Franklin D. Ro ...
were the following: *'' Perry v. United States'', *''U.S. v. Bankers' Trust Co.,'' 294 U.S. 240 (1935) *''Norman v. Baltimore & Ohio R. Co.'', *''Nortz v. United States'', The Supreme Court upheld all seizures as constitutional, with Justices
James Clark McReynolds James Clark McReynolds (February 3, 1862 – August 24, 1946) was an American lawyer and judge from Tennessee who served as United States Attorney General under President Woodrow Wilson and as an associate justice of the Supreme Court of the Unite ...
,
Willis Van Devanter Willis Van Devanter (April 17, 1859 – February 8, 1941) was an American lawyer who served as an Associate Justice of the Supreme Court of the United States from 1911 to 1937. He was a staunch conservative and was regarded as a part of the Four ...
,
George Sutherland George Alexander Sutherland (March 25, 1862July 18, 1942) was an English-born American jurist and politician. He served as an associate justice of the U.S. Supreme Court between 1922 and 1938. As a member of the Republican Party, he also repre ...
, and
Pierce Butler Pierce or Piers Butler may refer to: *Piers Butler, 8th Earl of Ormond (c. 1467 – 26 August 1539), Anglo-Irish nobleman in the Peerage of Ireland *Piers Butler, 3rd Viscount Galmoye (1652–1740), Anglo-Irish nobleman in the Peerage of Ireland * P ...
dissenting. The four justices were labelled the "
Four Horsemen The Four Horsemen of the Apocalypse are figures in the Christian scriptures, first appearing in the Book of Revelation, a piece of apocalypse literature written by John of Patmos. Revelation 6 tells of a book or scroll in God's right hand tha ...
" by the compliant press, as their conservative views were in opposition to Roosevelt's New Deal supported by the press.


Subsequent events and abrogation

The Gold Reserve Act of 1934 made gold clauses unenforceable and authorized the President to establish the gold value of the dollar by proclamation. Immediately following its passage, Roosevelt changed the statutory price of gold from $20.67 to $35 per ounce, thereby devaluing the US dollar, which was based on gold. That price remained in effect until August 15, 1971, when President
Richard Nixon Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 to 1974. A member of the Republican Party, he previously served as a representative and senator from California and was ...
announced that the US would no longer convert dollars to gold at a fixed value, thus abandoning the
gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the l ...
for foreign exchange (see Nixon Shock). The private ownership of gold certificates was legalized in 1964, and they can be openly owned by collectors but are not redeemable in gold. Following lobbying by Jim Blanchard, the limitation on gold ownership in the US 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 codified in , which went into effect December 31, 1974. However, P. L. 93-373 did not repeal the Gold Repeal Joint Resolution, which banned any contracts that specified payment in a fixed amount of money as gold or a fixed amount of gold. That is, contracts remained unenforceable if they used gold monetarily, rather than as a commodity of trade. However, an Act enacted on Oct. 28, 1977, Pub. L. No. 95-147, § 4(c), 91 Stat. 1227, 1229 (originally codified at 31 U.S.C. § 463 note, recodified as amended at 31 U.S.C. § 5118(d)(2)) amended the 1933 Joint Resolution to make it clear that parties could again include so-called gold clauses in contracts made after 1977.


Hoax of safe deposit box seizures

According to a hoax, Roosevelt ordered all safe deposit boxes in the country seized and searched for gold by an official of the Internal Revenue Service. A typical example of the text of the alleged order reads: The first known reference to the hoax was in the book ''After the Crash: Life In the New Great Depression''. The fake text refers only to gold, not to silver, which was added by 1998 to Internet references. It claims to be an executive order, but its text was written it to apply to specific individuals ("Your possession"), and so if the text originated from the government, it would have been sent to individuals, not published as an executive order. The first paragraph starts with the actual text of Executive Order 6102, then edits it slightly (changing "said national emergency" to "a national emergency" and "still continues to exist" to "still exists") and then adds invented text. The minor edits and the way that the real text and fake text are combined mid-sentence make it almost certainly an intentionally designed hoax, rather than an accident. Most of the text does not appear in the actual executive order. In fact, safe deposit boxes held by individuals were not forcibly searched or seized under the order, and the few prosecutions that occurred in the 1930s for gold "hoarding" were executed under different statutes. One of the few such cases occurred in 1936, when a safe deposit box containing over of gold belonging to Zelik Josefowitz, who was not a US citizen, was seized with a search warrant as part of a prosecution for
tax evasion Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the tax ...
. The US Treasury also came into possession of a large number of safe deposit boxes due to bank failures. During the 1930s, over 3000 banks failed, and the contents of their safe deposit boxes were remanded to the custody of the Treasury. If no one claimed the box, it remained in the possession of the Treasury. In October 1981, there were 1605 cardboard cartons in the basement of the Treasury, each carton containing the contents of one unclaimed safe deposit box.


Similar laws in other countries

In Poland, a similar regulation was issued on November 7, 1919, which forced citizens to sell their gold and silver to the state. A month later, it was extended until January 31, 1920. In Australia, Part IV of the Banking Act 1959 allows the Commonwealth government to seize private citizens' gold in return for paper money where the Governor-General is satisfied that it is expedient so to do, for the protection of the currency or of the public credit of the Commonwealth. On January 30, 1976, the operation of that part of the Act was suspended. United Kingdom introduced the gold trade ban law at 1966 (Exchange Control Act 1947). It became illegal for UK residents to continue to hold more than four gold coins dated after 1817, or to buy any gold coins unless they obtain collector licence from Bank of England. The reasoning was to prevent people from hoarding the gold, while the cost of living and inflation increase. This act was repealed in 1971.


See also

*
Causes of the Great Depression The causes of the Great Depression in the early 20th century in the United States have been extensively discussed by economists and remain a matter of active debate. They are part of the larger debate about economic crises and recessions. The sp ...
*
Emergency Banking Act __NOTOC__ The Emergency Banking Act (EBA) (the official title of which was the Emergency Banking Relief Act), Public Law 73-1, 48 Stat. 1 (March 9, 1933), was an act passed by the United States Congress in March 1933 in an attempt to stabilize t ...
March 9, 1933 *
Executive Order 6814 On August 9, 1934, U.S. President Franklin D. Roosevelt implemented the seizure of all silver situated in the continental United States with Executive Order 6814 - Requiring the Delivery of All Silver to the United States for Coinage. Executive Ord ...
, a similar Order pertaining to silver, signed in 1934 *
Fiat money Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometim ...
*
Gold Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile me ...
*
Gold Clause Cases The ''Gold Clause Cases'' were a series of actions brought before the Supreme Court of the United States, in which the court narrowly upheld restrictions on the ownership of gold implemented by the administration of U.S. President Franklin D. Ro ...
*
Great Contraction The Great Contraction is the recessionary period from 1929 until 1933, i.e., the early years of the Great Depression, as characterized by economist Milton Friedman. The phrase was the title of a chapter in the landmark 1963 book '' A Monetary Hist ...
*
Gold Standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the l ...


References


External links


Text of Executive Order 6102
from The American Presidency Project.

{{New Deal, state=expanded 6102 1933 in law Gold legislation Federal Reserve System 1933 in economics Gold in the United States