The U.S. government Gold seizures of 1933 and how they came to pass \ stacker news ~bitcoin

The U.S. government Gold seizures of 1933 and how they came to pass

10.9k sats \ 11 comments \ @Bitman 30 Sep 2023 bitcoin

I thought I'd learn about this part of fiat history as it could be useful for a bitcoiner to know.

TLDR Supreme Court allowed the public to get caught in a catch 22 situation. Citizens thought they'd be able to buy back their gold, so agreed. However, the fiat, that they were 'compensated' with, depreciated.

Firstly, here's a list of the relevant laws:

The Emergency Banking Act - authorized President to prohibit international gold payments
Executive Order 6102 - required the surrender of all privately held monetary gold in exchange for currency
The Gold Clause Resolution - voided all gold clauses within the United States.
The Gold Reserve Act - government took ownership of the Federal Reserve's gold stocks and devalued the dollar.

The first of these laws, Emergency Banking Act of 1933, wasn't scrutinized by Congress.

Much like, in more recent times, Bush Jr's Patriot Act was unable to be scrutinized (because it was so long, and the act had only hours to be read) - the Emergency Banking Act of 1933 was even more impossible to read - it hadn't been printed!.

A key piece of legislation in this story is the Emergency Banking Act of 1933, which Congress passed on March 9 without having read it and after only the most trivial debate. House Minority Leader Bertrand H. Snell (R-NY) generously conceded that it was "entirely out of the ordinary" to pass legislation that "is not even in print at the time it is offered." He urged his colleagues to pass it all the same: "The house is burning down, and the President of the United States says this is the way to put out the fire. [Applause.] And to me at this time there is only one answer to this question, and that is to give the President what he demands and says is necessary to meet the situation."¹

Naturally, the Act helped to strengthen the powers of the president at the time of the Depression, President Roosevelt:

Among other things, the act retroactively approved the president's closing of private banks throughout the country for several days the previous week, an act for which he had not bothered to provide a legal justification. It gave the secretary of the Treasury the power to require all individuals and corporations to hand over all their gold coin, gold bullion, or gold certificates if in his judgement "such action is necessary to protect the currency system of the United States."¹

I wanted to know the details of the confiscation, which came about because of later legislation (Executive Order 6102).

One question that I wanted answering is why citizens offered their gold up to the government. I'd heard seized quite as I imagined it - citizens were given US dollars in compensation. However, we all know that fiat isn't a good store of value. The citizens found this out the hard way.

Initially, citizens seemed fairly happy to hand over their gold - until they later realised that the dollars that they were compensated with was being devalued and that with this money they wouldn't be able to buy their gold back.

Later, I found out about the legality of the government 'seizing' gold...

It seems that the U.S. Supreme Court never directly looked into whether the president's order to 'seizing' citizens' gold was constitutional. However they presided on a few cases, known as 'The Gold Cases' in which a few cases of maligned citizens would be heard. In one case, Perry V. United States, the Court, although seemingly siding with the man, eventually were happy to see the man caught in a 'catch 22' type situation:

[T]he plaintiff was indeed entitled to his gold, since the government had an obligation to live up to its promises. But in not paying him his gold, the government wasn't really wronging him, since gold was now illegal to hold. In other words, if the government paid him in gold, it would then have to confiscate that gold from him anyway since holding gold was against the law.¹

The decision was not unanimous. One dissent read, in part:

"For the government to say, we have violated our contract but have escaped the consequences through our own statute, would be monstrous. In matters of contractual obligation the government cannot legislate so as to excuse itself." Suppose a private individual tried to do the same thing, "secreting or manipulating his assets with the intent to place them beyond the reach of creditors." Any such attempt "would be denounced as fraudulent, wholly ineffective."¹

When citizens were again allowed to own gold, things were still stacked up against average citizens who wanted to hold gold:

By the 1970s the federal government had once again permitted Americans to hold gold coins. But when it came time to actually mint them again, it made sure that gold coins could never circulate and displace the constantly depreciating paper currency printed by the US government: the law required that such coins could circulate with a face value only a tiny fraction of their market value.¹

¹ https://mises.org/library/great-gold-robbery-1933

Incidentally, I later realized that the U.S. is not alone in making laws to seize gold. Australia put a law in place in 1959 to allow gold seizures from private citizens, 'if expedient to do so'. Also between 1966 and 1979 the UK banned citizens from owning more than four gold or silver coins, and blocked the private import of gold.

I'm still yet to find out whether the seizing of gold effected all citizens across the board or whether, like prohibition, the wealthy might have been least effected - I guess having your gold in your own safe, rather than a bank, might have helped them with that...

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1120 sats \ 1 reply \ @supertestnet 30 Sep 2023

Some of Roosevelt's campaign speeches indicate to me that he was quite open about fighting "speculators" and effectively taking their profits away.

Here is a selection from one of his campaign addresses, the Commonwealth Club Address in 1932:

Every man has a right to his own property; which means a right to be assured, to the fullest extent attainable, in the safety of his savings…[so that he may] carry the burdens of those parts of life which…afford no chance of labor: childhood, sickness, old age. In all thought of property, this right is paramount; all other property rights must yield to it. If, in accord with this principle, we must restrict the operations of the speculator, the manipulator, even the financier, I believe we must accept the restriction as needful… [Industrialists] have undertaken to be, not business men, but princes of property. … [Therefore] they must fearlessly and competently assume the responsibility which goes with the power. … [I]nstead of acting each for himself, [they] must work together to achieve [a] common end. They must, where necessary, sacrifice this or that private advantage… It is here that formal Government…comes in. Whenever [the industrialist] declines to join in achieving an end recognized as being for the public welfare…the Government may properly be asked to apply restraint. Likewise, should the group ever use its collective power contrary to the public welfare, the Government must be swift to enter and protect the public interest.

It starts out great: everyone has a right to their own property. But then Roosevelt announces that your property rights "must yield to" the limitation that savings exist for the sake of "carry[ing] the burdens of...sickness...[and] old age," and that for people to actually carry those burdens during the Depression, the government must "restrict the operations of the speculator" and ensure that the "princes of property" make a "sacrifice [of] this or that private advantage." He does not say "they must sacrifice their gold." Only that they must sacrifice an unnamed "private advantage."

Here is a selection from another of his campaign addresses, his Presidential Nomination Address in 1932:

Enormous corporate surpluses [are] piled up -- the most stupendous in history. … [Let us] do something toward the reduction of the surpluses of staple commodities that hang on the market. … Final voluntary reduction of surplus is a part of our objective, but the long continuance and the present burden of existing surpluses make it necessary to repair great damage of the present by immediate emergency measures. … Let us be frank in acknowledgement of the truth that many amongst us have made obeisance to Mammon, that the profits of speculation, the easy road without toil, have lure[d] us from the old barricades. To return to higher standards we must abandon the false prophets and seek new leaders of our own choosing.

This one seems a bit more explicit at first: the wealthy are hoarding their wealth and he campaigns for emergency powers to effect "the reduction of [those] surpluses" -- and though he says he'd like for this reduction to be "voluntary," it is "necessary" (according to him) to act immediately, as in an emergency, without waiting for people to voluntarily hand over their wealth.

However, in order to make that paragraph sound a bit more explicit, I've done some careful chopping. The surpluses he explicitly promises to reduce “by immediate emergency measures” were actually “staple commodities” – namely, farm products, food, “agriculture.” (He uses that specific word in one of my dot-dot-dots.) The “enormous corporate surpluses” – he claims – were already drained: “Where, under the spell of delirious speculation, did those surpluses go? …into new and unnecessary plants which now stand stark and idle…[and] into the call-money market of Wall Street... Those are the facts. Why blink at them?”

Consequently, neither in this speech nor in the previous one that I quoted does Roosevelt explicitly call for emergency measures to confiscate speculative profits or gold. But perhaps he suggests it by calling attention, via proximity, to “enormous…surpluses” produced by speculation and the “reduction” of surpluses “by immediate emergency measures” – even though he technically aimed the latter at a claimed surplus of agriculture rather than at a claimed surplus of gold (which he never explicitly mentions in either speech). His remarks about "abandon"ing the "false prophets" of "Mammon" and "the profits of speculation" are also telling.

I don't know that gold-holders were surprised when Roosevelt tried to confiscate nearly all their gold. It seems to me that, because of his campaign speeches, most people not only knew or had an intuition of what was coming, they voted for it. Remember, most people in the Depression did not have gold that could be confiscated. The wealthy had gold, and the other voters seemed -- based on these speeches and others -- to be angry with them or maybe jealous of them. In Roosevelt's many other campaign speeches he frequently decries "speculation" and "hoarding," and in the two I quoted he even seems to say that the government must do something about it. He seems somewhat vague or indirect about exactly what, but it certainly involves rich people sacrificing something and someone's surpluses being involuntarily reduced. So perhaps the blame for the gold confiscation needs to be placed not just on the president, but on all those who voted for him in unjust anger or jealousy at the bogeymen of "speculators" and "hoarders."

0 sats \ 0 replies \ @Bitman OP 30 Sep 2023

Thanks for the quotes, interesting stuff.

The Emergency Banking Act if 1933 was actually written up by the previous (Hoover) administration.

Roosevelt had only been president for four days when it was passed.

I'm not sure how easy the 'transfer of power' would have been. He would have had a few months since the election to get up to speed though.

1305 sats \ 1 reply \ @elvismercury 1 Oct 2023

I'm curious about how people felt about this at the time -- was there widespread outrage? Did most people not care bc they didn't own any gold? Did they generally believe that the government's reasons were sound?

(EDIT: I see that @supertestnet covers some of this in his final paragraph. Note to self: read to the end of things.)

People talk a lot about this coming around again, except for btc and crypto. That the govt would try to attack btc seems reasonable, and, in fact, inevitable. But the form the attack will take seems likely to be different. I'm guessing it would be a triple whammy:

super draconian on-ramp oversight
anti-mining legislation
brutal tax implications

Would be interesting to see that scenario, or other attack scenarios, broken down. Has anyone done a good job of it? I've read examples but most of them are lacking -- when bitcoiners (at least the ones writing on social media) do threat modeling the threats tend to be trivialized.

100 sats \ 0 replies \ @Bitman OP 2 Oct 2023

Yes, I was curious too - in fact, that's why I started to look into it.

I too wanted first-hand accounts; however, up until the advent of the Internet, the soundings of the general populace has always been poorly recorded...

I've got a volume of three massive tomes at home that wholly lean on first-hand accounts to put history in a new context (from antiquity to the modern era). I'll consult them when I'm back at home.

If I find anything really interesting, I'll create a follow on if necessary.

21 sats \ 1 reply \ @Lux 30 Sep 2023

In hope you will expand, understand better and follow up with more research, Imma just leave this here

http://www.itsuandi.org/itsui/downloads/Itsui_Materials/THe%20UCC%20Connection%20Free%20Yourself%20from%20Legal%20Tyranny.pdf

https://archive.org/details/632RetiredJudgeSpillsTheBeans/632-retired-judge-spills-the-beans/mode/2up?view=theater

21 sats \ 0 replies \ @Bitman OP 30 Sep 2023

Thanks, I'll look into this after spending the weekend with the family.

1 sat \ 1 reply \ @wingalt 30 Sep 2023

Looks like Roosevelt was just as much as a crook as today's political class like for instance Nancy Pelosi saying "we have to pass the bill so you can find out what is in it"

0 sats \ 0 replies \ @Bitman OP 2 Oct 2023

I'd say that all government moves should be examined carefully all of the time - but especially during a crisis like bank runs, depressions and war (good examples are Great Depression and 9-11).

These are moments of crisis are universally used by scammers, con artists, salesmen and politicians.

We should all be extra vigilant during those times.

That moment during The Great Depression does seem to have set a very dangerous precedent...

I looked up the Peloci quote on Snopes.

Looks like Pelosi did say this, but the words were quoted out of context by the website that made an issue of this. Plus, importantly, the Act in question looks like it had been debated for months before Pelosi made her remarks too.

In hindsight, it looks like I should have added newspapers, social media and websites to that list...

0 sats \ 0 replies \ @2bithits 30 Sep 2023

I did not know Australia had a similar situation.

Some good lessons to be learned from this.

Thanks

0 sats \ 0 replies \ @aoeu 30 Sep 2023

Great research. Bookmarked to be read more thoroughly later!

0 sats \ 0 replies \ @SaToSHiWoMaN 6 Mar outlawed

stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.