Executive Order 6102

Executive Order 6102 is an Executive Order signed on April 5, 1933 by U.S. President Franklin D. Roosevelt "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates." It required all persons to deliver on or before May 1, 1933 all gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of Executive Order 6102 was punishable by fine up to $10,000 ($166,640 if adjusted for inflation as of 2008) or up to ten years in prison, or both. Because of this forced immediate sale of gold to the Federal Reserve at the government set price of $20.67 per ounce, this Executive Order is often referred to as the Gold Confiscation of 1933. Shortly after this forced sale, the price of gold from the treasury for international transactions was raised to $35 an ounce; the U.S. government thereby devalued the U.S. dollar by 41%.

In 1931 the Bank of England was forced off the gold standard as depositors demanded conversion of their notes to gold, threatening insolvency of the Bank. This pattern was repeated throughout Europe, and subsequently speculators targeted the United States' gold reserves, converting US dollars to gold, causing tremendous gold outflow, worsening deflation, and threatening the solvency of the United States' reserve. In February and March 1933, bank panics led people in the US to hoarding gold coins as suspicion about banks devolved into distrust of paper money, further worsening these same economic pressures. Before Britain left the gold standard, the Federal Reserve's own reserve ratio was 81.4%; by March 1933 it had fallen to 51.3%.

Shortly after taking office, in March and April 1933 Roosevelt implemented a series of policies to combat the crisis of solvency of the US monetary and banking systems, including Executive Order 6073, the Emergency Banking Act, Executive Order 6102, Executive Order 6111, and later the Agricultural Adjustment Act, 1933 Banking Act and HJR-192. These acts and executive orders effectively suspended the gold standard in the United States [citation |title=The International Gold Standard and U.S. monetary policy from World War I to the New Deal |journal=Federal Reserve Bulletin |date=June, 1989 |first=Leland |last=Crabbe |url=http://findarticles.com/p/articles/mi_m4126/is_n6_v75/ai_7698825] [citation |title=Remarks by Governor Ben S. Bernanke: Money, Gold and the Great Depression |last=Bernanke |first=Ben |journal=At the H. Parker Willis Lecture in Economic Policy, Washington and Lee University, Lexington, Virginia |date=March 2, 2004 |url=http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm] .

Order 6102 specifically exempted "customary use in industry, profession or art"--a provision that covered artists, jewelers, dentists, and electricians among others. The order further permitted any person to own up to $100 in gold coins (a face value equivalent to five troy ounces of Gold). Nevertheless, anecdotal accounts later related that many persons who possessed large amounts of gold simply ignored the order and hid their gold until the Order ceased to be in effect.Fact|date=May 2008

The Gold Reserve Act of 1934 abrogated the gold clause in government and private contracts and fixed the value of the dollar in gold for foreign exchange to $35 per ounce. This price remained until August 15, 1971 when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus abandoning the gold standard for foreign exchange (see "Nixon Shock").

The limitation on gold ownership in the U.S. 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 USPL|93|373 [http://thomas.loc.gov/cgi-bin/bdquery/z?d093:SN02665:@@@L&summ2=m&|TOM:/bss/d093query.html|] [http://www.fdic.gov/regulations/laws/rules/5000-200.html] which went into effect December 31, 1974. P.L. 93-373 does not repeal the Gold Clause Resolution of 1933, which makes unlawful any contracts which specify payment in a fixed amount of money "or" a fixed amount of gold. That is, contracts are unenforceable if they use gold monetarily rather than as a commodity of trade.

References

External links

* [http://www.wellsfargonevadagold.com/confiscation-order.pdf PDF of Executive Order 6102] distributed by the Postmaster General.
* [http://www.presidency.ucsb.edu/ws/index.php?pid=14611&st=&st1= Text of Executive Order 6102] from The American Presidency Project.
* [http://users.rcn.com/mgfree/Economics/goldHistory.html "How Americans Lost Their Right To Own Gold And Became Criminals in the Process"] by Henry Mark Holzer.
* [http://www.knology.net/~bilrum/fdrgoldaudio.htm 1933 Audio of FDR's Banking Crisis Fireside Chat]