How much Gold was Confiscated in 1933? | Gold Confiscation History, Executive Order 6102

Summary

This video explores the historical impact of Executive Order 6102, issued in 1933, which confiscated gold from U.S. citizens during the Great Depression. The order mandated citizens to turn in their gold, leading to the melting of significant amounts of gold coins. The video delves into the implications of the gold confiscation, its effects on gold pricing, and the subsequent legal battles, including the Supreme Court's ruling on gold clauses in contracts. It also highlights the lasting influence of this era on modern financial policies, including current government interventions in markets and the global economy.

Takeaways

• 😀 The 1933 gold confiscation, executed through Executive Order 6102, required U.S. citizens to turn in their gold coins to the Federal Reserve under the threat of severe fines and imprisonment.
• 😀 Citizens were paid a fixed price of $20.67 per ounce of gold, which was much lower than the market value at the time.
• 😀 After the confiscation, the U.S. government devalued the dollar, raising the price of gold to $33 per ounce and eventually to $35 per ounce within a year.
• 😀 The gold confiscation policy remained in effect until 1975, when private ownership of gold was legalized again.
• 😀 The U.S. Supreme Court in 1935 upheld the government's action in invalidating gold clauses in contracts, further empowering the government in financial matters.
• 😀 The gold confiscation and the government's actions were justified under the claim of a national emergency during the Great Depression, which allowed for extensive economic interventions.
• 😀 Argentina used the U.S. 1933 gold confiscation as a legal precedent during its own 2002 financial crisis, when it confiscated dollar-denominated bank accounts.
• 😀 The U.S. government became a global financial powerhouse not only through the gold confiscation but also by leveraging its role as a major manufacturer and net surplus trader during World War II.
• 😀 The U.S. Gold Reserve Act of 1934 established the Exchange Stabilization Fund, giving the Treasury Department the power to control the value of the dollar without the Federal Reserve's approval.
• 😀 Modern financial interventions, including market manipulation and bailouts, can trace their origins back to policies implemented during the 1933 gold confiscation era, impacting both domestic and foreign markets.

Q & A

What was Executive Order 6102, and when was it issued?

Executive Order 6102 was issued by President Franklin D. Roosevelt in 1933, requiring U.S. citizens to turn in their gold coinage and bullion to the federal government. The order was enacted during the Great Depression to combat economic stagnation.

What penalties did citizens face if they failed to comply with Executive Order 6102?

Citizens who did not comply with Executive Order 6102 faced a fine of up to $10,000, which would be roughly equivalent to $1 million today, and the possibility of up to ten years in prison.

How much gold was confiscated during the 1933 gold confiscation?

Approximately 2.65 metric tons of gold coinage were confiscated, which amounted to about 27.4% of all circulating gold coins in the U.S. at the time.

What was the market value of gold at the time compared to today?

At the time of the confiscation, gold was valued at $20.67 per ounce. Today, gold is valued at around $1,800 per ounce, reflecting a significant increase in its value.

What were the main economic reasons behind Executive Order 6102?

The main economic reasons for the order were to combat deflation, spur price inflation, and stimulate economic activity, as the U.S. was experiencing severe economic stagnation during the Great Depression.

What exceptions to the gold confiscation were there?

The order exempted gold jewelry and rare, collectible gold coins. However, most forms of gold, including raw bullion and circulating gold coins, were required to be turned in.

What was the significance of the U.S. Supreme Court's 1935 ruling on gold clauses in contracts?

The Supreme Court's 1935 ruling upheld the government's right to annul gold clauses in contracts, effectively allowing the government to change the currency of payment from gold to paper dollars. This decision was part of the broader economic changes during the Great Depression.

How did the gold confiscation affect the U.S.'s standing as an economic power?

While the gold confiscation itself did not directly make the U.S. a gold powerhouse, the nation gained significant economic strength through manufacturing, trade surpluses, and a stable gold reserve, particularly during World War II.

How did the 1933 gold confiscation influence modern-day financial policies?

The 1933 gold confiscation set the stage for modern financial interventions by the U.S. government. The Exchange Stabilization Fund (ESF) created in 1934 continues to allow the U.S. Treasury to intervene in foreign exchange and gold markets today.

What is the Exchange Stabilization Fund (ESF), and how does it work?

The Exchange Stabilization Fund (ESF) was established in 1934 to allow the U.S. Treasury to manage the value of the dollar without the Federal Reserve's approval. It is used to intervene in currency markets, including foreign exchange and gold trading, and has been involved in various financial bailouts and market interventions.