Executive Order 6102: The Gold Confiscation of 1933

On April 5, 1933, U.S. President Franklin D. Roosevelt signed Executive Order 6102, a significant and controversial measure during the Great Depression. This order required American citizens to surrender their gold coins, gold bullion, and gold certificates to the Federal Reserve in exchange for paper currency. The move was part of a broader strategy to combat the economic crisis and stabilize the banking system.

Context and Background

The Great Depression, which began with the stock market crash of 1929, had plunged the United States into severe economic turmoil. By 1933, banks were failing at an alarming rate, unemployment was soaring, and deflation was exacerbating the economic woes. The U.S. was on the gold standard, meaning that the value of the dollar was directly tied to a specific quantity of gold. This system limited the government’s ability to increase the money supply and stimulate the economy.

Key Provisions of Executive Order 6102

• Mandatory Surrender: The order mandated that all individuals and businesses in the U.S. deliver their gold holdings to the Federal Reserve by May 1, 1933.
• Compensation: In return, citizens received paper currency at the rate of $20.67 per ounce of gold, the then-current market rate.
• Exemptions: Certain exemptions were allowed, including gold used in industry, art, or professions, and a personal allowance of up to $100 in gold coins.
• Penalties: Non-compliance was met with severe penalties, including fines up to \(10,000 (equivalent to over \)200,000 today) and/or imprisonment for up to ten years.

Objectives and Consequences

The primary objective of Executive Order 6102 was to remove constraints on the Federal Reserve’s ability to increase the money supply, thus combating deflation and stimulating economic growth. By centralizing gold reserves, the government aimed to restore confidence in the banking system and stabilize the economy.

In January 1934, the Gold Reserve Act was passed, which revalued gold to $35 per ounce, effectively devaluing the dollar. This allowed the government to increase the money supply further, contributing to economic recovery efforts.

Broader Historical Significance

Executive Order 6102 marked a pivotal shift in U.S. monetary policy, moving away from the gold standard and towards greater federal control over the economy. It set a precedent for future government interventions during economic crises and highlighted the tensions between individual property rights and national economic interests.

The order remains a topic of debate among economists and historians, illustrating the complexities of balancing economic stability with personal freedoms. It underscores the drastic measures sometimes deemed necessary to address profound economic challenges.

Overall, Executive Order 6102 was a critical component of Roosevelt’s New Deal policies, reflecting the administration’s commitment to bold and innovative solutions in the face of unprecedented economic adversity.