Executive Order 6102
Encyclopedia
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 Certificate
s within the continental United States". The order criminalized the possession of monetary gold by any individual, partnership, association or corporation.
, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67
(equivalent to $ today) per troy ounce
. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($167,700 if adjusted for inflation as of 2010) or up to ten years in prison, or both. Most citizens who owned large amounts of gold had it transferred to countries such as Switzerland.
Order 6102 specifically exempted "customary use in industry, profession or art"—a provision that covered artists, jewellers, dentists, and sign makers among others. The order further permitted any person to own up to $100 in gold coins (a face value equivalent to 5 troy ounces (155.5 g) of Gold valued at about $7800 as of 2011). The same paragraph also exempted "gold coins having recognized special value to collectors of rare and unusual coins." This protected gold coin collections from legal seizure and likely melting.
The price of gold from the Treasury for international transactions was thereafter raised
to $35 an ounce ($587 in 2010 dollars). The resulting profit that the government realized funded the Exchange Stabilization Fund
established by the Gold Reserve Act
in 1934.
The regulations prescribed within Executive Order 6102 were modified by Executive Order 6111 of April 20, 1933, both of which were ultimately revoked and superseded by Executive Orders 6260 and 6261 of August 28 and 29, 1933, respectively.
, on the grounds that the order was signed by the President, not the Secretary of the Treasury as required.
The circumstances of the case were that a New York attorney, Frederick Barber Campbell, had on deposit at Chase National over 5000 troy ounces (155.5 kg) 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.
The case forced the Roosevelt administration to issue a new order under the signature of the Secretary of the Treasury, Henry Morgenthau, Jr.
, which was in force for a few months until the passage of the Gold Reserve Act
on January 30, 1934.
of 1934 made gold clause
s unenforceable, and changed the value of the dollar in gold from $20.67 to $35 per ounce. This price remained in effect 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 private ownership of gold certificates was legalized in 1964. They can be openly owned by collectors but are not redeemable in gold. 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 , which went into effect December 31, 1974. P.L. 93-373 did not repeal the Gold Repeal Joint Resolution, which made unlawful any contracts that specified payment in a fixed amount of money or a fixed amount of gold. That is, contracts remained unenforceable if they used gold monetarily rather than as a commodity of trade. However, Act of 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 and made it clear that parties could again include so-called gold clauses in contracts formed after 1977.
Examination of the actual Executive Order shows that this text never appears in it. 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 10000 troy ounces (311 kg) of gold belonging to Zelik Josefowitz, who was not a U.S. citizen, was seized with a search warrant as part of a tax evasion prosecution. Approximately 500 tonnes of gold were sold to the U.S. Treasury in 1933 at the rate of $20.67 per troy ounce.
The U.S. Treasury came into possession of a large number of safe deposit boxes due to bank failures. During the 1930s, over 3,000 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. As of October 1981, there were 1,605 cardboard cartons in the basement of the Treasury, each carton containing the contents of one unclaimed safe deposit box.
part IV of the Banking Act 1959 allowed 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." As of January 30, 1976, this part's operation is "suspended".
Gold coin
A gold coin is a coin made mostly or entirely of gold. Gold has been used for coins practically since the invention of coinage, originally because of gold's intrinsic value...
, Gold Bullion, and Gold Certificate
Gold certificate
A gold certificate in general is a certificate of ownership that gold owners hold instead of storing the actual gold. It has both a historic meaning as a US paper currency and a current meaning as a way to invest in gold....
s within the continental United States". The order criminalized the possession of monetary gold by any individual, partnership, association or corporation.
Rationalization
The order was rationalized on the grounds that hard times had caused "hoarding" of gold, stalling economic growth and making the depression worse. The New York Times, on April 6, 1933 p. 16, 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 forbade the hoarding 'of gold or silver coin or bullion or currency,' under penalty of $10,000 fine or ten years imprisonment or both."Effect of the order
Executive Order 6102 required U.S. citizens to deliver on or before May 1, 1933, all but a small amount of gold coinGold coin
A gold coin is a coin made mostly or entirely of gold. Gold has been used for coins practically since the invention of coinage, originally because of gold's intrinsic value...
, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67
(equivalent to $ today) per troy ounce
Troy ounce
The troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight of precious metals. One troy ounce is nowadays defined as exactly 0.0311034768 kg = 31.1034768 g. There are approximately 32.1507466 troy oz in 1 kg...
. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of the order was punishable by fine up to $10,000 ($167,700 if adjusted for inflation as of 2010) or up to ten years in prison, or both. Most citizens who owned large amounts of gold had it transferred to countries such as Switzerland.
Order 6102 specifically exempted "customary use in industry, profession or art"—a provision that covered artists, jewellers, dentists, and sign makers among others. The order further permitted any person to own up to $100 in gold coins (a face value equivalent to 5 troy ounces (155.5 g) of Gold valued at about $7800 as of 2011). The same paragraph also exempted "gold coins having recognized special value to collectors of rare and unusual coins." This protected gold coin collections from legal seizure and likely melting.
The price of gold from the Treasury for international transactions was thereafter raised
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....
to $35 an ounce ($587 in 2010 dollars). The resulting profit that the government realized funded the Exchange Stabilization Fund
Exchange Stabilization Fund
The Exchange Stabilization Fund is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention...
established by the Gold Reserve Act
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....
in 1934.
The regulations prescribed within Executive Order 6102 were modified by Executive Order 6111 of April 20, 1933, both of which were ultimately revoked and superseded by Executive Orders 6260 and 6261 of August 28 and 29, 1933, respectively.
Invalidation and reissue
There was only one prosecution under the order, and in that case the order was ruled invalid by federal judge John M. WoolseyJohn M. Woolsey
John Munro Woolsey was a United States federal judge in New York City.Born in Aiken, South Carolina, Woolsey attended Phillips Academy, and received an A.B. from Yale University in 1898. He was awarded an LL.B. from Columbia Law School in 1901, where he was a founder of the Columbia Law Review...
, on the grounds that the order was signed by the President, not the Secretary of the Treasury as required.
The circumstances of the case were that a New York attorney, Frederick Barber Campbell, had on deposit at Chase National over 5000 troy ounces (155.5 kg) 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.
The case forced the Roosevelt administration to issue a new order under the signature of the Secretary of the Treasury, Henry Morgenthau, Jr.
Henry Morgenthau, Jr.
Henry Morgenthau, Jr. was the U.S. Secretary of the Treasury during the administration of Franklin D. Roosevelt. He played a major role in designing and financing the New Deal...
, which was in force for a few months until the passage of the Gold Reserve Act
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....
on January 30, 1934.
Abrogation and subsequent events
The Gold Reserve ActGold 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....
of 1934 made gold clause
Gold clause
Gold clauses specified within business contracts allow the creditor the option to receive payment in gold or gold equivalent. A gold clause may prove valuable to the creditor in long term contracts, wherein questions may arise as to whether a currency in use at the time the contract was entered...
s unenforceable, and changed the value of the dollar in gold from $20.67 to $35 per ounce. This price remained in effect until August 15, 1971, when President Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
announced that the United States would no longer convert dollars to gold at a fixed value, thus abandoning the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
for foreign exchange (see Nixon Shock
Nixon Shock
The Nixon Shock was a series of economic measures taken by U.S. President Richard Nixon in 1971 including unilaterally cancelling the direct convertibility of the United States dollar to gold that essentially ended the existing Bretton Woods system of international financial exchange.-Background:By...
).
The private ownership of gold certificates was legalized in 1964. They can be openly owned by collectors but are not redeemable in gold. The limitation on gold ownership in the U.S. was repealed after President Gerald Ford
Gerald Ford
Gerald Rudolph "Jerry" Ford, Jr. was the 38th President of the United States, serving from 1974 to 1977, and the 40th Vice President of the United States serving from 1973 to 1974...
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. P.L. 93-373 did not repeal the Gold Repeal Joint Resolution, which made unlawful any contracts that specified payment in a fixed amount of money or a fixed amount of gold. That is, contracts remained unenforceable if they used gold monetarily rather than as a commodity of trade. However, Act of 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 and made it clear that parties could again include so-called gold clauses in contracts formed after 1977.
The myth of a safe deposit box seizures order
According to a folk rumor on the internet, President Roosevelt ordered all the safe deposit boxes in the country seized and searched for gold by an I.R.S. official. A typical example reads:Examination of the actual Executive Order shows that this text never appears in it. 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 10000 troy ounces (311 kg) of gold belonging to Zelik Josefowitz, who was not a U.S. citizen, was seized with a search warrant as part of a tax evasion prosecution. Approximately 500 tonnes of gold were sold to the U.S. Treasury in 1933 at the rate of $20.67 per troy ounce.
The U.S. Treasury came into possession of a large number of safe deposit boxes due to bank failures. During the 1930s, over 3,000 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. As of October 1981, there were 1,605 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 AustraliaAustralia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
part IV of the Banking Act 1959 allowed the Commonwealth government to seize private citizens' gold in return for paper money where the Governor-General
Governor-General of Australia
The Governor-General of the Commonwealth of Australia is the representative in Australia at federal/national level of the Australian monarch . He or she exercises the supreme executive power of the Commonwealth...
"is satisfied that it is expedient so to do, for the protection of the currency or of the public credit of the Commonwealth." As of January 30, 1976, this part's operation is "suspended".
External links
- PDF of Executive Order 6102 distributed by the Postmaster General.
- Text of Executive Order 6102 from The American Presidency Project.
- 1933 Audio of FDR's Banking Crisis Fireside Chat