On April 5, 1933, President Franklin Roosevelt issued a decree ordering every American to send his gold coins to the federal government and making it a felony offense for Americans to own gold. FDR’s nationalization of gold was no different in principle from the nationalization of private property that would be carried out by Cuban communist dictator Fidel Castro some 25 years later. FDR’s action ranks among the most shocking exercises of dictatorial power in American history.
What many Americans today do not realize is that gold coins and silver coins were the official money of the American people from the founding of the United States up until Roosevelt’s confiscation decree. Roosevelt’s action destroyed that monetary system, a system that had been brought into existence by the U.S. Constitution, the higher-law charter that governs the actions of federal officials.
How did Roosevelt have the power to nullify the higher law of the Constitution? He didn’t. He simply exercised dictatorial power to smash the constitutional monetary system, knowing full well that the judicial branch would defer to his dictatorial authority. Don’t forget, after all, that this was during the Great Depression, a temporary emergency that provided Roosevelt with the opportunity to exercise dictatorial powers with virtually no judicial or congressional interference. When the Supreme Court began declaring some of his actions unconstitutional, FDR simply threatened to alter the makeup of the Court. By 1937, the Supreme Court had become as acquiescent and compliant as the Cuban Supreme Court would become when Castro became Cuba’s dictator.
Up until that point, everyone understood that the official money of the American people were the gold coins and that Federal Reserve notes were nothing more than promises to pay money. After the decree, the notes were made the official money, notwithstanding the fact that they now promised to pay nothing.
So, why didn’t Roosevelt simply decree that the Federal Reserve notes were now the official money and leave Americans free to keep owning their gold?
Because he wanted to make certain that his fiat (paper) money system was not going to be temporary. He never intended it to last only until the Depression was over. If he left gold coins in private hands, there existed the possibility that the nation could return to the gold-coin system established by the Constitution as soon as the Depression was over. His aim was to permanently alter America’s monetary system, without going through a constitutional amendment.
He also wanted to smash out of the collective conscious of the American people any memory of what the gold standard really was.
Within 3 generations of Americans, people would forget the founding system and meekly acquiesce to the new paper-money system. Thus, today most Americans believe that the gold standard was a paper-money system in which the paper money was redeemable into gold. They have no idea that the gold standard was actually a system in which gold coins were the official money and that paper notes were nothing more than debt instruments promising to pay money.
Why was Roosevelt so insistent on converting America to a paper-money system? Because it was the only way to fund what he knew were going to be ever-growing expenditures of the welfare-warfare state way of life that he was also foisting onto the American people. Under a gold-coin monetary system, the government’s expenditures are limited to the gold coins it is collecting through taxes. Under a paper money standard, the government’s expenditures are unlimited because the government’s printing press can simply print whatever money the government needs. That’s, of course, what the Federal Reserve is all about.
That’s how we ended up with a system of constantly debased currency. That’s how we also ended up with a never-ending cycle of booms and recessions, bubbles and bursting bubbles. That’s how we also ended up with a system of out-of-control federal spending that is threatening the nation with a very severe economic and monetary crisis, one that could conceivably make the Great Depression look like child’s play.
Meanwhile, everyone who is on the government dole is steadfastly refusing any elimination of their particular welfare-warfare state programs. From recipients of Social Security, Medicare, Medicaid, education grants, farm subsidies, foreign dictators, and other recipients of federal welfare-state largess — to DEA, ICE, Homeland Security, SEC, and other regulatory agents — to the Pentagon, the CIA, the NSA, and other members of the national security establishment, no one is willing to call for the elimination of his particular dole. The welfare recipients claim that they couldn’t survive without it, the regulatory agents say they need to be paid to keep regulating, and the warfare recipients keep inciting crises in the Middle East and with Russia and China to make sure that no one eliminates their dole.
Franklin Roosevelt would undoubtedly be smiling at what he did to our nation on that fateful day in April 1933.
