Executive Order 6012

On this day in 1933, FDR signed into action Executive Order 6012, which made the private ownership, hoarding or contractual transferal of gold coin, bullion or certificates illegal in the USA in any amount of $100 face value.  This is the order that ended the production and circulation of gold currency in the US, and is much lauded as the harbinger of the "end times" by those that name the horseman of the apocalypse "FDR".

The anniversary caught my eye because I recently heard Beck shouting to the treetops that what has driven the US economy into the dirt is the simple and undeniable fact that FDR (and the rest of the New Deal devils) removed and rescinded the American people's inherent rights by denying them this "gold standard".

The jist of the Beck rant was that it was bad enough that gold coins, bullion and certificates were forcibly seized by the Federal government in 1933... but also that privately held safe deposit boxes were raided and seized as well, to ensure that they did not contain hoards of coin and bullion.

In point of fact, upon reading the actual text of the order, the Federal government had no "new" authority in regards to seizing safe deposit boxes at all.  Any safe deposit boxes that came into the hands of the Treasury Dept. got there by the simple fact that the Treasury Department took control of the boxes of any bank that failed... and there were roughly 3,500 failures in the first five years of the 1930s.  In fact, there are still 1,600 boxes with the contents of more than 2,400 safe deposit boxes still in the basement of the Treasury Department awaiting collection by their rightful owners or heirs.  The only gold seized from a safe deposit box was in 1936, when 10,000 ounces of gold were found during a tax evasion investigation of a foreign national named Josefowitz.  Upon completion of the investigation, Mr. Josefowitz got all his gold bars back (more than 680 lbs worth!).

More importantly, though...

Beck continues to make the point that the efforts of the liberals behind the New Deal did what they did to remove or reduce the ability of the common man to regulate his own life by putting in place federal regulations that couldn't be easily removed or revoked.

I won't start a fight here by saying this is NEVER true... but it is not true in this case.  Exec. Order 6012 ensured that the droves of people running to their respective banks every time the economy stumbled couldn't withdraw their savings as gold bullion.  The first reason is that no bank in the US at that time had enough gold on hand to accomplish this transaction... which caused thousands of closures across the country from 1929 until 1934.  The second was a two-fold action: to buy back from circulation all gold coin, bullion and certificates at a rate of just over $20 an ounce (admittedly, a discount rate from the standardized value of gold) and to raise the regulated rate to $35 an ounce, thus earning the Fed a 57% increase in revenue without ever having to "collect" a single dollar in taxes; and to secure for the nation a means by which the dreaded "run on banks" would never happen again with the frequency that it had in the past.  Both were hugely successful.

But in regards to Beck's point above (regulation that is impossible to remove once in place), I direct anyone's attention to the simple fact that the last line of the order gave a viable "out" to any President that cared to address it, at any time in the future.  It is quite telling, I think, that it WASN'T utilized until 1976 by Gerald Ford... four years after the "gold standard" was removed completely by Nixon.  Why wasn't it used by Ike, or Nixon, both of whom were avowed and card-carrying Republicans with two terms under their respective belts?

Because it worked.