It was April 1933, his first ''official'' act in office; President Roosevelt declared a banking ''holiday'' and issued the order to confiscate gold. Executive order: By virtue of the authority vested in me by Section 5(B) of The Act of Oct. 6, 1917, as amended by section 2 of the Act of March 9, 1933, in which Congress declared that a serious emergency exists, I as President, do declare that the national emergency still exists; That the continued private hoarding of gold and silver by subjects of the United States poses a grave threat to the peace, equal justice, and well-being of the United States; and that appropriate measures must be taken immediately to protect the interests of our people. ''Therefore, pursuant to the above authority, I hereby proclaim that such gold and silver holdings are prohibited, and that all such coin, bullion or other possessions of gold and silver be tendered within fourteen days to agents of the Government of the United States for compensation at the official price, in the legal tender of the Government. All safe deposit boxes in banks or financial institutions have been sealed, pending action in the due course of the law. All sales or purchases or movements of such gold and silver within the borders of the and its territories, and all foreign exchange transactions or movements of such metals across the border are hereby prohibited. ''Your possession of these proscribed metals and/or your maintenance of a safe deposit box to store them is known to the government from bank and insurance records. Therefore, be advised that your vault box must remain sealed, and may only be opened in the presence of an agent of the Internal Revenue Service. ''By lawful Order given this day, the President of the .''.
Under the authority of the Emergency Banking Relief Act, President Roosevelt issued Executive Order No. 6102, which allowed the government to confiscate all privately owned gold in the U.S. The owners would be repaid in paper dollars whether they liked it or not.
Dentists, jewelers and coin collectors were exempt from this Executive Order, and were allowed to own gold. (In terms of coins, the actual terminology used was ''gold coins having a recognized special value to collectors of rare and unusual coins.'')
In the late 1980s, Dr. Franz Pick (a highly respected economist and currency expert) wrote a well received book The Triumph of Gold. Pick wrote: ''I am afraid that one day the government will indeed call gold in. Gold bullion will be subject to confiscation. This is the one big advantage of numismatic gold, such as Double Eagles. It's an idiosyncrasy of governments that although they may prohibit ownership of gold in any form, they are reluctant to touch collections of numismatic gold coins.''
''Today there are some 49 countries which forbid ownership of gold by their citizens, but do allow holding gold coins for numismatic purposes. '
During WWI Congress passed The 1917 Trading With the Enemy Act. This act is still in place. Its article 5(b) states: ''That the President may investigate, regulate or prohibit, under such rules and regulations as he may prescribe, by means of licenses or otherwise, any transactions in foreign exchange for the export, hoarding, melting, or earmarking of gold or silver coins or bullion or currency.''
Roosevelt used section 5(b) in 1933 to confiscate gold. President Carter used it to freeze Iranian assets during the hostage crisis. Will President Obama also use it as things get worse? Do not bet against it!
Historically, governments have banned the ownership of gold when their citizens lose confidence in government issued paper money. Why will it be different here this time? It has already happened before. All that is required (because of the Trading With The Enemy Act of 1917) is for President Obama to issue a decree.
1933, 1934, 1954, 1984 and tomorrow: Roosevelt justified his executive authority because of the national emergency. He empowered the Treasury to maintain complete control over all transactions in gold, silver and foreign exchange. His executive order demanded COMPLETE SURRENDER OF GOLD COINS, GOLD BULLION AND GOLD CERTIFICATES still in the possession of individuals. The owners had 25 days to turn their gold into a Federal Reserve Bank. FAILURE TO COMPLY WAS PUNISHABLE BY A FINE OF $10,000 OR 10 YEARS IN PRISON OR BOTH.
Silver also suffered the fate of gold. On August 9, 1934 a Presidential Proclamation ordered all silver bullion surrendered to the Treasury within 90 days and a 50 percent tax was levied on any profits from the sale of silver. The sellers were paid 50.1 cents per ounce.
In 1984 the IRS proposed new legislation that distinguished between bullion and numismatic gold and silver. This could be used in the future as a standard to define what is exempt from confiscation. They said that gold or silver coins or bars must be worth at least 15% more than their metal value on sell back to qualify as a collectable rather than as bullion. Why would they possibly make such a distinction unless they planned, at some future date, to recall the bullion?
Our best defense against confiscation is the Eminent Domain Clause of the Fifth Amendment. The clause states, in part…''nor shall private property be taken by the government for public use, without just compensation.'' In 1933 the government paid the ''official'' price of $20.67 for an ounce of gold. Why did Roosevelt exempt gold coins ''having a recognized special value to collectors of rare and unusual coins''? His Executive Order did, after all, call for the confiscation of ''all gold coins.'' What is a ''just'' price for a ''numismatic'' gold coin? It would have been a monumental task to administrate the grading and pricing of each individual gold coin. Note the wording here - exempted from the surrender requirement were not the ''owners'' of rare gold coins, nor the ''holders'' of them, nor persons who ''possessed'' them, nor even ''investors.'' On the contrary, the order specifically focused on an individual's motives for having rare gold coins, exempting just one classification: ''Collectors.''
A clear distinction was made between the ''collector'' and the ''investor.'' A collector's primary interest in rare coins is enjoyment for historical, aesthetic or cultural reasons. An investor's interest in rare coins is financial, to make a profit. Roosevelt clearly intended to exclude only the collector.
This was a sad day for freedom in America. Whatever happened to the laws laid down by our founding fathers? As they stated in the Constitution of The United States of America, Art. 1 Sec. 8 and 10: ''The Congress shall have the power to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures…no state shall make anything but gold and silver coin as a tender in payment of debts.