Henry Holzer
Criminal Gold .......cont.
Wed Jan 21 14:59:21 2004
68.93.59.4

Second, it amended section 5(b) of the Trading with the Enemy Act, to provide that:

During time of war or during any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise, investigate, regulate, or prohibit, under such rules and regulations as he may prescribe, by means of licenses or otherwise, any transactions in foreign exchange, transfers of credit between or payments by banking institutions as defined by the President, and exporting, hoarding, melting, or earmarking of gold or silver coin or bullion or currency, by any person within the United States or any place subject to the jurisdiction thereof; and the President may require any person engaged in any transaction referred to in this subdivision to furnish under oath, complete information relative thereto, including the production of any books of account, contracts, letters or other papers, in connection therewith in the custody or control of such person, either before or after such transaction is completed. Whoever willfully violates any of the provisions of this subdivision or of any license, order, rule of regulation issued thereunder, shall, upon conviction, be fined not more than $10,000, or, if a natural person, may be imprisoned for not more than ten years, or both, and any officer, director, or agent of any corporation who knowingly participates in such violation may be punished by a like fine, imprisonment, or both. As used in this subdivision the term "person" means an individual, partnership, association, or corporation.31

Finally, it added a new subsection (n) to the Federal Reserve Act, giving the Secretary of the Treasury virtually unfettered discretion to compel holders of gold coin, gold bullion, and gold certificates to surrender them to the Treasurer of the United States, and to accept paper money instead.32

Ironically, while the Act ostensibly reflected Congress' alleged concern with gold withdrawals, Congress itself took no action at all. Instead, consonant with the remarks on the floor of each House, Congress gave the President sole authority to regulate all banks and financial transactions in general, and everything concerning gold in particular (with the Secretary of the Treasury acting as his "Requisitioner-in-Waiting"). And more: Roosevelt's new powers far surpassed those granted President Wilson by the World War I Trading with the Enemy Act; Roosevelt's authority extended beyond "time of war" to "any other period of national emergency declared by the President." Needless to say, just as the Act contained no elaboration as to what the current "emergency" was, neither did it establish any criteria by which the President was to ascertain the existence of any emergency-an omission which was to prove crucially important to future presidents-and to future owners of gold.

Cashing In on the "Emergency": Confiscation

Passage of the Emergency Banking Act on March 9 did not end that day's hectic activities. Still later that night, under the authority given him only several hours earlier, Roosevelt issued a new Proclamation. This one continued, in full force and effect, "until further proclamation by the President," the provisions of his March 6, 1933 bank holiday Proclamation33 and the regulations and orders which had been issued thereunder.34 However, a last loophole remained to be plugged: many individuals still had gold in their possession and no requisition had yet been made by the Government. Something had to be done to keep the gold where the Government could get at it when the time came. Accordingly, the next day, March 10, under the authority of the Emergency Banking Act and "all other authority vested in me," Roosevelt issued Executive Order No. 6073.31 In addition to authorizing the Secretary of the Treasury to decide which of the nation's banks could open, the order prohibited owners of gold from exporting or otherwise removing it "from the United States or any place subject to the jurisdiction thereof. . . except in accordance with regulations prescribed by or under license issued by the Secretary of the Treasury."36

Given this frozen state of financial affairs, the President could now turn his attention to what earlier he had deprecatingly referred to as "hoarding"-i.e., the holding of gold by the people who owned it. It took Roosevelt a month. Acting under the authority he thought had been given him by the Emergency Banking Act, the President, on April 5, 1933, issued Executive Order No. 6l02.37 Its title clearly discloses how Roosevelt intended to deal with "hoarding": "Executive Order Forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates." There were exceptions to this general prohibition: every American could retain a maximum of one hundred dollars in gold coin and gold certificates, rare coins were excepted altogether, and reasonable amounts of gold could be retained for use in industry and the arts. Banks, however, were required to turn over gold coin, gold bullion, and gold certificates "owned or received by them," to the Federal Reserve Bank. This included not only gold owned by the banks, but also gold owned by their depositors. In short, on or before May 1, 1933, all privately owned gold in the United States (subject to a few minor exceptions) was to be confiscated by the Government. As compensation, the owners were to receive paper money, whether they liked it or not.38 Willful failure to submit to the confiscation was punishable by up to ten years in jail and/or up to a $10,000 fine.39

During the next two months, additional steps were taken to implement the government's confiscatory policy. On April 19, the Secretary of the Treasury advised that, until further notice, no further licenses would be granted to export gold for the purpose of supporting the dollar in foreign exchange.40 On April 20, the President went one giant step further: he issued an Executive Order prohibiting the earmarking for foreign account, and the export, of gold coin, gold bullion, or gold certificates, while, at the same time, authorizing the Secretary of the Treasury to issue licenses permitting such export under certain conditions.41 On April 29, the Secretary of the Treasury issued supplementary regulations relating to the Executive Orders of April 5 and 20, with respect to gold hoarding and the gold export embargo.42 Article 5, section 1, of those regulations provided that

any person showing the need for gold coin or gold bullion for a proper transaction not involving hoarding, or for gold coin or gold bullion for purposes specified in the Executive Order of April 5 1933, and not covered by the foregoing Articles of these regulations may make application to the Secretary of the Treasury for a license to purchase, or if such coin or bullion is already in his possession to retain such coin or bullion.43

However, just the day before, on April 28, Acting Secretary of the Treasury Ballantine had established a precondition for all applicants: first, the gold had to be turned in. This precondition was, of course, couched in more legalistic terminology:

Until further notice the Secretary of the Treasury will grant no licenses for the acquisition of gold, gold coin, or bullion by persons making application for the same under the Executive order of April 5, 1933, for the purpose of meeting maturing obligations calling for payment in gold coin or bullion, within the United States or else- where, except where such applicants have surrendered gold coin, gold bullion, or gold certificates in obedience to the Executive order of April 5, l933.44

How to Impair the Obligation of Contracts and Get Away With It

The "proper transactions" and "maturing obligations calling for payment in gold" which the Treasury Department was coyly alluding to, involved what was known as 'gold clause contracts." These were agreements, quite common at the time, pursuant to which payment was to be made in gold. Needless to say, there were payments coming due in gold under these contracts every day all over America. Now that the government controlled the ownership of gold, how were these contracts to be performed? Were the contract obligers to be the "applicants" in question? In theory, perhaps, but not in practice. Under the regulations of April 29, it seemed that one might obtain a license from the Treasury and thus legally possess gold required for the contract performance. But no matter what the regulations implied, Acting Secretary Ballantine had announced that no one would receive a license until he had first surrendered his gold.45 Moreover, how could the Treasury grant licenses even to persons who did surrender their gold, in the face of official policy which sought to establish a virtual government monopoly on all the gold in America?

Accordingly, to solve this particular problem, the administration promptly prevailed on Congress to wipe out all obligations to pay in gold. The Joint Resolution of June 5, 1933 speaks for itself:

Whereas the holding of or dealing in gold affect the public interest, and are therefore subject to proper regulation and restriction; and

Whereas the existing emergency has disclosed that provisions of obligations which purport to give the obligee a right to require payment in gold or a particular kind of currency of the United States, or in an amount in money of the United States measured thereby, obstruct the power of the Congress to regulate the value of the money of the United States, and are inconsistent with the declared policy of the Congress to maintain at all times the equal power of every dollar, coined or issued by the United States, in the markets and in payment of debts.

Now, therefore, be it resolved that (a) every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency or an amount in dollars of the United States measured thereby, is declared to be against public policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts.46

In short, because of the alleged but unspecified "emergency," all voluntary, private agreements to pay and to be paid in gold-past, present, and future-were declared against "public policy," and gold was no longer a medium of exchange between private individuals.

An Embarrassing Slip-Up

Roosevelt's next Executive Order on the subject of gold was necessitated by a critical error he had made in an earlier Order (the Executive Order of April 5, l933),47 which had been promulgated under the authority granted him in the Emergency Banking Act of March 9. While it was true that the Act had given Roosevelt broad powers, those powers existed only "[d]uring time of war or during any other period of national emergency declared by the President . . . ."48 However, despite the Administration's apparent preoccupation with the alleged, but as yet unspecified, "emergency," when Roosevelt had issued his April 5 Executive Order, he forgot to declare that an emergency even existed! Eventually, however, someone must have noticed the omission, because, on August 28, Roosevelt promulgated a new Executive Order which was, and is, one of the two main props of the gold prohibition:49 it resurrected the fiction of a "national emergency," (although once again the Order failed to mention what that emergency was): it revoked the earlier Executive Orders of April 5 and 20, 1933; and it tied together in one neat package everything that Roosevelt had done up to that time with regard to private ownership of gold. For example: section 3 required information returns to be filed by anyone owning or possessing gold; section 4 authorized the Secretary of the Treasury to grant licenses authorizing the acquisition of gold; section 5 prohibited ownership or possession of gold except under license and provided for the requisition of all privately held gold in America; and section 10 made willful violation of the Order "or of any license, order, rule, or regulation issued or prescribed" under the Order a criminal offense punishable by up to ten years in prison and/or up to a $10,000 fine.50

A Boston University law professor of the day eloquently summed up the dubious "accomplishments" of the New Deal's gold manipulations:

March 6, 1933, began that complex sequence . . . of correlated proclamations, messages, declarations, resolutions, enactments, authorizations, embargoes, inhibitions, repeals, amendments, executive and departmental orders, regulations and requisitions, through which the President and Congress are dealing with the national emergency. The first great thing to be profoundly changed was the money of the people. Gold has been nationalized, that is, the national treasury has seized as its own all the privately treasured gold coins and bullion it could lay hands on, as well as the circulating certificates of gold deposits. Gold, the king of coinage, is a prisoner, locked up within bars of bullion and carefully guarded. No gold will be paid upon presentation and demand at the Treasury. No more gold coins are to be struck. A new felony has been created, merely having gold money, now termed hoarding and considered dishonest. A new legal tender dollar has been established. The dollar standard of the founders has been revalorized, that is, the actual value has been cut down, but the denominational and legal value for paying old debts remains; further inflation is indicated as quite certain to come: silver coinage and greenback issues are in the works, express provisions of statutes now inhibit the enforcement of otherwise legal obligations to pay in specie dollars or their equivalent in legal tender, the Statute of 1869 pledging the Nation's faith always to pay national debts in standard gold is repealed and the pledges made under it repudiated: we're off the gold standard; many think we're off the ethic standard.51

As indeed we were. The New Deal had given birth to a new class of felons: individuals with the temerity to deny that the Government had a right to confiscate their gold.

The New Deal Takes a Rebel to Court

The first American who was indicted for the "crime" of owning gold, and who rebelled against the notion that he was a felon for doing so, was a lawyer named Frederick Barber Campbell. If the President thought that all of the various regulations, Executive and Congressional, were on solid legal ground, the Campbell case52 would soon prove him wrong.

In October of 1932 and January of 1933 Campbell had deposited twenty-seven bars of gold bullion with Chase National Bank for safekeeping. Chase had agreed in writing to act as bailee, for a fee, and return the bars to Campbell on demand. Then came the Emergency Banking Act of March 9, 1933 and the various decrees discussed above. On September 13, 1933, Chase's assistant cashier informed Campbell that, pursuant to regulations of the Secretary of the Treasury, the bank was obliged to file, in connection with Campbell's gold, a return with the Government no later than September 18, and that Campbell himself was required to file such a return. The bank also called Campbell's attention "to Section No.5 of the President's Order, reciting that after thirty days from the date of the Order we shall be required to surrender [to the Government] any gold in our possession not covered by a license, as set forth in that Section."53 On September 16, two days before the final day to file returns, Campbell, in writing, demanded that Chase deliver the gold bars to him. On September 18, the bank declined, stating its belief that under the April 5, April 20, and August 28, 1933 Executive Orders it was prohibited from doing so. Less than two weeks later, on September 26, Campbell filed an equity complaint against Chase in the Southern District of