By Grant Davies
On this day in 1933, the Congress of the United States passed a law, (HJR 192), that took the country off the gold standard.
Ho hum, just some legalistic, monetary, mumbo jumbo that doesn't affect the common man, you might say. In fact, it might help the common man because it's designed to stop those evil rich guys from hoarding gold. And everyone knows that's what's causing the depression.. right?
Anyway, what's the big deal? The little guy doesn't have any gold so who cares what happens to the fat cats?
The law was just the rubber stamp that FDR's puppets applied to his "executive order 6102", which had been signed just three months earlier by the king, er, President. That order was the one that made every citizen in the country a criminal if they didn't turn in their gold by May 1st of the same year.
Oh, I forgot to mention, these laws and executive orders were preceded by, yep you guessed it, a Presidential Proclamation. "Proclamation 2039" to be exact. (It does sound a bit like what a king might do, but it's not like what the Wizard of Oz did when he gave out hearts, brains, and courage. But I digress.)
What all this meant was that the government took away all your gold coins and bullion. (Silver was included too. We'll leave that for a future story.) But not to worry, these nice men were allowing you to keep grandpa's gold watch and mom's wedding band. And what's the big deal? They will pay you $20.67 per ounce for it; it's not like they are stealing it from you.
So you get the paper, the government gets the gold (and the power to make the paper worth anything, or nothing, it wants) and all is right with the world. Surely this will fix the depression, so it's worth the minor inconvenience.
Before I forget, it should be mentioned that just a short time after they took all the gold they could get their hands on, they arbitrarily raised the price of gold to $35 an ounce. It was a stroke of genius for the Federal Reserve who was able to realize a 69 percent increase in the value of what they had just stolen, er, bought. It wasn't such a good deal for the home folks though because it made the value of their currency worth 40% less.
Another way to devalue the money would be to print it like crazy, but don't worry, they would never do that. After all, ever since the Fed began defending the value of the dollar it has lost 95% of its value, and who can argue with a track record like that?
To celebrate the day, stop down at the Yellow Rock Saloon and have a shot of Goldschlager schnapps. But just because it's about 40% alcohol don't assume you broke even on the deal.