geeky
A story in the New York Times the following day, appearing under the headline Hoarding of Gold, read "The Executive Order issued by the President yesterday amplifies and particularizes his earlier warnings against hoarding. On March 6, taking advantage of a wartime statute that had not been repealed, he issued Presidential Proclamation 2039 that forbade the hoarding 'of gold or silver coin or bullion or currency', under penalty of $10,000 and/or up to five to ten years imprisonment."
Roosevelt hoped that the order would remove the constraint on the Federal Reserve that prevented it from increasing the money supply during the depression. The Federal Reserve Act of 1913 required that there be at least 40% gold backing of Federal Reserve Notes that were issued. By the late 1920s, the Federal Reserve had almost hit the limit of allowable credit, in the form of Federal Reserve demand notes, which could be backed by the gold in its possession.
Executive Order 6102 required all persons to deliver on or before May 1, 1933, almost all of the gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve in exchange for $20.67 per ounce. This is equivalent to about $412 today. The Trading with the Enemy Act of 1917, as amended by the recently passed Emergency Banking Act of March 9, 1933, made a violation of the order an offense, punishable by fine up to $10,000 (equivalent to about $200,000 today), up to ten years in prison, or both.
There were exceptions to the order. It did not apply to gold that was for "customary use in industry, profession or art". This protected artists, jewelers, dentists, and others who used small amounts of gold in their profession. The order also permitted individuals to own up to $100 in gold coins, equivalent to 5 ounces of gold valued (approximately $10,000 today). Also exempt were gold coins having recognized special value to coin collectors. This safeguarded legitimate gold coin collections from seizure and their likely destruction by melting.
Many individuals and companies were prosecuted under the Executive Order 6102, but some of these were met with inventive defense, One prosecution against a New York lawyer named Frederick Barber Campbell was ruled invalid by Federal Judge John M. Woolsey, on the grounds that the order was signed by the President, instead of the Secretary of the Treasury as required. Campbell had one deposit at Chase National Bank of over 5,000 ounces of gold. When Campbell tried to withdraw the gold, the bank refused to allow him to do so, and Campbell sued Chase. A federal prosecutor then indicted Campbell on the following day for failing to surrender his gold. Although prosecution of Campbell was unsuccessful, the federal government was still able to seize his gold. The case caused the Roosevelt administration to issue a new order under the signature of the Secretary of the Treasury, Henry Morgenthau, Jr.
Congress passed the Gold Reserve Act of 1934, which ratified Roosevelt's orders. A new set of Treasury regulations was issued providing civil penalties of confiscation of all gold and imposition of fines equal to double the value of the gold seized.
The Uebersee Finanz-Korporation, a Swiss banking company, had $1,250,000 in gold coins for business use. This company had entrusted the gold to an American firm for safekeeping, and they were shocked to learn that their gold was confiscated. The Supreme Court upheld all seizures as constitutional by a bare majority of 5 to 4.
The Gold Reserve Act of 1934 authorized the President to establish the gold value of the dollar by proclamation. Immediately following its passage, Roosevelt changed the statutory price of gold from $20.67 to $35 per ounce, devaluing the US dollar, which was based on gold. That price remained in effect until August 15, 1971, when President Richard Nixon announced that the US would no longer convert dollars to gold at a fixed value, abandoning the gold standard for foreign exchange.
The limitation on gold ownership in the US was repealed after President Gerald Ford signed a bill to "permit United States citizens to purchase, hold, sell, or otherwise deal with gold in the United States or abroad" which went into effect December 31, 1974.