How Americans Lost Their Right To Own Gold And Became Criminals in the Process
Henry Mark Holzer
About the Author:
Henry Mark Holzer is Professor of Law at Brooklyn Law School, where he teaches constitutional law, administrative law, and other courses. His practice is limited to appeals and constitutional litigation.
Prof. Hoizer has lectured widely on a variety of legal and law- related topics, and his articles have appeared in newspapers, popular and professional magazines, and academic journals.
His most recent books are The Gold Clause (1980) and Government's Money Monopoly (1981).
For the first time since [James] Bond had known Goldfinger, the big, bland face, always empty of expression. showed a trace of life . . . . "Mr. Bond, all my life I have been in love. I have been in love with gold. I love its colour, its brilliance, its divine heaviness . . . .I have worked all my life for gold . . . .I ask you . . . . is there any other substance on earth that so rewards its owner?"1
For centuries, most people have shared the fictional Mr. Gold- finger's attitude about gold, though not necessarily for the same reasons. While gold has been much sought after, both for ornamental and industrial purposes, modern times-or, more specifically, modern governments-have taught men to value it for one purpose above all others: as a hedge against the debasement of paper money. Monetary economist Charles Rist acknowledged this phenomenon when he wrote: "[I]n the absence of governments capable of maintaining stable money, private individuals seek to assure it for themselves, hoarding a purchasing power [gold] more stable than that of any other merchandise . . . stable money is one of the last arms that remains at the disposal of the individual to direct his own affairs, whether it be an enterprise or a simple household."2 Indeed, during the monetary crisis of the last several years, the price of gold soared in free world markets as more and more individuals around the world acquired gold as a hedge against actual and potential currency devaluations.3 Unfortunately, while others scrambled to protect themselves from the instability of paper money, Americans had to watch from the sidelines. For them, owning gold has long been a criminal offense, punishable by up to ten years in jail and/or up to a $10,000 fine; they also risk confiscation of the gold and a penalty of twice its value.4
Most Americans are unaware of the existence of these harsh criminal sanctions. Fewer still, including the legal community, are aware of how-and why-Americans lost their right to own gold in the first place. The facts, which should startle layman and lawyer alike, expose the shaky legal foundation on which the gold prohibition rests: an unconstitutional arrogation of congressional power and the improper delegation of that power to the President, leading to what can be called the "endless emergency rationale.
World War I: The Seeds Are Sown
The existence of a state of war between the United States and Germany in 1917 had prompted the passage of the Trading with the Enemy Act,5 one purpose of which was to make unlawful all dealings between Americans and the enemies of the United States.6 However, an obscure subsection of the Act7 authorized the President to regulate, investigate, and prohibit "under such rules and regulations as he may prescribe . . . any transactions in foreign exchange, export or earmarkings of gold or silver coin or bullion or currency . . . by any person within the United States . . . "8 These sweeping new presidential powers had teeth in them: elsewhere the Act provided for severe criminal sanctions of up to ten years in prison and/or up to a $10,000 fine for violation of any decrees which the President might make under the Act.9
The net result of the Act, vis-à-vis transactions in gold, was the arrogation by the Sixty-Fifth Congress of a "money power not granted by the Constitution10-and further: the delegation of that power to the Executive branch of the Government.
The war emergency and the President's duty to fight the war provided Congress with a convenient rationale for the Act. The fact is, however, that the Constitution nowhere empowers Congress to prohibit dealing in gold-much less authorizes Congress to delegate that power to a coordinate branch of government.
Worst of all, the power which Congress delegated to the President enabled him to make criminals out of honest American citizens whose crime would consist only of trying to protect themselves from official debasement of their money. In more fundamental terms, Americans henceforth would be "under the gun" for exercising a fundamental, inalienable right: the right to deal with their own property as they saw fit. Gold, no matter what its special characteristics, is, after all, just another form of property.
If there were those who feared that Congress had more in mind than merely prohibiting transactions in gold during the World War I emergency, their concern would have been justified. On September 24, 1918, less than a year after its original enactment, and virtually on the eve of the War's end, the Trading with the Enemy Act was amended in two important respects: not only was the wartime Act extended "[u]ntil the expiration of two years after the date of the termination of the war between the United States and the Imperial German Government. . . ,"11 but the amendment actually enlarged the Executive's power to control private gold. Now, President Woodrow Wilson could also "[i]nvestigate, regulate, or prohibit any hoarding . . . of gold . . . by any person within the United States."12 Less than two months later, on November 11, 1918, the war ended, and two years later Wilson's power over private gold expired. Once again, Americans were under no restraints with regard to what they did with their gold. Presumably, the emergency was over.
The New Deal and the New "Emergency"
Franklin D. Roosevelt was inaugurated as President on March 4, 1933. Throughout the country, banks were slamming their doors on depositors clamoring to withdraw their own money, preferably in gold. For people who were seeking to exchange soft paper currency for the more stable metal-as existing law allowed, and as the Government had solemnly pledged-the new President had other ideas. On March 5, 1933, one day after taking office, Roosevelt issued a Proclamation convening Congress in Extra Session at noon on March 9, 1933, a decision allegedly necessitated by what the Chief Executive referred to vaguely as "public interests."13 But March 9 was still four days away, and Roosevelt apparently was impatient to stop bank depositors from withdrawing their paper money or converting it to gold. Accordingly, the next day, March 6,1933, he took an unprecedented step. For the first time in United States history, an American president closed the nation's banks. By Proclamation,14 he stated the following: the recent gold and currency withdrawals had been "unwarranted" and for the purpose of "hoarding"; speculation abroad had caused "severe drains" on the "Nation's" gold stocks; the result was to create a national "emergency"; further "hoarding"; and "speculation" must be prevented and "appropriate measures" taken "to protect the interests of our people"; the Trading with the Enemy Act, as amended, had given the President certain powers over private gold; and therefore, "to prevent the export, hoarding, or earmarking of gold," the banks would take a "holiday" from Monday, March 6, 1933, to and including Thursday, March 9, 1933, and that during the holiday no bank would "pay out, export, earmark, or permit the withdrawal or transfer in any manner or by any device whatsoever of any gold . . . or take any other action which might facilitate . . . hoarding"15 Roosevelt's action was devoid of even arguable legal justification. Nowhere in the Constitution is any branch of government, let alone the Executive, given the power to close privately owned banking institutions. Nor did the Proclamation even purport to invoke constitutional authority. And despite the Proclamation's passing reference to an alleged "national emergency," no war conditions were present which could have enabled Roosevelt to argue that, under the Commander-in-Chief's "war powers,"16 he had the authority to place in suspended animation a huge, crucially important part of America's commercial establishment. The Proclamation's reference to the World War I Trading with the Enemy Act, which had long since expired, was a strained attempt to find some semblance of legal support for Roosevelt's unprecedented assumption of complete control over America's banking system.
It is no wonder that Roosevelt immediately sent to a docile and compliant 73d Congress, a hastily drawn but comprehensive bill to amend the moribund Trading with the Enemy Act and to attempt to secure a legal basis for the unilateral action he had already taken.17
Retroactive Rubberstamping: The Emergency Banking Act
The House of Representatives convened at noon on March 9, 1933. After the customary opening prayer and the disposing of certain routine "housekeeping" matters,18 a message was received from the President19 which requested passage of H.R. 1491.
The bill's preamble dramatizes the haste with which the President's minions sought to railroad the bill through both Houses of Congress: "An Act to provide relief in the existing national emergency in banking, and for other purposes. Be it enacted . . . that the Congress hereby declares that a serious emergency exists and that it is imperatively necessary speedily to put into effect remedies of uniform national application."20
In the House, Majority Leader Joseph W. Byrns, Democrat of Tennessee, asked for immediate consideration of the bill and that debate be limited to forty minutes, twenty minutes for each party. Mr. Byrns expressed the hope that under the peculiar circumstances and
Next rose House Minority Leader Bertrand H. Snell, Republican of New York. After noting that "it is entirely out of the ordinary to pass legislation in this House that, as far as I know, is not even in print at the time it is offered," Mr. Snell, in a burst of bipartisanship, observed:
Someone then produced a copy of the bill, and it was read by the Clerk of the House.24 The bill was passed.25 After a short discussion, the spectacle of what had just transpired in the House in that hour-and-a-half session was best expressed by Congressman Lundeen:
Neither "calm deliberation and sober judgment, nor "full and free debate" characterized what took place next in the Senate,27 where H.R. 1491-which affected "millions of lives and billions of dollars"-spent the afternoon with at least eighty United States Senators. Seventy-three of them voted "yea"28 and the bill, which had originated in the House at noon, passed the Senate by 7:30 P.M. Later that same night, Roosevelt approved it and H.R. 1491 became the Emergency Banking Act.29
Fundamentally, the Act accomplished three things. First, it retroactively approved the President's illegal action of March 6, 1933.30 (If Roosevelt had thought himself to be on solid legal ground when he closed the banks, one could ask why he thought it necessary to go to Congress in the first place. This legislative "rubber stamp" approach to past and future executive action would be used more than once in the months ahead.)
Second, it amended section 5(b) of the Trading with the Enemy Act, to provide that:
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
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:
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:
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:
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 New York for specific performance of the contract of bailment, and seeking an injunction pendente lite against delivery of his gold to anyone but him.
Two days later it was the Government's turn. On September 28, the grand jury for the Southern District returned a one-count indictment against Campbell, charging him with failure to file the return due on or before September 18, 1933. The defendant demurred, alleging that the Emergency Banking Act was unconstitutional insofar as it purported to affect the private ownership of gold, and that Roosevelt's executive action taken thereunder was thus without authority and invalid.
In response, on October 5 the grand jury filed a superseding indictment, this time containing two counts. The first, for failure to file, the second, for owning, without license, on September 28, 1933, and up to the time of the indictment, $200,000.00 worth of gold bullion. Campbell again demurred on the same grounds, and, undeterred, on October 17 he sued the United States Attorney for the Southern District of New York in a civil action. In this action, Campbell sought an injunction to prevent his prosecution on the superseding indictment or any other indictment brought under the Emergency Banking Act and the regulations issued thereunder.
All of this litigation came on before Judge Woolsey, who rendered his decision on November 16. First, he turned to the equity cases, because, he said, "their inherent infirmities enable them to be disposed of on grounds not involving the constitutional question raised herein."54 As to the bailment action against Chase, the court held there was no federal subject-matter jurisdiction and dismissed Campbell's complaint. As to Campbell's action to enjoin the United States Attorney from prosecuting, Judge Woolsey dismissed it for lack of equity. Among his other reasons, he observed that "Campbell has raised the constitutional question here involved in the criminal case by his demurrers, and that question can be decided as well there . . . .''55
Once these two issues were out of the way, the court turned to the constitutional question. Woolsey recognized that Campbell's demurrer to the superseding indictment raised the following questions:
Judge Woolsey answered the first question affirmatively. Because gold was a "commodity affected with a public interest as a potential source of currency or credit," Congress could, "when it considers that the national exigency demands control of gold . . . control gold in such a manner and to such extent as it deems to be advisable, provided always that it does not violate the personal constitutional privileges of citizens."57 Thus, Congress was held to have the power to pass section 2 of the Act of March 9, 1933. As to section 3, authorizing the Secretary of the Treasury to requisition gold, the court, (after a lengthy discussion of eminent domain) held this to be "a valid exercise by Congress of a power necessarily incidental to its currency power."58
Campbell had argued that Congress, in the Act, did not itself legislate, but instead had improperly delegated to Roosevelt the power to legislate. Judge Woolsey disagreed because: "[T]his act meets all the requirements 'of legislation by Congress on the subject- matter involved, for it stated a policy, to be contingently followed, and also provided the plasticity necessary in the enforcement of that policy by the delegation of regulating power in the held covered by the policy."59 Thus, the court upheld the Act's delegation, to the President and Secretary of the Treasury, under sections 2 and 3, of Congressional regulatory and requisitioning powers over gold:
In considering Campbell's contention that Roosevelt's executive orders were not authorized by section 2 of the Act, the court first summarized the Act's rationale this way:
As to the President's authority under section 2 of the Act to require the filing of returns (pursuant to section 3 of his August 28 Executive Order) Judge Woolsey found Roosevelt's authority "unimpeachable. The statute is explicit, and the executive order does not go outside the mandate of the statute."62
A Resounding-But Incomplete- Victory for the Government
However, notwithstanding how much he had already validated, Judge Woolsey felt quite differently about the regulation made by section 5 of Roosevelt's August 28 Executive Order, which prohibited ownership or possession of gold after thirty days from the date of the Order.
The court thus recognized that authority to regulate or prohibit hoarding was not tantamount to authority to require, per section 5, that owners of gold yield up their interest therein and title thereto. "That requirement is neither a regulation nor a prohibition, but a requisition."64 Despite this conclusion, Judge Woolsey was not striking a blow for the freedom of private gold ownership. On the contrary, he was reasoning in a manner entirely consistent with his basic premise that the government did indeed possess the power to prohibit private ownership of gold. For his objection was not to the principle of confiscation, but to who was to do the confiscating and whether some compensation would be available to the victims.
In other words, private gold could be confiscated, but by the Secretary of the Treasury, not by the President.
What also bothered Judge Woolsey was the quandary a gold owner was placed in if he surrendered his gold pursuant to section 5 at the behest of the President rather than the Secretary of the Treasury. Since the President was not authorized by Congress to requisition gold, presumably the Government would thus not have made any implied promise to pay compensation for it. On the other hand, if the owner refused to surrender his gold to the President, he faced up to ten years in jail and/or up to a $10,000 fine. Judge Woolsey did not think it fair for a gold owner "[t]o lose his gold [without payment] if he complies and to be imprisoned and fined if he does not . . . ."66 He concluded, therefore, that section 5 of the Executive Order of August 28, 1933 was confiscatory-not because the gold was taken, but because it was taken by one who was under no duty to give even paper money in return. The court concluded
Campbell's demurrer to the second count of the indictment was sustained and that count dismissed.
That left count one: Campbell's failure to file the return. After deciding that the word "hoarding" was sufficiently definite for purposes of the indictment, and that Campbell's right not to incriminate himself was not violated by his having to file a return, the court overruled the demurrer as to the first count.
The net result of Campbell, therefore, was to validate passage of the Act of March 9, 1933, by which Congress had arrogated a constitutionally nonexistent money power; to validate the congressional delegation of power to the President (which, in turn, led to Roosevelt's "emergency rationale"); and to validate section 3 of his Order of August 28,1933, requiring the filing of returns. Roosevelt's requisition of gold under the August 28,1933 order, which, the court held, should have been made by the Secretary of the Treasury, was invalidated.68
Acting to turn Judge Woolsey's decision into a total victory, on December 28, a month after the Campbell decision, Treasury Secretary Henry Morgenthau, Jr., issued an order requisitioning most private gold in America.69 This requisition order was the final step in the government's ten-month effort to terminate private gold ownership in America.
The Gold Reserve Act: More Confiscation and Some Reassurance Regarding Past Actions
In his January 15, 1934 message to Congress, Roosevelt requested the enactment of additional gold legislation. Because, he said, "[there remains . . . a very large weight in gold bullion and coins which is still in the possession or control of the Federal Reserve Banks," the President asked that "Congress by specific enactment . . . vest in the United States Government title to all supplies of American owned monetary gold ."70
However, despite such fears about Roosevelt and Morgenthau having exceeded their authority and perhaps having issued orders contrary to the Constitution, the Gold Reserve Act was approved on January 30, 1934. Three sections of the Act are of particular interest.
Section 2 summarily accomplished the take-over of the Federal Reserve gold:
Section 4 provided for the forfeiture of any gold dealt with in a manner violative of the Act, and for a civil penalty of twice the value of the gold involved in the violation.
Section 13 brought out the old rubber stamp again, in a trans- parent attempt to put the congressional seal of approval on all of Roosevelt's past machinations:
The Gold Reserve Act made the Government's gold monopoly complete. It also supplied Roosevelt with the sanction he thought he needed to legitimize his "emergency." But a question-unstated, yet lurking beneath the surface of the morass of gold regulations and prohibitions-was left unanswered. What would happen to the rights (and liabilities) of gold-starved Americans when the Roosevelt administration came to an end-and with it, the Roosevelt-declared emergency of 1933?
The Endless Emergency: New Hands at Old Tricks
It was during the administration of Roosevelt's former Vice President, Harry S. Truman, that North Korea attacked South Korea. The day was June 25, 1950; the event, presumably a military one, having nothing to do with such economic issues as banking, foreign exchange, or transactions in gold. The Korean hostilities did, however, prompt President Truman to issue, on December 16, 1950 a Proclamation declaring the existence of a "national emergency" because: "[R]ecent events in Korea and elsewhere constitute a grave threat to the peace of the world and imperil the efforts of this country and those of the United Nations to prevent aggression and armed conflict . . . . "77 That Truman was addressing himself to a military emergency could not have been clearer.
Presidents Eisenhower78 and Kennedy79 each confirmed the continued existence of the Truman-declared national emergency-an emergency prompted, they readily admitted, by the threat of international Communism.
An American named Harold G. Bauer not unreasonably came to the conclusion that the military emergencies of the Truman and Eisenhower administrations could not be equated with the alleged 1933 economic emergency of the Roosevelt administration. Bauer, therefore, felt free to acquire some gold bullion-an action which promptly got him indicted. Convicted of the "crime" of possessing gold bullion, Bauer appealed to the United States Court of Appeals for the Ninth Circuit.80
The court framed the issue succinctly: "[Bauer's] acts were criminal if Executive Order No.6260 [of August 28,1933], as amended, was still in effect on . . . [February 12, 1954, the date of the alleged commission of the offense]."81
It was Bauer's contention that since neither a ware nor an economic emergency existed, Roosevelt's Executive Order had long since died a natural death. The Government did not choose to meet this argument, contending, instead, that the court lacked the power to take judicial notice of whether Roosevelt's economic emergency-or any other-had ceased to exist.82
The circuit court was clearly sympathetic to Bauer's argument:
Nevertheless, because it was unwilling to conclude, as a matter of law, that no emergency existed which could justify the continued validity of the criminal sanctions of Executive Order No.6260, and because, as an appellate court, it possessed "no jurisdiction or facilities for taking evidence,"84 the court remanded to the trial court below, "with directions to consider the matters here presented, with power to vacate the judgment, grant a new trial and take evidence or any other action in the light of this opinion."85
Bauer raised the question of whether the Government, in its zeal to retain its gold monopoly, would continue to attack gold ownership on the grounds that the Roosevelt emergency had not expired. The question was answered in United States v. Briddle and Mitchell.86 The Government, which had indicted the defendants for possessing gold bullion, this time argued in the alternative: either the 1933 emergency still existed, or "new" and sufficient emergencies had been created by Presidents Truman, Eisenhower, and Kennedy-by virtue of such diverse developments as the Korean war, Communist imperialism, and/or a balance of payments deficit. In other words, owning gold would always be taboo, because the Government would never run out of pretexts for declaring the existence of some emergency or other-endlessly and ad infinitum.
The trial court in Briddle and Mitchell did what the appellate court in Bauer had declined to do: it took judicial notice of the fact "that the 1933 economic emergency ended long before 1962,"87 and it noted, in passing, that Roosevelt's order "has not even the color of legal validity stemming from Congressional delegation of war powers."88
Taking into account the Government's endless emergency rationale, Judge Mathes observed:
Unable to restrain himself from pointing out the obvious, Judge Mathes noted:
Finally, Judge Mathes, exercising in magnificent fashion, his proper function as judicial guardian of the Constitution, held:
The judicial tables had been turned on the Government. Its "endless emergency" rationale had been repudiated, its indictments dismissed, and,92 in the Southern District of California, for the moment at least, "The Great Depression of 1933" had officially ended.
If at First You Don't Succeed
But the Government, undaunted, continued to ride herd on gold owners. After all, the Briddle and Afitchell decision was limited to a district court, and it was one judge's opinion. There were other judges, other courts, other jurisdictions-and other rationales besides the "endless emergency. ' In United States v. One Solid Gold Object in Form of a Rooster,93 for example, the Government tried [albeit unsuccessfully] to confiscate a 206 troy ounce, eighteen karat gold rooster-the symbol of a Nevada casino's "Golden Rooster Room"-on the ground that possession of it violated the Gold Reserve Act.
And in Pike and Brouwer V. United States,94 the Government, finding itself once more in the Southern District of California (but not before Judge Mathes), once again trotted out the "endless emergency" rationale and succeeded in getting a conviction. On appeal, the Ninth Circuit (the same appellate court which had remanded the Bauer case), composed of judges different from those who had sat in Bauer eight years earlier, was unsympathetic to the plight of the convicted gold owners whose appeal it was considering. While the court (and, incidentally, the Government) conceded that Roosevelt's 1933 "emergency" was indeed over, it nevertheless held that "[T]he power conferred upon the President by . . . [the Emergency Banking Act] was not confined to the 1933 banking crisis, but extends to any national emergency proclaimed by the President."95
Since Presidents Truman, Eisenhower, and Kennedy had proclaimed a continuing emergency because of the threat of international Communism, Executive Order No.6260 was still viable and, accordingly, the convictions were affirmed.
It is interesting to note that while in Pike and Brou'ver the Ninth Circuit expressly disavowed the holding in Briddle and Mitchell, (a district court under its jurisdiction), it lacked the courage expressly to disavow its own dictum in Bauer, wherein it had stated:
The Law Today
The precedent established in Pike and Brouwer remains the law of the land-at least in the Ninth Circuit-at the present time No other court of comparable jurisdiction has ruled otherwise on the validity of the criminal sanctions against Americans who own gold. As things stand now, an American who owns gold is courting a felony conviction. Moreover, under the Gold Reserve Act, all the gold he owns is subject to forfeit while he, himself, is subject to a penalty double in amount to the value of the gold.
The Supreme Court of the United States has yet to rule on the twin issues of congressional arrogation of a money power, as it relates to the regulation of gold, and congressional delegation of that power to the President.97 In other words, the Supreme Court has never ruled on whether Americans can be prohibited from owning gold.
If and when the High Court is given an opportunity to do so, it is to be hoped that the Court will recognize (as most lower courts have not) the danger of permitting the Government (Congress or the President) to prohibit Americans from owning gold. In the words of monetary economist Charles Rist: "It is certain that nothing so facilitates the seizure of all activities by the government as its liberty of action in monetary matters."98
And if the Court were to wonder why the government has struggled, so long and so deviously, to establish and hold onto its gold monopoly, economist Rist has revealed the Government's real motive. Referring to those "partisans of paper money [who] have disorganized the entire price system by deprecating paper" and then proclaimed "the capacity of governments to direct money and insure its stability," Rist observes that
RELATING TO THE HOARDING, EXPORT, AND EARMARKING OF GOLD COIN, BULLION, OR CURRENCY AND TO TRANSACTIONS IN FOREIGN EXCHANGE
By virtue of the authority vested in me by section 5(b) of the act of October 6, 1917, as amended by section 2 of the act of March 9, 1933, entitled "An act to provide relief in the existing national emergency in banking and for other purposes ', I, FRANKLIN D. ROOSEVELT, PRESIDENT of the UNITED STATES OF AMERICA, do declare that a period of national emergency exists, and by virtue of said authority and of all other authority vested in me, do hereby prescribe the following provisions for the investigation and regulation of the hoarding, earmarking, and export of gold coin, gold bullion, and gold certificates by any person within the United States or any place subject to the jurisdiction thereof, and for the investigation and regulation of transactions in foreign exchange and transfers of credit and the export or withdrawal of currency from the United States or any place subject to the jurisdiction thereof by any person within the United States or any place subject to the jurisdiction thereof.
SEC. 2. DFFINITION5.-As used in this order the term "person" means an individual, partnership, association, or corporation, and the "term United States" means the United States and any place subject to the jurisdiction thereof.
SEC. 3. RETURNS.-Within 15 days from the date of this order every person in possession of and every person owning gold coin, gold bullion, or gold certificates shall make under oath and file as hereinafter provided a return to the Secretary of the Treasury containing true and complete information relative thereto, including the name and address of the person making the return, the kind and amount of such coin, bullion, or certificates held and the location thereof, if held for another, the capacity in which held and the person for whom held, together with the post-omce address of such person,' and the nature of the transaction requiring the holding of such coin, bullion, or certificates and a statement explaining why such transaction cannot be carried out by the use of currency other than gold certificates,' provided that no returns are required to be filed with respect to-
(a) Gold coin, gold bullion, and gold certificates in an amount not exceeding in the aggregate $100 belonging to any one person.'
(b) Gold coin having a recognized special value to collectors of rare and unusual coin,'
(c) Gold coin, gold bullion, and gold certificates acquired or held under a license heretofore granted by or under authority of the Secretary of the Treasury, and
(d) Gold coin, gold bullion, and gold certificates owned by Federal Reserve banks.
Such return required to be made by an individual shall be filed with the collector of internal revenue for the collection district in which such individual resides, or, if such individual has no legal residence in the United States, then with the collector of internal revenue at Baltimore, Md. Such return required to be made by a partner ship, association, or corporation shall be filed with the collector of internal revenue of the collection district in which is located the principal place of business or principal office or agency of such partnership, association, or corporation, or, if it has no principal place of business or principal office or agency in the United States, then with the collector of internal revenue at Baltimore, Md. Such return required to be made by an individual residing in Alaska shall be filed with the collector of internal revenue at Seattle, Wash. Such return required to be made by a partnership, association, or corporation having its principal place of business or principal office or agency in Alaska shall be filed with the collector of internal revenue at Seattle, Wash.
The Secretary of the Treasury may grant a reasonable extension of time for filing a return, under such rules and regulations as he shall prescribe. No such extension shall be for more than 45 days from the date of this Executive order. An extension granted hereunder shall be deemed a license to hold for a period ending 15 days after the expiration of the extension.
The returns required to be made and filed under this section shall constitute public records,' but they shall be open to public inspection only upon order of' the President and under rules and regulations prescribed by the Secretary, of the Treasury.
A return made and filed in accordance with this section by the owner of' the gold coin, gold bullion, and gold certificates described therein, or his duly authoured agent, shall be deemed an application for the issuance under section 5 hereof of a license to hold such coin, bullion, and certificates.
SEC. 4, ACQUISITION OF GOLD COIN AND GOLD BULLION.- No person other than a Federal Reserve bank shall after the date of this order acquire in the United States any gold coin, gold bullion, or gold certificates except under license therefor issued pursuant to this Executive order, provided that member banks of the Federal Reserve System may accept delivery of such coin, bullion, and certificates for surrender promptly to a Federal Reserve bank, and provided further that persons requiring gold for use in the industry, profession, or art in which they are regularly, engaged may replenish their stocks of gold up to an aggregate amount of $100, by acquisitions of gold bullion held under licenses issued under section 5(b), without necessity of obtaining a license for such acquisitions.
The Secretary of the Treasury, subject to such further regulations as he may prescribe, shall issue licenses authorizing the acquisition of-
(a) Gold coin or gold bullion which the Secretary is satisfied is required for a necessary and lawful transaction for which currency other than gold certificates cannot be used, by an applicant who establishes that since March 9, 1933, he has surrendered an equal amount of gold coin, gold bullion, or gold certificates to a banking institution in the continental United States or to the Treasurer of the United States;
(b) Gold coin or gold bullion which the Secretary is satisfied is required by an applicant who holds a license to export such an amount of gold coin or gold bullion issued under subdivisions (c) or (d) of section 6 hereof, and
(c) Gold bullion which the Secretary, or such agency as he may designate, is satisfied is required for legitimate and customary use in industry, profession, or art by an applicant regularly engaged in such industry, profession, or art, or in the business of furnishing gold therefor.
Licenses issued pursuant to this section shall authorize the holder to acquire gold coin and gold bullion only from the sources specified by the Secretary of the Treasury in regulations issued hereunder,
SEC, 5, HOLDING OF GOLD COIN, GOLD BULLION, AND GOLD CERTIFICATES,-After 30 days from the date of this order no person shall hold in his possession or retain any interest, legal or equitable, in any gold coin, gold bullion, or gold certificates situated in the United States and owned by any person subject to the jurisdiction of the United States, except under license therefor issued pursuant to this Executive order; provided, however, that licenses shall not be required in order to hold in possession or retain an interest in gold coin, gold bullion or gold certificates with respect to which a return need not be filed under section 3 hereof.
The Secretary of the Treasury, subject to such further regulations as he may prescribe, shall issue licenses authorizing the holding of-
(a) Gold coin, gold bullion, and gold certificates, which the Secretary is satisfied are required by the person owning the same for necessary and lawful transactions for which currency, other than gold certificates, cannot be used,'
(b) Gold bullion which the Secretary, or such agency as he may designate is satisfied is required for legitimate and customary use in industry, profession, or art by a person regularly engaged in such industry, profession, or art or in the business of furnishing gold therefor;
(c) Gold coin and gold bullion earmarked or held in trust since before April 20, 1933, for a recognized foreign government or foreign central bank or the Bank for International Settlements', and
(d) Gold coin and gold bullion imported for reexport or held pending action upon application for export licenses,
SEC, 6. EARMARKING AND EXPORT OF GOLD COIN AND GOLD BULLION,-After the date of this order no person shall earmark or export any gold coin, gold bullion, or gold certificates from the United States, except under license therefor issued by the Secretary of the Treasury pursuant to the provisions of this order.
The Secretary of the Treasury, in his discretion 3nd subject to such regulations as he may prescribe, may issue licenses authorizing-
(a) The export of gold coin or gold bullion earmarked or held in trust since before April 20, 1933, for a recognized foreign government, foreign central bank, or the Bank for International Settlements;
(b) The export of gold, (i) imported for reexport, (ii) refined from gold- bearing materials imported by the applicant under an agreement to export gold, or (iii) in bullion containing not more than 5 ounces of gold per ton,'
(c) The export of gold coin or gold bullion to the extent actually required for the fulfillment of a contract entered into by the applicant prior to April 20, I 933,' but not in excess of the amount of the gold coin, gold bullion, and gold certificates surrendered by the applicant on or after March 9, 1933, to a banking institution in the continental United States or to the Treasurer of the United States,' and
(d) The earmarking for foreign account and/or export of gold coin or gold bullion, with the approval of the President, for transactions which the Secretary of the Treasury may deem necessary to promote the public interest.
SEC, 7, UNITED STATES POSSESSIONS-SHIPMENTS THERETO.-The provisions of sections 3 and 5 of this order shall not apply to gold coin, gold bullion, or gold certificates which is situated in the Philippine Islands, American Samoa, Guam, Hawaii, Panama Canal Zone, Puerto Rico, or the Virgin Islands of the United States, and is owned by a person not domiciled in the continental United States. The provisions of section 4 shall not apply to acquisitions by persons within the Philippine Islands, American Samoa, Guam, Hawaii, Panama Canal Zone, Puerto Rico, or the Virgin Islands of the United States of gold coin or gold bullion which has not been taken or sent thereto since April 5, 1933, from the continental United States or any place subject to the jurisdiction thereof,
SEC, 8. Until further order, the Secretary of the Treasury is authorized, through any agency that he may designate, to 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 from any banking institution within the United States to any foreign branch or office of such banking institution or to any foreign bank or banker, and the export or withdrawal of currency from the United States, by any person within the United States; and the Secretary of the Treasury may require any person engaged in any transaction referred to herein 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.
SEC. 9. The Secretary of the Treasury is hereby authorized and empowered to issue such regulations as he may deem necessary to carry out the purposes of this order. Such regulations may provide for the detention in the United States of any gold coin, gold bullion, or gold certificates sought to be transported beyond the limits of the continental United States, pending an investigation to determine if such coin, bullion, or certificates are held or are to be acquired in violation of the provisions of this Executive order. Licenses and permits granted in accordance with the provisions of this order and the regulations prescribed hereunder, may be issued through such officers or agencies as the Secretary may designate.
SEC. 10. Whoever willfully violates any provision of this Executive order or of any license, order, rule, or regulation issued or prescribed hereunder, shall, upon conviction, be fined not more than $10,000, or, if a natural person, may be imprisoned for not more than 10 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.
SEC. 11. The Executive orders of April 5, 1933, forbidding the hoarding of gold coin, gold bullion, and gold certificates, and April 20, 1933, relating to foreign exchange and the earmarking and export of gold coin or bullion or currency, respectively, are hereby revoked. The revocation of such prior Executive orders shall not affect any act done, or any right accruing or accrued, or any suit or proceeding had or commenced in any civil or criminal cause prior to said revocation, but all liabilities under said Executive orders shall continue and may be enforced in the same manner as if said revocation had not been made. This Executive order and any regulations or licenses issued hereunder may be modified or revoked at any time.
Chronology of Major Actions with Respect to Gold Ownership from October 6, 1917 to July 20, 1962.
1. October 6, 1917: Enactment of Trading with the Enemy Act; Pres!dent receives power to regulate and/or prohibit transactions in gold.
2. September 24, 1918: Amendment of Trading with the Enemy Act: President receives power to prohibit hoarding of gold.
3. March 5, 1933: Presidential Proclamation No. 2038; convenes Congress on March 9, 1933.
4. March 6, 1933: Presidential Proclamation No.2039; bank holiday declared until March 9,1933.
5. March 9, 1933: Presidential message to Congress (H.R. Doc. No. I); requests passage of H.R. 1491, emergency banking legislation.
6. March 9, 1933: Enactment of Emergency Banking Act; approves bank holiday; delegates to President power to regulate and/or prohibit transactions in gold in time of war. or during any other national emergency declared by him; delegates to Secretary of the Treasury power to requisition gold.
7. March 9,1933: Presidential Proclamation No.2040; continues bank holiday.
8. March 10, 1933: Presidential Executive Order No.6073; authorizes Secretary of the Treasury to decide which banks can reopen; prohibits export of gold, except as allowed by Secretary of the Treasury.
9. March 18, 1933: Presidential Executive Order No.6080; authorizes appointment of bank conservators, if necessary to protect bank assets.
10. April 5, 1933: Presidential Executive Order No.6102; owners of gold required to turn it over to the Government in exchange for paper currency.
11. April 19, 1933: Secretary of the Treasury advises that until further notice no licenses will be granted for export of gold.
12. April 20, 1933: Presidential Executive Order No. 6111; prohibits earmarking for foreign account and the export of gold coin, gold bullion, or gold certificates, but authorizes Secretary of the Treasury to issue licenses permitting such export under certain conditions.
13. April 29, 1933: Secretary of the Treasury issues regulations; persons needing gold for proper transactions not involving hoarding can apply for licenses; day before Acting Secretary of the Treasury announced no such licenses would be granted unless applicant had first surrendered his gold.
14. June 5, 1933: Joint Resolution of Congress declares gold clause contracts violate public policy and thus are void; action later upheld by Supreme Court in Norman v. Baltimore & O.R. Co., 294 U.S. 240 (1935).
15. August 28, 1933: Presidential Executive Order No. 6260; declares national emergency, revokes Executive Orders of April 5 and 20, 1933; requires filing of information returns; with certain minor exceptions, requires delivery of all domestically held private gold to Federal Reserve Banks; authorizes Secretary of the Treasury to license acquisition of gold: imposes stiff criminal penalties for violation of government gold policies.
16. August 29, 1933: Presidential Executive Order No, 6261: forces domestic gold producers to sell their output to Secretary of the Treasury, at price to be set by latter, for resale to those with gold licenses and/or foreign purchasers.
17. September 12, 1933: Secretary of the Treasury issues comprehensive regulations under Executive Orders of August 28 and 29, 1933.
18. October 25, 1933: Presidential Executive Order No, 6359: amends (in minor way) and revokes, respectively, Executive orders of August28 and 29, 1933: Treasury Department, to conform amends its regulations of September 12, 1933 accordingly.
19. November 16, 1933: United States District Court in New York upholds passage of Emergency Banking Act of March 9, 1933, its delegation of power to the President, and Section 3 of his Executive Order of August 28, 1933 requiring returns to be filed: invalidated is Roosevelt's requisition of gold under the August 28, 1933 Executive Order, which the court holds should have been made by the Secretary of the Treasury. Campbell v. Chase Nat'l Bank, 5 F. Supp. 156 (S.D.N.Y. 1933).
20. December28, 1933: Secretary of the Treasury promulgates order requisitioning gold, setting deadline of midnight on January 1, 1934.
21. January 11, 1934: Secretary of the Treasury amends in minor respect a rare coin exception made in his December 28, 1933 order.
22. January 12, 1934: Presidential Executive Order No, 6556: amends in minor respect the Executive Order of August 28, 1933.
23. January 15, 1934: Presidential Executive Order No. 6560: makes minor changes regarding transactions in foreign exchange, transfers of credit, and the export of coins and currency.
24. January 15, 1934: Secretary of the Treasury directs mints and assay offices to receive gold newly mined in the United States on consignment for the Federal Reserve Bank of New York: also supplements his order of December 28, 1933 by extending until midnight on January 17, 1934, the deadline for the surrender of gold in compliance with his order of December 28, 1933.
25. January 15, 1934: Presidential message to Congress: requests passage of additional gold legislation, vesting in the Government possession and title to all monetary gold in America.
26. January 17, 1934: Secretary of the Treasury instructs the Treasurer, mints, assay offices, and fiscal agents of the United States regarding gold not delivered to the Government before the midnight deadline.
27. January 17, 1934: Senate Banking and Currency Committee makes public the opinion of Attorney General Homer Cummings to the effect that the proposed new gold legislation is constitutional.
28. January 30, 1934: Gold Reserve Act approved: transfers to Government all gold of Federal Reserve System: gold coin ordered withdrawn from circulation and formed into bars: gold in any form to be acquired, transported, melted or treated, imported, exported, or earmarked or held in custody for foreign or domestic account only to the extent allowed by Treasury regulations issued under Act: Secretary of the Treasury issues provisional regulations.
29. January 31, 1934: Provisional Treasury regulations amended with regard to purchase and sale of gold by United States mints: also in regard to collectors of rare coins.
30. July 20, 1962: by Executive Order No. 11037, President John F. Kennedy prohibits Americans from owning gold outside the continental limits of the United States.
* Assistant Professor of Law, Brooklyn Law School; B.A., J.D., New York University.
The author wishes to thank Erika Holzer, of the New York Bar, for her exceptional contribution to this article.
The author also wishes to thank Harriet N. Cohen and William T. Schiffman, members of the Brooklyn Law Review, whose research assistance was invaluable in the article's preparation.
2 Rist, The Price of Gold in the United States, L'OPINION,Feb. 15, 1951,at 138, reprinted as C. RIST, THE TRIUMPH OF GOLD(1961).
3 Barron's, May 31, 1971, at 9 reported that the value of certain gold coins had increased substantially over the prior three years. For example, in May, 1968, the U.S. "Double Eagle" had been selling at a premium of about 45% over the actual gold content of the coin, the official rate then being $35.00 per ounce. In May, 1971, the premium was 69%. In May, 1968, the German Mark piece had been selling at a 75% premium; in May, 1971, the premium was 175%. As to gold bullion, U.S. News & World Report, Sept.25, 1972, at 68 stated that although the official government price of gold was pegged at $38 per ounce, the "free-market price in Europe recently has been nearer $65 or $70."
4 See notes 49 and 71 infra. In addition, according to Thomas W. Wolfe, Director of the Office of Domestic Gold and Silver Operations, the Treasury Department has "'determined that the purchase of a gold futures contract is the same as a purchase of gold itself.... It would certainly be an illegal activity for the 99.9% of us who have no Government authorization to deal in gold.'" TIME, Sept.18, 1972, at 90.
5 Act of Oct.6, 1917,ch. 106,§3,40 Stat. 411, 413.
6 Id. Another purpose of the Act was to authorize seizure of alien property in the United States.
7Id. § 5(b), 40 Stat. 411,415. Section 5(a), in effect, gave the President absolute discretion to apply, or not to apply, the Act, as he saw fit. Section 5(b) provided.'
9 Id. § 16,40 Stat. 411,425.
10 The only "money powers possessed by Congress are "[t]o borrow money on the credit of the United States" and "[t]o coin money [and] regulate the value thereof." U.S. CONST. art. I, § 8.
11 Act of Sept. 24,1918, ch. 176, § 5, 40 Stat. 965, 966.
12 Id. (emphasis added).
Hanna, Currency Control and Private Property, 33 COLUM. L. REv. 617, 619 n.3 (1933).
13 Proclamation No.2038, 48 Stat. 1689 (1933).
15 Id. The Proclamation provided:
By separate orders of March 6,1933, signed by the President and the Secretary of the Treasury, the Treasurer of the United States and the Director of the Mint were instructed to make payments in gold in any form during the continuance of the bank holiday only under licenses issued by the Secretary of the Treasury. Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year ended June 30, 1934, Treasury Department Document No.3065 at 201(1935) [hereinafter cited as Annual Report].
16 Article II, section 2, clause 1 of the Constitution mandates that "the President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States . . . Roosevelt's conception of his powers as Commander in Chief in wartime, particularly in matters touching the nation's economic structure, was spelled out nearly a decade after the bank holiday, in his message to Congress of September 7, 1942, in which he demanded that the legislature forthwith repeal certain provisions of the Emergency Price Control Act of January 30,1942, ch. 26, § I, 56 State. 23:
88 CONG. REC. 7042, 7044 (1942).
Surely, if this was Roosevelt's conception of his war powers, he could have adverted to those powers in his March 6, 1933 Proclamation. Perhaps it never occurred to him, or perhaps he found the concept of an 'emergency" more convenient for his purposes.
17 Later designated as H.R. 1491. The bill's destiny was preordained. The night before, Roosevelt had assembled at the White House
77 CONG. REC. 58 (1933) (remarks of Senator Glass).
18 77 CONG. REC. 67-75 (1933).
19 Id. at 75, which reads as follows:
FRANKLIN D. ROOSEVELT.
THE WHITE ROUSE, March 9, 1933.
20 77 CONG. REC. 76 (1933).
22 The record does not indicate whether or not Congressman Snell had seen a copy of the proposed bill.
23 77 CONG. REC. 76 (1933).
25 Id. at 81. The following are some of the typical comments made on the House floor in support of the bill:
77 CONG. REC. 79 (1933).
77 CONG. REC. 79 (1933).
77 CONG. REC. 80 (1 933).
77 CONG. REC. 82 (1933).
26 77 CONG. REC. 83 (1933) (emphasis added).
27 Id. at 50-67. What debate there was, centered around the meaning of the proposed enactment.
28 77 CONG. REC. 67 (1933).
29 The Emergency Banking Act of March 9,1933, ch. I, § 1, 48 Stat. 1.
Hanna, Currency Control and Private Property, 33 COLLM.L. REV.617,619(1933).
30 Section 106 of the Act "approved and confirmed" the bank holiday. The Emergency Banking Act of March 9, 1933, ch. 1, § 1, 48 Stat. 1.
31 Id. § 2, 48 Stat. I (emphasis added).
32 Id. § 1,48 Stat. I, now Federal Reserve Act, 12 U.S.C. § 221 et seq. (1970).
33 See note 15 supra.
34 Proclamation No.2040, 48 Stat. 1691(1933).
35 Exec. Order No.6073(1933), codified in3I C.F.R. § 120.3(1972), provides in part as follows:
On March 18, 1933, the President issued Executive Order No.6080 providing for the appointment of a conservator for the assets of any unopened bank if such appointment was necessary to preserve the bank's assets. Annual Report at 197.
36 Exec. Order No.6073 (1933), codified in 31 C.F.R. § 120.3(1972).
37 Exec. Order No.6102 (1933).
38 Id. § 4.
39 Id. § 9.
40 Annual Report at 202.
41 Exec. Order No. 6111(1933).
42 Annual Report at 202.
43 DEPARTMENT OF THE TREASURY, GOLD REGULATIONS(April 29, 1933).
44 Annual Report at 202.
45 In fact, no such licenses to acquire gold or gold coin to meet maturing gold clause obligations in the United States were ever issued because none of the applicants had surrendered their gold, gold coin or gold certificates, Id.
46 Joint Resolution of June 5, 1933, 48 Stat. 112-13, ch. 48, § 1,31 U.S.C. §§ 462, 463 (1970). The Joint Resolution was later upheld by a sharply divided Supreme Court in Norman v. Baltimore & 0. R.R., 294 U.S. 240(1935). At the time, it was estimated that the dollar value of outstanding gold clause contracts was at least 124 billion dollars. Hanna, Currency Control and Private Property, 33 COLUM. L. REv. at 633.
47 See note 37 supra
48 Emergency Banking Act of March 9, 1933, ch. I, § 2,48 Stat. 1 (1933) (emphasis added).
49 Exec. Order No.6260(1933). See Appendix I. This Executive Order was later amended, in a minor respect, by Exec. Order No.6556 (1934).
50 0n August 29, l933, the President issued Executive Order No.6261, which forced American gold producers to sell their output to the Secretary of the Treasury at whatever price the Secretary chose to pay for resale to those holding treasury department gold licenses and/ or foreign purchasers. On September 12, 1933, the Secretary of the Treasury issued comprehensive regulations under the Executive Orders of August 28 and 29, 1933. See Gold Regulations Prescribed by the Secretary of the Treasury Under the Executive Order of August 28, 1933 Relating to the Hoarding, Export, and Earmarking of Gold Coin, Bullion, or Currency and to Transactions in Foreign Exchange and the Executive Order of August 29, 1933 Relating to the Sale and Export of Gold Recovered from Natural Deposits, Treasury Department, Office of the Secretary, September 12, 1933.
On October 25, Executive Order No.6359 revoked the August 29 Executive Order and amended in a minor respect the August 28 Executive Order. On January 15, 1934, Executive Order No.6560, codified in 31 C.F.R. 127.0-127.7 and 127.14(1972), would make other minor changes regarding transactions in foreign exchange, transfers of credit, and the export of coin and currency. Annual Report at 2034)4.
51 Hannigan, The Monetary and Legal Tender Acts of 1933-34 and the Law, 14 B.U.L. REv. 485(1934).
52 Campbell v. Chase Natl Bank, 5 F. Supp. 156 (S.D.N.Y. 1933). Actually, there were three cases: Campbell v. Chase Nat'l Bank, 5 F. Supp. 156 (S. D.N.Y. 1933); United States v. Campbell, 5 F. Supp. 156 (S.D.N.Y. 1933), aff'd, 71 F.2d 699 (2d Cir. 1934); and Campbell v. Mesalie, 5 F. Supp. 156, aff'd, 71 F.2d 671 (2d Cir.), cert. denied, 293 U.S. 592 (1934).
53 5 F. Supp. at 163.
54 Id. at 165.
55 Id. at 167.
57 Id. at 169.
58 Id. at 172.
59 Id. at 173.
60 Id. at 174.
61 Id. at 175.
67 Id. at 177.
68 Judge Woolsey's reasoning was followed in the later case of United States v. Driscoll 9 F. Supp. 454 (D. Mass. 1935). There, two-count indictments were returned charging each of two defendants with failure to file returns under section 3 of the August 28, 1933 Order (Count 1), and with ownership or possession of gold coin under section 5 and the regulations promulgated thereunder (Count 2). The defendants demurred. The District Judge, following Campbell, held that Congress did not intend in section 2 to confer on the President authority to requisition gold, because Congress had expressly given that power to the Secretary of the Treasury in section 3 of the same act of March, 1933. Thus, the defendants' demurrer to count 2 was sustained. It was overruled as to count I, also in accordance with Campbell.
69 The order also set a deadline of January 1, 1934, later extended to January 17 (Annual Report at 204), and provided that all gold turned in after the deadline would be seized and its value applied to a "possible maximum penalty of twice the amount of the gold N.Y. Times, Jan. 18,1934, at l,col. 2. On January 17, the Secretary of the Treasury sent instructions to the Treasurer of the United States, the United States Mints and assay offices. and the fiscal agents of the United States, concerning how to deal with gold surrendered after the deadline. Annual Report at 204.
70 N.Y. Times, Jan.16, 1934, at 3, col. 2. In fact, hundreds of millions of dollars in gold were involved. N.Y. Times, Jan.18, 1934, at I, col. 1.
Although Roosevelt had asserted in his message that "under existing law there is authority, by Executive Act, to take title to the gold in the possession or control of the Reserve Banks . . .,"N.Y. Times, Jan. 16,1934, at 3, col. 2, on December 29, 1933, Governor E.R. Black of the Federal Reserve Board had written to the President noting "a serious difficulty presented to the Secretary [of the Treasury) in the question of his right to requisition gold of the Reserve System under the statute authorizing requisition of gold in protection of the currency system of the country." N.Y. Times, Jan.17, 1934, at 14, col. 2.
Not surprisingly, on January 17, 1934, the Senate Banking and Currency Committee made public an opinion of Roosevelt's Attorney General, Homer Cummings, that the proposed legislation was constitutional. N.Y. Times, Jan. 18, 1934, at 14, col. 2.
71 Act of Jan.30, 1934,48 Stat. 337,31 U.S.C. §§ 3l5b, 405b, 408a, 408b, 440-46, 752, 754a, 754b, 767, 821, 822a, 822b, 824; 12 U.S.C. §§ 213, 411-15, 417, 467. The Act did not make the President's previous actions regarding gold part of statutory criminal law. Bauer v. United States, 344 F.2d 794, 796 (9th Cir. 1957).
72 The remarks of Congressman Beedy indicate what transpired:
78 CONG. REC. 1012(1933). The vote in the House was 360 to 40.78 CONG. REC. 1013 (1933).
73 78 CONG. REC. 1010-11(1933).
74 In payment, credits in amounts equal to the value of the gold were established in the Treasury Department. As to any gold which had not previously been delivered to the government, and was still in private hands, it was to be held for the government's account and then delivered on the orders of the Secretary of the Treasury. All gold coins were to be withdrawn from circulation, and no more were to be minted. All United States gold was to be formed into bars. Section 3 authorized the Secretary to make regulations to prescribe the conditions under which, and only under which, gold could "be acquired and held, transported, melted or treated, imported, exported or earmarked: (a) for industrial, professional, and artistic use; (b) by the Federal Reserve banks for the purpose of settling international balances; and (c) for such other purposes as in his judgment are not inconsistent with [the other provisions of the Act]." On January 31, 1934, the Secretary issued regulations which in Section 20, provided that gold coins "of recognized special value to collectors of rare and unusual coins. . . may be acquired and held without the necessity of holding a license therefor."
75 This act had dealt primarily with agricultural purchasing power and farm indebtedness, and title III thereof involved certain currency and monetary matters.
76 Gold Reserve Act § 13, ch. 6,48 Stat. 343, as amended, 31 U.S.C. §824(1970).
77 Proclamation No.2914, Dec. 6, 1950, 3 C. F.R. (1949-53 Compilation) 99, 16 Fed. Reg. 9029, provides in part:
78 Exec. Order No.10896, November29, 1960,25 Fed. Reg. 12281 (1960); Exec. Order No.10905, January 14, 1961, 26 Fed. Reg. 321(1961).
79 Exec. Order No.11037, July20, 1962, 27 Fed. Reg. 6967 (1962). This order prohibited Americans, for the first time, from owning gold outside the continental limits of the United States.
80 Bauer v. United States, 244 F.2d 794 (9th Cir. 1957).
81 Id. at 795.
82 Id. at 796, 797.
83 Id. at 797.
85 Id. There is no record of what became of Bauer on remand. Nor did the case ever reach the Ninth Circuit again.
86 212 F. Supp. 584 (S.D. Cal. 1962).
87 Id. at 589.
88 Id. at 588.
89 Id. at 589-90.
92 On September 14, 1962, the government filed a notice of appeal to the Supreme Court of the United States, pursuant to 18 U.S.C. § 3731. However, on November14, 1962, the parties stipulated, pursuant to Supreme Court Rule 14, that the government's appeal be dismissed. See United States v. Lane and Valle, 218 F. Supp. 459, 460 (S.D.N.Y. 1963).
93 208 F. Supp. 99 (D. Nev. 1962).
94 340 F.2d 487 (9th Cir. 1965).
95 Id. at 487.
96 244 F.2d at 797.
97 In this regard, a recent dissent by Justice Douglas, from the Court's denial of certiorari, is of considerable interest. Petitioner was convicted of attempting to destroy certain war property "when the United States is at war, or in times of national emergency as declared by the President 18 U.S.C. § 2153(a). Justice Douglas stated:
Achtenberg v. United States, 409 U.S. 932 (1972).
98 Rist, supra note 2, at 139 (emphasis added).
99 Id. (emphasis added). Every few years there has been a semi-official hint that the right of Americans to own gold may be restored. For example, on May22, 1968, the Wall Street Journal reported from the American Bankers Association annual meeting that [s]ome U.S. Government officials are starting to consider the possibility of making gold freely available for hoarding and trading by American citizens The Treasury Department denied the report. In the last presidential election, the Republican platform of 1972 contained a plank that recommended the legalization of the ownership of gold, saying:
1972 CONG. Q. WEEKLY REP. 2151, 2157. At about the same time, a unanimous subcommittee of the Congressional Joint Economic Committee, headed by Representative Henry S. Reuss (D. Wis.), recommended that "[o]nce monetary reform is agreed upon, American citizens should again be allowed by buy, sell and hold gold." N.Y. Times, Nov.20, 1972, at 59, col. 8. Despite these occasional signs of a thaw in the government's anti-private gold position, there is, at best, only a slim chance that Americans will ever be able to own gold so long as the Government continues to be deeply involved in the nation's monetary affairs.
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