Free Gold by Matthew Hart

million more. President Herbert Hoover warned that all the bullion “dashing hither and yon from one nation to another, seeking maximum safety, has acted like a cannon loose on the deck of the world in a storm.”
    The man who would stop the rout of America’s reserves trounced Hoover in the election of November 1932. In the practice of the time, Franklin D. Roosevelt, the victor, would not be inaugurated until the following March. In the lame-duck interregnum, much could happen . . . and did. The cannon that Hoover had identified kept smashing around on the deck. When one of the men tipped for Roosevelt’s cabinet let drop that it might be smart to quit the gold standard, a run on the dollar took $320 million out of the Treasury in less than two months. Worse, some of those fleeing were Americans. Distrustful of Roosevelt, who refused to say what he planned to do, they cashed in their currency for gold. It wouldn’t do them any good.
    Roosevelt took office March 4, 1933. On March 9 he rushed through the Emergency Banking Act. The act gave the president the power to regulate ownership of bullion.On April 5 he signed Executive Order 6102 “forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States.” The order made it a crime for any individual, partnership, association or corporation to possess gold. The law exempted “customary uses” such as gold fillings for teeth, and rare coins in collections. All other gold was the government’s, and owners had todeliver it by May 1, twenty-five days after the signing of the order, when they would be paid the official government price of $20.67 an ounce.
    A challenger immediately tested the law. Frederick Barber Campbell, a sixty-seven-year-old New York insurance lawyer, marched into the Chase National Bank and asked for the twenty-seven gold bars that he had there on deposit. The bullion was worth $200,000, a large sum. In accordance with the presidential order, the bank refused to surrender the gold, and Campbell sued them. He also asked the court to restrain the bank from delivering the gold to the federal government. Campbell maintained that the order, and the law cited by the president as his authority for it, were both unconstitutional. The government responded by indicting Campbell for failing to report his holdings to the Treasury, and then indicting him again for hoarding. If convicted on both counts, Campbell faced a maximum term of twenty years. In the end he did not go to prison, but his lawsuit failed. Campbell died three years later of a heart attack, in the Metropolitan Club on East 60th Street, where he lived. The Treasury got the gold.
    As private gold shifted to the government, the public coffers swelled.In 1930 the United States had about 7,000 tons of gold. In 1935, two years after the confiscations started, the stock reached almost 10,000 tons. Not all of this increase came from private gold. As Europeans grew fearful of approaching war, some shifted wealth across the ocean to the safe haven of the United States. This increased the bullion flow into the Treasury. When war broke out in 1939 the United States, with its industries intact and still two years away from war, became an important supplier of arms and other goods to combatants. Gold imports soared. In 1940 the Treasury had 21,000 tons, a five-year increase of more than a hundred percent. Nor wasthe size of the reserve all that had changed. The cost of an ounce of gold had climbed from $20.67 to $35, a hike of almost 70 percent. It had happened very fast, and for one reason—the United States had been cooking the price.
    As soon as he had issued the gold confiscation order, Roosevelt obtained the authority to reduce the amount of gold a dollar represented by as much as 60 percent. It would take more dollars to buy an ounce of gold. The dollar would be worth less than it had been, but there would be more of