Inflation - What Was Executive Order 6102 ?
What was Executive Order 6102 ?
Executive Order 6102 was a Presidential order signed in the 1930s that made it illegal for a US citizen to own more than $100 worth of gold coins or bullion.
Why Are You Bothering To Write An Article on This ?
It is interesting history.
I like to bring this up as a counterpoint when people discuss fears about the “government banning bitcoin.” The government literally banned gold. That happen. Bitcoin, as a decentralized entity, would be much much much harder to “ban” as it requires no permission to own or send.
What caused this ban on Gold ?
As the economic situation worsened in the 1930s and concerns grew about a possible banking collapse, Americans began to hoard gold as a way of preserving their wealth. This led to fears that if hoarding continued unchecked, it could lead to an even further destabilization of the U.S. economy. To combat this situation, President Roosevelt enacted Executive Order 6102, which effectively removed gold from public circulation and allowed the Federal Reserve to print more currency backed by government reserves rather than gold.
So there were two primary functions:
Prevent hoarding - which could worsen the economy
Allow the government to “print money” - to do all the things governments like to do.
The specifics: The law required gold to be surrendered to the government in exchange for currency. The order made it illegal for individuals to own or possess more than $100 worth of gold coins or bullion, although some exceptions were made for numismatic and industrial uses.
Consequences of Order 6102:
Executive Order 6102 had several major consequences.
Created an atmosphere of distrust between individuals and their government.
It created fear and market instability as citizens began to hoard gold in response to the order. The threat of the government taking their gold - made certain individuals hoard it even more. This is actually a very American response. A country founded on the ideas of individual rights in rebellion against a king is more likely to do the opposite of whatever the government tries to force on them, especially when it involves limiting individual rights. No surprise, this hoarding led to further destabilization of the U.S. economy, which was already suffering due to the Great Depression and World War II.
Limiting individual rights by prohibiting the possession or ownership of gold and forcing citizens to trade their gold for government-backed currency, essentially diminished the value of their wealth.
It decreased economic growth by limiting the ability of banks to lend money since they no longer had a gold reserve against which to back loans.
It marked a significant shift in U.S. monetary policy as the nation abandoned the gold standard and allowed currency which was not backed by gold reserves. This allowed the Federal Reserve to print more money and provide more funds for New Deal programs designed to stimulate the economy.
Repeal of Order 6102
Following the issuance of Executive Order 6102, a movement emerged to challenge the order and fight for its repeal. At the forefront of this effort was Union Gold, an organization that sought to restore citizens' rights to own gold. The group argued that Executive Order 6102 was an example of government overreach and deeply deprived citizens of their ability to protect their wealth. Through legal challenges and public testimony, Union Gold rallied support for overturning the order and restoring citizens' gold rights. Unfortunately, this effort was ultimately unsuccessful as Executive Order 6102 stood until 1974 when it was finally repealed by President Nixon.
