A Frustrating Reality During Hard Times
In 1933, President Franklin D. Roosevelt issued Executive Order 6102, making it illegal for U.S. citizens to own significant amounts of gold. This was meant to stabilize the economy, but instead of circulating the confiscated gold and silver, the government stockpiled it in federal vaults. During a time of economic despair, many Americans struggled to find money, while the government held onto vast amounts of precious metals.
Massive Gold Acquisitions
Before 1933, the U.S. government held about 205 million ounces of gold. After Roosevelt’s order and aggressive gold purchasing policies, this number tripled. By 1939, U.S. gold reserves had climbed to approximately 650 million ounces. This means the Treasury acquired nearly 445 million ounces in just six years.
The Silver Boom
The Silver Purchase Act of 1934 allowed the Treasury to buy enormous amounts of silver at inflated prices. This move aimed to support struggling silver miners and boost monetary reserves. By 1939, U.S. silver holdings had reached nearly 2 billion ounces. The buying spree continued into World War II, eventually peaking at around 3 billion ounces in the early 1940s.
Where Did the Money Come From?
Funding these purchases required massive financial resources. Roosevelt’s administration relied on three major sources: tax increases, a gold revaluation windfall, and government borrowing.
- Higher Taxes: Roosevelt raised taxes every year from 1933 to 1939. The top income tax rate rose from 25% in 1932 to 79% by 1936. Everyday goods like alcohol, gasoline, and cigarettes faced new excise taxes. Corporations and the wealthy bore the brunt of additional tax burdens.
- Gold Revaluation Windfall: Roosevelt changed the official price of gold from $20.67 to $35 per ounce. This revaluation instantly increased the Treasury’s existing gold holdings by about $2.8 billion (roughly $60 billion today). These funds allowed further gold and silver purchases.
- Deficit Spending & Government Borrowing: Roosevelt used government borrowing to fund New Deal programs while simultaneously stockpiling gold and silver. The administration prioritized hard asset accumulation over direct financial relief to the public.
The Public’s Frustration
During the Great Depression, many Americans struggled to find work and put food on the table. Older generations recall a time when “there was no money,” yet the government continued accumulating vast gold and silver reserves. Instead of circulating these metals to stimulate the economy, the Treasury kept them locked away. Meanwhile, citizens were left with devalued paper currency.
What It Means Today
Between 1933 and 1939, Roosevelt’s administration acquired nearly 450 million ounces of gold and more than 2 billion ounces of silver. Instead of injecting these assets into the economy, the government hoarded them. This policy, combined with high taxes and deficit spending, left many citizens feeling abandoned by their government.
Roosevelt’s gold and silver policies played a crucial role in reshaping the U.S. monetary system. However, for those who lived through the era, the frustration remains: while the government held onto wealth, everyday Americans struggled to survive.
In 1933, President Franklin D. Roosevelt issued Executive Order 6102, making it illegal for U.S. citizens to own significant amounts of gold. This was meant to stabilize the economy, but instead of circulating the confiscated gold and silver, the government stockpiled it in federal vaults. During a time of economic despair, many Americans struggled to find money, while the government held onto vast amounts of precious metals.
Massive Gold Acquisitions
Before 1933, the U.S. government held about 205 million ounces of gold. After Roosevelt’s order and aggressive gold purchasing policies, this number tripled. By 1939, U.S. gold reserves had climbed to approximately 650 million ounces. This means the Treasury acquired nearly 445 million ounces in just six years.
The Silver Boom
The Silver Purchase Act of 1934 allowed the Treasury to buy enormous amounts of silver at inflated prices. This move aimed to support struggling silver miners and boost monetary reserves. By 1939, U.S. silver holdings had reached nearly 2 billion ounces. The buying spree continued into World War II, eventually peaking at around 3 billion ounces in the early 1940s.
Where Did the Money Come From?
Funding these purchases required massive financial resources. Roosevelt’s administration relied on three major sources: tax increases, a gold revaluation windfall, and government borrowing.
- Higher Taxes: Roosevelt raised taxes every year from 1933 to 1939. The top income tax rate rose from 25% in 1932 to 79% by 1936. Everyday goods like alcohol, gasoline, and cigarettes faced new excise taxes. Corporations and the wealthy bore the brunt of additional tax burdens.
- Gold Revaluation Windfall: Roosevelt changed the official price of gold from $20.67 to $35 per ounce. This revaluation instantly increased the Treasury’s existing gold holdings by about $2.8 billion (roughly $60 billion today). These funds allowed further gold and silver purchases.
- Deficit Spending & Government Borrowing: Roosevelt used government borrowing to fund New Deal programs while simultaneously stockpiling gold and silver. The administration prioritized hard asset accumulation over direct financial relief to the public.
The Public’s Frustration
During the Great Depression, many Americans struggled to find work and put food on the table. Older generations recall a time when “there was no money,” yet the government continued accumulating vast gold and silver reserves. Instead of circulating these metals to stimulate the economy, the Treasury kept them locked away. Meanwhile, citizens were left with devalued paper currency.
What It Means Today
Between 1933 and 1939, Roosevelt’s administration acquired nearly 450 million ounces of gold and more than 2 billion ounces of silver. Instead of injecting these assets into the economy, the government hoarded them. This policy, combined with high taxes and deficit spending, left many citizens feeling abandoned by their government.
Roosevelt’s gold and silver policies played a crucial role in reshaping the U.S. monetary system. However, for those who lived through the era, the frustration remains: while the government held onto wealth, everyday Americans struggled to survive.
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