How Much Gold Was Confiscated in 1933? Executive Order 6102
Did you know there was a momentous period in financial history when the US government seized ownership of gold from numerous Americans?By Jane Pardo | Updated April 5, 2023
Executive Order 6102, which involved a nationwide confiscation of gold from citizens, took investors and holders by surprise when it was issued in 1933.
But how much gold exactly did the US government confiscate? Why was the order issued, and what were its substantial effects?
Read on to learn everything about this controversial gold program. We will discuss how much gold was confiscated in 1933 and explain what happened when the order was issued.
Estimated total physical gold confiscated in 1933
The total amount of gold confiscated due to Executive Order 6102 in 1933 was 2,665 metric tonnes of gold. Today, the equivalent price would be over $171 billion in fiat Federal Reserve Notes using the recent spot gold price of $2,000. The government paid gold coin holders $20.67 per troy ounce, and all surrendered gold was melted down.
SD Bullion arrived at this total gold confiscation estimate upon comparing old US mint gold coin mintage numbers against the 1933 to 1939 melt data.
- 85,680,604 total ounces of confiscated gold: The total confiscated gold in 1933 was around 27.44 percent or slightly over one-fourth of all gold until that year.
- 226,579,419 total ounces of ignored and saved gold: This means 72.56 percent or nearly three-fourths of the US main gold coin circulating at the time of the order went into hiding and long-term savings.
$1,771,018,085: This is the total amount paid by fiat Federal Reserve to gold holders.
Executive Order 6102
President Franklin D. Roosevelt issued EO 6102 on April 5, 1933.
- All holders of gold coins, gold bullion, and gold certificates were required to deliver their gold possessions to a Federal Reserve bank, a branch or agency, or any Federal Reserve System member on or before May 1, 1933.
- Citizens who surrendered their gold received $20.67 per troy ounce in paper bills. This was the long-time fixed market value of gold at the time. $20.67 in 1933 is equivalent in purchasing power to over $450 in 2023.
- Violators were punishable by up to $10,000 in fines and up to 10 years in prison.
- Each citizen was allowed to own a maximum of $100 in gold coins, equivalent to 5 troy ounces of gold.
However, not all citizens were required to surrender their gold. Artists, jewelers, and professionals like dentists with immediate gold uses were exempted. Gold used in art, professions, and industry was not subject to confiscation.
Additionally, collectors who owned gold coins with recognized special value, such as rare and unusual coins, were exempt from legal seizure.
Reasons behind the issuance of Executive Order 6102
President Roosevelt issued EO 6102 within a month of his inauguration.
At the time, the US economic conditions were severely deteriorating. Inflation and worsening employment rates plagued the country.
President Roosevelt embarked on an ambitious plan to end poverty and bring economic relief amid the Great Depression.
Congress passed numerous programs to stabilize the financial system. One of these was EO 6102.
- The government believed that hard times made people hoard gold and silver for survival purposes. This purportedly impacted economic growth and worsened the depression as the gold standard was used for the US currency.
- President Roosevelt issued Proclamation 2039, which banned people from hoarding gold and silver coins.
Results of Executive Order 6102
Federal Reserve Notes were required to have 40% gold backing based on the 1913 Federal Reserve Act.
However, the Federal Reserve was near its limit of allowable credit through gold-backed Federal Reserve demand notes by the late 1920s.
With the issuance of 6102 and the successful confiscation of thousand metric tonnes of gold, there were no longer constraints on the Federal Reserve to increase the money supply during the depression.
Immediate increase in the price of gold
- Once the citizens surrendered most of their gold, President Roosevelt passed the 1934 Gold Reserve Act.
- The price of gold was raised by the Act. The US government raised the price of gold from $20.67 per troy ounce to $35 an ounce. This means the government immediately profited $14.33 per ounce of collected gold.
- With this significant price change, global gold production amplified, and foreigners exported gold to the US. However, it also devalued the United States dollar by magnifying inflation.
- The Act also transferred ownership of all gold and gold certificates from the Federal Reserve to the US Department of Treasury.
- All financial institutions, including the Treasury, were not allowed to redeem dollar bills for gold.
- The President could establish the dollar’s gold value simply by proclamation.
With a sizeable increase in gold reserves resulting from the higher price of gold, the Federal Reserve and US Treasury accumulated a huge amount of gold.
Exchange Stabilization Fund
The Exchange Stabilization Fund is the US Treasury Department’s emergency reserve fund. It was established through a provision in the 1934 Gold Reserve Act.
The ESF allowed the Treasury to control the dollar’s value without needing approval from the Federal Reserve.
1933 gold confiscation controversy
Some experts say that the 1933 gold confiscation was mainly responsible for transforming the US into a gold and monetary powerhouse.
Confiscating more than a quarter of the US citizens’ circulating gold coin savings allowed the government to become a giant net surplus trader and manufacturing colossus in the early 20th century.
Where was the confiscated gold stored?
The Federal Reserve and US Treasury stored the confiscated gold in the US Bullion Depository at Fort Knox, among other locations. The gold was melted into bars.
For how long were US citizens prohibited from owning and trading gold?
US citizens were not allowed to privately own and trade gold exceeding the $100 limit (5 troy ounces of gold) until 1964, when prohibitions started to loosen. President Gerald Ford signed a bill allowing people to hold and sell gold worldwide. This law went into effect in 1974.
What happened to the 1933 Double Eagle gold coin?
EO 6102 caused the 1933 Double Eagle gold coin to become extremely rare. All gold coin productions were stopped to comply with the order, and all 1933 minted coins were destroyed. Around 20 Double Eagle gold coins were stolen, one of which was sold for $7.5 million in 2002.
The massive confiscation of gold in 1933 resulted in an enormous increase in gold reserves, allowing the government to increase the money supply.
This oft-forgotten financial history significantly impacted the entire US, and its effects on market intervention policies continue to the present day.
Whether this confiscation was necessary to alleviate worsening the worsening economy at the time remains a debatable and controversial topic.