Rethinking FDR's Gold Confiscation: A Constitutional Analysis

The confiscation of American citizens' gold in 1933 by President Franklin D. Roosevelt (FDR) remains a controversial topic. Historically, it has been presented as a constitutional action, justified by the payment of fair compensation. However, scrutiny of the constitutional provisions and subsequent events reveals a more complex picture.

The Constitution and Gold Confiscation

To understand the constitutional implications, we must look at the relevant clauses of the U.S. Constitution. Article I, Section 8, grants Congress the power to ‘coin Money, regulate the Value thereof, and of foreign Coin.’ In contrast, Article I, Section 10, states that ‘no State shall make any Thing but gold and silver Coin a Tender in Payment of Debt.’ This presents a seeming contradiction, as one rule (allowing only gold and silver) appears to take precedence over another (granting Congress the power to regulate money).

The principle of ‘the exception that proves the rule’ (exceptio probat regulam in casibus non exceptis) suggests that any exception to the rule would need an amendment to be legally valid. In this context, the absolute prohibition on State minting except gold and silver would require an amendment to allow other forms of tender.

The 5th Amendment and Just Compensation

Many argue that the confiscation was constitutional because fair compensation was provided through the 5th Amendment, which states, ‘nor shall private property be taken for public use without just compensation.’ However, the question remains: was the relinquishment of one's gold and the acceptance of Federal Reserve Notes truly just compensation?

Confusing the issue is the lack of clarity between legal and lawful. While legal refers to adhering to law, lawful implies claims to legitimacy under law. This distinction highlights the potential misuse of constitutional power.

Gold Certificates vs. Federal Reserve Notes

Gold Certificates were considered lawful money due to their convertibility into gold. In stark contrast, Federal Reserve Notes lack intrinsic value; they are simply a promise to pay 'lawful money.' The inclusion of the word 'a' in the description ('A Legal Tender') versus the use of 'the' ('Legal Tender') significantly alters the nature of these instruments.

The 500 dollar Gold Certificate, for instance, states, 'A Legal Tender,' underscoring its intrinsic value. Meanwhile, the 500 dollar Federal Reserve Note declares, 'Legal Tender,' making it instead a promise to pay. This subtle difference in language underscores the disparity in their legal status and value.

The Role of the Federal Reserve

The Federal Reserve, a private banking organization, has taken on a controversial role since its inception. Woodrow Wilson, a proponent of the Federal Reserve, signed the Federal Reserve Act, which transferred the federal government's monetary responsibility to this private entity. This move officially stripped the federal government of its constitutional power to control the national currency.

The Controversial Actions of FDR

FDR's executive order in 1933 required citizens to turn over their gold and silver to the government. In exchange, gold was set at 35 dollars per ounce, effectively turning the confiscated gold into an instant profit for the federal government. This action was motivated by the need to address the debt owed to the Federal Reserve and place the federal government in a favorable position with the Reserve as the receiver.

The Constitutional Validity of FDR's Order

Given the constitutional analysis above, the gold confiscation appears to be unconstitutional. The subsequent issuance of Federal Reserve Notes does not meet the criteria for just compensation, and the use of the term 'A Legal Tender' versus 'Legal Tender' further complicates the legal status of these instruments.

The broader implications of FDR's actions include questioning the legitimacy of the 14th Amendment and the overreach of federal power. The 14th Amendment, which was the subject of much debate during its ratification, has been used to justify the ever-expanding power of the federal government over individual states and citizens.

Conclusion: Libertarian and Constitutional Analysis

The controversy surrounding FDR's gold confiscation highlights the importance of constitutional law and the role of private banks in the U.S. economic system. As the nation continues to grapple with economic and legal issues, such examples serve as a stark reminder of the complexities and challenges in interpreting and applying constitutional principles.