first majestic silver

Gold Confiscation and The Emergency Banking Bill of l933

February 25, 2002

The Emergency Banking Bill of March 9, l933, was implemented by an Executive Order used by President Roosevelt in order to call in the domestic gold. That Roosevelt Executive Order was repealed by an Executive Order by President Gerald Ford so that Americans could purchase gold, as Congress had restored Americans' right to own gold. Also, there have been other legal changes impacting The Emergency Banking Bill of l933. So, the wording of The Emergency Banking Bill presented here is AS ENACTED; and, NOT to be assumed to be the law of the land today. Still, there is considerable historical understanding and educational value to be gained by viewing the Bill, as enacted during a financial crisis.

That goal of historical understanding and educational study will be accomplished by a sequence of steps. The first step will set the historical stage. The second step will present some of the more important direct quotes from The Emergency Banking Bill of l933, as enacted. The next three parts will be weekly chronologies that will present direct quotes from articles in the weekly issues of Barron's dated: March l3, l933, March 20, l933 and March 27, l933. These three weekly glimpses of financial press coverage will educate us as to the circumstances, events and attitudes during that fateful time. The next to last step will focus on two apparently paradoxical sets of circumstances. In the final part , I will present some of my summary thoughts from my study of the entire contents of the Bill and its contemporary financial press coverage in Barron's.


Much focus and attention is placed on the gold confiscation authority of the Bill. However, it was primarily a banking bill that occurred in the midst of a full-blown banking crisis that had shut down the banks and the financial markets. The even larger context is that it was part of an evolving deflation crisis, that progressed through a series of financial 'panics' or 'flights'. "The Trader", a regular columnist in Barron's, described that progression of panics. ".....It has been aptly observed that the stages of deflation since l929 have been the flight from property (chiefly securities) into bank deposits; next a flight from bank deposits into currency; and, finally a flight from currency into gold." (Barron's, March l3, l933, Page 2) The crisis was anticipated. "Since early December, Washington had known that a major banking and financial crisis was probably inevitable. It was merely a question of where the first break would come and the manner of its coming." (Barron's, March 27, l933, Page 18.)

The day prior to President Franklin Roosevelt's inaugural address, the crisis had exploded, and the banks and the markets were closed nationwide in that long anticipated major financial crisis. Now, in 2002, we are again in the same position. Washington knows that a major, nation-wide financial crisis looms in front of us; and, is inevitable. Now, like l933, Washington does not know when the crisis will break, nor what manner the crisis shall take.



To provide relief in the existing national emergency in banking and for other purposes. .....the Congress hereby declares that a serious emergency exists and that it is imperatively necessary speedily to put into effect remedies of uniform national application."


.....Sec. 2. (b) During time of war or during any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise, investigate, regulate, or prohibit, under such rules and regulations as he may prescribe.....any transaction in foreign exchange, transfers of credit between or by banking institutions as defined by the President, and export, hoarding, or earmarking of gold or silver coin or bullion or currency.... Whoever willfully violates any of the provisions of this subdivision or of any license, order, rule or regulation issued thereunder, shall upon conviction, be fined not more than ten thousand dollars, or, if a natural person, may be imprisoned for not more than ten years, or both; ....."

"Sec. 3. Section ll of the Federal Reserve Act is amended by adding.....whenever in the judgment of the Secretary of the Treasury, such action is necessary to protect the currency system of the United States, the Secretary of the Treasury, in his discretion, may require any and all individuals, partnerships, associations and corporations to pay and deliver to the Treasurer of the United States any or all gold coin, gold bullion and gold certificates......"

"Sec. 4. member bank of the Federal Reserve system shall transact any banking business except to such extent and subject to such regulations, limitations and restrictions as may be prescribed by the Secretary of the Treasury with the approval of the President.".....


"Sec. 201. This title may be cited as the 'bank conservation act'..... "

"Sec. 203. Whenever he shall deem it necessary in order to conserve the assets of any bank.....the Controller of the Currency may appoint a conservator for such bank..... The conservator.....shall take possession of the books, records and assets of every description of such bank....." (The conservators took control of banks and either operated them; or, liquidated them.)


"Sec. 401......Upon the deposit with the Treasurer of the United States (a) of any direct obligations of the United States or (b) of any notes, drafts, bill of exchange or bankers' acceptances acquired under the Provisions of this act, any Federal Reserve Bank making such deposit in the manner prescribed by the Secretary of the Treasury shall be entitled to receive from the Controller of the Currency circulating notes in blank, duly registered and counter-signed. When such circulating notes are issued against the security obligations of the United States, the amount of such circulating notes shall be equal to the face value of the direct obligations of the united States so deposited as security;......"

"Such notes shall be the obligations of the Federal Reserve Bank procuring the same, shall be in form prescribed by the Secretary of the Treasury, shall be receivable at par in all parts of the United States for the same purposes as are national bank notes, and shall be redeemable in lawful money of the United States on presentation at the United States Treasury or at the bank of issue."

(For students of debt, this Sec. 401 of The Emergency Banking Bill of l933 is a keystone in the transition of the United States from economic capitalism to economic debtism. Sec. 401 completes the shift from monetary capitalism to monetary debtism. In Step One: Money is circulating gold and silver coin. Money is an asset. Money is 100% capital. In Step Two: 'Money' is paper gold certificates and paper silver certificates. 'Money' is then a paper debt backed by/and redeemable for, an asset- money- i.e. gold or silver coin. 'Money' is then a mixture of debt and capital. In Step Three: 'Money' is a paper debt backed by a paper debt, backed by 'faith'. 'Money' is now 100% debt. Under Sec. 40l is created "circulating notes" backed by "direct obligations of the United States", as U.S. bonds, or "any notes, drafts, bills of exchange or bankers' acceptances......." The progression from monetary capitalism to monetary debtism is simple: Money is: l) an asset, then, 2) a paper debt backed by a redeemable asset , and 3) a paper debt backed by a paper debt. In monetary technological debtism there is a Step Four: 'Money' is a computer entry debt - the aftermath of a tiny electrical impulse in the 'mind' of a network of mindless machines.)


I always prefer to read what was written at the time that something happened. It is the most accurate way to educate oneself about what really happened some seventy years ago. So, for educational purposes, here are a number of printed quotes from March, l933, that taken collectively, improve our historical understanding.

"The mad scramble for coin of the realm brought miscarriage to many plans." ( Page l0)

".....Hardly had President Roosevelt finished the recital of his oath of office and his inaugural speech when it became necessary to take command of the ship in the middle of a violent storm. Sudden development of the acute banking crisis on the day preceding his inauguration followed the precedent of all crises with which we have had to deal with in the past three years. Each and every one of them has come with appalling rapidity and has caught everyone napping."..... ......"What was that trouble? It was a general wave of distrust on the part of the public respecting the solvency of the banks." (From WITH THE EDITOR column, Page l2) (Thousands of banks had closed in the preceding three years.)

"After the first drastic order forbidding access to safety-deposit vaults, it was decided to relax that condition so that hoarders could bring their currency and gold back into circulation." ( Page 9) ....."The President then extended the banking bank-holiday period indefinitely." (Page 9)

"It was made illegal to deal in foreign exchanges, and consequently no quotations were available of any sort." (Page 23)

".....the wind-up of deflation and liquidation represented by the pell-mell flight of the Americans themselves from the dollar is in the words of the bear crowd, 'a natural.'. That is to say, more complete chaos short of a break-down of government could hardly have been precipitated......" (From "The Trader", Page 2)

More from "The Trader". "Well informed Washington authorities feel that some inflation, however temporary or mild, is inevitable from the banking bill, which permits almost unlimited issuance of currency upon existing securities."

"It is also quite certain that great as are our present troubles, recourse to inflation is only a leap from the frying-pan into the fire." (From an editorial by Thomas F. Woodlock, Page 11 )

"A collateral development of the new emergency banking bill is the extraordinary power given the President over 'hoarding'. Already through the threat of publicity and the fear of fines gold is trickling back to the banks." (From "The Trader", Page 2)

"Of course, Wall Street and banking in general are in a state of revolution." ........ "The banking crisis represented a domestic money panic pure and simple." (From "The Trader", Page 2)

"The new law provides for a controlled-currency issue through the Federal Reserve System, non-redeemable in gold,.....expanding the facilities of the Federal Reserve System.....Under this virtual dictatorship it is planned to build an improved banking system,....." ....."Acting under the Trading with the Enemy Act of l9l7, which was invoked in the bank-holiday proclamation, President Roosevelt effected a complete embargo on gold, ....." ( Page 9)

"The banking holiday in effect for the past week or more on a nation-wide scale has resulted in the introduction of many and varied forms of media of exchange. Probably the most common form, .....has been the age-old I.O.U.'s" (Page l6)

"Salt Lake City's 'fare' problem was more or less solved on the local street railway. Two pairs of silk hose, two tubes of toothpaste, a man's hat, and a pair of trousers were accepted from passengers who lack cash." (Page 10)


"Now that the United States has temporarily suspended gold payments, the....." ( Page l)

"Current interest in 'inflation' is universal. The moment issue of Federal Reserve Bank notes was announced, together with the restriction upon the hoarding and export of gold, the prevailing comment was, 'Now we're off the gold standard!'"......Federal Reserve Bank notes are redeemable in 'lawful money.' So long as they will buy as much as other forms of that 'lawful money'---e.g., Federal Reserve notes---we have no 'inflation' in our currency." ( Page 12)

"After being closed for nine days, the Stock Exchanges opened on Wednesday morning with a back-log of buying orders which swamped Wall Street, resulting in sensational gains in bonds and stocks. .......Bankers and economists are not concerned over possible 'inflationary' aspects of the new currency." ( Page l7)


Thursday night, March 2, l933. "After midnight, the Treasury conference broke up and the men who had been there went away with faces gray and lined.

"The crowds that had been milling about the lobby of the Mayflower Hotel had thinned out. Senators and others who had been with the President passed through them. They, too, were worried men.

"'They'll run 'em tomorrow,' said a Middle Western banker as he heard the news of no action.

"And 'run 'em' they did. State after state declared a banking holiday. In the morning some of the strongest banks had declared a firm intention of remaining open for all withdrawals. By noon many of these had said that they had enough and sought general shutdown." (Page l8)

"As a matter of fact, the plan, which finally was adopted, of opening the sound banks, isolating the weaker ones, and restoring confidence by a plentiful supply of money germinated before the President's proclamation was issued. But at that time it was one of a number of plans and it was in the rough only." (Page l8)

"But as soon as the discussions approached bed-rock, it became clear that the fundamental trouble was neither lack of currency nor the lack of ample machinery for issuing more currency. It was the lack of confidence in the entire credit structure." (Page 18)

"As long as currency was foremost in the discussions, the fear of a possible runaway in inflation was present. When currency assumed its proper proportions, it became immediately clear that the closing of hundreds of banks was highly deflationary, or, to put it more accurately, a recognition of a tremendous deflation which already had taken place." (Page l8) ( I personally see that "recognition of a tremendous deflation which already has taken place", by closings of unsound domestic financial institutions and domestic businesses, as a process that we are just now embarking upon. When that domestic internal deflation is made fully apparent by bankruptcies, repudiations, closings, and debt defaults; the deflation 'genie' will be out of the accounting bottle for all to see.)

"... These reparation payments linked with the volume of other intergovernmental indebtednesses bring the total to the staggering figure of---$52,741,500,000---according to Leo Pasvolsky's recent calculation---of payments which must cross the frontiers of 28 nations for the next 55 or 56 years down to l987 and l988. (Page 5)

"This total represents approximately two and one-half times the amount of gold produced throughout the world between l492 and l930, or nearly five times the amount of the present monetary gold stock of the world." (Page 5, from a feature article: "THE DEBT PROBLEM MUST BE SOLVED") (Then, $20.67 would purchase one ounce of gold. It is apparent that in l933, like today in 2002, massive international debts that are not repayable were an unsolvable problem except by massive defaults and the corresponding collapse in purchasing power that contributed to more years of severe economic depression.)

"By Wednesday, the Dow-Jones industrial average had reacted to 56.86 from the post-bank-holiday top of 62.95 and closed the week at 57.71." (Page 2)


In my opinion, it is historically apparent that crisis was used in order to effect a revolution, that literally overthrew many safeguards and freedoms within our United States Constitution. Also, in my opinion there was a striking contrast in the content of the March l3th and March 20th, l933 Barron's. Major inflation concerns expressed in the March l3th issue suddenly became strong assurances that there would be little or no inflation problem, in the March 20th issue. The words "revolution" and "dictatorship" were used in the March l3th issue and not observed by me in the March 20th issue. This abrupt silence of dissenting opinions is a paradox that gnaws at my gut.

Another contrast also troubles me. The Bill itself, endeavored to put fear into gold hoarders. Dentists worried that teeth might go off the gold-standard. Jewelers were in a quandary, and for an unspecified time, they were apparently unable to get gold for their manufacture of jewelry. And, of course, the strong gold embargo meant that no gold was to leave the country. Yet, in the March l3, l933 issue of Barron's we have the following on Page l0.

"Space had been engaged on the French liner Parison Saturday, March 4, for shipment of $9,000,000 of gold out of the country. New York's Governor Lehman, with the pronouncement of his banking moratorium at 4 a. m. that day, however caught the movement in process and stopped $6,000,000. Shipments aggregating $3,000,000 had been loaded earlier in the night and stevedores were awaiting the remaining $6,000,000 when informed that the shipper could not get possession of it due to the moratorium. The space was canceled and the gangplank drawn.

"The French Line admitted that shippers of the precious metal had asked their names withheld from public gaze, officials of the freight department declaring that all the shippers were banks, except one, apparently an individual, who had $100,000 on gold aboard. .... Federal Reserve Bank officials declined to identify the shippers.

"Arrangements for further shipments of even greater quantities were said to be under way when Governor Lehman's edict halted the outflow of the metal and when President Roosevelt later outlawed the traffic......................

"While taxation and publicity were threatened as measures to bring back hoarded gold, bankers and Reserve officials refused to divulge names of principal holders of gold, but it was said that among men who have sequestered large quantities---in some cases several million dollars---are figures of considerable prominence." Barron's, March l3, l933, Page l0. This paradox goes to the heart of our United States Constitution. It belies the constitutional notions that all men are equal before the law; and, it belies that justice is blind. As Orwell would say: 'All sheeple are equal; but, bankers and other shepherds are more equal.'

Of course, in the March 20th issue I saw no text on bankers and wealthy, prominent people smuggling millions of dollars of gold out of the country, while mom and pop were supposed to turn in their gold coins. In my humble opinion, the revolution begot by The Emergency Banking Bill of l933 was: Government of the bankers, by the bankers, for the bankers. It is ironic that bankers created the crisis that empowered their coup d' etat.


If you own investment silver; or, the stocks of silver miners, I am sure that you caught the wording in TITLE I., Sec. 2. (b): ...."of gold or silver coin or bullion or currency....." Even though it was not implemented, the Emergency Banking Bill of l933 authorized the confiscation of silver coin or silver bullion, at the whim and will of the President of the United States.

In TITLE 1., contemplate the wording: ".....whenever.....such action is necessary to protect the currency system of the United States....."

Now, many current actions make more sense. For instance, WB taking his silver out of the country (prior to the possibility of embargo, and taxation, or confiscation). In order to slow down the deflationary progression, the Fed has to support the securities markets (at least the Dow) in order to slow the flight from securities to bank deposits, to cash, to gold. I understand that, due to Congressional modification, that the President now only has the emergency powers of this bill during a time of war. Is there not talk that our President intends to fight one terrorist nation after another in sequence? Would not that leave us always at war so that the financial meltdown can be met with instant, essentially unlimited, dictatorial, monetary and financial markets powers; WHENEVER the meltdown occurs?

I walk away with several primary thoughts. First, the deflation and liquidation progression is from stocks, to bank deposits, to currency, to gold; and, from bank deposits to currency to gold can happen with lightening speed. Secondly, I see the free speech of dissent in the financial press vanish between March l3th, l933 and March 20th, l933. So, I have to wonder, do we gold and silver investors greatly underestimate the combat skills and powers of our fiat bankers? Third, two of the major crisis causing problems of l933 are the very same problems of today, 2002: Massive unrepayable domestic business and financial institutional debts; and, massive unrepayable international debts. Only today, thanks to computers and the internet technology, the unrepayable debts are exponentially larger. That means that the debt liquidations by defaults and repudiations will be exponentially larger. Thus, the collapse of purchasing power now unfolding will be exponentially larger than the collapse of purchasing power in the l930s.


The "practices of the unscrupulous money-changers stand indicted in the court of public opinion. .....There must be a strict supervision of all banking and credits and investments; ....There must be an end to speculation with other people's money; .... There must be provisions for an adequate but sound currency.......We must act and act quickly..." Does that sound like an excellent call for action for today, 2002? It is from the March 4, l933 Inaugural Address of President Franklin D. Roosevelt. (Barron's, March l3, l933, Page 9) But, look what it begot: A l933 distressed Dow Jones Industrial Average of 56.86 is now a 2002 distressed Dow Jones Industrial Average of 10,000.00.

DISCLAIMER: This article is provided for educational purposes only. The direct historical contents are provided in order that we may historically educate ourselves with greater accuracy. The article is provided for intellectual stimulation only. The contents are not intended as investment advice; nor, as advising any investment behavior. I am not trying to sell you the reader anything. I do encourage everyone to develop their own thoughts, deeply and passionately, for we live in very troubled times. I do learn from, appreciate, enjoy, and thank you for your email feedback. I respond randomly to as many individual email authors as possible. I deeply regret that I find myself unable to answer each and every email author individually. I sincerely apologize to many of you who have sent me outstanding detailed emails that I have been unable to individually answer. However, I will do my best to respond collectively to many of the outstanding suggestions and questions raised in your emails. So please, keep the emails coming.

Frank Smith, aka "Atocha"

[email protected]

February 25, 2002

In 1933 President Franklin Roosevelt signed Executive Order 6102 which outlawed U.S. citizens from hoarding gold.
Gold IRA eBook

Gold Eagle twitter                Like Gold Eagle on Facebook