Fiat Money and the Gold Standard

...

that contained both private and public entities. There were to be at least eight, and no

more than 12, private regional Federal reserve banks (12 were established) each with its

own branches, board of directors and district boundaries and the System was to be headed

by a seven member Federal Reserve Board made up of public officials appointed by the

President and confirmed by the Senate (strengthened and renamed in 1935 as the Board

of Governors of the Federal Reserve System with the Secretary of the Treasury and the

Comptroller of the Currency dropped from the Board). Also created as part of the Federal

Reserve System was a 12 member Federal Advisory Committee and a single new United

States currency, the Federal Reserve Note.” (Clarity, The Act Of 1913 Citation 3)

Controversy erupted and criticism about the Federal Reserve Act and the establishment of the

Federal Reserve System arose and speculation of its intimate failure. It was an idea that some

people did not like and had been something that most advocates for the removal of the Federal

Reserve Board have been attached to. One of their reasons was the fact that it was not part of the

US government but an “Offshore Printing press” that would be able to give money to the US that

it necessarily did not have. Even if it was against the Constitution that the government could not

print money, they could bypass it by using the Reserve Board. Since the Act of 1913 was passed,

it ensured that no matter if the US government was broke, they could still print money using the

One of the biggest events that increased the interest of the Federal Reserve System was the

“Great Depression”. It crushed the hope of Americans and called for an excuse for the US

government to print money. As WW2 became intimate for the US to enter, more of the staff of

the president agreed that it was time to keep the currency. For this reason and this reason alone

switched the mood of the US government’s plans for our money. After WW2, plans for the

rebuilding of all nations involved started to develop. One delegate, Bretton Woods, had a plan

that seemed like a wonderful idea at its time. His entire bases was the idea to make a “paper

dollar” that was contingent to the overall trade market. It was devised to make the new US dollar

the face of trading money. This would relieve the great depression and put the US on a road to a

speedy recovery. One flaw was that there was no actual value to the money. It was “Currency

that a government has declared to be legal tender, despite the fact that it has no intrinsic value

and is not backed by reserves(Investopia-Citation 4)

This idea lead to major controversy after the Executive Order 6102 was several years ago.

Executive Order 6102 was “Forbidding the Hoarding of Gold Coin, Gold Bullion and

Gold Certificates By virtue of the authority vested in me by Section 5(b) of the Act of October 6,

1917, as amended by Section 2 of the Act of March 9, 1933, entitled” Section 2 states “All

persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a

branch or agency thereof or to any member bank of the Federal Reserve System all gold coin,

gold bullion, and gold certificates now owned by them or coming into their ownership on or

before April 28, 1933” This section summed up means that all gold held by any person must be

sent in to a Federal Reserve bank or any branch member of the Federal Reserve. The only

“(a) Such amount of gold as may be required for legitimate and customary use in

industry, profession or art within a reasonable time, including gold prior to refining and

stocks of gold in reasonable amounts for the usual trade requirements of owners mining

(b) Gold coin and gold certificates in an amount not exceeding in the aggregate $100.00

belonging to any one person; and gold coins having recognized special value to collectors

(c) Gold coin and bullion earmarked or held in trust for a recognized foreign government

or foreign central bank or the Bank for International Settlements.

(d) Gold coin and bullion licensed for the other proper transactions (not involving

hoarding) including gold coin and gold bullion imported for the re-export or held pending

action on applications for export license.”

These were the only exceptions to this order which weren’t many and it limited the amount of

squeezing room people had. This Order was used to take away all the gold of everyone and made

it a criminal act to have gold other than the reasons given in the order. This caused major

speculation