The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury.
The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35.
A year earlier, in 1933, Executive Order 6102 had made it a criminal offense for U.S. citizens to own or trade gold anywhere in the world, with exceptions for some jewelry and collector's coins. These prohibitions were relaxed starting in 1964 – gold certificates were again allowed for private investors on April 24, 1964, although the obligation to pay the certificate holder on demand in gold specie would not be honored. By 1975 Americans could again freely own and trade gold.
The Gold Reserve Act authorized the Exchange Stabilization Fund to use such assets as were not needed for exchange market stabilization to deal in government securities.
The Gold Reserve Act had economic ramifications far beyond national finance. At that time many contracts stipulated that their monetary terms could be demanded in gold. Such gold clauses were intended to protect against the United States devaluing the dollar. When the Emergency Banking Act of 1933 and the Gold Reserve Act of 1934 outlawed the use of gold such contracts became sources of controversy. In the gold clause case Norman vs. Baltimore & Ohio Railroad Co., 294 U.S. 240 (1935), the U.S. Supreme Court ruled that gold clauses were invalid. However, Congress later reinstated the option to use gold clauses for obligations (new contracts) issued after October 1977 in accordance with 31 U.S.C. § 5118(d)(2).
The 2008 decision 216 Jamaica Avenue, LLC vs S&R Playhouse Realty Co. established that a gold clause in contracts signed before 1933 was only suspended not erased, and under certain limited circumstances might be reactivated.
Famous quotes containing the words gold, reserve and/or act:
“After reading Howitt’s account of the Australian gold-diggings one evening,... I asked myself why I might not be washing some gold daily, though it were only the finest particles,—why I might not sink a shaft down to the gold within me, and work that mine.... At any rate, I might pursue some path, however solitary and narrow and crooked, in which I could walk with love and reverence.”
—Henry David Thoreau (1817–1862)
“Mutual repect implies discretion and reserve even in love itself; it means preserving as much liberty as possible to those whose life we share. We must distrust our instinct of intervention, for the desire to make one’s own will prevail is often disguised under the mask of solicitude.”
—Henri-Frédéric Amiel (1821–1881)
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—Michel de Certeau (1925–1986)