A Brief History of US Money In 1913 the Federal Reserve replaced the national bank system, and Federal Reserve notes were issued with a promise to redeem them in gold on demand. Then, in the year 1933, the United States abandoned the gold standard. These were the circumstances: On April 5, 1933, one month after his inauguration, President Franklin D. Roosevelt declared a national emergency and ordered all gold coins, gold bullion, and gold certificates to be turned in to the Federal Reserve banks by May 1. This order applied only to those residing in the United States. It did not apply to foreigners living abroad. Within the United States, only those who had special gold collections or needed the gold for industrial or professional use were allowed to retain quantities of the yellow metal. As gold coins, gold bullion, or gold certificates were turned in, the American people received Federal Reserve notes redeemable in silver. On May 22, 1933, Congress enacted a law (48 Stat. 31) declaring all coin and currencies then in circulation to be legal tender, dollar for dollar, as if they were gold. It also empowered the President to reduce the gold content of the dollar up to 50 percent. On June 5, 1933, Congress enacted a joint resolution (48 Stat. 112) that all gold clauses in contracts were outlawed and no one could legally demand gold in payment for any obligation due him. On January 30, 1934, the Gold Reserve Act was passed, giving the Federal Reserve title to all the gold which had been collected. This act also changed the price of gold from $20.67 per ounce to $35 per ounce, which meant that all of the silver certificates the people had recently received for their gold now lost 40 percent of their value. The next day the President proclaimed (48 Stat. 1730) that the dollar was to be fixed at 15 and 5/21 grains of standard gold and was to be maintained at this level “in perpetuity.” This is still the definition of the “dollar” in the United States code. Russia and the central banks of Europe began buying up gold in huge quantities. Thus there came into being a dual monetary system: a gold standard for foreigners and Federal Reserve notes (redeemable in silver) for Americans. From 1914 to 1973, American currency went through the following erosion: From 1914 to 1933, every Federal Reserve note was redeemable in gold and silver. Between 1933 and 1963, all Federal Reserve notes promised to pay (or be redeemed) in “lawful money,” which meant silver. Then the wording on the Federal Reserve notes began to be changed to somewhat obscure language, which should have given Americans a warning that the government was planning something. In 1965 President Lyndon Johnson authorized the treasury to begin issuing debased “sandwich” dimes and quarters with little or no intrinsic value, and the quantity of silver in fifty-cent pieces was reduced to 40 percent. On June 24, 1968, President Johnson issued a proclamation that henceforth Federal Reserve silver certificates were merely fiat legal tender and could not be redeemed in silver. On December 31, 1970, President Richard Nixon authorized the treasury to issue debased “sandwich” dollars and half dollars. By August 1971, many of the European countries had collected so many billions in Eurodollars (foreign aid, money spent by the U.S. military abroad, etc.) that European banks had begun to get nervous about redeeming their money in gold. A threatened run on the U.S. Treasury resulted in the American gold window being slammed shut. This resulted in collapse of the dollar on the world market. Since then it has fluctuated on the world market like any other commodity, since it is no longer redeemable in precious metal and therefore has no intrinsic value. In 1973, the U.S. dollar was officially devalued, changing the price of gold from $35 per ounce to $42.23 per ounce. On March 16, 1973, Congress set the American dollar completely afloat with nothing to back it up but the declaration of the government that it was “legal tender,” or fiat currency. The world market immediately reflected serious erosion in the value of the American dollar. To buy an ounce of the gold it took not $42.23 but $100, then $200. After that, it moved higher and higher until it required $800 to buy an ounce of gold. Gradually some confidence was restored in the dollar as the symbol of the American economy, and so it settled back down to a plateau of approximately $300 plus. Today, the American economy operates under a monetary system which is completely outside the Constitution. Its fiat money is continually manipulated both in value and quantity.
Visibility: 2037
Duration: 9m 20s
Rating: 15