US President Franklin Delano Roosevelt (FDR) took office on March 4, 1933. On March 9, he rushed through the Emergency Banking Act. It gave the president the power to regulate ownership of bullion. On April 5, he signed Executive Order 6102, which made a crime for an individual, partnership, association or corporation to possess gold. The law exempted “customary use” such as gold filling for teeth, and rare coins in collections. All other gold was the government’s, and owners had to deliver it by May 1, when they would be paid the official government price of $20.67 per ounce.
As private gold shifted to the government, the public coffers swelled. In 1930, the United States had about 7,000 tons of gold. In 1935, the stock reached almost 10,000 tons. Not all of this increase came from private gold. As Europeans grew fearful of approaching war, some shifted wealth to the safe haven of the United States. This increased the bullion flow into the Treasury. When war broke out in 1939, the United States became an important supplier or arms and other goods to combatants. Gold imports soared. In 1940, the Treasury had 21,000 tons of gold, and the cost of an ounce of gold had climbed from $20.67 to $35.
As soon as Roosevelt had issued the gold confiscation order, he obtained the authority to reduce the amount of gold a dollar represented by as much as 60%. It would take more dollars to buy an ounce of gold, but more dollars were printed, and Roosevelt wanted more currency in circulation to stimulate the economy out of the Depression.
Source: GOLD by Matthew Hart, author of DIAMOND