Alex Pollock: Confiscation of gold by the federal government -- a lesson


By Alex Pollock
Real Clear Markets, Washington
Thursday, January 25, 2018

Historically as well as now, people in America tried to protect themselves against the government's devaluation of their dollars by holding gold; and formerly, by buying Treasury bonds which promised to pay in gold. The fundamental thought was and is the same that many holders of Bitcoin and other "cryptocurrencies" have now: Hold something that the government cannot devalue the way it can its official currency.

Unfortunately for such an otherwise logical strategy, governments, even democratic governments, when pushing comes to shoving, may use force to control and even take away what you thought you had.

The year 1933 and the new Franklin Roosevelt presidency provide vividly memorable, though little remembered, examples.

First the U.S. Treasury defaulted on its promises to pay gold bonds in gold; then under notable executive orders, the U.S. government confiscated the gold of American citizens and threatened them with prison if they didn't turn it in. It moreover prohibited the future holding of any gold by Americans, an outrageous prohibition which lasted four decades, until 1974.

All this may seem unimaginable to many people today, perhaps including Bitcoin enthusiasts, but in fact happened. Said Roosevelt in explanation, "The issuance and control of the medium of exchange which we call 'money' is a high prerogative of government." ...

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