J. P. Morgan once said, “Gold is money. Everything else is credit.” For over a century, The United States was proud to sling gold wherever they went. In a move that would make Scrooge McDuck cry, gold would be removed for good.
Nothing great about this
While everyone enjoyed using gold, World War I drastically changed things. During this time period, countries switched from using gold to using paper money. As expected, people weren’t fond of having crumpled pieces of paper in their pockets. In 1928, the gold standard returned, and all was right with the world again. Unfortunately, a fall in stock led to the Great Depression in the U.S. a year later. Some people, including historian Barry Eichengreen, pointed the finger at the gold standard for this disaster. “Far from being synonymous with stability, the gold standard itself was the principal threat to financial stability and economic prosperity between the wars,” Eichengreen wrote in his 1992 book Golden Fetters.
Springing into action
On March 4, 1933, Franklin D. Roosevelt took office as the new President. After watching Britain discard the gold standard in 1931, the New York native knew he had to follow suit. After forbidding banks from accepting gold, he forced them to trade in their gold supply. For $20.67 per ounce, banks were getting a decent amount for their collection. In mid-May 1933, the government already acquired $770 million in gold from national banks.
It’s officially over
On June 5, 1933, the United States was officially off the gold standard. To entice those hoarding gold, Roosevelt increased the gold price to $35 per ounce. The following year, Roosevelt signed the Gold Reserve Act, which prohibited private ownership of gold. All of the gold collected from banks were transferred to Fort Knox in 1937. While it was off the market, that didn’t stop folks from saving gold as an heirloom. They just hoped their great-grandchildren didn’t sell them to pay off their student debt.