What is the Law on the gold reserve, 1934′
The law on the gold reserve in 1934-an act that took away title to all gold and gold certificates that were held at the Federal Reserve Bank. The law on the gold reserve in 1934 made the trade and possession of gold a criminal offense for U.S. citizens. Only the title of this gold was given to the U.S. Treasury. It was not until 1975 that Americans could again own or trade gold.
Breaking down the ‘Law on the gold reserve, 1934’
The law on the gold reserve of 1934 gave the government a huge amount of unconstitutional powers. This allowed him to bind the value of the dollar to the value of gold, but it is able to adjust it on the go, which eventually led to a rapid devaluation of the dollar. During these years, was a simultaneous effect from other countries are rushing to buy large amount of gold and the US dollar is still a strong currency.
The act also fixed the weight of the dollar at 15.715 grains of nine-tenths pure gold. This changed the nominal price of gold from $20.67 per Troy ounce to $ 35. By doing this, the Treasury saw the value of their gold reserves increase of 2.81 billion dollars. Making sure that the possession or trading of gold was a criminal offense, the government failed to check the law and make it more easily enforced throughout the country.
The legislation of Roosevelt and consequences
The law on the gold reserve in 1934 was one of the two important laws that affect the monetary system throughout the United States. This law gave the Executive power to take all the gold that was in private ownership directly to the U.S. Treasury, along with added manipulation as currencies and commodities. It also took all the gold from the Federal government in reserves, instead of having to replace the Gold certificates. These certificates do not represent the value of gold, but more in order to allow traced the trail back to capture the gold.
The nationalization of gold was illegal as it went against the laws established by the Constitution. The government was allowed to cross the line, and at the same time, violation of the rights of ownership and set a slippery precedent for the solution of these problems in the future. The law at that time did not succeed in achieving its goal, which was to raise GDP in the US for currency manipulation. This law does not stand the test of time, as various pieces of legislation that got rid of him over the next 40 years.