Gold Reserve Act 48 Stat. 337 (1934)

views updated

GOLD RESERVE ACT 48 Stat. 337 (1934)

Following the Gold Content Rider of mid-1933, the government sought to stabilize the gold value of the dollar in an effort to raise prices. Congress, fulfilling a request from President franklin d. roosevelt, passed the Gold Reserve Act on January 30, 1934, under its monetary power and extended broad authority to establish a sound currency system. The act called in all gold and gold certificates in circulation, with specified exceptions, and granted the Treasury title to all monetary gold. The act also established an Exchange Stabilization Fund with which the secretary of the treasury was empowered to deal in gold in international markets to preserve a favorable balance of exchange and support the dollar. Congress also granted the President authority to regulate the gold content of the dollar. Further sections dealt with silver coinage and retroactively approved actions taken under authority of the emergency bank act.

On January 31, Roosevelt reduced the gold content of the dollar to just under sixty percent of its former value. By mid-year the absence of circulating gold necessitated a congressional joint resolution abrogating clauses in private contracts and government bonds that called for payment in gold; the Supreme Court sustained this action in the gold clause cases (1935).

David Gordon