While people around the world may be appalled at the actions of the Cyprus government to close their banks and confiscate a portion of certain accounts, many in America claim it “will not happen here.” Perhaps they are correct for at least the immediate future, but far worse was done to Americans in 1933 and it could happen again.
On April 5, 1933, approximately one month after first taking office, Franklin D. Roosevelt commanded, via Executive Order No. 6102, “All persons are hereby required to deliver on or before May 1, 1933, to a Federal reserve bank … all gold coin, gold bullion and gold certificates now owned by them or coming into their ownership on or before April 28, 1933[.]”
By his executive order Roosevelt deprived Americans of their property “without due process of law” under the Fifth Amendment. To add injury to insult, he also ordered up to a $10,000 fine or ten years in prison or both for anyone who willfully violated any provision of his executive order.
America was deep into a financial crisis of its own at the time, known as the Great Depression, and his executive order was his chosen method for resolving it. The problem Roosevelt faced was a near total collapse of America’s banking system caused by the over expansion of credit from fractional-reserve banks.
Fractional-reserve banks operate by loaning far more “money”, in the form of credit, than they possess. The system works well as long as “money” continues to pass through society and not stay in the possession of any one person for very long. Problems ensue when deposit holders lose confidence in their bank and near simultaneously withdraw their deposits.
Fractional-reserve banking has historically been unstable and the cause of many financial crisis throughout its history around the globe. The Dutch Tulip manias (1634-1637) and the British South Sea Bubble (1717-1719) are two examples of credit expansion “bubbles” caused by fractional-reserve banks prior to America’s founding . In the United States, besides the Great Depression, the panics of 1819, 1837, 1873, and 1907 were fractional-reserve bank induced credit “bubbles” that caused great economic distress for Americans.
In spite of this track record, the US Congress, in 1913, consolidated the fractional-reserve system at the national level in the Federal Reserve Banks. The result of this action was instead of having regional bank failures in which solvent banks could assist in the recovery, the US had a national bank crisis in which every bank in the nation was embroiled and nearly every citizen adversely affected.
In 1933, US paper currency, the Federal Reserve Note (FRN), was backed by gold, which required by law all banks to provide gold on demand to their depositors in exchange for FRNs. Since banks did not hold enough gold to meet the demands of the depositors who had lost confidence in the banks, the banks would have to liquidate their business to pay back the gold they owed.
By making it illegal for American citizens to own gold after May 1, 1933, Roosevelt gave the banks a “legal” recourse to default on their contractual agreements. Roosevelt saved the banks by confiscating the gold from American citizens and having Fort Knox built, at tax payer expense, to store the gold he stole. His decree, in effect, made the normal, unavoidable uses of money a justification for “the seizure of that money from its rightful owners, in order supposedly to “protect the currency system” of the people based on” the money he was confiscating.
Roosevelt used the term “hoarding” to describe the actions of people who lost confidence in their banks and withdrew the gold they had deposited in them. “What Roosevelt actually had in mind, but did not dare say in so many words, was that as a practical matter “hoarding” meant “withdraw[ing] and withholding” gold from the banks – and that therefore WE THE PEOPLE’S gold could be confiscated in the bank’s interests. The gold was to be used as captive reserves on which the banks could pyramid their paper currency and deposits. WE THE PEOLPLE’S cash balances were to be cannibalized in order to perpetuate the very fractional-reserve system that had caused the banks to collapse in the first place!”
If any of this sounds vaguely familiar, it is because similar actions were taken in the 2008-2009 bank bailouts in the United States. The only difference is that instead of gold confiscated from American citizens, the national government confiscated future earnings via liabilities placed against future tax revenue to bail out the banks.
In a monetary system not based on gold and silver, as the United States is currently, the national government has more options on how to confiscate the earnings of its citizens. The 2008-2009 bank bailouts were such a scheme. The majority of the “money” used to bail out the banks was borrowed from other countries. American tax payers will have to bear the burden of this borrowed “money” for generations to come, while the bankers whose mismanagement caused the problems gave themselves bonuses from the bailouts they received.
The national government also used a similar line of reasoning as Roosevelt used for his actions to unconstitutionally justify their conduct in that “the banks were too big to fail”. To the uninformed or those of a weak moral constitution this may sound like a good reason and an equitable solution, but it is certainly not equitable to those whose gold was taken “without due process of law” or those whose future earnings will be confiscated without “Appropriations made by law”. 
Some may argue that the government compensated Americans by paying them $20.67 in FRNs per ounce of gold they took. The problem with this argument is twofold; first the government undervalued the price of gold to the FRN, because Roosevelt ultimately sold thousands of ounces of the confiscated gold on the international market for $35 an ounce. Second, the government confiscated something of intrinsic value, gold, and replaced it with something of no intrinsic value, FRN paper currency, that is worthless as the paper it is printed on.
Americans are still stuck with the result this extortion in the form of the Federal Reserve Banks (FED) backed by only worthless FRN paper currency, now known as United States dollars, and the promise that American tax payers will foot the bill for every FRN fraudulently and fictitiously created without any “Appropriations made by Law”.
Americans have become blissfully ignorant to how they are currently being extorted and the looming financial disaster that is inevitable in every fractional-reserve system of banking, just like in 1933. By continually expanding the amount of FRNs via credit, the national government and the FED are causing a situation where more FRNs are chasing the same amount of goods and services, thereby rendering each FRN to be worth less than before the expansion, because it takes more FRNs to buy the same amount of goods and services.
The effect of this expansion of the money supply, known as inflation, is that both the national government and the FED are stealing the purchasing power of the FRNs, you worked to obtain, straight out of your wallet or bank account. Perhaps the pundits who claim our money is safe in the banks are correct, because our national government is content, at the moment, with confiscating a portion of our earnings every day of our lives through inflation.
Like all schemes based on the Bernie Madoff formula that are Ponzi in their nature, it is bound to fail and sooner or later America will either suffer another round of major bank failures or an extreme over inflation of the money supply, known as hyperinflation, in which everyone around the world will perceive FRNs to be as worthless as they already are.
Roosevelt’s 1933 executive order was just one step in many to take America completely away from gold and silver currency and put it on paper currency whose only value is by decree of Congress. After Roosevelt confiscated gold, the path was nearly completely open for the government to incrementally confiscate wealth from Americans through inflation of FRN paper currency backed by nothing but a promise of the government and future tax revenue. The lesson Americans should learn from this and other similar executive orders and acts of Congress is that when faced with a national crisis any recommended solution must also be a constitutional one based on original intent, or it is no solution at all.
 Edwin Vieira, Jr., Pieces of Eight, p. 935.
 Edwin Vieira, Jr., Pieces of Eight, p. 935.
 Article I Section 9 Clause 7
 Article I Section 9 Clause 7