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The Roosevelt Taking of Gold Was Unconstitutional

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Copyright Martin Armstrong All Rights Reserved December 6th, 2012


The Roosevelt Taking of Gold Was Unconstitutional

Gold is a commodity for trading as well as something you put in your sock drawer for a rainy day. They are two different things entirely. The fanatic Goldbugs who argue only gold will survive and hate my guts for daring to say it will pause before taking off, only see the end of the world scenario ranting & raving against anyone who dare treats it like any investment to trade. Of course everyone should own gold. But NOT as a trading investment for it will never go to $30,000 an ounce in isolation for if it were out of sync with everything else you can bet there will be troops searching every house door to door. If gold goes to $30,000 and a Big Mac also costs $85, then everything remains the same.

The real issue is deeper than all this nonsense. People do not realize that you have NO rights. The government ALWAYS gets to do whatever it wants and it is your OBLIGATION to take them to court to say that is unconstitutional. And even when you win, you lose. What most people do not realize is the Supreme Court had said that changing the gold clauses in government bonds retroactively was in fact UNCONSTITUTIONAL – but there was no harm!

During the Great Depression, Roosevelt was able to seize whatever gold existed in banks. He declared all contracts void that had gold provisions for payment. It was in Perry v. United States – 294 U.S. 330 (1935) that the US Supreme Court ruled that Congress, by virtue of its power to deal with gold coin as a medium of exchange, was authorized to prohibit its export and limit its use in foreign exchange, and the restraint thus imposed upon holders of such coin was incident to their ownership of it, and gave them no cause of action. P. 294 U. S. 356. The Supreme Court held that it could not say that the exercise of this power by Congress was arbitrary or capricious. P. 294 U. S. 356. They held that even if the Government’s repudiation of the gold clause in the government bonds was unconstitutional, it did not entitle the plaintiff to recover more than the loss he has actually suffered, and of which he may rightfully complain. P. 294 U. S. 354. Therefore, the Joint Resolution of June 5, 1933 it held: “insofar as it undertakes to nullify such gold clauses in obligations of the United States and provides that such obligations shall be discharged by payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts, is unconstitutional. P. 294 U. S. 349. Yet, swapping gold for dollars created no loss that was cognizable even though the taking of gold was unconstitutional. The Court reasoned:

“Plaintiff has not attempted to show that, in relation to buying power, he has sustained any loss; on the contrary, in view of the adjustment of the internal economy to the single measure of value as established by the legislation of the Congress, and the universal availability and use throughout the country of the legal tender currency in meeting all engagements, the payment to the plaintiff of the amount which he demands would appear to constitute not a recoupment of loss in any proper sense, but an unjustified enrichment.”

P. 294 U. S. 357.


The role of precious metals in the age of the Sovereign Debt Crisis is becoming clear. Do not put it past them for one minute that they can decree that it is illegal to possess gold. Those that argue for a gold standard are playing with fire for they would also have to declare the possession of gold is illegal and a criminal act. The Puritans (religious right) outlawed Christmas and made it a felony to kiss your wife in public besides outlawing all sports because it led to curing. They were so extreme, they were thrown out of power even by the Protestants and became the American Pilgrims. (See Charles Hibbert, 1963 Roots of Evil)

Gold is the mechanism by which the UNDERGROUND economy will function. It is by no means fiat that is driving everything up in price or will be the backdrop to gold’s rally. It is fiscal mismanagement and old theories like it is less inflationary to borrow than to print. As long as the bonds can be used as cash, then it is money that pays interest. We are melting down on a global scale. The Sovereign Debt Crisis is brewing and when it boils, look out. Governments are well aware of the gold trade and are taking steps to eliminate it as an unreportable industry. Governments are in desperate need for cash and are not yet at that stage where they see themselves as the problem. Consequently, they are still in a state of denial ranting about how there would be no problem but for people who do not pay their taxes.

As governments need money, they get nasty and we lose all our liberty. It was Adolf Hitler who made it a criminal act for any German to have an account outside the country in 1933. That provided the backdrop to the Swiss introducing their secrecy laws in 1934. Today, governments are taking the same approach but far worse than Hitler. Today the USA simply does not respect international law and are threatening the seizure of foreign assets if they do not spy on American citizens. Germany pays bribes to bank clerks to report names of German citizens. There is no rule of law. Today, government will do whatever it takes to accomplish their goals. Even Hitler did not invade Switzerland when he knew then passed their Secrecy Laws to protect Germans, which defeated his revenue collection scheme.

Banks are getting dicey in Europe and Japan. Where else can a person put their money? Of course the majority will follow government blindly into the light and that risks revolution or civil unrest on a grand scale. Tax rates are going up at the federal level and the state level and by the time it is all said and done liberty will vanish for they are pushing to eliminate cash and move to electronic money to get every penny they want in taxes. That is the REAL function of gold that is separate from a trading market like everything else. The majority always must be wrong. That is the driving mechanism that swings the pendulum between two extremes. Once they figure out they are wrong, they panic and move to the opposite position (bull v bear, Republican v Democrat, right v left, etc.).


Historically, people always hide their wealth from the government. The velocity of money shrinks in time of crises. Even President Cleveland noted that during the Panic of 1893 and that is why Roosevelt devalued the dollar and confiscated gold – to end the hoarding. This is what DEFLATION is all about. The value of CASH rises against declining assets (including gold in free markets). Cash is the major investment, interest rates drop as they have and the this is why we have the crisis today. INFLATION will rise as soon as interest rates start to rise. That is the key to watch for, That is the signal of the shift from DEFLATION to INFLATION.


So you have to understand. Be very careful of what you wish for. No peg or standard has ever survived because you cannot fix the prices of everything so they are a flat line – that is communism. Everything floats. That is the way things function. Every attempt to control that has failed in 6,000 years. Just look at the Legal Code of Hammurabi – the first attempt to fix the value of money, wages, and prices. It did not last.