The creator of Bitcoin celebrates his birthday on the day of Executive Order 6102: what happened on April 5, 1933?
April 5th is a special day for the entire Bitcoin community. Chosen by Satoshi Nakamoto as his birthday on the P2P foundation forum, the date coincides with the day in 1933 when then-President of the United States, Franklin Delano Roosevelt, signed Executive Order No. 6102.
The order made it illegal for all US citizens to own gold coins, gold bullion, and gold certificates.
The economic context
Between the 1920s and the 1930s, during what would later be remembered as the Great Depression, the country experienced a phase of overproduction: companies began to produce a significantly larger quantity of goods than the demand from consumers.
Following an initial period of euphoria in financial markets, the first problems began to arise: demand for goods and services was low, prices began to fall, and it didn’t take long to find ourselves in a period of deflation.
The deflationary spiral did not allow for a quick economic recovery. At that time, the Federal Reserve (Fed), the central bank of the United States, operated under a Gold Standard regime: during those years, the bank was allowed to issue paper money on the condition that it maintained gold reserves equal to at least 40% of the value of the notes issued. In practice, for every $20 of gold held, the Fed could issue notes worth $50.
However, by the end of the 1920s, the Fed had almost reached the limit of the number of notes issued for the gold it possessed.
October 24, 1929, marked the arrival of Black Thursday. The collapse of financial markets triggered a long economic depression: banks stopped lending, companies found themselves without liquidity, and many people lost their jobs.
The economy began to stagnate, and according to traditional economic theories, the government needed to stimulate consumption by injecting new money into the system. At that time, however, the Roosevelt administration did not have the necessary gold to emerge from the depression.
Executive Order No. 6102
The difficult economic situation led the government of the United States to a drastic decision.
On April 5, 1933, the then President of the United States, Franklin Delano Roosevelt, issued the so-called New Deal, a plan of economic and social reforms to restart the country.
Within the provisions of the New Deal was Executive Order No. 6102: the goal of this Order was to fill the state’s coffers with new gold in order to print new money and stimulate consumption and the economy.
According to the provisions of the Executive Order, all citizens, businesses, and associations were required to surrender their gold to the government by May 1, 1933. The gold surrendered was paid at $20.67 per ounce. For those who did not comply, sanctions were imposed: fines starting from $10,000 and a minimum of 10 years in prison. Gold was to be delivered to the Federal Reserve or banks affiliated with the Federal Reserve System.
Exemption from this obligation was granted only to individuals who used gold for industrial or professional purposes, such as jewelers, dentists, and electricians, and in some cases, for collecting purposes. The order allowed for per capita possession of gold of less than $100.
The government employed five methods to obtain the gold of American citizens:
- inspections and audits of accounting records and safes;
- reports, for which rewards were provided;
- tax investigations, i.e., discrepancies between declarations and a person’s lifestyle;
- undercover agent operations;
- investigations into past transactions and payments.
In cases where authorities were aware of significant amounts of gold, thorough inspections were conducted within the homes or businesses where it was held.
Despite the sanctions prescribed by the Order, the United States did not manage to seize all the citizens’ gold.
Shortly after confiscating much of the gold from Americans, the government prepared to create new money. On January 30, 1934, Roosevelt enacted the Gold Reserve Act, which allowed the government to increase the price of gold from $20.67 to $35 per ounce, thereby devaluing the American dollar by about 70%. This move aimed to stimulate economic growth by increasing the money supply and providing the government with greater flexibility.
The $35 price remained in effect until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars into gold at a fixed value, thus abandoning the Gold Exchange Standard.
The possession of non-redeemable gold certificates was legalized on August 14, 1964. Subsequently, the ban on gold possession was permanently lifted after President Gerald Ford signed Public Law 93-373, which took effect on December 31, 1974.
Satoshi Nakamoto’s choice to indicate April 5th as his birthday is imbued with symbolism. The day when Washington exercised force to arbitrarily confiscate citizens’ private property becomes a key date for those who have worked on introducing a technology capable of minimizing government confiscation and censorship abilities. Unlike gold, Bitcoin is much easier to conceal, transport, and spend, enabling a more effective defense against potential new attacks.
Revisiting a slogan particularly dear to the community: Bitcoin fixes gold.
