Gold Reserve Act
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| Other short titles | Gold Reserve Act of 1934 |
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| Long title | An Act to protect the currency system of the United States, to provide for the better use of the monetary gold stock of the United States, and for other purposes. |
| Acronyms (colloquial) | GRA |
| Nicknames | Gold Reserve Act (Devaluation) |
| Enacted by | the 73rd United States Congress |
| Effective | January 30, 1934 |
| Citations | |
| Public law | 73-87 |
| Statutes at Large | 48 Stat. 337 |
| Legislative history | |
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The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury.
The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35. This price change incentivized foreign investors to export their gold to the United States, while simultaneously devaluing the U.S. dollar in an attempt to spark inflation. The increase in gold reserves due to the price change as well as the confiscation clause resulted in a large accumulation of gold in the Federal Reserve and U.S. Treasury. The increase in the money supply lowered real interest rates which increased investment in durable goods.
A year earlier, in 1933, Executive Order 6102 had made it a criminal offense for U.S. citizens to own or trade gold anywhere in the world, with exceptions for some jewelry and collector's coins. These prohibitions were relaxed starting in 1964 – gold certificates were again allowed for private investors on April 24, 1964, although the obligation to pay the certificate holder on demand in gold specie would not be honored. By 1975 Americans could again freely own and trade gold.
The Gold Reserve Act authorized the Exchange Stabilization Fund to use such assets as were not needed for exchange market stabilization to deal in government securities.
The United States was still suffering the negative effects of the 1929 stock market crash in 1934 when the Gold Reserve Act was enacted. President Roosevelt was challenged with decreasing unemployment, raising wages and increasing the money supply, but was restricted by United States' strict adherence to the gold standard. The Gold Reserve Act, which banned the export of gold, restricted the ownership of gold and halted the convertibility of gold into paper money helped him overcome this obstacle. This act ratified the previous Executive Order 6102 which required almost all gold to be exchanged for paper currency.
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