As the left continues to decry the authoritarian tendencies of President-elect Trump, they conveniently forget those of President Franklin D. Roosevelt, who they continue to extol as one of America’s greatest presidents. Even though FDR’s authoritarian actions took place more than 80 years ago, they have had a lasting impact on the American people and American society.
Just think about only one of the things that FDR did: He nationalized and confiscated the gold-coin holdings of the American people, replacing them with irredeemable and devalued paper bills and notes. It’s difficult to get more authoritarian than that, especially considering that gold coins had been the official money of the American people for more than a hundred years.
When the Constitution called the federal government into existence, one of its main provisions was the establishment of a monetary system in which gold coins and silver coins were the nation’s official money. The federal government was expressly given the power to coin money and was not given the power to issue paper money. The Constitution also expressly prohibited the states from making anything but gold and silver legal tender. The states were also expressly prohibited from issuing paper money.
Keep in mind that the Constitution is the supreme law of the land. It is the instrument by which the American people brought the federal government into existence. With the Constitution, the American people told U.S. officials what they could and could not do. In the realm of monetary policy, people said: “We don’t want a paper-money system. We want a gold-coin system.” The supreme law of the Constitution reflected their conviction.
What if U.S. officials didn’t agree with the assessment of the American people? The Constitution provides a remedy — in fact, the only remedy. If anyone wanted a different monetary system, the only way he could do it is through a constitutional amendment that abolished the gold-coin system and replaced it with a paper-money system.
What if Congress enacted a law that abolished the gold-coin system and replaced it with a paper-money system? It wouldn’t work. That’s because the Constitution is the supreme law. It controls the actions of both the Congress and the president.
When the president adopts a policy or Congress enacts a law that violate the Constitution, they are null and void. That’s where the judicial branch comes into play. Its job is to declare any action or law that violates the Constitution to be null and void.
Franklin Roosevelt understood all this, but it didn’t matter to him. He was determined to abolish the gold-coin system that the Constitution had established and that had been in place for more than a century and replace it with a paper-money system. But he wasn’t about to go the long, arduous route of seeking a constitutional amendment.
So, he just did it. Through executive decree, which was the same way that Adolf Hitler and Benito Mussolini were ruling in Germany and Italy during the 1930s, Roosevelt issued an order to the American people: Deliver your gold coins to the U.S. government or be jailed and fined. (See Three New Deals: Reflections or Roosevelt’s America, Mussolini’s Italy, and Hitler’s Germany, 1933-1939 by Wolfgang Schivelbusch or see this review of the book by the Cato Institute’s David Boaz.)
What about the judicial branch, whose responsibility under the Constitution is to nullify acts and laws that violate the Constitution? It buckled, just as judiciaries in foreign countries often when faced with authoritarian or totalitarian regimes. (Example: The federal judiciary in Chile under Pinochet.) Pointing to the economic crisis of the Great Depression, the U.S. Supreme Court in the Gold Clause Cases upheld the constitutionality of FDR’s gold-coin seizure, his destruction of American’s more-than-a-century-old gold-coin system, and his establishment of a paper-money system. (See the following two FFF articles: “The Gold Clause Cases” by Jacob G. Hornberger and “Roosevelt’s Crusade Against Gold,” as well as an article on the Gold Clause Cases by FFF policy adviser David d’Amato that will appear in an upcoming issues of Future of Freedom [Subscribe here].)
But there was one big flaw in the Court’s reasoning: The Constitution itself, which does not provide for economic crises or emergencies as exceptions to its provisions. The Framers made it clear that its provisions were to be sovereign and supreme regardless of “emergency” or “crisis” circumstances. In fact, because “emergencies” and “crises” always pose greater dangers to liberty than under normal circumstances, the judiciary should be even more diligent to enforce the Constitution during such periods.
The Americans living under Roosevelt undoubtedly believed that FDR’s destruction of America’s monetary system would be only temporary, lasting only so long as the Great Depression. It was not to be. FDR’s destruction of the gold-coin standard established under the Constitution turned out to be permanent, which, among other things, enabled welfare-warfare state expenditures to grow exponentially over the next 80 years and gave the American people an ever-depreciating currency. It’s not a coincidence that although Roosevelt permitted the American people to continue using silver coins as legal tender, they ultimately disappeared from circulation. As Gresham’s Law points out, that’s what bad money does to good money.
The next time a leftist decries Trump’s upcoming authoritarian regime, remind him that his idol FDR set a standard for like-minded presidents to follow.