something very strange................., page-7

Following on from my initial post where I remembered reading something about banks being closed before. I have done a bit of searching and found where I read of this occuring before.

Before you read on bear in mind what happened a week or so ago. Paulson & Bernanke walked into congress and spoke. Now, we were not privy to what was said but I recall hearing one congressman saying what was said was downright scary - so much so that it could not be repeated. Could Paulson and Bernanke have stated that the banking system was insolvent?


(The reference for this material is: Economics And The Public Welfare - A Financial and Economic History of the United States, 1914-1946 by Benjamin M. Anderson)
and the link is: http://www.the-privateer.com/gold2.html

March 4, 1933
Not quite 20 years after the establishment of the Fed, President Franklin D. Roosevelt was inaugurated for his first term in office.

March 6, 1933
Using a wartime statute passed in 1917, Mr Roosevelt issued a proclamation closing every bank in the U.S. for four days. The banks were closed from March 6 to March 9.

March 9, 1933
Day One of "The Hundred Days". The President called a Special Session of the newly-elected Democratic Congress for the purpose of debating an act prepared in advance by the President's advisors. In a few hours, with minimal if any debate, Congress passed the act: "to provide relief in the existing national emergency in banking, and for other purposes".

April 5, 1933
President Roosevelt, acting under the sweeping authority passed to him by Congress on March 9, signed Presidential Executive Order 6102 which invoked his authority to make it unlawful to own or hold gold coins, gold bullion, or gold certificates. The export of Gold for purposes of payment was also outlawed, except under license from the Treasury.

June 5, 1933
A joint resolution signed by the President was introduced into Congress. This resolution abrogated the gold clause on all existing government and private contracts. Needless to say, the resolution passed.

October 1933
The Roosevelt Administration decided to implement a policy suggested by Professor George F. Warren of Cornell University. This policy advocated controlling "inflation" (firmly defined by this time as "rising prices") by raising and lowering the "gold content" of the Dollar. This policy was implemented, amongst many others, under the first big measure of the New Deal, the "National Recovery Act" (NRA). By January of 1934, the "adjustable Dollar policy" was an obvious and perceived failure, and it was dropped. The NRA itself was declared Unconstitutional on May 27, 1935.

January 30, 1934
The "Gold Reserve Act" became law. It had passed through Congress in five days, with minimal debate. Under this act, the Federal Government took away title to all "Gold Certificates" and gold held by the Federal Reserve Bank (the independent Fed?) and vested sole title with the U.S. Treasury. The Fed banks were to be provided with "Gold Certificates" in return for their Gold, but these certificates had no specific value in Gold assigned to them. When one witness testifying before the Senate Committee protested, he was taken aside by an Administration Senator and the situation explained to him:

"Doctor, you don't understand about these gold certificates. These are not certificates that you can get gold. These are certificates that gold has been taken away from you."

January 31, 1934
The day after the passage of the Act, President Roosevelt fixed the weight of the Dollar at 15.715 grains of Gold "nine-tenths fine". The Dollar was thereby devalued from $20.67 to one troy ounce of Gold to $35.00 to one troy ounce of Gold - or by 69.3 percent. The Treasury, which had become the possessors of all the nation's Gold on the previous day, saw the value of their Gold holdings increase by $US 2.81 Billion. The Treasury now "owned" the Gold, and no one else inside the U.S. was allowed to own any Gold except by the express permission of the Treasury.

The new ratio of $US 35 was adopted at Bretton Woods in July 1944. The U.S. Dollar was made the world's Reserve Currency and the IMF and World Bank established in 1947. The now international ratio of 35 U.S. Dollars to one troy ounce of Gold lasted until August 15, 1971.



This bit is taken from Wikipedia:
The Emergency Banking Act (also known as the Emergency Banking Relief Act) was an act of the United States Congress spearheaded by President Franklin D. Roosevelt during the Great Depression. It was passed on March 9, 1933. The act allowed a plan that would close down insolvent banks and reorganize and reopen those banks strong enough to survive.

On March 5, 1933, the day after Roosevelt's inauguration, he called a special session of Congress which instituted a mandatory four-day bank holiday. This act provided for the reopening of banks after federal inspectors had declared them to be financially secure.

The bill also gave the Secretary of the Treasury the authority to confiscate the gold of private citizens, in exchange for an equivalent amount of paper currency which was subject to later devaluation with relation to gold.

Despite the importance of the bill, it was passed in immense haste by Congress. Few, if any, Congressmen had the chance to read the bill; most were only able to hear the clerk read it. Quite a few Congressmen vocally protested the haste in which the bill was considered, but nevertheless it was passed sight unseen.

Within 300 days of the act's passage, 5,000 banks had passed inspection and were reopened. Roughly two-thirds of U.S. banks quickly reopened under this act, and faith in banking institutions was somewhat restored.

This act was a temporary solution to a major problem. The 1933 Banking Act passed later that year presented elements of a more permanent solution, including formation of the Federal Deposit Insurance Corporation (FDIC).

Now I'm not saying for a second that this is about to happen again. But it pays to at least be aware does it not. Interesting times indeed!