The Forgotten Man

The Forgotten Man: A New History of the Great Depression by Amity Shlaes, Jonathan Cape, 2007. 

Gold Confiscation

One of the issues Shlaes discusses is the gold standard. During the Great Depression, the federal government took several actions to weaken the gold standard. The most famous was the order that private citizens were no longer allowed to own gold, except in very small amounts, such as jewelry. Everyone had to turn in their gold and receive paper dollars in return. The federal government also cancelled the gold clauses in all contracts, both public and private. A gold clause is a statement that payment must be made in gold. This was a way for businessmen to protect themselves against inflation and currency devaluations. After everyone turned in their gold, the federal government changed the exchange rate, so that a dollar was worth only 0.03 ounces of gold, instead of the 0.05 ounces of gold it had been worth before.