Thank You Capitalism Morality Seminar Held on Saturday 30 July and Sunday 31 July 2016
Once the Great Depression hit with full force, countries once again had to abandon the gold standard. When the stock market crashed in 1929, investors began trading in currencies and commodities. As the price of gold rose, people exchanged their dollars for gold. It worsened when banks began failing. People began hoarding gold because they didn’t trust any financial institution.
The Federal Reserve kept raising interest rates. It was trying to make dollars more valuable and dissuade people from further depleting the U.S. gold reserves. These higher rates worsened the Depression by making the cost of doing business more expensive. Many companies went bankrupt, creating record levels of unemployment.
On March 3, 1933, the newly-elected President Franklin D. Roosevelt closed the banks. He was responding to a run on the gold reserves at the Federal Reserve Bank of New York. By the time banks re-opened on March 13, they had turned in all their gold to the Federal Reserve. They could no longer redeem dollars for gold. Furthermore, no one could export gold.
On April 5, FDR ordered Americans to turn in their gold in exchange for dollars. He did this to prohibit hoarding of gold and the redemption of gold by other countries. This created the gold reserves at Fort Knox. The United States soon held the world’s largest supply of gold.