23 November 2016
By Jacob G. Hornberger
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.
Jacob G. Hornberger is founder and president of The Future of Freedom
Foundation. He was born and raised in Laredo, Texas, and received his B.A. in
economics from Virginia Military Institute and his law degree from the
University of Texas. He was a trial attorney for twelve years in Texas. He
also was an adjunct professor at the University of Dallas, where he taught
law and economics. In 1987, Mr. Hornberger left the practice of law to become
director of programs at the Foundation for Economic Education. He has
advanced freedom and free markets on talk-radio stations all across the
country as well as on Fox News' Neil Cavuto and Greta van Susteren shows and
he appeared as a regular commentator on Judge Andrew Napolitano's show
Freedom Watch. View these interviews at LewRockwell.com and from Full
Context.
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