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Executive Order 6102

By Matthew Yglesias on August 5, 2011 at 3:59 pm

"Executive Order 6102"

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Thinking about comparisons between Barack Obama and FDR, two main issues come to mind. One, which I hear about most frequently from people close to the circle of power, is timing. By the time FDR took office, the Great Depression had ground on for years and years and was clearly “branded” as Herbert Hoover’s responsibility. By contrast, Obama took office more or less in the thick of things, and immediately started taking furious action to stabilize the situation. Consequently, the tendency is for Obama to get blamed for the fact that the situation, as stabilized, isn’t very good whereas the administration would like to get credit for the fact that they stabilized a situation that was slipping into Depression territory. This is a good point, albeit not a great election message.

The other thing I think about, however, is an incident that people barely know happened: Executive Order 6102. This was a kind of crazy scenario. What happened is that Roosevelt took a provision of the World War One era Trading With The Enemy Act and used it to confiscate all the monetary gold in the country (i.e., coins, bullion, and certificates but not jewelry) and make everyone give it to the Federal Reserve at a price of $20.67 per troy ounce. Then the Treasury Department set the price of gold for the purpose of international transactions at $35 per troy ounce. In effect, it was a giant devaluation of the dollar. The order was fiddled with with Executive Order 6111 later in the month and then Executive Orders 6260 and 6261 in August. But it wasn’t until the following year that Roosevelt actually got congress to act on the gold issue. He made the devaluation happen in the first instance with a bold stroke of executive authority that was obviously not in keeping with the intended use of the Trading With the Enemy Act.

That devaluation helped spark the strong growth of FDR’s first term and laid the groundwork for his larger political success. And good for FDR. But the point I would make about comparisons between Obama and Roosevelt is that if you want to compare the former unfavorably to the latter, the real question you need to answer is what’s his Executive Order 6102? What’s the unilateral bold stroke that would have had a huge impact on the economy? And the same question applies to the White House. Where’s your Executive Order 6102? Serious people acknowledge the existence of big political constraints. But leaders who feel constrained look for ways forward.

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