Slow Motion Run Against U.S. Government Emerges as Nightmare of Congress

Fear that we are in the midst of a slow motion run against the government of the United States is what emerged yesterday as the nightmare animating the Congressional hearings into private purchases of gold coins. Ostensibly the hearings, held by a congressman of New York, were about the marketing practices of a dealer called Goldline and its advertising on conservative talk shows on radio and television. But the deeper issue quickly emerged as the prospect that people are buying gold coins because they fear the government could confiscate private holdings of bullion the way an earlier Democratic administration, FDR’s, did during the Great Depression.

At one point, according to a report on yesterday’s hearings issued by Politico.com, the congressman chairing the hearings, Anthony Weiner, “grew red-faced” as he railed at an executive of Goldline. The Congressman spoke after “months of fulminating from afar,” Politico.com reported. Mr. Weiner had issued a report in May accusing Goldline of having formed an “unholy alliance with conservative pundits to drive a false narrative” that the United States is “destined for hyperinflation with Barack Obama as president.” At the hearing the Goldline executive, Scott Carter, insisted that the company gives its customers enough information to make informed decisions about the gold they buy.

It turns out that part of the information Goldline has been giving its customers is background on the executive order President Roosevelt issued in 1933 confiscating private holdings of gold. The reason Goldline and Mr. Weiner are focusing on gold coins is that the Gold Reserve Act of 1934, which codified Roosevelt’s confiscations of private gold holdings, had exempted certain coins of numistic value. The point is lost on neither Mr. Weiner nor Goldline. “These are uncertain economic times,” Goldline’s Mr. Carter was quoted by Politico.com as telling the hearing. “Our training is that if the executive order were reenacted as it was in ’33, that coins with collector value were excluded from confiscation.”

Mr. Weiner became slightly unhinged at this line of argument and “lambasted” Mr. Carter for promoting fear of the federal government, according to the report on Politico.com. “The fundamental question,” it quoted Mr. Weiner as saying, “is this: Should you be doing this? Should you be exploiting people this way? Should you be implying to people that a confiscation order is in place that hasn’t been in place since my father was born?” It strikes us as a formulation as slippery as that the congressman is attributing to Goldline. It is true that the executive order of FDR was in place for only a short while, but the ban on private gold holding lasted decades. It wasn’t until the end of 1974, when Mr. Weiner was a 10-year-old child, that the ban was lifted.

Mr. Weiner, moreover, has just introduced a bill that would impose draconian disclosure requirements not just on corporate gold dealers like Goldline but any person who sells, or even offers to sell, for investment purposes any coins or bullion of gold or other precious metals. And one of the things they would have to disclose is the coin or bullion’s “reasonable resale value.” That sets an awfully broad trap for the public — and, by an extension of logic, for the government, a point that was made by Ira Stoll of Futureofcapitalism.com, in the first dispatch on this contretemps. Should the government, for example, have disclosed that the value of the one-dollar Federal Reserve Notes it has been issuing would plunge to less than 1,290th of an ounce of gold from a 271st of an ounce of gold in the past ten years?

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Our sense of it is that the people are not as easy to fool as Mr. Weiner thinks they are. Or at least they have a better sense of history. Congressman Ron Paul, one of the leaders on the monetary issue within the Congress, wasn’t at Mr. Weiner’s hearings. He is not suggesting that Congress or the government is getting ready to confiscate gold. But he told us yesterday that Americans are very much alert to the history of gold confiscation. “I get asked that question all the time,” he said. It is important, he said, “to keep warning people that they’ve done it before.” Adds he: “Think of where we would have been if we had not had gold ownership legalized in the 1970s.” Or, as we would put it, the problem today is not the gold dealers and the conservative talk show hosts but the Federal Reserve, the United States Treasury and, most importantly, the Congress itself.

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This editorial has been updated from an earlier edition to correct the history of FDR ’s executive order.