Full text of Gold Reserve Act of 1934
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[ P u b l i c —No. 87—73d C on gress] [H.R. 6976] AN ACT To protect the currency system of the United States, to provide for the better use of the monetary gold stock of the United States, and for other purposes. Be it enacted by the Senate and Home of Representatives of the United States of America in Congress assembled, That the short, title of this Act shall be the “ Gold Reserve Act of 1934.” S ec. 2. (a) Upon the approval of this Act all right, title, and interest, and every claim of the Federal Reserve Board, of every Federal Reserve bank, and of every Federal Reserve agent, in and to any and all gold coin and gold bullion shall pass to and are hereby vested in the United States; and in payment therefor credits in equivalent amounts in dollars are hereby established in the Treas ury in the accounts authorized under the sixteenth paragraph of section 16 o f the Federal Reserve Act, as heretofore and by this Act amended (U.S.C., title 12, sec. 467). Balances in such accounts shall be payable in gold certificates, which shall be in such form and in such denominations as the Secretary of the Treasury may determine. All gold so transferred, not in the possession of the United States, shall be held in custody for the United States and delivered upon the order of the Secretary of the Treasury; and the Federal Reserve Board, the Federal Reserve banks, and the Federal Reserve agents shall give such instructions and snail take such action as may be necessary to assure that such gold shall be so held and delivered. (b) Section 16 of the Federal Reserve Act, as amended, is further amended in the following respects: (1) The third sentence of the first paragraph is amended to read as follows: “ They shall be redeemed m lawful money on demand at the Treasury Department of the United States, in the city of Wash ington, District of Columbia, or at any Federal Reserve bank.” (2) So much of the third sentence of the second paragraph as precedes the proviso is amended to read as follows: “ The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under the provisions of section 13 of this Act, or bills o f exchange endorsed by a member bank of any Federal Reserve district and purchased under the provisions of section. 14 of this Act, or bankers acceptances purchased under the provisions of said section 14, or gold certificates: ” . (3) The first sentence of the third paragraph is amended to read as follows: u Every Federal Reserve bank shall maintain reserves in gold certificates or lawful money of not less than 35 per centum against its deposits and reserves m gold certificates o f not less than 40 per centum against its Federal Reserve notes in actual circula tion: Provided, however, That when the Federal Reserve agent holds gold certificates as collateral for Federal Reserve notes issued to the bank such gold certificates shall be counted as part of the reserve which such bank is required to maintain against its Federal Reserve notes in actual circulation.” 2 [P u b . 87.] (4) The fifth and sixth sentences of the third paragraph are amended to read as follows: “ Notes presented for redemption at the Treasury of the United States shall be paid out of the redemp tion fund and returned to the Federal Reserve banks through which they were originally issued, and thereupon such Federal Reserve bank shall, upon demand of the Secretary of the Treasury, reimburse such redemption fund in lawful money or, if such Federal Reserve notes have been redeemed by the Treasurer in gold certificates, then such funds shall be reimbursed to the extent deemed necessary by the Secretary of the Treasury in gold certificates, and such Federal Reserve bank shall, so long as any of its Federal Reserve notes remain outstanding, maintain with the Treasurer in gold certificates an amount sufficient in the judgment of the Secretary to provide for all redemptions to be made by the Treasurer. Federal Reserve notes received by the Treasurer otherwise than for redemption ma^ be exchanged for gold certificates out of the redemption fund here inafter provided and returned to the Reserve bank through which they were originally issued, or they may be returned to such bank for the credit of the United States.*’ (5) The fourth, fifth, and sixth paragraphs are amended to read as follows: “ The Federal Reserve Board shall require each Federal Reserve bank to maintain on deposit in the Treasury of the United States a sum in gold certificates sufficient in the judgment of the Secretary of the Treasury for the redemption of the Federal Reserve notes issued to such bank, but in no event less than 5 per centum of the total amount of notes issued less the amount of gold certificates held by the Federal Reserve agent as collateral security; but such deposit of gold certificates shall be counted and included as part of the 40 per centum reserve hereinbefore required. The Board shall have the right, acting through the Federal Reserve agent, to grant in whole or in part, or to reject entirely the application of any Federal Reserve bank for Federal Reserve notes; but to the extent that such application may be granted the Federal Reserve Board shall, through its local Federal Reserve agent, supply Federal Reserve notes to the banks so applying, and such bank shall be charged with the amount of the notes issued to it and shall pay such rate of interest as may be established by the Federal Reserve Board on only that amount of such notes which equals the total amount of its outstanding Federal Reserve notes less the amount of gold cer tificates held by the Federal Reserve agent as collateral security. Federal Reserve notes issued to any such bank shall, upon delivery, together with such notes of such Federal Reserve bank as may be issued under section 18 of this Act upon security o f United States 2 per centum Government bonds, become a first and paramount lien on all the assets of such bank. “Any Federal Reserve bank may at any time reduce its liability for outstanding Federal Reserve notes by depositing with the Fed eral Reserve agent its Federal Reserve notes, gold certificates, or lawful money of the United States. Federal Reserve notes so depos ited shall not be reissued, except upon compliance with the con ditions of an original issue. “ The Federal Reserve agent shall hold such gold certificatesor lawful money available exclusively for exchange for Hie outstanding [P u b. 87.] 3 Federal Reserve notes -when offered by the Reserve bank of which he is a director. Upon the request of the Secretary of the Treasury the Federal Reserve Board shall require the Federal Reserve agent to transmit to the Treasurer of the United States so much of the gold certificates held by him as collateral security for Federal Reserve notes as may be required for the exclusive purpose of the redemption of such Federal Reserve notes, but such gold certificates when deposited with the Treasurer shall be counted and considered as if collateral security on deposit with the Federal Reserve agent.” (6) The eighth paragraph is amended to read as follows: “All Federal Reserve notes and all gold certificates and lawful money issued to or deposited with any Federal Reserve agent under the provisions of the Federal Reserve Act shall hereafter be held for such agent, under such rules and regulations as the Federal Reserve Board may prescribe, in the joint custody of himself and the Federal Reserve bank to which he is accredited. Such agent and such Federal Reserve bank shall be jointly liable for the safe keeping of such Federal Reserve notes, gold certificates, and lawful money. Nothing herein contained, however, shall be construed to prohibit a Federal Reserve agent from depositing gold certificates with the Federal Reserve Board, to be held by such Board subject to his order, or with the Treasurer of the United States for the purposes authorized by law.” (7) The sixteenth paragraph is amended to read as follows: “ The Secretary of the Treasury is hereby authorized and directed to receive deposits of gold or of gold certificates with the Treasurer or any Assistant Treasurer of the United States when tendered by any federal Reserve bank 01* Federal Reserve agent for credit to its or his account with the Federal Reserve Board. The Secretary shall prescribe by regulation the form of receipt to be issued by the Treasurer or Assistant Treasurer to the Federal Reserve bank or Federal Reserve agent making the deposit, and a duplicate of such receipt shall be delivered to the Federal Reserve Board by the Treasurer at Washington upon proper advices from any Assistant Treasurer that such deposit has been made. Deposits so made shall be held subject to the orders of the Federal Reserve Board and shall be payable in gold certificates on the order of the Federal Reserve Board to any Federal Reserve bank or Federal Reserve agent at the Treasury or at the Subtreasury of the United States nearest the place of business of such Federal Reserve bank or such Federal Reserve agent. The order used by the Federal Reserve Board in making such payments shall be signed by the governor or vice governor, or such other officers or members as the Board may by regulation pre scribe. The form of such order shall be approved by the Secretary o f the Treasury.” (8) The eighteenth paragraph is amended to read as follows: “ Deposits made under this section standing to the credit of any Federal Reserve bank with the Federal Reserve Board shall, at the option of said bank, be counted as part of the lawful reserve which it is required to maintain against outstanding Federal Reserve notes, or as a part of the reserve it is required to maintain against deposits.” v oec. 3. The Secretary of the Treasury shall, by regulations issued / hereunder, with the approval o f the President, prescribe the condi 4 [P u b . 87.1 tions under which gold may be acquired and held, transported, melted or treated, imported, exported, or earmarked: (a) for indus trial, professional, and artistic use; (b) by the Federal Reserve banks for the purpose of settling international balances; and, (c) for such other purposes as in his judgment are not inconsistent with the pur poses o f this Act. Gold in any form may be acquired, transported, melted or treated, imported, exported, or earmarked or held in cus tody for foreign or domestic account (except on behalf of the United States) only to the extent permitted by, and subject to the condi tions prescribed in, or pursuant to, such regulations. Such regula tions may exempt from the provisions of this section, in whole or in part, gold situated in the Philippine Islands or other places beyond the limits of the continental United States. S ec. 4. Any gold withheld, acquired, transported, melted or treated, imported, exported, or earmarked or held in custody, in violation of this Act or of any regulations issued hereunder, or licenses issued pursuant thereto, shall be forfeited to the United States, and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure, and condemnation of property imported into the United States contrary to law; and in addition any person failing to comply with the provisions of this Act or o f any such regulations or licenses, shall be subject to a penalty equal to twice the value of the gold in respect of which such failure occurred. S ec. 5. N o gold shall hereafter be coined, and no gold coin shall hereafter be paid out or delivered by the United States: Provided, however, That coinage may continue to be executed by the mints of the United States for foreign countries in accordance with the Act o f January 29, 1874 (U.S.C., title 31, sec. 367). All gold coin o f the United States shall be withdrawn from circulation, and, together with all other gold owned by the United States, shall be formed into bars o f such weights and degrees o f fineness as the Secretary of the Treasury may direct. v S ec. 6. Except to the extent permitted in regulations which may be issued hereunder by the Secretary o f the Treasury with the approval o f the President, no currency of the United States shall be redeemed in gold: Provided, however, That gold certificates owned by the Federal Reserve banks shall be redeemed at such times and in such amounts as, in the judgment of the Secretary o f the Treasury, are necessary to maintain the equal purchasing power of every kind o f currency of the United States: And provided further, That the reserve for United States notes and for Treasury notes of 1890, and the security for gold certificates (including the gold certificates held in the Treasury for credits payable therein) shall be maintained in gold bullion equal to the dollar amounts required by law, and the reserve for Federal Reserve notes shall be maintained in gold certificates, or in credits payable in gold certificates maintained with the Treasurer of the United States under section 16 o f the Federal Reserve Act, as heretofore and by this Act amended. No redemptions in gold shall be made except in gold bullion bear ing the stamp of a United States mint or assay office in an amount equivalent at the time of redemption to the currency surrendered for such purpose. [ P u b . 8 7.] 5 S ec. 7. In the event that the weight of the gold dollar shall at any time be reduced, the resulting increase in value of the gold held by the United States (including the gold held as security for gold certificates and as a reserve for any United States notes and for Treasury notes of 1890) shall be covered into the Treasury as a mis cellaneous receipt; and, in the event that the weight of the gold dollar shall at any time be increased, the resulting decrease in value of the gold held as a reserve for any United States notes and for Treasury notes of 1890, and as security for gold certificates shall be compensated by transfers of gold bullion from the general fund, and there is hereby appropriated an amount sufficient to provide for such transfers and to cover the decrease in value of the gold in the general fund. S ec. 8. Section 3700 of the Revised Statutes (U.S.C., title 31, sec. 734) is amended to read as follows : “ S ec. 3700. With the approval of the President, the Secretary of the Treasury may purchase gold in any amounts, at home or abroad, with any direct obligations, coin, or currency of the United States, authorized by law, or with any funds in the Treasury not otherwise appropriated, at such rates and upon such terms and conditions as he may deem most advantageous to the public interest; any provision of law relating to the maintenance of parity, or limiting the purposes for which any of such obligations, coin, or currency, may be issued, or requiring any such obligations to be offered as a popular loan or on a competitive basis, or to be offered or issued at not less than par, to the contrary notwithstanding. All gold so purchased shall be included as an asset of the general fund of the Treasury.” S ec. 9. Section 3699 of the Revised Statutes (U.S.C., title 31, sec. 733) is amended to read as follows: “ Sec. 3699. The Secretary of the Treasury may anticipate the payment of interest on the public debt, by a period not exceeding one year, from time to time, either with or without a rebate of inter est upon the coupons, as to him may seem expedient; and he may sell gold in any amounts, at home or abroad, in such manner and a t such rates and upon such terms and conditions as he may deem most advantageous to the public interest, and the proceeds of any gold so sold shall be covered into the general fund of the Treasury: Provided, however, That the Secretary of the Treasury may sell the gold which is required to be maintained as a reserve or as security for currency issued by the United States, only to the extent necessary to maintain such currency at a parity with the gold dollar.” S ec* 10. (a) For the purpose of stabilizing the exchange value of . the dollar, the Secretary of the Treasury, with the approval of the President, directly or through such agencies as he may designate, is authorized, for the account of the fund established in this section, to deal in gold and foreign exchange and such other instruments of credit and securities as he may deem necessary to carry out the pur pose o f this section. An annual audit o f such fund shall be made and a report thereof submitted to the President. (b) To enable the Secretary of the Treasury to carry out the pro visions of this section there is hereby appropriate^, out o f the receipts which are directed to be covered into the Treasury under section 7 hereof, the sum of $2,000,000,000, which sum when available 6 [P ub. 87.] shall be deposited with the Treasurer of the United States in a sta bilization fund (hereinafter called the “ fund ” ) under the exclusive control o f the Secretary o f the Treasury, with the approval of the President, whose decisions shall be final and not be subject to review by any other officer of the United States. The fund shall be available for expenditure, under the direction of the Secretory of the Treasury and in his discretion, for any purpose in connection with carrying out the provisions of this section, including the investment and rein vestment in direct obligations or the United States of any portions of the fund which the Secretary of the Treasury, with the approval of the President, may from time to time determine are not currently required for stabilizing the exchange value of the dollar. The pro ceeds of all sales and investments and all earnings and interest accru ing under the operations o f this section shall be paid into the fund and shall be available for the purposes of the fund. (c) All the powers conferred by this section shall expire two years after the date of enactment of this Act, unless the President shall sooner declare the existing emergency ended and the operation of the stabilization fund terminated; Dut the President may extend such period for not more than one additional year after such date by proc lamation recognizing the continuance 01 such emergency. S ec. 11. The Secretary of the Treasury is hereby authorized to issue, with the approval of the President, such rules and regulations as the Secretary may deem necessary or proper to carry out the purposes o f this Act. S ec. 12. Paragraph (b) (2), of section 43, title III, of the Act approved May 12, 1933 (Public, Numbered 10, Seventy-third Con gress) , is amended by adding two new sentences at the end thereof, reading as follows: “ Nor shall the weight of the gold dollar be fixed in any event at more than 60 per centum o f its present weight. The powers of the President specified in this paragraph shall be deemed to be separate, distinct, and continuing powers, and may be exercised by him, from time to time, severally or together, whenever and as the expressed objects of this section in his judgment may require; except that such powers shall expire two years after the date of enactment of the Gold Reserve Act of 1934 unless the President shall sooner declare the existing emergency ended, but the President may extend such period for not more than one additional year after such date by proc lamation recognizing the continuance of such emergency.” Paragraph (2) o f subsection (b) of section 43, title III, of an Act entitled “An Act to relieve the existing national economic emer gency by increasing agricultural purchasing power, to raise revenue for extraordinary expenses incurred by reason of such emergency, to provide emergency relief with respect to agricultural indebtedness, to provide for the orderly liquidation of joint-stock land banks, and for other purposes ”, approved May 12, 1933, is amended by adding at the end of said paragraph (2) the following: “ The President, in addition to the authority to provide for the unlimited coinage of silver at the ratio so fixed, under such terms and conditions as he may prescribe, is further authorized to cause to be issued and delivered to the tenderer of silver for coinage, silver certificates in lieu o f the standard silver dollars to which the tend (P u b . 87.1 7 erer would be entitled and in an amount in dollars equal to the number of coined standard silver dollars that the tenderer of such silver for coinage would receive in standard silver dollars. “ The President is further authorized to issue silver certificates in such denominations as he may prescribe against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, and to coin standard silver dollars or subsidiary currency for the redemp tion o f such silver certificates. “ The President is authorized, in his discretion, to prescribe dif ferent terms and conditions and to make different charges, or to collect different seigniorage, for the coinage of silver of foreign production than for the coinage of silver produced in the United States or its dependencies. The silver certificates herein referred to shall be issued, delivered, and circulated substantially in conformity with the law now governing existing silver certificates, except as may herein be expressly -provided to the contrary, and shall have and possess all of the privileges and the legal tender characteristics of existing silver certificates now in the Treasury of the United States, or in circulation. “ The President is authorized, in addition to other powers, to reduce the weight of the standard silver dollar in the same percentage that he reduces the weight of the gold dollar. “ The President is further authorized to reduce and fix the weight of subsidiary coins so as to maintain the parity of such coins with the standard silver dollar and with the gold dollar.” S ec. 13. All actions, regulations, rules, orders, and proclamations heretofore taken, promulgated, made or issued by the President of the United States or the Secretary o f the Treasury, under the Act of March 9, 1988, 01* under section 43 or section 45 of title II I of the Act o f May 12, 1933, are hereby approved, ratified, and confirmed. S ec. 14. (a) The Second Liberty Bond Act, as amended, is further amended as follows: (J) By adding at the end of section 1 (U.S.C., title 31, sec. 752; Supp. V II, title 31, sec. 752), a new paragraph as follows: “ Notwithstanding the provisions of the foregoing paragraph, the Secretary of the Treasury may from time to time, when he deems it to be in the public interest, offer such bonds otherwise than as a popular loan and he may make allotments in full, or reject or reduce allotments upon any applications whether or not the offering was made as a popular loan. (2) By inserting in section 8 (U.S.C., title 31, sec. 771), after the words “ certificates of indebtedness ” , a comma and the words “ Treasury bills ” . (3) By striking out the figures “ $7,500,000,000” where they appear in section 18 (U.S.C., title 31, sec. 753) and inserting in lieu thereof the figures “ $10,000,000,000.” (A) By adding thereto two new sections, as follows: “ S ec. 19. Notwithstanding any other provisions o f law, any obli gations authorized by this Act may be issued for the purchase, redemption, or refunding, at or before maturity, of any outstanding bonds, notes, certificates of indebtedness, or Treasury bills, o f the 8 [P u b . 87.1 United States, or to obtain funds for such purchase, redemption, or refunding, under such rules, regulations, terms, and conditions as the Secretary of the Treasury may prescribe. u S ec. 20. The Secretary of the Treasury may issue any obliga tions authorized by this Act and maturing not more than one year from the date of their issue on a discount basis and payable at maturity without interest. Any such obligations may also be offered for sale on a competitive basis under such regulations and upon such terms and conditions as the Secretary o f the Treasury may prescribe, and the decisions of the Secretary in respect of "any issue shall be final.” (b) Section 6 of the Victory Liberty Loan Act (U.S.C., title 31, sec. 767; Supp. V II, title 31, secs. 767-767a) is amended by striking out the words “ for refunding purposes ” , together with the preceding comma, at the end of the first sentence of subsection (a). (c) The Secretary of the Treasury is authorized to issue gold certificates in such form and in such denominations as he may deter mine, against any gold held by the Treasurer of the United States, except the gold fund held as a reserve for any United States notes and Treasury notes o f 1890. The amount o f gold certificates issued and outstanding shall at no time exceed the value, at the legal standard, o f the gold so held against gold certificates. S ec. 15. As used in this Act the term “ United States ” means the Government of the United States; the term “ the continental United States ” means the States of the United States, the District of Columbia, and the Territory of Alaska; the term “ currency of the United States” means currency which is legal tender in the United States, and includes United States notes, Treasury notes of 1890, gold certificates, silver certificates, Federal Reserve notes, and circulating notes of Federal Reserve banks and national banking associations; and the term “ person ” means any individual, partner ship, association, or corporation, including the Federal Reserve Board, Federal Reserve banks, and Federal Reserve agents. Wher ever reference is made in this Act to equivalents as between dollars or currency of the United States and gold, one dollar or one dollar face amount of any currency of the United States equals such a number of grains ox gold, nine tenths fine, as, at the time referred to, are contained in the standard unit of value, that is, so long as the President shall not have altered by proclamation the weight of the gold dollar under the authority of section 43, title III, of the Act approved May 12, 1933, as heretofore and by this Act amended, twenty-five and eight tenths grains o f gold, nine tenths fine, and thereafter such a number of grains of gold, nine tenths fine, as the President shall have fixed under such authority. S ec. 16. The right to alter, amend, or repeal this Act is hereby expressly reserved. I f any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder o f the Act, and the application of such provision to other persons or circumstances, shall not be affected thereby. S ec. 17. All Acts and parts of Acts inconsistent with any of the provisions o f this Act are hereby repealed. Approved, January 30, 1934.