From Monograph #35, 1981, published by the Committee for Monetary Research and Education, Inc.

INTRODUCTION

For centuries, most people have shared the fictional Mr. Goldfinger's attitude about gold, though not necessarily for the same reasons. While gold has been much sought after, both for ornamental and industrial purposes, modern times -- or, more specifically, modern governments -- have taught men to value it for one purpose above all others: as a hedge against the debasement of paper money. Monetary economist Charles Rist acknowledged this phenomenon when he wrote: '[I]n the absence of governments capable of maintaining stable money, private individuals seek to assure it for themselves, hoarding a purchasing power [gold] more stable than that of any other merchandise ...stable money is one of the last arms that remains at the disposal of the individual to direct his own affairs, whether it be an enterprise or a simple household." Indeed, during the monetary crisis of the last several years, the price of gold soared in free world markets as more and more individuals around the world acquired gold as a hedge against actual and potential currency devaluations. Unfortunately, while others scrambled to protect themselves from the instability of paper money, Americans had to watch from the sidelines. For them, owning gold has long been a criminal offense, punishable by up to ten years in jail and/or up to a $10,000 fine; they also risk confiscation of the gold and a penalty of twice its value.

Most Americans are unaware of the existence of these harsh criminal sanctions. Fewer still, including the legal community, are aware of how -- and why -- Americans lost their right to own gold in the first place. The facts, which should startle layman and lawyer alike, expose the shaky legal foundation on which the gold prohibition rests: an unconstitutional arrogation of congressional power and the improper delegation of that power to the President, leading to what can be called the "endless emergency" rationale.

WORLD WAR I: THE SEEDS ARE SOWN

The existence of a state of war between the United States and Germany in 1917 had prompted the passage of the Trading with the Enemy Act, one purpose of which was to make unlawful all dealings between Americans and the enemies of the United States. However, an obscure subsection of the Act authorized the President to regulate, investigate, and PROHIBIT "under such rules and regulations as he may prescribe...any transactions in foreign exchange, export or earmarkings of gold or silver coin or bullion or currency...by any person within the United States..." These sweeping new presidential powers had teeth in them: elsewhere the Act provided for severe criminal sanctions of up to ten years in prison and/or up to a $10,000 fine for violation of any decrees which the President might make under the Act.

The net result of the Act, vis-a-vis transactions in gold, was the arrogation by the Sixty-Fifth Congress of a "money power" not granted by the Constitution -- and further: the delegation of that power to the Executive branch of the Government.

The war emergency and the President's duty to fight the war provided Congress with a convenient rationale for the Act. The fact is, however, that the Constitution nowhere empowers Congress to prohibit dealing in gold -- much less authorizes Congress to delegate that power to a coordinate branch of the government.

Worst of all, the power which Congress delegated to the President enabled him to make criminals out of honest American citizens whose "crime" would consist only of trying to protect themselves from official debasement of their money. In more fundamental terms, Americans henceforth would be "under the gun" for exercising a fundamental, inalienable right: the right to deal with their own property as they saw fit. Gold, no matter what its special characteristics, is, after all, just another form of property.

If there were those who feared that Congress had more in mind than merely prohibiting transactions in gold during the World War I emergency, their concern would have been justified. On September 24, 1918, less than a year after its original enactment, and virtually on the eve of the War's end, the Trading with the Enemy Act was amended in two important respects: not only was the wartime Act extended "[u]ntil the expiration of two years after the date of the termination of the war between the United States and the Imperial German Government...," but the amendment actually ENLARGED the Executive's power to control private gold. Now, President Woodrow Wilson could also "[i]nvestigate, regulate, or prohibit ... any ... HOARDING ... of gold ... by any person within the United States." Less than two months later, on November 11, 1918, the war ended, and two years later Wilson's power over private gold expired. Once again, Americans were under no restraints with regard to what they did with their gold. Presumably, the emergency was over.

THE NEW DEAL AND THE NEW "EMERGENCY"

Franklin D. Roosevelt was inaugurated as President on March 4, 1933. Throughout the country, banks were slamming their doors on depositors clamoring to withdraw their own money, preferably in gold. For people who were seeking to exchange soft paper currency for the more stable metal -- as existing law allowed, and as the Government had solemnly pledged -- the new President had other ideas. On March 5, 1933, one day after taking office, Roosevelt issued a Proclamation convening Congress in Extra Session at noon <> on March 9, 1933, a decision allegedly necessitated by what the Chief Executive referred to vaguely as "public interests." But March 9 was still four days away, and Roosevelt apparently was impatient to stop bank depositors from withdrawing their paper money or converting it to gold. Accordingly, the next day, March 6, 1933, he took an unprecedented step. For the first time in United States history, an American president closed the nation's banks. By Proclamation, he stated the following: the recent gold and currency withdrawals had been "unwarranted" and for the purpose of "hoarding"; speculation abroad had caused "severe drains" on the "Nation's" gold stocks; the result was to create a national "emergency"; further "hoarding" and "speculation" must be prevented and "appropriate measures" taken "to protect the interests of our people"; the Trading with the Enemy Act, as amended, had given the President certain powers over private gold; and therefore, "to prevent the export, hoarding, or earmarking of gold," the banks would take a "holiday" from Monday, March 6, 1933, to and including Thursday, March 9, 1933, and that during the holiday no bank would "pay out, export, earmark, or permit the withdrawal or transfer in any manner or by any device whatsoever of any gold ... or take any other action which might facilitate ... hoarding..." Roosevelt's action was devoid of even arguable legal justification. Nowhere in the Constitution is any branch of govern ment, let alone the Executive, given the power to close privately owned banking institutions. Nor did the Proclamation even purport to invoke constitutional authority. And despite the Proclamation's passing reference to an alleged "national emergency," no war conditions were present which could have enabled Roosevelt to argue that, under the Commander-in-Chief's "war powers," he had the authority to place in suspended animation a huge, crucially important part of America's commercial establishment. The Proclamation's reference to the World War I Trading with the Enemy Act, which had long since expired, was a strained attempt to find some semblance of legal support for Roosevelt's unprecedented assumption of complete control over America's banking system.

It is no wonder that Roosevelt immediately sent to a docile and compliant 73d Congress, a hastily drawn but comprehensive bill to amend the moribund Trading with the Enemy Act and to attempt to secure a legal basis for the unilateral action he had already taken.

RETROACTIVE RUBBERSTAMPING: THE EMERGENCY BANKING ACT

The House of Representatives convened at noon on March 9, 1933. After the customary opening prayer and the disposing of certain routine "housekeeping" matters, a message was received from the President which requested passage of H.R. 1491.

The bill's preamble dramatizes the haste with which the President's minions sought to railroad the bill through both Houses of Congress: "An Act to provide relief in the existing national emergency in banking, and for other purposes. Be it enacted ... that the Congress hereby declares that a serious emergency exists and that it is imperatively necessary speedily to put into effect remedies of uniform national application."

In the house, Majority Leader Joseph W. Byrns, Democrat of Tennessee, asked for immediate consideration of the bill and that debate be limited to forty minutes, twenty minutes for each party. Mr. Byrns expressed the hope that

Next rose House Minority Leader Bertrand H. Snell, Republican of New York. After noting that "it is entirely out of the ordinary to pass legislation in this House that, as far as I know, is not even in print at the time it is offered," Mr. Snell, in a burst of bipartisanship, observed:

[Fire, fire, fire. Its *always* fire!]

Someone then produced a copy of the bill, and it was read by the Clerk of the House. The bill was passed. After a short discussion, the spectacle of what had just transpired in the House in that hour-and-a- half session was best expressed by Congressman Lundeen:

Neither "calm deliberation and sober judgment," nor "full and free debate" characterized what took place next in the Senate, where H.R. 1491 -- which affected "millions of lives and billions of dollars" -- spent the afternoon with at least eighty United States Senators. Seventy-three of them voted "yea" and the bill, which had originated in the House at noon, passed the Senate by 7:30 P.M. Later that same night, Roosevelt approved it and H.R. 1491 became the Emergency Banking Act.

Fundamentally, the Act accomplished three things. First, it retroactively approved the President's illegal action of March 6, 1933. (If Roosevelt had thought himself to be on solid legal ground when he closed the banks, one could ask why he thought it necessary to go to Congress in the first place. This legislative "rubber stamp" approach to past and future executive action would be used more than once in the months ahead.)

Second, it amended section 5(b) of the Trading with the Enemy Act, to provide that:

Finally, it added a new subsection (n) to the Federal Reserve Act, giving the Secretary of the Treasury virtually unfettered discretion to compel holders of gold coin, gold bullion, and gold certificates to surrender them to the Treasurer of the United States, and to accept paper money instead.

Ironically, while the Act ostensibly reflected Congress' alleged concern with gold withdrawals, Congress ITSELF took no action at all. Instead, consonant with the remarks on the floor of each House, Congress gave the PRESIDENT sole authority to regulate all banks and financial transactions in general, and everything concerning gold in particular (with the Secretary of the Treasury acting as his "Requisitioner-in-Waiting"). And more: Roosevelt's new powers far surpassed those granted President Wilson by the World War I Trading with the Enemy Act; Roosevelt's authority extended beyond "time of war" to "any other period of national emergency declared by the President." Needless to say, just as the Act contained no elaboration as to what the current "emergency" was, neither did it establish any criteria by which the President was to ascertain the existence of any emergency -- an omission which was to prove crucially important to future presidents -- and to future owners of gold.

CASHING IN ON THE "EMERGENCY": CONFISCATION

Passage of the Emergency Banking Act on March 9 did not end that day's hectic activities. Still later that night, under the authority given him only several hours earlier, Roosevelt issued a new Proclamation. This one continued, in full force and effect, "until further proclamation by the President," the provisions of his March 6, 1933 bank holiday Proclamation and the regulations and orders which had been issued thereunder. However, a last loophole remained to be plugged: many individuals still had gold in their possession and no requisition had yet been made by the Government. Something had to be done to keep the gold where the Government could get at it when the time came. Accordingly, the next day, March 10, under the authority of the Emergency Banking Act and "all other authority vested in me," Roosevelt issued Executive Order No. 6073. In addition to authorizing the Secretary of the Treasury to decide which of the nation's banks could open, the order prohibited owners of gold from exporting or otherwise removing it "from the United States or any place subject to the jurisdiction thereof ... except in accordance with regulations prescribed by or under license issued by the Secretary of the Treasury."

Given this frozen state of financial affairs, the President could now turn his attention to what earlier he had deprecatingly referred to as "hoarding" -- i.e., the holding of gold by the people who owned it. It took Roosevelt a month. Acting under the authority he thought had been given him by the Emergency Banking Act, the President, on April 5, 1933, issued Executive Order No. 6102. Its title clearly discloses how Roosevelt intended to deal with "hoarding": "Executive Order Forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates." There were exceptions to this general prohibition: every American could retain a maximum of one hundred dollars in gold coin and gold certificates, rare coins were excepted altogether, and reasonable amounts of gold could be retained for use in industry and the arts. Banks, however, were required to turn over gold coin, gold bullion, and gold certificates "owned or received by them," to the Federal Reserve Bank. This included not only gold owned by the banks, but also gold owned by their depositors. In short, on or before May 1, 1933, all privately owned gold in the United States (subject to a few minor exceptions) was to be confiscated by the Government. As compensation, the owners were to receive paper money, whether they liked it or not. Willful failure to submit to the confiscation was punishable by up to ten years in jail and/or up to a $10,000 fine.

During the next two months, additional steps were taken to implement the government's confiscatory policy. On *April 19,* the Secretary of the Treasury advised that, until further notice, no further licenses would be granted to export gold for the purpose of supporting the dollar in foreign exchange. On April 20, the President went one giant step further: he issued an Executive Order prohibiting the earmarking for foreign account, and export, of gold coin, gold bullion, or gold certificates, while, at the same time, authorizing the Secretary of the Treasury to issue licenses permitting such export under certain conditions. On April 29, the Secretary of the Treasury issued supplementary regulations relating to the Executive Orders of April 5 and 20, with respect to gold hoarding and the gold export embargo. Article 5, section 1, of those regulations provided that

However, just the day before, on April 28, Acting Secretary of the Treasury Ballantine had established a precondition for all applicants: first, the gold had to be turned in. This precondition was, of course, couched in more legalistic terminology:

HOW TO IMPAIR THE OBLIGATION OF CONTRACTS AND GET AWAY WITH IT

The "proper transactions" and "maturing obligations calling for payment in gold" which the Treasury Department was coyly alluding to, involved what was known as "gold clause contracts." These were agreements, quite common at the time, pursuant to which payment was to be made in gold. Needless to say, there were payments coming due in gold under these contracts every day all over America. Now that the government controlled the ownership of gold, how were these contracts to be performed? Were the contract obligors to be the "applicants" in question? In theory, perhaps, but not in practice. Under the regulations of April 29, it seemed that one might obtain a license from the Treasury and thus legally possess gold required for the contract performance. But no matter what the regulations implied, Acting Secretary Ballantine had announced that no one would receive a license until he had first surrendered his gold. Moreover, how could the Treasury grant licenses even to persons who did surrender their gold, in the face of official policy which sought to establish a virtual government monopoly on all the gold in America?

Accordingly, to solve this particular problem, the administration promptly prevailed on Congress to wipe out all obligations to pay in gold. The Joint Resolution of June 5, 1933 speaks for itself:

In short, because of the alleged but unspecified "emergency," all voluntary, private agreements to pay and to be paid in gold -- past, present, and future -- were declared against "public policy," and gold was no longer a medium of exchange between private individuals.

AN EMBARRASSING SLIP-UP

Roosevelt's next executive order on the subject of gold was necessitated by a critical error he made in an earlier Order (the Executive Order of April 5, 1933), which had been promulgated under the authority granted him in the Emergency Banking Act of March 9. While it was true that the Act had given Roosevelt broad powers, those powers existed ONLY "[d]uring time of war or during any other period of national emergency DECLARED BY THE PRESIDENT..." However, despite the Administration's apparent preoccupation with the alleged, but as yet unspecified, "emergency," when Roosevelt had issued his April 5 Executive Order, he forgot to declare that an emergency even existed! Eventually, however, someone must have noticed the omission, because, on August 28, Roosevelt promulgated a new Executive Order which was, and is, one of the two main props of the gold prohibition: it resurrected the fiction of a "national emergency," (although once again the Order failed to mention what that emergency was); it revoked the earlier Executive Orders of April 5 and 20, 1933; and it tied together in one neat package everything that Roosevelt had done up to that time with regard to private ownership of gold. For example: section 3 required information returns to be filed by anyone owning or possessing gold; section 4 authorized the Secretary of the Treasury to grant licenses authorizing the acquisition of gold; section 5 prohibited ownership or possession of gold except under license and provided for the requisition of all privately held gold in America; and section 10 made willful violation of the Order "or of any license, order, rule or regulation issued or prescribed" under the Order a criminal offense punishable by up to ten years in prison and/or up to a $10,000 fine.

A Boston University law professor of the day eloquently summed up the dubious "accomplishments" of the New Deal's gold manipulations:

As indeed we were. The New Deal had given birth to a new class of felons: individuals with the temerity to deny that the Government had a right to confiscate their gold.

THE NEW DEAL TAKES A REBEL TO COURT

The first American who was indicted for the "crime" of owning gold, and who rebelled against the notion that he was a felon for doing so, was a lawyer named Frederick Barber Campbell. If the President thought that all of the various regulations, Executive and Congressional, were on solid legal ground, the Campbell case would soon prove him wrong.

In October of 1932 and January of 1933 Campbell had deposited twenty-seven bars of gold bullion with Chase National Bank for safekeeping. Chase had agreed in writing to act as bailee, for a fee, and return the bars to Campbell on demand. Then came the Emergency Banking Act of March 9, 1933 and the various decrees discussed above. On September 13, 1933, Chase's assistant cashier informed Campbell that, pursuant to regulations of the Secretary of the Treasury, the bank was obliged to file, in connection with Campbell's gold, a return with the Government no later than September 18, and also called Campbell's attention "to Section No. 5 of the President's Order, reciting that after thirty days from the date of the Order we shall be required to surrender [to the Government] any gold in our possession not covered by a license, as set forth in that Section." On September 16, two days before the final day to file returns, Campbell, in writing, demanded that Chase deliver the gold bars to him. On September 18, the bank declined, stating its belief that under the April 5, April 20, and August 28, 1933 Executive Orders it was prohibited from doing so. Less than two weeks later, on September 26, Campbell filed an equity complaint against Chase in the Southern Distri ct of New York for specific performance of the contract of bailment, and seeking an injunction pendente lite

[pendente lite: pending the lawsuit. Matters pendente lite depend upon the outcome of litigation.]

against delivery of his gold to anyone but him.

Two days later it was the Government's turn. On September 28, the grand jury for the Southern District returned a one-count indictment against Campbell, charging him with failure to file the return due on or before September 18, 1933. The defendant demurred,

[A demurrer is a defendant's allegation that admits the alleged matters of fact but shows that they are insufficient for the plaintiff to proceed. Most courts will no longer hear demurrers but require other procedures.]

alleging that the Emergency Banking Act was unconstitutional insofar as it purported to affect the private ownership of gold, and that Roosevelt's executive action taken thereunder was thus without authority and invalid.

In response, on October 5 the grand jury filed a superseding indictment, this time containing two counts. The first, for failure to file; the second, for owning, without license, on September 28, 1933, and up to the time of the indictment, $200,000.00 worth of gold bullion. Campbell again demurred on the same grounds, and, undeterred, on October 17 he sued the United States Attorney for the Southern District of New York in a civil action. In this action, Campbell sought an injunction to prevent his prosecution on the superseding indictment or any other indictment brought under the Emergency Banking Act and the regulations issued thereunder.

All of this litigation came on before Judge Woolsey, who rendered his decision on November 16. First, he turned to the equity cases, because, he said, "their inherent infirmities enable them to be disposed of on grounds not involving the constitutional question raised herein." As to the bailment action against Chase, the court held there was no federal subject-matter jurisdiction and dismissed Campbell's complaint. As to Campbell's action to enjoin the United States Attorney from prosecuting, Judge Woolsey dismissed it for lack of equity. Among his other reasons, he observed that "Campbell has raised the constitutional question here involved in the criminal case by his demurrers, and that question can be decided as well there..."

Once these two issues were out of the way, the court turned to the constitutional question. Woolsey recognized that Campbell's demurrer to the superseding indictment raised the following questions:

1. Did Congress have power under the Constitution to pass title 1 of the Act of March 9, 1933? [i.e., the arrogation of power issue]

2. If Congress did have that power, did it exercise it in the proper manner by declaring a policy and delegating to the President, in section 2, and to the Secretary of the Treasury, in section 3, respectively, the power of making regulations under the said sections? [i.e., the delegation issue, which led to formulation of the "emergency" rationale]

3. If the manner in which Congress exercised its power was constitutional, were the executive orders made by the President and the regulations pursuant thereto of the Secretary of the Treasury, on which the prosecution of the defendant is founded, within the authority granted to the President by Congress in Section 2 of title 1 of the Act of March 9, 1933?

4. If the executive orders were within the authority given by Congress to the President, was that authority exercised in such a manner as not to violate any of the defendant's constitutional rights?

Judge Woolsey answered the first question affirmatively. Because gold was a "commodity affected with a public interest as a potential source of currency or credit," Congress could, "when it considers that the national exigency demands control of gold ... control gold in such a manner and to such extent as it deems to be advisable, provided always that it does not violate the personal constitutional privileges of citizens." Thus, Congress was held to have the power to pass section 2 of the Act of March 9, 1933. As to section 3, authorizing the Secretary of the Treasury to requisition gold, the court, (after a lengthy discussion of eminent domain) held this to be "a valid exercise by Congress of a power necessarily incidental to its currency power."

Campbell had argued that Congress, in the Act, did not itself legislate, but instead had improperly delegated to Roosevelt the power to legislate. Judge Woolsey disagreed because: "[T]his act meets all the requirements of legislation by Congress on the subject-matter involved, for it stated a policy, to be contingently followed, and also provided the plasticity necessary in the enforcement of that policy by the delegation of regulating power in the field covered by the policy." Thus, the court upheld the Act's delegation, to the President and Secretary of the Treasury, under sections 2 and 3, of Congressional regulatory and requisitioning powers over gold:

In considering Campbell's contention that Roosevelt's executive orders were not authorized by section 2 of the Act, the court first summarized the Act's rationale this way:

As to the President's authority under Section 2 of the Act to require the filing of returns (pursuant to section 3 of his August 28 Executive Order) Judge Woolsey found Roosevelt's authority "unimpeachable. The statute is explicit, and the executive order does not go outside the mandate of the statute."

A RESOUNDING -- BUT INCOMPLETE -- VICTORY FOR THE GOVERNMENT

However, notwithstanding how much he had already validated, Judge Woolsey felt quite differently about the regulation made by section 5 of Roosevelt's August 28 Executive Order, which prohibited ownership or possession of gold after thirty days from the date of the Order.

I think it is clear that the persons who drafted that executive order for the President's signature went outside the Congressional mandate of section 2 of title 1 of the Act of March 9, 1993, which gave the President authority to investigate, regulate, or prohibit -- under such rules and regulations as he might prescribe by means of licenses or otherwise -- inter alia the hoarding of gold bullion.

The court thus recognized that authority to regulate or prohibit *hoarding* was not tantamount to authority to require, per Section 5, that owners of gold yield up their interest therein and title thereto. "That requirement is neither a regulation nor a prohibition, but a requisition." Despite this conclusion, Judge Woolsey was not striking a blow for the freedom of private gold ownership. On the contrary, he was reasoning in a manner entirely consistent with his basic premise that the government did indeed possess the power to prohibit private ownership of gold. For his objection was not to the *principle* of confiscation, but to who was to do the confiscating and whether some compensation would be available to the victims.

It must always be remembered that the power to requisition gold bullion delegated by Congress was lodged only in the Secretary of the Treasury under section 3 of title 2 of the Act of March 9, 1933, and not in the President under section 2 thereof, and that the Secretary of the Treasury has not acted yet under the powers so given to him which I have above found to have been inherent in the currency power of Congress.

In other words, private gold could be confiscated, but by the Secretary of the Treasury, not by the President.

What also bothered Judge Woolsey was the quandary a gold owner was placed in if he surrendered his gold pursuant to section 5 at the behest of the President rather than the Secretary of the Treasury. Since the President was not authorized by Congress to requisition gold, presumably the Government would thus not have made any implied promise to pay compensation for it. On the other hand, if the owner refused to surrender his gold to the President, he faced up to ten years in jail and/or up to a $10,000 fine. Judge Woolsey did not think it fair for a gold owner "[t]o lose his gold [without payment] if he complies and to be imprisoned and fined if he does not..." He concluded, therefore, that section 5 of the Executive Order of August 28, 1933 was confiscat ory -- not because the gold was taken, but because it was taken by one who was under no duty to give even paper money in return. The court concluded

that, by section 5 of the Executive Order of August 28, 1933, the President stepped outside of the zone of the mandate given to him by Congress in section 2 of the Act of March 9, 1933, to investigate, regulate, or prohibit the hoarding of gold bullion, and into the zone of his fellow mandatory, the Secretary of the Treasury, because he provided by section 5 of his said executive order for what is, in effect, the requisition of gold bullion either as incidental to a prohibition against the hoarding thereof or as a means of insuring the enforcement of such prohibition. Section 5 of the Executive Orders of August 28, 1933, is, therefore, invalid.

Campbell's demurrer to the second count of the indictment was sustained and that count dismissed.

That left count one: Campbell's failure to file the return. After deciding that the word "hoarding" was sufficiently definite for purposes of the indictment, and that Campbell's right not to incriminate himself was not violated by his having to file a return, the court overruled the demurrer as to the first count.

The net result of Campbell, therefore, was to validate passage of the Act of March 9, 1933, by which Congress had arrogated a constitutionally nonexistent money power; to validate the congressional delegation of power to the President (which, in turn, led to Roosevelt's "emergency rationale"); and to validate section 3 of his Order of August 28, 1933, requiring the filing of returns. Roosevelt's requisition of gold under the August 28, 1933 order, which, the court held, should have been made by the Secretary of the Treasury, was invalidated.

Acting to turn Judge Woolsey's decision into a total victory, on December 28, a month after the Campbell decision, Treasury Secretary Henry Morgenthau, Jr., issued an order requisitioning most private gold in America. This requisition order was the final step in the government's ten-month effort to terminate private gold ownership in America.

[ Ed. Note: part 8 apparently missing here ]

THE ENDLESS EMERGENCY: NEW HANDS AT OLD TRICKS

It was during the administration of Roosevelt's former Vice President, Harry S. Truman, that North Korea attacked South Korea. The day was June 25, 1950; the event, presumably a military one, having nothing to do with such economic issues as banking, foreign exchange, or transactions in gold. The Korean hostilities did, however, prompt President Truman to issue, on December 16, 1950 a Proclamation declaring the existence of a "national emergency" because: "[R]ecent events in Korea and elsewhere constitute a grave threat to the peace of the world and imperil the efforts of this country and those of the United Nations to prevent aggression and armed conflict..." That Truman was addressing himself to a *military* emergency could not have been clearer.

Presidents Eisenhower and Kennedy each confirmed the continued existence of the Truman-declared national emergency -- an emergency prompted, they readily admitted, by the threat of international Communism.

An American named Harold G. Bauer not unreasonably came to the conclusion that the military emergencies of the Truman and Eisenhower administrations could not be equated with the alleged 1933 economic emergency of the Roosevelt administration. Bauer, therefore, felt free to acquire some gold bullion -- an action which promptly got him indicted. Convicted of the "crime" of possessing gold bullion, Bauer appealed to the United States Court of Appeals for the Ninth Circuit.

The court framed the issue succinctly: "[Bauer's] acts were criminal if Executive Order No. 6260 [of August 28, 1933], as amended, was still in effect on... [February 12, 1954, the date of the alleged commission of the offense]."

It was Bauer's contention that since neither a war nor an economic emergency existed, Roosevelt's Executive Order had long since died a natural death. The Government did not choose to meet this argument, contending, instead, that the court lacked the power to take judicial notice of whether Roosevelt's economic emergency -- or any other -- had ceased to exist.

The circuit court was clearly sympathetic to Bauer's argument:

It seems vital as a matter of national policy that emergency regulations and almost dictatorial powers granted or conceded in the turmoil of war, cold war, economic revolution, and the struggle to preserve a balanced democratic way of life, should be discarded upon return to normal conditions, lest we grow used to them as the fittings of ordinary existence. Executive regulations drafted and confirmed for an emergency should expire with the emergency. There will be time enough to revivify these if another emergency require and Congress be willing. Of course, if it seems essential to continue the subject matter of these criminal regulations now, Congress can so declare. But the power lies in Congress.

Nevertheless, because it was unwilling to conclude, as a matter of law, that no emergency existed which could justify the continued validity of the criminal sanctions of Executive Order No. 6260, and because, as an appellate court, it possessed "no jurisdiction or facilities for taking evidence," the court remanded to the trial court below, "with directions to consider the matters here presented, with power to vacate the judgment, grant a new trial and take evidence or any other action in the light of this opinion."

"Bauer" raised the question of whether the Government, in its zeal to retain its gold monopoly, would continue to attack gold ownership on the grounds that the Roosevelt emergency had not expired. The question was answered in "United States v. Briddle and Mitchell." The Government, which had indicted the defendants for possessing gold bullion, *this* time argued in the alternative: either the 1933 emergency still existed, or "new" and sufficient emergencies had been created by Presidents Truman, Eisenhower, and Kennedy -- by virtue of such diverse developments as the Korean war, Communist imperialism, and/or a balance of payments deficit. In other words, owning gold would always be taboo, because the Government would never run out of pretexts for declaring the existence of some emergency or other -- endlessly and ad infinitum.

The trial court in "Briddle and Mitchell" did what the appellate court in "Bauer" had declined to do: it too judicial notice of the fact "that the 1933 economic emergency ended long before 1962," and it noted, in passing, that Roosevelt's order "has not even the color of legal validity stemming from Congressional delegation of war powers."

Taking into account the Government's endless emergency rationale, Judge Mathes observed:

The Government urges, however, that it should be given an opportunity to present evidence that a "national emergency", sufficient to sustain the validity of Executive Order No. 6260, now exists by virtue of our present balance-of-payments-abroad deficit. This would be a futile procedure, since the President admittedly has not made the declaration which the statute requires.

Finally, the Government argues that a "national emergency" has been declared, both by President Eisenhower and by President Kennedy, which will sustain the validity of Executive Order No. 6260, and so the penal provisions of the statute. It is so pointed out that on December 1, 1960, President Eisenhower issued Executive Order No. 10896 [25 Fed. Reg. 12281 (1960)] proclaiming that, in light of the continued existence of the emergency declared in Proclamation No. 2914 [15 Fed. Reg. 9092 (1950)], Executive Order No. 6260 and the gold regulations issued thereunder "are hereby approved, ratified and affirmed and shall continue in full force and effect..."; also that on January 17, 1961, President Kennedy issued a similar Order [Executive Order No. 10905, 26 Fed. Reg. 321 (1961)] which also made reference to Proclamation No. 2914.

It may well be, as the Government contends, that each of these Executive Orders, and more especially the latter, was directed primarily against the recent outflow of gold. But rather than declaring the existence of an economic emergency necessitating Exec utive Order No. 6260, each is based upon Proclamation No. 2914, which was President Truman's declaration of a national emergency due to the Korean war and Communist imperialism.

Unable to restrain himself from pointing out the obvious, Judge Mathes noted:

The Korean hostilities have long since ended. And while Communist imperialism continues to pose a threat to the nation, the existence of that struggle -- that "national emergency" [12 U.S.C. Section 95a] -- cannot serve to prolong until almost 30 years later "The Great Depression" of 1933.

Finally, Judge Mathes, exercising in magnificent fashion, his proper function as judicial guardian of the Constitution, held:

To hold that the existence of Communist imperialism authorizes the criminal provisions here in issue would be to condone the methods of the enemy. For if the President of the United States be permitted to create crimes by fiat and ukase <> without Constitutional authority or Congressional mandate, there is little to choose between their system and ours.

The years since the 1933 enactment of 12 U.S.C. Section 95a have seen wholesale abdication of power by the Congress to the President. It is not the function of the Judicial Department to sit in judgment upon the wisdom of that trend, but it is both the function and duty of the courts to hold the exercise of delegated Congressional powers strictly within the confines prescribed by the Congress. A multo fortiori <> so, where the Congress delegates to the Executive the power to make criminal what was theretofore lawful.