NEW YORK (TheStreet) -- With the economy in tatters and the banks in crisis, the executive branch of the government took unprecedented action -- and it meant confiscating your closely held property.
And, no, we're not talking about the Great Recession.
In 1933, with America five years deep into the Great Depression, the stage was set for an act of huge economic proportions.
On March 6, 1933, Executive Order 6073 was passed by President Franklin Delano Roosevelt in an attempt to solve the dire banking crisis. The order reopened the banks but also strictly regulated the movement of gold in and out of the country and in and out of banks.
Executive orders have been around since 1789, allowing Presidents to issue legally binding orders unilaterally, without the consent of Congress. During his presidential tenure, a time of extreme crisis from 1933 to 1945, Roosevelt would issue 3,728 Executive Orders.
This was his third and it was a doozy. One could just imagine the anger and frustration at limiting access to gold. I doubt this will happen again but history does have a way of repeating.
Source: Wikipedia-executive order 6102
Just two days after Roosevelt was inaugurated as president, he proclaimed a "banking holiday." From Monday, March 6 to Thursday, March 9, 1933 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 silver coin or bullion or take any other action which might facilitate the hoarding thereof..." Sold to the American people as an attempt to control speculation and regulate interest rates, he closed America's banks, thwarting customers from withdrawing their paper money holdings or converting their holdings to gold.
With a wave of his magic wand, Roosevelt took control over America's banking system, expanding his executive powers in the process.
In his first "fireside chat" on March 12, 1933, Roosevelt said, "Let me make it clear to you that the banks will take care of all needs, except, of course, the hysterical demands of hoarders, and it is my belief that hoarding during the past week has become an exceedingly unfashionable pastime in every part of our nation. It needs no prophet to tell you that when the people find that they can get their money -- that they can get it when they want it for all legitimate purposes -- the phantom of fear will soon be laid. People will again be glad to have their money where it will be safely taken care of and where they can use it conveniently at any time. I can assure you, my friends, that it is safer to keep your money in a reopened bank than it is to keep it under the mattress."
On June 16, 1933, Executive Order 6073 passed into legislation as the Emergency Banking Act. After only one evening of debate, the bill passed. The wand was waved again.
At the time, Congressman Ernest Lundeen (a Republican from Minnesota), appalled at the reckless speed involved in the passing of this Bill said, "I want to put myself on record against procedure of this kind and against the use of such methods in passing legislation affecting millions of lives and billions of dollars. It seems to me that under this bill thousands of small banks will be crushed and wiped out of existence, and that money and credit control will be still further concentrated in the hands of those who now hold the power.... I am suspicious of this railroading of bills through our House of Representatives, and I refuse to vote for a measure unseen and unknown."
Meanwhile, Executive Order 6073 paved the way for Executive Order 6102 on April 5, 1933.
This Executive Order made it a criminal act to possess gold coins, gold bullion and gold certificates within the continental United States and ordered that the hoarded gold be delivered to the Government on or before May 1, 1933. The official price of gold was raised from $20.67 to $35 an ounce.
Although it is unknown just how much gold was confiscated by means of Executive Order 6102, numbers suggest that by August 1934, the government had 227.9 million ounces, up from 195.1 million in January 1934.
The government had to have some place to hold the confiscated gold. So, Executive Order 6102 paved the way for Fort Knox. The U.S. Treasury Department began construction of the United States Bullion Depository in 1936. Completed in December of that year, at a cost of $560,000, the gold vault sits in a 109,000-acre U.S. Army enclave in Kentucky.
The U.S. Mint states that 147.3 million ounces of gold are now tucked into Fort Knox.
While another executive order confiscating gold could come at any time, there are ways to take advantage of gold's next bull market that can add leverage and protection against a gold confiscation. One of the best ways is through the ownership of gold producing companies. The key here is in buying the right companies as the right time within the market cycle.
If you are interested in accumulating shares in what will be some of the best performing stocks in the near future, learn more here.
Kal Kotecha helped with the writing of this article.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.