“What For You Bury Me In The Cold, Cold Ground?”

In 1936, the United States Bullion Depository at Fort Knox, Kentucky, opened. Opened—not the mot juste. The federal government piled gold bars upon gold bars into this huge brand-new vault deep in the ground. An army base (Fort Knox) surrounded the setup, and the outer perimeter was an impenetrable circle of mountains. Nobody unauthorized was getting at this stuff.

The bars came from President Franklin D. Roosevelt’s gold confiscation of 1933. The big man barreled into office in March 1933 and in his first act as president told the nation’s inhabitants that they had until the end of May to turn in every scrap of gold they had, to the feds, for a $20 bill.

The lion’s share of this gold, this gold owned beyond legally by countless Americans up and down the country, was in United States Mint-issued coins. Yep, that had to be handed in for the paper bill. All the Eagles, Double Eagles, all that with the Augustus Saint-Gaudens beaux-arts designs and markings that the federal government had verily marketed to the American people for generations had to come back. For a paper bill, a greenback. And then the feds destroyed all the art. They melted the coins into bars, stamped them with a number like for prison inmates, and buried everything in the cold, cold ground.

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“What for you bury me in the cold, cold ground?” The question that the Tasmanian Devil posed to Bugs Bunny is a fair one with respect to the gold of the American people, coined gold that had been a part of their day-to-day lives, smoothing their commerce and a tool for investment (pre-1930s had been the golden age of investment) constantly for generations up until FDR’s suddenness of 1933. All this gold had been out there across the fruited plain, in the United States, accompanying the American people in their greatness as they summoned the agricultural and industrial revolutions to their acme. Gold coins had been with Americans the whole while, being useful and serious, as they made this greatness.

Dude confiscated it for greenbacks, melted it down, and buried it? What gives?

Why did he do it, what for did he bury it in the cold, cold ground? In the service of a theory. This was that the huge economic slowdown, the Great Depression at its absolutely frightful trough in 1933, in good part was happening because people had a preference for holding gold over cash. Paper will never appreciate in value, so people might spend it. Gold might appreciate in value, so people can hoard it. At a time when the exchange of money for goods and services had slowed to not even a crawl, and output and living standards had cratered, FDR said take all the gold and bury it.

Never mind—that the United States had had no income tax not twenty years before (in 1913) and that the top rate of that tax the year before, in 1932, had gone up one-and-a-half fold, from 25 to 63 percent. Never mind that the biggest tariff in history came into its own 1929-33. Never mind that local property taxes soared truly off the charts in the early 1930s—to 8 percent of GDP (one in twelve precious 1932 dollars going to goofs in local government??). Never mind that the consensus that the United States should have low taxes and stable money—the consensus of the economically prodigious nineteenth century—was manifestly shot to smithereens by the unbelievable policy developments of 1929-33.

Cast all that aside, please. Because people are hoarding gold, the economy cannot get up from flat on the ground.

In other words, FDR buried the gold in the cold, cold, ground because he had no idea—or did not want to know—why the Great Depression was going on. We have, to this day, the United States Bullion Depository at Fort Knox as a living testament to our misunderstanding of the greatest economic calamity of modern history, the Great Depression. The feds should should sell off the gold at Fort Knox for this reason alone. The place is a statue, a monument to horrid thinking about a grave issue.

Hold it, there was sharp economic recovery after 1933. FDR himself did not think so. He broke precedent for a third term in 1940 because he knew had he honored George Washington, he would be remembered today, as president from 1933-41, as the guy who tried, grandiosely, but failed to solve the Depression. Private production was still way off precedent in 1940, as was private employment. World War II gave FDR a chance to change the subject. It would have been more honorable had he owned his misdiagnosis of the 1930s. Now could we please move on, and sell the gold?