I would like to salute you sir on your decision to run again as the Republican nominee for Hawaii House District 41. Your decision to run is a true testament your perseverance and your adherence to the conservative values of family, patriotism, capitalism, and the abolition of legislative tyranny manifest in the form of “big government.”

The reason your decision to run is so important is because the current incumbent Democrat Representative from District 41 has been systematically misleading the public with his real intentions and “buying” their votes. He sends out these “community reports” where he tells the voters how he is using “their” own tax money to fund community projects. What he fails to tell them is how he is (1) wasting their tax money when they themselves could be using it in ways that benefit themselves and their community more, and (2) projecting an extremely liberal agenda that he does not list in his “community reports.”

His blatant hypocrisy and total departure from what I believe are the common sense values of the voters of District 41 have led me to research and compile a list of “unadvertised” actions that Representative Jon Riki Karamatsu has engaged in over the last year. Please use my research as you see best fit during your election campaign to educate the voters of District 41 on this “wolf” in sheep’s clothing.

You only lost by a little over one thousand votes in 2004. Although this may sound like a low number, in a district where only a little over four thousand people showed up to vote, that is a serious hurdle to over come. But I am confident that if the voters in this district actually see the kind of policies that Representative Karamatsu ACTUALLY supports, this can be a very close race indeed. While these are only House Resolutions, they really speak volumes as to Karamatsu’s personal values, character, and liberal agenda. Please seriously consider distributing some of this information to the voters in your campaign material or anywhere else you feel it would get maximum exposure to the voters of District 41.

Resolutions Sponsored by Jon Riki Karamatsu during the last Legislative Session:

     On March 29, 1792, James Madison, a founding father and key player at the Constitutional Convention, published an editorial in the National Gazette. In it, he defined the essence of property as, “That domination which one man claims and exercises over the external things of the world, in exclusion of every other individual” (Madison 515). He also concluded that property was defined as land, merchandise, and money in the physical sense, as well as opinions and free communications in the arena of “intellectual property” (Madison 515). Furthermore, Madison went on to argue that: 
        
          Government is instituted to protect property of every sort....This being the end of 
          government, that alone is a just government, which impartially secures to every man, 
          whatever is his own. (Madison 515)

This concept that Madison imparted in this editorial was one of the founding principles of our republic and was protected and guaranteed to us by the Fifth Amendment to the Constitution in 1791 which states, “No person shall be…deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation” (Bill of Rights). It was also this concept that helped America grow and expand, fueling progress and industry and contributing to the genius of the free-market capitalist experiment here. That was until 1929, however, when the country was suddenly jolted into a catastrophe of unimaginable proportions. After three and a half years of a government and administration that was seemingly paralyzed and unable to revive the American economy or help the American people, Americans voted into the Presidency a man that would turn the way they thought about the role of government in their lives upside down. That man was Franklin Delano Roosevelt and his “New Deal” unleashed a barrage of emergency actions aimed at recovering the confidence of the American people in the economy. Although many of these actions did help restore that confidence in the American economy and government, one of these efforts went too far and Americans are still paying for that decision today. That reactionary decision, which would cost future generations so much, and which spelled a complete departure from those founding principles of private property rights that Madison had espoused so impassionedly years before, was the removal of the United States dollar from the gold standard.

     On March 4, 1933, as Franklin Roosevelt was sworn in as the thirty-second President of the United States, America was experiencing a banking crisis of colossal proportions. Banks were closing their doors across the country and the United States banking system was on the verge of collapse. Individuals were running to the banks and withdrawing their money in order to “hoard” it themselves, not fully trusting in the country’s banking system. As a result, the banks did not have enough “hard” currency, or gold, to pay out the overwhelming demand they were experiencing, so many banks were forced to shut their doors. On March 6, 1933 President Roosevelt proclaimed a bank holiday in order to curb the rampant withdrawals that were taking place and convened an emergency session of Congress. Then, on March 9, 1933, Congress passed the Emergency Banking Act which gave the President, among other things, the power to regulate the, “…export, hoarding, melting, or earmarking of gold or silver coin or bullion or currency, by any person within the United States…” (Emergency Banking Act of 1933). Following that Congressional delegation of power, the next day on March 10, 1933, President Roosevelt issued Executive Order 6073 which not only reopened the counties banks, but also mandated that:

          Under further order, no individual, partnership, association, or corporation, including
          any banking institution, shall export or otherwise remove or permit to be withdrawn
          from the United States or any place subject to the jurisdiction thereof any gold coin, gold
          bullion, or gold certificates....No permission to any banking institution to perform any
          banking functions shall authorize such institution to pay out any gold coin, gold bullion
          or gold certificates except as authorized by the Secretary of the Treasury, nor to allow
          withdrawal of any currency for hoarding… (Executive Order 6073)

Following the issuance of this Executive Order, President Roosevelt went on national radio two days later on March 12, 1933 and told the American people what had transpired over the bank holiday, both in Congress and in the White House. He assured them that the banks were safe and told them that:

          The new law allows the twelve Federal Reserve banks to issue additional currency on
          sound assets....It is sound currency because it is backed by actual, good assets.
          (Roosevelt 14)

What the President actually meant by “sound currency” and “good assets” was not clearly stated in his radio address, however, given the standard of money at that time in United States history, it may reasonably be assumed that he was referring to gold. The following month, on April 5, 1933, the President officially took the United States dollar off of the gold standard, effectually, with Executive Order 6102. In it, he mandated that, “All persons are hereby required to deliver…all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership…” (Executive Order 6102). This Executive Order not only took the United States off the gold standard, but is also ordered the confiscation, by the United States government, of personal property in the form of gold. Arguably, it was this form of property that was one of the most valuable commodities that Americans could own during this unprecedented time in American history. Furthermore, this Executive Order, and the ban on civilian ownership or investment in bullion or monetary forms of gold by American citizens that resulted, would be made a permanent facet of American life by Executive Order 6260 on August 28, 1933. This civilian ban on civilian ownership of gold would remain in effect until December 31, 1974, when it was finally rescinded by President Ford with Executive Order 11825. Even with the rescinding of that ban, gold has never again been the measure of the United States dollar and the threat of another proclamation of gold confiscation still hangs like a dark cloud over the commodities investor of today.

     There is little doubt that a serious crises existed in 1933. That being the case, serious, reactionary, and emergency measures were the order of the day, both in the White House and in the 73rd Congress. The departure from the gold standard and the confiscation of gold were the result of a desperate attempt to try anything to revive the American economy. Additionally, President Roosevelt did have some rather good reasons for doing what he did at that point in American history. One of the reasons that the President gave for the departure from the gold standard, was the simple fact that previous administrations, in collusion with the financial sector, had already done so, at least “in deed,” and that he was only making it official. He gave this reason in his radio address to the nation on May 7, 1933 when he stated:

          ...it is worthwhile remembering that in the past the government has agreed to redeem
          nearly 30 billions of its debts and its currency in gold, and private corporations and
          individuals in this country have agreed to redeem another 60 or 70 billions of securities
          and mortgages in gold. The government and the corporations and individuals were
          making these agreements when they knew full well that all the gold in the United
          States amounted to only between 3 and 4 billion and that all of the gold in the world
          amounted to about 11 billion. (Roosevelt 25)

What President Roosevelt was saying, in other words, was that the government had printed more currency and issued more bonds promising to pay in gold, and corporations and individuals had made promises to pay in gold, in an amount that was roughly ten times the amount of actual gold that was available on the planet at that time! Obviously, if everyone tried to cash in these debts all at once, there would not be enough gold to go around and Roosevelt alluded to this in the subsequent paragraph of his address. In addition to recounting his need to pull the country off the gold standard, President Roosevelt also felt the necessity to explain to the American people why he had also ordered the confiscation of gold as well. In explaining that decision, President Roosevelt recounted that:

          A series of conditions arose three weeks ago which very readily might have meant, first,
          a drain on our gold by foreign countries, and second, as a result of that drain, a flight
          of American capital itself, in the form of gold, out of our country. (Roosevelt 25)

This was a very serious and real threat to the United States and President Roosevelt was right to be concerned about it. That kind of departure of real assets from America would very likely have caused real panic conditions in this country. Additionally, there is an historic president that highlights what happens when that sort of departure of gold commodities leaves a country or region. It is postulated that a major reason for the fall of the Western Roman Empire in the 5th century A.D. was do, in part, to the departure of gold from west to east. According to C. Warren Hollister and Judith Bennett in their book Medieval Europe: A Short History, along with other reasons, many of which may still experienced in modern national economies, such as, “…rural poverty, agricultural decline, population stagnation, runaway inflation, and high taxes.” (Hollister and Bennett 33), the departure of gold coins from the relatively new kid on the block, Rome, towards the long established metropolitan trade centers of the Eastern Roman Empire, contributed significantly to the decline of the Western Roman Empire (Hollister and Bennett 32). In a modern day comparative sense, President Roosevelt confiscated gold and forbade the hording or trade of such metal, in an attempt to ensure the fall of America was not the result of a flight of gold coin and bullion to Europe.

     Now that it has been established as to what exactly President Roosevelt did and why he did it, the question then needs to be asked; was this all constitutional? Actually, this question needs to be expanded on further to answer the two basic realities of the situation that, taken together, encompassed the actions President Roosevelt took, but separately, equated to two distinct courses of action themselves. Those two realities were: 1) The fact that the President took the nation off of the gold standard, and 2) The fact that the President ordered the confiscation of privately property, in the form of gold, by the United States government.

     To answer the question as to whether the action to take the nation off of the gold standard was constitutional, the Constitution itself provides the answer. In Article I, Section 8, of the Constitution, it states that Congress has the power, “To coin Money, regulate the Value thereof, and of foreign Coin…” Now this power in no way gives the President the power to do the same, however, that power was delegated to the President by Congress in the Emergency Banking Act of 1933, after concluding, “That the Congress hereby declares that a serious emergency exists…” Additionally, Congress affirmed all of the President’s actions in regard to his gold policy on January 30, 1934 with the passage of the Gold Reserve Act of 1934. This power that Congress has to “regulate the Value thereof” is a pretty broad and specific power and it is hard to argue that determining if the country’s money should be valued in gold or something else, would not fall under the intent of that clause. Furthermore, the United States Supreme Court would uphold the constitutionality of the removal of the United States dollar from the gold standard in a series of cases in 1935, known collectively as the “Gold Cases.” The cases did not actually challenge the legitimacy of whether Congress had the power to take the country off the gold standard, rather, the defendants in these cases challenged the fact that the United States government refused to redeem bonds bought prior to 1933 in gold, due to, in the government’s judgment, the fact that the “coin” of the United States no longer contained any gold content. The Supreme Court ruled in favor of the government, determining that the contract vehicles of the bonds were agreements to pay the bearer in United States currency, not in gold specifically. Through this decision, it can be implied that, in order to reach this decision, the court must have first acknowledged the inherent right that Congress had to change the value of the country’s currency from gold to the “full faith and credit” of the United States government.

     In regard to the question of whether the President had the right to order the confiscation of private property, in the form of gold, the question becomes less “cut and dry” and the answer more complicated. When President Roosevelt made the comment that, “…government currency and government credit are really one in the same…” in his radio address to the American public of May 7, 1933, he was referring to a currency that had been extended from mere coin to paper obligations, also known as “greenbacks.” These “greenbacks” promised to pay the bearer, on demand, a sum of currency in the form of coin. These pieces of paper, on which there were promise to pay, were, in and of themselves, worthless. The ability to trade them in for gold coin, however, did give them value, as long as there was gold coin to be had. But the government, long before President Roosevelt came along, had decided to overextend it’s obligations to pay out gold by printing more “greenbacks” than there was actual gold. Once the government had removed the United States dollar from the gold standard, it needed to do something about these obligations to pay gold, as well as that amount of gold coin, in the form of dollars, that were in circulation. Hence the Madisonian dilemma that the government was faced with; did it respect, unconditionally, that principle that Madison had espoused that “government is instituted to protect property of every sort” by allowing gold coin and certificates to remain in private hands and be honored, or did it institute its power “to regulate” currency under the Constitution and force a confiscation of those notes and coin. At issue, in actuality, was a conflict between Article I, Section 8, of the Constitution, which gave Congress the power to regulate currency, and the Fifth Amendment to the Constitution, which gave the people the right to be secure in their property. What eventually won out in this constitutional contest, was the Congress’s broad and sweeping power to regulate the United States currency. Whereas the Congress’s power under Article I, Section 8, gave the government practically unlimited room to move in the arena of currency, the Fifth Amendment was more restrictive and open to greater flexibility when it came to interpretation. The wording of the Amendment that said, ““No person shall be…deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation” is extremely ambiguous, especially the wording, “without due process” and “without just compensation.” That “due process,” in regard to the confiscation of gold, revolved around Congress’s Article 1, Section 8, powers. Likewise, the “just compensation” that was afforded to the owners of gold coin and gold certificates was a direct result of Congress’s use of its Article 2, Section 8, power to “coin money,” and determine the value of the United States dollar as something other than gold.

     While those individuals that owned gold coin and certificates were “paid” for their return of aforesaid commodities with “new” United States dollars, thus making the transactions constitutional, in theory anyway, what about the constitutionality of confiscating gold in other than monetary mediums, such as bullion? The President’s Executive Order’s concerning the confiscation of gold had all referred to bullion as well, which is, for all intents and purposes, an investment medium rather than a monetary one. This aspect was not brought up in the “Gold Cases” that the Supreme Court heard, nor was a ruling ever made on the constitutionality of this action. Being that bullion did not have a stamp on it marking it as a form of United States currency, the confiscation of bullion should not have had the constitutional confliction that gold dollars and certificates had succumb to, right? On the surface, this seems to have been a clear violation of the Madisonian principle of government protection of private property by confiscating an individuals property, in the form of gold bullion, without any claim to government regulation thereof due to the “Monetary Clause” in the Constitution. Well, in actuality, even though the country had technically gone off the gold standard, a good portion of that “full faith and credit” that the new dollar now relied on was vested in the country’s gold reserves. President Roosevelt alluded to this himself in his radio address to the nation on May 7, 1933 when, after explaining to the American people why he had took the country off the gold standard, he related that:

          Nevertheless, gold, and to a partial extent silver also, are perfectly good bases for
          currency, and that is why I decided not to let any of the gold now in the country go out
          of it. (Roosevelt 25)

This reason, again, harkened back to the aforesaid justification that was imparted in paragraph three of this paper, where President Roosevelt felt a need to keep America’s gold in the country and not have it drained away by foreign creditors and investors, primarily from Europe. That justification was affirmed by Congress in the Preamble to the Emergency Banking Act of 1933, referring to the “serious emergency” that existed on a national level. What President Roosevelt did, in effect, and like President Lincoln had done during the Civil War, was suspend a constitutional right due to a “state of national emergency.” Whereas President Lincoln had suspended the privilege of the Writ of Habeas Corpus guaranteed to all Americans by Article 1, Section 9, of the Constitution, due to the national Rebellion that had erupted in the Southern States, President Roosevelt similarly suspended the right of Americans to own property, specifically in the form of gold bullion, and as guaranteed to all Americans under the Fifth Amendment to the Constitution, due to the national emergency that was declared by Congress in the Emergency Banking Act of 1933. But unlike President Lincoln’s suspension, which was rescinded once hostilities ceased, President Roosevelt’s suspension of the right to own property in the form of gold bullion, was not rescinded until 1974, long after it was still necessary to combat the “national emergency” that was the Great Depression.

     Throughout the decades since President Roosevelt took these drastic measures, there have been a number of effects on the American public that his decisions regarding gold have resulted in. First, by taking the country’s currency off of the gold standard, the United States dollar was then “free” to be borrowed against and more of it printed and circulated, without the cumbersomeness of actually having a real commodity backing it. This has led to speculation against the dollar and has allowed the dollar to see wild inflationary gains, like those that were experienced in the 1970’s and early 1980’s. This has also led to a significant depreciation in the buying power of the United States dollar. For example, since 1950, just 17 years after the United States went off the gold standard, the purchasing power of the dollar has depreciated by 87 percent; or in other words, one dollar in 1950 would only buy 13 cents worth of goods today (Hodges)! Second, by valuing the dollar against the “full faith and credit” of the United States, this has allowed the Congress to borrow against the Gross National Product (GDP) of the United States, exploding the Public Debt to a current level of $8,263,812,000,000 with a debt limit instituted by the 109th Congress of $8,965,000,000,000 (Bureau of Public Debt). Third, again, by valuing the dollar against the “full faith and credit” of the United States, it puts the country on an uneasy footing internationally. Since the paper money that constitutes the dollar is worthless in and of itself, then the only value that the United States dollar has to foreigners is what goods, services, or real assets they can buy with that dollar. Sure, there is a active market today that involves the betting against different international currencies, the United States dollar being a key currency traded on that market, but at the end of the line, when that dollar has traded hands down to the last foreign national to own it, that dollar is only worth what it can buy here in the United States, in the way of real assets or property. This means that America has to be open for business, all the time, and especially to foreigners. This is normally a good thing, however, when the United States has a real need to institute protectionist measures in the interest of national security, this can pose a problem. The recent rejection of China’s bid to buy a United States oil company and the recent Dubai Ports World scandal are evidence of type of problems this might cause. By sending the message that the United States is not open for business in certain areas, the United States risks making the dollar less attractive to foreign investors and the dollar is subject to a decline in price on international currency markets. Finally, by the President and Congress sending the message to the American people in 1933 that gold can be confiscated on the whim of the United States government, this has created an uncertainty in the value of holding gold positions as an investment. If the government could do it once, then why could it not do it again? The long stretch of prohibition on the owning of gold by the American people as a monetary or investment vehicle has resulted in the “demonization” of gold. It has pushed investors away from gold for fear of the possibility of another gold confiscation during another economic crisis period. Given the fact that gold has been a relatively stable monetary device on earth for over 5000 years, this “demonization” seems a bit unwarranted and, quite frankly, unsound.

     President Roosevelt’s actions in relation to gold in 1933 fundamentally changed the way American’s view their money and how the United States government governs monetary policy. There is little doubt that the flow of gold out of the United States, and into the major banks of Europe, would have been a bad thing for the United States economy in the 1930’s. There is, however, a genuine issue of debate as to whether the methods used to secure America’s gold supply were the right course of action. The question at hand is whether or not it is exceptable to trample on the minority’s right to economic freedom and the constitutionally guaranteed right to be secure in one’s property, in order to improve economic conditions for the majority. In viewing President Roosevelt’s actions and the results of those actions from today’s perspective, I would have to conclude that, given the situation that President Roosevelt was faced with in 1933, his actions were probably one of the few courses he could have taken to secure the future prosperity of America. But these actions should only have been of a temporary nature, and I believe that America would have benefited from a return to the gold standard once the crises had been averted. That is of course, provided that the United States government would have instituted a strict regulation of monetary policy in relation to gold reserves and “greenback” printing that would not have put the country back into the situation of over extending its gold payment obligations. Additionally, the “demonization” that occurred in reference to gold acquisition and ownership in the post-Great Depression era was despicable and individuals should have been allowed to own gold as a hedge investment against the declining buying power of the dollar much earlier that 1974. It should have probably occurred as soon as the nation was effectively out of the grip of the Great Depression, but no later than 1950. The unfortunate aspect of President Roosevelt’s gold policy, and the Great Depression in general, was that they both entailed major changes from the traditional way that Americans were used to doing business. Some aspects of that change were for the better in the long run, but others were not. The problem is that humans, by their very nature, are naturally resistant to change. It takes a major undertaking, or major catastrophe like the Great Depression, to get people to change. Unfortunately, with regards to President Roosevelt’s gold policy, by the time World War II ended, which seemed to be the perfect time for the country to reverse those policies, the nation’s new monetary policies were already business as usual and that natural resistance to change reared its ugly head again. It is this generation, and future generations to come, that will have to pay the price for the World War II generation’s decision to put their own financial security over sound and fiscally responsible monetary policies, policies that would protect this country from inflation and massive government debt in the long run.

                                                     Works Cited

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United States. President. Executive Order 6102. 5 Apr. 1933. Washington: GPO, 1933.

United States. President. Executive Order 6260. 28 Aug. 1933. “The Donnelly Collection of Presidential Executive Orders.” The Conservative Caucus. n.d. 08 Jun. 2006 <http://www.conservativeusa.org/eo/1933 /eo6260.htm>.

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