Bankers called the excess “free gold.” The Federal Reserve needed a stock of free gold sufficient to satisfy redemption requests that might occur in the near future. The Federal Reserve typically held more than enough gold to back the currency it had issued. The law required the Federal Reserve to hold gold equal to 40 percent of the value of the currency it issued (technically termed the Federal Reserve Note but colloquially called the dollar) and to convert those dollars into gold at a fixed price of $20.67 per ounce of pure gold. In 1913 the gold standard was built into the framework of the Federal Reserve. The United States had been on a de facto gold standard since the 1830s and de jure gold standard since 1900. ![]() The Roosevelt administration’s policies regarding gold and dollars were controversial and consequential.
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