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The gold standard is a monetary standard that ties a unit of currency, or money, to a stated amount of gold. Under this system, both banks and the government stand ready to redeem their note and deposit liabilities in gold at the stipulated rate. In September 1931 the United Kingdom abandoned the gold standard, and many countries followed. The United States held on to the gold standard until 1933, when both foreign and domestic demand for gold led to runs on U.S. banks (with depositors and note-holders rushing to cash in their assets for gold). The fear was that a large number of banks would fail due to insufficient gold to cover demand, and that the U.S. official gold stock would be depleted. This economic danger occurred just as President Herbert Hoover's term was ending and Franklin Delano Roosevelt's had not yet begun. Moreover, there was no cooperation between the president and president-elect. Rumors were spreading that the new president might terminate U.S. adherence to the gold standard. While this would be the most obvious policy response to the problem, the rumors worsened the runs on banks. (An end to the gold standard would mean that gold would no longer be available; the public wanted to get gold while it could.) To solve the problem, abandonment of the gold standard had to be done quickly. Roosevelt took office on March 4, 1933, and the process of taking the U.S. off the gold standard began three days later, and culminated with the Gold Reserve Act of 1934 (P.L. 73-87, 48 Stat. 337).
The United States Gold Reserve Act of January 31, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury. The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in Fort Knox. The Act also changed the nominal price of gold from $20.67 per troy ounce to $35 per ounce.
A year earlier, Executive Order 6102 had made it a criminal offense for U.S. citizens to own or trade gold anywhere in the world, with an exception of some jewelry and collector's coins. These prohibitions were relaxed starting in 1964 — gold certificates were again allowed for private investors on April 24, 1964, although the obligation to pay the certificate holder on demand in gold specie would not be honored. By 1975 Americans could again freely own and trade gold.