Trump and Musk are planning a big inspection of Ft. Knox. They will find that there is little or no gold there. They will probably work with Fox to hype this news and treat it as crisis and use it to make cuts. It’s a lot of nonsense. But nonsense as politics has a long history. Ft Knox has always been pure theater.
Roosevelt took the United States off the domestic gold standard in the Gold Reserve Act of 1934. The Act made it illegal for private citizens or banks to hold “monetary gold,” requiring that they turn in any such hoards to the Treasury in exchange for paper dollars at a price set by Roosevelt. You could no longer redeem paper dollars be for gold, except at the discretion of the Secretary of the Treasury, a provision designed for foreign exchange.
Under the Roosevelt’s 1934 act individuals could still own gold jewelry or keep their gold dental fillings. But anyone owning “monetary gold”—coins or bullion—had to sell it to the Federal Government at higher than market rates. The Act ended the domestic gold standard and gave FDR control over the money supply to an extent not seen since the Civil War.
To reassure people jittery about money, Roosevelt built an entirely new vault to hold the gold the Treasury bought, at Fort Knox in Kentucky. The vault was pure theater: there was no shortage of space in existing vaults. There were no demands for more space coming from banks. As J.M. Keynes noted, all the gold in the world could fit easily in the cargo hold of the Queen Mary. The exterior dimensions of the Fort Knox vault itself are only forty by sixty feet, so clearly the gold required no vast space. Roosevelt used the construction of Fort Knox to create an impression of permanence and natural solidity.
In the bank panic of 1792, banker and historian Bray Hammond wrote, Hamilton’s Bank of North America tried to stave off a run by having its porters “carry its specie busily to and from the cellar in order to give magnified notion of what it had.” The bank’s managers, he added, “ostentatiously brought in deposits of gold and silver that had unostentatiously been carried out a little while before.” The show of specie money reassured the jittery customers, saving the bank from failure. Hammond himself recalled, as a young bank clerk in Iowa during the panic of 1907, employing the same dodge: heaping impressively large piles and sacks of low value coin in plain view, and ostentatiously counting it, in order to give the impression of overflowing vaults.
With Fort Knox, the government made a great show of moving its bullion to Kentucky. Press releases described the elaborate precautions needed. “Fifty armored trains to carry Federal gold,” announced the New York Times. Soldiers and submachine gun-toting Treasury agents rode with the gold as it moved by rail on a secret route. False “dummy” trains decoyed would-be thieves. Tanks and soldiers on foot protected armored trucks as they drove the yellow bars from railhead to vault. Although the Treasury kept both the actual moving day and the amount moved secret, it took pains to call attention to fact of the move, and to the gold’s enormous but unspecified value.
The elaborate and well-publicized precautions demonstrated unmistakably that the US owned the gold, that the gold was immensely valuable, and that it now sat in an impregnable fortress in the nation’s heartland. “It is the greatest treasure of all time,” wrote Popular Mechanics: “the strongest, best guarded, least expensive, most sensible strongbox owned by any nation.” Popular magazines and newspapers seized on the vault as a symbol of security and strength: several accounts noted that any potential invaders would have to “first fight their way across the Appalachians” just to approach the Fort. They also repeated Treasury department press releases describing the vault’s extraordinary security measures, including electric fences, a moat, steel and concrete walls of unknown but doubtless staggering thickness, a bombproof roof, poison gas booby traps and an emergency flooding system. The Treasury Secretary Henry Morganthau hinted at other forms of protection, too secret and awful to mention. “We thought Fort Knox would be a safe place,” Morgenthau answered cryptically when a reporter asked why he chose Fort Knox: “you know what I mean—safe.”
Fort Knox amounted to a performance of government, government as security, as impregnability: “security theater.” So even as the US left the gold standard, in the public imagination Fort Knox symbolized the connection between government and money, and the security of both. See for example, Yosemite Sam’s encounter with Fort Knox in 14 Carrot Rabbit (1952)
It was the subject of the James Bond movie Goldfinger, in which the Villain wants to irradiate all the gold in ft. Knox so his gold will increase in value, which made no sense at the time and still makes no sense.
It’s true that many people understand the dollar isn’t backed by gold, but enthusiasm for the gold standard has a long history among conservatives..Senator Rand Paul’s father, Congressman Ron Paul, would regularly demand inspections of of the vault. Th gold standard has a deep hold on the conservative imagination. The right wing site The Babylon Bee recently ran an article on how the vault was full of IOUs, and Forbes asked “Who has been in Ft; Knox’s Gold Reserves?”
FDR aimed to save capitalism, and the nation, from the great depression and he used the theater of Ft. Knox to strengthen faith on the money supply. Trump and Musk, on the contrary, are perversely trying to undermine confidence in the dollar. I expect that next week they will make a big show of the gold being “gone,” and use that absence A: as an excuse for more cuts in public spending, and B, to drive people to crypto, since Trump is a crypto huckster now.
Don’t be fooled by the hype: gold in Ft Knox has not mattered one bit since at least 1972, that is, for more than fifty years. This is theater by malign actors, trying to undermine the republic for their own ends.
