1944 Gold Coin Treasury Memorandum (& other cool stuff)

Another important detail as I review the history and personalities around the time of gold confiscation is that the Secretary of the Treasury at the time was William H. Woodin, who was a coin collector. Coin collectors, obviously, will associate with other coin collectors. So, the coin collectors threw a hissy fit over EO 6102, effectively pushing through the numismatic exceptions. So, there was a bit of luck on the side of the numismatists by having powerful people representing them in charge. So, this adds a bit of uncertainty as to how a future confiscation would take place - will the coin collectors have the same pull as they had in 1933? We have to acknowledge that this may have been an accident of history that was not inevitable.

 

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There was a silver confiscation in 1933 based on Executive Order 6814, with an exclusion for coins and numismatic items. It was then rescinded in 1938. In total, the US Treasury collected over 100 million ounces of silver based on this order. However, as far as I am aware, there was no congressional approval of this.

 

5 gold coins per adult was $100 which in The Depression years was alot of money. That's $200 for a married couple (I don't believe the 5 coins limit applied to kids).

Clearly, there weren't too many people who actually read the law, consulted a lawyer, or talked to numismatists (like Eliasberg) who saw that the numismatic exemption was wide enough to drive a truck through.

That's what that memo was about and it is very simplistic and almost idiot-conceived: if a coin was purchased for a price above the gold content value, ipso fatso it's a numismatic coin and exempt frome the gold bans.

 

We have to look at laws not just from literal interpretation, but also from their practical effects: EO 6102 effectively discouraged gold-buying and hoarding by the general public. As I pointed out, having Treasury Secretary Woodin, a coin collector, was likely key in having all of these exceptions in the law. Because these exceptions existed, and because there is a tendency to preserve history, it's likely similar exceptions would exist in a future confiscation. However, there is the possibility that this carve-out could be tightened up, with individuals allowed to hold even less, with maybe more exceptions for dealers (obviously), and with tougher enforcement. We just don't know how nasty a future administration might be under desperate economic conditions. A future administration may not care for coin collectors.

 

It seems that regardless of Woodin's presence (and I believe he died shortly into FDR's 1st term)....the widespread knowledge that you could hold gold in the form of coins wasn't well known until about the time of this memo....1944.

Actual coin collectors were certainly aware...but folks who wanted to take advantage of this memo's core thesis -- that if you paid a PREMIUM to the value of the gold...that the coin was numismatic -- appear to have been a bit late to the party. Louis Eliasberg picked up his gold buying right after 1933, killing 2 birds with 1 stone by buying numismatics (coin collecting + investing in gold).

I have not seen any in-depth analyses....but it is estimated that about 15 million to 40 million Americans hold more than 1 ounce of gold today wheras the amount in the early-1930's was probably a few million, tops. So much more widespread gold ownership today (and far larger in nominal and real terms) makes any talk of confiscation a pipe dream, IMO.

 

These infomercials selling gold coins must be doing OK since they are around so long. They could be selling to the same folks, I have no idea.

I wonder how many people firms like Blanchard and Monex served in the early-1980's.