A recent trivia question brought up the topic of the first authorised coin. So now I'm wondering about unauthorised coins... How did they manage to be created without authorisation? Or was it not actually that big of a deal. I see that the 1933 Saint-Gaudens $20 double eagle was unauthorised and is now illegal to own (with a few exceptions). Other unauthorised coins aren't illegal, so what’s the difference there. And what about coins, such as large cents, that were not legal tender. I assume this is different to being unauthorised. What was the point in creating the various denominations, but only using some of them as legal tender?
Well, the colonies created coins that were used for a couple of decades in an unauthorized fashion. Of course, I would be willing to bet that a whole lot of things ended up being done ad-hoc at the start of the USA. Essentially, until the government could develop standards and unite the people under a common currency that was federally minted, almost all coins were produced with colonial or external influences.
(1) In the context of the present Federal government under the current Constitution, considering "modern" times, the answer is based on routine. The Mint makes coins. Congress authorizes what they do. In the case of a new coin, such as the 20-cent or the Susan B. Anthony Dollar, Congress passes a law to create the coin and the Mint makes the dies and strikes the coins and sells them to banks, etc. If the Mint is in the process of creating current coins and Congress passes a law stopping the coin, the some have been created already and already exist. That was the case with the 1933 Double Eagles. It happened also with certain other issues. (2) In the case of the 1913 Liberty 5-cent Nickel coins, the expected order of events was to create the 1913 "Buffalo" Nickel but someone (Brown, we assume), went in an made the 1913 Liberties. That had happened before. Most of the so-called 1804 Dollars were made long after the event for special friends by authorities at the Mint with access to the tools. In both cases, the Secret Service turned (and turns) a blind eye to the problem for several reasons. Why bother with five coins totaling 25 cents in face value? Also -- perhaps more to the point -- the people who own these "novodels" were and are highly placed, wealthy people with friends in the right places. About 1890 or so, the Mint and Treasury and therefore the Secret Service, took a dim view of all the patterns and such out there among collectors and made some noise or even (perhaps; we do not know) took some action, but the process stopped and things went back to normal. (3) As for the Large Cents, the matter is somewhat complicated. You have to understand what "legal tender" means. You can find it on the Bureau of Engraving and Printing website. See "Legal Tender" http://www.moneyfactory.com/document.cfm/18/110 It so happens that in Canada and most other nations today, coins not legal tender. Only paper money, the banknotes of the central bank, are legal tender. In the USA, all coins and banknotes are legal tender. It was not always so. If I remember correctly, even Large Cents, 3-cent, etc., were legal tender up to some small value, perhaps only one dollar. The 3-cent coins was created to facilitate public use of the Post Office. In some cases, the coins were created by Congress, but in the enabling legislation, the "legal tender" paragraph was missing. So, they were not legal tender. No one wanted to be paid 1000 half-cent coins for a $5 debt -- certainly the government did not want to accept 10s of thousands of small coins in bags for, say, import duties. All import duties had to be paid in gold coin back then. Andrew Jackson's Treasury issued the "Specie Circular" which required payment of all taxes in gold coin. It worked wonders for the Treasury and the Budget, but really irked a lot of people, as you can imagine. (3a) In the 19th and early 20th centuries, there was also a situation with the gold-to-silver price ratio in the marketplace. Initially, one (silver) dollar was equal to one (gold) dollar. That became untenable as silver and gold fluctuated in price. We had huge rushes and strikes of both metals here. When the major nations of the world went to the Gold Standard (Britain first; Germany among the last), the price of silver plummeted. Silver coins became only tokens for gold coins. (3b) Only recently -- when gold was relegalized in 1973, I think -- did Congress pass a law making all US coins "legal tender." Understanding the hows and whys is complicated because the authorities did not understand. Your nearest large library probably has a dozen or more books from the 1800s "explaining" bi-metallism. The Congressional Record from that era (especially 1873-1890) is heavy with speeches on the subject, few of which actually contain any economic truths. If you want to understand "the way it's supposed to be" I recommend HUMAN ACTION by Ludwig von Mises -- a huge book that explains market economies from a true freemarket, capitalist point of view. FRACTIONAL MONEY by Neil Carothers -- a doctoral thesis from the early 20th century, reprinted by Bowers and Merena. It provides a good history of the problems of "bi-metallism." THE US MINT AND COINAGE by Don Taxay -- a standard work for all numismatists interested in US Coinage. This is a basic history of the Mint. ENCYCLOPEDIA OF US AND COLONIAL COINAGE by Walter Breen -- _the_ standard reference for US coin numismatics. Breen, however, had his own political views and often interjected them into the text. Again, however, one of the problems you will face is that the authors themselves even when they record an accurate history from the basic public documents, sometimes (often, perhaps) do not understand the economic theory that explains the problems, which is why I recommended HUMAN ACTION.
Can't add much to that reply, but I do recall one thing abouzt the $20 gold. It was struck "legally", but was never officially released. This is actually questionable, as the Mint supposely allowed employees to buy new coins back then, and some 1933 $20 were sold this way. If someone had fought it back then we may not have had the mess we have had for 70 years. It definitley is not consistent, though. The feds may confiscate some of the Sacky/quesrter mules, but the 1804s and 1913s (especially) are not much different. Yet, they are legal and classic rarities.
There is a thread that I wrote a while back about which coins are illegal and if they should remain that way. The Mint and Government have the ability to change their minds when the situation fits. In the early years of the mint, a lot of "FRIENDS" of the mint were allowed special coins. There really is no hard and fast rule as to what is legal and for how long. The 1964-D Peace dollar is a perfect example. Sold over the counter, then recalled. Some are a little more in the grey area. Why allow five 1913 Liberty Nickels, but none of the 433,000 St. Gaudens minted in 1933. While the law written in 33 governing the possession of gold was needed at the time, why should it still be inforced today? Why should the 1974 Aluminum Cent be illegal after Mint employees passed the coins out freely to members of Congress? The other fantasy pieces such as the 1804 dollar were made for "FRIENDS" of the Mint. Why they are legal, because they allow it. Look at how many coins have mintages of 25 or less. What purpose did it serve? All of the early proof coins were for special purposes. With few exceptions, this type of practice has stopped in the last 70 years.
I forgot about the 1964 Peace dollars. I think those are the ones I was thinking about when I mentioned the employee sales. I would have declared mine "lost". Or, I would have hired a lawyer.
I do believe you're right, and I was disgusted with the way the '33 Saint legal battle ended up. The government extorted out a cut of the action, and the plaintiff received a "legally unique" status for the coin (thus making even half the auction value likely more than ALL of the value had the government lost its case in the courts and the '33 Saints were freed). It's disappointing because I believe the plaintiffs had a very strong case to beat the government's claim and in so doing, eliminating the "contraband" status for the coin. Circumstantially, they could have added that the government hasn't tried to seize other "unauthorized" pieces (such as the 1913 Liberty nickel), and in so doing, isn't consistently enforcing the law (which sometimes causes courts to dismiss those selective enforcements). In the end, of course, it was all about the Benjamins, both from the government and the plaintiff. Film at 11; there's some real shocking stuff there. Both parties in that legal battle won; the hobby and the numismatic community lost big.
Well in the end hindsight is 20/20. While this case ended up a winner for all parties involved, the dealers could have certainly lost. Strong evidence doesn't always guarantee a winning decision. Despite the government giving away an example of the 1933 coin, it still had the law on its side. Fighting a lawsuit is always expensive, and no matter what, you can always lose. While I do not like the fact that the treasury was allowed to take 50% of the proceeds, it was the best decision for the dealer involved at the time. All the previous 1933 St. Gaudens had been melted when discovered.
Before you laugh...Playboy had the complete story about the 1933 double eagle. It was one of the very few articles that I read from (ahem) "cover to cover". It was great. They had pics of the dealer and some of the people involved with this coin. They explained that even the $7.2 million dollar auction price HAD to include $20 to represent the actual currency value of this coin. It was very well done and written.
Thanks for the replies everyone. I learned heaps, particularly from your post mmarotta. I had never considered the problems that would occur if a gold dollar was suppose to have the same value as a silver dollar
