History of Gold in the US – Part II

To have ruthlessly insisted on the surrender of all gold coins extant on or before April 5, 1933, that were still technically part of the circulating medium, and/or not obviously or generally recognized to be of unusual historic numis- matic value, would have been catastrophic indeed, as far as numis- matics is concerned. But the Treasury officials of that day chose to be tolerant, if not amiable, and, except for preventing the importation of large numbers of post-1933 foreign gold coins, did little to disturb numismatic gold activity. Apparently, numismatists, collectors, and even hoarders were too few in number at that time to cause alarm on the Potomac. Whatever the reason, we can feel thankful that the Treasury authorities of the first quarter-century following the demise of gold coinage in the U.S. did not flail about with the typical bureaucratic myopia that has characterized their successors. In any case, the “common” U.S. gold coins (which, as we know now, are anything but common) and most pre-1933 foreign gold coins were allowed to be traded and collected more or less openly during the years prior to 1954. In 1954, the Treasury Department recognized at last that the time had come to legitimize the numismatic gold market.

Consequently, an amendment was made to the Gold Regulations, to the effect that all gold coins minted prior to 1933 would subsequently be presumed to be rare and of recognized special value to collectors, without the necessity of further specific determinations by the Treasury. Coins minted after 1933 were still subject to specific Treasury Department rulings, which were to be based on the advice of the Curator of Numismatics of the United States National Museum. All U.S. gold coins and the vast majority of foreign gold coins were thus freed from the overhanging threat of confiscation, and a new era for American numismatics appeared to begin. It might have been reasonable to expect after 1954 that further relaxations of the Treasury’s Gold Regulations, particularly as they applied to numismatics, would be a natural development in time. But the subsequent course of American economic history ruled otherwise. By 1960, the underlying inflationary instability of the Western world had reached the point where the once seemingly unlimited gold reserves at Fort Knox had noticeably begun to shrink.

This unfortunate turn of events precluded any possibility of further liberalization of the gold rules, numismatic or other. Instead, in 1961, the Kennedy Administration saw the necessity of establishing within the Treasury Department the Office of Domestic Gold and Silver Operations (ODGSO) , in order to institute a more rigorous control over the import and export of gold and silver, the licensing of jewelers, 1 goldsmiths and industrial users of gold, and the import and sale of gold coins. The most positive accomplishment of the new ODGSO was to reaffirm, as its own policy, the 1954 amendments to the Gold Regulations, which ruled that all gold coins minted prior to 1934 are rare and consequently of recognized numismatic value.” For gold coins minted after 1933, the office required a separate ruling in each case and the issuance of a special permit for the importation or possession of each post-1933 coin approved. (Once an initial ruling on a particular coin was made, however, no further permits or applications were necessary to purchase or hold other coins of the same identity within the United States, although a license to import any post-1933 gold coin is still required, whether it has been previously approved or not.)

By some obscure and tenuous logic, ODGSO also required (until 1969) a permit to import pre-1934 gold coins, even though the 4 purchase or possession (or both) of such coins was unrestricted within the United States. I might add that the majority of applicants desiring to import pre-1933 as well as post-1933 gold coins were invariably refused. The author once applied for a permit to import some pre-1933 Mexican gold coins offered by a Canadian dealer. The license was refused, even though the coins under consideration were the rarest of their series and selling for more than twice their intrinsic value, on the grounds that they were “not of exceptional numismatic value within the meaning of the Treasury Department Gold Regu- lations.” In reply, I could only point out, politely (and in vain), that the Treasury Department Gold Regulations, which ODGSO was supposed to be administering, stated without qualification that all gold coins made prior to 1934 were to be considered of “recog- 44, nized special value to collectors.” The spectacle of federal regu- latory agencies regulating themselves in a circle is at times wondrous 4 to behold.

Fortunately, the 1954 amendments are now a well-established precedent, and they provided at least a basic protection for the numismatic gold collector. Furthermore, although it has required a change of administrations, ODGSO has finally come to recognize that some of its interpretations of the gold rules have been, in the words of its new director, “of dubious merit.”25 On April 22, 1969, the Gold Regulations of the U.S. Treasury Department were amended to correct the obvious and unreasonable inconsistency introduced by Executive Order 11037, issued July 20, 1962, which required, among other things, a permit from ODGSO for the importation of pre-1934 gold coins. The new director of ODGSO, Mr. Thomas Wolfe, appointed by the Nixon Administration, admitted candidly that “it really didn’t make a lot of sense” for ODGSO to prohibit or confiscate a pre-1934 gold coin coming from abroad, when the collector could walk across the street and buy the same coin in the U.S. without restriction.26 Therefore, the provisions requiring a license to import pre-1934 gold coins were eliminated. Collectors and dealers in the U.S. are now free to import such coins, provided they are genuine, subject only to the usual customs regulations and import duties.* Counter- feits or restrikes, however, are subject to confiscation, regardless of a pre-1934 date. The Gold Regulations were further amended to require import licenses only for gold coins struck from 1934 through 1959.