A common U.S. business opinion about Double Eagles 1 1

[RWB]

This letter, from a major U.S. Mining Industry publication, will give members a good idea of the opinion of many business people about the practical utility of double eagles in the domestic economy. This view goes back several years before Congress authorized coining gold dollars and double eagles. (Volunteer transcription.)

Edited April 28, 2020 by RWB

[kbbpll]

I'm curious why someone in the mining industry would care - they're selling their gold regardless. From a practical standpoint, of course he's right. It would be today's equivalent of us walking around with $500 coins (or bills) and expecting that it would be useful in day to day purchases.

[RWB]

It was widely felt that the economy would benefit by putting much more gold into domestic circulation - and that meant striking more $2.50 and $5.00 coins in preference to large denomination coins. Double eagles cost much more than casting gold bars, and export merchants preferred bars most of the time. So double eagles represented both an unnecessary expense of production, added loss in handling, higher insurance rates, higher shipping fees (shipped by weight), and extra fees in refining once they got to their destination - all of these expenses eventually came out of what U.S. merchants and miners received.

The eventual solution was issuance of Gold Certificates in place of circulating gold coin, and passing all coinage expenses to miners, banks and the Mint.

[GoldFinger1969]

So it's the size of the coin and denomination he's at odds with, not coins made of gold.

[RWB]

Yes. The letter's author wanted more gold coin in circulation, not just minted and shipped away.

[DWLange]

He should have polled American citizens. They simply didn't want to carry gold coins. Plenty were minted in 1878-79 in anticipation of their return to circulation after paper money achieved value parity with gold, but most of those coins remained idle in vaults. Simply knowing that they were available upon request made people comfortable using paper instead.

[GoldFinger1969]

20 minutes ago, DWLange said:

He should have polled American citizens. They simply didn't want to carry gold coins. Plenty were minted in 1878-79 in anticipation of their return to circulation after paper money achieved value parity with gold, but most of those coins remained idle in vaults. Simply knowing that they were available upon request made people comfortable using paper instead.

And yet most Americans didn't want to turn in their gold in 1933 when FDR said "hand it over".....and Gold Certificates I had read had mixed popularity.

I think we need to differentiate between wanting gold for everyday commercial use....and for storing one's wealth in an era where banks went under and you didn't have FDIC insurance behind you.

[RWB]

Mr. Lange hit a key point about gold coinage in the US - confidence in availability meant coins were not usually needed.

The various 1933 Executive Orders were concerned with hoarding gold in any form, including certificates. Of total gold coins in the country, most were in Treasury/Mint vaults and not actively circulating or in hoards. The EOs were largely repeats of actions by President Hoover about a year earlier. But Hoover was timid and unwilling to take bold measures to combat financial collapse. His plans initially worked. Then, banks in Chicago failed and people took their money out of banks with the result that Hoover only made matters worse.

[GoldFinger1969]

4,000 banks failed in both 1932 and 1933, Roger.  

[JacobBMiller]

That's a very useful post as I am a business education student and nowadays I am doing research on a website. While doing this, I have found a website which you can use if you want to prepare business plan which will help you to make a good business layout for your work. I have been also using this service and it is really helpful.

[Moxie15]

 

this is an example the same phenomenon seen in the early part of this century with dollar coins. Every time the  United States public, banks, and business, have a choice between a large value coin and a paper bill or note the paper becomes the choice while the coin languishes in treasure and bank vaults.

[VKurtB]

2 hours ago, Moxie15 said:

 

this is an example the same phenomenon seen in the early part of this century with dollar coins. Every time the  United States public, banks, and business, have a choice between a large value coin and a paper bill or note the paper becomes the choice while the coin languishes in treasure and bank vaults.

... and as a result, the need for a specie backed currency was disproven forever more and all currencies became fiat, and 95% of the people couldn’t care less.

Edited September 3, 2020 by VKurtB

[Moxie15]

pretty much what I was saying

[VKurtB]

Money is to an economy as water is to plants. It establishes the maximum growth that can occur. Therefore, having a money supply artificially tied to one particular commodity strangles economic growth, as it inevitably must. Even if that commodity is gold or silver. The entirety of the mainstream of the economics profession realized this between the Latin Currency Union and the Great Depression. Only those "wackadoodles" in the so-called Austrian School of economics persisted in their wet dream fantasies, and they continue to right up to this day.

[RWB]

Note to readers ---

The "Austrian School of economics" was built on a large rock in the middle of a swamp. It had no ready means of waste disposal except to toss (or pour) it into the swamp. Students, commonly known as "Dootles," took turns at this duty and sometimes had to be beaten and whipped to get them to do the nasty work. The Grand Masters, particularly Ludwig von Mises and Friedrich Hayek, were called "Wack-a-Dootles" by the students in recognition of their work incentive program. However, a doctrinaire split occurred. This was caused by the selection of different scourging tools. Von Mises used whips studded with stainless steel nails and Hayek only used whips studded with galvanized nails. Students took sides depending on who had to dump the offal.

[VKurtB]

3 minutes ago, RWB said:

Note to readers ---

The "Austrian School of economics" was built on a large rock in the middle of a swamp. It had no ready means of waste disposal except to toss (or pour) it into the swamp. Students, commonly known as "Dootles," took turns at this duty and sometimes had to be beaten and whipped to get them to do the nasty work. The Grand Masters, particularly Ludwig von Mises and Friedrich Hayek, were called "Wack-a-Dootles" by the students in recognition of their work incentive program. However, a doctrinaire split occurred. This was caused by the selection of different scourging tools. Von Mises used whips studded with stainless steel nails and Hayek only used whips studded with galvanized nails. Students took sides depending on who had to dump the offal.

I'm kinda partial to thoroughly tetanus-laden rusty nails. It's the only way to get many Austrian School proponents to "STFU" - lockjaw.

[RWB]

PS: The school song was:

Wien, weiss, Mises,

Wien, weiss, Mises,

Sehen, wie sie laufen

Etc....

Edited September 4, 2020 by RWB

[VKurtB]

1 minute ago, RWB said:

PS: The school song was:

Wien, Weiss, Mises,

sehen, wie sie laufen

Etc....

Just a little Clostridium tetani, well administered, goes a very long way.

[Conder101]

On 9/3/2020 at 5:20 PM, VKurtB said:

.. and as a result, the need for a specie backed currency was disproven forever more and all currencies became fiat,

Which century was he talking about the early 20th or 21st?.  If 20th that currency WAS specie backed so the preference for paper says nothing about disproving  the need for a specie backed currency.  If 21st, the currency (and the coinage) was already fiat, so the preference for the paper once again says nothing about disproving the need for a specie backed currency.

What it really says n both cases is that if the people are confident that their paper currency will be freely accepted at its nominal value, they will opt to carry the lighter weight paper than the heavy coinage.  In the 20th century they were confident because they knew they could exchange the paper for "real money".  In the 21st it's more because they always have been able to.  A citizen in the 1840's would not have viewed paper currency that way.  You never knew from day to day what value your paper currency would be accepted at so the desire was very strong for payment in hard money.  It was only the Federal governments  assurance of exchangeability at par, which didn't happen until around 1874, that people began to truly accept paper money

Edited September 5, 2020 by Conder101

[RWB]

Most are familiar with state bank notes of the pre-Civil War era. State banks profited most from small denomination bills: $1, 2, 3, 5 and 10. Larger denominations were very likely to be redeemed in specie and small denominations were likely to circulate away from the issuing bank's locality - usually at a discount - and a reduction in the proportion redeemed. These notes were in common use in part because of size, weight convenience, but also because there was limited availability of Federal currency in these denominations. Spanish/Mexican pesos and fractions took some of the specie burden, but there was not enough to force specie of any kind into routine use. Much of this shortage came from the Mint laws that required production of coins in denominations requested by depositors of bullion. The depositors had their own business interests in mind and not what was beneficial to locals. New Orleans was a prime example. Whenever the Mint tried to make large quantities of dimes and half dimes for local use (as requested by the populace), large depositors and Mint HQ demanded half dollars.

[Moxie15]

I just did a quick look up for 1850 wages in my state of NH A farm worker averaged $12.12 per month with board, A day laborer without board made $0.89 per day a carpenter without board $1.41 per day. So the need of $5 $10 or $20 coins or bills was minimal at best for the general population. I would imagine after paying housing and the butcher, the baker and the candlestick maker one would be very lucky to have $.50 left from a week's wage.

[VKurtB]

1 hour ago, Conder101 said:

Which century was he talking about the early 20th or 21st?.  If 20th that currency WAS specie backed so the preference for paper says nothing about disproving  the need for a specie backed currency.  If 21st, the currency (and the coinage) was already fiat, so the preference for the paper once again says nothing about disproving the need for a specie backed currency.

What it really says n both cases is that if the people are confident that their paper currency will be freely accepted at its nominal value, they will opt to carry the lighter weight paper than the heavy coinage.  In the 20th century they were confident because they knew they could exchange the paper for "real money".  In the 21st it's more because they always have been able to.  A citizen in the 1840's would not have viewed paper currency that way.  You never knew from day to day what value your paper currency would be accepted at so the desire was very strong for payment in hard money.  It was only the Federal governments  assurance of exchangeability at par, which didn't happen until around 1874, that people began to truly accept paper money

The fiatization (to coin anew word) of currency was tied to three key events that unfolded more or less as a continuum, not discreet events, but they were 1) the creation of the Federal Reserve System in 1913, 2) the great FDR gold order of 1933, and the closing of the exchange window in 1971. Notice I did not include the Bretton Woods conference, because the interval from the full manifestation and implementation of Bretton Woods and the 1971 exchange window closing was less than a single decade. Bretton Woods was "garbage in, garbage out" defined.

Edited September 5, 2020 by VKurtB

[RWB]

A digression ---

The concept of specie or specie-backed paper currency is long established. But it was only a substitute as were the metals commonly used as “backing” for paper – gold and silver.

Neither of these metals is especially rare. Neither has special characteristics that might make it valuable in an economy – from Iron Age forward.  Mixing copper or zinc or lead or tin or iron, or mercury with gold or silver only produced a lump of soft, useless alloy. They are worthless in machinery, weapons, medicines, milling, sailing or anything else that was/is really important to humans.

Gold has only three uses until well into the electronic age: jewelry, statuary ornamentation, and dental fillings (when amalgamated with mercury). The first two uses refer to its unusual, sun-like color and gold’s ability to remain bright under conditions that quickly stain and tarnish other materials. (Ancient Achaeans used paints for the same purpose on their statuary.) White silver was a color analog to gold and although it tarnished, it was also easy to restore with simple polishing.

As money, they were substitutes for Sumerian-style produce/livestock tokens and counters. As the scale of commerce grew, merchants and governments needed counters that were more durable than fired clay, that could account to larger quantities of items, and were more difficult to imitate. Electrum, and eventually gold and silver bits with stamped insignia served the purpose well. Neither metal had any other use. Both metals were stable, and both were more difficult to locate than other permanent materials.  Economic and social evolution move quickly into the assignment of “fixed” values and weights to these tokens, and they became generalized “money” capable of immediate exchange for a wide range of items.

In European societies, paper was only a convenience for fixed “money.” Elsewhere, metallic currency was the convenient exchange for small purchases, and paper was the official statement of governmental stability.

“Gold Standards” were intended to connect paper and metal in some rational way, but the systems only worked for a little while until social conditions changed. The present so-called “fiat money” systems are, like non-European paper currency systems dependent on metallic tokens for small change, official government-backed paper for larger transactions, and bookkeeping entries for big values. It is the force of economic activity, mediated by national governments, that now creates the base of “stored value” for currency.

[Moxie15]

thanks for this post RWB. I want to scream every time i see someone post that gold is 'real' money.

Gold, like fiat money only has value because we all agree it does. In fact there have been times when gold was not as highly prized as other metals, in ancient Egypt Silver was more valuable than gold as it was much harder to get. Iron was more valuable for much of pre history. Aluminium was twice the value of gold in the 18th and early 19th century. 

[RWB]

A teaser from Chapter 1 of "Saudi Gold."

Chapter 1 – Crowns of Gold, Feet of Clay

Is Gold Stable?

Our fixed-weight dollar is as poor a substitute for a really stable dollar as would be a fixed weight of copper, a fixed yardage of carpet, or a fixed number of eggs. If we were to define a dollar as a dozen eggs, thenceforth the price of eggs would necessarily and always be a dollar a dozen. Nevertheless, the supply and demand of eggs would keep on working. For instance, if the hens failed to lay, the price of eggs would not rise but the price of almost everything else would fall. One egg would buy more than before. Yet, because of Money Illusion, we would not ever suspect the hens of causing low prices and hard times. In what sense, then, should a dollar be fixed if not in weight? Evidently, in buying power.

— Irving Fisher, The Money Illusion, 1928

---

 

Edited September 6, 2020 by RWB

[Cat Bath]

On ‎9‎/‎3‎/‎2020 at 3:08 PM, Moxie15 said:

 

... Every time the  United States public, banks, and business, have a choice between a large value coin and a paper bill or note the paper becomes the choice while the coin languishes in treasure and bank vaults.

Yes...Unfortunately.  

I'd rather pay seigniorage directly to the treasury for a $1 coin than "buy" a note, not that I'm anti-Fed.

I get a bag of those new innovation dollars every time a new one comes out and people seem to like them.

Edited September 6, 2020 by Cat Bath

[VKurtB]

22 minutes ago, Cat Bath said:

Yes...Unfortunately.  

I'd rather pay seigniorage directly to the treasury for a $1 coin than "buy" a note, not that I'm anti-Fed.

I get a bag of those new innovation dollars every time a new one comes out and people seem to like them.

I love those. I can’t say I love the premium that has to be paid for them, but as soon as they were assigned to the US Mint’s Numismatic Division, rather than the Circulation Division, that die had been cast. All costs must be borne by the collectors.

 

I served on the committee at the October 2016 US Mint Forum at the Philadelphia Federal Reserve Bank that was tasked with recommending what to do next after the ATB quarters were done in 2021. Our recommendation was to kill the ATB “second round”, go back to the next stable reverse on the quarter, and do a series on American Innovations on a different denomination. So let it be written, so let it be done.

 

There were eight people (8) on that committee. Our recommendation was very controversial at the time when we all reconvened for the afternoon plenary session, but guess what...

Edited September 6, 2020 by VKurtB

[Zebo]

5 hours ago, VKurtB said:

I love those. I can’t say I love the premium that has to be paid for them, but as soon as they were assigned to the US Mint’s Numismatic Division, rather than the Circulation Division, that die had been cast. All costs must be borne by the collectors.

 

I served on the committee at the October 2016 US Mint Forum at the Philadelphia Federal Reserve Bank that was tasked with recommending what to do next after the ATB quarters were done in 2021. Our recommendation was to kill the ATB “second round”, go back to the next stable reverse on the quarter, and do a series on American Innovations on a different denomination. So let it be written, so let it be done.

 

There were eight people (8) on that committee. Our recommendation was very controversial at the time when we all reconvened for the afternoon plenary session, but guess what...

I haven't kept up with the ATB or the innovation series. Been concentrating on my world series. How did you end up on the committee?

[VKurtB]

4 hours ago, Zebo said:

I haven't kept up with the ATB or the innovation series. Been concentrating on my world series. How did you end up on the committee?

I was invited by the then-Acting Director of the United States Mint to the Mint Forum, and frankly, committee assignments were done by random pull of paper slips from a literal hat.

We were given a couple of hours plus the lunch break to hone our recommendation presentation, which we did, and our recommendation was ultimately passed into law and signed by President Trump.

Other committees’ recommendations also were adopted, but no other ones actually needed legislation, only management decisions. Example: selling new numismatic products to bulk wholesale dealers in just capsules, rather than the whole OGP cases, boxes, and sleeves. 
 

This was done based on the theory that most people want to buy them already slabbed anyway, which I’ve never understood, frankly, but I guess it is what it is.

Edited September 6, 2020 by VKurtB

[Zebo]

2 hours ago, VKurtB said:

I was invited by the then-Acting Director of the United States Mint to the Mint Forum, and frankly, committee assignments were done by random pull of paper slips from a literal hat.

We were given a couple of hours plus the lunch break to hone our recommendation presentation, which we did, and our recommendation was ultimately passed into law and signed by President Trump.

Other committees’ recommendations also were adopted, but no other ones actually needed legislation, only management decisions. Example: selling new numismatic products to bulk wholesale dealers in just capsules, rather than the whole OGP cases, boxes, and sleeves. 
 

This was done based on the theory that most people want to buy them already slabbed anyway, which I’ve never understood, frankly, but I guess it is what it is.

Kurt - I forget, what do you collect?