History Through Coins: The Great Depression 0

[Matt G]

A collapsing economy was reflected in falling mintages of US coinage. Read more

 

[GoldFinger1969]

And the Mints never put aside 1 bag of each of the gold coins to save them for posterity.

Edited May 13, 2020 by GoldFinger1969

[kbbpll]

2 hours ago, GoldFinger1969 said:

And the Mints never put aside 1 bag of each of the gold coins to save them for posterity.

That's really not their job though, is it? There is a 1913 Numismatist article lamenting the destruction of 120+ hubs and dies in 1910, and how the mint didn't strike sample coins from all of them before destruction. So your sentiment is an old one, but it's water under the bridge. It seems kind of pointless to complain about it.

[RWB]

Interesting article although quite similar to the one in the current issue of The Numismatist.

The following letter and table might make the reduced coin demand mentioned in the article a little more dramatic. Comparing FY 1930 and FY 1931 shows declines of over 97% for silver coins and about 48% for cents for coins shipped (not manufactured).

Edited May 15, 2020 by RWB
Fix formatting. Clarify language.

[GoldFinger1969]

4 hours ago, kbbpll said:

It seems kind of pointless to complain about it.

I like to complain.  I have alot of the late Frank Costanza in me. 

[Conder101]

6 hours ago, GoldFinger1969 said:

And the Mints never put aside 1 bag of each of the gold coins to save them for posterity.

They didn't need to put aside a bag they sent examples to the Smithsonian.  Representive specimens were all they needed.

[GoldFinger1969]

2 hours ago, Conder101 said:

They didn't need to put aside a bag they sent examples to the Smithsonian.  Representive specimens were all they needed.

For the public, coin collectors, multiple museums, etc.

I was thinking about this the other day:  if you knew the damn coins are all going to be melted, how about making it easier for coin collectors on the West Coast and/or Midwest to see them, rather than have to go to Washington, DC and the Smithsonian ?

Yeah, they saved 2 coins for each year, pretty much.  They could have made sure a few other museums around the country had them, too.  The Connecticut Library appears to have an extensive collection going back over a century, they would have appreciated the 1933's among others.

Edited May 14, 2020 by GoldFinger1969

[GoldFinger1969]

I've been thinking alot about the gold situation and FDR in March 1933 and 1933-37 lately (yeah, this virus has given me lots of free time  ):  when FDR issed his EO....and then we left the gold standard...what was the thinking at the Mint and the public and collectors regarding what was going to happen to all those coins that were in Mint vaults ?

Did they think they were all destined to be melted (was that a fate the Treasury Secretary had hinted at in early-1933)? 

Did they think they would just be saved in the vaults and maybe released once the prohibition on gold was lifted ?

The 1933's in particular still kept getting struck/minted after the April 1933 EO...why would you do that if you even suspected they might be melted and returned to gold ingots and pieces ?

I'll bet one of Roger's footnotes or bibliography sources in his book addresses this.  The book itself didn't go into the sentiments on the future of the coins, maybe he can elaborate further.

[World Colonial]

10 hours ago, GoldFinger1969 said:

I.what was the thinking at the Mint and the public and collectors regarding what was going to happen to all those coins that were in Mint vaults ?

Did they think they were all destined to be melted (was that a fate the Treasury Secretary had hinted at in early-1933)? 

Did they think they would just be saved in the vaults and maybe released once the prohibition on gold was lifted ?

The 1933's in particular still kept getting struck/minted after the April 1933 EO...why would you do that if you even suspected they might be melted and returned to gold ingots and pieces ?

My bet is hardly anyone was thinking about the future disposition of gold coinage at all. 

$20 was more than the typical person made in a week.  I believe the minimum wage was 25c/hour (roughly $40/month) when it was enacted around this time (1933), for those who even had a (full-time) job.  There is a good chance most people never even saw an eagle or DB (the only gold minted at this time).  Unless the collector base was disproportionately affluent, the majority couldn't afford one gold coin either.  If it was mostly affluent, only because it preceded mass collecting prior to the introduction of coin albums.

To give you another perspective on how little most people made at the time, there is an episode in the British TV series "Poirot" (from the Agatha Christie novels) where Poirot (who is quite well off) convinces the Scotland Yard Chief Inspector (who wasn't making the type of salary these people do today or the recent past) to buy meat at his local butcher.  When they both leave, Japp complains that the six shillings he paid for the packet of beef cutlets was enough to pay a house cleaner for three days. The TV series infers most of the episodes take place in the late 1930's (around 1936) and mostly in London.  My recollection is that the exchange rate of the GBP to the USD was $3.80, having been devalued from $4.80 earlier in the decade.  (This might be wrong but not far off.)

American incomes and living standards to my knowledge have always been noticeably higher than British, but you should see my point.  This is fiction but Christie did write some of her novels during this time and the scene I described is probably "ballpark accurate" on the economics of the period.

Not trying to pick on you, just trying to describe the reality of the time.  It's easy for all of us to lose perspective when a noticeable proportion of the large collector base during our collecting experiences (the financialized era of the "hobby") can and has been able to buy gold coinage at the inflated prices we know.    (On a relative basis, gold is at a multi-century high versus most other commodities and presumably, most goods and many services.)

It wasn't anything like that at the time.

[physics-fan3.14]

12 hours ago, GoldFinger1969 said:

For the public, coin collectors, multiple museums, etc.

I was thinking about this the other day:  if you knew the damn coins are all going to be melted, how about making it easier for coin collectors on the West Coast and/or Midwest to see them, rather than have to go to Washington, DC and the Smithsonian ?

Yeah, they saved 2 coins for each year, pretty much.  They could have made sure a few other museums around the country had them, too.  The Connecticut Library appears to have an extensive collection going back over a century, they would have appreciated the 1933's among others.

The National Numismatic Collection is in Washington. That's the capitol, that's were the Smithsonian is, that's where the collection is. Now, you could argue that the capitol should be more centrally located, but that's not going to happen. There was no reason to think about accomodating other museums - they sent the samples to the Smithsonian! Private museums are not their concern. The Connecticut Library, ANA, ANS, and other significant collections have examples of pieces because some collector bought them - not because the mint gave it to them. 

And, they definitely had no concern for the public or collectors! That wasn't their job. We as collectors have a slightly different perspective, but you have to think: the Mint is a Factory. They make what they're told, they melt what they're told. It's no different than Apple or Tesla. Is it Tesla's job or concern to send an example of each model to museums around the country? No - they are there to stamp out a product.

[GoldFinger1969]

Thanks PF, WorldC....no I get that most Americans, especially in 1933, had more important things to worry about than the fate of gold coins in mint vaults.

But mint officials surely had to be thinking about their future.....Washington higher-ups...collectors (if you knew that lots of hard-to-get 1929-33 DE's were going to be destroyed, wouldn't you try and get them ASAP via mail-in before it was prohibited ?).  Again, the Philly Mint kept striking 1933 DE's for months after FDR's EO on gold...they couldn't have been thinking "Let's do a good job striking these coins, to put them in our vault, to take them out sometime in the future and melt them down."

Must be some articles or books on the attitude towards gold in early-1933 through early-1934, the key period. 

Edited May 14, 2020 by GoldFinger1969

[RWB]

World Colonial has presented some excellent comments on GoldFinger1969’s questions. Here are additional thoughts and gleanings from Treasury’s Chief Counsel documents and related.

1.      What was the thinking at the Mint and the public and collectors regarding what was going to happen to all those coins that were in Mint vaults ?

Treasury and Mint Bureau officers were fully aware that nearly all US gold coins were stored in vaults and did not circulate. This had been the case for decades and Treasury holdings increased during WW I when gold was withheld from circulation to prevent export. Use of gold-backed paper currency greatly expanded during the war and the public stuck with paper after the war.

I’ve seen no signs of contemporary internal speculation about the fate of Treasury coin holdings until late in 1933. The only goal was to save the economy from complete collapse, and stopping hoarding of gold and gold certificates was a part of that. A key to stopping the contagion affecting the US economy was to break the chain of transmission – and adherence to a circulating gold standard was a primary means of spreading the disease, much like a virus. (Sound familiar….?)

2.      Did they think they were all destined to be melted (was that a fate the Treasury Secretary had hinted at in early-1933)? 

Initially no one knew, or at least wrote down, what Treasury General Counsel’s office thought or planned – but Treasury documents are largely focused on short-term. Evidently it was only Secretary Woodin who recognized the historical value of coin collections and added the well-known exemption. The situation was too critical to think much about a few coins that the government did not already control.

3.      Did they think they would just be saved in the vaults and maybe released once the prohibition on gold was lifted ?

It became clearer with the April EO that the US was really off the circulating gold standard, and that open market prices for gold would not permit a return unless they stabilized at the old $20.67… value….Something that never came close to happening. (At $20.67 gold was undervalued and miners couldn’t make a profit.)

4.      The 1933's in particular still kept getting struck/minted after the April 1933 EO...why would you do that if you even suspected they might be melted and returned to gold ingots and pieces ?

The Mint Bureau had been given orders to make double eagles in late January 1933 and began work in February with the first coins made in early March. No one changed those instructions. The Mint Bureau was not even mentioned in the EOs and it was not until May that Mary O’Reilly asked what the Mints were supposed to do. FRBs had no ability to deal with gold except as coins, but citizens were bringing in gold in all forms.

By August 1933 it was clear that gold market prices would not permit a return to circulating gold. The US had already returned to a gold bullion standard and President Roosevelt and Acting Secretary Morgenthau kept daily track of open gold markets from which they set Treasury’s buying price. Gold was treated as a national asset, and not an individual possession. This gave the government flexibility to stabilize the internal economy while blocking most external speculation and interference.

The Gold Reserve Act of 1934 was the official nationalization of gold in all forms except coin collections and modest amounts of personal property.  This had almost no impact on ordinary citizens – a gold wedding ring was about all they ever saw of the yellow metal – and their dollars remained the same as before.

Melting gold coins had three public purposes: reduce storage space, simplify accounting, and consolidation of gold in a specific location: the US Bullion Depository at Ft. Knox, Kentucky. A non-public purpose according to the General Counsel’s office was to prevent any attempt to re-issue or recoin to the new $35 standard. Several members of Congress had proposed this, but were faced with the immense cost of recoinage.

Edited May 14, 2020 by RWB

[RWB]

During the latter half of the 19^th century and until 1923, the Mint Bureau’s official policy was to permit recognized Numismatic Societies and museums with publicly displayed coin & medal collections to buy coins, medals and patterns at cost. The organization had to apply for the items, and pay either face value, bullion value, or manufacturing cost depending on the item.

The difficulty was that the organizations had to know about a coin, pattern or medal before they could request a copy, and only a select few where in a position to have that information. These few organizations were also dominated by some of the most active dealers and collectors of the time, so coins and medals naturally flowed into their personal holdings. The Mitchelson Collection was the last great assemblage to benefit from this policy.

[See the chapter “A Friend at Court” in Renaissance of American Coinage 1909-1915 for more information about the Mitchelson collection.]

Edited May 14, 2020 by RWB
Fix formatting

[GoldFinger1969]

Brilliant answers as always, Roger.  My comments to your comments follow:

"...I’ve seen no signs of contemporary internal speculation about the fate of Treasury coin holdings until late in 1933. The only goal was to save the economy from complete collapse, and stopping hoarding of gold and gold certificates was a part of that. A key to stopping the contagion affecting the US economy was to break the chain of transmission – and adherence to a circulating gold standard was a primary means of spreading the disease, much like a virus. (Sound familiar….?)"

I agree.  The priority wasn't "what's gonna happen to all the gold coins in mint vaults" or "what do we do with all all the 1933 Double Eagles" or even "Hey, did any of these 1933's get out ? ".....the focus was on 10-15 banks failing EVERY DAY.  By comparison, during the 1980's S&L Crisis, only 2 or 3 a WEEK failed.

I agree with all your statements in (2), (3), and (4), Roger.

 

 

 

Edited May 14, 2020 by GoldFinger1969

[GoldFinger1969]

12 minutes ago, RWB said:

During the latter half of the 19^th century and until 1923, the Mint Bureau’s official policy was to permit recognized Numismatic Societies and museums with publicly displayed coin & medal collections to buy coins, medals and patterns at cost.

Yup....but after April 1933, some museums and individuals could NOT get any Saints (including the 1933's) or any other gold coins from the regular mail-order method or even by calling in a favor from someone at the Mint or Treasury.  

[RWB]

After May 1 all distribution of gold coins and bars was prohibited except to gold dealers and license holders (dentists, craftsmen, electronic fabricators, etc.). Prior to that Treasurer of US did not fill gold coin orders.

Only the National Museum got 1933 gold coins - and they paid for them.

 

Edited May 14, 2020 by RWB

[GoldFinger1969]

19 minutes ago, RWB said:

After May 1 all distribution of gold coins and bars was prohibited except to gold dealers and license holders (dentists, craftsmen, electronic fabricators, etc.). Prior to that Treasurer of US did not fill gold coin orders.

Only the National Museum got 1933 gold coins - and they paid for them.

 

No law is written that will include 100% of all circumstances, that's why we have a judiciary.  So feel free to not comment on this but....do you think that after May 1st, 1933 a dealer or collector would have been able to EXCHANGE INTO (not buy) a particular year of Saint-Gaudens gold coin ?

My understanding from your book was that after May 1st (or April 1933) NO GOLD went out unless the Treasury Secretary or President himself authorized it.  Even neutral gold coin-for-gold coin exchanges.

Edited May 14, 2020 by GoldFinger1969

[kbbpll]

The interesting thing to me about the original topic is that the situation seems to be reversed in Canada, specifically for their nickels in relation to US Buffalo's. Their mintage was fairly consistent 1927-1936 (millions), G-VF grades are common and cheap, and MS coins are condition rarities, particularly MS63+ and the early 1930s. https://www.ngccoin.com/price-guide/world/canada-5-cents-km-29-1922-1936-cuid-1034492-duid-1270154 I wonder what was different between the two economies.

My grandfather was a railroad worker during the depression years, and still managed to save a $5 gold and half a dozen crisp 1935 $1 silver certificates. (The grandkids each got a $1 and no one seems to know what happened to the $5; I saw it when I was a kid).

[GoldFinger1969]

KBB, might have something to do with falling money supply and/or the decline in the velocity of money (a monetary concept; see Milton Friedman).  Plus the specifics of the Canadian economy at that time.

[kbbpll]

I'm sure it has to do with "the specifics of the Canadian economy", just wondering what. Canada didn't start minting dollar coins until 1935, and then skipped 1940-1944, so there are differences in coin demand and history. Maybe the Depression hit Canada much earlier or later. It just struck me how different the two collector markets are for the same time period for two adjoining countries.

[GoldFinger1969]

16 minutes ago, kbbpll said:

I'm sure it has to do with "the specifics of the Canadian economy", just wondering what. Canada didn't start minting dollar coins until 1935, and then skipped 1940-1944, so there are differences in coin demand and history. Maybe the Depression hit Canada much earlier or later. It just struck me how different the two collector markets are for the same time period for two adjoining countries.

Don't forget the population of Canada was much smaller (as it is today)...was probably like 12 million or so, right ?

Also....as a part of the British Commonwealth, they may have gotten (gold/silver) coins minted from overseas.  I'm not sure about this, just speculating.

[RWB]

Canada did not have a large supply of older domestic coins, so they had to make new ones. The Dominion had also been trying hard to expel US silver  and cents from domestic circulation.

[GoldFinger1969]

31 minutes ago, RWB said:

Canada did not have a large supply of older domestic coins, so they had to make new ones. The Dominion had also been trying hard to expel US silver  and cents from domestic circulation.

Probably found them in their washing machines, soda machines, and other vendor slots ! 

[Conder101]

13 hours ago, physics-fan3.14 said:

Now, you could argue that the capitol should be more centrally located,

When the city was founded it WAS somewhat centrally located.

[leeg]

This is a Super reference for that time period also. A reference in my Numismatic Library:

Edited May 15, 2020 by leeg

[physics-fan3.14]

On 5/15/2020 at 9:51 AM, leeg said:

This is a Super reference for that time period also. A reference in my Numismatic Library:

It's avaiable to read for free on the NNP: https://archive.org/details/insideviewhobby1984bowe/mode/2up

I will add it to my list! 

[RWB]

Letter collections such as the above, and diaries, such as William Ashbrook's, provide useful if narrow, windows on coin collecting nearly a century ago. Both are short on individual perceptions of their hobby, although Ashbrook's short comments are much more personal that Nichols' letters.

What is missing, however, are the thoughts and activities of ordinary coin collectors - people of modest means for whom Stellas, gold proof sets and similar items were out of financial reach. In examining archival documents the name of Giles Anderson appears from the 1880s into the 1920s. If we could learn more about Mr. Anderson, we might have a clearer understanding of regular collectors, and not the "top 5 percent." Here's one of Anderson's letters:

PS: Anderson was a bookkeeper and later a secretary at the firm on the letterhead.

Edited May 17, 2020 by RWB

[Walkerfan]

I'm always looking for a good read.  

This one did NOT disappoint.

This era is interesting to me, especially how it relates to classic coinage, like Walkers and Standing Liberties---my two favorites.  

Thank You for posting.  

Edit to add: The 1929-D & S Walkers also had a lower mintage but MANY were stored in Government vaults due to lack of need, because of the Great Depression.  By the time they were needed and the Great depression had susided; the 1933-S had ALREADY made it's introduction into commerce, so the 1929 coins remained there, though some were released.  This is WHY they (1929 S & D Walkers) are so readily available in mint state, today.  

Edited May 17, 2020 by Walkerfan
To add explanatory, pertinent information to the article

[GoldFinger1969]

Looks like at the bottom of page 18 (left side) someone is quoting a 1907 High Relief/Wire Edge for $26.50.

I KNEW those $30-plus prices wouldn't hold. 

I'm gonna wait for the price to head back to that $26.50 level before pulling the trigger.  

Edited May 18, 2020 by GoldFinger1969

[DWLange]

What is missing, however, are the thoughts and activities of ordinary coin collectors...

For that you need to read the Numismatic Scrapbook Magazine. From 1935 to 1976 it was the journal of ordinary collectors, the ones who searched through pocket change and filled coin boards. It was joined by similar publications with smaller distributions starting in the mid 1950s, but the NSM is really the history of the popular side of the hobby at mid-century. The letters to the editor reveal how little collectors knew about coin varieties and errors and the way they were made. If fact, editor Lee F. Hewitt didn't know much more than his readers. It's a shame that this publication is available only in snippet form at the Newman Numismatic Portal, but its copyright is held by Coin World, which has declined to make either publication's back issues available in full.