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 Replies: 17 / Views: 3,133 |
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Pillar of the Community
United States
784 Posts |
Just a curious question really. I never see gold coins graded lower than EF with the vast majority of them being AU and MS so it got me thinking; How were gold coins used in daily commerce? Were they circulated like other common coins of the period or were they more for bank to bank transactions and the wealthy? Would they have been more common in the gold rush areas and mining towns or in larger cities? If one were to watch the western channel on Starz for more than an hour you would think they were everywhere what with barkeeps biting them to see if they are real or a gang robbing a chest full from a stagecoach. More of a shower thought than anything but thanks in advance anyhow!
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Pillar of the Community
United States
3234 Posts |
A lot of them were melted and recoined or shipped overseas to be melted and reused. Plus, gold was largely for the wealtheir person which there were not that many so most gold coins didn't have a chance to change a lot of hands to show much wear.
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Pillar of the Community
United States
6130 Posts |
In 1933, the Roosevelt administration removed all gold coins from circulation to try to alleviate the Depression. Each person was given a $200 face allowance to keep any numismatically significant pieces. That would explain why most circulated pieces are very hard to find today--nobody "wasted" their allowance on low value pieces.
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Pillar of the Community
Canada
1747 Posts |
agree melted and repurposed for jewlery or other coins.
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Rest in Peace
United States
17900 Posts |
You can certainly find plenty of gold coins with circulation that reduces them well below the VF range, but it is less common than those of higher grades.
Gold was then very much like it is now, except, of course, it doesn't circulate now (although gold is still minted as bullion or as special collectors coins). Gold was counted as the ultimate storage unit of value.
I've sold through many estates in my time, and those that stretch back to pre-1930's days usually kept a few gold coins in the bank box. Some are still with the envelope when the coin was presented as a wedding gift, or a golden anniversary, or another special occasion.
For the "common man" there were probably very few times when they ever held gold in their hands for any purpose.
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Pillar of the Community
 United States
3098 Posts |
My daughter has an old newspaper from 1927 with an ad for a local dance contest. The ad says that the prize for the best couple at the contest was a five dollar gold piece. I thought it was interesting that it would specify a gold piece instead of just five dollars.
That says to me that the gold piece was something that was at least a bit out of the ordinary.
Paul Bulgerin
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Pillar of the Community
United States
1189 Posts |
I think TPG's are a little easier grading gold too. I've seen a lot of lightly circulated pieces graded MS when they should probably be AU.. |
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Bedrock of the Community
United States
17884 Posts |
Gold would mainly be used by banks and by the wealthy for LARGE transactions. Think about it, the average working man was making $100 - $200 a year. A $10 gold pieces might represent a months pay. How often would you use a single coin that equated a month of your income? Also gold coins had a relatively strict tolerance allowance for weight even in commerce. A coin worn enough to exceed that tolerance would be accepted not at face value but by weight. This meant that worn coins would be returned to the banks/government for recoinage before they reached that tolerance. So worn gold was constantly being pulled and recoined. Quote:
Each person was given a $200 face allowance to keep any numismatically significant pieces. That would explain why most circulated pieces are very hard to find today--nobody "wasted" their allowance on low value pieces. The order allowed people to keep $100 wotth of gold in any form. The amount of gold they could keep in the form of coins that were "rare or unusual" was unlimited with the exception that you could not have more than 4 quarter eagles of the same date and mintmark. "Rare or unusual" was defined as any gold coins struck before April 5th 1933. Which at the time meant pretty much anything. It only became relevant in later years when pieces struck after that date had to be approved for import on a case by case basis |
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Pillar of the Community
United States
1499 Posts |
Most gold coins were kept in banks, safes and family hoards. People did not run around with $2.50, $5.00 and $10.00 gold coins the way we carry paper money today.
In very early years, from 1795 to say, 1813, a great deal of the U.S. gold stayed in The United States. Starting in the mid 18-teens, the Philadelphia Mint became little more than gold foundry operation. Mostly businesses deposited gold there, got it turned into mostly $5 gold pieces for little or no charge and then shipped those coins to Europe. Once those coins hit Europe, most of them were melted which explains the great rarity of many U.S. gold coins that were minted from the 'teens to August 1834.
Why August 1834? That's when Andrew Jackson got a bill through Congress that changed the ratio between silver and gold coins from 15 to 1 to 16 to 1. To collectors these are known as the Classic Head gold coins. As a result of that gold coins stayed in the U.S. became a part of the U.S. economy. Gold coins were mostly used for business contracts, and some contracts specified that payments had to be made in gold, not paper.
There were some periods, like the Civil War, when almost all of the gold went out of circulation. You could buy with paper money (greenbacks in the North), but only by paying a premium. After the war the Federal Government finally got gold and paper money at a par value in the mid 1870s. There "hick-ups" during the economic downturns, but system worked reasonably well.
The Twenty Dollar Gold Piece became THE coin for business after it was introduced in 1850. If you check the mintages well over half of the gold coins produced after that date were double eagles. Overall the $20 gold piece accounted for a little over half of all the coins the U.S. Government issued up until the Gold Surrender Order of 1933. Twenty dollar gold coins were mostly moved from bank to bank, and did not circulate very much. That's why so many of the later dates, especially the St. Gaudens double eagles, are Mint State or close to it.
My mother told me that when she was young you could go to the bank and exchange paper money for gold just like I was able to get silver dollars at the bank when I was young. She told me that people mostly did that only for gifts at Christmas and the like. People preferred to use paper money.
My father graduated first in his class from a private school. He got $75 in gold coins as prizes at the graduation ceremony which he deposited in a local bank. The bank went under during the Great Depression, and he lost it all.
I know I've rambled a bit here, but I think you get the gist. Most people did not use gold coins for day to day living. The coins were used as reserves for banks, and for the people the coins were used for special occasions.
Edited by billjones
03/11/2016 2:11 pm
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Pillar of the Community
United States
4591 Posts |
The executive order restricting gold: http (6102)://www.presidency.ucsb.edu/ws/?pid=14611Quote:
(b) Gold coin and gold certificates in an amount not exceeding in the aggregate $100 belonging to any one person; and gold coins having a recognized special value to collectors of rare and unusual coins. The numismatic exception was unlimited. The personal exemption was only $100, not $200 as said above. -----Burton 50+ year / Life / Emeritus ANA member (joined 12/1/1973) Life member: Numismatics International, CONECA Member: TNA, FtWCC, NETCC, EveryCountry (online) coin club Owned by three cats and a wife of 40+ years (joined 1983) Author: 3rd Edition of the Sample Slabs book, https://www.sampleslabs.info/Edited by BStrauss3
03/11/2016 2:35 pm
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Pillar of the Community
United States
589 Posts |
Great information's from everyone posted above. From one of the books that I have read, it stated that many public officials wanted their salaries to be paid in US gold coins.
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Pillar of the Community
United States
1748 Posts |
A lot of our early gold coins were turned into British sovereigns. If our gold coin went to Britain in the days of the sovereign, that is what they became.
However, the Swiss did not melt them, but kept them intact. Problem with the Swiss was the coins were routinely machine counted, which is why so many brought back from Switzerland are low MS to AU.
The reasons there are common 1920's Saint Gaudens issues and then ultra rare ones are as follows:
1. Certain 1920's issues were heavily exported to Europe as balance of trade payments. Those issues have now found their way back home and are the ones that are most affordable. We have these coins now because the Europeans basically rebuked the recall order.
2. The now ultra rare issues, like 1927-D and 1933, were issues kept at the Treasury for backing on gold certificates. In 1937, the vast majority of these issues went to the melting pots along with the recalled gold coin.
Commonly asked question is why we left the physical gold standard. It was because we had only about 40 percent backing on gold certificates and federal reserve notes, which also claimed to be redeemable in gold. A run on gold was beginning to develop in 1933, mainly due to the banking crisis. The executive order on gold and the bank holiday put a stop to it. By those orders, the U.S. dollar was devalued to $35 per oz gold and we went to a gold exchange standard which lasted until 1971.
Edited by DoubleEagle20
03/11/2016 7:55 pm
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Pillar of the Community
United States
2130 Posts |
Great question Rking007 and great answers. Very interesting thread.
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Pillar of the Community
 United States
784 Posts |
Wow, thanks for all the answers everyone! I'm loving this thread. I never realized how little I actually knew about this history and it's created more questions than I thought I had haha!
SO, if I may, silver and gold certificates... what was their purpose? Did the average person have them along with their paper money or was it again something that was used more for business transactions? Billjones, you mentioned being able to just go to the bank and exchange paper money for gold or silver, was that only done with a gold or silver certificates? Did all banks just have gold and silver sitting in their vaults for this purpose?
Regarding a lot of gold going to Britain, it seems like there is a fairly specific date range to gold moving to Europe, what happened that made this stop being a way to pay back trade payments? Side note: I wonder how much is sitting at the bottom of the ocean from shipwrecks?
I plan on doing some reading about all this and I don't mean to ask questions that could probably be looked up on the internet but this thread is awesome and I want to keep it going! Thanks again for the answers all!
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Valued Member
United States
383 Posts |
What BIll Jones said... well put, sir.
ET
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Pillar of the Community
United States
1499 Posts |
Quote:
SO, if I may, silver and gold certificates... what was their purpose? Did the average person have them along with their paper money or was it again something that was used more for business transactions? Billjones, you mentioned being able to just go to the bank and exchange paper money for gold or silver, was that only done with a gold or silver certificates? Did all banks just have gold and silver sitting in their vaults for this purpose?
Gold certificates, silver certificates, U.S. Notes, national bank notes and Federal Reserve notes were all part of a sort of confusing system of paper money that we had in this country from the time of the Civil War. So far as I know they were all interchangeable when they were in circulation. The idea behind gold and silver certificates was to give people confidence in the paper money system. If they knew that they could get precious metal for their paper money, they were comfortable with it. Since paper money is easier to carry than coins, they didn't bother to exchange it in the vast majority of cases. Therefore the back-up coins only needed to be a fraction of the amount of money that was in circulation. There were times when there were exceptions to that. The Sherman Silver Purchase Act of 1890 was one of the worst pieces of legislation ever. It required the Federal Government to buy 4. 5 million ounces of silver every month. That provided a subsidy to the silver mining industry. That silver was paid for with notes that could be redeemed in gold or silver which resulted in a run on the government's gold reserves which threatened to wreck the national monetary system. Contrary to what the Sherman Act implied, gold was worth a lot more than silver, and an instant profit was made by exchanging those notes for gold after they had been issued to buy the silver. It was part of the cause of the Panic of 1893, which was a very nasty economic depression which sank President Grover Cleveland in his second term. The precious metal backed monetary system was like a bank. So long as people left their deposits there, things were fine. BUT if they panicked and made a run on the bank, the whole system faced collapse. As for my silver dollar exchanges when I was kid, I didn't need to have a silver certificate to get a silver dollar at the bank. All I needed was U.S. money, in any form. Edited to add: Gold certificates were long gone when I was kid. In fact it was illegal to hold them when I was kid. That was how silly the gold surrender laws were. All the gold certificates had were gold colored seals. There was no gold to recover on or in them. Edited by billjones
03/12/2016 1:09 pm
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Replies: 17 / Views: 3,133 |
Posted 03/11/2016 1:02 pm
