Question re. U.S. gold meltings.
CaptHenway
Posts: 32,001 ✭✭✭✭✭
There is a telemarketer, "New York Mint," that advertises on our local radio station. In their current ad they say stuff something like "Experienced collectors know how rare it is to be able to handle a genuine United States gold coin. Millions were melted down during the 1930's, and again years later to help rebuild war-torn Europe."
A question for our resident historian, Mr. Burdette: Was there any specific post-1945 melting of gold, pre-1933 or otherwise, for the benefit of European relief?
Or are they just making up bilgewater?
TD
A question for our resident historian, Mr. Burdette: Was there any specific post-1945 melting of gold, pre-1933 or otherwise, for the benefit of European relief?
Or are they just making up bilgewater?
TD
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
0
Comments
Bilgewater!
After 1933 gold coin and bar flowed into the US so fast the mints and NY Assay Office could barely keep up with casting it into bars. Most was not refined, but cast into .900 (coin gold) from US coins and foreign .900 fine coins; .9166667 (sovereign gold) from British Empire sovereigns; .995+ foreign certificate bars (most from Switzerland and Belgium); and .999+ fine bars made from fully refined gold.
US had significant quantities of unmelted US coins at least as late as 1940. The NY Assay Office had millions of sovereigns well into the 1970s and there are probably lots remaining - reserved for special missions.
(PS: The book I’m working on has major sections on gold melting during the 1930s and the Saudi gold discs made in 1945 and 1947.)
<< <i>A question for our resident historian, Mr. Burdette: Was there any specific post-1945 melting of gold, pre-1933 or otherwise, for the benefit of European relief? Or are they just making up bilgewater?
Bilgewater!
After 1933 gold coin and bar flowed into the US so fast the mints and NY Assay Office could barely keep up with casting it into bars. Most was not refined, but cast into .900 (coin gold) from US coins and foreign .900 fine coins; .9166667 (sovereign gold) from British Empire sovereigns; .995+ foreign certificate bars (most from Switzerland and Belgium); and .999+ fine bars made from fully refined gold.
US had significant quantities of unmelted US coins at least as late as 1940. The NY Assay Office had millions of sovereigns well into the 1970s and there are probably lots remaining - reserved for special missions.
(PS: The book I’m working on has major sections on gold melting during the 1930s and the Saudi gold discs made in 1945 and 1947.) >>
Thank you!
However, your reply raises a new question....If the Saudis wanted to be paid for their oil in sovereign equivalents (the one pound and four pound discs), why not just pay them in the sovereigns? Was it beause the U.S. wanted to demonetize gold, and the discs did not look like "money?"
TD
The fundamental misconception is that the gold discs were used to pay for oil or for Aramco’s concession payments.
The US State Department used minting of riyals and the gold discs to help the King’s finance minister make currency exchange profits and thus reduce the Kingdom’s budget deficit.
Aramco paid its workers in silver riyals. The US struck the riyals for the Saudi government at about 18-cents each. Aramco purchased them for 30-cents from the Saudi government, producing a 40% profit.
The US sold the Saudi’s the gold discs for $35 per ounce of pure gold. Each 4-sovereign disc, however, was used by the Saudi’s to buy about $60 in riyals, which were later sold to Aramco, the mining concession and businesses.
Because Aramco was required to pay its royalties and concession fees in sovereigns, when production increased in 1944-47 the sovereigns became a “drug” on the Saudi economy. They were accepted by merchants at a lower rate than gold bars. So, the Saudi government asked for $1 million in 1-sovereign gold discs which they could sell at a higher price than the exact same weight sovereign.
In the 1950s the Saudi government sold millions of sovereigns to the US Treasury at $35 per ounce in exchange for US dollar credits – dollars would buy what gold would not.
The Kingdom of Saudi Arabia gold discs were, in effect, an extreme example of Lend-Lease. The Saudis paid for silver riyals and gold with profits from selling the pieces - seigniorage. (The Saudi finance department was small and had almost no controls until the US helped them set up a system in 1954. The financial result is the very successful Saudi government built on US-style investment.)
Aramco never needed or used the gold discs.
Don't forget that lots of US gold coins were melted in the 19th century, both here and abroad; both the "old tenor" pre-1834 coins and the post-1834 coins.
(You can track the coins melted each year at the Mints and New York Assay Office in the Mint annual reports.)
Check out the Southern Gold Society
In 1919 the Treasury controlled about $720 million in gold coin. Approximately $500 million was "in circulation" but most had long since been converted to jewelry or paid overseas. The actual remaining gold coin was about $80 million. In 1934, the Treasury had to quietly write off about $500 million in gold coin plus $30 million in early gold notes as unrecoverable.
[Again - much more will be in my 1929-1946 book...including dates/mints and quantities melted from 1929-1933 and a few other dates.]
There's a story in the July 1959 issue of The Numismatist written by Harry X Boosel.