Filling holes in coins: legal or illegal?
RogerB
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This wordy letter was in reply to a jeweler who wanted to know if it was legal for him to fill holes punched in coins. Can you guess the answer after reading this letter?
"February 6, 1882
Hon. Charles J. Folger
Secretary of the Treasury
Sir:
I have the honor to acknowledge the receipt by your reference, of the letter of the Hon. J.C. Clements enclosing for my remarks the letter of John T. Owen, Esq. of Cartersville, Ga. Stating that he is a jeweler of that place and is frequently called upon by his patrons to stop holes in gold and silver coins, and inquiring if there is anything wrong legally in stopping the holes with coin gold or silver.
As a mutilated coin of the United States from which a portion of its gold or silver has been abstracted is no longer a legal tender or current money and can be regarded simply as bullion, the filling of holes punched in such coins would seem to be prohibited and punishable under Section 5457 of the Revised Statutes, as the crime of falsely making, forging, or counterfeiting the coins of the United States intended for the use or purposes of current money when not authorized by law. The conversion of gold and silver bullion into coins intended for the use and purposes of current money in the United States is only authorized to be done at and by the officer of the United States Mints and a violation of the latter Section is punishable by a fine of not more than three thousand dollars or by imprisonment of not more than five years or both.
The letters of Messrs. Clements and Owen are herewith enclosed.
Respectfully,
Horatio C. Burchard,
Director"
[RG 104 Entry 235 Vol 028, pp.139-140.]
Answer: Illegal.
Comments
VERY interesting. To restore it to usable condition is to make a coin that is not up to specs, hence the counterfeiting. Very interesting reasoning.
Yep. That's what I get from the letter. (There must have been a shortage of 'periods' and other punctuation in 1882....) The original is about 2-pages and I though a transcript might be more better.
Yes, I like transcripts. Reading some people's handwriting can be almost impossible. My hand writing is not good and gets worse the longer I have to write.
As for the issue I can see why the treasury would feel that way. One could hole a gold coin in a coupld places and fill it with something below the standard, or just have base metal with golden coverning. With silver in that day, there would not have have been enough money in it because silver was so cheap.
Illegal. That's what I'm reading.
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It should also be noted that the Secretary is giving a legal opinion, and not necessarily stating the law as it would actually be applied by the courts.
Like most legal issues that get be presented to the readers of this message board....you could probably get 10 differing opinions without much difficulty.
The beauty of law. Interpretation and precedence.
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I understand the reasoning. The timing of this event in 1882 was just before another event that shook the Mint up for years.
The 1883 Racketeer Nickel
Pete
Well I'm certainly not planning to spend any mutilated gold coins!
My Adolph A. Weinman signature
I can see where this discussion is headed........if the government can seize the 1933 DE, how come they don't also seize all the collector coins with repaired holes....or do they just "selectively" enforce the laws as they feel like it....
You are forgetting that at the time the intrinsic value of the coin matched the face value. It wasn't a $5 coin, it was a coin containing $5 worth of gold. That's why the reeded edges, to prevent shaving. Filling a 22 karat whole with 14 karat gold would be equally profitable. So, you are not "restoring it to usable condition", you are stealing money.
All comments reflect the opinion of the author, even when irrefutably accurate.
Guessing that they wouldn’t have any jurisdiction over this one if I decided to get it restored:
That it would be illegal, is logical, for reasons mentioned above. Though the letter did stipulate 'filling the hole with coin gold or silver'...As such, if done properly, the coin would be honestly represented. However, that opens the door to those whose moral fiber may not be as rigid. Ergo, the process would be forbidden. One may ask "Why would the hole be filled?" The answer can only be "To pass as currency."....Cheers, RickO
More interesting historical correspondence , Thanks
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So. I have the solution.
It appears it is the CONVERSION is the problem, not the filling of the hole.
So I fill the hole, correctly, with coin grade, re 22K gold, smooth it, make it perfect, but, in the eyes of the treasury, it is bullion and I cannot convert it.
So I "give" the coin to a friend, no telling the friend what has been done. I do not say "This is a repaired coin, now bullion, do not spend it as a coin" just give it to him.
He spends the coin, not knowing it was a coin to bullion and now he has make it "back" to a coin. Were all the people who SPENT the "counterfeit" "small O" Morgans ever prosecuted?
Going further back in the question, though. If the "value" of the coin was based on it's MINTED weight, and it was derated as a coin with a hole, reducing it to bullion status, then, shouldn't any wear amount that exceeded 1 cent of gold have caused that coin to be downgraded?
Is this setting up the entire American population to be guilty of a crime, passing something that should have been identified now as bullion, as a coin?
For if you do, then shouldn't we blame the whole monetary system of the United States? And if the whole monetary system makes all the American public guilty, then isn't this an indictment of all the people of the United States in general? I put it to you, Hon. Charles J. Folger Secretary of the Treasury: isn't this an indictment of our entire American society? Well, you can do what you you want to us, but we're not going to sit here and listen to you badmouth the United States of America.
No one would take a $5 gold piece (or $1 Morgan) for face value with a hole. [In 1882, of course.] Frequently, they would not take it if excessively worn. Shopkeepers had scales for this very reason - as well as counterfeit detection.
All comments reflect the opinion of the author, even when irrefutably accurate.
Since the intrinsic value now exceeds the face value, it is not an issue. No one "spends" collector coins. They are free to sell them as bullion - which is what they do - which does not violate the law.
On a more relevant note, I've wondered whether there is any actual law that states this, i.e. that as long as intrinsic value exceeds face value, you're okay. I'm thinking specifically of Dan Carr's use of "dollar" on his "fantasy pieces" as well as the occasional "real money silver round" that someone issues that also has a dollar value on it. It was my understanding that you could not use the denomination, but it seems to be okay as long as the intrinsic value is higher than the face value.
All comments reflect the opinion of the author, even when irrefutably accurate.
What would the cost be to say fill a 1/4" hole in a 1882 $20 gold piece back in 1882? After all, at the time, it was only worth $20 in trade or deposit. The actual gold/jewelers labor would be prohibitive unless you found the coin or was gifted to you and you had it repaired to bring the value up to par at a fraction of the value.
To me, the only way to come out ahead would be to fill the hole with something other than gold or silver and then disguise the repair which to me would be illegal under their definition. Not enough information to come to a concise conclusion.
"Keep your malarkey filter in good operating order" -Walter Breen
Trust him, he's pre-law, right Otter?
Liberty: Parent of Science & Industry
OK, so I can drill a hole in my copper Lincolns and Jefferson nickels. This would remove them from being considered coins and now just bullion. Now I can't spend them in commerce any longer because of this status. I can now melt them for scrap and not violate the unlawful penny melting rule right?
Interesting letter. I think it an interesting opinion. But to be unlawful I would expect that an intent to defraud would have to be shown, not just plugging a hole with the "proper" alloy.
@dcarr gets around this by minting over real US coins with the same denomination he portrays on the fantasy coins. Is it legal? His disclaimer on his website is convincing but ultimately it is a matter of interpretation and as far as I know the feds have never knocked on his door to dispute his perspective. He also makes some original material with $ denominations but they do not have the legends or devices associated with coins.
It is illegal to mint "coins" (with a denomination) that replicate or are arguably similar to US coins, or might be mistaken for US coins. Bernard von Nothaus and his Liberty Dollars are perhaps the most recent example of this. At issue was not how much the silver was worth relative to the "face value", but rather the charge that his "coins" were counterfeit (despite not being exact replicas of anything).
Another interesting letter - Thanks for posting it Roger
I'm not sure that's completely true. Dan Carr's 1964 Peace Dollar, for example, is "similar to US coins" and has a denomination. The only loophole, in my mind, is that it's intrinsic value is over $1. If I were to strike, for example, an 1856 Sacagawea dollar fantasy over a quarter planchet, would I not be guilty of counterfeiting? It seems that value must play a role. I can't print paper money denominated in dollars either, for that matter, whether it looks like U.S. currency or not.
All comments reflect the opinion of the author, even when irrefutably accurate.
From the Moonlight Mint listing for the 1964 Peace dollar: "Since these are over-struck on existing coins, there may be faint evidence of the original coin design showing since the over-strike is usually not perfectly aligned with the original strike."
All of Dan's fantasy coins (real design, fantasy date and/or mintmark) are struck over real coins of the same size/denomination. This is key to his justification that it is legal. Your example of an 1856 Sacagawea dollar fantasy over a quarter planchet would presumably be illegal.
I am not a lawyer and do not pretend to be offering any legal advice to anyone, but I pay very close attention to actual cases where legal issues with coins or currency arise in order to better understand the relevant laws (Where's George dollar bills, Silver Surfer quarters, Coors Light dollars, Liberty Dollars, Daniel Carr's creations, etc.). I do some counterstamping and I want to be confident of where the law might fall on various projects.
It is entirely possible that intrinsic value vs. denomination could be a factor, but I have so far seen to evidence to support that. In the case, of Daniel Carr's material, there is one item that I can think of that does not meet this test: the Jefferson nickel Hard Times tokens. They are overstruck on real nickels (except one version struck on war nickels) but the intrinsic value is possibly below the "face" value depending on current copper and nickel prices. That token does not exactly copy a US coin as the devices and text are all modified, but if it were not minted on a real nickel (which seems to provide some degree of protection) then it would be open for a Liberty Dollar type challenge. Of course, dcarr is not trying to circulate these so I doubt the government would take an interest in any case.
I'm no lawyer, but I am curious. I think this is the current statute on defacing, mutilating, altering.... coins.
https://www.law.cornell.edu/uscode/text/18/331
a .gov pdf here
https://www.gpo.gov/fdsys/pkg/USCODE-2016-title18/pdf/USCODE-2016-title18-partI-chap17-sec331.pdf
I think the key word is "fraudulently" and at that another key phrase would be "are by law made current"
So, bullion (a holed coin) is not collectible, nor legal for monetary exchange, once holed. And a jeweler is not a moneyer in the business of coining, so he is not legally authorized to repair them. Thank goodness we can have them conserved and NOT in violation of law. As to Mr Carr, he isn't in the business of fixing holed coins. He is filling a void where some minting facilities left a hole.
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Interesting. But, returning to Dan Carr, why isn't striking over the top of a Peace dollar considered "defacing"? Or is not "fraudulent"? But what would constitute fraud in this case? Changing the value?
All comments reflect the opinion of the author, even when irrefutably accurate.
Defacing coins (banknotes are different) is perfectly legal, unless it is done for fraudulent purposes (such as drilling out gold as with the situation that started this thread, or perhaps creating a rare collectable by altering a coin.) Separate laws also make it illegal to advertise on coins, and also prohibit the melting ,etc. of cents and nickels.
@dcarr strikes over existing coins to avoid counterfeiting laws.
Really not clear from the above quoted law what constitutes "fraudulent". Creating a fantasy 1964 Peace $ which is a "rare collectible" could be seen as fraudulent. Not sure if there's any specific case law.
All comments reflect the opinion of the author, even when irrefutably accurate.
I don't believe there is specific case law on these matters, unless you count the Liberty Dollars case, which is not like DCarr but offers some interesting but at times disturbing lessons. I was a claimant in that case so I got all the docs from the court as the process related to the claims progressed to completion (and I DID get back my 20 one ounce copper Liberty Dollars!). It was a but frightening to see what was declared "counterfeit" - designs that had little resemblance to anything ever issued by the Mint and in metals/denominations that never existed.
I personally believe that the "fraudulent" thing regarding coins had its roots in the days when coins were made of gold and silver. An updated definition would also include alteration to add/remove a detail that would make a coin seem to be a more valuable version. Altered date, mintmark, fake error - whatever alteration is done to defraud someone.
Someone could try to argue that @dcarr is committing fraud by making his fantasy coins, but he obviously feels he is covered by his disclaimers (and the use of real coins as the underlying host to avoid counterfeiting). I don't mean to put words in his mouth but this is what I have gathered from his site and a couple emails exchanged over the years. I don't see anyone challenging that situation, so I think he is safe.
The letter was written in 1882 and pertains to practices of that time. To be legal tender a coin had to meet specific criteria. If any of those were altered, it lost its legal tender status regardless of any subsequent acts. Drilling a hole disqualified the coin as legal tender. Anything done later was immaterial - it was no longer a coin, only bullion. If the jeweler added metal to return the weight to nominal - or even exceed it - the piece remained bullion.
Drilling and filling the edge of a gold coin was a common practice in 1882, so the Director would be expected to be very strict about attempts to "restore" a drilled piece. Anyone circulating it as money could be charged with counterfeiting, although it would have to be shown they knew the piece had been drilled and plugged.
Extending any circumstances from 1882 to the present is highly problematical.