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The Little Known Facts about FDR's 1934 Silver Confiscation
edgar
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As I prepare for tomorrow's puck release, and wonder where/how I'm going to store them all, I ran across this article...... The Little Known Facts about FDR's 1934 Silver Confiscation
I knew about the gold, But silver is news to me!
I knew about the gold, But silver is news to me!
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The price of silver ranged from 34c to 64c an ounce during that "confiscation" period. So even at 50c/oz most people probably got fair value for their silver. Interesting that a silver dime at that time contained about 3.5c of intrinsic silver. So it would have been FAR better to spend that dime at 3X the silver value rather than turn it in for 3.5c. Fortunately, the silver act exempted silver coinage and anything above 80% fineness. So that pretty much exempted all forms of silver ware. I would think the average guy had no silver required to be turned in, just industrial sources, speculative hoards, etc. The supposed primary "purpose" was to mint silver dollars but those stopped in 1935.
The gold "confiscation" is a misuse of that term. No gold was really confiscated as there are only a couple of court cases where someone was actually forced to turn in their gold. I'd say 99.9% of the gold turned in was voluntary. And the "collector" exemption as well as other exemptions in the Gold Reserve Act allowed you to keep a significant amount of gold bullion. If gold really wasn't confiscated, I'm not so sure that the term is misapplied to silver as well.
How is it voluntary when the gold owner is threatened with heavy fines and imprisonment? If a robber put a gun in your face, is giving him your wallet really a voluntary act?
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How is it voluntary when the gold owner is threatened with heavy fines and imprisonment? If a robber put a gun in your face, is giving him your wallet really a voluntary act?
I've talked with people who lived through it.
There was nothing voluntary about it.
They were fearful to keep the smallest amounts.
Actually, FDR's March/April 1933 EO was actually ILLEGAL as that order was required by law to be signed/issued by the Secretary of the Treasury. It was the court case above that brought this to the forefront. That was resolved in the fall of 1933 when William Woodin signed the order. Anyone who turned in gold before Oct/Nov 1933 did so voluntarily.
Since there's no record of anyone being fined or tossed in jail, I'd say it was "voluntary" even if there was a "threat" of fine/imprisonment.
I don't consider my income tax payment to be voluntary, do you?
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Executive Orders 6111 and 6260 followed and had the same allowance for gold ownership.
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There was nothing voluntary about it.
They were fearful to keep the smallest amounts.
Ditto. I've heard the same story from several people who lived through it. And I find their testimony much more compelling than someone's interpretation, eighty years later, of some written documents.
"Voluntary" has nothing to do with the gold confiscation in the 1930's.
It was in the middle of the Great Depression. Just how many people had enough money to fight the gold confiscation in court during that time?
Anyone who turned in gold before Oct/Nov 1933 did so under great fear, definitely in the vast majority of cases, not voluntarily. And, how many people would have said before Oct/Nov 1933, "oh, there will be a court case coming along that will prove the gold seizure is illegal"? I would bet that no more than a handful of people in the country would have made such a prediction before Oct/Nov 1933.
I don't think anyone in the early 1930's could predict court actions any better than anyone can predict court cases now.
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"Sou Mangueira......."
There was nothing voluntary about it.
They were fearful to keep the smallest amounts.
Ditto. I've heard the same story from several people who lived through it. And I find their testimony much more compelling than someone's interpretation, eighty years later, of some written documents.
"Voluntary" has nothing to do with the gold confiscation in the 1930's.
It was in the middle of the Great Depression. Just how many people had enough money to fight the gold confiscation in court during that time?
Anyone who turned in gold before Oct/Nov 1933 did so under great fear, definitely in the vast majority of cases, not voluntarily. And, how many people would have said before Oct/Nov 1933, "oh, there will be a court case coming along that will prove the gold seizure is illegal"? I would bet that no more than a handful of people in the country would have made such a prediction before Oct/Nov 1933.
I don't think anyone in the early 1930's could predict court actions any better than anyone can predict court cases now.
Well said.
I don't consider my income tax payment to be voluntary, do you?
Millions of people have been audited and/or fined by the IRS. Thousands have been sent to jail. Yet, not a single person was fined or imprisoned via the 1934 Gold Reserve Act. Apples vs. Oranges. There is no convenient "selection" the majority of Americans can select on their tax returns that would exempt them from paying taxes. There was such a selection back in 1934 to exempt one from turning in gold.....that is, select being a "collector" of gold coins.
The vast majority of Americans could have qualified, if only they really understand that this option was available to them. The Treasury Secretary at that time was a top collector and even had an "illegal" example of the 1933 $20 Saint. It was he who helped place the collector exemption into the Executive Order. 99% of Americans could have legally acquired hundreds to thousands of ounces of pre-1933 gold coins had they had the means to buy them. The fact that experienced US collectors got such a "pass" proves there was such a "selection." And I'd bet if you had interviewed some of those collectors back then, they loaded up on more common date gold coins for their collections in 1933-1934 to get them while they could, while the average guy was turning them in.
It's also probably true that a large % of people "cheat" or at least "fudge" or "stretch the truth" on their taxes. Clearly, they are taking voluntary action and not complying verbatim. We keep running into candidates for office that when scrutinized, have problems with their taxes. It's not like this is uncommon. And unless you're really doing something outlandish, the most you'll typically get is a fine.
These metals included iron and aluminum.
Those were desperate times.
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Wondercoin.
"Roosevelt’s economic policies and the industrial mobilization of World War II helped bring the United States out of the Great Depression. Silver stayed at its market value of $1.27 per ounce and could be bought or sold at that price in nearly unlimited quantities; another executive order (no. 6814, signed August 9, 1934) sought to prevent hoarding of huge amounts of silver, but did not affect coins, silver less than .800 fine, or Silver Certificates, and had nowhere near the effect of Executive Order 6102. Newly mined gold had to be sold to the government."
RR... I believe I had come across a case where someone got about 5 years "hard labor" in prison for failing to turn over some gold coins under the Act. I believe the case took place in the 1950s or early 60s. I don't have access to the legal research tools necessary to pull up the case at the moment, so perhaps an attorney on the boards can find it (if anyone cares). There was also quite a legal battle around that time over a very large solid gold chicken or rooster that a Nevada Casino said was part of its decorations and the govt. believed was being held in violation of the law. Makes for great reading if anyone can find that case.
Wondercoin.
The only case I'm aware of is the 5,000 oz one from 1933. And that person received no time and no fine. By the 1950's and 1960's the govt actually relaxed some of the gold coin exemptions/interpretations of the 1930's. By around 1969 you could even legally hold a number of common modern foreign gold coins. It sort of seems that as soon as the govt rounded up all the 1933 $20 Saints from the leading collectors/dealers by the 1940's their interest in further pursuits waned.
Anyone who wanted to own a pile of US gold coins in the 40's, 50's, and 1960's could have just "collected" $20's by date and mint. By the 1960's $20 Saints were all over the coin show bourse floors at $38-$45 each...not that big a premium to spot. Collector/lawyer/ANA governor David Ganz wrote a pretty detailed and accurate piece on the history of gold coin ownership during the 1933-1978 period that I have linked here before.
David Ganz on the potential of gold coin confiscation
From Ganz referencing Bareford, Pittman, Eliasberg, and others. Some of their gold coin purchases were barely above the price of bullion.
They each exploited a loophole that permitted coin collectors - actually those who acquired "rare and unusual coin" - to keep up to five specimens of each date and mintmark without being in violation of the Executive Orders that otherwise recalled gold coinage to the melting cauldrons of the 1930's. (Bullion ownership itself - bars, wafers and similar items - were prohibited in all but a few instances)
FDR's presidential seizure of gold specifically exempted "rare and unusual coin". That didn't mean "expensive", and it was not a synonym for "pricey".
If I recall correctly, Louis Eliasberg turned in his 1933 Double Eagle during that time.
Louis Eliasberg turned in his 1933 double eagle in 1952. He had purchased it in 1944 from dealer Ira Reed and hoped that the Mint would return it to maintain the completeness of his U.S. gold coin collection, but the Mint retained Eliasberg’s coin .
Coin World article on 1933's
I'd bet the govt gave plenty of exposure to these big guys turning in their "illegal" 1933 Saints. The big guys have to "comply" too. Sort of a cautionary tale to the little guys who still held gold. What they didn't know was that the 1933 $20 was the only gold coin they were hot after, not 1924 or 1928 Saints. I'd still like to know where/how Secretary of the Treasury William Woodin obtained his 1933 $20 Saint. You would think that however he did that, it must have been legal. After all, he was the gosh darn SOT!
Here is just the 50 cent mintages for 5 years:
1934 6,964,000
1934 D 2,361,000
1934 S 3,652,000
1935 9,162,000
1935 D 3,003,000
1935 S 3,854,000
1936 12,617,000
1936 D 4,252,000
1936 S 3,884,000
1938 D 491,600
Total 50,240,600
We have to remember what the average person had, and what it was worth.
I have a 1930 Model A Ford, got it in 1969 for $600. One of the club members got a 1928 Model A in 1935 for $2, because it RAN. If it would not run, they were worthless. So, since the "average" American could hold $100 in gold coin, not even counting collectable coins, that could be equivalent to owing 50 running, but aged, Model A cars.
My grandparents survived the depression as my grandmother worked for the government near Washington DC, at a Veteran's hospital. The Federal government ordered all married women terminated, and jobs given to out of work married men. The personnel person at this hospital changed the women's names to men's names, and they kept there jobs. My grandmother was Consuela but her government records show her as Ned. My father was preschool at that time, so my grandparents hired a nanny. Her wages were 10 cents per day, plus lunch.
My grandfather was a wheeler dealer around Washington DC. People had lots of STUFF but no money. People flocked to Washington looking for help. Cash was king, but there was very little of it. When I got married, my grandmother gave me her wedding sterling silver. I had always wondered why about 1/2 had our last name letter monogram, and the other half had a different letter. It was because someone had traded their sterling for a place to stay and food to eat. My grandfather talked about literally thousands of people, who had lost their homes, their jobs, and their money when the banks failed, with all the possessions they had left, sleeping in wagons and cars, all around the Washington DC area, trading goods for food, etc. My grandfather was a WW1 vet, disabled from being gassed, and watched, but was not a part of, the Bonus Army riots in Washington DC. He talked about how sick he was from the Vomit Gas, an arsenic based type of tear gas, that was used on the veterans, but mostly just drifted all across the crowd, as the confrontation was right around when people were getting off of work.
Gold coin: Before the USS Enterprise shipped out to Pearl Harbor, just before the start of WW2 for the US, they had sailing races, etc. in San Francisco. For the "big" races, 1st prize was a $20 gold coin. Imagine, the US government handing out gold coins after 1933.
I would quote it exactly if the search function worked.
Hoax of safe deposit box seizures[edit]
According to a hoax, Roosevelt ordered all the safe deposit boxes in the country seized and searched for gold by an official of the Internal Revenue Service. A typical example of the text of the alleged order reads:
By Executive Order Of The President of The United States, March 9, 1933.
By virtue of the authority vested in me by Section 5 (b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, in which Congress declared that a serious emergency exists, I as President, do declare that the national emergency still exists; that the continued private hoarding of gold and silver by subjects of the United States poses a grave threat to the peace, equal justice, and well-being of the United States; and that appropriate measures must be taken immediately to protect the interests of our people.
Therefore ... I hereby proclaim that such gold and silver holdings are prohibited, and that all such coin, bullion or other possessions of gold and silver be tendered within fourteen days to agents of the Government ... for compensation at the official price, in the legal tender of the Government.
All safe deposit boxes in banks or financial institutions have been sealed ... All sales or purchases or movements of such gold and silver ... are hereby prohibited.
Your possession ... and/or safe deposit box to store them is known by the government from bank and insurance records. Therefore ... your vault box must remain sealed, and may only be opened in the presence of an agent of the Internal Revenue Service.
By lawful order ..., the President of the United States.
Somethings never change.
So the government tracked hoarders and charged a 61% fee.
Somethings never change.
That's not how I would interpret it. The govt "set" the price of silver at a ridiculous $1.29/oz. That alone makes no sense to me as the market price during that period was no higher than 64c/ounce. So if there was a so-called 61% fee, it was applied to 2X the price silver. That's a classic retail hustle where you the retailer marks up 100% only to claim they are giving you 50% off. The auction houses do a similar shell game with buyer's and seller's fees. I don't know why the govt presented this silver confiscation like this.
Basically, those turning in industrial/commercial/speculative silver of 500 oz or more got all or most of the silver price for their silver. It would have been simpler if the govt had just said they'd give them current market price. Since the price of silver dipped under 50c/oz during that confiscation period, some people got more than 100% of spot for their silver. The Secretary of the Treasury had a list of hundreds of people/entities they identified as silver "hoarders." They held 50,000 oz or more of silver bullion or futures contracts. They didn't identify those in the 500-50,000 range as it would have been quite tedious. They went after the biggest boyz. Had they done this in the late 1990's Buffet's 130 MILL ounces of silver bullion certainly would have qualified as "hoarding."
... a New York attorney, Frederick Barber Campbell, had on deposit at Chase National over 5,000 troy ounces (160 kg) of gold. When Campbell attempted to withdraw the gold, Chase refused, and Campbell sued Chase. A federal prosecutor then indicted Campbell on the following day (September 27, 1933) for failing to surrender his gold.[11] Ultimately, the prosecution of Campbell failed, but the authority of the federal government to seize gold was upheld, and Campbell's gold was confiscated. https://en.wikipedia.............a>
Speaking of mandatory orders to "force" the public into action. Patriot Act 2 requires all dealers in precious metals, stones, and gems who buy more than $50,000/yr in qualifying items via cash/currency instruments from the public/non-dealers to maintain an anti-money laundering plan meeting numerous conditions. This includes verifying the identities of all those who you buy from. Failure to do so can result in a $250,000 fine and up to 5 years imprisonment. Next time you're at a local B&M, jeweler, or pawn shop, ask them what kind of AML plan they have. You'll probably get a puzzled look from most of them. With such an onerous law on these dealers, you'd figure 99% of them would be in strict compliance. Somehow I doubt that. Yet, I'm unaware of a single prosecution occurring in the coin industry since this first came out approx 10 years ago.
AML plan
David Baraban and his son Jacob Baraban owned a refining company. The Barabans' license to deal in unmelted scrap gold was revoked, so the Barabans operated their refining business under a license issued to a Minnie Sarch. The Barabans admitted that Minnie Sarch had nothing to do with the business, and that she had obtained the license so that the Barabans could continue to deal in gold. The Barabans had a cigar box full of gold-filled scrap jewelry visible in one of the showcases. Government agents raided the Barabans' business and found another hidden box of U.S. and foreign gold coins. The coins were seized and Baraban was charged with conspiracy to defraud the United States.[13]
In 1934, Congress passed the Gold Reserve Act of 1934 which ratified President Roosevelt's orders. A new set of Treasury regulations was issued providing civil penalties of confiscation of all gold and imposition of fines equal to double the value of the gold seized. Louis Ruffino was one individual who was indicted on three counts purporting to charge violations of the Trading With The Enemy Act. Eventually, Ruffino appealed[14] the conviction to the Circuit Court of Appeals 9th District in 1940; however, the judgment of the lower courts was upheld based on the President's executive orders and the Gold Reserve Act of 1934. Ruffino, a resident of Sutter Creek in California-gold country, was convicted of possessing 78 ounces of gold and was sentenced to 6 months in jail, paid a $500 fine, and had his gold seized.[15]
The above Wiki link shows these cases. So there was at least one person that went to jail. Had they held 78 different gold coins, they could have called themselves a "collector."
My local savings bank, about 1947 when I was 12, decided I was a bona fide collector and gave me a half eagle for $5 that somebody has just turned in.
It's only smart.
Who wouldn't "sell" their metals today for 5x "current price?"
What happens next is up to the "buyer."
However, when FDR confiscated gold bullion there was a fear that people, and especially corporations, would simply switch to hoarding silver bullion. Thus, the "Silver Tax act of 1934". This act required that entities making a profit on the sale of silver bullion must pay 50% of the profit on the transaction to the IRS. The mechanism for paying such tax involved the filling out of a "Form 2 (Silver)" and affixing to it, and cancelling upon it, "Silver Tax" stamps in the amount of the tax due. The Silver Tax was in effect until 1963.
Today, these special "Silver Tax" stamps are of interest to revenue stamp collectors. Some are quite rare and are worth significant amounts, even in today's stamp market. Some of the most common Silver Tax stamps are worth only $1 or so. However, any full documents with the stamps still affixed to them are rare and are worth a significant premium. Here is an example: