The United States Government confiscated gold in 1933. It was not the first or last time the government confiscated currency because of perceived national emergencies. This leads many collectors to wonder if numismatic coins can be confiscated.
Numismatic coins can be confiscated if the government decides it needs the coins to address a national challenge. That challenge could be a shortage of metal used in collectible coins. Any attempt to confiscate numismatic coins would likely be met with uproar, and so is very unlikely to occur.
Collectible coins have always been afforded certain leeway when it comes to confiscation. There are several reasons for this. We address those reasons below and map out why a confiscation attempt might be problematic from the start.
Can Numismatic Coins Be Confiscated?
As Prohibition illustrated, the government can seize whatever it wants, when it wants, and only mass public pushback can make it stop.
Public opinion drives a lot in politics and in the example of the 1933 gold confiscation initiative, public opinion regarding collectible coins certainly had an influence on the policy. While it is difficult to tell what the government would do in a crisis, collectible coins have been regarded as off limits for a number of reasons.
1933 Gold Confiscation
Gold confiscation was initiated on April 5, 1933, by Executive Order (EO) 6102, signed by US President Franklin Delano Roosevelt (FDR). Specifically, it forbade the “hoarding of gold coin, gold bullion and gold certificates within the continental United States.”
The EO was made via the Trading with the Enemy Act of 1917, which was amended under the Emergency Banking Act of March 1933. The limitation on gold ownership and outright prohibition of ownership of some forms of gold would stay on the books until President Gerald Ford signed a bill legalizing gold coins, bars and certificates in 1974.
What It Meant
Effectively, the EO and Presidential Proclamation 2039 forbade US citizens from hoarding gold or silver coins or bullion, or any other currency. The penalty for being caught hoarding any of that was severe:
- A $10,000 fine and/or
- Up to ten years in prison
By law, all citizens were required to turn over all but a small amount of any gold they owned to the Federal Reserve. They were paid $20.67 per troy ounce, which would be about $425 per ounce in today’s economy.
Why It Happened
It was introduced to prevent the “hoarding of gold,” which was believed to be stalling economic growth because US currency policy was backed by the gold standard.
It was also designed to remove any restrictions on the Federal Reserve to increase the money supply during the Great Depression.
It was believed that the public, panicked over the Depression and extremely pessimistic about any recovery, were safeguarding against further economic woes. Gold was their hedge investment.
At the same time, the Federal Reserve had reached its limit on borrowing via Federal Reserve Demand notes, which were backed by gold. This greatly constrained the ability of the Fed to print money.
The order provided exemptions for the following:
- Artists, jewelers, dentists, sign-makers, etc. that used gold as part of their work
- Private ownership of up to $100 in gold coins
- Private or public ownership of “gold coins having recognized special value to collectors of rare and unusual coins”
These exemptions effectively provided a small loophole for some citizens to hold onto their gold, but the majority had to turn over their holdings.
The Fed then raised the price of gold per ounce via the Gold Reserve Act to $35 and that created a “profit” that funded the Exchange Stabilization Fund. This created the buffer needed, for a time, for the Fed to issue Demand Notes backed by gold.
EO 6102 led to several consequences, having an effect through the present day:
- The 1933 Double Eagle gold coin became exceptionally rare – a legal surviving coin sold for over $7.5 million in 2002
- Multiple individuals were prosecuted, fined and imprisoned, and their gold seized
- Through the prosecution of Frederick Barber Campbell, the right of the federal government to seize gold was upheld
- The Gold Reserve Act of 1934 allowed the President to determine the price of gold by proclamation, absent of any necessary logical rationale for that price
- Ownership of gold certificates was legalized in 1964, but was not redeemable in gold
- Eventually, the US abandoned the gold standard in 1971
Additionally, no one knows how many numismatic coins were lost to history because of mistakes government personnel made or accidental confiscation. It is naïve to think, however, that in the execution of the 1933 confiscation of gold, no collectible coins were seized and melted down for gold bullion.
As we mentioned, ownership of gold certificates was legalized in 1964, but a certificate could not be redeemed for gold. In 1974, President Gerald Ford signed a bill to “permit United States Citizens to purchase, hold, sell, or otherwise deal with gold in the United States or abroad.” This made it legal, once again, for US citizens to own, sell, trade and hold gold.
This did not repeal, however, the Gold Repeal Joint Resolution, which banned contracts from having payment in gold as a requirement. Effectively, if payment in gold was the only payment mechanism in a contract, that contract could still be rendered unenforceable. In 1977, the Resolution was amended to allow for “gold clauses” to exist in contracts and gold to be honored as a form of payment.
Why Were Numismatic Coins Exempted?
The answer to this question is surprising to some people but it does shed some light on whether the government would ever try and confiscate collectible gold coins.
FDR never intended on confiscating gold coins because he never intended on going house to house confiscating gold. His targets in all of this were the big banks and that is where most of the confiscation took place. FDR went after the people who could not hide their gold.
In addition, a house by house search for gold was something no politician would ever have wanted. It would have evoked images of an authoritarian regime and likely would have spawned a massive protest from the public. For these two reasons, just about all gold coins, but particularly gold coins that were collectible, were never really a target of the confiscation.
Was Seizure Warranted?
As with all issues of this type, it depends on your perspective as to whether or not seizure of gold was warranted. FDR was certainly concerned about the gold supply and the US economy. Owners of gold, however, were possessive of their property and coin collectors just hoped they were overlooked.
The seizure of gold and prohibition on owning gold in certain forms achieved its fiscal and monetary goals, which went far beyond the government owning all the gold. Whether it started to stabilize the economy is a debate that has raged for over 70 years.
Whether the seizure was warranted, though, has a profound effect on the status of numismatic coins and confiscation. If the seizure was warranted, was FDR wrong to exempt collectible gold coins? Could seizure of those coins have helped the economic effort even more?
On the other hand, would an attempt to go after numismatic coins have resulted in the public resisting all efforts by FDR to pull the country out of the Depression? Would it have solidified resistance to FDR and ensured his term in office was a lot shorter than it turned out to be? These questions, of course, are purely for theoretical purposes. However, they’re still worth pondering.
Cultural Capital Of Coins
While there was certainly economic and political arguments against seizing collectible coins, there was also the cultural argument, which was formidable. Collectible coins possess a cultural value that is difficult to quantify. Collectible coins from any era attract public interest. Coins, in many ways, are some of our most revered historical objects.
For example, a gold coin from the early days of the USA stands for more than just the face value of that coin. It is a symbol of the country, its resilience and its history. It also has a collectible value that is certainly based on age and rarity, but also on its cultural value as an artifact of history.
Every collectible coin gives us:
- Artistic context
- Historical context
- Social context
- Cultural insight
- Technological context
Because of that, those interested in historical, cultural, social and numismatic matters have always held certain coins to be special.
Would The Government Confiscate Numismatic Coins?
If the government felt it needed numismatic coins, it would confiscate them. That situation, however, is a long way away, and it is possible that the US government would never get to that point.
A major reason it will likely never happen is that the USA is no longer dependent on the gold standard. That makes having a vast repository of gold almost an afterthought. Confiscating gold, much less numismatic coins, would be a wasted effort.
There are only a few ways that the government could ever get to that point:
- Severe economic collapse
- A massive financial crisis
- A very long war
If you think about it, the USA has recently gone through multiple financial crises, and just concluded an almost 20 year war in Afghanistan. The US government did not even mention confiscating gold, much less collectible coins.
The Role Of Media
There is also the reality that the 24 hour news cycle alerts the public of the actions of politicians or the government almost instantly. Undoubtedly, that rationale would apply to any policy that included confiscating numismatic coins
A good example of the news media and how it molds public policy and opinion is the recent proposal that the IRS be alerted to any bank transactions that exceeded $600. Within minutes of the proposal being made public, it was all over the national and international news via the internet.
Within hours, all those opposed to it were lobbying members of congress and talking about it on political TV shows. Soon, politicians started criticizing it. Within days after it had been floated, the White House started backpedaling. Eventually, the idea was abandoned.
Instant media has its drawbacks, but it does make it easier to organize and apply pressure on politicians and the federal government. What was once an isolated process that demanded a long media and court slog to stop can now be initiated in moments and be viral very shortly thereafter.
Then there is the public and how they view old, collectible coins. While not the most popular hobby, collectible coins have always intrigued the public. Whether it’s ancient coins from Rome, coins from early America, or other historic coins, the public admires coins and what they represent.
Because of that, any effort to confiscate collectible coins would be met with resistance. Trying to go door to door, which would be the only way to confiscate numismatic coins and have any hope of getting even a majority of them, would cause an uproar. No politician in his or her right mind would want to be part of that exercise.
When Could It Be Done?
Practically, we have not seen the scenario yet where confiscating collectible coins makes sense. Even global crises do not seem to steer us in that direction.
Confiscating gold or gold coins without an exceptionally good reason would result in wholesale protests and, thus far, nothing has risen to that level. A big part of that is not relying on our gold supply as much as we used to, but another is that collectible coins do not pose enough of a benefit to make the uproar worth it.
Numismatic coins can be confiscated. The only reason they would be confiscated would be if the government needed the money to address some kind of national challenge, such as a shortage in the metals used to make the coins. In the past, gold confiscation has been implemented for this reason.