Post WW-I. Treasury view on exchangng paper currency for coins. 0

[RWB]

This is a little long, but is a good explanation of Treasury Department instructions on exchanging paper currency for coins.

Edited April 21, 2022 by RWB

[DWLange]

It's easy to see why the coining of eagles and half eagles was nearly eliminated during the 1920s and the coining of quarter eagles was limited to the number needed to satisfy demand from those making seasonal or holiday gifts. It would be interesting to read correspondence pertaining to the eagle coinage of 1926 and the half eagle coinage of 1929 as to why any were struck at all. Most of the latter issue was withheld from release and later melted.

[RWB]

The 1929 $5 were intended to supply holiday demand for several years with the assumption that $2.50s would be eliminated. I've not found anything explaining the 1926 Eagles.

[DWLange]

There was a Treasury directive in 1930 suspending the production of quarter and half eagles altogether, and I wish I had that handy. America's move away from gold coinage clearly didn't happen overnight in 1933 but was instead a drawn out response to developments world wide.

[GoldFinger1969]

On 4/23/2022 at 8:43 AM, DWLange said:

There was a Treasury directive in 1930 suspending the production of quarter and half eagles altogether, and I wish I had that handy. America's move away from gold coinage clearly didn't happen overnight in 1933 but was instead a drawn out response to developments world wide.

Great Britain's September 1931 decision to abandon the gold standard sure didn't help.

[GoldFinger1969]

So...they wanted to give out Double Eagles if possible because (1) less abrasion than on smaller gold coins and (2) larger denominations less likely to circulate or be requested if it was the default coin for exchange ?

[RWB]

On 4/23/2022 at 8:43 AM, DWLange said:

There was a Treasury directive in 1930 suspending the production of quarter and half eagles altogether, and I wish I had that handy. America's move away from gold coinage clearly didn't happen overnight in 1933 but was instead a drawn out response to developments world wide.

   “H. R. 9894, now before you for consideration, provides for the discontinuance of the coinage and issue by the Treasury of the $2.50 gold piece.

   “The $2.50 gold piece is a coin that is not used or required in commerce. It is too small for convenient circulation and may be confused with a new 1-cent piece. There is a demand for the coin only during the Christmas holiday season for use as gifts, but when distributed for that purpose they very generally disappear from circulation. In effect, therefore, the Government is put to some expense in issuing a coin that is not a necessary part of our coinage system, but which is used merely for Christmas gifts.

   “So long as the statutory authority exists to coin the $2.50 gold piece the suspension of its coinage by the Secretary of the Treasury is of doubtful legality. For the past few years an amount of about $1,000,000 to $1,500,000 of these coins has been minted and distributed annually. When it becomes known that coins of this denomination are being minted a greater demand is created for it, and this demand is for coins of a current date. Dissatisfaction results when the demand is not met. In order fully to satisfy the demand it has b been estimated that it would be necessary to coin between $4,000,000 and $5,000,000 in these coins annually. To coin that amount would interfere with the manufacture of denominations of coins for which there is an actual need by the business public.”

[House of Representatives. Hearing before the Committee on Coinage, Weights, and Measures. March 10, 1930.]

Edited April 23, 2022 by RWB

[VKurtB]

On 4/23/2022 at 11:22 AM, RWB said:

   “H. R. 9894, now before you for consideration, provides for the discontinuance of the coinage and issue by the Treasury of the $2.50 gold piece.

   “The $2.50 gold piece is a coin that is not used or required in commerce. It is too small for convenient circulation and may be confused with a new 1-cent piece. There is a demand for the coin only during the Christmas holiday season for use as gifts, but when distributed for that purpose they very generally disappear from circulation. In effect, therefore, the Government is put to some expense in issuing a coin that is not a necessary part of our coinage system, but which is used merely for Christmas gifts.

   “So long as the statutory authority exists to coin the $2.50 gold piece the suspension of its coinage by the Secretary of the Treasury is of doubtful legality. For the past few years an amount of about $1,000,000 to $1,500,000 of these coins has been minted and distributed annually. When it becomes known that coins of this denomination are being minted a greater demand is created for it, and this demand is for coins of a current date. Dissatisfaction results when the demand is not met. In order fully to satisfy the demand it has b been estimated that it would be necessary to coin between $4,000,000 and $5,000,000 in these coins annually. To coin that amount would interfere with the manufacture of denominations of coins for which there is an actual need by the business public.”

[House of Representatives. Hearing before the Committee on Coinage, Weights, and Measures. March 10, 1930.]

So federal double talk is not new. 

[RWB]

(Letter from Secretary of the Treasury Mellon to the President of the Senate, dated January 17, 1930, transmitting draft of proposed bill to provide for the discontinuance of the coinage of the $2.50 gold piece. A preliminary draft was sent to Federal Reserve Banks January 3, 1930 and resulted in unanimous agreement.)

January 17, 1930.

My Dear Mr. President: I am transmitting herewith draft of a proposed bill to provide for the discontinuance of the coinage of the $2.50 gold piece.

The $2.50 gold coin is one not used or required in commerce, and is one for which there is no demand by the public, except during the Christmas holiday season. The coins are in demand at that time for use as gifts, but when so issued they very generally disappear from circulation. While a total of $50,541,4 7 5 in $2 .50 gold pieces has been coined for the period from 1796 to December 31, 1929, a total of only

$170,307 .50 of these coins remained on hand in the Federal reserve banks and the Treasury offices as of December 31, 1929. It is unlikely that a material amount of the coins now in circulation will ever be returned to the Treasury.

For some years the number of $2.50 gold pieces coined has been grossly insufficient to meet the Christmas demand therefor, and much irritation is created each year by the distribution of an inadequate supply. If the supply were wholly cut off, no inconvenience to business would be experienced. However, if, on the other hand,

this coinage is to be continued, the supply must be greatly increased in order to fully satisfy the Christmas demands therefor. The gold required for the manufacture of an adequate supply of these coins is needed, and can be utilized to better advantage, in the public interest, as a basis for credit and for other purposes.

Moreover, at the present time the capacity of the coinage mints is taxed to meet the requirements of business and commerce, and to suspend or interfere with the manufacture of needed denominations of coins for the purpose of manufacturing coins which are used almost entirely for gift purposes and which disappear from circulation after being issued, is undesirable from a business and a practical standpoint.

Under the circumstances, I am very strongly of the opinion that the coinage of the $2.50 gold piece should be discontinued, and recommend that a bill along the lines of the attached draft be enacted into law.

A draft of the attached proposed bill has been sent to the Speaker of the House of Representatives.

Very truly yours,

A. W. MELLON,

Secretary of the Treasury.

 (Coinage was officially discontinued as of April 11, 1930. The last quarter eagles were produced at the Philadelphia Mint on October 22, 1929 in the amount of $505,000. –RWB)

Edited April 23, 2022 by RWB

[Fenntucky Mike]

On 4/23/2022 at 12:22 PM, RWB said:

When it becomes known that coins of this denomination are being minted a greater demand is created for it, and this demand is for coins of a current date. Dissatisfaction results when the demand is not met.

 

On 4/23/2022 at 1:12 PM, RWB said:

For some years the number of $2.50 gold pieces coined has been grossly insufficient to meet the Christmas demand therefor, and much irritation is created each year by the distribution of an inadequate supply. If the supply were wholly cut off, no inconvenience to business would be experienced. However, if, on the other hand,

this coinage is to be continued, the supply must be greatly increased in order to fully satisfy the Christmas demands therefor.

Some things never change.   

[VKurtB]

On 4/23/2022 at 3:37 PM, Fenntucky Mike said:

 

Some things never change.   

“Have you brought enough for everyone?”

[RWB]

On 4/23/2022 at 1:12 PM, RWB said:

Moreover, at the present time the capacity of the coinage mints is taxed to meet the requirements of business and commerce,

Collectors will note that the above quote from Mellon is complete BS. Most productions capacity was focused on DE that would go into storage as backing for Gold Certificates. Equipment was is poor condition due to heavy wartime use, and lack of repair and maintenance. Mellon and mint director Grant starved the Mints and assay offices. It was not until 1933-34 that director Ross and Secretary Morgenthau began rebuilding from the neglect of Harding, Coolidge and Hoover administrations. (Many public institutions including the Army and Navy suffered from similar neglect.)

[DWLange]

That neglect is clearly evident in the poor quality of coins made during the 1920s. At a time when the U. S. Mint had its most memorable coin designs the opportunity to create beautiful examples was squandered producing weak strikes from worn dies in an effort to save money.

[VKurtB]

On 4/24/2022 at 2:43 PM, DWLange said:

That neglect is clearly evident in the poor quality of coins made during the 1920s. At a time when the U. S. Mint had its most memorable coin designs the opportunity to create beautiful examples was squandered producing weak strikes from worn dies in an effort to save money.

Not even mostly in gold. The red and “white” coins were miserable quality too. 

[GoldFinger1969]

On 4/24/2022 at 2:19 PM, RWB said:

Collectors will note that the above quote from Mellon is complete BS. Most productions capacity was focused on DE that would go into storage as backing for Gold Certificates. 

I believe your book said 2/3rds backing of Gold Certificiates had to be Double Eagles, right ?

Was that ALL GC's or just newly-printed GC's ?  And could Liberty DE's back them as well as small denomination gold coins (I believe they could).

Bars or coins could settle international trade but only coins (mostly Double Eagles, new or old) could back GC's.

[olympicsos]

On 4/24/2022 at 6:05 PM, VKurtB said:

Not even mostly in gold. The red and “white” coins were miserable quality too. 

In my opinion the gold coins seem relatively better struck just because gold is a softer metal. The 1920s Saints do look nice when lustrous. Walkers and Buffaloes OTOH are a disaster during the 1920s. 

[VKurtB]

On 4/25/2022 at 8:45 AM, olympicsos said:

In my opinion the gold coins seem relatively better struck just because gold is a softer metal. The 1920s Saints do look nice when lustrous. Walkers and Buffaloes OTOH are a disaster during the 1920s. 

Cents and dimes no great shakes, either. 

[olympicsos]

On 4/25/2022 at 9:50 AM, VKurtB said:

Cents and dimes no great shakes, either. 

Cents IMO the 1950s were worse since the obverse master hub in use since 1916 wore down considerably. Looks like Abe Lincoln has one misshapen chin!