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What Happened in 1933?

In a previous blog, I talked about the panic that followed the infamous 1929 Stock Market Crash and the depression our country suffered for the following decade.  The people of America walked in the euphoric haze of rising stock market numbers and increasing income from stock investments.  It was a dream that soon turned into a nightmare—an inescapable nightmare with disastrous ramifications. 

With the crash of 1929, several things happened.  Lots of people lost lots of money—life savings, in fact, that they had blindly thrown into the stock market.  Lives were changed forever, and the world came crashing down around bewildered stock investors.  Banks lost lots of money causing the American people to lose faith in banks altogether.  As a result, people began holding onto their gold with an iron grip, fully aware of its intrinsic value and the safety in owning it. 

Unfortunately, this posed a problem for the U.S. Government.  Earlier in the 20th century, the Federal Reserve Bank was born and so began the issuing of Federal Reserve Notes, paper slips with supposed gold backing.  Previously, the law imposed limitations on the amount of paper money the government could print out, capping it at the amount of gold in reserve.  So the government did what the government does best.  It changed the law.  Without those limitations, more and more Notes were printed and entered circulation.  Soon, the number of Federal Reserve Notes along with U.S. Treasury Gold Certificates in circulation exceeded the amount of gold in the Federal Reserve, which meant those pieces of paper were nothing more than that.  Paper. 

In a Fireside Chat on May 7, 1933, President Franklin D. Roosevelt spelled out the situation, unveiling the U.S. government’s complete lack of common sense and blatant disregard for the American people.  President Roosevelt explained that the government had made promises “to redeem nearly 30 billions of its debt and its currency in gold, and private corporations in this country…another 60 or 70 billions of securities and mortgage in gold.”  The problem with that?  Roosevelt continues, “The government and private corporations were making these agreements when they knew full well that all of the gold in the United States amounted to only between 3 and 4 billions” (emphasis mine).  Furthermore, he stated that the world-wide supply of gold was only about $11 billion worth! 

FDR’s solution to this problem was to take back all monetary gold from the American people, melt it down into bars, and store it in the Federal Reserve.  Rather than some receiving the gold they were owed, no one saw any of that gold.  Instead, it was locked away, and the country began the process of moving off of the Gold Standard.  More power was given to the government, and the American people were punished for their government’s wrongdoing.  In 1933, Executive Order 6102 made the ownership of monetary gold illegal.  The following year, the Gold Reserve Act changed the price of gold from $20.67 to $35 per ounce, and the devaluing of the Dollar began. 

Some coins, however, escaped the heat and are highly sought after in today’s gold coin market.  $10 Indians and $20 Saint-Gaudens, both minted between 1907 and 1933, are some of the most popular collector’s coins today.  The rarest of these coins are the 1933 $20 Saints, most of which were melted down leaving only a surviving handful smuggled out of the U.S. Mint before their lustrous artistry could be erased forever.  Don’t count on obtaining any 1933 editions of this coin, though.  The government found and confiscated 19 $20 Saints from the year, 1933 over the course of about 80 years.  If any more remain, their possessors likely have them locked away, safe from the clutches of the U.S. Government.

Thanks to a bill signed by President Ford in 1974, the ownership of gold is legal once again, and you can own as much of the shimmering, yellow metal as you want—including antique collectibles from the early 20th century!  Valued not only for their gold content, but also for their rarity and antiquity, Pre-1933 gold coins are a piece of United States history you can hold in your hand.