Montgomery County, Maryland—Newly installed Montgomery County Coin Club (MCCC) President Scott Barman announced that he would be running for a seat on the American Numismatic Association (ANA) Board of Governors.
“I would like to bring new ideas to the ANA that will increase its membership beyond the steady 25,000-28,000 of the last decade,” Scott said in his announcement. “Not only does the ANA need to embrace the future, but find ways of keeping young numismatists engaged after they reach 18 years old instead of waiting for them to find their way back after 40.”
Like many young numismatists, Scott’s collecting pursuits waned when he entered college. Although he carried his old blue folders and albums through adulthood, there was never time to engage in the hobby while growing a career and family. Like many, that changed in his 40s after becoming a widower.
Scott believes that if the technology was as available as it is today, he could have integrated collecting into his young adult activities into his life and continued with his collecting interests.
“Technology has changed a lot since I wrote my first program on punch cards,” Scott noted. “We use technology for everything from our work to talking with our neighbors. Schools teach classes online. Seminars are held online. Virtual organizations meet online. The ANA should embrace technology to keep those between 18 and 40 engaged.”
In keeping up with the technology industry, Scott knows that social media and computer-based learning are part of the fabric of life for those under 40. There is a lot that can be done with modest investments to keep young numismatists engaged as they advance to adulthood and help others interested to engage.
“A number of reports said that more than 3 million people were collecting State Quarters since the program started in 1999,” Scott said. “Why hasn’t that interest translated into more ANA members?”
Aside from making the services and resources of the ANA more available to its members, Scott is worried that the Association does not feel more accessible to the average collector. While the support from the commercial community is important, the ANA would benefit by engaging more collectors.
Building a service platform that the ANA can deliver its content to a wider audience will go a long way to engage current and new collectors. This will help make the ANA a leader in educating the public and possibly a model for similar organizations to emulate.
Another area that has to be addressed is the stability of the ANA Headquarters. For the second time, a dismissed executive director has chosen to pursue a claim against the ANA in court. This gives the appearance of a dysfunctional situation in Colorado Springs. Scott believes that the professionals working for the ANA are competent and qualified, but the Board of Governors must look into what it will take to create an atmosphere to support them and prevent the problems of the past.
“With support for the professionals in Colorado Springs and expanding the use of technology to engage more collectors, the future of the ANA will be very bright,” Scott added.
When Scott returned to collecting in 2002, he joined the Montgomery County Coin Club. Finding a club with an active membership, Scott embraced the challenge to become more active and looked to make an immediate impact. Shortly after joining, Scott became Webmaster of the MCCC website (montgomerycoinclub.org) and began to contribute to meetings with presentations. Eventually, Scott was elected to the MCCC Board of Directors before being first elected club president in 2008.
Scott served two terms as MCCC president including 2009, the club’s 50th anniversary. Club rules prohibited seeking a third consecutive term, so he became a board member and then vice president. Scott was elected president for 2013 and will continue to serve the club as its president and Webmaster.
After becoming hooked on numismatics again, Scott joined the ANA in 2003 and read everything he could find about his collecting interests. This has lead to Scott joining the American Israel Numismatic Association while collecting Israel currency and exploring his Jewish heritage, and the Royal Canadian Numismatic Association to learn more about Canadian coinage since his second wife’s family is from Canada.
Following his time as a club representative to the Maryland State Numismatic Association (MSNA), Scott became a member and the organization’s webmaster (mdstatenumisassn.org), board member, then was elected vice president for 2012. MSNA Vice President Scott Barman is serving his second term in 2013.
In 2005, Scott started the Coin Collectors Blog (coinsblog.ws) that he continues to write today. The Coin Collectors Blog is where Scott has spoken directly to other collectors writing about news, history, instructions, opinions, and whatever else has come to mind. This has lead to articles that have appeared in on-line and printed numismatic publications.
For the last year, Scott has worked with the ad-hoc ANA Technology Committee providing assistance to the ANA Board of Governors to repair and grow the ANA’s technology platforms. His work will continue with this committee and support it being made a permanent advisory committee to the ANA Board of Governors.
Recently, Scott has been working with the Gold & Silver Political Action Committee as political coordinator keeping the membership informed of the numismatic and precious metal news in his locale, Washington, DC.
When not involved in numismatics, Scott is an information security and systems architecture analyst for a not-for-profit corporation that works with the Federal Government. His job is to help the government build systems to serve the public and protect personal information. Scott holds a Bachelor of Science with a major in Computer Science from the University of Georgia and a Master of Information Systems Management with a concentration in information security and public policy management from Carnegie Mellon University.
Scott is currently finishing a book about collecting titled Enjoying Numismatics, A Conversation in Collecting. This will be published as an electronic book to reach the same audience he wants to interest in becoming ANA members.
Scott’s next project is tentatively titled The Policy and Politics of Money Manufacturing in the United States. The plan is to use his interest in public policy and numismatics and study what is behind the minting and printing of money in the United States. It will also help answer the perpetual question, “Why did the Mint do that?”
Scott’s collecting passion includes the coins of the 20th Century, numismatics representing his hometown of New York City and Inwood, Long Island; Maryland Colonial Currency; and Israel banknotes. He is also a fan of Philatelic Numismatic Covers also called coin covers with interesting themes.
Scott is passionate about collecting and the organizations that support the collector and dealer communities. He would like to use his unique background to bring a new perspective to the Board of Governors and to ensure the ANA’s future.
Last year, I wrote an article suggesting that congress could authorize the U.S. Mint to issue commemorative coins to raise money to fix our national monuments that were damaged by an earthquake. After all, commemorative coins have been used to raise money for various other efforts, why not help the National Park Service and their fundraising efforts.
What about expanding that program to fund other areas of the government? Congress can authorize the commemorative program, the project that will be funded, and whatever money is raised from the sale of the coins will be used for that program. No taxpayer money, just funds from the sales and donations. It has the advantage of not costing the government money and involves citizens in the direct funding of their favorite projects.
What do you think? Let me know in this week’s poll!
Should congress use commemorative coins to pay for federal projects?
Yes, that sounds like a good idea (54%, 14 Votes)
Not sure it will help (35%, 9 Votes)
No, it is a bad idea or a waste of resources (12%, 3 Votes)
Today was the ceremonial inauguration of Barack Obama for his second term as the 44th President of the United States. This is the 57th presidential inauguration in United States history. Obama is the 43rd person to hold the office of the presidency (Grover Cleveland served two non-consecutive terms).
The inauguration was held the day after the constitutionally mandated January 20th date because for the seventh time in history, the mandated date fell on a Sunday. Obama was inaugurated for his second term during a private ceremony held in the Blue Room of the White House.
Although the only part of the inauguration required by the constittution is the oath of office, all of the 57 presidential inaugurals have been as unique as the presidents and the times they served.
Federal Hall on Wall St. N.Y. and Washington’s installation 1789 / lith. Risso & Browne.
The first presidential inauguration was held on April 30, 1789 on the stairs of Federal Hall in New York City. New York City served as the temporary capital until the permanent capital in Washington, DC was built. Washington’s second inaugural address on March 4, 1793 in Philadelphia was 135 words, the shortest in history.
Thomas Jefferson was the first president to be inaugurated in Washington, DC on March 4, 1801. Six presidents were not inaugurated in Washington, DC including Washington and John Adams. The last was Lyndon B. Johnson whose first inauguration was on in Dallas on Air Force One following the assassination of John F. Kennedy. Johnson was the first and so far only president to be sworn in by a woman, U.S. District Judge Sarah T. Hughes.
Presidential fashion was changed on March 4, 1825 when John Quincy Adams was the first to wear long pants rather than knickers.
2009 William Henry Harrison Proof Obverse
The longest inaugural address was presented by William Henry Harrison. His 8,445 word speech took more than two hours to deliver in the cold of March 1841. Harrison, a war hero, refused to wear an overcoat. He eventually caught pneumonia and died 32 days later making him the first president to die before completing his term in office. Of course this lead to John Tyler to be inaugurated as the first president not directly elected to the job by the people or the electoral college.
Speaking of ascension to the presidency by the Vice President, this has happened nine times. Aside from Tyler being the first, the last and most significant was probably Gerald R. Ford, who was appointed Vice President under the provisions of the provisions of the 25th Amendment to the U.S. Constitution. This made Ford the only president not to be elected to national office.
Although the U.S. Constitution requires the president to be born in the United States, New York-born Millard Fillmore was the first president not to be born a British subject. Although Tyler was the governor of Tennessee, the first state that was not an original colony, Tyler was born in North Carolina which was an original colony. Kentucky-born Abraham Lincoln was the first president not born in one of the original 13 colonies. Obama was the first president to be born in Hawaii and the first not to be born in the continental United States.
Photograph of the Inauguration of James Buchanan, March 4, 1857 by John Wood
The technology advances that have been added to inaugurals include the first time an inaugural was photographed was James Buchanan’s inauguration on March 4, 1857; William McKinley’s inauguration in 1897 was the first to be recorded using a motion picture camera; coordination of Theodore Roosevelt’s second inauguration was aided using newly installed telephones in the White House; Warren G. Harding was the first president to ride in an automobile to and from the ceremony in 1921; Calvin Coolidge’s 1925 inauguration was the first broadcast on radio; in 1929, Herbert Hoover’s inauguration was the first to be recorded on talking newsreel; Harry S Truman’s second inaugural in 1949 was the first to be broadcast on live television; and Bill Clinton’s second inauguration in 1997 was the first to be streamed live on the Internet.
Washington, DC is not known to have the best weather. Even the moving of the inauguration from March 4 to January 20 by the 20th Amendment (effective with Franklin D. Roosevelt’s second inaugural) has not done much to change this. Rain plagued ten inaugurations. It snowed for seven inaugurations. Even though the warmest was 55-degrees for Ronald Reagan’s first inaugural on January 20, 1981, he experienced the coldest inauguration for his second go around on January 21, 1985 when the mercury was 7-degrees.
While Franklin D. Roosevelt was the only president to be inaugurated for four terms, Obama tied Roosevelt’s record for being the only presidents to receive the oath of office four times. Obama was given the oath of office a second time on January 20, 2009 after Chief Justice John G. Roberts, Jr. did not exactly get the words right the first time. This year, Roberts delivered the oath on January 20, 2013 as required by the constitution and then delivered it again on January 21 in a public ceremony.
Finally, following the tradition of all presidents, the 2013 Presidential Inaugural Committee commissioned an official inaugural medal that was struck in bronze, silver, and gold. Struck by the Medalcraft Mint of Green Bay, Wisconsin. Medals are available in bronze, silver, and gold. If you sign up for their mailing list, you will receive a code for discounts that can be applied to purchases. The last code I received was “2013” to take 15-percent off your order, but that could change as time passes.
Barack Obama Second Term Bronze Inaugural Medal
Barack Obama Second Term Silver Inaugural Medal
Barack Obama Second Term Inaugural Medal Set (L to R: bonze, gold, silver)
Credits
Inaugural Medal images courtesy of Presidential Inaugural Committee 2013.
Although I am a proponent of the virtual world and want to see numismatics expand virtually, there is something to be said about going to a local coin show. You know the type, one that is held in a large meeting room at a local hotel where 40-50 tables are setup attended by local dealers and people in the area. Sometimes, it could be more interesting than a larger show.
Earlier today, I had the pleasure of going to the Baltimore Area Numismatic Coalition (BANC) Show at a hotel in Timonium, Maryland. BANC is coalition of the Baltimore Coin Club, Catonsville Coin Club, and the Maryland Token & Medal Society who works together to put on a local quarterly show to bring together people in the Baltimore area and numismatists that may be visiting.
My visit to the BANC Show came about because the Maryland State Numismatic Association (MSNA) held a Board of Directors meeting after the show closed. Since I am Vice President of MSNA, I drove from the metro Washington region to northwest Baltimore a little early to do a little early shopping before the meeting.
Smaller shows do not attract the type of crowd that you will see in a larger venue, like a convention center. Fewer people go to these local shows making it a more relaxed atmosphere. You also see many of the local dealers, the men and (some) women who you want to get to know better because these are the people who can really help you put together your collection. And since the crowds are more relaxed, there is time to talk with those dealers and even catch up with pther collectors you may know.
Another advantage of being at a local show is to be able to talk with people who just come to the show because they have an interest. At this show, I was introduced to a woman who initially had a question about purchasing coins directly from the U.S. Mint at their facilities in the District of Columbia. What then happened is that you get an enthusiastic collector (me) and someone who wants to talk about collecting together and it turned into a wonderful conversation.
While I forgot to ask her name, I did give her the address to this blog. If you are the woman I spoke with, I hope you enjoyed our conversation as much as I did and hope it inspired you to expand your collecting pursuits. Also, we spoke about my write up about negotiating for coins. It was part of my two-part series “How Are Coins Priced.” You can read Part I first then Part II where the section on negotiating is included.
How can I go to a coin show without buying something?! Today, I kept with my New York collectibles and found a Bureau of Engraving and Printing folder with a Series 2003 $2 Single Star Note from the Federal Reserve Bank of New York. For those not familiar with the concept of Star Notes, the best short description is from the Bureau of Engraving and Printing:
When an imperfect note is detected during the manufacturing process after the serial number has been overprinted, it must be replaced with a new note. A “star” note is used to replace the imperfect note. Reusing that exact serial number to replace the imperfect note is costly and time consuming. The “star” note has its own special serial number followed by a star in place of a suffix letter. The serial number of the imperfect note that was removed is not used again in the same numbering sequence.
The other purchase was an 1830 Matron Head large cent that looks like it was dipped a long time ago and has re-toned. Although I prefer original surfaces, it is a good looking coin for its age and condition. Since I am passively working on a large cent year set (no varieties), it will fill a hole in that book. Too bad the dealer did not have other large cents to fill the holes since the price was right. But other coins were either too vigorously cleaned or had some corrosion.
Folder for the Series 2003 $2 Single Star Note from the Federal Reserve Bank of New York
Series 2003 $2 Star Note from the Federal Reserve Bank of New York. Rosario Marin/John Snow signatures.
Anyone that holds congress in contempt for the dysfunction that plagues the government should love the first two coin-related bills that have been introduced to congress.
The first pitch of political piffle is H.R. 77, the Free Competition in Currency Act of 2013. This folly was introduced by Rep. Paul Broun (R-GA) that takes up where the now retired Ron Paul has left off by introducing a bill “To repeal the legal tender laws, to prohibit taxation on certain coins and bullion, and to repeal superfluous sections related to coinage.” It marks the fourth congressional session that this bill has been introduced and it is likely to meet the same fate as its predecessors.
Although I took this seriously in the past, it appears that Broun did not get the memo that the government needs people to govern and not pontificate. Then again, it is difficult to find anyone of the 535 members of congress who really wants to govern on either side of the aisle, so I expect more of this hooey from this congress. It is unfortunate that he and I share the same undergraduate alma mater.
Dallas-based Heritage Auctions, the world’s largest collectibles auctioneer, is asking the public to suggest names, and has even created a proposed design for the coin. Information about naming the coin now is on Heritage’s Facebook pages.
Then again, asking for sanity from this congress may be too much to expect. Rather than responding to fact, Rep. Greg Walden (R-OR), and 19 other “quick” thinkers, introduced H.R. 220, Stop the Coin Act, that will “amend section 5112 of title 31, United States Code, to limit the face value of coins that the Secretary of the Treasury may issue, and for other purposes.”
I love that phrase, “and for other purposes.” Adding it allows congress to add their favorite brand of pork onto any bill.
The problem is that H.R. 77 might make sense if it was not introduced in reaction to the rumored $1 Trillion platinum coin. Aside from the platinum coin idea being a nonsense proposal, the idea did not even come from the administration. The best I can find, it was some blogger’s delusion that problems can be solved without the understanding of basic accounting—essentially, balancing the books when you create money. It is amongst the reasons why the nation is in such debt.
At another time and in a different context, it might be worth discussing the merits of H.R. 77, which would limit the face value of any coin produced by the U.S. Mint to $200. But for now, both the Department of the Treasury and the Federal Reserve said that it is not going to happen and that neither “… believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit.”
Unfortunately, I have a feeling that the Treasury’s statement will not end the discussion.
The Alfred E. Neuman-head Trillion Dollar coin mockup courtesy of Heritage Auctions. And if you think that’s funny, it seems that the mad folks at Mad magazine thought if it first!
Artist’s conception of the 1964-D Peace dollar, the #1 coin on the new PCGS Top 100 Modern U.S. Coins list.
At the top of the list is the 1964-D Peace dollar, the coin I chose for the logo of this blog. Although U.S. Mint records from the time show that 316,076 were struck, they were never placed into circulation and all were allegedly destroyed. Apparently, PCGS believes, as I do, that someone might have purloined at least one coin. They are offering a $10,000 reward just to seeand authenticate an example.
Let’s assume for the moment that a 1964-D Peace dollar still exists and you had the money to spend, which of the Top 5 in the PCGS Top 100 Modern U.S. Coins would you like for your collection?
Tim Geithner’s signature as it appears on U.S. currency
One of the responsibilities of the Secretary of the Treasury is to be one of the signatures on the United States’ Federal Reserve Notes. By convention, the Secretary’s signature is on the right side of the front of every note. Since the Bureau of Engraving and Printing began producing the Series 2009 Federal Reserve Notes, a signature of Tim Geithner has adorned the currency. However, we have recently learned that Geithner changed his signature to be more legible.
Should Lew be confirmed by the Senate, which is very likely, he will provide his signature to the engravers at the BEP so that it would replace Geithner’s. Based on past practices, the new Lew-Rios notes would become Series 2009A.
The Lewpty Signature of Jacob “Jack” Lew
This is not Jack Lew’s signature on a Hostess Cupcake
What has been noticed is that Lew’s autograph is different from any of the past Secretaries. His signature is a series of loops that has been charitably called the “Lewpty Lew” or compared to icing decoration on the Hostess Cupcake.
After hearing how Geithner changed his signature when providing the BEP with currency samples, there are some that want Lew not to change his autograph and have the “Lewpty Lew” appear on United States currency. Between now and February 8, 2013, there is a petition on the White House website to Save the Lewpty-Lew and have Jack Lew’s autograph loops appear on U.S. currency.
If you would like for Jack Lew to add his loops to U.S. currency and not try to make it legible, you can weigh in and sign the petition on the White House website!
A mock-up of what Jack Lew’s signature would look like on a one-dollar note
Credits
Image of Tim Geithner’s signature on currency courtesy of Wikipedia.
Now that it is award season, Professional Coin Grading Service is getting into the act by release its first annual listing of the “PCGS Top 100 Modern United States Coins.” PCGS is using the rising popularity of modern coins, those minted since the change to base metals in 1965, to bring this list to the public. PCGS announced the list on January 11, 2013, during a luncheon at the Florida United Numismatics Convention in Orlando, Florida.
PCGS is offering a $10,000 reward to verify a genuine 1964-D Peace dollar, the number one coin on the new PCGS Top 100 Modern U.S. Coins list. This image is a PCGS artist’s conception of a 1964-D Peace dollar.
Topping the list is the 1964-D Peace dollar, a coin that was struck but never put into circulation and allegedly destroyed.
“Mint records indicate that 316,076 1964-dated silver Peace dollars were struck at the Denver Mint in May 1965,” said Don Willis , President of PCGS, “but they were all were supposed to be destroyed.”
PCGS believes that not every 1964-D Peace dollar was destroyed and has offered a $10,000 reward “just to view in person and verify a genuine 1964-D Peace dollar.”
In 1964 the price of silver rose to new heights that it made the value of ordinary circulating coins worth more for their metals than their face value. Because of this, silver coins were being hoarded by the public and becoming scarce in circulation. Western states that relied on hard currency including the gaming areas of Nevada needed the U.S. Mint to strike additional coins for circulation.
The striking of a dollar coin had a powerful ally: Senator Majority Leader Mike Mansfield, Democrat from Montana, whose state would be directly affected by the new coins. Although the numismatic press was not in favor of the measure because of its limited ability to solve the coin shortage, Mansfield pushed a bill through congress to authorize the Mint to strike 45 million silver dollars.
After much discussion, the Mint looked for working dies but found that few survived a 1937 destruction order. Those that did survive were in poor condition. Mint Assistant Engraver Frank Gasparro, who would later become the Mint’s 10th Chief Engraver, was authorized to create new dies of the Peace dollar with the “D” mintmark. Since the coins would mostly circulate in the west it was logical to strike them closest to the area of interest.
Treasury Secretary C. Douglas Dillon was opposed to the the coin and wrote a letter to President Lyndon B. Johnson saying that the coins would not be likely to circulate and be hoarded. After Dillon resigned, Mansfield questioned the new Secretary, Henry H. Fowler, who assured Mansfield that the coins would be struck.
Although Mint Director Eva Adams, who was from Nevada, also objected to striking the coin, the Denver Mint began trial strikes of the Peace dollar on May 12, 1965.
When the coins were announced three days later, coin dealers immediately offered $7.50 per coin which would ensure that they would not circulate as intended. Everyone saw this as a poor use of Mint resources during a time of sever coin shortages. Adams announced that the pieces were trial strikes never intended for circulation and were later melted under reportedly heavy security.
To prevent this from happening again, Congress added a provision in the Coinage Act of 1965 (Public Law No. 89-81; 79 Stat. 254) that put a moratorium on striking silver dollars for five years.
There have been reports that some Peace dollars were struck using base metals (copper-nickel clad) as experimental pieces in 1970 in anticipation of the approval of the Eisenhower dollar. The same reports also presume these coins have been destroyed.
“It sometimes takes years for famous coins to surface,” said Hall. “Until 1920, no one knew there actually were 1913 Liberty Head nickels in existence. Until 1962, no one knew the 1804 Draped Bust silver dollar and the other coins in the special presentation set given by the United States to the King of Siam in 1836 were still in existence.”
“When we offered a $10,000 reward in 2003 to be the first to see and authenticate the long-missing Walton specimen 1913 Liberty Head nickel it resulted in the re-discovery of that coin after a 41-year absence from the hobby,” Hall continued. “Perhaps this new reward offer will help solve the mystery of whether any 1964-D Peace dollars survived the melting pots. It’s the number one modern U.S. coin.”
For collectors of silver crown-sized coins and large U.S. dollars, the 1964-D Peace dollar is the ultimate fantasy coin. As someone who collects silver coins including modern bullion issues, it should come as no surprise that I chose the 1964-D Peace dollar for this blog’s logo. My version was made using Photoshop and colored to not look “real” to avoid potential issues from our law enforcement friends at the Department of the Treasury.
It would be difficult to put a price if a version of the coin is found. It would certainly be a unique coin whose auction would start well out of my price range—maybe set a record for being the highest price paid for a single coin, topping the 1933 Farouk-Fenton Saint-Gaudens Double Eagle that sold for $7,590,020 in 2002.
This week’s poll asks if you belong to a local coin club.
I believe that local coin clubs are more the future of the hobby than national clubs. Members of local coin clubs can get involved in ways they cannot with a national club and have a greater impact in their community than on a national basis.
I am a member of two local clubs, the Montgomery County Coin Club (MCCC) and the Washington Numismatic Society (WNS). I joined MCCC in 2002 when I became interested in collecting again and have been significantly involved since. I think we are a strong club in an area of the country where there are varied interests a lot of alternative activities for people to be involved. Attendance at our monthly meets range from 20 during the slow summer months to over 40 when we have a popular program. For 2013, I will once again serve as the club’s president.
Last year I joined WNS with the intent of going to their meetings and getting involved with a different group of members. While some WNS members are also MCCC members, there people who are not members of both and a different way of doing things. My “real life” work requirements has prevented me from being more involved, but I hope that will change in 2013.
I am also a member of the Maryland State Numismatic Association (MSNA), the umbrella organization over clubs in Maryland where I have been Vice President since 2012. MSNA is in transition because of local changes in the numismatic climate, mainly the three-times per year Whitman Coin and Currency Expo held in Baltimore. The transition gives us an opportunity to try new ideas and help grow interest in numismatics in Maryland.
Being a member of these organizations allows me to meet and talk with others about numismatics. There are some members who are well known on the national scene, those whose regional knowledge has been valuable, and those with interesting collections and ideas that I would have never thought about.
Taking the time to meet other collectors is as rewarding as the hobby—especially with MCCC and WNS who dedicates a part of their meeting to exhibits, a numismatic “show-and-tell” of new finds or something different from their collections.
Are you a member of a local coin club? If not, why not? Vote in the poll and comments are always welcome below!
EDITED TO ADD: To find a club in your area, you can search for one through the ANA Club Directory. You can search by state, zip code, or even by specialty.
Do you belong to a local coin club?
No, but I am interested in joining (58%, 11 Votes)
Yes and I attend meetings regularly (26%, 5 Votes)
There is no coin club in my area (11%, 2 Votes)
Yes, but I do not attend meetings regularly (5%, 1 Votes)
Over the last few weeks there have been a public drumbeat for the U.S. Mint to strike a $1 Trillion platinum bullion coin to resolve part of the country’s debt issues. Regardless of the story saying that this should be done, the concept is that the coin would be deposited in the Federal Reserve and it would instantly generate $1 Trillion in profit (seigniorage) that would then be deposited in the Treasury general fund.
Regardless of the side of the political spectrum you are in this topic, it will not work.
The United States Code (U.S.C.) is the codification of the laws of the United States. It is divided into 51 titles each covering one general topic. References to the law are made by providing the title number, followed by “U.S.C.,” then the section of the law. Subsections are added using parentheses after the section. All of the laws governing the U.S. Mint are under Title 31. When talking about what coins the U.S. Mint may be allowed to strike, you would find those laws in Title 31 Section 5112 (31 U.S.C. §5112).
First question is whether it is legal for the U.S. Mint to strike the $1 Trillion coin. Although there are as many answers as there are pundits, everyone points Title 31, Section 5112, paragraph “k” (31 U.S.C. § 5112(k)) that reads as follows:
The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
This law was passed by congress under their authority in Article 1, Section 8 of the U.S. Constitution that says “The Congress shall have Power… To coin Money, regulate the Value thereof, ….” The law’s intent was to give the U.S. Mint the authority to issue the American Eagle Platinum Bullion and Platinum Proof coins. American Eagle Platinum coins have a $100 face value and sell for a premium over the market price of platinum and taking into consideration coin’s production cost. However, the law does not restrict the issuance of the platinum coin to the American Eagle program.
But is it constitutional? The argument from John Carney of CNBC says it is not by twisting a ruling by the Supreme Court. Carney cites the case Whitman v. American Trucking Assns., Inc. (531 U.S. 457 (2001)) in saying that “the Environmental Protection Agency rule making authority was too broad because Congress had failed to provide ‘intelligible principle’ to guide the agency.” Unfortunately, like a lot of people, Carney reads the headlines and not the majority opinion. In the majority opinion, Justice Antonin Scalia wrote the law “does not permit the Administrator [of the EPA] to consider implementation costs” which is against previous precedent because the Clean Air Act, which was under question, “often expressly grants the EPA the authority to consider implementation costs, a provision for costs will not be inferred from its ambiguous provision.”
In other words, the Supreme Court said that because there are conflicts in the law. The “intelligible principle” is that Congress cannot delegate partial authority over one part of a law where other parts have a requirement to consider other circumstances. In other words, the Supreme Court is saying that Congress has to be consistent in delegating its authority.
Could 31 U.S.C. § 5112(k) be interpreted in the same manner? It is possible for the Supreme Court to declare the law unconstitutional, but if they do so they would also have to rule that the law that allowed the U.S. Mint to create the 2009 Ultra High Relief Gold Coin unconstitutional. According to 31 U.S.C. § 5112(i)(4)(C):
… at the same time the Secretary in minting and issuing other bullion and proof gold coins under this subsection in accordance with such program procedures and coin specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
Under both 31 U.S.C. § 5112(k) and 31 U.S.C. § 5112(i)(4)(C), the Secretary can authorize the U.S. Mint to strike any denomination platinum or gold coin with the value of $1 Trillion. Since there is no ambiguity or contradictions that would be able to use Whitman v. American Trucking Assns. as a precedence, the constitutionality should not be in question.
If the Secretary could mint and issue a $1 Trillion coin, then the Secretary could mint 17 such coins that could theoretically be used to pay off the country’s debt and give the country a positive balance for the first (and only) time since 1835 under President Andrew Jackson.
For discussion sake, let us say that the Secretary authorized the U.S. Mint to produce a $1 Trillion coin. Who is going to buy the coin?
If the concept is to use the profit (seigniorage) from the sale of the coin, whether it is made of gold or platinum, the coin has to be sold in order for there to be a profit. If the government would just deposit a $1 Trillion coin in the Federal Reserve, then where is the profit for the government? In order for a coin to become legal tender, it has to be bought from the government for at least its face value unless the law allows otherwise (see the American Eagle Bullion program and any of the commemorative programs). The U.S. Mint does not consider a coin to be legal tender until it receives an appropriate deposit of bullion or other forms of legal tender.
It this concept of legal tender that has been behind the government’s position that because the 1933 Saint-Gaudens Double Eagle coin was not paid for by a depositor (part of which is required in 31 U.S.C. § 5122), they are government owned coins (31 U.S.C. § 5121) and not legal tender. This concept has been upheld in the history of the 1933 Saint-Gaudens Double Eagles including the settlement over the Fenton-Farouk coin that sold for $7,590,020 with $20 going to “monetize” the coin.
Most recently, Judge Legrome D. Davis (U.S. District Court for Eastern Pennsylvania) confirmed the legal tender status of the 10 Double Eagles that Joan Langbord allegedly found in a box once owned by her father, infamous Philadelphia jeweler Israel Switt who is considered one of the central figures in the coins removal from the U.S. Mint. In Lanbord et al v. U.S. Treasury (Civil Action No. 06-5315), Judge Davis’s opinion cites past cases including the government’s own case against Israel Switt in 1934 for not forfeiting recalled gold and the previous return of 75 coins attributed to him. His opinion effectively confirms the U.S. Mint’s argument that once it creates a coin it is not legal tender and a liability on their balance sheet until the coins is bought.
If the coin is has to be paid for by a depositor before it can become legal tender, who will buy a $1 Trillion coin?
If the coin is just deposited with the Federal Reserve, there will be a $1 Trillion liability on the government’s balance sheet. In order to make the books balance, the Department of Treasury would have to sell debt bonds to make up the difference and that would add $1 Trillion to the national debt.
If the coin is bought by the Federal Reserve, then the Fed will have to pay $1 Trillion to the U.S. Mint for the coin reducing its overall working capital by $1 Trillion. Paying for a $1 Trillion that could not be used will just transfer the debt from the general treasury to the Federal Reserve. Since the Federal Reserve is in charge of managing the country’s money supply, the net effect will be to reduce the money supply by $1 Trillion that will cause the economy to shrink—any time you artificially remove money from the economy it will shrink which will also weaken the buying power of the U.S. dollar.
Transferring the debt away from the general fund might look good on paper but the effect will shrink the economy and cause more problems than even considering the constitutionality of doing this.
Montgomery County, Maryland—Newly installed Montgomery County Coin Club (MCCC) President Scott Barman announced that he would be running for a seat on the American Numismatic Association (ANA) Board of Governors.
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