THE COUNTERFEITING OF U.S. GOLD COINS AFTER WWII

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V19 2016 INDEX E-SYLUM ARCHIVE

The E-Sylum: Volume 19, Number 5, January 31, 2016, Article 22

Harvey Stack has been addressing the topic of the counterfeiting of U.S. gold coins after WWII in a series of articles on the Stack's Bowers blog. Here are excerpts from the latest installments. -Editor

In the early days after World War II, as counterfeit coins were being made and entering the country, the Secret Service started confiscating and seizing false gold coins found in jewelry shops, pawn shops and even at some coin dealerships.

The agents went into shops, pretended to be buyers, asked what was available, and checked what they saw. If they felt something was a counterfeit they seized it, issued a pink slip as a receipt and took the items either to a qualified coin dealer or back to headquarters. Those who were selling counterfeits, even if the seller believed they were genuine, were indicted and received jail time as well as big fines.

During the 1950s counterfeit gold coins continued to flood the U.S. markets as well as world markets. Near the end of the 1950s the quantity was so great that Congress authorized the establishment of the Office of Gold and Silver Operations (OGSO) intensifying the confiscation of false gold coins. In fact, as the flow increased, President Kennedy authorized the office to institute regulations for licensing of all gold coin imports. In order to import any gold coin, one had to apply for an import license. After the license was received, one could request the import be sent and then the packages were open and compared to the license, counterfeits were removed and then the item could be imported. For all this to happen, the coins had to be genuine, they had to be considered rare and unusual by the Office, and only those that “qualified” according to the regulations were licensed.

The procedure was burdensome and difficult to adhere to, and the import of gold coins was slowed considerably. Actually, smuggling became quite common.

The main trouble was there was no list of what could be imported or what would be denied; the OGSO ruled individually on each coin that a license was to be issued for.

Most professional dealers, who needed to import gold coins, complied with difficulty, applying to get a license for each coin, and/or collection they wished to import. This procedure could be virtually impossible.

I offer one example to illustrate how this affected us at Stack’s. In 1963, a good client and friend of the firm, living in The Netherlands, decided he had to sell his collection, and move to a place like Arizona, for his health. He sent us a list of some 925 different gold coins of the world that he wanted to sell. He understood import and export regulations so he permitted us to apply using his list for the application. The major portion of the coins were of a classic nature, including ducats from the medieval era and choice and rare coins of the 17th, 18th, 19th and early 20th centuries. It would be a major collection for us to offer.

We took the list, filed it with the office in Washington and waited for a reply. After a month's time we inquired again and were advised it would be forthcoming. I had planned a trip to Europe to take place about two months after filing for the license, so that I could help our client pack and ship the coins to the United States. Thinking approval was imminent I left for Europe, calling my cousin Norman every day to see if the license had arrived. I stayed for over two weeks in Europe waiting for reply but none was received. The client said he would wait so he could sell the coins in America. About two months after my return, one of our foreign experts went to Europe in the hopes of assisting the client as soon as the license was received. After remaining in Europe for three weeks, the license had still not arrived and the expert came home.

Part Four describes the final outcome. -Editor

Since dealing with a government agency requires a legal mind, I engaged Washington attorneys to manage the dispute. We took advantage of a Departmental hearing that took place in late 1966 as I recall. We won the case as it was determined by the official who heard the pleadings that the rulings in our case were arbitrary and capricious. Based on the facts that these were collector items -- rare coins -- the importation should be allowed. As is often the case, we won the battle, but lost the war.

For a few days we were happy to hear that the restrictions could be waived. The basic reason for the ruling in our favor was that the Office of Gold and Silver operations never sent or provided reason why denials occurred. However, about a week later, our attorneys got a letter from the Office that said, in effect, “Regardless of the ruling license for the collection is still denied.“ It was a shock to all of us, and we decided immediately to go to court and appeal the decision.

We had started to prepare the appeal when our attorneys heard that it would be advisable to hold back as some new rulings were forthcoming. At a PNG meeting in the fall of 1967 a government official from the Treasury Department, which had authority over the office, spoke to the gathering about the gold regulations.

In essence, his speech explained that as the intent of the import rules of 1961 had been satisfied, there was no further need for licensing of genuine gold coins of the world, with the exception of coins issued after the initial Gold Act of 1933/34, which still might need review. This was a win for all dealers, and one that would allow imports without red tape. As members of the numismatic community, and coin professionals in particular, we were very pleased that we no longer had to deal with the arbitrary and restrictive policies on importation.

However, it was a loss for Stack’s as the client became sick and required the funds for his proposed relocation in America, forcing him to sell his holdings in Europe.