10K GOLD CLADDAGH RING

Brief History of the Gold Standard in the United States - CRS Report

The U.S. monetary system is based on paper money backed by the full faith and credit of the federal government. The currency is neither valued in, backed by, nor officially convertible into gold or silver. Through much of its history, however, the United States was on a metallic standard of one sort or another.

On occasion, there are calls for Congress to return to such a system. Such calls are usually accompanied by claims that gold or silver backing has provided considerable economic benefits in the past. This report briefly reviews the history of the gold standard in the United States. It is intended to clarify the dates during which the standard was used, the type of gold standard in operation at the various times, and the statutory changes used to alter the standard and eventually end it. It is not a discussion of the merits of such a system.

The United States began with a bimetallic standard in which the dollar was defined in terms of both gold or silver at weights and fineness such that gold and silver were set in value to each other at a ratio of 15 to 1. Because world markets valued them at a 151?2 to 1 ratio, much of the gold left the country and silver was the de facto standard.

In 1834, the gold content of the dollar was reduced to make the ratio 16 to 1. As a result, silver left the country and gold became the de facto standard. In addition, gold discoveries drove down the value of gold even more, so that even small silver coins disappeared from circulation. In 1853, the silver content of small coins was reduced below their official face value so that the public could have the coins needed to make change.

During the Civil War, the government issued legal tender paper money that was not redeemable in gold or silver, effectively placing the country on a fiat paper system. In 1879, the country was returned to a metallic standard; this time a single one: gold. Throughout the late 19th century, there were efforts to remonetize silver. A quantity of silver money was issued; however, its intrinsic value did not equal the face value of the money, nor was silver freely convertible into money. In 1900, the United States reaffirmed its commitment to the gold standard and relegated silver to small denomination money.

Throughout the period under which the United States had a metallic standard, paper money was extensively used. A variety of bank notes circulated, even without being legal tender. Various notes issued by the Treasury also circulated without being legal tender. This use of paper money is entirely consistent with a gold standard. Much of the money used under a gold standard is not gold, but promises to pay gold. To help ensure that the paper notes theretofore issued by banks were honored, the government created the national bank system in 1863. In 1913, it created the Federal Reserve System to help ensure that checks were similarly honored. The creation of the Federal Reserve did not end the gold standard.

The gold standard ended in 1933 when the federal government halted convertibility of notes into gold and nationalized the private gold stock. The dollar was devalued in terms of its gold content, and made convertible into gold for official international transactions only. Even this quasi-gold standard became difficult to maintain in the 1960s. Over the period 1967-1973, the United States abandoned its commitment to covert dollars into gold in official transactions and stopped trying to maintain its value relative to foreign exchange. Despite several attempts to retain some link to gold, all official links of the dollar to gold were severed in 1976.

The U.S. monetary system is based on paper money backed by the full faith and credit of the federal government. The currency is neither valued in, backed by, nor officially convertible into gold or silver. Through much of its history, however, the United States was on a metallic standard of one sort or another.

On occasion, there are calls for Congress to return to such a system. Such calls are usually accompanied by claims that gold or silver backing has provided considerable economic benefits in the past. This report briefly reviews the history of the gold standard in the United States. It is intended to clarify the dates during which the standard was used, the type of gold standard in operation at the various times, and the statutory changes used to alter the standard and eventually end it. It is not a discussion of the merits of such a system.

The United States began with a bimetallic standard in which the dollar was defined in terms of both gold or silver at weights and fineness such that gold and silver were set in value to each other at a ratio of 15 to 1. Because world markets valued them at a 151?2 to 1 ratio, much of the gold left the country and silver was the de facto standard.

In 1834, the gold content of the dollar was reduced to make the ratio 16 to 1. As a result, silver left the country and gold became the de facto standard. In addition, gold discoveries drove down the value of gold even more, so that even small silver coins disappeared from circulation. In 1853, the silver content of small coins was reduced below their official face value so that the public could have the coins needed to make change.

During the Civil War, the government issued legal tender paper money that was not redeemable in gold or silver, effectively placing the country on a fiat paper system. In 1879, the country was returned to a metallic standard; this time a single one: gold. Throughout the late 19th century, there were efforts to remonetize silver. A quantity of silver money was issued; however, its intrinsic value did not equal the face value of the money, nor was silver freely convertible into money. In 1900, the United States reaffirmed its commitment to the gold standard and relegated silver to small denomination money.

Throughout the period under which the United States had a metallic standard, paper money was extensively used. A variety of bank notes circulated, even without being legal tender. Various notes issued by the Treasury also circulated without being legal tender. This use of paper money is entirely consistent with a gold standard. Much of the money used under a gold standard is not gold, but promises to pay gold. To help ensure that the paper notes theretofore issued by banks were honored, the government created the national bank system in 1863. In 1913, it created the Federal Reserve System to help ensure that checks were similarly honored. The creation of the Federal Reserve did not end the gold standard.

The gold standard ended in 1933 when the federal government halted convertibility of notes into gold and nationalized the private gold stock. The dollar was devalued in terms of its gold content, and made convertible into gold for official international transactions only. Even this quasi-gold standard became difficult to maintain in the 1960s. Over the period 1967-1973, the United States abandoned its commitment to covert dollars into gold in official transactions and stopped trying to maintain its value relative to foreign exchange. Despite several attempts to retain some link to gold, all official links of the dollar to gold were severed in 1976.

Maxentius, 307-312

Aureus (Gold, 5.51 g 12), Ostia, 310-312.Obverse: MAXENTIVS P F AVG Bare-headed, draped and cuirassed bust of Maxentius facing.Reverse: VICTORIA AETERNA AVG N / POST Victory walking right, presenting globe to Maxentius, seated left in military dress on pile of arms.Rarity: Of the highest rarity and importance, one of only two examples known.References: A. Baldwin Brett, The Aurei and Solidi of the Arras Hoard, NC 1933, 139 (1) and Pl. XXVI, 7 (this coin). Bastien, Donativa p. 72, h. Beaurains 191 (this coin). Biaggi 1918 (=Beaurains 192 = Hunt III, 103 = Calico 5080). C. –. Depeyrot 1/10. Jameson 476 (this coin). Kent / Hirmer 615 (this coin). RIC 10. Vagi 2969 var. Condition: A remarkable coin with a magnificent facing portrait. Lightly toned and beautifully struck. Good extremely fine.

Provenance: From the collections of E. von Schulthess (ESR), Hess-Leu 17, 23 March 1961, 406, and Robert Jameson, ex R. Ratto, FPL, April 1923, 440 and from the Beaurains/Arras Hoard of 1922.Note: This astonishingly rare and beautiful coin was struck as a donative to celebrate Maxentius’ quinquennalia and to commemorate the death of his son Romulus on 28 October 310. Maxentius was one of the more exciting and tragic figures of the Tetrarchic period. Son of Maximian and son-in-law of Galerius one would have thought, and he certainly did think, that he was destined for the purple. However, when Diocletian and Maximian abdicated in 305 he was given no position and simply retired to his villa outside Rome. The people of Rome had never previously been subject to tax, so when Galerius decided to impose taxes on them, and remove the praetorian guards from the city, the people rose in revolt and chose Maxentius as their leader. He first took the titles of Caesar, and then Princeps Invictus, in an attempt to placate Galerius, but he was unsuccessful and Galerius ordered Severus II to destroy him. In need of aid Maxentius convinced his father Maximian to come out of retirement as Augustus, with the result that Severus II was defeated and captured. By this point Maxentius had also taken the title of Augustus, and for the next five years there were non-stop intrigues and wars between the various contenders for power in the West. While Maxentius was successful in crushing a revolt in Carthage by the usurper Alexander, thus ensuring the food supply, he was attacked by Constantine (his brother-in-law) in 312 and defeated and killed at the famous battle of the Milvian Bridge, where Constantine’s troops had inscribed the Chi-Rho monogram of Christ on their shields.The facing bust of Maxentius on this coin is not only the finest portrait of the Tetrarchic period, it is also one of the most dramatic of all portraits on Roman coinage. Maxentius is shown in the typical stylized way that began in the early Tetrarchy, but his intense and determined gaze shows individuality and power, and is indisputably a true portrait of the emperor himself.

LEU93, 128

Augustus. 27 BC-AD 14. AR Denarius (18mm, 3.64 g, 7h). Uncertain eastern mint. Struck circa 12 BC. Bare head right; all within oak wreath / Candelabrum, ornamented with rams’ heads and surmounted by a crescent; all within a floral wreath entwined with two bucrania and two paterae. RIC I 540; RSC 2 (Caius Caesar).

Ex Delmonte, 22 April 1933, lot 127.

Prideaux observes that this is a much discussed issue, primarily about the identity of the person depicted on the obverse. The young head cannot be that of C. Caesar, as Sutherland, Robertson, Giard, and others have argued. It can only be Augustus, as the oak wreath was his personal signature.

Prideaux notes that two important questions need to be examined: (1) why is he portrayed with such a young face and (2) what is the meaning of this unusual reverse? On the first point, the engraver wasn’t working in a regular mint, with mint approved bust models, and wasn’t accustomed to drawing Augustus’ face. Therefore, he drew a profile adding the oak wreath to identify, beyond any doubt, the portrait. On the second point, it seems clear that, based on the symbolism, there is not only a religious, but a funeral theme. It is interesting to note that the sadness of the funeral-themed reverse is counterbalanced by a young portrait and the oak wreath, corona civica aurea, which was given to the citizen who saved another citizen’s life. Some have assigned this issue to the Ludi Saeculares of 17 BC, but while they were religious in nature, they were not funereal.

There is no reason for such a special type to have been issued in Rome or Lugdunum. Prideaux notes one striking event in the period after 17 BC that supports his theory. In 12 BC, Augustus’ chosen heir, Agrippa, died suddenly in Pannonia. We know that the news was taken hard in Rome, just months after Agrippa and his family had been officially made the heirs of the Empire (cf. C. Marius Tromentina’s issues in 13 BC). This event especially reverberated among the legions; they had lost a much admired and multi-victorious general in the middle of a difficult war.

Prideaux proposes that this candelabrum issue was struck in Pannonia to pay the now leaderless, and perhaps restless, Pannonian legions, without having to wait for a monetary delivery from the regular mint in very distant Lugdunum. A local celator, not versed in the portrait of Augustus, produced the dies. The themes reminded the soldiers of Augustus’ corona civica, while paying tribute to their beloved chief with a funeral set. The gold and silver issues (RIC 539-40) should be considered as a special Pannonian military mint issue of 12 BC. This helps explain many of the puzzling details of this issue. cngcoins.com