Money and the Civil War

This was an article from The American Numismatic Associacion website, www.money.org

The Civil War was a pivotal period in American history. Politics, society, economics and the military were all changed in drastic ways as the nation was locked in an epic struggle never seen in North America, before or since. The war ended slavery in the United States, but not before countless battles led to the deaths of more than 600,000 men. Amid brilliant and incompetent generals, vast military campaigns and political turmoil, the impact of money on the war often gets overlooked.

The numismatic history of the era is as dramatic as the war itself. The nation moved from a laissez-faire monetary system based on bullion coinage andprivately-issued paper currency to a centrally controlled system based on paper money issued by National Banks and supplemented by Federal paper currency and coinage.

Both South and North were forced to issue huge amounts of paper money to pay for the war – the first mass issues of government-backed currency in the U.S. since the war of 1812. This paper money was not backed by gold or silver – a fragile concept in the 1860s. Union “greenbacks” (Legal Tender notes and Demand notes, printed with green ink on one side) were instead backed by bonds; an investor could purchase bonds with greenbacks, and then redeem the bonds for gold. The emergence of “war bonds” helped create a more solid economy for the Union; similar bonds were used by the U.S. to control inflation again during both world wars.

For the Confederate States, the problem was more acute than it was in the North – none of the States rich in gold or silver had joined the Confederacy, and the banking system in the South was underdeveloped. The South’s economy was almost exclusively based on agriculture, leaving the Confederacy dependent on trade to obtain the goods it needed to fight. As the conflict progressed, inflation ran rampant in the South and made it all but impossible to continue the war effort.

Civil War soldiers were supposed to be paid every two months, but were fortunate if they got their pay at four-month intervals. Payment in the Confederate Army was even slower and less regular. Union privates were paid $13 per month at the start of the war.

The North and South addressed financial difficulties to fight a war that would turn out to be longer and bloodier than anyone could have imagined. New technologies had changed the face of war, not only with deadlier weapons, but with improved communications, supply, and transport.

The North had industry and railroads. The South had great generals. So what decided the Civil War? MONEY.

The 1933 Gold Double Eagle - World's Most Valuable Coin

This is reprinted from an About.com Guide article by Susan Headley 

The 1933 Gold Double Eagle was Never Officially Issued:

The U.S. Gold Double Eagle, Saint-Gaudens type, had been issued from 1907 until 1932. Although 445,500 Double Eagles had been minted with the 1933 date, none were released into circulation because of changes made to currency laws during the Great Depression. In an effort to end the run on the banks and stabilize the economy, President Franklin Roosevelt took America off the gold standard. Not only were no more gold coins to be issued for circulation, people had to turn in the ones they had.

The 1933 Double Eagles are Ordered to be Destroyed:

It became illegal for private citizens to own gold coins, unless they clearly had a collectible value. This law was enacted during desperate times to prevent the hoarding of gold currency. Since there would be no more gold currency issued in the U.S., the Mint had melted down the 1933 run of Gold Double Eagles and converted them to gold bullion bars by 1937.

Some of the Double Eagles Escaped the Melt Down:

Two of the 1933 specimens were given by the Mint to the U.S. National Numismatic Collection at the Smithsonian Institute. These were the only two legal specimens to ever become part of a coin collection; however, by 1952, the Secret Service had confiscated 8 more 1933 Double Eagles! How did they leave the Mint? Why weren't they melted down?

Was the 1933 Double Eagle Switched for Another Coin?:

We may never know for certain how these coins left the Mint, but there is a general consensus among scholars that a Mint cashier by the name of George McCann exchanged about 20 1933's doomed for destruction and replaced them with earlier dated Double Eagles. This way, the accounting books would balance and nobody would realize that anything was amiss.  What we do know for sure is that a Philadelphia area jeweler by the name of Israel Switt came into possession of at least 19 of the coins.

The Coin of a King:

Israel Switt sold at least 9 of the 1933 Double Eagles privately to collectors, one of which found its way into the collection of King Farouk of Egypt. When the Secret Service discovered that these coins had surfaced, they confiscated them all because they were considered to be stolen property of the U.S. Mint. However, King Farouk had legally exported his coin before the theft was discovered, and the Secret Service was unable to recover his specimen through diplomatic channels.

The King's Specimen is Recovered in a Sting Operation:

After King Farouk was deposed in 1952, his 1933 Double Eagle briefly appeared on the market, but when it became clear that U.S. authorities still wanted to confiscate it, it vanished again! More than 40 years later, British coin dealer Stephen Fenton showed up with it in New York, and the Secret Service finally seized it during a sting operation during which they purportedly negotiated to purchase the coin.

The 1933 Double Eagle is Nearly Destroyed by Terrorists:

Fenton fought a several year-long legal battle in the U.S. courts over ownership of the coin, during time which it was stored in the Treasury Vaults at the World Trade Center. A mere 2 months before the terrorist attacks of September 11, 2001, the lawsuit was settled and the Double Eagle was moved to Fort Knox. Fenton and the U.S. Mint had come to a compromise: the coin would be sold at auction, with the proceeds split between the Fenton and the Mint.

Legal Tender at Last - and the Most Valuable Coin in the World:

The 1933 Double Eagle sold at auction on July 30, 2002, for $6.6 million, plus the 15% buyer's fee, which brought the total cost to the buyer to $7,590,000, plus $20 to monetize the coin and compensate the Mint for the $20 it believes it lost when the coin was thought to have been stolen. The buyer chose to remain anonymous, so once again we don't know where the Farouk specimen is, or when it might suddenly show up again. One thing is for sure: the Secret Service can't confiscate it any more!

In September of 2004, Joan Langbord, one of Israel Switt's heirs, discovered ten more specimens of the 1933 Double Eagle amongst his effects. Apparently unaware of the legal status of these coins (or perhaps just a bit too trusting of the government) she sent all ten specimens to the U.S. Mint to have them authenticated. The Secret Service declared the coins to be seized, and now Langbord is fighting the government over ownership while the specimens languish at Fort Knox. It will be interesting to see, should the 10 Langbord coins ever come to market, if the 1933 Double Eagle will retain its place as the world's highest priced coin when the number of available specimens increases ten-fold.

http://www.usacoinbuyers.com/