At what point do the stamped metallic disks we use as United States currency become money or, to use the government's terminology, "monetized"?
The question seems simple and straightforward. However, the answer Senior Staff Writer Paul Gilkes received when he posed the question to U.S. Mint officials was anything but simple. (See his story, "When does money become money?" on Page 2 of this issue.) In fact, the answer reminds us of the classic "Who's on first" routine. Apparently, Mint officials have been "monetizing" or declaring legal the disks we call coins at whatever point it suits their convenience. There is no precise, prescribed method.
According to Federal Reserve officials, "monetization" is not defined in federal law or regulation, nor does federal law specify when U.S. coins and paper money become "legal tender."
Evidently few have questioned the "monetization" process before because of a general assumption there must be an orderly method for specifying when the manufactured objects become money. After all, the U.S. Mint has been manufacturing coins for 210 years.
Perhaps few had thought about the "monetization" process until U.S. Mint officials tossed out the term as being definitive in declaring all 1933 Saint-Gaudens gold $20 eagles illegal to own when it seized (during a sting operation in New York City in 1996) a specimen purportedly once owned by King Farouk of Egypt.
Mint officials claimed that the entire 1933 production of 445,500 double eagles was never officially issued through accepted channels or "monetized," therefore no one could have legal title to such a coin. Then shortly before the case was to go to trial, the government announced an out-of-court settlement that called for the government to "monetize" the coin and sell it at public auction, splitting the proceeds with the coin dealer who had possession of the coin when it was seized.
July 30 Mint Director Henrietta Holsman Fore accepted (amid great fanfare) a $20 Federal Reserve note from Sotheby's Vice Chairman David Redden so that the gold coin, which had just been bid to $6.6 million at auction, could be "monetized." The Mint even issued a one-of-a-kind, giant-sized certificate signifying the coin's "monetization." Thus, the gold disk struck with Augustus Saint-Gaudens' designs for the $20 double eagle, magically became a coin some 69 years after its manufacture. And the proud new owner, "Mr. Anonymous," paid $7.59 million ($6.6 million plus the 15 percent buyer's fee) for the privilege of gaining legal title to what Mint officials claim no other can hold, the only "monetized" 1933 double eagle.
Rumors abound in the numismatic community that from one to three additional 1933 double eagles have survived in private hands (two specimens are held in the National Numismatic Collection in the Smithsonian Institution).
If these rumors are true, it seems to us there would be good reason for those owners to challenge the U.S. Mint's assertions, based on the lack of legal definition of "monetization." For good measure, throw in R.W. Julian's research that makes the case for there having been a window in 1933 for the coins to have been legally issued. Add in the fact that Sec. 102 of the Coinage Act of 1965 (Public Law 89-81) declares, "All coins and currencies of the United States (including Federal Reserve notes and circulating note of Federal Reserve banks and national banking associations), regardless of when coined or issued, shall be legal tender for all debts, public and private, public charges, taxes, duties, and dues."
The time is ripe to call the government's bluff.
