Gold Confiscation

By: Douglas V. Gnazzo | Tue, Aug 30, 2005
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Gold Double Eagle

U.S. Mint Confiscates 10 Rare Gold Coins

Recently in the news was the story of an unfortunate woman who had 10 gold Double Eagle coins confiscated from her by the United States Mint. Just the week before the Gold Anti-Trust Action Committee featured an article on the Treasury Department's announcement that the government still retains the power and authority to confiscate private gold holdings as Roosevelt did in 1933 Treasury Dept. claims power to seize gold and silver -- and everything else.

Needless to say, with the advent of the bull market in gold and silver, such news is deemed by many, if not all citizens, to be of prime importance. And well it should be, as the issue under question is one of private property rights - which effects all citizens of the United States.

The recent case of eminent domain in Connecticut, whereby private land was usurped from the people by the State, gives pause for reflection. The constitutional right to own private property is one of the main ideals that our country was founded upon. It is one of the pillars of strength supporting the American way of life. Freedom and Liberty can not long exist without it.

The question as to why there has suddenly been a rash of talk and action taken by the State in regards to this fundamental and unalienable right of the Constitution is most pressing and telling. But just what is it telling? First and foremost it is saying, "people - wake up and pay attention."

The following are some news clips relating to the confiscation of the gold coins. The U.S. Mint seized 10 gold Double Eagle coins dated from 1933. The coins are said to be among the rarest and most valuable coins in the world. A jeweler says she turned them in to the Mint to determine their authenticity.

Acting director of the Mint, David Lebryk, stated in a news release that the rare coins, which were said to never have been put into circulation, had been taken from the Mint "in an unlawful manner" in the mid-1930's. The coins are so rare that their value is near impossible to calculate, and are public property, he said.

Double Eagles were first minted in 1850. They had a face value of $20. There were 445,500 coins minted in 1933 that supposedly were never put into circulation; the reason given being that the nation went off the gold standard at the time. All of the coins were ordered to be melted down. A few coins are believed to have survived, including two presently in possession of the Smithsonian Institution.

Mint officials said that "Berke was told from the beginning that the coins would not be returned because they were the government's property.

What's Up

So what's the buzz? What's going on here? For starters, let's look a little closer and deeper as to what was said by the Mint's representative.

The first of several fascinating statements alluded to the fact that the rare coins had never been put into circulation, and had therefore, in all probability, been taken from the Mint in "an unlawful manner." Brings new meaning to the statement innocent until proven guilty.

Also brings a new meaning to, " nor to be deprived of property without due process of law", which means to have a trial by jury that determines the validity of the accusations to justify the taking of property allegedly obtained by unlawful means. It appears the keeper of the Mint has already had his own trial, finding of guilt, and sentencing - at least within the confines of his imagination, or those whose bidding he does.

The Bill of Rights speaks to the issue of private property within the fifth amendment, which in part says, " nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation " [to view the complete fifth amendment click on Amendment V: Individual debt and double jeopardy].

So alas, now we must struggle to comprehend what greater minds than ours mean when they say "in an unlawful manner." Unlawful means that which is not according to law, or that which goes against law. The first observation we will make is a question for all those possessing an astute legal mind: is that which is not according to law, the same as that which is not according to the law? Is to go against law, the same as to go against the law?

Which naturally gives rise to the questions: what is law? and what is the law? and are they the same? Then, as if the issue isn't already complex enough, there is also the question as to whether lawful and legal are the same?

And is lawful and legal the same as constitutional. Messy, messy, messy stuff - this legal jargon. Almost like trying to interpret a foreign language that is still under construction, using the add as needed featured plan.

The Constitution Speaks

Now the nay Sayers are saying, if nay Sayers really say anything that is: what does the Constitution have to do with it?

Plenty. In Article VI Clause 2 we find the following:

Clause 2:

"This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the Supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding."

Most interesting. As stated in the first sentence of clause two: this Constitution and the Laws of the United States are two different entities, as the use of the word and connotes; and as the language that follows which says "and the Laws of the United States which shall be made in Pursuance thereof..."

If the laws are to be in pursuance of the Constitution, obviously they (the laws) are different than the Constitution, as why or how could a thing pursue itself? The Constitution, the laws, and all treaties, together combine to form the Supreme Law of the Land - the Constitution being foremost in not only importance, but in order of existence as well. And note: We The People came before the Constitution, as we constructed and ordained the Constitution - in order to pursue a more perfect Union. The Constitution would not exist if not for We The People.

Note that clause two makes a distinction between the Laws of the United States, which is one of the three component parts of the Supreme Law of the Land; and the Supreme Law of the Land. Obviously, that which is a component part of a greater whole, is less than and distinct from that greater whole.

The Supreme Court Speaks

This also goes towards answering one of the questions we previously asked: is the law and law the same thing?

The Supreme Court, in one of its more lucid moments, ruled that:

"... in declaring what shall be the Supreme Law of the Land, the Constitution itself is first mentioned; and not the laws of the United States generally, but those only which shall be made in pursuance of the Constitution, have that rank.

Thus, the particular phraseology of the Constitution confirms and strengthens the principle that a law repugnant to the Constitution is void; and that courts, as well as other departments, are bound by that instrument." [Marbury v Madison 1803].

So no less than the Supreme Court has stated that a "law repugnant to the Constitution is void." That is a powerful statement. Its vast consequences and ramifications leave no nook and cranny of jurisprudence untouched. It unquestionably places the Constitution above all statutes, rules, and regulations.

So awesome and important are the ideals conveyed by the above that additional evidence of their validity can not be overstated. The case of Norton v Shelby County [1886] clearly and precisely elucidates further on the subject:

"... an unconstitutional act is not a law; it confers no rights; it imposes no duties; it is, in legal contemplation, as inoperative as though it had never been passed."

Needless to say, not only does the Constitution have something to do with the confiscation of private property, it also has everything to do with it and all of our freedoms and liberties and rights - as that is what the Constitution defines - by We The People's direction and choosing in its construction of our rights.

A Tale of Two Questions

We shall shortly attempt to decipher just what's what with the statement from the Mint regarding the supposed unlawful manner by which the coins were obtained. Before proceeding into the quagmire of legal jurisprudence, I would first like to mention one other particularly enlightening sentence in the mint's statement:

Mint officials said that "Berke was told from the beginning that the coins would not be returned because they were the government's property."

Another fascinating remark - the coins are government property, which translates into meaning that the government owns them by holding title to them. Most interesting.

So we have two major issues before us: are the gold coins the property of the government, or of the individual private citizen that had possession of them; and were the coins obtained by the said individual, as alleged - in "an unlawful manner"?

Let's take a look at what the Constitution says about the ownership of gold coins, for as we have seen, the Constitution takes precedence before the laws, the laws supposedly existing in pursuance of the Constitution - the foremost component of the Supreme Law of the Land.

Articles Of Importance

There are seven main constitutional clauses that deal directly with the money issue. Two however, are by far the most critical. To view a full in-depth view of the entire history of our monetary system click on Honest Money, Part I: The Constitution and Honest Money

"Article I, Section 8, Clause 5: The Congress shall have Power...To coin Money , regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."

"Article I, Section 10, Clause 1: No State shall... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt."

According to the above two clauses, Congress was vested with the power to coin money; to regulate the value thereof, and of foreign coin; and to fix the standard of weights and measures. Furthermore, no State was to coin money, emit bills of credit, or make any thing but gold and silver coin a tender in payment of debt. In other words, gold and silver coin were the constitutional forms of money - period.

As is well known and documented, much of our monetary history came from England, as the original settlers of the United States had hailed from England. Also, the early settlers did a brisk trade with the Spanish and South American peoples. It was only natural that our money had its exegesis from England and Spain.

As Blackstone noted in his Commentaries:

"Sir Edward Coke lays it down, that the money of England must be either gold or silver; and none other was ever issued by the royal authority till 1672, when copper farthings and half-pence were coined".

During our early Colonial history, Queen Anne's Proclamation of 1704, and the Parliamentary Act of 1707 both referred to,

"... regulation of coin according to their weight and fineness in proportion to the rate before limited and set for the Pieces of Eight of Sevil, Pillar, and Mexico... commonly known as the silver Spanish milled dollars".

In 1776 a report in the Journals of the Continental Congress referred to,

"the precise weight and fineness of the Spanish milled dollar now becoming the Money-Unit or common measure of other coins in these states".

The Report On The Mint

In 1791 Secretary of State Alexander Hamilton presented to Congress his report on the subject of a mint to coin the money the Constitution had mandated. In Hamilton's report to Congress there are many passages that discuss the dollar or unit of money to be issued.

The following depicts the definition of the dollar that is constantly used by Hamilton:

"It may, nevertheless, be advisable to repose a discretionary authority in the President of the United States, to continue the currency of the Spanish dollar at a value corresponding with the quantity of fine silver contained in it..."

The following year, The Second Congress passed the Coinage Act of 1792 by which the United States monetary system was enacted. From recorded history prior to the Constitution, up to and including the Constitution, it was the common practice of the day to use gold and silver coin as the most widely accepted medium of exchange, and unit of account: i.e. money. Hence the connotation of currency and current.

Coinage Act of 1792

The Coinage Act of 1792 followed the same tradition of hard money, as the Act was the legislative means to implement by statute, the monetary system according to the powers granted in the Constitution. The following sections pertain to the present discussion:

Section 9. "And be it further enacted, That there shall be from time to time struck and coined at the said mint, coins of gold, silver, and copper, of the following denominations, values and descriptions, viz

Section 11. And be it further enacted, That the proportional value of gold and silver in all coins which shall by law be current as money within the United States, shall be fifteen to one, according to quantity in weight, of pure gold or pure silver; that is to say, every fifteen pounds weight of pure silver shall be of equal value in all payments, with one pound weight of pure gold, and so in proportion as to any greater or less quantities of the respective metals.

Section 16. And be it further enacted, That all the gold and silver coins which shall have been struck at, and issued from the said mint, shall be a lawful tender in all payments whatsoever, those of full weight according to the respective values herein before declared, and those of less than full weight at values proportional to their respective weights.

Section 20. And be if further enacted, That the money of account of the United States shall be expressed in dollars, or units, dimes or tenths, cents or hundredths, and the milles or thousandths, a dime being the tenth part of a dollar, a cent the hundredth part of a dollar, a mille the thousandth part of a dollar, and that all accounts in the public offices and all proceedings in the courts of the United States shall be kept and had in conformity to this regulation." [To view the entire Act click on The Coinage Act of 1792]

Silver and Gold Coin

As evidenced by both the Constitution and the Coinage Act of 1792, the unit of money or account of the United States was the "dollar", and the dollar was defined as being a specific weight of silver.

Furthermore, the various denominations of the money were all to be coins of either silver, gold, or copper - hard money. No bills of credit or paper money was mentioned. As a matter of fact and record is that the words "to emit bills of credit" was actually taken out of the first draft because of the known inflationary evils that paper money engendered.

According to statute, the United States was on a silver standard. However, as we have seen, Congress also decreed that gold coins were to be minted and circulated along side of silver coins, and fixed the statutory valuation of silver to gold at 15 to 1.

In other words, Congress had " fixed" the exchange rate between the two metals. Thus the United States was on a silver standard, but it was also on a bimetallic system of coinage, that included gold to be circulated at a "fixed" exchange rate to the silver standard.

As established - silver and gold coin were the constitutional form of money, the same type of gold coin that was recently confiscated by the United States Mint. One of the reasons the mint gave for such occurrence was that the coins were the property of the United States.

Title of Ownership

Adam Hamilton's report to Congress on the mint, as well as the Coinage Act of 1792 both shed some light on the topic of just who owns the coins minted or struck by the Mint. First the pertinent section of the Coinage Act:

Section 14. And be it further enacted, that it shall be lawful for any person or persons to bring to the said mint gold and silver bullion in order to their being coined; and that the bullion so brought shall be there assayed and coined as speedily as may be after the receipt thereof, and free of expense to the person or persons by whom the same shall have been brought. And as soon as the said bullion shall have been coined, the person or persons by whom the same shall have been delivered, shall upon demand receive in lieu thereof coins of the same species of bullion which shall have been so delivered, weight for weight, of the pure gold or pure silver therein contained: Provided nevertheless, That it shall be at the mutual option of the party or parties bringing such bullion, and of the director of said mint, to make an immediate exchange of coins for standard bullion, with a deduction of one half percent from the weight of the pure gold, or pure silver contained in the said bullion, as an indemnification to the mint for the time which will necessarily be required for coining the said bullion, and for the advance which shall have been so made in coins. And it shall be the duty of the Secretary of the Treasury to furnish the said mint from time to time whenever the state of the treasury will admit thereof, with such sums as may be necessary for effecting the said exchanges, to be replaced as speedily as may be out of the coins which shall have been made of the bullion for which the monies so furnished shall have been exchanged; and the said deductions of one half percent. shall constitute a fund towards defraying the expenses of the said mint.

Nowhere in the above does it say that the government holds title or owns the silver and gold that is to be struck into coins. It clearly states just the opposite regarding state versus private ownership when it says: "it shall be lawful for any person or persons to bring to the said mint gold and silver bullion in order to their being coined", and that "as soon as the said bullion shall have been coined, the person or persons by whom the same shall have been delivered, shall upon demand receive in lieu thereof coins of the same species of bullion which shall have been so delivered, weight for weight, of the pure gold or pure silver therein contained."

Now for a look at some pertinent points from Hamilton's Report On The Subject Of A Mint:

"A third point remains to be discussed, as a pre-requisite to the determination of the money unit, which is, whether the expense of coining shall be defrayed by the public, or out of the material itself; or, as it is sometimes stated, whether coinage shall be free, or shall be subject to a duty or imposition? This forms, perhaps, one of the nicest questions in the doctrine of money.

The practice of different nations is dissimilar in this particular. In England, coinage is said to be entirely free: the mint price of the metals in bullion, being the same with the value of them in coin.

Upon the supposition that the expense of coinage out to be defrayed ought of the metals, there are two ways in which it may be effected; one by a reduction of the quantity of fine gold and silver in the coins; the other by establishing a difference between the value of those metals, in the coins, and the mint price of them in bullion.

Among the evils, attendant on such an operation, are these -- creditors both of the public and of individuals would lose a part of their property -- public and private credit would receive a wound -- the effective revenues of the government would be diminished." [to view the entire report click on Alexander Hamilton's 1791 Report - Page 1]

Once again we find no mention of the government owning or holding title to the silver and gold brought to the Mint for coining. We do, however, read of the "evils, attendant on such an operation, are these -- creditors both of the public and of individuals would lose a part of their property..."

The Power To Coin Versus Issue

The Constitution authorized the Government to coin money, not to issue it. To coin and to issue are two entirely different acts. To coin means that the Government was granted the power to establish a mint to stamp out coins from bullion brought to it by private owners. The coins minted were not Government property; they remained the property of the private citizen who brought their bullion to the mint to be so coined.

To issue money means to create money. The government was never granted the power to issue money, or to create money. It was granted the power to coin money out of already existing bullion owned by the public. The State did not hold title or own the coined money, the people retained title. The only way the government could possess money was through the power to tax or borrow - not through the power to create or issue.

For the first seventy years of our new country, Congress faithfully followed the intent of the Constitution. During this time, no paper currency or bills of credit were issued by the Government. Private bank notes and gold and silver coins minted by the Government for private owners were sufficient means to run the economy.

The Civil War abruptly changed the adherence to sound money principles. Secretary of the Treasury Salmon P. Chase recommend to Congress the issuance of United States notes, popularly called "greenbacks," and Congress obliged. Government debt was now allowed to circulate as the currency. This was the first legalized counterfeit issued by the United States Government, as it went against the constitutional standard.

The Constitution Still Stands

Without a constitutional amendment, the mandates of the Constitution stand at the foreground of The Supreme Law of The Land. And any law that is not in pursuance thereof, is void, and is, as if, it never occurred. Chase himself, when he was later Chief Justice of the Supreme Court, condemned his own act of issuing United States Notes as currency as being unconstitutional.

Needless to say, a case could be made that it is paper bills of credit, including today's Federal Reserve Notes that are unlawful or counterfeit money, as they do not pass the test of the Constitution, although they may pass the test of the United States Code. However, if any part of the United States Code is not in pursuance of the Constitution, it is null and void, and is, as if, it never occurred. For an unconstitutional act is not a law, much less - law.

We started this discussion by seeking the answers to two main queries:

  1. Are the gold coins in dispute, the property of the government, or the private citizen that had possession of them?

  2. Were the coins obtained by the said individual, as alleged by the Mint - in "an unlawful manner"?

We also made mention in the beginning of the article that the law, laws, and law, may perhaps all be a bit different from one another; as well as lawful is from legal; and again - as both are in comparison to constitutional.

In other words - legal, lawful, and constitutional do not connote the same exact meanings. The differences may be subtle, but subtle is as deadly a foe as any form of undiscriminating audacity: the effects of poison as compared to those of explosives.

According to the Constitution - nothing but gold and silver coin were to be used as money and accepted as legal tender.

According to the Constitution, and the Coinage Act of 1792, the purpose of the Mint was to serve the people, as does any other branch or department of government; in this case by providing a means to mint or coin the bullion that private citizens owned and would bring to the mint for the government's stamp of authenticity - as honest weights and measures.

According to the Constitution all laws are to be in pursuance of the Constitution, and if they are not - they are null and void, as if, they never existed.

So what are the answers to our two questions? We will leave the decision of such in the hands of the people, as the people gave birth to the Constitution - we are, in the final analysis, the only authority vested with such powers of discrimination. We The People are Sovereign. Act accordingly. Vote accordingly.


Douglas V. Gnazzo

Author: Douglas V. Gnazzo

Douglas V. Gnazzo
Honest Money Gold & Silver Report

Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

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