As the 112th Congress gets ready to open its second session, let’s take a look back at the numismatic-related legislation that were involved in the first session.

The characterization of the 112th Congress as a “do nothing” congress can apply to how they have handled numismatic legislation. Of all the bills submitted in both chambers, none have become law. The only bill that was of a concern to coin dealers was Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (H.R. 4, Public Law No.: 112-9). The new law changes the provisions in the Affordable Healthcare Act (Healthcare Reform) to eliminate the requirement to file Form 1099 after any transaction anyone makes of more than $600.

Since the passage of H.R. 4, members of the House of Representatives introduced 22 numismatic-related bills and members of the Senate dropped 9 bills into the hopper. None has passed to become law. Of the bills introduced, the House has considered only two bills: H.R. 886, United States Marshals Service 225th Anniversary Commemorative Coin Act, and H.R. 2527, National Baseball Hall of Fame Commemorative Coin Act. If passed by the Senate and signed by President Obama, both commemoratives programs will be struck in 2015.

In a related measure, H.R. 3512, a bill to amend the Abraham Lincoln Commemorative Coin Act to adjust how surcharges are distributed, was voted out of the Financial Services Committee and recommended for a vote on the House floor. The proceeds from the 2009 Abraham Lincoln Commemorative Dollars was to be distributed to Abraham Lincoln Bicentennial Foundation. This bill limits the payment to $2 million and divides any collected excess equally between Ford’s Theater, President Lincoln’s Cottage at the Soldiers’ Home, and The Abraham Lincoln Presidential Library and Museum.

Last June, National Public Radio published a story about the $1.1 billion worth of dollar coins being stored by the Federal Reserve. Although the story inaccurately said that taxpayers were paying the storage costs even though the Federal Reserve does not use any taxpayer money in its operations, it caused impulsive reactions by House members looking to curry favor with constituents. Six members evenly divided between the parties introduced bills whose intent was to limit or eliminate production of the dollar coin. These bills are:

• H.R. 2593, Wasteful Presidential Coin Act of 2011
• H.R. 2635, COINS Act of 2011
• H.R. 2760, Presidential Dollar Coin Efficiency Act of 2011
• H.R. 2778, Dollars and Sense Act of 2011
• H.R. 2789, Prevention of Wasteful and Unneeded Coins Act of 2011
• H.R. 2977, Currency Optimization, Innovation, and National Savings Act

H.R. 2977 differs from the other five in that it attempts to phase out the paper-based one dollar Federal Reserve Note to be replaced by coins in three years. It also is the only bill to have more than one or two co-sponsors.

[For related news, also read about the Treasury's suspension of circulating dollars.]

Two other bills were introduced in December in an attempt to reduce the production costs of the lowest denomination coins. Rep. Steve Stivers (R-OH) along with co-sponsors Timothy Ryan (D-OH) and Patrick Tiberi (R-OH) introduced H.R. 3693, Cents and Sensibility Act, and H.R. 3694, Saving Taxpayer Expenditures by Employing Less Imported Nickel Act (STEEL Nickel Act), to change the composition of the cent (H.R. 3693) and nickel coins (H.R. 3694) from their current composition to use U.S. manufactured steel. While an interesting idea, these bills face a number of obstacles including the vending machine and other commerce lobbies.

Rep. Ron Paul (R-TX) introduced H.R. 1098, Free Competition in Currency Act of 2011, a bill that he says will eliminate the monopoly the U.S. has on coining money and allow others currencies to be used in competition in commerce. Followers of Rep. Paul will recognize this as being consistent with his vision for the country’s future economy.

The rest of the numismatic bills introduced in the House are those attempting to honor various individuals and raise money for their respective organizations. These bills are as follows:

• H.R. 497, Ronald Reagan Commemorative Coin Act of 2011
• H.R. 1621, Marine Corps Aviation Centennial Commemorative Coin Act
• H.R. 1736, Mother’s Day Centennial Commemorative Coin Act
• H.R. 2139, Lions Clubs International Century of Service Commemorative Coin Act
• H.R. 2418, National Future Farmers of America Commemorative Coin Act of 2011
• H.R. 2453, Mark Twain Commemorative Coin Act
• H.R. 2968, James Monroe Commemorative Coin Act
• H.R. 3180, U.S.S. Cruiser Olympia Commemorative Coin Act
• H.R. 3187, March of Dimes Commemorative Coin Act of 2011
• H.R. 3252, Rabbi Arthur Schneier Congressional Gold Medal Act

When a coin or currency-related bill is introduced in the House, it is referred to the House Committee on Financial Services. The rules of the Financial Services Committee require coin bills to be assigned to the Domestic Monetary Policy and Technology subcommittee, chaired by Rep. Ron Paul. Aside from Rep. Paul’s current status as a candidate for the Republican nomination for president, he is known for not being a fan of using base metals for coins and “wasting time” on commemorative coin bills. In order for members to have the Marshal Service and Baseball Hall of Fame commemoratives referred out of committee, members of Domestic Monetary Policy and Technology subcommittee petitioned the Financial Services Committee as a whole to act on these bills, bypassing Rep. Paul’s objection.

Constitutionally, all legislation that affect the country’s budget must be introduced and acted upon in the House of Representatives. But Senate rules allow for members to introduce companion bills to their House counterparts. Also, senators submit commemorative bills by saying they are to benefit an organization and not the budget. Commemorative bills introduced in the Senate are as follows:

• S. 431, United States Marshals Service 225th Anniversary Commemorative Coin Act
• S. 889, Mother’s Day Centennial Commemorative Coin Act
• S. 1181, National Future Farmers of America Commemorative Coin Act of 2011
• S. 1299, Lions Clubs International Century of Service Commemorative Coin Act
• S. 1929, Mark Twain Commemorative Coin Act
• S. 1935, March of Dimes Commemorative Coin Act of 2011

In addition to the commemorative coins, Sen. Jim DeMint (R-SC) with Senators Mike Lee (R-UT) and Rand Paul (R-KY) introduced S. 1287, Sound Money Promotion Act. Similar to Ron Paul’s (Rand’s father) H.R. 1098, S. 1287 eliminates all taxes on any gold or silver coin that the federal or state government declares as legal tender.

Finally, not to be outdone by their colleagues in the House, senators introduced bills to eliminate the one-dollar coin S. 1385, A bill to terminate the $1 presidential coin program, and S. 1624, Currency Efficiency Act of 2011. Of note is that Senators Scott Brown (R) and John Kerry, both of Massachusetts introduced S. 1624, most likely on behalf of Crane & Co. of Dalton, Massachusetts, the sole supplier of currency paper to the Bureau of Engraving and Printing.

In addition to coin-related bills, both chambers introduced a combined total of 22 additional bills recommending the award of Congressional and Presidential Gold Medals to various heroes of our past. These bills are written to allow the U.S. Mint to strike copper medals using the same designs for sale to the public. Those being recommended for this honor include the Civil Air Patrol who served during World War II; the late congresswoman Shirley Chisolm, Lena Horne; suffragette Alice Paul; Raoul Wallenberg; Louis Zamperini, U.S. Olympian and World War II prisoner of war; and others.

The only gold medal that passed during the first session of the 112th Congress is the Fallen Heroes of 9/11 Act (H.R. 3421, Public Law No.: 112-76). This bill awards Congressional Gold Medals posthumously to the men and women who perished as a result of the terrorist attacks on the United States on September 11, 2001. It also authorizes the U.S. Mint to strike and sell bronze duplicates of the medals.

Will the U.S. Marshal Service and Baseball Hall of Fame commemoratives become law? Now that Treasury Secretary Tim Geithner has ordered a reduction in production of dollar coins, will that doom any of the bills eliminating dollar coins to be permanently tabled committee? Are there any coin and currency bills that will be introduced by members of congress? Stay tuned; the second session of the 112th Congress convenes January 3, 2012, the same day as the Iowa Republican Caucus.

Scott Barman is a collector and author of the Coin Collector’s Blog. When Scott is not playing with his coins, he works as an information security analyst in the Washington, DC area. In between all of that, he can be found with his wife and two puggles while they check out his pocket change.

High inflation during the American civil war benefited farmers who were debtors and who received high prices for farm products. After the war, the U.S. went back to the gold standard causing general deflation. Various rural-based inflation movements developed. By the early 1890s, the Populist Party and figures within the Democratic and Republican Parties advocated “free silver” (a silver-standard currency at a high price for silver that would bring inflation). The Populists represented an alliance of rural interests and silver mining interests. Free silver advocate William Jennings Bryan became the Democratic presidential candidate of 1896, delivering the famous “Cross of Gold” speech denouncing the gold standard. This is a radio broadcast on the 100th anniversary of the speech which includes a 1923 phonograph recording of excepts from the speech by Bryan. (Bryan ran for president 4 times. He was Secretary of State under Woodrow Wilson for a time. And he became the prosecutor in the Scopes “Monkey Trial” in Tennessee, convicting Scopes for teaching evolution in the public schools.)

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Source: http://www.vrijspreker.nl/….gold/

(Het Nederlands artikel volgt snel)

 September 18 we published these questions and here are the first answers.

We repeat the questions of the Dutch Socialistic Party with the answers of the Secretary, and follow up with first comments of the Vrijspreker. We think further questions are justified!
Question —Answer—Comment

1 Did the Dutch Central Bank (DNB) loan part of their gold? If yes, how much and to whom?

No. DNB has informed me that they have stopped loaning out gold as of 2008.

 Comments Vrijspreker: if so, why doesn’t DNB make that clear in the annual report? Why hide such crucial information.

2 Why are gold and gold loans stated as one line item in the annual report 2010 instead of mentioned as 2 separate items?

DNB follows the rules for valuation, determination of result and balance sheet presentation of the European system of Central Banks. The asset ‘Gold and Gold Receivables’ reflects the physical gold inventory.

 Comments Vrijspreker: good international accounting standards oblige companies to separate cash from receivables, as they’re clearly different. Why wouldn’t these standards apply to central banks? In times of increasing civil unrest because of opaque financial schemes being set up by governments, central and commercial banks and the demand for more transparency, how would you justify these special rules for central banks? Are they above the law?

3 Can you give an overview of the yearly yields of the gold loans during the past years?

No gold has been loaned out over the past years.

4 Where IS the physical gold of DNB? At which locations and how much is where? What is the reason that the gold is still at these locations?

DNB has a location policy, which means that the gold has been spread over the following locations: New York, Ottawa, London and Amsterdam.

 Comments Vrijspreker: why doesn’t the Secretary answer all the questions? What is the amount per location? And what exactly is the location policy?  Why New York instead of any random other city? Also it’s important to know how often and by whom the vaults are audited.

5 What was the most important reason for DNB to sell the gold in the past? Are the storage costs a reason? What are the actual costs to store the gold?

By selling gold in the past, DNB has tried to align its gold holdings with other gold holding countries. The storage costs were not a factor in the decision to sell the gold, because they are relatively low. Currently, DNB’s total annual storage costs paid to other central banks amount to a few hundreds of thousands of euros. The costs vary per location.

Comments Vrijspreker: why would DNB want to align its gold holdings with other central banks’ holdings? Is there a coordinated central policy amongst all central banks? Has this been prescribed by the Bank of International Settlements? Are the recent gold purchases by developing countries’ central banks not conflicting with this international policy. Could you outline the details of this policy?

6 Can you confirm that since 1991 of the 1700 tons of gold about 1100 tons have been sold? Is the remark of journalist Peter de Waard correct that because of these historic sales there is a loss of about 30 billion euro? If not correct, what is the right amount?

Since 1991, 1,100 tons of gold have been sold. Back then it was concluded that DNB held relatively much gold compared to other central banks. Decided was to align the amount of gold with other important gold owning countries. Sales proceeds have been added to DNB’s general reserves and have been invested in interest generating investments. Comparing the actual, as a result of the financial crisis, higher gold price with the historical gold price does indeed lead to more or less the amount as mentioned by Mr. De Waard. However, one has to take into account the investment income generated since selling the gold and the fact that the result of said calculations heavily depend of the strongly fluctuating price of gold.

Comments Vrijspreker: again, why align the gold holdings with that of other central banks? What exactly is the purpose of that policy?

7 How much of the National Debt has during the past 20 years been paid off with the proceeds of the gold sales? Are you of opinion that the sustainability of the national debt will be improved by paying off the debt and at the same time selling the gold?

Gold is an asset of DNB. The sales proceeds have been invested in other assets and have hence not been used to reduce the national debt. The return on investments will flow back to the Dutch government as a result of DNB’s dividend payments.

8 What is in your opinion the present function of the gold stock?

DNB’s physical gold holdings function as the ultimate reserve and anchor of trust in times of financial crisis. Further, gold is being held for diversification reasons.

 Comments Vrijspreker: clearly DNB sees value in gold. For that reason, it needs to be more transparent, and so should all central banks.

9 What is the relation between the size of the market of the gold stock and the size of the market of gold derivates? What are the possible consequences of this?

The size of the physical gold market and derivatives market cannot easily be compared because of diverging measures for the size. For the trade in physical gold the turnover is measured: in the most important market (London) this amounted to USD 136 billion in the second half of 2010 according to the London Bullion Market Association. For the derivatives market the underlying value of outstanding derivatives (swaps, future contracts and options) is of importance. For the second half of 2010 these amounted to USD 396 billion according to the Bank of International Settlements. In general one can say that the availability of derivatives markets promote efficient price discovery.

 10 Can you confirm that recently a number of countries have even enlarged their physical gold stock? Do you have an explanation for this development?

Buyers are developing economies that show strongly growing official reserves or where gold traditionally only constituted a small portion of the reserves. There is also a wide group of countries that have sold gold the past decade (including France, Spain, UK and Switzerland)

Quote of the century: “Don’t buy gold – it’s not backed by anything. Unlike the U.S. Dollar which is backed by the government and is going to be around for awhile” WOW can you believe this?

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