March 4, 2020 • 15 mins
Sometimes historical circumstances lead to unconventional proposals. Such is the case of a U.S. $50 gold coin known as a half union. Its story is filled with bureaucratic intrigue and economic transformation. Everett walks through the history of the half union and why it never gained approval for regular production.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
This is Breaking the Dollar.
(00:05):
The podcast that dismantles some of the biggest misconceptions about money.
Presented by Gainesville Coins.
Hello everyone, welcome back to Breaking the Dollar.
I'm Everett Millman, your host, and this week's episode is about one of the coolest gold coins
(00:31):
that you have probably never heard of.
Now this story traces back to the middle of the 19th century, right around the time of
the California Gold Rush.
And there are some interesting similarities to another topic that we've covered in a
previous episode, the 1933 Saint-Gaudens Double Eagle.
(00:52):
I encourage you to go back and check out those episodes if you haven't already because they
will provide some interesting background that is going to be brought up again here.
So one of the interesting consequences of the California Gold Rush is how quickly it
increased the amount of gold in the United States.
And at this time on a gold standard, that meant that literally the wealth and the amount
(01:15):
of money in the US was growing.
The only way you could do that was to mine more gold.
Now that gold rush sparked tens of thousands of people to head out west and try and strike
it rich.
So as a result, the territory of California very quickly achieved statehood, and in fact
it happened so fast that a lot of the normal financial institutions like banks and mints
(01:40):
to make the new coins really couldn't keep up with how fast California and the western
territories were growing.
So what you had was a very unregulated commercial environment on the western frontier.
So at this time in the late 1840s and early 1850s, there was a lot of growth in California
obviously, but there was a severe scarcity of paper currency.
(02:06):
Bank notes that came from far away in the east where there was a lot of this banking
infrastructure really weren't trusted out west.
The only money that had any legitimacy was gold.
One of the disadvantages of having gold be the dominant currency is that it was much
more difficult to move around large quantities of money given that you had to do this only
(02:31):
in 20 dollar gold coins, the double eagle.
This was the highest denomination that the United States Mint made, and in fact it had
only been around since 1850. Prior to that the $10 eagle was the highest denomination
coin in the country.
So the proposed solution to this was for the government to issue two new gold coins that
(02:55):
would have denominations of $50 and $100.
The name that advocates in California came up with for these coins was the $100 coin
would be called a union, and it followed logically that the $50 gold coin would be a half union.
And you can see that if you had these higher denomination coins, it would be easier to
(03:16):
move money around in bulk.
So this idea was put forward by the US Treasury Department and some allies in the US Senate.
Legislation to create these two coins did pass the Senate, but ultimately it failed
in the House of Representatives, which was much more heavily representative of East Coast
interests, not the West Coast.
(03:37):
From there, the idea essentially died.
However, private businesses essentially stepped in where the government would not.
So several gold refiners in California and in a few other states like Georgia, North
Carolina, and New York began striking unofficial gold coins.
So these were not officially legal tender, but they looked extremely similar to existing
(04:03):
US coins.
You'll often hear these referred to as private territorial gold.
And even though the San Francisco Mint was established in 1854, for the next two or
three decades, this private territorial gold helped facilitate commerce and trade and business
throughout the western territories.
(04:25):
It really is a fascinating example of a free market response to a pressing economic need,
and that need was to use gold as currency.
The names of some of the big companies that were engaged in making these coins were Moffatt
& Company, Kellogg & Company, a firm called Wass, Molitor & Company.
(04:46):
So again, these are private firms that are solving economic problem through a free market
solution.
Now this worked through the 1880s, and in fact the same refiners and minting operations
even made very small denomination gold coins.
So these had face values as low as 50 cents or 25 cents.
(05:09):
They were very tiny, and similarly they were not official US coins.
They really can be thought of as tokens that were used as money, but you could not exchange
in the payment of taxes, for example.
The government did not officially recognize them, but they certainly served their purpose.
Funny enough in 1877 after this sort of system had been going on for a while, the
(05:35):
director of the US Mint, H.R. Linderman, so he had the chief engraver of the Mint Charles
Barber and the assistant engraver, George T. Morgan, come up with their own sketches to
design these new coins.
Ultimately, the $100 union coin was never struck, but that same year the Mint did make
(05:57):
two examples of the $50 half union.
These were what is known as pattern coins, so really they are trial pieces just for the
Mint to get an idea of what this design will look like once it is struck onto a coin.
I must say as someone who is interested in coins and numismatic history, the reverse
(06:19):
design that Charles Barber made for the $50 half union is certainly some of his best work.
Artistically, it is beautiful and it is a slightly different eagle than you find on
any other US coins.
I think it was a really innovative attempt at keeping the classic design themes that
the United States was already using for its money.
(06:41):
This is where the story gets a little bit controversial.
In most cases, pattern pieces are kept by the government.
They are not official coins, so they are technically illegal to own -- a theme that harkens
back to the 1933 Saint-Gaudens Double Eagle.
However, during the 19th century, it was a relatively common practice for employees
(07:04):
at the Mint to sell such coins to wealthy high-end collectors who wanted a one-of-a-kind coin.
And sometimes you even saw them making requests of the Mint for some exotic piece.
So one example of that is Indian Head penny, a one-cent coin, was actually struck in gold
(07:26):
and given to a collector.
And they would pay exorbitant amounts of money for these specialty novelty coins or
patterns and then the people working at the Mint who made these experimental pieces could
then pocket the money.
So they'd run a little side business selling these rare collectibles out the back door.
As I said, that is a pretty questionable practice that would not go over well today.
(07:51):
So this is what initially happened to the two $50 half union coins that the Mint struck
as patterns in 1877.
The only reason we know this is that a few decades later in 1909, the two coins were
sold to a private collector, a financier named William Wooden who, interestingly enough,
(08:12):
would later become the Secretary of the Treasury.
Wooden was not only a financier, he was also an avid coin collector.
Now if you remember the story of the '33 Saint-Gaudens, the government went to court and
was able to seize that coin.
It was declared illegal to own, it was the property of the government, and they just
(08:33):
took it.
No compensation.
What's fascinating to me is that William Wooden did not get the same treatment, although
the government stepped in and said, hey, this is our property, you are not allowed to own
these pattern coins.
They were not able to directly seize it as they had, or as they would 20 years later.
And instead, they made a massive trade with Wooden, where he relinquished the two pattern
(08:58):
coins in exchange for many, many other rare coins from the Mint's private collection,
known as the Mint Cabinet.
And this is basically a catalog or record of all of the designs that the US Mint issued
over the years.
So Wooden did not walk away empty-handed, he was compensated for giving up the two coins,
(09:21):
and they now reside in the National Numismatic Collection at the Smithsonian Institution.
So these coins will never be back on the market, they are officially illegal to own, but they
are really interesting from a historical perspective.
If they were ever officially made, they would be by far the largest gold coins the United
States has ever issued.
These two half union patterns measure 50 millimeters across, and they contained almost
(09:46):
two and a half troy ounces of gold.
So in terms of how much gold that is, we can make a simple comparison to the $20 double
eagle.
Today, the melt value of the gold in a double eagle is well over $1,000.
So that's $20 at the time it was made in face value to now today over $1,000.
(10:07):
For the half union, what was $50 in gold back in 1877 is today worth over $4,000.
So these coins are absolutely massive.
Even compared to today's bullion coins, they are really impressive.
Now although these two patterns, the only ones in existence, are held in a museum, there
(10:29):
is some indication that the United States Mint ended up striking the same design in copper.
Probably a handful of about 12 to 15 of these half union design coins were made in copper,
and a few of them were gilded, meaning they were covered in a thin layer of gold.
Even these copper examples sell for hundreds of thousands of dollars at auction.
(10:53):
They are extreme merities, and they carry this very interesting historical story behind them.
Ultimately though, the problem that the $50 half union and the proposed $100 gold union
coin were made to solve ended up resolving itself as the United States became more industrialized
and railroads started connecting the western frontier to the rest of the country.
(11:18):
By that time, around the turn of the 20th century, access to paper money no longer became
a problem.
You didn't need these giant gold coins because paper money was available and more convenient.
It really does illustrate how much easier it is to transfer, divide, and transport money
when you're using fiat paper currency as opposed to hard money like gold.
(11:44):
It is much less expensive to transport a bunch of paper bills across the country than it
would be to transport those same gold coins.
They're so much heavier.
If you think about it, even today, anytime you start talking about large amounts of money
or value, it usually takes the form of a claim of ownership on something physical, like real
(12:06):
estate for example, or if you owned a share or preferred share of a big company like Berkshire
Hathaway.
But these are more of a way of storing wealth rather than a financial vehicle for trading
or engaging in commerce.
You really can't spend real estate, so to speak.
And that's what makes gold much different than other tangible assets like that.
(12:30):
Gold is very liquid and it can readily be spent as money rather easily.
One final interesting note about this whole saga is that eventually the US government
did issue a special $50 half union gold coin.
However, it was a commemorative in 1915 known as the Panama Pacific commemorative.
(12:53):
And indeed, this giant commemorative gold coin is one of the most revered and beautiful
collectibles that the United States has ever issued.
So that pretty much wraps it up.
I hope you found that historical overview as interesting as I did because I know if the
US meant ever did issue another $50 half union commemorative, I would be all over that.
(13:16):
Anyway that brings us to our question of the week submitted by the listeners.
This week's question comes from Hal in Thonotosassa, Florida.
He asks, what is your favorite brand of silver bullion?
That's an excellent question because there are a lot to choose from.
Personally, my favorite is always going to come with a really cool design because you
(13:40):
can buy generic silver that has very basic design or perhaps no design at all.
But for a very small premium above that price, you can get something that looks really cool
and is very artistic.
The first name that comes to mind in that regard is a brand called Silver Bullet Silver Shield
and not only other designs, very high quality, but they carry a pretty interesting tongue
(14:03):
in cheek economic message as well.
So I really love SBSS.
Another big name that I really trust is Sunshine Minting because in addition to having a very
attractive design, they are extremely resistant to being counterfeited.
So you know what you're getting along those same lines.
Another privately owned silver brand is Mason Mint.
(14:24):
I really like that they have original designs and they cover a bunch of different themes.
So you can choose from whatever interest you and you still know that you're getting 99.9%
pure silver.
So really there are no bad options when it comes to reputable brands of silver, but those
are some of my favorite ones for the artistic and metaphoric quality of the themes in the
(14:47):
designs.
As always, I want to thank everybody out there for listening.
We really appreciate you tuning in.
Next week's episode will tackle what's going on in the gold mining industry.
So be sure to tune in.
Today's episode was presented by our sponsors Gainesville Coins.
You can find out more at GainesvilleCoins.com.
If you enjoyed today's show, we encourage you to go to iTunes and subscribe, leave a review
(15:11):
and leave a rating.
The views and opinions expressed on the show are for informational purposes only and should
not be used or construed as professional investment advice.
This is Breaking the Dollar.
(00:05):
The podcast that dismantles some of the biggest misconceptions about money.
Presented by Gainesville Coins.
Hello everyone, welcome back to Breaking the Dollar.
I'm Everett Millman, your host, and this week's episode is about one of the coolest gold coins
(00:31):
that you have probably never heard of.
Now this story traces back to the middle of the 19th century, right around the time of
the California Gold Rush.
And there are some interesting similarities to another topic that we've covered in a
previous episode, the 1933 Saint-Gaudens Double Eagle.
(00:52):
I encourage you to go back and check out those episodes if you haven't already because they
will provide some interesting background that is going to be brought up again here.
So one of the interesting consequences of the California Gold Rush is how quickly it
increased the amount of gold in the United States.
And at this time on a gold standard, that meant that literally the wealth and the amount
(01:15):
of money in the US was growing.
The only way you could do that was to mine more gold.
Now that gold rush sparked tens of thousands of people to head out west and try and strike
it rich.
So as a result, the territory of California very quickly achieved statehood, and in fact
it happened so fast that a lot of the normal financial institutions like banks and mints
(01:40):
to make the new coins really couldn't keep up with how fast California and the western
territories were growing.
So what you had was a very unregulated commercial environment on the western frontier.
So at this time in the late 1840s and early 1850s, there was a lot of growth in California
obviously, but there was a severe scarcity of paper currency.
(02:06):
Bank notes that came from far away in the east where there was a lot of this banking
infrastructure really weren't trusted out west.
The only money that had any legitimacy was gold.
One of the disadvantages of having gold be the dominant currency is that it was much
more difficult to move around large quantities of money given that you had to do this only
(02:31):
in 20 dollar gold coins, the double eagle.
This was the highest denomination that the United States Mint made, and in fact it had
only been around since 1850. Prior to that the $10 eagle was the highest denomination
coin in the country.
So the proposed solution to this was for the government to issue two new gold coins that
(02:55):
would have denominations of $50 and $100.
The name that advocates in California came up with for these coins was the $100 coin
would be called a union, and it followed logically that the $50 gold coin would be a half union.
And you can see that if you had these higher denomination coins, it would be easier to
(03:16):
move money around in bulk.
So this idea was put forward by the US Treasury Department and some allies in the US Senate.
Legislation to create these two coins did pass the Senate, but ultimately it failed
in the House of Representatives, which was much more heavily representative of East Coast
interests, not the West Coast.
(03:37):
From there, the idea essentially died.
However, private businesses essentially stepped in where the government would not.
So several gold refiners in California and in a few other states like Georgia, North
Carolina, and New York began striking unofficial gold coins.
So these were not officially legal tender, but they looked extremely similar to existing
(04:03):
US coins.
You'll often hear these referred to as private territorial gold.
And even though the San Francisco Mint was established in 1854, for the next two or
three decades, this private territorial gold helped facilitate commerce and trade and business
throughout the western territories.
(04:25):
It really is a fascinating example of a free market response to a pressing economic need,
and that need was to use gold as currency.
The names of some of the big companies that were engaged in making these coins were Moffatt
& Company, Kellogg & Company, a firm called Wass, Molitor & Company.
(04:46):
So again, these are private firms that are solving economic problem through a free market
solution.
Now this worked through the 1880s, and in fact the same refiners and minting operations
even made very small denomination gold coins.
So these had face values as low as 50 cents or 25 cents.
(05:09):
They were very tiny, and similarly they were not official US coins.
They really can be thought of as tokens that were used as money, but you could not exchange
in the payment of taxes, for example.
The government did not officially recognize them, but they certainly served their purpose.
Funny enough in 1877 after this sort of system had been going on for a while, the
(05:35):
director of the US Mint, H.R. Linderman, so he had the chief engraver of the Mint Charles
Barber and the assistant engraver, George T. Morgan, come up with their own sketches to
design these new coins.
Ultimately, the $100 union coin was never struck, but that same year the Mint did make
(05:57):
two examples of the $50 half union.
These were what is known as pattern coins, so really they are trial pieces just for the
Mint to get an idea of what this design will look like once it is struck onto a coin.
I must say as someone who is interested in coins and numismatic history, the reverse
(06:19):
design that Charles Barber made for the $50 half union is certainly some of his best work.
Artistically, it is beautiful and it is a slightly different eagle than you find on
any other US coins.
I think it was a really innovative attempt at keeping the classic design themes that
the United States was already using for its money.
(06:41):
This is where the story gets a little bit controversial.
In most cases, pattern pieces are kept by the government.
They are not official coins, so they are technically illegal to own -- a theme that harkens
back to the 1933 Saint-Gaudens Double Eagle.
However, during the 19th century, it was a relatively common practice for employees
(07:04):
at the Mint to sell such coins to wealthy high-end collectors who wanted a one-of-a-kind coin.
And sometimes you even saw them making requests of the Mint for some exotic piece.
So one example of that is Indian Head penny, a one-cent coin, was actually struck in gold
(07:26):
and given to a collector.
And they would pay exorbitant amounts of money for these specialty novelty coins or
patterns and then the people working at the Mint who made these experimental pieces could
then pocket the money.
So they'd run a little side business selling these rare collectibles out the back door.
As I said, that is a pretty questionable practice that would not go over well today.
(07:51):
So this is what initially happened to the two $50 half union coins that the Mint struck
as patterns in 1877.
The only reason we know this is that a few decades later in 1909, the two coins were
sold to a private collector, a financier named William Wooden who, interestingly enough,
(08:12):
would later become the Secretary of the Treasury.
Wooden was not only a financier, he was also an avid coin collector.
Now if you remember the story of the '33 Saint-Gaudens, the government went to court and
was able to seize that coin.
It was declared illegal to own, it was the property of the government, and they just
(08:33):
took it.
No compensation.
What's fascinating to me is that William Wooden did not get the same treatment, although
the government stepped in and said, hey, this is our property, you are not allowed to own
these pattern coins.
They were not able to directly seize it as they had, or as they would 20 years later.
And instead, they made a massive trade with Wooden, where he relinquished the two pattern
(08:58):
coins in exchange for many, many other rare coins from the Mint's private collection,
known as the Mint Cabinet.
And this is basically a catalog or record of all of the designs that the US Mint issued
over the years.
So Wooden did not walk away empty-handed, he was compensated for giving up the two coins,
(09:21):
and they now reside in the National Numismatic Collection at the Smithsonian Institution.
So these coins will never be back on the market, they are officially illegal to own, but they
are really interesting from a historical perspective.
If they were ever officially made, they would be by far the largest gold coins the United
States has ever issued.
These two half union patterns measure 50 millimeters across, and they contained almost
(09:46):
two and a half troy ounces of gold.
So in terms of how much gold that is, we can make a simple comparison to the $20 double
eagle.
Today, the melt value of the gold in a double eagle is well over $1,000.
So that's $20 at the time it was made in face value to now today over $1,000.
(10:07):
For the half union, what was $50 in gold back in 1877 is today worth over $4,000.
So these coins are absolutely massive.
Even compared to today's bullion coins, they are really impressive.
Now although these two patterns, the only ones in existence, are held in a museum, there
(10:29):
is some indication that the United States Mint ended up striking the same design in copper.
Probably a handful of about 12 to 15 of these half union design coins were made in copper,
and a few of them were gilded, meaning they were covered in a thin layer of gold.
Even these copper examples sell for hundreds of thousands of dollars at auction.
(10:53):
They are extreme merities, and they carry this very interesting historical story behind them.
Ultimately though, the problem that the $50 half union and the proposed $100 gold union
coin were made to solve ended up resolving itself as the United States became more industrialized
and railroads started connecting the western frontier to the rest of the country.
(11:18):
By that time, around the turn of the 20th century, access to paper money no longer became
a problem.
You didn't need these giant gold coins because paper money was available and more convenient.
It really does illustrate how much easier it is to transfer, divide, and transport money
when you're using fiat paper currency as opposed to hard money like gold.
(11:44):
It is much less expensive to transport a bunch of paper bills across the country than it
would be to transport those same gold coins.
They're so much heavier.
If you think about it, even today, anytime you start talking about large amounts of money
or value, it usually takes the form of a claim of ownership on something physical, like real
(12:06):
estate for example, or if you owned a share or preferred share of a big company like Berkshire
Hathaway.
But these are more of a way of storing wealth rather than a financial vehicle for trading
or engaging in commerce.
You really can't spend real estate, so to speak.
And that's what makes gold much different than other tangible assets like that.
(12:30):
Gold is very liquid and it can readily be spent as money rather easily.
One final interesting note about this whole saga is that eventually the US government
did issue a special $50 half union gold coin.
However, it was a commemorative in 1915 known as the Panama Pacific commemorative.
(12:53):
And indeed, this giant commemorative gold coin is one of the most revered and beautiful
collectibles that the United States has ever issued.
So that pretty much wraps it up.
I hope you found that historical overview as interesting as I did because I know if the
US meant ever did issue another $50 half union commemorative, I would be all over that.
(13:16):
Anyway that brings us to our question of the week submitted by the listeners.
This week's question comes from Hal in Thonotosassa, Florida.
He asks, what is your favorite brand of silver bullion?
That's an excellent question because there are a lot to choose from.
Personally, my favorite is always going to come with a really cool design because you
(13:40):
can buy generic silver that has very basic design or perhaps no design at all.
But for a very small premium above that price, you can get something that looks really cool
and is very artistic.
The first name that comes to mind in that regard is a brand called Silver Bullet Silver Shield
and not only other designs, very high quality, but they carry a pretty interesting tongue
(14:03):
in cheek economic message as well.
So I really love SBSS.
Another big name that I really trust is Sunshine Minting because in addition to having a very
attractive design, they are extremely resistant to being counterfeited.
So you know what you're getting along those same lines.
Another privately owned silver brand is Mason Mint.
(14:24):
I really like that they have original designs and they cover a bunch of different themes.
So you can choose from whatever interest you and you still know that you're getting 99.9%
pure silver.
So really there are no bad options when it comes to reputable brands of silver, but those
are some of my favorite ones for the artistic and metaphoric quality of the themes in the
(14:47):
designs.
As always, I want to thank everybody out there for listening.
We really appreciate you tuning in.
Next week's episode will tackle what's going on in the gold mining industry.
So be sure to tune in.
Today's episode was presented by our sponsors Gainesville Coins.
You can find out more at GainesvilleCoins.com.
If you enjoyed today's show, we encourage you to go to iTunes and subscribe, leave a review
(15:11):
and leave a rating.
The views and opinions expressed on the show are for informational purposes only and should
not be used or construed as professional investment advice.
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