Remember When: Counterfeiting A Mid 20th Century Story, Part 1

By Harvey G. Stack, Senior Numismatic Consultant

As many collectors and government enforcement agencies know, counterfeiting was quite extensive after World War II. Actually, in 1941 through 1945, counterfeit United States paper money was produced by Germany and Japan in an attempt to undermine the integrity of U.S. currency. This false currency was very deceptive and became so prolific that the U.S. government had to issue special notes to circulate in Europe and also in the Far East. In Europe they changed the Treasury seal to gold. In the Far East, they surcharged the reverse with the overprint of “HAWAII.” These measures seemed to substantially reduce the quantity of false currency and the value of the “mighty dollar” remained strong.

After the war, people in the coin business noted a profusion of the foreign designed gold coins and U.S. gold coins appearing on the market. They had the proper weight and fineness of standard coins and at first they seemed to be used only for jewelry. However counterfeiters could make money for their efforts as government coinage usually earned some sort of premium over the gold content. Some scarce date and mintmark coins also appeared. But greed soon took over and the coins were struck in lower quality and fineness than standard coins and also of lighter weight.

Neophytes as well as experienced jewelers who were unfamiliar with the details of designs and the overall look of standard coins, bought these counterfeits as if they were genuine, and only learned of their mistake when the pieces were examined by a professional numismatic eye.

The Secret Service as well as foreign treasury officials became very active trying to stop the sale of these coins, yet the imports continued. It got so bad that the Eisenhower administration enacted criminal legislation to enforce the law and capture the perpetrators. By the time this abuse reached its peak, President Kennedy had instituted a Gold Import Act, administered by the U.S. Treasury. It authorized the Office of Gold and Silver operations, which was to establish a licensing procedure for the import of gold coins.

The regulations became so strict and the licenses were so restrictive, that normal gold trading in the United States nearly came to a complete stop; imports were almost completely banned. Gold collectors protested vigorously and the government action was answered by a suit against the strict rules and procedures, instituted by Stack’s in 1965-1966, which I will talk about in my article next week.