This is a story of the history of gold and silver buying — in all its shady and manipulative splendor — from someone who got their start in the Seventies.
Tonight the Smithsonian Channel will air a documentary on the elusive Double Eagle gold coin, but if you don’t get it in your area or are impatient, the whole thing is on YouTube.
A college student has been arrested for counterfeiting, after being caught with $13,000 in fake $100 bills. They were verified as counterfeit because each was signed by “Moe Money”, the “Proprietor of Counterfeiting”.
The buzzword these days is “altered art”, where people take one thing and cut it up, making something else — ‘collage’, what they called it back in the seventies when I was in school. Artist Mark Wagner makes complicated, beautiful, and psychedelic works purely from cut-up dollar bills:
But – wait – if cutting pennies for art is legal, then this must be OK, right?
Let’s check out the law. 18 U.S.C. § 333 says that:
Whoever mutilates, cuts, defaces, disfigures, or perforates, or unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, or Federal Reserve bank, or the Federal Reserve System, with intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued, shall be fined under this title or imprisoned not more than six months, or both.
Now that’s somewhat vague: what is “unfit to be reissued”? According to ArtTechLaw, creative uses generally don’t incur the wrath of the Secret Service — if you’ll remember, people messing with paper money is the reason Lincoln created the Secret Service. Like the coin law, enforcement of this part of the United States Code is primarily focused on destruction designed to affect the value of the money or affect the monetary system as a whole. Even when the Joker burned a huge pile of money, because it’s fiat money, with no inherent physical value, the Treasury can just print up a bunch of new sawbucks to replace what was destroyed. Part of the Treasury’s job is figuring out what to do with badly damaged money; if Mr. Wagner ever falls on hard times, he could probably carry his art right up to the Treasury’s front doors and nicely ask to have the money converted back into circulating bills. Hopefully it won’t ever come to that.
Just look at this work of art: Robert Wechsler designed many different pieces of art for The New Yorker earlier this year, each made from actual, valuable coins:
Whenever something like this comes out, people develop hives and stutters: ”WAIT — HE CAN’T DO THAT! That’s destroying money, and that’s illegal!”
18 USC Chapter 17 of the US Code has a section called “Mutilation, Diminution, and Falsification of Coins” — ‘Mutilation’ is about the only thing going on in the art above, and it continues on to say:
Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales, or lightens any of the coins coined at the mints of the United States…Shall be fined under this title or imprisoned not more than five years, or both.
The word fraudulently appears in both paragraphs, and is the key to this: the reason this law exists is a layover from the days of coins being made from precious metals. Like the reeded edges on coins, this is meant to prevent people from altering their coins to be more valuable. Let’s say you go to the bank and get a thousand dollars in gold coins. Now, you take each coin and you put it against the bench grinder, taking off a thin layer around the circumference. You do this to all 50 double-eagles, and then you take them back to the back and deposit them. Now you’ve got a grand in the bank — and a pile of gold dust underneath your bench grinder.
So, you got $20 for $19.99 worth of gold, plus it introduces “more” gold into the system, which potentially affects the value of the dollar.
Taking some pennies out of circulation for the purpose of art, or a cute memento of Disneyland, isn’t illegal because you’re not doing to fraudulently alter the value of the coin. Try melting nickels and pennies for profit, that’s gonna get you a visit from federal agents. So, intent is all part of the game: make art of pennies and sell it for hundreds, but don’t try to squeeze copper out of your pocket change. They might feel the same, but the rules view the two very differently.
Note: I’m not a lawyer, nor am I your lawyer, so this post isn’t a legal defense. So, don’t print this out to show the judge when somebody arrests you for skirting the law.
Coins might not be precious metals anymore, but they seem to be more “money-like” than paper bills. Plus, they come from the Mint, not the Treasury, so they’re more closely tied to specie money than a greenback. So it’s quite a surprise when people get arrested for paying for things with nothing but coins:
A Chinese couple were arrested in Paris, France, for paying their hotel bill entirely with Euro coins. In fact, they were paying for everything in Euro coins, which aroused suspicion and the hotel called the police. There was nothing illegal about paying for things in coin, of course, but the hotel thought they had discovered a counterfeit ring who were too dumb to not hide their operations. Turns out, the couple were salvaging coins from junked cars, and had saved up for a nice trip. I hope the arrest was only a slight detour.
Scrapped Euros are actually a problem: Euros are “destroyed” by separating the bi-metal contents, but entrepreneurs in China have been buying the components and reassembling them into “genuine” coins. They still count as counterfeit, but they defeat most detection so the French hoteliers were right to be a little bit suspicious.
A Utah man found himself on the wrong side of the law for paying a $25 medical bill — in pennies. Once again, the pennies weren’t the problem: the man was cited for disorderly conduct because, well, he was doing it just to be a dick. Others have done it successfully, well, sorta, so much that it has attracted the attention of Snopes.
So, the moral of the story is: there’s nothing wrong with paying for things entirely in coin, but you’re going to attract attention — so be prepared for the fallout.
What do you do when your business has been making money abroad and you want to send it home? You could wire it, you could write a check…but what if that profit is in cold, hard cash? You could deposit it at a bank, but — oh wait — you are the bank, and those greenbacks aren’t doing you any good sitting in a Swiss vault. So, you pack it up, put it on a plane, and ship it back to the U.S. Money’s safe at 30,000 feet, right?
Not as much as the bank thought. Over a million dollars of cash disappeared in flight between Zurich and New York. Maybe Karl Malden was right: when flying, take traveler’s checks instead. D.B. Cooper jumped out of a plane with $20,000 strapped to his chest, but $1,200,000 in C-notes was only 10x as much weight. Because the packs of hundreds were in a case packed inside another case, the theft escaped notice until its arrival. More than likely, the money was stolen before it was loaded on the plane, and there wasn’t any mid-flight adventure flick shenanigans going on.
Despite all the money stored in bits and bytes these days, the Reserve has about $1.19 trillion of currency in circulation. That means the theft consisted of 1/1,000,000th of all currency in circulation — one out of every million dollar bills disappeared from that plane. That might not seem like much, but a million doesn’t buy a whole lot anymore.
If you think bank robbery will be your gateway to a life of luxury and relaxation, think again. When you do the math and realize that most bank robberies have 1.6 accomplices and take about $30,000, each person walks away with maybe $15,000, or below the povery line in most first-world countries. So, let’s say you don’t believe the statistics and go for it, and aren’t caught — that’s not even going to last you a year by normal living standards, so what’s next, another robbery? Statistically, the more you rob, the more likely somebody’s going to find you.
The big picture, though, applies to investors in banking security equipment. If you’re selling something that costs the bank $50,000 that saves them only $30,000, then you’re gonna have a bad time. If you’ve got an invention in mind to reduce bank robbery take, it better cost less than thirty grand, or at least more than the statistical average take that it’ll prevent.