Littleton Coin Company’s Collector’s Corner

Notes Reflect the Great Depression, Part 1


It’s not often U.S. bank notes or coins reflect a specific event, but there have been exceptions. The Civil War and World War II were two famous ones. Lesser known is the fact that the Great Depression was also. Most people don’t realize that policy changes to meet the crisis affected both the coins and notes of the period.

When Franklin D. Roosevelt issued the Gold Recall Order of 1933, all gold coins were recalled and melted down. The only exceptions were those coins of recognized collector value. Those coins that were recalled were melted down. Needless to say, this created a host of great rarities. Rarities like the 1927-D Saint-Gaudens double eagle – and even better dates, whose mintages were almost totally melted. Gold coins aside, the impact of the Great Depression can be easily seen in the lower mintages (in some cases, none at all) of the early 1930s.

The Great Depression also left a tremendous and lasting mark on the notes being used. And while sometimes that mark is easy to recognize, in others it is more subtle (but equally important).

Most obviously affected were the Gold Certificates. They were basically the second type of note in upper denominations, and Series 1928 Gold Certificates were in circulation at the time. However, the early days of 1933 had seen a great increase in the money supply and a significant drop in the gold reserves. That situation simply could not be allowed to continue. Something had to be done, and once again that something was the Gold Recall Order.

As it did with gold coins, the order required Gold Certificates to be turned in for destruction. However, there weren’t any exceptions provided for notes of special historical value or interest to collectors. They were all supposed to be turned in for destruction.

At that time, an estimated 25% of the nation’s workers were unemployed. And an estimated 50% of homeowners were behind in their payments. So to save a Gold Certificate with a face value of at least $10 was a significant risk. There was a lot of confusion as to just what might happen to you if you violated the Gold Recall Order. Some felt they might end up in jail if found with a gold coin or Gold Certificate. A more likely option, in many minds, was that any gold coins or Gold Certificates they tried to use wouldn’t be accepted. That was a risk few could take at a time when everyone worried about their financial situation.

Under the circumstances, any Series 1928 Gold Certificate has to be seen as a souvenir of a very troubled time. And it’s truly amazing that any small-size Gold Certificates are available today. Nevertheless, it’s possible for a collector to acquire all denominations from $10-$100 in at least circulated grades.

The Gold Recall Order of 1933 also caused other problems as well. And in the case of the Federal Reserve Note, the problem was less obvious, but every bit as significant. In the late 1920s and early 1930s, the Federal Reserve Note was everywhere. Available in all denominations except $1 and $2, it was the dominant note of its time. But every series prior to those of the 1930s carried what was called a "gold clause" that promised payment in gold to the bearer. Needless to say, this was in direct opposition to the wording of the Gold Recall Order.

Obviously, something had to be done quickly to comply with the new law. That something was to drop the gold clause. But while this was a simple solution in theory, it meant beginning a new series of Federal Reserve Note – Series 1934 – for every single denomination. And it all had to be done at the same time.

But that was only the first step. In the meantime, earlier series notes (such as the Series 1928C and 1928D for the $5) were either quickly retired or destroyed before ever reaching circulation. That makes some of the early Federal Reserve Notes better than their printings might suggest. And all are interesting reminders of the early days of Great Depression – when even the Federal Reserve Note was as good as gold.