The War on Gold: A Personal Account
February 3, 2010 by John Myers
“Open up,” demanded a man.
I rose from the breakfast table. It was Sept. 19, 1974. I caught a glimpse of the flashing lights bouncing off the premature frost that clung to our trees.
Three cruisers from the Royal Canadian Mounted Police (RCMP) had converged on our small farm south of Calgary, Canada.
“What the hell is going on?” my father C.V. bellowed from down the hall.
I was 15 and filled with dread, fear and fascination. “The cops are here!”
My old man whipped-open the door. Five RCMP officers and a plainclothes tax agent burst into our home.
At the same moment in Calgary the Mounties and Revenue Canada raided my dad’s offices, his lawyer’s office and his bank branch.
Was my father a kidnapper or a bank robber? Hardly. Yet in the eyes of the government he was something much worse. He was a Libertarian and a gold-bug! Worst of all, he had been buying gold for his United States subscribers at a time when it was illegal for them to own it (more about this in a moment).
That morning agents were hunting down documents on my dad and his newsletter, Myers’ Finance & Energy (MFE). But they couldn’t touch his company, Interpublishing, a bona fide operation in Switzerland paying taxes in Switzerland.
Interpublishing was a legitimate offshore company set up by my dad’s accountants. Interpublishing was not a shell company. In fact it was organized the same way as the Canadian Pacific Railway Company, one of Canada’s oldest and largest public companies.
The Midas Mess
The Mounties were out to get their man. It had to do with Americans buying and owning gold and my dad acting as their agent. This had some in the U.S. Treasury Department very upset.
You see at that time it was illegal for Americans to own gold although most believed the law was unconstitutional, and indeed, the U.S. Treasury had become aware of purchases by U.S. citizens.
Meanwhile gold ownership was fully legal in Canada. So my father had started buying gold for any subscribers that could put cash on the barrelhead; charging only a small commission and storage fee.
C.V. wrote in MFE: “We don’t care if you are Chinese, Burmese, Russian or American. Gold ownership is legal in Canada; put the money on our desk and we will buy you the gold. Your account will be numbered but your corresponding identity will be kept secret in Switzerland.”
After the tax men had recorded every check which had been paid by the Americans for this gold they still did not have the owner’s names. And Washington wanted names.
It turned out they had just the instrument to get them. It’s called blackmail. You see, if the Americans couldn’t come forward to claim their gold it could be held hostage to any assessment the Tax Department might like to issue against my dad.
The hope was that mounting pressure from the gold owners would force my dad and the Swiss company to pay the assessment—right or wrong. My dad said it was like hijacking; the only difference being hijackers held third party lives while the tax men held third party money.
Americans Demand their Gold
Then good fortune shined. U.S. gold ownership became legal on Dec. 31, 1974. This meant that owners could come forward. But it meant much more. For if the claimants identified themselves, the Tax Department, having all the documents and keys, had automatically become the legal custodian to the gold and fully responsible, just as Interpublishing had been, to turn it over to the rightful owners upon demand.
The safety deposit keys and the identification list were sent via Teletype from Switzerland and turned over to the Tax Department. Now the tax men not only had the gold, they had everything, including the responsibility.
At this point they were holding a hot potato. Rentals on safety deposit boxes began coming due. Revenue Canada had to decide if it was going to bill the clients just as Interpublishing had been doing, or if it was going to pay the rentals itself? And what if an owner sent in an order to sell? Was Revenue Canada legally obligated to sell it and forward the check?
Like it or not the tax man was in the gold business.
My father advised all clients to write Revenue Canada demanding that they execute the delivery of their wholly-owned gold post-haste.
The Gold is Freed, the Gold-Bug Imprisoned
Things got pretty hot. The gold owners had to be answered. A huge counting operation was arranged. It included a representative of Interpublishing in Calgary, the company’s lawyers, the Tax Department, officials of the bank and two security guards. All boxes were opened, counted and recorded. In all there was $4 million worth of bullion!
When the count was finished it was found that every claimant’s gold was separately wrapped. Not a coin was missing. None belonged to C.V. Myers or Interpublishing.
Falling prices spurred American owners to action. Through a Calgary law firm they launched an action against Revenue Canada and the individuals they claimed had acted beyond their authority in withholding from them their rightful property.
The deadlock broke in March 1975, when the Supreme Court of Alberta admonished Revenue Canada and ordered the return of each and every ounce of gold to my dad’s clients. No damages were paid: there was not even an apology.
Norman Stone wrote a book about the case titled: Unbridled Bureaucracy in Canada, The Bizarre Case of C.V. Myers.
Stone concluded that Canada’s tax department had acted on orders, not from Ottawa, but from Washington. Furthermore wrote Stone, “The capitulation forced by the court left the taxmen (sic) red-faced, angry and vengeful. Talk among the personnel in the Department was funneled back: Get Myers!”
It didn’t take long. I was finishing up my junior year in high school. The old man and I pulled up to his parking space outside his office in late spring 1975. As we got out of the car door two plainclothes agents blocked his way.
“C.V. Myers?” asked the cop.
“You are under arrest.”
“For evasion of taxes. I must warn you that you don’t have to speak and anything you say may be used against you.”
The cops cuffed my old man right then and there. I was dumbfounded. As the back door on the cruiser was being closed he yelled to me, “Call my lawyers, I am under arrest and on my way to jail.”
Tale of Two Trials
The charge was evasion on $1.8 million in income, exactly the same amount which had been assessed Interpublishing eight months before.
Later that day dad got out on $100,000 bail. But the real cost of urging Americans to buy and hold gold was yet to be announced.
Over the next two years my dad would face two trials. In the first one he was fully acquitted. The second case—a trial de nova (double jeopardy, which was later eliminated by the Canadian Constitution) found my dad guilty and sentenced him to two years plus a day. He was given hard time, especially for a man who was in his 70s.
After my mother died my dad stood over her casket. He was weeping softly as he held one of her hands between his handcuffed two. Behind him stood an impatient corrections officer, telling my dad to hurry, that he had to get him back to his prison cell. He led my dad away just as a young girl started singing my mother’s favorite song: Amazing Grace. My 8-year-old nephew began to sob. Our family mourned in quiet devastation.
But all was not lost. Word of the injustice began to spread. For example the late Congressman Larry McDonald and Congressman Ron Paul urged Ottawa to release my father. And there were editorials in the press condemning the sentence and calling my dad a political prisoner. Colleagues like Richard Russell, Harry Schultz and Jim Dines began writing the Prime Minister and Members of Parliament.
After my dad was diagnosed with liver cancer he was released from Bowden Federal Penitentiary. Less than two years later he died in Loma Linda, Calif., a free but broken man.
Gold had given my dad a sterling reputation, a loyal following and a small fortune. But in the end he paid a terrible price.
What was done to just one individual illustrates what lengths government will go to shut-up its opponents and enforce its will. I know, I was there; a witness to the war on gold.
Yours for real wealth and good health,
Myers’ Energy and Gold Report