There’s a fascinating romp through the history of U.S. coinage in Coins that Go Clunk at The American that held even a few surprises for someone like me, who is pretty familiar with the whole American progression from sound money to a pure fiat currency.
Author Alex Pollock gets to the first surprise in his first sentence in the little known (and ironic) Golden anniversary of the move away from silver coins that has led to the one dollar silver coin below being worth about twenty times that amount at coin shops (it’s still only worth a dollar at a bank where, as I understand it, they must accept it as legal tender).
The year 2014 is a little noticed 50th anniversary: the anniversary of the disappearance of U.S. silver coins from circulation in 1964. In that year, the American people decided that silver was probably going to be a better store of value than paper dollars, regardless of the pronouncements of the central bankers and politicians of the time. The people were right. At silver’s year-end 1960 price of 91 cents an ounce, the 0.77 ounces of silver in a silver dollar had been worth about 70 cents. But by late 1963, it was worth a dollar. Today, with silver at approximately $20 an ounce, the silver in a silver dollar is worth more than $15. (Silver has been as high as $49 an ounce.)
Up to the 1960s, American dimes and quarters (as well as half-dollars and silver dollars in those days) rang when you dropped them on a table. Now they go clunk. This change from coins made of silver, it might be said, is of little practical importance. Yet it symbolizes a profound shift in the behavior of the U.S. government with respect to money, a precursor to the immensely destructive Great Inflation of the 1970s.
Long before the 1960s, all the gold coins and bullion of American citizens had been confiscated by their government under its diktat of 1933. At the same time, the same government defaulted on the bonds it had promised to pay in gold. It took the extreme, indeed despotic, step of making any possession of gold coins or bullion by American citizens illegal and a punishable, criminal offense! It became harder for Americans to protect themselves against money printing. This law, which today is hard to believe was real, lasted four decades, until 1974.
Silver certificates, the collapse of Bretton Woods, and a host of other topics are covered in a report that is well worth reading in its entirety, even if you think you know the whole story.
Another thing I didn’t know was that the 1965 coinage act was the first fundamental change in U.S. coinage since 1792 – during George Washington’s first term as the first president.