USA Coin Album: The Silver Dollars of 1878-1935, Part One

[EZ_E]

by David Lange

 

 

Long considered a nuisance, Morgan and Peace silver dollars have had a tumultuous past and an unusual significance in U.S. history, as David Lange illustrates.

 

In case you didn’t already know it, the Morgan and Peace silver dollars so loved by collectors today were mostly a nuisance in their own time. Only the western states and territories used them in daily commerce, though there is anecdotal evidence suggesting that they likewise circulated to some extent in the South. Most, however, were simply put into storage as soon as they were struck, residing for years within mint vaults and in the sub-treasuries (precursors of the federal reserve banks). When the vaults became full, canvas bags full of silver dollars began to pile up in hallways and working areas within these buildings. It was understood by nearly everyone that the coins weren’t really needed and that they were produced solely to prop up America’s silver mining industry. Since the price of silver bullion nevertheless continued to decline, the only virtue of silver dollars was that their inflationary impact lessened the burden on farmers and other persons mired in debt. Thus, their unlimited production became a political issue during the presidential campaigns of 1896 and 1900.

 

The silver dollars coined from 1878 to 1935 were authorized by three major pieces of legislation and one minor one. The first of these was the Bland-Allison Act of 1878, which mandated that the Treasury purchase not less than two million dollars worth of silver bullion monthly to be coined into silver dollars. The Sherman Silver Purchase Act of 1890 repealed the Bland-Allison Act, but it continued the purchase of silver for dollar coinage in the amount of two million ounces per month.

 

This distinction between dollars and ounces is significant. With a silver dollar containing only about three-quarters of an ounce of silver, and the price of silver having fallen quite a bit between 1878 and 1890, the outcome of this new language was to dramatically increase the number of silver dollars being ordered. The situation only worsened as silver continued its plunge in value during the 1890s, and it was not until repeal of the Sherman Act on November 1, 1893 that the madness ended. Even so, the silver bullion purchased up to that time lasted into 1904, when the coining of silver dollars ceased, seemingly forever.

 

In 1918, however, Congress passed the Pittman Act. Under its terms, more than 270 million silver dollars were melted in 1918-19 and then replaced during 1921-28 with ones coined from newly mined bullion. Were the replacement coins needed for commerce? Of course not, but then the support of western congressmen and senators was necessary for other important bills, so their constituents had to be pacified. Nearly all of these coins languished unwanted in vaults, as had their predecessors. It seemed then that further coining of silver dollars was dead once and for all, but this judgment once again proved premature.

 

The Great Depression of the 1930s saw the adoption of many government measures that seemed quite radical at the time. President Roosevelt’s “alphabet soup” of new federal agencies and legislation included the Agricultural Adjustment Act, which sought to provide relief to farmers devastated by collapsing prices for their products. Tacked onto this bill was the Thomas Amendment, which included a provision for the purchase of silver bullion from American miners at subsidized prices. A subsequent executive order mandated that this bullion be coined into silver dollars, resulting in the brief emission of Peace dollars dated 1934-35. As the coinage provision was completely unnecessary, it was soon repealed. The Treasury responded by revising the silver certificate notes issued in conjunction with the coins so that their stated redemption would be in “silver” rather than specifically in “silver dollars.”

 

This fine distinction in terms was driven home some thirty years later, when a run on the Treasury’s supply of silver dollars began early in 1964. Speculators were lined up around the block at the Treasury’s headquarters building in Washington, DC to buy all the bags of silver dollars they could carry. What kicked off this feeding frenzy was the recent discovery of previously rare issues that could be sold to dealers for an immediate profit. With no new silver dollars coined since 1935, the gradual reduction of the Treasury’s supply had finally culled out all of the common later pieces. As the deepest recesses of the vaults were being exposed, lucky buyers were finding ever more rarities from the Carson City Mint. These were coins that had been extremely rare uncirculated, since nearly their entire mintages had gone into storage decades earlier.

 

Invoking its right to redeem silver certificate notes in silver bullion of any form, the Treasury suspended the payment of silver dollars in March of 1964. Thereafter, until the redemption of silver certificates ended altogether in 1968, those presenting the notes in exchange for silver received their bullion in the form of bars or granules, the latter being used to make exact change. The era of the silver dollar as a circulating coin was over, though a small mintage of 1964-dated pieces was made in 1965 and never released. These coins were subsequently destroyed.

 

Next month, I’ll take a look at the actual usage of Morgan and Peace Dollars in commerce, as well as the role they played in our culture.

 

[kryptonitecomics]

Nice!!!!! I was fortunate enough to meet David at last years NGC Luncheon....nice guy.....and he might just know a thing or two about coins

 

 

[bsshog40]

Cool info Victor!

[RWB]

David Lange's knowledge and perceptions of US coinage are astounding. The hobby and business is very fortunate to have him involved!

[rrantique]

Great post Victor. (thumbs u

[DWLange]

Thanks to all for the kind words. You can receive my column each month by signing up for the NGC online newsletter.

[EZ_E]

You're quite the historian, Dave, who can write an article and make a point without it being as dry as sawdust.

 

I'm looking forward to part 2. (thumbs u

[DC Dawg]

Thanks to all for the kind words. You can receive my column each month by signing up for the NGC online newsletter.

I thought EVERYONE was a subscriber of the NGC newsletter!!

 

But it's a good point... Dave writes some great stuff and you can get it earlier than others if you subscribe to NGC's online newsletter!

 

(I am not employed by Dave or NGC... but I am a fan of Dave's work!)

 

Scott

[EZ_E]

[font:Comic Sans MS]USA Coin Album: The Silver Dollars of 1878-1935, Part Two[/font]

Posted on 2/15/2008

David Lange shares some more surprising revelations about Morgan and Peace dollars (including why the most worn coins don’t come from the mints you might expect).

 

Though the survival rate of uncirculated Morgan and Peace dollars is disproportionately high when compared to other United States coins of the same period, there’s no disputing that the cartwheels did circulate. There are countless worn pieces to prove it. Anyone who collects this series will come to learn, however, that the distribution of worn versus unworn coins is not at all balanced. Certain dates are often found heavily worn, while others are nearly unknown in anything less than About Uncirculated condition. Certain patterns emerge as one studies this distribution, and these include a few surprising results.

 

Given that silver dollars were most likely to circulate in the West, where paper money was not in general usage before World War I, it’s natural to assume that most of the heavily worn silver dollars would carry “S” or “CC” mintmarks. Surprisingly, among the silver dollars most often seen uncirculated are the San Francisco Mint coins of 1878-82 and the Carson City Mint dollars of 1878-85. Those that did enter circulation seemed to have stayed there for decades, so collectors have a broad range of grades for these issues.

 

One would expect the silver dollars coined at Philadelphia to all be pristine, since there was little circulation of silver dollars in the Northeast, yet dates such as 1878 through 1886 are readily found worn. Other Philadelphia issues, 1897 being an example, are rarely seen with any but the lightest wear. In the Peace series, dates that are common uncirculated but rare in well-worn condition include the “P” Mint dollars of 1925-27.

 

The real surprise is how many New Orleans silver dollars are quite heavily worn. This applies to nearly every “O” Mint dollar in the series, with the notable exceptions of 1898, 1903, and 1904. These three dates were very rare uncirculated until numerous bags of each began to surface among the silver dollars being distributed by the U.S. Treasury in 1962. This set off a mad dash by speculators to buy as many bags of Treasury silver dollars as possible, until their distribution was cut off altogether in March of 1964.

 

That episode explains in a nutshell why the degree of wear found on silver dollars has little to do with their mint of origin. Being mostly unneeded at the time of their striking, silver dollars were stored wherever space could be found for them, and they were periodically moved to other locations. When a regional demand appeared for silver dollars, such as at the December holiday season, the coins distributed to banks in a particular area may have come from any one of five mints. This is in contrast to the more useful denominations of coins that were typically distributed within the region served by a specific mint. There was no rhyme or reason when it came to which date/mint combinations were released to circulation. They also were not released on a first-in, first-out basis. Thus, now common issues such as 1923(P) and 1925(P) were once considered key dates in the Peace dollar series until many bags of them were released during the 1940s. It’s fun to look through old numismatic magazines to see how the perceived rarity and value of each issue changed in response to the latest releases.

 

The typical circulation of a silver dollar in the East and Midwest was quite brief. Usually given as a holiday or birthday gift, a fresh, uncirculated silver dollar may have been carried around for a few weeks before being spent, whereupon it immediately went to the bank with that day’s receipts and then languished in storage for years more.

 

In the West, however, silver dollars were actually used in daily circulation. I know this from firsthand accounts provided me by my mother, who used to find the receiving of silver dollars in change from the grocery store quite a nuisance during the 1950s. Silver dollars were even more common in the rural West, but they were most prevalent in the gambling casinos of Nevada. There they survived in daily use until 1964-65, when customers ceased cashing them in at the end of play and simply took them home. The casinos attempted to discourage such hoarding by filing off the dates of their dollars, but this short-lived practice couldn’t change people’s perceptions that the coins would soon be worth more than face value. Of course, this is exactly what happened, as their silver value quickly exceeded one dollar.

 

Among the more unusual items that collectors may encounter are silver dollars having round stickers of varying sizes applied to them. In most instances, these are advertising pieces and the stickers describe some local business. This was a more economical alternative to the older practice of counterstamping coins with the name of a particular product or business establishment. Another reason for applying stickers to silver dollars was to reveal the impact of a particular industry on the local economy. A large employer would pay its workers in silver dollars marked with the company’s name so that merchants and politicians would be impressed by how much money was being spent by that block of employees. Less often seen are dollars that have had similar messages applied to them with colored ink.

 

David W. Lange's column, “USA Coin Album,” appears monthly in Numismatist, the official publication of the American Numismatic Association

[bsshog40]

Very good Article there David. Thanks for posting Victor. To add also, I do subscribe to the NGC newsletter but I haven't received anything from them in a while.

[BillJones]

The only thing that I would add is that there was one more really bad provision that was in the Sherman Silver Purchase Act. The silver were paid for with currency that could be redeemed in either silver or gold. Although the silver producers loved to talk about how great silver was, their mommas did not raise any fools. Given the chance to redeem the notes in silver or gold, they went for the gold. As a result the gold stocks that the U.S. Government had on hand fell to dangerously low levels. At a time when a government’s financial health was measured by its gold holdings, this was serious business. It was one of the contributing factors to the Panic of 1893, which was a very nasty economic depression.

 

President Grover Cleveland called Congress into a special secession to repeal the Sherman Silver Purchase Act with the belief that it would solve the depression. It didn’t right away, and if they had been taking polls in those days, President Cleveland’s approval rating would have been lower than George Bush’s numbers are today. In the 1894 off-year Congressional elections, the donkey party lost a record number of seats. In fact the turn around was the dramatic that any political party as suffered in U.S. history.

 

BTW I am generally an admirer of Grover Cleveland, but he was ill-equiped to deal that crisis.