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The Great Coin Shortage of 1964

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How many of you witnessed the great coin shortage of the 1964?

 

I'm reading Roger Burdette's Peace Dollar book, and I find it interesting that the coin shortage of 1964-5 kept the Mint from striking Peace Dollars for (limited) circulation. I've read other accounts of a speculative frenzy not only in US coins, but also Canadian and others. As quickly as the US and Royal Canadian Mints churned out coins, speculators and collectors bought them in rolls and bags. The demand got so great even base-metal cents and 5-cent coins were snapped up.

 

I wasn't around back in those days. Does anyone have any first-hand accounts of either the shortage or the frenzy that caused it?

 

I picked up a 5-set package of Australian coins from 1966, and now I wonder if the American collector who ordered them was speculating in their "investment" potential.

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The problem wasn't really collectors so much as the mint itself.

 

They announced as early as 1961 that coinage demand was depleting the 3 1/2 billion ounces of silver the government had stockpiled and the price would go up when they had to purchase silver. This got the general public hoarding silver and a little bid of the hoarding spilled over into the base metal coins. At the same time the economy was strong and improving which inevitably results in people being slow to redeem stashes of coin so the systemic hoarding was increasing. If all this weren't enough, coins actually had real value in those days so increasing numbers of vending machines were going into operation.

 

It's true that collectors stood out like a soar thumb because coincidentially there was a massive speculation in modern rolls, sets, and bags. A '50-D nickel bag got up to over a half million dollars in today's money and people were buying and selling brand new coin. But collector activity was a tiny part of the problem as proven by the collapse in mintages of cents and nickels in 1965 and still soaring mintages of the silver coin.

 

The mint would have been better advised to simply start planning for a switch to base metal rather than announcing a shortage which most took as the starting gun.

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I was around, but all of 3 years old at the time. I do however remember Kennedy being shot vividly and not understanding what was going on other than everyone was upset and my mother crying.

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I was a kid then and can confirm that the Mint announced there was a silver shortage and they bounced around with several different ideas before settling on clad coins as were struck. The general public felt that silver content was required and snapped up everything they could get their hands on. Within a few months as I recall there were zero silver coins to be found in change.

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In 1964 a carton of milk in the school cafeteria was 2¢ (the remainder was subsidized) and I don't ever remember there being a shortage of cents. However, I do remember grocery stores putting out little signs or asking, 'If you can, please pay with exact change' because they could not get the required change needed for transactions from the local banks. It was as though the banks were rationing out coins because there just wasn't enough to go around.

 

The half dollars just disappeared altogether during this time frame, so the quarters

became king of the 'til'

 

Beer was 20¢ per glass, so a dollar bill laid out on the bar got you 5 regular beer glasses, so the change and the dollar bill would both eventually end up in the cash register. Rue the person who picked up their change and walked out. The tax that would have screwed everything up was paid on the keg long before it was even tapped. Every now and then a quarter was dropped into the Juke Box and 5 songs could be played. Usually the first song was over by the time you decided on the 5th. Someone at the bar would see you heading towards the Juke Box and yell out a number...like B-17 If you couldn't find anything worthy, you played their shout out.

 

The only place that didn't seem to ever run out of change was the US Post Office...they had an inside connection.

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The price of silver was a big motivator for people to set aside any high silver content coin. Look at the mintage of the 1865 Washington Quarter, that record still has not been surpassed. That shows that the Mint could ramp up production on that or any coin if the need was there.

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To Woody----You are as old as the hills---Just like me.

 

Yep, I also was 17 in 1964. My Dad had an in with the banks in Baltimore. The "new" Kennedy halves came in----but Dad could only get two of them like everybody else. I remember treating those halves like gold coins. We all believed that silver coinage was just going to be a thing of the past. Everyone in America seemed to want the new silver Kennedy half.

 

I can remember in 1965----sitting with my family---and sreaming at the U.S. mint for taking out the silver from my half dollars. I was SOOOO MAD that I only saved a couple of the newer coins. It was my opinion that the government was trying to RUIN coin collecting.

 

By the time 1967 got here----all the silver dollars were gone too. My Dad got me 21 silver dollars from the bank for my 21st birthday. I remember him handing me those coins and telling me "NOT" to look for any more. Course, back then, he was still getting a silver dollar in exchange for a paper dollar.

 

As kids, we just "NEVER THOUGHT" that things would ever change like they did. We just were happy to fill the holes in our Whitman blue books---out of pocket change---"NEVER" thinking that one day the circumstances would be different. Back in 1964---I stopped believing in the "government". Bob [supertooth]

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There appear to have been several causes tfor the shortage of coins. (The shortage was real in the sense that many places that needed coins found them hard to get; but other places had more than they needed.)

 

Increased commercial demand for silver

Removal of Treasury’s fixed selling price of silver.

Inefficient distribution of coins by mints and FRBs

Growing economy with large increase in coin-operated devices

Greater use of dime and quarter (versus cent and nickel in previous decade)

 

President Kennedy stopped the Treasury Dept sales of silver at fixed prices on November 28, 1961. This permitted the price of silver to float on the open market and it quickly rose above the monetary value of $1.2929 per ounce. Treasury orders prohibited melting of silver coins were issued. This had the effect of increasing hoarding by ordinary citizens. Since silver certificates were redeemable in silver dollars, many were exchanged for coins, thus drawing down the silver dollar supply. In March 1964 redemption of silver certificates was limited to silver bullion (which was an option under the Gold Redemption Act of 1934), and issuance of silver certificates was halted. Redemption of silver certificates for bullion continued until June 24, 1968.

 

Collector’s Impacts:

Fad of collecting coins by rolls and bags

Huge expansion of coin collectors as baby boomers, age 10-13, gained access to WWII souvenir coin caches and became more aware of US coins.

Availability of nation-wide advertising and promotion of coins through hobby media and commercial activities (bill stuffers, etc.)

 

The role of coin collectors was incredibly small, but the Treasury and mint recognized they could use collectors as a scape goat by publicizing the negative hoarding aspects and letting newspapers do the rest. (Documented in NARA files.)

 

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While silver coins did become increasingly scarcer starting in 1966 (the first clads were not issued until late in 1965), it's a myth that silver disappeared overnight. I was a young collector then, and I was still able to get a certain percentage of silver coins in change through the middle of 1968. After that time, however, silver did disappear very quickly and was pretty much gone by the end of the decade. Perhaps the publicity about silver certificates being non-redeemable after June of 68 prompted the general hoarding.

 

By that time silver coins were worth slightly over face value, but it was not enough that any dealer would yet pay me over face for them. I remember trying to sell my local coin shop my nearly complete set of circulated Washington Quarters around 1971, during a several-month drop in the price of silver, only to have them rejected. I simply rolled the coins and brought them to my parents' bank. The cashier was reluctant to take the roll, because it looked shorter than normal. I had to explain to her that it was because the coins were silver and heavily worn. Only then did she accept them, and I walked away with a crisp sawbuck with which to buy a nice Barber Half in Fine, my collecting passion at the time. No collector would do such a thing today, but silver was not consistently bringing a premium at the time, and I needed coin money for my addiction.

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David is quite right!

 

The withdrawal of silver was gradual and took about five years. The FRBs also began pulling silver dimes and quarters from circulation in the late 60s as production of clad coins allowed circulating pieces to be removed. Halves didn’t circulate much, and bank rolls were mostly 90% silver.

 

I recall there was so much silver in circulation that I could not afford to put it aside.

 

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I was around, but all of 3 years old at the time. I do however remember Kennedy being shot vividly and not understanding what was going on other than everyone was upset and my mother crying.
i was 3 and a half 11/63 when kennedy got shot and remember it vividly as well. schools were let out as well then. i remember the kennedy half coming out the next year as well
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Collector’s Impacts:

Fad of collecting coins by rolls and bags

 

This one fascinates me. Our current trend continues to be registry sets and grade rarity, so to see something so different makes one wonder what collecting means.

 

A collector now wonders, "Why would anyone buy coins in bulk without even checking to see if they have full steps (full band lines, full heads, etc.)?"

"Why would any sane collector buy raw coins?"

"Why would anyone buy coins sight unseen?" (i.e. when buying sealed bags or rolls)

 

40 to 50 years from now collectors will wonder why anyone would pay $500 for a common coin just because it was a few grade points higher than one they could get for $50 or so or why anyone would pay hundreds (even thousands) for a top-pop coin that could be had in unc for face value.

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40 to 50 years from now collectors will wonder why anyone would pay $500 for a common coin just because it was a few grade points higher than one they could get for $50 or so or why anyone would pay hundreds (even thousands) for a top-pop coin that could be had in unc for face value.

 

You don't have to go that far into the future.... :) To me, the whole registry thing and “top pop” is nutz.

 

Back then, people bought and sold bags and rolls just like they do modern commems. Coin World had hundreds of ads offering to buy and sell bags of new and circulated coins, including coins from vending machines. (The circulated bags were searched for "keepers.")

 

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Having delivered newspapers as a 12 year old in 1963, I saw many silver halves and quarters weekly. I would say that silver coinage was common until '67 or '68 and faded rather quickly after that.

I too, remember vividly the assassination of JFK. I was released early from junior high and came home to find my little old Finnish grandmother crying in front of the TV. My parents were in Washington DC. Pic shown is my dad w/ JFK. Autographed before heading to Dallas and postmarked at the White House PO on 11/22/63

 

 

 

 

 

 

 

 

jfk4.jpg

 

jfk3.jpg

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A collector now wonders, "Why would anyone buy coins in bulk without even checking to see if they have full steps (full band lines, full heads, etc.)?"

"Why would any sane collector buy raw coins?"

"Why would anyone buy coins sight unseen?" (i.e. when buying sealed bags or rolls)

 

The answer to this one is that collectors and dealers were not "micro grading" coins the way we do today. In the early to mid 1960s when I started paying more than face value for coins, there were two Mint State grades, "Unc." and "Gem." Even Dr. Sheldon only had three grades for large cents, MS-60, 65 and 70. The concept of have 11 Mint State grades would have made as much sense then as having a home computer.

 

The guys who were buying and selling rolls were most interested in whether or not a previous owner had filched a coin thus making it a "short roll." Since many of the rolls were new coins obtained from a bank, most all of the coins were Uncirculated although for some dates that were badly made from the get-go, like some of the Denver mint Franklin half dollars in the early 1960s, were lucky to grade MS-62. The speculation was that these coins would increase in value because collectors would be making up albums full of BU coins.

 

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One of my memories about the great coin shortage of the mid 1960s was "The Bill to Kill Coin Collecting" that was introduced by Nevada senator, Alan Bible. Bible was angry at coin collectors because he perceived that they were hoarding coins from circulation on pure speculation and hurting the economy. In his state people were still pushing silver dollars into slot machines, and casino owners were having more and more trouble getting silver dollars for their business. This was reason why the 1964-D Peace dollars were struck.

 

The Bible bill called for the Treasury Department to issue a list of collector coins that would been legal to hold. Holding coins that were not on this list carried penalties. He did not tell us how this law would be enforced. In addition coin dealers would be limited to charging only "service fees" to collectors when they sold their coins. Fortunately the Bible bill never got out for a full vote in the Senate, but the hobby magazines of the time called the alarm and urged their readers to contact their senators and representatives. I think I read the article about this bill in "Coins" magazine.

 

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There was little emphasis on quality for most collectors in the 1960s. It was all about completing sets by filling all the holes in one's folders or albums. Since most of the coins were obtained from circulation, the few that could not be found were purchased in similar grades. That's why the values for most 20th Century coins in grades VG-F peaked around 1964 and then fell after one adjusts for nearly 50 years worth of inflation. Only the key dates have held their value or increased in circulated grades.

 

If it were not for the run-up in the price of silver during the past few years, this would be all the more obvious. For cents and nickels, which are lacking that silver boost, it's very plain.

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You do not even need to go back to the mid 60's for roll and bag collecting/hoarding/speculating, check out the prices realized for these two dates, you'll be astonished!

 

1983-D and 1986-D BU Original Rolls of Washington Quarters

 

MarkW, nice photo of Jack...you can tell the narrow dark tie was in style in 1963.

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A collector now wonders, "Why would anyone buy coins in bulk without even checking to see if they have full steps (full band lines, full heads, etc.)?"

"Why would any sane collector buy raw coins?"

"Why would anyone buy coins sight unseen?" (i.e. when buying sealed bags or rolls)

 

The answer to this one is that collectors and dealers were not "micro grading" coins the way we do today. In the early to mid 1960s when I started paying more than face value for coins, there were two Mint State grades, "Unc." and "Gem." Even Dr. Sheldon only had three grades for large cents, MS-60, 65 and 70. The concept of have 11 Mint State grades would have made as much sense then as having a home computer.

 

The guys who were buying and selling rolls were most interested in whether or not a previous owner had filched a coin thus making it a "short roll." Since many of the rolls were new coins obtained from a bank, most all of the coins were Uncirculated although for some dates that were badly made from the get-go, like some of the Denver mint Franklin half dollars in the early 1960s, were lucky to grade MS-62. The speculation was that these coins would increase in value because collectors would be making up albums full of BU coins.

 

Thanks for a bit of collecting history.

 

My point is that some collectors now are so caught up in current trends that they can't fathom why anyone would buy bags or rolls of coins (i.e. without going through them to cherrypick varieties or choice grades). In the future similarly myopic collectors will marvel over micrograding, CAC stickers, and other norms of our day.

 

Now that chopmarked coins are certified they are considered collectible, but when I first started collecting them most collectors I spoke with considered them "damaged" coins in the same category with tooled or whizzed coins. A collector from 20 years ago would shake his head as he looked at my collection of crappy, "problem" coins and probably pity me. It's good to keep in mind that future generations will pity us and think us foolish.

 

My dad picked up two cent pieces, commemorative half dollars, half dimes, and all other kinds of wonders from change in Denver in the mid to late 1940s. It amazes us to think of this now, but maybe future generations will wonder why we didn't pull certain coins that are in circulation now.

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