Average circulation life of US silver coins 1 1

[RWB]

A common question is, "What was the average circulation life of US silver coins?"

 

This was an important statistic for the Mint Bureau and they conduced several abrasion tests as well as collecting large quantities of coins from circulation for weight analysis. (This was in addition to the usual millions in used coin normally reviewed each year.) Other world mints did much the same but the US Mint was much more careful about the quality of circulating coins than other countries. After all, until WW-I US coins were in common use in Canada and several Central/South American countries.

 

The overall average was from 20 to 25-years until silver coins had to be withdrawn and recoined due to excessive loss of metal. Large denomination silver lasted longer than small denominations pieces, mostly because small coins changed hands more frequently than half dollars or dollars.

 

Obviously, there were exceptions such as bust halves, and when circumstances favored government or private accumulation and/or overproduction.

 

Modern clad coins last longer - approximately 50 years - and here the problem is less that of wear than of damage, loss and other non-monetary attrition.

 

This is just a little comment for future reference by collectors. (No -- there will not be a book about this.)

[DWLange]

I can verify that wear rate from my own experience. When I began collecting from circulation in 1965, 10-year-old dimes typically were no better than Fine, while 20-year-old dimes were apt to be VG or less, and 30-year-old dimes were AG or less. I believe the Treasury not as diligent in removing excessively worn coins in the 1960s as in it had been decades earlier, as there were a lot of dogs.

[cladking]

There are a lot of confounding factors. Clad quarters probably do last nearly 50 years now but in 1965 they only had a 30 year life expectancy. Old quarters today are a little more likely to be lost and destroyed than new quarters.

 

In the old days high grade coins were likely to be removed from circulation by collectors. Many circulating coins would sit out for years at a time in storage or in piggy banks.

[Conder101]

Also in the 60's the let the Treasury let the dogs stay in circulation because there was a severe coin shortage. It made more sense to let the dogs stay and add to them than to withdraw and replace them with new. A "dog" coin was still another coin in circulation.

Edited February 13, 2016 by Conder101

[cladking]

 

The overall average was from 20 to 25-years until silver coins had to be withdrawn and recoined due to excessive loss of metal. Large denomination silver lasted longer than small denominations pieces, mostly because small coins changed hands more frequently than half dollars or dollars.

 

 

I believe more accurately the life expectancy was in the 25 year area for dimes. Life expectancy is composed of much more than merely how much wear a coin gets. Many coins are damaged and many are lost in fires and flood while they're still almost brand new. Back when silver circulated collectors removed coins for collections. Coins were used in science experiments and fraudsters might chemically remove metal to make such compounds as silver nitrate and then the coin would have to be removed from circulation. They were used as fuses and lost under the woodwork. They were left in old autos under the seat cushions when it was cut apart.

 

But no dime would wear out in only 25 years in this century. In 1957 there were no Barber coins in circulation but this was obviously because they had been removed by collectors. '16-S dimes and half dollars circulated freely despite having lower mintages than many of the Barbers they replaced and this despite the "special" mintmark. Of course they were getting quite heavily worn but one must assume these issues in nice condition were specifically targeted by coin collectors. '16-S dimes were really pretty common and they could be found as nice as nearly G.

 

The government has always been loathe to take coin out of circulation for recoining because there are substantial costs involved not the least of which is that the coins are always underweight. They'd prefer to leave it circulate until it is lost or destroyed. In those days 90% of the old quarters lacked their dates but the government certainly wasn't retrieving them for recoinage. These quarters simply accumulated in circulation because collectors had no interest in them. The government is even slower to pull bad clad out of circulation because there's no precious metal in them. In the last five years they seem to have increased their diligence in this matter but it's a costly exercise for them nonetheless.

 

The rate at which coins become too worn for circulation is highly dependent on definitions but no coin was really worn out in only 25 years but the definitions of the US mint or FED. Perhaps somewhere in the 19th century but not in the US in the 20th.

[cladking]

I can verify that wear rate from my own experience. When I began collecting from circulation in 1965, 10-year-old dimes typically were no better than Fine, while 20-year-old dimes were apt to be VG or less, and 30-year-old dimes were AG or less. I believe the Treasury not as diligent in removing excessively worn coins in the 1960s as in it had been decades earlier, as there were a lot of dogs.

 

Most of the silver in circulation in 1962 ended up being pulled out by the general public over the next six years. You can see this by the typical condition of "junk silver"; There are lots of coins like AU 1956 quarters in the bags because they quit wearing when they were pulled. But during this entire period collectors were culling off the best coins. As the absolute number of silver and old coins fell collectors pulled out the least worn issues and better dates. This caused the coins in circulation to appear to age prematurely. By 1965 all the buffalos had been pulled out except the dateless issues. In the summer of 1968 the FED began removing silver and recovered about 35% of all the silver that had been in circulation in 1962 by the summer of 1969. I use the date "1962" as a benchmark because that was when the FED and mint began talking about running out of silver and the general public took it as the starting gun for grabbing the silver. you can see this in the mintages compared to increase of GNP of the time. Part of the reason for the coin shortage may be some people appear to have just started saving all their coins though this is speculation.

 

These were bleak days for coin collectors because the entire US government was at war with coin collectors and had gutted the coin market. Then to add injury to injury they replaced real coins with the clad garbage that was not only ubiquitous but was going to have the same date forever. All the real coins were gone and replaced by junk.

[cladking]

A common question is, "What was the average circulation life of US silver coins?"

 

This was an important statistic for the Mint Bureau and they conduced several abrasion tests as well as collecting large quantities of coins from circulation for weight analysis. (This was in addition to the usual millions in used coin normally reviewed each year.) Other world mints did much the same but the US Mint was much more careful about the quality of circulating coins than other countries. After all, until WW-I US coins were in common use in Canada and several Central/South American countries.

 

The overall average was from 20 to 25-years until silver coins had to be withdrawn and recoined due to excessive loss of metal. Large denomination silver lasted longer than small denominations pieces, mostly because small coins changed hands more frequently than half dollars or dollars.

 

Obviously, there were exceptions such as bust halves, and when circumstances favored government or private accumulation and/or overproduction.

 

Modern clad coins last longer - approximately 50 years - and here the problem is less that of wear than of damage, loss and other non-monetary attrition.

 

This is just a little comment for future reference by collectors. (No -- there will not be a book about this.)

 

Your posts have been a real eye-opener for me about the high rate at which the government did recoin silver. They do recover significant percentages of their own coinage a little at a time and in massive operations like in '68/ '69. These latter coins were quickly melted into huge round rods of 90% silver and ended up in the strategic stockpile. They were probably all refined into 1000 ounce bars by the 1990's and most have since been "consumed" by industry.

 

Tracking the huge amount of silver may be impossible though, and it wouldn't have all suffered the exact same fate.

 

 

[RWB]

The quantities of coin cycled through the FRBs and mints was tremendous.The cost of recoinage was viewed by Treasury as a cost of maintaining the economy and integrity of the currency. Activities of coin collectors as a group were trivial. Throwbacks by non-collectors were commonplace, but also minor for most denominations.

 

Circulation life calculations were averages of attrition and the US numbers were tested several times.

[cladking]

Activities of coin collectors as a group were trivial.

 

The effects of coin collectors on 1962-D dimes are trivial. The effect on clad quarters is far far less.

 

But the effects of collectors on 1909-S VDB cents was sufficient to eradicate them from circulation by the end of WW II. Collectors wiped out every non-cull full date buffalo nickel by 1963 and all the partial dates by 1965.

 

Every coin in circulation used to pass through a collector's hands a couple timnes a year and anything of interest was not respent. Now days all coins pass unnoticed and unless they are silver circulate freely. People remove silver and silver no longer works in most vending machines or even some coin counters like Coin Star. Just about everything else circulates freely. A few people pick out bicentennial and others pull 1982 or '83.

[RWB]

There are specific exceptions. Consider the 1883 five cent coin without Cents on the reverse. That is one of the most common Liberty nickels in uncirculated condition today. Publicity implied they would be recalled and thus become very valuable.The same applies to 1909 VDB and S VDB cents. But they are tiny bumps in the data with no meaningful impact overall.

[GoldFinger1969]

RWB, if so many of some types of coins didn't circulate, why did the mint make so many ? I am thinking of the Saint Gaudens and Liberty Double Eagles, especially later in each's production life.

 

If the bulk were used to do balance-of-payments transfers overseas, why not cut back on the mintage and make larger, easier to produce big gold bars ? As currency took hold, I would think the dropoff in circulation became apparent to mint officials comparing how many actual gold coins were used in 1855 vs. 1880 vs. 1900 vs. 1925, no ?

Edited February 15, 2016 by GoldFinger1969

[Conder101]

Eventually they did just that. But in the 1800's people preferred a recognizable coin over an anonymous bar. Eventually it was realized that gold coins suffered more for abrasion losses in shipping than bars did. Once they figured that out overseas paymants switched to bars and the coinage of the big gold coins declined.

 

A similar thing happened with silver. In the 1870's - 1890's the government was buying up silver making it into dollars, then putting the dollars in the vault and using them as backing for silver certificates. It wasn't until the 1930's they that they just started using silver bars to back the certificates and skipped the costly steps of turning the bars into coins.

[RWB]

RE:

“RWB, if so many of some types of coins didn't circulate, why did the mint make so many? I am thinking of the Saint-Gaudens and Liberty Double Eagles, especially later in each's production life.

 

If the bulk were used to do balance-of-payments transfers overseas, why not cut back on the mintage and make larger, easier to produce big gold bars? As currency took hold, I would think the drop-off in circulation became apparent to mint officials comparing how many actual gold coins were used in 1855 vs. 1880 vs. 1900 vs. 1925, no?”

 

To expand a little on Conder101’s response –

Logically, one would expect production of coins, especially large denomination gold, to follow a more-or-less supply and demand relationship. When more were needed for export or circulation, more would be made.

 

Simple.

 

But the US system of making and implementing monetary policy has always been closely connected to political policy, and politics means that the Congress makes laws that do not necessarily make economic sense. It took intense lobbying by New York interests to get an assay office in the country’s largest city, and then more to get Congress to permit large scale sales of bullion bars for export.

 

When the double eagle was introduced in 1850 it was already well known that shipping coins was less efficient than shipping bars, but the legislation was approved for other reasons, not practicality. The DE was an easy way to demonstrate that there was a lot of money in circulation, even though they didn’t circulate a lot outside of western North America. With gold exports and imports being tracked in only the most superficial ways, it was easy to convince foreign investors that the country was rolling in gold.

 

After the Civil War it gradually became obvious that Federally-backed paper could serve most of the purposes of gold coin in domestic use. Congress then decided on the quantity of physical gold required for each dollar of paper gold. To keep the coin in circulation looking good, and to provide for short-term demand, Congress required part of the gold backing paper certificates to be in the form of coins. The resulting Gold Certificates were really warehouse receipts for gold coins and bullion held by the government, but they circulated freely. Thus US Customs Agents preferred Gold Certificates to coin or bullion because they were always full value, and needed no assaying or weighing unlike physical gold.

 

Because Gold Certificates were backed by both bullion and coin, large production of DE was usually associated with increased issues of Gold Certificates. Raw gold from mines and placer diggings in the US, Canada and Australia could aid growth of the US economy only if part of it was coined. But, the coins were, as you note, of only secondary demand for export. There were periods of several months in the first decade of the 20th Century when Treasury deliberately “ran out” of fine gold bars, so that exporters would have to use coins. That helped draw down useless coin stock.

 

By 1910 changes in Treasury policy allowed new gold refined on the west coast to be credited against New York accounts, and the need to ship coins from place to place nearly evaporated. Further, Gold Certificates (face value up to $10,000 each) could be mailed for a few cents from coast-to-coast and then exchanged for bullion in New York (or vice versa).

 

At the onset of WW-I Treasury Secretary McAdoo convinced Congress to reduce the required coin backing of Gold Certificates. But the economy expanded so much that all three mints had to keep cranking out double eagles, even though most Denver and San Francisco production never left Mint custody. Hence the common Philadelphia coins and scarce issues from the other mints. This was the normal situation in the 1920s and early 30s until Congress finally realized how much was being wasted by striking useless gold coins.

 

The above is very brief and kind of rambling, but I hope it will help understand the situation.

 

[Andrew Hart]

I'm surprised that nobody has a bonafide indisputable and easy to find search result for this query because I just got a 1863 libertad that weighs 27 grams of an supposed

original 31.1 and besides the coin being polished which is probably also to blame I think the coin is genuine and passes all of the tests. If anyone has anything case specific to old piesces of 8 or libertad-capped coins please respond because I'd like to know the US Coins answer too!

Stay safe everybody,

  

[RWB]

The United States was an exception in recoining lightweight and damaged coins. Most countries just let the money circulate until nobody would accept it, then paid only bullion content for it.

 

In 1917 (if memory is correct) the Mint accepted all US gold coin on the west coast regardless of condition at full face value. The government lost several hundred thousand but the replacement gold helped maintain confidence in the coinage.

Edited August 16, 2020 by RWB

[Henri Charriere]

On 2/13/2016 at 11:54 AM, cladking said:

 

 

These were bleak days for coin collectors because the entire US government was at war with coin collectors and had gutted the coin market. Then to add injury to injury they replaced real coins with the clad garbage... All the real coins were gone and replaced by junk.

This pretty much sums up why I, with a few exceptions, "stopped out" of coin collecting altogether sometime in the mid-1960s.

Edited August 16, 2020 by Quintus Arrius
Superfluous word

[cladking]

10 hours ago, Quintus Arrius said:

This pretty much sums up why I, with a few exceptions, "stopped out" of coin collecting altogether sometime in the mid-1960s.

The number of serious coin collectors Imploded between mid-'64 and mid-'65 and the number of casual collectors continued to implode in slow motion for five years as the old coins disappeared.  The number of casual collectors continued to erode  until the states quarters were begun.  

The velocity of coins in circulation has continued to drop in the last few years and more dimes are lost than worn out however the FED has apparently begun removing heavily worn clad finally.

Old silver coins are often seen very heavily worn though in other countries they were sometimes circulated until they became unrecognizable.  

 

[Conder101]

One other reason for a preference for fine gold bars for exporting was that if depositied gold was made into coins the depositors would be charged for the copper used to alloy the metal.  then once it arrived overseas it would often be then melted down and made into either fine gold bars, or coinage.  and they would then be charged again, this time a refining charge to remover the copper they had paid to have added to make coins.  Rather then be charged twice they would just ship fine gold bars, which would be accepted at their value upon arrival.

[RWB]

18 hours ago, Conder101 said:

One other reason for a preference for fine gold bars for exporting was that if depositied gold was made into coins the depositors would be charged for the copper used to alloy the metal.  then once it arrived overseas it would often be then melted down and made into either fine gold bars, or coinage.  and they would then be charged again, this time a refining charge to remover the copper they had paid to have added to make coins.  Rather then be charged twice they would just ship fine gold bars, which would be accepted at their value upon arrival.

The quote is a little misleading.

There was no double charge for refining or copper alloy. Gold was shipped as payment and had a new owner on receipt. Certified fine gold "good delivery" bars were preferred because they were accepted as marked, were easier to pack and ship, simpler to weigh, and lost less metal during handling than coins. Details of obtaining these bars varied from time to time, so there was no entirely consistent process until after 1873. Bars were not a standard mint product until after 1854.

In the latter 19th century, depositors of gold were paid for the fine gold content by check, transfer order on New York, currency, or in coin. There were no deductions or additional charges because the Government bought the gold outright, and could then refine it as needed for coinage. If a depositor wanted fine gold bars in payment then a refining charge was added to cover this cost. Details of this type of transaction kept changing as Treasury tried to keep refining in line with covering costs but also not undercutting private refiners. Low fineness gold was also subject to a refining charge, and gold contaminated with iron faced an additional "toughening" charge. There was also a period of about 20 years where the mint kept any silver in a native gold deposit but did not pay the depositor for it. The silver was treated as compensation for refining.

Here's a short letter about silver bars and refining charge. There are many more - all equally exasperating and confused.

For export, the customer normally went to the NYAO and bought either fine bars or gold coins (DE usually). They paid face value for the coins and gold value plus a small charge for the bars. They also paid for kegs and packing, transport to the ship and other expenses, plus insurance. On receipt, the new owner used the bars or coin as they wished. If the coins went to the government in payments then it was usually melted and recoined as local money. In Europe, except for Britain, this was a direct melt-recoin process with only routine fineness checks. In Britain, US gold coins went to a private refiner who would add sufficient pure gold to reach 0.917 standard. This was sold to the Bank of England who then sold the bars to the Royal Mint. This refining step led to British complaints about California gold being tainted with iridium, osmium, and platinum in 1850. It eventually led to improvements in US Mint refining processes and other changes.

 

Edited August 19, 2020 by RWB