Use of Silver Coins in the United States
by Staff Editor
It’s been well over a quarter of a century now since the United States government has made silver coins for use in daily commerce. Prior to that there was at least a small amount of silver in the half-dollar coin, and at one time all coins from the dime to the dollar contained a full measure of ninety percent pure silver. The metal is so scarce and valuable today that it doesn’t seem possible that it ever could have been that plentiful.
Last Year of Silver Coins
It was in 1970 that the last silver half dollars were made. They contained a mixture of silver and copper for a total amount of only 40 percent of the precious metal, but even that was a significant amount that made the coins worth nearly 50 cents in bullion value. After that all United States coins from dime to dollar were made of clad material that contained no silver whatsoever. The outer layer of coins is a copper-nickel alloy, while the center part is made of pure copper.
Value of Silver
Prior to 1960, when the old solid silver coins were in circulation, nobody thought much about the value of silver in them. For many years the price of that metal was about 37¢ an ounce, which meant that the face value of each coin was far in excess of the silver content. It wasn’t until the early 1960s that the value of silver began to escalate to the point where it came close to the face value of the coins. The critical turning point was $1.29 per ounce where the melt value, and the face value became equal.
Even when the price of silver bullion did hit $1.29 or more in 1964 and 1965, few people bothered to think about saving them from circulation. It simply wasn’t worth the effort to find a way to melt them and recover a few cents profit for the effort. When the price of silver began to move up into the range of $1.50-$1.75, more people took notice of what was happening. Then when the government stopped making 90% silver coins in 1965, everyone took a new look at their money. Something was happening and those in the know began to accumulate as many of the old silver coins as they could find.
From 1965 to 1970 the price of silver rose steadily to the point where bullion dealers were paying a premium of about 5% over face value for all pre-1965 coins. As little as that seems today, it made looking for the old coins a worthwhile effort because they were so plentiful. Not everyone realized how easily the game could be played. The informed simply had to buy bags or rolls of coins from banks, sort through them, and turn in the silver pieces for cash and a quick profit.
Things changed dramatically in 1979 when the value of silver began to soar from the effects of inflation and the pressure of speculators. By then nearly everyone was cognizant that old silver coins were worth a premium. In the period from 1978 to 1980 the value rose steadily to a dazzling high of around $50.00 per ounce. Refiners were paying three or four times face value for all the silver coins they could acquire and nearly every old coin was pulled from circulation. Since 1980 it has been all but impossible to find any silver coin still in use. Since then the value of silver has leveled off to reflect current demand economic conditions, but the coins that were melted in that holocaust are gone forever. The world was quite a different place when silver was valued at only 37¢ an ounce, but there are interesting comparisons with the prices of everyday items then and today, where the price of silver has almost doubled in 3 years to around $9.34 per ounce. Perhaps the most revealing is the minimum wage which was, curiously, right around 40¢ per hour in pre-war America and is around $5.50 today. A pack of cigarettes that once cost about 20¢ is now over $4.00, and a loaf of bread at 15¢ is now $2.50. As a general rule-of-thumb, unskilled wages are still pegged at about one ounce of silver, and just about everything is priced at ten times what it was back in the days of cheap silver.
Remembering those “good old days” can be both exasperating and comforting when one thinks about the price of everyday items today. Can an automobile really be worth $20,000.00 now when a similar one cost only $1,800.00 years ago? Or can the value of a house, or wages really be worth ten times what they were in the past? No question about it, inflation is here to stay. The only thing that is really constant is the price of gold and silver which always seems to remain relative in value to everything else. Realizing this somehow makes the $40.00 cost of a restaurant meal a little easier to accept when we look back on paying only $3.00 for the same treat years ago.
Silver Coins Today
In checking through your pocket change you will probably notice that there are no pre-1965 coins left, and it is even an oddity to find a pre-1971 half-dollar with any trace of silver in it. A few 40-percent silver coins were made for collectors in 1976, but the Mint only sold those in sets, and none were placed in circulation. Any silver coins that you acquire today will no doubt have to come from some that have been saved for the past quarter century by dealers or collectors. You can, however, often find old clad coins that date back to the end of the silver era and as long ago as 1965 or thereabout. And while they do not have the same value as their predecessors, they are fun to reflect upon as mementos of the transition from the past.
History of Silver Coin Circulation
Were there always silver coins in circulation prior to 1965? The answer to that is sort of yes and no. The United States Mint has been making silver coins since it began producing coins for this country in 1794. During those 200-plus years there have been several turbulent times when the value of silver and gold has risen to a point where the melt-value of coins was more than the face value. At those times the government has usually curtailed production, or in some cases reduced the amount of precious metal in the coins. In some of those emergencies the public simply had to do without a ready supply of coins and rely on paper currency, privately made tokens, or barter.
The foremost period of critical shortage of gold and silver coinage came during the Civil War. All precious metal coins were hoarded, and they were only sold or used at a premium value. The government could not keep up with production, and the cost of the metal was greater than the face value of the coins. As an example in 1862 only 12,000 silver dollars were produced, and in 1863 only a scant 14,000 dimes were made. Today, nice examples of either of those coins are valued over $1,000.00 each.
The silver coins most familiar to this generation are the dimes, quarters and halves made just prior to the time that it became no longer practical to use the metal for coinage. Roosevelt dimes and Washington quarters still look very much like they did when they contained a full measure of vale, but the old Franklin half dollars became obsolete when they were replaced by the Kennedy halves in 1964. That was the last year that any 90-percent silver coins were made for circulation. The 40-percent silver half-dollars were made from 1965 through 1970, but everything since then has been copper-nickel clad.
If you haven’t seen any half-dollars in circulation lately, it is only because you live in an area that doesn’t ask for them. Some communities seem to use lots of them, but in other places they are seldom encountered. Usually they can be ordered through any bank by anyone who seriously wants to have a few. The leading use of clad coins is by the vending machine industry where half dollars, quarters, and even Susan Anthony dollars see daily circulation. With the passing of silver coinage from circulation we have witnessed a unique era in American history. It is an event that will perhaps never be repeated, but something that will be long remembered by the tangible evidence of the few old coins that remain in the hands of museums, hidden hoards and collections.
Courtesy of The American Historic Society Coin Collector's Newsletter
