LITMIR.BIZ

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early in 1865. American nickel interests seized upon this circumstance to fight for a new three-cent coin for redemption of the paper money. A law was quickly passed and signed by President Abraham Lincoln on March 3, 1865, providing for a three-cent coin of 75%-25% copper-nickel composition. The United States then possessed two types of three-cent pieces, although neither was seriously needed. The nickel three-cent piece was struck continuously until 1889, the silver three-cent piece until 1873.

      The new copper-nickel alloy ratio was selected for the five-cent coin, adopted May 16, 1866, and thereafter known as a nickel. Again, the people had a coin denomination available to them in two forms. The silver half dime, like the three-cent piece, was retired from service in 1873 to curb the use of silver.

      The great influx of silver from the Comstock Lode in Nevada, mainly in the 1860s and ’70s, increased the nation’s supply of silver for coins and taxed the Philadelphia Mint’s capacity for production. Pressure from silver-mine interests in Nevada influenced the opening of a special mint in Carson City to assay and mint silver locally, rather than having it shipped to Philadelphia or San Francisco. Production was inefficient, costly, and slow. By 1893 the lode was virtually depleted, and minting activities at Carson City ceased.

      The Law of March 3, 1871, was a redemption measure and was passed to provide the United States Treasury with means for the disposal of millions of minor coins, which had accumulated in the hands of postmasters, merchants, and others. Small-denomination coins, because of this new law, were placed on an equal footing with silver and could be redeemed when presented in lots of $20.

      There was a general revision of the coinage laws in 1873. Several years of study and debate preceded the final enactment. The legislative history of the bill occupies hundreds of pages of the Congressional Globe, and the result was considered by many a clumsy attempt and a failure. The law has sometimes been referred to as the “Crime of ’73.” One consequence of the bill, which achieved final enactment on February 12, 1873, was the elimination of the silver dollar. In its stead, the trade dollar of greater weight was provided for use in commerce with the Orient in competition with the Mexican dollar. The legal tender provision, which gave the trade dollar currency within U.S. borders, was repealed in 1876 to avoid profiteers’ buying them at a reduced rate. The trade dollar was thus the only United States coin ever demonetized. (Through an oversight, the legal tender status was reinstated under the Coinage Act of 1965.)

      It may be a surprise to some collectors to learn that silver dollars did not circulate to any great extent after 1803 (except in the 1840s). The coin was turned out steadily since 1840, but for various reasons (such as exportation, melting, and holding in bank vaults), the dollar was virtually an unknown coin. The Act of February 21, 1853, in effect demonetized silver and committed the country to gold as a single standard. The silver-mining interests came to realize what had occurred in the 1870s, and the ensuing quarter century of political and monetary history was filled with their voluble protests. There was a constant bitter struggle for the return to bimetallism.

      From an economic point of view, the abundant supply of gold was responsible for a steady decline in gold prices worldwide. This brought about a gradual business depression in the United States, particularly in the South and Midwest. Private silver interests influenced great sections of the West for bimetallism as a remedy for the failing price level. Worldwide adoption of bimetallism might have improved economic conditions; but, had the United States alone proceeded to place its money on a double standard at the old 16-to-1 ratio, the situation would only have worsened.

      Of particular importance to collectors were those features of the Law of 1873 that affected the statuses and physical properties of the individual coins. The weights of the half dollar, quarter, and dime were slightly changed, and arrows were placed at the date for the ensuing two years to indicate the differences in weight. Silver three-cent pieces, half dimes, and two-cent pieces were abolished by the act, and the manufacture of minor coins was restricted to the Philadelphia Mint.

      The short-lived twenty-cent piece was authorized March 3, 1875. It was created for the Western states, where the Spanish “bit” had become equivalent to a U.S. dime. The five-cent piece did not circulate there, so when a quarter was offered for a “bit” purchase, only a dime was returned in change. The so-called double dime was frequently confused with the quarter dollar and was issued for circulation only in 1875 and 1876.

      On February 28, 1878, Congress passed the Bland-Allison Act, which restored coinage of silver dollars. It required the Treasury to purchase at market price two to four million dollars’ worth of silver each month and to coin it into silver dollars at a ratio to gold of 16 to 1. Proponents of “free silver” contended that with more money in circulation, workers would receive higher wages. Business leaders argued for the gold standard and against free silver because they believed that inflation would cheapen the value of money. The act was called by some “a wretched compromise.”

      The North and East so avoided the silver dollars that the coins did not actively circulate there and eventually found their way back to the Treasury, mostly through tax payments. Treasury Secretary Daniel Manning transferred ownership to the people and the coins were specifically earmarked as backing for Silver Certificates.

      The Bland-Allison Act was repealed in 1890 and the Sherman Silver Purchase Act took its place. Under this new law, 4,500,000 ounces of silver per month could be paid for with Treasury Notes that were to be legal tender, and redeemable in gold or silver dollars coined from the bullion purchased. Important in this case was the fact that the notes were constantly being redeemed for gold that mainly was exported. The measure was actually a government subsidy for a few influential silver miners, and as such it was marked for failure. It was hastily repealed. The Bland-Allison Act and the Sherman Act added a total of 570 million silver dollars to the nation’s monetary stocks.

      The Gold Standard Act of 1900 again gave the country a single standard, but reaffirmed the fiction that the silver dollar was a standard coin. It still enjoyed unlimited legal-tender status, but was as much a subsidiary coin, practically speaking, as the dime, for its value in terms of standard gold, even before the gold-surrender executive order several decades later, was far below its face value.

       The silver dollar struck from 1878 to 1921 is named for its designer, U.S. Mint engraver George T. Morgan.

      The lapse in silver dollar coinage after 1904 and until 1921 was due to lack of silver. Legislation authorizing further metal supplies for silver dollars was not forthcoming until 1918, when the Pittman Act provided silver for more dollars.

      Prior to March 1933, the metallic worth of U.S. gold coins was equal to their face value. In order to encourage a steady flow of gold to the mints, the government (with the exception of the period 1853–1873) had adopted a policy of gratuitous coinage. The cost of converting gold into coin had generally been considered an expense chargeable to the government.

      In practice, the Mint made fine bars for commercial use, or mint bars for coinage, at its discretion. The bars in later years were stored in vaults and Gold or Silver Certificates issued in place of the coins.

      On April 5, 1933, President Franklin Roosevelt issued an order prohibiting banks from paying out gold and Gold Certificates without permission, and gold coins were thus kept for reserve purposes. The law was intended to stabilize the value of gold. In effect, it removed all gold from circulation and prevented it from being hoarded. Gold imports and newly mined domestic gold could be sold only to the government. Today, gold bullion and coins may be collected and saved by anyone, as all restrictions were removed on December 31, 1974.

      Under the Coinage Act of 1965, the compositions of dimes, quarters, and half dollars were changed to eliminate or reduce the silver content of these coins because the value of silver had risen above their face values. The replacement “clad” dimes and quarters were composed of an outer layer of copper-nickel (75%-25%) bonded to an inner core of pure copper. Beginning in 1971 the half dollar and dollar compositions were changed to that of the dime and quarter. All silver clad coins have an outer layer of 80% silver bonded to an inner core of 21% silver, for a total

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