Silver Dollars - Everyday Use?

In the period before the Second World War, people used cash very generally, & it was not really uncommon for even an ordinary workingman to carry around a hundred dollars or more in currency. The silver dollar, however, did not circulate much in the more populous Eastern regions of the country, being confined mostly to the Mountain West & Pacific coast.

The entire reason for the issue of "silver certificates" in small denominations was that people found the coins, in general, bulky & inconvenient. My late grandfather described how he had done an upholstery job on a sofa during the Depression, & the customer paid him with a paper bag containing thirty-five silver dollars. This was in California, where "hard money" was preferred, & paper did not circulate very much until after the First World War.

The other thing to realize is that the Bland-Allison & Sherman acts created a truly monumental quantity of silver dollars. The coinage of 1878 was greater than the whole sum of silver dollars coined in the US before the passage of the Act! Before the revaluation of the gold coins in the 1830s, which effectively put the United States on a gold standard, silver dollars were used extensively in large transactions, but they were mostly Mexican or Spanish colonial pieces, not US Mint products. (This was partly because new US dollars could be swapped for old, worn pieces of eight, & carried out of the country where they would fetch a higher price.) After that, gold became the common medium, hence the large production of quarter eagles & gold dollars. There was also considerable issue of low-denomination paper, but the prevalence of counterfeits (estimated to comprise a third of the circulation in 1860) & the uncertain soundness of the banks made that a very imperfect substitute.

After the mid 1860's when the Federal paper began trading at par with gold and silver, paper became the preferred circulating medium. Except in some areas of the west silver dollars rally did not circulate. (Before the mid 1860's given the choice people would take the silver dollars because the paper was of questionable value while the silver dollar was solid money. I think a lot of collectors don't really appreciate the nightmare of trying to do business with currency before 1862.

The Morgan dollars didn't circulate they were just struck them and put them in storage and then used them for backing for silver certificates. They didn't strike dollars from 1904 to 21 because it took them until 1904 to use up all the silver they bought from 1890 to 93 under the Sherman Purchase act. With no more silver purchased coinage stopped until they had to replace all the silver dollars melted under the Pittman Act.

On 1 July 1893, the US Treasury reported that 98 744 388 silver dollars were in the vaults of the several US Mints, 5 343 715 having been coined in the previous year, & 6 811 629 distributed. On the same date, the total coiange of silver dollars up to that time was given as 419 332 550, with the number held by the Treasury against silver certificates being 325 717 232, the number in circulation (including pieces lost, taken out of the country, melted, made into jewelry, &c) being 58 725 818, & the balance in the Treasury 34 889 500.

So, it may reasonably be said that about 14% of the silver dollars produced were actually in circulation at any given time. Of the 75% held against certificates, most never saw the light of day again, until 1963 at any rate (& many were melted under the Pittman Act).

Interesting stuff...

The government did not really want to get rid of the silver certificate, but the price of silver had risen to the point where now every silver certificate worth one dollar could be exchanged for a silver dollar that contained more than a dollars worth of silver. Plus bags of rare dates came out of the vaults (Bags of 1903 O dollars, listed at the time as being worth $1,500 per coin) which turned the whole thing into a treasure hunt. The Treasury vaults became a slot machine with a greater than 1 to 1 payout. Put in silver certificates and out coins worth at least what you put in, and maybe more. Don't get a winner, get some more silver certificates and try again. Eventually the government tried to put a stop to it by paying out silver granuales and bars instead of coins. Then they legislatively declared that some 200 million silver certificates that had been issued were assumed to have been lost or destroyed so they write them off. This allowed them to remove millions of ounces of silver from possibly being claimed by the public. Eventually they just repudiated the redemption clause for the silver certificates. This let them keep the silver, and kept the silver certificates in circulation with no backing and redeemable only in other unbacked paper.

thq that cracked me up.