The British colony of India - as it was during the Great War (WWI) - was populated by a people who place great store in the intrinsic value of precious metals, as they do today. During the latter half of the 19th Century and into the 20th, Britain found it advantageous to impose a hard currency program (paper backed by metal, as opposed to fiat currency whose value derives from a declaration by the issuing government) there in the interest of lessening their physical commitment of precious metals. Keep in mind, in that day as well as this, India was the second most-populated country on Earth behind China. In the Great War, India's population equaled that of the US today. It was one of only three countries of that era (the Russian Empire being the third) whose population exceeded one hundred million.
Even in those days, it took a
lot of money to keep an economy of that size functioning. Britain's solution was to print paper currency backed by hard metal, and institute a network of redemption centers where Indians could exchange their bills for silver/gold coins, should they wish. This proved quite effective; Indians trusted the system and were therefore quite receptive to using paper instead of specie, greatly lessening Britain's need to stockpile valuable precious metals.
But during the Great War, Germany mounted a propaganda program in India whose aim was to paint the British (rightly) as seriously deficient in this precious metal. The goal was to cause the Indian people to hoard silver, draining the British coffers and thereby reducing their ability to wage war.
It worked pretty well, and the British got somewhat into a corner. They turned to the United States for assistance, and a solution was crafted. It was presented in a bill to Congress from Sen. Key Pittman of Nevada - the Pittman Act. Under the Act, authorization was granted to convert as many as 350,000,000
Morgan dollars into bullion for transferral to Britain - at $1 per ounce, a tad above the actual price. Ultimately, a total of about 270,000,000 Morgans were melted, 259,000,000 of those for Britain and the remainder for lower-denomination silver in the US. In one fell swoop, almost half of all Morgans ever minted disappeared.
The Act also provided for the replacement of these Dollars, using silver purchased in the US at $1 which was still a subsidy to the silver industry. As a result,
Peace dollars were minted in
huge numbers to the same end as Morgans, which is to say it's pretty easy to understand why Mint State
Peace dollars are so easy to find and also why strikes are so indifferent. They knew the coins were being minted for political reasons rather than economic ones, and the overwhelming majority of the coins would never see the light of day.
Just like the Morgans. Th machinations of governments to serve expedient political ends never fail to fascinate.
Posted 02/06/2014 7:12 pm
