The U.S. produced its first “coin” in 1792 and has been pumping them out non-stop for the next 200+ years. For the year 2000 alone, the last year that the Redbook lists full mintage figures, the mint produced in excess of 22.326 BILLION of the little circles of metal for circulation alone, not counting the numbers of commemoratives, proofs, or gold and silver coins made for other special purposes. By this account, the U.S. should be awash with these little devils, but instead we periodically endure coin shortages where the banks cannot get enough coins to meet the needs of commerce.
What happened to all the coins? Are they sitting in Grandma and Grandpa’s cookie jars all over the country or has some bunch of shrewd coin dealers bought them all up in a quest to corner the coin market? Sadly to say, the answer is “neither”. The coins were destroyed to make way for newer designs, less costly compositions and compositions containing little or no intrinsic value. What a waste! But, how could this have happened? Let’s revisit some key moments in U.S. numismatic history to find out the grisly details.
Large Cent To Small Cent (1856)
During the mid 1850’s, the U.S. was recovering from the Civil War and was in the midst of a severe copper shortage. Because of the copper demands of the war, the price of copper was rising to the point that it was no longer feasible to mint copper half cent and one cent pieces as the bullion value of the copper in the coin was exceeding the face value of the coin. The answer seemed to lay in the elimination the Half Cent and the production of a smaller one-cent piece, which was to become the Small Cent. The Law of 1857 thus mandated the elimination of the Half Cent and the minting of a smaller one-cent coin. By shrinking the size of the one-cent coin, the government would use less copper per coin and stretch it’s copper reserves further. Another challenge was also present and that was what to do with all of those large Half Cents and cents that were already in circulation. In order to kill two birds with one stone, the government proceeded to recall all Half Cents and Large Cents from circulation as they became available to the banks. These coins were then returned to Washington to be melted and the resulting copper bullion would be used to strike the new Small Cents. How many Half Cents and Large Cents were recalled? Millions! What were their dates and mints? Nobody knows, as it was not mandated that anyone keep track. One story has it that mint employees were allowed to purchase some of these recalled coins for face value for “numismatic purposes only”! Some farsighted mint employees saved uncirculated and near uncirculated specimens from the melting pot to start their own collections. We must remember, though, that coin collecting was not an established hobby of the masses at that time and money was quite precious to the working man for purposes of food, clothing and shelter with little to be “saved”. Fortunately for us, this was small change and most likely “hid” in bureau drawers and glass jars by common folks as “emergency” money and thus escaped destruction.
The Pittman Act of 1918
In 1918 the Pittman Act was ratified. Silver dollars were not a popular series of coinage in use in commerce and by 1904 the U.S. had used up its silver supply and stopped minting them. Under the Pittman Act (named for one of its principal sponsors, Sen. Key Pittman of Nevada), the federal government was authorized to melt as many as 350 million silver dollars, convert the silver into bullion and then either sell the metal or use it to produce subsidiary silver coinage. It also was required to strike replacement dollars for any and all that were melted. During fiscal years 1918 and 1919, the U.S. government melted a total of more than 270 million silver dollars. The “Pittman coins” represented nearly half the entire production of standard silver dollars (as distinguished from Trade dollars) made by the U.S. Mint up to that time. Were any records kept of the dates/mints that were sacrificed to the melting pot? Again the answer is in the negative.
The Gold Confiscation Of April 5, 1933
In 1933, during the height of the Great Depression, President Franklin Roosevelt issued Presidential Executive Order 6102, which “forbid the hoarding of Gold Coin, Gold Bullion and Gold Certificates”. It further went on to state, “All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28, 1933”. In other words, the government recalled all gold coinage and currency payable in gold coin from the banks and made it illegal for any U.S. citizen to hold gold in the form of coins or bullion. This act was further given teeth when you remember that this came in the midst of the worst depression in U.S. history when the common man barely had enough money to supply food, clothing and shelter for his family, much less being able to hoard gold. Were it not for farsighted wealthy numismatists that violated this law, we would not have the beautiful gold coins that we admire today. Once again, the specific dates/mints that were melted is unknown.
The Great Silver Melt (1960 – 1965)
For quite some time the U.S. Treasury had been a net buyer of silver, in part to keep the silver markets settled and for the manufacture of coinage. By 1960, it had become a net seller as silver prices began to rise. The Treasury sold 22 million ounces of silver bullion in 1960, and used another 46 million ounces in coinage. The next year the Treasury had to sell 63 million ounces of bullion to settle the silver markets and use another 56 million ounces to replace silver coins that had been taken out of circulation by investors speculating in silver. The Treasury quickly realized that it would run out of silver for use in coinage and as backing against silver certificates unless it took drastic measures. It thus began phasing silver out of currency. In 1961, the Treasury ordered $5 and $10 silver certificates out of circulation, freeing silver reserves held against these bills. In November of 1961 the government also suspended silver bullion sales by the Treasury at the formerly fixed price of 91 cents.
Without the active intervention of the U.S. Treasury on its behalf, the price of silver quickly rose. By 1963, silver prices reached $1.29, which was equal to the value of the silver in our coins. At $1.38/oz it became profitable to recycle coinage for its silver content.
Between 1960 and 1965 the Treasury sold silver to keep the price stable Over the six years between 1960 and 1965, the Treasury used 814 million ounces of silver in coinage. The silver used in coinage during this time quickly found its way into the hands of investors. Government steps to remove silver from the currency had led investors to conclude that the price of silver would rise sharply once the Treasury no longer was supplying the market with such large volumes of the metal and thus the investor run on silver had begun. Coin melt rose from 10 million ounces in 1960 to 30 million ounces in 1965.
The Hunt Brothers (1970’s)
As if our silver coinage had not been beaten up enough by this point, along came the Hunt Brothers of Texas. In 1973, the Hunt family of Texas was quite possibly the richest family in America and, as a hedge against inflation, decided to buy silver bullion. Remember, it became illegal to own gold in 1933 so the Hunts began to buy silver in enormous quantity.
By 1979 Nelson Bunker Hunt and William Herbert Hunt formed a silver pool of more than 200 million ounces of silver, equivalent to half the world's deliverable supply.
The Hunts started buying silver back in 1973 when the price was in the $1.95 / ounce range. By 19'79, the price had climbed to around $5. As of early 1980 the price had skyrocketed up to the $50 range, peaking at $54.
Very quickly, a combination of changed trading rules on the New York Metals Market (COMEX) and the intervention of the Federal Reserve put an end to the game. The price began to slide, culminating in a 50% one-day decline on March 27, 1980 as the price plummeted from $21.62 to $10.80.
What this meant for U.S. silver coinage was that all, or most of the silver coinage that had escaped the Treasury’s grasp in the early 1960’s fell into the great melting pot as the price of a common silver dime (numismatic value $.20) soared to $2.50 and more. “Common” Morgan and Peace dollars died as their melt price exceeded $25 along with common Franklin And Walking Liberty Half dollars whose melt value exceeded $12.00. I personally viewed the melting stock of some buyers, which contained not only silver dollars but also Barber coinage and 3¢ silvers. BU rolls and individual coins were turned in to be melted indiscriminately.
To answer the question that I posed earlier… Where are all the coins… the answer is GONE for the most part. Except for those that survived in cookie jars, collector’s albums and investors inventory. It is a wonder that some dates/mints haven’t disappeared completely during all of this mayhem.