MORGAN SILVER DOLLARS 1878-1921
by R.W. Julian
Background of the Morgan Dollar
While on the surface the Morgan dollar of 1878-1921 seems an uncomplicated issue of coins, in reality it is one of the most complex and misunderstood series of coins issued by the United States. The story began in the early days of the Civil War ....In the South citizens had quickly hoarded all the gold and silver coins that could be found, but in the North a different set of rules applied, at least at first. It was not until December 1861 that gold left circulation in the Union states while silver was to go the following June. From 1862 until 1873 the marketplace in the eastern United States was to use primarily base coins and paper money, an irritation for government and citizen alike. (Although coins went into circulation in limited numbers in 1873, it was not until 1876 that they were in widespread use throughout the country.)
The Silver Situation
Even though gold or silver coins did not circulate, a surplus of silver was beginning to build up as earlyas 1868. Prior to 1859 the amount of silver mined in this country had been negligible, but in that year there were significant discoveries in what is now Nevada. The Comstock Lode was one of the best known in
that area. There was a flood of silver from these mines, but until the late 1860s much of the metal was sent to Europe to payoff war-time debts and interest on loans.
Europe became awash with silver by the late 1860s. In 1871, after the Franco-Prussian War provided the means to unite Germany, Berlin went on the gold standard and dumped tons of silver on the international market. Slowly, but surely, the price of the metal was driven downward. Silver men, later to be known as "Silverites," grew increasingly nervousabout what the future held in store for their industry.
The 1853 Mint Act provided that depositors could no longer get minor silver coins in exchange for their bullion. Only the silver dollar could now be struck from a depositor's bullion, and so long as the value of the silver in a dollar exceeded the face value, few
cared to lose money in this way. However, beginning in 1868, the declining value of silver, coupled with the growing surplus, made it attractive to deposit silver at the Philadelphia Mint for dollar coinage.
The Coinage Act of 1873
The government at last realized that something had to be done about the growing silver surplus, and in February 1873 there was a complete overhaul of the coinage laws. The silver dollar and several other coins were abolished and a trade dollar created. The
purpose of the new trade dollar was to siphon silver off to the Orient, preferably never to return. Although the trade dollar succeeded in this task for some years (mostly in southern China), political opposition, a misguided legal tender provision, and further
lowering of silver prices contributed to its unwise and premature abolition.
Even if the trade dollar did not live up to expectations, another government policy certainly did. Mint Director Henry Richard Linderman, with quiet encouragement from the Treasury, began in 1873 to distribute minor silver coins in exchange for paper
money, especially the worn and dirty fractional notes, called shinplasters by the public.
Technically illegal, nevertheless the move was a popular one andforced Congress in 1875 to pass a law allowing the process to go on above board. However, it was not until 1876 that subsidiary silver coins became abundant in circulation.
As early as 1868 the coinage of minor silver had increased, but until 1876 the government was unableto put the coinage into circulation and keep it there. Now they succeeded, and considerable amounts of silver bullion were purchased for the dimes, quarters, and half dollars which seemed to flow in a never-ending stream from the mints. Silverites were not entirely happy, but half a loaf was better than
It was the unwritten policy of the government, after the end of the war in 1865, to create a controlled deflation, driving down prices and wages. It was only in this way that silver and gold coinage would once more be used in the marketplace. The value of the paper was being raised to meet that of silver. This deflationary policy, however, was hard on the small farmers and businessmen, not to mention the wage earners. There was no written policy for such deflation; this observation is derived from the course of action that was taken in the late 1860s and early 1870s.
As the decade wore on the price of silver continued to decline. For the silver dollar to contain full value, silver had to be worth $1.29+ per ounce. In July 1873 silver was at $1.30. In July 1875 the value had fallen to $1.22, while one year later it had dropped to $1.08. Subsidiary silver was struck at the rate of $1.38 face value of coins per ounce of fine silver metal used, giving the Treasury a good profit from this source.
Silver Coinage of the 1870s
During the 1870s there were some interesting attempts by some western representatives and senators in Congress to increase the use of silver in coinage. One of the most bizarre was the successful bill introduced by Senator John P. Jones of Nevada creating the 20-cent piece. He claimed that this coin would, in some obscure fashion, stop the short-changing of customers in stores. No one really believed this nonsense, but he was owed enough political favors to get the measure adopted. After all, what harm could a 20-cent piece really do?
Another, more serious, challenge to the monetary system was the measure introduced in December 1876 by Missouri Representative Richard P. Bland to allow free and unlimited coinage of silver dollars, the same situation, with minor differences, that had been in effect from 1853 to 1873. Bland's proposal was defeated for several reasons, the principal one being such that a radical measure required strong support, which he did not have. The silver forces were powerful in the House, where the measure passed, but not in the Senate.
Further complicating the political situation was the growing strength of the Greenback party, which advocated government funding by means of the printing press. In short they wanted more, not less, paper money in circulation, and many debtors strongly agreed with the party platform. The bottom line of the Greenbacker position was an end to the controlled deflation. It was only a matter of time until Greenbackers and Silverites joined forces for a change in the currency.
In the summer of 1877 there was an uneasy truce between the government and the populist elements of society (in this case, primarily the Greenback party and the Silverites) when disaster struck, in the form of minor silver coins!