The Story of Silver

by William L. Silber

  24. “Senators for Silver Sales at 90 cents; McCarran Sees Re-monetization,” New York Times, April 26, 1946, p. 1.

  25. “Congress Sets Price of Silver at 90.5 cents; Agreement Frees Postal and Treasury Pay,” New York Times, July 20, 1946, p. 26.

  26. “House, Senate Accept 90.5 Cent silver Price,” Christian Science Monitor, July 20, 1946, p. 15. For a reprint of the bill see the Annual Report of the Secretary of the Treasury for 1946, p. 325.

  27. “Both Houses Pass Silver Legislation: Koppleman Hails Reduction from $1.29 for Treasury Metal,” Hartford Courant, July 20, 1946, p. 2.

  28. There was, of course, a tiny spread between the Treasury’s buying price (bid), which was 90.41¢, and its selling price (offer), which was 90.91¢, to cover expenses and perhaps make a little profit. See Handy & Harman, Annual Review of the Silver Market, 31st, 1946 (New York: Pandick Press, 1947), p. 7.

  CHAPTER 11: JFK’S DOUBLE CROSS

  1. LBJ wrote of the Warren Commission investigation: “Russia was not immune. Neither was Cuba. Neither was the State of Texas. Neither was the new President of the United States.” See Robert Caro, The Passage of Power (New York: Random House, 2012), p. 440.

  2. Report of the President’s Commission on the Assassination of President Kennedy (Washington, DC: Government Printing Office, 1964), pp. 367–69. Henceforth, this will be referred to as the “Warren Commission Report.”

  3. No reference appears to silver or silver bloc senators in the “Warren Commission Report.”

  4. The letter, along with Kennedy’s reply, is reprinted (pp. 1102–4) in J. P. Ryan and Katheen M. McBreen, “Silver,” in U.S. Bureau of Mines, Minerals Yearbook 1961, vol. 1, Metals and Minerals (except fuels) (Washington, DC: Government Printing Office, 1962), available at http://digital.library.wisc.edu/1711.dl/EcoNatRes.MinYB1961v1.

  5. The data are from Handy & Harman, The Silver Market in 1963, 48th Annual Review (New York: 1964), pp. 20–21.

  6. “Hi-Yo, Silver,” New York Times, November 30, 1961, p. 36.

  7. The quote from the CRB (Commodity Research Bureau) database for November 28, 1961, is 91.375¢ and for November 29 it is $1.00¾. The price was unchanged at 91⅜ for the entire year until then because of pegging by the U.S. Treasury’s purchases and sales at that price. A spot check comparison of CRB records with daily price quotations for silver during this period from Handy & Harman confirms the reliability of the quotations.

  8. “Mining Men Cheer Kennedy Order on Silver,” Los Angeles Times, November 29, 1961, p. C9.

  9. “U.S. Silver Decision Reverberates,” Christian Science Monitor, November 30, 1961, p. 20.

  10. The quotes are from Kennedy’s letter, reprinted in Ryan and McBreen, “Silver,” Minerals Yearbook 1961, pp. 1102–4, available at http://digital.library.wisc.edu/1711.dl/EcoNatRes.MinYB1961v1.

  11. Mel Carnahan had served as the Democratic governor of Missouri and was elected posthumously as U.S. senator in 2000 after being killed in a plane crash three weeks before the election.

  12. For the biographical details in this paragraph see “C. Douglas Dillon Dies at 93; Was in Kennedy Cabinet,” New York Times, January 12, 2003.

  13. See the entry for Douglas Dillon at http://www.anb.org/articles/07/07-00862.html.

  14. William L. Silber, Volcker: The Triumph of Persistence (New York: Bloomsbury, 2012), p. 28.

  15. Paul Volcker and Toyoo Gyohten, Changing Fortunes (New York: Times Books, 1992), p. 22.

  16. “Mint Director Loses Authority to Supervise Silver Policies,” New York Times, October 27, 1961, p. 19.

  17. Silber, Volcker, pp. 27–28.

  18. “Mint Chief Confirmed,” New York Times, September 24, 1961, p. 80.

  19. “Silver Backer to Head Mint—Minus Powers,” Los Angeles Times, October 29, 1961, p. D1.

  20. Dillon’s quote is from “Woman Sworn in as Mint Director,” New York Times, October 31, 1961, p. 16.

  21. See Kennedy letter in Ryan and McBreen, “Silver,” Minerals Yearbook 1961, pp. 1102–4, available at http://digital.library.wisc.edu/1711.dl/EcoNatRes.MinYB1961v1.

  22. “Excerpts from President Kennedy’s Economic Report to the Congress,” New York Times, January 23, 1962, p. 16.

  23. For the end-of-year number for 1961 see Board of Governors of the Federal Reserve System, Banking and Monetary Statistics: 1941–1970 (Washington, DC: Government Printing Office, 1976), p. 620, available at https://fraser.stlouisfed.org/scribd/?title_id=41&filepath=/docs/publications/bms/1941-1970/BMS41-70_complete.pdf. The volume of silver certificates on June 30, 1934, was $401 million. See Board of Governors of the Federal Reserve System. Banking and Monetary Statistics: 1914–1941 (Washington, DC: Government Printing Office, 1943), p. 409, available at https://fraser.stlouisfed.org/docs/publications/bms/1914–1941/BMS14–41_complete.pdf.

  24. See Dillon’s letter to Kennedy in Ryan and McBreen, “Silver,” Minerals Yearbook 1961, pp. 1102–4, for the statement “nearly 1.7 billion ounces.” The precise number of ounces backing the $2.12 billion of silver certificates outstanding on December 31, 1961, is .7734 (the fraction of an ounce of silver in a silver dollar) times 2.12, which is 1.62396 billion ounces. Recall that a silver certificate could be exchanged for a silver dollar (not an ounce of silver). According to the Board of Governors of the Federal Reserve System, Banking and Monetary Statistics: 1941–1970 (p. 620), Federal Reserve notes outstanding on December 31, 1961, totaled $28.7 billion, or more than ten times the volume of silver certificates.

  25. The Federal Reserve Act of December 23, 1914, section 16, entitled “Note Issues,” permits the issuance by the Federal Reserve Banks for circulation “notes of the denominations of $5, $10, $20, $50, and $100, as may be required.” The omission of one-dollar denomination notes was explicit but not commented on in the legislation. Perhaps it had something to do with the silver bloc in the Senate promoting the circulation of silver dollars and one-dollar silver certificates.

  26. See U.S. Department of the Treasury, Annual Report of the Secretary of the Treasury, for the Fiscal Year Ended June 30, 1962 (Washington, DC: Government Printing Office, 1963), p. 177.

  27. See Bratter, Silver Market Dictionary, for the definition of subsidiary coin. Subsidiary coins had limited legal tender status from the act of June 9, 1879, which specified that such coins must be accepted in payments up to ten dollars but not necessarily above that amount. Title III of the Thomas Amendment of May 12, 1933, specified that “All coins and currencies of the United States … should be legal tender for all debts public and private,” but that may or may not have applied to subsidiary coin. According to a 1960 memorandum prepared by the U.S. Treasury, “the legal tender quality of subsidiary silver has never been ruled upon by the courts.” See “Coins and Currency of the United States,” reprinted in Senate Committee on Banking and Currency, Federal Reserve Direct Purchases— Old Series Currency Adjustment Act: Hearings on S. 3702 and S. 3714, 86th Cong., 2d sess., June 24, 1960, pp. 21–40, esp. p. 28. The ambiguity was resolved by Public Law 89–81 of July 23, 1965, section 102: “All coins and currencies of the United States (including Federal Reserve notes and circulating notes of Federal Reserve banks and national banking associations) regardless of when coined or issued shall be regarded as legal tender for all debts, public and private, public charges, taxes, duties and dues.”

  28. The news story “U.S. Moves to End Backing of Silver,” New York Times, February 22, 1962, p. 33, dates the introduction of the bill as February 20, but the bill itself, S. 2885, “A Bill to Repeal Certain Legislation Relating to the Purchase of Silver and for Other Purposes,” carries the date February 22, 1962.

  29. This quote and the next are from “U.S. Moves to End Backing of Silver,” New York Times, February 22, 1962, p. 33.

  30. Bible’s remarks and the other comments are in Senate Subcommittee on Minerals, Materials, and Fuels of the Committee on Interior and Insular Affairs, “Gold and Silver Production Incentives”: Hearings on S.J. Res. 44, 87th Cong., 2d ses
s., March 15 and June 8, 1962, pp. 6–7.

  31. Ibid.

  32. “Administration Bid to Repeal Silver Acts Appears Doomed, at Least for This Year,” Wall Street Journal, March 15, 1962, p. 5.

  33. This quote and the next are from “Critical Coin Shortage Hits Christmas Buying,” Boston Globe, December 11, 1962, p. 17.

  34. “Mint Employees Work Weekends to Ease Yule Coin Shortage,” Wall Street Journal, November 27, 1962, p. 8.

  35. “Critical Coin Shortage Hits Christmas Buying,” Boston Globe, December 11, 1962, p. 17.

  36. “Coin Shortage Held Likely by Treasury Boss,” Los Angeles Times, January 31, 1963, p. B7.

  37. Ibid.

  38. “Dillon Backs Change in U.S. Silver System,” Chicago Tribune, March 12, 1963, p. 5

  39. “This quote and the next are from “Coins Remain Scarce in Many U.S. Cities; Treasury Seeks Funds to Build New Mint,” Wall Street Journal, March 26, 1963, p. 32.

  40. The data are from Handy & Harman, The Silver Market in 1963, 48th Annual Review (New York, 1964), pp. 20–21.

  41. “Silver Act Repeal Plan Wins House Approval,” New York Times, April 11, 1963, p. 61.

  42. “Campaign to Get Congress to Sever Silver’s Link to Paper-Currency Is Opened by Dillon,” Wall Street Journal, January 31, 1963, p. 6.

  43. “Bill to Cut Silver’s Paper Currency Link Is Passed in House,” Wall Street Journal, April 11, 1963, p. 20.

  44. Senate Committee on Banking and Currency, “Repeal of Silver Purchase Acts”: Hearing, 88th Cong., 1st sess., April 29, 1963, p. 4.

  45. This quote and the next are from ibid., pp. 4–5.

  46. In 1961 Idaho produced 17 million ounces, while Arizona, the next biggest, produced 5 million ounces. A similar relationship held for the previous five years. See Ryan and McBreen, “Silver,” Minerals Yearbook 1961, p. 1108, available at http://digital.library.wisc.edu/1711.dl/EcoNatRes.MinYB1961v1.

  47. Senate Committee on Banking and Currency, “Repeal of Silver Purchase Acts,” p. 81.

  48. This quote and the others in this paragraph are from ibid., pp. 72–74.

  49. This quote and the next are in ibid., p. 81.

  50. These quotes and the next are from Dillon’s testimony reprinted in U.S. Department of the Treasury, Annual Report of the Secretary of the Treasury, for the Fiscal Year Ended June 30, 1963 (Washington, DC: Government Printing Office, 1963), pp. 400, 404.

  51. Ibid., p. 405, for a reprint of Public Law 88–36.

  52. The vote was 68–10 as reported in “Senate Votes End to Silver Backing,” May 24, 1963, New York Times, p. 1. Support by Dodd, Pell, Pastore, and Keating appears in Senate Committee on Banking and Currency, “Repeal of Silver Purchase Acts,” p. 8.

  53. “Cutting the Silver Chord,” Washington Post, May 26, 1963, p. E6.

  54. “Silver Is Traded on Open Market: Hectic Trading as Brokers Enter the ‘Silver Ring’ for the First Time in 29 Years,” New York Times, June 13, 1963, p. 59.

  55. “Silver Hits Price Treasury Quotes for Its Holdings,” Wall Street Journal, September 10, 1963, p. 32.

  56. See “Silver Is Bought from U.S. Stocks,” New York Times, September 13, 1963, p. 19; and “Cashing Bills to Get Silver Now Feasible,” Chicago Tribune, September 15, 1963, p. D3

  57. See “Delivery of Silver Bullion in Exchange for Silver Certificates,” in Federal Register (July 24, 1963), vol. 28, no. 143, reprinted in Handy & Harman, Silver Market in 1963, pp. 27–28.

  58. Detailed data on Treasury silver appears in U.S. Department of Treasury, Treasury Staff Study of Silver and Coinage (Washington, DC, 1965), table 5 (p.16). The Treasury owned 1,584 million troy ounces at the end of 1963.

  59. “Senate Drops Dollar’s Silver,” Newsday, May 24, 1963, p. 2.

  60. Ibid.

  61. The quotes in this paragraph are from the “Warren Commission Report,” pp. 40–41.

  62. Ibid., p. 296.

  63. See chapter 2, last paragraph.

  CHAPTER 12: LBJ NAILS THE COFFIN SHUT

  1. Caro, Passage of Power, p. 356.

  2. Ibid., picture following p. 426.

  3. Ibid., p. 429.

  4. Ibid., p. 430.

  5. See Annual Report of the Secretary of the Treasury for 1963, p. 400.

  6. “Long Lines Form to Buy Silver Dollars at Treasury,” New York Times, March 24, 1964, p. 10.

  7. “Dillon Asks New Silver Dollars as Trading in Old Ones Goes On,” Washington Post, March 24, 1964, p. A1.

  8. This quote and the remaining in this paragraph are from “Mansfield Fights to Keep Cartwheels Rolling,” Boston Globe, March 22, 1964, p. 33.

  9. “State Residents Flip Over New JFK Halves,” Hartford Courant, March 26, 1964, p. 10A.

  10. “Kennedy Half Dollar Due Today with Limit of 40 to Customer,” Washington Post, March 24, 1964, p. A3.

  11. “Bank Workers Profit on Kennedy Halves,” Washington Post, June 26, 1964, p. A1.

  12. “Fruit of the Mints,” New York Times, November 29, 1964, p. X34.

  13. “Problem of Sinking Silver Supply Draws Multitude of Plans,” Chicago Tribune, October 27, 1964, p. C5.

  14. The Coinage Act of 1853 made the silver content of a dollar’s worth of subsidiary coin equal to 345.6 grains, or .72 (345.6/480) per troy ounce. Section 15 of The Coinage Act of 1873 slightly increased the silver content to 347.229 grains or to .72339+ per troy ounce. Therefore, after 1873, subsidiary coins bought a troy ounce of silver at 1/.72339 = $1.3824. See Laughlin, History of Bimetallism, p. 82, for a discussion of the 1853 Act and Laughlin (p. 305) for section 15 of the 1873 Act. The slight change occurred because in the 1853 Act the total size of the half-dollar was defined as 192 grains while in the 1873 Act it was defined as 12½ grams, which is 192.905 grains (each gram contains 15.4234 grains). Since each coin contained 90% silver, the silver in each half-dollar after 1873 was 173.6145 grains or 347.229 for two half-dollars.

  15. “Coin Business Is High Finance,” Hartford Courant, November 15, 1964, p. 10C3.

  16. Each of these nickels contained 56% copper, 9% manganese, and 35% silver. The silver content of each coin weighed .05626 ounces, which is worth 7.274¢ at silver’s price of $1.293. See http://silvercoinmeltvalues.net/jefferson-nickels1942-1945/.

  17. For this quote and the remaining discussion in this paragraph see “Grocery Chains Plan to Issue Own ‘Money’ to Meet Coin Needs,” Wall Street Journal, June 8, 1964, p. 1.

  18. Ibid.

  19. “Wooden Nickel Test Foiled by Treasury,” Hartford Courant, June 1, 1964, p. 12A.

  20. Ibid.

  21. “Paper Scrip Plan Ruled Illegal in Treasury Advisory Opinion,” New York Times, June 13, 1964, p. 27.

  22. “Johnson OK’s Around-Clock Work at Mints,” Chicago Tribune, May 4, 1964, p. E6.

  23. Ibid.

  24. “Silver Dollar Legislation Signed,” Washington Post, August 4, 1964, p. A13.

  25. “News of Coins: President Gets the Bill to Freeze 1964 Date,” New York Times, September 6, 1964, p. X24.

  26. See U.S. Department of the Treasury, Treasury Staff Study, p. 16, table 5.

  27. Ibid., p. 7, table 1.

  28. “Treasury Delays Minting of Silver Dollars; Will Seek to Cut All Coins’ Silver Content,” Wall Street Journal, December 28, 1964, p. 9.

  29. For the volume of silver certificates in 1964 see Board of Governors of the Federal Reserve System, Banking and Monetary Statistics: 1941–1970, p. 620, available at https://fraser.stlouisfed.org/scribd/?title_id=41&filepath=/docs/publications/bms/1941-1970/BMS41-70_complete.pdf. See U.S. Department of the Treasury, Treasury Staff Study, p. 16, table 5, for the required silver bullion to back those certificates. Recall that each certificate was entitled to the amount of bullion in a silver dollar, which was .77344 ounces. The $1.232 billion certificates outstanding times .77344 equals 952 million ounces.

  30. Ibid., p. 16, table 5, col. 2.

  31. Ibid., p. 7, table 1. Also see the discussion on the influence of price
on consumption on pp. 30–32.

  32. “It’s Silver Time in the Rockies as Mines Come Alive,” New York Times, December 10, 1964, p. 75.

  33. Ibid.

  34. Ibid.

  35. Ibid.

  36. See U.S. Department of the Treasury, Treasury Staff Study, p. 28.

  37. See Washington Post, January 1, 1965, p. C5, for the headline and for the remaining quotes in this paragraph.

  38. The quotes in this paragraph and the discussion in the next appear in “Text of President Johnson’s Message to Congress on Changing the Nation’s Coinage,” New York Times, June 4, 1965, p. 18.

  39. “U.S. Won’t Mint Cartwheels,” Boston Globe, May 25, 1965, p. 28.

  40. “Text of President Johnson’s Message to Congress on Changing the Nation’s Coinage,” New York Times, June 4, 1965, p. 18.

  41. The source of Fowler’s nickname had been obscured by history until I spoke with Roy Smith, his son-in-law and my colleague here at the Stern School of Business, who explained the origin. Also see “Perfect Fit: The Appointment of Fowler,” Washington Post, March 22, 1965, p. A18.

  42. House Committee on Banking and Currency, Coinage Act of 1965: Hearings on H.R. 8746, 89th Cong., 1st sess., June 4, 7, 8, 1965, p. 19.

  43. “Reaction to President’s Coin Proposal Is Mixed,” New York Times, June 4, 1965, p. 18.

  44. This quote and the next are from House Committee on Banking and Currency, Coinage Act of 1965, pp. 17–19.

  45. Ibid., p. 22.

  46. Wright Patman, interview (1) by Joe B. Frantz, August 11, 1972, oral history transcript, LBJ Presidential Library, available at http://transition.lbjlibrary.org/files/original/49e8dd04e2a6a1db3aaa8ef58993cbdc.pdf.

  47. The following interchange is from House Committee on Banking and Currency, Coinage Act of 1965, pp. 20–21.

  48. See chapter 11, note 27.

  49. Public Law 89–3, March 3, 1965, An Act to Eliminate the Requirement that Federal Reserve Banks Maintain Certain Reserves in Gold Certificates against Deposit Liabilities.