This is part of a series of blog posts I wrote for a coin collecting site circa ~2015 that seems to have disappeared off the Internet. Note any prices mentioned in this series are from 2015.
Collectors of the Morgan dollar series might feel that their quest to complete the series is stacked against them. As opposed to other coin series, Morgan silver dollars are harder to come by than you would otherwise think, considering the mintages. The story of why they are so scarce forms a fascinating insight into history and economics.
#1: Heavy circulation in the early series due to mistrust of paper currency.
The Morgan dollar was minted between 1878 and 1904. Note that the United States Civil War had only ended by the mid 1860s, with the period being defined by the Confederate states printing their own currency and uncertainty as to which side would win. The National Banking Act had only been signed into law in 1863, making the dollar the sole unit of currency for the first time. Then there was the economic panic of 1893. Add it all up, and this generation had many reasons to be hesitant to convert their fortunes into green ink on paper, backed up by little more than hope. Today, we compare precious metals to fiat currency, but at the time, fiat currency was an even harder sell when nobody was used to the idea. Naturally, heavy circulation cuts down on the collectible specimens.
#2: Millions of Morgan dollars were melted down through The Pittman Act.
During World War I, the Pittman Act of 1918 provided for the melting of some 270 million silver dollars into bullion silver. In fact, the act authorized up to 350 million, so had the full quota been enacted, Morgan dollars would be even more scarce now. The reason behind this massacre of coins was to aid our WWI allies, namely the UK and France, in providing hard metal to back their currency. This effort prevented the collapse of the British banking system during the inflation caused by the war. It also paid off a sizable debt – the British and French were the ones building tanks and planes for the US.
#3: Another 50 million Morgan dollars were melted down to help build the atomic bomb.
Of all the things you run into in researching numismatic history, now we have to talk about electromagnetic isotope separation. This is the process by which one derives the kind of uranium which makes a bomb. Originally, scientists at the Los Alamos National Laboratory wanted to use copper for this process, but that proved to be too much demand for the scarce supply at the time, so silver was used as the next best substitute. In August of 1942, silver bullion was obtained from melted Morgan dollars at the West Point Mint and cast into magnetic coils for the project. After the war, much of the silver was painstakingly reclaimed and returned to West Point – so there’s a good chance that some recently minted silver coins contain silver that once electromagneticly separated isotopes.
#4: Then the Hunt Brothers made silver too valuable to stay in coin form.
Once upon a time, the brothers Nelson Bunker and William Herbert Hunt dared to dream the impossible dream of avarice: They wanted to corner the silver market. No, not the United States’ silver market, but the world’s silver market! In a scheme worthy of a James Bond villain, the Hunt brothers methodically bought their way into over half of the entire world’s silver supply. By 1980, this caused the price of silver to spiral wildly out of control. During this time, a Morgan silver dollar didn’t stand a chance, as it would contain about $50 worth of silver when in all likelihood it had been obtained for $1. The scheme was put to a halt by COMEX, which stopped all non-liquidation silver transactions. The price of silver fell again, and the Hunt brothers were unable to repay the debts they’d accumulated in obtaining silver, so they had to sell out, which caused even more panic.
#5: Recent years’ silver prices have led to more coin melting.
A common misconception is that there is a US law against melting down coins. The United States code, as stated clearly on USMint.gov, forbids only the fraudulent defacing of US currency for the purpose of misrepresenting it; you’re not allowed to paint a penny and try to pass it off as a dime. However, if you’re not committing fraud, you’re free to melt away! Whenever precious metal values spike, coins are regularly melted down all the time. The recent US depression of the late 2000s and our current economic doldrums, together with the spiraling cost of silver related to industrial use, has caused a number of coins to disappear from circulation.
So there you have it. If you are the proud owner of some Morgan dollars today, you should respect them. Given all the hazards they’ve faced, they’re very lucky to exist at all!
