Silver content in old U.S. coins 0

[Jeff12633]

In studying the composition and melt values of U.S. silver coins from the 1873-1964 time frame, I noticed that there's a discrepancy between the amount of silver in Morgan and Peace dollars and that in the lower denomination coins.  If you assume the silver in a dime, quarter, or half dollar was intended to be equal to the exact face value of the coin, it suggests a silver bullion price of about $1.382 per troy oz.  However, if you assume the same for the silver dollars, it is consistent with a silver price of only $1.293 per troy oz.  Interestingly, the latter price is exactly the silver price I calculate from 1792 legislation setting the weight of all silver denominations in grains "pure" and "standard".  So my question is, which of the following is the explanation? 

(1)  Was the amount of silver in the lower denomination coins reduced compared to the 1792 standard to account for a rise in the price of silver and gold, while the dollar for some reason retained the original weight?  This would mean the dollar was worth more than a dollar, while the lower denominations were worth exactly their face values.  The higher silver price is consistent with a 15:1 ratio of gold to silver with a gold price of $20.67 per oz, as set in 1837. 

(2)  Was the amount of silver in the dollar exactly equal to a dollar, while the smaller denominations were worth less than face value?  The lower silver price would be consistent with a 15:1 ratio of gold to silver with a gold price of $19.39 per oz, the price set in 1792. 

Option (1) seems more likely, unless the 15:1 ratio was changed at some point prior to 1934.  But if so, why would Congress allow the minting of hundreds of millions of dollar coins over almost 90 years that were worth $1.07 each?

[jtryka]

There were a series of acts after the Coinage Act of 1792 that at various times changed the standard for dollars and subsidiary coinage. It was in the Coinage Act of 1853 that eliminated the right of depositors of bullion to have their bullion minted in subsidiary coinage, from that point until the "Crime of '73" depositors could only have bullion returned in dollars.  The Act of 1853 also reduced the silver content of the half dime through have dollar to equate to 25g of 0.900 fine silver per $1 compared to 26.73g of 0.900 fine silver for silver dollars.  This change led to various design changes (addition of arrows in 1853 and 1873) to indicate changes in the standards.  I hope this helps, but someone else likely has more detailed view of the various mint acts.

[RWB]

The US Mint terms "standard" and "fine" mean, respectively, 0.900 fine silver or gold; and 0.999+ (or 1.000) fine silver or gold.

From 1794 - 1837 all us silver coins were 0.8924 silver, balance copper. After  passage of the Act of January 18, 1837 the silver was increased o 0.900 fine and the weight slightly reduced so the coins had the same pure silver content as earlier. In 1853 the weight of 0.900 fine silver coins was reduced slightly, while the "standard silver dollar" remained as before. This made all silver coins below the dollar in denomination "subsidiary" since any combination with a face value of one-dollar contained less silver (a "subsidiary amount") than the standard silver dollar. Coins with arrows at the date have the reduced weight. In 1873 the weight of subsidiary silver coins was increased slightly. This made two half dollars (or any combination equaling one-dollar, except the silver dollar) exactly equal in weight and purity to the French 5 franc coin and other Latin Monetary Union member coin standards.

An exception to the above was the tiny 3-cent silver coin which was 0.750 silver from 1851-1853, and 0.900 silver from 1854-1873 when it was mercifully discontinued.

U.S. gold coins were 0.9167 gold, balance approximately 1/2 silver and 1/2 copper from 1795- 1834. The Act of June 28, 1834  reduced the fineness to 0.8992, with the same alloy; and the Act of January 18, 1837  standardized gold coins at 0.900 fine, again with the same alloy. By the early 1840s, U.S. gold coins gradually transitioned to alloy solely of copper.

Does this help with the OP's questions?

The open market prices of silver and gold were never really in a stable ratio, regardless of the wishes of brokers, politicians and various others. Even the government-established value of a gold dollar varied in international trade....but that's a whole different and larger ball of wax. :)

[Jeff12633]

Thank you both for the excellent information!  It definitely helps clear things up for me.  So if I'm interpreting it right, when the price of gold was changed in 1834 from $19.39 per oz to 20.67, the price of silver was not changed to maintain the 15:1 ratio--is that correct?  If so, the math all works out perfectly, with the dollar coin being the only silver coin being worth exactly $1.

Thanks again!

[Conder101]

Yes but that changed after the discovery of so much gold in California in 1849. Silver rose in value compared to gold resulting in the silver coin containing more than their face value in respect to gold and so they disappeared from circulation,  That lead to the Act of 1853 which reduced the weight of the silver miner coins so they contained less than their face value in silver.  Their legal tender status was also reduced.  Until that time they were unlimited legal tender, after the Act of 1853 they were only legal tender in amounts of less than $5.  The weight of the silver dollar was not reduced.  This meant that the silver dollar now contained about $1.04 worth of silver.  One more nail in the coffin for trying to get the dollar coin to circulate.  The weight of the standard silver dollar remained unchanged then from 1853 to 1935 

As silver prices fell later the amount of silver in the dime, quarter, and half was increased slightly in 1873 but still remained below the face value and the legal tender status remained limited.

Edited March 4, 2020 by Conder101

[jtryka]

It's also fascinating to see the impact of these changes on the several central and South American countries that pegged to the dollar.  For instance, Cuba and Panama had Peso's and Balboas respectively that contained 26.73g of 0.900 fine silver, while their subsidiary coinage contained the 25g per unit, so a half Balboa contained 12.5g of 0.900 fine silver while a Cuban 40-centavo contained 10g of 0.900 fine silver.  Other countries, like Venezuela had a 25g of 0.900 fine silver.  The various pegs are an interesting piece of my collecting mind!