The composition of our dime, quarter dollar and half dollar are taken for granted today but at one time the composition of these coins was a hotly contested issue.
In the years between 1960 and 1964, the rising coinage output at the Mint had increased that agency's silver usage from 42 million ounces in 1960 to 144 million ounces in 1964, and it seemed that if nothing were done the Mint's annual consumption of the precious metal would hit 300 million ounces in the near future.
Estimates indicated the Treasury Department's 1-billion-ounce stockpile of silver could last the Mint three years, but the Mint was not the only agency that tapped the reserves. Sixty million ounces were sold every year to keep the price of silver stable, and other agencies, such as the Navy, which needed silver for nuclear submarine batteries, drew silver from the stockpile.
At the same time the industrial use of silver was climbing, pushing silver prices to new highs. The Western mine owners, who produced most of the domestic silver, about $50 million annually, cheered as prices rose and demand outstripped supply. But, officials at the Mint and the Treasury became anxious as the price of silver approached $1.38 an ounce, the point at which it would become profitable to melt coins for their silver content.
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WHILE CONGRESS DEBATED removing most or all silver from circulating coinage, the Mint was striking 1964 Roosevelt dimes. A new composition, copper-nickel clad, was introduced to the 10-cent denomination in 1965.
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Seeing an impending crisis, and the potential for a severe coinage shortage, Congress quickly saw the need for at least a reduced silver content in the coinage if not its complete removal. However, as so often happens with Congress, a squabble over the issue let the 90 percent composition stand for a little while longer.
The Treasury Department started its own probe into the issue, considering any substitute to the 90 percent silver composition. A wide variety of alternatives were considered, ranging from plastic to brass. One Treasury official commented that "just about everything but wood" was under consideration but no material seemed to be perfectly suited for the task.
Plastic would be too easy to counterfeit and vending machines might accept game tokens on par with real money. Another downside of plastic coins is that they might debase the currency.
Aluminum's light nature would make the public feel shortchanged and it would require a major adjustment in vending machines.
Brass coins might not be recognized, and nickel would be difficult to strike.
In Congress, there was a consensus that the silver content needed to be reduced, but a debate sprang up over how much to reduce it by. Members of Congress from Western states wanted Uncle Sam to consume as much silver as possible. Some Southern members feared that the removal of silver would debase the currency, while members from industrial states wanted to keep the price of silver low to support the growing economy.
President Lyndon Johnson intervened and offered a compromise. Under the president's plan silver would be removed from the dime and the quarter dollar in favor of a copper-nickel clad alloy, and the half dollar would see its silver content reduced from 90 percent to 40 percent, a largely symbolic gesture.
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SILVER HAD BEEN used in the 25-cent denomination since the 18th century, but the 1964 Washington quarter dollar is the last of its kind. For three years beginning with the 1965 coins, Mint marks were removed, as with this 1967 example.
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To protect the price of silver, the Treasury would be authorized to buy any silver that became available for $1.25 an ounce.
To keep silver coins in circulation long enough for enough new coins to be struck, the Treasury would sell its reserves for $1.29 an ounce. If that failed to deter coin melting, penalties of up to $10,000 and five years in prison could be imposed.
The president told Congress, "Silver is becoming too scarce for continued large-scale use in coins," and that his plan would eliminate the possibility of a "chronic and growing scarcity of coins." The president's plan ultimately cut the Mint's silver usage by about 95 percent from the estimated 300 million ounces that would have been needed in 1965 to a mere fifteen million ounces.
Although it was ultimately approved, the plan outlined by the Johnson administration was not immediately accepted. Reacting to the proposed legislation, Rep. Walter S. Baring, D-Nev., implored members of Congress from other silver producing states to unite and "fight this all down the line," and many did. Rep. Compton I. White Jr., D-Idaho, set up a display in the house lobby depicting the decline of Rome upon the removal of silver from its coins.
An amendment to the bill was introduced in the house by Rep. James F. Battin, R-Mont., that would have made the dime, quarter dollar and half dollar 40 percent silver, and thereby peg the Mint's annual silver usage at a little less than 150 million ounces. The amendment ultimately failed.
In an alternative plan that would have eliminated silver from the coinage entirely, members of the House Banking Committee voted 31-2 to approve a plan that would eliminate silver from the half dollar, as well as the quarter dollar and the dime.
The view of the committee was summed up by Rep. Silvio O. Conte, R-Mass., who said that a 40 percent half dollar would become "a curiosity item" that would only serve to drain the government's silver reserves and "disappear from circulation."
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THE 90 PERCENT SILVER 1964 Kennedy half dollars are the last of that denomination struck for circulation in that composition. The silver clad composition of this 1965 Kennedy half dollar had a total silver content of 40 percent.
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Similar views existed in the Senate, Sen. John O. Pastore, D-R.I., attempted to have silver removed from the half dollar. That measure lost 60-32. Another proposal, from Sen. Frank E. Moss, D-Utah, that would have made the composition of the dime and the quarter dollar 40 percent lost 57-34.
The Senate eventually passed the president's bill, with the support of the vending machine industry, which would not have to make any significant changes to its machines, in June 1965 by a vote of 72-9. Only a few Western senators such as Alan Bible, D-Nev., whom Mint Director Eva Adams had served as an administrative assistant until her appointment to the Mint post, opposed the bill.
The House approved the bill July 14, 1965, by a vote of 255-151. The only major change that Congress made to the president's proposal was to remove the Mint marks of the coins to prevent collectors from hoarding them.
The president signed the bill into law July 23, 1965, and the first coins were introduced Nov. 1, 1965. The Federal Reserve placed 230 million of the silverless coins into circulation that week, apparently to prevent hoarding by collectors. With the successful launch of the new coins, the only question left was what to do with the $500 million windfall.
