# What was the last year when the value of coins was related to their metallic content? **URL:** \ **Category:** Factual Questions\ **Created:** [April 23, 2004, 11:46pm UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732 "2004-04-23T23:46:33Z")\ **Posts on this page:** 14\ **Page:** 1
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 23, 2004, 11:46pm UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/1 "2004-04-23T23:46:33Z")
A coin originally was a small ingot of precious or semiprecious metal with a government stamp attesting to its weight and purity. In theory, you could melt all your coins down into bricks without gaining or losing any value. This was the case in the United States at least until the late 19th Century – which is why the agrarian Populists’ inflationary “free silver” policy was such a hot issue. Nowadays, coins are made of base metal, and most money is paper bills, or purely notional credits and debits in account books. At what point did all this change? When was the last year when a coin’s metallic content bore any real or theoretical relationship to its value? (I’m not asking about the “gold standard” for fixing the dollar’s value, which the United States adhered to until the Nixon Administration; I’m asking about actual, physical coins.) ---
**Author:** ![umop\_ap\_sdn](https://avatars.discourse-cdn.com/v4/letter/u/dbc845/32.png) [@umop\_ap\_sdn](https://boards.straightdope.com/u/umop_ap_sdn)\ **Post date:** [April 24, 2004, 12:38am UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/2 "2004-04-24T00:38:37Z")
So I’m told, our coins became tokens in 1963. This is according to my faher, who claims the silver was taken out right after Kennedy was assassinated. I don’t know if there’s any truth to that. It may or may not be related, but according to the Kirk & Othmer encyclopedia, the red phosphor in our TV sets used to contain a small amount of silver, until a more efficient vanadate phosphor was found. This happened - interestingly enough - in 1964. ---
**Author:** ![dqa](https://avatars.discourse-cdn.com/v4/letter/d/d6d6ee/32.png) [@dqa](https://boards.straightdope.com/u/dqa)\ **Post date:** [April 24, 2004, 12:55am UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/3 "2004-04-24T00:55:10Z")
I don’t think that having silver content per se means the coin value is related to the metallic content. But surely **samclem** will be along shortly to enlighten us further. > [@cityboy916](#): > > So I’m told, our coins became tokens in 1963. This is according to my faher, who claims the silver was taken out right after Kennedy was assassinated. > > …the red phosphor in our TV sets used to contain a small amount of silver, until…1964. Surprisingly, no dip in silver prices during [this period](http://www.kitco.com/LFgif/ag792-999D.gif). (source: [Kitco.com](http://www.kitco.com/)). ---
**Author:** ![Chairman\_Pow](https://avatars.discourse-cdn.com/v4/letter/c/838e76/32.png) [@Chairman\_Pow](https://boards.straightdope.com/u/Chairman_Pow)\ **Post date:** [April 24, 2004, 1:28am UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/4 "2004-04-24T01:28:13Z")
You can still buy silver coins that have value from their silver content, IIRC, Kugerrands, Maple leafs, etc., which all have value of silver and etc. I don’t know that you’d get the 7-11 to accept it as tender though… [http://www.taxfreegold.co.uk/krugerrandinfo.html](http://www.taxfreegold.co.uk/krugerrandinfo.html) …couldn’t find any good info on silver maple leafs. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [April 24, 2004, 3:07am UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/5 "2004-04-24T03:07:48Z")
> [@BrainGlutton](#): > > A coin originally was a small ingot of precious or semiprecious metal with a government stamp attesting to its weight and purity. In theory, you could melt all your coins down into bricks without gaining or losing any value. .) Not really. First, it would have been impossible since the value of gold and silver fluctuated. More importantly the value of the coins was frequently modified by fiat. I don’t know the situation in, for instance Britain, but I believe it was similar to France, so I think the french example would be valid. If you wanted, say, to rent a house, your rent was expressed in a count unit : the “livre” (same thing as the british pound). But there was no coins with a facial value expressed in livres. You could have a 2 “louis” gold coin, for instance. The value of the “louis” expressed in “livres” could be modified at any time by the king. For instance a livre could be worth 4 “louis” today, but 6 “louis” tomorrow (of course, it’s just an example…the variations weren’t as important as that). So, the value of your gold coins had suddendly dropped. You still had to pay, say 10 “livres” (count unit) for your rent, but you now needed 60 “louis” (real coins) instead of 40 to pay it. IOW, the currency had been devaluated. The reverse could be done, and , suddenly, the currency had been reevaluated and the national debt had dropped (its amount in count units had not changed, but ythe state needed less coins to pay it or to pay the interests) Besides, even if you didn’t want to do that, you could also change the weight of gold in each coin. You just had to mint new coins, with the same facial value, but containing less gold. And withdraw from the circulation the former ones. The difference would go directly to the state’s treasury. You could even order people to bring the former coins to the royal mint and _tax them_ to give them in exchange new coins containing less gold. These ways of messing with the currency was usually quite unpopular, especially during the earlier periods. But it has been done since the middle-ages. Though gold or silver coins had more value than our current paper bills, it doesn’t mean that historically the official value of these coins was identical to the value of the gold/silver they contained. Their facial value was essentially always higher (if it had been lower, people would have melted the coins to sell the gold). ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [April 24, 2004, 3:29am UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/6 "2004-04-24T03:29:33Z")
> [@BrainGlutton](#): > > When was the last year when a coin’s metallic content bore any real or theoretical relationship to its value? (I’m not asking about the “gold standard” for fixing the dollar’s value, which the United States adhered to until the Nixon Administration; I’m asking about actual, physical coins.) Well, the “gold standard” has to come into the discussion. The world free market price of gold had risen in the late 1920’s-early 1930’s to _above_ the previous standard. So, a US $20 gold coin, which contained about .96 ounce of pure gold was worth more than the US $20 face value. Roosevelt, correctly IMHO, decided to go off the gold standard at that point, at least as far as issuing gold coins with a fixed value goes. Since 90% of the US gold coins were in the hands of the banks and the US government at the time, it wasn’t a problem declaring that the US would no longer issue gold coins, and would only redeem them for their face value. (Never mind that immediately after all gold coins were demonetized, the official price of gold in the US was monetized upward to the world price. A tidy sum for the US treasury. The US quit issuing silver coins after 1964. All silver coins issued in 1964 and earlier were made of 90% silver, and conformed to a standard that had been in existance since 1794. But the world price of silver was increasing and would have bankrupted the US if we had continued to make silver coins and _continued issuing silver certificate dollar bills which could be redeemed at the Treasury for a dollars worth of silver_. US silver certificates were redeemable until late 1968 for a dollars worth of silver, and after that date you could still spend them, but they wouldn’t be redeemed for silver. This is done from memory. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 24, 2004, 4:38pm UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/7 "2004-04-24T16:38:01Z")
> [@clairobscur](#): > > Besides, even if you didn’t want to do that, you could also change the weight of gold in each coin. You just had to mint new coins, with the same facial value, but containing less gold. And withdraw from the circulation the former ones. The difference would go directly to the state’s treasury. You could even order people to bring the former coins to the royal mint and _tax them_ to give them in exchange new coins containing less gold. I believe that is the origin of Gresham’s Law: “Bad money drives out good.” Gresham, an Englishman of the reign of Elizabeth I, pointed out that when the state devalues the currency by reducing the gold or silver content of the coins, people will hide their old coins away (or melt them down into bullion) and use only the new ones for commercial transactions. Which causes inflation, which is a bad thing if you are a creditor and a good thing if you are a debtor. Which is why the 19th-Century American Populists, mostly debt-ridden farmers, wanted “free silver” – that is, they wanted dollars coined in silver with the value of 16 ounces of silver being set, by fiat, to equal that of one ounce of gold, when the actual market ratio at the time was, I believe, 32 ounces of silver to one of gold. The purpose was to inflate/devalue the American dollar coins, so farmers could use cheap silver to pay back money they had borrowed in precious gold. What puzzles me is why nowadays some American right-wing radicals, with their political power base largely among debt-ridden farmers, want to return the U.S. to gold and silver coinage. Don’t they realize that such an inflexible system, making the value of currency dependent on the amount of precious metals that actually has been dug out of the ground, would be deflationary, and bad for farmers? Nothing would cause inflation short of a major gold strike somewhere. ---
**Author:** ![Chairman\_Pow](https://avatars.discourse-cdn.com/v4/letter/c/838e76/32.png) [@Chairman\_Pow](https://boards.straightdope.com/u/Chairman_Pow)\ **Post date:** [April 24, 2004, 4:50pm UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/8 "2004-04-24T16:50:37Z")
> [@BrainGlutton](#): > > What puzzles me is why nowadays some American right-wing radicals, with their political power base largely among debt-ridden farmers, want to return the U.S. to gold and silver coinage. Don’t they realize that such an inflexible system, making the value of currency dependent on the amount of precious metals that actually has been dug out of the ground, would be deflationary, and bad for farmers? Nothing would cause inflation short of a major gold strike somewhere. It _would_ be bad for farmers (or other debtors, of which the USG is the largest in the world (IIRC, or at least a very big one), followed by the American consumer), but the upshot is that you can’t instantaneously print more money to try to inflate yourself out of debt, which is impossible to do anyway. You also have to understand that there would still be inflation - all the gold that is dug out of the ground each year contributes to the total supply of gold, but it would be more-or-less controlled instead of firing up the printing presses to try tog et out of problems. The only downside would be manipulation of futures markets to drive the value up/down. I’m not exactly sure how that would work, but we’ve seen similar things happen with fiat currencies (i.e. Soros and the pound). ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 26, 2004, 5:15pm UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/9 "2004-04-26T17:15:48Z")
> [@Chairman Pow](#): > > . . . but the upshot is that you can’t instantaneously print more money to try to inflate yourself out of debt, which is impossible to do anyway. Of course you can – provided the amounts of the debts in question are not contractually adjusted to compensate for inflation. But, as it happens, the U.S. government has **not** added large amounts of fiat money to the economy since the New Deal; the general feeling is that inflation is, under most circumstances, an evil to be avoided. So why are the militia types so concerned with bringing back metallic currency? (It wouldn’t have anything to do, would it, with a false perception that Jews control the banking and finance industries?) ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [April 26, 2004, 7:27pm UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/10 "2004-04-26T19:27:49Z")
> [@Chairman Pow](#): > > It _would_ be bad for farmers (or other debtors, of which the USG is the largest in the world (IIRC, or at least a very big one), followed by the American consumer), but the upshot is that you can’t instantaneously print more money to try to inflate yourself out of debt, which is impossible to do anyway. > > You also have to understand that there would still be inflation - all the gold that is dug out of the ground each year contributes to the total supply of gold, but it would be more-or-less controlled instead of firing up the printing presses to try tog et out of problems. > > The only downside would be manipulation of futures markets to drive the value up/down. I’m not exactly sure how that would work, but we’ve seen similar things happen with fiat currencies (i.e. Soros and the pound). But bills and coins are only a tiny part of the circulating money. What would you do with all the immaterial money, like the money which is in your bank account, for instance? Also, given the enormous value of the money (even only bill and coins) circulating, your gold and silver coins (or gold and silver kept in the reserve bank used to “back” your bills and coins, depending on the way you handle this) should have an equivalent value. In other words, the value of gold and silver would go through the roof. And I don’t know why one would expect that the market value of precious metals couldn’t be influenced by traders, leading to sudden variations in your currency’s value. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 26, 2004, 11:24pm UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/11 "2004-04-26T23:24:30Z")
> [@clairobscur](#): > > But bills and coins are only a tiny part of the circulating money. What would you do with all the immaterial money, like the money which is in your bank account, for instance? Well, that “immaterial money” is another thing those eccentric financial right-wingers want to eliminate, so far as possible. I’ve read some of their screeds and they are hostile to the whole concept of “fractional reserve lending” – the practice, in sum, of a bank being allowed to lend out several times more money in the form of financial instruments than it actually has in its vaults in the form of specie, paper bills, or whatever. Fractional reserve lending has been the basis of Western financial systems ever since the Knights Templar invented it, and it’s hard to see how a modern economy could function without it. ---
**Author:** ![Chairman\_Pow](https://avatars.discourse-cdn.com/v4/letter/c/838e76/32.png) [@Chairman\_Pow](https://boards.straightdope.com/u/Chairman_Pow)\ **Post date:** [May 1, 2004, 7:11pm UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/12 "2004-05-01T19:11:57Z")
> [@BrainGlutton](#): > > Of course you can – provided the amounts of the debts in question are not contractually adjusted to compensate for inflation. Huh? When have you ever had to pay off a balance that was listed in, say 1980 dollars? Did you mean to say that _are_ contractually adjusted to compensate for inflation? [qotw]But, as it happens, the U.S. government has **not** added large amounts of fiat money to the economy since the New Deal; [/quote] What exactly is a “large amount of fiat money?” Seems to me that there’s a lot more money in circulation in the M1-M3 supplies than there were back then. > [@](#): > > (It wouldn’t have anything to do, would it, with a false perception that Jews control the banking and finance industries?) What does this have to do with the argument? > [@](#): > > the general feeling is that inflation is, under most circumstances, an evil to be avoided. Granted, but what’s that got to do with our argument? > [@](#): > > So why are the militia types so concerned with bringing back metallic currency? I assume by metallic you mean precious metal and not more dimes. Go back and read my previous post for an explanation (although I can’t claim to speak for all milita types). ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [May 2, 2004, 3:26am UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/13 "2004-05-02T03:26:55Z")
> [@Chairman Pow](#): > > Huh? When have you ever had to pay off a balance that was listed in, say 1980 dollars? Did you mean to say that _are_ contractually adjusted to compensate for inflation? I merely added that qualifier because, although it is not typical, a contract **could** include an inflation-adjustment provision; it would be legally enforceably so long as the total resultant real interest on repayment did not constitute usury – and the legal definition of “usury” does **not** take account for inflation. > [@Chairman Pow](#): > > What exactly is a “large amount of fiat money?” Seems to me that there’s a lot more money in circulation in the M1-M3 supplies than there were back then. You’re talking about expansion in the money supply created by fractional reserve lending and the federal rules governing same. This is not the same thing as simply printing and issuing new federal reserve notes. The inflationary effect might be the same, but one difference is that changing to a metallic currency would not, by itself, prevent the expansion of the money supply through extensions of credit. It is a related but separate issue. Here’s a discussion of fractional reserve banking from an anti- point of view: [http://www.nationalreform.org/statesman/98/banking.html](http://www.nationalreform.org/statesman/98/banking.html) > [@Chairman Pow](#): > > What does this [the Jews] have to do with the argument? Strictly speaking, nothing. But it has to do with figuring out the motivations of the metallic-currency advocates. Strange to relate, I have read some literature on this issue which explicitly or implicitly declares that the Jews exert malevolent power over society through their control of the financial and banking systems and, apparently, that it is essential to go to a metallic currency because the global supply of precious metals is something even Jews can’t control. Here are some typical links: [http://www.freedomdomain.com/bankfed.htm](http://www.freedomdomain.com/bankfed.htm) [http://www.jrbooksonline.com/Intl\_Jew\_full\_version/ij77.htm](http://www.jrbooksonline.com/Intl_Jew_full_version/ij77.htm) And I could add any more, but most of them would violate the rule against linking to actual “hate sites.” The above are not hate sites . . . quite. > [@Chairman Pow](#): > > Granted, but what’s that [the perception by government that inflation should be avoided] got to do with our argument? It means that the government will not try to “inflate its way out of debt,” because the cure is perceived to be worse than the disease. The government will float bonds to finance deficit spending, but, in most circumstances, it won’t just print up more money to cover its debts. I’m simply trying to address the often-repeated argument that “a metallic currency is not subject to government manipulation” – as if it were a **good** thing to have an inflexible, non-manipulable currency! > [@Chairman Pow](#): > > I assume by metallic you mean precious metal and not more dimes. Go back and read my previous post for an explanation (although I can’t claim to speak for all milita types). You said in your above post that “the upshot [of metallic currency] is that you can’t instantaneously print more money to try to inflate yourself out of debt, which is impossible to do anyway.” In fact, it **is** possible for a debtor to take advantage of inflation by paying off his or her debt with cheaper units of currency; and it is possible (within limits) for a government to print money to pay its own debts, resulting in inflation, as in the German Weimar Republic. Nowadays governments simply don’t **do** this; but I believe that option always should be open, to increase the money supply in dire emergencies where an increase in the money supply might help matter. Furthermore, even with a metallic currency, government could still take action to increase the money supply, as noted above. ---
**Author:** ![Dystopos](https://avatars.discourse-cdn.com/v4/letter/d/e79b87/32.png) [@Dystopos](https://boards.straightdope.com/u/Dystopos)\ **Post date:** [May 7, 2004, 3:24am UTC](https://boards.straightdope.com/t/what-was-the-last-year-when-the-value-of-coins-was-related-to-their-metallic-content/241732/14 "2004-05-07T03:24:21Z")
> [@BrainGlutton](#): > > Nothing would cause inflation short of a major gold strike somewhere. Like, say, a [mineral-rich asteroid](http://news.bbc.co.uk/1/hi/sci/tech/401227.stm)? _“In the 2,900 cubic kms of Eros, there is more aluminium, gold, silver, zinc and other base and precious metals than have ever been excavated in history or indeed, could ever be excavated from the upper layers of the Earth’s crust.”_ BBC News, July 22, 1999