I found a U.S. Silver Coin Melt Value Calculator. They provide a list of silver coins, with face value, weight, percent silver and other data. I typed in a quantity of one for each of the coins on the list.
Total face value: $7.85
Total value of silver: $239.27 (based on the current price of silver just a few days ago).
The value of the silver in those seventeen coins is more than 30 times the face value of the coins.
A Jefferson nickel, containing only 30% silver, contains $1.31 in silver. In a nickel.
But you know what really gets me? The Kennedy half dollar issued in 1964 contains $8.42 worth of silver at recent prices. But the Kennedy half issued in 1965 contains only $3.44 silver. Because after 1964 the silver content dropped from 90% to 40%.
The issue of dimes and quarters containing 90% silver, if I read the list right, also stopped at 1964. I vaguely remember. (I was in high school.) Wikipedia confirms.
Clearly, before 1965 the people in charge of issuing our coins knew they could not continue to issue coins containing 90% silver, or people would melt them down to make money on the silver in the coins. It's Gresham's law: Bad money drives good money out of circulation.
It's also a kind of reverse debasement: The government had to take silver out of the coins, because the coins were getting to be worth less than the silver was worth.
Usually, when I think of debasement, I think of the money becoming worth less because the government reduces the silver content. That's not what happened here.
2 comments:
Does this not show that fiat money can be specie? Here we have an example of the government declaring X ounces of silver being worth Z dollars and then in the next year declaring Y ounces of silver being worth Z dollars. It seems to me that Gresham's Law is a perfect example of fiat specie.
Yeah, I think you're right. No matter what the money is made of, the issuing body defines the "standard of value".
Post a Comment