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.
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.
ReplyDeleteYeah, I think you're right. No matter what the money is made of, the issuing body defines the "standard of value".
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