This article was originally printed in the latest issue of Numismatic News.
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Lyndon B. Johnson entered the presidency Nov. 22, 1963, just as the budget for the following fiscal year was being framed. At some point, either in the Oval Office or “across the street in the Treasury Building, a decision was made to include an item in both the supplemental appropriation budget for 1964 and that for the following fiscal year.
Whether or not it was Johnson who ordered the inclusion cannot be ascertained. In any event, it is clear that he did not object to it. Simply put, placed in both budgets were funds to produce 150 million silver dollars, 50 million from the 1964 supplementary appropriation, the balance from the regular 1965 submission covering the fiscal year ending June 30, 1966.
The House of Representatives refused to grant any of the funding requested, but the Senate revised the appropriations bill to include $600,000 needed to produce 45 million silver dollars.
Senate Report 1095 states that the Finance Committee “specifically approves the use of $600,000 as requested for the manufacture of 45 million silver dollars.” The Treasury agreed to the modification. It is purely conjectural as to what happened in the conference committee between the two houses, but it is likely that Johnson, the former majority leader of the Senate, prevailed upon his old colleagues to press for the provision.
It is equally plausible, however, to conclude that Mint Director Eva B. Adams, well known on the Hill as former key aide to Sen. Pat McCarran, D-Nev., may have similarly requested passage of this point, or, it could have been Senate Majority Leader Mike Mansfield, D-Mont.
Regardless, when the conference reported out its version, the appropriation for production of 45 million dollars was included and, on Aug. 3, 1964, Johnson signed it into law.
Manufacture of the coins had to take place during the fiscal year, which ended June 30, 1965. After that point, new authorization and appropriation would be required and, potentially, the same conflict between the House and Senate could result and go the other way.
Initially, Assistant Secretary of the Treasury Robert A. Wallace recalled in testimony before the House Appropriations Committee, “It was in keeping with the national tradition of recognizing regional interests that the Treasury made the request for authority to mint these silver dollars ... There is a desire backed by long tradition for a circulating silver dollar in Western States.”
And yet, the nation in 1964 was in the midst of a coin shortage of massive proportions. Silver coinage, in general, was about to be overhauled. Plans, in short, were already being made for the cupronickel clad pieces now in circulation. Silver dollar production could be accomplished, but at what price?
Estimates were that production of 45 million silver dollars could be accomplished at the cost of 500 million other coins. The reason was manifold: The coin had not been struck for more than 30 years, technology was different, production techniques had changed dramatically.
Nonetheless, Wallace declared on May 24, 1965, nine days after more than 300,000 pieces had been produced for circulation by the Denver Mint that there was nothing wrong with producing silver dollars in small quantities.
The figure he named was between four and five million in fiscal 1965, which ended just 36 days later on June 30.
“Up until about April of this year,” Wallace said in his testimony before the Appropriations Subcommittee on the Treasury Department, “it appeared that the diversion of silver and production facilities to the minting of silver dollars would not be in the best interests of the country, due to a shortage of the smaller coins that are ‘indispensable to our daily lives ...’
“To produce the entire 45 million silver dollars would displace the production of 500 million other coins, which we cannot afford at this time ... Crash production efforts by the Mint in recent months have made substantial progress toward elimination of the coin shortage, but the supply of silver coins is still somewhat tight.”
Nonetheless, Wallace told the subcommittee that it would not be a great burden to cater to the regional interests and produce four to five million silver dollars. “We believe the general coin situation would permit us to divert a portion of our production facilities to a small run of silver dollars.”
Simultaneous with Wallace’s appearance before the subcommittee, the Treasury Department issued a release that provided in part that “the Mint will not make any ... dollars at this time.” In fact, production had already begun.
In mid February 1965, Treasury Secretary C. Douglas Dillon appeared before the same Appropriations Subcommittee. Then, he could say quite correctly, “We have not commenced minting any of these silver dollars because we are still short in the other coins.”
Rep. Silvio Conte, R-Mass., engaged in a colloquy with Dillon on this point, noting in part that “it does not make sense to mint silver dollars when we have this tremendous shortage of silver, compounded by the shortage of coins.”
Dillon’s response: “That is the reason we have not done it so far.” All the stoppers were pulled out on May 15, 1964, when Johnson, probably at the instigation of Mansfield, the majority leader of the Senate and an old-time friend who strongly backed the idea, issued a statement indicating he had ordered production of silver dollars to begin before the appropriation expired on June 30.
When the President of the United States issues an order provided it is within his authority to do so, the order is usually obeyed. In this pre-Watergate era, when the President was ostensively carrying out the will of Congress by ordering the expenditure of an authorized appropriation, production began.
Trial strikes were made at the Philadelphia Mint immediately following the Presidential directive. The die work had evidently been prepared months before, probably after the appropriation had been authorized.
A total of 30 pieces were produced in this first trial striking and 28 were immediately melted by count. The remaining two pieces were shipped to Washington, D.C., for optical, spectrographic and physical analysis by the Mint Laboratories. There they would remain for six years, locked in the vaults of the office of technology, even as statements were made denying they existed.
The initial question this poses, of course, is whether in fact the 28 silver dollars were melted, or whether some were secreted out of the Mint. From available information, it appears indisputable that they were melted after the coins were defaced by a destruction committee.
Destruction committees are by no means new to the Mint. They are part of standard operating procedure designed to prevent precisely what did occur later: escape into circulation of coins that never were intended to leave the Mint.
In 1965, the destruction committee at the Philadelphia Mint consisted of representatives from the engraving and coining divisions, the superintendent’s office and management office of the director of the Mint. Because a mere 30 pieces were struck on trial, it was possible to physically count out the 28 specimens that remained after two were shipped to Washington.
Each of the four representatives swore an affidavit to the effect that he had witnessed the destruction of the pieces. From all available evidence, this is precisely what happened.
Johnson ordered the Bureau of the Mint, as it was called then, to commence production of silver dollars on May 15, 1965. Money had been “appropriated the previous August and, but for the national coin shortage and the rising price of silver, little probably, would have been made of the event, least of all by a Congress so recently elected in a landslide led by the incumbent President.
Given these two critical ingredients, however, Congress had begun to make a fuss over the possibility of striking silver dollars. It would cost the Mint badly needed production, would deprive the market of silver and thus raise the price of the metal; and the coins would be a waste of time; they’d never circulate the arguments, against the proposals said.
Nonetheless, a Presidential directive is difficult to ignore, particularly when it is ostensively in compliance with the will of Congress which, after all, had appropriated the funds for such a production program on Aug. 1, 1964.
And so, after Philadelphia completed trial strikes, the word went forth to Denver to begin a production run of the silver dollars all bearing the 1964 date as a result of the date “freeze” that was still in effect in early 1965.
Denver was chosen as the site for main production for multiple reasons. Philadelphia was a crowded facility, old and awaiting the completion of a new mint building. Denver, far removed from Washington politics, was not only in the commercial center of the area where silver dollars used to circulate, but it was better equipped productionwise to handle the request.
Mint records show a total of 316,076 silver dollars with the 1964 date were manufactured between May 15 and May 24, 1965. In the interim, a number. of events happened that ultimately halted production and led to the decision by both the President and the Treasury Department to melt the coins that had been struck before they were issued for circulation.
Conte was furious when he learned that the Mint was going ahead with plans to strike silver dollars. As the ranking minority member of the Appropriations Subcommittee on the Treasury; he had successfully fought the battle in the House against funding such enterprises, only to lose to the Senate in conference.
Nonetheless Conte felt that in view of the coin shortage and the rising price of silver, which he suspected would make increasing demands on Mint production in the coming year and cause greater shortage, the channeling of Mint energies to meet the current crisis would be better than producing silver dollars.
In fact, a commitment had been received from Treasury Secretary Dillon in February 1965 that the dollars would not be struck. As we have seen, however massive pressure caused the Treasury to shift its position to the point where Assistant Secretary Wallace allowed that production of “four or five million dollars would not damage Mint production requirements.”
Springing into action, Conte prepared legislation to halt production of the dollar coins. On May 19, 1965, the day he introduced the bill, he made a major speech on the House floor in which he roasted the Treasury and Administration for its stance that favored the production of silver dollars.
On May 24, 1965, an order left the White House and traveled across the street to the Treasury Department. In a word, it ordered the destruction of the 316,000 silver dollars struck during the preceding nine days at the mint in Denver. A second destruction committee was formed. With this quantity of silver dollars, individual examination was not possible.
Instead, the approach taken by the committee was to weigh the coins on a quantity basis and melt them.
Unlike the Philadelphia trial strikes, the coins were not first rolled out and defaced. With such a method, some error might creep in, particularly in light of the fact that coin weights do vary. To assure that as accurate as possible a weighing took place, the destruction committee weighed in all of the webbing created by the blanks and the scrap left over.
Participants included accounting, management, director’s office and technology who witnessed the weighing and the subsequent melting. They signed affidavits certifying that the weights before and after were identical, or as nearly so as, massive scales would allow for. Thus, by the end of May 1965, in so far as official records indicate, the Bureau of the Mint was satisfied that all of the 1964 silver dollars were destroyed save for the two pieces in the office of technology in Washington.
Mint director Adams was touchy about the ensuing controversy over the 1964 dollars for a long period to come. In an extensive interview conducted after she left office in 1969, she told me that none of the coins ever left the Mint ... We had that most carefully guarded to avoid a loss ...
In another interview in March 1972, also held in Washington, she added that “each piece was counted and melted.” We usually talked at a K Street French restaurant, Jean Pierre’s after meeting first at her Mutual of Omaha Washington lobbying office.
Following the debacle of the 1964 Peace dollar, the Coinage Act of 1965 fundamentally changed American coinage, since it removed silver from the circulating dime and quarter, reduced the silver composition of the half dollar (subsequently removed at year end in 1970) and authorized various prohibitions against the melting of coins as determined by the Secretary of the Treasury.
The silver dollar became a coin that might have been. Economic events moved just too quickly for the old pols and their connections to the President to overrule necessity.
So instead of silver dollars, the country got copper-nickel clad dimes and quarters.