In American history, when the production of a series of coins ended, there usually was a changeover to a different design in the same or next year. In other instances, the denomination went out of production (e.g. half cents, 2 cents, 20 cents, double eagles).
Neither of these reasons fit for why no Morgan dollars were struck after 1904 until 1921. So, what happened?
You can find the answers in specialized reference catalogs covering Morgan dollars. The answer turns out to involve a combination of economics and politics.
The price of silver relative to gold had started to fall dramatically in the early 1870s, shortly before Germany adopted a gold standard in place of a bimetallic gold and silver standard. Germany’s economic clout at the time forced most other European nations (with the notable exception of the United Kingdom) to adopt a gold standard by 1873.
The shift away from a silver standard contributed to a declining price of silver. At the same time, silver production from the western United States and elsewhere significantly increased. The combination of all of these factors led the U.S. government to enact the Coinage Act of 1873, setting America’s monetary system on a de facto gold standard (not official until 1900). Production of circulating silver dollars for use in America ceased that year.
Western states, especially representatives from Colorado and Nevada, pushed for the U.S. government to again strike silver dollars for circulation. Eventually, the Bland-Allison Act was passed in 1878. It mandated the U.S. Mint to strike two to four million silver dollars per month, without regard to the quantity needed for commerce. In addition, the U.S. government was authorized to issue paper money redeemable in silver dollars – the first Silver Certificates. The bill became law when Congress overrode a veto by President Rutherford B. Hayes.
One objection to this legislation raised by Hayes is that the value of the silver in these Morgan dollars was then valued at about 90 cents.
Over the next 12 years, the U.S. Mint purchased more than 291 million ounces of silver. Then, the Sherman Silver Purchase Act of 1890 required the US government to purchase 4.5 million ounces of silver each month at current market prices to be struck into silver dollars. This law also established Treasury Notes, which could be redeemed for either gold or silver. Under the Sherman Act, the federal government purchased more than 168 million ounces of silver, of which barely 85 percent was used for striking silver dollars (the balance was used to strike lower-denomination silver coins, which had a slightly lower silver content per dollar of face value).
The Sherman Act only mandated that the government purchase the 4.5 million ounces of silver until July 1, 1891. Thereafter, it only was required to strike silver dollars as needed to redeem outstanding Treasury Notes. The Sherman Act was repealed in 1893. At that time, the government pretty much stopped all purchases of silver.
The Act of June 13, 1898, required that the U.S. Mint use up the remaining silver acquired under the Sherman Silver Purchase Act of 1890 into silver dollars. The last of this silver was used for this purpose during 1904, after which production of Morgan dollars ceased.
There are a number of details of the political and economic back-and-forth that took place over these decades that are omitted from the above discussion, which you can find in the specialized silver dollar catalogs.
But wait, more Morgan silver dollars were struck in 1921. Why?
This was part of a U.S. government welfare program to prop up British India during World War I, which used a currency based on the silver standard. The details of that story will have to wait for another time.
Patrick A. Heller is winner of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman Dealer of the Year Award, and 2008 Presidential Award. He was also honored by the Numismatic Literary Guild in 2017 and 2016 for the Best Dealer-Published Magazine/Newspaper and for Best Radio Report. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com).
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