John F. Kennedy Favored Federal Reserve Notes and the De-Monetization of Silver.
JFK and Silver.
JFK never issued a direct or indirect threat to the Federal Reserve.
The JFK vs. The Fed Myth.
One of the most persistent and totally false, yet fervently defended urban myths is that U.S. President John F. Kennedy was killed for challenging the Federal Reserve by ordering the issuance of Silver Certificates and silver backed U.S. Notes. While Kennedy did order Silver Certificates to be issued by the U.S. Treasury, his intention was not to challenge the Federal Reserve by issuing a competing currency to the Federal Reserve Note.
Indeed, JFK favored Federal Reserve Notes as the nation’s currency and worked to de-monetize silver.
In his Annual Economic Report to the Congress on January 21, 1963, John F. Kennedy said:
“I again urge a revision in our silver policy to reflect the status of silver as a metal for which there is an expanding industrial demand. Except for its use in coins, silver serves no useful monetary function.
In 1961, at my direction, sales of silver were suspended by the Secretary of the Treasury. As further steps, I recommend repeal of those Acts that oblige the Treasury to support the price of silver; and repeal of the special 50-percent tax on transfers of interest in silver and authorization for the Federal Reserve System to issue notes in denominations of $1, so as to make possible the gradual withdrawal of silver certificates from circulation and the use of the silver thus released for coinage purposes. I urge the Congress to take prompt action on these recommended changes.”
Congress and JFK would act on these recommendations in June of 1963.
In his speech to Congress JFK was clearly urging the de-monitization of silver and its tie to U.S. paper currency. At the time of JFK’s speech in 1963 silver was used in the minting of dimes, quarters and half dollars.
Silver coins of the type that were in circulation in the United States during John F. Kennedy’s Presidency.
Also in circulation at the time were U.S. Silver Certificates issued by the United States Treasury that were redeemable by holders for physical silver.
Silver Certificates certified that there was on deposit at the U.S. Treasury an amount of silver necessary to redeem the face value printed on the certificate.
For a summary of U.S. Notes, Federal Reserve Notes and U.S. Silver Certificates, click here.
In 1963, silver was required in large quantities to make coins and for industrial use. Kennedy wished to free the silver sitting in the U.S. vaults backing Silver Certificates in order for it to be used for coinage and industry. To accomplish this goal, the Silver Certificates would have to be withdrawn from circulation and replaced with Federal Reserve Notes.
JFK’s Earlier Calls For the De-Monetization of Silver
JFK’s speech to Congress in 1963 was not the first time he called for the de-monitization of silver. A Southeast Missourian newspaper article dated November 28, 1961, noted Kennedy’s opposition to silver as a monetary metal:
“Kennedy directed the Treasury to stop using the [silver] stockpile as a source of coin making. He said that henceforth, silver needed for the mints should be withdrawn from monetary reserves, with an equal amount of silver certificates pulled out of circulation at the same time.”
Again, this demonstrates Kennedy’s desire to remove silver as a backing for U.S. currency and for it to be used in the mintage of coins only.
What About JFK’s Executive Order 11110?
On June 4, 1963, John F. Kennedy issued executive order 11110 and decades later an urban myth was born. Under the order the U.S. Treasury would “issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates”
John Kennedy was notorious for not knowing the difference between monetary and fiscal policy. He was not an anti-Fed crusader. Indeed, his public statements and campaign to remove Silver Certificates from the U.S. currency supply were an explicit endorsement of unbacked Federal Reserve Notes.
So why did JFK order the issuances of Silver Certificates?
Kennedy did not act alone!
The order to issue Silver Certificates against existing Treasury silver was an intermediate step in Kennedy’s goal to remove Silver Certificates from circulation and was issued in conjunction with the passing by Congress of the Act of June 4, 1963 (31 U.S.C. 405a-1). (the same day as Executve Order 11110). If Kennedy was trying to undermine the Fed he would have issued an order increasing the number of Silver Certificates in circulation and increasing the silver monetary reserves backing those certificates.
Instead, Kennedy issued Executive Order 11110 to enable the Act of June 4, 1963 in order to phase out Silver Certificates.
On June 6, 1963 the Spokane Daily Cronicle reported on the Act of June 4, 1963:
“Under the new law pushed by the Administration, the Treasury will be able to retire Silver Certificates paper money now backed by silver bullion as the silver is melted down for coinage. The Silver Certificates would be replaced by Federal Reserve Notes.”
Kennedy’s goal of de-monetizing silver realized after his death
Pursuant to the Act of June 4, 1963, U.S. Treasury C. Douglas Dillon announced in March 1964 the end of redemption of silver certificates to coincide with the cessation of mintage of silver coinage at the end of that year. The Act allowed the exchange of silver certificates for silver bullion until June 24, 1968.
After Kennedy’s death in November 1963, the U.S. Mint changed the half dollar to feature JFK on the obverse. The Kennedy half dollar was minted of 90% silver in 1964 and 40% silver from 1965-1970.
What about U.S. Notes that were not issued by the Federal Reserve during Kennedy’s Administration?
During the Kennedy Administration there were bills in circulation that were not issued by the Federal Reserve. These were called U.S. Notes and had a distinctive red seal. Some argue that these notes were evidence of Kennedy issuing a currency to compete with the Federal Reserve Note.
United States Notes with their distinctive red seal were issued from time to time by the U.S. Treasury from 1878 to 1966.
JFK Didn’t Invent U.S. Notes
U.S. Notes, however, were not a JFK invention. U.S. Notes were issued by the Treasury and authorized under the Act of May 31, 1878 that required that $346,681,016 of Legal Tender U.S. Notes always be in circulation. From time to time the U.S. Treasury would issue additional Notes to remain in compliance with the requirements of the 1878 Act. These were not issued in accordance with Executive Order 11110.
The Act of 1878 requiring United States Notes to be kept in circulation was finally discontinued in 1994 via the Riegle Improvement Act that relieved the Treasury of the requirement of issuing U.S. Notes.
$100 U.S. Notes were also issued in 1966 during the Johnson administration. You can see examples of them here.
United States Notes are considered legal tender and can be redeemed for Federal Reserve Notes. Like the Silver Certificates, United States Notes are collectibles and you can buy a $5 one for less than $15.
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