The Last Silver Empire?
Like the Roman Empire, The United States has paid for its welfare/warfare state by debasing its currency.
The decline and fall of the Roman Empire occurred over centuries, how long will U.S. Empire last?
In the “Decline and Fall of the World’s First Silver Empire” we noted that the Roman Empire’s welfare/ warfare state was funded by the denarius, which was first minted of 90-98% silver. Over the years of decline of the Roman Empire, the silver content of the denarius also declined.
The United States welfare/warfare empire is funded by the U.S. Dollar. The U.S. Dollar was once backed by gold and silver. The U.S. empire came into existence after World War II (WW II). While the United States was an industrial power prior to World War II, it was the United Kingdom (itself a silver empire) that ruled the seas and the world.
The Gold Backed Dollar Becomes the World’s Reserve Currency in 1944
The American Empire began after WW II when the U.S. emerged as the world’s sole superpower. In 1944 delegates from forty four countries met at Bretton Woods, New Hampshire and decided that the world’s reserve currency would be the U.S. dollar which would be redeemable in gold by other central banks.
At the time of the Bretton Woods agreement, U.S. dimes, quarters and half dollars were minted with 90% silver. This was not remarkable as most countries, France, Britain, Mexico and Canada to name a few, had silver coins circulating freely among their populations until the mid and late 1960’s.
After WW II, the United State began to engage in overseas “development”. One of the first projects was the Marshall Plan (1948-1951) under which the U.S. spent over $13 billion (over $100 billion in today’s dollars) to help rebuild western Europe. A military treaty with the European recipients of the Marshall Plan largess, the North Atlantic Treaty (NATO) followed in 1949 to fight the “Cold War” with former U.S. World War II ally, the U.S.S.R. who had annexed most of eastern Europe at the end of WW II.
At the end of WW II, with much of Europe and Asia in ruins the U.S. was the industrial powerhouse of the world and viewed its mission to combat communism across the globe and as the world’s richest nation, to eradicate the embarassment of the poverty of millions of its citizens.
Presidents Kennedy and Johnson Call for Building the Welfare/Warfare State
In John F. Kennedy’s inaugural address on January 20, 1961, he pledged boldly “Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty.”
Lyndon Johnson declared a “War on Poverty” in his State of the Union address of January 8, 1964. Four months later, Johnson outlined his plan to build a “Great Society”; one that would involved spending heavily on education and welfare.
In order to attain the goals of being the leader of the “free” world able to “pay any price, bear any burden” AND to eradicate poverty, the U.S. established and began to grow a massive welfare/warfare state.
In the early and mid sixties the U.S. was on top of the world. The vast majority of its citizens had attained a living standard unparalleled any where in the world and it had the most powerful military on earth.
And its coinage was 90% silver.
To achieve the visions laid out by Presidents Kennedy and Johnson the spending began in earnest, accelerated and continues to this day.
Coins and Paper Currency of the United States
At the time of the inaugurations of Presidents Kennedy and Johnson, U.S. dimes, quarters and half dollars were made of silver and per the Bretton Woods Agreements, the U.S. dollar was backed by gold.
Article 1 Section 10 of the U.S. Constitution provides No state shall “make any Thing but gold and silver Coin a Tender in Payment of Debts”
Silver in U.S. Coins/Silver Certificates
U.S. Silver Coinage (1794-1964)
The first United State silver dollars from 1794-1840 were made of 89.24% silver and 10.76% copper. Starting in 1840, silver dollars were made of 90% silver and 10% copper until the final mintage of the Peace Dollar in 1935.
U.S. dimes, quarters and half dollars were also first minted in the late 1700’s of 89.24% silver and 10.76% copper. Starting in 1836, (quarters and half dollars) and 1837 (dimes), U.S. dimes quarters and half dollars were minted of 90% silver and 10% copper. Dimes, quarters and half dollars were minted of 90% silver until mid 1965 (and dated 1964).
During World War II nicklels, were minted of 35% silver from 1942-45.
In the period of the United States “silver era” (1794-1965), the U.S. had so much silver that in 1918 it was able to melt down 270 million U.S. silver dollars to help the UK allievate a silver shortage and to support the U.S. silver mining industry.
In 1964 the U.S. Mint produced approximately four billion silver dimes, quarters and half dollars for everyday use using about 550 million ounces of silver in the process.
U.S. Silver Certificates (1878-1968)
U.S. silver certificates were first issued in the United States under the Bland Allison Act of 1878 that also authorized the minting of Morgan Silver Dollars Silver certificates entitled the holder to redeem them at U.S. Banks for silver dollars.
The Beginning of the End of Silver Coinage and Silver Certificates in America
John Kennedy broke with a long Democratic Party tradition that supported inflationary policies and favored silver and silver mining interests, by his public shunning of silver. In John Kennedy’s Annual Message to the Congress January 21, 1963, he made a call to remove silver from the U.S. monetary system.
“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. (emphasis added)
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 (emphasis added) and the use of the silver thus released for coinage purposes. I urge the Congress to take prompt action on these recommended changes.”
Goodbye Silver Coins and Silver Certificates – 1965
Through the efforts of John F. Kennnedy and Lyndon Johnson, the men that had urged a vast welfare/warfare state, silver was removed from the U.S. monetary system and its coins.
Unlike the gradual debasement of the Roman denaius, in 1965, the U.S. eliminated just about all silver from its coinage in one year. From 1965-1970 the U.S. Mint produced 40% silver half dollars.
Pursuant to the Act of June 4, 1963 (31 U.S.C. 405a-1) 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 (silver coins dated 1964 were minted well into 1965 at the U.S. Mint). The Act allowed the exchange of silver certificates for silver bullion until June 24, 1968.
In 1965, with silver out of the picture, the United States massively increased it participation in Vietnam (warfare) sending hundreds of thousands of troops to south east Asia and launched the War on Poverty and the Great Society (welfare).
Silver remained out of U.S. coinage until 1981 when the U.S. Mint minted 2.2 million silver half dollars commemorating the 250th Anniversary of George Washington’s birth. These commemorative, while legal tender were intended for collectors only and not generally circulated.
In 1986, the U.S. Mint began selling 99% American Eagle coins to the public. Since 1986 the U.S. Mint has sold about 450 million silver eagle coins.
The amount of silver required to produce twenty nine years worth of American Silver Eagle coins to sell to the public (about 450 million ounces) is still less than the amount of silver the U.S. Mint used to produce 1964 dated dimes, quarters and half dollars.
Removing Gold From The U.S. Monetary System
Starting 1795, the U.S. began minting $10 (“Eagles) and $5 (“Half Eagles”)coins made of 91.67% gold and 8.33% silver and copper. By 1849, the composition of Eagles and Half Eagles had switched to 90% gold and 10% copper and $2.50 (Quarter Eagles) and $20 (Double Eagles) face value coins had been introduced with the same composition.
On April 5, 1933 President Franklin Roosevelt issued executive order 6102, that among other things, removed all U.S. gold coins from circulation. For more information on this order see “Think Fed Destroyed the Dollar”
On August 15, 1971, Richard Nixon, unilaterally informed the world that the United States would no longer honor the provisions of the Bretton Wood Agreements that allowed foreign central banks to redeem their dollars for gold held at the U.S. Treasury.
From that date forward United States currency would have neither the backing of gold nor silver.
And the spending continued and increased on welfare and wars.
A debased currency was not enough, however, to support the United States’ welfare/warefare state and massive deficit spending made possible by issuing Treasury securities, first domestically and then increasingly to foreigners was needed to fuel U.S. government spending.
Federal Debt Total – A Century of Red Ink
The chart below illustrates the ballooning of U.S. deficit spending:
The U.S. deficit does not include any U.S. agency debt of Government Sponsored Agencies like Fannie Mae, Freddie Mac, Sally Mae or costs associated with Social Security and Medicare. Estimates for these expenditures range from $100 -$200 trillion.
In addition to the Federal government debt loads, U.S. state also have significant debt outstanding. According to Usgovernmentdebt.com the state government debt in the United States is expected to be $1.184 trillion at the end of 2016.
Where the Welfare/Warfare Money is Spent
See below for a list of wars and the new programs and Federal agencies created since the U.S. removed silver from its coinage and gold backing from the dollar.
U.S. Mint Examines Ways to Further Debase its Coinage
In 2014, the U.S. Congress, not content to be producing coins from base metals instead of silver, commissioned the U.S. Mint to study even cheaper alternatives to copper and nickel to mint, nickels, dimes and quarters.
Next up “The Decline and Fall Of the First Gold Empire” Subscribe below to get this post as soon as it is published.
Also see “The Decline and Fall of the World’s First Silver Empire”
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