A Real Silver Shortage!

Something Big Happened in the Gold Market To Cause Silver Hoarding.

The U.S. Mint Reacted by “Clipping Coins” and Turning On The Printing Press.

The Gold Silver Ratio of 15-1 Set Under the Bi-Metallic Standard Failed.

Bad Money Drives Out Good Money.

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The Bimetallic Standard of 1834

In 1834 the United States set the gold silver ratio at 15-1 for purposes of minting coins. Coin weights and values were based on the 15-1 ratio. Even though the ratio was set, the market fluctuations occurred in the price of gold and silver causing ratio to change. When one metal was valued more than the other people would either hoard the coins made of the more valuable metal or buy the cheaper metal coins with coins of the more expensive metal.

The price of silver was rising relative to gold throughout the 1840’s. Then something happened in the gold market to cause a full scale silver coin shortage.

The Great Silver Shortage of the 1840’s and 1850’s

A big event happened in the mid 19th century in the United States – the discovery of gold in California in 1849. As the gold discovered in California headed headed east, the relative value of gold coins to silver coins decreased further.

Gresham’s Law: “bad money drives out good” (e.g. pre and post 1965 dimes, quarters and half dollars/silver vs clad)

Silver coins became worth more than their face value causing them to be withdrawn from circulation. Because of the 16-1 ratio, the face value of the silver coins was less than its silver value, so the silver coins were hoarded and there were few small denominated coins circulating leading to a shortage. When silver and gold were money they were still subject to the stamped value that the government placed on them. So while there was no shortage of silver bullion in the 1840 and 50’s, there was a shortage of silver coins.

The gold rush had caused a silver shortage!

The ‘bad money’ was the gold.

The Lowest Cost. Period.

The U.S. Mint Reacts

First reaction – a half measure

In 1851, the U.S. Mint introduced a silver three cent piece. This coin was minted of 75% silver instead of 90% silver like other silver-based coinage at the time. In 1851, 6,167,400 silver three cent pieces were minted. In 1852, mintage of the three cent piece was increased to 18,663,500. In 1853, 11,400,000 three cent silver pieces were made.

Three cent silver piece front

1853 Silver Three Cent Piece (75% silver)

three cent silver piece back

Silver three cent piece back

Queer as a three dollar bill

Although the US never printed three dollar bills, they did mint three dollar gold coins. Three dollar gold pieces also minted in 1854 to coincide with the issuance of 3 cent postage stamps. Three dollar gold pieces were minted from 1854 1889. FOUR dollar gold pieces were also minted from 1879-1880.

Turn on the Printing Presses!

The increase in the price of silver relative to silver led the US Mint to “clip its coins” and turn on the printing presses!

The mint responded by decreasing the weight of the coins (see chart) by about 6.7% to 8.1% to make the silver coins worth less and then they minted them in copious quantities to alleviate the shortage

Reduction in Weight

How the US Mint fixed the silver shortage of the 1850s weight

Increase in Mintage

How the US Mint fixed the silver shortage of the 1850s mintage

1854 with arrrow quarter

Arrows were added on the Liberty Seated coin series from 1853-55 to indicate lower silver content

The silver coin shortage was eliminated very quickly by the U.S. Mint’s increased production of silver coinage but continued to produce excessive amounts of silver coins until 1858.

Note:The foregoing events occurred during a period when there was no U.S. Central Bank (1837-1862).

Buy Liberty Seated Silver Coins and Three Cent Silver Pieces:


Three Cent Silver Piece (1851-53-75% silver; 1854-73- 90% silver)

Seated Liberty Half Dimes

Seated Liberty Dimes

Seated Liberty Twenty Cent Piece (1875-1878)

Seated Liberty Quarters

Seated Liberty Half Dollars

Seated Liberty Dollars

U.S. coins did not feature the semblance of any real person until the introduction of the Lincoln penny in 1909.

Check out the Smaulgld History of Silver Youtube Playlist including When the U.S. Confiscated Silver, The Decline and Fall of the World’s First Silver Empire and President Johnson’s 1965 Warning on Silver

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Compare American Silver Eagles for sale at:

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Money Metals Exchange

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US Coin History: The Nation Drifts Toward War

The Bimetallic Era of Currency

Gold triumphed in 1850s silver shortage

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