E-Sylum contributor David Ginsburg published a nice article in the October
2014 issue of The Numismatist, the official publication of the American Numismatic
Association. "Into the Melting Pot: Silver Coins During the Fractional Currency Era"
examines just what happened to all the coins that disappeared from circulation during and after the
U.S. civil war. With permission, here's an excerpt. If you're an ANA member, be sure to
read the complete article. -Editor
The impact of the American Civil War and the
fractional-currency era on silver coins is fairly clear. As author Neil Carothers related in
Fractional Money (1930), banks in the North suspended payment of gold (in exchange for their
bank notes at face value) at the end of December 1861. The first issue of greenbacks (which were
essentially IOUs issued by the federal government instead of a local bank) appeared in April 1862,
and immediately began to depreciate in terms of their face value in gold coin. The currency that
was worth 97 cents on the dollar in terms of gold at the beginning of May was worth only 95 cents
by mid-June and 92 cents by that month’s end.
Silver coinage, which had been slowly disappearing from circulation, was by then completely
absent from the channels of commerce. Everyday retail transactions were completed with a
combination of cents and fractional scrip until federal fractional currency was introduced in Fall
1862.
[To learn more] I set out to study 19th-century periodicals, electronic versions of which are
now freely available on a number of websites. My efforts were rewarded by James Parton’s profile of
the Gorham Manufacturing Company in the September 1868 issue of Harper’s New Monthly
Magazine. In addition to a history of the demand for silver spoons in New England and an
explanation of how sterling (.925 fine) became the standard for American silverware, the text
offered much to satisfy a numismatic researcher. The numismatically relevant portions of the
article are excerpted here.
…Generally, however, it is to Wall Street or its vicinity that the makers of silver-ware resort
for their daily supply of the precious metals. In these times, when the price of gold and silver
changes every minute or two, and sometimes more than once in a minute, no one buys a large quantity
in advance. There are often in course of treatment, in the various apartments of the Gorham
factory, as much as three tons of silver; but it is only necessary to start one or two thousand
ounces every morning on their progress through the establishment in order to keep every department
in full activity.
The time has been when silversmiths could not buy in all New York five hundred dollars’ worth of
silver, and they had to run about Chatham Street hunting up little lots of dimes and half-dimes
that used to be displayed in the windows of lottery shops.
These bullion and coin dépôts in Wall Street are interesting to the unaccustomed visitor. There
is something respectable, if not impressive, about a long row of large, smooth kegs of Mexican or
Peruvian dollars rough from the mint. …Most interesting of all is it to see great heaps of the
small silver coin of the country, long lost to sight, to memory dear. I ventured to ask the great
King of the Bullion Dealers—one of those mighty men who buy half a million of gold with a wink, and
sell it again with a nod—I say I took courage to ask this potentate what had become of all the
small silver coin which we used to have in circulation, but which children six years of age have
never seen. “Where,” said I, “are the dimes and half-dimes and quarters at this moment? The
silver-smiths melt only dollars and half dollars. Where, then, have the small coins gone?” He
replied that a large quantity of them had found their way to Canada; more still to the West Indies
and South America; but that there is still a large amount of it in this country, performing the
office of a savings-bank to ignorant and timid people. A proof of this is that parcels of it
frequently come into “the street” from distant points. I saw, myself, that day ten thousand
dollars’ worth in one heap, which had just arrived from the country, and was about to be shipped to
Havana, where it would then be used to advantage.
This article illustrates the great advantage of reading contemporary sources: the time period is
brought to life in a way that no secondary source can match, and it includes details that might
have been overlooked or not thought relevant by subsequent researchers. In just a few pages, I
learned not only where many American silver coins went during the Civil War, but also gained some
insight about how many of them might have disappeared into silversmiths’ melting pots across the
country; how much of a problem contemporary counterfeit coins presented; and how they were detected
and destroyed.
Wayne Homren, Editor
The Numismatic Bibliomania Society is a non-profit organization
promoting numismatic literature. See our web site at coinbooks.org.
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