The Coinage Act of 1965 removed all silver content from dimes and quarters, and cut the silver content of half dollars from 90 to 40 percent.
Two separate trends conspired to substantially reduce the use of silver coinage. First, a coin shortage was making itself felt despite a triple increase in mint output of coins from mid-1959 to mid-1964. The rapid growth in vending machines, pay telephones, parking meters, and sales taxes fueled a corresponding increase in the demand for small change, including dimes, quarters, and half dollars. Also, collectors may have been absorbing coins at a faster clip. By mid-1964 merchants were facing difficulty making change and some banks were rationing dimes and nickels.
Second, world demand for silver exceeded world production, and the United States Treasury had been filling the gap by selling off silver reserves. By mid-1965 the Treasury faced a serious depletion of its silver reserves, and the market price of silver was rising, raising the specter that the price of silver might exceed the trigger price of $1.3824, at which point the silver content of small change would exceed the face value. Once the price of silver rose above $1.3824, silver coins would be worth more melted down and sold as bullion, leading to a disappearance of silver coins from circulation.
The Treasury proposed the complete removal of all silver from coinage, preferring to completely circumvent the threat that the price of silver would rise high enough to make melting down silver coins profitable. The role of silver in the monetary affairs of the United States, however, has been a politicized issue for over a century and Congress compromised by maintaining a 40 percent silver content in half dollars. The act provided for the coinage of dimes and quarters composed of a cupronickel plating over a copper core. Cupronickel is a copper and nickel alloy.
Two separate trends conspired to substantially reduce the use of silver coinage. First, a coin shortage was making itself felt despite a triple increase in mint output of coins from mid-1959 to mid-1964. The rapid growth in vending machines, pay telephones, parking meters, and sales taxes fueled a corresponding increase in the demand for small change, including dimes, quarters, and half dollars. Also, collectors may have been absorbing coins at a faster clip. By mid-1964 merchants were facing difficulty making change and some banks were rationing dimes and nickels.
Second, world demand for silver exceeded world production, and the United States Treasury had been filling the gap by selling off silver reserves. By mid-1965 the Treasury faced a serious depletion of its silver reserves, and the market price of silver was rising, raising the specter that the price of silver might exceed the trigger price of $1.3824, at which point the silver content of small change would exceed the face value. Once the price of silver rose above $1.3824, silver coins would be worth more melted down and sold as bullion, leading to a disappearance of silver coins from circulation.
The Treasury proposed the complete removal of all silver from coinage, preferring to completely circumvent the threat that the price of silver would rise high enough to make melting down silver coins profitable. The role of silver in the monetary affairs of the United States, however, has been a politicized issue for over a century and Congress compromised by maintaining a 40 percent silver content in half dollars. The act provided for the coinage of dimes and quarters composed of a cupronickel plating over a copper core. Cupronickel is a copper and nickel alloy.
