Thursday, July 05, 2012

What is our money worth today? What is it made of? When did it all change?

Money, money, money....The old story says it makes the world go round. Of course it does economically, but American coinage has changed a lot over the years.  It was once as I have written here the half cent through the 20 dollar gold piece. I remember as a boy talking to an old man who described his Christmas mornings to me. He said in the the early 1920's as the Christmas dinner was prepared and served, everyone would find a five dollar gold piece under their plate.  That was a lot of money in 1920. And gold was always the standard in money.  Our whole money system ran on it, it was called the "Gold Standard".  There were some battles over gold in the later part of the 19th century. This led to a showdown between the gold and silver forces. Through it's champion, William McKinley, gold resumed its place and the silver bugs who were championed by William Jennings Bryan, lost out.  The old cry was 16 to 1...That was the value set to the silver and gold. Gold would be 16 times more valuable than silver. Don't we wish it was so now?

But our coinage stayed pretty constant through the 19th century. Save for sizes being reduced. But when we reached the 20th century many things started to change The silver dollar which was and had been minted for years was so well produced they did not make any for a number of years. In 1921 after a long lapse the silver dollar was produced again in the old style which was called the Morgan and the new that was called the peace dollar. But then as now, it was a lot easier to use paper money than have a pocket full of coins.  Being that they were silver they rang out quite loudly and that was not wanted as you walked around. But paper money was huge. It would by the end of the 1920's be reduced in size by a third.

Gold coins were the norm till 1933, when they were made illegal, which of course made everyone hoard them. In 1935 the minting of  the silver dollar  was stopped.
The main materials used for coins after this would be copper, nickel, and silver.

By the early 1960's it was being noticed that the silver used in coins was worth more than the value of the coin. Therefore starting in 1965 there was major change in American coinage. the most drastic in the lifetime of the American mint.

Copper became the most used metal, followed by nickel. Silver usage was taken down massively

Here is an example of the change in many of the coins from 1964 to 1965

1964 penny = copper                                  
1965 penny = copper

1964 nickel = nickel
1965 nickel = nickel

1964 dime = silver 90%
1965 dime = copper core and nickel cladding

1964 quarter = silver 90%
1965 quarter = copper core and nickel cladding

1964 half dollar = silver 90%
1965 half dollar = copper core and silver clad 40%

Eventually, there would be a silver dollar again , however it too would be 40% silver cladding.
By the early 1970's this too would change and nickel would replace silver on every coin made. By this time there was no more silver coins in production and the only silver coins made were special ones for collectors. This brought a lot of fun in my eyes to seeing the words silver dollar still used for the Eisenhower and Susan B Anthony dollar coins. Cause there was not a bit of silver in them!

The last major change was in 1982. It was found that the copper to make a penny was worth more than a penny. So the penny ceased to be made mainly of copper. It was then after made of zinc and thinly coated with with copper. In my mind I think ...Why bother?  Why do we need to waste hundreds of millions of dollars changing and refitting a penny?  Just round out the amounts charged and get rid of it

So the great worry was that the materials in the coins would be worth more than the coins value. We can now relax some. There is no silver used in our coinage, Gold although legal again to own will never be used for coinage again.   So our coinage is worth less in its material value than the coins value.  If that changes, the only option would be to get smaller coins to be made.  But who knows?