Q. David Bowers
The G.S.A. Dollar Sales
Government Stocks Depleted
No account of the Treasury release of the early 1960s would be complete without a description of the General Services Administration's involvement:
As the silver dollars in the Treasury hoard diminished in the early 1960s and over 150 million Morgan and Peace dollars had been paid out at face value, the government decided to get a share of the profits for itself. Just before the Treasury halted such sales on March 25, 1964, an audit was taken of coins remaining. It was found that nearly 3 million Uncirculated Carson City dollars survived, primarily in the vaults of the Treasury Building in Washington. A freeze was put on these and some other Morgan dollars, and some Peace dollars. However, Carson City dollars, primarily dated in the 1878-1885 years, furnished the bulk of the coins. This, of course, was a classic case of locking the barn after the horse was stolen; for many years from the 1930s through the mid-1950s the Cash Room at the Treasury Building had paid out CC dollars to collectors, dealers, and other interested buyers.
What to do with the coins? It seemed that everyone had ideas. Coin World and Numismatic News printed suggestions from readers, congressmen had their own constituents who wanted to get involved, and several rare coin firms expressed interest, as did a few national merchandising companies.
On December 31, 1970, President Richard M. Nixon signed legislation which provided that the General Services Administration branch of the government be empowered to liquidate the coins.
An article by Lee Martin, "The Great Silver Dollar Drain," in the June 1970 issue of COINage Magazine brought readers up to date on the situation as of that time:
As the government now prepares to auction off the last of its all-silver dollars, memories return of the great "dollar rush" of 1964.
If a time machine were functioning and you could be transported to 1960 (but you were able to retain your present knowledge), you would certainly head for the Treasury Cash Division in Washington for that locale would sell you all the silver dollars you wanted for face value. But fantasy and fact rarely mix; they only separate pleasant dreams from reality. Silver dollars are not found in circulation and only longtime coin dealers have adequate stocks, although many foresighted collectors have groups stocked away as investment items and numismatic treasures.
Only the western states used silver dollars in large numbers. The silver mining states encouraged their use and rough hewn men in overalls cared little if pockets were jumbled as long as spending money was available. The balance of the nation, with possible exceptions in portions of the South, rarely used large silver coins because weight was not proportionate with value. Large gold coins were in demand and no objections were heard against the twenty dollar pieces, unless it was that they were so hard to get. As the past became the present, silver dollars became mementos of obsolete issues and curiosity pieces but no large scale demand appeared. In 1958 Treasury records indicated only 16 million dollars were withdrawn from stocks. Many of these were purchased for promotional programs and very few by collectors. Hobbyists may have ignored the easy access to dollars because a bag contained $1,000 coins and smaller lots were obtainable only from commercial banks. Every Christmas traditional releases of dollars arrived and tellers were able to quickly satisfy the limited number of collectors who were aware of silver dollars.
By 1960, due to a growing economy and publicity given the Small Date cents, many new fans jumped on the hobby bandwagon. Obsolete coins became more popular and dollars, readily accessible at face, began to attract attention. A promoter obtained 100 bags and shipped the dollars abroad where they became the base for jewelry. He was not cognizant of the importance of low mintages, and no one will ever know if he melted key coins. His ease in getting the large number of coins did not go unnoticed, and when his source was disclosed some dealers went to Washington to get a bag or two. The story of one young man is well known now and sounds like he may have been our time traveler who returned to the Treasury Cash Division. His rewards were out of proportion to effort and cash expended.
Horatio Alger must have told him to "Go East young man." He listened and bought a bag of silver dollars. Because a slow steady drain of bags had been underway, the pile of coins had been reduced and long stored coinage finally reached an easy access point. The bag given our hero were all dated before the initial Morgan dollar series of 1878. His Seated Liberty bag averaged out to $80 per coin and a net profit of $79,000 above face. The delighted dealer now faced a problem ... if he sold all at once, the price would drop but if he held them he would not be able to buy any more coins and indications were strong that following bags were also filled with rare dates. Throwing caution at the feet of quick profits, he went to a better financed dealer and explained the situation. In less time than it takes to blink astonished eyes, the financier bankrolled the young dealer and the great dollar drain received its jet propelled boost.
It has been said the great Gold Rush of California was triggered when someone muttered "Gold," and the sound reverberated around the world. Like its predecessor, the great silver strike floated across the world but this time it was the sight of someone lugging bags of dollars and insisting they were not heavy. "Methinks the lady doth protest too much" must have flown through the minds of observers for suddenly the once unpopular dollar became the storm center and throngs gathered at the Cash Division to join the fraternity and sorority waving money and gathering bags of dollars.
One photograph of the lines formed around the Treasury Building showed a never ending formation and literally thousands of would-be buyers in the impatient crowd. Many stories of chicanery have been heard. Limitations in bag orders were bypassed by the simple expedient of paying someone to stand in line and buy for the financier who sponsored bag purchases. The chance to make huge profits on a $1,000 investment also resulted in back door purchasing, and angry onlookers quickly reported the probability of payoffs. Several employees were fired because bags were deliberately mislabeled and due to the obvious acceptance of under-the-table money.
Lugging bags of money is not the easiest or safest job in the World. Bodyguards were hired by some and the most unusual transportation aids were used. Children's wagons, bicycles, handcarts and homemade contraptions to puzzle a Rube Goldberg were photographed as they tottered beneath the weight of silver dollars heading for a temporary last roundup. Before officials could decide to halt the withdrawal, many rare dates were to become rewards for the purchasers and catalogue prices of dollars were to be revamped. The largest number were familiar common dates, but as the bags neared the bottom of storage facilities, a sudden exposure revealed a final hoard of Carson City minted dollars. It was this tantalizing glimpse that prompted a cessation of cash sales and a frantic surge in buying from those who had just bought. The line became an outdoor marketplace for those who wanted to gamble.
Mint sealed bags containing dollars worth only face were sold for five times that. One speculator opened a bag and although no one was to know what he had found, it was obvious he was no poker player when his eyes lit up and his hysterical laugh resounded throughout the area. What is up? What did he get? What did he pay? Who is he? The questions were on everyone's lips but the answer from thehappy source was merely a frantic charge away from onlookers.
The great silver dollar drain is more than a mere memory and it still affects the dollar market. Many new dollar collectors joined the ranks and created demand. Very few of the purchased bags were used as anything but a long range investment, and steady price rises of common date dollars continue. Higher priced dollars remain at their categories for low mintage coins, and whether available or in permanent storage will always be limited. One very surprising development has not occurred despite dire predictions by many pessimists. The hoard of Carson City dollars hovering over the market did not cause a depression in this field. Time has proven the collector to be correct who knew CC dollars were worthy of buying. When the dollars are sold to the public they will evidently be sold near market prices so owners of CC coins will not be affected.
Almost three million dollars will soon be sold to the general public. They represent the last of the silver dollars and a transition to the new Eisenhower dollar involvement.