Q. David Bowers
Dollars as Securities (1967)
In 1967, trading of silver dollars as a security commenced.
The following is from a news release issued by the New York Mercantile Exchange, August 1, 1967:
"Spot Trading in Silver Dollars To Start August 21 on N.Y.M.E.
'''New York, N.Y.-Spot trading in silver dollars will start August' 21, 1967, on the New York Mercantile Exchange, it was announced today. There will be two separate contracts, one calling for the delivery of used coins. Both contracts will permit delivery of either 'Peace' or 'Morgan' silver dollars of 'common date' years. The contracts both call for the delivery of 1,000 coins loose in a single canvas money bag of the type used by the United States Mint.
"Common date silver dollars are from the years when the most coins were minted. Other silver dollars are of greater value than common date coins and thus would not logically be delivered. The value of these rarer silver dollars varies according to the year and the mint where they were struck. Morgan dollars were minted from 1878 to 1904 [sic; 1921 intended] and 'Peace' dollars from 1921 to 1928 and 1934 to 1936 [sic; 1935 intended]. No silver dollars have been minted since 1936 [sic].
"Trading hours for spot trading of silver dollars willbe 12:60 noon to 2:00 p.m, Price changes will be in units of five dollars and prices will be posted to the nearest five dollars.
"A spot check of coin dealers in the New York area this week shows 'common date' silver dollars at retail cost $1.75 used and $2.50 Uncirculated. It is estimated that about 1.1 billion [sic; should be 847 million] silver dollars of the two varieties were minted in total and that a minimum of 330 million were melted down by the government for the silver or for recasting. The number in existence is unknown. The government has on hand a total of only three million, all of rare dates and high numismatic value."
The New York Times, August 22, 1967, included this article on the same subject: .
"Commodity Men Watch turnover in Silver Cartwheels. "By Elizabeth M. Fowler
''New 1880-S $1,000.' This was the stamping on a white canvas bag out of which coin dealer Charles Ross spilled yesterday a shining flood of silver dollars atop a desk on the trading floor at the New York Mercantile Exchange. The time was 11:50 A.M. and in just 10 minutes trading was scheduled to begin in silver dollars.
"'The bag weighs about 60 pounds,' he explained to about two dozen brokers and clerks gathered around, 'To bemore exact, 59 pounds and 1 ounces for 1,000 coins. They are Uncirculated ones that came right out of the machines at the San Francisco Mint back in 1880.' The small letter "S" indicated the San Francisco Mint. He said the bag was a regulation Treasury bag turned inside out and then marked, since he had looked over the coins and counted them.
"Promptly at noon, Mr. Ross and other traders gathered around .a board at the side of the trading floor, and the shouted bids and offers began. The pace was almost too fast for the three board members to chalk on blackboards the current prices and the initials of those who bid or offered them. Five new traders, all coin dealers, have joined the exchange, and the other members also can participate in the trading. Membership totals about 401, but only about 100 show up regularly to trade.
"'There's going to be a lot of confusion,' said one veteran floor trader. I'm going back to potatoes.' He darted toward the ring on the far side of the room where the exchange'smain business-potato futures-takes place.
"Amid the shouting it soon became evident that the prices of silver dollars were higher than many observers had expected. At the opening, a bag of Uncirculated coins sold at $2,300. Only five months ago, such a bag brought a price of $1,550, but that was before that talk about the silver shortage and the government's move to alleviate the situation by auctioning silver to industrial users at prices above the $1.29 an ounce, where it had been pegged for many years.
"Yesterday's price of$2,300 brought a pleased smile from Darrell M. Hills, 33 years old, of Topeka, Kan., for whom the opening sale was made by his broker, 'If the price was under $2,000 I planned to buy. If it was over $2,100 I planned to sell,' Mr. Hills said. He is president of the Commodity Exchange Bulletin, an advisory service, and flew here primarily for the opening of trading.
"Mr. Hills became interested in silver coins 10 years ago when he started a collection for his children. 'The value seemed to grow each year. I've got about a 50 percent profit on the bag that sold at $2,300,' he said.
"Yesterday's prices surprised quite a few conservative commodity men because the underlying value at current price levels for silver is about $1.40 a coin. However, the coins retail in coin shops for anywhere from $1.75 to $2.50, depending on whether they are Uncirculated or whether they bear the obvious look of the wear-and-tear of having been in circulation. The exchange trades both types-circulated and Uncirculated.
"At the close yesterday, the Uncirculated dollars, which opened at $2,300 a bag, sold as low as $2,200 and as high as $2,500. [Trading volume] totaled 32 bags .... "
London & Fishberg, commodities dealers in New York City, issued this "Silver Dollar Market Comment" on September 12, 1967:
"Market comments of September 1st are still accurate and can be repeated. In addition, it must be observed that although buyers are not particularly aggressive at this time and bidding seems almost to be non-existent, every time a large seller has approached the market, there was a buyer-probably coming out of hiding.
"This can only lead us to feel that buyers are hoping to gain from nervous profit-takers. If a large seller gets itchy for profits, he'll find no trouble unloading into the eager hands of a quick buyer.
"This could be seen on Tuesday, September 11th-no bid was on the blackboard at $1,975 for BU dollars, yet as soon as a seller seemed anxious to do business, six bags changed hands quickly at that price. What may appear to be, on the surface, a quiet market probably is in reality a gathering place of eager buyers managing to temper their zeal in order to get the best price possible.
"Albert London, New York"
A synopsis of trading activity furnished by Albert Russell to Coin World Editor Margo Russell, circa September 13, 1967 (and here adapted from material from the Coin World archives), gave this information:
THIRD WEEK OF TRADING:
Tuesday, September 5, 1967: BU dollars: Open $2,050. High $2,050. Close $2.050. Volume: 2 bags. Circulated dollars: No trades.
Wednesday, September 6,1967: BU dollars: Open $2,025. High $2,100. Low $2,025. Close $2,100. Volume: 5 bags. Circulated dollars: Open $1,800. High $1,800. Low $1,800. Close $1,800. Volume: 2 bags.
Thursday, September 7, 1967: BU dollars: Open $2,100. High $2,100. Low $2,100. Close $2,100. Volume: 1 bag. Circulated dollars: No trades.
Friday, September 8, 1967: BU dollars: Open $2,090. High $2,090. Low $2,050. Close $2,050. Volume: 4 bags. Circulated dollars: Open $1,850. High $1,850.Low $1,850. Close $1,850. Volume: 1 bag.
FOURTH WEEK OF TRADING:
Monday, September 11, 1967. BU dollars: Open $2,100. High $2,100. Low $2,075. Close $2,075. Volume: 2 bags. Circulated dollars: No trades.
Tuesday, September 12, 1967. BU dollars: Open $2,000. High $2,000. Low $1,975. Close $2,000. Volume: 9 bags. Circulated dollars: No trades.