Why 40% Kennedy halves?

Looking back on my younger days culling out 40% silver Kennedy halves from bank rolls, something never occurred to me: Why do they exist? By that I mean, why didn't the Mint make them clad in 1965 just like the rest of the coinage? Halves were the heaviest circulating coin (silver dollars disappeared very quickly) -- it must have been an expensive choice, so why did it take five years to make the transition?

If this is already answered on another thread I'd appreciate a link!

 

Log in or Sign up to hide this ad.

I recall seeing reasons for this answered on other threads but that's a darned hard one to pinpoint in an Advanced Search on CT to swiftly supply you with a link. Better just hang on until the folks with the concise answer swing around and re-post for our benefit. :smile

 

A last stand attempt to keep silver in circulation? Or was someone sad to see silver go?

 

My guess would be that the mint had needed a way to get rid of surplus bullion and at the time 40% by weight was still substantially less than $0.50 at that time

I really don't know just and educated guess
I would love to know the real reason myself

 

In honor and memory of JFK.
He was assassinated in 63 I believe and then since the wound was still fresh it was done in his honor.

 

The coin was minted in his honor and memory... the OP's question was why it was minted in 40% silver instead of clad.

 

Congress bowed down to the silver mine owners. They finally took the silver out of the half to stop the hoarding.

 

I don't think the government much cared about people hoarding half dollars, which then as now barely circulated. I seem to remember some talk at the time about the need to retain a "prestige" coin. The Canadians abandoned silver coinage in 1968 because the price of silver first exceeded $2 US in 1967, after hovering around $1.30 in the prior years. In 1970, the last year of the 40% half, the price went down to $1.60, meaning it only contained twenty-six cents worth of silver. It wasn't until 1973 that its intrinsic value exceeded face.

 

I've read that people would have taken it as a slight to Kennedy if they debased his coin so soon after his death.

 

Idhair has the answer. Due to the rising silver prices the government wanted to remove the silver from all the coinage. But the silver producers applied pressure to their Representatives and Senators to retain silver in all the circulation coinage. The efforts by these Congress members resulted in delays in passing the needed legislation to create the clad coinage. They finally reached a compromise that made the dimes and quarters clad, the half dollar 40% silver and the silver dollar 90% silver. This took the silver out of the workhorse coins and left the largest coins till silver or partially silver. This compromise passed as part of the coinage act of 1965. Later the silver dollar was eliminated by presidential order, and eventually the silver was removed from the halves.

Frankly I'm not sure why the silver interests pressed for the silver to remain in the coins. It was obvious that their continued circulation was impossible since they were now worth more as metal than as money. You might think that they were hoping that the Treasury would be pressured to buy even more of their silver to continue making the coins, but the law required the Treasury pay no more than $1.2929 per oz for silver and the market price was already higher than that. So the silver producers would have to sell to the Treasury at less then they could get on the open market. Why would they? Probably they hoped the government would raise the purchase price. But if that had occurred, all the silver coinage in circulation would have immediately disappeared since it would be profitable to melt it down and sell it back to the government at more than face value. (Not good when you are already in the middle of a coin shortage.) And at the rate the Treasury was drawing done their reserves to create silver coins they would have been completely out of silver within three years.

 

Brilliant +10CT points

 

Great stuff, Condor101! Very educational -- thanks. I knew how powerful the silver lobby was in the late 19th and early 20th century, but didn't realize they still had clout in the 1960s. Not enough to get the Mint to up their buy price, however.

In 1964 the President was a Democrat (Johnson) and in 1968, a Republican (Nixon). Congress was firmly controlled by the Democrats the entire decade. I don't know if either party had a "silver bias."

In 1971 recycled silver accounted for 40 percent of U.S. refinery production.
By 1974 that number had risen to 67 percent. Which gives you an idea how much silver coinage was probably being smelted.

 

My recollection is that the Mint's equipment was not capable of minting cupro-nickel clad Half Dollars at the time. Nickel is much harder than silver. Clad Dimes and Quarters were not a problem but the Mint's coin presses could not exert enough force to strike up a cupro-nickel Half Dollar. (A Half Dollar has 59% more surface area than a Quarter, therefore it takes much more force to strke up a Half Dollar.)

The Mint found that they could adequately strike up Half Dollars whose outer clad layers were 80% silver. So the Mint struck 40% silver Half Dollars (with 80% outer layers) until they acquired presses with higher striking force that could adequately strike up cupro-nickel Half Dollars.

 

Which would explain why clad dollars weren't minted until 1971. Thanks Hobo!

 

WTH?
They kept it as silver clad in memory of JFK's assassination, it had nothing to due with silver pressure.
the least circulating coin with less than 50% silver? to help the silver industry? if you do the math it doesnt add up.
by being 40% its not technically a silver coin, but it still has silver,hence theyre not breaking laws, its a tribute to JFK and his legacy. thats all their is to it.

 

You make a good point. I feel it was both. A bone to industry and a tribute to a great man.

 

Franklin Halves circulated. I remember seeing them as a little kid. The JFK 1964 was considered a commemorative by many, and I remember several adults postulating a return to the Franklin design in 1965.

 

Source: Silver History Coin World Almanac 1990 edition pgs 487 - 491

The Treasury in May 1965, "The world and the US silver supply and production situation nd outlook do not warrent continuation of the large scale use of silver in the US coinage."

On the basis of technical studies the Treasury recommended copper-nickel cladas the best material for a new and permanent subsideary coinage.

Public hearings on on the government proposals were held. silver users anxious to have ample supplies of the metal available at stable or declining priceswanted silver to be completely eliminated from the coinage.

Silver producers on the other hand took a somewhat different view. Fearing that a sharp swing away from silver might trigger a price break, they argued roe the retention of silver in the coinage to the maximum extent feasible.

Western legislators argued the Treasury stocks would soon be depleated unless the government permitted the price of silver to rise in a free market. (The Treasury was selling silver into the market at $1.2929 to all comers even though the market forces were pushing for a higher level. This resulted in an artificially low price for silver.)

The western Governors Conference resolved "that Congress provide for the retention of silver in reduced amounts in all coins now silver, that an affirmative program be adopted to increase for and the development ofdomestic silver supplies, and that silver be permitted to seek its own price in the marketplace."

Every company with a material in any way suitible for coinage pressed its claim for inclusion in the new coinage.

The coinage act, like the new coinage, was a composite containing something for everyone. For the silver producers, silver kept at least a stake in the coinage, with the new half dollars requiring at least 15 million ounces per year. Producers were also assured a minnimum of #1.25 per ounce for their silver supplies.

Silver users did not gat an entirely silverless coinage, but they did get silverless dimes and quarters. In addition the continued redemption of silver certificates by the Treasury provided an effective ceiling on the price.


So the retention of silver for the half dollar was a compromise to appease the western silver producers.

 

I'm sure that honoring the Kennedy legacy played into it, but the simple fact that the Kennedy half was produced, silver or not, was a considerable honor.

I think Hobo's striking theory makes a lot of sense. They couldn't *stop* minting the halves because they were legally bound to use 15 million oz. -- and their equipment was insufficient to transition to cupronickel. So 40% silver was a conveniently cheaper alternative than buying new machinery.

It wasn't until Eisenhower died in March 1969 that things shook loose. There was interest in honoring Ike on a coin, but the only denomination available was the dollar, and that wasn't possible on the presses at the time, and a 40% dollar (for circulation) would have cost nearly $1 in silver in 1969. (You couldn't use a lower silver content than the Kennedy half -- that would be like a snub, right?) So there was finally the political will to upgrade the presses, but that took another year -- so no 1970 Ike dollar and the final year for a 40% half.

That's my theory, anyway.

 

I much enjoyed reading the posts on this thread. Quite informative. I'd never heard the theory about the mint lacking the ability to produce good quality non-silver halves. One question, though. The English removed silver from their coinage in 1947, and were producing cupro-nickel half crowns (larger than US halves) from that date. They even made cupro-nickel crowns in 1951, 1960 and 1965. If they could do it, why couldn't we?