My guess on this one is that is because the silver dollars weren't circulating to begin with so if they were made out of silver they would just be hoarded.
He may have beat you with an answer but the answer does not appear to answer the question of "Why 40%?".
IMHO, the 40% halves were produced as a bone to the silver and hard money interests. Our Money was backed by metal up until the early 60s, when it was all removed, the 40% half dollar was made to keep some illusion of a "backed by hard money" coinage in place when in fact, they had just flushed the entire idea down the toilet with the clad coinage and the issuance of federal reserve notes
Several reasons. As mentioned the country was in the midst of a major coin shortage and it didn't make much sense to strike 45 million silver dollars, a coin that basically did not circulate, when the same silver could be used to create 180 million quarters or 450 million dimes that were desperately needed. Also the price of silver had already risen to the point where the silver dollars were already worth more than their face value which would keep them from circulating. And finally speculation for the new coins was already running rampant, so much so that coin dealers around the country had already offered to buy up the entire mintage at prices up to $7.50 per coin. It became clear that the issuance of the new dollars was just going to one big waste of time, effort, and resources. The Mint tried dragging their feet hoping to get the authorization overturned but the orders came down, the law is the law and they aren't going to budge. So at that point President Johnson stepped in and killed the dollar coin.
In 64 I liked the Kennedy Half. The banks simply stopped supplying them where I lived after 66. I went from 67 to 2003 without getting any as change in banks or elsewhere. The 'hoarding' in that era was done way above the level of the common consumer. When I worked for Brinks in the early 70s I saw tons of them in bags and boxes stored in the vaults of 1st National City Bank, Chase Manhattan (there was a heck of lot of it (and other stuff) in the WTC Chase vault, I know because I helped carry a lot of it into them)), Bank Hopolim, and 100 other major banks we brought bags and boxes to for storage in their deep vaults. Those were the real hoarders (and probably still are). Pass a law requiring any US bank to release into general circulation any coin stored by them for more than 10 years and you would see lots of stuff supposedly hoarded by coin collectors suddenly being put back into circulation.
