Pittman Act of 1918 and Its Impact on Precious Metals

Throughout American history, the availability or scarcity of certain metals has generated profound impacts on the coins and other minted objects produced at the same time.

For instance, the California Gold Rush spurred demand for new gold coins in the 1850s, while the discovery of the Comstock Lode in Nevada later led to the creation of the Carson City Mint in 1870 to process silver.

A similar situation occurred during World War I. Britain expended much of its gold and silver reserves to pay for its participation in the war. To aid one of its closest allies, the US passed the Pittman Act of 1918.

The Pittman Act of 1918 called for the conversion of hundreds of millions of Morgan silver dollars into bullion by melting them down. The newly poured bullion was then offered to Britain at a favorable $1/oz price, which England used to bolster its continued participation in the war.

This page walks through the Act in detail because, as it turns out, its effects remain visible to the present day. So, let’s talk about why the Pittman Act of 1918 is important to precious metals.

What is the Pittman Act of 1918?

To start, here is the opening preamble of the Act:

An Act To amend the emergency shipping fund provisions of the urgent deficiency appropriation Act approved June fifteenth, nineteen hundred and seventeen, to empower the President and his designated agents to take over certain transportation systems for the transportation of shipyard and plant employees, and for other purposes.

The preamble quoted above comes from the larger appropriations bill to which the Pittman Act was attached. The section relevant to silver dollars specifically authorized the Secretary of the Treasury to melt up to 350 million silver dollars and sell the bullion to allied governments.

As we mentioned, the pretext for the bill was the increasing demand for funds overseas. The US was undoubtedly part of the Allied Powers by this point, but its involvement in the ongoing conflict paled in comparison to Great Britain’s involvement in the conflict.

So, the new law – the brainchild of Key Pittman, a longtime Democratic senator from Nevada – authorized the Secretary of the Treasury to “melt or break up” as many as 350 million silver dollars (mostly of the Morgan variety) and sell the resulting bullion “to assist foreign governments at war with the enemies of the United States.” The Act also called for a concurrent temporary Silver Certificate withdrawal to equalize the removal of the silver dollars from circulation.

At the same time, the Act also pledged to recover the lost bullion from domestic mines at the equivalent $1/oz price that it would gain from the sale of the old bullion overseas. Because this rate was higher than the going rate for mined ore, the Pittman Act secondarily served to subsidize the mining industry in the country.

Impact on US Coinage

Now, the Pittman Act allowed for the removal of up to 350 million silver dollars, but in the end, the government melted and converted just over 270 million silver pieces.

Many of the silver coins that were melted were Morgan dollars. Between 1878 and 1904, and for a final year in 1921, the US Mint produced roughly 660 million Morgans, and the removal of 270 million of them constituted a significant constriction (~41%) of their supply.

With the increased scarcity, Morgan dollars became a much bigger prize for coin collectors and numismatists. The US Mint added only 44 million more Morgans in 1921 before ceasing production of them, so no more than roughly 430 million could have survived at most, though far fewer remain today due to attrition over the past century.

From that maximum point in 1921, more than 100 years have passed. So, Morgan dollars are a favorite for modern numismatists and coin collectors of any experience level and will likely only increase in their regard as more time passes.

Of course, 1921 was a pivotal year for US history overall, as the end of World War I elevated the United States into the spotlight of the world’s stage. The decision to resume production of the Morgans for a single year serves as evidence of that elevation, but also to provide continuity for the newly designed Peace dollar series.

The Peace dollars were issued as the successor to the Morgan dollars to commemorate, well, the newfound post-WWI world peace. However, circumstances would also make their run a short one, leading to a situation where two successive coin series became favored among coin collectors.

Numismatic Significance of the Pittman Act

Until the Pittman Act, the Morgan dollar was a rather unremarkable coin in the public eye. Because so many of them were minted and distributed during their heyday, they were mostly forgettable coin pieces.

However, the sudden removal of roughly two out of every five Morgans made people care about the remaining ones much more. By the 1970s, they were a staple of most coin-collecting pursuits.

Ironically, part of what makes them so popular is the fact that there were still hundreds of millions of them remaining after the Pittman Act took effect. So, they had become rarer and scarcer, but not so much that they were difficult to obtain. Even now, you can still purchase a genuine Morgan dollar for less than $50, and it is entirely possible to buy them in bulk.

At the same time, they offer an almost limitless upside potential. In 2021, one particular Morgan dollar sold for more than $2 million, and several others are worth hundreds of thousands of dollars. So, collecting Morgan dollars holds appeal for investors of every stripe, and much of this fact is due to the Pittman Act of 1918.