Klepto Currency Frank I. Sillay

Klepto Currency

During the 1960s, silver disappeared from American coinage . . . It was late morning, on a weekday in 1960, when Tom and I, both students at MIT, walked into a bar (known to us as “The Greasy Spoon”) around the corner from the fraternity house in Boston.

Surveying the interior, we saw that there were only three or four drinkers in the place. We seated ourselves at the bar, and Tom pulled an old, greasy, patinated leather pouch from his pocket, dropped it on the bar so that its contents of several silver dollars spilled out and said to the bartender “beer for everybody in the house.” (draught beer in those far-off, happy days, was 15 cents a glass.)

The customers soon gathered around, and the conversation was exclusively focused on the silver dollars: “Jeez, I haven’t seen one of those since I was a kid! Where did you get those?”

Tom, an accomplished raconteur, spun a yarn about having just hitchhiked from Alaska, where, in a poker game, he had won a quantity of silver dollars from an old prospector, this being the last residue of his windfall.

Only a moment of silence passed before one of our guests broached the question: “Could I buy one of those from you?”

Refusal gave way to reluctance, then negotiation, and Tom and I were soon on the sidewalk with fifteen or twenty dollars in folding money, plus a couple of the remaining silver dollars. We made our way to the nearest bank, soon converted the paper money to silver dollars, and selected another bar.

This time was my turn, and my story was that while tearing down an old house on my uncle’s ranch in Nevada, I had found a cache of the antique currency. The play proceeded much as before, and the net result was having started off with three or four dollars in change between us, Tom and I stayed drunk for several days.

I sense disbelief, especially among younger readers, but this story, while describing elements of deception, is entirely true. Prior to the mid-sixties U.S. one dollar bills bore the inscription “The United States will pay to the bearer on demand one dollar in silver” or words to that effect. This was universally understood to mean silver dollars, and banks were required to keep reasonable stocks of them in hand. After that time one-dollar bills became Federal Reserve Notes, and fell into line with larger denominations, claiming only to be “legal tender for all debts, public and private”

In the early ‘60s, silver dollars, while still legitimate currency, were virtually never seen in circulation, except in the far west, where the occasional gambling machine and unattended gas pump still accepted them. People in the East, who were not coin collectors, tended to be unaware of the significance of Silver Certificates, which were the last remaining legacy of William Jennings Bryan, who famously objected to working people being “crucified on a cross of gold” in a dispute over the basis of currency backing in the 1890s. It was during the 1960s that silver disappeared from American coinage, leaving only the faith of the general public as a basis of value. Just like crypto currencies.

--Frank I. Sillay