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Although gold and silver coins do not circulate as cash in the United States today, at one point many gold and silver coins were used everyday. Why were gold and silver coins abandoned as currency?

The History of Gold and Silver Coins in the U.S.

Coins were first introduced as currency in the United States in 1792. Until the time of the American Revolution, coins of many countries, mostly England, were used as currency in the United States. When the federal government was established, an American currency was established as well, and since coins were the most popular form of currency worldwide at the time, coins were produced for this new currency.

From 1792, when Congress passed the Mint Act, all coins were gold, silver and copper. The dollar was valued to to silver and gold at 371.25 grains of silver and 24.75 grains of gold. These gold and silver coins were issued in denominations of:

• Half Cents ($0.005) in copper,
• Cents ($0.01) in copper,
• Half Dismes (Dimes) ($0.05), later known as nickels, in silver,
• Dismes (Dimes) ($0.10), in silver,
• Quarter Dollars ($0.25), in silver,
• Half Dollars ($0.50), in silver,
• Dollars ($1.00), in silver,
• Quarter Eagles ($2.50), in gold,
• Half Eagles ($5.00), in gold,
• Eagles ($10.00), in gold.

Although paper money was widely introduced during the Civil War, having been experimented with on several occasions before, coins continued to be more popular as currency throughout the 19th Century and the first quarter of the 20th Century. At some times during the 19th Century, the value of the paper currency was tied directly to its value in gold or silver. The removal of this value would prove important in later years.

Because the value of the silver and gold coin was related directly to the value of the gold or silver the coin contained, this allowed the economy to sustain itself with ease. As the value of gold and silver remained stable, so did the value of goods that could be purchased with gold and silver; hence there was very little inflation most of the time, and the cost of goods and services in the United States stayed relatively constant between 1635 and 1913.

The Shift Away from Gold and Silver Currency

Gold and silver as United States currency began to lose ground in the 20th Century. Paper currency began to be more popular with citizens by the 1920s, and the production of and popularity of gold and silver dollars and larger currency specie declined.

While some silver currency was produced until the 1960s, the death knell was sounded for gold coinage in 1933, when President Franklin D. Roosevelt ordered the confiscation and destruction of all gold currency.

Roosevelt, in an attempt to stabilize the value of the American dollar, confiscated all privately held gold – including gold currency – in order to devalue gold and remove the tie between gold and the worth of the American dollar. Gold coins were melted down, and the era of gold coins was effectively ended.

Gold and Silver Coins Today

Although gold and silver currency was for the most part abandoned in the latter half of the 20th century, the U.S. Mint continues to produce gold and silver coins for the numismatic market, and bullion coins for investment.

Twenty-dollar American Eagle Coins are produced in both gold and silver; featuring the Saint-Gaudens Liberty design, these proof coins are produced specifically for the collectors’ market. These are coins in regular production.

Special edition gold and silver collectors’ coins include the 24-karat American Buffalo, the gold First Spouse coins, and an array of silver and gold commemorative coins that celebrate historic figures and events important to American history. Most of these coins have limited production runs, making them highly prized by numismatists.

The U.S. Mint also produces bullion coins in silver, gold and platinum; these coins, developed with those who buy gold as an investment in mind, are produced with the American Eagle design. Valued at their troy weight in silver, gold, or platinum, these coins have no assigned currency value, and are not legal tender.

While gold and silver coins are no longer popular in circulation in the United States, they have a long and interesting history that is fascinating to those who enjoy coins, American history, or both. Whether you are a coin collector or a history buff, the story of gold and silver coins in American currency is worth investigating.

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