the mighty morgan

The US silver dollar pictured here, designed by George T. Morgan and struck in the millions but intermittently by the US Treasury between 1878 and 1904 and again in 1921, is what people used to call "hard money." It's easy today to forget that when it was minted in 1895, the Morgan's value was universally accepted as one dollar, even though the silver in it -- a little more than 3/4 of an ounce or 90 percent of the coin's weight -- would trade for less than that.

But now, with silver futures trading at over $43 an ounce, the deeply conservative impulse of which hard money preferences are so much a part resonates with renewed vigor. One web pundit educated in such matters wrote that "Clueless central bankers seem incapable of understanding why printing billions of pieces of colorful paper (currency) might affect the price of gold," an observation that underscores the popular conviction that the money the Federal Reserve creates simply by declaring that it exists isn't real money.

It's still real enough that we can exchange it for the goods and services we need and want, but the erosion of the American greenback's value has accelerated dramatically since the end-of-decade economic calamity and the corresponding flood of fiat money meant to stanch that calamity. Today we see that erosion in hard-edged relief, as if backlit, and awaken from our dream of fiat money to see essential commodities such as food and gasoline on the one hand and the US dollar on the other, at opposite ends of a gigantic see-saw.

Some point to the Hunt brothers' cornering of the silver market several decades ago, which caused the price to bubble out to $50 before it precipitously collapsed in 1980, or the sudden spike in gas prices to five bucks in the summer of '08, to argue that today's run-up in commodities prices is the result of speculative manipulations rather than the dollar's erosion. But they're wrong.

Hundred-dollar oil, three-dollar avocados, five-dollar bread, 1500-dollar gold, and forty-dollar silver are here to stay, and it will only get worse from now on, or if you're one of the lucky ones in possession of some hard money, better. And if you're looking to acquire some, you couldn't do better than the Morgan.

Both the Morgan and its successor, the Peace Dollar, are viable currency because of their uniformity and ease of authentication. They are also universally acknowledged to be worth many times their face value -- $33.55 at this precise moment -- such is the effect of fiat money. In addition, they're easily negotiable, unlike gold which is now so valuable that it's impractical as a medium of exchange except for very large purchases.

The Morgan, is far and away the sexiest US coin in semi-circulation today. Many if not most were hoarded in Treasury Department vaults for decades, because the government feared the inevitable easy-money inflation that would have resulted from circulating all of them when they were minted. Sold off in huge lots to eager and rich collectors in the early '60's, many still have the deep mirror-like luster of uncirculated money. If oil is the king of commodities, the Morgan Dollar is the queen of currency.

If this topic interests you, there's an interesting article here on how the JP Morgan banking firm might be attempting to keep silver prices artificially low, and how their ability to do so may be at an end.

El Gato Negro
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