On June 19, 1934, Congress authorized the use of Silver Tax stamps.
Founding Father and first secretary of the Treasury Alexander Hamilton was a supporter of a “bimetallism” money system, in which both gold and silver were used as currency. The two metals would be fixed in relative value. But by the late 1830s, it was clear that bimetallism was a failure, since the market rate of silver was higher than the monetary value of silver.
In the late 19th century, the ratio of gold to silver dropped to an unprecedented level. America was gripped by a post-Civil War depression, and the mine owners of the lightly populated western states were developing a power bloc.
The “Silver Bloc” wanted to bring bimetallism back. They succeeded in getting favorable legislation passed, such as the Sherman Silver Purchase Act of 1890, which required the government to buy 4.5 million ounces of silver a month (as much as the total US production in a full year). President Grover Cleveland signed the bill repealing the act in 1893.
During the Great Depression, which began in 1929, the value of silver fell dramatically. To help stabilize its value, Congress enacted the Silver Purchase Act on June 19, 1934. The Silver Purchase Act allowed President Franklin Roosevelt to nationalize domestic silver mines. He ordered all US silver to be delivered to the US Mints to be stored or made into coins. The US Treasury paid rates for silver well over its 1934 value, achieving the hoped-for result, raising the price of silver from 45¢ to 81¢ an ounce.
During this time, Roosevelt also purchased large amounts of silver from other countries, increasing the price of silver worldwide. Although most countries were on the gold standard by this time, China still used the silver standard for its currency. The dramatic rise in the price of silver forced the Chinese to abandon the silver standard.
The Silver Purchase Act of 1934 also included a 50¢ tax on profits from the transfer of silver bullion. The tax was paid through Silver Tax Revenue stamps. To document the payment of the tax, the revenue stamps were applied to transfer documents.
The first Silver Tax issues were documentary stamps overprinted with “SILVER TAX.” The denominations ranged from 1¢ to $1,000. Differences in the overprints, such as spacing between the words or ink colors, caused varieties in some denominations.
In 1941, specific Silver Tax stamps picturing secretaries of the Treasury were produced. That year they were overprinted with “SERIES 1941.” The following year, the date was changed on the overprint.
An error occurred on a small number of stamps issued in 1942. The year was replaced with “5942” on one of the 100 stamps on a sheet. About 20 sheets were printed with the wrong number in seven different denominations before the error was discovered. Some of the error sheets already produced were found and destroyed and some were never accounted for.
The overprint was no longer used after 1943. Silver Tax stamps were discontinued in 1963.
Click here for more Silver Tax stamps.
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Good information on a lesser known aspect of this country’s early philatelic history.
I would hope for clarity: President Cleveland did not repeal the Sherman Silver Purchase Act. He signed the bill repealing the Sherman Silver Purchase Act.
Boy Craig, you don’t give anyone a break do you? I wish you’d write an article so I could sharp shoot you.
Thank you for the information Mystic…I’ve vaguely heard of these stamps over the years, but knew hardly nothing about them.
This makes no sense at all…..are you trying to show off your intelligence ?
Wow great history.
Every philatelic stamps have a history. But this stamps have great history.
Shoulda’ left the gold alone..I didn’t know you could keep 5 oz, thanks for the info.
Are any of the error stamps collectible?
Roosevelt was more of a tyrant than I imagined. Nationalizing the silver mines?
Thank You, Mr Emert. Like any government since earliest times, ALL governments fear the populace of the country having more and rising higher
than the political power in place. I remember from my economic text in college. Governments of the first world, fear other governments of the same world. Governments of the third world fear EVERYONE. Generally speaking, nothing changes. As the old adage says: The more things change, the more they remain the same.
These orders not to own gold or silver seem strange. Isn’t the USA the most free country in the world? Can any other nation compare to our liberties?
Hang on to your gold and silver ..those times are coming again.
A fascinating article on FDR’s control and inflation of silver values. I was aware of his Gold Reserve Act (1934), but was not sensible to his arbitrary elevation of silver too. The federalized raising of the value of both “species” was, in great part, done to infuse the economy with more dollars to be backed by inflated government silver and gold holdings. For farmers — and there were 6.8 million farms, compared to .89 million currently— more dollars in circulation would increase crop prices and ease the plight of this significant workforce.
The U.S. gold mine closing order of the 40’s forced mines that produced gold as their primary commodity to shut down. If the mine produced gold as a by-product during the course of mining other metals, it was exempt from this order. For decades prospectors were discouraged from searching for gold deposits because they couldn’t own gold. Today prospectors and mine developers are faced with the heavy hand of over-regulation and exhausting permit requirements, causing deposits to sit idle while many mining companies go abroad to stay in business. During the 1930’s many people were pressured by the banks to turn in their gold because they were told it might become worthless. So my parents and grandparents turned their gold coins in for paper. Today world banks and investors are trading their paper for gold.
This is unknow to me. How did the gov’t know if you kept more than 5%?
Wish I had asked my dad that. He held onto a few gold coins not knowing coin collectors could keep their gold.