The Coinage Act of 1965
, Pub.L. 89–81, 79 Stat. 254, enacted July 23, 1965, eliminated silver from the circulating United States dime
(ten-cent piece) and quarter dollar
coins. It also reduced the silver content of the half dollar
from 90 percent to 40 percent; silver in the half dollar was subsequently eliminated by a 1970 law.
There were increasing coin
shortages beginning in 1959, and the United States Bureau of the Mint increased production to try to meet demand. The early 1960s was a time of increasing use of silver both in the coinage and in industry, putting pressure on the price of silver, which was capped at just over $1.29 per ounce
by government sales at that price. The silver in a dollar
's worth of quarters would be worth more as bullion
than as money if the price of the metal
rose past $1.38 per ounce, and there was widespread hoarding
of silver coins. Demand for the Kennedy half dollar as a collectable drove
it from circulation after its debut in 1964. The Bureau of the Mint increased production, helping reduce the coin shortages by May 1965, but government stocks of silver were being rapidly reduced, and might run out by 1968. After extensive study by the Treasury Department, President Lyndon B. Johnson in June 1965 recommended that Congress pass legislation to allow for silverless dimes and quarters, and debased silver half dollars. Although there was some opposition, mainly from legislators representing Western mining states, the bill progressed rapidly through Congress, and was enacted with Johnson's signature on July 23, 1965.
The new coins entered circulation beginning in late 1965, and alleviated the shortages. They passed side by side with their silver counterparts for a time, but the precious metal
coins were hoarded beginning in 1967 as the Treasury ended its efforts to keep silver prices low. The act also banned the production of silver dollars until at least 1970.