If you've attempted to make a cash purchase in recent weeks, you are undoubtedly aware that a nationwide coin shortage has forced many businesses to insist on credit cards or cash purchases using exact change. Despite the best efforts of major retailers and small family-owned businesses alike, the coin shortage appears to be getting worse, not better. In fact, in businesses all across the country, customers are being told that they are no longer allowed to use cash at all. That's right-- in many places, legal tender has been rendered illegal.
This, of course, is not an unprecedented event. There have been major coin shortages throughout our nation's history. However, there is one common thread tying all these coin shortages together, and that common thread has nothing to do with pandemics or public heath, nor does it have anything to do with recessions or depressions. There is only one common thread, and that is a massive and devastating war.
Is the coin shortage truly the result of "hoarding" or fears of contagion as government officials, economists and so-called financial experts insist? Is this a push for universal currency? An attempt to transition to a cashless economy? Or is the present coin shortage a harbinger of something far more disastrous like a world war?
History is perhaps the best predictor of future events, and if history is any indication it would appear that the United States is stockpiling copper, nickel and other critical war materials in preparation of a war the likes of which mankind hasn't seen in over a generation. Could it be possible the government is anticipating military action in China as "revenge" for unleashing a plague upon the world?
As you can see by the graph, there have been only four major coin shortages in American history, and all of these shortages correspond with a major war. In three of the four cases, the coin shortages began before U.S. military involvement. In the case of the Korean War, however, the coin shortage began one month after U.S. involvement, due to the fact that the United States was woefully unprepared.
Coin Shortage Precedes First World War
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| A 1917 article blaming the shortage on hoarding and prosperity |
The U.S. delayed its entry into World War 1 until April of 1917, after two and a half years of sitting on the sidelines. However, as early as the summer of 1914, the government was making the necessary preparations for the inevitable, and these preparations produced a nationwide shortage of coins by the end of 1916. By the fall of 1917 the coin shortage became a major crisis, bankers blamed the shortage on American prosperity. On October 23, 1917, the Pittsburgh Post-Gazette devoted its front page to the shortage. The article explained:
There is a serious shortage of fractional currency in the county, a shortage that has grown to such proportions that, although the government mints are working 24 hours daily, they are unable to turn out enough coins to meet the demands of business... Prosperity is the reason assigned for it. One local banker exclaimed that a coin shortage is always prevalent around the holiday season, because it is then people begin to hoard coins for Christmas shopping.
Hoarding coins? Hmm, sounds like one of the reasons our government and so-called experts are giving for the 2020 coin shortage. Little did the bankers and economists of 1917 realize at the time that, by war's end, eight billion rounds of small arms ammunition alone would be expended on the battlefields of Europe by American, British and French forces. That works out to a mind-blowing six million rounds per day-- and that's only counting ammunition fired by rifles and pistols!
The nationwide coin shortage dragged on until 1920, but even as late as 1918 bankers were still blaming the dearth of pennies and nickels on children and collectors, rather than the war. "Shortage of small coins, complained of by banks, may be due partly to the practice of saving buffalo nickels, bankers believe," penned one newspaper in May of 1918. "Bankers said the penny famine probably was due to recently instilled thrift among children... Coins that formerly went back into circulation as quickly as little feet could flutter, now find their way into the toy bank."
Coin Shortages During WW2
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| Article describing the coin shortage of 1940, seventeen months before the attack on Pearl Harbor |
The shortages raw materials during WW2 are so well documented they hardly bear repeating. Nickel was a critical war material, and on March 27, 1942, Congress authorized a nickel made of 50% copper and 50% silver. As the war progressed, it became necessary to devote all copper production to the war effort as well, leading to the famous "steel pennies" of 1943.
However, while most people are aware of the wartime metal shortage, many are unaware that the coin shortage actually began before the Japanese attacked Pearl Harbor on December 7, 1941. In August of 1940, the Philadelphia and Denver mints suddenly began minting coins on a continual 24-hour basis. Once again, the public was lied to about the cause for this imminent shortage, and once again prosperity was reported to be the culprit.
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| Mints go into 24-hour production months before Pearl Harbor |
Months before Pearl Harbor, the coin shortage had become so severe that every mint in the United States was operating 24 hours a day, and bills were put before Congress calling for the construction of new mints to address the growing problem. Secretary of the Treasury Henry Morgenthau put the blame on juke boxes and vending machines. The truth, of course, was that the government was stockpiling metals in preparation of war.
Coin Shortage During the Korean War
Although the Korean conflict began when North Korea invaded its neighbor to the south in June of 1950, the United States did not get fully involved until two months later, when Congress gave its consent to fund military action. Because of post-WW2 defense cuts, the U.S. military was strapped for cash and unprepared. As a result, the first major U.S. engagement-- the Battle of Osan on July 5, only utilized four hundred American soldiers. The U.S. was so unprepared for war that one Navy helicopter pilot reported that he had to repair his chopper's broken rotor blade with masking tape. It was two weeks before the Navy sent him a replacement rotor.
After Congress appropriated $12 billion to fund the war in August, coins began disappearing from circulation. This is the first and only time in American history when a coin shortage occurred after a war had already begun, rather than in the months leading up to military conflict. There is little doubt that a coin shortage would have occurred prior to the Korean War if the United States hadn't been caught off guard.
Yet, even as tanks rolled across battlefields and bombs dropped from the sky, economists were quick to blame the coin shortage of 1951-1952 on anything other than the obvious. In the fall of 1951, just as the Second Infantry Division seized Heartbreak Ridge from the North Koreans, the Family Economics Bureau of Northwestern National Life Insurance Company blamed the nationwide coin shortage on "the growth of coin-operated devices", such as cigarette vending machines, juke boxes, pay phones and parking meters. City officials across the country scoffed at this explanation, stating that parking meters are emptied every other day, and that bus companies deposit their fares in bank depositories every single night. Business owners explained that, while the juke boxes and vending machines are emptied on a less regular basis, the coins usually stay with the bar or cafe, causing the the change to circulate within the same establishment. So long as patrons continued to feed the machines, the business would never run out of change. That same month, however, the Federal Reserve blamed a different "favorite" culprit-- piggy banks.
What economists and the U.S. government failed to mention as a possible cause of the coin shortage was the ungodly amount of ammunition that the United States and her allies were expending in Korea after Congress appropriated the funds to fight the war. In a three month span in 1952, for example, the U.N. fired over 3.5 million field gun shells and nearly 2.6 million mortar shells. In comparison, the enemy fired a mere 377,782 field gun shells and 672,194 mortar shells-- a ratio of nearly 6:1 in the U.N.'s favor. That's a lot of metal.
Coin Shortage Foreshadows Vietnam War
It was the arrival of 3,500 Marines in Da Nang, South Vietnam, on March 8, 1965, that marked the beginning of the U.S. ground war in Vietnam. By year's end, these Marines would be joined by 200,000 additional troops.
It was over a year earlier, in November of 1963, when the first U.S. coin shortages were reported in eastern Iowa and western Illinois. This coin shortage happened to coincide with President Kennedy's decision to increase the number of military advisors in Vietnam from under a thousand to 16,000 under the Military Assistance Advisory Group (MAAG) program.
"We've had a bad shortage of coins," declared Leonard E. Finck, a baker in Bettendorf, Iowa, in 1963. "Our main problem has been pennies, nickels and dimes. But now even quarters and halves are starting to get scarce." F.A. Ahlstrand, the bank president, told the Davenport Daily Times that he had attempted to order nickels from the Federal Reserve bank in Chicago, but was turned down. Other baks throughout the Midwest reported similar problems. Experts initially blamed the shortage on hoarding and coin collecting.
Things got worse by the following spring, with some banks offering depositors a brand new $2 bill in exchange for $1.95 in coins. A chain of grocery stores in Chicago began issuing "scrip" (small scraps of paper which represent money that are only good when used at the store which issued it), and soon national chains like Kroger followed suit.
By the dog days of the Vietnam War, the coin shortage had grown into a national emergency. In July of 1964, the Treasury Department increased its coin production by 75%. That number was doubled by year's end. As usual, the official government response was that the shortage was caused by hoarding and collecting. On July 1, the Nashua Telegraph reported on an investigation into the shortage launched by the House Monetary Affairs Subcommittee:
Treasury officials, blaming much of the coin shortage on hoarding and speculation by collectors, told Congress yesterday that the shortage will end by next year... Eva Adams, director of the mint, testified that a "coin craze which has hit this country" has caused the shortage.
At no point during the hearings was the war in Vietnam blamed for the coin shortage.
It is interesting to note that Canada, who had for years refused to participate in the Vietnam War, finally bowed to U.S. pressure in 1973 and sent troops to South Vietnam as part of Operation Gallant. Almost immediately, Canada was faced with its own coin shortage, inspiring Sandra Woods of the Ottawa Journal to open her September 22 column with the plea: A dime! A dime! My kingdom for a dime!
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| Article on the Canadian coin shortage in 1974. |
By the following year, the shortage had spread from Ottawa, Toronto and Montreal to all parts of the county. But, much like the U.S. government, Canadian officials refused to link the coin shortage to military operations. Once more, the problem was blamed on hoarding and vending machines.
But What About Pandemics and Recessions?
If we are to believe that the 2020 coin shortage is a direct result of the COVID pandemic, as experts and the media insist, then we should have seen coin shortages at the height of the influenza pandemic of 1918, the polio epidemic of 1952, the Zika epidemic of 2015-2016, or the deadly flu season of 2017-2018. Yet, the major coin shortages in history began in 1916 (two years before the Spanish flu outbreak), 1940 (twelve years before the polio outbreak), 1950 (two years before the polio outbreak) and 1963 (eleven years after the polio outbreak). There were no coin shortages during the H1N1 (Swine flu), Zika, or MERS outbreaks, nor during the historically deadly flu season of 2017-2018.
There were also no coin shortages during the Great Depression, the various recessions of the 80s and 90s, no the Great Recession of 2007-2009.
In other words, from a historical perspective, coin shortages do not coincide with pandemics, epidemics or economic downturns. There is only one common thread, and that is major war.
Sources:
Statistics of the Military Effort of the British Empire During the Great War, Page 479.
Pittsburgh Post-Gazette, October 23, 1917. Page 1.
Marshallton Evening Times-Republican, May 15, 1918. Page 3.
Spokane Spokesman-Review, Aug. 13, 1940. Page 23.
Munster Times, Jan. 24, 1941. Page 32.
Fort Worth Star-Telegram, Nov. 5, 1951. Page 13.
Central New Jersey Home News, January 23, 1952. Page 28.
Davenport Daily Times, Nov. 11, 1963. Page 19.
Battle Creek Inquirer, June 11, 1964. Page 26.
Ottawa Journal, September 22, 1973. Page 3.
Regina Leader-Post, Dec. 16, 1974. Page 29.