To qualify as sterling, silver must be 92.5% pure. The standard establishing the pound sterling was announced in the reign of Elizabeth I. In the US, Hamilton established a bi-metallic currency system with a gold to silver ratio of 15:1. The system held until 1873 when Congress demonetized silver. That led to a contraction of the money supply which slowly deflated real estate values and agricultural prices. William Jennings Bryan, known as the Great Commoner, became famous for making his "Cross of Gold" speech, espousing a return to bimetallism, at the 1896 Democratic Convention. However, the gold standard reigned supreme from the middle of the 19th century until the 1930's. In order to increase the money supply, FDR took the US off the gold standard in 1933. In addition to fixing gold at $35 per ounce, the US took steps to increase the value of silver. Since the Chinese yuan was fixed to silver, this led to a strengthening of the Chinese currency and a severe decline in trade, making the weakened country particularly susceptible to Japanese aggression. Decades later, the Kennedy administration freed silver from government involvement and let the white metal float at market prices. In 1965, all links between US currency and silver prices were severed, leading, at least in the minds of some, to the inflation of the 70's. With inflation perking up and silver the only hard metal hedge, speculation in the new commodities markets was likely. In the early 70's, Bunker and Herbert Hunt began buying contracts and accepting physical delivery of silver. Bunker Hunt was so paranoid about America confiscating his wealth that he shipped his silver to Switzerland. By 1979, inflation was in double digits, silver closed the year at an unbelievable $34.45 oz., and the Hunts were still taking delivery. The Comex Board stepped in in January reducing the number of futures contracts a person could own, thus beginning a slide in the price of silver. The levered Hunt's were forced to mortgage all they had to avoid bankruptcy. Eight years later, a series of judgements forced them to file Chapter 11. A decade or so later, Warren Buffet made a long play on silver's role as an industrial commodity and made quite a bit of money. I started this book knowing two things about silver. One was that William Jennings Bryan became famous for excoriating gold and supporting silver. The second was that someone in the Hunt family tried to 'corner' the silver market in the late 70's. That was the limit of my knowledge. And I suspect that is all anyone really needs to know. The author is a renowned financial historian, but most of this is a real snoozer and I clearly never have, and never will, understand monetary policy or theory.
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