The Great Depression brought the U.S. economy to its knees. As unemployment climbed and banks failed, confidence in the financial system collapsed. In response, the federal government introduced emergency policies designed to stabilize the economy and reassert control over the monetary system. One of those efforts was the Silver Purchase Act of 1934.
The Silver Purchase Act of 1934
This act directed the U.S. government to buy large quantities of silver to build up its reserves. It wasn’t a full nationalization of silver, but it came close. While private ownership remained technically legal, the government took aggressive steps to absorb as much silver as possible into its vaults.
The goal was to increase silver to 25 percent of the combined value of gold and silver reserves. To do that, the Treasury was authorized to purchase silver at no more than its official market price, which was capped at 50 cents per ounce for silver already held within the U.S. as of May 1, 1934. These purchases gave a temporary lift to silver prices and provided a much-needed boost to the domestic mining industry.
The Act stated that if silver takes up less than 25% of the gold and silver reserves, then:
- The Treasury Secretary could buy silver (from inside or outside the US) using US funds.
- Silver couldn’t be bought at a price higher than its official value.
- Silver within the continental US as of May 1, 1934, cannot be bought for more than 50 cents per ounce. This stabilized silver value in the United States until the Act ended.
Silver Certificates and Exemption Licenses
The silver the government acquired backed new silver certificates, which were issued as a form of paper money. These certificates could be redeemed for silver dollars and were used to pay debts. In effect, they tied part of the currency directly to silver in U.S. reserves.
Some individuals and industries were granted exemptions that allowed them to keep silver essential to their work. These included industrial, professional, and artistic uses. The exemption system helped ensure that silver could still support key parts of the economy while the broader reserve buildup continued.
Executive Order 6814
Not long after the Act passed, Executive Order 6814 required most silver holders to surrender their metal to the U.S. Mint within 90 days. The Treasury covered shipping and insurance, but there were penalties for non-compliance, including possible seizure of silver and legal consequences.
The order did not apply to all silver. Exemptions included foreign and domestic silver coins, unrefined silver below .800 fineness, and silver mined after December 21, 1933. However, refined silver that met purity thresholds was still subject to delivery, depending on how quickly it was processed.
Executive Order 6814 stated there are exemptions to what silver can be delivered. Silver was not accepted in the following categories:
- Foreign or domestic silver coins
- Raw or unrefined silver of a fineness of .8 or less, which has not entered industrial, commercial, professional, artistic, or monetary use
- Silver mined after December 21, 1933, from natural deposits in the US or any place subject to the Act’s jurisdiction.
- However, If the silver mined in the continental US is refined to a fineness greater than .800 within 75 days of the Executive Order’s effective date, it must be delivered no later than 90 days after that date. If refined to that fineness after 75 days, it must be delivered within 15 days of processing.
Executive Order 6102
The Silver Purchase Act didn’t happen in a vacuum. Just a year earlier, Executive Order 6102 made it illegal for Americans to hold onto gold. Citizens were required to hand over their gold coins, bullion, and certificates in exchange for paper currency. This move was about more than just collecting metal. Once the government had the gold, it raised the official price from $20.67 to $35 an ounce. That change instantly reduced the value of the dollar in gold terms and gave the government more room to expand the money supply.
This was a turning point in how the government handled money. It showed that when push came to shove, it would take control of monetary metals to manage the economy. The Silver Purchase Act continued that shift. While it didn’t outright ban silver ownership, it put the government in the driver’s seat. By buying up massive amounts of silver and issuing new silver-backed certificates, the Treasury gave itself more flexibility to issue paper money without being tied to how much silver people held privately.
Taken together, these actions marked a clear departure from a system based on hard assets. Gold and silver were no longer seen as untouchable stores of value. They became tools the government could use to steer monetary policy. For today’s investor, it’s a reminder that the rules around precious metals can change fast – and that owning physical assets has always carried both financial and political weight.
The Silver Purchase Act Impact
Within the first 90 days, the Treasury bought 109 million fine ounces of silver. Between 1934 and 1938, it purchased another 4 million ounces. By the time the program ended in 1938, the government had acquired 113 million ounces.
The Act achieved its short-term goals. It stabilized silver prices, supported miners, and gave policymakers more flexibility. But it also made something else clear. Precious metals were no longer just stores of value. They had become tools of government policy.
For today’s investor, that shift still matters. The Silver Purchase Act marked the beginning of silver’s exit from the heart of U.S. monetary policy. It was a clear signal that when economic pressure mounts, governments will take control of the monetary levers, including the ones tied to metals once thought untouchable.
