Tell Me More About Silver Tax Revenues

This is a topic of interest to me because it's one of the few that bridges numismatics and philately. I gather the 1934 Silver Tax was a disincentive for hoarding silver during the Depression era, when precious metals might be considered a better bet than keeping money in a bank that might fail. But why did it remain in place until 1963? And what type of documents were the RG's used on?

It was a tax on silver bullion purchases. Kodak used a lot of them, sometimes in philatelically inspired ways, such as using one of each value to pay a specific tax rate that had been deliberately created.

There are several aspects to the original silver purchase act. Congress was urged by the silver mining interests to support a stable and higher price for silver (to put the miners back to work). So the government set the price of silver. Second a tax was established that was 50% of the profit made on the sale of silver. And closely related to all of this was the issuing of silver certificates, which could be exchanged with the government for silver bullion or silver dollars, which contained a dollar's worth of silver. That exchange would continue until I believe 1965. After that, of course, we have a lot of speculation in silver and the eventual demise of the Hunt Brothers. The stamps were used on the sales document that specified the price paid for the silver and the sale price of the silver - 50% tax on the profit!! Even with no profit, the sales document had to be filed and franked with a 1¢ silver tax stamp. This all coincides with the abolition of the gold standard for our currency and the end of gold certificates.

Silver tax stamps were used to pay the tax or fee on the trading of silver bullion as a commodity. Commodity brokers had to apply the stamps to the trade memorandum, much the same way that stock transfer stamps paid the tax on the trading of stocks or Future Delivery stamps paid the tax on trades for stock futures.

The tax was effective May 15, 1934, but stamps were not available until at least late June or July, as Congress did not authorize them until June 19.

The tax was quite punitive: 50% of the profit the seller made on the transfer. So the tax amount was subtracted from the seller's proceeds, rather than being added to the amount the buyer owed.

In historical context, the Thompson Amendment to the 1932 Agriculture Act abandoned the gold standard and allowed the president to authorize the Treasury to purchase silver, but he did not immediately do so. FDR halted gold trading in 1933, except for jewelry and gold coins, and Congress passed the Gold Reserve Act in January 1934. So the Silver Purchase Act in 1934 essentially nationalized silver at a price of 50¢ an ounce, and within 5 years the U.S. had stockpiled 40,000 tons of it. The storage equivalent to Fort Knox for gold was West Point for silver. By 1964 the U.S. no longer needed it, that was the last year silver coins were minted, industry needed silver, and the world price had risen to the $1.29 floor by which the Treasury could no longer purchase it, so the hoard was sold. While the U.S. continued to tax silver trading after 1963 as they did all stock, commodity and futures trading, it was no longer the punitive 50% and silver tax stamps were no longer necessary.

Excellent background information! Thanks for the posts, this is most educational. I wonder if anyone on the forum has a Silver Tax revenue on document. Eric, perhaps?

There are a few documents on my website here: https://www.ericjackson.com/rsubpro...Cond=&page=4

A couple of examples

Document from Eastman-Kodak, that Revcollector spoke of.

Any chance you have a larger image?

More eamples from the Kodak transaction and other transfer documents.

Note that the two $1000 values include both varieties of the overprint.

Silver transfer form with tax paid using documantary stamps, this was an accapted practice when the gray silver tax stamps were not available.




Transfer document with many RG18 on the back