The following is excerpted from Clifford Mishler’s Coins: Questions & Answers
Q: Is it possible to account for the fact that the 1895 Philadelphia Mint silver dollar is available only in Proof, when the Mint report shows that 12,000 production pieces were struck?
A: Morgan dollars were coined in amounts fantastically in excess of circulation requirements, as Congress had mandated by law that the Treasury purchase newly mined silver in large quantities in support of Western silver mining interests. Many of the issues were bagged and stored in Treasury vaults for years, with Silver Certificate issues being circulated in their stead. Other supposedly scarce issues (1898-O, 1903-O, and 1904-O) were similarly stowed away in large quantities for over a half-century but eventually started appearing in quantities when released to banks to satisfy a demand for shiny new dollars to be given to children on Christmas.
Many supposed at the time that the 1895 dollars were similarly tucked away in the Treasury, to eventually surface as inventories depleted. Others believed that they had been melted and re-coined under the provisions of the 1918 Pittman Act, which mandated the melting of silver dollars from Treasury coffers, with more than 270 million being melted down between then and 1921, when the coinage of silver dollars was resumed. Once the Treasury-held reserve of silver dollars was largely dispersed in a series of mid-1970s sales conducted by the government’s General Services Administration—at that point about 3 million dollars remained, including large quantities of several Carson City Mint issues—the melting theory seemed to be the obvious answer. Subsequent research has established, however, that the reported 1904 Philadelphia Mint silver dollar production for circulation was of 1903-dated coins, although Proofs dated 1904 were produced.