First Draft of the Report on the
Establishment of a Mint.74
The Secretary of the Treasury having maturely considered the subject referred to him by the order of the House of Representatives of the 75 day of last relatively to the establishment of a Mint begs leave respectfully to submit the result of his reflections.
A plan for an establishment of this nature must not only contemplate the principles of a coinage of the United States; but must extend its
attention to regulations the coins of all other countries which shall have been introduced into them. It must involve a variety of considerations intricate nice and important. All the revenues of the country; the general state of debtor and Creditor; all the relations and consequences of price; the value of all property; the essential interests if trade and industry are liable to be sensibly influenced, beneficially or otherwise, according to the well or ill ordering of this very interesting object. It is truly one not more necessary than difficult to be rightly adjusted; one which has long occupied the meditations and researches of statesmen and politicians; without having harmonised their opinions on some of the most important of the principles which enter it into it. Accordingly different systems continue to be advocated; and the systems of different nations after much investigation continue to differ materially from each other. The immense disorder, in whatever relates to the matter which has prevailed and still prevails in this country calls not more loudly for a remedy than it considerably enhances the difficulty of devising one to which objections of weight may not be urged. This however can not reasonably be allowed to discourage from an undertaking, the accomplishment of which is indispensable to the order which ought to reign in the pecuniary affairs of the government and of Individuals.
while it must inspire diffidence in one whose duty it is made to propose a plan for the adjustment of so delicate and momentous a concern and unusual circumspection in the whole progress of the business ; and perhaps it may be permitted to be relied upon as some excuse for any errors which may be chargeable upon what shall be be proposed or any deviations which may appear from sounder ideas heretofore sub that may have been suggested by others or even in part acted upon by the former government of the United States. It is an encouragement to the Secretary to reflect that his views of the subject correspond in some leading respects with what has been heretofore proposed and done.
In order to a proper result the following particulars require to be discussed and determined.
1. The proportion between the metals in the gold and silver coins
2 The proportion and composition of alloy in each
3. Whether coinage
should be free or subject to a duty imposition or charge or in other words whether there shall be a difference or not between the value of the coins and the mint price of bullion, weight for weight.
4 The nature of the money unit & money Arithmetic
5 The number demominations
forms and devices of the coins 6 The Organization of the Mint.
The Whether foreign coins shall be permitted to pass current as money or not; if the former how long and at what rates.
7 The Organisation of the Mint.
The proportion between
the quantity of the metals in the coins is a matter of considerable importance. The consequence s of overating either in respect to the other are the banishing banishment of that which is underated. Another consequence not equally certain, but which many circumstances render probable, is the acquisition or possession of a less quantity of specie in the aggregate. and an actual loss to the country in the total mass of its gold and silver proportionate to to the excess of value which is allowed to the one or the other of them.77
The first effect
is produced by a very simple process results from very simple principles. Let two countries be supposed, in one of which the proportion between gold and silver is 1 to 16, and in the other of which that proportion is as 1 to 15. It is evident that in the former gold will be worth more silver less than in the former latter; it is evident that whenever therefore the former has a payment to make to the latter silver will be selected, for the purpose; gold when the latter has a payment to make to the former. In addition to this money exchangers will find it a profitable speculation to carry the gold of from the same cause will find a profitable traffic in the exchange of the metals between the two countries. Hence if other things are equal all the gold will at length come to be collected in one place and all the silver in the other.
be supposed that the course of trade would correct the legal disproportion between the metals by their market value and counteract the tendency natural tendency of that disproportion: But the truth is that the legal rates influence though they do not absolutely controul the market rates; and influence them so far and so often that the comparative values of the metals in the coins have nearly their full operation in the way which has been stated.
This inference has been verified by facts. Silver is continually flowing from Europe, where is comparitively cheaper to the East-Indies where it is comparitively dearer; and gold often returning in its stead. In Spain and England where gold is rated higher than in other
countries of Europe silver is always scarce. In France where is rated lower than in any other except Holland it is particularly abundance.
This circumstance has appeared to some immaterial, and there are even persons who from a fanciful predilection to gold have thought it adviseable to give
them it a preference even by a higher price. But real utility the true criterion to be consulted. And this seems to dictate that a due proportion of both metals is most desireable. If gold is more convenient in large payments, silver is preferable in the more minute and ordinary circulation. If the one or the other were of necessity to be excluded, there are considerations, especially in countries, where bank circulation was prevalent, which might plead for a preference to silver.
But the most serious
effect of overating either of the metals is the one last mentioned. The following are some of the circumstances which render it probable. It is evident, that as often as a country, which values either of the metals higher than in other countries with than the usual proportions receives a payment in that metal, it receives a less actual quantity of it for any given sum of money than if the metal were rated lower or conformably to those proportions. And It is also evident that there will be a continual effort to make payments in that particular metal to which it has assigned a superior value; wherever that metal is current at a less proportional value. And it seem s to be a very natural effect from those causes that the country in question not only that the mass of the precious metals in the country in question would consist chiefly of that kind which it had thus overrated given an extra value th but that it would be less, than if the metals had been duly proportioned to each other.
s of this nature however are to be drawn with great caution. In matters, of this kind there are always some local and many other particular circumstances which qualify and vary the operation of general principles, even where they are true ; and there are endless combinations very difficult to be analized or penetrated which often render principles that have the most plausible pretensions delusive. and unfounded. According to the general theory for instance there ought to be little else than gold in the United States; because perhaps the actual value of that metal in this country, in prop compared with silver is greater than any where else.
There ought for instance, according to
the principles which have been stated, to be greater pr quantity of gold, in proportion to silver, in the United States, than there really is; because the actual value of gold in this country is perhaps higher than in any where else. But our proximity to the West India Islands (into some of which silver s there is a greater influx of silver, than of gold, directly from the mines facilitates supplies of silver to replace the sums exported occasions an extraordinary supply of silver and a greater pr proportion of it, in our circulation, than its relative value. may be supposed to intitle us to.
What influence the proportion
between the metals may have upon the state of prices, and how far this may affect its operation tendency to increase or lessen the quantity is a points not easy to be devellopped. And yet they are very necessary to an accurate judgt. of the operation of the thing.
But however difficult it may be to pronounce with certainty that the possession of a less quantity of specie, in the aggregate, is a consequence of
a wrong proportion between the Metals, there is enough of probability in the considerations which seem to indicate it to form an ag argument against any such overvaluation.
A third consequence of a wrong proportion is a greater and more frequent disturbance of the money Unit by
th greater & more frequent ly the legal & the market proportions. fluctuations in But the presumption t is that price is there is no obviou very obvious connection between the two things; and there are so many circumstances which manifestly and sensibly regulate price are known to regulate price, and which must necessarily do it with such superior force, wh with a force manifestly so much superior to any thing that can be attributed to that cause, if it has any influence at all, that there is not room for a presumption that its effect in this way, if it has any at all, can counteract its tendency in the other. The impossibility difficulty however of calculating the effect and of a variety of other circumstances which occur in an investigation of this sort.
The relations of commerce
between one country and others, or, in other words, the general course of the trade of a country, which must influence the market value of the metals, as well as of all other things, enter deeply into the calculation of the proper proportion between them which ought to be establish ed by law between them. Perhaps they ought to furnish the rule Indeed there seems to be no better rule for the legal than the market proportion; if the latter considered as having been produced by the fair and permanent steady operation of commercial principles. It is presumeable that each metal would in this case find its true level according to the its intrinsic utility in the general system of money operations.
s matters that involve such various and intricate combinations, that admit of so many exceptions to general rules and it may be even be said of such a conflict of principles, it must always be dangerous to depart too far from the actual state of things in compliance with abstract or speculative ideas however irrefragable they may seem in theory with abstra general propositions deduced from an abstract or theoretic view of the subject.78 Nevertheless the presumption of there being something wrong in that state of things may be so decisive, it may present such extremes and may diverge so widely from principles, that there may be less hazard of erring by departing from it than by adhering to it; provided the departure be not too violent, or excessive. be neither violent in the mode nor excessive in the degree.
As an expedient for avoiding the inconveniences of an erroneous proportion it has been proposed that none should be fixed, that the money unit should be attached to one of the metals only and that the other should be left to
fluctuate find its value in the market as bullion.
This idea is not without strong reasons to support it; but it is also open to weighty objections. It is evident that the metal to which the unit was not attached would be divested of the character and office of money; for to
preserve these an ascertained value an ascertained and determinate value in all payments both to the public and to individuals is indispensable. And that necessarily involves a legal proportion.
To annul the
utility use of one of the metals as money would be to abrige the quantity of circulating medium; and would be subject to all the objections which spring from a comparison of the benefits of a full, with the evils of a scanty, circulation.
It would not be a satisfactory answer to say that none but the favoured metal would find its way into the country;
that all in that, all ballances would be paid. This would depend on the abundance or scarcity of it in the Country paying. Where there happened to be but little of it, it is either could not be had or it would require a premium to obtain it, which wherever there was a competition with others in a branch of Trade, would constitute a deduction from the profits of the party receiving. It is also to be expected suspected that the embarrassments which this would sometimes create in the pecuniary liq liquidation of ballances would lead to increased efforts to find a substitute in commodities; and would so far obstruct the introduction of the metals. The effect The consequence too of excluding one of the metals would in other senses unfriendly to commerce. It is often in the course of trade as desireable to have the kind of money, as the kind of commodities, which will best suit a foreign market.
The design of the proposition under consideration is to render that which is the common measure of value as fixed and as invariable as the nature of things will admit. But perhaps
the same va this valuable end may be obtained by another expedient less exceptionable, which will be mentioned hereafter.
Taking it for granted that
both the coins of the United States ought to consist of both of the embrace both the precious metals and consequently that the proportion between must be adjusted by some rule, it remains to inquire what ought to be that rule.
There seems to be an option of one of three things—
To seek on a mean proportion or average of the relative value which
To approach as nearly as possible to
a mean or average proportion of the relative values of the two metals in the countries commercial parts of Europe.
To take as a standard the proportion which now exists in the United States.
Or to seek for some intermediate
whih which there may be reason to believe is better adapted than either to our particular situation.
To ascertain the first, with perfect precision, would require better
matter materials, than are possessed; especially as the sources of information which there has been opportunity of consulting are not intirely correspondent with each other.
A representation of Sir Isaac Newton to the Treasury of Great Britain in the year 1717;79 which is the most authentic document within the reach of the Secretary,
stating the following particulars—that the legal proportions between gold and silver in Spain and Portugal is 16 to 1; that in Spain Silver commonly bears a premium of 6 Cent that in France fifteen to one; that according to the proportions which prevail between gold and silver in Holland an English Guinea would be worth 20/ & 7½ Stg; which gives the proportion of that according to the current rates of gold and silver in Italy Germany Poland Denmark and Sweden a guinea would be worth from 20/ & 7d to 20/ & 4d Sterling which at a mean would give the proportion of and concludes from the whole that “by the course of trade and exchange between nation and nation in all Europe fine gold is to fine silver as 14 ⅘ to 15 for 1.”
An English writer who appears to have
investi investigated the point with great accuracy and care and who details all the data of
their calculations states the proportion between Gold and Silver in Holland at and in France at
An German author81 who
appears and pro professes to have be stowed great l and appears to have taken great pains to collecting and collating information on the subject states the proportion between gold and silver as follows
|In Holland as
||1 to from
|1 to 15 nearly|
|In England as||1 to||15.191|
|In France as||1 to||14.443|
|In Portugal as||1 to from 13.438 to||13.496|
|In Spain as||1 to from 14.886 to||14.897|
|In Mexico as||1 to||14.906|
|In Denmark as||1 to||14.947|
|In Russia as||1 to||13.885.82|
The Table83 in the Schedule extracted from the work of this author
will shew the several coins to which these proportions relate and the quantities of fine gold and silver to which each of them corresponds expressed in German aces, which are to troy grains as 1 to [or] 7766 to 576084
These authorities and
some tables of coins which are every where to be met with contain the most accurate details relative to the subject of Inquiry which the Secretary has been able to meet find. To assist the inquiry To this written information he has added that which all that he could derive from communications with well informed other sources and among others from an assay of the different coins current in the United States which he has caused to be made by different individuals. But from the latt less benefit is derivable than might be supposed. The want of the species of practice which begets precision in this particular does not permit a reliance on the accuracy of what has been done.85
From all the information which the Secretary has obtained, compared and combined, he infers, that
the average in those Countries of Europe in which Commerce may be supposed to have proportion between Gold and Silver its natural and due influence is in the matter namely England Holland France Spain Portugal and Italy, the average market proportion between gold and silver is as and that throughout Europe that proportion is as In this calculation the market proportion in England is taken to be as 1 to though the legal proportion now is as 1
propor current proportion between gold and silver in the United States may be considered as 1 to 15.873 or thereabouts. Gold Coin in Pensylvania The several gold coins of Fran In Pensylvania the price of gold in coin the coins most usually current is ⁶⁄₈ dwt.—that of silver is ⁷⁄₆ per dollar for a Spanish dollar and for a French Crown which may be considered as our standard silver coin of the country. This gives the proportion mentioned. The average weight of the dollars which now in general circulation are those a not are such as have been coining coined since the year and their average weight as nearly as it can be ascertained is 17d 17 dwt. 8 grains and six mites.86 Computing a dollar of this weight at ⁷⁄₆ and a pennyweight of Gold Supposing the Taking their fineness to be as 221 to 19, which is the proportion agreeably to the Table of Assays compiled by Sir Isaac Newton (and the Secretary knows not of any change in the Spanish standard) and computing a dollar to be of the weight of 17 dwt 8 Grains & 6 mites and of the value of ⁷⁄₆ Py Curren & a penny weight supposing gold to be twenty two
The following are the data upon which this proportion is determined. English Spanish Portugal & French gold Coins are those which are usually current in this country and generally at the same rate though they differ in fineness. This rate is 6/8 dwt. Pensa. Currency. Spanish Dollars and French crowns are the silver coins which constitute the mass of our currency in that metal. The former
are generally pass at the rate of 7/6 Pensylvania Currency. The latter per piece and the latter at but the latter are current in different parts of the Union at different rates. In Pensylvania the value of a French Crown is 8/4 in New York at 9/ currency of that state. And there are other differences in other states. Supposing that all these differen kinds of gold coins and the two kinds of silver coins circulate in equal quantities (which though probably not exactly the fact is probably not so wide from it as to make any material difference) and calculating their mean fineness according to the table of assays compiled by Sir Isaac Newton it is found that a penny dwt. of fine go contains of fine gold
It appears on It appears that the dollars now in common circulation are such as have been coined since the year and that their average weight is 17 dwt. 8 Grs. & 6 mites. And that the weight of the French Crown is Calculating the mean fine sess of these two kinds of coins according to the Table and stating the price of the crown at a mean between the two rates which are mentioned above, it results that 7/6 Pensylvania Currency is the value of of fine silver. Hence of fine gold are of equal value with of fine silver which establishin the furnishes the proportion of 1 for These minute minute details are stated from the supposition that in matters o a matter of such nicety it will be satisfory to the House to be possessed be acquainted with the principles from which any general conclusions are drawn.
What has been the occasion of giving so high a value to gold is not easy to be accounted for. No reasons of commerce occur to afford a solution. There is every
proportion is probability that the proportion is an arbitrary one once and that having been assumed adopted it has been supported by the scarcity of money, and the want of accura accurate attention to the operation of the thing. The demand for the coins has been for a considerable time past so great that it has been not difficult to give n and maintain an artificial value to either or both of the Metals. My The result of my inquiries after the cause of this high valuation of gold is that any an opinion was entertained that it would conduce to the plenty of money by preventing rendering it less advantageous to export the gold. This is the prejudice alluded to. For nothing can be more ill founded than this idea. It is true indeed that it would have the exp effect of restraining the exportation of gold but this would only occasion silver to be exported in place of it and in greater quantity than ought to be the case. If a foreigner was paid a sum of money in this country & intended to export it he would if he understood his own interest silver for the purpose interest convert his gold into silver; for for e every ounce of gold he could get in this country near 16 ounces of silver & with from about 14 & a half to fifteen of these ounces would be equivalent to the ounce of gold. Consequently the difference would be so much gain to him & for the same reason so much loss to us.
And then examples were not wanting of a premium being given
upon silver. in the exchange of gold for silver. But it does not appear that this has been the case since the peace.
There seems to be a moral certainty that so excessive a value to gold is factitious and
unnutar an unnatural; consequently a disease in the pecuniary system of the country which calls for a remedy. It considerably exceeds the actual value every where else In England the market proportion is generally less than 1 to 15 1/5. In Spain and Portugal where according to Sir Isaac Newton the legal proportion is 1 to 16 the market proportion according to the same authority is about 1. 1 to 15.1/25 though the legal value as stated by Sir Isaac Newton in Spain and Portugal is somewhat greater higher.
One to fifteen is
The proportion which in the Judgment of the Secretary would be desireable. is He is inclined to think that such a middle station between the lowest and highest proportions which appear obtain in Europe would be attended with some peculiar advantages and in the particular position of this Country would be attended with no inconveniences.
But there are considerations connected with so
considerable an alteration in the relative value of gold which are worthy of serious attention. It will be seen at once how it will affect the immediate possessors of that species of money, at the moment of the change. And it is possible that it may in some cases affect the relative situation of debtor & Creditor to the benefit of the one and the detriment of the other. But this last does not appear to be a necessary consequence,87 beyond the immediate effect upon the gold actually in possession of each party, unless an alteration should be produced in the price of labour and commodities. If this should remain the same as would probably be the case, dollars being the measure to which the minds of the people of this country have been familia It is probable that it would be obviated by making silver the medium of adjustment of all past contracts. The minds of the people of this country have been accustomed to consider the dollars as the common measure of pecuniary value. It is upon this that all foreign exchanges have been regulated. It is to this that the prices of labour and commodities seem to be attached. If this be true, those prices will y not be be likely to continue at their usual rates; though in respect to the mean value of the two metals they will be greater than before. The Debtor therefore will obtain the same quantity of silver and a greater quantity of gold for whatever he can bring to market as formerly. And he must pay his creditor with exactly the same number of dollars as before in silver or with as much greater a quantity of gold as his labor or commodities have been worth to him. So far the Debtor will not gain and the Creditor will not lose. The latter whether paid in silver or gol gold or silver will get the full number of dollars of which his debt consisted and will be able with them to purchase the same quantity of land labour or commodities as he could have done previous to the alteration.
If it be thought that prices
would be more likely to find a level decline to a level with the mean value of the pr metals; or in other words that a given quantity of labour or commodities would produce less gold and more less th silver than before corresponding with the difference between the old and the new proportion between the metals—then to preserve the relative situation of debtor and Creditor on its original footing the expedient will be to provide that that all past contrac in respect to all past contracts, pay shall be made in equal quantities of gold and silver. This it is conceived In this case same the debtor will get for a given quantity of labour and commodities will represent the same quantit sum of debt as before and the same sum of debt will represent the same quantity of labour com and commodities.
Whether in the uncertainty of the issue, with regard to price, it would be adviseable to adopt either expedient is
certainly not a little probele problematical.
Whether to so great an innovation as a reduction of the proprortion of the metals from that of 1 to 15 8/10 to that of 1 to 15 is consistent with a due degree of caution is also worthy of serious reflection. Perhaps upon the whole the more prudent course will be to stop at the proportion in the English Coins namely of 1 to 15 2/10. This is suggested by the consideration that the specie ballances we pay are principally if not wholly to Great Britain. The prevailing ideas will more easily rally to this standard. There will be the less danger of adding any new inducement to the exportation of our specie. Such a change is recommended by its greater moderation and it appears to be absolutely free from hazard. But no reason whatever
concurs for permitting a higher proportion in favour of gold to subsist.88
The proportion and composition of alloy in
each metal is the next point to be considered.
The ordinance of Congress of the 89 reglates
that part the proportion at 1/12 that is 11 parts fine gold or silver and 1 part alloy. This proportion as it respects gold corresponds with what is professed to be standard of most of the European Coins. But in the greater part of these it is not in fact so. There is an allowance for what is called in England Remedy for the Master of the Mint; in France “Remedy of weight and alloy” “Remedy of Alloy” which varies the proportion. In France it is This is in the nature of an allowance to the Master of the Mint to indemnify him for unavoidable imperfections in the process or workmanship, rendering the coin either lighter or baser than it ought to be. This in England is 1/5 of a Carat En in the theory of the English Mint is 1/6 of a Carat; but in fact the coin approaches more nearly to the real standard. The remedy however is realised in the coins of Spain Portugal Italy & France. In France the proportion of fine gold to alloy is as The ducats of Germany Holland Sweden & Denmark and the Sequin of Venice are 1 Carat and 7/8 better than the English standard. The carat is a term of proportion signifying the 24th part of any integ integer of actual weight.
There are like variations in the Silver coins of the different parts of Europe. That of England is 222 parts fine and 18 parts alloy. That of of Spain is 223 parts fine & 1 part alloy. That of France The standards of other countries vary from that of England from 17½ better to 75 parts worse.
The reasons assigned for alloy are these The mixture of the
metals finer with the baser metal in the natural state and consequently the sparing of expence in refine them. The necessity of hardening the former, to prevent the too great diminution of the coins by friction or wearing. From the prevalency of the practice of alloying the first reason extends to the state of the foreign which are to be converted into the national; and which if alloy were to be excluded from the latter would be to be refined at no inconsid an expence. The justness of the second reason has been disputed and experiments have been asserted to prove that the alloyed coins wear faster than the fine. Fist appearances are against this position; but the fact may deserve future investigation. In the mean time other more certain considerations and the general most more general practice of nations ought to govern.
The proportion of 1/12 alloy
seems to be a well chosen one; because it corresponds with the standard real or professed or real of the most commercial nations and of those with whom we have most intercourse and because it is said to be not far distant from the usual proportion which is found in the metal in its natural state; and which if true mu affords a consideration of some weight in reference to the expence of refining. To increase the alloy would be objectionable in different respects. As the value of the Coin is and ought to be rated according to the quantity of fine gold contained in it all unnecessary addition of alloy is an unnecessary increase of expence; especially as if is to consist partly of silver. Secondly the debasement of the standard is apt to occasion in public estimation a species of discredit to the Coin. And in fact from the difficulty of separation any go quantity of gold mixed with silver loses a portion of its value. Thirdly in proportion as the coin deviates from that state which constitutes its greatest beauty and acquires a baser countenance it becomes more exposed to the danger of counterfeits. The perfection of the coin as well in relation to the beauty of its color as to the excellences of its workmanship is no inconsiderable ingredient security against the fraudulent imitation of it.
A like proportion for silver as for gold recommends itself by its symmetry & correspondency in system; especially as it varies
ver not materially from the standard of the silver coins in general currency in the United States. If a regard to system in a more important point does not recommend a different proportion departure. This will be examined hereafter.
The alloy of gold is part
ly part silver ly copper. That of silver is wholly copper. Two reasons are given for the mixture of silver & copper with gold. One is that they are usually found mixed with the metal in its primæval state. An The other is that the beauty of the coin depends on that mixture, silver tending to render it too pale, copper too red.
In England the rule is
half silver half Copper. The proportion varies in the coins of some other countries from that of England one half to 1 third, Silver. There may be reasons for fixing it by law in the United States not to exceed one half nor fall short 1/3 leaving a discretion in some proper place to regulate the matter within those limits as experiment in the execution shall recommend. recommend.
Whether Coinage shall be free or subject to a duty or in other words whether there shall be a difference between the value of the metals in the National Coin & the Mint price of foreign Coins and bullion?
The practice of different countries differs in this particular. In England coinage is free; that is the expence of it is
borne by the Government; In France there and at the Mint an equal quantity of fine gold in guineas is exchanged for bullion at the par of the fine gold in each. In France there is a considerable duty which not only defrays the expence but yields a profit to the state. In Holland there is a duty designed to be only commensurate with the expence of the Coinage; but which is said to afford a small profit. The difference between the Mint v legal value of the metal, in the coins, and the mint price of bullion, is according to the most accurate statement that has been obtained, upon gold and upon silver
The Ordinance of Congress90 establishes
the like difference at ½ Cent on Gold & upon 2 Cent on Silver.
The policy of these differing usages presents one of the nicest questions in the doctrine of money.
The arguments for a free coinage are that it preserves the intrinsic value of the metals which are the money of the world; that it makes the expence of coinage a general instead of a
particular partial tax and (it has been added) that it tends to promote the introduction of the gold and silver, which it is alleged will naturally flow to that place where they can find the best market.
The arguments for a duty on coinage are—That the want of it occasions an extra expence,
by occasionning the national coins to be melted down or exported indiscriminately with bullion, there being no motive to make a ma distinction between them; there being in such case no motive of individual interest to distinguish between the national coins and bullion, which are accordingly melted down & exported indiscriminately. that when the national coins become light by wearing bullion rises in price even beyond those of full weight which occasions the melting down of the coin and additional expence and loss to the Mint to renew it. in repairing the waste increases the expence of maintaining the requisite supply for circulation; (as was exemplied in England in the year when the current price of a pound of Troy of gold bullion of standard fineness was 19 Shillings and 6d Sterling more than the same weight of guineas at their exit from the as delivered at the Mint: a phœnomenon thus accounted for—Guineas were then current by tale (The old ones were more than two per cent lighter than they ought to be. A pound weight of bullion was therefore really worth more in those The standard weight of a guinea in bullion was therefore truly worth two per Cent more than those guineas. The market price regulated itself in conf It accordingly rose in the market in respect to them though not in proportion to the real difference. As guineas passed by tale the new ones which were issued from the mint ed were confounded in the circulation with the old ones and by the association were depreciated below their intrinsic value. It became of course a profitable traffic to sell bullion for coin to select it and reissuing the light ones in currency to melt down the heavy ones and sell them again as bullion. This practice cost no inconsiderable sum to the government as was no trifling derangement of the monied operations of the nation) that a duty on coinage promotes a favourable course of exchange and benefits trade not only by that circumstance but by rendering in certain cases domestic obliging foreigners in certain cases to pay more for domestic commodities and to sell their own cheaper. take less for their own.
As far as these arguments
are relate to the inconveniences of a free coinage as lead favouring the melting down and exportation of the National Coin and consequently augmenting the expence of maintaining coining, they are certainly founded both in reason and experience. They describe what has taken place and is continually going on in Great Britain.
The effect of giving an artificial value to Bullion above the value of Coin weight for weight was exemplified in the Country referred to in the years when the current price of a pound troy in bullion of standard fineness was from 19/6 to 25
mo higher than the value of the same weight of Guineas as delivered from the Mint. The phemomenon is thus satisfactorily accounted for (Take in all on other side)91
But the practice which has since obtained of receiving the gold by weight as long as it continues will be an antidote to the return of that evil. But there is a degree of inconvenience attached to this which may cause it to be discontinued.
The remainder of the argument however is not equally clear or satisfactory.
It depends upon very intricate combinations which allow the greatest latitude to falacies in the reasoning. It is easy to discover that if it imposition the duty has advantages it has also considerable disadvantages which perplex the result where the duty is considerable advantages are so equally blended with disadvantages, as upon a comparison, to perplex the result.92
The most plausible part of the
argument hypothesis is that which relates to the course of exchange. As Experience has shewn that the market price of bullion has been influenced by the Mint difference between the bullion and the coin sometimes to the full extent of that difference, which in France was formerly (if it is not now) 8 per Cent it would seem that whenever that difference was in the market was greater than the charges of remitting gold to another exchange would be in favour of the country in which the duty of it was subject to a duty; supposing the ballance of trade even. The reason is this—In the latter country, any . given sum in the weight of the metals in the national coins will be purchase a quantity a greater weight quantity of them in the coins of the other country corresponding with the market difference If that mater The operation may
The reason will best
appear by stating a case stating the nature of the operation. If the ballance of Trade were at any time equal between France & England their merchants would have reciprocal payments to make to an equal amount. This of course as usual would be negotiated principally bil by bills of exchange. If at in this situation the market difference between coin & bullion should be 8 Ct. as at the Mint 8 Cent in France and of the charges of transporting money from France to England should not nec exceed 2 Ct. it is evident that if exchange was at par a profit of 5 Cent could be made by sending bullion by from France to England and drawing bills for the amount. 100 Louis dors in the Coin would purchase 108 in bullion 100 of which being remitted to England to pay the debt and 2 Cent being paid for the charges of trans insurance and transportation there would remain 6 Ct. for the benefit of the person by whom the Negotiation was managed. But as so large a profit could not fail to produce competition less and less would the bills woud would be sold lower and lower till the profit was reduced to the mimimum of what was a proper compensation for the trouble and risk. The amount of 100 louis dors in England might be afforded for 96 in France with a profit of three Ct to the Exchanger or Broker; and at this rate bills upon England would be in France 2 C 4 Ct below par.
But it is admitted that this
state of advantage is lost, when the ballance of Trade of Trade is against the nation which imposes the duty or Coinage as by creating the demand for bullion it brings it to the par of the Coins. And it may be added that the effect is reversed And it is to be suspected that where commercial principles have their free operation the Market state of will difference wil between Coin and bullion will seldom approach n approximate to that of the Mint. The Bullion The money of the world which can be employed to equal purpose in the commerce of the world can hardly with difficulty be kept in such a state of degradation in comparison with the money of a particular country.
This alone would seem sufficient to prevent it. Whenever the difference in the Market price materially exceeded the par of the metals it would become an object to send the bullion abroad, if not to pay any ballance of trade, to be invested in foreign countries, where it was
worth more of more value; an operation by which immense fortunes might be amassed; if it were not that the exportation of the bullion would of itself restore the intrinsic par. As long however as it could be practiced with advantage which is as long as exchange could reman below par there would be a continual drain of the gold and silver of the Country. And thus the advantage alleged would operate its own destruction. & produce a collateral evil, the investment of a part of the National capital abroad in foreign countries.
If any thing can maintain a
considerable difference between the par of the metals in Coin and in bullion it must be a constant and considerable ballance of Trade in favour of the nation where it was maintained. In a situation like that of the U States it would be im could not happen. The frequent demand for gold & silver to pay foreign ballances would preserve the equilibrium of intrinsic value and by common consent the foreign coins would circulate nearly at par with the coin.
To say that as far as the lowering the exchange is produced,
though though it be only occasional and momentary, there is a benefit the more thrown into the scale if public prosperity is not very satisfactory. It has been seen that it may be accompanied with an evil, the investment of a part of the National capital in foreign Countries. And perhaps on a close examination other evils will be descried.
One allied to that already mentioned is this—wherever it
may happened that french louis dors have been sent to a foreign Country from whatever cause, if there be a considerable market difference in France between Coin and bullion it will constitute an advantageous traffic to send back these Louis Dors and bring away bullion; upon all of which exchanges France sustains an actual loss of a part of its gold and silver.
Again Such a difference between coin and bullion has a natural tendency to produce an unfavourable ballance of Trade. Whenever a foreign Merchant carries his own commodities to France for sale he has a strong inducement to bring back specie instead of commodities; because the return in the latter
af may afford no profit, may be attended with loss, in the former it will afford a certain profit. The same principle will operate in the general course of remittances from France to foreign countries. The only question with a Merchant naturally is—In what article can I procure a given sum abroad with most advantage? And in every case in which other commodities are not likely to produce a greater profit than bullion he will prefer that. Its certainty of answering his purpose will be an additional motive. There can perhaps be no circumstance more unfriendly to Trade ; than the existence of continual inducement to export gold and silver than than the productions of the commodities of a Country. Happily such an inducement cannot long exist. The evil will bring its own remedy the bullion will find its due level and the effect will cease.
But this proves not only that the supposed effect cannot long exist; but that as long as it does it has an injurious tendency.
The other supposed advantages of obliging foreigners to pay dearer for domestic commodities and to sell their own cheaper are applied to a
favourable situation, which includes a favourable ballance of Trade. But it is at the same time admitted that these very circumstances affect that ballance, disadvantageously, by diverting trade into other channels: For foreigners will then naturally seek some other vent for their own commodities, and some other market where they can supply their wants at an easier rate. And nothing that tends to change the course of a favourable beneficial branch of Trade can well compensate by any particular advantages for so injurious an effect. It is much easier to change the course of trade where it can be directed into a better channel than to bring it back from that into its old one. Whatever is capable of giving an artificial interruption to the natural current of Trade ought with great caution to be patronised because it may have some exhibit some specious and alluring appearances.
not unworthy of attention, that the able Minister, who has so long presided over the Finances of France93 does not attribute any pecuil to the impos duty on Coinage, in that country, any peculiar advantages in respect to Trade or exch relation to exchange and trade. Though he appears rather an advocate for it, in is within the present limits, he is seems to confine the inducement to the revenue derived from it , which he considers in the light of a very moderate duty on the general mass of exportation.
It is probable too that the peculiar felicity of situation of that kingdom has prevented its experiencing some of the
ill effects in which are naturally incident to the regulation. There is no country in Europe which stands so little in need of other countries is France —comprehending a variety of soils and climates— & an immense population, agriculture in a state of high improvement, it possesses within itself, all the productions of the earth which any of its neighbours can are common to other countries and spec superadds the finest wines in the world. any of its most favoured neighbours can boast and many more than most of them possess. The abundance & peculiar excellence of its wines form a distinguishing and sin important advantage. Arts and manufactures are there also in a very advanced state; some of considerable importance in higher perfection than elsewhere. The nature of its connection with Its contiguity to Spain, a country with few or no manufacture and the nature of its connection with Spain a country with few fabrics manufactures consequently numerous wants and the reservoir of the riches of the new world. These circumstances are calculated to securing to France a very considerable ballance of Trade as to counteract the natural tendency of the errors which in the management of its Coin in the system of its Mint; and to render any inferences from the operation of that system there in reference to this Country more liable to mislead than instruct.
Nor ought it to pass unnoticed that with all these advantages, the Government has upon particular occasion been obliged to employ very violent
expedients to compel the bringing of bullion to the Mint; which is a strong argument of the inexpediency of the Regulation and of the impracticability of executing it in the U States.
It will not follow however, from what has been said, that the idea of difference between the
leg value of the Coins and the mint price of bullion weight for weight ought ult wholly to be discarded. It will only follow that it ought not to be adopted with a view to any supposed advantages to exchange and trade, or let it be added; with any view of profit to the state, because this would be likely to extend it further than would be likely to be safe salutary or safe; and beyond the ideas of intrinsic value, as will be explained hereafter.
The Secretary does not discern that a small difference corresponding with the minimum of expence which attends the fabrication of
money bullion into coin and excluding absolutely the idea of profit or Revenue is likely contrary to any sound principle or likely to be attended with any ill effects. To compute that minimum here where there has been no experience is not an easy task. But from the information which it has been possible to procure, it is inferred that, by an œconomical establishment of the Mint and avoiding an unnecessary multiplication of the Coins, the coinage of gold may be effected at about ½ Cent and of silver at about 1 Cent on silver will defray the expence of their coinage. It is not meant that these rates will correspond with the precise expence of each kind but that together they answer to that of both.
That a fabric or manufacture of whatever kind should be esteemed of greater value than a raw material, in the proportion of the expence which
it costs the fabrication costs, is in the nature of things; It is an universal and comports with the ideas which prevail on all other subjects. When a Nation has a coin of its own, bullion is to it the raw material. And the coin may be affirmed to be intrinsically worth more in the as much more as it costs in the preparation.
A difference therefore equal to this in the Mint price of Coin and bullion is founded in a real difference between the two things and is conformable to the most natural ideas of
value price or value.
A question arises whether with such a difference foreign coins or bullion will be voluntarily brought to the Mint to be converted into the National coin. There seems to be no reason to doubt that it will. The consequences of the establishment of a
Coin will be that that only will be legally current either in payment s to the government or to individuals. It will therefore have a superior utility to bullion, which always implies superior value. And where the difference is as moderate as is contemplated, this circumstance can hardly fail to give it effect in the Market and consequently to dispose individuals to sell the bullion to the Mint at the price established.
But there is still another question, will it not promote the exportation of bullion? It is difficult to perceive how it could have this effect .
There seems to be but two inducements in the course of trade to the exportation of gold and silver. One to pay a wrong ballance; the other to make profit on the commodity . When the first exists it must at all events be paid either in bullion or in coin, and it is better that it should be paid in the former than in the latter because it avoids the expence of furnishing an additional coinage. In regard to profit, the difference of price in contemplation would not admit of any; because the charges of transmission would exceed it. These between the U States & Europe are between two & three per Cent. As to the avoiding of greater loss there may be particular situations in which this ma consideration may operate. The commodities of a country may happen at a particular conjuncture to bear so low a price in a foreign Market that bullion or even coin may make a better remittance. And the inferior value of bullion must be allowed to increase the chances of such cases. The difference is the measure of the weight of any objection to be drawn from this source. But it appears in this view that there is some room for one.94 Two things seem to
It does not however appear to be a formidable one. Where the comparitively greater loss of which there is a
chance is very small, the other chance of a less loss or perhaps of some profit from a favourable change rise of prices favourable alteration of prices is apt to preponderate. And it may be added, that the Merchants of a country consider themselves as so much interested in the preservation of its specie that they are commonly willing rather to hazard something than be instrumental in its exportation. If the duty were high that disposition could not be relied upon, because the probable sacrifice would be too great; in this case in which case the obj neither would the chance of a rise in prices be prices be put in competition with the prospect of doing so much better more certain prospect of doing so much better by the exportation of bullion. The objection though therefore however dimininished in reference to a low small differences between coin and bullion would be very powerful when applied to a large one. But, in relation to any difference, it is to be acknowledged that the observations which are to be opposed to it in only qualificat only qualify but do not remove the objection.95
A third question which arises is whether this duty on coinage does not operate as a partial tax. If it is truly, as has been alleged
a tax on in the nature of a duty on exportation the inference would seem to be that it will be divided among the Community . In those articles in which there is a competition between us & other Nations the duty will be paid at home. And in this case For here the furnishers of commodities for exportation would stand in the place of the consumers of articles imported. In regard to those articles in which there is little or no competition with foreigners they as consumers will generally pay the duty. But if it be it operate as a spe duty on the particular commodity to which it directly relates its operation would be confined to the Merchants who import it & who cannot who could not in this as in other cases of duties on importations indemnify themselves out of the pockets of the Consumers.
But viewing it in the latter light
it the no very weighty objection would perhaps result if the regulation be really beneficial it will only afford an objection of weight if the regulation be not really a beneficial one as it relates to general system of the order of the National Coin. If it have a good effect with regard to this, the Merchants may be indemnified by the advantage it produces in that way. For it is the class of the community most directly interested in the proper management of this branch of administration.
The question then is what are the advantages of such a Regulation in regard to the Coin of the nation. Those which appear to be real and solid are the prevention of the melting down and exporting of the National Coin as long as bullion can be had instead of it; and consequently the saving of a considerable expence to repair the waste.
With regard to the disorder of bullion rising above
the its intrinsic value in respect to the coin the practice which has since obtained in England of taking the coin by weight and not by tale is itself a preventative. It is to be admitted however that there is a degree of inconvenience in this which may bring it into disuse; but if allowed by the laws it is presumeable it would be revived when the bullion should rise again above the par of the Coin.96
has been sometimes suggested as an expedient to prevent the evils which consistently with a free coinage might tend to prevent the evils attend desired in contemplation; to increase the quantity of alloy in the metal coins (valuing them nevertheless according to the quantity of pure metal they contain ed) which it is alleged by increasing the difficulty of refining would cause a preference to be given to bullion but for home manufacture s and exportation.
But strong objections to this have been already mentioned. An increase of expence in proportion to the increase of alloy.
The value of copper the additional copper in a long series years a considerable object of the silver a more considerable. A depreciation of the standard in the public estimation from the very circumstance of the increased difficulty of refining it; which in England is at four pence Sterling per Ounce a greater depreciation in the public estimation from the deb apparent debasement of it, the loss of its beauty, a part of its perfection, and consequently an d increase of the danger of counterfiets.
Though a small
increase of copper may not be at in the coinage of a year may not appear a considerable object yet in a long series of years it becomes a very considerable one. And the Regulations of the National coin ought to contemplate the operation of ages; and the smallest additional expence in this view is of great moment. This observation when applied to an increase of the silver in the gold coin becomes still more weighty and serious. If the increase in this case should be wholly of Copper, the effect upon the colour of the gold would be proporptionably disadvantages. If the quantity of Copper mixed with gold be at all considerable it gives it a coppery hue. From The mixture of an equal portion of silver where the proportion of alloy is only 1/12 indicates that experience has shewn a greater quantity than about 1/24 to be ineligible.
In England where
ever bullion is below the standard fineness it is common to make a deduction; which when the difference is a Carat is 4d. Sterling Ounce of fine gold; which is about ½ Cent. If therefore the additional half Taking this as a rule, if a difference of a single carat or 1/24th part should be made in the fineness of the gold coin of the U States each piece would ½ Cent of less value than a piece of English Coin containing only the same quantity of fine gold. Thus all the gold coin of the Country would be actually depreciated ½ Cent; with an additional expence to the Government to produce that effect. This too would be in reality a diminution of the money Unit of the U States.
If Gold plate by usage or by law were of a finer standard than Gold Coin; the foreign Coins of a superior standard would be really worth more to the goldsmith than the National Coin; whence there would be a possibility of their bearing a higher price in the Market, which
would not only obstruct the carrying them to the Mint but might occasion the exportation of the Coin in preference. The Secretary does not understand that the practice of making a deduction for the inferiority of the standard obtains at the English Mint. If it does not the National coin would answer as well to be remitted that to that Kingdom as its own. And this would in a great degree too frustrate the intended effect. For in this case the Coin of the U States would according to its fine the actual quantity of fine gold contained in it produce d as many guineas at the mint as bullion of the of its own or any other standard.
plate shoul the standard of plate should correspond with that of the Coin, then the inducement to prefer bullion for the manufacture of it would be at an end and the proposed advantage as far as respects the object would be lost.
The effect of the debasement in the public opinion is not easy to be calculated. It is always to be remembered however that the effects of imagination & prejudice are not to be disregarded in any thing that
relates to money. It would be difficult to persuad the bulk of the people that what appeared worse was not really less valuable. And It is not certain that the consequence might not be an unnatural augmentation of prices; which would be a further actual depreciation of the coin.
danger additional danger of counterfiets as far as it is founded is a serious consideration. It is a sound observation that And it is evident that beauty or appearance is a colour is as much well an ingredient in the perfection of Coin as the excellence of the workmanship. To approximate its complexion too much either to silver or copper would deprive the mass of the community of one of its best means of distinguishing the genuine from the false.
It appears then that the augmentation of the alloy would have several ill consequences & might not answer the end proposed by it. On the whole it would seem more expedient to submit to the inconveniences of a free coinage with a
more perfect standard rather than to those of a debasement especially too as it is questionable whether the expence in which those inconveniences principally terminate would not be equalled in the other operation.
Whether it be not truly preferable upon the whole to have the Coinage of the U States free
is without any alt an degradation of the standard, is a problem which the reflections of the Secretary have not solved to his own satisfaction. But he inclines to the opinion that it will be adviseable to commence the Coinage of the U States with the experiment of a small difference between the value of the metal in the Coin & the Mint price of bullion. According to his ideas of the mode of doing it nothing will be more easy than to relinquish it, if there shall be hereafter cause to suspect that its operation is not beneficial.
The Ordinance of Congress makes the difference ½ Ct on gold & 2 C on Silver.97 The Secretary does not contemplate as eligible more than 1 Ct. on silver. If the expence should really be greater he conceives it will be best that the excess should be defrayed by the
There are two modes in which the difference may be made; by making a deduction
out of the quantity of the fine gold or silver from the weight of the Coin or by leaving the Coin of full weight and aft making allowing at the Mint a less price for bullion equivalent to the difference intended to be established. These operations are essentially different & have the most different consequences.
The first is that which has obtained in the Ordinance of Congress That Ordinance proceeds on the supposition that the Spanish Dollar is to be considered as the
Unit money unit of the U States and computing the fine silver in it at makes a deduction from that quantity of 2 Cent which leaves of fine silver for the proposed Dollar of the United States. The same principle regulates the weight of the proposed Eagle or gold Coin. It is not indeed declared that the Dollar shall pass Current as an equivalent for the Spanish Dollar: But this seems to have been contemplated. If this was the Intention of it, it is with great regret, the Secretary cannot
Taking this to be the intention of it, the Convictions of the Secretary, and a sense of duty oblige him to express a different opinion from that which must have governed the Honorable body who framed that Ordinance.
It is not easy to perceive in what an operation of this kind is to be distinguished from that of raising the denomination of the Coin, which has been disapproved by the wisest men, in the nations in which it has been at any time practiced & condemned by the rest of the world. To declare that a less weight of fine gold or silver shall pass for
a greater s the same sum which before represented a greater weight or to declare that the same weight shall pass for a greater sum seem to be things precisely of one nature. And the consequences of them, if they really can be carried into effect seem to degrade the money unit below its intrinsic value, to break in upon all past contracts, and obliging Creditors to receive less than they are intitled and in fine depreating the property of the Country of every description. For it is evident, in this case, that every thing would be represented by a less quantity of Gold & silver than formerly.
To a conclusion of this sort the argument already used respecting the the
int difference of intrinsic value between Coin a Manufacture and bullion a raw Material may seem an objection. Why it may be asked ought not the Coin of the U
To this the answer is that foreign Coins hitherto have been
considered by our laws and practice not as bullion, but as Coin. The sanction given to them has been equivalent to that which the new which will be hereafter given to the Coin of the U States. All prices have adjusted themselves and according to this principle. According to this principle they have found their level both as well in foreign as in domestic commerce. If they Were they to remain attach e d to the denomination of the new coin (though diminished in weight (though of a lighter standard) their proper ballance would be overturned and every acre of land as well as every bushel of wheat would be actually worth less than before.
But it is not
probable that this would be the case. Men in this country reason too accurately to be influenced by a name. They would readily be persuaded that they ought to give as much of any commodity for grains of fine silver as they have been persuaded accustomed to give for grains, merely because the former as well as the latter is denominated a dollar. The enlightened and free turn of thinking in this Country and the demand for gold and silver towards foreign country render such an attempt less likely to succeed in the U States than in any other part of the world. The most probable consequence would be that all prices would rise in reference to the new proportion of the new Dollar in proportion to its deficiency in weight. In A revolution of this kind would confound in some degree the ideas of the community would disturb the natural order of things; and would in f and if a difference was produced par was produced between the old and the new dollar were of equal value in the market, discontents would of course prevail among all those who live on the income of their money and among the poorer classes of the community to whom the ne the necessaries of life would appear to have become dearer. It is however very much be doubted whether in such a state of things ideas of value would not adhere to the old Dollar and consequently keep its price in the Market above that of the new Dollar in a ratio to the difference of weight. The probality of this results not only from the reason of the thing but from the fact which has been noticed with regard to the price of Bullion in England when the coin by wearing had become lighter than it ought to be to have been. For whether the Coin be lighter by law or by decay the effect is the same. This would intirely defeat every the very end of the Regulation.
a either Event the Creditors of the public and of Individuals would lose a part of their property; public and private Credit would receive a serious wound. And the Revenues of the Country Government would be lessened.
There is no point in the administration of the affairs of a Nation of greater consequence than the preservation of the intrinsic value of the Money Unit.
United On this the security of Contracts the steady value of property essentially depends. Every experiment of a departure by Government has been attended with numerous ills and much disorder.
The other mode therefore is evidently the one to be preferred.
To let the This is, to let the same weight and quantity of fine gold and silver in the new coin represent a the same sum of money as in the old. To allow such a price at the Mint for foreign Coins and or bullion as will admit of gain sufficient to defray the expence of the Coinage: To abolish after a certain in proper time the legal currency of the foreign coins in public or private payments: And to leave the superior utility of the Coin to effectuate the difference of market value wit which is necessary to induce the bringing of bullion to the Mint. In this way, all property and labour will be represented by the same quantity of gold and silver, as before, and the only change will be the withdrawing of the privilege heretofore granted to foreign coins of circulating as money and permitting them to become as they ought to be a mere article of Merchandize. Here bullion, or the matter which composes the foreign coins, will be the only thing affected.
Assuming it as a
sacred principle to avoid as much as possible and with scrupulous caution whatever may make an alteration in the intrinsic value of the Money Unit—The investigation naturally proceeds to the Natural of the Money Unit and Money Arithmetic which the system of the U States ought to embrace.
It has been justly remarked that the Dollar has the fairest pretensions to be considered as the Money Unit
ed of the United States. Not only the proceedings of the Government of the United States since the commencement of the late revolution have adopted it as such; but the doing of this was evidently analogous to the antecedent state of things. This may be inferred from the method of computing the foreign exchanges throughout the U S which as far as the Secretarys information goes is the same in the states generally and is evidently founded upon the Dollar. The par for example between Pensylvania and England is deemed 166 pounds 13/ & 4 Peny Currency for a hundred pounds Sterling. The Dollar passes Current in Pensyl. for 7/6 which according to the supposed par of exchange would make its value in Sterling money 4/6. Now this is the true value of the of the old Dollar or old seville piece of which was doubtless in view of the Æra that when that par was first fixed; though the Dollar has since degenerated both in weight and finess. This computed par of exchange has evidently had no relation to Gold, which at 6/8 dwt, the rate at which it is current would make the par for 100 pounds Sterling.
Though the pound therefore has been the unit in the money of Account, in use among individuals, the Dollar
s appears to have been the actual unit in the Coins or that which has been the common measure of the value of the money of Account.
The preservation of the Dollar
s as the unit in the Coins of the United States is recommended not only by the station it has held hitherto but by other considerations. It has been justly remarked that the Dollar s is a piece of commo convenient volume or size & that it for a measure of the ordinary money transactions & that it is desireable that the new unit should correspond with some of the foreign known coins that the minds of the people may readily familiarise themselves to it and its subdivisions; withou and may be able by a quick reference in the mind to compare them with the measures of value to which they have been heretofore accustomed; without which the general adoption of the change would certainly be adopted attended with delay difficulty and some portion of disinclination. The new dollar, if understood, to be of the same intrinsic value with the old would at once be substituted in its place; and its subdivisions into tenth parts may will admit an easy comparison with the former measures. In Pensylvania it would exactly correspond with nine pence in New York it would approach most nearly to ten pence in the states in which the Dollar s has been rated at 6/ it would b answer to about a penny half penny.
It merits a remark here that the idea of preserving the intrinsic value of the
Dollar Unit is not less necessary to secure the advantage of a ready adoption of it in the minds of the people as a common measure than it is important in the other lights. Any diminution of that value would be likely to be in this respect a source of inextricable confusion.
What is the
in intrinsic value of the present money Unit is a question of fact. If be the Dollar be taken as that species of coin to which it has had relation, which it is presumed ought to be the case then it would seem that the average weight of fine silver in the Dollar now & for some years back in general circulation ought to furnish the standard. According to the observation, which has been made the Dollar originally compl contemplated was a different thing from that which which now prevails. It was of greater effective weight and of finer standard. The former was 17.12 Grains, the latter 1 dwt. worse than the English. It consequently contained grains of fine silver. The average weight of the present dollar is 17.8 —Its standard, according to the most modern authorities, which best correspond with the assays which have been made under the direction of the Secretary, is 261 parts fine and 27 parts alloy. Taking this as a rule the quantity of fine silver in a the present circulating Dollar is 377 Grains.
But it has been suggested by the secretary of
the State as a desireable thing that the weight of the money unit should corres be correspond with the unit of weight.98
There is an accuracy and spirit of system in this suggestion which constitute
s a strong recommendation of it; if the advantage is not to be procured at the expence of some more considerable benefit. Fortunately there is such a coincidence of essential principles with this systematic idea, that it is not difficult to adhere to it. The unit of weight is calculated at in Troy Grains at 21438 410.21438. At 1/12 alloy the Dollar will only be 411.27272 the difference 1.05834. A very diminution of the alloy will suffice to bring it to the point desireable point.99
It may be a question whether the old seville pice of eght (which as has been remarked was the dollar originally contemplated) ought not rather to be considered as the true money unit. The following considerations seem to determine against it. There has been no general regulation of law adopting it as such and usage has accommodated itself to the successive variations in the Dollar. The new ones have been indiscriminately received for the old and they have so long stood in their place that they must be presumed in point of fact to
be have been in the contemplation of most of the contracts which have been entered into for several years back. So that in relation to them the adopting of the old seviville pice of Eight would be a raising of the actual money unit to the prejudice of Debtors.
The difference however between the old & the new Dollar is a
conclusive argument for a National Coinage. Nothing can be more improper or have a more pernicious tendency than to suffer the all the contracts of the country to fluctuate upon the regulation of a foreign Mint. The truth is that by the successive diminutions of the intrinsic value of the Dollar our money unit has been depreciated Cent.
Another and a very interesting question presents itself in this place. Shall the unit in the Money of account be exclusively attached to the proposed Dollar? The argument for this (as
sta before stated) is that it then becomes a more fixed & permanent thing and does not fluctuate with the fluctuations in the proportions of the Coins of the different Metals. If so it must be rendered the only thing in which payments can legally be made; and in this case the gold Coin if there should be any would become in a certain sense bullion. The inconveniences of its being so altogether have been stated; but they would not exist in the gold ought to there ought to be no gold coin; but gold ought to be left to find its market price as bullion. The inconveniences of this have been in part stated. It is very probable that they would be such as to cause a conventional value to be given to all foreign gold coins; which from usage as is now the case may become as fixed as if it was regulated by law. And by mean the a great part of the the principal end of a National Coinage, which is to avoid the disorders in money in transactions which otherwise exists, will be defeated. They will continue to have their full operation in regard to Gold. It might in some measure lessen them, if a gold coin were struck receiveable in all payments to the public. But it cannot be a convenient arrangement as it respects the Government to receive for money what it cannot pay as such and must first be obliged to sell before it can comply with the demands upon it. It is indeed probable that that this Gold Coin would in practice pass as currently for be adopted in practice as money for the same value which it had with the Government. But this would not answer the purpose for which the unit was attached; to one species of the Coin for it would then in fact be subject to the fluctuations which are desired to be guarded against. When ev the superior value of gold and its other properties are considered it seems to have a title to be preferred to silver as money; and this is an d additional reason against leaving leaving it in a state of uncertainty & subject to fluctuation.
Another expedient has been suggested for preserving the intrinsic value of the money unit which appears to be
well worthy of consideration. This is to consider it as attached to neither metal but to both and consequently to require that in all payment establish that equal parts, in value, of gold & silver shall be necessary to the legality of a payment. When one rises in value, it is argued, the other falls proportionately and if va prices vary with the variations in the proportion between the two metals one half of each in a given sum will always purchase the same quantity of commodities. If they remain fixed the loss will be divided between Debtor & Creditor. But perhaps all these ideas savour of too much and aim at a perfection which is not attainable, & to endeavour at which will produce greater inconveniences than are remedied. It may be discerned here that particular conjunctures would be apt to turn such a regulation to the disadvantage of one party & to the advantage of another. A particular demand may occasion a sudden rise in silver; a Debtor may be provided with gold for the discharge of a debt; he is now obliged to fail in his engagement or to part with one half his gold to procure silver at less than it was worth a little while before. He therefore sustains a loss. The Creditor receives his payment gives the money by him for a few days & the extra demand for silver ceases & its price falls to the usual level. Now the Creditor is able to make use of his silver at a greater value than that at which he received. He of course gains by a fluctuation in the market.
On the whole it seems most adviseable
to submit to endeavour to regulate (as nearly as circumstances will permit) the proper to have coins of both metals; to regulate the proportion between them as near to their just value as circumstances will permit and to give an equal currency to both at ther regulated in values in all payment whatsoever, leaving the unit to suffer the small fluctuations incident to those which attend the proportional value of the metals. In this case nothing more is mea will be meant by calling the dollar the Unit than that is the integer in the coins corresponding with a given quantity of silver or gold to be combined or subdivided as shall be judged convenient.
If a steady
diffence difference should hereafter be discovered between the market and the legal proportions of the Metals it will call for a new regulation of that proportion.
The Money Arithmetic which has been
doc adopted by the Ordinance of 100 has been deservedly applauded both abroad and at home. Nothing can be more convenient than the Decimal Subdivisions. There is every reason to expect that the real simplicity and convenience of this arrangement with a correspondency in the Coins will quickly bring it into general use. The adoption of it in all proceedings in Courts of the United States of the United States as well as in the offices of the United States will accelerate its adoption elsewhere. It ought to be a rule tha not only that the public accounts of every It is not sufficient that all public accounts should be kept in this mode; but it ought to be a rule that accounts all accounts & statements exhibited there the exhibited for settlement at the public offices and in the judicial controversies depending before Tribunals of the U States shall be in conformity to the established money of account. The latter being qualified by the exception of Original documents. The number of the diffe
With regard to the number
of different piece of different pieces, which shall compose the Coins of the United States two considerations are to be consulted, the convenience of circulation and the cheapness of the coinage. The former ought not to be sat sacrificed to the latter; but as far as both can be conciliated, it is desireable to do it. Numerous and small (if not too minute) subdivisions of the coin facilitate circulation; but a multiplication of those of the smaller must necessarily occasion an augmentation of expence the same process being necessary to a small as to a large piece.
As it is easy to add, it will perhaps be most adviseable to begin
with a with a smaller number till shall experience shall decide whether any other subdivisions are necessary. It will probably be sufficient to begin with the following kinds.
1 Gold piece equal in value to 10 Dollars or Units.
Dollar or Unit silver piece which shall be the dollar or Unit
1 silver piece which shall be a tenth part of the Dollar or Unit
1 Copper piece which shall be of the value of
100 part a hundredth part of a Dollar.
1 Copper pice which shall be of
the the value of the other. In payments of less than ten dollars
And unless there is a scarcity of silver which the
sit relative position of this Country renders improbable it is not easy to conceive what inconvenience to business can accrue from the necessity of may making all payments under 10 Dollars in silver that species of Coins of that metal.
The tenth part of a Dollar is
a piece sufficiency but a small piece; and with the aid of the Copper s Coin seem capable of sufficing for all the more minute calls of circulation. It is less than the smallest piece of silver coin in England.101
The largest copper piece will nearly answer to the half penny Sterling & of course the smallest to the farthing. Pieces of very small value are a great accommodation to the poor
and of consequence in to the by enabling them to purchase in very small portions the necessaries of which they stand in need. If they there were only Cents for instance the lowest price for any vendible commodity however inconsiderable in quantity would be a cent; where there are half cents it will be half cent; and in a great number of cases exactly the same things will be sold for a ½ Cent which would otherwise bring a Cent. But a half Cent is low enough for the minimum of price. The consequence of enabling the poorer & labouring classes to procure necessaries cheap is the putting it in their power to labour for less—and the advantages of this need not be detailed.
☞ The denomination
for the silver coins contained in the Ordnance of Congress are significant and proper. The Dollar is a preservation of the form recommended by its correspondency with the existing Coin for which it is the substitute; which which will facilitate its ready adoption in the minds of the people in lieu of it . The disme or tenth, the Cent or Hundredth the mille or thousandth are expressive of the proportions which are intended to designate. It is only to be regretted that the sense of meaning of these terms will not be known to those who are not acquainted with the language from which they are borrowed. It were to be wished, that the length, and in some degree clumsiness of some of the corresponding terms in English did not discourage from preserving them. Perhaps however it may be an improvement to do it in part. The Dollar may h It is desireable to make nam names signify the things and, in respect to objects of general use, in a manner intelligible to all. Perhaps it might be an improvement to let the Dollar have an alternative appellation that is to be called either or Unit (which last will be most significant) & to substitute “tenth” to disme. In time, the Unit may succeed to the Dollar. The Cent being in pretty comm general use in instruments of different kinds will without much difficulty be understood as the hundredth & the ½ Cent of course as the two hundred part.
The eagle is not a very
significant or apt appellation for the gold piece, but nothing better occurs. The term chrysal would from its termination be more significant but it would be rather affected. The smallest may also be called the Dollar or Unit in common with the silver piece with which it coincides.
The volume or size of
the a each piece is a matter of more consequence than its denomination. It is evident that the more superflicies or surface the more the piece will be injured by friction or in other words the faster it will wear. For this reason, it is desireable to render the thickness in proportion to breath as convenient great as may consist with neatness and good appearance. which is not to be disregarded. Hence the form of the double Guinea or double louis dors is preferable to that of the half Johannes for the large gold pice. The small of one will of course be of the size of the Spanish piece of Eight of the same metal.
As it is of consequence to fortify the idea of the Identity of the Dollar, it may be best to let the form & size of the new one
correspond with the form & size of the old one present.
The tenths may be in a mean between the Spanish 1/8 & 1/16 of a Dollar.
The diameter of the Cop
Cents Copper coins may be formed merely with a view to good appearance; as the degree of their wearing cannot merit particular consideration.102
of a which woul fine copper to be contained in the Cent ought in the opinion of the Secretary to be In this, the idea of intrinsic value is no further departed from than is necessary to indemnify for the expence of coinage and to avoid a too cumbrou bulky and cumbrous. species of small change. The first cost and charges of fine copper will be about Ton. Adding Cent for the expence of Coinage, the value of of is exactly a Cent. No sufficient inducement can remain to hazard the penalties of counterfieting; especially as it is hoped that means may be found to render the wormanship too perfect for ordinary imitation.
The devices on the Coins are evidently not matters of indifference. The Secretary will content himself with remarking that as far as may consist with due ornament they ought to be simple as well as significant . The more sharp points & angles are multiplied the more is lost by the wearing of the Coins.
Whether foreign Coins &c is the point next in order to be considered.
As Manifest inconveniences would attend the sudden discontinuance of the Circulation of the foreign Coins; it seems prudent, that certain kinds of them at least should be permitted to circulate for a certain period after the Mint shall in activity to afford an opportunity to supply their place with the Coins. In that interim, the sums arising from the public revenues can undergo a Coinage before they are reissued; together with such others as may be voluntarily brought to the Mint. But all the reasons which operate in favour of the institution of a Coinage dictate that the foreign coins shall not be permanently current.
Two years after the operations of the Mint should commence would probably
The kinds of foreign Coins, of which it would be convenient to permit the circulation, (because they are those now in general currency) are
Guinea or duplica double Guinea Guineas & its subdivisions Gold Coins
The Spanish Gold & Silver Coins
The French Gold & Silver Coins
The Portugal Gold Coins
The ducats of Germany
The rates at which they may be received ought to correspond with their intrinsic value that is to the quantity of fine gold and silver in each, which will appear in the Table which forms the Schedule.
How far the consideration that their circulation is to be so temporary
may induce to leaving them upon their present footing is submitted.
The Copper coins may be formed merely with a view to good appearance as
the any difference in the wearing which can result from the form can not be of material consequence in relation to that metal.
It is conceived, that the weight of the cent
ought to be 11 pennyweight, which deducting the expence of coinage will answer pretty well or pretty exact proportion to the value of the copper and the expence of coinage. ⟨This⟩103 will be to conform ⟨to⟩ the ideas of intrinsic ⟨val⟩ue as far as due ⟨regard⟩ to the convenient ⟨size⟩ of the coins will ⟨per⟩;mit and the ⟨deduc⟩tion of the ⟨expe⟩nce of coinage ⟨in⟩ this case will ⟨be⟩ the more ⟨pro⟩per as the copper coins which have been known in this country till the much more than their intrinsic value. Taking the weight as has been suggested the size of the Cent may be nearly that of the piece herewith transmitted which weighs 10dw.11gr.10.m Two thirds of the diameter of the Cent will suffice for the diameter of the half Cent. late confusion of late ha have been current till very lately at
might perhaps appear expedient to make the derive profit from the copper coinage ; but where this can be done to any considerable extent, it is hardly possible to have any effectual security against counterfiets. This consideration & the soundness of the principle of preserving the intrinsic value of the money of the country seems to outweigh the inducement of profit. Perhaps the Legislature may
The foregoing suggestions respecting the sizes of the several coins are made on the supposition that the legislature may think fit to regulate this matter. Perhaps however it may be judged not unadviseable to leave it to executive discretion.
With regard to the proposed size of the cent it is to be confessed that it is greater than
could be wished if it could with propriety and safety be made less: And if the value of copper continue d to decrease as it has done of late for sometime past it will not long be qu very questionable whether it will long remain a fit metal for money. This has led to considering the expediency substituting to that a composition of silver and copper intermixing a small proportion of silver to with copper, to increase the value and lessen the bulk in order to be able to lessen the bulk of the small coins inferior coins. For this, there are precedents in different parts of Europe. In France, this composition composition, goes under the denomination of billion, and consists of one part silver and four parts copper; according to which proportion a cent might contain defraying out of the material the expence of the coinage. The conveniency of this size is no inconsiderable argument for such a species of coin but the Secretary is deterred from proposing it by the apprehension of counterfiets. The effect of so small a mass of quantity of silver in so large a quantity of copper, comparatively, could easily be imite imitated by an intermixture of other metals of little value and the temptation to doing it would not be inconsiderable.
74. ADf, Hamilton Papers, Library of Congress.
75. This and all other spaces in all versions of the Report were left blank by H. The date of the order of the House of Representatives was April 15, 1790 (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826). description ends , 194).
76. In the margin opposite this sentence H wrote and crossed out “Difference between.”
77. In the margin opposite this sentence H wrote:
78. In the margin opposite this sentence H wrote and crossed out: “with those general ideas which are apt to be impressed by the more prominent features of a complicated subject.”
79. This document is printed in Postlethwayt, Universal Dictionary description begins Malachy Postlethwayt, The Universal Dictionary of Trade and Commerce, Translated from the French of the Celebrated Monsieur Savary, Inspector-General of the Manufactures for the King, at the Custom-house of Paris; With Large Additions and Improvements, Incorporated throughout the Whole Work; Which more particularly accomodate the same to the Trade and Navigation of these Kingdoms, And the Laws, Customs, and Usages, To which all Traders are subject. Second edition (London, Printed for John Knapton, in Ludgate-Street, 2 Vols., 1757). description ends , I, 528–29.
80. At the bottom of this manuscript page H wrote “Sir James Stewart.” See Steuart, Political Economy description begins James Steuart, An Inquiry into the Principles of Political Oeconomy: Being an Essay on the Science of Domestic Policy in Free Nations. In which are particularly considered Population, Agriculture, Trade, Industry, Money, Coin, Interest, Circulation, Banks, Exchange, Public Credit, and Taxes. In Two Volumes (London, Printed for A. Millar, and T. Cadell, in the Strand, 1767). description ends , II, 70–100.
81. Juergen Elert Kruse, J. E. Krusens … Allgemeiner und … Hamburgischer Contorist, welcher von den Währungen, Münzen, Gewigten, Maassen, Wechsel-Arten, und Usanzen der vornehmsten in und ausser Europa gelegenen Städte und Länder,… eine umständliche Nachricht ertheilet, etc. Der dritten, order zum zweytenmal verbesserten und ansehnlich vermehrten neuen Auflage Erster (Zweyter) Theil (Hamburg, 1766–65).
Statistics, translation of information, and interpretation of Kruse’s work are contained in nine manuscript pages in the Hamilton Papers, Library of Congress. The document in an unidentified handwriting is unsigned and undated.
82. In the margin opposite the table H wrote:
83. The “Table” is a part of the information taken from Kruse. See note 81.
84. The following explanatory note to the “Table” was added to the information taken from Kruse: “As it may be of service to know the proportion between gold & silver in other countries, I have extracted the above from a German Author, and have calculated the difference between the two metals. Those marked thus * are fluctuating & therefore uncertain, but the others are true. This Author has not only consulted all others which have written on the subject, but has endeavoured to obtain all the necessary information by many years correspondence. But in his Tables of Coins he has made up of the holland Troy weight, the reduction of which, so as to compare them with others, is very tedious, as the proportion cannot be reduced to small numbers,
7766 ases being equal to 5760 grains or
10000 ases “ equal to 7417 grains.” (D, Hamilton Papers, Library of Congress).
85. See Introductory Note.
86. An undated document in an unidentified handwriting in the Hamilton Papers, Library of Congress, states the influence of variations in fine weight among Spanish silver dollars and the effect of these variations on ratios between silver and gold. Among the ratios given is that for the Mexican dollar “of 17dwt. 8 gr. 6 mites” which “gives the proportion of 15.873.”
87. In the margin opposite this sentence H wrote “Price.”
88. In the margin following this sentence H wrote and bracketed the words “Regulation of Congress.”
A manuscript in a clerk’s writing in the Hamilton Papers, Library of Congress criticizes the resolution of August 8, 1786, for the Mint ratio of 1:21 which it established (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXXI, 503–04). The proportion was reduced to a little less than 1:15.23 by “An Ordinance for the establishment of the Mint of the United States of America, and for regulating the value and alloy of Coin,” October 16, 1786 (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXXI, 876–78).
89. On August 8, 1786, Congress “Resolved, That the standard of the United States of America, for Gold and Silver, shall be eleven parts fine and one part alloy” (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXXI, 503).
90. As H makes clear in the final version of this Report, these percentages were stated in a report of the Board of Treasury dated April 8, 1786, upon which subsequent action by Congress was based. The resolution of August 8, 1786, and the ordinance of October 16, 1786, give differences between mint and coin prices in excess of the coinage percentage suggested in the report of April 8, 1786 (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXX, 162–82; XXXI, 503–04, 876–78).
91. H is referring to the material in parentheses printed above.
92. In the margin opposite this paragraph H wrote:
93. Jacques Necker had been Director General of the Finances of France from June 29, 1777, to May 19, 1781, and from August 25, 1788, to September 4, 1790.
94. In the margin opposite this paragraph H wrote: “Note in another place Silver
be will be raised in price & more than the diff in Question.”
95. In the margin below this paragraph H wrote “Exchange some Counterpoise.”
96. In the margin opposite this paragraph H wrote:
97. See note 90.
98. Jefferson’s “Plan for Establishing Uniformity in the Coinage, Weights, and Measures, of the United States,” July 4, 1790 (ASP description begins American State Papers, Documents, Legislative and Executive, of the Congress of the United States (Washington, 1832–1861). description ends , Miscellaneous, I, 13–20).
99. In the margin opposite this paragraph H wrote:
Supposing the Troy Grains in a pound Averdupois to 7002 the weight of the Dollar would be 410.28732.”
The figure (410.17020) in the marginal insertion refers to the weight of the new dollar recommended by Jefferson in his report to Congress on July 4, 1790. The next figure refers to the amount of pure silver in this dollar.
In the Hamilton Papers, Library of Congress, in an unidentified writing there are the following calculations from which H drew the final statement in the marginal insertion:
“If the pound avoir du poise is 7002 grains Troy.
the ounce avoir du pois is 437,625 grains Troy
Then as 1728 is to 1620,05506862 : : 437,625
to 410,2873839 grains
Troy is the new standard ounce 11/12ths of which is the pure silver in the unit or Dollar that is 376,0967685 grains Troy
And as 437,625 is to 432—So 376,0967685
to 371,2626198 the expression of the pure silver in the unit
If the pound avoir du pois is taken at 497000,68 grains Troy which is the average weight resulting from the different experiments made in great Britain then the ounce avoir du pois is 437,5425 grains Troy
Then as 1728 is to 1620,05506862 : : 437,5425
to 410,21 grains Troy in the new standard ounce 11/12ths of which is—376,02 the pure silver”
100. The decimal system was accepted by Congress in a resolution of July 6, 1785 (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXIX, 500) and referred to in the resolution of August 8, 1786 (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXXI, 503–04).
101. In the margin opposite this section H wrote “Qr.”
102. In the margin opposite this sentence H wrote and crossed out: “The diameter of the quarter dollar will answer for that of the cent but as the weight of the latter will be about double that of the former the thickness must be so likewise.”
103. The material in the broken brackets has been taken from the final version of this Report.