Alexander Hamilton Papers
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Second Draft of the Report on the Establishment of a Mint, [28 January 1791]

Second Draft of the Report on the
Establishment of a Mint

The Secretary of the Treasury having maturely considered the subject referred to him by the order of the House of Representatives of the   day of  105 last relatively to the establishment of a Mint most respectfully submits the result of his inquiries investigation and reflections.

A plan for an establishment of this nature involves a great prodigious vast variety of considerations intricate nice and important. The general state of debtor and Creditor; all the relations and consequences of price; the essential interests of trade and industry; the value of all property the whole income both of the State and of revenues of the Country, as well of the public as of the individuals; are liable to be sensibly influenced, beneficially or otherwise injuriously, by the injudicious or injudicious regulation of this important matter. very interesting object. It is one likewise not more necessary, than difficult to be rightly adjusted; one, which has much repeatedly occupied the meditation and researches of politicians, without having harmonised their opinions on some of the most important of the principles which enter into its discussion. Accordingly different systems continue to be advocated and the systems of different nations, after much investigation, continue to vary differ from each other.

But if a right adjustment of the affair matter matter be truly of such nicety and difficulty, a question very naturally arises whether it may not be most adviseable to leave things, in this respect, in the state in which they are. Why it might might it be asked, since they have so long proceeded in a train, which has caused no general sensation of inconvenience, should alterations be attempted, the precise effect of which cannot with certainty be calculated?

The answer to this question is not perplexing embarrassing. The immense disorder which actually reigns in the matte so delicate and important a concern, and the still greater disorder, which is every moment possible, call loudly for a reform. The dollar, originally contemplated in the money transactions of this Country, by successive diminutions of its weight and fineness, has d sustained a depreciation of about 10 per Cent.106 And yet the new dollar still passes has a currency in all payments in place of the old, with scarcely scarcely any attention to the difference between them. The effect of this operation of this, in depreciating the value of all property, depending upon past contracts, and of all other property (as far as inattention to the alteration in the coins may be supposed to leave prices uninfluenced stationary) and uninfluenced of all other property, is too we is apparent. Nor can it require argument to prove, that a Nation ought not to suffer the value of the property of its citizens to fluctuate with the fluctuations fickle undulations of a foreign mint, and at the pleasure of a foreign power. and to change with the changes in the regulations of a foreign power sovereign.. This nevertheless is the condition of every country one, which having no standard coins of its own adopts with ul unlimite implicit confidence those coins of an other countries.

The unequal values allowed in different parts of the union to coins of the same intrinsic worth, the defective species of them, which embarrass the circulation of some of the states and the dissimilarity of in their several monies of account, are inconveniences which if though they cannot generally either if they are not in some measure to be ascribed to the want of a national coinage will at least be most effectually remedied by the establishment of one; a measure which will at the same time give additional security against con impositions by counterfiet as well as by base currencies.

It is was with great reason therefore that the house of representatives have entered upon the business of establishment ing a mint the attention of Congress under the late confederation was repeatedly drawn to the establishment of a Mint; and it is with equal reason that the house of representatives have resource resumed the subject subject has been resumed; now that the improvement in the favourable change, which has taken place in the state of public affairs admits of its being carried into execution.

But though the difficulty of devising a proper establishment ought not to deter from undertaking so necessary a work; yet it cannot but inspire diffidence in one, whose duty it is made to propose a plan for the purpose; and may perhaps be permitted to be relied upon as some excuse for any errors which may be chargeable upon it, or for any deviations from sounder principles which may have been suggested by others, or even in part acted upon by the former Government of the United States.

In order to a proper conclusion, the following particulars require to be discussed—

1 What ought to be the nature of the money unit of the United States?

2dly What the proportion between gold and silver, if coins of both metals are to be instituted established established?

3dly What the proportion and composition of alloy in each kind?

4thly Whether the expence of coinage shall be defrayed by the Government or ought out of the material itself? and if the last

5ly. The What shall be the number denominations sizes and devices of the Coins

6thly. Whether foreign coins shall be permitted be to be current or not; if the former at what rate of value and how long for what time duration period?

The A ascertainment of as far as may be practicable what is the present money unit of the United States is a necessary prerequisite preliminary to the determination of what it ought to be.

A prerequisite to determining with propriety what ought to be the money unit of the United States is to endeavour to form as accurate an idea as the nature of the case will admit of ascertain as wha far as may be practicable what it now is. The pound, though of various value, is the unit in the money of account of all the states. But it is not equally easy to pronounce what ought to be considered as the unit in the Coins. If the mode of adjusting foreign exchanges As there is no formal regulation on the point it can only be inferred collected from usage or practice. The manner of adjusting foreign exchanges would be seem to indicate the dollar as best intitled to that character. In those, the old seville piece of eight old piaster of Spain or old seville piece of 8 reals of the intrinsic value of 4 Shillings and six pence Sterling is evidently contemplated. Accordingly The computed par, of exchange between Great Britain and Pensylvania, will serve as an example. According to that, 100 pounds Sterling is equal to 166 pounds and two thirds of a pound in Pensylvania Currency; which corresponds with the proportion between 4/6 Sterling and 7/6; the current value of the Dollar, by immemorial usage, in Pensylvania: And as far as the information of the Secretary goes the same comparison holds in the other states.

But this circumstance, in favour of the dollar, loses much of its weight from two considerations. That species of Coin has never had any settled or a standard value according to weight or fineness; but has been permitted to circulate by tale, without regard to either; very much as a mere money of convenience; while gold has had a fixed price by par by weight and in some107 instances with an eye to its fineness. This greater stability of value of the gold coins is an argument of force force for considering the money unit as having been a hitherto virtually attached to gold, rather than to silver.

And it is found It appears by comparison and calculation that Twenty four grains and 6/8 of a Grain of fine gold have corresponded with the nominal value of the dollar in the several states; without regard to the successive diminutions of its intrinsic worth.108 But If if the Dollar should notwithstanding be supposed to have the best title to being considered as the present money unit in the Coins, it would remain to ascertain ascertain determine what kind of dollar ought to be understood, or, in other words, what precise quantity of fine silver.

The old piastre of Spain, which appears to have regulated our foreign exchange, weighed 17 dwt. 12 grains and contained 117 386 grains & 15 Mites of fine silver. But this piece has been for a long since time past out of circulation. The dollars now and for several years past in common currency are of recent date and much inferior to that both in weight and finess. The average weight of them upon repeated different trials in large masses, has been found to be 17.8 dwt grains. Their finess is less precisely ascertained; is the results of various assays made by different persons, under the direction of the late Superintendant of the Finances and of the Secretary himself are being as various as the assays themselves. The difference between their extremes is not less than 24 grains in a dollar of the same date weight and of the same or nearly the same age; which is too much for any probable difference in the pieces. The reference want of proper apparatus and of practice must account for it. It is rather to be presumed that a degree of inaccuracy has been occasioned by the want of proper apparatus and perhaps of practice. Those which appear to have the best pretensions to accuracy exactness would make the new dollars to contain from a small fin 370.933 to 376.133 grains of fine pure silver.

According to an authority,109 on which the Secretary places reliance, the standard of Spain for its silver coin in the year 1761 was 261 parts fine and 27 parts alloy; agreeably to at which proportion, a dollar of 17 dwt. 8 grains would consist of 377 grains of fine silver and 39 grains of alloy. But there is no question that the standard has been lately altered for the worse; to what precise point is not as accurately ascertained as could be wished; but from a computation of the value of the new dollars in the markets of Amsterdam & London (a criterion which cannot materially mislead) the new dollar is does not appear to contain more than about 368 grains of fine silver and its immediate predecessor about 374 grains. This too is rather in some degree confirmed by the assays which have been mentioned. He has no other evidence of a posterior debasement degradation of that standard, than results from those assays; but he is inclined to believe, that there has been an alteration for the worse.

In this state of things there is some difficulty in defining the Dollar, which ought to be considered as corresponding with the present money unit, on the supposition of its being most applicable to that species of coin. The old seville piece of 417 386 grains and 2 15 Mites fine comports best with the computations of foreign exchanges & and with the more ancient contracts respecting land property but far the greater number of existing contracts still in operation and concerning that kind of property and all those of a pers merely personal nature now in force being must be referred to a dollar of a different kind. The actual dollar at the time of contracting is the only one which can be supposed to have been contemplated and it has been seen that as long ago as the year 1761 there had been a material degradation of the standard. And even in regard to the more ancient contracts no person has ever had any idea of a scruple about receiving the dollar of the day as a full equivalent for the nominal sum which the dollar originally imported.

A recurrence therefore to the ancient dollar would be in the greatest number of cases an innovation in fact and in all an innovation in regard respect regard to opinion. The actual dollar in common circulation has therefore evidently a much better claim to being regarded as the actual money unit.

An equation of the to decern find

The mean intrinsic value of the kin different kinds of known dollars has been suggested as an expedient intimated as affording a the proper standard. But when it is recollected, that the more antient and more valuable kinds ones are not now to be met with at all in circulation that those of a more modern not more than thirty or forty years standing are only occasionally to be seen and that the mass of those generally current is composed of the newest and most inferior kinds, it will be perceived that even such an equation of that kind nature in the would be a considerable innovation upon the real present state of things; which it will certainly be prudent to approach as far as may be consistent with the permanent order which it is the design of the government designed to be introduced.

It is conceived that it will be a better compromise of the different considerations which ought to be attended to, to take as a rule the

ascertained standard of 1761 and to apply it to what has been found to be a the average weight of the dollar in circulation namely 17 dwt. 8 grains which as already observed will make the dollar to consist of 377 grains of fine silver. If this should exceed, as it probably does the real quantity of fine silver in the prevailing dollar, the excess will not be great; and the state of degradation in which the degraded value of this dollar is a reason for inclining to a more liberal standard. A minute departure however from this rule cam cannot be very objectionable; if there shall be found any collateral inducements to it or any motive of collateral advantage or utility should dictate it.110

An additional reason for considering taking the value or nearly the value of the now prevalent prevailing dollar, which now prevails, or something near it, as the standard of the present money unit rather than the ancient dollar is that the proportion which it will bear a more just proportion to the present established value of gold which is and that has been so long annexed to gold will not only be more conformable it will be not only be more conformable to the true existing proportion between the two Metals in this Country but will be more conformable to that which obtains in the rest of the Commercial world. Europe. the rest of the commercial world, generally.

The difference, established by custom in the United States between coined gold and coined silver has been stated upon another occasion, to be nearly as 1 to 15.6.111 This, if truly the case, would imply that gold was extremely overvalued in the United States, for the highest actual proportion in any part of Europe very little if at all does not exceeds 1 to 15 and the average proportion throughout Europe is probably not more than about as 1 to 14¾ 14.8 8. But that statement has proceeded upon the sup idea of the ancient old dollar. One penny weight of coined gold of 22 Carats fine at 6/8 and the old seville piece of 386 grains and 15 mites of pure silver at 7/6 furnish the exact proportion ration of 1 to 15.6262. But this does not coincide with the actual real difference between the metals, in our market or which is with us the same thing in our or rather currency. To determine this, the dollar in common circulation the average the quantity of fine silver in the general mass of the the rate of the late Dollar of dollars now in circulation must afford the rule. Taking the rate of the late Dollar of this to be 374 277 Grains (which is a lage allowance) the proportion would be as 1 to 15.1123. 15.11 Taking it at the mean of the new rate of the newest dollar as it appears by the assays, is 374 Grains and a half grain the proportion be would then be as 1 to 15.134 14.84 The mean of the two would afford the proportion of 1 to 15 very nearly; less somewhat less112

This last proportion, though perhaps not exact precisely what it ought to be, approaches much nearer to it than that which has been supposed than the legal proportion in the coins of Great Britain which is as 1 to ⟨ ⟩ Fifteen & 2 tenths; though the market but somewhat more than the actual or market on be not more, often less, than proportion which is less than not quite 1 to 15.

Though this The preceding view of the subject does not indeed afford a precise or certain definition of the present unit in the coins yet but it furnishes data which will serve as guides in the progress of the investigation. It ascertains at least that the sum correspo in the money of account of each state corresponding with the nominal value of the dollar in such state, corresponds also with 24 Grains and ⁶⁄₈ of a grain of fine gold and with from something not very distant from between 368 & 374 near 376 375 Grains 375 & 376 Grains of fine silver.

Another preliminary discussion towards a right determination

The next inquiry towards a right determination of what ought to be the future money unit of the United States involves turns upon this question—Whether it ought to be peculiarly attached to either of the Metals, in preference to the other, and, if to either, to which of them?

The suggestions hitherto have had for object the annexing fixing of it rendering of the silver dollar emphatically to the mon silver Dollar. A resolution of Congress of the 6th of July 1785113 declares that the money unit of the United States shall be a dollar, and another resolution of the 8th of August 1786114 fixes that dollar at 375 Grains and 64 hundredths of a grain of fine silver. The same resolat resolution however determines that there shall also be two gold coins one of 246 grains and 268 parts of a grain of pure gold equal to ten dollars, and the other of half that quantity of fine pure gold, equal to five Dollars; and it is not explained whether either of the two species of coins, of gold or silver, shall have any greater legality in payments than in ot the other. Yet it would seem that a preference in this particular is necessary to execute the idea of attaching the unit to one or the other of the metals exclusively to one kind.. If either each of them is as equally valid as with the other in payments to any amount, it is not obvious in what effectual sense either of them can be deemed the money unit, rather than the other.

If the general declaration, that the dollar shall be the money unit of the United States could be understood to give it a superior peculiar legality in payments, the institution of coins of gold and the declaration; that each of them shall be equal to a certain number of dollars would appear to destroy that inference: And the circumstance of making the dollar the unit in the money of account seems to be more rather matter of form than of substance.

It may be a doubt, whether this is not the best footing on which the matter can be put—to establish a formal correspondency between the unit in the money of account and some one of the coins, but in fact to annex that unit to neither of the metals exclusively.
   The Secretary, nevertheless, is rather inclined to a different opinion; and though not without much hesitation, produced increased by a deference to the ideas of others which have hitherto prevailed, he is disposed upon the whole to believe, that it will be expedient to attach the money unit essentially, to gold.

Contrary to the ideas, which have hitherto heretofore prevailed, in the suggestions & discussions concerning a Coinage for the U States though not without much hesitation, arising from a deference for those ideas, The Secretary is upon the whole inclined to the opinion, that if the a preference is to be given to either of the Metals for the money unit, it out to be to gold rather than to silver.

His reasons are these—It is certainly manifestly a primary object in the establishment of the money The inducement to a preference of that kind is to render the unit to render it as little variable and fluctuating as possible; because on this depends the steady value of all contracts and indeed in a certain sense of all other property. in a relative sense. And this object would seem to be best attainable, by annexing it in preference to one of the metals; and that the least liable itself to variation. or fluctuation. If And it is truly observed that if it it belong indiscriminately to both the metals or to either of them, it is evidently subject to all the variations which fluctuations and changes that happen in the relative proportional value which they bear to each other: If it be attached or if annexed peculiarily preferably to one of them, it will as evidently be more or less stable, in proportion as that to which it is annexed is the one, which has itself most or least stability. But the same reason would lead to annexing it to that particular one metal which has the greatest pretensions to stability which is itself the least liable to variation; if there is be in this respect any discernible difference between the two.

Gold may perhaps in certain senses be said to have more greater stability, than silver: As being of superior value, fewer liberties have been taken with it in the regulations of different countries. Its standard has been remained more uniform and it has in other respects been subject to undergone less fewer fewer changes: As being less a Merchandize in an article of than silver both America and in Europe on account of the demand for use made of the latter in the Trade owing to the nature of the intercourse with China and the East Indies, it is less liable to be affeced by the vicissitudes of Commercial demand. As being not so much an article of Merchandize as Silver, on account of the considerable owing to the use made of the latter  silver in the Trade with the East Indies and China, it is less liable to be influenced by circumstances of Commercial demand. And, if reasoning by analogy, it could be added, without the appearance of too much refinement, that there is a physical probability of greater proportional proportional increase, in the absolute quantity of silver, than in that of gold, it would afford an additional argument of reason for calculating on greater steadiness stability steadiness   firm in the value of the latter.

As long as gold, either from its intrinsic superiority as a metal, from its greater rarity, or from the prejudices of mankind maintains retains so great a superiority vast considerable a preeminence in value over silver, a natural consequence of this seems to will be that its condition will be more stationary. The revolutions therefore wi which may take place in the comparattive value of gold and silver will be changes in the state of the latter rather than of the former. And in this view, the money unit of the Unit of the United States, if affixed to silver, would would be continually or frequently varying in relation to the money of the world: A circumstance which cannot hardly be deemed an either a convenient or an immaterial one; when it is considered how what extensive interests are affected by every change in the value of the money unit and how quickly the intercourses of Commerce would cause any such change, as it affec regarded the money in relation to the money of other countries in the relation which has been stated of the in reference to the money of other Countries in relation to other coun to be felt in the or at least to be operated be operative in the interior or domestic concerns of a the a community.

Some of these ideas may appear too abstract. They may possibly not be very solid; but taken collectively they at least afford circumstances against attaching the giving the preference to silver and in favour of giving it to gold; if either is to be preferred to the other. firstand most impressions do It may be assumed too that the most simple and obvious view first and most simple impressions of of the subject does not naturally incline to annexing the unit peculiarly to the least inferior or valuable of the two metals.

If there should be an appearance of too much abstraction in any of these ideas it may be remarked that the first & most simple impressions do not naturally incline to giving a preference to the inferior or least valuable of the two metals.

It is sometimes observed that silver ought to be encouraged rather than gold as being more conducive to the extension of Bank Circulation, from the greater difficulty, and inconvenience, which its greater bulk, compared with its value, occasions in the transportation of it. But bank circulation is desireable rather as an auxiliary too than as a substitute for that of the precious metals; and it ought to be left to its nature course without the aid ought to be left to its natural course. Artificial expedients to extend it the former in exclusion or diminution of the latter by opposing obstacles to the latter other kind are at least not recommended by any very obvious advantages. And in general it is the safest rule to regulate every particular institution or object according to the principles which in relation to itself appear the most sound. and to abstain from incorporating in it any portion of imperfection. In In addition to this, it may be observed that the inconvenience of transporting either of the metals is sufficiently great to induce a preference of th Bank paper whenever it can answer the purpose equally well.

The sense in which it is here meant, that the unit ought to be attached peculiarly to gold is this—that gold only shall be a legal tender, in payments between individuals except for sums a sums less than that the value of the standard principal gold coin; or where there they may be a special contract in writing reserving a right to pay in in either metal. in gold or silver.115

This it is conceived but would substantially annex the unit to gold; and whenever it should be found that the market proportion between the two metals steadily differed from that in the coins, a neces a correspondent alteration in the regulated value of silver co would restore the proper equilibrium without breaking in upon any rights or involving any material inconvenience. But it is not proposed that this superior legality of preference of gold should should be extended to payments.

A more complete and exclusive annexation of the unit to one of the metals has been frequently recommended. This is to leave the one to which it is not attached to find its level consider the one to which it is not attached as mere bullion.

But the effect of this would be to destroy the utility of one of the Metals as money

But upon the whole it seems to be most adviseable not to attach the unit exclusively to either of the metals because this cannot be done effectually, without destroying the office and character of one of them as money, and reducing it to the situation of mere bullion; And which accordingly, this at different times has been proposed from different and very respectable quarters; but which would probably be a greater evil than occasional fluctu variations in the unit from the fluctuations in the proportional relative value of the metals; especially if care be taken in the to regulate of the that proportion between them with an eye in conf with an eye to their average commercial value.

To annul the use of either of the metals as money is to abrige the quantity of circulating medium and is liable to all the objections which arise from a comparson of the benefits of a full with the evils of a defective scanty circulation.

It is not a satisfactory answer to say that none but the favoured metal would in this case find its way into the country as in that all ballances must be paid. The practicability of this would in some measure would in a great measure depend on the abundance or scarcity of it in the country paying. Where there was but little it either would not be procurable or it would cost a premium to obtain it, which in every case of a competition with others in a branch of trade would constitute a deduction from the profits of the party receiving. Perhaps too the embarrassments which such a circumstance might sometimes create in the pecuniary liquidation of ballances might lead to additional efforts to find a substitute in commodities and might so far impede the introduction of the metals. Neither could the exclusion of either of the metals them be deemed in other respects favourable to commerce. It is often in the course of trade as desireable to possess the kind of money as the kind of commodities best adapted to a foreign market.

If then the unit ought not to be attached exclusively to either of the metals, it becomes the proportion which ought to be established between them in the coins becomes a preliminary inquiry in order to its proper adjustment,. a matter which This proportion appears to be in several views of no inconsiderable moment.

One consequence of overvaluing either metal in respect to the other is the banishment of that which is undervalued. If two countries are supposed, in one of which the proportion of between Gold and to Silver is as 1 to 16, in the other as one to 15; as in the firmer one gold will be being worth more silver less in one than in than in the other, it is manifest that in their reciprocal payments each will select that species which it values least to pay to the other which where it is valued it more most. Besides this, the dealers in money will, an of from the same cause, often find a profitable traffic in an exchange of the metals between the two countries. And hence it would come to pass, if other things were equal, that the greatest part of the gold would be collected in one, and the greatest part of the silver in the other. The course of trade might in some degree counteract the tendency of the difference in the legal proportions legal disproportions by the market value; but this is so far and so often influenced by the legal rates, that it does not prevent their producing the effect which is s inferred. Facts too verify the inference. In Spain & England, where gold is rated higher than in other parts of Europe, there is a scarcity of silver; while it is found to abound in France and Holland, where it is is rated higher, in proportion to gold, than in the neighbouring nations. And it is consi continually flowing from Europe to China and the East Indies from the compartive cheapness of it in the former and dearness of it in the latter.

This consequence is deemed by some not very material and there are even persons who from a fanciful predilection to gold are is willing to invite it even by a higher price. But just ideas of utility general utility will best be promoted by a due proportion of both metals. If gold be most convenient in large payments silver is best adapted to the more minute and ordinary circulation. And each is best adapted to certain foreign payments

But it is to be suspected, that there is another consequence more serious than the one which has been mentioned. This is the diminutionabrigement of the total quantity of specie which a Country would naturally will possess.

It is evident that as often as a Country, which overrates values either of the metals higher than ought to be the usual proportion receives a payment in that metal it gets a less actual quantity than it ought to do, or than it would do, if it were rated at a due proportion. It is also equally evident that there will be a continual effort to make payments to it in that species to which it has annexed an exaggerated value wherever it is current at a less proportional value. And it would seem to be a very natural effect of these two causes, not only that the mass of the precious metals in the country in question would consist chiefly of that kind to which it had given an extraordinary value, but that it would be absolutely less that if they had been duly proportioned to each other.

A conclusion of this sort however is to be drawn with great caution. In such matters, there are always some local and many other particular circumstances, which qualify and vary the operation of general principles, even where they are just; and there are endless combinations very difficult to be analized, which often render principles, that have the most plausible pretensions unsound and delusive.

There ought, for instance, according to those which have been stated to have been heretofore formerly to be a greater quantity of gold in proportion to silver in the united States than there has been; truly is; because the actual value of gold in this country compared with silver was is perhaps greater higher than in any other. But our situation with regard to the West India Islands, into some of which there is a large influx of Silver directly from the mines of South America occasions an extraordinary supply of that metal and consequently a greater proportion of it in our circulation situation than might have been be expected from its relative value.

What influence the proportion under consideration may have upon the state of prices and how far this may counteract qualify its tendency to increase or lessen the quantity of the metals are points not easy to be devellopped: And yet they are very necessary to an accurate judgment of the true operation of the thing.

But however impossible it may be to pronounce with certainty that the possession of a less quantity of Specie is a consequence of overvaluing either of the metals, there is enough of probability in the considerations which seem to indicate it, to form an argument of weight against such overvaluation.

A third ill consequence resulting from it is a greater & more frequent disturbance of the state of the money unit by a greater and more frequent and more considerable diversity between the legal and the market proportions of the metals. This has not hitherto been experienced in the United States but it has been verified elsewhere. And from its not having been felt by us hitherto it does not follow that it will not be so felt hereafter; when our commerce shall have attained a to great maturity which will place it under the influence of and more fixed principles.

In establishing fixing a proportion between the Metals there seems to be an option of one of two three things—

To approach, as nearly as it can be ascertained, to the mean pro or average proportion between the Metals in what may be called the Commercial world—Or

To retain that which now exists in relation to the coins the current in the U States. A coincidence of these will obviate all danger of error. As far as these happen to coincide they will render the path plainer, and more certain.

Or to seek some intermediate point term which may be supposed better adapted th without too great a departure from the one latter may bring us nearer to the other.

To ascertain the first with precision would require better materials, than are possessed, or than could be obtained, without an inconvenient delay.

Sir Isaac Newton in a representation to the Treasury of Great Britain in the year 1717116 gives it h after stating the particular proportions in the different countries of Europe concludes thus—“by the course of trade and exchange between nation and nation in all Europe fine gold is to fine silver as 14 4/5 or 15 to 1.”117

But however accurate and decisive this authority may be deemed, in relation to the period, to which it applies, it cannot be taken, supposed to furnish an exact rule at the distance of more than seventy years. The alterations however which have since taken The result of the investigation which has been bestowed in the present case upon this point by the secretary would rather incline to estimating the proportion in question at this day at about nearly 14 6/10 to 1 which has the greater probability of being the just one, as it coincides with that which exists in Holland, the greatest money market in the world. as a rule for determining the existing proportion. Alterations have been since made, in the regulations of their coins, by several nations; The last accurate account of the legal st which have a certain influence on the market which as well as the course of trade have an certain influ: on the Market.. Nevertheless, there is reason to believe, that the state of the matter as represented by Sir Isaac Newton, does not materially vary different from its actual present state. In Holland the greatest money market of Europe gold was to silver in December 1789, as 1 to 14.88 and in that of London it has been for some time past but little different approaching perhaps something nearer 1 to 15.

It has been seen that the existing proportion between the two metals in this country is about as not remote from that of 1 to 15 2/10. To descend from this to that of 1 to 14 6/10 would be a very considerable innovation; greater it is conceived than could prudently be hazarded. It is fortunate in this respect that the innovations of the Spanish Mint have imperceptibly introduced Its effect in respect to those who should be possessors of that species of money at the time of the change would be very considerable—and perhaps its effect upon the general state of Debtor and Creditor, to the benefit of the one and the dteriment fo the other may be such as to merit serious attention. The disadvatage of it a proportion so analogous as this is to that which prevails in among the principal commercial nations, as it greatly facilitates a proper regulation of the matter.

The But the particular state of our Trade furnishes an additional reason against it This proportion of 1 to 15 is recommended by the particular state of our Trade. The foreign ballances we pay are essentially to Great Britain. In her market the proportion of silver to gold is about as 1 to 15. This proportion of 1 to 15 is recommended by the particular situation of our trade; as it is being very nearly that which obtains in the Market of G B; to which nation our specie is principally exported. A lower rate for either of the metals, in our market than in hers might If A gold were lower in ours, it would might not only afford a motive the more in some certain cases, to remit in gold specie rather than in commodities but it might cause her to receive in some others cause us to pay a greater quantity of it for a given sum than we should otherwise do.. It is possible too that this state of things might occasion If the effect should rather be to occasion cause a premium to be given for gold in our market the metal which was underrated, this would obviate those disadvantages; but it would involve imply another, a difference between the market and legal proportions, which would amount to a disorder in the national coinage.

Looking forward to the payments of interest which will hereafter be to be made to Holland, the same proportion does not appear less eligible ineligible. The legal rat proportion in the coins of Holland is stated to be 1 to 14 9/10. That of the market varies somewhat at different times but seldom widely from this point.

With regard to the second option—to retain the proportion which now exists between the two metals gold and silver in the United States—it is not evident, that it will not be the most prudent course.

There can hardly be a better rule in any country for the legal than the market proportion; if this can be presumed supposed to have been produced by the free and steady course operation of Commercial principles. The presumption in such case is, that each metal finds its true level according to its intrinsic utility in the general system of money operations operations.

But it may reasonably be doubted whether this has been the case in regard must be admitted that this argument in favour of continuing the existing prop is not applicable to the state of the Coins with us. There have been too many artificial and heterogeneous ingredients too great much want of order in the pecuniary transactions of this the country to authorise a reliance on the effects authorise the attributing the effects which have appeared to the regular operations of Commerce. A proof of this is to be drawn derivable deducible from the variations alterations which have happened in the proportion between the metals merely by the unnoticed degrati successive degradations of the dollar in consequence of the regulations by the authority of variations of a foreign Mint. It The value of silver gold to silver appears to have has declined wholly from this cause from 15 6/10 to 1 to its original state to about 15 2/10 to 1. its present state. Yet as this last proportion however produced approxim coincides so nearly with that what may be deemed the Commercial average it seems to furnish as good a rule as can be pursued.

Neither is there any discernible relation of Commerce which acco can account for a higher different proportion in our p market than in from that of Great Britain. The ballances we have na continually paid to her ought naturally to have produced un conformity in this respect. in the two markets. The force of custom and opinion seconded by the considerable demand for specie, which has rendered it easier the easier more easy to maintain an artificial ratio, can alone have occasionned the deficiency difference.
   When these things are considered in conjunction with and the reasons which operate against overvaluing either of the Metals, in respect to the other, are duly weighed the disinclination to innovate in a point so delicate in itself and so little reducible to any certain rule of to certain principles determination adjustment, which is inspired by a due degree of caution is in a great measure overcome; so far indeed in the mind of the Secretary that his judgment, though not with the assuance of perfect conviction is strongly inclined to an establishment of the proportion between relative value of gold and silver in the Coins of The United States at the proportion of 1 to 15. This if the prevailing dollar be not more that 373 grains of fine silver, as some of the assays indicate, would very little vary from the actual proportion, which in this case would be as 1 to 15.07.
   This proprotion of 1 to 15 is recommended by its near approximation to the actual proportion in the market of that country the payments to which constitute the chief outlet of our specie. This circumstance seems to render it safe and to afford a security against its proven having an unfavourable influence in regard to the exportation of the metals. Silver will be then exportable Remittances in silver will then be attended with less advantage than heretofore & gold with no prof profit will arise on gold to render it an object of speculation. Approaching more nearly to the average of the Commercial world, the money unit of the U States will be less likely to be disturbed by fluctations in the market—the supply of each metal there will be a better prospect of an equal a due supply of each both metals and less prob loss from danger of loss from the overrating of one either of them. And the alteration is not great enough materially to affect any particular interests.

The old only question seems to be whether the value of gold ought not to be a little lowered to bring it to a more exact conformity with the markets which have been mentioned. But as all innovation in so delicate an article ought to be avoided unless for some object of evident utility, and as the pro ration of 1 to 15 is so nearly conformable in that respect and as all innovation in so delicate a concern circumstance ought to be avoided unless for some object of evident utility it seems to be preferable to adhere to the existing state of things. If it be true as the Secretary is informed it is the proportion of the market of Spain continues to annex a higher value to Gold as it has done in time past than that which is recommended, there will be some advantages in a middle station.

A further preliminary to the adjustment of the future money unit is to determine what shall be the proportion and coposition of alloy in each species of the Coins.

This The proportion first by the the by the resolution of the 8th of August 1786 already before referred to is regulated placed at one one a twelveth, part or in other words at one part alloy to 11 parts of fine, gold or fine silver whether gold or silver: which appears to be a convenient and eligible rule. proportion for both. The Its correspondency in regard to both metals is a recommendation of it, because it contradic interf a difference could answer no purpose of utility calls for a difference and the similarity is favourable to order.

This proportion ratio as it regards gold coincides with the proportion real or professed of in the most of the European coins of Portugal England France and Spain. In those of the two former it is real; in those of the two latter, there is an allowance remedy deduction for what is called remedy of weight and alloy, which is in the nature of an allowance to the Master of the Mint for unavoidable errors and imperfections in the process rendering the coin either lighter or baser than it ought to be. The same thing is known in the theroy theory of the English Mint where 1/6 of a carat is allowed. But the difference seems to be, that there, it is merely an occasional indemnity within a certain limit to that extent for real and inevitable unavoidable errors and imperfections whereas whether in the practice of the Mints of France and Spain it amounts to is a stated and regular deviation departure from the nominal standard. Accordingly the real standards of France and Spain are something less worse than 22 carats or 11/12 fine or 11 parts in twelve fine.

The principal gold coins of Germany Holland Holland Italy Sweden Denmark Poland and Italy are finer than those of England and Portugal in different degrees from 1 Carat and ¼ to nearly 1 Carat & 7/8 which last is within 1/8 of a carat or 24th part of pure gold.

In the standards of the silver coins of Europe there are much greater

There are similar diversities in the standards of the silver coins of the different nations parts countries of Europe. That of Great Britain is 222 parts fine to 18 parts alloy:

Those of the others European nations vary from that of Great Britain proportion as widely as from about 17 of the same parts better to 75 worse.

The principal reasons, which are assigned for the use of alloy, are the saving of expence in the refining of the metals, (which in their natural state are always mixed with a portions of the coarser kinds) and the rendering of them harder as a security security against too great waste by friction or wearing. The first reason drawn from the original state composition of the metals is strengthened at present by the practice of alloying their coins, which has obtained among so many nations.

The truth reality of the effect to last reason position on which the last reason is founded applicable has been denied and experience has been appealed to as proving that the more alloyed coins wear faster than the purer. The true state of this matter may be worthy of future investigation, though first appearances are in favour of of the effect ascribed to the intermixture of a portion of alloy. and In the mean time the saving of trouble and expence are good sufficient inducements to following those examples of those nations who those examples which suppose its the expediency of introducing alloy into Coins. And the same considerations leads to taking, as our models, those nations, with whom we have most intercourse, and with whose coins are most prevalent in our circulation. These are Spain Portugal England & France. The relation, which the proposed proportion bears to the respective standards of their Gold coins has been explained. In respect to their silver coins, it will be not be very remote far from a the mean to of their several standards.

The component ingredients of the alloy in each metal will also require to be regulated. This In silver, copper is the only kind in use, and it is doubtless the only proper one. In gold there is a mixture of silver and copper; in the English coins consisting of in equal qua parts in the coins of some other countries varying from 1 thir ⅓ to ⅔ of silver.

The reason of this union of silver with copper is this—the silver counteracts the tendency of the copper to injure the color or beauty of the coin, by giving it a coppery hue, which a small quantity will produce; and the copper prevents the too great whiteness which silver alone would occasion confer confer. It is apprehended, that there are circumstances in the situation of the state considerations, which may render it prudent to establish by law by law that the proportion of silver to copper in the gold coins of the United States shall not be more than ½ nor less than ⅓; leaving vesting a discretion in some proper place to regulate the matter within those limits as experience in the execution may recommend.

A third point remains to be discussed, as a prerequisite to the determination of the money unit, which is whether the expence of Coinage coining shall be defrayed by the government Public, or ought out of the material itself; or, as it is sometimes stated, whether coinage shall be free or shall be subject to a duty or imposition? The discussion of this po This forms, perhaps, one of the nicest questions in the doctrine of money.

The usages of practice of different nations is dissimilar in this particular. In England, Coinage is intirely free: the Mint price of the metals in bullion is the same with the value of them in the coins. In France, there has been is a duty which has been, if it is not now of Eight per Cent. In Holland there is a difference in between the mint price and the value in the coins which has been computed at ½ per Ct or something m less than one. .96 . per Cent per Cent upon gold and at 1.48 at or something m less than 1 & a half per Cent upon silver. The resolution of the 8th of August 1786 proceeds upon the ida idea of a deduction of ½ per Cent on from gold and of two per Cent from silver as an indemnification for the expence of coining. This is to be inferred from the a report of the late Board of Treasury upon which that resolution appears to have been founded.

Upon the supposition that the expence of coinage ought to be defrayed out of the metals, there are two ways in which it may be effected, one by a deduction from the quantity of fine gold and silver in the coins; the other by making a difference between the value of them in the coins and the mint price of them in bullion.

The first method appears to the secretary altogether inadmissible. He is unable to distinguish an operation of this kind from that of raising the denomination of the coin; a measure which has been disapproved by the wisest mean men of the nations in which it has been practiced and condemned by the rest of the world. To declare that a less weight of gold or silver shall pass for the same sum which before represented a greater weight or to ordain that the same weight shall pass for a greater sum are things substantially of one nature. And The consequences of either of them, if the change can be realized, is are, to degrade the money unit below its intrinsic value; obliging to depreciate the val to oblige creditors to receive less than their just dues—and indeed to depreciating property of every kind: For it is manifest that every thing would in this case be represented by a less quantity of gold and silver than before.

It is sometimes observed on this head, that though every spe any article of property might in fact be represented by a less actual quantity of pure metal it would nevertheless be represented by something of the same intrinsic value. Every fabric or manufacture it is remarked is worth intrinsically the price of the raw material and the expence of fabrication; a truth not less applicable to a piece of coin than to a yard of cloth.

This position well founded in itself is here misapplied. It supposes that the coins now in circulation are to be considered as bullion or in other words as a raw material. But the fact is, that the adoption of them as money has caused them to become the fabric. It has invested them with the character and office of coins and has given them a sanction and efficacy equivalent to that of the stamp of the sovereign. The prices of all our commodities at home and abroad and of all foreign commodities in our markets have found their level in conformity to this principle. The foreign coins may be divested of the privilege they have hitherto been permitted to enjoy and may of course be left to find their value in the market comparison with the national coin as a raw material. But the quantity of gold and silver in the national coins corresponding with a given sum cannot be made less than before heretofore without disturbing the ballance of intrinsic value; and making every acre of land as well as every bushel of wheat of less actual worth than in time past. If the United States were insulated and s cut off from all intercourse with the reas rest of mankind the world this reasoning would not be just equally conslusive. just. But it appears when considered with a view to. the relations which Commerce has created between us and other countries.

The probability however is that the effect meditated would be defeated by a rise of prices not be produced; that prices would not rise in proportioned to the diminution of the intrinsic value of the coins. This might be looked for in every enlightened commercial country; but perhaps in none with greater certainty than in this—because in none are men less liable to be the dupes of sounds names—in none has authority so little resource, for contravening the natural course of things substituting names to things.

Such a revolution in prices

A general revolution in prices though only nominally and in appearance could not fail to would distract the idea of community and would be apt to breed discontents as well among all those who live on the income of their money as among the lo poorer classes of the people to whom the necessaries of life would seem to have become dearer. In con the confusion of such a state of things ideas of value would be most likely to adhere to the old coins; which from that circumstance instead of feeling the effect of the loss of their privilege as money, would probably from that circumstance, consequently bear a price in the market corresponding with the relatively to the new ones eg answering to the difference of weight. in ea in exact proportion to weight. The frequency of the demand for the metals to pay foreign ballances would contribute to this effect.

Among the evils, attendant on such an operation, are these—Creditors both of the public and of individuals would lose a part of their property—Public and private credit would receive a serious wound—the effective revenues of the government would be materially diminished. There is scarcely any point, in the œconomy of national affairs, of greater moment than the uniform preservation of the intrinsic value of the money unit. On this the security & steady value of property essentially depend.

The second method therefore of defraying the expence of the coinage out of the metals is greatly to be preferred to the other. This is to let in practise to let the same quantity of gold and silver in the new coins, represent the same sum of money continue to represent in the new coins exactly the same quantity of gold and silver as it now does in those old now current—to allow at the Mint such a price only for those meta for those metals as will admit of profit just sufficient to defray the expence of coinage—to abolish the legal currency of the foreign coins both in public & private payments—and of course to leave the superior utility of the coin national coins for domestic purposes to operate the difference of market value which is necessary to induce the bringing of bullion to the Mint. In this case, all property and labor will continue still be represented by the same quantity of gold and silver as formerly, and the only change will which will be made wrought will consisting in annexing the office of money exclusively to the national coins; consequently and in withdrawing it from those of foreign countries and suffering them to become as they ought to be mere articles of merchandize.

The arguments in favour of a regulation an arrangement of this kind are—

That the want of it occasions an extra expence, there being then, no motive of individual interest, to distinguish between the National Coins and bullion; which accordingly are indiscriminately melted down and exported; that from the same cause when the

First, That the want of it is as a a source cause of extra expence:, in two ways. There being then no motive of individual interest to distinguish between the national coins and bullion, they are, it is alleged, indiscriminately melted down for domestic manufactures and exported for the purposes of foreign Trade: and when the coins become it is added that when the coins become light by wearing the same quantity of fine gold or silver bears a higher price in bullion than in the coins; whence in which situation state of things, the melting down of the coins to be sold as bullion becomes a becomes profitable traffic is attended with considerable profit: and in both ways from both causes the expence of supporting and maintaining the specie capital of the Nation the Mint is very materially augmented. or in other words the expence of maintaining the specie capital of the Nation is materially augmented.

Secondly That the existence of such a Regulation promotes a favourable course of exchange and benefits Trade, not only by from that circumstance, but by obliging foreigners, in certain cases, to pay dearer for domestic commodities, and to sell their own cheaper.

As far as relates to the tendency of a free coinage to produce an increase of expence, in the different ways that have been stated—the argument must be allowed to have foundation both in reason and in experience. It describes what has been exemplified in great Britain.

The effect of giving an artificial value to bullion is not at first sight obvious; but it actually happened in the years   in the country just named. A pound troy in gold bullion of standard finess was then from 19/6 to 25/ dearer than an equal weight of guineas as delivered at the Mint. The phanomenon It is thus accounted for. The old guineas were more than two per Cent lighter than their standard weight. This weight therefore in bullion was truly worth two per Cent more than those guineas. It accor consequently had in respect to them a correspondent rise in the market. And as Guineas were then current by tale, the new ones, as they issued from the mint, were confounded in circulation with the old ones; and, by the association, were became depreciated below their intrinsic value, in comparison with bullion. It became, of course, a profitable traffic, to sell bullion for coin, to select the light pieces ones and reissue them in currency and to melt down the heavy ones and sell them again as bullion. This practice besides other inconveniences cost the government large sums in renewing the coin the renewal of the coins.

But the remainder of the argument stands upon ground, far more questionable. The truth of It depends upon very numerous and very complex combinations, in which there is infinite latitude for fallacy and error.

The most plausible part of it is that, which relates to the course of exchange. Experience, in France, has shewn, that the market price of bullion has been influenced by the mint difference between that and coin, sometimes to the full extent of the difference; and it would seem to be a clear inference, that whenever that the difference in the market was cons. was con materially exceeded the charges of remitting bullion, from the country where it existed, to another, in which coinage was free, exchange would be in favour of the former. The reason of this will best appear from a statement of the

If, for instance, the ballance of Trade, between France and England, were at any time equal, their Merchants would naturally have reciprocal payments to make to each other to an equal amount; which as usual of course would be liquidated by the means of bills of exchange. If, in this situation, the difference between coin and bullion should be in the market, as at the Mint of France, 8 per Cent; if also the charges of transporting money from France to England should not be above two per Cent; and if exchange should be there at par, it is evident, that a profit of six five per Cent might be made, by sending bullion from France to England and drawing bills for the amount. One hundred louis dors in coin would purchase the weight quantity of 108 in bullion; one hundred of which would suffice remitted to England would suffice to pay a debt of an equal amount: and two being paid for the charges of insurance and transportation, there would remain 6 for the benefit of the person, who should manage the negotiation. But as so large a profit could not fail to produce competition; this competition would cause the bills in consequence of this from the effect of this, would to decrease in price till the profit was reduced to the minimum of an adequate recompence for the trouble and risk. And as the amount of 100 louis d’ors migh in England might be afforded for 96 in France, with a more profit of more than 1 & ½ per Cent, to the exchanger or broker, bills upon England might fall in France to 4 per Cent below par; yielding still a sufficient profit to compensate one per Cent being deemed a sufficient per Cent profit to the exchanger or broker for the management of the business.

But it is admitted that the advantage is lost is against when the ballance of Trade is against the nation which imposes the duty in question; because by increasing the demand for bullion it brings this to the a par of with the coins: And it is to be suspected that where commercial principles have their free scope and trade is well in are well undersood, the market difference between the metals in coin and bullion will seldom approximate to that of the Mint if the latter be considerable. The It must be not a little difficult to keep the money of the world, which can be employed to equal purpose in the commerce of the world can with difficulty can with difficult be kept in a state of degradation in comparison with the money of a particular country.

This alone would seem sufficient to prevent it: whenever the difference price of coin to bullion, in the market, materially exceeded the par of the metals, it would become an object to send the bullion abroad, if not to pay a foreign balance, to be invested in some way or other way in foreign countries, where it had bore a superior 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. But it that circumstance would naturally certai have this effect; and hence the supposed advantage supposed would contain in itself the principle of its own destruction. As long, however, as the exportation of bullion could be made with profit, it could be practiced with advantage, which is, as long as exchange should could remain below par, there would be a drain of the gold and silver of the country. And thus

If any thing can maintain for any a length of time a material diffenece between the value of the Metals in Coin and in Bullion, it must be a constant and considerable ballance of trade in favour of the country in which it is maintained. In one situated like the United States, it would in all probability be a hopeless attempt. The frequent demand for gold & silver to pay forei ballances to foreigners would tend powerfully to preserve the equilibrium of intrinsic value. The prospect is, that it would occasion foreign coins to circulate by common consent nearly at par with the national.

To say, that as far as the effect of lowering exchange is produced, though it be only occasional and momentary, there is a benefit the more thrown into the scale of public prosperity is not satisfactory. It has been seen, that it may be productive of one evil, the investment of a part of the national capital in foreign countries; which can rarely only be beneficial except in a situation like that of the United Net Holl Netherlands, where an immense capital and a decrease of internal demand for it, renders it necessary to find employment for money it in the wants of other nations. And perhaps on a close examination other evils may be descried.

One allied to that which has been mentioned is this; supposing France for greater taking France, for the sake of more concise illustration, as the scene. Whenever it happens that French Louis d’ors are sent abroad from whatever cause, if there be a considerable difference between coin and bullion in the market of France, it will constitute an advantageous traffic to send back these louis d’ors and bring away bullion in lieu of them; an upon all of which exchanges France must sustain an actual loss of a part of its gold and silver.

Again, such a difference between coin and bullion must naturally counteract the a favourable ballance of Trade. Whenever a foreign merchant is the carrier of his own commodities to France for sale, he has a strong inducement to bac bring back specie instead of French commodities; because a return in the latter may afford no profit, may even be attended with loss; in the former it will afford a certain profit. The same principle must be supposed to operate in the general course of remittances from France to other countries. The principal question with a Merchant naturally is—In what manner, can I realise a given sum with most advantage, where I wish to place it? And, in every case, in which other commodities are not likely to produce a greater profit than bullion, it may be expected that this will be preferred: The to which the greater certainty which attends an operation with the metals attending the operation must be an additional incitement. There can hardly be imagined a circumstance less friendly to trade, than the existence of an extra inducement, arising from the possibility of a profitable speculation traffic in upon the articles themselves, to export from a country its gold and silver, rather than the products of its land and labour. But happily for nations, in which in which an erroneous policy, calculated to produce such an effect, may exist, the evil brin brings its own cure—the nature of things frustrates the mistaken devices of the politician: In the instance, under consideration, bullion in a variety of ways finds its due level, and the effect which has been stated ceases.

The other supposed advantage supposed of obliging foreigners to pay dearer for domestic commodities and to sell their own cheaper are applied to a situation which includes a favourable ballance of trade.

It is understood in this sense— thus explained—Domestic The prices of domestic commodities (such at least as are peculiar to the country) remain attached to the denominations of the coins. When a favourable ballance of trade which realizes in the market the mint difference between coin and bullion, foreigners who must pay in the latter are obliged to give more of it for such commodities than they otherwise would do. Again the bullion which is thus procured now obtained at a cheaper rate in the home market will procure the same quantity of goods in the foreign market as before; which is said to render foreign commodities cheaper.

But the first of these inferences seems to be drawn from a partial view of the matter and the last involves a fallacy.

If it be true that foreigners pay more for domestic commodities, it must be equally true, That they get more for their own when they bring them themselves to market. If peculiar, or other domestic commodities, adhere to the denominations of the coins foreign commodities of a like character no reason occurs why foreign commodities of a like character should not do the same thing. And in this case the foreigner though he receive only the same value in coin for his merchandize as formerly can convert it into a greater quantity of bullion. Whence the nation is liable to lose a greater quantity of its gold and silver than if their intrinsic value in relation to the coin coins were preserved. Here is disadvantage against advantage; and which would may preponderate would appear to depend on the question, which of the two countries had the greatest proportion of active commerce with the other.

It In the last case, it is evident that the nation pays as much gold and silver as before for the goods which it procures abroad; and whether it obtains this gold and silver cheaper or not, turns on the solution of the question just stated. suggested above.

Besides these considerations, this, it is admitted, in the reasoning, that the advantages supposed, which depend on a favourable ballance of Trade, tend have a tendency to affect that ballance disadvantageously. injuriously. Foreigners, it is allowed, will in this case, seek some other vent for their commodities and some other market where they can supply their wants at an easier rate. A tendency of this kind, if real, would be a sufficient objection to the regulation. Nothing which contributes to change a beneficial current of trade can well compensate by particular advantages for so injurious an effect. It is far more easy to translate transfer Trade from a less to a more favourable channel, than whence once transferred, to bring it back into its old one. Every source of artificial interruption to an advantageous current, is therefore cautiously to be avoided.

It merits attention, that the able Minister who lately and so long presided over the Finances of France118 does not attribute to the duty of coinage in that Country any peculiar particular advantages in relation to Trade and Exchange and Trade.. Though he rather appears an advocate for it, it is this ’tis on the sole ground of the revenue it affords, which he represents as a in the nature of a very moderate duty on the general mass of importation.

And it is probable, that to the peculiar singular felicity of situation of that Kingdom is to be ascribed its not having been sensible of the evils, which seem incident to the Regulation. There is perhaps no part of Europe, which has so little need of other countries, as France. Comprehending a variety of soils and climates, an immense population, its agriculture in a state of high improvement, it possesses when within its own bosom most if not all the productions of the earth, which any of its most favoured neighbours can boast. The variety, abundance and peculiar excellence of its wines constitute a peculiar advantage in its favour. Arts and manufactures th are there also in a very advanced state—some of them of considerable importance in a state of preeminent higher perfection, than elsewhere. The Its contiguity to Spain, the intimate nature of its connection with that country; a country with few fabrics of its own, consequently the numerous wants, and the immediate receptable of the treasures of the new world. These circumstances concurs in securing to France so uniform and so considerable a ballance of Trade as in a great measure to counteract the natural tendency of any errors, which may exist in the system of her Mint, and to render inferences from the operation of that system there, in reference to this Country, more liable to mislead than to instruct. Nor ought it to pass unnoticed that with all these advantages, the government of France has a found it necessary, been obliged on some occasions, to employ very violent methods to compel the bringing of bullion to the Mint; a circumstance, which affords a strong presumption of the inexpediency of the Regulation, and of the impracticability of executing it in the United States.

This point has been the longer dwelt upon not only because there is a has been a considerable difference of opinion among speculative men concerning it and a difference in the practice of the most considerable commercial nations but because the acts of our own government under the confederation have proceeded upon the expeditiency expediency of deducting one defraying the expence of the coinage out of the metals themselves and upon this idea they have first both, made a deduction from the weight of the coins and established a difference between their regulated value and the mint price of bullion. This double operation, in favour of a principle so questionable in itself, has made a more particular investigation of it a duty.

It is however more rather the intention of the preceding remarks to prove that the expectation of commercial advantages ought not to decide in favour of a duty of coinage and that if it should be adopted, it ought not to be in the form of a deduction from the intrinsic value of the coins—than absolutely to explode the expediency of any difference whatever between in the value of the metals in coin and in bullion. It is not clearly discerned that a small difference between the Mint price of bullion and the regulated value of the coins would be pernicious, or that it might not even be adviseable in the first instance by way of experiment merely as a preventative to the melting down and exportation of the coins. This will now be somewhat more particularly considered.

The arguments for a coinage intirely free are that it preserves the intrinsic value of the metals; that it makes the expence of fabrication a general instead of a partial tax; and that it tends to promote the abundance introduction of gold & silver, which it is alleged will flow to that place, where they find the best that price, and from that place, where they are in any degree undervalued.

The first consideration has not much weight as an objection to a plan which without does not diminishing the quantity of metals in the coins but merely allows a less price for them in bull bullion at the national factory or Mint. No rule of intrinsic value is violated by considering the raw material as worth less than the faber fabric in proportion to the expence of fabrication.

The second consideration has perhaps greater weight. But it may not amount to an objection, if it is be the best method of preventing disorders, in the coin, which it is in a particular manner, the interest of those, on whom the tax would fall, to prevent. And it is in the judgment of the secretary the least exceptionable expedient that has occurred for obviating The practice of taking gold by weight, which has of late years obtained in Great Britain, has been found in some degree a remedy; but this is inconvenient and may on from that account circumstance get fall into disuse. Another circumstance has had a remedial operation. This is, the delays of the Mint. It appears to be the practice there, not to make prompt payment for the bullion, which is brought to be exchanged for coin; but to receive it, and deliver out an equal weight in coin, when it can have been prepared. The fulfilling of prior engagements of course postpones the receipt of coi coin in exchange for the bullion delivery of the coin in lieu of the bullion. And this creates a difference in the market price of the two things. For some years past, an ounce of standard gold, which is worth in coin £3.17.10½ Sterling is has been in the Market of London in bullion only £3.17.6 which is within a small fraction of a a a half per Cent less. Whether this be management in the mint to accommodate the bank in the purchase of bullion or to effect indirectly something equivalent something equivalent to a formal difference of price, or whether it be the more natural course of the business thing furnishes room for conjecture.

It, at the same time, indicates, that if the Mint were to make prompt payment, at about half per Cent less, than it does at present, the state of bullion in respect to Coin would be precisely the same as it now is. And it would be then certain that the government that the government would save half per Cent in the expence of in the coinage of gold; since it is not probable, that the actual delay in preparing it time actually lost in preparing it in the course of the year in preparing it can be worth in converting bullion into Coin can be computed as an equivalent to half per Cent on the advance; and there will generally be in the Treasury a considerable sum of money waiting for some periodical disbursement which without hazard might be applied to that advance. This idea will be resumed.

The tendency of a free coinage to favour the introduction of gold and silver, if it be admitted to

In what sense, a free coinage may can be said to promote the abundance favour the introduction of gold and silver, may be inferred from the instances, which have been given of the tendency of a contrary system to promote their exportation. It is, however, not probable, that a very small difference can have an effect in this respect between the value of the metals in the of value between coin and bullion can have any effect, which ought to enter into calculation. There can then be no inducement of positive profit to export the bullion, because the expence of transportation as long as the difference of price is exceeded by the expence of transportation. And the prospect of less loss when it is but little less upon the metals, than upon commodities, when the difference is minute, will be frequently overballanced by the possibility of doing better with the latter from a rise of markets. It is, at any rate, certain, that it can be of no consequence in this view whether the superior rate price pr value superiority of coin to bullion in the market be produced, as in England, by the delay of the Mint, or by a formal difference in the discrimination in the regulated prices values.

Under an impression, that a small difference between the value of the Coin and the Mint price of bullion is the least exceptionable expedient for restraining preventing the melting down or exportation of the former—and not perceiving that if it be a very moderate one it can be hurtful have any ill effiect in other respects The Secretary is inclined to an the experiment of ½ per Cent on each of the metals. The fact, which has been mentioned, with regard to the price of gold bullion, in the English Market, seems to demonstrate that such a difference may safely be made. In this case there must be prompt paym immediate payment for the gold and silver offered to the Mint. How far ½ per Cent this will go towards defraying the expence of the coinage cannot be determined before hand with accuracy. It is presumed probable that ½ per Cent on gold will on an œconomical plan it will suffice in relation to gold. for the expence of the coinage of coining gold. that Metal—But it is not calculated, that the same rate on silver will be sufficient to defray the expence of coining that metal attending the coinage of that metal. Some additional provision must of course be made, if this limit be adopted.

It does not seem appear to be expedient adviseable to make any greater difference, in regard to silver than to gold: Besides Because it is desireable, that the proportion between the two Metals in the Market should correspond with that in the coins, which would not be the case if the mint price of one was comparatively lower than that of the other; and because also silver being proposed to be rated rather lower in respect to gold somewhat rather lower than below its general true Commercial value, if a further disparity shou there should be a disparity, to its disadvantage, in the mint prices of the two metals it would obstruct too much the buying of it to be coined and would add too much to the an inducements to export it. Nor does it appear to the secretary safe to make a greater difference between the value of coin and bullion than has been mentioned. It will be better to have to increase it hereafter if this shall be found, expedient found the experiment shall recommend its being done than to have to recede from too considerable a difference in consequence of evils which shall have been experienced.

It is sometimes mentioned as an expedient, which consistently with a free coinage may serve tend to prevent the evils desired to be avoided, to incorporate in the coins a greater proportion quantity of alloy than is usual; (regulating their value nevertheless according to the quantity of pure metal they contain). This, it is supposed, by adding to the difficulty of refining them would cause bullion to be preferred both for manufacture and exportation.

But strong objections lie against this scheme—These are—an augmentation addition of expence—an actual depreciation of the coin—a danger of still greater depreciation in the public opinion—a greater facility of counterfieting the facilitating of counterfiets—while it is questionable, whether it would have the effect expected from it.

No value lies

The alloy being considered as of esteemed of having no value attached to it, an increase of it is evidently an increase of expence. This in relation to the gold coins particularly is a matter of moment. It has been noted stated that the alloy in them consists partly of silver. If to avoid expence, the addition should be of copper only, this would spoil the appearance of the coins and give it them a base countenance. Its beauty would indeed be injured though in a less degree, by the increase of even the proposed increase even if the usual proportions of silver and copper should be maintained in the increased additional quantity of of the alloy.

And however inconsiderable an expend additional expenditure of copper, in the coinage of a year, may be deemed, appears in a series of years it would become of consequence. In regulations, which contemplate the lapse and operation of ages, a very small item of expence acquires importance.

The actual depreciation of the coin, by an increase of alloy, results from the very circumstance, which is the motive to it—the greater difficulty of refining—In England, it has been is customary for goldsmiths and others those concerned in manufactures of gold to make a deduction in the price of four pence sterling per ounce of fine gold for every carat, which the mass containing it is was below the legal standard. Taking this as a rule, a difference an inferiority of a single carat or 1/24 part in the gold coins of the United States compared with the English standard would cause the same quantity of pure gold in them one of our coins to be worth nearly 4/10 ths ths per Cent less than in the coins of Great Britain. This circumstance would be likely in process of time to be felt in the market of the U States.

A still greater depreciation of the Coin in the public opinion would be to be apprehended from the apparent debasement of the Coin. it. The effects of imagination and prejudice cannot safely be disregarded in any thing that relates to money. If the beauty of the coin be impaired it may be found difficult to satisfy the generality of the community, that what appears worse is not really less valuable; and it is not altogether certain, that an impression of its being so may not occasion an unnatural augmentation of prices.

Greater danger of imposition by counterfiets is also to be apprehended from injury which will be done to the injuring of the appearance of the Coin. It is a just observation that

And it is evident that beauty the colour as well as the excellence of the workmanship is an ingredient in the perfection of coin. The intermixture of two too much alloy, particularly of copper, in the gold coins at least, must materially lessen the facility of distinguishing by the eve, the genuine, from a baser kind.

If gold plate in the United States,

The inefficacy of the arrangement to the purpose intended to be answered is rendered probable by different considerations. If the standard of gold plate in the U States should be regulated according to that of the national coins, it is to be expected that the Goldsmith would prefer these to the foreign coins; because he would he would find them prepared to his hand it its is already in the state which he desires; whereas he and he would have to add to the foreign coins expend an additional quantity of alloy to bring the foreign coins to that state. If the standard of plate by law or usage should be superior to that of the national coins, there would be a possibility of the foreign coins bearing a higher price, in the Market; and this would not only obstruct their being brought to the Mint, but might occasion the exportation of the national coin in preference. It is not understood that the practice of making an abatement of price for the inferiority of standard is applicable to the English Mint; and if it be not, this would also contribute to frustrating the expected effect from the increase of alloy. For in this case a given quantity of the pure metal in our standard would be worth as much there as in bullion of the English or any other standard.

Considering, therefore, the uncertainty of the success of the expedient and the inconveniences wh which seem incident to it, it would appear preferable to submit to those of a free coinage. It is also observable that additional expence which is one of the principal of these is also applicable to what is pro the proposed remedy.

Indeed, the judgment of the Secretary though inclined upon the whole to a small difference between the Mint price of bullion and the regulated value of the coins as a remedy for the inconveniences of a free coinage, is not without considerable hesitation on the point. He is far from feeling a thorough complete assurance that the latter ought not rather to be preferred.

It will have been perceived

The It is now proper to resume and finish the answer to the first question; the first question and to give the answer to it;; which has necessarily caused in order to which the three succeeding ones have necessarily been anticipated. The conclusion to be drawn which the from the observations which that have been are designed to establish made on the subject is is this that the United in the Coins of the U States ought to correspond with 24 Grains and ¾ of a grain of pure gold and with 371 Grains and ¼ of a grain of pure silvereach answering to a dollar in the money of Account.. The former is exactly agreeable to the present value of gold and the latter is within a small fraction of the mean of the l two last emissions of dollars; the only ones which are now found in common circulation and of which the newest is in far the greatest quantity. abundance.

The alloy in each case to be 1/12 of the total weight which will make the Unit 26.8125 grains of standard gold & 402.1875 Grains of standard silver.119

It Each of these, it has been remarked will answer to a dollar in the money of account. It is conceived that nothing better can be done in relation to this than to pursue the tract marked out by the resolution of the 8th of August 1786. This has been approved abroad as well as at home; and it is certain that nothing can be more simple or convenient than the Decimal subdivisions. There is every reason to expect that the method will speedily grow into general use when once seconded by it once comes to be seconded by corresponding coins. On this plan the Unit in the money of account will continue to be as established by that resolution a Dollar, and its multiples, dismes, cents, milles, or tenths, hundredths, thousands.

With regard to the number of different pieces which shall compose the coins of the United States two things are to be consulted—convenience of circulation and cheapness of the coinage. The first ought not to be sacrificed to the last; but as far as they as they can be reconciled to with each other it is desireable to do it. Numerous and small (if not too minute) subdivisions assist circulation; but the multiplication of the smaller coins kinds increases adds to the expence of coining; 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 small number till experience shall decide whether when any other kinds species species proportions are necessary. The following it is conceived will be sufficient in the commencement—

1 Gold piece equal in weight and value to ten Units or Dollars

1 Gold piece, equal to a tenth part of the former, and which shall be a the a unit or Dollar

1 Silver piece which shall also be the United a unit or Dollar

1 silver piece which shall be in weight and value a tenth part of the silver Unit or Dollar.

1 Copper piece which shall be of the value of a hundredth part of a dollar.

1 other Copper piece which shall be of half the value of the former.

It is not proposed, that the lightest of the two gold coins should be in the first instance numerous; as in large payments, the larger the pieces, the shorter the process of counting, the less the risk of mistake, and consequently the greater the safety and the convenience; and in small payments, it is not perceived that any inconvenience can accrue, except in the event of a scarcity of silver, which the relative from leaving an intire dependence on the silver and copper coins. The chief inducement to the establishment of the small gold pice is to have a sensible object, in that metal, as well as in silver, to express the unit. One hundred thousand may be as much as ought to be at any time in circulation.

The tenth part of a dollar is but a small piece and with the aid of the copper coins will probably suffice for all the more minute purposes of circulation. It is less than the least piece of the silver coins of England.

The largest copper piece will nearly answer to the half penny sterling and the smallest of course to the farthing. Pieces of very small value are a great accommodation to the poor; by enabling them to purchase in smaller proportions and at a more reasonable rate, the necessaries of which they stand in need. If there were only cents, the lowest price for any vendible commodity, however inconsiderable in quantity would be a cent; if there are half cents, it will be a half cent; and in a great number of cases, exactly the same things will be sold for a half cent, which if there were none would cost a Cent. But a half cent is low enough for the minimum of price. Excessive minuteness would defeat its object. To enable the poorer classes to procure necessaries cheap is to enable them with more comfort to themselves to labour for less; the advantages of which need no comment.

The devices of the coins are far from being matters of indifference; as they may be made the vehicles instruments of useful impressions. They ought therefore to be emblematical, but without losing sight of simplicity. The fewer sharp points and angles there are, the less will be the loss by wearing. The Secretary thinks it best on this point to confine content himself to with these concise and general concise general remarks.

The last point to be discussed respects the currency of foreign Coins.

The abolition abrogation of this in proper season time is a necessary part of the system contemplated for the national coinnage. But this must of necessity be deferred till some considerable progress has been made in preparing a the substitute for them. A gradation may therefore be found most convenient.

The foreign coins may be suffered to circulate precisely upon their present footing for one year, after the mint shall have commenced its operations: The privilege may afterwards then be continued for another year to the gold coins of Portugal England and France and to the silver coins of Spain: And these may then still be permitted also be allowed to be current for one two years more at the same rates which shall be allowed to be given for them at the Mint; after the expiration of which the circulation of all foreign coins to cease.

In this mode

The monies which come shall are brought will be paid into the Treasury during the first year being recoined before they are issued anew again will form a partial supply to circulation before any interruption is given to it afford a partial substitute previous to even a partial giving any any interruption being given to the usual supplies of circulation. The revenues of the succeding year, and the discontinued coins which will naturally be brought to the Mint in consequence of the discontinuance of their circulation currency will materially extend the substitute during in the course of that year, and its extension will be considerab so far increased during the third year by the effect of facility which the diminution of the current diminished values of the remaining foreign coins will give to procuring them for the purpose of recoinage the facility of procuring the remaining for recoinage the remaining species on account of to be recoined ⟨————⟩ by reason the diminution of their current values, as to enable the dispensing afterwards with the use of the foreign coins as a circulating medium wholly with the circulation use currency of the foreign coins after that period.

This arrangement, besign besides avoiding a sudden stagnation of circulation will cause a considerable proportion of whatever loss may be incident to the fal establishment in the first instance to fall as it ought to do upon the government public and will probably tend to di distribute the remainder of it more equally among the community.

The Secretary for the Department of State, in his Report to the House of Representatives, of on the subject of120   has proposed that the weight of the Dollar should correspond with the unit of weight. This was done, on the supposition, that it would require but a trifling alteration addition to the quantity of metal, which the Dollar, ought independently of the object he had in view, ought to contain; in which he was guided by the resolution of   fixing the dollar at  .121 The Taking this as the proper standard of the dollar, a small alteration for the sake of incorporating so systematic and idea would appear desireable. But if the principles, which have been reasoned from, in this report, are just, that idea cannot be pursued the execution of that idea becomes more difficult. It would certainly not be adviseable to make, on that account, so considerable a change in the money unit, as that of adding would be implied in the addition of six five grains of silver to the proper weight of the dollar, without any increase on the gro without a proportional augmentation of its relative numerary value. And to make such an augmentation would be to abandon the advantage of having the do proposed dollar considered present preserving the identity of the dollar or rather to speak more accurately of having the proposed one received and considered as a mere substitute for the present.

The end may however be attained without either of those inconveniences by increasing the alloy in proportion of alloy in the silver coins. And it is not perceived that any positive evil would attend this. But this would destroy the uniformity in that respect between the gold and silver coins. It remains therefore to elect which of two systematic ideas shall be pursued or relinquished. And it may be remarked that it will be more easy to convert the present silver coins into the proposed ones if these last have nearly the same or nearly the same proportion of alloy than if they have less.

All which is humbly submitted

104ADf, Hamilton Papers, Library of Congress.

105April 15, 1790 (Journal of the House, I description begins Journal of the House of Representatives of the United States (Washington, 1826). description ends , 194).

106In an undated document in H’s handwriting in the Hamilton Papers, Library of Congress, the following appears:

“Sir Isaac Newton’s Dollar 17.10.2 or 418  Grains 2 Mites fine
According to supposed standards 377 
41.2   about 10per Cent
depreciation or 9.83 per Ct
equal to a standard of 10.16⁵⁄₁₂ fine   
1.3⁷⁄₁₂ alloy”  

In the final version of the Report H corrected the error made here through confusing a standard weight with a fine weight.

107In the margin H wrote “most” as an alternative for “some.”

108In the margin opposite this sentence H wrote “371 2/8.”

109A note in the document described in note 81 supplements the table of coin taken from Kruse.

“Mr. Kruse, the German author states the standard of Spain to be

in gold 22 carats fine and 2 alloy
in silver 10 Dineros & 21 grainos fine Silver } 261
1       3 do alloy  27
12 24) 288
48 12”

110In the margin opposite this paragraph H wrote “Elsewhere.”

111On a separate sheet of paper in the Hamilton Papers, Library of Congress, H’s calculations for this paragraph read as follows:

“at 6/8 per dw Gold & at 7/6 for the Dollar of 17.12 or

old seville piece the proportion is 1 to 15.6262 = 24⁶⁄₈  Grains fine gold
386¹⁵⁄₂₀ fine silver

that is ⁷⁄₆ for 24⁶⁄₈ Grains fine gold

If the dollar is taken at 377 Grains & the proportion is fixed at fifteen it will correspond with 25³⁄₁₅ Grains fine Gold—If the proportion is 15.2 for 1 it will correspond with 24⁸⁄₁₀ Grains. If the Dollar is 376.2 fine and the proportion 1 to 15 it will correspond with 25.08 Grains pure gold. If the proportion 15.2 for 1 it will correspond with 24.75 Grains pure gold.”

On another sheet of paper H wrote:

“At ⁶⁄₈ d per dwt of Gold 22 parts fine
 2 parts alloy & 7/6 for

a Dollar containing 377 Grains of fine silver the proportion between gold & silver will be 1 to 15²³⁄₉₉”

112This statement was made in a report of the Board of Treasury of April 8, 1786 (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXX, 163).

113JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXIX, 500.

114JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXX, 503–04.

115In the margin opposite this paragraph H wrote and crossed out “Where there is no special contract.”

116This report may be found 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.

117Postlethwayt, 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.

118See note 93.

119In the margin opposite this paragraph H wrote:


120See note 98.

121H is referring to the resolution of August 8, 1786 (JCC description begins Journals of the Continental Congress, 1774–1789 (Washington, 1904–1937). description ends , XXXI, 503).

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