Mint of the United States 29th November, 1796
The Director of the Mint of the United States, respectfully reports to the President of the United States, on the state of the Mint.
That during the experience of twelve months, he has turned his attention (as far as has been in his power) to the Institution under his care: He has seen, with regret, an opinion generally prevailing, that the Establishment is unnecessarily expensive, and less productive than was rationally expected by its advocates and friends.
The Director, finding some foundation for the charge, has endeavoured to discover the cause, as nothing appears in the general nature of the institution, to warrant the idea.
The issue of the inquiry is, that the extraordinary expenses attending the mint, are in a great measure owing to its original plan, and the principles on which it was established. Among others, the whole coinage, including the refinement of the precious metals, was directed by Law to be executed at the public expence, the Depositor being fully indemnified from all charges whatever; on this principle, not only the original cost of the works, and the salaries of the stated officers fall on the public; but also the whole amount of the workmanship, with the alloy, wastage, & contingent losses.
The want of experimental knowledge in the business at the first establishment of the mint, prevented any tolerable precise estimate of the expenses necessarily attending the process; but soon after the commencement of the business, it was found impracticable to proceed with propriety, unless an addition was made to the establishment, by the appointment of a Melter and refiner.
This important and necessary officer, is not known in foreign mints, as the precious metals are there generally deposited of the proper standard, or above it; or they are purchased by the mint, and become public property, there being professional refiners independent of the mints, whose business it is to purify metals under standard; but there being no such artists in this City who follow the business, it became indispensibly necessary to execute this service in the mint.
This circumstance was not foreseen, or, if foreseen, was considered as included in the duties of the assayer; but the necessity of so essential a check on that officer, forbad this measure, had it been otherwise practicable. This added, considerably, to the annual expenses of the mint.
Formerly, the Director could not make any charge for this process against Depositors; the whole expense, therefore, fell on the public. Thus, on assaying one deposit of about 96,000 oz. of Silver Bullion, it turned out near 24,000 oz. under standard; to refine which, it cost the United States upwards of £500; so that the Depositor really gained that sum, by bringing his bullion to the mint. This operated, very unequally among Depositors. The citizen who brought Bullion in this debased state to the mint, received as much coin for the standard silver therein, as he whose Bullion was previously refined equal to the standard, and ready for coining at a very trifling expense.
Again, the institution of the mint, without any appropriation of Capital, either to purchase the precious metals in Bullion, anticipate payments due on deposits, or to coin for the public, has been another cause of very considerable expence: depending upon Depositors alone for the precious metals, it became necessary, for their encouragement and satisfaction, to coin every deposit as soon as possible after it came into the Treasury of the mint, to prevent its remaining unproductive to the Depositor, by which means the clippings and grains were obliged to be melted and coined as they arose, often three or four times for one deposit.
Thus, the melting, refining, and coining a deposit of 200 oz. of Silver, or 20 oz of Gold, would cost the public nearly as much as 1,000 oz. of either, and a much greater proportional wastage; whereas, could the Bullion be purchased for the public at the market price, and kept in the Vaults till a large quantity might be coined at once, or a capital of about ten thousand dollars be allowed to the mint, so as to anticipate the payments to depositors, without being obliged to an immediate coinage on every occasion, a very great public saving would take place, not only as to the wastage, but in the expenditure of the materials and labour used in the process, and no injury done to the United States, but in the loan of the money for a short time. In a word, the difference would be much the same, as between the wholesale merchant and the Huckster.
This measure would also have a tendency to fix the price of Bullion, and indemnify the public for some part of the expense of coinage. The only question that would arise, is whether, on the principles of political Economy, it would be a prudent measure on the part of Government? Suppose the expenses of coinage, including wastage to be fixed at 3 Centum to the depositor, while in foreign countries it costs nothing—The consequence would be, that bullion in America, might vary its price 3 Cent, according to the ballance of trade, while bullion in those countries must be supposed invariable in its price, let the ballance of trade stand as it will. Bullion, then, in those countries, will always be at the highest price it ever can be at in America, since it is the price of coin; but in America it may be 3 Cent lower. If, therefore, the United States, by coining free of all expense, contribute to keep the price of bullion higher than it is in countries where the coinage is paid for, a voluntary expense is created, of which there can be no just reason to complain.
A representation of some of these difficulties, with the dangerous situation of the mint, for want of protecting Laws to secure the Instruments of coinage, the metals and the coin, as also to prevent counterfeits, has been heretofore made by the officers of the mint, with but little other success, than a Resolution of Congress, enabling the Director to retain the expense of refining the precious metals under standard; but the wastage, alloy, and coinage, are still dead charges on the public Treasury.
While, therefore, this policy on the whole, is considered as beneficial to the United States, the complaints against the mint for its heavy expenses to the public, are without solid foundation, as it is impossible to carry on an institution of this nature, under these circumstances, and which requires from 15 to 20 workmen and labourers to attend it, without great expense. Add to this, that the alloy of Silver and Copper, with the loss by necessary wastage, must unavoidably rise to a considerable annual amount.
But, notwithstanding these and other difficulties attending an infant institution, especially in the late great advance in the prices of materials and labour, the aggregate expenses of the Mint are greatly reduced, either from the superior knowledge of the persons employed, gained by experience, or from new arrangements found to be more advantageous than those made on the spur of the occasion: This will appear more evident, by a review of the progressive reduction of the contingent expenses in the quarterly accounts, rendered into the Treasury Department, and it is hoped that there will be a further progress in this disirable economy.
When the present Director entered upon the administration of the mint, there was no appropriation of money for the purchase of copper, for the coinage of Cents. This, he clearly foresaw, would prove a source of further expence, by often leaving the workmen without employ. He made application to Congress, by their committee on this subject, but all that was obtained was thirteen thousand dollars, which was coined into Cents and returned into the public Treasury, or remitted for the purchase of copper before the rising of Congress the last Spring. No further appropriation was made, till it was too late to procure the necessary importation of copper for the Summer’s coinage, whereby much time has been lost, and some considerable expence of workmen has been added to the summer’s account.
It is now hoped, from the present arrangement, no such inconvenience will arise hereafter, but a continual and ample supply of copper coinage be produced adequate to the public wants.
As the Laws relative to the mint now stand, the officers are obliged to pay to each Depositor, the coins arising from his deposit[s], in strict order, and to reserve three pieces of coin from each mass, yet no appropriation has been made to replace the reserves, or to make good the wastage. It is, therefore, impossible for the officers of the mint to comply with the Law, and the Depositors complain of being kept out of their property, till provision is made by Congress for their relief.
By a number of new half Joannes’s brought to the mint for assaying, said to have been coined in the United States, it appears that a coinage for that purpose is carried on in some State in the Union. some of these are found to be under standard in their quality, and between two and three pennyweights less than their true weight. These are facts which the Director thinks it his duty to communicate to the President.
From the various experiments made since the establishment of the mint, it is found unnecessary to make use of Silver in alloying of Gold, unless it is for the purpose of beautifying the coin, in which case it should be composed at the proportion of one third silver, to two thirds copper.
By the following abstracts of the Bullion and Coin received and issued from the mint since its first establishment, may be seen, as well the nature of the deposits made, as the coins returned to the Treasury, and the dates of the receipts and issues to this day, with the amount of the copper coinage.
From this it appears that there is due for wastage, during that period, the quantity of fifteen hundred and ninety-nine ounces, sixteen penny weights and fifteen grains of Silver, equal to eighteen hundred and forty five dollars ninety-five cents and five mills. Besides a deficit of eight hundred and forty four ounces, seventeen penny weights and five grains of silver, equal to nine hundred and seventy-four dollars, seventy five cents and five mills—making, in the whole, two thousand eight hundred and twenty dollars and seventy one cents, for which an appropriation ought to be made by Law, to satisfy a deficient deposit.
The Director thinks it necessary to mention, in exculpation of the former officers of the mint, that, by a report made on this subject, it appears that there is yet a considerable quantity of old pots and test bottoms, from which it is expected that nearly the amount of the deficient silver, as stated above, will be extracted.
DNA: RG 46—Records of the U.S. Senate.