Communicated to the House of Representatives, January 28, 1791.
The Secretary of the Treasury having attentively considered the subject referred to him by the order of the House of Representatives, of the fifteenth of April last, relatively to the establishment of a Mint, most respectfully submits the result of his inquiries and reflections.
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A plan for an establishment of this nature, involves a great 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 individuals, are liable to be sensibly influenced, beneficially or otherwise, by the judicious or injudicious regulation of this interesting object.
It is one, likewise, not more necessary than difficult to be rightly adjusted; one which has frequently occupied the reflections and researches of politicians, without having harmonized 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 differ from each other.
But, if a right adjustment of the matter be truly of such nicety and difficulty, a question naturally arises, whether it may not be most advisable to leave things, in this respect, in the state in which they are? Why, 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. The immense disorder which actually reigns in 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 sustained a depreciation of five per cent., and yet the new dollar has a currency, in all payments in place of the old, with scarcely any attention to the difference between them. The operation of this in depreciating the value of property, depending upon past contracts; and, (as far as inattention to the alteration in the coin may be supposed to leave prices stationary) of all other property, 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 of a foreign mint, and to change with the changes in the regulations of a foreign sovereign. This, nevertheless, is the condition of one which, having no coins of its own, adopts with implicit confidence those of 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 in their several moneys of account; are inconveniencies, which, if not to be ascribed to the want of a national coinage, will at least be most effectually remedied by the establishment of one — a measure that will, at the same time, give additional security against impositions by counterfeit as well as by base currencies.
It was with great reason, therefore, that 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 subject has been resumed, now that the favorable change which has taken place in the situation 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 right judgment of what ought to be done, the following particulars require to be discussed:
1st. What ought to be the nature of the money unit of the United States?
2d. What the proportion between gold and silver, if coins of both metals are to be established?
3d. What the proportion and composition of alloy in each kind?
4th. Whether the expense of coinage shall be defrayed by the Government, or out of the material itself?
5th. What shall be the number, denominations, sizes, and devices of the coins?
6th. Whether foreign coins shall be permitted to be current or not; if the former, at what rate, and for what period?
A pre-requisite to determining with propriety, what ought to be the money unit of the United States, is to endeavor to form as accurate an idea as the nature of the case will admit, of what it actually, 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 is to be considered as the unit in the coins. There being no formal regulation on the point, (the resolutions of Congress of the 6th July, 1785, and 8th of August, 1786; having never yet been carried into operation) it can only be inferred from usage or practice. The manner of adjusting foreign exchanges, would' seem to indicate the dollar as best entitled to that character. In these, the old piaster of Spain, or old Seville piece of eight reals, of the value of four shillings and six-pence sterling, is evidently contemplated. The computed par between Great Britain and Pennsylvania, will serve as an example. According to that, one hundred pounds sterling is equal to one hundred and sixty-six pounds and two-thirds of a pound, Pennsylvania currency; which corresponds with the proportion between 4s. 6d. sterling, and 7s. 6>d. the current value of the dollar in that State, by invariable usage. And, as far as the information of the Secretary goes, the same comparison holds in the other States.
But this circumstance in favor of the dollar, loses much of its weight from two considerations. That species of coin has never had any settled or 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 weight, and with an eye to its fineness. This greater stability of value of the gold coins is an argument of force for regarding the money unit as having been hitherto virtually attached to gold, rather than to silver.
Twenty-four grains and six-eighths of a grain of fine gold have corresponded with the nominal value of the dollar in the several States, without regard to the successive diminution of its intrinsic worth.
But, if the dollar should, notwithstanding, be supposed to have the best title to being considered as the present unit in the coins, it would remain to determine what kind of dollar ought to be understood; or, in other words, what precise quantity of fine silver.
The old piaster of Spain, which appears to have regulated our foreign exchanges, weighed 17 dwt.12 grains, and contained 386 grains and 15 mites of fine silver. But this piece has been long since out of circulation. The dollars now in common currency, are of recent date, and much inferior to that, both in weight and fineness. The average weight of them, upon different trials, in large masses, has been found to be 17 dwt. 8 grains. Their fineness is less precisely ascertained; the results of various assays, made by different persons, under the direction of the late Superintendent of the Finances, and of the Secretary, being as various as the assays themselves. The difference between their extremes is not less than 24 grains in a dollar of the same weight and age; which is too much for any probable differences in the pieces. It is rather to be presumed that a degree of inaccuracy has been occasioned by the want of proper apparatus, and, in general, of practice. Tie experiment which appears to have the best pretensions to exactness would make the new dollar to contain 370 grains and 933 thousandth parts of a grain of pure silver.
According to an authority 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; 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 this standard has been since altered considerably for the worse: to what precise point, is not as well ascertained as could be wished; but, from a computation of the value of dollars in the markets both of Amsterdam and London, (a criterion which cannot materially mislead) the new dollar appears to contain about 368 grains of fine silver, and that which immediately preceded it about 374 grains.
In this state of things, there is some difficulty in defining the dollar which is to be understood as constituting the present money unit, on tie supposition of its being most applicable to that species of coin. The old Seville piece of 386 grains and 15 mites fine, comports best with the computations of foreign exchanges, and with the more ancient contracts respecting landed property; but far the greater number of contracts still in operation concerning that kind of property, and all those of a merely personal nature, now in force, 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 intended; 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 respect to opinion. The actual dollar in common circulation, has evidently a much better claim to be regarded as the actual money unit.
The mean intrinsic value of the different kinds of known dollars, has been intimated as affording the proper criterion. But, when it is recollected that the more ancient and more valuable ones are not now to be met with at all in circulation, and that the mass of those generally current, is composed of the newest and most inferior kinds, it will be perceived that even an equation of that nature, 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 designed to be introduced.
An additional reason for considering the prevailing dollar as the standard of the present money unit, rather than the ancient one, is, that it will not only be conformable to the true existing proportion between the two metals in this country, but will be more conformable to that which obtains in 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. 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, exceeds 1 to 15; and the average proportion throughout Europe, is probably not more than about one to 144/5. But that statement has proceeded upon the idea of the ancient dollar. One pennyweight of gold of twenty-two carats fine, at 6s. 8d., and the old Seville piece of 386 grains and 15 mites of pure silver, at 7s. 6d., furnish the exact ratio of 1 to 15.6262. But this does not coincide with the real difference between the metals in our market, or, which in with us the same thing, in our currency. To determine this, the quantity of fine silver in the general mass of the dollars now in circulation, must afford the rule. Taking the rate of the late dollar of 374 grains, the proportion would be as 1 to 15.11. Taking the rate of the newest dollar, the proportion would then be as 1 to 14.87. The mean of the two would give the proportion of 1 to 15 very nearly; less than the legal proportion in the coins of Great Britain, which is as 1 to 15.2, but somewhat more than the actual or market proportion, which is not quite 1 to 15.
The preceding view of the subject does not indeed afford a precise or certain definition of the present unit in the coins, but it furnishes data which will serve as guides in the progress of the investigation. It ascertains, at least, that the sum 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 something between 368 and 374 grains of fine silver.
The next inquiry towards a right determination of what ought to be the future money unit of the United States, turns upon these questions: Whether it ought to be peculiarly attached to either of the metals, in preference to the other, or not; and, if to either, to which of them?
The suggestions and proceedings, hitherto, have had for object, the annexing of it emphatically to the silver dollar. A resolution of Congress, of the 6th of July, 1785, declares that the money unit of the United States shall be a dollar; and another resolution of the 8th of August 1786, fixes that dollar at 375 grains and 64 hundredths of a grain of fine silver. The same 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 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 the other. Yet it would seem that a preference in this particular is necessary to execute the idea of attaching the unit exclusively to one kind. If each of them be as valid as 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 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 rather matter of form than of substance.
Contrary to the ideas which have heretofore prevailed, in the suggestions concerning a coinage for the United States, though not without much hesitation, arising from a deference for those ideas, the Secretary is, upon the whole, strongly inclined to the opinion, that a preference ought to be given to neither of the metals, for the money unit. Perhaps, if either were to be preferred, it ought to be gold rather than silver.
The reasons are these:
The inducement to such a preference is to render the unit as little variable as possible; because on this depends the steady value of all contracts, and, in a certain sense, of all other property. And, it is truly observed, that if the unit belong indiscriminately to both the metals, it is subject to all the fluctuations that happen in the relative value which they bear to each other. But the same reason would lead to annexing it to that particular one, which is itself the least liable to variation, if there be, in this respect, any discernible difference between the two.
Gold may, perhaps, in certain senses, be said to have greater stability than silver: as, being of superior value, less liberties have been taken with it, in the regulations of different countries. Its standard has remained more uniform, and it has, in other respects, undergone fewer changes: as, being not so much an article of merchandise, owing to the use made of 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 affirmed, that there is a physical probability of greater proportional increase in tie quantity of silver than in that of gold, it would afford an additional reason for calculating on greater steadiness 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, retains so considerable a pre-eminence in value over silver, as it has hitherto had, a natural consequence of this seems to be that its condition will be more stationary. The revolutions, therefore, which may take place in the comparative value of gold and silver, will be changes in the state of the latter, rather than in that of the former.
If there should be an appearance of too much abstraction in any of these ideas, it may be remarked, that the first and most simple impressions do not naturally incline to giving a preference to the interior 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 desirable, rather as an auxiliary to, than as a substitute for that of the precious metals, and ought to be left to its natural course. Artificial expedients to extend it, by opposing obstacles to the other, 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. 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 bank paper, whenever it can be made to answer the purpose equally well.
But, upon the whole, it seems to be most advisable, as has been observed, 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 a mere merchandise; which, accordingly, at different times, has been proposed from different and very respectable quarters; but which would, probably, be a greater evil than occasional variations in the unit, from the fluctuations in the relative value of the metals; especially, if care be taken to regulate the proportion between them, with an eye to their average commercial value.
To annul the use of either of the metals, as money, is to abridge the quantity of circulating medium, and is liable to all the objections which arise from a comparison of the benefits of a full, with the evils of a scanty circulation.
It is not a satisfactory answer to say, that none but the favored metal would, in this case, find its way into the country, as in that all balances must be paid. The practicability of this would, in some measure, depend on the abundance or scarcity of it in the country paying. Where there was but little, it either would not be procurable at all, 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 balances, 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 them be deemed, in other respects, favorable to commerce. It is often, in the course of trade, as desirable to possess the kind of money, as the kind of commodities best adapted to a foreign market.
It seems however, most probable, that the chief, if not the sole effect of such a regulation, would be to diminish the utility of one of the metals. It could hardly prove an obstacle to the introduction of that which was excluded in the natural course of trade; because it would always command a ready sale, for the purpose of exportation to foreign markets. But such an effect, if the only one, is not to be regarded as a trivial inconvenience.
If, then, the unit ought not to be attached exclusively to either of the metals, the proportion which ought to subsist between them, in the coins, becomes a preliminary inquiry, in order to its proper adjustment. 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 gold to silver is as 1 to 16, in the other as 1 to 15, gold being worth more, silver less, in one 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, where it is valued most. Besides this, the dealers in money will, 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, 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 inferred. Facts, too, verify the inference: In Spain and 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 rated higher, in proportion to gold, than in the neighboring nations. And it is continually flowing from Europe to China and the East Indies, owing to the comparative 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 willing to invite it, even by a higher price. But 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.
But it is to be suspected, that there is another consequence more serious than the one which has been mentioned. This is the diminution of the total quantity of specie which a country would naturally possess.
It is evident that, as often as a country, which overrates either of the metals, receives a payment in that metal, it gets a less actual quantity than it ought to do, or than it would, do, if the rate were a just one.
It is also equally evident, that there will be a continual effort to make payment to it in that species, to which it has annexed an exaggerated estimation, 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, than 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 analyzed, 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 formerly a greater quantity of gold in proportion to silver in the United States, than there has been; because the actual value of gold in this country, compared with silver, was perhaps higher than in any other. But, our situation with regard to the West Indian 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, than might have been expected from its relative value.
What influence the proportion under consideration may have upon the state of prices, and how far this may counteract its tendency to increase or lessen the quantity of the metals, are points not easy to be developed; 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 and more frequent disturbance of the state of the money unit, by a greater and more frequent diversity between the legal and market proportions of the metals. This has not hitherto been experienced in the United States, but it has been experienced elsewhere; and from its not having been felt by us hitherto, it does not follow that this will not be the case hereafter, when our commerce shall have attained a maturity which will place it under the influence of more fixed principles.
In establishing a proportion between the metals, there seems too be an option of one of two things—
To approach, as nearly as it can be ascertained, the mean or average proportion, in what may be called the commercial world; or,
To retain that which now exists in the United States. As far as these happen to coincide, they will render the course to be pursued more plain and more certain.
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 1717, 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 144/5 or 15 to 1.”
But however accurate and decisive this authority may be deemed, in relation to the period to which it applies, it cannot be taken, at the distance of more than seventy years, as a rule for determining„ the existing proportion. Alterations have been since made, in the regulations of their coins, by several nations; which, as well as the course of trade, have an influence upon the market values. Nevertheless, there is reason to believe, that the state of the matter, as represented by Sir Isaac Newton, is not very remote from its actual 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 beep seen that the existing proportion between the two metals, in this country, is about as 1 to 15.
It is fortunate, in this respect, that the innovations of the Spanish mint have imperceptibly introduced a proportion so analogous as this is, to that which prevails among the principal commercial nations; as it greatly facilitates a proper regulation of the matter.
This proportion of 1 to 15 is recommended by the particular situation of our trade, as being very nearly that which obtains in the market of Great Britain, to which nation our specie is principally exported. A lower rate for either of the metals, in our market, than in hers, might not only afford a motive the more, in certain cases, to remit in specie rather than in commodities; but it might, in some others, cause us to pay a greater quantity of it for a given sum, than we should otherwise do. If the effect should rather be to occasion a premium to be given for the metal which was under-rated, this would obviate those disadvantages, but it would involve another — a customary difference between the market and legal proportions, which would amount to a species of disorder in the national coinage.
Looking forward to the payments of interest hereafter to be made to Holland the same proportion does not appear ineligible. The present legal proportion in the coins of Holland is stated to be 1 to 149/10. That of the market varies somewhat, at different times but seldom very widely from this point.
There can hardly be a better rule in any country, for the legal, than the market proportion, if this can be supposed to have been produced by the free and steady course 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.
But it must be admitted, that this argument, in favor of continuing the existing proportion, is not applicable to the state of the coins with us. There have been too many artificial and heterogeneous ingredients, too much want of order in the pecuniary transactions of this country, to authorize the attributing the effects which have appeared to the regular operations of commerce. A proof of this is to be drawn from the alterations which have happened in the proportion between the metals merely by the successive degradations of the dollar, in consequence of the mutability of a foreign mint. The value of gold to silver appears to have declined wholly from this-cause, from 156/10 to about 15 to 1. Yet, as this last proportion, however produced, coincides so nearly with what may be deemed the commercial average, it may be supposed to furnish as good a rule as can be pursued.
The only question seems to be, whether the value of gold ought not to be a little lowered to bring it to a more exact level with the two markets which have been mentioned. But as the ratio of 1 to 15 is so nearly conformable to the state of those markets, and best agrees with that of our own, it will probably be found the most eligible. If the market of Spain continues to give a higher value to gold (as it has done in time past) than that which is recommended, there may be some advantage in a middle station.
A further preliminary to the adjustment of the future money unit, is, to determine what shall be the proportion and composition of alloy in each species of the coins.
The first, by the resolution of the 8th of August, 1786, before referred to, is regulated at one-twelfth, or in other words; at I part alloy to 11 parts fine, whether gold or silver; which appears to be a convenient rule; unless there should be some collateral consideration which may dictate a departure from it. Its correspondency, in regard to both metals, is a recommendation of it, because a difference could answer no purpose of pecuniary or commercial utility, and uniformity is favorable to order.
This ratio, as it regards gold, coincides with the proportion, real or professed, in the coins of Portugal, England, France, and Spain. In those of the two former, it is real. In those of the two latter, there is a 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 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 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, for real and unavoidable errors and imperfections; whereas, in the practice of the mints of France and Spain, it appears to amount to a stated and regular deviation from the nominal standard. Accordingly, the real standards of France and Spain are something worse than 22 carats, or 11 parts in 12 fine.
The principal gold coins in Germany, Holland, Sweden, Denmark, Poland, and Italy, are finer than those of England and Portugal, in different degrees, from 1 carat and a 1/4, to 1 carat and 7/8, which last is within 1/8 of a carat of pure gold.
There are similar diversities in the standards of the silver coins of the different countries of Europe. That of Great Britain is 222 parts fine, to 18 alloy; those of the other European nations vary from that of Great Britain as widely as from about 17 of the same parts better, to 75 worse.
The principal reasons assigned for the use of alloy, are the saving of expense in the refining of the metals, (which in their natural state are usually mixed with a portion of the coarser kinds) and the rendering of them harder as a security against too great waste by friction or wearing. The first reason, drawn from the original composition of the metals, is strengthened at present by the practice of alloying their coins, which has obtained among so many nations. The reality of the effect to which the last reason is 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 favor of alloy. In the mean time, the saving of trouble and expense are sufficient inducements to following those examples which suppose its expediency. And the same considerations lead to taking as our models those nations with whom we have most intercourse, and whose coins are most prevalent in our circulation. These are Spain, Portugal, England, and France. The relation which the proposed proportion bears to their gold coins has been explained. In respect to their silver coins, it will not be very remote from the mean of their several standards.
The component ingredients of the alloy in each metal will also require to be regulated. 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 equal parts; in the coins of some other countries, varying from 1/3 to 2/3 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 too much redness, or rather a coppery hue, which a small quantity will produce; and the copper prevents the too great whiteness which silver alone would confer. It is apprehended, that there are considerations which may render it prudent to establish, by law, that the proportion of silver to copper, in the gold coins of the United States, shall not be more than 1/2, nor less than 2/3; 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 pre-requisite to the determination of the money unit, which is, whether the expense of coining shall he defrayed by the public, or 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? This forms, perhaps, one of the nicest questions in the doctrine of money.
The practice of different nations is dissimilar in this particular. In England, coinage is said to be entirely free: the mint price of the metals in bullion, being the same with the value of them in coin. In France, there is a duty, which has been, if it is not now, eight per cent. In Holland, there is a difference between the mint price and the value in the coins, which has been computed at .96, or something less than one per cent. upon gold; at 1.48, or something less than one and a half per cent. upon silver. The resolution of the 8th of August, 1786, proceeds upon the idea of a deduction of half per cent. from gold, and of two per cent. from silver, as an indemnification for the expense of coining. This is inferred from a report of the late Board of Treasury, upon which that resolution appears to have been founded.
Upon the supposition that the expense of coinage ought to be defrayed out of the metals, there are two ways in which it may he effected: one by a reduction of the quantity of fine gold and silver in the coins, the other by establishing a difference between the value of those metals in the coins, and the mint price of them in bullion.
The first method appears to the Secretary inadmissible. He is unable to distinguish an operation of this sort, from that of raising the denomination of the coin — a measure which has been disapproved by the wisest men of the nations in which it has been practised, 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. The consequence of either of them, if the change can be realized, is to degrade the money unit; obliging creditors to receive less than their just dues, and 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 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, it is remarked, is worth intrinsically the price of the raw material and the expense 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 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 heretofore, without disturbing the balance 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 isolated, and cut off from all intercourse with the rest of mankind, this reasoning would not be equally conclusive. But it appears decisive, when considered with a view to the relations which commerce has created between us and other countries.
It is, however, not improbable, that the effect meditated would be defeated by a rise of prices 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; in none, has authority so little resource for substituting names for things.
A general revolution in prices, though only nominally, and in appearance, could not fail to distract the ideas of the community, and would be apt to breed discontents as well among all those who live on the income of their money, as among the poorer classes of the people, to whom the necessaries of life would seem to have become dearer. In the confusion of such a state of things, ideas of value would not improbably adhere to the old coins, which, from that circumstance, instead of feeling the effect of the loss of their privilege as money, would, perhaps, bear a price in the market, relatively to the new ones, in exact proportion to weight. The frequency of the demand for the metals to pay foreign balances, 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 wound; the effective revenues of the Government would be diminished. There is scarcely any point, in the economy of national affairs, of greater moment than the uniform preservation of the intrinsic value of the money unit. On this, the security and steady value of property essentially depend.
The second method, therefore, of defraying the expense of the coinage out of the metals, is greatly to be preferred to the other. This is to let the same sum of money continue to represent in the new coins exactly the same quantity of gold and silver as it does in those now current — to allow at the mint such a price only for those metals as will admit of profit just sufficient to satisfy the expense of coinage; to abolish the legal currency of the foreign coins, both in public and private payments; and, of course, to leave the superior utility of the 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 still be represented by the same quantity of gold and silver as formerly; and the only change which will be wrought, will consist in annexing the office of money exclusively to the national coins; consequently, withdrawing it from those of foreign countries, and suffering them to become, as they ought to be, mere articles of merchandise.
The arguments in favor of a regulation of this kind are, first: That the want of it is a cause of extra expense; 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 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; in which state of things, the melting down of the coins to be sold as bullion is attended with profit; and from both causes, the expense of the mint, or, in other words, the expense of maintaining the specie capital of the nation, is materially augmented.
Secondly. That the existence of such a regulation promotes a favorable course of exchange, and benefits trade, not only by 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 expense 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 at the period immediately preceding the late reformation in the gold coin of the country just named. A pound troy in gold bullion, of standard fineness, was then from 19s. 6d. to 25s. sterling dearer than an equal weight of guineas, as delivered at the mint. The phenomenon is thus accounted for: The 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 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 depreciated below the intrinsic value, in comparison with bullion. It became of course a profitable traffic to sell bullion for coin, to select the light pieces, and re-issue 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 the renewal of the coins.
But the remainder of the argument stands upon ground far more questionable. 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 shown 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 difference materially exceeded the charges of remitting bullion from the country where it existed, to another in which coinage was free, exchange would be in favor of the former.
If, for instance, the balance of trade between France and England were at any time equal, their merchants would naturally have reciprocal payments to make to an equal amount, which, as usual, would be liquidated by 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, eight 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 at par, it is evident that a profit of six per cent. might be made, by sending bullion from France to England, and drawing bills for the amount. One hundred louis d’ors in coin, would purchase the weight of one hundred and eight in bullion; one hundred of which, 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 six for the benefit of the person who should manage the negotiation. But as so large a profit could not fail to produce competition; the bills, in consequence of this, would decrease in price, till the profit was reduced to the minimum of an adequate recompense for the trouble and risk. And, as the amount of one hundred louis d’ors in England, might be afforded for ninety-six in France, with a profit of more than one and a half per cent., bills upon England might fall, in France, to four per cent. below par; one per cent. being a sufficient profit to the exchanger or broker for the management of the business.
But it is admitted that this advantage is lost, when the balance of trade is against the nation which imposes the duty in question; because, by increasing the demand for bullion, it brings this to a par with the coins; and it is to be suspected, that where commercial principles have their free scope, and are well understood, the market difference between the metals in coin and bullion, will seldom approximate to that of the mint, if the latter be considerable. It must be not a little difficult to keep the money of the world, which can be employed to an equal purpose in the commerce of the world, in a state of degradation, in comparison with the money of a particular country.
This alone would seem sufficient to prevent it: Whenever the 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 other way, in foreign countries, where it 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, as it would naturally have this effect, the 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, which is as long as exchange could remain below par, there would be a drain of the gold and silver of the country.
It' any thing can maintain, for a length of time, a material difference between the value of the metals in coin and in bullion, it must be a constant and considerable balance of trade in favor 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 and silver, to pay balances 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 hardly be beneficial but in a situation like that of the United Netherlands, where an immense capital, and a decrease of internal demand, render it necessary to find employment for money 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 — 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; upon all which exchanges, France must sustain an actual loss of a part of its gold and silver.
Again, such a difference between coin and bullion may tend to counteract a favorable balance of trade. Whenever a foreign merchant is the carrier of his own commodities to France for sale, he has a strong inducement to 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 suppossed 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 realize a given sum, with most advantage, where I wish to place it? And, in cases in which other commodities are not likely to produce equal profit with bullion, it may be expected that this will be preferred; to which the greater certainty 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 upon the articles themselves, to export from a country its gold and silver, rather than the products of its land and labor.
The other advantages supposed, of obliging foreigners to pay dearer for domestic commodities, and to sell their own cheaper, are applied to a situation which includes a favorable balance of trade. It is understood in this sense — the prices of domestic commodities, (such, at least, as are peculiar to the country) remain attached to the denominations of the coins. When a favorable balance of trade 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 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. In this reasoning, much fallacy is to be suspected. 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, 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 merchandise as formerly, can convert it into a greater quantity of bullion. Whence the nation is liable to lose more of its gold and silver than if their intrinsic value in relation to the coins were preserved. And whether the gain or the loss will, on the whole, preponderate, would appear to depend on the comparative proportion of active commerce of the one country with the other.
It is evident, also, that the nation must pay as much gold and silver as before, for the commodities which it procures abroad; and whether it obtains this gold and silver cheaper or not, turns upon the solution of the question just intimated, respecting the relative proportion of active commerce between the two countries.
Besides these considerations, it is admitted in the reasoning, that the advantages supposed, which depend on a favorable balance of trade, have a tendency to affect that balance disadvantageously. 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 transfer trade from a less to a more favorable channel, than, when once transferred, to bring it back to 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 France, does not attribute to the duty of coinage in that country, any particular advantages in relation to exchange and trade. Though he rather appears an advocate for it, it is on the sole ground of the revenue it affords, which he represents as in the nature of a very moderate duty on the general mass of exportation.
And it is nut improbable that, to the singular felicity of situation of that kingdom, is to be attributed 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 mature improvement, it possesses within its own bosom, most, if not all, the productions of the earth, which any of its most favored neighbors can boast. The variety, abundance, and excellence of its wines, constitute a peculiar advantage in its favor. Arts and manufactures are there also in a very advanced state; some of them, of considerable importance, in higher perfection than elsewhere. Its contiguity to Spain; the intimate nature of its connexion with that country — a country with few fabrics of its own, consequently numerous wants, and the principal receptacle of the treasures of the new world: these circumstances concur, in securing to France so uniform and so considerable a balance 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 found it necessary, 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 diversity of opinion among speculative men concerning it, and a diversity in the practice of the most considerable commercial nations, but because the acts of our own Government, under the confederation, have not only admitted the expediency of defraying the expense of coinage out of the metals themselves, but upon this idea have both made a deduction from the weight of the coins, and established a difference between their regulated value and the mint price of bullion, greater than would result from that deduction. This double operation in favor of a principle so questionable in itself, has made a more particular investigation of it a duty.
The intention, however, of the preceding remarks, is rather to show that the expectation of commercial advantages ought not to decide in favor of a duty of coinage, and that, if it should be adopted, it ought not be in the form of a deduction from the intrinsic value of the coins, than absolutely to exclude the idea of any difference whatever, between 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 advisable, in the first instance, by way of experiment, merely as a preventive to the melting down and exportation of the coins. This will, now, be somewhat more particularly considered.
arguments for a coinage entirely free, are, that it preserves the intrinsic value of the metals; that it makes the expense of fabrication a general instead of partial tax; and that it tends to promote the abundance of gold and silver, which, it is alleged, will flow to that place where they find the best 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 diminishing the quantity of metals in the coins, merely allows a less price for them in bullion at the national factory or mint. No rule of intrinsic value is violated, by considering the raw material as worth less than the fabric in proportion to the expense of fabrication. And by divesting foreign coins of the privilege of circulating as money, they become the raw material.
The second consideration has perhaps greater weight. But it may not amount to an objection, if it be the best method of preventing disorders in the coins, which it is, in a particular manner, the interest of those, on whom the tax would fall, to prevent. 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 that account, 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 payment for the bullion which is brought to be exchanged for coin, till it either has in fact, or is pretended to have undergone the process of recoining.
The necessity of fulfilling prior engagements, is a cause or pretext for postponing the delivery of the coin in lieu of the bullion. And this delay creates a difference in the market price of the two things. Accordingly, for some years past, an ounce of standard gold, which is worth in coin £3 17s. 101/2d. sterling, has been in the market of London, in bullion, only £3 17s. 6d. which is within a small fraction of one 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 to a formal difference of price, or whether it be the natural course of the business, is open to 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 would save expense in the coinage of gold; since it is not probable that the time actually lost in the course of the year, in converting bullion into coin, can be an equivalent to half per cent. on the advance, and there will generally be at the command of the treasury a considerable sum of money waiting for some periodical disbursement, which, without hazard, might be applied to that advance.
In what sense a free coinage can be said to promote the abundance 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 of value between coin and bullion can have any effect which ought to enter into calculation. There can be no inducement of positive profit, to export the bullion, as long as the difference of price is exceeded by the expense of transportation. And the prospect of smaller loss upon the metals than upon commodities, when the difference is very minute, will be frequently overbalanced 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 superiority of coin to bullion in the market, be produced, as in England, by the delay of the mint, or by a formal discrimination in the regulated 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 the melting down, or exportation of the former, and not perceiving that, if it be a very moderate one, it can be hurtful in other respects, the Secretary is inclined to an experiment of one half 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 immediate payment for the gold and silver offered to the mint. How far one half per cent. will go towards defraying the expense of the coinage, cannot be determined beforehand with accuracy. It is presumed that, on an economical plan, it will suffice in relation to gold. But it is not expected that the same rate on silver will be sufficient to defray the expense attending that metal. Some additional provision may, therefore, be found necessary, if this limit be adopted.
It does not seen to be advisable to make any greater difference in regard to silver than to gold; because it is desirable 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 in respect to gold, somewhat below its general commercial value, if there should be a disparity to its disadvantage in the mint prices of the two metals, it would obstruct too much the bringing of it to be coined, and would add an inducement 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, 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 to prevent the evils desired to be avoided, to incorporate in the coins a greater proportion 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 — an augmentation of expense; an actual depreciation of the coin; a danger of still greater depreciation in the public opinion; the facilitating of counterfeits; while it is questionable whether it would have the effect expected from it.
The alloy being esteemed of no value, an increase of it is evidently an increase of expense. This, in relation to the gold coins, particularly, is a matter of moment. It has been noted, that the alloy in them consists partly of silver. If, to avoid expense, the addition should be of copper only, this would spoil the appearance of the coin, and give it a base countenance. Its beauty would indeed be injured, though in a less degree, even if the usual proportions of silver and copper should be maintained in the increased quantity of alloy.
And, however inconsiderable an additional expenditure of copper in the coinage of a year may be deemed, 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 expense 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 or refining. In England, it is customary for 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 below the legal standard. Taking this as a rule, an inferiority of a single carat, or one twenty-fourth part in the gold coins of the United States, compared with the English standard, would cause the same quantity of pure gold in them to be worth nearly four-tenths 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 United States.
A still greater depreciation, in the public opinion, would be to be apprehended from the apparent debasement of the coin. 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 worst 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 counterfeits, is also to be apprehended from the injury which will be done to the appearance of the coin. It is a just observation, that “the perfection of the coins is a great safeguard against counterfeits.” And it is evident that the color, as well as the excellence of the workmanship, is an ingredient in that perfection. The intermixture of too much alloy, particularly of copper, in the gold coins at least, must materially lessen the facility of distinguishing, by the eye, the purer from the baser kind — the genuine from the counterfeit
The inefficacy of the arrangement to the purpose intended to be answered by it, is rendered probable by different considerations. If the standard of plate in the United 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 find them prepared to his hand, in the state which he desires; whereas he would have to 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 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 which seem incident to it, it would appear preferable to submit to those of a free coinage. It is observable, that additional expense, which is one of the principal of these, is also applicable to the proposed remedy.
It is now proper to resume and finish the answer to the first question, in order to which the three succeeding ones have necessarily been anticipated. The conclusion to be drawn from the observations which have been made on the subject, is this: That the unit, in the coins of the United States, ought to correspond with 24 grains and 3/4 of a grain of pure gold, and with 371 grains and 1/4 of a grain of pure silver, each 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 two last emissions of dollars — the only ones which are now found in common circulation, and of which the newest is in the greatest abundance. The alloy in each case to be one-twelfth of the total weight, which will make the unit 27 grains of standard gold, and 405 grains of standard silver.
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 track marked out by the resolution of the 8th August, 1786. This has been approved abroad, as well as at home, and it is certain that nothing can be more simple and convenient than the decimal sub-divisions. There is every reason to expect that the method will speedily grow into general use, when it shall 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, dimes, cents, and mills, or tenths, hundredths, and thousandths.
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 can be reconciled to each other, it is desirable to do it. Numerous and small (if not too minute) sub-divisions assist circulation; but the multiplication of the smaller kinds increases expense; the same process being necessary to a small as to a large piece.
As it is easy to add, it will be most advisable to begin with a small number, till experience shall decide whether any other kinds are necessary. The following, it is conceived, will be sufficient in the commencement:
One gold piece, equal in weight and value to ten units, or dollars.
One gold piece, equal to a tenth part of the former, and which shall be a unit or dollar.
One silver piece, which shall also be a unit or dollar.
One silver piece, which shall be, in weight and value, a tenth part of the silver unit or dollar.
One copper piece, which shall be of the value of a hundredth part of a dollar.
One other copper piece, which shall be half the value of the former.
It is not proposed that the lightest piece of the two gold coins should be numerous, as, in large payments, the larger the pieces, the shorter the process of counting, the less 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 from an entire dependence on the silver and copper coins. The chief inducement to the establishment of the small gold piece, is to have a sensible object in that metal, as well as in silver, to express the unit. Fifty thousand at a time in circulation, may suffice for this purpose.
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 uses of circulation. It is less than the least of the silver coins now in general currency in England.
The largest copper piece will nearly answer to the halfpenny sterling, and the smallest, of course, to the farthing. Pieces of very small value, are a great accommodation, and the means of a beneficial economy to the poor, by enabling them to purchase, in small portions, and at a more reasonable rate, the necessaries of which they stand in need. If there are only cents, the lowest price for any portion of a vendible commodity, however inconsiderable in quantity, will 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 labor for less; the advantages of which need no comment.
The denominations of the silver coins contained in the resolution of the 8th of August, 1786, are conceived to be significant and proper. The dollar is recommended by its correspondency with the present coin of that name for which it is designed to be a substitute, which will facilitate its ready adoption as such, in the minds of the citizens. The dime, or tenth; the cent, or hundredth; the mill, or thousandth, are proper, because they express the proportions which they are intended to designate. It is only to be regretted, that the meaning of these terms will not be familiar to those who are not acquainted with the language from which they are borrowed. It were to be wished that the length, and, in some degree, the clumsiness of some of the corresponding terms in English, did not discourage from preferring them. It is useful to have names which signify the things to which they belong; and, in respect to objects of genera use, in a manner intelligible to all. Perhaps it might be an improvement to let the dollar have the appellation either of dollar, or unit, (which last will be the most significant) and to substitute “tenth” for dime. In time, the unit may succeed to the dollar. The word cent, being in use in various transactions and instruments, will, without much difficulty, be understood as the hundredth, and the half cent, of course, as the two-hundredth part.
The eagle is not a very expressive or apt appellation for the largest gold piece, but nothing better occurs. The smallest of the two gold coins, may be called the dollar, or unit, in common with the silver piece with which it coincides.
The volume or size of each piece, is a matter of more consequence than its denomination. It is evident, that the more superficies, or surface, the more the piece will be liable to be injured by friction, or, in other words, the faster it will wear. For this reason, it is desirable to render the thickness as great, in proportion to the breadth, as may consist with neatness and good appearance. Hence, the form of the double guinea, or double louis d’or, is preferable to that of the half johannes, for the large gold piece. The small one cannot well be of any other size than the Portuguese piece of eight, of the same metal.
As it is of consequence to fortify the idea of the identity of the dollar, it may be best to let the form and size of the new one, as far as the quantity of matter (the alloy being less) permits, agree with the form and size of the present. The diameter may be the same.
The tenths may be in a mean between the Spanish 1/8 and 1/16 of a dollar.
The copper coins may be formed, merely with a view to good appearance, as, any difference in the wearing that can result from difference of form, can be of little consequence in reference to that metal.
It is conceived that the weight of the cent may be eleven pennyweight, which will about correspond with the value of the copper, and the expense of coinage. This will be to conform to the rule of intrinsic value, as far as regard to the convenient size of the coins will permit; and the deduction of the expense of coinage in this case, will be the more proper, as the copper coins, which have been current hitherto, have passed, till lately, for much more than their intrinsic value. Taking the weight, as has been suggested, the size of the cent may be nearly that of the piece herewith transmitted, which weighs 10dwt. 11grs. 10m. Two-thirds of the diameter of the cent will suffice for the diameter of the half cent.
It may, perhaps, be thought expedient, according to general practice, to make the copper coinage an object of profit, but, where this is done to any considerable extent, it is hardly possible to have effectual security against counterfeits. This consideration, concurring with the soundness of the principle of preserving the intrinsic value of the money of a country, seems to outweigh the consideration of profit.
The foregoing suggestions respecting the sizes of the several coins, are made on the supposition that the Legislature may think fit to regulate this matter. Perhaps, however, it may be judged not unadvisable to leave it to Executive discretion. '
With regard to the proposed size of the cent, it is to be confessed, that it is rather greater than might be wished, if it could, with propriety and safety, be made less; and should the value of copper continue to decline, as it has done for some time past, it is very questionable whether it will long remain alone a fit metal for money. This has led to a consideration of the expediency of uniting a small proportion of silver with the copper, in order to be able to lessen the bulk of the inferior coins. For this, there are precedents in several parts of Europe. In France, the composition which is called billon, has consisted of one part silver and four parts copper; according to which proportion, a cent might contain seventeen grains, defraying out of the material the expense of coinage. The conveniency of size is a recommendation of such a species of coin, but the Secretary is deterred from proposing it, by the apprehension of counterfeits. The effect of so small a quantity of silver, in, comparatively, so large a quantity of copper, could easily be imitated, by a mixture of other metals of little value, and the temptation to doing it would not be inconsiderable.
The devices of the coins are far from being matters of indifference, as they may be made the vehicles 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 head, to confine himself to these concise and general remarks.
The last point to be discussed, respects the currency of foreign coins.
The abolition of this, in proper season, is a necessary part of the system contemplated for the national coinage. But this it will be expedient to defer, till some considerable progress has been made in preparing substitutes 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 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 still be permitted to be current for one year more, at the rates allowed to be given for them at the mint; after the expiration of which, the circulation of all foreign coins to cease.
The moneys which will be paid into the treasury during the first year, being re-coined, before they are issued anew, will afford a partial substitute, before any interruption is given to the pre-existing supplies of circulation. The revenues of the succeeding year, and the coins which will be brought to the mint in consequence of the discontinuance of their currency, will materially extend the substitute in the course of that year, and its extension will be so far increased during the third year, by the facility of procuring the remaining species to be re-coined, which will arise from the diminution of their current values, as probably to enable the dispensing wholly with the circulation of the foreign coins, after that period. The progress which the currency of bank bills will be likely to have made, during the same time, will, also, afford a substitute of another kind.
This arrangement, besides avoiding a sudden stagnation of circulation, will cause a considerable proportion of whatever loss may be incident to the establishment in the first instance, to fall, as it ought to do, upon the Government, and will, probably, tend to distribute the remainder of it, more equally, among the community.
It may, nevertheless, be advisable, in addition to the precautions here suggested, to repose a discretionary authority in the President of the United States, to continue the currency of the Spanish dollar, at a value corresponding with the quantity of fine silver contained in it, beyond the period abovementioned, for the cessation of the circulation of the foreign coins. It is possible, that an exception, in favor of this particular species of coin, may be found expedient, and it may tend to obviate inconveniences, if there be a power to make the exception, in a capacity to be exerted, when the period shall arrive.
The Secretary for the Department of State, in his report to the House of Representatives, on the subject of establishing a uniformity in the weights, measures, and coins, of the United States, 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 very small addition to the quantity of metal which the dollar, independently of the object he had in view, ought to contain, in which he was guided by the resolution of the 8th of August, 1786, fixing the dollar at 375 grains and 64 hundredths of a grain.
Taking this as the proper standard of the dollar, a small alteration, for the sake of incorporating so systematic an idea, would appear desirable. But, if the principles which have been reasoned from, in this report, are just, the execution of that idea becomes more difficult. It would, certainly, not be advisable to make, on that account, so considerable a change in the money unit, as would be produced by the addition of five grains of silver to the proper weight of the dollar, without a proportional augmentation of its relative value, and, to make such an augmentation, would be to abandon the advantage of preserving the identity of the dollar, or, to speak more accurately, of having the proposed one received and considered, as a mere substitute for the present.
The end may, however, be obtained, without either of those inconveniences, by increasing the proportion of alloy in the silver coins. But this would destroy the uniformity, in that respect, between the gold and silver coins. It remains, therefore, to elect which of the 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 the same, or nearly the same proportion of alloy, than if they have less.
The organization of the mint yet remains to be considered.'
This relates to the persons to be employed, and to the services which they are respectively to perform. It is conceived that there ought to be:
A director of the mint, to have the general superintendence of the business.
An assay master, or assayer, to receive the metals brought to the mint, ascertain their fineness, and deliver them to be coined.
A master coiner, to conduct the making of the coins.
A cashier, to receive and pay them out.
An auditor, to keep and adjust the accounts of the mint.
Clerks, as many as the director of the mint shall deem necessary, to assist the different officers.
Workmen, as many as may be found requisite.
In several of the European mints, there are various other officers, but the foregoing are those, only, who appear to be indispensable. Persons in the capacity of clerks, will suffice instead of the others, with the advantage of greater economy.
The number of workmen is left indefinite, because, at certain times, it is requisite to have more than at others. They will, however, never be numerous. The expense of the establishment in an ordinary year, will, probably, be from fifteen to twenty thousand dollars.
The remedy for errors in the weight and alloy of the coins, must necessarily form a part in the system of a mint; and the manner of applying it will require to be regulated. The following account is given of the practice in England, in this particular:
A certain number of pieces are taken promiscuously out of every fifteen pounds of gold coined at the mint, which are deposited, for safe keeping, in a strong box, called the pix. This box, from time to time, is opened in the presence of the lord chancellor, the officers of the treasury, and others, and portions are selected from the pieces of each coinage, which are melted together, and the mass assayed by a jury of the company of goldsmiths. If the imperfection and deficiency both in fineness and weight, fall short of a sixth of a carat, or 40 grains of pure gold, upon a pound of standard, the master of the mint is held excusable, because, it is supposed, that no workman can reasonably be answerable for greater exactness. The expediency of some similar regulation seems to be manifest.
All which is humbly submitted.
ALEXANDER HAMILTON, Secretary of the Treasury.
. . . . . . . .
[The following papers were not communicated by Mr. Hamilton:]
First. The value of silver compared with gold;
Second. The weight or size of the several pieces of money that are to be made;
Third. The money arithmetic, or the mode in which it is to be counted; and
Fourth. The charges of coinage; are to be considered.
1. In France, one grain of pure gold is counted worth fifteen grains of silver; in Spain, sixteen grains of silver are exchanged for one of gold; and, in England, fifteen and one-fifth. In both of the kingdoms last mentioned, gold is the prevailing money, because silver is undervalued. In France, silver prevails. Sundry advantages would arise to us from a system by which silver might become the prevailing money. This would operate as a bounty, to draw it from our neighbors, by whom it is not sufficiently esteemed. Silver is not exported so easily as gold, and it is a more useful metal.
Certainly our exchange should not be more than fifteen grains of silver for one of gold. It has been alleged, by the late financier, that we should not give more than fourteen and a half. Perhaps fourteen and three-quarters would be a better medium, considering the quantity of gold that may be expected from Portugal.
2. The weight, size, or value, of the several pieces of money that shall be made, or rather the most convenient value of the money unit, is a question not easily determined, considering that most of the citizens of the United States are accustomed to count in pounds shillings and pence, and that those sums are of different values in the different States — hence they convey no distinct ideas. The money of the United States should be equally fitted to all. The late financier has proposed to make gold and silver pieces of particular weight, and there is a very simple process by which the imaginary money of the several States may be translated into such pieces, or vice versa. He proposes that the money unit be one-quarter of a grain of pure silver; that the smallest coin be of copper, which shall be worth five of those units; the smallest silver coin to be worth one hundred units; another to be worth five hundred; another of one thousand; and thus increasing decimally.
The objections to this plan are, that it introduces a coin unlike in value to any thing now in use; it departs from the national mode of keeping accounts, and tends to preserve inconvenient prejudices; whence it must prevent national uniformity in accounts, a thing greatly to be desired.
Another plan has been offered, which proposes that the money unit be one dollar, and the smallest coin is to be of copper, of which two hundred shall pass for one dollar. This plan also proposes that the several pieces shall increase in a decimal ratio, and that all accounts be kept in decimals, which is certainly by much the most short and simple mode.
In favor of this plan, it is urged, that a dollar, the proposed unit, has long been in general use — its value is familiar. This accords with the national mode of keeping accounts, and may, in time, produce the happy effect of uniformity in counting money throughout the Union.
3. The money arithmetic, though an important question, is one that can admit of little dispute. All accomptants must prefer decimals.
4. What is the best mode of defraying the expense of coinage? Different nations have adopted different systems. The British value their silver, when coined, no higher than bullion; hence it follows, that the, expense of the mint, increasing the civil list, must be paid by a general tax; and tradesmen are disposed to work up the current coin, by which the tax is increased and continued. In some other countries, silver or gold, when coined, are valued above the price of bullion; whence tradesmen are discouraged from melting or working up the current coin, and the mint is rather profitable than burthensome. Certainly there are good and conclusive reasons why we should value the national coin above the price of bullion; but there is a certain point beyond which we may not proceed, lest we encourage counterfeits or private imitations of our coin. It has been proposed to make a difference of two and a half per cent. nearly, as an allowance for the coinage of gold, and of 3.013 per cent. for the coinage of silver. It is probable that three per cent. would more than defray the expense of coining silver; in which case, it would be a temptation to private imitation, and would operate against the free circulation of the money, as being valued too high. It is to be remembered that silver coin ought to be encouraged, and, probably, two per cent. or two and a quarter per cent. would be a proper difference between silver, coined, and bullion. The same difference to be made in the price of gold. If this does not fully pay the expenses of the mint, there will be a much larger gain on the coinage of copper; and, if there should remain a small balance against the mint, its operation will not be unfavorable.
The coinage of copper is a subject that claims our immediate attention. From the small value of the several pieces of copper coin, this medium of exchange has been too much neglected. The more valuable metals are daily giving place to base British half-pence, and no means are used to prevent the fraud. This disease, which is neglected in the beginning, because it appears trifling, may finally prove very destructive to commerce. It is admitted that copper may, at this instant, be purchased in America at one-eighth of a dollar the pound.
British half-pence, made at the tower, are forty-eight to the pound. Those manufactured at Birmingham, and shipped in thousands for our use, are much lighter, and they are of base metal. It can hardly be said that seventy-two of them are worth a pound of copper; hence it will follow, that we give for British half-pence about six times their value. There are no materials from which we can estimate the weight of half-pence, that have been imported from Britain since the late war; but we have heard of sundry shipments being ordered, to the nominal amount of one thousand guineas; and we are told that no packet arrives from England without some hundred weight of base half-pence. It is a very moderate computation which states our loss, on the last twelve months, at 30,000 dollars, by the commerce of vile coin. The whole expense of a mint would not have amounted to half of that sum, and the whole expense of domestic coinage would remain in the country.
The following forms of money are submitted:
|1||piece of gold, of||5 dollars.|
|1||piece of silver, of||1 dollar, containing 362 grains pure silver. This is the unit, or money of account.|
|1||do.||do.||1/2, or .5|
|1||do.||do.||1/4, or .25|
|1||do.||do.||1/10, or .1|
|1||do.||do.||1/20, or .05|
|1||do.||of copper, of||1/100, or 01|
|1||do.||do.||1/200, or .005|
The quantity of pure silver being fixed that is to be in the unit or dollar, and the relation between silver and gold being fixed, all the other weights must follow.
When it is considered that the Spaniards have been reducing the weight of their dollars, and that, instead of 385.5, the grains of pure silver in the old Mexican dollar, the new dollars have not more than 365 grains, it will hardly be thought that 362 grains of pure silver is too little for the federal coin, which is to be current in all payments for one dollar. Some of the old dollars will admit of a second coinage, but the new ones will not. If the value of gold, compared to that of silver, be fixed at fifteen to one, and the alloy in each be one-twelfth, the weight of the several denominations will be readily determined.
The price of bullion is immediately determined by the per centage that is charged towards the expenses of the mint.
If the United States determine to adhere to the dollar as their money of account, and to simplify accounts by the use of decimals, there is nothing to prevent the immediate commencement of a coinage of copper.
Let the copper pieces, of which one hundred are to pass for a dollar, contain, each, one hundred and thirty-one grains of pure copper, or forty-four of them weigh one pound. In this case, our copper coin, when compared with the money of account, will be six per cent. better than that of Great Britain. There will remain a sufficient profit on the coinage.
Copper of the best quality, in plates, may be purchased in Europe at 101/2d. sterling. In cutting blanks, there will be a waste of twenty-two per cent. Those clippings are worth 71/2d. per pound;. thence the blanks will cost 111/2d. nearly — it may be stated at 1s. 9d. New York money, per pound, exclusive of the expense of cutting them, which is not great, as one man can readily cut one hundred weight in a day.
The operation, improperly called milling, by which the sharp edges are worn off from the coppers, is not more expensive than cutting the blanks.
In the process of coining copper, eight artists or laborers may be required: One engraver, one laborer, for the blank press; one smith, five laborers, for the coining press.
By these people, one hundred weight of copper may readily be coined every day, or the value of forty-four dollars. Deducting the necessary expenses, there may be saved thirty percent.
. . . . . . . .
Office of Finance, January 15, 1782.
Finding, by the act of the United States, in Congress, of the seventh instant, that I am instructed to prepare and report a table of rates at which the different species of foreign coins, most likely to circulate within the United States, shall be received at the treasury, I have been induced again to turn my attention to an object which has employed my thoughts very frequently, and which would have been long since submitted to Congress, had I not been prevented by other business, and much delayed by those things relating to this business, which depended upon others.
I shall now pray leave to deliver my sentiments somewhat at large on this subject.
The United States labor under many inconveniences, and even disadvantages, which may at present be remedied; but which, if suffered to continue, would become incurable, and lead to pernicious consequences. It is very fortunate for us, that the weights and measures used throughout America, are the same. Experience has shewn in other countries, that the efforts of the legislator to change weights and measures, although fully seconded by the more enlightened part of the community, have been so strongly opposed by the popular habits and prejudices, that ages have elapsed without producing the desired effect. I repeat, therefore, that it is happy for us to have throughout the Union, the same ideas of a mile and an inch, a hogshead and a quart, a pound and an ounce. So far our commercial dealings are simplified, and brought down to the level of every capacity. With respect to our money, the case is very widely different. The ideas annexed to a pound, a shilling, and a penny, are almost as various as the States themselves. Calculations are, therefore, as necessary for our inland commerce, as upon foreign exchanges, and the commonest things become intricate where money has any thing to do with them. A farmer in New Hampshire, for instance, can readily form an idea of a bushel of wheat in South Carolina, weighing sixty pounds, and placed at one hundred miles from Charleston; but if he were told that, in such situation, it is worth twenty-one shillings and eight pence, he would be obliged to make many inquiries, and form some calculations, before he could know that this sum meant, in general, what he would call four shillings; and even then, he would have to inquire what kind of coin that four shillings was paid in, before he could estimate it in his own mind, according to the ideas of money which he had imbibed. Difficulties of this sort do not occur to farmers alone; they are perplexing to most men, and troublesome to all. It is, however, a fortunate circumstance, that money is so much in the power of the sovereign, as that he can easily lead the people into new ideas of it; and, even if that were not the case, yet the loose state in which our currency has been for some years past, has opened the way for receiving any impressions on that subject. As we are now shaking off the inconveniences of a depreciating medium, the present moment seems to be that, in which a general currency can best be established, so as that in a few months the same names of money will mean the same things, in the several parts of the United States. Another inconvenience, which admits of the same easy remedy, and which would indeed be cured by the very same act, is the want of a legal tender. This is as necessary for the purposes of jurisprudence, as a general currency is, for those of commerce; for, although there is great impropriety, not to say injustice, in compelling a man to receive a part of his debt in discharge of the whole, yet it is both just and proper that the law should protect the honest debtor, who is willing to pay, against the vexatious suits of an oppressive creditor, who refuses to receive the full value. The nature, value, and use of money, have always occasioned strong temptations to the commission of fraud; and, of consequence, the practice of counterfeiting is coeval with that of coining. No Government can guard its subjects entirely, against the wicked ingenuity which has been exercised in this respect; but it has always been the object of every wise Government to take all the precautions against it, which are within the compass of human ability. These precautions will be most effectual, where the coins are few and simple, because they, by that means, become familiar to all ranks and degrees of men; but where the coins are so numerous that the knowledge of them is a kind of science, the lower order of citizens are constantly injured by those who carry on the business of debasing, sweating, clipping, counterfeiting, and the like. It is, therefore, to be lamented that we have so many different coins in the United States. It is not necessary to mention what is in every body’s mouth, that the precious metals were first used as bullion; and that the inconvenience of weighing, and the difficulty of assaying, introduced the practice of coining, in order that the weight and fineness might be known at the first view, and of consequence the value be instantly ascertained. It is equally unnecessary to observe, that the great privilege of declaring this value by particular marks, has, among all nations, been vested, exclusively, in the sovereign. A trust so important could not indeed be vested any where else, because, the danger of abusing it was too great. And history informs us, that sovereigns themselves have not, on this occasion, behaved with that integrity which was alike due to their subjects and to themselves, to the interests of their People, and to their own personal glory. Experience has already told us that the advantage of gold as a coin is, in this country, very considerably diminished: for, every distinct piece must be weighed before it can be safely received. Both gold and silver coins are indeed preferable, in one respect, to common bullion — that the standard is presumed to be just, and consequently they are received without the delays and expenses of assaying. It must, however, be remembered, that they are all foreign coins, and of course we are not only exposed to the tricks of individuals, but, should it suit the interest or convenience of any sovereign to make base money for us, there is nothing to prevent it. If, for instance, the King of England, or any of his Birmingham artists, should coin guineas worth but sixteen shillings sterling, our citizens would readily and freely receive them at twenty-one shillings sterling. It is my duty to mention to Congress, information I have received, that guineas of base metal are coined at Birmingham, so well, as to escape any common attention. Now there can be no doubt but that every such guinea, received here, would be a national loss to us of an English crown. How much we suffer in this way at present, it is impossible to estimate. What I have already had the honor to observe, contains some of the reasons why it appears to me highly necessary that an American coin should be adopted without delay; and to these reasons it may be added, that there is a want of small money for the common occasions of trade, and that it is more felt by our soldiery than any other persons: for, the little pay which they do receive, being either in gold, or at best in dollars, the settlers and others with whom they have dealings, continually take advantage of their want of change, and rate the prices of their goods accordingly.
Shortly after my appointment, finding that there was a considerable quantity of public copper at Boson, I ordered it round to this place. It has safely arrived, and will, when coined, amount to a considerable sum. The necessary machinery of a mint can be easily made, and there are persons who can perform the whole business. I must pray leave, therefore, to submit to Congress, some few more particular remarks on the subject, as introductory to a plan for an American coin.
At though most nations have coined copper, yet that metal is so impure, that it has never been considered as constituting the money standard. This is affixed to the two precious metals, because they alone will admit of having their intrinsic value precisely ascertained. But nations differ very much in the relation they have established between gold and silver. In some European countries, one ounce of pure gold passes for fifteen ounces of pure silver; in others for fourteen. In China, it passes for much less. The standard, therefore, which is affixed to both metals, is, in reality, affixed to neither. In England, gold is to silver, nearly in the proportion of one to fifteen; and in France, nearly of one to fourteen. If a man carries fourteen ounces of gold from France to England, he receives two hundred and ten ounces of silver, which, in France, purchases fifteen ounces of gold; so that he gains on that exchange, one ounce of gold. In like manner, he who carries from England fourteen ounces of silver to France, receives one ounce of gold, which in England purchases fifteen ounces of silver, wherefore he gains on that exchange, one ounce of silver. If it be then supposed that the coins of these two countries were alike pure, it must follow, that, in a short time, all the gold coin of full weight would be in England, and all the silver coin of full weight, in France. But the light silver circulating in England and the light gold in France, the real standard of coin in each would be different from the legal, and seek a medium of fourteen and an half of silver for one of gold, although the legal standard might still be in the one place fifteen and in the other fourteen.
The demand which commerce might make for any one of the precious metals, in preference of the other, would vary this real standard, from time to time, and in every payment a man would get more or less of real value for his debt, according as he were paid in the coin of greater or lesser value, in relation to the real standard. If, for instance, the debt were contracted when the silver was, to gold, as one to fifteen, and paid when as one to fourteen; if the debt were paid in silver, he would gain one thirtieth; and if in gold, he would lose one thirtieth. In England, the money standard is rather affixed to gold than to silver, because all payments are made in the former, and in France, it is rather affixed to silver than to gold.
Arguments are unnecessary to shew that the scale by which every thing is to be measured, ought to be as fixed as the nature of things will permit of. Since, therefore, a money standard affixed to both the precious metals will not give this certain scale, it is better to make use of one only. Gold is more valuable than silver, and so far must have the preference; but it is from that very circumstance the more exposed to fraudulent practices. Its value rendering it more portable is an advantage, but it is an advantage which paper possesses, in a much greater degree, and of consequence the commercial nation of England has had recourse to paper for the purposes of its trade; although the mass of circulating coin is gold. It will be always in our power to carry a paper circulation to every proper extent.
There can be no doubt, therefore, that our money standard ought to be affixed to silver.
But silver is liable, like every thing else, to a change of value; if there is a demand for it to export, the value will rise; if the contrary, it will fall; and so far it cannot be considered as a fixed measure of value. Before this objection be considered, it will be proper to make a few reflections on another part of the present subject; but in this place I remark, that if the objection cannot be removed, we must not suffer it to preponderate, because it weighs alike against every other metal.
To coin money is a certain expense, and, of course, it is an expense which must be borne by the people. In England, the coin, when melted, will sell as bullion for just as much as its weight in other coin. The expense of coinage is paid by the crown, and, of course, it is raised by taxes from the people. In France, the coinage, instead of being expensive, yields a profit. The price given for metal at the mint, is about eight per cent. less than the same quantity will yield when coined at the French standard. Both of these methods are liable to objections. When commerce demands an exportation of bullion from England, the coin of the kingdom goes out in common with others; this increases, of course, the national expense of coinage. Laws to prevent the exportation or importation of any thing so valuable as money, are always nugatory, because they always can be eluded, and, therefore, when private interest requires, they always will be eluded. That the guineas of England, therefore, are not continually going away, is to be attributed to the extraordinary value affixed to gold, which has just been mentioned, and which banishes silver continually. In France, the people are not liable to this inconvenience, because their money passing for more than its value in bullion, bullion will always be exported in preference to coin; but, for the same reason, there is always a strong temptation to imitate their coin, and send it for the purchase of their commodities.
It would be both impossible and unnecessary to distinguish the true from the false, because both would be of equal intrinsic value; the place at which they were struck would be indifferent to the receiver, of consequence the foreigner who made French coin would gain by his trade, and the French nation would lose proportionately.
The money paid for coining, or the coinage of France, has, however, this advantage, that the money is a standard which does not fluctuate with the price of bullion. This coinage is, as has been said, about eight per cent. When bullion is below ninety-two, it is carried to the mint; when above ninety-two, to the broker or silversmith. The coin still continues fixed, nor will it bear exportation until bullion rises to an hundred, when the French coin would be as liable to exportation as the English. In that case it would be exported on one hand, while, on the other, no more would have been coined for a considerable period, because, to make the eight per cent. coinage, it is necessary that the mint price should be ninety-two. The coin, therefore, could not long be exported, if at all, but would soon resume its value. The price of bullion must float between ninety-two and a hundred, while the coin would preserve its fixed quality as money. Hence, then, it appears proper that the price of coining should be defrayed by the coinage, because, first, it is natural and proper that the price should be paid where the benefit is received, and that the citizen, in return for the advantage of being ascertained in the value of the medium of commerce by the sovereign, should pay for ascertaining it, just as that he should pay for the fashion of the plate he uses, or the construction of the cart he employs; secondly, it is right that money should acquire a value as money, distinct from that which it possesses as a commodity, in order that it should be a fixed rule whereby to measure the value of all other things; and thirdly, it is wise to prevent the exportation of the coin, which would involve an unnecessary national expense, and also prevent the imitation of it abroad, so as to create a national loss; for both which purposes, it is proper that the coinage should only defray the expense, without making any considerable profit. The laws usual in all countries, with respect to the money, will then fully operate the effect intended.
In order that a coin may be perfectly intelligible to the whole people, it must have some affinity to the former currency. This, therefore, will be requisite in the present case. The purposes of commerce require that the lowest divisible point of money, or what is more properly called the money unit, should be very small, because, by that means, the price can be brought, in the smallest things, to bear a proportion to the value. And, although it is not absolutely necessary, yet it is very desirable, that money should be increased in a decimal ratio, because, by that means, all calculations of interest, exchange, insurance, and the like, are rendered much more simple and accurate, and, of course, more within the power of the great mass of people. Wherever such things require much labor, time, and reflection, the greater number, who do not know, are made the dupes of the lesser number, who do.
The various coins which have circulated in America, have undergone different changes in their value, so that there is hardly any which can be considered as a general standard, unless it be Spanish dollars. These pass in Georgia at five shillings; in North Carolina and New York at eight shillings; in Virginia and the four Eastern States at six shillings; in all the other States, except South Carolina, at seven shillings and six pence; and in South Carolina at thirty-two shillings and sixpence. The money unit of a new coin, to agree, without a fraction, with all these different values of a dollar, except the last, will be the fourteen hundred and fortieth part of a dollar, equal to the sixteen hundredth part of a crown; of these units, twenty-four will be a penny of Georgia; fifteen will be a penny of North Carolina or New York; twenty will be a penny of Virginia and the four Eastern States; sixteen will be a penny of all the other States, except South Carolina; and forty-eight will be thirteen pence of South Carolina.
It has been already observed, that, to have the money unit very small, is advantageous to commerce; but there is no necessity that this money unit be exactly represented in coin; it is sufficient that its value be precisely known.
On the present occasion, two copper coins will be proper — the one of eight units, and the other of five. These may be called an eight and a five: two of the former will make a penny, proclamation of Pennsylvania money; and three a penny Georgia money; of the latter, three will make a penny York money, and four a penny lawful, or Virginia money. The money unit will be equal to a quarter of a grain of fine silver in coined money; proceeding thence in a decimal ratio, one hundred would be the lowest silver coin, and might be called a cent. It would contain twenty-five grains of fine silver, to which may be added two grains of copper, and the whole would weigh one pennyweight, three grains. Five of these would make a quint, or five hundred units, weighing five pennyweight, fifteen grains; and ten would make a mark, or one thousand units, weighing eleven pennyweight, six grains.
If the mint price of fine silver be established at 22,237 units per pound, this, being coined, would be four times 5,760 grains, or 23,040 units; the difference is 803 units, and, therefore, the coinage is 803 on 23,040, or somewhat more than 3 48/100 per cent., which would be about the expense attending it.
A dollar contains, by the best assays which I have been able to get, about 373 grains of fine silver, and that, at the mint price, would be 1,440 units. In like manner, if crowns contain from 414 to 415 grains of fine silver, they would, at the mint price, be worth 1,600 units.
When such a coin shall have been established, the value of all others would be easily ascertained, because nothing more would be necessary than to have them assayed at the mint. The advantage of possessing legal money, in preference of any other, would induce people to carry foreign coin to the mint, until a sufficiency were struck for the circulating medium; the remainder of the foreign silver, together with the gold, should be left entirely to the operations of commerce, as bullion.
In the present moment, it is by no means of such consequence to establish the relative value of different coins, as to provide a standard of our own, by which, in future, to estimate, them. If the value were now sought, they must all be estimated in dollars, because dollars are called for in the several requisitions of Congress. Without noticing the preference thus given to one foreign coin over another, it is sufficient to observe, that, if greater alloy should be introduced by the Spanish Government into their dollars, our interior regulations as to money would be overturned; and certainly we have no security that this will not happen. There is not any great inconvenience from leaving matters on their present footing until they can be remedied by the operations of a mint: for it is not to be supposed that all the money raised by taxes in a State is to be brought out of it. I expect that there will be very little occasion to transport money from place to place. It is much easier to negotiate, than to carry it; and if any species of money is generally received within a State at the same rate in which it is paid in taxes, there will be no difficulty in expending it at its value. Whenever money shall be struck by authority of the United States, then, indeed, it will be proper to receive in taxes no other coin.
If Congress are of opinion with me, that it will be proper to coin money, I will immediately obey their orders, and establish a mint; and I think I can say with safety, that no better moment could be chosen for the purpose than the present: neither will any thing have a greater tendency to restore public credit: for, although it is possible that the new money will at first be received with diffidence by some, yet, when it has been fairly assayed, it will gain full confidence from all, and the advantage of holding the only money which can pay debts or discharge taxes, will soon give it the preference over all, and, indeed, banish all other from circulation. Whereas, fixing a relation of value, now, on whatever principles attempted, might give offence to the power whose coin should in any instance be reduced from its present numerary value among us.
These sentiments are submitted with all possible deference to the United States in Congress assembled, in expectation of their further instructions on the subject.
With great respect, I have the honor to be, sir, your most obedient and humble servant,
His Excellency the President of Congress.
. . . . . . . .
If one member of Congress from Georgia, another from Massachusetts, a third from Pennsylvania, and a fourth from North Carolina, were a committee to decide on the general currency of America, each would prefer that of his own particular State. If a fifth member were added from South Carolina, (he not being particularly attached to the new adopted sterling of that country) might wish for an expedient to reconcile the litigants. He would, therefore, seek a currency, which, though different from either, would coincide with all. The present currencies are in the following proportions to each other: as 1/60, to 1/72, to 1/90, to 1/96 of a dollar; that is, as 24 to 20, to 16, to 15. Suppose, then, we take the following currency:
|1 crown, or 10 dollars,||1.0000|
|1 dollar, or 10 bits,||1000|
|1 bit, or 10 pence,||100|
|1 penny, or 10 qrs.||10|
|1 qr. (i.e.) a quarter of a grain of fine silver,||1|
This currency may, by means of a small profit taken to defray the expense of coining, be so adjusted, as to be in the proportions above mentioned;
|And then the penny||of Georgia will be,||24||qrs.|
|of Virginia and the four Eastern States,||20|
|of Maryland, Delaware, Pennsylvania, and New Jersey,||16|
|of North Carolina and New York,||15|
To accomplish this matter, let the crown, be made of gold, 22 carats fine, and weigh 188 grains.
Let the dollar be made of silver, and contain 250 grains pure, and 10 of alloy, 260 grains.
|Let the mint give||for every pound of standard gold, brought in for sale,||29.9000|
|for every pound of pure silver,||2.2340|
On this state of things let it be asked, 1st, what is the coinage or profit on coining? and 2dly. what is the proportion resulting from thence between the precious metals? To answer the first, say, as 188 grains of standard gold, the propose weight of a crown, is to 1.0000 the proposed value; so is 5,760 grains, the quantity in a pound, to 30.6383, the value when coined. And as 29.9000, the mint price, is to 30.6383; so is 100 to 102.47, nearly. The coinage of gold, therefore, will be 247/100 per cent.
Say again, as 2.2340, the mint price of five silver, is to 2.3040, the value of 5.760 grains, at 4 quarters each; so is 100 to 103.13, nearly. The coinage of silver, therefore, will be about 313/100 per cent. These per centages will about defray the expenses of the mint. And note here, that, since the expense must be paid, no tax for the purpose can be more equitable than one which is raised on the money itself.
To answer the second question, since a pound of gold, at 22 carats, contains 5.280 grains of pure metal, and this is worth, as above, 30.6383 quarters of a grain of fine silver, say, as 21,120 quarters of fine gold is to 30.6383 quarters of fine silver; so is one of fine gold to 1410703/21120 of fine silver, being somewhat more than 141/2 of silver for 1 of gold.
It remains next to see, what are the values of this money; but a previous observation must be made, viz. That, by the currency of clipped gold, the value of American money has been considerably depreciated. Thus, the par between sterling and Pennsylvania currency was 1662/3 currency for 100 sterling. But 3 dwt. of gold are current for 20s. A pound of gold is, therefore, equal to £80 currency; and two pounds, or 89 guineas, to £160. Therefore, £93 9 0 sterling, equals £160 Pennsylvania currency; and as £93 9 0 is to £160, so is £100 to £171 4 31/2, the present par, instead of £166 13 4, the former par.
To return, then, to the value of the money proposed, a guinea ought to contain 1291/2 grains; therefore, say as 5,760 grains, or one pound of gold, is to 29.9000, the mint price, so is 1291/2 to 6,722, which, divided by 16, to reduce it to Pennsylvania currency, gives 420d.1/8 or 35s. The French crown ought to contain 4121/2 grains pure silver; therefore, say, as 5,760 grains is to 2.2340, the mint price, so is 4121/2 grains to 1600, or 8s. 4d. Pennsylvania currency. Lastly, the dollar contains about 372 grains of fine silver; but there is much difference between the old and new dollars; say, then, as 5,760 is to 2.2340, so is 372 to 1442, or 7s, 6d.1/8 Pennsylvania currency. The value of the dollar, therefore, may be stated at 1,440; and this, dividend by the proportional numbers before mentioned, gives the different values thus:
|Divided||by 24, it gives the value in Georgia||60 pence.|
|“||by 20, that of Virginia, and the four Eastern States,||72|
|“||by 16, that of Pennsylvania, Maryland, Delaware, and New Jersey,||90|
|“||by 15, that of North Carolina and New York,||96|
And the same thing will appear from a similar operation upon the value of a guinea or French crown, as above specified. Hence results a corollary of some importance towards simplifying the complex subject of money, viz: That, in the proposed currency, a quarter of a grain of pure silver (the smallest fractional part) would serve as a common expression or denominator to all the different currencies now in use; and any sum on a merchant’s books might be reduced to that expression with ease and exactness. Suppose, for instance,
|£151 13 4.||C.||qrs.|
|This sum,||in Georgia, would be expressed by,||87||36|
|“||in Virginia; and the four Eastern Sates,||72||08|
|“||in Maryland, Pennsylvania, Delaware, and New Jersey,||58||24|
|“||in North Carolina and New York,||54||06|
So far, we have rather had in contemplation the money of account.
Let us now proceed to the coins. These may be as follows:
Hence it appears, that these coins would agree with the currency of nine States out of the thirteen, with like precision as the money of account, represented, would agree with them all.
Let us next examine the state of exchanges which would result from the adoption of such a plan. And here we should confine our view to those three countries with whom we have exchange dealings, viz: England, France, and Holland; as to Spain and Portugal, we barter our produce for theirs, among the articles of which are silver and gold. It has already been noted, that two pounds of standard gold are 89 guineas, or 1,869 shillings; and that one pound of the coined gold is 30.6383; consequently, two pounds are 61.2766; therefore, say, as 1,869 is to 61.2766, so is 20 to 6,556, the value of a pound sterling.
It has also been mentioned, that the French crown, or 6 livres, contains 4121/2 grains of pure silver; that is, 1,650 qrs.: therefore, say, as 6 is to 1,650, so is 1 to 276, the value of a livre. The exchanges with Holland are taken upon the bank florin, which is merely a money of account, and the current money varies from it at the rate of from two to five per cent. advance. The bank guilder, or florin, must, therefore, be taken at a medium value, and will be found worth 600. On these values, we shall find the following par exchanges, among those countries, viz:
|£||1||sterling, or||6,556||equal||to about||10||10||8,||and about||23||16||10|
The advantages of coining money in this country, are, first, those which arise from the same operation in all other countries; and secondly, that of reducing all our currencies to one. The advantages from the coin here proposed are, first, that none other will effect the object already mentioned, of banishing other currencies, because that alone applies, without fractions, to them all. Secondly, that the minuteness of its lowest denomination, would render it an accurate measure of the smallest variations of quantity or quality, in any commodity. Thirdly, that the decimal proportion of its parts, would render all calculations in it easy, as appears in the calculations, and consequent rates of exchange above mentioned. And lastly, that few figures would be used for the largest sum, while, at the same time, the smallest sums would be comprehended: for, if the lowest denomination be of considerable value, recourse must be had to fractions, as in England, where the penny is divided into fourths, eighths, and sometimes sixteenths, and even then without sufficient accuracy; whereas, the lowest denomination of the coin here proposed, will be about 1/27 of a penny sterling.
Lastly, as to the names above chosen, they, like all other names, are arbitrary, and better may, perhaps, be substituted; the word crown occurred from the following idea of an impression for the gold coin: an Indian, his right foot on a crown, a bow in his left hand, in his right hand thirteen arrows, and the inscription — Manus inimica Tyrannis.
. . . . . . . .
Notes on the establishment of a Money Mint, and of a coinage for the United States. — By Mr. Jefferson.
In fixing the unit of money, these circumstances are of principal importance: 1. That it be of convenient size to be applied as a measure to the common money transactions of life. 2. That its parts and multiples be in an easy proportion to each other, so as to facilitate the money arithmetic. 3. That the unit and its parts or divisions be so nearly of the value of some of the known coins, as that they may be of easy adoption by the people.
The Spanish dollar seems to fulfil all these conditions.
1. Taking into our view all money transactions, great and small, I question if a common measure of more convenient size than the dollar could be proposed. The value of 100, 1,000, 10,000 dollars, is well estimated by the mind; so is that of the tenth or the hundredth of a dollar. Few transactions are above or below these limits. The expediency of attending to the size of the money unit will be evident to any one who will consider how inconvenient it would be to a manufacturer, or merchant, if, instead of the yard for measuring cloth, either the inch or the mile had been made the unit of measure.
2. The most easy ratio of multiplication and division, is that by ten. Every one knows the facility of decimal arithmetic. Every one remembers that, when learning money arithmetic, he used to be puzzled with adding the farthings, taking out the fours and carrying them on; adding the pence, taking out the twelves and carrying them on; adding the shillings, taking out the twentieths and carrying them on; but when he came to the pounds, where he had only tens to carry forward, it was easy, and free from error. The bulk of mankind are school-boys through life. These little perplexities are always great to them, and even mathematical heads feel the relief of an easier substituted for a more difficult process. Foreigners, too, who trade or travel among us, will find a great facility in understanding our coins and accounts from this ratio of sub-division. Those who have had occasion to convert the livres, sols, and deniers of the French, the gilders, stivers, and pennings of the Dutch, the pounds, shillings, pence, and farthings, of these several States, into each other, can judge how much they would have been aided had their several sub-divisions been in a decimal ratio. Certainly, in all cases where we are free to choose between easy and difficult modes of operation, it is most rational to choose the easy. The financier, therefore, in his report, well proposes that our coins should be in decimal proportions to one another. If we adopt the dollar for our unit, we should strike four coins, one of gold, two of silver, and one of copper.
Compare the arithmetical operations on the same sum of money expressed in this form, and expressed in the pound sterling, and its divisions.
A bare inspection of these operations will evince the labor which is occasioned by sub-dividing the unit into 20ths, 240ths, 964ths, as the English do, and as we have done; and the ease of sub-divisions in a decimal ratio. The same difference arises in making payment. An Englishman, to pay £8 13 111/2 must find, by calculation, what combinations of the coins of his country will pay this sum; but an American, having the same sum to pay, thus expressed, $38 65, will know, by inspection only, that three golden pieces, eight units or dollars, six tenths, and five coppers, pay it precisely.
3. The third condition required is, that the unit, its multiples, and sub-divisions, coincide in value with some of the known coins so nearly, that the people may, by a quick reference in the mind, estimate their value; if this be not attended to, they will be very long in adopting the innovation, if ever they adopt it. Let us examine in this point of view each of the four coins proposed.
1. The golden piece will be 1/9 more than a half joe, and 1/15 more than a double guinea. It will be readily estimated, then, by reference to either of them, but more readily and accurately as equal to ten dollars.
2. The unit, or dollar, is a known coin, and the most familiar of all to the minds of the people. It is already adopted from south to north; has identified our currency, and therefore happily offers itself as an unit already introduced. Our public debt, our requisitions, and their apportionments, have given it actual and long possession of the place of unit. The course of our commerce, too, will bring us more of this, than of any other foreign coin, and, therefore, renders it more worthy of attention. I know of no unit which can be proposed in competition with the dollar, but the pound. But what is the pound? 1,547 grains of fine silver in Georgia, 1,289 grains in Virginia, Connecticut, Rhode Island, Massachusetts, and New Hampshire, 1,0311/4 grains in Maryland, Delaware, Pennsylvania, and New Jersey, 9663/4 grains in North Carolina and New York. Which of these shall we adopt? To which State give that pre-eminence, of which all are so jealous? And on which impose the difficulties of a new estimate for their corn, their cattle, and other commodities? Or shall we hang the pound sterling as a common badge about all their necks? This contains 1,7183/4 grains of pure silver. It is difficult to familiarize a new coin to the people. It is more difficult to familiarize them to a new coin with an old name. Happily, the dollar is familiar to them all; and is already as much referred to for a measure of value, as their respective provincial pounds.
3. The tenth will be precisely the spanish bit, or half pistareen in some of the States, and in the others will differ from it but by a very small fraction. This is a coin perfectly familiar to us all. When we shall make a new coin, equal in value to this, it will be of ready estimate with the people.
4. The hundreth, or copper, will be nearly the penny or copper of New York and North Carolina, this being 1/96 of a dollar, and will not be very different from the penny or copper of New Jersey, Pennsylvania, Delaware, and Maryland, which is 1/90 of a dollar; it will be about the medium between the old and the new coppers of these States, and, therefore, will soon be substituted for them both. In Virginia, coppers have never been in use. It will be as easy, therefore, to introduce them there, of one value as of another. The copper coin proposed, will be nearly equal to three-fourths of their penny, which is the same with the penny lawful of the Eastern States.
A great deal of small change is useful in a State, and tends to reduce the prices of small articles. Perhaps, it would not be amiss to coin two more pieces of silver, one of the value of two-tenths, which would be equal to the Spanish pistareen, and one of the value of five coppers, which would be equal to the Spanish half bit. We should then have four silver coins, viz:
The plan reported by the financier, is worthy of his sound judgment. It admits, however, of objection in the size of the unit. He proposes, that this shall be the 1440th part of a dollar, so that it will require 1440 of his units, to make the one proposed. He was led to adopt this, by a mathematical attention to our old currencies, all of which, this unit will measure, without leaving a fraction; but, as our object is to get rid of these currencies, the advantage derived from this coincidence, will soon be past; whereas, the inconveniencies of this unit, will forever remain, if they do not altogether prevent its introduction. It is defective in two or three requisites of a money unit.
1. It is inconvenient in its application to the ordinary money transactions; 10,000 dollars will require 8 figures to express them, viz: 14.400.000. A horse or bullock, of 80 dollars value, will require a notation of 6 figures, viz: 115.200 units. As a money of account this will be laborious, even when facilitated by the aid of decimal arithmetic; as a common measure of the value of property, it will be too minute to be comprehended by the people. The French are subjected to very laborious calculations, the livre being their ordinary money of account, and this but between a 5th and 6th of a dollar. But what will be our labor, should our money of account be 1-1440th of a dollar?
2. It is neither equal nor near to any of the known coins in value. If we determine that a dollar shall be our unit, we must then say with precision, what a dollar is. This coin, as struck at different times, of different weights and fineness, is of different values. Sir Isaac Newton’s assay and representation to the lords of the treasury, in 1717, of those which he examined, made their value as follows, viz:
|The Seville piece of eight,||17||12||containing||387||of pure silver.|
|The New Seville||do.||14||3087/10|
The financier states the old dollars as containing 376 grains of fine silver, and the new 365 grains. If the dollars circulating among us, be of every date equal, we should examine the quantity of pure metal in each, and from them, form an average for our unit. This is a work proper to be committed to the mathematicians as well as merchants, and which should be decided on actual and accurate experiments.
The quantum of alloy is also to be decided. Some is necessary to prevent the coin from wearing too fast. Too much fills our pockets with copper instead of silver. The silver coins, assayed by Sir Isaac Newton, varied from 11/2 to 76 penny weight alloy, in the pound troy of mixed metal. The British standard has 18 dwt. The Spanish coins assayed by Sir Isaac Newton, have from 18 to 191/2 dwt. The new French crown has in fact 191/2, though by edict it should have 20 dwt., that is 1/12.
The taste of our countrymen will require that their funiture plate should be as good as the British standard. Taste cannot be controlled by law. Let it, then, give the law in a point which is indifferent to a certain degree. Let the Legislatures fix the alloy of furniture plate at 18 dwt., the British standard, and Congress, that of their coin at one ounce in the pound, the French standard. This proportion has been found convenient for the alloy of gold coin, and it will simplify the system of our mint, to alloy both metals in the same degree. The coin, too, being the least pure, will be easily melted into plate. These reasons are light indeed, and, of course, will only weigh if no heavier ones can be opposed to them.
The proportion between the value of gold and silver, is a mercantile problem altogether. It would be inaccurate to fix it by the popular exchanges of a half joe for 8 dollars, a louis for 4 French crowns, or 5 louis for 23 dollars. The first of these would be, to adopt the Spanish proportion between gold and silver; the second, the French; the third, a more popular barter, wherein convenience is consulted more than accuracy. The legal proportion in Spain, is 16 for 1, in England, 15 1-5th for 1, in France, 15 for 1. The Spaniards and English are found in experience to retain an over proportion of gold coins, and to lose their silver. The French have a greater proportion of silver. The difference at market, has been on the decrease. The financier states it at present, as at 141/2 for 1. Just principles will lead us to disregard legal proportions altogether; to inquire into the market price of gold in the several countries with which we shall principally be connected in commerce, and to take an average from them. Perhaps, we might, with safety, lean to a proportion somewhat above par for gold, considering our neighborhood and commerce with the sources of the coins, and the tendency which the high prices of gold, in Spain, has to draw thither all that of their mines, leaving silver principally for our, and other markets. It is not impossible, that 15 for 1 may be found an eligible proportion. I state it, however, as conjectural only.
As to the alloy for gold coins, the British is an ounce in the pound; the French, Spanish, and Portuguese, differ from that only from a quarter of a grain to a grain and a half. I should, therefore, prefer the British, merely because its fraction stands in a more simple form, and facilitates the calculations into which it enters.
Should the unit be fixed at 365 grains of pure silver, gold at 15 for one, and the alloy of both be 1-12th, the weights of the coins will be as follow:
The golden piece, containing 2431/3 grains of pure metal, 22.12 grains alloy, will weigh 11 dwt 1.45 grains.
|The unit, or dollar,||365||33.18||16||14.18|
|The 5th, or pistareen,||73||6.63||3||7.63|
|The 10th, or bit,||361/2||1.659||1||15.818|
|The 20th, or half bit,||181/4||3.318||19.9|
The quantity of fine silver, which shall constitute the unit, being settled, and the proportion of the value of gold to that of silver, a table should be formed from the assay before suggested, classing the several foreign coins according to their fineness, declaring the worth of a pennyweight, or grain, in each class, and that they should be lawful tenders at those rates, if not clipped, or otherwise diminished; and, where diminished, offering their value for them, at the mint, deducting the expense of re-coinage. Here the Legislatures should co-operate with Congress in providing, that no money should be received, or paid at their treasuries, or by any of their officers, or any bank, but on actual weight; in making it criminal, in a high degree, to diminish their own coins, and, in some smaller degree, to offer them in payment, when diminished.
That this subject may be properly prepared, and in readiness for Congress to take up at their meeting in November, something must now be done. The present session drawing to a close, they probably would not choose to enter far into this undertaking. The committee of the States, however, during the recess, will have time to digest it thoroughly, if Congress will fix some general principles for their government. Suppose, then, they be instructed:
To appoint proper persons to assay and examine, with the utmost accuracy practicable, the Spanish milled dollars of different dates, in circulation with us.
To assay and examine, in like manner, the fineness of all the other coins which may be found in circulation within these States.
To report to the committee the result of these assays, by them to be laid before Congress.
To appoint also proper persons to inquire what are the proportions between the values of fine gold and fine silver, at the markets of the several countries with which we are, or may probably be, connected in commerce; and what would be a proper proportion here, having regard to the average of their values at those markets, and to other circumstances, and report the same to the committee, by them to be laid before Congress.
To prepare an ordinance for establishing the unit of money within these States, for subdividing it, and for striking coins of gold, silver, and copper, on the following principles:
That the money unit of these States shall be equal in value to a Spanish milled dollar, containing so much fine silver as the assay, before directed, shall show to be contained, on an average in dollars of the several dates in circulation with us;
That this unit shall be divided into 10ths and 100ths;
That there shall be a coin of silver, of the value of an unit; one other of the value of 1-10th of an unit; one other of copper, of the value of the 100th of an unit;
That there shall be a coin of gold, of the value of 10 units, according to the report before directed, and the judgment of the committee thereon;
That the alloy of the said coins, of gold and silver, shall be equal in weight to 1-11th part of the fine metal;
That there be proper devices for these coins;
That measures be proposed for preventing their diminution, and also their currency, and that of any others, when diminished;
That the several foreign coins be described and classed in the said ordinance, the fineness of each class stated, and its value by weight estimated in units, and decimal parts of units and that said draught of an ordinance be reported to Congress at their next meeting, for their consideration and determination.