Communicated to the House of Representatives, December 27, 1810.
Mr. Quincy, from the Committee to whom was referred the bill from the Senate, “to suspend the second section of the act, entitled ‘An act regulating foreign coins, and for other purposes,’” made the following report:
That the general design of the bill being to increase the current money of the United States, by authorizing foreign gold and silver coins again to become a legal tender, is important in its object, and may be beneficial in its consequences. It is very apparent, that the denial to foreign coins of the privileges of currency, and of being a legal tender, has, at once, the combined edict of circumscribing the just sphere of mercantile action, and of encouraging the exportation of that species of coin, to which these privileges are denied. In the present circumstances of the United States, it seems peculiarly unadviseable to permit any statute prohibitions to continue, which have a tendency to produce such an effect. The statute currency of the United States, which now consists only of the coinage of the mint of the United States, and of Spanish milled dollars and parts of dollars, is, also, probably insufficient for the ordinary necessities of domestic exchange, and is certainly wholly inadequate to support any peculiar embarrassment of our circulating medium, which, in the event of the disolution of the Bank of the United States, cannot but be anticipated. Your committee were, therefore, of opinion, that foreign gold coins ought to be made current money and a legal tender.
Your committee, having caused a letter to be addressed to the Secretary of the Treasury, in relation to the former statute rate at which foreign coins were made current, received from him the two letters accompanying this report. From which it appears, that the gold coins of Spain and its dominions, had been estimated by the former statute of the United States, at a rate of four per cent. above their intrinsic value; in other words, that the quantity of pure gold contained in twenty seven grains and two-fifths of a grain of Spanish standard coin, instead of being equal in value to one hundred cents, the statute rate, was only equal in value to about ninety-six cents.
Upon receiving this information, two general inquires were suggested for the consideration of the committee. 1st. Whether, in again vesting Spanish gold coin with the character of current money of the United States, it were expedient to establish the old statute rate, now discovered to be erroneous, or, whether a new statute rate for it should be established, which should conform to its intrinsic value? 2d. Upon the supposition that it should be deemed adviseable to enact a new statute rate for it, conformable to its intrinsic value, whether, as a loss of four per cent. upon all the Spanish gold in the United States, would thus be incurred, by the present holders, in consequence of no fault of theirs, but solely by reason of the erroneous estimate or a law of the United States, any moral or equitable considerations required that this loss should be assumed, by the United States?
Concerning the first object of inquiry, the committee will attempt to add nothing to the satisfactory elucidation contained in the letter of the Secretary of the Treasury, and only express their entire concurrence with his opinion, that “the statute rate of these coins should be made to conform with their intrinsic value.”
With respect to the second inquiry, which the Secretary represents as “of a more doubtful nature,” the committee were of opinion, that, whatever equitable considerations might exist, the attempt to apply relief, under the particular circumstances of this loss, was inexpedient, and, for the most part, impracticable. For, it is very apparent, that there is no foundation or color for indemnification, on account of any receipts of these coins, subsequent to the 10th of April, 1809, when the law making them a legal tender expired. Now, so far as it respects individuals, the cases (if such in fact exist) in which the present holders of those coins received them, antecedent to that period, must be so extremely rare, as to render a general provision for their relief, scarcely necesary. And, as to banks, such is the successive circulation of specie through the vaults, that it is hardly to be supposed, that any one institution in the United States could distinguish the amount of this species of coin, which it had received prior to the 10th of April, 1809, from that which it had received subseqently. And, although, in a few instances, this might be the case, yet, it seems far better that in these, the loss should remain where it has fallen, than that the community should be exposed to the multiplied frauds and inconveniences which the attempt to indemnify, upon any general principle, would inevitably introduce.
Your committee, upon recurring to the acts existing on the subject of the bill from the Senate, in connexion with the proposed alteration in the rate of Spanish gold coins, found that the operation of the respective provisions would be embarrassing and confused, in their nature, and inconvenient in their form. The bill from the Senate, proposed to suspend the second section of “An act regulating foreign coins and for other purposes.” This act passed on the 9th of February, 1793, and the effect of this suspension was, to revive the provisions or an act passed on the 10th of April, 1806. Whether the intended, would be the legal result, your committee had some doubt. But they had none that the proposed, was a very inconvenient circuit, to a direct object. They were also of opinion, that it was highly expedient that all the provisions, touching a subject of such universal concern, should be concentrated in one bill, and divested of every thing which might embarrass research. They, therefore, report the whole bill from the Senate stricken out, after the enacting clause, and propose an amendment, comprehending all the provisions necessary on the subject of the currency of foreign coins.
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[Strike out from the word “that,” in the second line, and insert,]
From and after the passage of this act, foreign gold and silver coins shall pass current as money within the United States, and be a legal tender for the payment of all debts and demands, at the several and respective rates following, and not otherwise, viz:
The gold coins of Great Britain and Portugal, of their present standard, at the rate of one hundred cents for every twenty-seven grains of the actual weight thereof; the gold coins of France, of their present standard, at the rate of one hundred cents for every twenty-seven grains and an half of a grain of the actual weight thereof; the gold coins of Spain, and the dominions of Spain, of their present standard, at the rate of one hundred cents for every twenty-eight grains and sixty hundredths of a grain of the actual weight thereof. Spanish milled dollars, at the rate of one hundred cents for each, the actual weight whereof shall not be less than seventeen pennyweights and seven grains, and in proportion for the parts of a dollar. Crowns of France, at the rate of one hundred and ten cents for each crown, the actual weight whereof shall not be less than eighteen pennyweights and fifteen grains and an half of a grain, and in proportion for the parts of a crown. And it shall be the duty of the Secretary of the Treasury, to cause assays of the foreign gold and silver coins made current by this act, to be had at the mint of the United States at least once in every year, and to make a report of the result thereof to Congress, for the purpose of enabling them to make such alterations in this act as may become requisite from the real standard value of such foreign coins. And it shall be the duty of the Secretary of the Treasury, to cause assays of the foreign gold and silver coins, of the description made current by this act, which shall issue subsequently to the passage of this act, and shall circulate in the United States, at the mint aforesaid, at least once in every year, and to make report of the result thereof to Congress, for the purpose of enabling Congress to make such coins current, if they shall deem the same proper, at their real standard value.
Sec. 2. And be it further enacted, That, at the expiration of three years from and after the passing of this act all foreign gold coins, and all foreign silver coins, except Spanish milled dollars, and parts of such dollars, shall cease to be a legal tender as aforesaid.
Sec. 3. And be it further enacted, That the act, entitled “An act regulating the currency of foreign coins in the United States,” and also every section and parts of sections of any act or acts heretofore passed relative to the currency of foreign coins in the United States, be, and the same are hereby, repealed.
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Treasury Department, December 17th, 1810.
I had the honor to receive your letters of the 14th and 15th instant. The assays for the year 1810 are daily expected, but not yet received. I, therefore, beg leave to refer the committee, to those made according to law, in the year 1809, the result of which is exhibited in the letter of 29th June, 1809, from the Director of the Mint, annexed to the report from this department, of 8th December, 1809.
It appears from those assays that the intrinsic value of all foreign coins, the gold coins of Spain excepted, which were made a legal tender by the act of 10th of April, 1806, either agrees precisely with the legal value fixed by that act, or differs from it by so small a fraction, as to render any alteration in that respect unnecessary. But the difference in the value of Spanish gold coins is considerable.
It will be recollected, that the value of gold coins of the United States is established in conformity with the following principles, viz:
1st. The unit, or silver dollar, contains 371¼ grains of pure silver.
2d. The comparative value of gold and silver is in the ratio of 15 to 1; that is to say, that fifteen ounces of pure silver, are, according to law, equal in value to one ounce of pure gold.
3d. The standard gold, or that of which gold coins of the United States are made, contains eleven parts of pure gold and one part of alloy; or one-twelfth part of its weight is alloy.
Thence it follows, 1st that 24¾ (being the 15th part of 371¼) pure gold, are equal to one dollar. 2dly, that 27 grains of standard gold of the United States, containing 24¾ grains of pure gold, are also equal to one dollar.
In fixing the rate at which foreign coins should pass, the object was to ascertain the standard, or quantity of pure gold contained in a given weight, and to place them, according to that intrinsic value, exactly on a par with coins of the United States. The act of 10th of April, 1806, was predicated on the supposition that 272/5 grains of Spanish standard gold contained 24¾ grains of pure gold, and were, therefore, equal in value to 27 grains standard gold of the United States, or to one dollar current money of the United States. But that supposition is proven by the assays to have been erroneous; the standard of Spanish gold coins being worse, or containing more alloy, than was then believed. That standard varies according to the years of the coinage. The coins of the year 1806, are the lowest and worst by more than four and a half per cent., than the value fixed by the act of 10th of May, 1806. Those of the year 1807, are worse than those of the year prior to 1806; and those of the year 1808, are worse than those of 1807. Those of the years prior to 1806, though better than the subsequent coinages, are almost three and a half per cent. worse than the value fixed by the act of May, 1806.
Taking the general average of the several coinages, it appears that they should be taken at the rate of 2853/100 grains, (instead of 2740/100) for one dollar; and that the difference between their intrinsic value and, that fixed by the act of April, 1806, is almost four per cent. (3986/1000 per cent.)
If, therefore, the act should be revived, without any alteration, every person receiving those coins in payment, would, in fact, be compelled to receive only ninety-six instead of one hundred cents on every dollar paid to him. The unavoidable effect of putting in circulation any one species of coin, at a rate higher than its known intrinsic value, is to invite its importation and increased circulation, and to drive out of circulation the other species. Every bank, if called on to pay its notes in specie, will, in that case, pay with that species of coin; and the whole paper circulating medium must, after a while, be depreciated in the same proportion. The only guard against the abuse, and consequent depreciation of bank paper, is a strict adherence to the principle, that payment may, at any time, be demanded in specie, rated at its intrinsic value.
On the other hand, it is not less true, that the gold coins of Spain, were made a legal tender by law, for a certain number of years, at a higher rate than they were really worth; that, to the very last day of that period, every person was compelled to receive them in payment, at that rate; and that, at the expiration of the period, a quantity of that gold necessarily remained in the hands of some persons, on whom the loss falls, by the unavoidable effect of the law, and without any fault of theirs. It is in order to relieve those persons, that it is proposed to make the loss fall on the community, by reviving the law, without alteration; that is to say, by putting again the coins in circulation, at a higher rate than their intrinsic value.
The two questions put by the committee, are, whether, the statute rate of these coins should not be made to conform with their intrinsic value, and whether, in order to relieve individuals from the loss resulting from the late erroneous legal estimate of their value, it would not be eligible that the difference should be paid by Government.
To the first question, I can have no hesitation, for the above mentioned reasons, to answer in the affirmative. The second question is of a more doubtful nature. But if it shall be thought just, that the loss should fall on the community, rather than on individuals, it will certainly be preferable to pay at once the difference, rather than knowingly to make the coins again a legal tender, at a higher rate than they are worth. Should that measure he adopted, the mode proposed by the committee, viz: to direct the mint to receive that species of gold, for a short time, at the former statute rate, the United States paying the difference, appears also the most simple and eligible manner of effecting the object. The following provisions are, in that case, respectfully suggested:
1st. That, as the assays of the coins of the years 1809 and 1810, have not yet been received, and, as Spanish gold ceased to be a legal tender early in the year 1809, the revival of the law making them a legal tender should apply only to coins coined prior to the year 1809.
2d. That, for the same reasons, the statute value should be fixed at a rate not higher than the average, of the assays heretofore made; that is to say, that they should pass at a rate not higher than 2853/100 grains, for one hundred cents.
3d. That, for the same reasons, the obligation on the mint to receive those coins, at their former statute rate, should be limited to coins coined prior to the year 1809.
4th. That, as the indemnification to the individuals, arises from equitable considerations, and not from an absolute legal obligation, the period during which the coins shall be received at the mint, at their former statute value, be made so short as to preclude the possibility of embracing speculative importations. One month from the passing of the law would seem sufficient.
5th. That no such coin shall be thus received at the mint, at its former statute value, unless proof, or at least an affidavit be made, that the persons claiming the benefit of the provision, had actually received the same at that value prior to the time when the law making it a legal tender expired.
It will also be necessary, in that Case, that an appropriation should be made to enable the mint to carry the provision into effect. The amount of that appropriation, should be at the rate of four per cent. on the supposed amount of Spanish gold now in the United States, which may be embraced by such provisions. But, having no knowledge whatever of that amount, I cannot suggest any precise sum.
I have the honor to be, respectfully, sir, your obedient servant,
Honorable Josiah Quincy, Chairman, &c. in Congress.
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Treasury Department, December 24th, 1810.
This year’s assays, have been received, and will be sent to-morrow to Congress. These make the average for French gold coins 2752/100 grains, and for Spanish coins, 2862/100. It must also be observed, that French crowns were rated too low. Instead of its being necessary that they should weigh 18 pennyweights and 17 grains, they ought to be received, if weighing 18 pennyweights and 15½ grains; it appearing from the assays, that, if of the first mentioned weight, they are worth 110 cents and 36/100 of a cent, instead of 110 cents.
I have the honor to be, respectfully, sir, your obedient servant,
Honorable Josiah Quincy, in Congress.