GOLD AND SILVER COINS, &c.

March 26, 1832.
Printed by order of the House of Representatives, with the subjoined estimate.

Mr. Wilde submitted the following

RESOLUTION:

Resolved, That the Committee on Coins be instructed to inquire into the expediency of authorizing prompt payment to be made in coin for bullion delivered at the mint, requiring a seignorage not exceeding the expense of coining, making gold a legal tender for large, and silver a legal tender for small payments only, imposing a duty on bank bills of low denominations, or a tax upon the banks issuing them, or providing that the bills of such banks shall not be received in payments to, or deposites on account of, the United States; and of adopting any, and what other measures, for the purpose of preserving an adequate supply of gold and silver coins in use, and increasing the specie circulation of the country.

Mr. Wilde’s resolution as proposed to be modified when it next comes up.

Resolved, That the Committee on Coins be instructed to inquire into the expediency of authorizing prompt payment in coin for bullion delivered at the mint, requiring a seignorage not exceeding the expense of coining, and making gold a tender in large, and silver a legal tender in small payments only, or the reverse; and that the said committee do further inquire, and report whether any, and what evils or inconveniences result from the currency of bank notes of small denominations, and what are the appropriate remedies; whether it is practicable and expedient to restrain their circulation, by providing that the bills of such banks as issue them shall not be received in payments to, or deposites on account of, the United States, or by any other, and what means, within the legitimate powers of Congress; and generally to inquire, and report what further measures are requisite for the purpose of preserving an adequate supply of gold and silver coins in use, and increasing the specie circulation of the country.

ESTIMATE of the comparative expense of a small note and specie circulation of ten millions of dollars for one hundred years.

A.

Insolvency.

From 1811 to 1830, (19 years,) according to Mr. Gallatin’s table, 165 banks failed. The capital of 129 of them amounted to a little upwards of 24 millions; this would give for the whole amount 30 millions.

If we suppose they issued notes to the amount of their capital, 30 millions, and the loss by their failure was 50 per cent., or 15 millions, allowing ⅕th of this to fall on the small notes, it would be three millions; 3 millions for 20 years would, on 10 millions, for 100 years, be 15,000,000, or 1½ per cent. per annum.

Suppose they issued notes to only half the amount of their capital, and the loss on their failure was 50 per cent., then the loss on small notes, from their insolvency, would be ¾ of 1 per cent., or 7,500,000.

The average of these gives 1⅛ per cent., or 11,250,000, which has been adopted.

2. The parliamentary returns show, from 1790 to 1818, the failure of 274 banks in England. If we estimate the loss by each at £20,000, this would be per annum £195,714, which, on a circulation of 15 millions of notes, is more than 1¼ per cent., giving for 3 millions of small notes, (i.e. ⅕ of the whole,) ⅕ of £195,714, or £39,142, rather more than 1¼ per cent. This would make our loss on ten millions of small notes for 100 years, $12,500,000.

3. Loss of the United States, by broken banks, from 1814 to 1819, 1 million.

This loss, it is believed, may be said to have accrued within the 5 years from 1814 to 1818, both inclusive. The receipts into the Treasury during those 5 years were $198,000,000, the loss thereon over ½ of 1 per cent. on the 5 years, or 1⁄10 of 1 per cent. per annum.

If it should be taken into consideration, however, as it ought to be, that sixty-eight millions eight hundred thousand dollars were received from loans and Treasury notes, and ninety-three millions from customs, and that upon none of the notes received from either of these sources was there any loss to the Government, then the whole amount of loss accrued upon thirty-six millions of dollars, received for public lands, internal revenue, direct taxes, and incidental sources. One million on thirty-six is upwards of 2¾ per cent. on the whole period.

B.

Forgery.

The loss by forgery cannot be very accurately estimated. Small notes, it is known, however, are much more frequently forged than large ones. The only data discovered are in the report, in 1819, by a committee of the Commons House of Parliament, of which Sir James McIntosh was chairman, on the subject of forgeries.

According to the testimony of Basil Montague, Esq., the number of forged notes of £1 in circulation, was,

These forgeries were almost all of Bank of England notes. The Bank of England notes under £5 in circulation, during 1816 and 1817, did not exceed 8½ millions. This would give more than 5⁄16 of 1 per cent.

The loss by forgery in this country is probably somewhat less, and has been estimated at ¼ of 1 per cent. The foregoing returns of forgeries, however, it is apprehended, are of those only detected at the bank, or prosecuted; and they are confined to £1 notes.

By far the greater number of Bank of England notes under £5 were, it is true, £1 notes.

C.

Loss and Destruction of Small Notes.

Extract of a letter from a highly respectable gentleman in Philadelphia, to R. H Wilde, February, 1832.

*      *      *      *      *

“The loss of notes under $5 is somewhat larger. One of the oldest and most respectable of our Philadelphia banks gives the following details for a period of ten years, namely, from 1814 to 1824:
Issued, of one dollar notes, $119,150, of which 2,936 are still in circulation.
Issued, of two dollar notes, $59,600, of which 987 are still in circulation.
And, for a period of twenty years, namely, from 1804 to 1824, issued, of three dollar notes, 285,348, of which 7,362 remain in circulation. [On the $1 notes ¼ of 1 per cent. per annum, on the $2 notes upwards of ⅛ of 1 per cent. per annum, on the $3 notes upwards of ⅛ of 1 per cent.]

An intelligent cashier of another highly respectable banking institution in Philadelphia, from whom information relative to the loss of notes in circulation was requested, says: ‘I have given attention to the subject, and send you a statement, in which the amounts given as issued and returned are to be considered as hypothetical, whilst the result of loss to the community, and apparent gain to the banks, may be relied on as facts. The result shows people take such good care of a bank note, whatever its value, that in the instances adduced, although there has been a loss to the public, it is not more than pays the institution the expenses of plates and paper. Without a controlling power that could prevent excessive issues, by collecting and returning the small notes for redemption, very different results would, in many instances, occur.’

It appears that the 243,200 were returned and re-issued between November, 1825, and April, 1827, so often as to make the aggregate amount paid out during that interval $611,027.”

Extract of a letter from a highly respectable gentleman in Richmond, to the Hon. A. Stevenson, Speaker of the House of Representatives.

“Richmond, March 1, 1832.

“Dear sir: The amount of small notes for change issued by the city in the years 1815, ’16, and ’17, was $39,947 60, and the amount now outstanding, and, I presume, lost or destroyed, so as never to be called for, is $8,298 12. The amount of one and two dollar notes, also issued in 1820, was, $19,986, and the balance to credit outstanding is now $584. It may be proper, however, to mention, that, in consequence of the passage of an act prohibiting the issuing of notes under $5, the latter were brought in and redeemed much earlier and in larger amounts than would otherwise have been the case, and there was less time for loss and destruction of them.”

[On the change bills, for the whole period, 20 per cent.; on the one and two dollar notes, for the whole period, 3 per cent.]

The acts prohibiting small notes passed in 1820 and 1821. The loss on the change bills, therefore, was about 4 per cent. per annum, and on the small notes about 1½ per cent.

D.

Cost of Making Small Notes.

10,000 impressions may be taken from a plate. It will then require to be retouched. This, it is understood, can be done only once. 20,000, therefore, are all one plate will produce. The plate holds four notes, and costs $200: the retouching, one-fourth of the first cost, or $50. The $10,000,000 of small notes, assorted sizes, 1, 2, 3, and 5s, will be about 7,500,000 notes. These, requiring to be renewed every 2½ years, make 40 emissions necessary in 100 years; 40 emissions, of 7,500,000, is 300,000,000 of notes, which require 3,750 plates, producing 20,000 impressions, of 4 notes each.

Washington, March 24, 1832.

Sir: I have had the honor of receiving your note on the subject of bank bills, cost of paper, engraving, printing, &c., and with pleasure annex the following estimate of cost, etc. , for your information, viz.

With respect, Your obedient servant,

R. G. LANPHIER.

R. H. Wilde, Esq.

In case of forgery, it is necessary to call in all the old emission, and issue a new one.

This requires new plates; but being an irregular and contingent expense, it has not been estimated. Perhaps it might occur once in ten years.

Cost of Treasury Notes, Obtained from the Treasury.