IN THE SENATE OF THE UNITED STATES.

March 8, 1852.

Submitted and ordered to be printed.

March 9, 1852.

Ordered that 2,000 additional copies be printed.

Mr. Hunter made the following

REPORT:

[To accompany bill S. No. 271.]

The Committee on Finance, to whom was referred the report of the Secretary of the Treasury, have considered so much of the same as relates to a change in the coinage, and respectfully submit the following views:

The subject is one of great importance and much difficulty, for it involves more or less all the questions connected with the metallic currency of the country. On the one hand we have seen the rapid disappearance of our silver currency, and the certain consequence of that loss, a flood of small bank notes; and on the other we have the natural, and to some extent the well-founded, apprehensions as to the danger of tampering at all with the standard of value. Among those even who believe that there is a necessity for some legislation on the subject of our coinage, there is a diffierence as to the precise measure to be adopted. Some are of opinion that only one of the precious metals should be used as the legal standard; and these, again, differ as to which shall be selected. Others think that the double standard should be preserved, but recommend a different legal ratio to be established between the two metals, according as the silver coins are large or small. These views have all been examined by the committee, as far as their time and means of information permitted. And first, as to the danger of accommodating the legal standard to the increasing quantity of gold, which many seem to think may swell the volume of currency so rapidly as to disturb not only all the settlements of property made for long periods of time, but to affect seriously all the pecuniary transactions of society. To ascertain what may be the probable effect of the additions to the stock of precious metals in the world, which have been made so rapidly of late, it will be necessary to see in what manner and to what extent their capacities as a standard of value have been affected by changes which have been made in their relative proportions to the property of the world.

If there were no other money but gold and silver, and if contracts were made, not according to arbitrary values assigned by legislation to given portions of them, but were measured by certain weights of fine gold or silver, then these metals would fluctuate precisely according to natural laws; that is to say, according to the proportion which they bore to the residue of the property of the world. A contract might be measured in specie by a law of its own; that is to say, it might specify that it was to be paid in such a weight of gold or in such a weight of silver, and this arbitrary rule might differ a little from its real value as bullion; but in general, the great mass of transactions would be measured in these metals nearly according to their true bullion value; that is to say, their currency and their bullion values would correspond. If the stock of bullion in the world increased in the same ratio with the property of the world, the standard of value would be invariable; if more slowly, it would appreciate; if more rapidly, it would depreciate. But still the natural laws of trade would lead to constant efforts to produce an equilibrium: if they grew dearer, more of these metals would be raised; if cheaper, less labor would be employed in producing them; and although there might be periods when the true equilibrium could not be preserved, still the tendency would be that way. At any rate, the relative values of the two metals, gold and silver, would be regulated by the laws of trade, and contracts would be measured by those metals within a reasonable degree of approximation to the true proportions. If now, however, the governments of the world should interfere and enact that a certain quantity (say fifteen ounces) of silver should be equal to one of gold, it would become more difficult to trace the laws which would then regulate the compound standard. These metals derive their value from two distinct sources — one from their use as a currency, the other from their application to manufacturing purposes. The demand for them as currency in any given year is to be measured by the number and amount of exchanges to be made in specie during that year — their value for mechanical uses is their bullion value; that is to say, it is measured by their proportion to the residue of the property of the world, for the demand for them in the arts will be very nearly in proportion to the wealth of society. When this regulation of law takes effect, these two values may differ by sensible limits. If, in the instance cited, any extraordinary cause should increase the relative supply of gold, then the bullion value of fifteen ounces of silver would be greater than one ounce of gold. The demand for the precious metals to be used in the arts would play upon the silver, and it would be directed to such purposes until the decrease of currency and the increase of plate had again equalized the currency and the bullion values. But in such a case it would be clear that this artificial regulation had prevented the currency of the world from increasing with the supplies up to the natural rate of bullion, and had forced some of it into manufactures which otherwise would have gone into coin.

The great point of preserving a precise equality between the bullion and currency values of the precious metals would now, to some extent, be lost. Still the deviations might not be enough to lead to very serious consequences. It will still simplify the inquiry beyond the real state of the case if we continue to suppose that gold and silver are the only money of the world. But to approach still nearer to the real state of things, we now take the case of a difference in the ratio of gold to silver, as established in different countries. Instead of a common legal proportion of fifteen to one, we will now suppose that some nations adopt that ratio — others, that of fourteen to one — and that others, again, use only one metal as a standard, some preferring silver and others gold; and here, again, we will suppose an extraordinary increase in the supply of gold; the bullion price of silver now rises to fourteen to one: how will these different countries be affected? As a currency, silver will leave that in which its ratio is fixed to fifteen to one of gold, and gold will there replace it; it will still be seen as a currency where its legal rate is fourteen to one, and it will be used as bullion every where until the increased quantities bring down its bullion to its currency-value, taking the world together. But how will the first country be affected? It will purchase the gold to replace the silver, at a loss; that is to say, it will not get gold enough in exchange for its silver; and it must be remembered that this loss is sustained on far the largest value which it had invested in coin, because, where both circulate freely, the silver probably appears in so much greater quantities as to be more valuable. It seems that for fifty years, from 1750 to 1800, (see Doc. No. 117, p. 50, 1st sess. 21st Cong.) the quantity of silver raised was to that of gold as forty to one: and yet, during that period, the value of gold was not more than fifteen times as great as that of silver. As a further proof of the greater quantity of coined silver, we find that the value of the silver, as compared with gold coin, was, in France, from 1803 to 1840, nearly as three to four; and in the United States, from 1793 to 1841, was nearly as two to one; and in Great Britain, where gold was the exclusive legal standard, silver being used only for the smaller transactions of trade, the proportion of silver was more than one to six. So that there can be little doubt of the large excess in value of the silver coin, as compared with gold. (See table A.) Indeed, it appears from a carefully compiled table, appended to Mr. Ingham’s report, (Doc. No. 117, p. 101,) that, from 1492 to 1825, there were coined from the American mines $4,310,000,000 in silver, and only $1,890,000,000 in gold. But, in tracing the effect of this change of the relative value upon particular countries, we must not forget its operation upon the rest of the world. In thus excluding one of these metals from one country, if its property and trade were large, and in thus forcing more than its natural proportion into manufactures, we should diminish the volume of specie currency of the world below the natural supply. How this would affect mankind will be hereafter examined. But the mischief would be great indeed if all the world were to adopt but one of the precious metals as the standard of value. To adopt gold alone, would diminish the specie currency more than one-half; and the reduction the other way, should silver be taken as the only standard, would be large enough to prove highly disastrous to the human race. Indeed, a reference to the history of the precious metals, and the general course of human production, can scarcely fail to convince us that there has been a constant tendency to appreciate their value, as compared with the residue of the property of the world, and that every extraordinary increase of the supply of the precious metals, of which we have any account, has exercised a highly beneficial effect upon human affairs. When contracts are made by a standard which is gradually contracting, the advantages are on the side of capital, as agaiast labor, and productive energy is cramped by receiving less than a fair share of the profit of its enterprises. Before the invention of substitutes for payments in coin, and before the increased supply of specie from the discovery of America, human history is full of the strifes between debtor and creditor, and human legislation is rife with experiments to limit the encroaching and engrossing power of capital.

The most ancient legislation of which we have authentic accounts, extinguished all debts in every seventh year. Interest was often prohibited, and generally regarded with abhorrence; for although the reason was not perceived, yet the fact was felt, that capital received profit enough for its sue in the appreciation of the standard of value. Up to a recent period, the debasement of coin has been practised in all countries. The English pound, which in the days of William the Conqueror contained a pound weight of silver, contains now 3oz. 12dwt. 16gr. The French livre, whose original weight would now be worth $18 16, is so reduced as to be worth only 18⁴⁷⁸/1000 cents. Such are the effects which would have naturally flowed from a constant tendency towards contraction in the standard of value upon which contracts were based. The attempts which were made to relieve these evils were unskilful, and often mischievous; but these expedients were sometimes called for by the necessities of the times, and were the evidences, if not the remedies, for mischiefs actually endured. To have prevented the contraction of the specie standard of value, it was necessary that the precious metals should have increased as fast as the residue of the property of the world; but we know that before the discovery of America, the annual supply of the precious metals was very small, whilst it is notorious that capital and property accumulate rapidly in times of profound peace. That this must be so, becomes still more evident when we trace the history of the precious metals since the discovery of America, and during a period when we have better means for ascertaining facts in relation to the relative progress of specie and property. That capital has increased with great rapidity, even in the last two centuries, although there were long periods of wasteful warfare in both, there is abundant evidence. Since the time of William of Orange, capital in Great Britain, and perhaps in Europe generally, must have doubled; for the rate of interest, notwithstanding the increasing demand for capital from increasing population, has diminished nearly one-half. The legal rate of interest in England during that reign was eight per cent., and money may now be borrowed for one-half of that rate, or less. The immense impulse which has been given by discoveries to the productive power, not only of man, but of material agencies, has increased vastly the property of the world. But for the last century the increase of the precious metals has been comparatively slow. The amount produced annually cannot be accurately ascertained for any period of time, but a statement made by Brogniart of the production of the precious metals (see Doc. No. 117, p. 99,) from 1790 to 1802, places it at $45,585,241. The entire production from the mines of America from 1492 to 1825, (see same Doc., p. 101,) according to a table compiled from the statements of Humboldt and Ward, amount to $6,200,000,000. The quantity existing in the world at the time of the discovery of America, and that added from other sources since that period, are to a great degree conjectural, but it is probably not under $8,000,000,000. (See table E.) Now if $45,500,000 be taken as the average annual product during the last century — and doubtless until within the last ten years this estimate is sufficiently large — and if we deduct for the annual abrasion and waste $10,000,000, (and Humboldt computes for the waste in plate alone in Europe, $4,500,000 — see same Doc., p. 70,) then the average annual addition to the stock of specie was not quite one-half of one per cent. Indeed this addition is probably overestimated here, for Mr. Gallatin estimated the annual supply from 1809 to 1829, at $18,000,000 in silver, and $9,000,000 in gold, making but $27,000,000 in all. Who can suppose but that property has increased at a far more rapid rate? Population has certainly increased at a much more rapid rate than one-half per cent. annually, (see table F,) and we shall hereafter show that the property of the world has grown faster than its population. In 1846, the ascertained public debt of Europe alone was $8,170,345,607, (see Statistical Companion, by Banfield and Weld, pages 23 and 24;) and all must admit that this constitutes but a small portion of the capital in those countries, even if we apply the term only to those products in which labor enters as an element. VVhen we consider how small a portion of the capital of the world is invested in public debt, we may form some conjecture as to th vast amount of commodities which measure the value of the specie of the world. That this stock is increasing much faster than that of the precious metals, is also highly probable. If, notwithstanding the increased demand for capital which an increased population produces, there is a fall in the rate of interest, there is reason to presume that the increase of capital is faster than that of population; that is to say, unless extraordinary circumstances have occurred to produce a greater relative waste, either of population or capital. But the period between 1800 and 1850 has not been marked by such circumstances. From 1801 to 1841, the popuiation of Great Britain has increased from 10,942,646 to 18,720,394; and in the United States, from 1800 to 1850, the population has increased from 5,305,925 to 23,091,488; but during this period the rate of interest has greatly diminished. Now if capital had increased precisely in the same ratio with population, the interest would have been about the same now as in 1800; but this last having diminished, we have in that fact a proof that capital has increased faster than population.

If, then, we had possessed no currency but specie, and if our stock is about what has been estimated, it would have required a much larger annual supply of specie to have maintained the standard of value now as it was in 1800. But instead of that, the relative excess of property has been constantly increasing. How, then, can we fear that any supplies of the precious metals likely to be derived from California, or any mines now known, can affect injuriously the standard of value? The probable amount of specie raised annually does not now exceed $150,000,000, (see table B,) which is a sum far below what would be necessary to keep up an invariable relation between the specie and the constantly increasing property of the world.

The effect of this contraction of the specie standard has been palliated by reductions in the amount of fine metal which was contained in coins of a given denomination. Less gold and silver were made from time to time to represent the same values; and although this made up to some extent for deficiencies in the production of the precious metals, yet its operation upon existing contracts, and especially those which required a long time for their fulfilment, must have had a depressing effect upon enterprise and production. The best matured schemes for profitable adventure might thus disappoint expectation, not because the calculation, so far as founded upon known data, was imperfect, but because of a contraction in the standard of value. What could be better calculated to discourage enterprise or depress the spring of human production? How much of the depression of commerce, during the middle ages, arose from the decline of prices consequent upon a diminution of the stock of precious metals, has probably never been sufficiently estimated. And yet a comparison between the deep decline of all the great interests connected with commerce and human industry during that period, and the wonderful impulse given to all sorts of productive enterprise after the discovery of the American mines, must suggest the effects which the existing state of the standard of value produced during the two periods. But it may he asked why it is that this contraction of the standard of value has not been more seriously felt in modern times, if, in truth, the relative additions made to the stock of specie and property of the world were much larger in the latter than in the former case. If all the pecuniary transactions of society had been settled in currency, and there had been no currency but specie, there is reason to believe that the present state of things would give unmistakable evidences of the effects of a contraction of the currency upon our enterprise and industry. But since the general use of bills of exchange, currency has not constituted the only means of settling pecuniary transactions; and since the middle of the seventeenth century, when banks began to be felt in commercial affairs, specie has not constituted the only currency of the world; but this last has been so largely composed of paper, that we cannot omit its consideration in any question connected with our standard of value. Perhaps no discovery in the wdiole machinery of commerce has been more important to the world than that of the bill of exchange; none which saved so much labor in its processes; none which was so efficient in keeping up some approximation between the real and the money standards of value of tbe world. Accounts which formerly required a long, expensive, and hazardous transportation of the precious metals, began now to be settled by offsets, or an exchange of balances mutually due by distant bankers; and thus a mere transfer of entries upon their respective books, often saved the expense and the risk of the actual transportation of specie. The great facilities thus afforded, doubtless suggested the idea of the first hanks which were established. The banks of Venice and Amsterdam were founded merely for purposes of exchange. A bank note was a certificate of a deposite of coin, or bullion, or an open letter of credit to that amount on the books of the bank. A credit thus established in the Bank of Amsterdam, when that city was one of the great centres of commerce, became more valuable sometimes to a London merchant, than the same amount in specie at home, because with it he could pay a debt in France or Italy, and save the expense and risk of transporting his money. It was not surprising, therefore, that such a bill, should be worth more than the specie which it represented. To estimate the amount of pecuniary transactions settled at home and abroad by this system of exchange or offset, would be plainly impossible. But some idea may be formed of the vast extent to which it diminishes the demand for currency, if we consider the profit which a small part of this business pays, the number of persons whom it supports, and the immense amount of such transactions which individuals perform for themselves, since the machinery of commerce has improved so much, and steam and telegraphs have increased so greatly the facilities for intercourse and correspondence. But this is not the only mode in which paper has diminished the demand for the precious metals. Not only did the wholesome operations of the system of exchange dispense with the use of specie to a great extent, but another contrivance was made which is of more doubtful utility. The value of a paper founded upon an actual deposite of specie, suggested the idea of one based upon the supposed capacity of the maker to redeem it in specie whenever it was demanded. Governments lent their aid to this attempt to substitute a promise to pay coin, for coin itself. A demand was created for it by receiving it for loans, and taxes, and currency, contracted and expanded, not according to the specie standard, but according to the demands for credit, and under laws often differing very widely from those which should regulate currency. The notes representing specie deposites, and used to transfer and offset the balances of trade, had performed a highly useful function, and had interfered with the specie standard of value in no other way than by economizing its use, and in enabling less to discharge the office of payments. If there was a tendency to a contraction of the specie standard, the business of exchange became more active, and thus contributed to keep to a proper level the currency value of the precious metals. If, on the other hand, there had been a tendency to an expansion of the specie medium, which has not existed since about the middle of the sixteenth century, the bullion value of the precious metals would rise, and thus tend to preserve the true standard. But when banks undertook to carry on the business of exchange or offset by paper which represented neither deposites of specie nor actual balances of trade, but which undertook to find either the specie or the bills, founded upon real balances, whenever they were required at a certain place, the whole subject passed from the regulation of the natural laws of trade, and was placed under the management of artificial and empirical rules, which, however ingeniously conceived and skilfully administered, have had the effect to derange often the whole system of exchanges and of commerce in the world. As this paper took the place of specie, the currency value of the precious metals diminished, large amounts were driven into the uses of manufacture, which ought to have been employed as currency, and the great law of nature was thus suspended for a time, which, by increasing the value of specie, would have directed more labor to producing it. If, then, specie enough could be furnislied to perform all the offices of circulation, and to banish all paper from the uses of currency, except such as was founded upon an exchange of real values, consisting either in specie or actual balances arising in the operations of trade, who could doubt the beneficial results from such a state of things? The vibrations between the greatest possible contractions and expansions of such a currency, for the period which would embrace the transactions of a generation, would never be such as to produce a tithe of the calamities to which a paper currency has so often exposed us; and commerce would be secured from a source of risk vastly more prolific and dangerous than all those against which insurance offices undertake to provide.

If the preceding views are correct, there is no just cause to apprehend any dangerous expansion of the currency from the increase of the precious metals. The annual production of gold and silver probably does not exceed $150,000,000; but the interest upon the public debt of Europe alone, at 4 per cent. per annum, would amount to $326,813,821, and the annual production of the United States is probably at least four times that sum. Indeed there is reason to believe that the value of the property of the world is increasing faster than that of the precious metals, even with the new sources of supply to the latter. Now there can be no danger of an undue expansion of specie currency until the stock is increased beyond the point of which we are speaking, and up to that point such an increase would prove an unmixed blessing. Indeed, no increase of specie can produce an expansion if we should have none but a specie currency until there is enough to take the place of the paper money afloat. In the United States alone the bank notes in circulation in 1850, according to a report from the Secretary of the Treasury, which included returns only from a portion of the banks, amounted to $131,366,526, and this constitutes but a small part of the paper money of the world. But would any possible increase of the precious metals supersede paper money, and leave nothing in circulation but the paper of exchange? Unless governments interfered, such might be the effect of a sufficiently large increase of the precious metals. The expense of issuing promises to pay in specie — or, in other words, of issuing bank notes in the usual form — is not measured only, as sometimes asserted, by the value of the paper and printing, but is another form of the great business of exchange, by which banks or persons undertake to transfer and offset the actual balances of trade by means of credit instead of money. When specie is scarce and dear, this business is profitable; but as the former becomes plentiful and cheap, the profits of the latter decline, and dealers will not pay for a promise to furnish specie in a mode which involves a chance of failure, when it is so abundant that they may readily obtain bills drawn upon actual deposites.

The probability is, that the whole amount of the precious metals raised annually, after deducting the quantity lost to the stock of the world by abrasion and other causes, does not amount to the bank note circulation in the United States alone. In 1803 Humboldt estimated the annual loss on plate in Europe alone, from abrasion and other causes, at $4,500,000. The loss on coin by abrasion was estimated by Lord Liverpool at one per cent. on the guinea, and two per cent. on half-guineas, for fifty years; and in eleven years one-fifth of one per cent. on crowns, 1⁹/10 per cent. on half-crowns, upwards of five per cent. on shillings, and 3¹/7 per cent. on sixpences. Some idea may thus be formed on the annual wear of the precious metals, which is to be subtracted from the $150,000,000 which are probably raised in the year. Upon a review of all the considerations which affect the questions submitted to us, there would seem to be no danger from an undue expansion of the standard of value, if we bring into active use both of the preciouS metals, and if the annual supplies of both were to increase beyond their present annual measure. It is true that none but a calculation of approximation can be made upon this subject. The data are too complicated and uncertain to enable us to make an exact estimate of the values of the specie or of the property of the world. But since the middle of the seventeenth century there is great reason to believe that the value of the specie standard has contracted, and there are some grounds for supposing that in the United States this tendency has not been corrected even by the production of gold in California. The summer of 1851 witnessed a severe pressure in the money market in New York; and an exhibit of the banks of the State of Massachusetts for the year 1851, shows that the proportion of their liabilities for circulation and deposites was to their specie as 13.17⁷/10 to 1, which is a far greater proportion than was ever known in that State from 1815 to 1851, with the exception of the two years of 1835 and 1836. (See Hunt’s Merchants’ Magazine of February, 1852, p. 222.)

This state of things was probably brougbt about, in part, by the appreciation of silver beyond the mint price under our law. The silver coin left us, and stimulated importations from the places where it went. Gold did not immediately replace it in circulation; indeed, for the purposes of small change, it could not; and the banks were thus tempted to issue notes to supply the vacancy in the currency. Had the market and mint prices of silver corresponded in the United States, we should probably have seen nothing of all this. Although it is possible that the first effects of a large influx of specie might be an increase of bank paper, yet this is an evil which the laws of trade would soon correct. Should, however, the present state of things continue in relation to silver, we shall not only lose the advantages of the more abundant of the precious metals, for the purposes of a standard, but we must lose the specie standard entirely in the smaller exchanges of society. It is doubtful whether the dollar gold piece can maintain its place in circulation; and smaller values in that metal can hardly be used for coins. This vacuum must then be supplied by bank notes of the very worst kind, the notes of smaller denominations. So much is the value of currency affected by the facility with which it may be counted, and its convenience of transportation, that there will always be difficulty in supplying the place of small notes with any thing but silver, or that of large notes with any thing but gold. We require, then, for this reason, the double standard of gold and silver; but, above all, do we require both, to counteract the tendency of the specie standard to contract, under the vast increase of the value of the property of the world. And what harm can arise from any probable increase of the precious metals, if both are allowed to swell the volume of currency? On the contrary, a more beneficial event for the trade, the industry, the moral and political condition of the world, could scarcely be imagined. Of all the great effects produced upon human society by the discovery ot America, there were probably none so marked as those brought about by the great influx of the precious metals from the New World to the Old. European industry had been declining under the decreasing stock of precious metals and an appreciating standard of value, human ingenuity grew dull under the paralyzing influences of declining profits, and capital absorbed nearly all that should have been divided between it and labor. But an increase of the precious metals, in such quantities as to check this tendency, operated as a new motive power to the machinery of commerce. Production was stimulated by finding the advantages of a change in the standard upon its side. Instead of being repressed, by having to pay more than it had stipulated for the use of capital, it was stimulated by paying less. Capita!, too, was benefited, for new demands were created for it by the new uses which a general movememt in industrial pursuits had developed; so that if it lost a little by a change in the standard, it gained much more in the greater demand for its use, which added to its capacities for re-production, and to its real value. Property which had been acquired by the strong arm, and accumulated in violation of the great laws of equity and trade, by an almost insensible transition, was distributed more equally in society. Nature, under the operation of this its great bankrupt law, as if by an invisible hand, loosened the bonds of the debtor, which heretofore time had continually tightened, and distributed to labor, for purposes of re-production and upon equitable terms, capital which distrust and apathy had either locked up or administered with a too sparing hand. New influences arose in society, and a new impulse was given to its movements. In the present stage of the world we may, perhaps, no more expect any event to produce such rapid transformations in society. But we might reasonably look for something like the same consequences from a similar event. Any system, either of violence or law, which distributes property improperly and unjustly, and which gives a false direction to the great stream of productive industry, will, in the end, produce throes and convulsions in the bosom of society. Unless human skill, such as is rarely if ever known, intervenes to give a true direction to affairs, or unless nature interferes, through the silent operation of her laws, to remove inequalities and repair injustice, violence is almost sure to be used to make a change if it cannot apply a remedy. The recent discovery of vast auriferous deposites on the globe, would seem to mark the approach of one of those great eras in human affairs when the hand of nature is more obvious than that of man in producing changes. But, be this as it may, we may safely act upon conclusions to which we are led, either by a practical or theoretic view of the question; and your committee are not prepared to go further than to provide for a want which experience has demonstrated to exist. They are disposed to adopt nearly the recommendations of the Secretary of the Treasury, and to leave, for a future day, whatever provisions time and experience may prove to be necessary.

To afford the country the benefit, to some extent, of both metals as a standard of value, it is proposed to diminish the quantity of silver in the half-dollar, and coins of smaller denomination, by about 6.91 per cent. The British government have adopted a still gieater seignorage, and their experience seems to have proved the efficiency of this measure for furnishing metallic coins in sufficient quantities for the smaller transactions of society. But, if not made a legal tender — and it is not made so in Great Britain, except for small sums — it can only circulate for such purposes. To make it a legal tender at such rates, rates beyond its bullion-value, would debase the standard and expel the gold. To secure the use of a silver coin, in place of small notes, for the minor transactions of commerce, it is proposed to make this coin a legal tender for sums not exceeding five dollars, and to receive it in payment of public dues. This, however, does not secure the full benefit of the use of silver as a currency, unless we were to adjust its legal value to that which it bears in the market; but as no relation between the market values of the two metals has so developed itself as to promise to be permanent, it might be dangerous to attempt at present to disturb the existing law. Whenever the relation between the market and mint values of gold and silver shall promise a reasonable degree of stability, there can be little doubt but that there should be a re-adjustment of the mint-values of these metals. In the mean time, however, the course of our commerce, and the convenience of exchange, would seem to require some new provisions in relation to bullion. Gold has become an article of export — movements of the precious metals from one country to another are now more frequent and active, and these are regulated by the value of the metals, not as coin, but as bullion. For all such purposes it would be a convenience to trade, and a saving of the expense of coinage to government, if the bullion were cast into bars, either of fine metal or of standard fineness, at the option of the depositor, for a moderate compensation. Foreign exchanges are measnred in the precious metals by weight; the custom of commerce may, perhaps, establish hereafter a like measure in domestic transactions; and should that ever be done, the legal regulation of this difficult subject will be somewhat simplified.

In adopting a diminution of the amount of standard silver to the extent recommended by the Secretary of the Treasury, your committee have acted not without doubt. So great a diminution in the amount of silver will undoubtedly preserve a supply of coin for the smaller transactions of society; but if it approached more nearly the true bullion value, the silver coin would be much more efficient as a general circulating medium. Indeed, the American coins of a less denomination than a quarter of a dollar would probably be retained in this country, even with their present amount of silver. The expense of coining a given value of silver into the smaller coins is much greater than into the large; and when coined, the great demand for them gives them a higher currency value than that assigned by law. As a proof of this, the demand for silver for exportation has not operated as yet upon these smaller coins — that is to say, the dime and half-dime, (the quarter, too, has been partially exempted) — whilst it has swept the silver dollar and half-dollar from the country. A greater diminution of the amount of silver is therefore required in the half-dollar, if the object be to save it from exportation, because the mere coinage does not add so much to its value. But still it is desirable to adjust the quantity of silver in the half-dollar as nearly as may be to its bullion value, as compared with the mint price of gold, if this can be made compatible with the object of retaining these coins in the country. The Secretary of the Treasury, in his annual report, has estimated the difference between the mint price of gold and its bullion value, at nearly two per cent. Some gentlemen, of large experience and practical knowledge of this subject, in New York, have been consulted, and the difference has been valued from 2½ to 3½ per cent. The director of the mint places it at 3 per cent. If, then, the cost of coining silver is 1½ per cent., the amount charged at the French mint, and if that be something near the additional value given by coinage, the half-doilar and pieces of a less denomination would probably be used as a currency under the natural demands of commerce, even when silver bore not more than 3½ per cent, premium; that is to say, if these pieces cease to be coined, as the accompanying bill proposes, for anybody except the government, which would limit the supply by the demand for currency. But should this premium continue to advance, the half-dollar would not be exported until the premium covered the 5 per cent. over its present legal value, the additional value given it by its character as a coin here, and the expense of transportation rated, from New York to Liverpool, at about ⅜ per cent. for large coin. The probability, therefore, is, that with a reduction of only 5 per cent. in the amount of silver, this coin would not be exported. With this reduction, silver in the smaller coins would bear to gold a ratio of nearly 15.238 to 1, which gives it a greater value than the existing laws of Russia, Holland, and France, in which it bears to gold the respective values of 15.333 to 1, of 15.5 to 1, and of 15.5 to 1. In England it bears a higher value; but there it is used only for tokens, and is not a legal standard except for small sums. The expense of exporting small coins abroad is far greater than, that of exporting bullion or coins of large value. The gold coin exported from this country has consisted principally of the double-eagle; and experience has shown that at a premium of 3½ per cent., the dime was not exported, owing to the increased value given it by its character of currency and to the greater expense of exportation. This remark applies, of course, to the new dime, and not those which are worn. If it was deemed expedient to use silver only as a token, then it would be safer to adopt a greater measure of diminution than that recommended by the Secretary of the Treasury, so as to accomplish the object with greater certainty. But if it is thought expedient to preserve the double standard, and to readjust it when the relations between the two metals promise to be more permanent, then it is desirable to make no greater deviations from the true value of silver than may be necessary to accomplish the object of retaining a specie currency for small transactions. That this object might be accomplished with a less reduction of the quantity of silver than is now proposed, there is some reason to believe. There is a natural tendency in the two metals to find a stable relation between their values, which continues, if not from age to age, at least for many years. Thus Mr. Moore, (see Doc. 117, before mentioned, page 50,) an officer of the United States mint, consulted by Mr. Ingham when he made his report on this subject, states that notwithstanding the supply of silver to gold in weight had been for many years as 40 or 50 to 1, yet the price of gold to silver had not varied much from the proportion of 15 to 1. Mr. Ingham remarked on the stability of the ratio between the two in France and England for ten years before his report, and we all know that until recently the proportion fixed by law in 1834, in the United States, preserved the two metals in circulation together. Such ought to be the state of things, reasoning from theory. If in any country silver, as compared with gold, be too low according to the legal standard, it will leave that country for others where it is sufficiently valued, and it will leave the uses of currency for those of the arts if more be given for it in manufactures than at the mints. All this tends to produce an equilibrium by raising the value of the one as currency, and diminishing that of the other as bullion. There are already symptoms of the commencement of that process. The premium on silver (see table C) in New York and London is less than it was in January, 1851, and still less than that of May, 1851, when it bore the greatest premium, being at the rate of 15.460 to 1, which it is to be observed is a lower value for silver than is proposed in the accompanying bill, for silver coins of the smaller denominations. In addition to these considerations, we are to remember that the higher price of silver and the lower price of quicksilver must both stimulate the production of the former.

But notwithstanding these considerations, the committee have determined to adopt the recommendation of the Secretary of the Treasury, which will at least accomplish the end of giving the community a currency of silver tokens, instead of one of bank notes of small denominations. The great measure of readjusting the legal ratio between gold and silver, cannot be safely attempted until some permanent relations between the market values of the two metals shall be established. The ratio of 14.884 to 1, as proposed by the Secretary of the Treasury, has a great recommendation in the fact that it will make the new silver coins of convenient weights, not only for the manipulations of the mint, but for the money of account with the residue of the world.

In examining the subject of coinage, another question has pressed itself for consideration. The capacity of coins to perform all the offices of a currency, depends more upon the denomination than has generally been supposed. (See table H.) When different coins are prescribed to a country, those will be most used which are capable of making most payments, and those will make the most payments which can be transported and counted with the greatest convenience. By convenience of transportation is meant not only the facility, but the safety with which they may be carried. By the convenience of counting is meant those which alone, or in combination with others, can make the most payments, and at the same time be most easily and speedily counted. Thus, the smaller the coin, the more payments it is capable of making, and also the more time will it consume to make large payments in them. The larger the coin, the fewer payments it will make, but the greater the economy of time in using them to settle great amounts. We should expect, then, to find that the pieces for which there is a demand in the greatest number, are neither the largest nor smallest. Thus, of the gold pieces in this country, by far the larger number consists of the half-eagle. In France, the gold piece coined in the largest number is the twenty-franc piece, which, of their coins, is nearest in value to our half-eagle. In Great Britain, the sovereign piece, which approaches still nearer to our half-eagle in value, is in most demand. Of the larger silver coin, we coin most halves, the French most five-franc pieces, the Austrians most rix-dollars. Of the smaller silver coins, we coin most dimes, the English most shillings, (21.8) the French most of the one-franc piece, (18.5) Austria most of the twenty-kreutzer, (16.2) Spain most of the pistareen, (18.6;) thus showing something like an identity of value in the coin which makes most payments and is in most demand. (See table D.) But it is to be observed that the values invested in the different coins, by no means correspond with the number of pieces. This conclusion is also somewhat strengthened by the relative wear of some of the pieces, in regard to which we have information. If of the same thickness and fineness, the greater the wear, the greater the rapidity with which they have circulated. Thus, according to Lord Liverpool, (p. 70, Doc. 117, referred to) in eleven years the half-crown loses 1⁹/10 per cent., the shilling five per cent., the sixpence 3¹/7 per cent. But according to Mr. Moore, (same, page 70) the guinea loses but two per cent. in fifty years, and silver less — meaning silver coin of the larger denominations. It is true that the greater wear of the smaller coins is to be ascribed, in some degree, to their greater superficies in proportion to their weight; but that will not account for the whole of it, as it is to be observed that the shilling piece wears more than the sixpence, because, probably, it Ls most often used. This great tendency of the small coin to become light, proves that the amount of metal should not be too much diminished, and would also suggest the propriety of a further resort to chemical and metallurgic experience, for the purpose of lessening the loss by abrasion. The considerations of which we have been speaking, also suggest the propriety of attending to the results of experience in relation to the most convenient denominations for counting off payments, either in combination with others, or in single pieces. Instead of the double-eagle, eagle, half-eagle and quarter-eagle, it would be far more convenient to have pieces of one, two, three, five and ten dollars, and to dispense wuth the double-eagle, which is merely used for bullion. Not only is the superior capacity of these pieces to make numerous and convenient payments demonstrated by theory, but it is proved by experience. Bank notes of almost all denominations have been used, and the numbers which experience has proved to be most convenient are the same with those just mentioned. Following out these views, a provision has been introduced for coining a new gold piece of the value of three dollars. The great capacity of such a piece for making payments, either alone or in combination with the existing gold coins, is so great, (as will be seen by a reference to table H,) that there can be little doubt of the propriety of authorizing this coin. If a two-dollar piece could be substituted for the quarter-eagle, the coinage would be decidedly improved; but the committee have not ventured further than to propose the additional piece.

It will be observed that the bill which accompanies this report, makes these new coins receivable in payment of public dues. There might be danger that such a demand would induce so great a coinage as seriously to depreciate the general currency of the country. But the bill provides that the new coin shall not be struck upon the demand of depositors, but under the directions of the Secretary of the Treasury, who can thus always limit the amount. Should any further check be necessary, Congress may hereafter define the amounts beyond which such coin should not be receivable for public dues.

The committee have also adopted the recommendation of the Secretary of the Treasury in relation to a seignorage. The mints of this country are likely to become so expensive, and the quantities of the precious metals manufactured in them are already so large, that it would seem to be proper to impose some legal charge upon the manufacture for the purpose of sustaining the mints. The amount of seignorage is a question of some practical difficulty; but the charge now proposed is somewhat less than that exacted in England or France. In France the charge is one-half per cent. on gold, and one and one-half per cent. upon silver. In England one and one-half per cent. is paid upon gold, and two and one-eighth per cent. on silver. (See table G.) We propose to charge to depositors one-half of one per cent. for both gold and silver; denying them, however, the right of having the new silver coin struck on their own accounts.

With these views, the accompanying bill is submitted.

APPENDIX