II. COINAGE AND PRODUCTION OF PRECIOUS METALS.

The prevailing systems of coinage in this country and among all great commercial nations are the result of development and growth. Gold and silver have become the principal money metals by a process of natural selection, which has chosen the instruments best suited to the purpose. In recent years, and under the laws of development, nearly all the great trading countries of the world have selected gold as the standard of value. In the future, gold itself may give way to something better, for it only relatively meets the essentials of a perfect standard.

Among Greeks, Romans, and Oriental peoples, cattle were generally used as a standard of value. The modern rupee of India is the old Sanscrit word roupa, a herd. Capital is but the estimate of Roman riches in cattle. The Latin pecus, cattle, is the root of pecunia, riches, and the origin of our word pecuniary. The Icelanders measured values in dried fish; the Hudson Bay country in skins; the early Virginians in tobacco; the Indians of the United States and Canada in wampum; the Chinese, even in recent times, in squares of pressed tea; the Africans in bars of salt and slaves.

These primitive devices gradually gave way, under the demands of international trade, to the use of metals as standards of value. Tin, copper, gold, silver, and iron all were used, and, at first, passed by weight. Government coinage of money is thought to date from the seventh century B. C., and is credited to the Lydians and to Pheidon of Argos, the official stamp being a guarantee of the honesty, weight, and purity of the coins.

Modern coinage dates from the reformation of the coinage of Rome under Constantine, who introduced the gold solidus of $3.02 in value, and a silver coin of like weight but of relative value. After the time of Julian, this silver piece, called siliqua, was given such value as that twenty-four of them equaled a gold solidus. In the Frankish Empire, under the Merovingian kings, the relative values of the solidus and siliqua fluctuated greatly. In the eighth century, on account of the scarcity of gold, there was a gradual transition to the silver standard, and a silver unit, also called a solidus, was substituted for the gold solidus, the former being divided into twelve pence. This silver solidus afterwards became the shilling of England and Germany. At first 300 pence were coined out of a pound of silver; but under Pepin the number was reduced to twenty-two solidi of twelve pence each—264 pence—out of a pound of silver. Under Charlemagne it was provided that only 240 pence, or twenty solidi of account, should be stamped out of a pound of silver, and this system was introduced, with more or less success, in what is now France and Germany. As to form, it has remained, up to the most recent period, the basis not only of the countries of Charlemagne’s Empire but of England.

After the time of Henry VIII. came a period of coinage debasement which culminated in 1551. A thorough coinage reform was effected under Elizabeth in 1560. The first large coinages of gold in England were made under James I. These continued until the death of William III., in 1701. Still, silver continued to be the standard metal, and in 1695 another attempt was made to reform the currency by a recoinage of the silver pieces, most of which had been clipped or worn, into a new full-weight silver coin. These, however, were soon exported, in spite of a reduction of the current value of the guinea, in 1717. The gold standard in England gained a nearly complete victory by act of Parliament in 1774, which provided that silver coins not of full weight (there were hardly any others) need not be accepted in payments of more than twenty-five pounds, except by weight. This provision, after several renewals, became permanent in 1798. In 1797 coinage of silver was suspended, and the single gold standard practically introduced, though its operation was somewhat interfered with by the existence of a paper currency. In 1816 the present English monetary system was introduced. It held fast to the gold standard, by the provision that silver pieces should be used only as divisional coins, and with a legal-tender power limited to forty shillings.

OLD UNITED STATES MINT, PHILADELPHIA.

Properly speaking, there was no coinage in the United States during the colonial period. Maryland had a mint at one time, and one or two of the other States, but they practically amounted to nothing. In the early colonial period the substitutes for coins were wampum and bullets, as in Massachusetts; skins and furs, as in New York; tobacco, as in Maryland and Virginia. The coins in use before the Revolution were, to some extent, those of England, but more largely those of Spain, circulated in South America and traveling up to the United States. The unit of account was the Spanish milled dollar or piece-of-eight, though, up to 1775, accounts were kept in pounds, shillings, and pence, a pound consisting, then as now, of twenty shillings, and a shilling of twelve pence “colonial” or “pound” currency. Four pounds of this “colonial currency” were reckoned as equal to three pounds sterling.

This colonial composite system of current coins was regulated by coinage tariffs. Such a tariff, issued in 1750, valued one ounce of silver at six shillings and eightpence, the Spanish milled dollar at six shillings, the guinea at twenty-eight shillings, and the English crown at six shillings and eightpence. All foreign coins were valued in proportion to the value of the Spanish piece-of-eight. Some of the colonies stamped the shilling, which constituted a large part of the money in circulation. It, however, varied greatly in value in the different colonies. Thus, the Spanish dollar equaled five shillings in Georgia; eight in North Carolina and New York; six in Virginia, Connecticut, New Hampshire, Massachusetts, and Rhode Island; seven and sixpence in Maryland, Delaware, Pennsylvania, and New Jersey; thirty-two and sixpence in South Carolina. The Spanish dollar itself, with which these comparisons were made, was frequently below legal weight, and, therefore, varied in value. Where the pieces mentioned in the tariff of 1776 were of full weight, the ratio there established was the English ratio of one to 15.21, the ratio for bullion being nearly the same.

After the tariff of 1776 had been in operation for six years, the colonies began to feel keenly the difficulties caused by the variety of coins constituting their metallic circulating medium, and the need of a special American coinage was frequently expressed. In 1782, Robert Morris, superintendent of finance, submitted to the Congress of the Confederation a scheme for a national coinage and the establishment of an American mint, which met with approval. Jefferson recommended the decimal system, with the dollar as the unit. Neither of these proposals was carried into effect till, in 1786, the Congress of the Confederation chose as the monetary unit of the United States the dollar of 375.64 grains of pure silver, which unit had its origin in the Spanish piaster or milled dollar, then the basis of the metallic circulation of the English colonies in America. This American dollar was never coined, there not being at the time a mint in the United States.

The Act of April 2, 1792, established the first monetary system of the United States. The bases of the system were: The gold dollar, containing 24.75 grains of pure gold, and stamped in pieces of $10, $5, and $2.50, denominated respectively eagles, half-eagles, and quarter-eagles; the silver dollar, containing 371.25 grains of pure silver. A mint was established. The coinage was unlimited, and there was no mint charge. The ratio of gold to silver in coinage was 1:15. Both gold and silver were legal tender. The standard was double.[4] The Act of 1792 undervalued gold, which was therefore exported. The Act of June 28, 1834, was passed to remedy this by changing the mint ratio between the metals to 1:16.002. The latter act fixed the weight of the gold dollar at 25.8 grains, but lowered the fineness from 0.916⅔ to 0.899225. The fine weight of the gold dollar was thus reduced to 23.2 grains. The Act of 1834 undervalued silver as that of 1792 had undervalued gold, and silver was attracted to Europe by the more favorable ratio of 1:15½. The Act of January 18, 1837, was passed to make the fineness of the gold and silver coins uniform. The legal weight of the gold dollar was fixed at 25.8 grains, and its fine weight at 23.22 grains. The fineness was therefore changed by this act to 0.900 and the ratio to 1:15.988+. Silver continued to be exported. The Act of February 21, 1853, reduced the weight of the silver coins of a denomination less than $1, which the Acts of 1792, 1834, and 1837 had made exactly proportional to the weight of the silver dollar, and provided that they should be legal tender to the amount of only $5. Under the Acts of 1792, 1834, and 1837 they had been full legal tender. By the Act of 1853 the legal weight of the half dollar was reduced to 192 grains, and other fractions of the dollar in proportion. The coinage of the fractional parts of the dollar was reserved to the government.

[4] This was true so far as the law was concerned, but not actually, as may be seen by reading the sentences immediately following the above statement.

The Act of February 12, 1873, provided that the unit of value of the United States should be the gold dollar of the standard weight of 25.8 grains, and that there should be coined besides the following gold coins: A quarter-eagle, or two and-a-half dollar gold piece; a three-dollar gold piece; a half-eagle, or five-dollar piece; an eagle, or ten-dollar piece; and a double eagle, or twenty-dollar piece, all of a standard weight proportional to that of the dollar piece. These coins were made legal tender in all payments at their nominal value when not below the standard weight and limit of tolerance provided in the act for the single piece, and when reduced in weight they should be legal tender at a valuation in proportion to their actual weight. The silver coins provided for by the Act were a trade dollar, a half-dollar or fifty-cent piece, a quarter-dollar, and a ten-cent piece, the weight of the trade dollar to be 420 grains troy; the half-dollar, twelve and a half grams; the quarter-dollar and dime, respectively, one half and one fifth of the weight of the half-dollar. The silver coins were made legal tender at their nominal value for any amount not exceeding $5 in any one payment. Owners of silver bullion were allowed to deposit it at any mint of the United States to be formed into bars or into trade dollars, and no deposit of silver for other coinage was to be received. Section 2 of the joint resolution of July 22, 1876, recited that the trade dollar should not thereafter be legal tender, and that the Secretary of the Treasury should be authorized to limit the coinage of the same to an amount sufficient to meet the export demand for it.

The Act of March 3, 1887, retired the trade dollar and prohibited its coinage. That of September 26, 1890, discontinued the coinage of the one-dollar and three-dollar gold pieces. The Act of February 28, 1878, directed the coinage of silver dollars of the weight of 412½ grains troy, of standard silver, as provided in the Act of January 18, 1837, and that such coins, with all silver dollars theretofore coined, should be legal tender at their nominal value for all debts and dues, public and private, except where otherwise expressly stipulated in the contract. The Secretary of the Treasury was authorized and directed by the first section of the act to purchase from time to time silver bullion at the market price thereof, not less than $2,000,000 worth nor more than $4,000,000 worth per month, and to cause the same to be coined monthly, as fast as purchased, into such dollars. A subsequent act, that of July 14, 1890, enacted that the Secretary of the Treasury should purchase silver bullion to the aggregate amount of 4,500,000 ounces, or so much thereof as might be offered, each month, at the market price thereof, not exceeding $1.00 for 371.25 grains of pure silver, and to issue in payment thereof Treasury notes of the United States, such notes to be redeemable by the government, on demand, in coin, and to be legal tender in payment of all debts, public and private, except where otherwise expressly stipulated in the contract. The act directed the Secretary of the Treasury to coin each month 2,000,000 ounces of the silver bullion purchased under the provisions of the act into standard silver dollars until July 1, 1891, and thereafter as much as might be necessary, to provide for the redemption of the Treasury notes issued under the act. The purchasing clause of the Act of July 14, 1890, was repealed by the Act of November 1, 1893. The War Revenue Act of June 13, 1898, authorized and directed the coinage of standard silver dollars to the amount of not less than one and one half million dollars a month, from the bullion in the Treasury purchased under the Act of July 14, 1890. The Act of June 9, 1879, made the subsidiary silver coins of the United States legal tender to the amount of $10. The minor coins are legal tender to the amount of twenty-five cents.

The following official figures give, by periods of ten years, the coinage of the United States from the establishment of the Mint to the present time:—

Years.Gold.Silver.Minor.Total.
1793–1799$696,530.00$1,216,158.75$50,111.42$1,962,800.17
1800–18093,067,067.503,154,687.75164,865.796,386,621.04
1810–18192,348,915.006,107,903.75162,534.078,619,561.82
1820–18292,579,017.5014,787,327.65178,372.7017,544,717.85
1830–183917,745,422.5028,112,136.60334,810.2146,192,369.31
1840–184958,909,439.0022,223,733.00360,840.3381,494,012.33
1850–1859352,915,059.0047,238,813.001,135,580.03401,289,443.03
1860–1869290,786,131.0013,637,607.908,504,070.00312,927,808.90
1870–1879370,718,883.50142,196,178.602,231,009.50515,146,071.60
1880–1889411,766,277.00305,869,081.208,127,305.56725,762,663.76
1890 to June 30, 1897374,806,225.00136,248,501.657,564,849.65518,619,576.30
$1,886,338,958.00$720,792,129.85$28,814,558.26$2,635,945,646.01

At this writing the report of the Director of the Mint has not been published, but the coinage for the full year 1897 may be stated as follows: gold, $76,028,484; silver, $18,486,697; and for the year 1898, gold, $77,985,757; silver, $23,034,034. From January 1 to June 30, 1899, the coinage was: gold, $65,915,020; silver, $12,780,441.

It is sometimes thought that the silver dollars are not a full legal tender, but this is not so. They are an unlimited legal tender for all debts, public and private. The Treasury does not, in practice, redeem silver dollars in gold, but successive Secretaries of the Treasury have announced their readiness to do so, if necessary to keep the silver dollars from depreciating,—that is, preserve their parity,—which the law directs.

Silver certificates and gold certificates are not legal tender, but entitle the holder to receive the kind and amount of coin named on their face.

The value of gold bullion in a dollar of that metal is 99.991125 cents, or practically 100 cents. The value of the silver bullion in a dollar of that metal is about 45 cents. It varies, however, with the fluctuations in the market value of silver.

It will thus be seen that the bullion value of a silver dollar and of a gold dollar differs greatly, but the equality of the purchasing power of the two coins is due to the fact that the silver dollars are receivable for public and private debts, that they are indirectly exchangeable for gold, by depositing them in the banks, and that the government is pledged to redeem them in gold, if necessary to preserve their parity with gold.

NEW UNITED STATES MINT, PHILADELPHIA, PA.

As early as 1826 the United States began to export domestic gold, beginning with an export of $1,056,088 of gold coin and bullion, and receiving an import of $678,740. Up to 1897 the grand total of exports of gold coin and bullion amounted to $2,186,238,541, and the total imports to $1,112,138,766, an excess of exports over imports of $1,074,099,775. In 1898 the imports of gold coin and bullion into the United States were $120,391,674, and the exports $15,406,391, making the net imports $104,985,283.

From 1821 to 1897 the grand total of exports of silver coin and bullion from the United States was $1,152,688,776, and the imports $730,325,881, making an excess of exports over imports of $422,362,895. In the fiscal year 1898, the silver imports were $30,927,781, and the exports $55,105,239, making the excess of exports $24,177,458.

The total product of gold in the United States from 1792 up to 1896 was $2,113,034,769, and of silver $1,444,970,000, making a grand total of the precious metals of $3,558,004,769. The total value of the entire world’s production of gold, between the years 1493 and 1896, was $8,983,320,600, and of silver $10,556,700,800, making a grand total of gold and silver of $19,540,021,400.

As a comparison of the money status of the United States at the beginning and end of the century, the following figures are interesting: In 1800 the population was 5,308,483; the estimated bank notes outstanding, $10,500,000; the estimated specie in the country, $17,500,000; the total money in the United States, $28,000,000; the specie in the Treasury, $1,500,000; the money in circulation, $26,500,000; the amount per capita, $4.99. In 1898 the population was 74,522,000; the total coin in the United States, including bullion in the Treasury, $1,498,993,249; total paper money, $1,138,440,126; total money of all kinds, $2,637,433,375; coin, bullion, and paper money in the Treasury, $799,537,480; total circulation, $1,837,859,895; circulation per capita, $24.66.

CARPENTERS’ HALL, PHILADELPHIA.

(First Site of First United States Bank.)

Perhaps no law relating to the coins and currency of the United States has been so widely discussed, or has borne more directly on the attitude and influence of political parties than the Coinage Act of 1873. This act grew out of a proposition to revise our coinage laws, made by John Jay Knox to the Secretary of the Treasury, in April, 1870. Mr. Knox, in his rough draft of a bill, provided for a silver dollar of 384 grains, to be a legal tender for sums not exceeding $5.00. Thus, the standard silver dollar of 412½ grains was eliminated. It did not appear in the bill as it passed the Senate, January 10, 1871, nor in that reported to the House, March 9, 1871. The bill underwent protracted and thorough discussion, and on May 27, 1872, was passed in the House. As passed, it contained the original provision for coining a silver dollar of the weight of 384 grains—twice the weight of the silver half dollar. These dollars were to be a legal tender for amounts not exceeding $5.00. The Senate amended this House bill, by substituting a trade dollar of the weight of 420 grains for that of 384 grains, at the same time preserving the legal-tender limit of $5.00. In the amended form, it passed the Senate, January 17, 1873, and the House, February 7, 1873, and became a law. It will be seen that the standard silver dollar of 412½ grains was never in the bill, and could not, therefore, have been secretly omitted, as was afterwards charged. It was omitted from the first draft, and all through, because none were being coined, and those that had been coined were exported, the silver bullion in them being, at that time, worth more as bullion than coin. By joint resolution of Congress, approved July 22, 1876, the trade dollars provided for in the act were deprived of their legal-tender quality. It was supposed they would circulate in China, but they proved useless even for that purpose.