Monopolies and the People

by D. C. Cloud

Moneys collected from duties of tonnage and from import duties constituted at that period the entire resources of the national treasury, and the antecedent act of congress, providing for the collection of those duties, imperatively required that all such duties should be paid in gold and silver coin, from which it follows that the moneys mentioned in the act creating the treasury department were moneys of gold and silver coin which were collected as public revenue from the duties of tonnage and import duties imposed by the before-mentioned prior acts of congress. Appropriations made by congress were understood as appropriations of moneys in the treasury, and all warrants issued by the secretary of the treasury were understood to be warrants for the payment of gold and silver coin. Forms for keeping and stating accounts, and for making returns, and for warrants for moneys to be issued from the treasury were prescribed, and in all those forms the secretary of the treasury adopted the money unit recognized in the constitution, and which had been ordained four years before by the congress of the confederation.

Argument to show that the national treasury was organized on the basis that the gold and silver coins of the United States were to be the standard of value is unnecessary, as it is a historical fact which no man or body of men can ever successfully contradict. Public attention had been directed to the necessity of establishing a mint for the coinage of gold and silver, several years before the convention met to frame the constitution, and a committee was appointed by the congress of the confederation to consider and report upon the subject. They reported on the 21st February, 1782, more than a year before the treaty of peace, in favor of creating such an establishment, and on the 16th of October, 1786, the congress adopted an ordinance providing that a mint should be established for the coinage of gold, silver, and copper, agreeable to the resolves of congress previously mentioned, which prescribed the standard of gold and silver, and recognized the money unit established by the resolves passed in the preceding year.

Congressional legislation organizing the new government had now progressed to the point where it became necessary to re-examine that subject and to make provision for the exercise of the power to coin money, as authorized by the constitution. Pursuant to that power, congress, on April 2d, 1792, passed the act establishing a mint for the purpose of a national coinage, and made provisions, among other things, that coins of gold and silver, of certain fineness and weight, and of certain denominations, value, and descriptions, should be from time to time struck and coined at the said mint. Specific provision is there made for coining gold and silver coins, as follows: First, gold coins, to-wit: Eagles of the value of ten dollars or units; half-eagles of the value of five dollars; quarter-eagles of the value of two and a half dollars, the act specifying in each case the number of grains and fractions of a grain the coin shall contain, whether fabricated from pure or standard gold. Second, silver coins, to-wit; "Dollars or units," each to contain 371 grains and 4/16ths parts of a grain of pure silver, or 416 grains of standard silver. Like provision is also made for the coinage of half-dollars, quarter-dollars, dimes, and half-dimes, and also for the coinage of certain copper coins, but it is not necessary to enter much into those details in this case.

Provision, it must be conceded, is not there made, in express terms, that the money unit of the United States shall be one dollar, as in the ordinance passed during the confederation, but the act under consideration assumes throughout that the coin called dollar is the coin employed for that purpose, as is obvious from the fact that the words dollars and units are treated as synonymous, and that all the gold coins previously described in the same section are measured by that word as the acknowledged money unit of the constitution. Very strong doubts are entertained whether an act of congress is absolutely necessary to constitute the gold and silver coins of the United States, fabricated and stamped as such by the proper executive officers of the mint, a legal tender in payment of debts. Constituted, as such coins are, by the constitution, the standard of value, the better opinion would seem to be that they become legal tender for that purpose, if minted of the required weight and fineness, as soon as they are coined and put in circulation by lawful authority, but it is unnecessary to decide that question in this case, as the congress, by the 16th section of the act establishing a mint, provided that all the gold and silver coins which shall have been struck at, and issued from, the said mint shall be a lawful tender in all payments whatsoever—those of full weight "according to the respective values herein declared, and those of less than full weight at values proportioned to their respective weights." Such a regulation is at all events highly expedient, as all experience shows that even gold and silver coins are liable to be diminished in weight by wear and abrasion, even if it is not absolutely necessary in order to constitute the coins, if of full weight, a legal tender.

Enough has already been remarked to show that the money unit of the United States is the coined dollar, described in the act establishing the mint, but if more be wanted it will be found in the twentieth section of that act, which provides that the money of account of the United States shall be expressed in dollars or units, dimes or tenths, &c., and that all accounts in the public offices, and all proceedings in the federal courts, shall be kept and had in conformity to that regulation.

Completed, as the circle of measures adopted by congress were, to put the new government into successful operation, by the passage of that act, it will be instructive to take a brief review of the important events which occurred within the period of ten years next preceding its passage, or of the ten years next following the time when that measure was first proposed in the congress of the confederation. Two reasons suggest the 21st of February, 1782, as the time to commence the review, in addition to the fact that it was on that day that the committee of congress made their report approving of the project to establish a national mint. They are as follows: (1) Because that date just precedes the close of the war of the Revolution; and (2) because the date at the same time extends back to a period when all America had come to the conclusion that all the paper currency in circulation was utterly worthless, and that nothing was fit for a standard of value but gold and silver coin fabricated and stamped by the national authority. Discussion upon the subject was continued, and the ordinance was passed, but the measure was not put in operation, as the convention met the next year, and the constitution was framed, adopted, and ratified, the president and the members of congress were elected, laws were passed, the judicial system was organized, the executive departments were created, the revenue system established, and provision was made to execute the power vested in congress to coin money and provide a standard of value, as ordained by the constitution.

Perfect consistency characterizes the measures of that entire period in respect to the matter in question, and it would be strange if it had been otherwise, as the whole series of measures were to a very large extent the doings of the same class of men, whether the remark is applied to the old congress, or the convention which framed the constitution, or to the first and second sessions of the new congress, which passed the laws referred to and put the new system of government under the constitution into full operation. Wise and complete as those laws were, still some difficulties arose, as the several states had not adopted the money unit of the United States, nor the money of account prescribed by the twentieth section of the act establishing the mint. Such embarrassments, however, were chiefly felt in the federal courts, and they were not of long continuance, as the several states, one after another, in pretty rapid succession, adopted the new system established by congress both as to the money unit and the money of account. Virginia, December 19th, 1792, re-enacted that section in the act of congress without any material alteration, and New Hampshire, on the 20th of February, 1794, passed a similar law. Massachusetts adopted the same provision the next year, and so did Rhode Island and South Carolina. Georgia concurred on the 22d of February, 1796, and New York on the 27th of January, 1797, and all the other states adopted the same regulation in the course of a few years. State concurrence was essential in those particulars to the proper working of the new system, and it was cheerfully accorded by the state legislatures without unnecessary delay.

Congress established as the money unit the coin mentioned in the constitution, and the one which had been adopted as such seven years before in the resolve passed by the congress of the confederation. Dollars, and decimals of dollars, were adopted as the money of account by universal consent, as may be inferred from the unanimity exhibited by the states in following the example of congress. Nothing remained for congress to do to perfect the new system but to execute the power to coin money and regulate the value thereof, as it is clear that the constitution makes no provision for a standard of value unless the power to establish it is conferred by that grant.

Power to fix the standard of weights and measures is vested in congress by the constitution in plain and unambiguous terms, and it was never doubted, certainly not until within a recent period, that the power conferred to coin money or to fabricate and stamp coins from gold and silver, which in the constitutional sense is the same thing, together with the power to determine the fineness, weight, and denominations of the moneys coined, was intended to accomplish the same purpose as to values. Indubitably it was so understood by congress in prescribing the various regulations contained in the act establishing the national mint, and it continued to be so understood by all branches of the government—executive, legislative, and judicial—and by the whole people of the United States, for the period of seventy years from the passage of that act.

New regulations became necessary, and were passed in the meantime, increasing slightly the proportion of alloy used in fabricating the gold coins, but if those enactments are carefully examined, it will be found that no one of them contains anything inconsistent in principle with the views here expressed. Gold, at the time the act establishing the mint became a law, was valued 15 to 1 as compared with silver, but the disparity in value gradually increased, and to such an extent that the gold coins began to disappear from circulation, and, to remedy that evil, congress found it necessary to augment the relative proportion of alloy by diminishing the required amount of gold, whether pure or standard. Eagles coined under that act were required to contain each two hundred and thirty-two grains of pure gold, or two hundred and fifty-eight grains of standard. Three years later congress enacted that the standard for both gold and silver coins should thereafter be such that, of one thousand parts by weight, nine hundred should be of pure metal and one hundred of alloy, by which the gross weight of the dollar was reduced to four hundred and twelve and a half grains, but the fineness of the coins was correspondingly increased, so that the money unit remained of the same intrinsic value as under the original act. Apply that rule to the eagle, and it will be seen that its gross weight would be increased, as it was in fact by that act, but it continued to contain, as under the preceding act, two hundred and thirty grains of pure gold and no more, showing conclusively that no change was made in the value of the coins.