July 2003 Book Review Continued- Part One

Jefferson's coinage plan suggested the striking of a dollar, or unit; half dollar, or five-tenths; a double tenth, or fifth of a dollar, equivalent to a pistereen; a tenth, equivalent to a Spanish bit; and a one-fifth copper

coin, relating to British farthing. He also wanted a gold coin of $10,

corre-relating to the British halfpence.

In reference to his coinage denominations, Jefferson said, it was

important that the coins "coincide in value with some of the known

coins so nearly, that the people may by quick reference in the mind, estimate their value."

More than a year, however, passed without any further action on his

plan or that proposed by Morris. In a letter to William Grayson, a

member of the Continental Congress, Washington expressed

concern for the establishment of a national coinage system,

terming it "indispensibly neccessary." Washington also

complained of the coinage in circulation: "A man must travel with

a pair of scales in his pocket, or run the risk of receiving gold at

one-fourth less than it counts."

A PLAN AT LAST

On May 13, 1785, the 13-member Grand Committee, to whom

Jefferson's plan had been submitted, filed its report, generally

favoring Jefferson's coinage system. The committee did, however,

make slight alternations, including the elimination of the gold $10

coin, the addition of a gold $5 coin, and the dropping of Jefferson's

double tenth, which it replaced with a quarter dollar. The

committee also added a coin equal to 1/200 of a dollar (half cent).

On July 6, 1785, Congress unanimously approved the Grand

Committee's plan. It failed, however, to set a standard weight for

the silver dollar or to order plans drawn up for a mint. These two

factors led to new proposals.

On April 8, 1786, the Board of Treasury, which had been reinstated

after Morris' resignation as superintendent of finance two years prior, tendered three distinct coinage proposals, based on varying weights

and bimetallic ratios for the silver dollar. The first of these three plans

(the one passed by Congress on Aug. 8, 1786) required the silver

dollar to contain 375.64 grains of pure silver. The board's proposal

varied from earlier coinage plans in that it advocated a higher

bimetallic ratio of 15.256-to-1 and differing charges to depositors

for coining of gold and silver. It called for minting of gold $5 and

$10 coins, and silver denominations of the dime, double dime,

half dollar, and dollar. In copper were a cent and half cent. The

proposal came during the peak of state coinages and influxes of

debased coppers, which, as the board reported, were being

"Imported into or manufactured in the Several States."

Concerned over the need to control state coinages and foreign

coppers, the board suggested that, within nine months of

passage of its proposal, the legal-tender status of all foreign

coppers be repealed and that values be set at which the state

coppers would circulate. The board obviously expected

immediate action and ordered a supply of copper that was

being stored in Boston to be brought to New York in the hope

that it might soon be coined. Their hopes, however, rested on

the positive and quick action of Congress, something that

hadn't occurred with the other proposals and would not occur

this time.

Opposition to the mint was beginning to surface. Several

members of Congress expressed their belief that the supply

of foreign gold and silver coins in circulation was sufficient to

preclude any need for a mint. They also argued that the

problem with debased coppers could be solved by contracting

with private individuals to strike the nations's cents and half

cents.

Several proposals were offered for a contract coinage. On

April 21, 1787, the board accepted a proposal by James

Jarvis to strike 300 tons of copper coin at the federal

standard. Jarvis, however, delivered slightly less than

9,000 pounds of his contract. The contract was voided the

following year for his failure to meet scheduled delivery

times, but helped to delay further action on a mint.

Concerted action on a coinage system and a mint would

wait until the formation of the new government.

Alexander Hamilton, named in September 1789 to head the

new Treasury, offered three different methods by which the

new nation could achieve economic stability, including the

funding of the national debt, establishment of the Bank of

North America, and the founding of the U.S. Mint. On Jan.

21, 1791, Hamilton submitted to Congress a "Report on

the Establishment of a Mint." It was compiled through his

study of European economic theories and the earlier works

of Morris and Jefferson, along with the 1786 report of the

Board of Treasury.

Hamilton agreed with Jefferson that the dollar seemed to be

best suited to serve as the basic unit, but believed it

necessary to establish a proper weight and fineness for

the new coin. To do so, Hamilton had several Spanish coins

assayed to determine the fine weight of the Spanish dollar.

He also watched the rate at which Spanish dollars traded for

fine gold (24 3/4 grains per dollar) on the world market.

From his assays and observations he determined that the

Spanish dollar contained 371 grains of silver. He then

multiplied 24 3/4 by 15 (the gold value of silver times his

suggested bimetallic ratio) and arrived at 371 1/4

as the proper fine silver weight for the silver dollar.

In regard to his findings, Hamilton admitted that Morris had

made similar assays and had arrived at a weight of 373

grains for the Spanish dollar. Hamilton attributed the

discrepancy to the differing equipment used in making the

assays. He failed, however, to observe that silver coins

were traded in the world market at actual weight rather

than the weight at time of issue. The Spanish dollar

contained 376 grains of pure silver when new, 4 3/4

grains more than Hamilton's proposed silver dollar.

July's Book Review Continued 2- Part One

July 2003 Book Review Continued- Part 1

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