I. THE COINAGE SYSTEM CHAPTER I 1776 TO 1789 systems. THE American colonies, prior to the confederation in Colonial 1778, had almost as many systems of money as there were distinct colonies. Inasmuch as the majority of the inhabitants were of British birth and traded chiefly with the mother country and with each other, the monetary units were in some measure similar, although, as frequently occurs in colonies, the money of account imposed by the mother country differed from the money in actual use. in use. The colonies generally reckoned in pounds, shillings Coins and pence, but in actual transactions other coins, chiefly the Spanish dollar and its subdivisions, constituted the medium of exchange. The gold coins in use other than British pieces were the French guinea and pistole, the Portuguese moidore and johannes or "joe," the Spanish doubloon and pistole. Silver coins in circulation other than British were the French crowns and livres and the Spanish pieces, the latter being, as before stated, most prevalent.1 The people were naturally compelled to find an equivalence between the money of account and that of exchange, and hence the practice of reckoning the dollar at so many shillings obtained. The valuation varied in 1 MS. Reports, Committee on Finance, Continental Congress, Vol. 26; reprinted in International Monetary Conference, 1878, p. 422. dollar and "shillings." Rating of the different colonies. In what is known as New England and in Virginia the dollar was six shillings; in New York and in North Carolina it was valued at eight shillings; in Georgia at five; in South Carolina at thirty-two and one-half; and in the remaining four colonies at seven and one-half.1 Jefferson's Notes on the shilling. The "shillings" here referred to evidently differed in value and were not in fact the English shillings, for it is declared in a law of Massachusetts of 1750 (23d George II., Chapter V.)2 that the value of the English shilling was equal to one and one-third of the Massachusetts shillings. The "shillings" of most of the other colonies must have been worth much less, therefore, in English coin. The established rate of exchange with London was four shillings and sixpence to the dollar. Jefferson stated that the tenth part of a Spanish dollar was known as the "bit,"3 yet in states other than Virginia the term was applied to the eighth of a dollar, the same as the "York shilling," and to this day in the western and southwestern sections of the country the quarter-dollar is called "two bits." The Continental Congress undertook the task of creating a uniform system out of this apparent chaos at a time when the actual currency in circulation was depreciated paper. It may be said to have fixed upon the unit finally adopted as early as 1775, when it authorized the issue of notes payable in "Spanish milled dollars," but it was not finally specifically determined upon until several years later. Report of Robert Morris, Superintendent of Finance, Vol. I., p. 289. 2 See Appendix. 3 Jefferson's Notes; Appendix. 4" Milled" money means coins struck in a mill or coining press as distinguished from those produced by a die by striking it with a hammer. In April, 1776, the Congress appointed a committee of seven "to examine and ascertain the value of the several species of Gold and Silver coins, current in these colonies, and the proportions they ought to bear to Spanish milled dollars."1 other coins. The committee reported, in September following, a Rating of resolution fixing such values for the several kinds of coin in circulation, under which the English shilling was rated at two-ninths of a dollar, or about 22 cents, deduction being made for abraded coins. This resolution also fixed the value of gold bullion at $17 and of silver bullion at $1 per ounce Troy, thus attempting to establish a legal ratio between gold and silver of 15.3 to 1.2 Under the Articles of The Articles of Confederation which governed the colonies now known as the United States were adopted in 1778, and continued in force during the remainder of tion. the Revolution and until 1789, when the present Constitution went into operation. Article IX. provided that "The United States in Congress assembled shall also have the sole and exclusive right and power of regulating the alloy and value of coin struck by their own authority or by that of the respective states." Thus the states retained the power to coin money coördinately with the Confederation, but the power to regulate its value was given to Congress. In August, 1778, after the adoption of the Articles of Confederation, Congress appointed a committee with Robert Morris as chairman, to consider the state of the money and finances of the United States. Morris was subsequently appointed Superintendent of Finance, but 1 Journal Continental Congress; reprinted in International Monetary Conference, 1878, p. 419. 2 MS. Reports, Committee on Finance; reprinted in International Monetary Conference, 1878, p. 422. Reports on coins and establish ment of a mint. Robert Morris's plan. apparently no definite action was taken until January, 1782, when he was instructed to prepare for Congress a table of rates at which the various foreign coins should be received at the Treasury of the United States. On January 15 Morris submitted a comprehensive report1 on a coinage system, in which he pointed out the need not only of a uniform system of coins, but of legal tender provisions as well. After discussing the ratio of silver to gold and the fluctuations in the market value of the precious metals, he concluded that the money standard for the United States ought to be affixed to silver. He favored a coinage charge, urged that the money unit should be very small, and that the decimal system be established. After suggesting that the Spanish dollar had undergone the least change in intrinsic value, he recommended a money unit which would be the 1440th part of a dollar, or a quarter of a grain of pure silver. Such a unit agreed without a fraction with all the differing valuations of the dollar in the several states. Of these units he proposed that 100 constitute the lowest silver coin, to be called the cent, containing, therefore, 25 grains of silver, to which he proposed adding for alloy two grains of copper; five of these cents to constitute a piece to be called the quint; and ten, or one thousand of the original units, a piece to be called the mark. He favored a ratio between silver and gold of 14 to 1. He recommended the establishment of a mint and the coinage of the pieces suggested. Congress on February 21, 1782, approved this recommendation and directed Morris to report a plan therefor.2 This was the first action toward establishing a federal mint. 1 MS. Reports, Superintendent of Finance, Vol. I.; reprinted in International Monetary Conference, 1878, p. 425. 2 Journal Continental Congress; International Monetary Conference, 1878, p. 432. He plan. In December, 1782, Morris recommended to Congress a resolution fixing a valuation of foreign coins, measured in dollars, in order to prevent their exportation, thus denuding the country of specie. In April, 1783, he submitted to Congress specimens of coins prepared by him, and asked further consideration of his mint and coinage proposition. Both these matters were referred to a committee, which did not report for some time. Meanwhile Jefferson had taken up Morris's plan for Jefferson's a coinage system and submitted a substitute.1 recommended the adoption of the Spanish dollar as the unit, as best answering all requirements, and easy of adoption because then practically in general use. His system comprised a gold coin of ten dollars, the unit or dollar of silver, the tenth of a dollar, also of silver, and the one hundredth of a dollar of copper, and supplemental thereto a half dollar, a double tenth (twenty cents), and a twentieth of a dollar. He criticised Morris's plan as less easy of adoption and more laborious in operation than the purely decimal system. As to the contents of the dollar, he recommended finding the average weight of pure silver in the dollars then in use and adopting the resulting weight, to be coined at a fineness of eleven-twelfths. He proposed fixing a proportion between gold and silver coinage at Jefferson on the average ratio of the nations trading with the United the ratio. States, which would probably be 15 to 1; also that the coins provided be made lawful tender unless diminished in weight. Jefferson's paper was also referred to a committee, which did not, however, reach a conclusion until May, 1785. Morris had meanwhile retired from the Finance Department. In general the committee approved Jefferson's plan, regarding Morris's proposed system as introducing coins 1 In full in the Appendix. |