In April, 1786, the Board of Treasury submitted to Congress three alternative propositions concerning the weight and fineness of the coinage proposed, as exhibited in the table below.

Congress on August 8, 1786, passed a resolution fixing the fineness of gold and silver coins at eleven-twelfths, the dollar or unit to contain 375.64 grains of pure silver. It provided for mills, or 1000ths of a dollar, as the lowest money of account, and coins as follows: half cents and cents of copper; dimes or tenths of a dollar, double dimes (20 cents), half dollars and dollars, of silver; five dollars and ten dollars, of gold; the latter being coined at 24.6268 grains pure metal to the dollar, thus giving the ratio 15.253 to 1 as above stated. The copper coinage was to be at the rate of 100 cents for 2 pounds avoirdupois of copper. Finally, pursuant to a report of the Board of Treasury of September 20, 1786, Congress on October 16 of that year passed the ordinance establishing the mint.

The mint price of standard gold, eleven-twelfths (or .9163) fine, was fixed at $209.77 and of standard silver, of the same fineness, at $13.777, for the pound Troy, with a coinage charge of 2 per cent., giving a ratio of 15.22 to 1. Deposits of gold or silver were to be paid for, 95 per cent. in gold or silver and 5 per cent. in copper coin.

The act never became fully operative. Only copper coins were actually struck under this law, and these were made receivable for taxes and public dues to the extent of 5 per cent. in any

payment, all other copper coins being excluded. After September 1, 1787, foreign copper coins were to cease to be current, and copper coins struck by the states were rated by weight at the value fixed by the coinage law of August 8, 1786, viz., 100 cents for 2 pounds.

The financial as well as the general economic condition of the country at this time was so unsettled, that it became obvious to most of the leading men in the colonies that a more stable form of government for the confederation was absolutely necessary. A convention of the states was called to meet in Annapolis, Maryland, in 1786. Nothing came of this, and another convention met in Philadelphia in 1787. Although primarily assembled to consider economic questions, the deliberations of the convention ultimately produced a new form of government, the present Constitution (without the amendments).

Respecting the coinage system that instrument provides “ART. 1. SEC. 8. The Congress shall have Power . . .

To coin Money, regulate the Value thereof, and of foreign Coin." "SEC. 10. No State shall . . . coin Money; make any Thing but gold and silver Coin a Tender in Payment of Debts."

Thus the states surrendered the right to coin money, the power over the standard becoming an exclusively federal function.

PRODUCTION OF GOLD AND SILVER

The most reliable data respecting the world's production of gold and silver toward the close of the eighteenth century give the following annual averages:

No reliable data for annual periods are available, the above estimates being conclusions reached by Soetbeer after the most exhaustive study of the subject ever attempted.

The evidence all tends to verify the general conclusion that the production of gold diminished and that of silver increased, thus accounting for the fall in the market price of silver as indicated in the table of ratios.

The production of precious metals in the United States prior to 1800 was insignificant in amount.

CHAPTER V

COINAGE SYSTEM

1790-1829

THE new form of government was nominally put into operation on March 4, 1789. Actually the transition was very deliberate. Washington was not inaugurated as President until April 30, and the Treasury Department was not provided for by law until the following September.

Alexander Hamilton was the first Secretary of the Treasury, and soon after organizing the Department he set himself the task of establishing a comprehensive federal monetary system. He first took up the question of the public debt, then the establishment of a banking system, and on January 21, 1791, presented to Congress his justly celebrated report upon the establishment of a mint and a coinage system for the United States.

He examined this comprehensive subject in all its aspects and ramifications, presenting the facts and arguments bearing upon both sides of each question, and after careful analysis reached the following conclusions:

1. That the dollar, because it had been in actual use as the measure of values in practically all of the states, was the most suitable unit for the proposed system; that it was of the utmost importance to define as exactly as possible just what the dollar was, in order that neither debtors nor creditors might be injuriously affected. The dollars in existence varied considerably, Spain having degraded or changed the standard at different times. He therefore recommended a dollar containing 371.25 grains

of pure silver, as best expressing the actual average value of the coin in use.

2. That the decimal system was of demonstrated superiority over the duodecimal of Great Britain.

3. That inasmuch as the undervaluation of either metal would cause its exportation, thus shifting the standard to the other, which might result injuriously, and since it was very desirable to have coins of both metals in actual use, the ratio should conform as nearly as possible to the commercial ratio, rather than follow any specific European precedent. He therefore recommended the ratio of 15 to 1.

4. That the silver dollar was the equivalent of 24.75 grains of gold, and therefore a gold dollar containing that quantity of metal be also provided for, in order that there might be a unit coin in each metal.

5. That the fineness of the coins should be eleven-twelfths or .9163, corresponding with the British standard of fineness for gold; the alloys being for gold coins, silver and copper; for silver coins, copper only.

6. That no mint charge should be imposed upon the bullion brought for coinage, the cost thereof being properly a general charge rather than one to be imposed upon specific individuals, and to impose a charge might influence prices in international relations, being in effect a reduction of the standard of the coin, as compared with bullion.

7. That foreign coins should be permitted to circulate for one year, that thereafter certain foreign pieces might be tolerated for another year or two; anticipating that the mint would be prepared to provide all the coin needed, he concluded that after three years the use of foreign coins should be prohibited.

Hamilton's report was reviewed by Jefferson, who, in a short letter, expressed concurrence upon the bimetallic proposition and other features of Hamilton's plan.

Congress gave Hamilton's recommendation attention and