CHAPTER VI.

MONEY STANDARD 1792 TO 1853.

HE brief account of the legislation in relation to

THE

gold and silver money, from the organization of the Government under the Constitution of the United States down to the commencement of the late civil war, given in the preceding pages, exhibits the following features:

I. The adoption in 1792 of a gold and silver standard on a ratio or relative valuation of 15 to I, which ratio corresponded substantially with the market relation of the two metals at that time.

2. A reduction in 1834 and 1837 of the weight and fineness of the gold coins by which the ratio or relative valuation of gold and silver in the coinage was fixed at I to 15.988, instead of 1 to 15.

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This change increased the coining rate or legaltender value of gold in this country 6 per cent., and was made because for several years previous gold had been worth more in the markets of the world than its valuation in United States coins.

The author of the coinage law of 1792, Hamilton, assumed that in the markets of Europe one ounce of pure gold was equal in value to fifteen ounces of pure silver, which appears to have been the fact; but within a few years thereafter this relative value of the two metals changed, so that an ounce of pure gold was equal in value to 151⁄2 or 16 ounces of pure silver.

Gold being undervalued in United States coins, the latter found their way to markets where gold commanded more than the value stamped at the United States Mint. Congress undertook, in the year 1834, to remove this difficulty by a corresponding increase of the coining rate or value of gold.

3. It was soon apparent, however, that gold had been slightly overvalued by the new law, (1834). This overvaluation, and the fact that the coining rate of the two metals in the principal European countries was I to 15, gave silver a higher value in the market as bullion than its coining rate at the United States Mint. Concurrent circulation with gold could not be thereafter effectively maintained.

4. The difficulties experienced by this expulsion of the silver coins from the channels of circulation, especially those of small denominations, finally called for a new adjustment of the coinage, and, in 1853, the weight of the silver coins of less denomination than the dollar was reduced to an extent sufficient

to insure their retention in circulation, but their legaltender quality was, at the same time, limited to the amount of five dollars.

The measures adopted in 1834 and 1853 in respect to the coinage were decided steps toward the establishment of a single gold standard, and were no doubt so intended.

CHAPTER VII.

WITHDRAWAL AND RE-COINAGE OF FRACTIONAL SPANISH AND MEXICAN SILVER COINS.

OR many years prior to the reduction, in 1853,

FOR

of the weight of United States silver coins of less denomination than the dollar, the pieces known as the quarter, eighth and sixteenth of the Spanish and Mexican dollar constituted a considerable portion of the change money of this country. From long use these pieces had become so worn that on the greater portion of them the inscriptions and devices were quite illegible, and their bullion value was thus reduced considerably below the nominal or tale value at which they were current by law and usage.

After an ample supply of United States silver coins of reduced weight and limited tender had been issued, there was no longer any excuse for allowing the worn and depreciated Spanish and Mexican fractional pieces to remain in circulation.

An Act was accordingly passed (Feb. 21, 1857),

repealing all former Acts making these foreign coins current or legal-tender money, and fixing the following rates at which they should be received at the Treasury of the United States, its several offices, and at the several post-offices and land-offices.

of a dollar or piece of two reals, 20 cents.

These pieces had previously been current at twentyfive, twelve and a half, and six and a quarter cents respectively, or thereabouts.

When received at the Government offices, they were sent to the Mint for conversion into United States coin. They were also received at the Mint at their nominal values respectively, in exchange for the copper-nickel cents authorized by the same Act.

Under the foregoing provisions of law, the foreign fractional coins speedily found their way to the Mint, and in a few years disappeared from circulation.

Copper and other Minor Coinage.

Under the provisions of the Monetary Act of 1792, the coinage of copper cents of the weight of 264 grains, and half-cents of proportionate weight, was authorized.

The weight of the cent was, by the Act of June 14,