Ken Berger writes:
In the last E-Sylum David Ganz stated "The act of Feb. 21, 1857, (ch. 56, 11 Stat. 163 ) determined that the legal tender of the Spanish pillar dollar continued but for other foreign coins, legal tender status was denied."
I read this act and section 3 states:
"Sec. 3. And be it further enacted, That all former acts authorizing the currency of
foreign gold or silver coins, and declaring the same a legal tender in payment for debts, are hereby repealed; . . .."
Based upon my reading of this section, all foreign coins (which would include the Spanish pillar dollar) are no longer legal tender. I ask therefore, based upon this section, how the legal tender status of the Spanish pillar dollar was continued?
Dave Lange writes:
I'm not a lawyer, but I nevertheless have to challenge a statement that David Ganz made in his essay about the meaning of legal tender. He said that the Act of February 21, 1857 permitted the Spanish eight-reales coins to remain legal tender when all other foreign coins lost that status. This didn't sound right to me, so I reread the act in its entirety.
In fact, all acts regarding the legal tender status of foreign coins in the USA were repealed under the 1857 law. This effectively ended the legal tender status of such coins. While the Spanish coins and those of Spain's former New World colonies were thus no longer lawful money, a provision was made for the redemption of existing supplies of fractional silver coins, their sheer numbers in circulation making this a desirable means of retiring them. These coins could be used in payment solely at the U. S. Treasury, federal post offices and federal land offices, but they were to be received only at a discounted rare. The two reales, one real and half real coins would be accepted as 20 cents, 10 cents and five cents, respectively. They could not be paid out by these offices, but were instead to be forwarded to the U. S. Mint for recoinage into federal money. As no mention of the four reales coin was made, it must have been driven from circulation years earlier by the vast numbers of federal half dollars minted.
The 1857 law also permitted the Mint to pay out the new copper-nickel cents in exchange for the Spanish coins at their nominal circulating rates of 25 cents, 12.5 cents and 6.25 cents, respectively. Thus, the old Spanish coins were worth more in exchange for cents than in payment at federal offices or deposit at the Treasury. This encouraged holders of the coins to purchase and circulate the new cents, thereby facilitating retirement of both the Spanish coins and the old copper cents and half cents. The latter two were also redeemable in new cents. This provision was to expire in two years from the effective date of the act, but it was extended in 1859 when the supply of obsolete coins wasn't disappearing quickly enough.
Thanks for your follow-ups!
Ginger Rapsus adds:
The latest issue of The E-Sylum was one of the best I've read. I especially enjoyed the article on legal tender. Reminds me of when I got into an argument with a Pace bus driver over using dollar coins for bus fare.
A silly question...did the Coinage Act of 1965 legalize the 1933 $20 gold?
To read the complete article, see:
DAVID GANZ ON LEGAL TENDER AND SPENDING MONEY
Wayne Homren, Editor
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