Len Augsburger passed along an article by Eric Brothers in the Fall 2022
Financial History Magazine from the Museum of American Finance titled "Applying Hamilton's Mint Report to American Finance and Commerce." Thanks. Here's an excerpt.
Alexander Hamilton's 1791
the Establishment of a Mint (hereafter,
the Report) is an iconic financial
document in which the first Secretary of
the Treasury carefully plotted the future
money of the United States. However,
when Congress considered the Report and
enacted the Coinage Act of 1792, important elements were excluded.
A main theme of Hamilton's Report was
that the national unit of account would be
the dollar. Through images and mottos, as
well as everyday use, the dollar (both in
gold and silver) would promote the bimetallic standard Hamilton desired. It would
also provide a tangible embodiment of
being an American and would help citizens
identify with the United States as a nation,
not just with their individual states. The
idea was for the new American coinage
to push out of circulation the ubiquitous
Spanish-American eight reales (also called
pieces of eight or
Spanish dollars) and
other international coins, as well as the
myriad state coins then in circulation.
It was important to Hamilton to mint
both gold and silver one-dollar coins. In
Alexander Hamilton on Finance, Credit,
and Debt, Richard Sylla and David Cowen
The gold dollar's main purpose was
to make the bimetallic standard real by
having a coin of the same denomination
in both metals. Congress did not include
Hamilton's gold dollar in the Coinage Act.
In fact, the Mint only produced a gold dollar from 1849 to 1889. However, the Coinage
Act did include the quarter eagle ($2.50),
half eagle ($5) and eagle ($10) gold coins.
Among the themes in Hamilton's Report
was ending the circulation of foreign coins
within a three-year period. He provided
some latitude for the Spanish dollar to
remain in circulation for a longer time.
The intention was to have all foreign
coins brought to the Mint to be melted
into bullion and used to strike the new
national coinage, with iconic imagery
and mottos. This was part of Hamilton's
concept of employing American coinage to create connections between the
American people and the nascent United
States, although the coins were intended
for international trade and not solely for
However, this important proposal was
not included in the Coinage Act of 1792,
and foreign coins were allowed in commerce as legal tender until the Coinage Act
of 1857. Thus, an important and voluminous source of bullion was not available to
produce the new national coinage. During
the 1790s, silver mining production in
the United States was virtually nonexistent. Therefore, Congress' decision to
allow foreign coins to continue circulating
unabated severely hampered the Mint's
ability to produce a large quantity of
American coinage for everyday commerce.
Ah, what might have been! The article discusses the fineness of silver coinage and U.S. coinage undervaluation, which led to many being shipped overseas rather than entering commerce.
The surviving coins today—many of
which are great rarities—were the subject
of hoarding and possible storage in banks.
This begs the question of why, over the
course of 40 years, did Congress not once
modify the silver to gold ratio? If gold
merchants were regularly bringing gold
bullion to the Mint to be converted into
coins for the sole purpose of export, why
did Mint officials not petition Congress
to amend the law and charge seigniorage?
Hamilton left the US Treasury in 1795
and died in 1804, and no other financial
minds stepped in to successfully confront
these challenges. Congress and successive
Mint directors discussed and complained
about these problems for 40 years, yet
nothing was done to fix them.
To read the complete issue on the Newman Numismatic Portal, see:
Financial History (#143)
Wayne Homren, Editor
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