Before the first coinage act in the United States, citizens of the United States exchanged goods and services through the barter system because no coins were available except for various foreign coins such as the widely traded and trusted Spanish Real dollars. With the signage of the constitution and with a newly formed nation that allowed Congress to coin money under Article 1 Section 8, the first coinage act was proposed and passed Congress under the Presidency of George Washington, the first president. This article will cover a brief history of coins and events that surrounded changes made beginning in 1792 and ending in 2005.
The first coinage act was passed April 2, 1792, Statute 246 that established the first mint in Philadelphia with the Treasury to oversee all mint operations and manage the mint’s first employees such as an engraver, an assayer and a chief coiner. All employees by law had to post a $10,000 bond to be considered for these positions. The first coins in the United States were minted using either gold, silver or copper with words and inscriptions of liberty engraved.
The first coins minted with year of mint were the $10 Gold Eagle with 270 grains of pure gold, $5 Gold Half Eagles with 135 grains of pure gold, $2 Quarter Eagles and Half Dollars with 67 grains of standard gold, $1 dollars with 416 grains of pure silver, Half Dollars with 208 grains of standard silver, Quarter Dollar with 104 grains of standard silver, Dimes spelled Disme until the 1800’s had 41 grains and 3/5 parts of a grain of silver, Half Dimes with 20 grains and 4/5 parts of standard silver, One Cent with 11 pennyweights of copper and Half Cents with 5 pennyweights and 1/2 of copper.
To offer an idea what these weights meant in 1792’s marketplace, one gram = 15.4323584 grains. So 277.7824512 grains = 18 grams while one pennyweight = 1.55517384 grams. The gold/silver ratio was 1:15.
So one Troy ounce of gold would buy 15 ounces of silver. Section 19 addresses debasing the currency. Violators were charged with a felony and would suffer death. Dollars were minted in the tradition of the Spanish Milled Dollar. English speakers referred to the Spanish Milled Dollar as the Spanish 8 Real.
The word milled meant that coin blanks called Planchets were made on a milling machine to stay consistent with weights and sizes and prevent counterfeiting. Speculation exists that the Spanish term E Pluribus Unum, out of many, one was placed on gold coins in 1795 and silver in 1798 due to Colonel Reed of Uxbridge Massachusettes.
The price of gold remained consistent at $19.39 an ounce from 1792 until a small spike to $21.79 in 1814 and $22.16 in 1815 then back to $19.39.
By 1833, $19.39 gold would never be seen again so Congress reconciled the new value of gold with the passage of the 1834 Coin Act under the Presidency of Andrew Jackson. A new regulation of weight and value of gold was adopted to bring the value of gold in sync with the marketplace and its relative value to silver.
6% of gold was taken from the weight of each dollar and creditors were justly compensated less 6%. Constitutionally, 5th amendment questions such as taking private property for public use without just compensation was never challenged. This act reduced the weight of gold coins so later minted coins wouldn’t be melted and allowed to circulate in commerce.
The Half Eagle suffered the worst prior effects as 744 were minted between 1792- 1834 and rising to 2.1 million struck between 1834-1838, most struck in Philadelphia. E Pluribus Unum was again removed from newly minted coins under the 1834 Act. By 1836, silver dollars had a value of 1.02 of the gold dollar so the 1837 Coin Act was passed.
This act under President Grant fixed the weight of the dollar at 412 1/2 grains of a troy ounce. 412 oz troy= 12814.632 grams while 480 grains =1 troy ounce. Undervalued dollars went out of circulation.
This act was also called the Crime Act by Western Silver farmers because of a silver boom that enriched western states economies and because silver was dropped for the gold standard that would later be adopted by governments around the world.
A powerful force called the Free Silver Movement was established that would be instrumental in the passage of the 1878 Bland Allison Act. This act allowed the Treasury Department to purchase $2-4 million a month of domestic silver to be coined into a newly designed Morgan Silver Dollar. 10 million coins were minted.
This act passed Congress over the veto of President Rutherford B Hayes yet the act was not fully adopted until 1900 with the Presidency of William McKinley. The Sherman Silver Purchase Act passed in 1890 and saw an increased purchase of 4.5 million ounces of silver bullion a month.
President Cleveland repealed this act because the Treasury issued a new coin for silver purchases that would be later exchanged for gold dollars as investors profited and Treasury was losing gold reserves. Fully minted pure gold coins stopped by 1935 and resumed in 1971 with Eisenhower Dollars.
Southern ministers encouraged Treasury Secretary Salmon P. Chase in 1861 to enscribe In God We Trust on coins so Congress approved the 2 cent coin in 1864 with In God We Trust enscribed.
In God We Trust was expanded to gold and silver coins with the passage of the 1865 Act and approved on the 3 cent coin in 1866 by passage of the 1866 Act. By 1873, all coins were approved with In God We Trust without further congressional approval.
Under President Johnson, the 1965 Coin Act was passed that eliminated silver from coins due to a silver and coin shortage.
Coins were factored to have a 25 year life span. Silver quarters and dimes saw complete elimination by 1966 with half dollars suffering a 40 % reduction. Silver was replaced with alloys of Copper, Zinc, Maganese and Nickel that would bring the cost to mint a quarter to 2.5 cents.
Silver dollars ended for the first time since 1792. To prevent hoarding, a date freeze was also passed.
All newly minted coins had a 1964 date for a period of time. Mint marks were also eliminated for 5 years. Mint marks are the letter of the mint that struck the coin and established for responsibility purposes. Mint marks were mandated by the 1835 Coin Act.
The Coin Act of 2005 saw commemerative coins that recognized all prior presidents that began in 2007. Prior commemerative $1 coins would continue such as the Sachagaweega $1 but will consists of no less than 1/3 the total of all $1 coins.
Brian Twomey is a currency trader and adjunct professor of Political Science at Gardner-Webb University