Foreign coin no longer a tender.

General review.

Australia as well as California had become a large producer of gold, and the commercial ratio of silver to gold continued to rise under the influence of this largely increased production. In 1853 the ratio rose above 151 and did not again recede to that point until 1861. For the year 1859, 15.19 was recorded. The premium on the silver dollar was four to five per cent. No dollars could have circulated under these conditions, and hence but few were coined. The government actually coined less than 2,800,000 of these pieces from 1834 to 1861.

The final act in the series to establish a currency of domestic coin, in place of the depreciated foreign pieces, became law February 21, 1857.1 It repealed all statutes permitting the circulation of and giving legal tender power to foreign coins, excepting only the SpanishAmerican fractional silver pieces, which were to be received only at government offices at a greatly reduced rate and at once recoined. Changes were made in the minor coins, nickel being then first used in combination with copper. The coinage of the half cent was discontinued and the weight of the cent was reduced from 168 to 72 grains.

The act also transferred from the Secretary of the Treasury to the Director of the Mint the duty of annually reporting the values of foreign coins, and required the latter officer to make his reports to the Treasury instead of to the President.

A review of the history of the coinage laws prior to 1861 shows that all the leaders in the government of the country were convinced of the imperative necessity of uniformity in the standard of value as represented by coin. Hence there was no contest over the provision in the Constitution which deprived the several states of the power to coin money and fix the value of coins. Nor 1 See Appendix.

was there a difference of opinion between the chief party leaders at the outset (Hamilton and Jefferson) upon the question of the advisability of a concurrent use of both gold and silver at the ratio of 15 to 1. Being unable to foresee the eventual change in the commercial ratio, no provision was made for an alteration in the legal ratio.

remedies.

Hesitating to depart from the bimetallic policy adopted Ineffective under the inspiration of these men, the followers of both in Congress did not venture upon a radical change such as Great Britain had made, but endeavored first by the legislation of 1834 and 1837 to adjust the legal to the commercial ratio, the disparity in which had deprived the country of gold currency; and later, in 1853, by reducing the amount of silver in the fractional coins. they sought to retain the same in circulation as the small change of everyday transactions by making the coins worth more as money than they were as bullion for export. For nearly half a century prior to 1853 the people had suffered from a dearth of coin and especially fractional parts of a dollar, with all the economic disturbances resulting therefrom.

Notwithstanding the declared purpose in 1853 to establish the single gold standard, the bimetallic law remained, and silver dollars, equally with gold, possessed full legal tender power. The failure of Congress to provide a sound coinage system with a single standard of value materially affected the paper currency system, which is now to be discussed, and left the seed from which was to grow the greatest monetary heresy of modern times, destined to threaten the welfare of the people for a quarter of a century.

The great increase in production of gold, shown in the above table, accounts for the marked rise in the price of silver, as indicated by the fall in the commercial ratio.

GENERAL STATISTICS, PRECIOUS METALS, UNITED STATES

(Amounts in millions of dollars)

Production of silver in the United States for the period, $500,000.

The silver coinage included only 1,017,500 silver dollars.

Domestic coin exports included both gold and silver, but the Mint reports include them with the gold.

available, without claiming accuracy.

The figures are presented as the best

The production of silver in the United States was only $1,150,000.

The silver coinage included only 1,682,080 silver dollars.

Domestic coin exports included both gold and silver, but the Mint reports include them with the gold.

available, without claiming accuracy.

The figures are presented as the best