Financial History 141 Spring 2022 - Page 27

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The 1785 Immune Columbia was part of a series of private or unofficial coins that circulated when Hamilton was writing his iconic numismatic document .
metal and export the undervalued one …”
Therefore , it was of utmost importance to accurately set the relative value of the two metals . Such a bimetallic standard had the potential to increase the overall money supply and make available a variety of denominations needed for day-today commerce . The Report presents different silver to gold ratios from European nations , considers the market value in America in 1791 and suggests a 15:1 ratio . As stated in the Coinage Act , “ that is to say , every fifteen pounds weight of pure silver shall be of equal value in all payments , with one pound weight of pure gold , and so in proportion as to any greater or less quantities of the respective medals .” In addition to specifying the ratio between the precious metals , Hamilton also had to specify their alloy content . alloyed coins wear faster than purer .” The Treasury Secretary saw no reason to change the practice , though , taking as models the coins of “ those nations with whom we have most intercourse , and whose coins are most prevalent in our circulation … Spain , Portugal , England and France .”
The Report states that copper is the only alloy to be used in the production of silver coinage . The reason for “ this union of Silver and Copper ” was that the silver counteracts the copper from changing the color and appearance of the coin ; more copper would give it a redness or coppery tone . Conversely , the copper prevents the coin from looking too ghostly white , which is the appearance of unalloyed silver . The alloy for gold coins is different : a blend of silver and copper . He presented his recommendations , his “ considerations , which
may render it prudent to establish by law , that the proportion of Silver to Copper in the Gold Coins … should not be more than 1/2 nor less than 1/3 …” He next tackled the expense of coining , whether cost should be covered by the public or taken from the precious metals themselves — or “ whether coinage should be free or shall be subject to a duty or imposition ?”
The Cost the Mint Should Charge to Turn Bullion into Coins
Hamilton stated that “ practice of different Nations is dissimilar , in this particular .” He reported that there was free coinage in England ; that France charged a steep 8 %; and that in Holland the fee was around 1 % for gold and about 1.5 % for silver . The Treasury Secretary referred to a resolution from the Congressional Board of Treasury of August 8 , 1786 , that recommended a fee of . 5 % for gold and 2 % for silver .
The Report presents two ways to defray the expense of coinage : “ one by a reduction of the quantity of fine Gold and Silver in the Coins ; the other by establishing a difference between the value of those Metals , in the Coins , and the Mint price of them in bullion .” Hamilton found the former to be completely unworkable : “ the quantity of Gold and Silver in the National Coins corresponding with a given sum cannot be made less , than heretofore , without disturbing the balance of intrinsic value ; and making every Acre of Land , as well as every bushel of Wheat , of less actual worth than in times past .”
The Proper Alloy Composition of Coins
The Report states that according to the Congressional resolution of August 8 , 1786 , the proportion of alloy , “ is regulated at one twelfth , or in other words , at one part alloy to 11 parts fine , whether Gold or Silver …” The same ratio “ coincides with the proportion , real or professed …” in the gold coinage of Portugal , England , France and Spain . The Report tells us that for the two former , “ it is real …” The latter two nations , however , allow for “ errors and imperfections …”
Hamilton explained that the use of alloy was to save money in the production of coins . Additionally , it was purported to make them harder to protect against much “ waste by friction or wearing .” However , the Report tells us that in reality “ the more
Table of weight and value of coins , 1792 . This shows the confusing economic state of affairs that Hamilton strove to rectify with his Report .
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