The Coinage Act of 1792: the day a dollar was 371¼ grains of silver

Before 1792

The money of the American colonies was Spanish. Britain kept its own silver at home and allowed the colonies no mint of their own, so the coin that changed hands from Boston to Savannah was the Spanish milled dollar (the eight-real piece, or piece of eight), struck by the millions in Mexico City, Lima and Potosí. Colonists kept their books in pounds, shillings and pence and paid in Spanish silver, and when the time came to name a national unit the pocket beat the ledger. The name came from the German thaler by way of the Spanish coin.

Behind that choice was a bad experience with paper. The Continental Congress, with no power to tax, had financed the Revolution by printing, and the Continental dollar was worthless by 1781. “Not worth a Continental” has its own post. The states then struck their own coppers, of varying weight and honesty. The Constitution of 1787 ended both experiments. Congress alone would coin money and regulate its value, and no state could make anything but gold and silver coin a tender in payment of debts.

Hamilton’s report, January 28, 1791

Thomas Jefferson had proposed the dollar and a decimal system in 1784. It fell to Alexander Hamilton, as Secretary of the Treasury, to turn a proposal into a mint. His Report on the Establishment of a Mint, delivered to the House on January 28, 1791, settled four things.

The unit would be the dollar, defined by the silver in the Spanish dollars then circulating. Hamilton had them assayed and settled on 371.25 grains of pure silver. The coinage would be decimal, in dollars, dimes (he spelled it disme), cents and mills, at a time when every other money on earth was counted in twelfths and twentieths. Both gold and silver would be coined, at a fixed ratio to one another of 15 to 1 by weight. And coinage would be free. Anyone could bring gold or silver to the Mint and receive its weight back in coin at no charge, or, for those who wanted coin at once rather than waiting, for a deduction of one half of one percent.

The Act, April 2, 1792

Congress passed the Act establishing a Mint on April 2, 1792 (it sits at 1 Stat. 246) and turned Hamilton’s report into law with few changes. Section 9 set the denominations: eagles ($10), half eagles and quarter eagles in gold; dollars, half dollars, quarter dollars, dismes and half dismes in silver; cents and half cents in copper. The dollar was to contain “three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver” (371.25 grains of silver, 24.057 grams, in a coin of 416 grains, an alloy of .8924 fine). The eagle was 247.5 grains of pure gold in 270 grains of standard, eleven-twelfths fine. Section 11 fixed the two metals to each other: “the proportional value of gold to silver in all coins which shall by law be current as money within the United States, shall be as fifteen to one, according to quantity in weight, of pure gold or pure silver.” Section 16 made both gold and silver coin a lawful tender for any sum.

And Congress, which had watched the Continental die in its own hands, wrote into Section 19 what it thought of debasement:

That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offences, shall be deemed guilty of felony, and shall suffer death.

The first Congress under the Constitution understood that the mint itself was the most likely debaser, and wrote the penalty accordingly.

The Mint

The Mint was the first building the federal government put up under the Constitution, on Seventh Street in Philadelphia, then the capital. David Rittenhouse, an astronomer and clockmaker and the most respected scientific mind in the country, was appointed its first Director in April 1792. He laid the cornerstone himself on July 31 and served until 1795.

The first pieces, about 1,500 silver half dismes, were struck that July in a cellar before the building was finished. The story that the silver came from Washington’s own tableware is old, attractive and unproven. Copper came first in quantity, and the Chain cents of 1793 were the first coins struck for circulation inside the Mint. The first silver dollars, 1,758 Flowing Hair dollars, were delivered in October 1794. Gold followed in 1795, the half eagle in July and the eagle later that year.

The flaw

Hamilton’s design had one weakness, and it was in the number 15. A legal ratio between two metals holds only while the market agrees, and it did not for long. By the early 1800s the European ratio was about 15.5 to 1 (France wrote that figure into law in 1803), which meant that an ounce of gold bought more silver in Paris than it did at the Philadelphia Mint. Gold eagles left the country or went into the melting pot almost as fast as they were struck, and for three decades the United States ran, in practice, on silver. Mostly it ran on Spanish silver at that, since the new dollars were exported too and Jefferson halted their coinage in 1806.

This is Gresham’s law: the money overvalued by the mint drives out the money undervalued by it, whether or not anyone intends it. Congress reset the ratio with the Coinage Act of June 28, 1834, cutting the gold in a dollar from 24.75 grains to 23.2, a ratio of very nearly 16 to 1, and adjusted it again in January 1837 to 23.22 grains and .900 fineness for both metals, a ratio of about 15.99 to 1. Now gold was the overvalued metal. It flowed in and silver flowed out, and by the 1850s the country that could not keep a gold coin could not keep a silver one. Two metals at one fixed price never holds for long, and each reset only chose which metal to lose next.

What survives

What did survive was the idea at the center of the Act, that a dollar is a weight. The silver dollar of 371.25 grains was struck to that definition, unchanged, until 1935, though the standard silver dollar was dropped from the coinage list in 1873 (the Crime of 1873, as its opponents called it) and never again defined the unit. The gold dollar of 23.22 grains defined the currency until 1933, when it stopped being something a citizen could hold, and January 1934, when it was cut to 15 5/21 grains of standard gold. The last silver certificates were redeemed for silver on June 24, 1968. After that, for the first time since Hamilton, the word “dollar” had no weight attached to it at all.

The counter’s footnote

Pieces from the first decades of the Mint do turn up at the counter, usually out of an estate, usually with a story. They are handled differently from everything else on the bench: early US coinage that comes across the counter is appraised as coins, not melt, because a coin that Rittenhouse’s Mint struck to Hamilton’s weight is history first and 371.25 grains of silver second. The scale still comes out, but it is only the first question.