HISTORY OF THE NATIONAL COINAGE First Coinage Act The first Coinage Act of the United States was prepared by Alexander Hamilton in 1792. It provided for the establishment of a mint and a bimetallic system of gold and silver at a 15:1 ratio; it named the coins—eagles, half- and quarter-eagles, dollars, half- and quarter-dollars, dimes and half-dimes, cents and half cents—and the weights, metal, and fineness of each, as well as the devices. The dollar was made the unit and defined as grains of pure silver. Coinage was gratuitous and free, without preferences as to bullion-bringers. All the gold and silver coins were full legal tender for all debts whatsoever. In 1793, rates were established at which foreign coins circulating in the United States would be legal tender. Coinage of silver was begun in 1794 and of gold in 1795, and the legal-tender quality of foreign coins ceased at different dates as proclaimed by the President or enacted by Congress.
Changes in the Mint Ratio The 15:r ratio as ascertained by Hamilton was soon found to be too low. The French had a higher ratio, 15.5: 1, and gold flowed to France where its coinage value was higher. Silver only was coined, and much of that was exported to South America. Bimetallism gave place to silver monometallism. In 1834 Con gress attempted to restore bimetallism by readjusting the mint ratio; the gold dollar, which had weighed one-fifteenth of 371.25 grains, or 24.75 grains, was reduced to 23.2 grains, or one sixteenth of 371.25. This was a 7 per cent debasement of gold, but probably it was better thus to favor the debtor class than to favor the creditor class by increasing the weight of the silver dollar until the mint ratio equaled the market ratio. In 1837 the fineness of gold and silver coins was made uniform, at nine-tenths, and the ratio was thus slightly changed until it stood at 15.98: where it still stands.
But this new ratio overvalued gold. As gold could be profit ably brought from France, silver coins were melted or transported abroad, gold drifted to the mints, and gold monometallism re sulted. In 1853, to preserve the fractional silver coinage, the weights of the half-dollar, quarter, dime, and half-dime were reduced, their legal-tender quality limited to $5, and their free coinage stopped.
Thereafter, when new issues of subsidiary silver were found necessary, the mint was empowered to purchase bullion in the market and coin it, charging the profits from seigniorage to the Treasurer of the United States.' It was now unprofitable either to melt or export subsidiary silver, since coined silver was over valued by the amount of the seigniorage. Between 1834 and 1853 gold was increasingly the circulating metal.
Coinage of the Silver Dollar Between 1861 and 1879 greenbacks took the place of metals; the silver dollar had not been coined since 1834, and when, in 1873, the coinage laws were reconstructed, the silver dollar was omitted from the list of coins. This act later became known as the "Crime of '73," and it was alleged by silver men to be an intentional omission so as to demonetize silver. All independent investigations, however, agree that no such ill purpose was in the mind of Congress. Bimetallism in the United States thus ceased in law; it had existed only in law for two score years.
Between 1871 and 1874 free coinage of silver was stopped in many European countries and big mines were discovered in Ne vada. The narrowing market and suddenly increased production caused a remarkable fall in the market value of silver. It became profitable to coin silver dollars again, but the mint had been closed to silver by the Act of 1873. For the next three decades the silver and debtor interests struggled for the remonetization of silver. A series of compromises followed. In 1878 the Bland-Allison Act authorized the coinage of standard silver dollars and made them full legal tender; the Secretary of the Treasury was to buy in the market not less than $2,000,00o worth nor more than $4,000,000 worth of silver bullion per month, and have it coined into such dollars, and pay the seigniorage into the Treasury. Between 1878 and 189o, $378,168,00o in silver were coined at a seigniorage of nearly S70,000,000.2 In 1879 the subsidiary silver was made redeemable, in mul tiples of $20, in lawful money, and made legal tender in sums not exceeding $io.