[Note F.]
Notes on the Establishment of a Money Unit, and of a Coinage for the United States.
In fixing the Unit of Money, these circumstances are of principal importance.
I. That it be of convenient size to be applied as a measure to the common money transactions of life. II. That its parts and multiples be in an easy proportion to each other, so as to facilitate the money arithmetic.
III. That the Unit and its parts, or divisions, be so nearly of the value of some of the known coins, as that they may be of easy adoption for the people.
The Spanish Dollar seems to fulfill all these conditions.
I. Taking into our view all money transactions, great and small, I question if a common measure of more convenient size than the Dollar could be proposed. The value of 100, 1000, 10.000 dollars is well estimated by the mind; so is that of the tenth or the hundredth of a dollar. Few transactions are above or below these limits. The expediency of attending to the size of the money Unit will be evident, to any one who will consider how inconvenient it would be to a manufacturer or merchant, if, instead of the yard for measuring cloth, either the inch or the mile had been made the Unit of Measure.
II. The most easy ratio of multiplication and division, is that by ten. Every one knows the facility of Decimal Arithmetic. Every one remembers, that, when learning Money-Arithmetic, he used to be puzzled with adding the farthings, taking out the fours and carrying them on; adding the pence, taking out the twelves and carrying them on; adding the shillings, taking out the twenties and carrying them on; but when he came to the pounds, where he had only tens to carry forward, it was easy and free from error. The bulk of mankind are schoolboys through life. These little perplexities are always great to them. And even mathematical heads feel the relief of an easier, substituted for a more difficult process. Foreigners, too, who trade and travel among us, will find a great facility in understanding our coins and accounts from this ratio of subdivision. Those who have had occasion to convert the livres, sols, and deniers of the French; the gilders, stivers, and frenings of the Dutch; the pounds, shillings, pence, and farthings of these several States, into each other, can judge how much they would have been aided, had their several subdivisions been in a decimal ratio. Certainly, in all cases, where we are free to choose between easy and difficult modes of operation, it is most rational to choose the easy. The Financier, therefore, in his report, well proposes that our Coins should be in decimal proportions to one another. If we adopt the Dollar for our Unit, we should strike four coins, one of gold, two of silver, and one of copper, viz:
1. A golden piece, equal in value to ten dollars:
2. The Unit or Dollar itself, of silver:
3. The tenth of a Dollar, of silver also:
4. The hundredth of a Dollar, of copper.
Compare the arithmetical operations, on the same sum of money expressed in this form, and expressed in the pound sterling and its division.
£ s. d. qrs. Dollars. £ s. d. qrs. Dollars.
Addition. 8 13 11 1-2=238.65 Subtraction. 8 13 11 1-2=38.65
4 12 8 3-4= 20.61 4 12 8 3-4=20.61
13 6 8 1-4=59.26 4 1 2 3-4=18.04
Multiplication by 8. Division by 8.
£ s. d. qrs. Dollars. £ s. d. qrs. Dollars.
8 13 11 1-2=38.65 8 13 11 1-2=8) 38.65
20 8 20 4.83
173 $309.20 173
12 12
2087 2087
4 4
8350 8) 8350
8 4) 1043
4)66.800 12) 260 3-4
12)16700 20) 21 8 3-4
20)1391 8 £1 1 8 3-4
£69 11 8
A bare inspection of the above operations will evince the labor which is occasioned by subdividing the Unit into 20ths, 240ths, and 960ths, as the English do, and as we have done; and the ease of subdivision in a decimal ratio. The same difference arises in making payment. An Englishman, to pay £8, 13s. 11d. 1-2 qrs., must find, by calculation, what combination of the coins of his country will pay this sum; but an American, having the same sum to pay, thus expressed $38.65, will know, by inspection only, that three golden pieces, eight units or dollars, six tenths, and five coppers, pay it precisely.
III. The third condition required is, that the Unit, its multiples, and subdivisions, coincide in value with some of the known coins so nearly, that the people may, by a quick reference in the mind, estimate their value. If this be not attended to, they will be very long in adopting the innovation, if ever they adopt it. Let us examine, in this point of view, each of the four coins proposed.
1. The golden piece will be 1-5 more than a half joe, and 1-15 more than a double guinea. It will be readily estimated, then, by reference to either of them; but more readily and accurately as equal to ten dollars.
2. The Unit, or Dollar, is a known coin, and the most familiar of all, to the minds of the, people. It is already adopted from South to North; has identified our currency, and therefore happily offers itself as a Unit already introduced. Our public debt, our requisitions, and their appointments, have given it actual and long possession of the place of Unit. The course of our commerce, too, will bring us more of this than of any other foreign coin, and therefore renders it more worthy of attention. I know of no Unit which can be proposed in competition with the Dollar, but the Pound. But what is the Pound? 1547 grains of fine silver in Georgia; 1289 grains in Virginia, Connecticut, Rhode Island, Massachusetts, and New Hampshire; 1031 1-4 grains in Maryland, Delaware, Pennsylvania, and New Jersey; 966 3-4 grains in North Carolina and New York. Which of these shall we adopt? To which State give that pre-eminence of which all are so jealous? And on which impose the difficulties of a new estimate of their corn, their cattle, and other commodities ? Or shall we hang the pound sterling, as a common badge, about all their necks? This contains 1718 3-4 grains of pure silver. It is difficult to familiarize a new coin to the people; it is more difficult to familiarize them to a new coin with an old name. Happily, the dollar is familiar to them all, and is already as much referred to for a measure of value, as their respective provincial pounds.
3. The tenth will be precisely the Spanish bit, or half pistareen. This is a coin perfectly familiar to us all. When we shall make a new coin, then, equal in value to this, it will be of ready estimate with the people.
4. The hundredth, or copper, will differ little from the copper of the four Eastern States, which is 1-108 of a dollar; still less from the penny of New York and North Carolina, which is 1-96 of a dollar; and somewhat more from the penny or copper of Jersey, Pennsylvania, Delaware, and Maryland, which is 1-90 of a dollar. It will be about the medium between the old and the new coppers of these States, and will therefore soon be substituted for them both. In Virginia, coppers have never been in use. It will be as easy, therefore, to introduce them there of one value as of another. The copper coin proposed will be nearly equal to three-fourths of their penny, which is the same with the penny lawful of the Eastern States.
A great deal of small change is useful in a State, and tends to reduce the price of small articles. Perhaps it would not be amiss to coin three more pieces of silver, one of the value of five-tenths, or half a dollar, one of the value of two-tenths, which would be equal to the Spanish pistareen, and one of the value of five coppers, which would be equal to the Spanish half-bit. We should then have five silver coins, viz.:
1. The Unit or Dollar:
2. The half-dollar or five-tenths:
3. The double tenth, equal to 2, or one-fifth of a dollar, or to the pistareen:
4. The tenth, equal to a Spanish bit:
5. The five copper piece, equal to .5, or one-twentieth of a dollar, or the half-bit.
The plan reported by the Financier is worthy of his sound judgment. It admits, however, of objection, in the size of the Unit. He proposes that this shall be the 1440th part of a dollar: so that it will require 1440 of his units to make the one before proposed. He was led to adopt this by a mathematical attention to our old currencies, all of which this Unit will measure without leaving a fraction. But as our object is to get rid of those currencies, the advantage derived from this coincidence will soon be past, whereas the inconveniences of this Unit will forever remain, if they do not altogether prevent its introduction. It is defective in two of the three requisites of a Money Unit. 1. It is inconvenient in its application to the ordinary money transactions. 10,000 dollars will require eight figures to express them, to wit, 14,400,000 units. A horse or bullock of eighty dollars value, will require a notation of six figures, to wit, 115,200 units. As a money of account, this will be laborious, even when facilitated by the aid of decimal arithmetic: as a common measure of the value of property, it will be too minute to be comprehended by the people. The French are subjected to very laborious calculations, the Livre being their ordinary money of account, and this but between 1-5th and 1-6th of a dollar; but what will be our labors, should our money of account be 1-1440th of a dollar? 2. It is neither equal, nor near to any of the known coins in value.
If we determine that a Dollar shall be our Unit, we must then say with precision what a Dollar is. This coin, struck at different times, of different weights and fineness, is of different values. Sir Isaac Newton’s assay and representation to the Lords of the Treasury, in 1717, of those which he examined, make their values as follows:
dwts. grs.
The Seville piece of eight . . . 17—12 containing 387 grains of pure silver
The Mexico piece of eight ... 17—10 5-9 " 385 1-2
The Pillar piece of eight 17-9 " 385 3-4
The new Seville piece of eight 14— " 308 7-10
The Financier states the old Dollar as containing 376 grains of fine silver, and the new 365 grains. If the Dollars circulating among us be of every date equally, we should examine the quantity of pure metal in each, and from them form an average for our Unit. This is a work proper to be committed to mathematicians as well as merchants, and which should be decided on actual and accurate experiment.
The quantum of alloy is also to be decided. Some is necessary, to prevent the coin from wearing too fast; too much, fills our pockets with copper, instead of silver. The silver coin assayed by Sir Isaac Newton, varied from 1 1-2 to 76 pennyweights alloy, in the pound troy of mixed metal. The British standard has 18 dwt.; the Spanish coins assayed by Sir Isaac Newton, have from 18 to 19 1-2 dwt.; the new French crown has in fact 19 1-2, though by edict, it should have 20 dwt., that is 1-12.
The taste of our countrymen will require, that their furniture plate should be as good as the British standard. Taste cannot be controlled by law. Let it then give the law, in a point which is indifferent to a certain degree. Let the Legislature fix the alloy of furniture plate at 18 dwt., the British standard, and Congress that of their coin at one ounce in the pound, the French standard. This proportion has been found convenient for the alloy of gold coin, and it will simplify the system of our mint to alloy both metals in the same degree. The coin, too, being the least pure, will be the less easily melted into plate. These reasons are light, indeed, and, of course, will only weigh, if no heavier ones can be opposed to them.
The proportion between the values of gold and silver is a mercantile problem altogether. It would be inaccurate to fix it by the popular exchanges of a half Joe for eight dollars, a Louis for four French crowns, or five Louis for twenty-three dollars. The first of these, would be to adopt the Spanish proportion between gold and silver; the second, the French; the third, a mere popular barter, wherein convenience is consulted more than accuracy. The legal proportion in Spain is 16 for 1; in England 15 1-2 for 1; in France, 15 for 1. The Spaniards and English are found, in experience, to retain an over-proportion of gold coins, and to lose their silver. The French have a greater proportion of silver. The difference at market has been on the decrease. The Financier states it at present, as at 14 1-2 for one. Just principles will lead us to disregard legal proportions altogether; to enquire into the market price of gold, in the several countries with which we shall principally be connected in commerce, and to take an average from them. Perhaps we might, with safety, lean to a proportion somewhat above par for gold, considering our neighborhood, and commerce with the sources of the coins, and the tendency which the high price of gold in Spain has, to draw thither all that of their mines, leaving silver principally for our and other markets. It is not impossible that 15 for 1, may be found an eligible proportion. I state it, however, as a conjecture only.
As to the alloy for gold coin, the British is an ounce in the pound; the French, Spanish, and Portuguese differ from that, only from a quarter of a grain, to a grain and a half. I should, therefore, prefer the British, merely because its fraction stands in a more simple form, and facilitates the calculations into which it enters.
Should the Unit be fixed at 365 grains of pure silver, gold at 15 for 1, and the alloy of both be one-twelfth, the weight of the coins will be as follows:
Grains. Grains. dwt. Grains.
The Golden piece containing 242 1-3 of pure metal, 22.12 of alloy, will weigh 11—1.45
The Unit or Dollar 365 33.18 16—14.18
The half dollar, or five
tenths, 182 1-2 16.59 8—7.09
The fifth, or Pistareen, 73 6.63 3—7.63
The tenth, orbit, 36 1-2 3 318 1—13.818
The twentieth, or half Bit, 18 1-4 1,659 19.9
The quantity of fine silver which shall constitute the Unit, being settled, and the proportion of the value of gold to that of silver; a table should be formed from the assay before suggested, classing the several foreign coins according to their fineness, declaring the worth of a pennyweight or grain in each class, and that they shall be lawful tenders at those rates, if not clipped or otherwise diminished; and, where diminished, offering their value for them at the mint, deducting the expense of re-coinage. Here the Legislatures should co-operate with Congress, in providing that no money be received or paid at their treasuries, or by any of their officers, or any bank, but on actual weight; in making it criminal, in a high degree, to diminish their own coins, and, in some smaller degree, to offer them in payment when diminished.
That this subject may be properly prepared, and in readiness for Congress to take up at their meeting in November, something must now be done. The present session drawing to a close, they probably would not choose to enter far into this undertaking themselves. The Committee of the States, however, during the recess, will have time to digest it thoroughly, if Congress will fix some general principles for their government. Suppose they be instructed,
To appoint proper persons to assay and examine, with the utmost accuracy practicable, the Spanish milled dollars of different dates, in circulation with us.
To assay and examine, in like manner, the fineness of all the other coins which may be found in circulation within these States.
To report to the Committee the result of these assays, by them to be laid before Congress.
To appoint, also, proper persons to enquire what are the proportions between the values of fine gold, and fine silver, at the markets of the several countries with which we are, or probably may be, connected in commerce; and what would be a proper proportion here, having regard to the average of their values at those markets, and to other circumstances, and to report the same to the Committee, by them to be laid before Congress.
To prepare an Ordinance for establishing the Unit of Money within these States; for subdividing it; and for striking coins of gold, silver, and copper, on the following principles:
That the Money Unit of these States shall be equal in value to a Spanish milled dollar containing so much fine silver as the assay, before directed, shall show to be contained, on an average, in dollars of the several dates in circulation with us.
That this Unit shall be divided into tenths and hundredths; that there shall be a coin of silver of the value of a Unit; one other of the same metal, of the value of one-tenth of a Unit; one other of copper, of the value, of the hundredth of a Unit.
That there shall be a coin of gold of the value of ten Units, according to the report before directed, and the judgment of the Committee thereon.
That the alloy of the said coins of gold and silver, shall be equal in weight to one-eleventh part of the fine metal.
That there be proper devices for these coins.
That measures be proposed for preventing their diminution, and also their currency, and that of any others, when diminished.
That the several foreign coins be described and classed in the said Ordinance, the fineness of each class stated, and its value by weight estimated in Units and decimal parts of Units.
And that the said draught of an Ordinance be reported to Congress at their next meeting, for their consideration and determination.
Supplementary Explanations.
The preceding notes having been submitted to the consideration of the Financier, he favored me with his opinion and observations on them, which render necessary the following supplementary explanations. I observed, in the preceding notes, that the true proportion of value between gold and silver was a mercantile problem altogether, and that, perhaps, fifteen for one, might be found an eligible proportion.
The Financier is so good as to inform me, that this would be higher than the market would justify. Confident of his better information on this subject, I recede from that idea.2
He also informs me, that the several coins, in circulation among us, have been already assayed with accuracy, and the result published in a work on that subject. The assay of Sir Isaac Newton had superseded, in my mind, the necessity of this operation as to the older coins, which were the subject of his examination. This later work, with equal reason, may be considered as saving the same trouble as to the latter coins.
So far, then, I accede to the opinions of the Financier. On the other hand, he seems to concur with me, in thinking his smallest fractional division too minute for a Unit, and, therefore, proposes to transfer that denomination to his largest silver coin, containing 1000 of the units first proposed, and worth about 4s. 2d. lawful, or 25-36 of a Dollar. The only question then remaining between us is, whether the Dollar, or this coin, be best for the Unit. We both agree that the ease of adoption with the people, is the thing to be aimed at.
1. As to the Dollar, events have overtaken and superseded the question. It is no longer a doubt whether the people can adopt it with ease; they have adopted it, and will have to be turned out of that, into another tract of calculation, if another Unit be assumed. They have now two Units, which they use with equal facility, viz., the Pound of their respective State, and the Dollar. The first of these is peculiar to each State: the second, happily, common to all. In each State, the people have an easy rule of converting the pound of their State into dollars, or dollars into pounds; and this is enough for them, without knowing how this may be done in every State of the Union. Such of them as live near enough the borders of their State to have dealings with their neighbors, learn also the rule of their neighbors: thus, in Virginia and the Eastern States, where the dollar is 6s. or 3-10 of a pound, to turn pounds into dollars, they multiply by 10 and divide by 3. To turn dollars into pounds, they multiply by 3, and divide by 10. Those in Virginia who live near to Carolina, where the dollar is 8s. or 4-10 of a pound, learn the operation of that State, which is a multiplication by 4, and division by 10, et e converso. Those who live near Maryland, where the dollar is 7s. 6d. or 3-8 of a pound, multiply by 3, and divide by 8, et e converso. All these operations are easy, and have been found, by experience, not too much for the arithmetic of the people, when they have occasion to convert their old Unit into dollars. or the reverse.
2. As to the Unit of the Financier; in the States where the dollar is 3-10 of a pound, this Unit will be 5-24. Its conversion into the pound then, will be by a multiplication of 5, and a division by 24. In the States where the dollar is 3-8 of a pound, this Unit will be 25-96 of a pound, and the operation must be to multiply by 25, and divide by 96, et e converso. Where the dollar is 4-10 of a pound, this Unit will be 5-18. The simplicity of the fraction, and of course the facility of conversion and reconversion, is therefore against this Unit, and in favor of the dollar, in every instance. The only advantage it has over the dollar, is that it will in every case express our farthing without a remainder; whereas, though the dollar and its decimals will do this in many cases, it will not in all. But, even in these, by extending your notation one figure further, to wit, to thousands, you approximate to perfect accuracy within less than the two-thousandth part of a dollar; an atom in money which every one would neglect. Against this single inconvenience, the other advantages of the dollar are more than sufficient to preponderate. This Unit will present to the people a new coin, and whether they endeavor to estimate its value by comparing it with a Pound, or with a Dollar, the Units they now possess, they will find the fraction very compound, and of course less accommodated to their comprehension and habits than the dollar. Indeed the probability is, that they could never be led to compute in it generally.
The Financier supposes that the 1-100 part of a dollar is not sufficiently small, where the poor are purchasers or vendors. If it is not, make a smaller coin. But I suspect that it is small enough. Let us examine facts, in countries where we are acquainted with them. In Virginia, where our towns are few, small, and of course their demand for necessaries very limited, we have never yet been able to introduce a copper coin at all. The smallest coin which anybody will receive there, is the half-bit, or 1-20 of a dollar. In those States where the towns are larger and more populous, a more habitual barter of small wants, has called for a copper coin of 1-90, 1-96, or 1-108 of a dollar. In England, where the towns are many and populous, and where ages of experience have matured the conveniences of intercourse, they have found that some wants may be supplied for a farthing, or 1-208 of a dollar, and they have accommodated a coin to this want. This business is evidently progressive. In Virginia, we are far behind. In some other States, they are further advanced, to wit, to the appreciation of 1-90, 1-96, 1-108 of a dollar. To this most advanced state, then, I accommodated my smallest coin in the decimal arrangement, as a money of payment, corresponding with the money of account. I have no doubt the time will come when a smaller coin will be called for. When that comes, let it be made. It will probably be the half of the copper I suppose, that is to say, 5-1000 or .005 of a dollar, this being very nearly the farthing of England. But it will be time enough to make it, when the people shall be ready to receive it.
My proposition then, is, that our notation of money shall be decimal, descending ad libitum of the person noting; that the Unit of this notation shall be a Dollar; that coins shall be accommodated to it from ten dollars to the hundredth of a dollar; and that, to set this on foot, the resolutions be adopted which were proposed in the notes, only substituting an enquiry into the fineness of the coins in lieu of an assay of them.
^{2} 1 In a newspaper, which frequently gives good details in political economy, I find, under the Hamburgh head, that the present market price of Gold and Silver is, in England, 15.5 for 1: in Russia, 15: in Holland, 14.75: in Savoy, 14.6: in France, 14.42: in Spain, 14.3: in Germany, 14.155: the average of which is 14.675 or 14 5-8. I would still incline to give a little more than the market price for gold, because of its superior convenience in transportation.