Aspects
of Early United States Gold Coinage
by Q. David Bowers
Gold!
Few words can inspire as much excitement. Diamonds,
silver, platinum, festively colored paper currency they
all have their appeal, but gold has a certain magic
to it. For millennia, the precious metal has been an
object of desire in many cultures all over the globe,
from the Aztecs and Incas to the Egyptian pharaohs and
Chinese emperors.
And today, gold is in
the news as much as ever. Just about anyone can quote
with approximation the current
price of an ounce of gold, and one can scarcely scan
an issue of the Wall Street Journal or the Financial
Times without seeing notice of one or another gold mining
or refining stocks.
Mutual funds have been
formed to hold gold shares, and millions of people across
the world have tucked away gold in bullion form, often
as "coins" struck in our own generation, including
the South African krugerrand. the Canadian maple leaf,
and our own "gold eagle."
The GOLD Exhibit
The American Museum of Natural History, in New York
City, recently held an exhibit titled GOLD (Figs. 1-3,
15). Several galleries were set aside to showcase what
may well be the finest exhibit of gold ever assembled
in one place.
The tour began with
gold in its raw form as nuggets or ore, continued on
to illustrate wrought examples from ancient tombs and
treasure caches, then to coins and ingots (including
a remarkable display of treasure from the S.S. Central
America), and finally to gold ingots, Fort Knox style.
The ANS contributed
to the exhibit by loaning examples of struck pieces
from ancient times through the twentieth century, including
popular varieties and types.
The present article has a narrower focus: an overview
of gold coins in the United
States from the inception
of mintage through the 1830s, the beginning of the era
that blossomed into a panorama including branch mints,
the California Gold Rush, and more.
Before
the Mint
By 1792. gold coins were a familiar sight
in American commerce, especially in the larger cities.
Banks were few and far between, but exchanges and counting
houses acted as depots for coins. Paper money was virtually
nonexistent, as continental currency had depreciated
in value to nearly the vanishing point, and any new
federal issue would surely be have been viewed with
Jisfavor.
Fig. 4. Mexico: Mexico City. AV 8 escudos, 1729. (HSA
1001.1.25712) 35 mm
Fig. 5. United States: New York, AR doubloon pattern,
1787. Counterstamped with the initials of Ephraim Brasher.
Breen 981.5. (ANS 1969.62.1, ex Norweb coll.) 30 mm.
Gold coins seen in the channels of
trade were dominated by Spanish-American issues denominated
in escudos (Fig. 4), or about S2, with ' the eight-escudo
or doubloon being valued at SI6. These were from mints
in South and Central America, predominantly Mexico.
Gold issues of France, England. and other European
countries were also plentiful. These were typically
traded at values based upon their actual gold content,
which varied from country to country as well as over
a period of time. Newspapers carried lists of "prices
current." giving values for commodities as well
as silver and gold coins.
Although some gold coins were privately minted in
1786 ajid 1787 in the United States, by Ephraim Brasher
in New York City {Fig. 5) and by Standish Barry in
Baltimore, there was no federal coinage until 1795.
After that time it took many years until there were
enough United States gold coins to satisfy the needs
of commerce. In the meantime, selected foreign silver
and gold coins remained legal tender until the Act
of February 21. 1857, provided for their discontinuation
in two years (that deadline was later extended by
six months).
The Establishment of
the Federal Mint
The Mint Act of April 2, 1792, provided
for the establishment of a federal mint, discussion
of which had occupied much time and interest during
the preceding decade. Standards were specified as
to coinage denominations, weights, and finenesses
(degrees of purity). The decimal system was adopted,
the basic unit being the dollar. Gold and silver coins
were made legal tender without limit. Copper coins
were intended as a convenience and had no status as
legal tender. Gold and silver coins were to be valued
at the metallic ratio of I to 15; that is. one ounce
of pure gold at the Mint was to be fully equivalent
to fifteen ounces of pure silver, and vice versa.
Silver and gold coins were to contain virtually full
intrinsic or meltdown value equal to their face value.
The ratio calculation proved to be incorrect in terms
of market conditions; the ratio of silver was fractionally
higher than the fifteen set, and gold coins became
"cheap" in terms of silver, causing many
gold coins to be melted or exported.
For gold coins of the denominations of quarter eagle
($2.50). half eagle ($5). and eagle ($10), the fineness
was set at 11/12ths, representing eleven parts of
pure gold to one part of alloy. The one part of alloy
was to consist of no more than half in silver, although
there was no requirement that there be any silver
at all. Silver was a natural "impurity"
in gold, and native gold usually contained some percentage
of it.
Later, as technology improved, it became a simple
matter to extract most of the silver, such extraction
in itself becoming a profitable enterprise. Copper
was added to lend strength to the alloy and to reduce
loss by abrasion and circulation. The alloy, whether
all copper or up to half in silver, was not considered
when computing the intrinsic value of the coins. The
11/12ths pure gold was equal to 22 carats in the gold
and jewelry trade (24 carats being absolute purity),
in the decimal system. 916.66+ pure, conveniently
stated as 917/1000 fine.
For the gold denominations,
requirements were as follows:
• $2.50 quarter eagle: Standard total
weight of coin: 67 1/2 grains Troy. Weight of pure gold in
coin: 61 7/8 grains Troy.
• $5 half eagle: Standard total weight
of coin: 135 grains Troy. Weight of pure gold in coin: 123
3/4 grains Troy.
• $10 eagle: Standard total weight
of coin: 270 grains Troy. Weight of pure gold in coin: 247
1/2 grains Troy.
A legal variation in the total
weight of gold and silver coin was allowed to the extent of
one part for each 144 parts; this variation could be above
or below the weight of pure gold in the coin. For the $10
gold coin, this amounted to a 1.72 Troy grains margin. These
statutory specifications remained in effect until the Act
of June 28. 1834. The cornerstone for the Philadelphia Mint
was laid on July 31. 1792. this being the second structure
erected by the United States government (the first was a lighthouse)
(Fig. 6). At the time, this was the seat of the federal government,
which did not move to the Federal City, later known as Washington
City, until 1800. David Rittenhouse (Fig. 7). appointed as
director of the Mint earlier in the year, was on hand, and
some accounts suggest that George Washington was there as
well. Information concerning the president and the early Mint
is mostly anecdotal, such as the scenario of Washington taking
great interest in the facility and visiting it regularly.
Facts are scarce. Beginning in September, equipment was moved
in. and. soon, pattern coins were struck, including the impressive
copper issues by Robert Birch and the elegant 1792 quarter
dollar by Joseph Wright, with a Liberty Head on one side and
an eagle on a globe on the other. Beginning in 1793, copper
half cents and cents were made, and in 1794 the production
of silver coins commenced on a limited basis, as the largest
press on hand could not satisfactorily strike dollar-size
coins.
Fig. 6. Illustration of the Philadelphia
Mint as it is believed to have appeared in 1792 (painting
by Edwin Lamasure, 1 914).
While
copper coins were struck for the Mint's own account,
and profits from the coinage helped pay expenses, a
different arrangement was in effect for silver and gold.
Depositors of these
precious metals could specifically request the denominations
they desired to receive.
This had dramatic effects
on the types produced. When new equipment became available
in the summer of 1795. and silver dollars could be struck
properly, depositors' requests for lower silver denominations
fell off sharply, creating low-mintage coins that would
become numismatic rarities.
The
First Gold Coinage
No gold coins were struck at the Mint until the summer
of 1795. The absence of coinage in this metal was
due to surety requirements: the chief coiner and assayer
were required to post personal bonds in the amount
of $10,000 each, which was far beyond their financial
ability.
By 1795. the bonds had been reduced
in amount considerably, the chief coiner and assayer
had fulfilled them, and gold coinage commenced.
Around May of the same year, Director Rittenhouse
assigned engraver Robert Scot to produce half-eagle
dies. Work began apace. Rittenhouse resigned, leaving
the Mint at the end of June, and was replaced by Henry
William DeSaussure, who ordered that gold coin production
should begin. On July 31, 744 half eagles were delivered,
followed by subsequent amounts through September totaling
8.707 pieces for the year (Fig. 8). Enough dies were
made in 1795 that a supply was left over, with at
least one being used as late as 1798.
The $10 eagle gold coinage followed
soon thereafter (Fig. 9). The first such piece struck
at the Philadelphia Mint was presented by Director
DeSaussure to President George Washington. By year's
end 5,583 eagles had been struck.
Fig. 7. David Rittenhouse,
well known as a scientist and philosopher, was named
by President Washington to be the First director of
the Mint (engraving by James B. Longacre, 1835).
Fig. 8. United States:
Philadelphia Mint. AV 5 dollars, 1795. Breen6413. (ANS
1980.109.2106, bequest of A. J.Fecht) 25mm.
Fig. 9. United States: Philadelphia
Mint. AV 10 dollars, 1795.
Breen 6830. (ANS 1980.109.2106, bequest of A. J. Fecht)
32 mm
In 1796. the first
$2.50 gold coins or quarter eagles were made. This
completed the sequence of denominations. It was not
until 1849 that the list was expanded by adding the
SI and $20 values.
From that point, the production of gold denominations
followed the requests of depositors. Generally, larger
denominations were preferred, as they were easier
to count. As a result, quarter-eagle mintages tended
to be low.
Gold Coins in Commerce
By 1804. it was realized that while some $10 coins
were being used domestically, they hud an even more
important use in the export trade, especially to Europe.
This was an era in which paper money was distrusted
and gold was the standard for most foreign transactions
(in the China and East Indies trade, silver coins
were used almost exclusively).
Continued coinage of eagles
would simply be a service to exporters and do little for inland
commerce, the Treasury Department reasoned. On the other hand,
perhaps the $5 would be less useful in foreign trade and would
be retained in the states, helping to achieve a significant
quantity of United States coins in everyday trade, gradually
reducing reliance on foreign issues. Accordingly, no SlO coins
were made after 1804 (Fig. 10).
Fig. 10. United States: Philadelphia Mint.
AV 10 dollars, 1804. Breen 6847. (ANS 1908.93.238, gift
of the American Museum of Natural History: The John Pierpont
Morgan, Sr., Collection) 32 mm.
In the
meantime. Spanish-American gold coins remained dominant
in circulation, as the total mintages of federal coins
had been very small in comparison. Prices were reckoned
in dollars, with merchants and banks using charts to
determine the equivalent values of gold coins offered.
As eagles were no longer being made, depositors of gold
bullion ordered half eagles. In ensuing years, these
were struck in record numbers. Most were used in the
export trade, with the result that they were scarce
in domestic circulation.
By this time, banks in New York City. Philadelphia,
Boston, and several other cities had commenced issuing
paper money. Such production was largely unregulated,
as the federal government had no control and the states
had yet to
establish banking commissions
(which took place in a significant way beginning in the late
1830s). Such currency usually traded at face value, provided
that the issuing bank was of good reputation. To determine
this, newspaper listings were consulted by merchants, banks,
and tradesmen, as were publications that came to be known
as banknote reporters and counterfeit detectors.
In 1810, for example, such consultation would reveal that
notes of the Bank of New York, the Bank of Maryland, and the
Providence Bank, to mention just three "good" institutions,
were worth par. but that bills from the Farmers Exchange Bank
of Gloucester. Rhode Island, and of the Hillsborough Bank
of Amherst. New Hampshire were worthless. Notes of sound banks
often traded a small discount in areas distant from the issuing
bank. Thus a bill from New York or Boston would be received
at slightly less than face value in. say. Charleston. Bills
of the Bank of the United States (established in 1791) traded
at par almost everywhere, but counterfeits were a menace.
Fig. 11. United States:
Philadelphia Mint. AV
5 dollars, 1815 (photo
courtesy or the Harry
W. Bass Jr.Foundation) 25 mm.
Gold coins
maintained their value and were desired, but were not
always available, as most had been shipped overseas.
From time to time they either disappeared from the marketplace
entirely or were available only at a premium. The War
of 1812, which ended with the Battle of New Orleans
in January 1815 (unaware that peace had been declared
at a European convention the previous December), induced
monetary chaos, and in many locations only paper bills
were available at par. Gold and silver coins were nowhere
to be seen. Niles' Weekly Register.
The National Intelligencer.
and other contemporary newspapers with circulation throughout
the states often reported that monetary conditions in
Baltimore, for example, were quite different from those
in New York City, and neither resembled the situation
in Boston.
It was anticipated that after the war ended, coins and
paper money would be plentiful in circulation, readily
exchangeable with each other at face value. This did
not happen, and while silver coins became available
once again by 1817, gold coins remained scarce. In 1815,
only 635 half eagles were minted (Fig. 11), and no gold
coins at all were struck in 1816 or 1817.
Coinage of gold resumed
in 1818 as deposits were received, and it continued
steadily afterward. Nearly all newly minted half eagles
were exported, as international trade had resumed with
vigor. Overseas merchants desired hard money in the
form of gold or silver and did not want paper currency
issued by various banks.
The
Scarcity of Gold Coins in the 1820s
Beginning in 1821. the value of gold bullion
on the international market exceeded the face value of United
States gold coins. A depositor of gold at the Mint who requested
half eagles in exchange would have to give slightly more than
$5 in gold metal for each one. This was not a problem, and,
as illogical as it may seem at first glance, the system worked
well. Half eagles were made in record numbers in the 1820s
but were used nearly entirely for export. At their destination
in London, Paris, Hamburg, or other city, they would be valued
based on their gold content, with the face value being irrelevant.
It was the practice of foreign
countries to melt United States coins as they were received
and convert them to their own coinage. Accordingly, half eagles
reaching London would be melted down and made into British
sovereigns. This arrangement was logical, as in that way the
Bank of England as well as other entities owning such sovereigns
would know exactly what they were worth at a given time. The
alternative would have been to have had a wide variety of
American and other coins on hand, all of different values
a confusing situation.
Very few United States half
eagles minted in the 1820s escaped the melting pot, despite
generous mintages. Today, these are among the rarest of the
rare in numismatics. While half eagles were the main denomination
for coinage and export, quarter eagles were also made, but
in very limited numbers just a few thousand each year. These
were not made for export but were distributed domestically,
at a premium to exchange brokers and also in the pay envelopes
of certain government officials. Senator Thomas Hart Benton.
nicknamed "Old Bullion." demanded his stipend in
gold coins.
In the meantime, coinage of
the largest federal silver coins currently being made, the
half dollars of the design we know today as the Capped Bust
type, reached record numbers. These coins saw duty both in
circulation and as bank reserves. Although there were exceptions,
at most times and in most areas they were readily exchangeable
at par with the notes from sound banks. Half eagles could
be obtained, but only by paying a premium for them at a broker
or exchange office.
On July 4, 1829, the cornerstone
for a new Mint building was laid. Those in attendance were
able to acquire souvenir silver half dimes, which Mint personnel
had been striking since the wee hours of that morning the
first pieces of this denomination made since 1805.
Gold
Discoveries
On the same day. Niles' Weekly Register included
this account: Plenty of Gold! Since our last notice of
the mines in North Carolina, we met with the following in
the Raleigh Register: "We are informed that a gold mine
has been recently discovered in Davidson County containing
a vein of the precious metal, eighty feet in width. This is
the largest vein ever heard of either in this or any other
country. They generally vary in width from two to five feet."
More gold. The Yorkville Pioneer
(South Carolina) of June 6 says: It is with much pleasure
we state, that a company of gentlemen of this district have
commenced the gold mining business with every prospect of
success. A few days since we were shown a piece of gold, (about
six grains.) collected from about two quarts of pulverized
rock, which was found in their mines in this district. We
do not deem it improper to remark, that a gentleman of this
place has discovered a gold mine on his plantation, situated
about a mile from this village, which, from every appearance,
promises to be very productive. From various indications throughout our district, as well
as the spirit which animates our citizens on the subject,
we should not be surprised, if, in a few years, York would
become as celebrated for gold mining as Mecklenburgh County,
North Carolina. There are still, however, wanting men possessing
not only the same capital but the same enterprise of those
gentle¬men first alluded to, in order that the business
may be successfully pursued.
Fig. 12: United States: Georgia. AV 10
dollars, pri¬vately minted by Templeton Reid, 1830.
28 mm.
Until
this time, there had been very little gold produced
within the boundaries of the United States. Most deposits
at the Mint consisted of bullion obtained elsewhere
and foreign coins. The discoveries of native ore in
North Carolina and finds in Georgia would change that
dramatically.
Changes
of the 1830s
In 1830, Templeton Reid, a gunsmith and
mechanic in Milledgeville, Georgia, commenced the minting
of gold coins for his own account, receiving metal from
miners. He soon relocated to Gainesville in the same
state, to be closer to the source. That summer he struck
$2.50, $5, and $10 coins (Fig. 12), and. in the absence
of refining and assaying equipment, he reckoned their
value by weight. A local individual styling himseif
as "No Assayer" reported that such pieces
when tested fell short of face
value by about seven cents seemingly not a large amount,
but it indicated that Reid's pieces were not fully worth
the value stamped on them. They soon fell out of favor,
and Reid left the business.
In Ruthertbrdton. North Carolina, German immigrant Christopher
Bechtler and his family set up an assay, refining, and
coining business in their home, and commenced to strike
coins in $1, $2.50, and $5 denominations (Figs. 13-14).
These were of full weight and circulated readily. Bechtler's
profit was made by charging a fee to depositors. Under
the direction of his son August, the minting business
continued until 1852.
Fig. 13. United States: North Carolina,
AV 1 dollar, privately minted by the Bechter Family in
Rutherfordton, using metal from the region, 1840. Breen
776l.(ANS 1934.146.51, purchase) 16 mm.
The
early 1830s saw great prosperity in America, fueled
by the building of railroads, speculation in western
lands (today's Midwest), and a robust manufacturing
climate. Demand for exports rose, and the production
of half eagles averaged over 100.000 pieces per year,
with gold from Georgia and North Carolina making up
much of the bullion. As it still cost more than face
value to make them, they were not seen in domestic circulation.
In January 1833. the second Philadelphia Mint opened
for business, in premises that were much larger and
with improved equipment. This decade would see vast
improvements in die preparation and minting techniques
and the introduction of steam power.
The Coinage Act of June 28. 1834. reduced the weight
of gold coins, thus enabling them to circulate once
again. Implementation of the act was on August 1. 1834.
Interestingly. Christopher Bechtler modified his design
of the $5 gold coin to reflect the legislation and also
modified the weights of the denominations.
As a reflection on the earlier United States gold coinage
from 1795 onward, it was estimated by the secretary
of the Treasury that by June 1834 there was less than
$1 million worth of federal gold coins still in America.
(By way of comparison, this is less than the face value
of $5 gold coins struck in 1820 alone.) All of the others
had been exported or melted.
Fig. 14. United States: North
Carolina. AV 1 dollar, privately
minted by the Bechter family in
Rutherfordton, using metal from
the region, 1842. Breen 7764. (ANS 1864.40.1, gin of
F. H.Norton] 16mm.
Conclusion
To later generations, the few surviving gold
coins of the 1795-1834 era became numismatic treasures. Today,
all are appreciated for their history and rarity. The new
book by Harry W. Bass Jr. (posthumously) and John Dannreuther.
Early U.S. Gold Coin Varieties, 1795-1834, is the definitive
study of the series.
The Act
of June 28. 1834, achieved its purpose, and by the autumn
of that year, large quantities of reduced-weight quarter
eagles and half eagles were in circulation, mostly in
banks and not in general commerce. These were of a new
design called the Classic Head by numismatists.
In 1838, the first three branch mints
opened, at New Orleans, Dahlonega (Georgia), and Charlotte
(North Carolina).
From late 1834 until
the Civil War in 1861. gold and silver coins circulated
at par in commerce, along with paper money issued by
over one thousand banks.
By that year, foreign
gold and silver coins were no longer legal tender. The
American monetary system had reached the objective envisioned
by the drafters of the Mint Act of April 2, 1792. It
was a long time coming.
Epilogue: This stability ended in early 1862, when the
uncertainty of the outcome of the war prompted extensive
hoarding, which caused gold and silver coins to disappear
entirely from circulation.
