Lake the Mormons,
the Oregon settlers made use of the California
gold dust to issue coins prior to the first private
mint of San Francisco. This was probably in part
because many more settlers were in Oregon at the
time than in Northern California. Trapping and
trading were well established enterprises in Oregon
when gold was discovered in California, and the
Oregon settlers were quick to take advantage of
the new-found commodity.
Fur, or the search for fur, is the main feature
of the history of early Oregon. Not only did beaver,
otter, mink, and marten pelts bring about the
commercial development of the Pacific Northwest,
long before the discovery of gold in California,
but they were extensively used as a Western medium
of exchange decades before the use of gold coins.
The demand for furs led to a three-sided contest
in the late eighteenth and early nineteenth centuries
for possession of the Pacific Northwest. The Russians
moved into Alaska in 1780 while the British and
Spanish left Nootka Sound in 1790. In 1821, the
United States took over the Spanish claims in
Oregon, its political position having been greatly
strengthened by the preliminary spadework done
by the Boston merchants and the American Fur Company
formed by John Jacob Astor in 1811.
Astor's scheme had been to create a chain of trading
posts along the Mississippi, Missouri, and Columbia
Rivers to the Pacific Ocean. Chartered in New
York, the ill-fated company was beset by loss
of ships, the vigorous opposition of the rival
British North West Company, and the War of 1812.
By October 1814, Astor had had enough and sold
his company to the British North West Company
at a considerable loss. However, rivalry for the
Pacific fur trade did not cease there. Too much
was at stake.
The long-range winner was the Hudson's Bay Company,
founded in 1670. This older and more powerful
firm advanced on the weaker North West Company.
After a fierce struggle in which many lives and
enormous sums of money were lost, the latter company
was compelled to submit to a merger in 1821. From
his headquarters at Fort Vancouver on the north
side of the Columbia River, Chief Factor Dr. John
McLoughlin of the Hudson's Bay Company (Columbia
District) dominated the political and commercial
life of what later became Oregon, Washington,
and part of Idaho.
AMERICAN
IMMIGRATION INTO OREGON
The first two
American settlements in the Northwest were founded
by missionaries in 1834 and in 1837 near the Canadian
village of Champoeg in the Willamette Valley.
By the fall of 1840, some 137 Americans, sixty-three
Canadians, and the employees of the Hudson's Bay
Company had settled in what was later to become
Oregon, and a year later this number had increased
to 500, half of whom were American. It was inevitable
that the influx of American settlers, partially
drawn by promises of free land and better economic
conditions, would undermine the Hudson's Bay Company's
position particularly as the corporate headquarters
were 5,000 miles away in London, and Canada had
fewer people to provide as would-be settlers.
As early as 1841, American Commodore Wilkes and
Mission Steward George Abernethy, later to become
Oregon's first governor and one of the founders
of the Oregon Exchange Company, discussed forming
an independent government in the territory. They
wisely decided to wait until their numbers increased,
but they did not have to wait long, for in 1842
a former Oregon missionary, Dr. Marcus Whitman,
returned to the Willamette Valley with 1,000 settlers
after having convinced President Tyler and Senators
Daniel Webster and Thomas Hart Benton of the necessity
of settling the West. Accompanying Whitman were
two future governors, one future senator, and
several other prominent men and women. Among these
people were the future organizers of Oregon's
first mint.
In March 1843,
the American inhabitants of Oregon petitioned
Congress for protection against the quasi-government
under the Hudson's Bay Company. As no Congressional
action was forthcoming, the settlers took matters
into their own hands and established a Provisional
Government in 1845. George Abernethy was elected
governor.
Whatever their political claims, the American
settlers remained dependent upon the markets provided
by the Hudson's Bay Company. In 1847, however,
this situation was to change radically, as the
U.S. government established postal rates and steamers
to Oregon. The Oregon Treaty giving the United
States title to Oregon and the discovery of gold
in California in 1848 profoundly affected the
economic life of the Oregon settlers. As they
constituted the only sizeable community in the
Far West in 1847, over a year before the California
gold fever, they were also the first to be affected
by the proximity of the gold fields. And with
this new influx of gold dust came the need for
a standard medium of exchange to conduct trade,
naturally culminating in the establishment of
the second mint in the West.
EARLY
TRADE IN OREGON
A satisfactory
medium of exchange was needed in the Pacific Northwest
to facilitate the region's economic life. Trappers,
hunters, sailors, merchants, and Indians had to
find some standard form of exchange before commercial
intercourse could take place.
First came barter, with the Indians using salmon
and horses in trade for roots, buffalo meat, and
other food. Some tribes traded metallic ornaments
or war instruments for food, while others exchanged
haiqua or milk-white shells of extreme hardness
found near Nootka Sound. These bead-like shells
were sometimes strung into six-foot necklaces
in much the same way as East Coast Indians strung
their local shells into wanpanpiag (commonly miscalled
"wampum") for trade purposes.
When the white trappers and hunters arrived, the
natives soon realized that the farmers would give
them virtually any commodity they desired for
beaver and other pelts. These beaver pelts, worth
10 shillings ($2.25), soon became the primary
form of exchange in the Pacific Northwest, although
they never were used as a common denominator or
standard of value. Thus, for some thirty years,
the vast Oregon region had no financial system
other than barter.
As settlers began to arrive in the 1840's, they
brought little specie, as most of their coin had
been expended on supplies for the journey west.
But the new farmers did have an abundance of wheat,
for which there was a general demand. This, together
with the need for a circulating medium, led to
the creation of a system of deposit receipts whereby
farmers would deposit wheat at a general store
where they were given credit, either on the books
or in the form of certificates which passed as
money and were often redeemable in wheat.
The absence of specie, the demand for wheat, and
the latter's general acceptance led to the enactment
in December 1843 of the Gray Currency Law in which
the Provisional Government made wheat legal tender.
Although the Hudson's Bay Company could still
set the price, wheat became the major medium of
exchange, driving the price of a bushel to $10
by 1848. The use of wheat was so popular that
the law was not repealed until December 20, 1847,
when the harvests were so plentiful that there
was a glut in the wheat market.
Other problems were inherent in the use of wheat
as currency. Besides not meeting economist Adam
Smith's currency requirements of portability and
divisibility, wheat receipts were only as good
as the merchants on which they were drawn. Specie
was hoarded and commodities were quoted in two
prices; one for the price in wheat, and one in
coin at one-third lower. Other remedies were clearly
necessary to relieve this difficulty.
One solution came when the Provisional Government,
being in great need of revenue, issued 6 percent
interest-bearing scrip to pay its debts. The notes
were payable to order, transferable by endorsement,
and legal tender for all private and public debts.
Unfortunately, these provisional government treasury
warrants were in odd and relatively large amounts
and, therefore, inconvenient for small transactions
in addition to being unacceptable outside the
general area. The acute need for small change
brought about another innovation, related by historian
James H. Brown:
In 1844
there were but two places in Oregon that had
grown beyond the customs of the frontier trading
post, one was located at Vancouver (now in Washington),
the other at Oregon City. George Abernethy,
a merchant at the latter city, and later provisional
governor, found the change question a perplexing
one and endeavored to meet the difficulty in
rather a novel manner. The chips of flint rocks
as left by the Indians in their manufacture
of arrowheads were collected by Mr. Abernethy,
shaped up, and pieces of paper glued on them.
On this was written the date, the amount of
change (due) and his signature.
The flint rocks
were collected from the Willamette River near
Aber-nethy's store. The "rock money"
was about a quarter of an inch thick. Called Abernethy
Rock, the new currency was passed out of his store
and readily accepted but was difficult to use
in all but the most elementary of transactions.
As might be expected, the rocks' lack of portability
quickly led to their disuse. Only one of these
"rocks" is known today. Its original
value was 35 cents.
Prior to the discovery of gold, these rocks, treasury
warrants, warehouse receipts, wheat, and various
other commodities served as currency in the Pacific
Northwest. It was clear that the Federal Government
was not about to relieve the currency problems
of such a remote frontier area. In an effort to
regulate the currency, the Provisional Government
passed a series of bills. In August 1845, hides,
beef, pork, butter, tallow, peas, lumber, wheat,
and orders on solvent merchants were made legal
tender. In December, this act was modified to
include only gold, silver, treasury drafts, orders,
currency, and good wheat inpayment for taxes and
other obligations. By 1847, wheat was no longer
acceptable.
Little specie entered the area. Probably the single
largest amount of coin brought to Willamette Valley
came in 1845 when 15 British warships, sent to
protect the interest of the Hudson's Bay Company,
anchored for eighteen months off the Willamette
River. The sailors were paid in "a barrell
of silver dollars dealt out for their pay."
Some accounts claim that this was the first money
ever seen in Oregon. These silver dollars most
likely were Spanish, as 8-real pieces were the
most prevalent silver coins in the New World.
Because of their scarcity in the Far West, these
silver coins often commanded a 10 percent premium
over their face value and they were hoarded almost
immediately.
The absence of an acceptable medium of exchange
retarded the devel¬opment of trade relations
with other coastal markets and the Sandwich Islands.
But all this was changed radically in 1848. In
the spring of that year, the population of the
Oregon Territory had climbed to 13,000; Oregon
City with 800 inhabitants was the largest and
most important settlement. Legend has it that
news of gold in California arrived in Oregon City
on July 31, 1848. The schooner Honolulu from Yerba
Buena (San Francisco) sailed into the harbor and,
almost before it was moored, the captain began
purchasing knives, spades, picks, pans, and flours.
"What are you going to do with that sort
of cargo, Cap'n?" he was asked. "Oh,
hardware for the Spaniards," was the nonchalant
reply as the ambitious captain stacked the equipment
away. When the schooner was full and the sails
trimmed, by way of goodbye, the trader held up
a sack of gold dust. "The hills of California
are made of that," he explained, to which
the incredulous settlers burst out laughing.
THE EFFECTS OF GOLD DUST IN
OREGON
News of the gold discovery
was confirmed on August 9, when the brig Henry arrived
from San Francisco. By summer, the rush for the gold
fields had begun in earnest, and soon some two-thirds
of the male population of Oregon had left for the
gold mines. The Oregon Spectator was forced to discontinue
publication, "because its printer, with 3,000
officers, lawyers, physicians, farmers and mechanics
were leaving for the gold fields."
Ironically, the city of Portland was born out of this
mad rush, for a man named Pettygrove sold the site
of that city for a pack of leather to take with him
to the mines. Located at the mouth of the Willamette
river, the village of Portland flourished. Tens of
vessels loaded on cargo, all paying with bags of gold
dust and heading back to California.
This tremendous acceleraton in trade between the two
regions resulted in substantial quantities of gold
dust flowing into Oregon in return for lumber and
foodstuffs for California. In addition, owing to the
fact that the Oregonians constituted one of the first
wave of gold miners, they were among the first to
be successful, founding Placerville (Hangtown), one
of the most successful mining towns. By the winter
of 1849, the Oregon pioneers had returned with significant
quantities of California gold dust. The Spectator
estimated that by mid-January, some $400,000 in gold
dust had reached the community. In less than two years,
this amount had increased to $2 million.
As usually happens, those who remained at home to
harvest the crops, to market the surplus grain and
lumber, to keep the mills running day and night, and
otherwise to provide service and supplies to the miners,
fared even better than those who left for the gold
fields. By the end of 1849, the population of California
had reached 100,000 and this phenomenal influx of
immigrants, coupled with the widespread desertion
of farms for the mines, created an extraordinary market
for the products of Oregon. As historian James Gilbert
(Trade and Currency in Early Oregon) succinctly put
it: "The demand was effective since it was reinforced
by ability to pay and that, too, in an acceptable
medium."
The effects of this new influx of gold were significant.
The most obvious of all was the increase in value
of export articles by 200 to 300 percent. The new
dust facilitated exchange in Oregon, creating a means
for buying flour, lumber, and shipping, allowing producers
to exchange their surplus for the new currency. Industry
became more diversified with particular attention
to shipping.
By the spring of 1849, the gold dust had diffused
itself throughout the community, reaching almost $100
per capita. Gold dust and nuggets all but replaced
furs and agricultural products as frontier money.
Trade increased significantly to a far more sophisticated
level as farmers and lumbermen turned traders to serve
the new horde of prospectors. The new medium was accepted
universally; it was portable, divisible, and a considerable
improvement over governmental scrip, wheat, and merchants'
orders. Unfortunately, there were the usual inherent
difficulties in its use. Gold dust from different
regions contained varying amounts of natural im¬purities,
which could easily be added to by devious traders.
The only way that the dust's value could be approximated
was by weighing it on a small apothecary scale or
gold scales. At best this was an inaccurate and unreliable
method of approximating value, based on dubious assumptions
about the fineness of the gold dust.
There were constant differences of opinion between
the purchaser and the seller as to whether the transactions
were equitable; the receiver claiming the gold was
not up to the correct or accepted standard, the owner
claiming it was worth more. The result was that the
Oregon miner was usually forced to accept $5 to $9
per ounce less than the going rate in California.
For a short time, the Hudson's Bay Company introduced
a small quantity of silver coin needed for minor transactions
and quickly forced the gold dust value down to $7
an ounce.
The need for another standard medium of exchange was
widespread. An editorial appearing in the Spectator
estimated that by August 1849 some $500,000 would
be lost by the miners through the use of gold dust.
On February 7, 1849, a group of Oregon's prominent
citizens, headed by W. H. Rector, presented the legislature
with a petition calling for the creation of a territorial
mint at Oregon City. The petition began by echoing
the basic problem surrounding the Southern Appalachian,
Californian, and other gold rush areas: "In consequence
of the failure or neglect of the Government of the
United States to extend her jurisdiction and protection
over this long-neglected territory, the time has arrived
when the people, through their representatives, should
act with firmness and decision for the protection
of their interests against the combined monopolies
of the wheat and gold dust trade."
After careful consideration, a selected committee,
headed by Represen¬tative Samuel Parker, presented
the proposed act on February 13, 1849. The proposed
bill cited dust's loss by depreciation, frequent division,
and constant handling, as well as the merchant's greed
and unfair gains. The petition also suggested the
potential financial gain to the government by charging
a seigniorage for coining the gold dust. Although
not mentioned in the petition, it was universally
felt that the coined gold would also raise the price
of gold dust, which was selling for $11 to $12 an
ounce, or less than two-thirds its value at the Philadelphia
Mint.
Proponents argued that although the Constitution of
the United States forbade any state (a territory was
not covered!) to coin money, gold weighed and stamped
in North Carolina and Georgia had been circulated
and received for government dues by the United States.
It was further believed that a chartered company would
command more confidence in its stamped metal, especially
if the officers received a fixed salary (thereby reducing
the temptation to defraud). It was also hoped that
the proposed mint would be a source of non-fiscal
revenue. On February 15, nine days after the petition
was presented, an act establishing a place "at
Oregon City, fifteen miles north of Portland, for
the weighing and assaying of gold, and melting and
stamping the same," was adopted on a vote of
sixteen to two.
This act provided that James Taylor be appointed director;
Truman P. Powers, treasurer: George L. Curry, assayer;
and Dr. William H. Willson, melter and coiner. Five-
and ten-dollar pieces were to be struck at a rate
of $16.50 per ounce of gold. Profits were to be used
to pay for expenses incurred in fighting an Indian
uprising known as the Cayuse War. The dies for stamping
were to be engraved on one side with the words, "Oregon
Territory," with the year of coinage circling
the outer edge of the face, and the arms of Oregon
in the center.
Opposition to the bill was minimal and mainly centered
around its possible unconstitutionality. Since it
was not yet known in Oregon that it had become a territory
of the United States at this time, this argument was
countered effectively and the bill passed in the belief
that its "provisional" government status
left it exempt from proscriptions in the U.S. Constitu¬tion.
Interestingly, soon after the passage of the bill,
the Spectator ran an editorial stating that as a bill
under the Provisional Government, the new act was
unobjectionable, but as one intended to continue under
the newly proposed Territorial Government it will
doubtless be reconsidered by the territorial officers
upon their arrival. Two weeks later, this forecast
came true.
According to the original mint bill, "the dies
for stamping shall represent on one side the Roman
figure five, for the pieces of five pennyweights,
and the Roman figure ten for those often pennyweights.
The reverse side shall have the words, 'Oregon Territory'
and the date of the year of stamping around the face,
with the Arms of Oregon in the centre."
Historian Dudley L. McClure theorizes that this "Arms
of Oregon" referred to a "salmon seal"
then current, which bore as its devices three upright
sheaves of wheat about a Chinook salmon stretched
horizontally somewhat above the exergue.
Eight days before the mint was scheduled to open,
General Joseph Lane (whose office as the first Territorial
Governor of Oregon had been offered to and declined
by an obscure politician, Abraham Lincoln) arrived
in Oregon, and on the following day, March 3, declared
the province a Territory of the United States Government,
thus rendering the proposed mint bill supposedly in
violation of the Constitution.
THE OREGON EXCHANGE Co.
Of course, nullification
of the coinage act did not alter the necessity for
a circulating medium. Taylor suspended operations
for the planned mint on March 4, 1849, and resigned
the office of director. Soon after, several prominent
businessmen met in the counting room of Campbell &
Smith's store in Oregon City and formed the Oregon
Exchange Company for the purpose of weighing and stamping
gold. Members included William K. Kilborn (originally
from Massachusetts), Theophilus Magruder (New York),
James Taylor (Pennsylvania), George Abernethy (New
York), William H. Willson (Massachusetts), William
H. Rector (New York), John Gill Campbell (Scotland),
and Noyes Smith (New York).
Taylor and Willson had been appointed officers under
the original (now invalid) mint bill, and Abernethy
had been the Provisional Governor. The company petitioned
the legislature for permission to coin, but their
plea was unsuccessful.
As both the Federal and Territorial
Governments refused to provide a means for an adequate
currency, the private Oregon Exchange Company took
independent action. They would coin with or without
government permission. William Rector was selected
to supervise the making of dies, stamps, and press.
Thomas Powell, a Salem blacksmith, was the machinist,
doing the forging at $10 per pound of iron used. The
iron for the construction of the mill was obtained
from old wagon wheels and other scrap metal. Rector
did the lathe work on a machine brought all the way
from Missouri by Victor M. Wallace. Powell assisted
Rector with the lathing, receiving an additional $40.
The two-story frame mint building in Oregon City was
the one originally rented as the legislature's proposed
site. The building was located at 5th and Water Streets,
in the present day business district.
The first coins were probably issued in late March,
soon after the Oregon Exchange Company was formed,
but there is no conclusive evidence for an actual
date. Historian James Henry Brown credited Hamilton
Campbell with engraving the $5 dies, but actually
the designs were drawn by J. G. Campbell at the first
meeting of the company, with Hamilton Campbell, assisted
by Rector, engraving them. The dies con¬tained
two errors. Instead of "O.T." for Oregon
Territory, "T.O." was mistakenly engraved,
and where each partner's last initial appeared on
the coins, Campbell's incorrectly appears as a "G".
The company to avoid delay did not refashion the flawed
dies.
While the $5 coins were being struck, Victor M. Wallace
was engraving the dies for a $10 coin. The T.O. was
properly changed to O.T., and c was substituted for
the G in Campbell. The initials A (Abernethy) and
w (Willson) were omitted since they did not contribute
toward purchasing the new equipment.
The gold for the coins was not artificially alloyed
with silver or copper, so that there could be no question
regarding their value upon redemption. No assay was
made of the metal and since it was taken from different
California districts, the Oregon coins varied in purity
and color. The soft native gold pieces also suffered
from abrasion when in contact with harder, alloyed
coins. The $5 coins weighed approximately 130 grains;
the $10 twice that (10 and 20 grains heavier proportionately
than the proposed coinage of the Provisional Mint).
The native gold quality of the coins made them 8 to
10 percent more valuable than the artificially alloyed
Federal Government coinage. This was done to insure
that the coins would be accepted despite the variance
in purity although it did little to insure adequate
intrinsic value. As a result, they were melted down
for their intrinsic value (probably in California)
and soon disappeared from circula¬tion. When taken
to the mint in San Francisco in 1854, the $5 and $10
coins commanded a 10 percent premium.
The new coinage was soon dubbed "Beaver Money,"
after the beaver— later to become the official
emblem of Oregon—which appeared on each coin.
The price of gold dust rose from $12 to $16 an ounce
as the Oregon Exchange Company purchased gold dust
at $16 an ounce and circulated their coins. The account
book of one Oregon City merchant indicates that as
early as April 23, 1849, the current price of gold
dust already had risen to $16 an ounce.
Commercial transactions were greatly facilitated by
the appearance of the new, standardized coins. Imports
and domestic trading were stimu¬lated, and it
no longer became necessary to transport goods from
place to place to use as mediums of exchange.
Unlike California, which seemed to suffer continually
from a shortage of denominations under $5 despite
active private gold coining, Oregon used its gold
to resolve this particular need in a unique manner.
It did not mint small change but returned excess gold
dust to California where it was ex¬changed for
Mexican and Peruvian silver and shipped back to Oregon
for service as small change, thereby contributing
to the change shortage in California.
There is some difference of opinion concerning just
how many Oregon coins were issued. Perhaps the most
reliable accounting comes from the minter himself
(J. G. Campbell), who included his company's output
in a report concerning the mint's cessation of operation:
After having issued some $10,000
and broken both of our crucibles (we had with much
trouble been able to procure only two) having effected
our object, viz., raised the price of gold dust
and stopped the influx of South American currency,
and every piece that we coined being at the expense
of the company, we concluded to cease operations,
and did so.
Historian James Henry Brown (Political
History of Oregon) states that 6,000 $5 pieces and
2,850 $10 specimens were minted. While Brown can be
mistaken, his figures more nearly accord with the
effects described by Campbell, than do Campbell's.
Campbell may also have sought to minimize the quantity
of coins issued because he feared a lawsuit or prosecution,
or his memory may have been deficient.
Whatever the number of coins issued, the mint operated
for less than six months. By Rector's own account,
he "continued to work at it until September 1,
1849, when I determined to go to the mines again.
They did not coin any more gold after I left."
At last Oregon had an adequate medium of exchange,
much to the dismay of the Hudson's Bay Company. The
latter's power over the settlement was finally broken
when exchanging at its trading post no longer was
essential for economic intercourse. In addition, the
fur trade, its economic mainstay, had declined. By
1860, the British company had removed its assets from
Oregon and Washington to Canada where it was already
in difficulty.
Evidently the Oregon "beavers," along with
various foreign coins and the California private mint
products, adequately served the territory as a medium
of exchange until the establishment of the San Francisco
Mint in 1854 enabled United States currency to replace
them. No more attempts were made at issuing coins
in Oregon after September 1849, although there was
serious talk in 1862 of building a mint in Walla Walla,
The Dalles, or Portland.
The Dalles was the gateway of commerce in Oregon during
the late 1860s and early 1870s. It was there that
in 1868, $110,000 was expended to build a mint which
was never completed, there no longer being enough
profit in operating the diggings in California or
elsewhere and therefore little gold to sustain a mint
in that area.
