Silver Dollars & Trade Dollars of the United States - A Complete Encyclopedia

Chapter 3: Early Dollars, Historical Background
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Hamilton and his small group of employees worked on this project for the next several months and asked many experts, such as merchants and importers of gold and silver, searching questions designed to collect the maximum amount of information.

The secretary also ordered careful assays of silver and gold coins to be made, especially on those of Spain. It was clear that the Spanish silver dollar, or eight reales, would be the basis of our silver coinage, and Hamilton was determined to learn all that he could. The Spanish, because of internal problems with their economy, were somewhat secretive about their coinage and had reduced the amount of silver in the dollar and its fractions without making this fact known. One source indicates that the Spanish dollar in 1791 was supposed to contain about 375 grains of pure silver, though it is not clear if all their mints were that accurate in the final product.

In determining the precise weight of the pure silver in the Spanish eight reales coin, Hamilton had to consider two points: the weight and fineness of the coins being issued in 1791 and the amount of pure silver in the average piece of eight circulating in the western hemisphere. Because of the change in the purity prior to 1791, the secretary decided to use the amount of pure silver in the average coin. Some scholars later charged that this was a mistake, and the 1791 Spanish mint purity ought to have been used, but this view has equal problems. Hamilton was forced to work in a vacuum. However, his study was the best that could be done in a nation far removed from the money markets of the world, London and Amsterdam.

Federal Mint Authorized

Hamilton's report was presented to Congress on January 28, 1791, and has long been considered a classic in its field. Because of the complex nature of the report and the several different topics covered, it took the congressmen considerable time to digest all that had been presented. At length, on March 3, 1791, Congress passed a resolution authorizing the president to establish a mint and hire those persons necessary to carry out the work.

Although, in close scrutiny, the resolution actually was of little direct value and nothing was accomplished under its mantle, still it showed the resolve of the legislators to have a mint and national coinage. (It is interesting to note that nineteenth-century mint directors, especially those in office before 1850, considered the March 1791 resolve to be the basis of the mint system and not the law of April 1792.) The president was simply unable to accomplish much under the terms of a joint resolution.

President Washington's annual address to the joint Congress for 1791 came on October 25, and he pointed out to the assembled legislators that the resolution was hardly what was needed; instead a law should be passed that would spell out in necessary detail what was to be done. Merely saying that there should be a mint was not enough. The Senate responded by appointing a special committee, chaired by Robert Morris, to draft the necessary legislation.

The Morris committee, after its own investigation, proceeded to write a draft bill for consideration by the full Senate. On December 21, 1791, Morris formally presented the bill but parliamentary considerations dictated that little real debate would occur until after the third reading although it is not clear if the bill actually was read in its entirety; then as now, it is likely that such regulations were honored more in the breach than in reality.

At any rate the committee agreed with Hamilton that the dollar would contain 371.25 grains of silver, but on the other hand should have a gross weight of 416 grains, producing the odd fineness of 1485/ 1664 (892.4+/1000). Congressmen felt that this was necessary, one would assume, in order to have the prestige of a dollar coin equal in size and weight to the famous eight reales of Spain.

New Coins to Portray Washington?

When real debate began on the bill in the Senate, on January 9,1792, the question of the pure silver in the dollar was barely broached, if at all. (The official record in that era merely reported the general thrust of speeches, not the actual words.) The most controversial section of the Morris draft legislation concerned the placing of the current president's head on the obverse of the silver and gold coins.

After heated debate, the Morris draft bill was accepted by the Senate more or less intact; it was then sent to the House of Representatives. The House chose to read the legislation with great care and it was not until March 24 that representatives got around to formal discussion of the bill and its merits.

The House rejected the concept of the president's head on the coinage and replaced it with one of their own: the head of Liberty. The revised version of the bill was returned to the Senate, which refused to accept the Liberty head provision and reaffirmed the original stand. The House now did the same as before and the bill was returned once more to the Senate; the latter finally gave in and accepted the House version. President Washington signed the bill into law on April 2, 1792.

Chapter 3: Early Dollars, Historical Background
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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