Article 1, Section 8, Clause 5
Thomas Jefferson, Propositions respecting Coinage13 May 1785Papers 7:194--98, 202
First. The value of silver compared with gold. Second. The weight or size of the several pieces of money that are to be made. Third. The money arithmetic, or the mode in which it is to be counted; and fourth, The charges of coinage are to be considered.
1. In France, 1 grain of pure gold is counted worth 15 grains of silver. In Spain, 16 grains of silver are exchanged for 1 of gold, and in England 151/5. In both of the kingdoms last mentioned, gold is the prevailing money; because silver is undervalued. In France silver prevails. Sundry advantages would arise to us from a system by which silver might become the prevailing money. This would operate as a bounty to draw it from our neighbours, by whom it is not sufficiently esteemed. Silver is not exported so easily as gold, and it is a more useful metal.
Certainly our exchange should not be more than 15 grains of silver for one of gold. It has been alledged by the late financier, that we should not give more than 141/2 perhaps 143/4 would be a better medium, considering the quantity of gold that may be expected from Portugal.
2. The weight, size or value of the several pieces of money that shall be made, or rather the most convenient value of the money unit, is a question not easily determined, considering that most of the citizens of the United States, are accustomed to count in pounds, shillings and pence; and that those sums are of different values in the different states: hence they convey no distinct ideas. The money of the United States should be equally fitted to all. The late financier has proposed to make gold and silver pieces of particular weight; and there is a very simple process, by which the imaginary money of the several states may be translated into such pieces, or vice versa. He proposes that the money unit be one quarter of a grain of pure silver. That the smallest coin be of copper, which shall be worth 5 of those units. The smallest silver coin to be worth 100 units; another to be worth 500; another of 1000; and thus increasing decimally.
The objections to this plan are, that it introduces a coin unlike in value to any thing now in use. It departs from the national mode of keeping accounts, and tends to preserve inconvenient prejudices. Whence it must prevent national uniformity in accounts; a thing greatly to be desired.
Another plan has been offered, which proposes, that the money unit be one dollar; and the smallest coin is to be of copper, of which 200 shall pass for one dollar. This plan also proposes, that the several pieces shall increase in a decimal ratio; and that all accounts be kept in decimals, which is certainly by much the most short and simple mode.
In favour of this plan it is urged, that a dollar, the proposed unit, has long been in general use. Its value is familiar. This accords with the national mode of keeping accounts, and may in time produce the happy effect of uniformity in counting money throughout the union.
3. The money arithmetic, though an important question, is one that can admit of little dispute. All accomptants must prefer decimals.
4. What is the best mode of defraying the expence of coinage? Different nations have adopted different systems. The British value their silver when coined, no higher than bullion. Hence it follows, that the expence of the mint, increasing the civil list, must be paid by a general tax; and tradesmen are disposed to work up the current coin, by which the tax is increased and continued. In some other countries silver or gold when coined, are valued above the price of bullion; whence tradesmen are discouraged from melting or working up the current coin, and the mint is rather profitable than burdensome. Certainly there are good and conclusive reasons, why we should value the national coin above the price of bullion; but there is a certain point beyond which we may not proceed, lest we encourage counterfeits, or private imitations of our coin. It has been proposed to make a difference of 21/2 per cent. nearly, as an allowance for the coinage of gold, and of 3.013 per cent. for the coinage of silver. It is probable that 3 per cent. would more than defray the expence of coining silver, in which case it would be a temptation to private imitation, and would operate against the free circulation of the money, as being valued too high. It is to be remembered that silver coin ought to be encouraged, and probably 2 per cent. or 21/4 per cent. would be a proper difference between silver coined and bullion. The same difference to be made in the price of gold. If this does not fully pay the expences of the mint, there will be a much larger gain on the coinage of copper; and if there should remain a small balance against the mint, its operation will not be unfavourable.
The coinage of copper is a subject that claims our immediate attention. From the small value of the several pieces of copper coin, this medium of exchange has been too much neglected. The more valuable metals are daily giving place to base British halfpence, and no means are used to prevent the fraud. This disease, which is neglected in the beginning, because it appears trifling, may finally prove very destructive to commerce. It is admitted that copper may at this instant be purchased in America at 1/8 of a dollar the pound. British halfpence made at the tower are 48 to the pound. Those manufactured at Birmingham, and shipped in thousands for our use, are much lighter, and they are of base metal. It can hardly be said that 72 of them are worth a pound of copper. Hence it will follow, that we give for British halfpence, about six times their value. There are no materials from which we can estimate the weight of halfpence that have been imported from Britain since the late war. But we have heard of sundry shipments being ordered, to the nominal amount of 1000 guineas; and we are told, that no packet arrives from England, without some hundred weight of base halfpence. It is a very moderate computation which states our loss on the last twelve months, at 30,000 dollars, by the commerce of vile coin. The whole expence of a mint would not have amounted to half of that sum, and the whole expence of domestic coinage would remain in the country.
The following forms of money are submitted.
The quantity of pure silver being fixed that is to be in the unit or dollar, and the relation between silver and gold being fixed, all the other weights must follow.
When it is considered, that the Spaniards have been reducing the weight of their dollars, and that instead of 385.5 the grains of pure silver in the old Mexican dollar, the new dollars have not more than 365 grains, it will hardly be thought that 362 grains of pure silver is too little for the federal coin, which is to be current in all payments for one dollar. Some of the old dollars will admit of a second coinage; but the new ones will not. If the value of gold compared to that of silver, be fixed at 15 to one, and the alloy in each be 1/12, the weight of the several denominations will be readily determined.
The price of bullion is immediately determined by the per centage that is charged towards the expences of the mint.
If the United States determine to adhere to the dollar as their money of account, and to simplify accounts by the use of decimals, there is nothing to prevent the immediate commencement of a coinage of copper.
Let the copper pieces, of which 100 are to pass for a dollar, contain each 131 grains of pure copper, or 44 of them weigh one pound. In this case our copper coin, when compared with the money of account, will be 6 per cent. better than that of Great-Britain. There will remain a sufficient profit on the coinage.
Copper at the best quality in plates, may be purchased in Europe at 10d. 1/2 sterling. In cutting blanks there will be a waste of 22 per cent. Those clippings are worth 7d. 1/2 per pound. Thence the blanks will cost 11d. 1/2 nearly; it may be stated at 1s.9d. New-York money per pound, exclusive of the expence of cutting them, which is not great, as one man can readily cut 100 weight in a day.
The operation, improperly called milling, by which the sharp edges are worn off from the coppers, is not more expensive than cutting the blanks.
In the process of coining copper, eight artists or labourers may be required.
One engraver, 1 labourer for the blank press.
One smith, 5 labourers for the coining press.
By those people 100 weight of copper may readily be coined every day, or the value of 44 dollars. Deducting the necessary expences, there may be saved 30 per cent.
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The advantages of coining money in this country are, first, those which arise from the same operation in all other countries; and secondly, that of reducing all our currencies to one. The advantages from the coin here proposed are, first, that none other will effect the object already mentioned of banishing other currencies, because that alone applies without fractions to them all. Secondly, that the minuteness of its lowest denomination would render it an accurate measure of the smallest variations of quantity or quality in any commodity. Thirdly, that the decimal proportion of its parts would render all calculations in it easy, as appears in the calculations and consequent rates of exchange above mentioned: And lastly, that few figures would be used for the largest sum, while at the same time the smallest sums would be comprehended. For if the lowest denomination be of considerable value, recourse must be had to fractions, as in England, where the penny is divided into fourths, eights, and sometimes sixteenths, and even then without sufficient accuracy; whereas the lowest denomination of the coin here proposed will be about 1/27 of a penny sterling.
Lastly, as to the names above chosen, they, like all other names, are arbitrary, and better may perhaps be substituted. The word crown occurred from the following idea of an impression for the gold coin--An Indian, his right foot on a crown, a bow in his left-hand, in his right-hand thirteen arrows; and the inscription Manus inimica Tyrannis.
The Papers of Thomas Jefferson. Edited by Julian P. Boyd et al. Princeton: Princeton University Press, 1950--.
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