Article 1, Section 8, Clause 5
Robert Morris to Thomas Jefferson1 May 1784Jefferson Papers 7:189--92
I have received your favor of the twenty sixth Instant for which I pray you to accept my Thanks. Enclosed you have the Copy of my Letter of the fifteenth of January 1782. to Congress and also Mr. Governeur Morris's Letter to Mr. Helmly of the thirtieth of April 1783. I will add to these such Observations as have occurred on your Notes which agreably to your Desire are herewith returned.
I agree with you as to your Idea of a Money Unit in the first and second Points but to the third must submit an Alteration. Premising however that in this Letter I shall adopt the Term Unit in the Sense in which you have used it viz: as the largest Silver Coin instead of that Sense in which it is applied in my Letter viz. as the lowest fractional Money of Account not represented precisely by any Coin, similar in this Respect to the Portugueze Rea. I think then the third Proposition would stand best in this Way That its Parts be so correspondent to the present Money of Account as to be of easy Adoption to the People.
I take it to be a self Evident Proposition that any Coin may be Circulated at a Rate nearly proportioned to it's intrinsic Worth and in that Point of View it is unimportant what the Size or Standard shall be. But the present Object is to go farther and adopt such a Coin as shall become exclusively the circulating Medium and a new Money of Account. It is true that Dollars form our general Circulation but they are not any where the Money of Account. No Merchants Books are kept in Dollars few if any Purchases are made at a Rate specified in Dollars and Parts of Dollars. Let it be supposed then that a Dollar be taken as the Unit and divided into an hundred Parts and that a Merchant desirous of adopting the New Coin should balance his Books to open them in it. Let it be a Merchant of Boston and let the first Sum he wants to reduce be £365. this would be expressed thus in the new Coin 1216.662/3. His first Essay therefore would oblige him to combine both Vulgar and decimal fractions. If the same Essay be made on the Books of any other Merchant it would be attended with the same Effect. It is therefore of little Avail that the unit be nearly or even exactly of the Value of known Coins unless it's Parts correspond with the present Money of Account.
In this Letter you will find enclosed my original Letter to Congress of the twenty third of April 1783. together with the Specimens of a Coin there mentioned. These you will be so kind as to deliver to the Secretary of Congress after you have done with them and as the Reasoning on such Subjects is facilitated by a Reference to visible Objects let us take the largest of those Silver Coins as the Money Unit divisible into a thousand Parts each containing 1/4 of a Grain of pure Silver. Here then we have a Piece of Money of convenient Size containing 250 grains of pure Silver, and worth about two thirds of a Dollar viz: 4/2 Virginia Money. The smallest Copper Piece is worth one Farthing Virginia Money and £365. is expressed thus 1752. Suppose we add 6.d.1/4 it will then stand 1752.125. Trials upon other Currencies will shew that all Sums can be brought to agree not only nearly but exactly to this unless in a very few Cases indeed where 1/15 of the small Copper Piece must be rejected. The Objection you State against this Coin is that the Unit is divided into 1000 Parts whereas you would divide a Unit one third larger into no more than 100 Parts but we must consider that the 1/100 of a Dollar is not sufficiently small to be rejected in any Matter of Accot. and then when the Poor are Purchasers or Venders it does not admit of the Divisibility necessary for their Affairs. The Rea of Portugal is 1/800 of a Dollar and is not found to make any Difficulty in Calculations or Entries but on the contrary to occasion much Convenience. Names are of little Consequence but they are not quite indifferent. Suppose that we call the largest Piece a Dollar the smallest a Shilling and that the Shilling be divisible into an hundred Pence. If a Gold Coin be struck it may be made equal to five Dollars and it's value about that of a Pistole. This might be called a Pound and would be exactly 20/10 of the Currency of New Hampshire Massachusetts Rhodes Island Connecticut and Virginia. In point of Size I believe that these Pieces of Money would be convenient and I do not think it of small Consequence that the lowest fractional Part be a Quantity of pure Silver equal to an established Weight because in considering foreign Exchanges we can by that Means always bring the Money of Account of foreign Nations to an exact analogy with our own.
On the whole there are but two Points in which we differ the first is as to the Value of the lowest fractional Part of the Money Unit for we agree that it should proceed from thence upwards in a decimal Ratio. The second is as to the Proportion which Gold should bear to Silver. I wish this to be rather too small than too large because I think the Bank Paper may supply the Place of Gold and not of Silver. If therefore we give more for Silver and less for Gold the Gold will be exported and the Silver will stay. To this I add that our direct Means of importing Bullion is Gold from Lisbon and not Silver from the Spanish Territories because the latter will probably continue to be shut against us and we know by Experience that Silver was exported to England in Preference to Gold while our legal Proportion was the same as theirs because theirs being too high Silver always was worth more at Market than the Mint Price. To shew that this continues to be the Case I will observe that the lowest Price Current of Dollars yet received from England is for old Dollars 63/9 and for new Dollars 62/6. per Pound, altho neither of them are so fine as the Sterling Standard which according to Law is worth but 62/. Hence you will see that the actual is below the legal Proportion and the fixing of the legal Proportion so high is the Cause why all but light Silver is banished from Circulation. If the Piece of five Dollars were made to contain 84 Grains of pure Gold and seven of Alloy this would establish a Proportion of 1. to 14. 37/42 and would be attended with this Advantage that the Piece would weigh exactly three Pennyweight nineteen Grains, without any fractions of a Grain either in the pure [gold or in the] Alloy. The Quantity of Alloy in the Silver is not material to the Value but if it be sufficiently hard all Alloy beyond that Point renders it more liable to Imitation by a baser Composition. Let the Plan be what it may I think it would be advantageous to make the different Pieces of Money consist of Weights represented by a Number of Pennyweights or Grains without Fractions and also to have in each Piece an integral Number of Grains of pure Metal.
I do not think it will be necessary to cause Assays of the different Coins to be made because I have already a Work more perfect in its Kind than any Assays we can have made. It is the Production of a Person employed by the french Court for the Purpose and the only Difficulty in the Application of it consists in the Difference between their Weights and ours. This however is easily surmounted by Approximation. I should suppose that Congress might adopt (before their Adjournment) a Plan for the Coinage and certainly it is an Object which merits immediate Attention. So far from being attached to the Plan which I have held out I am ready to confess that the Subject is not so familiar as I could wish and that I am not for that Reason competent to a decisive Judgment. All which I can pretend to is a general Sketch to be matured by the Wisdom of Congress but I wish that it may meet their speedy Determination.
There is one Point on which you have not said any Thing but which appears to be of Importance viz: how the Expence is to be defrayed. Supposing you to be with me in Opinion that it ought to be by what is called Coinage I would hint that the Price to be given for fine Silver or Mint Price should be established and if you make a Golden Coin that of Gold also. If the Mint Price of an Ounce of fine Gold be fixed at 28. Dollars this at the Rate of 84. Grains for 5 Dollars would when coined amount to 28.571. being a little more than two per Cent Difference.
I must intreat your Excuse for the Crudeness of this hasty Production which is not so attentively digested as it might have been because I am unwilling to delay it.
The Founders' Constitution
Volume 3, Article 1, Section 8, Clause 5, Document 3
The University of Chicago Press
The Papers of Thomas Jefferson. Edited by Julian P. Boyd et al. Princeton: Princeton University Press, 1950--.
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