The History of the US Mint
The first system of exchange to be established was the barter system. A particular farmer might have a need for wooden chairs. He is a producer of chickens. Perhaps he would devise a method of exchange such as twenty (20) chickens for four (4) wooden chairs. If he had more chickens, maybe he would exchange them for bushels of corn, and so on. The value of the chickens, chairs or corn was measured by the time and effort it took to produce them. Barter objects included grain, tobacco, livestock and animal pelts. Even wives were purchased through the barter system. The greatest problem with this system of exchange was its inconsistency; the time it took one person to produce four wooden chairs might be a different duration than it took another person. Thus, there was no way to make the values uniform.
The Native Americans created wampum as a medium of exchange. This system had the potential for better consistency of value. The Native Americans had two types of wampum. The least expensive was made from a shellfish called periwinkle; it was white in color and was fashioned so that six (6) beads were equal to one penny. The beads were made once the shell had been removed. The second type of wampum was made from the henspoquahoc shellfish – a type of clam. These were black in color and three (3) beads were equal to one penny. Though the value of the wampum was consistent, it became a vehicle for cheating and deception. It’s said that the Native Americans would dye the white beads black and once a transaction had taken place, refused to receive the dyed beads back. Apparently they were more adept at detecting the dyed beads. The White Americans are said to have produced a crudely manufactured form of the white beads; these had less value than the periwinkle shellfish kind thus adding to the distrust and dishonesty rampant at that time. Musket balls used for hunting and defense were also used as a means of exchange; the value was consistent but they were heavy and inconvenient to handle.
By the year 1652 the Massachusetts Bay Colony felt that some action had to be taken to devise a consistent medium of exchange. Little or no coins were coming over from Britain. Britain was in the midst of a civil war; sending coins to the new country was not a priority. In addition, those who had gone to America were seen as rebels, and some had even been prisoners. These individuals were held in disrespect, another fact which made it unlikely that British coins would be sent. By now colonists had access to French, Dutch and Spanish coins but trying to regulate any type of uniformity of exchange was nearly impossible. Cheating was again rampant as one item sold for so much in Dutch coinage and a totally different amount in French coinage. If the colonists began making their own money it would be seen as an act of defiance, however they felt that they had little choice.
On May 27, 1652 a law was passed encouraging the melting down of Spanish coin bullion to be made into coins for the colony. John Hull, an artisan, businessman and goldsmith by trade, partnered with Robert Sanderson, a fellow goldsmith trained in England to undertake the production of coins. These first coins, forged out of desperation were a problem. They were crudely produced and easy to counterfeit. Clipping – cutting clips of metal from the edges of the coins – was widespread; the clips were used to make other coins and the coins that had been clipped steadily decreased in value. The production of these coins by Hull did not do much to solve the coin shortage; coins continued to go oversees and Hull’s commission was so high that it detracted from the coin production. England had gotten wind of the minting; the coins had been produced with the Year of Our Lord 1652 even after 1652 so that the Mother Country wouldn’t realize that coins were still being made.
On October 1, 1683 simultaneously John Hull died and England issued an order to discontinue the production of coins. The colony had forestalled any punitive action by England by offering bribes. When the official order came, they requested a change in the law or permission to continue production; both requests were denied. That early mint went out of existence. Each colony now had its own coinage system. Exchange and economy was haphazard and unstable.
Benjamin Franklin spoke out in favor of paper money. He said, “Trade in general being nothing but the exchange of labor for labor, the value of a thing is most justly measured by labor.” He reasoned that if one can produce 20 bushels of corn in one year and another produces 20 ounces of silver in a year, than the bushels of corn are equal in value to the ounces of silver. Franklin argued that bullion is heavy and that it should be stored and paper money, bills of credit, be used instead.
On May 1, 1775 Massachusetts became the first colony to use unauthorized paper money. Just short of the revolution this was still seen as an act of defiance. The first paper money was actually interest-bearing promissory notes – a bonus was given to those who held them beyond a certain date. This was done to dissuade the populace from their preference for silver coins. Massachusetts was subsequently joined by Rhode Island and Connecticut in the production of these paper notes. On May 10, 1775 the Continental Congress issued paper money without backing to support the efforts of war. The colonists believed that the backing would be obtained once their liberty had been gained. Paper money was produced ten more times up until January 14, 1779. These bills were in odd denominations, whole dollars were 1, 2, 3, 4, 5, 6, 7, 8, 20, 30, 35, 40, 45 and then five dollar increments up to 80. There were also fractional notes valued at 1/6, 1/3, Ã?½ and 2/3. This oddity was the result of developing these notes to conform to the English monetary system, e.g. 1/3 dollar equal to 9 pence.
The problems generated by these paper notes were monumental. They were very easily counterfeited – the British actually made counterfeit paper money and advertised it in papers like the NY Gazette. The British did this to undermine the war efforts of the colonies. The then unformed nation suffered their first great pains of inflation as prices soared and value decreased. Many colonists were reduced to beggars; hoarding and violence was prevalent. By 1781 one dollar in silver or gold was equal to 75 paper dollars. In 1776 a Continental Dollar was created made of brass, pewter and silver, however it was not enough to replace the paper money.
In 1779 planning began to create a native coin system that would unite the colonists. In the postwar era there were two plans for this new coin system. The first plan was devised by Robert Morris, Superintendent of Finance and his assistant, Gouverneur Morris. Their plan was an elaborate one which would take into account the British and Spanish coinage system. Each dollar would be divided into 1440 parts, 1440 being a common multiple of 60, 72, 90 and 96. The smallest coin would be a unit or a quarter which would equal 1/1440 dollar. The second plan was put forth by Thomas Jefferson. It was to be a decimal system, with coins of gold, silver and copper. Jefferson’s plan called for a half-dollar or five-tenth’s coin; a fifth coin or pristeen; a tenth or bit coin and a twentieth or half bit coin. These were to be made of silver. A hundredth coin was to be made of copper and there would be a ten dollar gold coin.
In May 1785 Thomas Jefferson’s plan was accepted with modifications – the pristeen was dropped for a quarter dollar coin. On July 6, 1785, Congress made its plans for a decimal system of coinage; it would be the first in the world. The eagle was the name given to the gold ten dollar coin; the tenth dollar coin was named a disme (later to be termed dime); the quarter was a double disme, and cent replaced the hundredth. This system also called for a half cent or two hundredth coin and a mille, also called a one thousandth coin. The mille was never constructed as it was seen to have no commercial value.
On October 16, 1786 Congress passed the Mint Ordinance and regulations and details for its provisions were established. Coins would be made of copper, silver and gold. Under the Articles of Confederation the first official United States coins were issued. They were called Fugio cents – Fugio meaning time flies. The Fugio cent was approved by Congress April 21, 1787; the contract was given to a James Jarvis who turned out to be dishonest and never produced the quantity of coins expected of him. After an over long time, Jarvis produced just 400,000 Fugio cents, less than one-fifth of the expectation. By this time copper had become devalued. On January 29, 1792 Jarvis was arrested when he could not pay the debt he owed when he defaulted on his contract.
On September 17, 1787, the Congress of the United States passed that the states could no longer supply their own coinage. (This was ratified much later.) Instead, power was given to the Congress to have authority to coin money and regulate its value. On January 21, 1791 Alexander Hamilton, the Secretary of Treasury issued a report in favor of the construction of six coins, two each in gold, silver and copper. There would be a fifteen to one ratio of silver to gold. He advised that no profit should be made from the production of coins but that they were to have face value. Hamilton called for the phasing out of foreign coins over a three year period, but anticipating the possible slow production of the mint and the public acceptance of the Spanish silver coin, he also inserted that the President would decide whether or not the foreign coins would remain in circulation longer than three years. In April 1792 a close vote brought these directives into law. The closeness of the vote was due to arguments over the loss of individual states’ rights and whether Washington’s face should be on the coins. On April 14, 1792 George Washington approved David Rittenhouse, a scientist, as first director of the United States Mint.
The Mint was to be established in Philadelphia; it would be Rittenhouse’ responsibility to hire people necessary for the work. The official coins would be the eagle, a ten dollar gold coin; the half-eagle, a five dollar gold coin; the quarter eagle, a two and one-half dollar gold coin; a dollar, half dollar, quarter dollar, disme and half-disme coin, all in silver and the copper cents and half-cents. The building chosen for the US Mint was a former distillery at 37-39 North Seventh Street and the adjoining lot at 631 Filbert Street. Production began July 19, 1792 and was completed in early 1793. The first coins minted under the new provisions were the disme and half-disme and the Birch cent, designed by Robert Birch. The portrait on the disme was supposed to be Liberty but was actually a portrait of Martha Washington. The first coin production met with much outrage due to the design of the cent; the picture of a chain on the reverse side symbolized slavery to some, an ill-chosen icon to those newly liberated from the Mother Country. Production was hampered by yellow fever, a disease virtually unknown in the late 18th century.
By March of 1800 efforts were made to eliminate the Mint; it was felt that the cost of maintaining it was disproportionate to the services it provided. However, by 1820 Congress decided that the Mint was practical and should be expanded. On March 2, 1829 appropriation was made for enlarging the mint; eventually new land and equipment was purchased. The original Mint was sold at auction for just $10,000 on October 8. 1835.
Branch Mints were constructed in various parts of the country due to the discovery of gold in those parts. Most of these edifices are no longer used as Mint offices. Many have become assay offices and government buildings, the production of gold coins discontinued for many years. These Branch Mints were created out of expediency. It became unfeasible for frontiersmen and miners to bring their gold or silver to the original Mint, so Congress passed acts allowing for the construction of Mints throughout the country. The Dahlonega, Georgia Mint, the Charlotte, North Carolina Mint and the New Orleans Mint were all authorized March 3, 1835. The San Francisco Mint was authorized July 3, 1852; the Denver Mint was authorized April 21, 1862; the Carson City Mint was authorized March 3, 1863. During the height of gold production, Christian Bechtler offered to coin the gold for the miners for a small percentage. His offer was accepted and Bechtler began in 1831 coining great quantities of gold. His coins had his name on one side and the coin specifications on the other. A government investigation showed his operation to be an honest one so he continued his work until his death in 1843. After his death, Bechtler’s nephew, C. Bechtler, Jr. continued operations until 1857. Bechtler and his nephew are credited with creating the first gold dollar in the United States.
