By Jacquie Foote While it is true the Articles of…
By Jacquie Foote While it is true the Articles of Confederation's federal government was, in many ways, too weak to run the country, it was…
By Jacquie Foote
While it is true the Articles of Confederation’s federal government was, in many ways, too weak to run the country, it was strong and wise enough to take the following steps to stabilize America’s monitory situation:
– It saw to it that the official money of the United States would be precious metals -silver and gold.
– It ruled that the basic unit of value would be called a dollar and would consist of 375 and 64/100s grains of fine silver. (Keep in mind that this dollar was a coin. There was no provision for paper money.)
– It decided that all other coins, both foreign and domestic, would be evaluated in terms of this official silver dollar. (Thus, keeping any coins issued by individual states tied to the legal tender of the nation as a whole.)
Once the Constitution was ratified, the Congress moved quickly to enact the wishes of the founders as expressed in the provisions in the Constitution so as to stabilize the national fiscal situation. Congress wrote:
– That they (the U.S. Congress) would have the power to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures. (Article I, Section 8, Clause 5.)
– That they (the U.S. Congress) would have the power to punish the counter-feiting of money. (Article I, Section 8, Clause 6.)
– That no tax on imported persons (meaning bonded servants) would exceed ten dollars. (Note the use of the word dollars in this provision.) (Article I, Section 9, Clause 1.)
– That no state would be able to coin money, emit bills of credit, or make anything but gold and silver tender in payment of debts. (Article 1, Section 10, Clause 1.)
– That in civil cases for more than twenty dollars, the right of trial by jury would be preserved. (Seventh Amend-ment.)
Then, in 1792, Congress passed the Coinage Act. This law mandated the death penalty for anyone debasing the money (producing a coin with less than the required silver or gold in it). The Coinage Act also provided for a United States mint where silver dollars were to be coined along with gold coins.
The rules set down for the content of the coins were:
– Silver dollars were to contain 46 grains of standard silver.
– Half dollars, quarters, and dimes and half dimes were to contain an amount of standard silver proportionate to the amount in a dollar.
– Pennies and half pennies were to be made of copper.
– Gold eagles (a gold coin) were worth ten silver dollars, with a ratio between gold and silver fixed by statute. (The fixing of this ratio by statute turned out to be a mistake, as is born out by the fact that the ratio between gold and silver which was fixed at 15 to 1 was soon out of phase in favor of gold and, as a result, much of the American gold stocks began to be purchased by Europe.)
– Half eagles (worth $5) and quarter eagles (worth $2.50) were also to be minted.
– Free minting privileges were granted to all citizens who could take either gold or silver to the mint and have it minted into coins for them. (This practice lasted until 1873.)
In 1834, the ratio between gold and silver was changed to 16 to 1 (which favored silver), and from then until the Civil War the nation was, for all intent and purposes, on a gold standard. Europe began buying silver, with the gold it had previously accumulated. This, happily, soon brought gold stocks back to the United States.
But, what about paper money? Greenbacks? Folding money? Next time!
For information on the events at the Geauga County Historical Society’s Burton Century Village Museum, call 440-834-1492 or visit www.geauga
historical.org.
