1826 US coins

Fair enough, I stand corrected in regard to the beginning of the bullion fund. But during this time period the US was doing far more to procure the bullion deposits for the mint than just sitting around and waiting for them to come in.

Example - in 1801 the US purchased 25 tons of copper planchets from Mathew Boulton in England specifically for the US Mint.

The money to do that came from some place, and it wasn't from people bringing in deposits to the mint. It came in the form of loans, from other nations and the banks in other nations. And those foreign banks and governments gave the bullion, or the money to purchase bullion, to the Bank of the United States which in turn deposited the bullion with the US Mint for the purpose of producing coinage.

In 1802 all foreign gold and silver coins ceased to be legal tender in the USA for three years.

In Aug. 1803 Mint Director Elias Boudinot suspended coinage of dollars due to their main use in export profiteering. By Dec. of the same year the coinage of silver dollars resumed.

Then inn March of 1804, President Thomas Jefferson suspended coinage of silver dollars, to stop the practice of profiteers exporting them to the West Indies, exchanging them for Spanish dollars, and then importing the Spanish dollars for recoinage at the Philadelphia Mint.

Also, as early as May 1804 the first American mined gold was deposited at the Philadelphia Mint for coinage.

In May of 1806 Secretary of State James Madison instructed U.S. Mint Director Robert Patterson to cease coinage of silver coins larger than the half dollar due to exportation of silver dollars by the Bank of the United States.

And it was during this period that numerous bills were introduced in Congress, and even passed by the House, to abolish the US Mint and allow the Bank of the United States to mint coinage. This went on for several years but in the end the bills were always defeated. Of course all of this was caused by the profiteering possible because of the rates of exchange. The laws regarding the value of foreign silver and gold coins were constantly being changed. And it was not until 1828 that the battle to abolish the US Mint came to an end.

I guess what I'm trying to say is this. It's not that there was a shortage of silver and gold being made available to the mint for coinage during this time. Rather there was an abundance of it because of the profiteering motive. People were falling all over themselves trying to deposit silver with the mint.

 

Because they didn't have any choice but to do that. The Spanish dollars were deposited with the mint and the way the law worked everything had to be melted down, assayed, costs deducted, and then the depositor was paid with US coins. (The same law exists still today.) They did not just exchange coins for coins.

That's what allowed the profiteering to work.

 

Chris - you're making incorrect assumptions here.

US dollar until 1840 - .8924 silver, 26.96 grams

Spanish dollar prior to 1800 - .9170, .9030, .8960 silver depending date (with the majority being the 2 former), 27.06 grams

The mint melting the Spanish dollars down is how the depositors were able to profit.

Now as to why they were able to trade 100 US for more Spanish, I believe it was political and a lack of trust in the Spanish dollar more than anything else. After 1800 the governments in Mexico and South America (which is where all the Spanish dollars came from) were in great turmoil, revolution was afoot. And Napoleon was running amok in Europe. People just didn't want Spanish dollars any more because they could no longer get a fair exchange on them anywhere else in the world, only in the US could they do that. So they wanted US dollars. They could take US dollars anyplace and get a fair exchange rate. That's why they could trade 100 US dollars for more Spanish dollars, outside the US. The West Indies just happened to be the closest place and the easiest to get to.

 

Think of it like this. Not so long ago you could go anywhere in the world and get more if you paid for it with US dollars than you could if you used local or other currency. There was no silver or gold involved, it was just the fact that it was US currency because the exchange rates were favorable.

Well, the early 1800's were the beginning of that. In Europe the various countries were constantly battling each other over exchange rates and had been for centuries. They had forever had the problem of trying to get their own currency to stay in their own country. Great Britain in particular had this problem with silver coins, but all of the countries over the centuries suffered the same problem depending on who was at war with whom, or who was mad at whom, at the time.

What was going on in the US in the early 1800's was merely an extension of that. Look at various finenesses for Spanish dollars for example, depending on the date the coin could have 3 different amounts of silver in it. So people were afraid of accepting those coins for fear of being cheated. But US coins, at the time, all had the same amount of silver. So that made them worth more because of the trust issue.

It's the same principle that allowed Venice to rule the trade world in the 1300's and then the Netherlands to rule the trade world in the 1600's. They made coins of the same fineness and same weight every single time. So everybody in the world would accept their coins.