part of the nation, should feel and appreciate the evils of excessive importations as soon as they occur. Then, the prudent man, being forewarned, might guard against them; and the opinion of the people being formed upon facts, which all comprehend, would give a better direction to the policy of the country as well as to their present affairs.

Observations on the Currency of the United States,

In compliance with an earnest request to that effect by persons entitled to very respectful consideration, the undersigned has consented to put on paper some suggestions in relation to the approaching crisis in the monetary system or the United States. Having undertaken a laborious examination of this complex subject, preparatory to an official report, some twenty years ago, and being thus prepared to give it a more intelligent consideration, since, as successive occasions have brought it into special notice, he persuades himself that he has clearer views of the facts and principles involved in this great question, than he might otherwise have had, and especially of some opinions then ontertained, which he now deems erroneous, and feels some obligation to endeavor to place in their proper light.

There are few subjects under the acknowledged control of the political power of a nation, whieh are so universally interesting to its people as that of its coinage. The power to coin money, necessarily includes the power to determine what metals shall be used for this purpose, and, when two or more are employed, the power of fixing their relative values and respective weights, and also of constituting them standard measures of value, and compelling their acceptance at the prices fixed by the government, in fulfillment of contracts and payment of debts.

The coins, thus made legal tenders, become necessarily the measures of value, which, however, may be changed at the pleasure of the ruling power, and contracts made under one standard or measure, may thus become payable under another. A single case, out of hundreds that might be adduced, will show how this power may be abused. When Henry VIII. ascended the British throne, the pound sterling, originally contained 5,760 grains, containing only 2,966 grains of silver, and a debt then contracted, viz: in 1509, or annuity devised, could have been paid with 800 grains of silver for the pound sterling at Henry's decease in 1546, and his successor, Edward VI., ordered a coinage of 400 grains of silver to the pound sterling. The history of coinage abounds with such facts. Our present business is, however, with more recent events. The measures adopted by the British government, at successive periods from 1816 to 1829, for the reformation of the currency, which had been greatly deranged by continental subsides, and the consequent suspension of specie payments at the bank from 1797, had affected the relative values of gold and silver throughout the commercial world. In 1816, that government changed

the character of its silver coins, by making them a tender only in payments not exceeding forty shillings, at the same time reduced their weight materially, and made gold coins the exclusive standard of value in all other transactions. In 1820, the Bank of England resumed specie payments, and in 1829, the issue of all bank-notes of less amount than five pounds was prohibited by law.

These measures caused such an unusual demand for gold to fill the vacuum in English currency, that the price of gold rose in the United States nearly six per cent above its valuation, compared with silver in the coin. In the United States mint regulations, the metals were estimated at 1 to 15, and, of course, gold only was used for exportation for which it was bought at a premium, fluctuating from three to six per cent, from 1824 to 1829.

The subject attracted the attention of Congress, and was referred, by resolution of the Senate, in 1830 to the Treasury Department for investigation, when i was ascertained that gold bullion, compared with silver bullion, had risen in price, averaging for ten years about 5 per cent, which had then all the appearance of permanence. The Secretary of the Treasury 1ecommended an alteration in the ratio of the coins from 1 to 15 to 1 to 153, which estimated gold about 4 per cent higher than it was then established at the mint. The secretary remarked, in his report, that "we have had long experience of a currency without gold, and but very little of a currency without silver. The inconvenience of the former is sensibly felt, but that of the latter was insupportable. We have, however, no experience of a gold currency without silver. But it would not be difficult to foresee that if any event should drain off the silver, its place will be supplied not by gold, but by small bank notes and paper tokens, which are the most obnoxious of all the various materials for currency." This paragraph is quoted because the "event" adverted to is now happening; gold has depreciated in value, and the drainage of the silver is in rapid progress. For the reasons above stated, the secretary earnestly recommended a valuation of the gold coins at a lower rate than the ascertained average marked value of gold bullion, apprehending a serious derangement of the currency if the value of gold bullion should at any time become so reduced as to make silver coins more profitable for exportation than gold. The subject was not acted on in Congress until 1834, an unfortunate period for ascertaining new facts, as for that calm and deliberate consideration which so grave a subject demanded. The whole community was in a state of morbid excitement, occasioned by the disturbance of the currency and ruinous revulsions in every kind of business, attributed to the great quarrel between the government and the Bank of the United States, complicated with the interest of the State banks and all the elements of political strife. At such a time Congress undertook to re-arrange the relative values of the gold and silver coins, partly, as it were, by way of throwing a tub to an excited whale.

Congress, no doubt, believed that by overvaluing gold at the mint, it would be brought into general circulation, and gratify and pacify the public mind; and, looking only at one side, they lost sight of the danger of banishing the more indispensable coin of silver. The ratio adopted was 1 to 15.988, which estimated the value of gold in the

mint 1.19 per cent above that of gold bullion to silver bullion in the market, 2.272 per cent higher than was recommended by the Secretary of the Treasury, 2.37 per cent higher than proposed by Mr. Gallatin, nd 6.5 per cent above the ratio fixed by the act of 1792, and thereby reduced the value of the gold eagle about 66 cents below that of the old coinage under that act. This extraordinary change did not, however, accomplish its purpose; it was not perceived that, however gold coins might be over valued, they would not circulate to the exclusion of bank-notes, which were still more overvalued; wherein lies the solution of the problem in United States currency, which has so much puzzled the speculators in this science; it is unnecessary to dwell further on these points.

We have now approached a crisis, in which, by reason of the overvaluation of gold in the coins and the increased production of gold in California, it has so depreciated, in proportion to silver, that the latter commands a premium of 3 per cent, and is rapidly being withdrawn from the banks and public treasury for exportation, and a few months will probably leave nothing for the small payments and exchanges, except some light foreign coins, and their companions paper tokens, or tickets to be issued by every one who pleases.

There is no reason to hope, as long as we have balances to pay abroad, and gold shall continue to be supplied as heretofore, that it will be possible, under the present mint regulations, to maintain a silver currency sufficient for the public necessity, much less for the public convenience. And yet it is more than probable that a few years may so exhaust the California workings as to depreciate gold, at least to the mint value. The question, therefore, what can be safely done? forcibly addresses itself to all those who have power over the subject.

To change the relative values of metals used as standard measures of property, is a very grave and serious work. It is nothing less, in its character, than to change the weight and lenght of the weights and measures which are the standards of quantity in all the internal commercial transactions of a nation, and at the same time compelling the execution of previous contracts according to the new measures, without permitting any allowance for the surplus or deficiency; nothing but an extreme necessity can justify the slightest modification of the standards of value, and whenever attempted, it should be directed by the most careful and skilful hand. Such a measure will not, therefore, be proposed in this paper, and more especially because it is believed that a remedy for the drainage of the silver coins may be devised, without any general change of the relative values of gold and silver at the mint, and without affecting contracts or deranging the standards in the slightest degree.

In view of this measure, it should be observed, that silver coins, which are made by law a tender for the payment of debts, have two distinct values, derived from, and depending upon, the uses to which they are applied. If they are wanted for remittances, bills of exchange are abundantly more convenient; if wanted for large payments at home, gold and bank-notes are quite as good, if not preferable. But when small payments are to be made, in the every day business of every body, we have no possible substitute, except dollar bank-notes, and that vile trash, individual paper tokens, which will inevitably find

their way into the channels of currency whenever silver is drawn out. It would be difficult to determine how much premium retail dealers would be willing to give for small silver coins, rather than be obliged to do without them, or to use as a substitute the paper tokens; but it is evident that such a premium would only be given for coins to be applied to these small payments, while gold could be had at a cheaper rate for larger payments. The two distinct values, above mentioned, are therefore self-evident; and, keeping in view this fact, it is only necessary to make a coin adapted to the uses for which it is so much more valuable, and for which, only, it is required; for it is the same thing to the community whether the proper relative value of a coin is maintained by the quantity of metal in it, or by its peculiar adaptation to the uses for which it is wanted. Such a coin should, however, be confined by law to that class of payments wherein its peculiar value would be fully appreciated and sustained, and from which it could not be withdrawn, to be used for payments requiring a higher metallic value. This purpose may be accomplished by a mint regulation to provide a new coinage of all the subdivisions of the dollar, to be as much lighter than those now coined as would protect these new coins from exportation or the melting crucible, which must be made by law a legal tender only in payments not exceeding say five or ten dollars. Such a regulation will confine these new coins to their appropriate sphere, without disturbing the general arrangement of the monetary system, and without the slightest effect on contracts. While silver commands a premium, the silver dollars will, of course, be exported, but their loss will not be sensibly felt. The gold dollar will take their place as far as it can be crowded into the channels of circulation among the dollar notes which now overflow its banks, or if these notes supersede gold dollars at par, they will even more easily take the place of the silver dollar at a premium of three per cent. These facts, however, relate to the coinage as it now is, without reference to the proposed change, which in this respect will not affect it in any way. A premium of less than three per cent will soon drain off all the silver dollars, whether the proposed change is made or not, and the alteration suggested for the subdivisions will neither hasten nor retard that operation. But if nothing is done to prevent it, not only the silver dollars but the half dollars will be exported, and all the smaller coins, except those which have become too light by wear to justify a sufficient premium, will be melted. The great desideratum, and the object of the proposed new coinage, is to preserve all these subdivisions of the dollar permanently in circulation, which can only be done by a proper reduction of their weight.

If there should be any doubt as to the certain effect and convenience of such a coinage, an example may be found in the monetary system of England, previously adverted to, which was adopted in 1816. The new silver coins then established were nominally reduced 6.06 per cent below the weight of their predecessors, which the government bought up at 67 137 shillings the pound for pure silver, or 62 shillings the pound for standard silver. In the treasury report, before referred to, as also in a letter of Mr. Gallatin, this new mint regulation in England was adverted to with decided disapprobation, no doubt under the impression, as was remarked by the secretary, that some who re

ceived their dues in small sums payable in these light silver coins might be obliged to pay their debts, in sums over 40 shillings, in gold, for which they must pay a premium equal to the over valuation of their silver coins. But it could not have occurred to them, that the silver coins applicable only to these small payments were intrinsically worth, for that purpose, as much more than gold, or any other medium adapted to large payments only, as the difference between the mint and market values of silver, or, in other words, between silver coin and silver bullion, and that a metal coined for a special purpose, to which it was exclusively applicable, derived an increased value from this adaptation, not unlike that of a piece of steel manufactured into an edge-tool. Such being the fact, both theory and practice prove, that as long as the currency is not overstocked with these small light coins, they would circulate freely with gold, and be at all times exchangeable with it at par, as is well known to be the fact in England. The system was therefore condemned theoretically, with an essential term of the theorem left out. We have, also, nearer home an example on a smaller scale, but full of instruction, where the light foreign coins of small denominations maintain their spurious rank in our currency in defiance of their condemnation by banks and statutes, and even public opinion. Their extremely smooth faces are their passport and safe conduct through all these dangers; a premium of five per cent on silver bullion would not touch them.

There are, however, several propositions to be eonsidered in determining to make a coinage of the character proposed. 1st. That the silver bullion to be coined, except that for dollars, must be bought at the mint, and the profit on the coinage must accrue to the public treasury. 2d. That individuals who offer silver for coinage can only have it coined into dollars. 3d. That the government must from time to time, through highly responsible functionaries, determine and control the amount of the proposed new coinage, which functionaries must especially take care that the demand for it in the circulation be not overstocked. 4th. That the proposed reduction in the weight of the new coins be sufficient to countervail any probable future premium which may be offered for silver. 5th. That this reduction be no more than shall appear to be indispensable for its purpose. Lastly. That if the coins are made too light, they may be counterfeited at a profit on their full weight, and the currency be thus overstocked, when they cannot be made heavier; but if found by experience too heavy, there will be no difficulty in making them, at a new coinage, lighter.

The reasons on which these propositions are based are too apparent to require further disquisition in this paper. The chief difficulty that presents itself is, to ascertain the proper amount of reduction to be made in the new coin. The present premium for silver in the United States is three per cent; and if we suppose it will not hereafter rise above six per cent, a reduction of weight of five or five and a half per cent will be ample for the protection of the small coin; which being not particularly eligible, in point of form, for exportation, and being also subject to wear, would not be taken out of the currency for a premium of one per cent. These suggestions are, it is true, conjectural, but the case admits of no other, and they may be modified by