Early Gold To Silver Ratios
When the Mint law was passed by Congress in 1792, it was decided that the monetary system of the United States would be bimetallic, that is an arrangement by which silver and gold would be of equal importance in the coinage issued.
The relationship between the two metals was set at 15 ounces of silver to one ounce of gold. this was commonly referred to as a 15-to-1 ratio. The 15-to-1 ratio was the brainchild of the Treasury Secretary Alexander Hamilton. The ratio was carefully spelled out in a masterful report presented to Congress in January 1791.
Initially the Congress did little, but with much prodding from President George Washington in late 1791, congress finally stirred to action and the final result was the Mint law of April 1792. Hamilton had set the ratio at 15 to 1 because this was the ratio being used in the international financial markets at the time.
One big problem with financial markets is that they change over time. Every new discovery of bullion or wars that disrupt normal commerce throw the markets out of kilter. This is what happened in 1799. Unfortunately the new law had no provision for changing the ratio.
While silver coinage began at the Philadelphia Mint in the fall of 1794, it was not until 1795 that the operations got fully underway for this metal. In July the silver was joined by the gold coinage and now the nation had a fully operational mint utilizing all three metals to include copper.
As there was no serious change in the international markets during the waning years of the 1790s, gold and silver coinage in the United States operated in their appointed ways. Both precious metals circulated freely, although the gold coins was restricted to the merchant and banking classes and was used for large transactions.
Even though the U.S. Mint was issuing coins in the three metals, the bulk of coins circulating were of foreign origin. Spanish gold and silver coins formed the bulk of the foreign coins circulating. It took a while for the coins being issued from the Philadelphia Mint to circulate outside of this domain.
By 1800 the shift in the ratio of gold to silver was becoming a matter of concern. It soon reached a ratio of 15.5 to 1, meaning that it now took fifteen and one-half ounces of silver to equal one ounce of gold. This caused the gold coins of the United States were now undervalued and began to be exported to Britain and France.
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