American Gold

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NOWADAYS MONEY SEEMS to have become a pure idea, a universally agreed-upon fiction conveyed by pieces of paper, plastic cards, computers, and coins made of nearly worthless metal. But until just fifty-one years ago, money meant solid gold, that precious, rare, beautiful, glamorous, and nearly indestructible element which had stood throughout history as the invulnerable guarantee of financial security. For 138 years, from 1795 through 1933, the United States grounded its currency in gold (as well as silver part of the time) and issued hundreds of millions of gold coins, valued at one to twenty dollars apiece. They were worth their weight and were traded freely. Today most of them are gone—they were melted down for bullion, both by citizens and by the government.

Those that remain are treasured for their gold content, their rarity, their age, their glimmering beauty (though some are much more attractive than others), and as the legacy of America’s long affair with gold cash—an affair that, like many, seems much sweeter in retrospect. It was an uneasy, if colorful, relationship. The money system of the last century seems primitive and disorganized today. The new nation had to invent its own currency and struggle to establish it at a time when the nature of money itself was changing. A broad variety of gold coins were produced over those years, and while they dazzle the eye, their surfaces also reflect the development of America’s money and the rise and fall of gold’s central part in it.

The first gold coins known to be made in the United States were doubloons turned out in 1787 by a New York goldsmith named Ephraim Brasher. At the time, most business was transacted in an assortment of foreign and colonial moneys; the doubloon was equal to sixteen Spanish dollars. Brasher’s coin bore the words Nova Eboraca , for New York, and Columbia , for the nation, plus Unum E Pluribus and Brasher . One face showed a stiffly drawn American eagle, the other a sun rising over a mountain. Nobody knows how many of these coins Brasher produced—only seven still exist—or even why he made them. They may have been designed for general circulation, as souvenirs, or as samples to impress the New York State Legislature, from which Brasher sought a contract to mint copper coins. In any case, they are today among the most valuable coins in the world. In 1979 one of them was sold for $725,000, the highest price ever commanded by any coin anywhere.

 
 
 
 
 
 
 
 

WHILE BRASHER was making his doubloons, Congress was inventing American money. Spanish silver dollars were a popular currency, known as “pieces of eight” because each was worth eight reales , or “bits,” and in 1792 Congress sensibly adopted a decimal monetary system conceived by Thomas Jefferson and based on the dollar. Each dollar was to divide into ten “dismes” and one hundred “cents,” and ten dollars would become one “eagle.” The value of the new American dollar was pegged at 24.75 grains of gold, or exactly fifteen times as much silver.

A new Philadelphia mint issued its first gold coins in 1795. There were pieces valued at $2.50, $5, and $10—quarter eagles, half eagles, and eagles—all with nearly identical Liberty profiles on the front and eagles on the back. Since they were to be worth their weight in metal, they carried no mark of denomination—they were expected to trade for less as they wore down. Coins of a dollar or less were minted of silver and copper; paper money, which had gotten a bad reputation during the Revolution, was not part of the system.

Private, independent minting of gold coins for circulation was fully legal until 1864.

During its early years the mint provided free coinage—it accepted gold and silver from anyone and converted it, free of charge, into U.S. coins. Merchants provided much of the gold—they brought in jewelry, foreign coins, and gold bars taken in payment for international trade.

Two major problems beset the nation’s coinage early on and persisted for many decades—the widespread acceptance and familiarity of existing foreign currency and the unwieldiness of a strict tie to two metals at once. By 1799 gold had increased in value relative to silver on the European markets, so gold coins began to disappear from circulation and be hoarded or traded for their gold content. Meanwhile, speculators found that they could buy U.S. silver dollars with worn Spanish dollars worth slightly less and thus end up with free metal, so silver money also disappeared. American money was off to a weak start. In 1804 the minting of both silver dollars and gold eagles was suspended.