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The Coinage Act of 1857 (Act of Feb. 21, 1857, Chap. 56, 34th Cong., Sess. III, 11 Stat. 163) was an act of the
"The Mystery of Banking"
(pdf), p.10, 1983-11-28. and allowed as legal tender by the Act of April 10, 1806.
"An Act regulating the currency of foreign coins in the United States"
passed on April 10, 1806, referenced 2009-08-24. The Coinage Act of 1857 also discontinued the half cent. Furthermore, the penny was reduced in size. The large cent was discontinued and regular coinage of the
In the newly created union after the Revolutionary War and up until 1792 and the establishment of the US mint, the sole medium of exchange in terms of specie was foreign coin. Alexander Hamilton had proposed that foreign coin (of which he specially based the dollar) circulate freely for a period of three years until the new mint in
Full text of act
at the American Memory {{Money and central banking within the contemporary United States (pre–1913) United States federal currency legislation 1857 in law 1857 in the United States 1857 in economics
United States Congress
The United States Congress is the legislature of the federal government of the United States. It is Bicameralism, bicameral, composed of a lower body, the United States House of Representatives, House of Representatives, and an upper body, ...
which ended the status of foreign coins as legal tender, repealing all acts "authorizing the currency of foreign gold or silver coins". Specific coins would be exchanged at the Treasury and re-coined. The act is divided into seven sections.
Background
Before the Act, foreign coins, such as the Spanish dollar, were widely used Murray N. Rothbard"The Mystery of Banking"
(pdf), p.10, 1983-11-28. and allowed as legal tender by the Act of April 10, 1806.
Library of Congress
The Library of Congress (LOC) is the research library that officially serves the United States Congress and is the ''de facto'' national library of the United States. It is the oldest federal cultural institution in the country. The libra ...
"An Act regulating the currency of foreign coins in the United States"
passed on April 10, 1806, referenced 2009-08-24. The Coinage Act of 1857 also discontinued the half cent. Furthermore, the penny was reduced in size. The large cent was discontinued and regular coinage of the
Flying Eagle cent
The Flying Eagle cent is a one-cent piece struck by the Mint of the United States as a pattern coin in 1856 and for circulation in 1857 and 1858. The coin was designed by Mint Chief Engraver James B. Longacre, with the eagle in flight based o ...
began.
History
In the newly created union after the Revolutionary War and up until 1792 and the establishment of the US mint, the sole medium of exchange in terms of specie was foreign coin. Alexander Hamilton had proposed that foreign coin (of which he specially based the dollar) circulate freely for a period of three years until the new mint in Philadelphia
Philadelphia, often called Philly, is the largest city in the Commonwealth of Pennsylvania, the sixth-largest city in the U.S., the second-largest city in both the Northeast megalopolis and Mid-Atlantic regions after New York City. Since ...
was running at full capacity in order to have a smooth transition. This clause was renewed several times after being first specifically spelled out on April 10, 1806. By 1830, about 25% of all circulating coins were milled of Spanish origin. President Andrew Jackson
Andrew Jackson (March 15, 1767 – June 8, 1845) was an American lawyer, planter, general, and statesman who served as the seventh president of the United States from 1829 to 1837. Before being elected to the presidency, he gained fame as ...
supported foreign coin as legal tender in his famous war with the Bank of the US in the Gold Bill.Martin, David A. “The Changing Role of Foreign Money in the United States, 1782–1857.” Journal of Economic History. 4 (1977): 1009–1027. This new development ended up making it difficult for the US to retain its overvalued worn Spanish silver in the 1840s. By the late 1840s and early 1850s, the US mint had finally been able to match demand for foreign coin.
Effects
The Coinage Act of 1857 repealed prior legal tender laws concerning foreign specie. It fixed the weight and measure of US one-cent pieces at 4.655 grams, which was composed of 88%copper
Copper is a chemical element with the symbol Cu (from la, cuprum) and atomic number 29. It is a soft, malleable, and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a pink ...
and 12% nickel
Nickel is a chemical element with symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel is a hard and ductile transition metal. Pure nickel is chemically reactive but large pieces are slow t ...
. It also mandated that this new copper/nickel alloy
An alloy is a mixture of chemical elements of which at least one is a metal. Unlike chemical compounds with metallic bases, an alloy will retain all the properties of a metal in the resulting material, such as electrical conductivity, ductili ...
be received as payment for the worn gold and silver coins turned in at the mint. The effective aim was to limit the domestic money supply
In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circu ...
by crushing European competition. This was the first major step towards the government essentially having a monopoly over the money supply
In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circu ...
.
The act drastically altered American business. For decades, those who had accepted any form of payment as long as it was made of specie began to immediately only tolerate those newly minted with a fresh seal from the US government. Due to insatiable demand early on for the new federal cents and the profits to be made by collecting the foreign silver, many individuals, along with banks, competed with each other. The newly minted American silver made much of the foreign silver obsolete in the eyes of some. There also was the ever-present issue of the non-decimal system used in foreign coin, making prices subject to fractions of a cent and therefore payments were inconvenient. Even still, circulation of foreign coins lasted for decades longer in the rural interior.
See also
* Coinage Act of 1792 *Coinage Act of 1834
The Coinage Act of 1834 was passed by the United States Congress on June 28, 1834. It raised the silver-to-gold weight ratio from its 1792 level of 15:1 (established by the Coinage Act of 1792) to 16:1 thus setting the mint price for silver at a le ...
*Coinage Act of 1849
The Coinage Act of 1849 was an Act of the United States Congress passed during the California Gold Rush authorizing the Mint to produce two new gold coins in response to the increased gold supply: the small gold dollar and the large double eagl ...
*Coinage Act of 1853
The Coinage Act of 185310 Stat. 160 was a piece of legislation passed by the United States Congress which lowered the silver content of the silver half dime, dime, quarter dollar, and half dollar, and authorized a three dollar gold piece. Althou ...
*Coinage Act of 1864
The Coinage Act of 1864 was a United States federal law passed on April 22, 1864, which changed the composition of the one-cent coin and authorized the minting of the two-cent coin. The Director of the U.S. Mint developed the designs for these ...
*Coinage Act of 1873
The Coinage Act of 1873 or Mint Act of 1873, was a general revision of laws relating to the Mint of the United States. By ending the right of holders of silver bullion to have it coined into standard silver dollars, while allowing holders of go ...
*Coinage Act of 1965
The Coinage Act of 1965, , eliminated silver from the circulating United States dime (ten-cent piece) and quarter dollar coins. It also reduced the silver content of the half dollar from 90 percent to 40 percent; silver in the half dollar was s ...
Notes
Further reading
*.External links
Full text of act
at the American Memory {{Money and central banking within the contemporary United States (pre–1913) United States federal currency legislation 1857 in law 1857 in the United States 1857 in economics