Change Comes to Gold Coinage: 1834-1837

Gold has been long removed from the daily life of ordinary citizens in the United States, but this has not always been the case. In this age of fiat money, we are far removed from the early 19th century when coins of gold and silver circulated freely in the marketplace. In those days, the average citizen looked carefully at the coins that were used, making certain that they were genuine and of full weight and value.

When the basic Mint law was passed by Congress in 1792, it was decided that the monetary system of the United States would be bimetallic, an arrangement by which gold and silver would be of equal importance in the coinage. The relationship between the two metals was set at 15 ounces of silver to one ounce of gold, usually referred to as a 15-to-1 ratio.

The 15-to-1 arrangement had been carefully worked out by Treasury Secretary Alexander Hamilton in a masterful report presented to Congress in January 1791. At first Congress did little, but after prodding from President George Washington in late 1791 the legislators finally stirred and the result was the Mint law of April 1792.

Hamilton had set the ratio at 15-to-1 because the international money markets used that number. The problem with market ratios, however, is that they change over time with new discoveries of bullion or wars that disrupt normal commerce. This is what happened after