The Coinage Act of 1857 (Act of Feb. 21, 1857, Chap. 56, 34th Cong., Sess. III, 11 Stat. 163) was an act of the

United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...

which ended the status of foreign coins as

legal tender Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in pa ...

, repealing all acts "authorizing the currency of foreign gold or silver coins". Specific coins would be exchanged at the

Treasury A treasury is either *A government department related to finance and taxation, a finance ministry. *A place or location where treasure, such as currency or precious items are kept. These can be state or royal property, church treasure or i ...

and re-coined. The act is divided into seven sections.

Background

Before the Act, foreign coins, such as the

Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver coin of approximately diameter worth eight Spanish reales. It was minted in the Spanish Empire following a monetary reform in 1497 with content ...

, 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 library is ...

"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 A penny is a coin ( pennies) or a unit of currency (pl. pence) in various countries. Borrowed from the Carolingian denarius (hence its former abbreviation d.), it is usually the smallest denomination within a currency system. Presently, it is t ...

was reduced in size. The

large cent The United States large cent was a coin with a face value of 1/100 of a United States dollar. Its nominal diameter was 1 inch (28.57 mm). The first official mintage of the large cent was in 1793, and its production continued until 1857, whe ...

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 United States Mint is a bureau of the Department of the Treasury responsible for producing coinage for the United States to conduct its trade and commerce, as well as controlling the movement of bullion. It does not produce paper money; tha ...

, the sole

medium of exchange In economics, a medium of exchange is any item that is widely acceptable in exchange for goods and services. In modern economies, the most commonly used medium of exchange is currency. The origin of "mediums of exchange" in human societies is ass ...

in terms of specie was foreign coin.

Alexander Hamilton Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American military officer, statesman, and Founding Father who served as the first United States secretary of the treasury from 1789 to 1795. Born out of wedlock in Charlest ...

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. Sinc ...

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 President most commonly refers to: *President (corporate title) *President (education), a leader of a college or university *President (government title) President may also refer to: Automobiles * Nissan President, a 1966–2010 Japanese ful ...

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

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 pinkis ...

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 to ...

. 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, ductility, ...

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 Circulation (curren ...

by crushing European competition. This was the first major step towards the government essentially having a

monopoly A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...

over the

. 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.

Notes

External links

Full text of act
at the

American Memory American Memory is an internet-based archive for public domain image resources, as well as Sound recording, audio, video, and archived Web content. Published by the Library of Congress, the archive launched on October 13, 1994, after $13 million w ...

{{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

Background

History

Effects

See also

Notes

Further reading

External links