Napoleon Ascendant- U.K. Parliament Studies Ratio of Eagles to Foreign Gold in U.S. Circulation-1810
JCH22
Posts: 214 ✭✭✭✭
Short answer: Ratio was estimated to be 1/9. Longer answer...
The rise of Napoleon caused a spike in gold significant enough for the UK Parliament to appoint a committee in 1810 to investigate. The Committee’s report/testimony was detailed, long, and surveyed the economies of its continental and North and South American rivals & allies. I commend that report in full to anyone with an interest in the global monetary system at the dawn of the 19th Century.
The United States was in the potential rival category given the Embargo Act (1807) and Nonintercourse Act (1809). The U.K responded with retaliatory Orders in Council. This back and brought reciprocal trade to a standstill.
Points from that Report relevant here:
1) The capital of all the Banks in the U.S was estimated to be about $40 million. The banks had about $30 million in notes outstanding.
2) The principle means of bullion exchange/ bank settlement in the U.S. was gold due to a shortage of silver. The ratio of the U.S. Mint’s production was estimated by Parliament to be 62 parts silver to 1 part gold. Despite this, silver on average traded at a 1 to 2% premium over gold, reaching highs of 5%. Silver was subject to sudden and great drains which were contributed to by exportation to the East Indies and China.
3) Given the shortage of silver, gold was paid out by the National Bank to meet runs, as both were legal tender. This was a successful strategy, only one Bank in Rhode Island failed (due to a lack of adequate capitalization to meet notes issued).
4) U.S. reserves were sufficient, but were made up of a ratio of 1/9 U.S eagles to foreign coins. The bulk of foreign gold coins were Spanish and Portuguese, with a smaller percentage of British and French coins.
Comments
Thanks for posting. Collecting foreign coin types that circulated here is great fun and of significant historical interest. Many, but not all, were legal tender until 1857. It took us 64 years to produce a sufficient domestic supply. Most of my type is now foreign.
Interesting.
Would I be correct in assuming that the term "Eagles" refers to all Eagle-denominated gold, including Eagles, Half Eagles and Quarter Eagles?
This might be considered related. The Gold Standard Act of March 14, 1900, required that the stores of physical gold held by the Treasury as backing for Gold Certificates (and potentially other currency) be at least 2/3rds U.S.-issued coin gold and up to 1/3rd good quality foreign gold coins and certain good quality assayed ingots. During World War One, so much foreign gold came into this country as payment for war materials that the Act of June 12, 1916 reversed this ratio, allowing the foreign gold coins and good quality bars to reach up to 2/3rds of the fave value of the currency so backed. By 1919 that 2/3rds limit was in danger of being breached, and that is why the Mint resumed coining gold in 1920.
I believe you would be. Report is a little loose with language--see first 2 attachment describing our coinage. Third attachment is from where I drew the ratio. From the context, I took it to mean all Eagle denominations.
