Gadsden Purchase - Were actual coins paid? - Where are they now?

StrikeOutXXX · November 9, 2006 1:25AM

I'm still on my papers of the Presidents kick. Found a reference in a Dec 10, 1854 Special Message to the senate from Franklin Pierce: Special Message Text

The part that interested me was this:

It is also recommended that for the third article of the original treaty the following shall be adopted as a substitute:

In consideration of the grants received by the United States and the obligations relinquished by the Mexican Republic pursuant to this treaty, the former agree to pay to the latter the sum of $15,000,000 in gold or silver coin at the Treasury at Washington, one-fifth of the amount on the exchange of ratifications of the present treaty at Washington and the remaining four-fifths in monthly installments of three millions each with interest at the rate of 6 per cent per annum until the whole be paid, the Government of the United States reserving the right to pay up the whole sum of fifteen millions at an earlier date, as may be to it convenient.

I am guessing it never got amended, becasue article III still reads:
In consideration of the foregoing stipulations, the Government of the United States agrees to pay to the government of Mexico, in the city of New York, the sum of ten millions of dollars, of which seven millions shall be paid immediately upon the exchange of the ratifications of this treaty, and the remaining three millions as soon as the boundary line shall be surveyed, marked, and established.

So here are my questions - Where are these millions in gold or silver coins? Were they physically transferred to Mexico? Was it an "On paper only" transaction? Are they still in a vault somewhere, melted, slabbed as the Gadsden Hoard and sold on eBay, anybody know?

StampAlarm · November 9, 2006 3:15AM

Wow, no I don't. But it sure sounds interesting.

Jerry

Longacre · November 9, 2006 3:22AM

Good post. I would be interested to hear if anyone knew the answer.

CaptHenway · November 9, 2006 3:43AM

The chances are that the purchase was paid for in specie, but there would be no way to identify any of the coins today. The Mexican government would have simply melted them down and converted them into Mexican coins.

When James Smithson died in England and bequeathed his entire estate to the establishment of an institution of learning in America, the executors sold everything and sent approx. 100,000 sovereigns to America. They were received in 1847 and converted to $5's and $10's (check the mintages) and the money used to start the Smithsonian Institution, which did keep two of the sovereigns for their museum!

TD

messydesk · November 9, 2006 3:52AM

<< <i>They were received in 1847 and converted to $5's and $10's (check the mintages) >>

Not 1839?

StrikeOutXXX · November 9, 2006 4:45AM

<< <i>The chances are that the purchase was paid for in specie, but there would be no way to identify any of the coins today. The Mexican government would have simply melted them down and converted them into Mexican coins.

When James Smithson died in England and bequeathed his entire estate to the establishment of an institution of learning in America, the executors sold everything and sent approx. 100,000 sovereigns to America. They were received in 1847 and converted to $5's and $10's (check the mintages) and the money used to start the Smithsonian Institution, which did keep two of the sovereigns for their museum!

TD >>

Very good info. I think I have one book at home with Mexican coin mintages, and info; I'll have to see if they had a huge spike of gold coins being produced through the mid 1850's.

DaveG · November 9, 2006 9:44AM

Since the Treaty called for the money to be paid in New York, most likely it never reached Mexico.

Mexico was, especially at that time, a nation heavily in debt to European lenders. (Wikipedia says that the Mexican people were upset because President Santa Anna [yes, the Alamo guy] "squandered" the proceeds from the Gadsden Purchase. ["Half the money he spent on liquor and women, the rest he just wasted."] Also, by the late-1850s(?), the Mexicans were so broke they stopped paying interest in their foreign loans, which led the French, British and Spanish to invade the country to get repaid. The British and Spanish left quickly when they learned that the French wanted to take over permanently and install Maximilian as Emperor of Mexico.)

So, most likely, the payment was made in gold coin in New York and the coins were either shipped to Europe or used to purchase European Bills of Exchange. If the coins were shipped to Europe, they would probably have been melted shortly after their arrival and recoined into European coins or turned into gold bars, since American coins weren't legal tender in Europe.

They certainly aren't still sitting in a vault somewhere. Who could afford to let $10 million sit around for a hundred years without at least earning interest on the money?

Tom,

My understanding is that the British shipped the 100,000 sovereigns to America in 1838 and the bullion was used to mint the 1838 and 1839 eagles. Is that not correct?

Michigan · November 9, 2006 10:04AM

Around the same time as the Gadsden purchase the US was also interested in buying Baja California from Mexico (this is the long
peninsula just south of California that extends into the Pacific ocean) but the American negotiator was so obnoxious and difficult
to deal with that the Mexicans decided they didn't even want to try and work with him so nothing came it.

CaptHenway · November 9, 2006 10:16AM

<< <i>Since the Treaty called for the money to be paid in New York, most likely it never reached Mexico.

Mexico was, especially at that time, a nation heavily in debt to European lenders. (Wikipedia says that the Mexican people were upset because President Santa Anna [yes, the Alamo guy] "squandered" the proceeds from the Gadsden Purchase. ["Half the money he spent on liquor and women, the rest he just wasted."] Also, by the late-1850s(?), the Mexicans were so broke they stopped paying interest in their foreign loans, which led the French, British and Spanish to invade the country to get repaid. The British and Spanish left quickly when they learned that the French wanted to take over permanently and install Maximilian as Emperor of Mexico.)

So, most likely, the payment was made in gold coin in New York and the coins were either shipped to Europe or used to purchase European Bills of Exchange. If the coins were shipped to Europe, they would probably have been melted shortly after their arrival and recoined into European coins or turned into gold bars, since American coins weren't legal tender in Europe.

They certainly aren't still sitting in a vault somewhere. Who could afford to let $10 million sit around for a hundred years without at least earning interest on the money?

Tom,

My understanding is that the British shipped the 100,000 sovereigns to America in 1838 and the bullion was used to mint the 1838 and 1839 eagles. Is that not correct? >>

The sovereigns were indeed received in 1838, and the two coins that they kept are dated 1838, but it was my understanding that the gold sat for eight or more years while the U.S. government tried to decide what to do with it. There was talk of building a national university, and other ideas, and the Smithsonian as we know it was not authorized until August of 1846. Things moved slower back then. Remember, Smithson died in 1829.

Of course, my source that said they were used for the 1847 coinage may be wrong. I cannot remember where I read it.

TD

DaveG · November 9, 2006 10:50AM

Tom,

Wouldn't the Government have deposited the sovereigns in one of Jackson's "Pet Banks" instead of just leaving the boxes in a vault somewhere?

My understanding is that the increased mintage of gold coins in 1847 was the result, following the re-authorization of the Independent Treasury Act of 1846, of the Secretary of the Treasury's order that foreign gold coins collected as payment for duties at the Custom Houses were to be sent to the Mints for re-coinage into American coins.

Historical Background: From 1816 to 1836, the Second Bank of the United States acted as the de facto US central bank. Andrew Jackson hated the Bank and refused to re-authorize its charter and, after 1836, directed that Government monies be deposited in several state-chartered banks (dubbed the Pet Banks). The Independent Treasury Act required the Government to establish a series of Sub-Treasuries to hold government monies instead of depositing them in state banks. The Independent Treasury Act was signed into law in 1840, but almost immediately rescinded (a change in Presidential administrations). In 1846, however, the Act was reinstated.

denga · November 9, 2006 11:39AM

Michigan Thursday November 09, 2006 5:04 PM

Around the same time as the Gadsden purchase the US was also interested in buying Baja California from Mexico (this is the long
peninsula just south of California that extends into the Pacific ocean) but the American negotiator was so obnoxious and difficult
to deal with that the Mexicans decided they didn't even want to try and work with him so nothing came it.

************

[Translation] The envoy did not understand Mexican customs and failed to show his gratitude (i.e. bribes) to the right officials.

Denga

DaveG · November 9, 2006 11:41AM

Me Loves the Internet:

This is a quote from an article in the October 1840 issue of The North American Review, which reviews a book published in London in 1839 entitled: "Observations on the Financial Position and Credit of such of the States of the North American Union as have contracted Public Debts, etc."

"A further purchase of $500,000 Arkansas stock [what we call bonds today] has been made by the federal government. . . This was the investment of a legacy to the United States, left by Mr. James Smithson of London, to found a literary institution at Washington."

Here's the link.

It sounds like the Government wouldn't have had the Smithson bullion to mint eagles in 1838, but we still don't know what happened to the sovereigns. (Gee, I hope Arkansas didn't default on those bonds!)

Leiana · November 9, 2006 11:47AM

This is such a neat and interesting thread!

-Amanda

Connecticoin · November 9, 2006 12:29PM

Interesting -- the price for the whole Louisiana purchase $15 million as well --- then by 1854 $15 million could only buy some desert land in Arizona and New Mexico. Now $15 million will buy you a townhouse on the Upper West Side in Manhattan!!

Leiana · November 9, 2006 12:36PM

Just learned this- Smithson actually left his estate to his nephew in 1829, who died heirless in 1835. The stipulation was that if his nephew had no heirs, the estate would be turned over to the US for the establishment of the future Smithsonian Institution.

Edited to add- there was also a lawsuit that held the state in probate until 1838.

-Amanda

Graphix · November 9, 2006 12:42PM

another little page about the Treaty of La Mesilla if your bored and want to read...

StrikeOutXXX · November 9, 2006 1:29PM

Wow - this is definitely one of the threads I'll have to make sure my son reads, thanks for all the responses.

I never really thought about all the melting and reminting of gold coins. For all we know, some of today's gold coins could have been part of many gold coins in the past.

I didn't find any strange increases in Mexican gold coins, so I'll buy into the theory they weren't used for that purpose. I found many references to Santa Ana squandering the 7 million initial payment, couldn't find much on the other 3 million due upon land survey and marking and how it was paid. From what I understand, the purchase price was $15 million, but part of the deal was making good on $5 million Mexico owed the US for other debt incurred with some provisions of the previous Guadalupe Hidalgo, so it netted to $10 million.

If some of the payment was indeed paid in coins and shipped to Europe, that ties nicely into Longacre's post about Millard Fillmore and his concerns of US gold going to Europe at roughly the same time.

I grew up in Arizona and had many years of AZ history in school; now I wish I paid more attention back then.

Longacre · November 9, 2006 10:38PM

Some great commentary here! DaveG-- your responses were particularly informative.

Gadsden Purchase - Were actual coins paid? - Where are they now?

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