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Monday, July 28, 2014

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Money in Colonial Times

Introduction

A shortage of money was a problem for the American colonies. England did not supply its colonies with sufficient coinage and prohibited them from making their own. The early settlers brought coins from Europe but they went quickly back there to pay for supplies. Without enough money, the colonists had to barter for goods or use primitive currency such as Indian wampum, nails and tobacco.

Colonial Coins

In time some Spanish, Portuguese and French coins appeared in the colonies as a result of trade with the West Indies. The most famous of these was the Spanish Dollar, which served as the unofficial national currency of the colonies for much of the 17th and 18th centuries. With its distinctive design and consistent silver content, the Spanish dollar was the most trustworthy coin the colonists knew. To make change the dollar was actually cut into eight pieces or “bits.” Thus came the terms "pieces of eight" from these early times and "two bits" from our time.

In 1652, Massachusetts challenged England's ban on colonial coinage. The colony struck a series of silver coins, including the Pine Tree Shilling. On the coin the lettering MASATHVSETS IN encircles a pine tree. The reverse bears the inscription NEW ENGLAND AN DOM, the date 1652 and the Roman numeral XII (twelve pence or one shilling) in the center.

All Pine Tree shillings were dated 1652, though they were produced for many years. Therafter, that way, if England ever found out about this illegal coinage, Massachusetts could claim it had not made any coins since 1652.

Colonial Paper Money

When the colonies did not have metal to coin, they frequently used paper money. Most colonial notes were "bills of credit" notes meant to be redeemable in coin. Colonial paper money rarely lasted very long because the colonies generally issued too much of it and the resulting inflation made the bills worthless. Thus the term "not worth a Continental."

Quest for a National Coinage

After the Revolution, the United States turned its attention to its war-ravaged finances. In the process the problem of a national coinage system took on great importance. Under the Articles of Confederation signed by the states in 1778, both Congress and the states had the power to coin money. But the country's leaders had come to believe that an exclusively national coinage was essential to establishing national sovereignty. The only unresolved issue was whether to open a national mint or contract a third party to strike United States coins.

In the 1780s and 90s many independent coiners struck sample coins, known as pattern coins, in the hope of winning a contract with the United States. None of these pattern coins ever gained official status, though some probably received small, unauthorized circulation in the states.

The most famous pattern coins were the Washington Pieces, which all portray George Washington on the front of the coin. Over twenty varieties are known, mostly copper and silver cents struck independently between 1783 and 1792. A few depict Washington in classical rather than colonial dress.

Surprisingly, most of the Washington Pieces originated in England. Although none of them won official status, they did spark a debate in Congress over whether portraying the President on a coin was proper, since it was similar to England's practice of putting the images of its monarchs on its money.

First Attempt to Start a Mint

The 1783 Nova Constellantio coins were proposed under a system at a new mint planned by Robert Morris, then the nation's Superintendent of Finances. His system was based on a small monetary unit and appeared in three silver denominations: the mark (1,000 units), the quint (500 units) and the cent (100 units) and a copper piece worth five units.

The front design of the coin, an image of an eye, a circle of thirteen stars, and the inscription Nova Constellantio, meaning new constellation of stars. The legend of the reverse, LIBERTAS JUSTITIA, means liberty and justice. Morris's proposals were not approved by Congress and the Nova Constellatios were never produced in large quantities.

In 1787 the United States issued its first official coin, the copper Fugio Cent. Congress devised the Fugio to get sorely needed small change into circulation. Coiner, James Jarvis was awarded a contract to strike 300 tons of Fugio cents.

Congress specified the design for the Fugio; "on one side... thirteen circle inked together, a small circle in the middle with the words, United States round it, and in the center the words, We Are One." "On the opposite side... a dial with the hours expressed on the face of it; a meridian sun above, on one side of which.. the word fugio and on the other, the year in figures '1787'. Below the dial, the words 'mind your business'."

The Fugio cents never made it into general circulation, and the government finally sold them to a merchant at a loss.

The Coinage Act of 1792

In 1787 the Constitution gave Congress exclusive power to coin money and in 1792 Congress passed its first coinage act, establishing a national mint in Philadelphia and outlining a coinage system.

The 1792 Coinage Act adopted the decimal system, and combined Alexander Hamilton's idea of a bimetallic standard with Thomas Jefferson's proposal that the dollar be the standard unit of money. The denominations prescribed for silver coins were to be a half dime, dime, quarter dollar, half dollar and dollar. Denominations for gold coins were to be a quarter eagle ($2.50), half eagle ($5), eagle ($10). Congress also provided for the coining of copper cents and half cents but did not give copper legal tender status, therefore copper could be refused as payment.

Early United States Copper Coinage

The Half Cent first coined in 1793 ws unpopular because making change was cumbersome and many merchants refused to accept them. The coin was discontinued in 1857.

The one-cent piece, the Large Cent was first struck in 1792. Almost as large as our present day half dollar, it was also unpopular, cumbersome and awkward to use as change. The coin was produced with a low-grade copper and was of poor quality. The Large Cent was produced until 1857, when it was replaced by a much smaller coin.

Early Silver Coinage

Coinage of silver began in 1794 and only the half dollar and the dollar were struck consistently; smaller denominations were coined only on demand of depositors. The earliest U.S. silver coins are identical in design and bear no mark of denomination; only their size distinguishes their value.

The first quarter was not struck until 1796 and for several years at a time none were coined. The 1804 quarter was the first United States silver coin to include its denomination on the obverse or reverse. The simple "25c" appears below the eagle on the reverse.

Early Gold Coins

The first United States gold coins were struck in 1795. However, early gold coinage was restricted by the inevitable hoarding and exporting occurred because gold was undervalued.

The distinguishing design characteristic of early United States gold coins is the cap Liberty wears over her hair. The Mint also tended to use the heraldic eagle on gold coins. As with silver coinage, denominations do not appear on the earliest gold issues.

The half eagle (five dollar piece) first struck in 1795, dominated early gold coinage and for several years it was one of the few coins the Mint issued in gold. Early half eagles featured two versions and on one, the heraldic eagle and the motto "E PLURIBUS UNIUM", out of many, one, appeared for the first time on a United States coin. The Mint began putting denominations on gold coin ith the 1807 half eagle, which bears the mark "5 D." on the bottom of the reverse.

The quarter eagle was unpopular with depositors due to its unusual denomination of $2.50. The eagle was struck in steady quantities from 1795 to 1804, when like the silver dollar, it was discontinued due to the exportation problem.

The End of the First Mint

Because gold and silver were kept out of circulation by incorrect assigned values and because of the unpopularity of copper, the first Mint failed to establish its coins as bona fide national currency. Although Congress repeatedly criticized the Mint for its lagging output and inability to circulate its coins, legislation permanently establishing the mint was narrowly passed. In 1833 the nation reaffirmed its faith in its coinage by building a larger and more modern mint facility.

Liberty and The Eagle

The images of Liberty and the eagle were used in early U.S. coinage and both proved enduring, though with many changes. In the early days of U.S. coinage, public sentiment ruled against using the images of famous leaders on coins; that was too much of a reminder of the British practice of putting the monarch's image on coins.

Liberty's earliest appearance was on the large copper cent, first issued in 1793. Politely known as the "flowing hair" design, it drew less-than-kind remarks from the press and public. "The American cents...do not answer our expectations," said a newspaper of the time. "Liberty herself appears to be in right." Both a lack of artistry and technical difficulties contributed to the unfortunate design.

Despite its lack of popularity, the "flowing hair" design continued in use, although in a somewhat toned down version, for some time. The large copper cent, however was the first time the mint changed a coin design because of popular sentiment. The reverse of the coin originally featured a circular chain, but after popular objections were voiced to the chain, a wreath design was substituted.

A second version of Liberty, still with flowing hair, appeared on the copper half cent of 1793. In this design, Liberty's unruly, shoulder length hair is held in place by a fillet or band, and behind her is a pole topped by a Phrygian slave's cap, commonly referred to as a "liberty cap." Because it was ceremonially placed on the slaves' head when they gained their freedom in ancient Rome.

The 1794 half dime, the first five cent coin issued by the U.S., also carried the flowing hair design.

Liberty made yet another appearance on the quarter eagle and other gold coins of the period when, instead of having a hat nearby, she was wearing one. The design is believed to have been adapted from a Roman copy of a Hellenistic goddess. Though the cap was long taken for a liberty cap, it was later identified as a high-fashion headdress of the 1790s.

Another flowing hair liberty, but a much more attractive one, came into use when a new Mint director decided to improve the design of silver coins an ntroduced gold ones. He turned to the famous portrait artist, Gilbert Stuart, who produced a drawing modeled after Mrs. William Bingham, making this the first but not last coin featuring a Liberty modeled after a living woman.

Liberty took many more designs over the years. Sometimes she looked more woman, sometimes she was seated on a rock, sometimes walking, sometimes rather sparsely clothed and other times clothed much more heavily. Despite the changes, she remained a familiar figure on American coins until her last appearance on the 1947 half dollar. Although you won't find her in the cash register at you eighborhood grocery store, today Liberty has reappeared on American gold coins, the minting of which resumed in 1986.

The design of the eagle, too, has changed over the years, but its use on our coinage has been continual to this date. The eagle shown on the reverse of gold coins of the late 1790s is in the "natural" design as distinguished from the "heraldic" form. The 1795 eagle is an adaptation from a 1st century A.D. Roma nyx cameo. This eagle has a wreath in his beak and a palm branch in his claw

By 1796, the heraldic eagle was in use. It is an adaptation of the Great Seal of the United States, with the warlike arrows in the eagle's dexter claw (the observer's left), the more honorable position under the traditional rules of heraldry. The olive branch of peace is clutched in the sinister claw.

The heraldic eagle became standard on American gold and silver coins, with slight changes over the years. Other representations of the eagle have also been used: at times, the eagle has flown; at other times, a naturalistic eagle on a branch has reappeared. In our own time, the eagle has appeared with a moon in the sky to remind us of the Apollo 11 moon mission.

Related Resources

For more information on money in colonial times, view the Treasure Trove from our Money in Motion exhibit.