Creature From Jekyll Island by G. Edward

which transliterated into 'dollars.' Interestingly, the American colonies did not adopt the dollar from England, but from Spain. Under that country's monetary reform of 1497, the silver real became the Spanish money-unit, or unit of account. A new coin consisting of eight reales also appeared. Variously known as pesos, duros, piezas de ocho ('pieces THE LOST TREASURE MAP

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of eight'), or Spanish dollars (because of their similarity in weight and fineness to the thaler), the coins quickly achieved predominance in financial markets of the New World because of Spain's then-important commercial and political position.1

In 1785, Thomas Jefferson urged the adoption of the Spanish silver dollar as the nation's official monetary unit. In a pamphlet submitted to the delegates of the Continental Congress, he said: Taking into our view all money transactions, great and small, I question if a common measure, of more convenient size than the dollar, could be proposed.... The unit or dollar is a known coin, and the most familiar of all to the minds of people. It is already adopted from south to north; has identified our currency, and therefore happily offers itself as an unit already introduced.2

On July 6, 1785, Congress unanimously voted to adopt the

Spanish dollar as the official monetary unit of the United States.

Jefferson realized, however, that this was not sufficient. Although the coin had been one of the most dependable in terms of weight and quality, it still varied in content between issues, and a way had to be found to rate one coin in value against another. That was, after all, the service that Congress was required to render when it was given the power to 'regulate the value' of money. Jefferson came directly to the point when he said: 'If we determine that a dollar shall be our unit, we must then say with precision what a dollar is. This coin as struck at different times, of different weight and fineness, is of different values.'3

The logic voiced by Jefferson could not be ignored. Two years later, after carefully examining the actual weight and fineness of the Spanish dollars currently in circulation, Congress defined the dollar. After ratification of the Constitution, a dollar would contain 371.25 grains of fine silver, and all items in commerce, including other coins, were to be measured in value against that standard.

As the Spaniards continued to reduce the silver content of their coins, the pressure for the minting of an American dollar of predictable value began to mount. Secretary of the Treasury, Alexander Hamilton, in his 1791 report to Congress, urged the 1- Vieira, p. 66.

2. Propositions Respecting the Coinage of Gold, Silver, and Copper (printed pamphlet Presented to the Continental Congress on May 13,1785), pp. 9-10. Cited by Vieira, P. 68.

3- Ibid., p. 11.

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establishment of a federal mint and also presented a powerful case for maintaining an inviolable standard for the coins to be produced by that mint. He said:

The dollar originally contemplated in the money transactions of this country, by successive diminutions of its weight and fineness, has sustained a depreciation of five per cent, and yet the new dollar has a currency in all payments in place of the old, with scarcely any attention to the difference between them. The operation of this in depreciating the value of property depending upon past contracts, and ... of all other property is apparent. Nor can it require argument to prove that a nation ought not to suffer the value of the property of its citizens to fluctuate with the fluctuations of a foreign mint, or to change with the changes in the regulations of a foreign sovereign T h e quantity of gold and silver in the n a t i o n a l coins, corresponding with a given sum, cannot be made less than heretofore without disturbing the balance of intrinsic value, and making every acre of land, as well as every bushel of wheat, of less actual worth than in time past.... [This] could not fail to distract the ideas of the community, and would be apt to breed discontent as well among those who live on the income of their money as among the poorer classes of the people to whom the necessities of life would ... become dearer.1

BIMETALLISM

Note in the preceding quotation that Hamilton referred to both gold and silver coins, not merely silver. That is because it was precisely at this time that Congress began to consider a bimetallic coinage. In retrospect, this was a mistake for, throughout history, bimetallism has never worked well very long. It always has led to confusion and, ultimately, the disappearance as money of one of the metals. This is because there is always a subtle shifting of the relative values between gold and silver—or any other two metals for that matter—depending on constantly changing supply and demand. We may set a value ratio of one to the other that is quite acceptable today but, eventually, that ratio will no longer reflect reality. The metal which grows in value over the other will be hoarded or possibly even melted down because it will bring a higher price as metal than it will as money.

That is precisely what happened in the early days of our

Republic. It was determined after careful analysis of the free-1. The Debates and Proceedings in the Congress of the United States (J- Gales, compil.

1834), Appendix, pp. 2059,2071-73. Cited by Vieira, pp. 95,97.

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market that the value of gold at that time was approximately fifteen times the value of silver. The Coinage Act of 1792 accordingly set the relative value of gold-to-silver at fifteen-to-one. It then authorized the federal government to mint gold coins called Eagles, and it specified that their value was ten dollars. In other words, the gold coins would be equal in value to ten silver coins. Ten silver coins, each of 371.25 grains of fine silver, would contain a total of 3,712.5

grains. The content of the Eagle, therefore, was one-fifteenth that amount, or 247.5 grains of fine gold.

Contrary to popular misconception, Congress did not create a

'gold dollar.' (It didn't do that until fifty-seven years later in The Coinage Act of 1849.) In fact it reaffirmed that 'the money of account of the United States shall be expressed in dollars or units'

and again defined those units as coins containing 371.25 grains of pure silver. What