a history of our money

Good morning and welcome to the August 29th edition of a Wonderful Wednesday! This morning I thought it might be interesting to look at the metamorphosis of money in the United States. I mean, it started in 1792 with silver and gold and in less than 225 years had become simply “ones and zeros” in an electronic world network. So before we jump into the news, refill that cup and grab a seat. Ward Bond and Frank Faylen greet us this morning with their “It’s A Wonderful Life” rendition of I Love You Truly.

Gold is currently up +$5.20 this morning, however it’s down -$17.50 on the month.

Silver is currently up +$0.05 at $14.75, and it’s down -0.72 for the month.

Platinum is currently up +$2 at $790, and it’s down -$38 in the last twenty-nine days..

Palladium is currently up +$10 at $946. It began the month at $919 so it’s showing the only increase.

Yes, I know that the song-of-the-day really threw many of you and probably all of my regular readers. Sometimes the song I wake up with playing in my head makes sense and sometimes not. And it’s very rarely a song outside of my youth. But either way, I hope you enjoy this classic written in 1901 and performed in 1946.

So, to understand the history of money in the United States, let’s start at the beginning. Prior to the Coinage Act of 1792, colonies, aka States, created their own coins and currencies. Further, because we imported much more than we exported, money was scarce. Most silver and gold coins minted in other countries were accepted at the metal value. Thus it was not uncommon to have silver Spanish Reales, British Pounds, French Francs, and local coin and currency being traded.

The Coinage Act of 1792 established the United States Mint, defined the coin standards, and set the silver-to-gold ratio at 15:1. Forty-two years later, Congress revisited monetary standards with the Coinage Act of 1834 which altered the silver-to-gold ratio to 16:1. This doesn’t seem like a huge issue, but you have to consider what was going on at the time. President Andrew Jackson was fighting with Senators John Calhoun, Daniel Webster, and Henry Clay in closing the Second National Bank as it was filled with corruption by then. Further, by devaluing what he considered overvalued silver, under-valued gold would be revalued and thus bank notes would be considered stronger.

Largely due to the California Gold Rush of 1848, the Congress enacted the Coinage Act of 1849 which authorized two additional denominations of gold coins, the gold dollar and the gold $20 double eagle. The gold dollars were produced through 1889, whereas the $20 Double Eagle continued in production until 1933 when Roosevelt signed Executive Order 6102 which required all citizens to deliver all but a small amount of gold to the Federal Reserve and thus creating what became the federal gold reserves.

The Coinage Act of 1857 was the act that ended the status of foreign coins as legal tender in the United States. Up until then, the most common coins in use were Spanish Dollars. Anyone holding foreign coins could trade them at the Treasury and they were re-coined. Further, this Act discontinued both the half-cent and large cent. The significantly smaller Flying Eagle Cent was introduced and began it’s two-year production.

The next important change in our money occurred with the Coinage Act of 1864 during the Civil War. This law introduced our coinage to a new phrase, “In God We Trust,” which would replace our national motto (E Pluribus Unum) some 92 years later.

Of course, there have been a number of additional coin laws that have been enacted over the years, but I personally see the Coinage Act of 1965 as the most important of all monetary acts in our federal system. This act eliminated silver from the circulating coinage. Up until then, you could take a silver certificate to a bank and receive a dollars worth of silver. Then in 1971, President Nixon took the U.S. off the gold standard with the promise that the dollar would retain it's value.

And that’s where we are today. Money backed with a $21 Trillion deficit and the 1971 dollar worth only 17 cents!

Well, I’ll let that be it for today. Go out there and make a difference! See ya later!

*Disclaimer: Precious Metal Musings™ is written for entertainment and news purposes only and should not be used in making purchases and/or sales of precious metals.