The first coins in circulation in non-Spanish North America were standard French and English issues used in a variety of unsuccessful colonies ranging from the St. Lawrence River to the Caribbean. The colonists were not likely to have too much specie left after they purchased their supplies for the voyage to the New World, but what was left most certainly did come along, as the travelers did not dare to leave anything of value in a land to which they were likely never to return.
With the establishment of successful colonies in the early 1600s, the colonists began to trade both with their parent companies and the Spanish colonies of the Caribbean. The trade with England was highly restricted and most English gold and silver that reached the North American shores soon returned to Europe in the form of taxes, custom duties and profit for the companies. The trade with Latin America was much less formal (due to smuggling) and provided much of the circulating coinage for the British Colonies.
Because the British Colonies could never acquire enough coinage of the homeland to fulfill their needs, they were eventually forced to produce some themselves. In 1652 the Massachusetts Bay Colony produced silver shillings, sixpence and threepence, but at a reduced weight so that the coins would not be exported. Various designs were used over a 30-year period, but the date on the coins remained at 1652 (except for the 1662 twopence). The traditional explanation is the fixed date was a ruse to hide the actual years of production since the mint was illegal. However, Philip L. Mossman (in the highly regarded Money of the American Colonies and Confederation) suggests the dates indicate the denominations were authorized. The shilling, sixpence and threepence were authorized in 1652, the twopence in 1662.
Seeing that there was (supposedly) a market for underweight coins in the Colonies, several speculators began issuing private tokens for export to these markets. Most of these issues were officially sanctioned in some fashion. In effect the speculators were given a license to counterfeit, in exchange for a percentage of the profits. Some of these tokens circulated and some did not, depending upon the greed of the manufacturer and how much he debased the tokens. One of the more candid manufacturers, an American, changed the inscription of his unpopular copper threepence pieces to read value me as you please.
Throughout the period of the Revolution and afterward, a large part of the supply of small change was made up of privately issued store card tokens. Most of these were made in England and were of better quality than the majority of the various state issues. Those issued by American merchants were allegedly payable at these stores, but the others were payable only at London or Liverpool or other equally distant places. These tokens circulated for several years after the establishment of the federal Mint in Philadelphia, despite an effort to recoin them into U.S. money.
The Articles of Confederation, adopted in 1778, permitted the states to issue their own coinages, with Congress fixing a uniform “standard of weights and measures.” Only three of the 13 states struck coins for circulation under the Articles of Confederation: Connecticut, Massachusetts and New Jersey. Vermont, the 14th state, struck coinage before it entered the union. Private manufacturers under contract to the states produced most of the state coinages, although Massachusetts operated its own mint in 1787 and 1788. Connecticut authorized a mint, but most of its coinage was struck privately.
The U.S. Constitution, however, brought an end to the state coinage. Article 1, Section 10, Paragraph 1 of the Constitution reads, “No state shall ... coin money, emit bills of credit, make anything but gold or silver coin a tender in payment of debts.” The sole right to coin money was granted to the federal government by the ratification of the Constitution in 1788 (although a loophole permitted private coinage until 1864, when the constitutional loophole was closed).
Federal coinage studies
As Congress debated various monetary plans in the 1780s and early 1790s, it took one concrete step and authorized a copper coin. At this time, 1787, the three states and Vermont were still producing copper coinage when they were joined by the federal government, still organized under the Articles of Confederation. Members of Congress, meeting in Philadelphia, recognized the need for a standard coinage and on April 21, 1787, ordered that a copper coin be produced by private contract but under federal inspection.
The resulting coins were the Fugio cents, generally acknowledged to be the first coins of the United States government. They are named for the Latin legend fugio (“I [Time] Fly”) that appears on the coin’s obverse. A sundial appears on the obverse, along with the legend mind your business; 13 linked rings on the reverse signify the 13 states, surrounding the legends united states and we are one. James Jarvis, a Connecticut businessman, received a contract to strike 300 tons of the copper coins, or about 26,666,666 pieces. Jarvis began coinage of the cents in New Haven, Conn., shortly after approval by Congress, but had struck fewer than 400,000 Fugio cents by June 1, 1787, by which time coinage had ceased. The federal government voided Jarvis’ contract for missing the December 1787 delivery date (the coins were not delivered until beginning in May 1788). The Fugio cents proved underweight and were unpopular with the public. Thus the federal government’s first experiment in a federal coinage had failed.
Meanwhile, a federal coinage system had been under study since the early 1780s. Two plans merit attention here. Superintendent of Finance Robert Morris submitted the first to Congress Jan. 15, 1782. Assistant Financier of the Confederation Gouverneur Morris (no relation to Robert Morris) probably wrote the proposal. The Morris proposal was a complicated one, substituting the British system of pounds, shillings and pence for a decimal system based on the Spanish milled dollar. The basic unit would be worth 1/1,440 of the Spanish dollar, a sum arrived at by determining the largest common divisor by which state currencies could be divided without a fraction. The denominations in the Nova Constellatio series, as the coins are called, would have been copper 5-unit and 8-unit pieces, plus a silver cent worth 100 units, a silver quint worth 500 units and a mark worth 1,000 units. The cumbersome nature of the Morris system, however, gained little support.
Alexander Hamilton, secretary of the Treasury, submitted the second plan to Congress, on Jan. 21, 1791. In his proposal, Hamilton recommended the basic unit be a dollar. The denominations would have been a gold $10 coin, a gold dollar, a silver dollar, a silver tenth-dollar, a copper coin valued at 100 to the dollar, and a second copper coin, valued at 200 to the dollar.
The Hamilton proposal was very similar to what Congress would approve in April 1792. Following Hamilton’s proposal, Congress passed a resolution March 3, 1791, that a federal Mint be built, and President Washington in his third State of the Union speech agreed.
Then, on April 2, 1792, Congress passed a law authorizing both a federal Mint and coinage. Ten denominations of coins, more than recommended by Hamilton, were approved: in gold were a $10 eagle, a $5 half eagle and a $2.50 quarter eagle; in silver were a dollar, half dollar, quarter dollar, disme (the “s” was dropped from Mint documents in the 1830s, with the 10-cent coin finally called a dime) and half disme (equal to 5 cents); and in copper, a cent and half cent, neither of which had legal tender status.
The April 1792 act even outlined what design elements should appear on the coins (discussed later).