Q.David Bowers
To Hon. Thomas Corwin, Secretary of the United States Treasury.
In compliance with your instructions, we herewith send our report for the month of March. It will appear from it and our previous report that the business of the United States Assay Office had from its commencement steadily increased. From present appearances its amount for the current month will greatly exceed that of the last. The objects of the assay law now seem to be in a fair way of accomplishment. The effect of its operation upon the gold dust market and upon the monetary affairs of this country has already been great indeed. It has within the last fortnight produced almost an entire revolution in our financial transactions, of which a brief history may not be uninteresting.
We have hereto informed you that the Assay Office encountered the opposition of bankers. Their hostility arose from the belief that its successful operation would conflict with their interests, first, by advancing the price of gold dust; secondly, by compelling them to increase the rates of exchange, and, thirdly, by destroying certain private mints to which they were selling large quantities of gold dust at a profit. In our last we informed you that the first two results had already happened. Since then the third has been accomplished. Those private mints (four in number) encouraged, if not established by bankers, had for some time been flooding the country with their coins. All this coin was manufactured from the gold of the country without any process of refining; and although of full United States standard weight, yet under mint value because the average fineness of California gold is much below the mint standard. Careful assays of the coin had been made by the United States Assayer, and the fact demonstrated that it was on the average some three percent below its purported value. A correspondence between the United States Assayer and one of our bankers, showing the result, was published. [This is a reference to the previously-mentioned assay done by Augustus Humbert at the request of James King of William.] The effect was instantaneous and overwhelming; the private mints were at once compelled to suspend operations, and their issues amounting, we have reason to believe, to a million and a half, have since been purchased at a discount of from 5 to 10 percent, and it is not at all likely that another private coin will ever be struck in California. In the meantime the issues of the Assay Office were popular with the merchants and the people generally. They had the impress of authority, bore the United States stamp, were considered to all intents and purposes a United States coin, and bankers began to find that to discredit it was beyond their power. They have, therefore, made a virtue of necessity, and from enemies have become its friends. They not only now receive it and pay it out as they do other coins of the United States, but they have been the largest depositors of dust at the Assay Office. It will be seen from the report that all the issues of the Assay Office have been of the denomination of $50; such too has been the case in the present time. This is owing to the absence of a sufficient supply of legal currency; they are not shipped but go into circulation here, and the chief complaint against the office has been that it has not been authorized to make its issues of still less denominations. The necessity for such authority is augmented by the sudden withdrawal from circulation of so large an amount of private coin. We are waiting with much anxiety such instructions as will enable us to supply this desideratum.
Ingots of large denomination will be in demand only when they shall be required for shipment; that they will soon be so required we have every reason to believe. The advance in the price of gold dust as a gradual increase in the rate of exchange convinced us that the day of profit on shipment of dust is nearly passed, and that ere long the miner, the producer, will obtain the full value of his gold, while the merchant will have to rely for his profit on his goods, and the banker on his exchange, and not upon gold dust.
Moffat & Co.
P.S. Lest it might be inferred with the private coins spoken of, that of Moffat & Co. is included, we deem it proper to say that we discontinued its issue before commencing operations under the Government contract; that it still has, as it has ever had, the confidence of the public and continues to circulate at par quite freely as coin of the United States.
Even though the need for smaller denominations was acute, a letter from William L. Hodge, acting secretary of the Treasury, in reply to the foregoing, refused permission:
In reference to the suggestion made in your letter of the 14th of April, giving the results of the assaying and stamping of gold ingots during the month of March, that authority should be given to assay and stamp ingots of denominations and values under fifty dollars, I have to state that it is not deemed expedient at this time to authorize the assay and stamping of ingots of less denomination or value than $50.
One contemporary newspaper account noted that the cumbersome $50 slugs were about as annoying as "the plagues of, Egypt." The Alta California on July 25, 1851, wrote:
...The machinery at the slug mill of Moffat & Co. has at Just been repaired, and recommenced operations yesterday. The monstrous fifty-dollar chunks are becoming a decided nuisance, unless privately taken in large quantities. It is fast becoming one of the greatest favors you could ask of a store-keeper to accommodate you by changing one of them, such is their sluggishness in the market. We hear, in fact, of varying instances where various individuals have purchased a pair of gloves or some other small article for which they have no earthly use, merely for the purpose of getting one of these pieces changed. No longer ago than on the occasion of the departure of the last steamer one of them was changed at our counter for a person who was excessively anxious to make a cash purchase of a steamer paper. Price of paper $0.25.
Moffat again repeated its request to produce smaller coins. On August 26, 1851, acting Secretary of the Treasury William L. Hodge again refused. The scarcity of small coins was the subject of an editorial in the Picayune, a San Francisco newspaper, on October 21, 1851:
The scarcity of gold and silver coin not only in our city but throughout the State has for some time been a growing evil, and such a one as not only embarrasses our heavy moneyed men but annoys all classes and confuses business of every kind. Since the suspension of small gold coinage by Moffat & Co. this scarcity has been pressing more and more upon the community, as the great proportion of our current coin of the $5 and $10 denominations came from their mint. This currency, together with that afforded by Mexican and the various South American doubloons, has been of almost inestimable value in the conducting of business. Immense quantities of these coins have been melted up into ingots or shipped to foreign countries, which has resulted in a complete derangement of the currency of this State and the substitution of another circulating medium which, as it has happened, is not at all adapted to the ordinary wants of the community.
Until within a few months it was not generally supposed that the issue of ingots by the United States Assay Office would have the effect of driving the smaller kinds of gold coins from circulation, except perhaps the fraudulent and uncurrent issues of some of the private mints; and this last was a result which was contemplated by all with none other than feelings of satisfaction. Of Moffat's coin there was already in circulation an amount supposed to be ample for years, as none of it would find its way out of the State. But a great share of it has gone into the Assay Office and has reappeared in the shape of fifty-dollar ingots. Many of the doubloons have taken a similar course, though most of them have been shipped away, the increased price of gold dust having destroyed in a great measure the opportunity for the profitable investment here.