Q.David Bowers
On April 20, 1850, a law establishing the office of State Assayer was enacted. This subsequently led to the appointment of Frederick Kohler in that capacity. ATSo on the same date a law which required the private coiners to redeem their issues was passed:
Section 1. Any person or company who shall make or cause to be made, within the State, any piece of gold or silver, whether pure or alloyed, in the form of coin or otherwise, and intended or calculated to circulate as money, shall be held responsible to the holder thereof for the marked value thereof, or at the rate at which such coin is uttered, and shall on presentation redeem all such coins at such a rate with legalized coins of the United States.
Section II. If any person making or uttering such coins shall refuse or neglect to redeem the same in the manner prescribed in Section I, he shall be deemed guilty of a misdemeanor . . .
Section III. If any person shall hereafter make or utter any piece of gold or silver as described in Section I, without stamping upon the same the day, month, and year of its manufacture, he shall be guilty of a misdemeanor ...
Section IV. If any person shall hereafter make or utter any coin, or piece of gold or silver, such as described in Section I of this chapter, of less value than its marked or nominal value, or the value at which it is issued, he shall be deemed guilty of fraud . . .
Section V. This Act shall take effect on the fifth day after its passage.
The law provided that coins had to be redeemed with legal coins of the United States, which were scarce in circulation and often not readily available, that the intrinsic value had to be equal to the face value (thereby removing any profit, even if nominal), and that not only the year had to be stated, but also the day and the month (making it virtually impossible to manufacture coins with standard dies on a high-speed production basis). For a while the impact of this legislation deterred several who wished to issue coins.
Early in 1851 private coinage resumed at a furious pace. Baldwin, Shultz, and Dunbar produced generous quantities. On March 21, 1851, the Banking House of James King of William sent sample coins to Augustus Humbert, who by that time had been appointed as United States Assayer, and requested findings. Transmitted were the following coins: Baldwin & Co. $20, 13 coins; $10, 10 coins; $5, 28 coins; Shultz & Co. $5, 45 coins; Dubosq $10, 7 coins; and $5, 3 coins.
Augustus Humbert responded on March 26th with an assay which showed that the Baldwin $20 issues had an intrinsic value of $19.40, the $10 issues $9.74 and the $5 .issues $4.91. The Shultz half eagles were worth on the average $4.87 each, while the Dubosq $10 pieces assayed as $9.93 and the $5 pieces by the same maker were worth $4.96.
The Alta California editorally noted that the holders of Baldwin $20 gold pieces would lose 60 cents on each coin, and that the best value was received by owners of Dubosq pieces who would lose only seven cents on each $10 transaction. The result of this editorial discussion was that banking houses immediately refused to handle any coins at face value with the exception of those made by Moffat & Co.
On April 4, 1851, San Francisco businessmen met to discuss the private coinage situation. An investigative committee was appointed. On the following day the Alta California had a lengthy editorial on the subject. It was stated that private coins, which had no legal standing whatever, caused all sorts of financial hardships.
The present indications are a return to condition of things similar to what succeeded the issuing of Miners' Bank coins, the introduction of Mormon coins, and similar operations, by which a large portion of the people who are good natured enough to receive those vile falsehoods in the shape of coin, found themselves cheated out of twenty percent. Most, perhaps all, of the coins in circulation are much better than those, but the public has no security that ere a month, or at any future time, those yet to be issued will really be worth as much as were the Miners' Bank and Mormon issues. There is every reason, except such as conscience might repudiate, for alloying these coins to any extent which a determination to make money by the operation would dictate. When once a company of individuals have established the credit of their issues sufficiently to give them currency, not holding themselves under any obligation to redeem them, what is there to restrain any amount of swindling by lowering the fineness and stamping a piece of metal as worth ten dollars although it may not be of the value of five? We know of nothing except a refusal on the part of the public, businessmen, and others, to receive this currency which is open and liable to any conceivable amount of adulteration, and consequent loss by the recipients ...
In the same editorial Moffat's assertion that its coins were worth more than contemporary United States gold issues also drew a comment:
It is rather singular if their coin is worth more than United States coins, as some assert. The assertion that it is so seems to prove too much or nothing. What conceivable object is there to make it so? If a single coin should prove it so it is evidently made by mistake, or else by design to be one of a few mixed for the specific purpose, to create public confidence in the entire issue upon the strength of an assay made upon one or more extra pieces. The whole system is as bad as it can well be...
The Alta California went on to say that it:
... wished not to be understood as charging intentional fraud upon the persons engaged in coining. The evil lies in the system itself. Individuals cannot get permanent confidence in any issues of their own. Nothing short of national guarantees can do it ...
The editor further contemplated the inconsistency of the public's practice of accepting French 5-franc pieces for one dollar when they were intrinsically worth just 93c, and accepting English shillings at the value of a quarter.
On April 9th the businessmen's committee, which had been appointed several days earlier, reported that although it did not wish to censure any of the private mints, the system in its entirety should be condemned. They found that the coinage of the United States Assay Office, which was authorized by the United States government and which was receivable at the Custom House for payments, should be accepted in trade, but only as a temporary measure as it:
. .. does not seem to meet the necessities of the country. Great delay now occurs in the coinage of dust left at the Office, and it may be doubted if the capacity of the establishment will enable it to supply the country with a circulating medium.