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Subject Area: Political Theory

GALLATIN TO S. D. INGHAM, Secretary of the Treasury. - Albert Gallatin, The Writings of Albert Gallatin, vol. 2 [1879]

Edition used:

The Writings of Albert Gallatin, ed. Henry Adams (Philadelphia: J.B. Lippincott, 1879). 3 vols.

Part of: The Writings of Albert Gallatin, 3 vols.

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GALLATIN TO S. D. INGHAM, Secretary of the Treasury.

New York, August 4, 1829.

Dear Sir,—

Owing to my family having removed to another house whilst I was at Washington, my papers were so much deranged that I could not, till last week, lay my hands on those respecting the relative value of gold and silver. On inspection I find some information still wanting, which I expect to obtain in a few days, after which I will communicate the facts and submit my conclusions to you. There is no doubt as to the fact of our mint regulations having rated gold too low, nor as to the propriety of raising it to its market value, unless we intend to exclude gold coins altogether. As the defect of our currency consists in our wretched paper system, the contemplated regulation relating to gold may not be very important; but its effect, though not great, cannot be but beneficial. It will not in any degree affect either property or contracts; theorists may object for a reason which will be hereafter explained; and some of the dealers in exchange and precious metals may prefer the present state of things, which is unintelligible to the many and, on that account, favorable to a few. But the true difficulty consists in ascertaining the average relative value of the two metals within such narrow limits as that, selecting any convenient ratio between them, no practical inconvenience can arise. At present I can only say that the true ratio is between 15.54 and 15.69 to 1. Those limits, which correspond to about 260.60 and 258.13 grains standard gold (instead of 270) in the eagle, are too far apart (near 1 per cent.); and I am in hopes to come to a nearer result. But I am in search of truth, and I will not assert as certain what, after a thorough investigation, may to me still appear doubtful.

The lists of the rates of our exchanges and price of gold will be useful, but require corrections, and are subject to several objections and exceptions. The price of doubloons is artificial and must be excluded, as it would lead to much too high a valuation of gold. The rates of exchange with England prior to the resumption of specie payments there (about 1819-20) must be thrown out. For the subsequent years the first operation is to calculate, from the quotations, the average nominal premium for each month; and the next, to obtain the true amount paid in dollars per pound sterling for each month. Thus, as the premium is quoted (at least in New York) on the supposition that the pound sterling is worth only $4.44, if the premium is quoted at 10 per cent. it means that bills at sixty days sell at the rate of $4.88 per pound sterling. The premium on British current gold coin is calculated on the same principle; that is to say, that a sovereign, or twenty-shilling gold coin, though worth, even at our low valuation of gold, $4.56.6, is rated as if worth at par only $4.44. And as the quotations of the price of American gold are founded on its mint value, this makes an apparent difference of 3 per cent. between the premiums on both kinds. All those discrepancies must be corrected, and a new table prepared from the quotations, in which every exchange and price shall be brought to one common standard, before any comparison can be made or true inference be drawn. As I had prepared such one from the New York quotations for three years, and the details are familiar to me, I think I can, when at Washington in October, assist in pointing out how a complete one may be made from the materials you will have collected. But this, after all, can only assist, the price of gold here, as it is now only an article of merchandise, being entirely governed by its price abroad, combined with the current rate of exchange and the charges of transportation. On this last point, which it is essential to ascertain with precision, as well as the result of actual sales abroad, I have also collected and hope to obtain more information.

I have written so much by anticipation that you may be satisfied that I have not forgotten my promise, and that the delay must be ascribed to the desire of obtaining the greatest degree of correctness within my reach.

I have the honor, &c.