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Subject Area: Political Theory

GALLATIN TO S. D. INGHAM. - 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.

New York, 27th September, 1829.

Dear Sir,—

Expecting to be in Washington in the course of next month, and wanting still some materials, I had postponed putting them in proper order and digesting them till I should be there. I am at this moment so exclusively and deeply engaged in preparing our reply to the British statement (on the North-East boundary), which reached me near one month later than expected, that I could not for the present, without much inconvenience, relinquish that object for another. I have always found that intense and undivided thinking on the same subject was necessary for a complete analysis; and the importance and complexness of the question at issue with Great Britain must for some time require my whole attention. I will have gone through all but the mechanical part of the work when I reach Washington, and will be at leisure to attend to the other subject. The result of my researches on this I am also desirous to give to you as complete and in as proper shape as I am able; and this will require but two or three days, which I really cannot spare now. All the materials which I could expect are obtained, save only a sufficient number of actual sales of American gold in London and Paris, the difficulty of obtaining which is owing to the small amount actually exported.

The relative value which I have ascertained is that of France, the great European mart of precious metals, and where alone can be found a sure and easy way to ascertain that value, by the rate of the premium on the gold coins of the country. The English prices are of much less certainty, the transactions in metals being far less extensive, and, on account of the exclusion of silver coin for any purpose but to have change, the relative value they give being that of bullion to coins, and not of coins to coins. Yet I have not neglected them, and they do not differ materially from those of France. Indeed, the Paris prices may with great safety be taken as the average prices of Europe, though the fluctuations in London, Amsterdam, and Hamburg may not and do not, in point of time, agree with them. What we want is the general average and the limits of ordinary fluctuations; and both will be found in those of France.

My tables of the price of American gold coin in silver American dollars are only for New York, and from 1st January, 1825, to 30th June, 1829, during which period the price was never less than 2 per cent. premium. About 3¾ per cent. premium (our eagle being taken at 10 silver dollars) is about par according to the average relative value of gold to silver in Europe. The effect of raising our gold coins to the same value will be to prevent their exportation when the premium is not above that rate, 3¾ as now quoted, but in reality par at the lowest estimate that can be made of the relative value of gold. In Mexico, Havana, and South America it is indubitably higher. With us the quantity of precious metals is, on account of our paper system, so extremely small, and the transactions in exchange so enormous, that the exportation of gold and silver cannot and never does (as in France and other European countries, that have less commerce and a much greater quantity of metallic currency than we have) prevent the rise of exchange. It is, on the contrary, the rate of exchange which always, though not with mathematical uniformity, governs the market price of our gold in our own country, as is obvious from a view of the comparative tables of our rates of exchange and prices of gold. A regulation, therefore, raising our gold coins to their true value cannot prevent their exportation when the exchange will rise 1 per cent. above that, or, in other words, when the exchange on London will rise to more than 1 per cent. above true par; that is to say, to more than 1 per cent. above what is called 6½ per cent. premium, calculating the dollar at 4 shillings 6 pence sterling.

What has been the origin of that erroneous valuation I never could ascertain. Since the year 1772 the legal weight of Spanish dollars has been (from the most correct comparison of weights existing) hardly above 417 troy grains, and the legal standard, which is still impressed on the new Mexican dollars (10 D. 20 G.), parts fine and alloy. The only older and better dollars, of which any are yet found in circulation, are those (prior to 1772) with two shields and without effigies. They are of the same weight, but of a better standard, being taken by the French mint at the rate of 906, and probably being actually of the standard of fine. The variations of coinage, with respect to all, have consisted in making them of less and not of higher value. The highest legal rate above stated falls far short of 4 shillings 6 pence sterling. But there may have been still more ancient and more valuable dollars, no longer to be seen, of which I have no knowledge, and on which the original valuation of 4 shillings 6 pence was perhaps founded. It is only in some ancient works on the subject that the information can be had. I have seen quoted a publication of Sir Isaac Newton, being a statement of his assays of foreign coins whilst at the head of the mint of England; but it is not printed in any of the collections of his works, and I have never met with it.

I have the honor, &c.