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"Money": Legal History

Adoption of the “Dollar” as the “Money Unit” Prior to the Ratification of the Constitution

The Founders did not need explicitly to adopt the “dollar” as the national monetary unit or to define that word In the Constitution, because the Continental Congress had already performed that task.

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Last Updated on January 15, 2023 by Constitutional Militia

The Constitutional “Dollar”

Both Article 1, Section 9, Clause 1 and the Seventh Amendment to the Constitution refer explicitly to the “dollar”—in the one case, permitting “a Tax or duty * * * not exceeding ten dollars for each Person” the States saw fit “to admit” prior to 1808; and, in the other, guaranteeing trial by jury “[i]n suits at common law, where the value in controversy shall exceed twenty dollars.” The Constitution does not define this “dollar.” But, in the late 1700s, no explicit definition was necessary: Everyone conversant with political and economic affairs knew that the word imported the silver Spanish milled dollar.

ADOPTION OF THE “DOLLAR” AS THE “MONEY UNIT” PRIOR TO THE RATIFICATION OF THE CONSTITUTION

The Founders did not need explicitly to adopt the “dollar[ ]” as the national monetary unit or to define that word In the Constitution, because the Continental Congress had already performed that task.

The “dollar” did not begin with that Congress, however. Far from it. Historians generally first associate the “dollar” with one Count Schlick, who began striking such silver coins in 1519 in Joachim’s Thal, Bavaria. Originally called “Schlicktenthalers” or “Joachimsthalers” , the coins became known simply as “Thalers”, which transliterated into “dollars”. Interestingly, the American Colonies adopted the “dollar” not from Germany or England, but from Spain, where it was first coined by Ferdinand and Isabella. Under that country’s monetary reforms of 1497, the silver reale became the unit of account. A new coin consisting of eight reales also appeared. Variously known as colanatas, piastras, pesos, duros, “Spanish dollars” (because of their similarity to Thalers), and “pieces of eight” (because they contained eight reales)[1] the coins achieved predominance in the New World because of Spain’s then-important commercial and political position there.[2] Recognized by law in the Colonies in 1672,[3] by 1704 the “pieces of eight” had become the unit of account, as Queen Anne’s Proclamation of that year made clear, when it decreed that all other current foreign silver coins “stand regulated, according to their Weight and Fineness, according and in Proportion to the Rate * * * limited and set for the Pieces of eight of Sevil, Pillar, and Mexico”.[4]

By the time of he War of Independence, the “piece of eight” was, for all practical purposes, rapidly becoming the monetary unit of the American people. Not surprisingly, the Continental Congress first used, and then took formal steps to adopt, the Spanish milled (or pillar) dollar as the nation’s standard of value. On 22 May 1776, a Congressional committee reported on “the value of the several species of gold and silver coins current in these colonies, and the proportions they * * * ought to bear to Spanish milled dollars”, in which Continental Currency was payable. And on 2 September of that year, a further committee report undertook to declare “the precise weight and fineness of the * * * Spanish milled dollar * * * now becoming the Money-Unit or common measure of other coins in these states”, and to explain the principles and establish the rules “by which * * * the said common measure shall be applied to other coins * * * in order to estimate their comparative value”.[5]

In his letter to Congress of 15 January 1782, Robert Morris, Superintendent of the Office of Finance, commented that, “[a]lthough most nations have coined copper, yet that metal is so impure, that it has never been considered as constituting the money standard. This is affixed to the two precious metals, because they alone will admit of having their intrinsic value precisely ascertained.”[1] “Arguments are unnecessary to shew that the scale by which every thing is to be measured ought to be as fixed as the nature of things will permit”, wrote Morris, concluding that “[t]here can be no doubt therefore that our money standard ought to be affixed to silver”.[2] Although Morris personally favored creating an entirely new standard coin, he nonetheless recognized the constraining reality that “[t]he various coins which have circulated in America, have undergone different changes in their value, so that there is hardly any which can be considered a general standard, unless it be Spanish dollars.”[3]

Footnotes:

1.) Propositions respecting the Coinage of Gold, Silver and Copper (printed folio pamphlet presented to the Continental Congress 13 May 1785, at 4. See 28 Journals of the Continental Congress, 1774-1789 (Library of Congress ed. 1904 et seq), at 354-58.

2.) Id., at 4.

3.) Id., at 5.

In a plan first published on 24 July 1784, Thomas Jefferson concurred that “[t]he Spanish dollar seems to fulfill all the[ ] conditions” applicable to “fixing the unit of money”.[1] Taking into our view, all money transactions, great and small, he ventured, “I question if a common measure, of more convenient size than the dollar, could be proposed.”[2] “The unit, or dollar” he wrote, already equating the one with the other, “is a known coin and the most familiar of all to the minds of the people. It is already adopted from south to north; has identified our currency, and therefore happily offers itself as an unit already introduced. Our public debt, our requisitions and their apportionments, have given it long and actual possession of the place of unit”.[3]

Yet Jefferson recognized the necessity of certain practical steps to adopt the Spanish dollar as the “Money-Unit”: “If we determine that a dollar shall be our unit, we must then say with precision what a dollar is. This coin as struck at different times, of different weights and fineness, is of different values.”[4] This, though, Jefferson saw as a problem for economic science to solve through objective measurement, not as a matter for politics to dictate according to arbitrary “policy”. “If the dollars circulating among us be every date equal, we should examine the quantity of pure metal in each, and from them form an average for our unit. This is a work property be committed to the mathematicians as well as merchants, and which should be decided on actual and accurate experiments.”[5] “The proportion between the value gold and silver”, he added, “is a mercantile problem altogether.”[6] Given “[t]he quality of fine silver which shall constitute the unit”, and “the proportion of the value of gold to that of silver” Jefferson went on, “a table should be formed * * * classing the several foreign coins according to their fineness, declaring the worth * * * in each class, and that they should be lawful tenders at those rates, if not clipped or otherwise diminished”.[7]

Concluding, he encouraged Congress

     To appoint proper persons to assay and examine, with the utmost accuracy practicable, the Spanish milled dollars of different dates in circulation with us.

     To assay and examine in like manner the fineness of all the other coins which may be found in circulation within these states.

*      *      *      *      *

     To appoint also proper persons to enquire what are the proportions between the values of fine gold and fine silver, at the markets of the several countries with which we are or probably may be connected In commerce; and what would be a proper proportion here, having regard to the average of their values at those markets * * * .

     To prepare an ordinance for establishing the unit of money within These states * * * on the * * * principle[:]

     That the money-unit of these states shall be equal in value to a Spanish milled dollar, containing so much fine silver as the assay * * * shall shew to be contained on an average in dollars of the several dates in circulation with us.[8]

Footnotes:

1.) NOTES on the ESTABLISHMENT of a MONEY MINT, and of a COINAGE for the United States appended to Propositions respecting the Coinage of Gold, Silver and Copper (printed folio pamphlet presented to the Continental Congress 13 May 1785, at 9.

2.) Id.

3.) Id. at 10.

4.) Id. at 11.

5.) Id.

6.) Id.

7.) Id. at 12. “Here the legislatures [of the States] should cooperate with Congress in providing that no money should be received or paid at their treasuries, or by any of their officers, or any bank, but on actual weight; in making it criminal in a high degree to diminish their own coins, and in some smaller degree to offer them in payment when diminished.”

8.) Id.(emphasis supplied).

On 13 May 1785, a committee presented Congress with “Propositions Respecting the Coinage of Gold, Silver, and Copper”, which referred to the “Plan * * * which proposes * * * that the Money Unit be One Dollar”.[1] “In favor of this Plan”, the committee reported, is “that a Dollar, the proposed Unit, has long been in general Use. Its Value is familiar. This accords with the national mode of keeping Accounts.”[2] Later, the report referred to the “Dollar as the[ ] Money of Account”, thereby equating that term with the term “Money-Unit”.[3]

Footnotes:

1.) 28 Journals of the Continental Congress, 1774-1789 (Library of Congress ed. 1904 et. seq.), at 335.

2.) Id. 

3.) Id. at 357.

On 6 July 1785, Congress unanimously “Resolved that the money unit of the United States * * * be one dollar”.[1] Almost another year elapsed until, on 8 April 1786, the Board of Treasury reported to Congress on what the composition of the “dollar”ought to be taken to be:

     * * * Congress by their Act of 6 July last resolved, that the Money-Unit of the United States should be a Dollar, but did not determine what number of Grains of Fine Silver should constitute the Dollar.

     We have concluded that Congress by their Act aforesaid, intended the common Dollars that are Current in the United States, and we have made our calculations accordingly.

     *      *      *      *      *

* * * The Money-Unit or Dollar will contain three hundred and seventy five grains and sixty four hundredths of Grains of fine Silver. A Dollar containing this number of Grains of fine Silver, will be worth as much as the New Spanish Dollars.[2]

Footnotes:

1.) 29 Journals of the Continental Congress, 1774-1789 (Library of Congress ed. 1904 et. seq.), at 499-500.

2.) 30 id. at 162-63 (emphasis supplied). After ratification of the Constitution, Congress made a more accurate determination of the intrinsic value of the “common Dollars that are Current in the United States”, setting it at 371-1/4 grains of fine silver. See Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution, (Chicago, Illinois R R Donnelly & Sons, Inc., GoldMoney Foundation Special Edition [2011] of the Second Revised Edition, 2002) by Dr. Edwin Vieira, Jr., Volume I, at 191-199, 214-215.

Shortly thereafter, on 8 August 1787, Congress adopted this standard as “the money Unit of the United States”.[1]

In sum, the constitutional “dollar[ ]”, the unit of “Money” or money of account of the United States, is an historically determinate, fixed weight of fine silver—a unit of measure in equal “intrinsic value” (weight and fineness) to “the common Dollars [Spanish pieces of eight] that [were] Current in the United States” in the late 1780s—adopted, not created, first by the American market and then by the Continental Congress well before the ratification of the Constitution.

Footnotes:

1.) 31 Journals of the Continental Congress, 1774-1789 (Library of Congress ed. 1904 et seq), at 503.

1.) See A Del Mar, Money and Civilization: or A History of the Monetary Laws and Systems of Various States Since the Dark Ages, and Their Influence Upon Civilization (1886), at 105-11.

2.) See Summer, The Spanish Dollar and the Colonial Schilling”, 3 Amer. Hist. Rev. 607 (1898). 

3.) See W. Summer, A History of American Currency (1874), at 13.

4.) An Act for ascertaining the Rates of foreign Coins in her Majesty’s Plantations in America, 1707, 6 Anne, ch. 30, § I.

5.) Journals of the Continental Congress, 1774-1789 (Library of Congress ed. 1904 et seq), at 381-82; 5 id. at 725.

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