What Is the Coinage Act of 1792?
The Coinage Act of 1792—more commonly known as the Mint Act or the Coinage Act—was a regulation passed by Congress on April 2, 1792, that established the United States Mint in Philadelphia. The act provided stipulations for the design and production of coins, laying the foundation for modern U.S. currency. The Coinage Act of 1792 outlined the duties of the five officers of the mint and established the U.S. dollar as the nation's standard unit of currency.
- The Coinage Act of 1792 established the U.S. dollar as the nation's currency and created a mint for national coinage.
- During the Revolutionary War, both Congress and the states had the right to coin money and issue debt in order to fund their war efforts.
- This resulted in a glut of debt certificates and Continental dollars, which quickly lost value as they were not backed by physical assets such as silver or gold.
- The United States Constitution addressed the currency crisis by giving Congress the sole authority to coin money.
- The Coinage Act of 1792 instructed the U.S. mint to strike coins of gold, silver, and copper of various denominations.
Understanding the Coinage Act of 1792
Prior to the Coinage Act of 1792, the challenges of not having a national coinage system had become a critical problem for the fledgling independent nation. Approved by the states in 1778, the Articles of Confederation gave both the states and Congress the authority to coin money. During the American Revolutionary War, the Continental Congress issued paper currency—called Continentals—to help fund the war.
Continentals, which were not backed by a physical asset like silver or gold, quickly lost value. Both the colonies and Congress issued enormous amounts of debt certificates to cover their war expenses, which resulted in the rapid depreciation of all forms of paper currency. To resolve the currency crisis and help the nation establish its sovereignty, the United States Consitution gave Congress the exclusive authority to coin money. This was then followed by the Coinage Act of 1792, which established the U.S. coinage system and placed the mint at the seat of the U.S. government.
In Jan. 1777, $1.25 of Continental currency could buy $1 in gold or silver coins. By Jan. 1781, the Continental had depreciated to the point that it took $100 in Continentals to obtain $1 in gold or silver coins.
Requirements of the Coinage Act of 1792
The law created U.S. eagles, dollars, cents, and sub-denominations of each, as legal tender at their face value or, for partial coins, in proportion to their weight. The act specified the metallic composition and weight of each coin in copper, silver, or gold, either pure or of a standard fineness. The value of each of these coins was dependent on the type (gold, silver, copper) and the amount of material used to make them.
The Coinage Act established the dollar as a basic unit of currency. It also fixed the price of gold and silver at 15 pounds of pure silver to one pound of pure gold. It defined a decimal system of larger and smaller denominations. Eagles, half eagles, and quarter eagles were minted from gold, and worth $10, $5, and $2.50, respectively. Dollars (or units), half dollars, quarter dollars, disme (the early form of the dime), and half disme were minted from silver and were worth $1, $0.50, $0.25, $0.10, and $0.05 respectively. Cents and half cents were minted from copper and were worth $0.01 and $0.005 respectively.
Design of Coins
The Coinage Act further directed the markings to be inscribed upon the coins minted. One side of each coin was to be inscribed with the word “Liberty,” the year of the coinage, and an image symbolizing liberty. The reverse side of the silver and gold coins was to be inscribed with the image of the eagle and the words “United States of America.” Copper coins were to be inscribed with their denomination on the reverse side as well.
The Coinage Act allowed any person to have silver or gold bullion coined at the mint free of charge, or exchange it for the equivalent value of the coin, less a charge of one-half percent of the weight of pure bullion presented. The Mint Act established quality control measures for the assaying of coins that would remain in effect until 1980 when the United States Assay Commission was abolished. The law also established a penalty of death for the debasement of gold or silver coins or the embezzlement of the same by the officers of the mint.