The state chronicle. [volume] (Raleigh, N.C.) 1891-1893, 1892-05-11
Free Coinage of Gold.

in the Ptcavune On the free coinage of
gold, as follows:
eff | recollect correctly the position
OF the writer is that the mint receives
the fine gold and returns like weight
in gold coin to the depositor, leaving a
profit of about II per cent. in the
hands of the government. Is there not
an error in this statement? Why should
the owner of the fine gold sell it to the
government for about $18.6O5 per
ounce, when the dealers in bullion will
give about $20.67 per ounce?'
AS the above shows sapprehen.
sion OF the fact as stated by us in the
article in question, and as the matter
is one of no little public interest in
connection with the general discussions
upon coinage at this time, it will not
be out of place to present some expla-
nation of the free coinage of gold.
The United States Revised Statutes,
section 351l, providing the denomina-
tions and values of the gold coins of
the United States, declares that the
unit Of these coins shall be the one
dollar piece of the weight of twenty
five and eight-tenths grains, expressed
in figures by $3.50. The half eagle,
or S. piece, shall weigh 1900 grains;
the eagle, or $40 piece, shall weigh
250.OO grains; and the double eagle, or
$50 piece, shall weigh $1,000 grains,
all troy weight.
Section 35l4 4 declares that the stand
ard for both gold and silver coins of
the United States shall be such,
that of 1000 parts by weight, 900 parts
shall be of pure metal and 100 parts
of alloy. The alloy is not counted in
the value of the coin, being mixture
of copper and silver, the latter being
net more than one-tenth of the mixture.
Il will be seen then that all the
coins consist of nine-tenths pure metal
and one-tenth alloy. The one dollar
gold piece must weigh $3.50 grains of
troy. Of this weight 1922 grains are
pure gold and 2.58 grains are alloy.
The other coins are all in the same
proportion. 1t the rate of 1922 grains
Of pure gold to one dollar, 1t will be
seen that one ounce of pure gold con-
tanning 4SO grains, will he worth
$2O.67 and very little fraction more.
But since all our coin is alloyed to the
extent of one-tenth, it will be seen that
while an ounce Of pure gold is worth,
say S2O.67, an ounce of United States
gold coin is worth only $3.50, or
thereabouts.
Now when gold bullion is deposited
in the mint for coinage it's value in pure
metal IS ascertained, and then an equal
weight Of gold coin is paid for it. 1t is
true that the government makes a gross
profit of one-tenth on the transaction,
but the cost of mintage, wasteage, and
the like must come out of it, so that
the net profit is not so large in the end,
even ifthe government only pays $18.-
60 for $2O.67 worth of pure gold.
But now for the question: "Why
should the owner Of fine gold sell it to
the government for $3.50 when the
dealers in bullion will give about 500.
67 per ounce for it?' Who are these
dealers? Fine gold is purchased in large
quantities only by the mints of the
several nations and by the great gov
ernment and private banks of Europe,
Gold is worth more in England than
elsewhere because England, not being
producer Of gold, must get it in the
way of trade from other countries, and
in order to draw gold in preference to
silver the Bank of England in the lat
ter part of the seventeenth century,
under the advice of Sir Isaac Newton,
master of the mint, increased the ratio
of the value of gold over silver, so that
gold was given greater proportional
paying power, thereby encouraging
payments in gold. This movement
forced a subsequent discountenancing
of silver in all other commercial coun-
tries and has resulted in a general
characterization of silver.
Returning to the statement that
gold is worth more in London than
elsewhere, we find that, by act of par.
lament, the Bank Of England is au
thorized to pay for fine (pure) gold
f3,l7 shiliings and pence per ounce
An act of the United States Congress
fixes the value in America of the Brit
ish pound sterling at $4.S6.95, or four
dollars eighty-six cents and nine and
one-half miles. At this rate, the Bank
Of England pays for pure gold about
$3.50 per ounce, or say 80 cents more
than is paid by our government mints
But it costs something in freight AM
insurance to ship gold bullion to Lon
don, and there would be very little
profit in carrying fine gold from this
country. Now, since the Bank of Eng
land fixes the price of pure gold al
$3.50 per ounce, it is not likely tha
any dealers will be found to purchas
it at $20.67, when they would have t(
sell it to the great banks and mints a
a loss.
. ANYBODY can deposit gold bullion i,