The Coinage Act of 1857

On February 21, 1857, the U.S. Senate and House of Representatives enacted the Coinage Act of 1857. The primary importance of the act was the end of the legal tender status of foreign coins in the United States. The new legislation required that the only coins to be circulated were those struck by the United States Mint.

The story begins with Congressional passage of the Act of April 10, 1806, that regulated the legal-tender value of foreign gold and silver coins in the United States. It was enacted primarily because the newly established U.S. Mint, created on April 2, 1792, could not produce enough domestic currency to meet the nation’s needs.

The 1806 Act defined the precise value of foreign coins based on their weight in gold/silver relative to U.S. coins, preventing arbitrary valuation and easing trade. The 1806 Act included, “the gold coins of Great Britain and Portugal, of their present standard, at the rate of one hundred coins, for every twenty-seven grains of the actual weight thereof.” Similar values were regulated for the coins of France, Spain, and the dominions of Spain.

The enactment of the 1857 Coinage Act repealed prior legal tender laws concerning foreign specie. The Act established a unified, decimal-based national currency, ended reliance on Spanish, Mexican, and other foreign silver, and finalized the transition to a US-minted monetary system.

Foreign coins were necessary due to a shortage of domestic currency. However, by the 1850s, improved production technology and branch mints in New Orleans, Dahlonega, and Charlotte, along with the Philadelphia Mint, allowed the U.S. to produce enough coins.

The non-decimal system of foreign coins was inconvenient. It did not conform to the U.S. decimal system (dollars and cents), which made calculations for merchants and consumers burdensome. The Act represented a major step toward establishing government control over the money supply.

The newly enacted legislation began by reviewing how Spanish and Mexican coins were to be valued when received by the U.S. “That the pieces commonly known as the quarter, eighth, and sixteenth of the Spanish pillar dollar, and of the Mexican dollar, shall be receivable at the treasury of the United States, and its several offices, and at the several post-offices and land-offices, at the rates of valuation following, that is to say, the fourth of a dollar, or piece of two reals, at twenty cents; the eighth of a dollar, or piece of one real, at ten cents; and the sixteenth of a dollar, or half real, at five cents.” Section 2 of the Act enacted that the foreign coins mentioned, “shall not again be paid out, or put in circulation, but shall be re-coined at the mint.”

In addition to banning foreign currency, the Coinage Act of 1857 made some changes to American coinage. The Act discontinued the half-cent, which had been struck since 1793. The Act also drastically reduced the size of the cent that had been as large as current U.S. dollar coins.

In 1857, the first small cent, the Flying Eagle Cent, was introduced. The coin was minted to reduce its composition from the cost of 100% pure copper to 88% copper and 12% nickel.

However, the Flying Eagle Cent’s design was criticized for its weak strike and quickly became unpopular. After only two years of production, the coin was discontinued. It was replaced by the Indian Head Cent.

The Coinage Act of 1857 was landmark legislation. It will be remembered as an essential congressional act that led the nation to establish a standardized national currency by formally banning foreign coins as legal tender.

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