Too Little, Too Late

In May 7, 1859, the San Joaquin Republican ran an article entitled, “The New American Dollar.” It announced, “We received from Mr. Charles H. Hempstead, Esq., Superintendent of the Mint at this place, a silver dollar of the new coinage.” This dollar, an example of the first issue of silver dollars from the San Francisco Mint, was one of Hempstead’s attempts to address an issue that had plagued California merchants for years—an issue that, ironically, was the direct result of the California Gold Rush.

Although gold was first discovered in California in January 1848, it took more than a year for a large quantity of the metal to make its way eastward. When gold began to flood the U.S. mints and assay offices, its value relative to the value of silver dropped. Soon, a dollars’ worth of silver coinage was valued at $1.06 in gold. As a result, many melted down their silver coins into bars and exchanged them for gold at a premium.

A Potential Solution

The government’s solution—codified as the Coinage Act of 1853—was to reduce the weight of half dimes, dimes, quarters, and half dollars by 7 percent to bring their value back in line with the gold price. The government also added an arrow to either side of these coins’ date from 1853 to 1855, so people would know there was no point in melting them down. Officials hoped that this change would restore the circulation of silver throughout the country for use in small transactions, and, for the most part, it did.

The Coinage Act of 1853 did not alter the weight of the silver dollar to signal that the bimetallic standard originally set forth by the United States was still in effect. Consequently, merchants found the dollar substantially more desirable. But because the San Francisco Mint did not strike dollars, the city was awash with underweight small denomination coins—coins that were unusable for trade with Asia. As a result, the price of Mexican 8 reales skyrocketed, pushing their market value up by almost 10 percent over their melt value.

A New Coin

In November 1858, the Superintendent of the San Francisco Mint, Charles Hempstead, wrote to Mint Director James Ross Snowden:

We are now attracting to our shores large quantities of silver, in bars, from Mexico, for which we pay in silver coins. By reference to your letter of the fourth of August last, I find that you say that single “silver deposits may be received, but they are only payable in silver dollars or in fine silver bars.” We have never received any dies for silver dollars, nor am I aware of the reason why this branch has never made that denomination of coin. I would, therefore, suggest that the coinage of silver dollars (if it be not contrary to the policy of government) would relieve us of just one-half of the labor now necessary in the coinage of large quantities of Mexican silver.

Snowden responded by sending four pairs of dies to Hempstead. By May, the mint commenced coining of the denomination. However, by the end of the year, the mint had struck just 20,000 pieces. As it turned out, China’s preference for Mexican 8 reales endured. Although the vast majority of 1859-S dollars were sent to China, the large denomination failed to solve San Francisco’s trade issues, and the denomination wasn’t struck again at the branch mint for another 11 years. 

Although nearly every example of San Francisco’s first dollar was sent to Asia, China’s preference for Mexican coinage resulted in some coins being returned to the United States, making the 1859-S a scarce but collectable coin today.