Resource Note: 1795-1807 Money Supply
The First U.S. Gold Coin: 1795 Half Eagle
The 1795 Half Eagle stands as the first gold coin ever minted by the United States, representing a pivotal milestone in America's early monetary development with a total mintage of 8,707 coins produced between July and September 1795. Struck at the Philadelphia Mint under the direction of Henry William DeSaussure, who succeeded David Rittenhouse as Mint Director, these coins contained 0.2355 troy ounces of gold at .9167 fineness, weighed 8.75 grams, and measured 25.4 millimeters in diameter. The $5 Half Eagle gold coins, designed by Chief Engraver Robert Scot, featured the Capped Bust (or "Turban Head") obverse showing Liberty wearing a soft cap facing right, while the reverse displayed the controversial "Small Eagle" design derived from an ancient Roman cameo that was later replaced due to public criticism. These historic pieces formed part of the first year of America's gold coinage, which also included the production of $10 Eagle gold coins later in the autumn of 1795, establishing the foundation of the U.S. precious metals monetary system that would continue for nearly 140 years until the Great Depression.
Source: Fourester Research
Source: Fourester Research
Source: Fourester Research
Coinage Act of 1792
The United States Mint, established by the Coinage Act of 1792, created the foundation for America's monetary system and launched the nation's first official gold coinage program. While the Philadelphia Mint began operations in 1793 with copper cents, gold coin production was delayed until 1795 due to surety bond requirements for Mint officials handling precious metals. The Mint's headquarters at the time were located at 7th and Arch Streets in Philadelphia, Pennsylvania, which was then the nation's capital. David Rittenhouse served as the first Mint Director until June 1795, when Henry William DeSaussure took over and immediately prioritized the commencement of gold coin production. The bond requirements were eventually reduced, allowing the Mint to proceed with striking gold coins in mid-1795, finally fulfilling one of its original congressional mandates three years after its establishment. Director DeSaussure remained in office only until October 1795, followed by Elias Boudinot who served until 1805, overseeing the expansion of gold coin production during the early years.
Source: Fourester Research
Gold Component of U.S. Money Supply (1795-1807)
The Coinage Act of 1792, also known as the Mint Act, was a pivotal piece of legislation passed by the United States Congress on April 2, 1792, that established the United States dollar as the country's standard unit of money and created the United States Mint to oversee coin production. The Act addressed the economic instability following the Revolutionary War by implementing a national decimal-based monetary system, replacing the diverse foreign currencies previously in circulation. It regulated the design, composition, and denominations of U.S. coins, establishing gold, silver, and copper as the metals for coinage with specific weights and purities for each denomination. The Act fixed the silver-to-gold ratio at 15:1, defined the dollar in terms of specific silver content, created positions for Mint officials including the Director, Assayer, Chief Coiner, and Engraver, and notably included a death penalty provision for officials who debased the coinage. This comprehensive legislation laid the critical foundation for the American monetary system that continues to evolve today.
The gold component of the United States money supply from 1795 to 1807 was characterized by limited circulation despite ambitious production plans authorized by the Coinage Act of 1792. After overcoming initial challenges with surety bonds that delayed production until 1795, the Philadelphia Mint began striking three gold denominations: the $10.00 Eagle, the $5.00 Half Eagle, and later the $2.50 Quarter Eagle. The actual circulating supply of these gold coins remained severely constrained by a fundamental flaw in the bimetallic standard established by Congress, which set a gold-to-silver ratio of 15:1 that undervalued gold relative to world markets where the ratio was closer to 15.5:1 or 16:1. This mispricing created a persistent economic incentive for gold coins to be exported, melted for bullion, or hoarded rather than circulated domestically, effectively removing them from the active money supply almost as quickly as they were produced.
The Mint's production records indicate growing gold coinage output during this period, with annual mintages of Half Eagles climbing from the initial 8,707 coins in 1795 to over 30,000 by 1807. However, these official mintage figures substantially overstate the actual contribution of U.S. gold coins to the circulating money supply. Contemporary accounts suggest that domestic commercial transactions continued to rely heavily on foreign gold coins (particularly Spanish and Portuguese pieces), paper bank notes, and silver coins for daily commerce. The limited domestic circulation of U.S. gold coinage is further evidenced by the survival rates of these coins today - despite modest mintage figures, many early gold issues are exceptionally rare, confirming their rapid export or destruction. Even bullion depositors, who could request specific denominations from the Mint, often preferred Half Eagles over other gold denominations, creating an uneven distribution within the already constrained gold component of the money supply.
By 1804, the export problem had become so severe that President Thomas Jefferson suspended Eagle production entirely, while Half Eagle production continued as the "workhorse" gold denomination. The Quarter Eagle, introduced in 1796 with just 963 pieces, remained a minor component throughout this period due to its awkward denomination that didn't align well with commercial needs. The combined gold coinage annual output rarely exceeded $500,000 in face value during this period, a modest sum compared to the nation's growing economic activity. This underperformance of U.S. gold coinage as a viable component of the money supply represents one of the significant monetary policy challenges of the early republic, demonstrating how theoretical monetary frameworks could be undermined by practical economic realities and market forces that transcended national boundaries.
Bottom Line
The gold component of the United States money supply between 1795 and 1807 remained substantially smaller than intended by the nation's founders due to fundamental valuation problems in the bimetallic standard. While the Philadelphia Mint successfully produced over half a million dollars in gold coinage across three denominations during this period, the vast majority of these coins were immediately exported, melted, or hoarded rather than circulated within the domestic economy. The Treasury and Mint officials recognized this problem but lacked effective tools to address it, leaving the nation's commercial interests to rely on a mix of foreign gold coins, paper currency, and silver for their monetary needs. This circulation failure would persist until the 1834 Coinage Act finally adjusted the gold-to-silver ratio from 15:1 to 16:1, enabling gold coins to circulate freely within the United States for the first time nearly four decades after their initial introduction.