U.S. Liberty Head $20
Double Eagles by Q. David Bowers
By Robert J. Galiette
Every story must be told from some perspective. This book focuses on the six decades that began with the discovery of gold in California in 1848 and the design in 1849 of a new $20 gold coin, the Liberty Head double eagle. At close to the size of a silver dollar, and twice the weight of any gold coin previously minted by the United States, this coin was intended to accommodate the great quantities of gold being mined in California by providing a convenient means of channeling that gold directly into commerce. Numismatic developments from the introduction of the Liberty Head double eagle in 1850 through its more than half century of mint production are reviewed herein year by year consecutively through 1907, and events in America linked to each year are provided as well. A modern catchphrase is “follow the money.” We accordingly begin in this book with as close a look as possible at the coins themselves, their production, the collecting of them by numismatists, and the ripple effects they had on the economy, politics and technology in America.
This overall 60-year period in human history is exceptional by any standard. The magnitude of the quantum steps forward in transportation, communications, science, law, politics, military capabilities, art, athletics, and other areas was so great in one short span of human existence that these accomplishments could find comparison only with the advances achieved from the eighth to sixth century B.C. in classical Greece, and even then it would be difficult to find a comparably short year span. When the United States concluded the Louisiana Purchase in 1803, President Thomas Jefferson speculated that it would take about 600 years for the United States to populate and develop the vast lands between the East and West coasts of the continent. Certain physical assets unique to the geography of America, coupled with monetary, social, political, military, and technological developments, shrank that time span to only a few decades. It would be difficult in one book to adequately summarize even a single year during this period, yet here we’re looking at six decades in a compact number of pages. The objective is to show an unfolding of the evolution and relationship of events to each other, almost like time-lapse photography, all from the perspective of Liberty Head $20 gold double eagles.
During the years covered in this book, gold was, officially or unofficially, the principal and ultimate standard by which accounts were settled in America, as well as internationally in most of the industrialized world and elsewhere. Gold was money, and money was gold. It was a requirement throughout this period that currency be backed by precious metals, or specie as they’re also referenced in regard to gold or silver coins. In the period from 1848 through 1907 there was no central bank to control the money supply during times of recession or financial stress. The charter of the Second Bank of the United States had expired in January 1836, the Federal Reserve was not formed until almost eight decades later in 1913, and the money supply risked being inelastic at economically critical times. With many industries expanding in the 1840s and 1850s, the financial needs of the Civil War in the 1860s affecting the fortunes of the North and South, and the great post-war growth of the industrialization of America, gold from California and an unending production of gold double eagles provided needed liquidity.
It’s difficult to imagine how a money supply premised on gold, and to a lesser extent silver, would have thrived as it did in the mid- and late nineteenth century without the abundant flow of both these metals from Western mines. Rapid industrialization and a robust expansion of the population were occurring, which placed stress on every type of resource. Stabilization of the money supply was critical, and this was accomplished through an expansion of gold reserves, principally held as $20 double eagles.
During the American Revolution, paper currency had been used to meet the exigencies of paying for goods and soldiers’ salaries. However, this currency was not backed by precious metal and was subject to severe devaluation, sometimes at an exchange rate of hundreds to one. With families to feed, soldiers who were paid at the inception of fighting at Lexington and Concord in 1775, for example, couldn’t hold onto paper currency and wait until the late 1780s for the possibility that such currency would recover its intended face value, so typically it was sold or exchanged for a fraction of its worth. An attempt in some states at using commodity bonds as an alternative to paper currency proved too complicated, as a means of exchange in support of simple transactions, to gain favor with the public.
As the first secretary of the Treasury, Alexander Hamilton was influential in having Congress support a plan to accept the debts of the Continental Congress as well as the Revolutionary War debts of the respective states, totaling about $60 million. Continental Currency bills were redeemed at the discounted rate of $1 for every $40 face value. These debts were paid through bonds, and the money the United States created to back these bonds eventually came in the form of new issues of gold, silver and copper coins to replace Spanish and other foreign coins which had circulated freely in the American colonies. However, certain non-U.S. coins remained legal tender until 1859, as in the early years the Mint output constituted only a small fraction of the gold and silver coins in commerce. Struck experimentally in 1792, United States coins subsequently began to be produced in 1793 at the new mint in Philadelphia as large copper cents and half cents. Silver coin production followed in 1794 (silver half dimes, dimes, half dollars and dollars, with quarter dollars following in 1796), and in 1795 gold $5 half eagles and $10 eagles, followed in 1796 by $2.50 quarter eagles. The bonds that Hamilton had introduced in 1792 were among the first financial instruments traded on the New York Stock Exchange, were highly liquid, and provided exceptional investments for early insurance companies, which could count on the ability to hold them as reserves against insurance losses.
Having experimented with unbacked paper currency in colonial times, there was no interest in a federal paper currency at the nation’s inception. Except for the limited use of some paper currency during the war of 1812, and then around 1837 after the hard times and recession of that era, the United States government did not issue circulating paper currency again until the Civil War in 1861. Instead, state-chartered banks each issued their own circulating bank notes, backed to some percentage by an amount of gold and silver coin reserves.
When gold was discovered in California on the American River in January 1848, that entire territory was still part of Mexico. Two weeks later, California became a United States territory by treaty settlement, although neither those who made the gold discoveries in California nor those who were signing the treaty in Mexico could have known of the actions that were transpiring in the other’s location. The Liberty Head $20 double eagle gold coins that resulted from these large finds in California were not used in regular daily transactions by average citizens, but were very well received in international transactions and provided a convenient form in which reserves could be held by banks.
While we may experience great advancements today, progress throughout the Liberty Head double eagle period from 1850 through 1907 was exceptional. Samuel Morse first demonstrated his telegraph in 1844. President Polk’s State of the Union address in December 1848 was the first one carried over the telegraph, and his announcement confirming large gold discoveries in California sparked the rush there in 1849. The age of the “Victorian Internet,” as some in recent times have described the telegraph’s contribution, had arrived. By the 1850s, communication was virtually instantaneous in many parts of America. Transportation transformed both America and the world as the earliest steam railroads and horse-drawn carriages evolved into major railroads, electric street cars, and trains powered by electricity in major cities such as New York. Clipper ships evolved from slower sailing vessels, and side-wheel steamers became steel fleets. The automobile replaced the horse and buggy, and in 1903 the Wright brothers pioneered independent flight. Today 11 of the 20 largest companies by revenue in the world are in the petroleum industry, which got its start between 1855 and 1859.
Rotary printing allowed books and newspapers to be produced at very low cost. As a result, the public became better informed and enjoyed literature from exceptional authors. Meanwhile in athletics, the games of baseball, football, and basketball all had their origins during the 1850 to 1907 period of the $20 Liberty Head double eagle, as did the first present-day Olympics in 1896. Heroic construction projects were undertaken, from completion of the first transcontinental railroad in 1869, to the rise of skyscrapers in major cities as visible symbols of accomplishment in post-Civil War America. The telephone, incandescent light bulb and electric generators were developed in the 1870s and the electric motor in the 1880s. The United States emerged as a world power following the 1898 Spanish-American War victory of Admiral George Dewey and the Navy’s new steel fleet.
The free flow of information and easier means of travel allowed scientists to better communicate with each other and to make enhanced observations. In 1859 Charles Darwin put forward his theory of evolution. British surgeon Joseph Lister made his famous 1867 publications of antiseptic surgery in the Lancet based on Louis Pasteur’s discoveries in the 1860s of the causes of certain types of bacterial disease. Pasteur’s continued work in the 1880s resulted in landmark research in vaccines for the prevention and cure of many types of disease. Wilhelm Roentgen discovered X-rays in 1895, and in 1900 the work of Gregor Mendel was rediscovered, advancing the modern science of genetics. In 1905, 26-year-old Albert Einstein contributed substantially to the foundation of modern physics. How far and quickly had human understanding evolved from the horse and buggy days of the 1840s!
The “official inception” of The Gilded Age is associated with writers Mark Twain and Charles Dudley Warner and their 1873 book, The Gilded Age: A Tale of Today, which satirized their views of an era which they believed had serious social problems hidden by a thin gold gilding. The steady flow of Liberty Head $20 gold double eagles made possible an emerging era of new technology and prosperity. However, under the “gilding” of this unprecedented growth were evolving concerns and issues of poverty, education, ethnic and racial inequality, child labor, factory safety and unionization initiatives, women’s suffrage, civil service reform, graft in government, prohibition of alcohol, health care, and other important matters. They each generated significant and needed public debate.
By all standards of world history, America is a very young nation. There remains much to be learned from our history, especially from our so-little-reviewed financial history. Please “follow the money” and enjoy, in whichever order you may choose to read them, the individual chapters on these historic United States gold coins.