Goloid Dollars: America’s Electrum Coinage
The discovery of vast amounts of gold in California upset the ratio between gold and silver, to the point where silver coins traded at $1.04 for every gold dollar. This amount—while seemingly small—caused enough of a disruption that silver coinage disappeared from circulation and was hoarded. Congress passed the Coinage Act of 1853 to try and rectify this, which lowered the weights of the half dime, dime, quarter, and half dollar—decreasing their values to the point where they would reenter circulation. The silver dollar, however, remained at its full weight in an attempt to not disrupt its use abroad, as it was still in heavy competition with the Mexican peso as a coin of international trade.
In the United States, however, although the lower denominations saw circulation once again, Americans continued to hoard the silver dollar. Individuals could still bring their uncoined silver or foreign coinage to the Mint to be made into United States dollars, but because there was more than a dollar’s worth of silver in a silver dollar it was more profitable to have it coined into smaller denominations or to sell it to jewelers or other tradespeople as bullion.
The Coinage Act of 1873 sought to rectify all of this, and more, but eventually turned into a political firestorm that lasted for decades. There were several reasons for the passage of the Coinage Act, which resulted in a complete overhaul of a range of then-existing existing monetary laws. The silver dollar situation, however, was one of the major concerns. To many, the coin was seen as obsolete, an accounting novelty, and pointless in the wake of the gold discovered in California. After three years of internal deliberation, the Act quietly passed, thus—among other things—demonetizing silver and putting the nation onto the gold standard.
Perhaps one of the biggest reasons for this, at this particular moment in history, was not because of the high price of silver, but because of the fear that the price of silver was about to come crashing down. Mint Director Henry R. Linderman (Fig. 1) and Deputy comptroller of Currency John Jay Knox were keenly aware of the amounts of silver being mined from the Comstock Lode in Nevada, and knew that this would cause an even worse ripple in the monetary system than the California Gold Rush—or, really, to the official response to the gold rush.
Perhaps it is at this point they realized that instead of lowering the weight of the silver coinage in 1853, they should have raised the weight of the gold coinage for a proper adjustment. In 1873, however, with a reduced-weight silver coinage and the price of that metal about to crash, they felt that the easiest solution was to abandon silver altogether, which they did. Still in need for a large-sized silver coin to compete with the Mexican peso, however, the Coinage Act of 1873 created the Trade dollar, which contained more silver than a traditional silver dollar, but had limited legal tender status in the United States, so was vastly unpopular. In China, it was only marginally more successful.
It was not until 1876, three years later, when the price of silver finally dropped and individuals tried to bring their ore to the Mint to be recoined into silver dollars, only to find that this denomination no longer existed. By 1890, the Coinage Act of 1873 and the abandonment of bimetallism became known as the “Crime of ’73” and continued to be a political talking point (if not arguing point) through the end of the century.
From the late 1870s through 1900, many plans and ideas were offered as a way to rectify the situation—some were accepted while others were not. One of the earliest emerged in 1877, just after people began to realize the realities of the Coinage Act of 1873. On April 4, 1876, Dr. William Wheeler Hubbell (Fig. 2), of Philadelphia, applied for a patent entitled an “Improvement in Metal Alloys for Commercial Coin”—an alloy he termed goloid.
On May 22, 1877, he was awarded this as patent No. 191,146. According to Hubbell, goloid “consists of certain proportions of gold, silver, and copper. The exact and best proportions are one pound of gold, twenty-four pounds of silver, and two and a half pounds of copper [and] one grain of sulphate of sodium or sulphate of potassium to one thousand grains of the metal.” Even then, Hubbell contended that the proportions could be altered—the silver could be raised to 30 parts instead of 24 parts, or lowered to little as 20 parts; the copper could be increased to one-eighth or as little as one-twelfth of the final weight.
On October 23, 1877, Senator William A. Wallace introduced a bill to Congress that would have made goloid dollars, half dollars, and quarter dollars legal tender. The original bill intended to pay for coins “by issues of four percent bonds redeemable in ten and payable after twenty years, and to be paid out in exchange for bonds paying a higher rate of interest, as the latter are retired.” The bill called for an initial amount of $400,000,000 in goloid coinage to be struck. Deliberations on the matter split Congress, permeated the press, and frustrated the Mint. The day following the proposal, for instance, the Eureka Daily Sentinel (Eureka, Nevada) stated, we send out of the mountains an emphatic protest. Gold or silver straight suits us, but goloid never. Down with the galvanized delusion. There is too much of the pure stuff in the country to admit of this debased nonsense.”
Hubbell contended that his alloy made the dollar coin “more difficult to counterfeit” largely due to the increased density of the alloy. “Usually,” he mentioned, “gold and silver alloyed are less in density than the mean of their constituents.” Goloid, on the other hand, with its particular constituents, showed an increase in density. While the mean density of the individual metals was 10.685, the alloy proved to hold a density of 10.802 on average. While this fact supposedly-proved that the alloy was difficult to counterfeit, it would take a fairly-sophisticated set of tools to determine the density of a given goloid coin. Furthermore, Hubbell asserts that the coin will have a golden hue in the outermost layers, while the natural color of goldoid is a purple-golden color (Fig. 3)—a trait that would only become more pronounced as the coin wore with use. This purple color would be at its strongest when vinegar or acetic acid was used on the surface.
Not everybody agreed with his positive outlook. In fact, on December 29, 1877, the Congressional Committee of Coinage, Weights, and Measures asked Mint Director Linderman to prepare samples of goloid coinage for their inspection (Fig. 4)—of which several were made of two different designs, both distinct from any other design then being struck.
Already knowing that goloid and standard silver were very similar in appearance, Linderman used this as an opportunity to test the Congressmen. Linderman presented Congress with two coins, one of goloid and another of 90% fine silver—the composition then used for circulating silver coinage at the time. He had marked the silver coin—“the distinction between them is in the one being blurred in one of the characters, the letter ‘O.’” Even during the test itself, Linderman had difficulties in keeping the coins straight. “I shall have to look myself to see which one is the goloid dollar,” he admitted. “If is very difficult for anybody to tell the difference, for the general appearance is the same. The difference between one and the other is not perceptible.” The difference in value between the two, however, was about 40¢, as one had about 60¢ in silver, while the other had one dollar in goloid.
Linderman had Congress convinced. Goloid would have created even greater problems to the United States monetary system than a price drop in silver. In the end, the alloy was the downfall of the alloy itself. There was too little gold involved to make a noticeable difference in appearance. In the end, the bill did not pass. On February 28, 1878, Congress passed the Bland-Allison Act, which restored the legal tender status of the silver dollar, and required the United States Treasury to purchase between $2 million and $4 million in silver each month from western mines and coined.
Goloid, however, was not the first coinage to combine gold and silver into an amalgamated composition, albeit now known as electrum. In fact, the first coinage famously used this combination in the 7th century BCE—the electrum coinage of Lydia (Fig. 5), whose usage spread Western Asia Minor, throughout eastern ancient Greece, and the Mediterranean world through the next few centuries.
Into the 11th through 14th centuries, a succession of Byzantine emperors issued electrum coinage. In the 19th century, Japanese shogunates issued their own electrum coins. While many sources claim that ancient electrum was a naturally-occurring combination of gold and silver, research now shows that this was, in fact, a manufactured alloy—even the earliest pieces—just like goloid. While there is much more primary source material for the goloid coinage of the United States available than there is for the ancient coins struck from electrum, perhaps there is something to learn from the experiences and observances of the modern pieces.