John Hull, the Mint and the Economics of Massachusetts Coinage

Published by EH.NET (February 2004)

Louis Jordan, John Hull, the Mint and the Economics of Massachusetts Coinage. Lebanon, NH: University Press of New England, 2002. xx + 348 pp. $50.00 (hardback), ISBN: 1-58465-292-6.

Reviewed for EH.NET by Ron Michener, Department of Economics, University of Virginia.

Louis Jordan, a historian with a strong interest in numismatic issues, has written what is undoubtedly the definitive history of Massachusetts’ seventeenth-century mint. It is a work of such detailed and meticulous scholarship as to nearly boggle the mind of an economist accustomed to terse journal articles that convey highly stylized facts. So little is known about the Massachusetts mint that Jordan has a wide scope for his historical detective work. The book is divided into parts, and the first is devoted to telling the story of John Hull and the Mint. To give the flavor of the discussion, there are two chapters in this section: Chapter 1, which devotes nineteen pages to carefully reviewing scraps of evidence that indicate exactly where the Mint was actually located, and Chapter 2 which is devoted to a discussion of what can be gleaned from mint master John Hull’s surviving ledgers. Part 2 (Chapter 3) comes closest in tone to a journal article. It carefully studies the attitude of imperial authorities towards the unauthorized mint operated by the Massachusetts government, and makes a convincing case that imperial authorities, despite some misgivings, were never very perturbed by it. Part 3 (Chapters 4-6) are devoted to the economics of Massachusetts silver coinage, encompassing such topics as mint charges, the weight and fineness of the coins produced, and the relative value of Massachusetts and British coinage. Part 4 (Chapters 7-13) considers production issues: Jordan explains how the minting was done, details the quantity of specie consigned to the mint, the mint’s productivity, the size of melts, etc. This section also includes detailed biographies of all individuals known to have been associated with the mint. Part 5 (Chapters 14-17) discusses the role of the Spanish dollar (or eight reales) in England and Massachusetts. The end of the book consists of appendices that contain detailed information concerning all important documents pertaining to the mint. These appendices comprise nearly half the book’s length.

The book is richly detailed and aspires to be a comprehensive history of the mint, the coins it produced, and the people connected with it. If the book can be said to have a central thesis, it is that the mint gradually became unprofitable. As the gap between the values assigned an ounce of Spanish coined silver and an ounce of Massachusetts coined silver narrowed, it became increasingly unprofitable to bring Spanish coin to the mint to be converted to local coin. This, more than the hostility of imperial authorities, was the mint’s downfall.

This book is so well researched that I predict it will remain the definitive work on this subject for centuries, unless the improbable happens, and important new evidence is unearthed. That said, it is a peculiar book in some respects. Most striking is that it seems to have been written without the influence of an editor imposing strict page limits. Few details in the lives of the participants, or of the mint’s workings, seem to have been so unimportant as to have been omitted. In chapter 1, for example, Jordan not only explains where the mint probably was located, but also explains — in the kind of detail that would ordinarily be relegated to footnotes or edited out entirely — the steps he followed to reach his conclusion. Any neophyte historian would be well advised to read this material; if one wants to do research in this era, here is a master showing you how it is done. The detail was presented because there has been a recent debate among numismatists on this very topic; however, general readers or economists might have preferred a more condensed version of the narrative. The second thing I found peculiar about the book is the scant attention it pays to folklore. There are at least two colorful and entertaining anecdotes of doubtful authenticity pertaining to the mint. In one, Thomas Temple, defending the mint in a conversation with Charles II, is said to have successfully appealed to the king’s vanity by telling him that the oak impressed on the Massachusetts coin represented the Royal Oak at Whiteladies, where Charles had hidden on September 6, 1650, to avoid capture by Cromwell’s forces. The second anecdote maintains that John Hull had made such profits as mint master, that when his daughter wed Samuel Sewall, Hull purportedly offered a dowry equal to her weight in silver. According to the tale there was actually a ceremony, where his daughter was placed on one arm of a balance, and silver on the other, to settle the dowry. Jordan mentions the first incident, but only fleetingly (pp. 34, 232). The second I discovered only in the editor’s forward written by Philip Mossman. Jordan knows these stories, so I can only surmise that he treated them as he did because of their doubtful authenticity. It is striking evidence of his priorities in writing this book that he made such scant use of them. Sturdy scholarship, not idle amusement, is what the book is designed to deliver.

In reviewing a book, one necessarily gives some consideration to where one’s own research suggests amendments to the author’s work. I have two that I would like to mention, with the understanding that Jordan’s book presents the orthodox treatment of these subjects, and I do not mean to fault him for failing to anticipate my thoughts — some unpublished and some available only in obscure sources — on these matters.

The first concerns the rating of coins — that is, the value assigned in local currency units to foreign coins — particularly Spanish silver. Jordan does an admirable job in chapter 17 of tracing Massachusetts’ legislation bearing on the rating of Spanish silver. However, his assumption seems to be that the rating was set by legislative action, whereas I would argue that the rating was set by merchant compact and effectively ratified by the local courts, who accepted the argument that bargains should be enforced according to the understanding of those who entered into them. Legislative enactments frequently lagged behind the de facto arrangements that governed commercial activity. After colonial legislatures came under the constraints of Queen Anne’s proclamation, colonial legislatures could no longer offer even a belated acknowledgment of prevailing practice.

This observation is of particular relevance to pages 175-78 of Jordan’s book, which discuss the rating of Spanish silver in Massachusetts in the early eighteenth century. William Douglass, in his Discourse (1740), reported that “A. 1706 the Courts of Judicature chancered Silver to 8s. per Oz. in satisfying of Debts, being nearly after the Rate of 6s. a light Piece of Eight as then current.”(1) There is a deposition in the possession of the Boston Public Library, dated March 27, 1706 and signed by several merchants, that may well have played a role in the court’s decision. The deposition states that this rating had prevailed for a number of years in all mercantile transactions. The divergence of the de facto and de jure coin ratings was widely mentioned in merchants’ letters, verifying that the merchants “who govern the vallue of mony and everything elce contrary to our express law here, had forced the mony to pass at fifteen penny waight for six shillings.”(2) In short, the legislated coin ratings so fully documented in Jordan’s chapter sometimes were not the economically relevant ones, although, admittedly, documenting the de facto conventions prevailing in the seventeenth century would be a daunting task.

The second consideration involves an important question of economics that is, in my opinion, slighted in this otherwise encyclopedic book. What was the purpose of coining money that was approximately 25 percent under the weight of its British equivalent? Many books maintain that overvaluing coin, or “crying up the coin” as such a devaluation was called, was a way to attract specie. Most historians have uncritically accepted the notion that coin would flow to wherever it was valued most highly. Crying up the coin was often defended in this way by contemporaries, but as any economist trained in international economics will tell you, if all the money is cried up in unison, the scheme won’t work unless prices are rigid. Cry up the coin by 25 percent, and prices simply rise by 25 percent and all real variables are unaffected. Ben Franklin even said so:

Pennsylvania … had from Time to Time, like the neighbouring Colonies, agreed to take Gold and Silver Coins at higher and higher nominal Values, in Hopes of drawing Money into, and retaining it for the internal Uses of the Province. During that weak Practice, Silver got up by Degrees to 8s. 9d. an Ounce, and English Crowns were called 6, 7, and 8s. Pieces long before Paper Money was made. But this Practice of increasing the Denomination was found not to answer the End. The Balance of Trade carry’d out the Gold and Silver as fast as it was brought in, the Merchants raising the Price of their Goods in Proportion to the increas’d Denomination of the Money (Ben Franklin, 1767, Franklin Papers, vol. 14, pp. 78-9).

Though the absolute nominal values assigned do not matter, except perhaps for a brief period before nominal prices adjust, the relative nominal values assigned matter very much. Gresham’s law dictates that the coin whose bullion content was most highly rated would be used in preference to others. Gresham’s law explains why the Massachusetts coinage and not Spanish coinage circulated in Massachusetts in the mint’s early years, and why, when upward revisions in the nominal value assigned Spanish silver coins slowly closed the gap, Spanish silver coins began to compete with Massachusetts coinage. On this topic, Jordan is admirably clear and correct. But Jordan never quite frees himself from the naive belief in the importance of the absolute nominal value assigned a fixed quantity of silver, so never questions why crying up coin would attract silver.

Were the colonists being naive? Or was “crying up the coin” simply a way for debtors to defraud their creditors? Actually, there is a set of circumstances in which absolute nominal coin ratings would matter; namely, when raising the nominal coin rating changed the relative value of coins vis-a-vis some other means of payment. In the American colonies in the seventeenth century, a variety of commodities were used as a means of payment, and many were made legal tenders at prices set by the government, including such things as wampum, beaver, and country pay.(3) If the price set on these alternatives happened to be too high, as often occurred, Gresham’s law would apply. Debtors would have a strong incentive to pay in these monetized commodities rather than cash. Of course, lowering the legislated price or demonetizing the commodities would be one solution to the numerous inconveniences that resulted, but that solution would be deflationary, and, even with fully flexible prices, would likely bankrupt many honest debtors by increasing the real burden of their existing debts.(4) Arguably the fairest way to escape the difficulties associated with such inconvenient means of payment is to increase the rating of specie coins, so the values assigned specie would rise relative to beaver, wampum, and country pay, bringing specie back into circulation. An increase in the rating of specie coins could also be used to ameliorate the deflationary effects of removing the legal tender property from wampum, beaver, or country pay. Thomas Hutchinson, in John Adams’ opinion the man most knowledgeable about money in colonial America, advanced this as his best guess for why Massachusetts had fallen into the habit of advancing the value of her coin, and I believe he is probably correct.(5)

Endnotes:
1. William Douglass, Discourse Concerning the Currencies of the British Plantations in America, &c. (1740). Reprinted in Andrew McFarland Davis, Colonial Currency Reprints (New York: Augustus M. Kelley, 1964, vol. III, pp. 312, 315).
2. Wait Winthrop to Samuel Reade, October 22, 1709, in Collections of the Massachusetts Historical Society, series 6, vol. 5, Boston: Published by the Society, 1892, Winthrop Papers, p. 201; see also ibid, March 5, 1708, p. 165 and letters too numerous to detail in the Thomas Fitch letter book, 1703-11, at the American Antiquarian Society. There is some further discussion in my EH.NET Encyclopedia article “Money in the American Colonies,” eh.net/encyclopedia/michener.american.colonies.money.php.
3. For an example of how these commodities came to be monetized in the first place, see Marion H. Gottfried, “The First Depression in Massachusetts,” New England Quarterly, vol. 9, no. 4 (1936), pp. 655-78.
4. Peter Stuyesant described this dynamic at work in New York, and urged the nominal value of monetized commodities be lowered. Horace White, “New York’s Colonial Currency,” Sound Currency, vol. 5, no. 5, March 1, 1898. 5. Boston Evening Post, January 4, 1762.

Ron Michener is the author (with Robert Wright) of “State ‘Currencies’ and the Transition to the U.S. Dollar: Clarifying Some Confusions.”