Assay Office and Sub Treasury
Assay Office and Sub Treasury
With this purchasing procedure, security on gold shipments was enhanced. Only the purchaser, the U. S. Government, and selected individuals within a steamship company would be aware of their respective shipment obligations, and these details were made available only to individuals on a need-to-know and when-to-know basis. Ultimately, as will be discussed further under "Security," in addition to the owner, only selected steamship company managers, as well as the actual transporting vessel's Master, Purser and/or First Officer, would know the specific ocean-transport details of gold shipments.
2c. Operations of the Assay Office and Sub-Treasury. Gold export movements, and the lack thereof, were determined by the market price (rate of exchange), availability, and composition of gold for export.
Gold, by virtue of commercial usage and the laws of the various countries of the world, may be said to be the only international money, and its purchasing power is practically the same throughout the world. But, bear in mind, the value of gold coins is not always as expressed on their face. In large international transactions the weight of the mass is regarded and not the number of pieces, and their value depends upon the weight and fineness. By fineness is meant pure metal. Nearly all coins contain alloy or inferior metal which is added to increase their durability.
Foreign Exchange, An Elementary Treatise Designed
The Assay Office is a branch of the United States Mint, and, as its name indicates, it receives and assays deposits of gold and silver and returns same to the depositors in the shape of bars, or the Government will give coin for the value of the gold. An interesting book could be written about the Assay Office, its methods of melting and refining, and its marvelous scales, which are so delicately adjusted that they can weigh one-half of one hair of a person's head. It is from this office that the exporters of gold obtain most of the yellow metal for shipment; and it is in this connection that the Assay Office becomes an important part of the mechanism of Wall Street. In this office we are confronted with the evidence of the dual character of gold as money or a medium of exchange, and as merchandise, an article itself bought and sold the same as pig-iron. The Assay Office makes two kinds of gold bars for sale: small bars varying in value from $100 to $700, which are bought for use in the arts and sciences; and large bars varying in value from $5,000 to $8,000, which are used for the export of the precious metal. These bars are stamped with weight and fineness as ascertained by the assay. Exporters pay 4 cents per $100 for them, but even at this cost the bars are cheaper than coin would be.
The Work of Wall Street, Sereno S. Pratt
Assay Office Courtyard, 1904
The alleyway back of the assay office presented an unusual spectacle yesterday. It is in this alleyway that the gold bars are packed for shipment, and this operation has, of course, been carried on there many a time, but rarely, if ever, has there been so many bars packed at one time as has been the case Monday.
Wall Street Journal, April 26, 1904, 8:2.
... To qualify as good delivery in most international transactions, standard bars must be at least 99.5 percent pure gold and weigh between 350 and 430 troy ounces. Bars that meet that standard are called "fine" bars. ... A standard 400-troy ounce gold bar weighs 438.8 avoirdupois ounces, or 27.4 avoirdupois pounds.
The Key to the Gold Vault, Public Information Department
The banks and financial institutions were dependent on the availability of primarily gold bars at the New York Assay Office. Bankers preferred to ship bars because they were less expensive than coins. Coins were purchased at face value and were subject to wear and consequent, literal, gold loss before purchase. After purchase, coins were subject to additional gold loss through abrasion while in transit. Because of the normal "wear" of gold coins, their face value often exceeded their actual gold content value. On the other hand, gold bars were purchased on the sole basis of weight and fineness. If the New York Assay Office did not have sufficient bars for export, bankers would commit coins (preferably mint condition coins exhibiting minimum wear and, therefore, maximum weight) from the New York Sub-Treasury if the market purchase price was sufficient to cover, with profit, the expense of coins. Bars from the New York Assay Office were, therefore, the predominant form of gold export to Europe.
... When bars are shipped abroad, who stands the expense, the exporting bank or the Treasury? Why is gold coin not preferable?
Harper's Weekly, February 6, 09, 30:3
... Coin and Bars. The operation of shipping gold is in itself interesting. Coin is often used, but bar gold is preferable and used by shippers whenever it can be obtained at the U. S. ... [assay office]. Coin is paid for at its face value, but is credited abroad by weight. Unless it is new [our emphasis], therefore, considerable loss may be caused the shipper by reason of the fact of the coins having been rubbed and having lost weight. With bars, on the other hand, it is a mathematical calculation. So and so many ounces are bought at a certain price and paid for, and upon arrival of the metal on the other side are credited at so and so much per ounce. ...
The Bankers Magazine, May - June 1910, 924:1
... There is a practically unlimited supply of gold coin in the Sub-Treasury which will be paid out in exchange for gold certificates, but exchange must advance considerably before it will become profitable to export gold coin, on account of the risk of abrasion of the coin. When coin is exported it is valued according to its actual weight, while the Sub-Treasury pays it out at par [face value] as long as the abrasion is within the [legal] limit of tolerance. ...
Wall Street Journal, December 14, 08, 8:5
... The policy of the present administration of the Treasury Department appears to be to keep the mints employed coining gold bullion and not to accumulate a large stock of gold bars in the assay office, as was done under former administrations, and which facilitated gold exports. ...
Wall Street Journal, December 4, 08, 8:1
... The further decline of the Paris cheque on London to 25fr. 10c. has again advanced exchange here upon Paris to the gold export point, but there is little probability that any gold will go out until after the turn of the year. The demands of Paris upon New York for gold will be limited to the amount of gold bars that can be supplied by the Assay Office. The Bank of France does not care to import United States gold coin, and it is not the policy of the present administration of the Treasury Department of the United States to facilitate gold exports by transferring gold bars from other mints and assay offices to New York. ...
Wall Street Journal, December 31, 08, 8:1
The Bank of France did not care to import United States gold coin. This detail will play an important part in our discussion of the Republic's cargos.