History of Early United States Gold Coins
The Mint Act of April 2, 1792, set forth specifications for federal coins in silver, copper, and gold. For gold, three denominations were authorized: the $10 eagle, the largest, and its fractional parts the $2.50 quarter eagle and $5 half eagle. At the time there were no commercial gold-mining operations in the United States. The metal, widely used in commerce, came from other sources, predominately Spanish-American countries to the south. Used in commercial transactions were the Spanish denominations of 8 escudos, or the doubloon, and its 1, 2, and 4 fractional equivalents. Many documents prepared in colonial America mentioned the trade value of gold.
No gold coins were struck at the Philadelphia Mint until the summer of 1795, by which time the copper and silver denominations had been inaugurated, save for the dime and quarter dollar. The absence of gold coinage was due to surety requirements, not to any lack of desire or ability on the part of the Mint officials and staff. The chief coiner and assayer were required to post personal bonds in the amount of $10,000 each before handling precious metals. By 1795 the bonds, reduced considerably, were fulfilled and gold coinage commenced.
Absent a supply of native metal, gold for United States coins as well as for jewelry and art purposes was mainly obtained by melting foreign coins. Minting proceeded apace in the summer of 1795, and on July 31st, 744 half eagles were delivered, followed by subsequent amounts through September totaling 8,707 pieces for the year. Coinage of eagles followed in the autumn, and in 1796 the first quarter eagles were struck.
Such gold coins were intended to facilitate commerce and, in time, take the place of legal-tender foreign coins. That did not happen. Merchants, bankers, and others took up the majority of the newly-minted coins and shipped them overseas as payment for goods and merchandise. At their destinations, mainly England, they were melted. The situation reached an extreme in 1804 when the Mint stopped making $10 eagles, as they were serving no domestic purpose.
Half eagles then became the largest gold coin of the realm. These too were exported. Circulation within the United States was erratic. Due to the rising value of gold on international markets, by 1821 it cost more than face value to mint a $5 gold coin. After this time they were struck to the order of bullion depositors and valued not at the denomination marked, but as bullion. Nearly all were shipped overseas and melted, until the Act of June 28, 1834, lowered the gold content of such coins.
This scenario explains why all United States gold coins struck from 1795 to that point are rare today, and some with high mintages are extremely rare.