CURRENCY, BIMETALLIC. 



281 



The United States, perhaps, presents the best 

 illustration of a bimetallic currency, and her 

 experience is very instructive. Under the 

 leadership of Hamilton, Congress adopted a 

 system of bimetallism in 1792, at the begin- 

 ning of our monetary history. It was an ex- 

 ample of strict bimetallism ; that is, an attempt 

 to select a legal ratio that should be in ac- 

 cord with the market ratio, and so to secure 

 the concurrent circula- 

 tion of both gold and sil- 

 ver. No scheme can be 

 called bimetallic which 

 does not have this in 

 view. The legal ratio 

 chosen was 15 : 1 ; so 

 that fifteen times as 

 many grains of pure 

 silver should be found 

 in a dollar of silver as 

 of pure gold in a dollar 

 of gold. And it so hap- 

 pened that, in the bull- 

 ion market, one grain 

 of gold exchanged for 

 fifteen grains of silver. 

 Thus the market and 

 mint ratios coincided, 

 and had there never 

 been any divergence 

 both gold and silver 

 would have continued 

 to circulate side by side. 

 But the ratio of silver 

 to gold changed, be- 

 cause of a serious fall 

 in the value of silver 

 due to the extraordi- 

 nary production from 

 the Mexican mines be- 

 tween 1780 and 1820; 

 and even after the pro- 

 duction fell off, the ef- 

 fects of the past produc- 

 tion on the total supply 

 still kept its value down. 

 By 1806 the market was so far from the mint 

 ratio that silver had begun to drive gold out of 

 circulation, and by 1818 the absence of gold was 

 the cause of general remark, and the subject of 

 a resolution introduced into Congress. So that 

 only for a few years after 1792, during which 

 the market ratio coincided with the mint ratio 

 of 15 : 1, could gold have circulated equally 

 with silver. But, in fact, very little gold was 

 ever in circulation during this time. 



In 1834, after discussion and reports to Con- 

 gress for fifteen years, now legislation was 

 reached, which changed the legal ratio from 

 1 : 15 to 1 : 16. The market ratio during this 

 time remained about 1 : 15'7, so that the legal 

 and market ratios were not the same, as had 

 been the case in 1792. It was believed by 

 some that as the value of silver was falling, a 

 further fall should be anticipated by putting 

 the legal ratio beyond the market ratio; but 



the real reason, probably, was that Benton and 

 the anti-bank party wished a ratio of 1 : 16, 

 which, by overvaluing gold, would bring it into 

 circulation. The change was brought about 

 by leaving the silver dollar of the same weight, 

 and by reducing the grains of pure gold in the 

 equivalent of a dollar from 24*75 grain* to 23-2 

 grains, a reduction of about 6 per cent. This 

 has been regarded by some writers as a debase- 



ment of our standard, since the silver coin 

 that was retained as the standard had fallen 

 in value, as before explained. 



In 1837 a change was made in the amount of 

 alloy in the coins. Since 1792, the gold coins 

 had contained T V allov ^ and tne wlv-er about ^ 

 alloy (that is, 371 i grains pure out of 416 grains 

 standard weight). The act of 1837 established 

 the common fineness of fa or *900, for both 

 gold and silver coins, by which the silver dol- 

 lar kept the same amount of pure silver in it, 

 but weighed 41 2 grains of standard weight. 



After 1834 gold began to drive out silver, and 

 the increasing product of the mines of Russia, 

 California, and Australia, by cheapening gold, 

 continued the movement, so that the United 

 States was soon denuded of all its silver, even 

 of the small coins. Since 1792 the subsidiary 

 silver coins had been of weights proportional 

 to the dollar-piece ; that is, two half-dollars had 



