THE FARMER AND THE CURRENCY. 361 



would not absorb the annual output of bullion at prices which 

 had hitlierto been paid. For the purpose of sustaining silver, 

 which was then at a ratio of seventeen and nine-tenths to one, 

 Congress, in 1878, directed the coinage of silver dollars to be 

 resumed, and made them legal tender, concurrently with gold, 

 in unlimited amounts, at their face value, which was at the ratio 

 of sixteen to one,* at the same time pledging the faith of the 

 United States that all money issued by its authority should 

 be constantly maintained at its face value at the existing ratio 

 of sixteen to one. This, in effect, pledged the United States to 

 give gold dollars for silver dollars on demand, which has 

 always been done, although by indirect methods involving 

 more trouble than a direct exchange of one metal for the other. 

 The latter, however, is usually done at all sub-treasuries when 

 requested. 



As it was evident that when any one could, with an ounce 

 of gold, buy seventeen and nine-tenths ounces of silver, have 

 it coined, and buy back the ounce of gold for sixteen ounces 

 of coined silver, every one would be eager to do it, and that, 

 therefore, unless silver should promptly rise, there would be 

 a great loss to the treasury, individuals were not allowed to 

 deposit silver for coinage, but the Secretary of the Treasury was 

 directed to buy the bullion and coin it for account of the gov- 

 ernment, which in this way made the profit between the market 

 value of silver bullion and the face value of the coin. This 

 profit to the government is called "seigniorage." The amount 

 directed to be coined was not less than $2,000,000, and not 

 more than $4,000,000 per month. It was believed that coin- 

 age to this amount would sustain the price of silver. In the 

 meantime the authorities of the Latin Union had become 

 alarmed,t and in 1873 had agreed that the aggregate annual 



"The exact ratio is 15.98 to 1. 



t When the Latin Union was formed it established " free coinage "" for both 

 gold and silver. Any one could deposit either metal and receive coin for it less 

 a trifling mint charge. When silver began to fall, the market ratio had only 

 to increase to 15.75 to induce deposits of silver for coinage in France, to an 

 amount greater than the capacity of the mint for two years. In one year the 



