Financial Legislation and its Limitations. 



41 



weight of gold is a dollar, then sixteen times that weight of 

 silver is a dollar for purpose of payment at the option of the 

 debtor, in the absence of previous agreement between debtor 

 and creditor as to the material to be used. This provision has 

 been so far justified by experience as it was a fact that gold and 

 silver were both used in circulation. But it has not been 

 customary to use gold or silver indifferently for the payment of 

 debts of all sizes. As the world has grown wealthier, gold is be- 

 come necessarily the standard, simply because a standard metal 

 has been needed, to be held in the reserves of banks and to 

 be transported from country to country, which should contain a 

 considerable value in small compass. Gold has been found best 

 adapted to that purpose. Silver has continued to be used for 

 small transactions, for small change ; and not inappropriately, 

 in the " silver campaigns," the silver dollar has been called 

 "the poor man's dollar." 



International bankers have during much of the world's history 

 maintained gold payment. Silver, in modern times, has not been 

 good tender in international exchange, and yet there is no super- 

 government lording over others to enact what shall be legal 

 means of absolution. The practice is by the consensus of the 

 international credit organism. American domestic banks have 

 also preferred to pay gold on balances. That w^as well illustrated 

 in 1882. The New York Clearing House Association had passed 

 a statute to that effect. The law of 1882, continuing the charter 

 of the United States Banks, specifically stated that such a 

 provision of the statutes of a clearing house was illegal. A law 

 of 1878 had enacted that silver was as much a legal tender as 

 gold, and therefore it was not permissible that a clearing house, 

 whose membership was moreover composed of banks chartered 

 by the United States, should prohibit its use in payment. The 

 clearing house rescinded the regulation, but went on receiving 

 and giving gold on balances as before. Not even a " gentleman's 

 agreement" to that effect was required. In California, during 

 the Civil War, the gold standard w^as sustained in spite of the 

 suspension of specie payments throughout the rest of the United 



155 



passing a 

 bimetallic law 

 simply because 

 both silver and 

 gold are in 

 use. Contem- 

 poraneous 

 usage is not 

 necessarily 

 substitutional 

 usage. 



Illustrations 

 of usage 

 making a 

 standard. 



