The silver dollar was not mentioned in the act of 1853, but from 1792 until 1874 it was worth more in the market than the gold dollar provided for in the act of 1837. It was not a current coin contemplated as being in circulation at the passage of the act of February 12, 1873. The whole amount of such dollars, issued prior to 1853, was $2,553,000. Subsequent to 1853, and until it was dropped from our coinage in 1873, the total amount issued was $5,492,838, and this was almost exclusively for exportation.
By the coinage act approved February 12, 1873, fractional silver coins were authorized, similar in general character to the coins of 1853, but with a slight increase in silver in them, to make them conform exactly to the French coinage, and the old dollar was replaced by the trade dollar of 420 grains of standard silver.
Much complaint had been made that this was done with the design of depriving the people of the privilege of paying their debts in a cheaper money than gold, but it was manifest that this was an error. No one then did or could foresee the subsequent fall in the market value of silver. The silver dollar was an unknown coin to the people, and was not in circulation even on the Pacific slope, where coin was in common use. The trade dollar of 420 grains was substituted for the silver dollar of 412½ grains because it was believed that it was better adapted to supersede the Mexican dollar in the Chinese trade, and experiment proved this to be true. Since the trade dollar was authorized $30,710,400 had been issued, or nearly four times the entire issue of old silver dollars since the foundation of the government. Had not the coinage act of 1873 passed, the United States would have been compelled to suspend the free coinage of silver dollars, as the Latin nations were, or to accept silver as the sole coin standard of value.
Since February, 1873, great changes had occurred in the market value of silver. Prior to that time the silver in the old dollar was worth more than a gold dollar, while it was worth then, in 1877, about 92 cents. If by law any holder of silver bullion might deposit in the mint and demand a full legal tender dollar for every 412½ grains of standard silver deposited, the result would be inevitable that as soon as the mints could supply the demand the silver dollar would, by a financial law as fixed and invariable as the law of gravitation, become the only standard of value. All forms of paper money would fall to that standard or below it, and gold would be demonetized and quoted at a premium equal to its value in the markets of the world. For a time the run to deposit bullion at the mint would give to silver an artificial value, of which the holders and producers of silver bullion would have the sole benefit. The utmost capacity of the mints would be employed for years to supply this demand at the cost of, and without profit to, the people. The silver dollar would take the place of gold as rapidly as coined, and be used in the payment of customs duties, causing an accumulation of such coins in the treasury. If used in paying the interest on the public debt, the grave questions then presented would arise with public creditors, seriously affecting the public credit.
It had been urged that the free coinage of silver in the United States would restore its market value to that of gold. Market value was fixed by the world, and not by the United States alone, and was affected by the whole mass of silver in the world. As the enormous and continuous demand for silver in Asia had not prevented the fall of silver, it was not likely that the limited demand for silver coin in this country, where paper money then was, and would be, the chief medium of exchange, would cause any considerable advance in its value. This advance, if any, would be secured by the demand for silver bullion for coin, to be issued by and for the United States, as well as if it were issued for the benefit of the holder of the bullion. If the financial condition of our country was so grievous that we must at every hazard have a cheaper dollar, in order to lessen the burden of debts already contracted, it would be far better, rather than to adopt the single standard of silver, to boldly reduce the number of grains in the gold dollar, or to abandon and retrace all efforts to make United States notes equal to coin. Either expedient would do greater harm to the public at large than any possible benefit to debtors.
The free coinage of silver would also impair the pledge made of the customs duties, by the act of February, 1862, for payment of the interest of the public debt. The policy adhered to of collecting these duties in gold coin, had been the chief cause of upholding and advancing the public credit, and making it possible to lessen the burden of interest by the process of refunding.
In view of these considerations, I felt it to be my duty to earnestly urge upon Congress the serious objections to the free coinage of silver on such conditions as would demonetize gold, greatly disturb all the financial operations of the government, suddenly revolutionize the basis of our currency, throw upon the government the increased cost of coinage, arrest the refunding of the public debt, and impair the public credit, with no apparent advantage to the people at large.
I believed that all the beneficial results hoped for from a liberal issue of silver coin could be secured by issuing this coin, in pursuance of the general policy of the act of 1853, in exchange for United States notes, coined from bullion purchased in the open market, by the United States, and by maintaining it by redemption, or otherwise, at par with gold coin. It could be made a legal tender for such sums and on such contracts as would secure to it the most general circulation. It could be easily redeemed in United States notes and gold coin, and only reissued when demanded for public convenience. If the essential quality of redeemability given to the United States notes, bank bills, tokens, fractional coins and currency, maintained them at par, how much easier it would be to maintain the silver dollar, of intrinsic market value nearly equal to gold, at par with gold coin, by giving to it the like quality of redeemability. To still further secure a fixed relative value of silver and gold, the United States might invite an international convention of commercial nations. Even such a convention, while it might check the fall of silver, could not prevent the operation of that higher law which places the market value of silver above human control. Issued upon the conditions stated, I was of opinion that the silver dollar would be a great public advantage, but that if issued without limit, upon the demand of the owners of silver bullion, it would be a great public injury.
CHAPTER XXXII. ENACTMENT OF THE BLAND-ALLISON SILVER LAW. Amendments to the Act Reported by the Committee on Finance—Revival of a Letter Written by Me in 1868—Explained in Letter to Justin S. Morrill Ten Years Later—Text of the Bland Silver Bill as Amended by the Senate and Agreed to by the House—Vetoed by President Hayes —Becomes a Law Notwithstanding His Objections—I Decide to Terminate the Existing Contract with the Syndicate—Subscriptions Invited for Four per Cent. Bonds—Preparations for Resumption—Interviews with Committees of Both Houses—Condition of the Bank of England as Compared with the United States Treasury—Mr. Buckner Changes His Views Somewhat.
The President's message supported and strengthened the position taken by me both in favor of the policy of resumption and against the free coinage of silver provided for in the Bland bill. The comments in the public press, both in the United States and in Europe, generally sustained the position taken by the President and myself. I soon had assurances that the Bland bill would not pass the Senate without radical changes. Even the House of Representatives, so recently eager to repeal the resumption act, and so hasty and united for the free coinage of silver, had become more conservative and would not have favored either measure without material changes. I conversed with Mr. Allison and wrote him the following letter: