The History of Currency, 1252 to 1896

by William Arthur Shaw

New York, with Mr. Gallatin at their head, favoured that proportion. The difficulty of adjusting this value, so that neither metal should expel the other had been the stumblingblock for a great many years, and now this seemed to be as formidable as ever. Refined calculations were gone into, scientific light was sought, history was rummaged back to the times of the Roman Empire; and there seemed to be no way of getting to a concord of opinion either from the light of science, the voice of history, or the result of calculations. The author of this View had, in his speeches on the subject, taken up the question in a practical point of view, regardless of history and calculations and the opinions of bank officers; and looking to the actual and equal circulation of the two metals in different countries he saw that this equality and actuality of circulation had existed for above three hundred years in the Spanish dominions of Mexico and South America, where the proportion was 16:1. Taking his stand upon this single fact, as the practical test which solved the question, all the real friends of the gold currency soon rallied to it. Mr. White gave up the bill which he had first introduced, and adopted the Spanish ratio. Mr. Clowney of South Carolina, Mr. Gillet, and Mr. Cambreleng of New York, Mr. Ewing of Indiana, Mr. McKim of Maryland, and other speakers gave it a warm support. Mr. John Quincy Adams would vote for it, though he thought the gold was overvalued, but if found to be so the difference could be corrected hereafter. The principal speakers against

it and in favour of a lower rate were Messrs. Gorham of Massachusetts, Selden of New York, Binney of Pennsylvania, and Wilde of Georgia, and eventually the bill was passed by a large majority, 145 to 35. In the Senate it had an easy passage. Messrs. Calhoun and Webster supported it, Mr. Clay opposed it; and on the final vote there were but seven negatives—Messrs. Chambers of Maryland, Clay, Knight of Rhode Island, Alexander Porter of Louisiana, Silsbee of Massachusetts, Southard of New Jersey, Sprague of Maine. The good effects of the bill were immediately seen. Gold began to flow into the country through all the channels of commerce, old chests gave up their hordes, the Mint was busy; and in a few months, as if by magic, a currency banished from the country for thirty years overspread the land and gave joy and confidence to all the pursuits of industry."

The panacea thus magnificently lauded soon proved itself worse than inefficient. The ratio was too high, and the silver dollars could not be maintained. They were unduly exported, especially between the years 1848 and 1851. And in order to retain within the country a sufficient amount of small coin the amount of silver in the small coins, from the half-dollar downwards, was reduced by an Act of 24th February 1853. It was at the same time provided that they should be coined only on Government account, and they were made legal tender only up to the sum of five-dollars.

The direction of this step will be seen at a glance—it

was in the direction of the gold valuation. This is as plainly the case as it was in the Latin Union, already exemplified (p. [190]). Further, it was so conceived and explicitly stated by Dunham, who piloted the bill through the House. "We have had," he said, "but a single standard for the last three or four years. That has been and now is gold. We propose to let it remain so, and to adapt silver to it, to regulate it by it." Legally, the old silver dollar was left untouched, and the gold and silver valuation was not expressly abolished. No reference whatever was made to the silver dollar in the Act, for the simple reason that for years nothing had been seen of them. They did not and could not circulate. There was plenty of gold, and the absence of silver with the change in standard therein practically implied was either unnoticed, or regarded, if at all, only with indifference.

The final step in the simplification and unification of this system was commenced in 1870, when a bill was prepared for a revised coinage law with a pure gold standard, silver being demonetised as a legal tender money. The bill did not become law till 12th April 1873. And no opposition was expressed in either the House of Representatives or the Senate to the abolition of the double standard. The silver dollars previously coined (of which, however, but few were in existence) maintained their quality as legal tender; but the coining of new dollars, whether on Government or private account, was forbidden.

UNITED STATES: THE LEGISLATION OF 1873-74

This Act was therefore simply the complement of the preceding legislation of 1853.

The completion of this system thus established was provided in section 3586 of the Revised Statutes of 1874, by which the silver coins of the United States were declared legal tender only up to five dollars, thus completing, from December 1873 onwards, the demonetisation of silver, and the establishment of gold monometallism on the English plan. As an effective scheme it meant little because of the prevalence of paper.