70. ENGLAND'S EXPERIENCE WITH BIMETALLISM1

BY SOPHONISBA P. BRECKINRIDGE

From the time of Henry VIII the value of gold bullion changed rapidly in terms of silver, and although the mint ratios were frequently altered all efforts to retain both metals in circulation failed. In 1604 the mint ratio of gold to silver was raised 10 per cent an increase not great enough, however, to bring gold from countries where it was more highly rated. In 1611-12 an alteration in the same direction, going too far, drove the silver out as the gold came in, causing so great a scarcity of silver that the old laws against exportation were revived and re-enacted. No remedy was found until, by the simple passage of time, in the development then in progress, the market value of gold in terms of silver overtook and soon passed the mint value of that metal.

Again in 1662-63 there was an alteration in the gold coins, caused by the market value of the gold in terms of silver creeping past the mint value. Finally, the whole question of coinage was taken up by William in 1695, who threw upon Parliament the responsibility of finding a remedy. It was proposed that the same remedy be applied that had been employed by Edward I four centuries before; that is, that the legal be adapted to the actual value of the coins; but this proposition was rejected, and the great recoinage of the silver of the realm was carried out in the years 1695-98, leaving the silver coins unchanged.

The provision for the recoinage of silver caused the gold coins to fall in value relatively to silver, and it was resolved by the House of Commons that they should not pass at a value higher than 28s., which value was soon reduced to 26s. On the basis of this resolution an act was passed imposing a penalty on anyone who should receive or pay the twenty-shilling piece at a higher rate than 26s. This, by another act of the same session, was reduced to 22s. In 1698 their price had fallen to 21s. 6d., at which rate they were taken by the officers of the revenue. This rating of the gold coin was not, however, such as to prevent the exportation of silver, and in 1717 the legal value of the guinea was reduced to 215.

Even this estimate of gold in terms of silver was still too high, however, to bring silver into circulation, and during the century it

Adapted from Legal Tender, pp. 43-46. (The University of Chicago Press,

remained so scarce that gold became the customary medium of exchange and the true standard of payments. In 1774 this state of facts was recognized by legislation, and the legal-tender power of silver coin was limited to £25 in any one payment, an excess of that amount being paid by weight at the rate of 3s. 2d. to the ounce. This act, the duration of which was for two years, was in 1776 renewed for another period of the same length. In 1778 it was extended to 1783, when it was allowed to expire. In 1798 it was again revived, and continued until 1816, when the silver coins were reduced in weight and given the position of representative coins having a limited legaltender power. By this act gold was declared to be the standard coin of the realm; the silver pound was to be divided into shillings weighing 87 grains, and it was decreed that silver coins should be considered representative coins, legal tender to the value of two guineas only.

72. THE ADOPTION OF THE GOLD STANDARD BY LEADING NATIONS

National bimetallism has been tested by the experience of practically every modern commercial nation. England was the first country to give up the double standard, resorting to a monometallic system in 1816. For an indefinite period England had suffered from the evils of a fluctuating standard. During the eighteenth century the only silver coins remaining in circulation were those which had been much reduced in weight by fraudulent clipping; all the rest had been driven out by the cheaper gold coins.

The kingdom of Portugal next adopted the single gold standard in 1854. In the year 1857 the states composing the German Zollverein and the empire of Austria entered into a monetary treaty by which they adopted the single silver standard. The treaty provided, however, that any of the contracting states might mint gold coins to circulate at their market value. It was expressly stipulated that these should not be legal tender, though they might be received at the public treasuries at rates to be fixed by the respective governments at least once every six months.

Shortly after the establishment of the German Empire in 1871 the single gold standard was adopted in Germany. Silver was made a subsidiary currency, and in 1873 was completely demonetized.

The states composing the Latin Monetary Union, which had been formed in 1865 in an endeavor to secure a uniform international double standard, one by one practically went over to the single gold standard in the decade of the seventies. In 1873 France limited the coinage of silver on individual account. In the same year Belgium first limited and then entirely suspended the coinage of silver. Early in 1874 the Union itself limited the amount of silver that might be coined each year by each of the countries of the Union; within three. years each state had entirely ceased to coin silver and the demonetization was practically complete.

In 1873 the United States in revising her coinage system omitted the standard silver dollar from the list of coins that might be struck at the mint, and thus became a single gold standard country. This law was modified, however, and for many years there was a limited coinage of silver.

In 1873 the Scandinavian Monetary Union was formed by Norway, Sweden, and Denmark, and a single gold standard was adopted. In 1874 silver was entirely demonetized.

In 1873 Holland limited the coinage of silver and two years later adopted a single gold standard. Spain began the restriction of silver money in 1876 and completed the process in 1878. In 1876 Russia suspended the coinage of silver for individuals, except as required for trade with China. Finland adopted the single gold standard in 1877, and in 1878 Austria-Hungary abolished the free coinage of silver.

In 1893 after long agitation the mints of India were closed to the free coinage of silver. In 1898 Japan definitely adopted the single gold standard. The following year Russia completed the change begun in 1876 and adopted the gold standard. In 1900 the United States definitely settled the standard controversy that had raged for over twenty years by the enactment of a gold standard law. Practically all of the small states of the world have also in recent years adopted either the single gold standard basis or the gold exchange standard, a variation on the principle of the single gold standard.

C. Bimetallism in the United States until 1873 73. THE ADOPTION OF A MONETARY SYSTEM BY THE UNITED STATES1

BY A. BARTON HEPBURN

Alexander Hamilton was the first Secretary of the Treasury, and soon after organizing the department set himself the task of establishing a comprehensive federal monetary system. He first took up the question of the public debt, then the establishment of a banking system, and on January 21, 1791, presented to Congress his justly celebrated report on the establishment of a mint and a coinage system for the United States.

He examined this comprehensive subject in all its aspects and ramifications, presenting the facts and arguments bearing upon both sides of each question, and after careful analysis reached the following conclusions:

I. That the dollar, because it had been in actual use as the measure of values in practically all of the states, was the most suitable unit for the proposed system; that it was of the utmost importance to define as exactly as possible just what the dollar was, in order that neither debtors nor creditors might be injuriously affected. The

'Adapted from Contest for Sound Money, pp. 20-22. (The Macmillan Co.,