monometallic country, but, while it did not follow England's example, it adopted the double standard in 1816, returning in 1847 to the single silver standard.

Germany was a single silver standard country until its currency reform of 1871, as until lately has been Austria, although it is now putting into operation the single gold standard.

III.

THE GOLD MOVEMENT IN EUROPE.

The tendency of European countries in the early part of the present century was towards the adoption of the single standard. This course was dictated by common prudence and a desire to simplify transactions between the various countries.

M. Chevalier was the most conspicuous advocate in Europe of the use of silver as a money metal, and he is authority for the statement that gold disappeared from France during the Napoleonic wars and was not in circulation, while Mr. Giffen, the eminent English statistician, asserts that gold was constantly at a premium in France from 1820 to 1847. It ought to be explained that it is a mistake to suppose that the French law of 1803 first fixed the ratio of 15% to 1. If there is any magic in that ratio to keep the metals at a parity, it had an opportunity to show itself in the reign of Louis XVI., for Colonne fixed the ratio 151⁄2 to 1 in 1785, and the statute of 1803 merely affirmed what already existed, and extended its life. Colonne chose the ratio because gold was thereby overvalued.

In 1785 the commercial ratio was 14.92 to 1, and in 1803 it was 15.41. This ratio was maintained for two years, but in 1805 it became 15.79 to 1; in 1806 it was 15.52; in 1807 it fell below the French legal ratio once more, but gold recovered, and in 1808 the actual ratio was 16.08 to 1. It was not again as low as 151⁄2 until 1814, and for six years gold was overvalued by the French coinage law. In 1820, however, the ratio was once more above 151⁄2, and remained above for twenty years. Then, for one year, 1840, it was below. Again it rose in 1841 to 15.70, and did not fall again until 1851, under the influence of the gold discoveries in California and Australia. Once more the ratio was below 151⁄2 for one year only. In 1852 it was 15.59. It again fell below 151⁄2 in 1853, and remained below for eight years. In 1861 the actual and legal ratios in France were the same; for the next six years gold was overvalued. In 1867 it was again undervalued, and the difference since then has been increasing owing to the depreciation of silver.

The experience of France in undertaking to maintain the parity of the two metals was not happy. Since Colonne determined on the ratio of 15% to 1, one hundred and nine years ago, that has been below the market ratio seventyone years; it has been equal to the market ratio one year and above it thirty-six years. In other words, it has expressed the truth once during that long period. Since 1803 gold has been undervalued in France sixty-eight years, correctly valued one year, and overvalued twenty-one years.

It was the intention of the framers of the law of 1803 to provide France with a single standard of silver, but nature was against them, and by circulating gold the tendency was to exclude their favorite metal from circulation, until war came to the assistance of the financiers, when the ratio of 151⁄2 to 1 became an undervaluation of gold, whereupon gold disappeared and silver constituted the circulation.

Silver was the circulating medium in 1803, and remained so until the great gold discoveries brought a flood of the yellow metal to Europe. Between 1851 and 1853 gold began to appear in the French circulation, and the people, like the people of England in the last decade of the seventeenth century, found it prefera. ble, by reason of its smaller bulk and weight, to the heavy five franc pieces

This state of things lasted until 1867, when the discovery of the great silver deposits had begun to be made. The Comstock lode was discovered in 1859, but the Belcher bonanza was not found until 1864; the Chollar-Potosi bonanza in 1865; the Hale and Norcross bonanza in 1866. During the period when the gold discoveries were being made the price of silver gradually rose in London from 59 1⁄2d. per ounce in 1848 to 61 %d. in 1864, but it did not fall below 60d. until 1873, when the average price was 59 4d.

In the mean time the commercial countries of Europe were coming to the gold standard. The attempt to maintain the single silver standard was about to be abandoned. So much silver was deposited for coinage at the mint of France that the mint could not have performed its expected task in much less than two years. The currency was becoming inflated. Exchanges were disturbed and France was suffering from cheap money. In addition to the silver thrown upon the market by the extraordinary increase of the output of the silver mines of this country, the closing of the German mints to the coinage of silver and the sale of the Government's stores for the purchase of gold needed for the adoption of the gold standard had reduced the price of silver.

Germany abandoned silver in 1871 and adopted the single gold standard. The suspension of silver coinage was followed by the melting down of the old coins and the sale of the bullion. This sale was stopped in 1879. While it was going on the price of silver in London fell from 60 1⁄2d. in 1871 to 51 1⁄44d. in 1879. It is undoubtedly true that Germany's demonetization of silver had much to do with this decline in price; but, as has been already shown, a decline had set in six years before 1871.

During that six years silver had gone down only about 1d. on the ounce. While, therefore, the whole decline in price from 1871 to 1879 cannot be charged to the action of Germany, most of it is.evidently due to the coinage law of the new empire. Since Germany stopped selling, the price of silver has declined about 20d. and this decline has not been arrested by the two silver purchase laws enacted by the United States.

It is fair to assume that the decline has been partly aided by the closing of the mints of the Latin Union to silver, and by the action of the Austrian Government in deciding to adopt the single gold standard. The Latin Union was formed in 1865. The metallic coinage of Continental Europe was in a most deplorable condition, and the silver countries found themselves, in contrast with Great Britain, at a serious commercial disadvantage. Therefore, France, Belgium and Switzerland formed a union, and they were subsequently joined by Greece and Italy. Silver token coinage was adopted, and, following the English system, it was made legal tender to the amount of 50 francs, equivalent to £2, or $10.

In 1876 the mints of the Latin Union were closed to the coinage of silver on private account, and while, as had been said, it is fair to assume that this action had some effect on the price of silver, that effect was not great, for the price was 52 3⁄44d. in 1876, and it was not until 1881 that it fell permanently below 52d. Belgium, acting alone, had already suspended the coinage of silver. Holland fol lowed Germany, suspending the coinage of silver temporarily in 1873 and per manently in 1875. Spain adopted the monetary system of the Latin Union in 1868, but in 1878 determined that silver should be coined on State account only. Austria suspended silver coinage in 1879.

While the fall in the price of silver was inducing the United States to “re habilitate" that metal by the Allison Purchase act, Europe was adopting the single gold standard.

IV.

IN THE UNITED STATES BEFORE 1873.

The experience of the Government of the United States with bimetallism during the first eighty years of its history was somewhat similar to that of France. It had a theoretical double standard, but was practically monometallic. It was also like that of England in the latter part of the seventeenth century. coin was hoarded and sold abroad, and the coin that circulated was the worn and light foreign coin that came into a country where it was able to procure more than its intrinsic worth.

Its good

The first coinage act of this country was passed in 1792. The question of currency at that time seems to have excited merely a languid interest in Congress, and for some time it was doubtful if a mint would be established. The probable cost of its maintenance seemed to be an insuperable objection. The matter of coinage was practically settled by the executive branch of the Government. For once those old and persistent political enemies, Hamilton and Jefferson, came together and decided that both metals should be used and that the ratio should be 15 to 1.

It was the English ratio and the French system coming together. England was examining the coinage question for herself, and had temporarily suspended free coinage of silver, but the people of this country had little commercial experience to instruct them in the consequences of bimetallism, and accepted the double standard because gold and silver had both been the money metals of the world from time immemorial. After a fashion that has not yet gone out of date the people of this country insisted on acquiring their experience for themselves and paying for it.

1792-1834 SILVER MONOMETALLISM UNDER DOUBLE STANDARD.

The coinage act was passed in 1792, but the first silver was actually coined in 1794 and the first gold in 1795. Under the first statute the silver dollar weighed 416 grains, 1,485 parts pure and 179 parts alloy. The fine silver in a dollar was, therefore, then as now, 371.25 grains. The gold eagle weighed 270 grains, 11-12ths fine, so that a gold dollar contained 24.75 grains of fine gold. The ratio established was not the true ratio. Gold was undervalued. An ounce of gold was worth more than 15 ounces of silver; it was worth 15.17 ounces. The new coins, as has been pointed out, did not circulate. The Government itself was largely responsible, for it permitted the cheap and worn foreign coin which came to it in payment of its customs dues to go out into the circulation, once more, to illustrate the truth of Gresham's law. Gold was exported, and quantities of our new eagles were seen in the show windows of European goldsmiths. In 1793 only were the legal and market ratios the same. In 1794 the ratio was 15.37 to 1, and not once so long as the ratio of 15 to 1 prevailed, except in 1793, was gold down to the value fixed by Congress.

Neither the gold nor the silver circulating, the coinage of silver dollars was suspended in 1804, and none were coined again until 1830, when 1,000 were struck off. None were coined after that until 300 were struck off in 1839. Then the coinage went on, but it was 1869 before the number minted in any year reached 400,000, and 1871 before it was 1,000,000. In 1873, the year when silver was demonetized, the mints coined only $293,600, which measures the desire of the bullion owners of that time for the preservation of silver as a money metal at the ratio of 16 to 1 then prevailing.

Gold entirely disappeared from circulation by 1817, and no gold dollars whatever were coined until 1849, after the discovery of gold in California. The establishment of American coins as circulating currency was a work of great labor,

attended with many difficulties. The early years of the Republic were years of struggle, war and financial distress. After the dissolution of the United States Bank the business of the country was carried on by means of paper currency of more than uncertain value. Specie payments were suspended in 1814, and metallic money was practically unknown.

So disastrous to the material interests of the country was the lack of confidence in the paper currency that in 1816 the money question came up in Congress for discussion. The United States Bank was rechartered, and the right of establishing branches with the privilege of issue was granted to it. After that for a time the country had paper money based upon foreign coin.

Several efforts were made to establish our own coin and to prevent the inroad of foreign coin, but nature insisted on having its own way. A proposition was made to Congress to return to the devices that had been found futile in the reigns of James I. and Charles I., and to prohibit the exportation of American coins. In 1816 and 1819 laws were passed providing that foreign gold coin should not be legal tender in this country, but this accomplished nothing, and in 1823 all foreign gold coins were made receivable for the public lands, while in 1834 an act was passed making the dollars of Mexico, Peru, Chili and Central America and the five-franc piece of France legal tender at their nominal value.

1834-1873 GOLD MONOMETALLISM UNDER DOUBLE STANDARD.

In 1834, foreign gold not being legal tender under the laws of 1816 and 1819, the basis of our circulation was foreign silver and fractional coin. A movement now began in the interest of gold. Like the silver movement of to-day, it was largely protective. The gold mines of North Carolina, discovered in 1801, had begun to yield a generous output in 1828. About the same time gold was discovered in Georgia, and great results were expected. Congress undertook to care for the American gold interest by changing the ratio and by also changing the composition of the gold coin. The ratio was changed from 15 to 1 to 16 to 1. The weight of the silver dollar was changed from 416 to 412.5 grains, but the fine silver in the coin, 371.25 grains, remained unchanged. The fine gold in a dollar of the other metal, however, was reduced from 24.75 to 23.22.

Thus, in the interest of an American industry, the gold dollar, which had been worth under the old law $1.038, became worth 971⁄2 cents. Silver became the more valuable metal and disappeared from the circulation. At the time when it was demonetized in 1873 a silver dollar was worth $1.03 in gold coin, or about the same as the gold dollar was worth in 1833. Up to the passage of this law about $12,000,000 of gold had been coined in this country, chiefly in half eagles. Eagles had not been coined since 1804, and their coinage was not resumed until 1838. Double eagles were not coined until 1850, at the time when the recent gold discoveries had greatly increased the production of the metal. In 1849 an act was passed providing that the gold dollar should contain 25.8 grains of fine gold.

No sooner had the silver dollar been underrated than silver coins began to be exported from this country in large quantities. Silver coin became scarce in the circulation, except the Spanish-American coins with which every one was familiar thirty years ago. So greatly was the market value of silver in excess of its coinage value that the fractional coins began to disappear, and in 1853 our fractional silver was made subsidiary and token money by the reduction of the amount of fine silver in the coins. It was at the same time made legal tender to the value of $5.

Thus the country continued under a practical gold monometallism, with subsidiary or token silver coins, until the passage of the act of 1873. The silver dollar was not in circulation, because it was too valuable for that use at the existing ratio. It had never been in circulation. The only silver dollars with which the people of

this country were familiar were those of the South American and Central American countries mentioned in the act of 1834.

The act of 1834 may be said to have deliberately driven silver out of circulation and out of use as money, except for small change, because gold was overvalued for that purpose. And yet the price of silver was not affected by that action of the United States, as the following quotations from the London market reports will show :

Silver increased in price, and the increase continued during the years when the output of gold was growing by reason of the discoveries of gold mines in California and Australia. But silver began to fall, as has already been shown, after 1872. In 1873, however, the law that was passed for demonetization merely made statutory a fact that had existed for nearly forty years.

V.

IN THE UNITED STATES SINCE 1873.

When the act of 1873 was passed extraordinary movements affecting currency were going on everywhere. That act has been made altogether too important in the discussion of bimetallism. It was in reality a mere formal declaration of a fact. Silver was not demonetized by it. That was done by the act of 1834 changing the ratio of the two metals and the mount of fine gold in a dollar. The act of 1853 reducing the amount of silver in the fractional currency and making it token money was also a movement strengthening gold monometallism. Not only was the single gold standard the result of the two laws; it was the declared intention of their movers and advocates to adopt the gold standard in this manner. The silver dollar was not in circulation, because it was worth $1.03 in gold, and no one made an effort, as by urging a revision of the legal ratio to make it agree with the market ratio, to secure its restoration. The great fall in silver that was to occur shortly had not set in. Therefore when the bill, accompanied by the reports of the Secretary of the Treasury and Mr. John J. Knox, its author, was presented to Congress no comment was made on the fact that the 4121⁄2 grain dollar was dropped by it from the silver coinage of the country. The bill simply provided that certain pieces, naming them, should constitute the silver coinage of the United States. The 412% grain dollar was not included. The trade dollar was authorized, and, by mistake, a legal-tender quality up to $5 was bestowed upon it as upon the subsidiary coins. Subsequently the mistake was rectified. Really, the trade dollar was not part of the coinage of the country. It was simply a bit of silver weighing 420 grains, stamped by the Government at the expense of the owner of the bulliou, to be sold at a profit in Oriental countries.

It has been the fashion of some controversialists to say that the silver dollar was surreptitiously demonetized. History does not sustain the contention, As has been seen from a simple record of the events, silver was demonetized in 1834. But whether the method of passing the act of 1873 was or was not surreptitious has no bearing on the merits of bimetallism or of monometallism. They must stand on a