The Gold Standard in the United States

In 1873 a law was passed which demonetized the silver dollar, making gold the sole legal tender coinage of the United States. This act is still the subject of acrimonious discussion. Comparatively little silver had been coined since 1834, the total value during the century was only about $8,000,000. As the ratio of our dollar was sixteen to one by weight to gold, and the Latin Union rate was fifteen and a half, a large proportion of our silver coinage was taken by Europe and recoined at a profit. It was generally believed that the immense annual output of gold would establish that metal as the standard of the world. The Monetary Conference at Paris in 1867 advised the demonetization of silver, and the United States, which was represented, agreed to this recommendation. There had been in 1872 an effort to increase the issue of Treasury notes, the popular "greenbacks," from $356,000,000 to $380,000,000. A further "Inflation Bill" in 1874 was vetoed by the President. A compromise measure was passed for the relief of the banks, which fixed the maximum issue at $382,000,000, no part of which was to be held in reserve. It was not until the immense output of Colorado's silver mines, subsequent to 1873, had exceeded the demand that the allegation of fraud was hurled against those who had quietly demonetized the dollar in the Act of that year. Legal tender silver dollars had ceased to be coined, and Europe was acting on the same lines. The Resumption Act was passed in January, 1875, providing that the Treasury should resume specie payments, redeeming the greenbacks in coin from and after January 1, 1879. The Secretary of the Treasury was authorized to sell at not less than par, sufficient bonds to provide the necessary coin, all of which was supposed to be gold. The national debt was also to be paid in coin. In 1875 began the agitation for the restoration of silver to its legal status. The "trade dollar," for use in China, had not been interfered with. Gold had appreciated and prices had fallen. Alarm was widely felt that if debts could not be paid in legal silver coinage it would mean severe hardship if not ruin to taxpayers and traders. A bill was introduced by the Representative from Missouri, known as the "Bland Bill," restoring the silver dollar to its former position as legal tender. It provided that "any owner of silver bullion may deposit the same at any coinage mint or assay office to be coined into dollars, for his benefit, upon the same terms and conditions as gold bullion is deposited for coinage under existing laws."

The bill passed the House but the Senate hesitated to sanction the payment of government bonds, issued when silver was at sixteen to one, with a coinage the ratio of which had fallen to eighteen to one, with the probable continuance of decrease in value. Not until 1878 did the "Bland Bill" become a law, and its passage was only rendered possible by Senator Allison's amendment or substitute, which enacted that the Secretary of the Treasury should buy, at the current market price, from $2,000,000 to $4,000,000 worth of silver each month and coin it into silver dollars, which should be legal tender for all debts. This was accepted by Congress, and on being vetoed by President Hayes, was passed by both Houses on the same day, February 28, 1878. This legislation was supplemented in 1890 by the "Sherman Law" creating Treasury notes issued on deposit of silver bullion. The status of gold was not materially affected by these silver measures. The purchase clause was repealed in 1893. The continued and serious depreciation of silver occasioned a re-discussion of the whole question. The results of the elections of 1896 and 1900 indicated a virtual acceptance, at least for the time, of the universal adhesion to a gold standard. From 1862 until the resumption of 1897 gold had been above par, reaching the high premium of 285 in 1864. It first touched par a few days before January 1, when the Resumption Act came into force.

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