In the United States at that time, and until 1879, green backs were standard money, and neither gold nor silver was regularly in circulation (except in California). There was a long-continued discussion of a "return to specie payments," which meant the return to a metallic standard, and the re demption of greenbacks on demand. Meantime in 1873 a law was passed making the gold dollar "the unit of value" and dropping out the standard silver dollar from the list of coins authorized to be issued at the From 1873 until 1879 prices (in greenbacks) were falling in this country very rap idly because the country, with the increase in population, wealth, and business, was "growing up to" its unchanging currency supply. For a like reason, at the same time gold prices throughout the world were falling. While this coun try was lowering its level of prices from an inflated paper money to a gold commodity basis, the gold basis itself was sinking to a lower level? Between 1864 and 1876 our own gold product had been nearly all exported; but, beginning in 1878 and continuing till 1888, the demand of our Treasury and banks for gold caused the retention of our own gold product in this country (nearly $400,000,000 worth, coining value, in the period of eleven years), and required an enor mous net importation, amounting (in the same period) to $225.000,000 worth of gold. The combined effect of these causes is seen in the great fall of prices in all gold-standard countries in the period of 1873-1896.
The general price level fluctuated but on the whole tended downward between 1884 and 1893 (the year of panic), and a This change was what later was referred to in political discussions as "the crime of '73." The dollar referred to was the standard silver dollar: at the same time the coinage of a trade dollar was authorized (intended to be used only in foreign trade), which, after 1876, was not legal tender in the United States.
TSee eh. 4, 4.
reached a minimum in the year 1895 in Germany, 1896 in England, and 1897 in America. The resulting increase in the burden of outstanding debts was felt by all debtors, but particularly by great numbers of the agricultural classes both in Europe and in America. Their tribulations were aggra vated by the fact that at that time (especially from about 1873 to 1896) the prices of their products were falling much more rapidly than were general prices, as a result of the very rapid extension of the agricultural land supply." There was complaint, agitation, and demand for relief on the part of many interests in France, Germany, England, and the United States. As a result, the money question became in this country a leading political issue and continued to be such between 1873 and 1900.
§ 10. Nature and object of bimetallism. First came the "greenback movement," which lasted until after This then gave way to an agitation for bimetallism. Bimetallism
is the plan of using two metals as standard moneys. Bimet allism is legally authorized when both metals are admitted to the mints for free coinage at an established ratio of weight. Bimetallism may be legally authorized, but not actually work ing; for if the market value long continues to vary appre ciably from the legal ratio, only one of the metals may in fact be left in circulation. This situation is called limping bimet allism (or halting double standard), though this is a contra diction of terms. National bimetallism is confined to a single country, as was the case in the United States before the Civil War, and in France before 1867. International bimetallism is that resulting from an agreement among several nations to use two metals on the same terms.
The theory of bimetallism is that the government can act on the value of the two metals through the principle of substi tution. The metal tending to become dearer will not be 10 See Vol. I, on agricultural leases, p. 159, wheat prices, p. 436, and changes in the land supply, p. 442.
11 See ch. 4, § 13.
coined, the other will be coined in greater quantities. The degree of influence that can thus be exerted on the value of the two metals depends on the size of the reservoir of the metal that is rising in value. When it all leaves circulation, the law on the statute book permitting it to be coined becomes a mere phrase. In such a case there is bimetallism de jure, but monometallism de facto. The greater the league of states, the greater is the likelihood that the plan will continue to work. The only notable historical instance of international bimetallism is that of the Latin Union which united France, Belgium, Italy, and Switzerland in an agreement remain ing actually in force from 1866 to 1874. A strong movement developed between 1878 and 1892 in favor of forming a great international bimetallic union of states.
One object of bimetallism was to put an end to the great fluctuations in the rates of exchange of money between the silver-Using and gold-using countries, fluctuations that occa sioned much uncertainty and loss to individuals engaged in foreign trade. The rise in the price of gold exchange in the silver-using countries (notably India) meant also an in crease in their burden of taxation. These countries collected their revenues in silver, but they had to pay their debts, principal and interest, in gold. Another object of this move ment was to prevent the burden of individual debts from increasing by reason of the rise in the value of the single standard, gold. It was, indeed, hoped that by bringing silver much more into use the value of gold would be reduced, thus bringing relief to the debtor classes. Still another object of the bimetallic movement was to aid the silver-miners and silver-producing districts by creating a larger market for silver.