The final step necessary for a stable financial system was the es tablishment of a uniform currency system. The Mint Act of April 2, 1792, provided for a bimetallic monetary system, based upon a dollar consisting of 24i grains of pure gold or 3714 grains of pure silver, a ratio of one to 15. The Act provided for the limited and gratuitous coinage by the Mint, to be established in Philadelphia, of both metals, at the option of any holder.
Until the Civil War, customs duties constituted the main source of revenue of the Federal Government. The few internal revenue taxes that had been intermittently in force were largely abolished in 1817. Sales of public lands yielded varying amounts annually, ranging, after 1800, from $168,000 in 1801 to $25 millions in 1836. The national debt was extinguished in 1835—though the depres sion following the panic of 1837 and the Mexican War quickly created a new debt. The Civil War, disrupting the economic as well as the political life of the Nation, and waged relentlessly for four long years, created serious fiscal problems. The Treasury was forced to suspend specie redemption of its legal tender notes (greenbacks), which, issued in the amount of $449 millions during the War, depreciated severely in terms of gold, this depreciation amounting to as much as 61 per cent. at one time. Despite the introduction of a series of highly productive internal revenue taxes, heavy annual deficits were incurred. The interest-bearing public debt rose from approximately $65 millions in 1860 to $2,322 millions in 1866. On June 3o, 1860, the Government's gross debt was only $2.06 per capita ; by June 3o, 1866, it had risen to $77.69 per capita—a figure not reached again until the World War. The National Banking Act of 1863, which authorized the establish ment of national banks and the issue by such banks of circulating notes secured by United States bonds, helped to provide a market for the Civil War bond issues. Financial recovery was swift in the years following the Civil War. The war-time excise taxes were largely retained, and the combination of these and the still grow ing customs receipts resulted in a long series of uninterrupted budget surpluses (1866-1893). The Treasury resumed specie payments in 1879; and the interest-bearing public debt was con tinuously reduced, falling below one billion dollars by 1888.
The resumption of specie payments soon brought monetary controversies to the fore. The original gold-silver mint ratio of s to one set in 1792 had closely approximated the actual market ratio. Very soon thereafter, however, a decline in the market value of silver tended to send gold coins out of circulation and out of the country. After some years of discussion, Congress in 1834 reduced the content of the gold dollar and in 1837 raised it slightly, without changing the weight of the silver dollar. The
resulting ratios, 16.002 and 15.988 to one, both overvalued gold rather decidedly. Silver dollars were melted and sold as bullion. Following discoveries of gold in California and Australia in 1848 and 5849, the value of silver rose so much in terms of gold that Congress in 1853 had to reduce the bullion content of fractional silver coins to prevent their being melted and sold as bullion. In revising the list of coins to be struck by the Mint, preparatory to the resumption of specie payments, Congress in 1873 eliminated the silver dollar. This attracted little notice at the time because no silver dollars had been coined for many years. Soon afterward, the discovery of new silver supplies in the United States and the demonetization of silver by several European countries caused a decline in the market price of silver. A strong movement arose in the United States for the resumption of unlimited coinage of silver dollars. Many supporters of this movement hoped thereby to check the current decline in general commodity prices. Partial concessions to this movement were made by Congress in 1878 and in 1890 when the Bland-Allison and the Sherman Silver Purchase Acts, respectively, were passed. Under the former, the Secretary of the Treasury was directed to purchase $2 millions to $4 mil lions of silver bullion at market prices each month, and to issue therefor legal tender silver dollar coins, or silver certificates representing the deposit of such coins in the Treasury. This Act was succeeded by the Sherman Act, whereunder the Secretary of the Treasury was directed to purchase 41 million ounces of silver bullion per month and to pay therefor in legal tender Treasury notes redeemable in either gold or silver, at his option. Neither of these acts provided for the unlimited coinage of silver and, there fore, left the monetary system on an essentially monometallic gold base. The Sherman Act was repealed in 1893, after the Treas ury's gold reserve had been greatly reduced by the repeated redemption of the Sherman notes in gold. The outstanding public question during the Presidential campaign preceding the election of 1896 was whether the United States should re-establish a bime tallic monetary system on the basis of both gold and silver, or maintain a single gold standard. Following President McKinley's election, the silver movement lost much of its impetus, mainly because the increasing output of the South African gold mines and the expanding volume of credit provided by the banking sys tem made possible a period of rising prices. In the Gold Standard Act of 1900, the monetary standard of the United States was formally declared to consist of 25.8 grains of gold nine-tenths fine; and the Secretary of the Treasury was directed to maintain all forms of money of the United States at par.