The United States until the outbreak of the Civil War had been legally upon a bimetallic basis. As in France, the outflow of silver fol lowing the gold discoveries of the middle of the century had led to laws making the silver frac tional coins tokens of limited legal tender. In the revision of the coinage laws in 187:3, when we were yet upon a paper basis, the silver dollar was dropped from the laws, and gold became the nominal standard. With the return to a metal lie currency, a reaction in favor of silver set in. Various unsuccessful attempts were made to reiistablish the free coinage of the silver dollar. The strength of the silver advocates was suffi dent to bring about a series of compromise meas ures which, without removing all restrictions upon the coinage of silver, materially increased the volume of silver in the circulation of the country, and at times threatened the mainte nance of the gold standard. The law of Itiiti pro vided for the purchase of not less than two mil lion dollars' worth of silver monthly nor more than four million dollars' worth. and the coinage of the bullion thus purchased into silver dollars of grains standard silver nine-tenths fine. Under this law nothing more than the minimum amount, was purchased and (wined. In s(ane re spects the law of 1S90 wont further in providing that the Secretary of the Treasury should pur chase monthly 4.500.000 ounces of silver bullion and issue Treasury notes for the of the same. Both the silver dollars and the Treasury notes of 1890 enjoyed the full legal tender quality. The policy of purchasing silver Was abandoned in lS93. In the Presidential election hinged upon the declaration of the Dem ocratic platform in favor of the free coinage of silver by the United States in the ratio of if; to 1. The defeat of the Democratic candidate and subsequent adoption of the currency law in 1900 still further strengthened the gold standard leg islation of the nation. These, with the creation of silver coinage in India, and the adoption of the gold standard by Japan, are in brief the salient features of the history of the standards among modern nations. For a more detailed ac count of the historical aspects of the case, the reader should consult the articles LATIN UNION; .1.0NETARY COM MISSIONS ; :MONETARY CONFER ENCE; and MoNEv.
The arguments advanced by the advocates of the opposing systems may now be passed in re view. In the first place, it should be stated that in its modern form the question of bimetallism is one of standards and not of circulation. If in earlier days the problem was to secure the concurrent circulation of gold and silver coin to meet the needs of wholesale and of retail trade. this aspect of the question is no longer important. for means have been found to insure this result without. a resort to bimetallism. Al most equally irrelevant is the objection often heard to the use of silver as standard money be cause of its bulk and weight. This is an objec tion perfectly well founded, to be sure, against. the circulation of silver coin, but not against sil ver as standard money. For silver money may and does circulate through its paper representatives, as the notes of the Bank of France or the silver certificates of the United States amply testify. In the same line of argument, the contention that bimetallism exists everywhere in fact, be cause wherever gold is used, silver must also be used in the monetary circulation, has no bearing upon the controversy. Only the most inexperi enced in monetary affairs would attach the name bimetallism to the circulation of the two metals side by side, irrespective of the laws which gov ern their coinage. For it is the essence of bi metallism, as appears in our definition, not sim ply that. both metals should be coined, but that both should be coined on precisely the same legal footing, and possess the same legal-tender quali ties. They may circulate together, yet stand
upon a wholly different basis. Thus, in the United States, the subsidiary silver coins are limited both in amount and in legal tender, while the silver dollars, though unlimited in legal tender, are Einited in amount. Both stand obviously upon a wholly different footing from gold, which not only possesses unlimited legal tender, but which can be coined at the instance of individ uals without restriction of amount. It is that element in the metallic currency which is freely expansible by law which gives the standard.
The advocates of bimetallism have laid stress upon two results which they say would follow the adoption of their system: (I )The regulation of exchanges between the various nations; (2) the attainment of a more stable standard of value. They point out that the use by some nations of gold and others of silver as the monetary stand ard pnidnees a fluctuating eu• of exchange be tween gold and silver nations which impedes COMMeTee and excuses great uneertainty in their mutual relations. To the extent that uncertain ty prevails as to the return when the prices at tained in one country are translated into the standard of the country which has sold the goods. to that extent is trade rendered difficult. The liability to hiss through exchange enhances the prices of goods sold. It is further pointed out that the varying tendencies of prices under one standard, as compared with another, acts as an unnatural impediment. or stimulus to trade. If gold prices and the gold price of silver fall alike, silver-using nations may export to gold countries without any loss, while gold countries find prices falling. Thus, if wheat falls in price in England, exporters in India suffer nothing, while export ers in the United States must be content with lower prices. A fall in the gold price of silver accompanies a fall in the prices of other com modities in gold eountries. but the relation of silver to commodities remains the same, and no enhancement of general prices ensues in silver countries.
A more important tenet of the bimetallic creed is that such a system produces a more stable standard of value. The evils of instability in the monetary standard are thoroughly conceded by all parties. As illustrated in the fluctuating for tunes of paper money, they are patent to all. 'Under a metallic system, changes in the value of the standard are more gradual and less revolu tionary in their effects. Yet they exist, none the less, and reveal themselves in the ups and downs of general price movements. It is only after sonic study that persons understand that prices and the value of the standard are reciprocals; that low prices mean a high value of money and high prices a low value of money. The economic effects of changes in the value of money must be studied in the effects of priee-changes. Downward movements representing an enhanced purchasing power of money redound to the benefit of credi tors and hear heavily upon debtors. who require a larger produce to fulfill their obligations. ward movements lighten the burden of the debt or, while they shrink the purchasing Dower of what the creditor receives, and thus work to his injury. Such changes are not without profound effects upon the general conditions of trade and industry. Bimetallism proposes to eliminate in a large measure these evils. furnishing a more stable standard, Instability of the standard rests upon the fluctuations in the production of the metals. It is argued that by uniting in the monetary standard two metals instead of one, the fluctuation in the production will be dimin ished. The aggregate product is less likely to vary than is the product of each, the changes in the production of the one being offset by changes in the production of the other.