The experience of the United States with bimetallism admirably supplements that of France because it exhibits the effect of two ratios, one above and the other below that of the French mint. From 1792 to 1834 the mint ratio in this country was 15 to 1, and since the latter date it has been 16 to 1. It will be well, therefore, to separate these two periods in our discussion.

A. The period from 1792 to 1834. - The adoption of bimetallism and of the ratio 15 to 1 was chiefly the work of Alexander Hamilton, who was the author of our monetary system. Previous to the passage of the act of 1792, or rather to the execution of the provisions therein contained, our currency consisted of foreign coins, chiefly English and Spanish, and of the mintages and paper money of the various colonies. It was inadequate in quantity and extremely inconvenient on account of its numerous and varied elements. It was Hamilton's belief that the bimetallic system was necessary in order to secure an adequate supply of the precious metals for coinage purposes, and the ratio 15 to 1 was adopted because it was thought to represent approximately the market value of the precious metals at that time. Two or three years were required after the passage of the act of 1792 before a mint could be constructed and equipped, and the new system actually put into operation, and meanwhile the market ratio changed, silver falling in value relatively to gold. According to Mr. Soetbeer, it was 15.37 to 1 1794, 15.55 to 1 in 1795, 15.65 to 1 in 1796, 15.41 to 1 in 1797, 15.59 to 1 in 1798, 15.74 to 1 in 1799, 15.68 to 1 in 1800, 15.46 to 1 in 1801, and 15.26 to 1 in 1802.* Practically from the beginning, therefore, there was a divergence petween the market and the mint ratio, and silver was overvalued. Being a very new country, however, situated a long way from Europe, and commerce being but slightly developed, the markets of the United States were sluggish and did not respond quickly to foreign influences. There was a great demand for money, and accordingly both gold and silver were minted in considerable quantities, but in time, and probably as early as 1810, + gold began to disappear from circulation, and ultimately in such quantities as to attract the attention of Congress. From about 1818 on also, the coinage of silver greatly increased, while that of gold relatively, and in some years absolutely, decreased.

The action of the bimetallic system was somewhat obscured and complicated during this period by the circulation of various foreign coins and by inadequately secured bank-notes. Spanish silver dollars were full legal-tender, and, since they contained more silver than the corresponding coins of the United States, they were hoarded by bankers and money-changers or sent to the mint for recoinage, and, since both coins passed at their face value among the people generally, a profitable trade was carried on by sending our silver dollars to the West Indies and transporting hither the heavier Spanish coins. On this account the coinage of silver dollars was suspended in 1805, but the traffic still continued to be carried on with our smaller coins. The result was that only worn and clipped foreign silver coins were in actual circulation, and there was a great dearth of the kind of money needed for ordinary transactions. During the war with England, 1814 to 1816, there was a general suspension of specie payments by the banks of the country, and consequently so great a depreciation of bank-notes that coins of all kinds were driven out of circulation.

* For the ratio at dates subsequent to 1802 see table on p. 323. + See Laughlin, chap. iii.

Though the situation was much confused by these disorders, the resumption of specie payments in 1818 brought into clear light the effect of the undervaluation of gold at the mint. It did not return to circulation, and the exchanges of the country were practically on a silver basis, and all large payments had to be made in banknotes. Owing to the general distrust of this latter form of currency, caused by our unfortunate experiences with paper money during colonial times, the Revolutionary War, and the period of suspension, and fostered by President Jackson and his supporters during their fight to prevent the recharter of the second United States Bank, a strong party arose in favour of such a change in the ratio as would bring gold again into circulation. Aided undoubtedly by the discovery of gold-mines in South Carolina, this party was able in 1834 to secure the passage of an act by which the mint ratio was made 16 to 1. Though it was generally known that this was an overvaluation of gold, the desire to restore this metal to circulation was so great that the party in power did not wish to take any chances in the matter, and many probably believed that the tendency of silver was to fall still more in value, and that it was, therefore, best to anticipate to some extent the probable course of events in the future. The change from the old to the new ratio was accomplished by diminishing the amount of pure metal in the gold eagle from 247.5 to 232 grains, the amount of pure silver in the dollar remaining unchanged at 371.25 grains.

B. The period from 1834. to 1873. - Whatever may have been the expectations of the framers of the act of 1834, the ratio between gold and silver upon the markets did not greatly change during the next sixteen years, and never became 16 to 1. With the fall in the value of gold which accompanied the greatly increased supply after 1850, it diverged more and more from that point, and did not show any marked tendency to turn in the other direction until about 1867. The result was at first a gradual substitution of gold for silver in the currency, and, after the gold discoveries, the disappearance of silver to such an extent as to seriously interfere with commerce and to cause the issue of private tokens and other monetary devices to take the place of the small coins. This situation compelled Congress again to take up the question of the coinage, and this time the remedy to which England had been forced under similar circumstances in 1816 was adopted, namely, the reduction of the small silver coins to a subsidiary basis. The act by which this was accomplished was passed in 1853, and it diminished by 6.91 per cent the content in pure silver of all coins below the denomination of a dollar. Heretofore the half-dollars, quarter-dollars, dimes, etc., had contained respectively one-half, one-quarter, one-tenth, etc., of the amount of metal put into the dollar, but henceforth two half-dollars were to contain only 345.6 instead of 371.25 grains of pure silver, and 384 instead of 412 1/2 grains of standard silver, and the other coins in proportion. This act also took away the free-coinage privilege in the case of these coins, and made them legal-tender for sums of five dollars and under only.

The effect of this act was to place the currency of the United States upon a gold basis. Nominally, however, it still remained bimetallic because by law the silver dollar was still authorized to be freely coined at the mint at the ratio with gold of 16 to 1, and its legal-tender power had not yet been removed. Since it was worth a premium of four or five cents per dollar in gold, however, it did not form an element in the currency, and had not done so since 1834.

From 1862 to 1879 legal-tender government notes, issued as a financial expedient during the war between the states, constituted the basis of the currency of the United States, their depreciation having expelled from circulation both gold and silver, even the subsidiary coins. The annals of this period, therefore, are not significant in the history of the operation of the double standard, and could be passed over in silence, were it not for the act of 1873 and the controversy of which it was the occasion in subsequent years. The purpose of this act was to bring together in one code the laws which were in force at the mint and to eliminate their obsolete features, one of which was supposed to be the authority to coin a silver dollar which was then at a premium in gold, and had not been a part of the circulating medium since 1834, and had played but a very insignificant role since 1805. Accordingly in the enumeration of the list of coins authorized to be struck at the mint the silver dollar was omitted, and our currency was thereby made gold monometallic in law as well as in fact.

This act had no immediate effect upon the currency of the United States, and only a subjective one upon the relations between gold and silver in other parts of the world, inasmuch as only inconvertible paper was in circulation at the time. However, it did become significant when we resumed specie payments six years later, and even before, owing to the authorization of resumption by an act passed in 1875 and a sudden drop in the value of silver in the following year, an event which must be explained before we can profitably proceed with our account of the history of bimetallism.