The metallic money consists of gold coin and bullion, standard silver dollars, subsidiary silver and minor coins. The total stock of gold, including coin and bullion, amounts to over $1,931,000,000. The statement shows over $615,000,000 of gold in circulation, but as a matter of fact comparatively little of it is in actual circulation, but is held in the banks as reserves. Of the $177,-307,660 in the Treasury, $150,000,000 constitutes a reserve fund held for the redemption of the United States notes and the maintenance of the gold standard. The gold coins are the double-eagle ($20), the eagle ($10), the half-eagle ($5), and the quarter-eagle ($2 1/2). While the gold dollar is the unit and standard of value, no $1 gold pieces have been coined since 1890. The three-dollar gold piece was discontinued also at that time. The eagle weighs 258 grains and consists of a mixture of nine parts of pure gold to one part of copper; the pure gold in the eagle weighs, therefore, 232.2 grains. Gold is coined free of charge, the coining value of an ounce of pure gold being $20.67 or of an ounce of standard gold $18.60. Gold coin is legal tender in unlimited amounts for all debts public and private.

Gold bullion consists mainly of bars made by the United States mints for the convenience of jewellers and gold-exporting houses. Since gold is not well-suited for coins of small denominations, and since paper money is more convenient for everyday use, the chief use of gold is for bank reserves and for the settlement of interregional and international balances. For this latter purpose, bars of bullion properly assayed and stamped are quite as serviceable as coin.

The total stock of standard silver dollars amounts to $565,813,363, of which only about $70,000,000 are in actual circulation. The bulk of the silver dollars are stored in the United States Treasury where they are held in trust for the outstanding silver certificates issued against them. The story of the silver controversy which agitated the country for a quarter of a century has been told in Chapter III (History Of United States Coinage. 18. Adoption Of A Coinage System). Originally the silver dollar was standard money, but because of depreciation in the relative value of silver with relation to gold its coinage was discontinued in 1873. By the act of 1878 limited coinage of the silver dollar was renewed; and the law of 1890 provided that it should be coined only as needed to redeem the treasury notes issued under that law to pay for silver bullion. Finally, in 1893, the silver-purchase clause of the law of 1890 was repealed, since which time no new silver has been purchased for coinage into dollars. Though still retaining the name "standard" silver dollars they are not in fact standard money. They should be classed rather as subsidiary or token money, for their bullion value is only about one-half their face value, and since 1873 there has been no free coinage of silver. Silver dollars, however, are legal tender for all payments, public and private, except where otherwise expressly stipulated in the contract. They are not legally redeemable in gold, but ordinarily there, is no difficulty in exchanging them for gold.

What to do with the enormous hoard of silver dollars stored in the vaults of the Treasury is a question that has been much discussed from time to time. Though these silver dollars are nominally the security back of the silver certificates which circulate in their stead, yet, as Professor Seager says, "Really they contribute nothing to the acceptability of these certificates. It is confidence that the Government will redeem them in gold and the need there is for small bills to carry on the country's trade, not the prospect of getting in exchange for them silver dollars which no one wants, that maintain these certificates at par with other kinds of money." Two plans have been suggested for disposing of these silver dollars.1 One is to withdraw the silver certificates and convert the silver dollars into bullion to be disposed of as the Secretary of the Treasury may see fit. This plan, however, would involve a large loss to the Government since the silver dollars when reduced to bullion would bring less than one-half their face value.

1 See Seager: Principles of Economics, p. 339.

To avoid this loss a second plan proposes to substitute United States notes for the cancelled silver certificates and turn the proceeds from the sale of the silver bullion into the legal gold reserve. Professor Seager estimates that if the sale of the 500,000,000 silver dollars as bullion brought in $200,000,000 in gold the gold reserve would be increased to $350,000,000, while the credit money secured by this reserve would be increased to about $847,000,000. He concludes that "the new reserve would thus be considerably in excess of one-third of the new liability, and as the greater part of this liability would be in the form of small bills which are continuously needed in connection with the retail trade of the country, there seems every reason to believe that it would be as adequate as is the present reserve against the present liability."1 The first plan may be objected to, as already suggested, on the ground that it would involve a heavy loss in the nominal assets of the Government. Objection to the second plan would come from those who, in the light of our past experience with the greenbacks, oppose the further issue of credit money by the Government. Many publicists and students of the currency system urge the retirement of the existing United States notes and the substitution of either gold certificates or bank notes secured by commercial paper, or both.

Our subsidiary silver coins are the half-dollars, quarters and dimes. The total stock of these on June 1, 1914, amounted to about $181,000,000. The coinage law of 1792 provided also for half-dimes, and in 1851 a three-cent silver piece, one-quarter of the weight to be copper, was authorized, but when the coinage laws were revised in 1873, these were withdrawn. For two or three years after 1875 a twenty-cent piece was issued. Originally the subsidiary silver coins were proportionate in weight to the dollar and they were full legal tender, but by the act of 1853 the amount of metal in these coins was reduced to prevent their being melted or exported, and they were made legal tender only to $5. In 1879 the legal tender limit of all the subsidiary silver coins was made $10.

1 Ibid.

The minor coins are the five-cent nickel made of a mixture of three-fourths copper and one-fourth nickel, and a one-cent bronze coin composed of copper (95 per cent), tin and zinc. These coins are legal tender up to 25 cents and are redeemable at any sub-treasury in sums of $20 or more. The supply of minor coins is regulated by the Director of the Mint to conform to the current needs of the country. The only minor coins provided for by the original coinage act of 1792 were copper cent and half-cent pieces. In 1857 the half-cent was discontinued and the weight of the cent was reduced. In 1864 the present cent was issued, also a two-cent piece; in 1865 a three-cent piece (25 per cent nickel) and in 1866 the five-cent nickel were added. All these were subsequently discontinued except the nickel and the one-cent piece. From time to time the coinage of a half-cent piece has been urged.

As opposed to gold, which is the standard money, all other coins are subsidiary or token money. Gold is the only metal which the Government will coin for anyone who deposits bullion at the mints or assay offices. All other coins are made from bullion purchased from time to time as need arises. In none but the gold coins is bullion worth as much as the coin. As already noted the bullion value of a silver dollar is only about one-half its value as a coin. The bullion value of the subsidiary silver coins is worth even less relatively since they contain only 347.22 grains to the dollar as compared with 371.25 grains of pure silver in the silver dollar, while the bullion value of the nickel and bronze (cent) coins is still smaller. Such coins are called "token" coins because their free circulation at full face value is a matter of habit or usage. They are usually of a baser metal than the standard, and are issued only in such quantities as are required to meet the need for small change in retail trade. Token coins may properly be classed as credit money, since their general acceptance and use depend upon "the good faith and credit of the government evidenced by their redeemability in gold." One objection to the silver dollars, regarded as token money, is that their coin value is so much in excess of the value of their metal content as to make it very profitable for counterfeiters to make them.

Not only is the coinage of gold free and unlimited, but it is also gratuitous, as the government bears the expense of mintage. In most other countries there is a mintage charge, called "seigniorage," which is a certain amount deducted by the government either as bullion or coins. The word seigniorage comes down to us from mediaeval times when the "seigneur" or lord had a monopoly of coinage and exacted his quota of all coins made. The operation of seigniorage can be illustrated by comparing the coinage practices of the French government with ours. In the United States a person who takes a certain weight of standard gold to the mint receives the same weight of gold in the form of coin; but in France the government retains as seigniorage 7 4/9 francs out of every 3,100 francs coined.1 In the United States gold coinage is free, that is, open to everyone, and gratuitous; in France it is free but not gratuitous.2

In the case of our silver coinage there has been a popular but loose use of the term seigniorage. During the silver period the great decline in the market price of silver bullion made it possible for the Government to coin silver dollars from bullion which cost only 50 or 60 cents. The difference or gain between the amount paid for silver bullion and the value of the coins made from it amounted to over $143,000,000. This difference, popularly known as seigniorage, but officially called "gain," was put into the "silver profit fund," or, in the ease of the subsidiary silver, the "minor coinage profit fund."

1 Johnson: Money and Currency, p. 170.

2 The coinage act of 1853 levied a seigniorage of 1/2 of 1 per cent; when the free coinage of silver was abolished in 1873 the seigniorage on gold was reduced to 1/5 of 1 per cent, and in 1875 it was abolished.