In the United States at the present time gold is the standard money from which the value of other forms of money is reckoned. The value of the gold coins, in turn, is regulated by permitting the free coinage of gold. We have a "single standard" of money and that standard is gold. Where there is free coinage of both gold and silver there is, nominally at least, a "double standard" of money, or bimetallism.

Before 1873 we had bimetallism in this country. The government fixed the weight of a gold dollar, after some experimentation, at 25.8 grains of standard gold. Since standard gold is nine-tenths fine, the weight of the pure gold in a gold dollar is 23.22 grains. The weight of a silver dollar is 412.5 grains. It contains 371.25 grains of pure silver. The silver in a silver dollar is, therefore, approximately sixteen, times as heavy as the gold in a gold dollar. Thus, by law, an ounce of gold in the form of money is worth approximately sixteen ounces of silver in the form of money. The mint ratio is 16 to 1. But an ounce of uncoined gold may be worth more or less than sixteen ounces of uncoined silver, depending upon the relative demands for, and supply of, the two metals in the markets of the world. When the market ratio between the two metals is less than the mint ratio the gold in the gold dollar is less valuable than the silver in the silver dollar. Since the two coins are equally effective in the payment of debts, debtors will choose to make payments in the money which can be secured the more cheaply, namely, gold. On the other hand, when the market ratio between the two metals is greater than the mint ratio, the silver in the silver dollar is worth less than the gold in the gold dollar. Under these circumstances debtors will prefer to make their payments in silver, if there is free coinage, since it can be secured more easily than gold.

When silver is overvalued at the mint the owners of gold will withhold their gold from coinage and the gold coins in circulation, in accordance with Gresham's law, will be withdrawn from circulation. On the other hand, when gold is overvalued at the mint, silver will cease to circulate. In order that gold and silver may both circulate as money at the same time under a system of bimetallism, that is, under free coinage of both metals, it is necessary that the market ratio and the mint ratio do not vary appreciably from one another. No one nation exercises a sufficiently strong influence upon the market for the precious metals to keep the market ratio from varying from its mint ratio. A strong combination of nations might do so by international agreement, but such agreement is hard to secure. The principal nations of the world have therefore adopted the single gold standard in order to avoid the fluctuation in standards under a system of bimetallism.