to 31.5 times that of gold, while in the forty years intervening between 1780 and 1820 it was never less than 47.2 times that of gold, and for the ten years 1800 to 1810 averaged 50.2 times as much.* It was natural, therefore, that the value of silver should fall below that established by law in France in 1803, which was not far from the market value at that date. The natural effect of the resumption of specie payments in England was to increase the demand for gold, that being the standard money of the country after the passage of the act of 1816. This fact considered in connection with the continued large annual production of silver as compared with gold goes far toward explaining why silver did not recover its value during the next thirty years.

The effect of the increased production of gold after 1850 is not questioned by anyone. The only marvel is that the value of this metal did not fall to a much lower point than was actually the case. The facts regarding the matter are as follows:** On account of the exploitation of very rich gold mines discovered in Australia and California the annual production of that metal increased from about $15,000,000 in 1840 to an average of more than $137,000,000 for the five years 1850 to 1855, and to an average of more than $143,000,000 for the succeeding five years. It did not fall to so low a figure as $100,000,000 until 1874, and then for two years only. While the production of silver began to increase greatly at about the same period and has continued at a high rate ever since, its proportion to that of gold fell tremendously in 1851 and has never been restored. While in weight it was 50.2 times as great in the decade 1801 to 1810, it was only 4.4 times as great

*Laughlin's History of Bimetallism, 1st ed., p. 42. **Laughlin, pp. 217 and 218.

in the period 1851-60, and between six and seven times as great during the next ten years.* The fall in the purchasing power of gold over commodities during this period has been variously estimated, but it was probably not less than nine nor more than fifteen per cent. The change in its ratio to silver is indicated in the table on p. 319. On account of its overvaluation at the mint France received more than her share of this metal and silver began to disappear from circulation, causing a scarcity of small coins and finally compelling the government to make all silvevr coins, except the five-franc piece, subsidiary.

In 1865 the history of bimetallism in France entered upon a new phase, before describing which, however, it will be well to note some of the early monetary experiences of the United States. Regarding the general results of its operation during the period here under discussion, there can be no question, however much people may differ regarding the explanation of specific phenomena. It did not succeed in preventing divergence between the legal and market ratios of the two metals, and the dominance now of one and now of the other in the circulating medium, and it did subject French commerce to great inconvenience by rendering it difficult and at times impossible to keep in circulation an adequate supply of small change, not to speak of the uncertainty attending the change of the standard in 1851 from silver to gold. As compared with the peaceful course of England, the continued occupation of the French government with harassing coinage questions during the entire century is an object lesson which should not be overlooked.

4. Bimetallism in the United States to 1873.-The experience of the United States with bimetallism admirably supplements that of France because it exhibits the effects of

*Laughin, p. 42.

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 I. 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 I 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 I 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 in 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 I 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 between the market and the mint ratios, and silver was overvalued. Being a very new country, however, situated a long way from Europe, and commerce being but

*For the ratio at dates subsequent to 1802 see table on p. 319.

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 banknotes. 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. In consequence of the war with England, in the years 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.

Though the situation was much confused by these disorders, the resumption of specie payments in 1818 brought

*See Laughin, chap. iii.

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 bank-notes. 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 favor 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