day of this session; each member procured a copy of the bill, and there has been a thorough examination of the bill again."

Mr. Harper on April 9, 1872, for instance, spoke as follows on section 16: "Section 16 re-enacts the provisions of the existing laws defining the silver coins and their weights, respectively, except in relation to the silver dollar, which is reduced in weight from 412 to 384 grains, thus making it a subsidiary coin in harmony with the silver coins of less denomination to secure its concurrent circulation with them. . . . . This bill provides for the making of changes in the legal-tender coin of the country and for substituting as legal-tender coins of only one metal instead as heretofore of two. I think myself this would be a wise provision, and that legal-tender coins, except subsidiary coin, should be of gold alone; but why should we legislate on this now when we are not using either of those metals as a circulating medium ?"

On May 27, 1872, the bill was once more called up in the House by Mr. Hooper for the purpose of offering an amendment in the nature of a substitute.

In view of certain statements which have been going the rounds to the effect that the bill or its substitute was never read, it may not be out of place to state somewhat more fully the events preceding the passage of the act in the House, as they are recorded in the Globe: 1. A motion to suspend the rules and pass the bill without reading was defeated.

2. Mr. Hooper then asked that the bill about to be passed be read. 3. The record reads, "The clerk began to read the substitute" (which was the bill passed).

4. Mr. McCormick later said, "I ask that the nineteenth section be read again."

5. After further discussion the bill was passed, yeas 110, nays 13.

The bill was again printed in the Senate on May 29, 1872, and referred to the Finance Committee, from which it was reported back December 16, 1872. After debate, the bill was once more printed in full, with amendments, and was considered by the Senate section by section.

After passing the Senate, January 17, 1873, the bill was sent to the House, and on January 21, 1873, it was again printed with amendments. Subsequently conference committees were appointed, consisting of Messrs. Hooper, Houghton, and McNeely of the House, and

Senators Sherman, Scott, and Bayard of the Senate. The reports of the Conference Committee were agreed to, and the bill became a law on February 10, 1873.

I22. AN ECONOMIST'S VIEW OF THE ACT OF 18731

BY FRANCIS A. WALKER

As one who has read a good deal upon both sides of this subject, I do not believe that any fraud was committed or intended by the Act of 1873. Very few people knew what the monetary system of the country was by law. Our public men had almost no training in economics or finance. The general public had not had its attention at all called to the subject of the standard. Some committeeman, or some few committeemen, ran the pen through the silver dollar; and the thing was done. The measure passed through the usual course; the bill was duly "read" the regular number of times; and without debate the demonetization of silver was effected.

But while I am disposed to discredit the allegations of sinister motives, it seems to me, nevertheless, that the silver men have a grievance. No man in a position of trust has a right to allow a measure of such importance to pass without calling attention sharply to it. Everyone knows that but few men upon the floor of Congress read the text of one in twenty of the bills they have to pass upon; and it is the duty of the committees dealing with any class of subjects to see to it that every proposal is fully explained to Congress and to the country. They are not discharged of their obligations simply by giving members an opportunity to find it out for themselves.

123. THE TRADE DOLLAR

BY A. PIATT ANDREW

During the sixties the United States suddenly developed silver resources second only to those of Mexico; and Congress, desirous of assisting American mine-owners to secure an Oriental market for their product, in 1873 consented to their having their silver stamped at the government mint into coin adapted for the Eastern trade. So great was the foreign demand for Mexican dollars at this time that they continually commanded a premium; and, as the Mexican govern

Adapted from "The Free Coinage of Silver," Journal of Political Economy, I (1892), pp. 169-70.

Adapted from Quarterly Journal of Economics, XVIII (1903-04) 329-31.

ment levied a tax of 8 per cent upon their export, there was every reason to believe that the new American coins, which could be freely exported, and which would be more accurate in mintage and superior in bullion value to the Mexican dollars, would meet a real demand in the East, and might even supersede the Mexican coins in those parts. The ordinary American dollar, containing 371 grains of pure silver, had never been well received in China on account of its inferior content. So the new coins were to contain 378 grains, or of a grain more than the standard of the Mexican dollar. This would make them worth, at the ratio of exchange prevailing when the act was passed, a little more than $1.04 in gold, and would have the double advantage, it was thought, of rendering them acceptable in the Orient without danger of their invading the circulation at home.

The new trade dollars, as had been expected, found a ready market in the East. At Hong Kong and the Straits Settlements, in French Indo-China, and at several Chinese ports they were made a legal tender along with the Mexican dollars; and the California mint soon found difficulty in turning them out fast enough to meet requirements. Within six years after the commencement of their coinage nearly 36 millions had been struck, and in January, 1877, the leading bankers in China reported that there was "evidence powerful enough to convince the most skeptical" that the United States trade dollar has been a success, predicting that "ultimately it will be current all over China." The American dollar was thus making rapid inroads upon the territory of the Mexican dollar and threatening it with very serious competition in the Far East, when unanticipated conditions in America resulted in the abrupt cessation of its coinage and its ultimate withdrawal from the field.

The decline in the price of silver reached such a point in 1877 that the silver in a trade dollar was worth not only less than a gold dollar, but also less than the depreciated paper dollars which constituted the circulating medium of almost the entire country. As a consequence, large numbers of trade dollars began to appear in circulation. These trade coins really had no legal standing in the country, being neither an authorized tender for debts nor receivable at the public treasury. In the eyes of the law they were only discs of metal assayed and stamped at the government mint for foreign use; but they bore on their face the words "trade dollar" and "United States of America," and it was not strange, therefore, that they were frequently given and taken at home at their face value. The

confusion was aggravated in the following year, when Congress ordered the renewed coinage of the old standard silver dollar under the BlandAllison act (February 25, 1878); for this meant that dollar pieces of even less intrinsic value were to circulate at par under governmental authority. If these smaller silver coins were to be everywhere receivable as equivalent to the gold dollar, it appeared but logical that the larger coins issued from the same mint should not be worth less.

Apprehending the increasing misuse of the trade dollar, the Secretary of the Treasury therefore ordered the discontinuance of its coinage on October 15, 1877; and the ban was lifted upon only a few occasions after that date, when small amounts were coined expressly for exportation. The trade dollars still outstanding in the country continued, however, to be a source of embarrassment, until finally, in 1887, Congress decided to get rid of the anomalous pieces altogether. An act was passed on March 3 of that year authorizing the redemption and recoinage into standard silver dollars of all trade dollars presented during the succeeding six months. The government had coined in all 35,965,924 of them, of which 7,689,036 were withdrawn under the provisions of the act, a considerable number having been reimported after the passage of the act. The vast majority, however, seem destined to remain in the Orient, unrepaired and unreinforced until time and use have accomplished their decay or the melting-pot has consumed them.

124. THE BLAND-ALLISON ACT OF 1878

As early as July, 1876, bills were introduced into Congress for the recoinage of silver, but it was not until 1878 that sufficient strength could be gained to enact a law. The Bland bill, providing for unrestricted coinage of silver at the ratio of 16 to 1, passed the House without debate November 5, 1877, by a vote of 163 to 34. In the Senate there was an extended debate resulting in the Allison amendment, which limited the purchase of silver bullion for coinage to "not less than two million dollars worth per month, nor more than four million dollars worth per month."

The amended bill was unsatisfactory to the silver party in the House, but was finally supported by the silver people in the belief that something was better than nothing, and with the hope that it would be speedily followed by complete bimetallism. On the other hand, it was supported, also, by many of the opposition, who believed that it would be repealed after a short trial. At the same time it appeared a satisfactory solution to those legislators who were anxious

to appease all parties. The measure was thus a welcome compromise all around. President Hayes, however, vetoed the bill, whereupon it was promptly passed over his veto by a vote of 196 to 73 in the House and 46 to 19 in the Senate.

125. THE SHERMAN ACT OF 18901

BY HORACE WHITE

On July 14, 1890, Congress passed an act for the issue of an indefinite amount of legal-tender notes for the purchase of silver bullion. This is commonly called the Sherman Act. The notes were to be redeemed on demand in "coin," either gold or silver, at the discretion of the Secretary of the Treasury, but it was declared in the words of the act to be "the established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio or such ratio as may be established by law." This was a hint rather than a command to the Secretary in favor of gold redemption. The notes were declared in the act to be "legal tender in payment of all debts, public and private, except where otherwise expressly stipulated in the contract." In practical effect this was a fresh issue of greenbacks in time of peace, and of unlimited amount. The only restriction was as to the rate of issue, which was to be the sum necessary to pay for 4,500,000 ounces of silver bullion each month at the market price.

The act of 1890 was not grounded upon financial considerations. It was a part of a political trade. In the Senate, April 29, 1896, Senator Teller of Colorado gave what he called the "unvarnished history" of the Sherman Act, which has never been contradicted. He said that the Republicans desired to pass the McKinley tariff bill. The silver men desired to pass a free-coinage bill. The latter had a majority in the Senate, with power to adopt a free-coinage clause as an amendment to the tariff bill and thus compel the House to adopt it or lose the latter bill altogether. They did not follow that plan because they knew that President Harrison would veto a free-coinage bill, even if, in doing this, he should kill the tariff bill. So the silver senators determined to adopt, not a free-coinage measure, which would certainly be vetoed, but the nearest approach to it, and put this measure on its passage ahead of the tariff bill. The Sherman silver bill was then passed by the Republicans as the price for securing the passage of the McKinley tariff bill.

'Adapted from Money and Banking, pp. 159–60. (Ginn & Co., 1895.)