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worth only about four per cent less than the standard gold coins. To-day they are worth about forty per cent less, and the inducement to counterfeit has become correspondingly great.

Moreover, the recommendations of the mint authorities and the action of Congress were quite in harmony with another attempt which was making at this time-that in favor of an international coinage system.

On February 8, 1870, Mr. Sherman introduced the following resolution in the Senate:

"Resolved, That the President be requested, if not incompatible with the public interests, to invite a correspondence with Great Britain and other foreign Powers, with a view to promote the adoption by the Legislatures of the several Powers of a common unit and standard of an international gold coinage, and that such correspondence be submitted to Congress for its information and action."

The Forty-first Congress was at least consistent. It did not attempt, as did a later one, to secure an international agreement for a common unit and by its own act put another barrier in the way. It rather undertook to bring the currency system of the United States into accord with that of the most completely developed of her sisters in the family of nations.

Finally, as if to remove the last shadow of doubt as to the definite intentions of the administration, we have the recommendation of the Secretary of the Treasury in his report for 1872, issued when the bill was in its last days. Silver had already begun to depreciate. Its use as currency had been discontinued by Germany and some other countries. The amount mined was at the same time increasing. Believing that the depreciation of silver was likely to continue, the Secretary urged such alterations in the Mint Bill as would "prohibit the coinage of silver for circulation in this country." He held that no attempt should be made to introduce the use of silver as currency, but "that the coinage should be limited to commercial purposes,

and designed exclusively for commercial uses with other nations."

It was in carrying out the policy, recommended by the Secretary of the Treasury, that authority was given to manufacture the "Trade-dollar.” In attempting to determine the motives which led to the discontinuance of the silver dollar due consideration must be given to this fact, that the same act grants the right to have the more valuable trade-dollar manufactured at the mint. The history of the trade-dollar also offers an exceedingly interesting lesson in the operation of currency laws.*

Section 21 of the Act of 1873 provided that any owner of silver bullion might "deposit the same at any mint to be formed into bars, or into dollars of the weight of four hundred and twenty grains Troy, designated in this act as trade dollars, and no deposit of silver for other coinage shall be received, the charges for converting standard



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silver into trade dollars shall equal but not exceed the actual average cost to each mint and assay office of the material, labor, wastage and use of machinery employed," these to be determined by the Secretary of the Treasury. Under this provision the amounts issued in millions of dollars were in 1873, 1.2; in 1874, 4.9; in 1875, 6.3; in 1876, 6.2; in 1877, 13.1. The coinage was partially suspended in October, 1877, and finally discontinued by the act of February 22, 1878.

The legal tender quality of the trade-dollar, limited to amounts not exceeding five dollars in any one payment, was entirely removed by the act of July 26, 1876; yet as many of these coins were made after this date as before, and they remained in circulation for a number of years after their coinage had been entirely disallowed. That is to say, the American people persisted for several years in having manufactured and in using a coin to which Congress gave no sanction

• A detailed account of the life of this coin is given in the report of the Director of the Mint for 1887, pp. 96-100.

other than the guarantee of an honest and efficient mint. From 1873 to 1875 these coins cost somewhat more than a dollar each in the United States, and hence no one could afford to use them as money, either in paying debts or buying goods. It was only by exporting them to China and the East that the expenses of their coinage could be met. In 1876 and 1877, however, they cost less than a dollar apiece to manufacture,* and as the public generally continued to receive them at their face value, holders of bullion found it profitable to send it to the mint for coinage, as prescribed by the Act of 1873, into a 420-grain trade-dollar.

Of the total amount coined, † one-fifth (7,689,036) was redeemed at face value, in exchange for standard silver dollars or subsidiary silver coins, under the act of March 3, 1887. Nearly all the remainder have been permanently exported. So far as our currency is concerned, therefore, the trade-dollar has become a thing of the past.

The Act of 1873 thus appears to have been an attempt to remonetize rather than to demonetize silver. By the Act of 1834 silver, as compared with gold, had been undervalued in our coinage. From about 1840 down to 1875 the 3714 grains of fine silver in a dollar had been worth more than the 23.22 grains of fine gold in a dollar-from one to ten cents more. During all this time Congress had failed to rectify the mistake, if mistake it was, that had been made in 1834, and as a consequence the American people had used a gold currency. Silver had not been monetized; indeed, it was demonetized by the public during this period. The only monetization took place under the Act of 1853, debasing the fractional silver currency and limiting the right of manufacture by abolishing "free coinage" and creating the government monopoly.

The Act of 1873 was supplementary to the Act of 1853 and conceived with the same intent. The circulation of

* See Diagram.

+ 35,965,924.

postal currency had driven silver coins out of circulation during the Civil War and the years subsequent thereto. The proposition was made in 1869 to restore silver to its position as a subsidiary coin, the supply from Nevada and Colorado, it was believed, making this feasible. Any excess in the silver product for export was to be in the form of a "trade-dollar." An American silver coin had never been the chief component of American currency, and there was at that time no apparent reason for attempting to introduce it. For a generation silver had been used as the metal of our subsidiary coins. It remained, then, to bring the dollar into harmony with the fractional coins or to retire it from the circulation. The latter alternative was chosen, although the former had been recommended. Provision was made at the same time for the manufacture of coins of a convenient form, with quality and quantity of metal marked upon each, which could be used in trade with countries having a silver currency.

The important effect of this law, and of the provision of the revised statutes (1874) which deprived the silver dollar of legal tender quality, was that they prevented a use of silver which, under laws previously in force, would inevitably have followed the fall in the value of silver (1876) and the failure of the Greenback movement. Whether or not this was a desirable result is a much disputed question. The belief that it was not has led to the persistent effort of the last fifteen years to extend the use of silver. It is with the passage of the Act of January 14, 1875, providing for the resumption of specie-that is, gold-payments on the outstanding obligations of the government, that the real bimetallic controversy in this country begins. It has been carried on alike by those personally interested, as they believe, in maintaining the stability of our measure of value and standard of payments and by those who are anxious for the general welfare and believe that industrial growth and prosperity, as well as political justice, demand a composite unit of value.

Thus far this movement for bimetallism has resulted in three apparently quite fruitless attempts to secure international agreement regarding the coinage of gold and silver,* and in the two acts requiring the United States Government to purchase silver as the basis of a paper currency.

By the Act of February 28, 1878, the coinage of the standard silver dollar was authorized and its legal tender quality restored. But the coinage was fixed within definite limits and to be made on government account only. The Secretary of the Treasury was instructed to purchase not less than two nor more than four million dollars' worth of silver per month and have it coined into standard dollars. He was also authorized to issue certificates for the deposit of these coins, which should be receivable for customs, taxes and all public dues, and when so received might be reissued. Nearly 400,000,ooo were coined under this act, of which about 60,000,000 remain in circulation; the remainder are covered by certificates, or are lying idle in the vaults of the government.

The Act of July 14, 1890, known as the Sherman Act, directs the Secretary of the Treasury to purchase four and one-half million (4,500,000) ounces of silver per month, or such part thereof as may be offered for sale at prices below $1.29 per ounce, and to issue Treasury Notes in payment. These notes are a legal tender at their face value "in payment of all debts, public and private, except when otherwise expressly stipulated in the contract." They are redeemable in either gold or silver coin at the option of the secretary. The government is thus made a regular purchaser of silver, which it uses as the basis of a paper currency that increases from $40,000,000 to $60,000,000 a year, according as the price of silver rises or falls. Thus far the administration, Democratic as well as Republican, has been able to redeem the Treasury Notes in gold.

School of Social Economics.


* Held at Paris in 1878 and 1881, and at Brussels in 1892.

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