The Hillsdale standard. [volume] (Hillsdale, Mich.) 1851-1909, 1878-01-15
LEGAL TENDER LAWS AND
THEIR EFFECTS.

| W.T. @AtOhhO1ig tht AANt
ed British author of several works up
on commerce and political economy,
says, in his Commercial Dictionary,
Title Coins" written more than forty
years since, "If both gold and silver
coins be made legal tenders, ii is OBJ
viously indispensable that their value,
with respect TO each other, shall be
fixed by authority. The practice of
making both metals legal tenders was
long adopted in England. From 1857
TO 1904, the value OF gold coins was
regulated by proclamation, or taken as
equivalent to certain specified sums Of
silver. From 1864 down to l7l7, tho
relation of gold TO silver was not fixed
by authority; and silver being then the
only legal tender, the value of gold
coins fluctuated, according TO the fiuc-
tuations in tho relative worth Of the
metals in the market But, in 17l7 the
ancient practice was reverted to; and
it was fixed that the guinea should be
II shillings, and conversely.
"But the value OF each Of the pre-
cious metals is liable to perpetual
changes; and hence,
the moment change takes place, il be-
comes tho obvious interest of every
1 OhO NhO mao - w MANY w
make il in the overvalued metal; which
consequently becomes the sole, or near
ly the sole currency of the country
Hence the reason why the coins of
some countries are almost wholly Of
silver and others almost wholly OF
gold. Ii is estimated that when il was
fixed in l7l7 that the guinea should
exchange for 2l shillings, gold was
oyervalued, as compared with silver,
To the extent OF 6-l0 per cent. and
as the real valuo Of silver with respect
to gold, continued TO increase during
the greater part of last century, the
advantages of paying in gold, in pref
erence TO silver. became more decided,
and ultimately led 10 the universal use
of gold in large payments, and TO the
fusion or expectation of all silver coins
OF full weight.
In France n different valuation Of
the metals has had different effect
Previously 10 the re-coinage of 1885,
the Louis dor was rated at only 2i
livres when i. was really worth %
livres 10 sous. Those that discharged
their obligations in gold coin, instead
of silver, lost one hvre and 10 sous on
every sum Of "a livres. Iu consequence,
4 NCIN lew EuCu Dhl Mtst inutlts
gold was almost entirely banished
from circulation, and silver became al
most the only species of metallic mon
ey used in France.
"In 1916 n new system was adopted
in this country (England); IL being
then enacted that gold coins only
should be legal tender in all payments
OF more than 40 shillings,
4 I'll. 4 4 a.. 4. a.. L. II
value, and forms merely a subordinate
species of currency, or change, occu-
pying the same place in relation to
gold, that copper occupies IN relation
10 itself.
"a good deal of difference Of opin-
ion has existed as TO whether gold or
silver coins are best fitted for being
made legal tender. 1t does not seem
that the one possesses any very strik-
ing advantage over the other; none
certainly that would justify a change,
after "a selection had been made aud
acted upon for any considerable pc
Rod.
| Such are the rational explanations OF
Mr.. McCulloch, of the causes Of fuc-
tuation in the relative value Of gold
and silver-showing that one Of the
causes is purely legal, statutory, and
artificial. The experience Of England
upon the subject has been very curious
and instructive. England first made
silver only, then both gold aud silver,
aud finally gold only, legal tender for
large payments. When silver coin on
ly was legal tender, from 1914 to l7l7,
its value was fixed by law and was
steady. Gold was then commercial
commodity, huctuating in value, as
silver has during the last four years,
since Germany and the United States
joined England in discrediting it as
money, except for small payments.
Silver has been mostly discarded as
money in Great Britain since 1916
more than 81 years, but it did not fall
in value in other countries for more
than fifty years, and not uutil il was
demonetized by an American Congress,
and the Government Of Germany also.
Neither gold nor silver coin will have
stability OF value in any country, un-
less il is made a legal tender in pay
ment Of debts. Each OF these metals
has intrinsic value for use in the arts,
and will have commercial value as n
commodity, which will huctuate with
the temporary supply aud demand. un-
less the law fixes its value, makes ii
legal tender for debts, and thus gives
lit stability. II both be made legal
tender, as they should be, the value OF
each must be fixed by law; and If
either Of them be rated relatively low
or in one country than in other coun-
tries, ii will be the principal coin ex
ported, aud the overyalued coin i'm
ported and retained at home. The
coinage act Of congress Of 1884 made
gold l6 times the value OF silver, when
il was rated in other countries only
from 10 to 10 5-S times the value OF
silver The effect was, as was then
predicted by Mr.. McCulloch, to indEce
the expectation Of silver aud the i'm
portation of gold. The effectual meth
od that occurs 10 me, 10 obyIato that
difficulty and 10 maintain both metals
IN use, is 10 give the creditor a legal
right TO require all payments 10 be
made in equal amounts of gold and
silver coin. Such rule would be Just
TO the debtor and TO the creditor, also,
and maintain an equilibrium between
the two metals.
The American Congress and German
Government both followed q British
precedent, and fell into the British
gold trap, which has lessened the uses
and demand for silver and depressed
Its price; and now the American bond
holders have joined the British and
German holders Of American bonds in
raising the cry that silver is changea-
BILE in its value, and an unsafe stand
ard Of values, and therefore should
not be made a legal tender, except for
small sums; and that our bonds should
be paid in gold only. How blind in
terest and selfshness often make men!
Those gentlemen, who, having no
original opinions OF their own upon
subjects of finance, borrow theip opin-
ions from old England, can not deny
the authority OF Mr.. McCulloch, who,
= for nearly fifty years, was employed in
manufacturing commercial, financial,
and free trade opinions as we'll as
books, Tor fereign markets-to pro-
mote the interests Of the British peo-
lple. The time has come when the An
glo-American people should throw of
allegiance 10 British authority, upon
subjects Of commerce and finance, and
political economy also, as well as gov
eminent, and policies Of their own.
adapted 20 the condition and circum.
stances Of Our country. They should
stndy American interests, and not take