Daily Honolulu press. [volume] (Honolulu, Hawaiian Islands) 1885-1886, 1885-09-14
THE B1-MELAIIro THEORY.

Trying 10 una tnclr way out Oh the IN
tricacies of our currency muddle will
find arguments, logic, and facts in the
following comprehensive summary of
the subject involved. The article is
taken from the New York Indebendanf
and is especially recommended to those
who direct the Kingdoms finances.
THE UNIT OF PEcUNrARY VALUE.
The pnit Of pecuniary value is simply
specified quantity, by weight, or Of a
given hneness, Of gold or silver, as the
case may be, whether it be called
a dollar, pound, or franc, We say
gold or silver, since among civilized
nations these are the only metals which
in modern times are used as such units
What the unit shall be called, and
the amount of gold and silver which it
shall contain, are questions which each
nation determines for itself. This unit
in the United States, is called "dol-
lar"; and if it be gold dollar, it con
tains twenty-five and eight-tenths grains
of standard gold, while if it be silver
dollar, it contains four hundred and
twelve and half grains of standard
silver. In each a given quantity OF
metal, either gold or silver, and of a
given fineness or purity, is fixed upon
by the Government as the unit Of value.
All the other coins authorized to be
struck are graded to and regulated by
this unit The gold twenty-dollar piece,
for example, contains twenty times as
much gold as the gold dollar piece !;
and the same rule is observed in the
coinage of the gold tcn-dollar or the
gold five-dollar piece. If there we're a
gold half-dollar piece, it would contain
half the amount of the gold dollar.
There is no difficulty in securing the
necessary variety of coins Of the same
metal for public convenience, when
once the unit of pecuniary value is
fixed. All that is needed is to increase
or decrease the quantity of metal in the
new coins to be produced, SO that these
coins shall have a fixed and under
stood proportion of metal to the amount
contained in the unit Of value.
The difficulty on this subject arises
when, and only when, governments es-
tablish two units Of pecuniary value,
the one of gold, and the other of silver,
and undertake to adjust the coinage of
the one to that Of the other, SO that gold
dollar and silver dollar, for example,
shall be commercially equivalent to each
ether. 1t so happens that gold and
silver, taken in the same quantity by
weight, and having the same purity, are
not, and never have been commercial
equivalents. Gold, as commodity,
has and always has had, much higher
value than silver ; and this difference
in the value of the two metals varies at
different times. If then, the two metals
are to be coined as units of pecuniary
-snlrIr.= and gstrf,=,,r,;A= i, to be -lepaI
tender at its nominal value, what shall
be the coinage ratio of value as between
them
The proper answer to this question
is, that it should be the commercial
ratio existing in the market of the
world at the time of the coinage. Any
other ratio would be false to the facts
as then existing, and would make one
of the units more valuable than the
other This difference in value would |
not be avoided by calling both of them
dollars, or by making both legal |
tenders for the discharge of contracts
to be paid in dollars. The common
sense of the people would distinguish
between them; and by well known
law, the dollar of least value would
come INTO general use in the computa-
ton and exchange of other values, and
that of highest value would go into
disuse. In order to circulate, side
by side as commercial equivalents, SO
that neither will displace the other, the
two kinds of dollars must have the
same actual value and this can be
secured only by putting into the silver
dollar an amount of silver bullion that
is equal in value to the amount of gold
bullion contained in a gold dollar
What this relative amount actually is,
can be determined only by reference
to the gold and silver market of the
world at the time of the coinage.
Suppose the true ratio of value as
between gold and silver be in the pro-
portion of sixteen of the latter to one of
the former SO that it will take sixteen
pounds of silver to be equivalent of
one pound of gold F; and then the ques-
ton arises, whether this ratio will con
tinue to hold true. The answer of
history, especially in modern times is
that the relative value of these metals
is variable, and so variable that the
use OF two standards or units of value
has never been a complete success.
In actual practice, one or the other has
been treated as the unit of value, even
when bi-metalism was established by
law. 1t takes but slight variation in
the relative value of the two metals to
make this difference in practice. No
country can be SO constantly altering
its coinage laws as to adjust them to
these fluctuations OF market value
and hence the laws and the facts, with
two standards or units of value, are
quite sure to be in conflict with each