The progressive farmer. [volume] (Winston, N.C.) 1886-1904, 1895-05-28

60 100 Our own monetary history
na N ntready furnished two most strlk
1ns Illustrations of the operation of the
H1GuiaI law under which the coins
WnNLon are over-valued by statute al
May urlVe out of circulation the coins
Wu!cn are under-valued. Our own eX
PoIIoiCe had again demonstrated what
we history of the world already
O" u-that whenever the coinage
oo;noL any country permit b tree
SHnHSe OF both metals with the full
80 Oo1oer qualities at ratio of value
~ L 0oes not conform substantially
" LII intrinsic or commercial ratio
AZ Ono markets of the world, both kinds
VI CoIn cannot be kept in circulation
80 III same time. The reason Is that,
DoGn pglng full legal tender, the leasj
VaIGaole coin will always be used in
LLaALIs payments, and will become
Cn9 SIC measure of value, and the most
valuable will be boarded or sent out of
q country into the markets where it's
real value can be obtained.
Our hrst coinage law was passed in
1|9Z' Il 1t provided for full legal
tender gold and silver coins at a ratio
of Is to 1; that is to sav..15 mounds of
silver were to be considered as equal
IN value to 1 pound of gold, and the
Welghts OF the coins were adjusted to
that rule. Ia deciding upon this ratio.
neither Mr.. Hamilton, who recOmmen
ded 1t, nor the Congress which adopted
1T, supposed they were arbitrarily es-
tabIlshlng the relative values of the
two metals, o no legislative author
lty could do that, but 1T was supposed
that they were simply adopting and
utilizing IN the statute law the exist
ing intrinsic or commercial ratio be-
tween them. A brief experiment, how
ever, showed that O mistake had been
been made, and the inevitable result
followed. It soon became evident that
Is pounds of silver were not in fact
equal in value to 1 pound of gold, and
that no matter what words were prin
ted in the statute book the people in the
transaction of their business wholly
disregarded the legal ratio and treated
the metals according to their relative
commercial value, and that they would
not exchange 1 pound Of gold for Is
pounds Of silver, either In coin or buI-
lion, nor use gold coins as money when
the amount of bullion in the coin
was worth in the market more than
the coin itself. In short, silver had
been over valued and gold had been
under valued in the law, and the o
81 quence was that by the year 1912
gold had disappeared from the coun-
try, and from that time on until after
the passage of the act of 1884 the
United States had practically mono
metallism. In May, 1906, President
Jefferson stopped the coinage of the
silver dollar, and during a period of
thirty-one years, thereafter, not single
oE~-ln-I o;ryon In1S0a 11n .nOS-n1 0H 49,
mInts of the United States; but, under
the act of 1892, the subsidiary coins
were of full weight as compared with
the dollar and were legal tender. and
these coins, with Spanish dollars,
French crowns or 5 franc pieces, and
bank notes constituted circulating
medium. Gold having disappeared
from circulation, Congress determined,
in 1884, to bring it back by changing
the ratio. The act of 1884, supplement
ted by the act of 1887, provided that
the legal ratio should be 16 to l; that
ia. that 16 pounds of silver in the coins
should be equal to l pound of gold in
the coins, and the effeCG of this was to
drive silver out of circulation and substi-
tute gold in It's place, because silver
was under-valued and gold vas over
valued in the statute. One pound of
gold coined or uncoined was not, in
fact. worth i~ntrinsically or CONNER
cially Is pounds of silver, coined or
uncOined, and, therefore, the coins of
the two metals could not circulate to
gether at that ratio. The authors and
supporters of this law we'll knew what
the effect of such a legal ratio would
be in case it did not conform to the
commercial ratio, but the great object
n view was the restoration Of gold to
the circulation, and all other consider u
ations we're subordinate to that.
Doubtless many of them still believed
that the 6 called double standard
could be maintained, and that the coins
the two metals could be kept in circu-
latiOn together at the new ratio; but
they were mistaken. Silver went out
and gold came in. the gold basis was
established in 1864. by the practical
operation Of the ratio, just as com
pletely and effectually as if it had been
expressly declared III the statute.
HIRE, then, were two experiments in
the free coinage of the two metals in
this country, covering a period of
eighty one years, at legal ratios very
nearly corresponding to the real rala-
tive values in the commercial world,
and they both failed-in one case be-
cause silver was over.valued, and in
the other case because gold was over
valued. A very small percentage OF
difference between the legal ratio and
the commercial ratio has always been
found sufficient III modern times to
drive the under-valued metal entirely
ont and substitute che other, Or paper
based upon the other, in its place, and
no Congress or Parliament can repeal
or alter the natural law of trade by
which this movement of the metals is
governed.
In 1853 Congress, in order to main