The herald., 1896-10-26
A QUESTION ANSWERED

A subscriber asks when was silver
first demonetized. and what was silver
worth when the Sherman law was
passed?"
The first nation to demonetixe silver
was England in 1916. There was no
movement by any other nation to elm
mate silver from its monetary system
until 1871, when the Germafrempire be-
gan to legislate for the demonetization
of silver. which eliminated in adopting
the gold standard in 1873. While the
question was pending in Germany, Nor
way, Sweden and Denmark, known as
the Scandinavian union, changed to the
gold basis in 1872. In 1873 the United
States demonetized silver. and in 1874
the Latin union, comprising the coun-
tries Of Greece, Switzerland. Belgium.
Italy and France. adopted the gold
standard Since 1874 several other coun-
tries have either adopted the gold stand
ard or suspended the coinage of silver.
England, under the influence of her
banking Institutions. inausurated the
war upon silver, and by diplomatic and
commercial intrigue, finally succeeded
in having nearly all the nations adopt
ultimate redemption, whether In the
settlement Of trade balances or in the
liquidation Of government loans.
It is claimed by the gold advocates
that the production Of silver had be-
come 30 great that 1t had to be demon
etized. so as to prevent a volume Of
money that would be far in excess Of the
requirements Of commerce, which
would operate to NIL the world with
cheap and deprecated money, and they
point to the fall in the price Of silver
since 1t was demonetfzed to prove that
it's coin value was entirely fictitious
The facts however, do not bear them
out. From the best information that
can be obtained it is ascertained that
the ratio of production never exerted
any influence upon the commercial ra-
ito. Going back to the discovery Of
America, we find that the production Of
silver outstripped the production of
gold, and that between 1851 and 1900
there were produced nearly flfty-seven
ounces Of silver to every ounce Of gold,
but the coinage or commercial ratio
ranged at a trifie over 151k. During the
period of 10S years preceding 1900 the
ratio of silver production was thirty
Of silver ounces to one ounce Of gold,
and during the century beginning with
100 the ratio of production was forty to
one. From 1900 to 1900 the average pro-
duction was thirty of silver to one of
gold, and from 1900 to 1873 production
was about seventeen to one. But from
| the discovery of America down to 1873
Af l,,% %I,<
| world was above the coinage ratio of
| 16 to 1, and that, too, in the face Of the
| fact that the average production Of
silver was about thirty-two ounces to
| one ounce of gold. The absurdity. there
fore, of saying that the coinage ratio of
the metals should be based upon the
| production ratio is apparent.
| When the United States demonetized
silver in 1873 the commercial ratio was
1892 of silver to of gold, but since
| then the ratio has ranged from 16 to
| to SO to l. These figures show that since
| 1893 certainly the coinage ratio has not
at all times been based upon the COM
mercial ratio. Up to 1900 from 1851 the
production was, as we have said, nearly
| 81 to /, while the coinage or the COM
was true in the period mentioned has
| been substantially tue in all the years
since. That is to say. the fats of gov
ernments fixed the coinage ratio with
out any reference to the production ra-
ito, and no country in the world ever
attempted to coin the metals other
wise until 1916, when England found
that the only way to make money
scarcer was not to increase the coinage
ratio, but to eliminate silver alto
gether as redemption money. It was
not because the ratio of gold and silver
| production was widening because Of
any increased output of silver but be-
cause the output of both metals was in.
creasing and threatened to give the
world larger supply of metallic money
| than England could control, and it was
British influence that caused the United
States and the countries on the con.
| tinent to discontinue the use Of silver as
redemption money.
The commercial ratio Of silver wher
the Sherman law was passed in 1891
was 1876, and 26.49 when the law wa.
repealed in 1898 When the Bland-Al
lison law became operative in 1879, thu
commercial ratio was about 1850. Blu
the production nor the commercial ra
tios have any direct bearing upon thu
coinage ratio They could not have, fo
the commercial and production ratio
are constantly fluctuating, while th
coinage ratio is necessarily fixed and i'm
movable, until changed by an edict O
the fiat of the government. These fig
ures show very conclusively that tn
purchasing power Of silver dollar un
der free coinage at the ratio of 16 to
would be the equivalent of 100 cents
and that, too, without any referenc
to the production ratio. Fractional sill
yer coin is legal tender for a give
amount, and so are copper cents an
nickels, and they are purposely coine
on the basis Of greater purchasin
value as coin than as a mere meta
besides they are not redeemable in O
exchangeable for any other form Q
money. They stand on their own merit
FRANCIS TALKS