Rensselaer Republican, Volume 27, Number 37, Rensselaer, Jasper County, 9 May 1895 — “COIN’S” ERRORS. [ARTICLE]

“COIN’S” ERRORS.

Prof. Laughlin, of University of Chicago, Points Out a Few More. Silver. Was Not the Monetary Standdard Continuously from 17 9 2 Until 1873-Gold and Silver Have Never Been In Concurrent Circulation. There is no necessity in this discussion of gold and silver that either side Ishould adopt the you-are-a-fool-if-you-dont believe attitude. It is proper to reason together fairly and frankly. Our only concern must be to get at the truth whatever it may lead us. And even if “Coin’s” book seems often hopelessly in error, it is j ust as well to take these errors as an occasion for hunting up the facts on the point in question. “Coin” tried to show in his book (p. 20) that foreign silver coins were used to maintain a continuous silver basis from 1792 to 1873. And then he quoted a law (which was passed, although he does not give the d Je), March 3,1843), as follows: And be It further enacted. That from and after the passage of this act the following foreign silver coins shall pass currentas money within the United States, and be receivable by tale* for the payment of all debts and demands at the ratio following, that Is to say: the Spanish Tillar dollars, and the dollars of Mexico. Peru and Bolivia, etc.— Why did “Coin” stop just here? What is the remainder of section 2? It is as follows: —of not less than eight hundred and nlaety-sev-en thousandths In fineness, and four hundred and fifteen grains in weight, at 100 cents each; and the fiv’e-france pieces of France, of not less than nine hundred thousanths In fineness, and three hundred and eighty-four grains In weight, at 93 cents each, That is, our own silver coins having entirely disappeared from circulation, under the act of 1834, which fixed the ratio at 16 to 1, the medley of foreign coins which crept into the country were legalized in lieu of nothing else. And even then they were to be taken only according to certain weights and fineness carefully specified. Now, if this section two is to be quoted to prove, that we use silver alone, and were only on a silver basis, why did “Coin” suppress section 1 of this same act, which goes on also to enact the terms according to which “from and after the passage of this act the following foreign gold coins shall pass current as money within the United States, and be receivable, by weight, for the payment of all debts and demands,” etc. If section 2 proves that “we needed more silver than we had,” then section 1 proves that we needed more gold. The result is an obvious reductio ad absurdum: It shows that when legislating about foreign coins we had to deal with both gold and silver coins; as, in 1792. we started out to maintain both gold and silver coins in circulation at a ratio of 15 to 1. But irrespective of all quibbling about interpretations or an act, and avoiding all hair-splitting, as fair-minded persons trying to get at the facts, what other reasons do we find for showing that silver was not, in fact, the monetary standard continuously from 1792 until 1873? Starting in 1792 with a .clear trial of a double standard at a ratio of 15 to 1, we find that silver soon so fell in value that in 1808 the .market ratio was 16.08 to L (See “Coin’s” book p. 34;) and it never after got again as high as 15 to one. That is, it

was cheaper to pay debts in silver than in gold; and by 1812 it was noticed that gold was disappearing. And so matters stood until 1834, when a new attempt was made to change the legal ratio in order to adopt it to the market ratio, which was then 15.73 to 1. Thinking silver was likely to keep falling they anticipated the fall by choosing a ratio of 16 to 1. This overdid the case. And now gold became cheaper by 3-100 of an ounce. Consequently we had only a gold circulation after 1834; even our small silver went out with the silver dollar pieces. And this was the reason why in the act of Feb. 21,1853, when we took up the question again, no further attempt was made to keep both ailver and gold in concurrent circulation; and the only thing done was to introduce a proper system of overvalued token silver subsidiary coins. The dollar piece was then no longer in circulation; and the dollar’s worth of small coin was hereafter to contain only 345.6 grains of pure silver instead of 37as formerly. Therefore, from a time soon after 1834 until 1878 a silver dollar was never seen in circulation. How were we then on a silver basis? Just as well say we are walking only on the right leg because one wilfully refuses to see the left leg. J. Laurence Laughlin Professor of Political Economy, University of Chicago.