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rency act of 1900 makes it the duty of the Secretary of the Treasury to maintain all other forms of money at a parity with gold-a requirement which means that he would have to redeem silver dollars in gold if such action should at any time be needed to maintain their parity. Gold certificates and silver certificates, are simply a mechanism for putting gold and silver money into circulation in convenient form. They are analogous to warehouse receipts, because they represent gold coins and silver dollars that are stored in the government Treasury to the full amount of the certificates issued, and which may be obtained at any time in exchange for the certificates. National bank notes, which constitute a large part of our actual circulating medium, are redeemed at the federal Treasury in government notes. In practice the government is continually receiving all kinds of money, including silver dollars, and exchanging other kinds of money for them.

The significant thing is that all other kinds of money are exchangeable, directly or indirectly, for gold coin. In the case of gold coin, there is a further kind of exchangeability- the unlimited and free convertibility of gold coin and gold bullion. So long as any one can secure gold coin in any amount for the same weight of gold bullion of standard fineness, and so long as gold coin can be freely melted down into gold bullion, it is impossible that there should be any difference between the value of a gold coin and the value of its metallic content. We have, then, not only the interchangeability of all parts of the circulating medium, but also the positive physical identity of one part of it and the material of which this part is made. Gold, whether in coin or bullion, constitutes the standard of value, for it is the value of gold that fixes the value of the dollar. The measuring of values in terms of dollars through the exchange of goods and services for money of different sorts, the equalizing of the values of dollars in all varieties of money through their exchangeability, and the automatic standardization of the value of the dollar through the free and unlimited coinage of gold1;- these are the fundamental facts of our monetary system.

'In fixing the value of coins at the value of their metallic content, unlimited coinage is of more importance than free coinage, as the history of seigniorage shows. Some writers have emphasized the importance of the legal tender quality

Gold coins, because their value as bullion is equal to their value as coins, constitute standard money. The gold dollar weighing 25.8 grains, and containing 23.22 grains of fine gold, is by law the unit of value. The coinage of the gold dollar was discontinued in 1890, but the gold coins that are minted contain precisely this amount of gold per dollar.

Limited Coinage. - Gold is the only metal which is made into coins by the United States government for any one who deposits bullion at the mints or assay offices. All other coins are made from metal purchased from time to time for that purpose as Congress may direct. In none of these coins is the bullion worth as much as the coin. In 1878, when the United States began the limited coinage of silver dollars, the value of the 371 grains of pure silver in a silver dollar was about 89 cents. The value of silver declined steadily until 1902, when 371 grains of silver were worth only 41 cents. Since that time there has been a slight upward movement, but nevertheless the present (1908) bullion value of a silver dollar is only about one half its value as a coin. The bullion value of the smaller silver coins is still less, for they contain but 347.22 grains of silver to the dollar, while the bullion value of our nickel and bronze coins is yet smaller, relatively.

Such coins are sometimes called "token coins," the implication being that the fact that they pass from hand to hand at their full nominal value is merely a matter of habit or usage, supported by general acquiescence. More accurately, however, they are credit coins, because the excess of their coin value over their bullion value depends ultimately, as we have seen, upon the good faith and credit of the government, evidenced by their redeemability in gold. If, for example, a catastrophy should overthrow the present federal government, and if the new government should refuse to recognize the obligations of the old, nothing could prevent these coins from sinking to their bullion value.

in this connection. But experience has shown that while the fact that money must be accepted by a creditor at full value sometimes makes an otherwise undesirable kind of money a "generally acceptable medium of exchange," it does not suffice to maintain its value, so far as prices made after such money has been issued are concerned.

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A very considerable profit accrues to the government from this limited coinage. The difference between the amount paid for silver bullion from 1878 to 1907, and the value of the coins made from it, amounted to $143,000,000. In the accounts of the federal treasury this profit is called seigniorage, but it is to be carefully distinguished from real seigniorage, a charge exacted for the conversion of standard bullion into standard coin. If the federal government should issue a general balance sheet of the kind used in corporation accounting, the credit element in its outstanding limited coinage would properly appear as a liability, which might be greater or less than the profits that had accrued on such coinage, depending upon whether the present value of the bullion in the coins happened to be greater or less than the prices which the government had paid for it.

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Bimetallism. A monetary system like the present one of the United States is a single standard system, because only one commodity is used as a standard of value. The double standard system, under which two different commodities serve concurrently as legal standards of value, has, however, been used in the past by many governments, including our own, and its superiority over the single standard system has been alleged by many advocates. Practically the only commodities that civilized nations have used as standards of value in modern times are gold and silver. The question of the double standard resolves itself, accordingly, into the question of the bimetallic standard, which means in practice the unlimited coinage of both gold and silver.

Bimetallism does not mean, in theory, as might be supposed, the establishment of two different monetary units of different names, one measured by the value of a certain amount of silver, the other by the value of a certain amount of gold, prices being measured according to convenience in terms of either unit. On the contrary, it contemplates the establishment of one nominal unit, such as the dollar, to be measured at the same time by the value of either a definite amount of gold or a definite amount of silver. More concretely this means the opening of the mints to the unlimited coinage of both gold and silver into dollars, or dollar multiples, the amount of silver

in a silver dollar and the amount of gold in a gold dollar being established by law.

Many of the arguments that have been advanced by bimetallists have related to the alleged immediate advantages to be secured from the adoption of the double standard under particular conditions of time and place. One argument, however, of more general significance is based on the probable greater stability in value of the double standard. Silver and gold are produced under somewhat different conditions, and are used for somewhat different purposes. It has been suggested that tendencies toward fluctuations in the value of silver and gold would, therefore, be as apt to be in opposite directions as in the same direction, and that so far as they were in opposite directions they would tend to counterbalance each other.

Most opponents of bimetallism, while admitting that, if feasible, it might possess some advantages, deny its possibility. The difficulty is, they maintain, that while the ratio of the weight of gold in the monetary unit to the weight of silver in the monetary unit has to be fixed and definite, the ratio of the value of gold to the value of silver is not fixed and definite, but is subject to the fluctuations of the market. If one metal is relatively undervalued and the other relatively overvalued by the legal ratio, the result will be that only the overvalued metal will be brought to the mint for coinage, for the undervalued metal will be worth no more than the overvalued one as coin, but will be worth more as bullion. The actual result will be, in such a case, not a bimetallic standard, but a single standard composed of the metal which, at the mint ratio, is the cheaper. Moreover, if, by a change in the relative market values of the two metals, this one in turn becomes undervalued by the mint ratio, the standard coins composed of that metal that are already in use will, according to Gresham's law,1 disappear from circulation, being hoarded, melted down, or exported, and the other metal will take its place as the actual standard of value.

1 Gresham's law is that "bad money drives out good," or that "the cheaper money drives out the dearer." Sir Thomas Gresham, master of the mint under Queen Elizabeth, came to this conclusion as a result of his observation of the difficulties encountered by that sovereign in her attempts to improve the condition of the debased, worn, and mutilated coinage bequeathed to her by her predecessors.

All but the most extreme bimetallists would admit the impossibility of establishing and maintaining a coinage ratio between the two metals that would differ by any considerable margin from the ratio corresponding to their market values, but they maintain that a mint ratio established as nearly as possible to the prevailing market ratio will have a steadying influence upon the latter that will tend to prevent any wide divergence between the two. If one metal should rise in value to such an extent that it would not pay to use it as money, more of the other metal would be used for monetary purposes, thus decreasing the supply of it available for other uses and consequently enhancing its value. The net effect would be, it is claimed, a tendency toward the equilibrium of the value of the two metals at the coinage ratio.

The appeal to history has been used both by bimetallists and their opponents. The claim of the monometallists that legal bimetallism is apt to mean actual monometallism, with the relatively cheaper metal as the standard, has been substantiated many times in the monetary experience of different nations. The automatic change from one single standard to the other, following a change in market values, is also a phenomenon that has been illustrated by a large number of concrete cases. On the other hand, the bimetallists are able to point to some apparently successful bimetallic systems, such as that of France in the eighteenth century. But it is a significant fact that no real bimetallic system has been able to endure for any considerable time except when the annual production of gold and silver was relatively small and relatively stable, and where international trade was a relatively unimportant item. There is no scientific student of monetary problems who believes that it would be possible for any nation to maintain independently the double standard under the present conditions of a large and fluctuating annual production of the precious metals, coupled with an international commerce of vast proportions.

International bimetallism, that is, the adoption by each of the leading nations of a bimetallic standard, at a ratio fixed by national agreement, has had many supporters, even among those who do not believe in the practicability of national bimetallism, and representatives of different nations have assembled in several inter

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