GOLD, SILVER, AND THE ELUSIVE GOLD STANDARD

 
A silver écu, minted in 1784, depicting Louis XVI, King of France.

The United States had operated on the bimetallic standard prior to the Civil War, when the cash-strapped Lincoln administration began printing greenbacks. But when Ulysses Grant signed the Coinage Act of 1873, drastically limiting the minting of silver-based currency, he had placed the nation on the path to adopting the gold standard alone, as many European nations had already done and as others would do in the years to follow.

Decried as the ‘Crime of '73' by its detractors, the law touched off decades of acrimonious political debate, pitting the East Coast financial establishment, whose constituents argued for ‘sound money' backed by gold, against midwestern farmers and the citizens of western mining outposts, who pushed for a vast expansion of silver-based currency. Ballooning the money supply was attractive to debtors struggling to repay their loans, and farmers hoped it would increase the price of their crops; for the miners of Montana and Nevada, where the Comstock Lode had been discovered in 1859, it would almost literally give them the ability to mint money.

But bankers such as Seligman warned that unilaterally returning to bimetallism could have disastrous economic results, crippling international trade and causing precious gold to flee across the Atlantic while Europe dumped its silver on the U.S. Treasury. ‘A standard different from that of the commercial world would affect the vast mass of our imports and exports,' Jesse cautioned in an essay published in The North American Review, ‘and but little less directly every other industry touching these at any point.' One possible solution to America's monetary impasse was convincing key European trading partners—such as Britain, France, and Germany—to adopt international bimetallism and establish a commonly accepted ratio between gold and silver. Seligman's mission was to gauge European attitudes and pave the way for an international conference where the silver question might finally be settled.

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GOLD, SILVER, AND THE ELUSIVE GOLD STANDARD -- 4/8/24 (https://www.delanceyplace.com/view-archives.php?p=5039)

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