The patriotism and statesmanship of Andrew Jackson and Thomas Jefferson
were untainted in 1792 by the dangerous influence of a coterie of silver
barons. They simply ascertained as nearly as they could the relative
or market value of the two metals, and determined the legal from the
commercial ratio, placed them side by side and started our mints going
with the unlimited coinage of gold and silver at the ratio of 15 to 1.
As a matter of fact they had overvalued silver; that is to say, the
gold dollar was worth 100 cents, but the silver dollar was only worth 98
cents. Now the rank and file of our forefathers cared very little about
the discrepancy of the 2 cents on the dollars, but the money changers
were abroad in the land in 1792, the same as they are in 1896, and
whenever a gold coin came into their possession it was quietly retired
from circulation. In other words, the cheaper money drove out of
circulation the higher priced money, and as a result, we had silver as
the only hard money currency circulating in this country from 1792 to
1834. Let me quote Thomas Jefferson's own words. In speaking of the
ratio of the two metals, he says:
"THE PROPORTION BETWEEN THE VALUES OF GOLD AND SILVER IS A MERCANTILE
PROBLEM ALTOGETHER."
What statement could be clearer and more concise than that? It being
a mercantile problem, it of course was understood to be subject to
fluctuation and change. Accordingly, in 1834 our forefathers concluded
as their first attempt at a double standard had utterly failed in
keeping the two metals circulating side by side as money, that they
would change the ratio from 15 to 1 to 16 to 1, which they did. It seems
this ratio undervalued silver, that is to say, the gold dollar was still
worth 100 cents, but the silver dollar was worth from 102 to 103 cents.
Gold at once became the hard money circulating medium in this country,
silver the higher priced money, was entirely retired by the money
changers, bullion dealers and silversmiths. This is another illustration
where the cheaper money drove out of circulation the higher priced
money.