In 1834 people had become tired of lugging silver around. They had by
this time found out what was the matter. They determined to have some
gold in their pockets, but it cannot be affirmed that Congress had
reached a scientific conclusion in favor of the single gold standard.
What is certain is that Congress adopted the ratio of 16 to 1 in 1834
by very large majorities in spite of proofs urgently presented that
this ratio would drive silver out of circulation altogether, as it did.
This bill was called the “Gold Bill” in the discussions of the time.
As reported by the special committee, it provided for a ratio of 15.60
to 1, but when it came up for discussion, Mr. Campbell P. White, the
Chairman of the Committee, who was himself in favor of the single gold
standard, moved to amend by making the ratio 16 to 1, and his amendment
was adopted without a division. On the main question the debate was
long and animated. An amendment to the amendment was offered, making
the ratio 15.625 to 1, and it was supported on the ground that this was
the true market ratio, and that it would enable the country to keep
both silver and gold in concurrent circulation. This amendment was
voted down--yeas 52, nays 127. The bill was then passed in the House by
145 to 36, and in the Senate by 35 to 7.
There was a variety of motives leading to the passage of the Gold Bill,
but among these the desire of having gold in place of silver was the
most influential. Thomas H. Benton, one of the strongest advocates of
the measure, declared that the object of his endeavors was:
“To enable the friends of gold to go to work at the right place to
effect the recovery of that precious metal which their fathers once
possessed, which the subjects of European kings now possess, which
the citizens of the young republics to the south all possess, which
even the free negroes of San Domingo possess, but which the yeomanry
of this America have been deprived for more than twenty years, and
will be deprived forever unless they discover the cause of the evil
and apply the remedy to its root.--[Speech of Senator Benton of
Missouri, quoted by Louis R. Ehrich in his ‘Question of Silver.’]”
The effect that was predicted was abundantly realized. Silver did go
out of circulation. The minor coins, being of proportional weight and
fineness with the dollar, were melted and exported, and their place in
the circulation was taken by light-weight foreign coins, principally
Spanish and Mexican six-pences, shillings, quarters, and halves.
Those coins, when of full weight, were almost identical with our own
fractional coins. If our own would not circulate the foreign ones
of course would not. But if there was a certain proportion of these
coins, whether foreign or domestic, that had been worn down by long use
so that they really represented the market ratio or something less,
such coins would circulate concurrently with gold. To illustrate: two
halves, four quarters, or ten dimes, if new and of full weight, were
worth about one cent and a half more than a gold dollar. Consequently
they would be collected by brokers, melted and exported. But two
halves, four quarters, or ten dimes, that had lost one and a half
cents’ worth of silver by abrasion, would circulate, because there
would be no motive to melt or export them. There would be no profit
in it. When I was a boy the silver money of this country consisted
exclusively of foreign coins, mostly Spanish and Mexican, but with a
considerable sprinkling of English, French, German and Scandinavian
pieces. Every merchant kept a coin chart manual for handy reference to
determine the value of these pieces as they were offered in trade. I
have also seen Spanish quarters cut in half, each piece circulating as
a shilling. There was nothing remarkable about this, since all these
foreign coins were circulating at their bullion value. The two halves
of a Spanish quarter were therefore worth as much as they would have
been if joined in a single piece.
It became apparent to everybody that if full-weight silver coins would
not circulate on the ratio of 16 to 1, while those of light weight
would circulate, then it would be safe to _make_ minor coins (halves,
quarters, etc.), designedly of light weight on Government account, of
limited legal tender. There would be no profit in exporting such coins,
because they would not sell as bullion for as much as it would cost to
collect them. In 1853 an act of this kind was passed.
From 1837 onward the country had gold money and the gold basis. Silver
dollars were hardly ever seen. There was not an hour in the whole
period of forty years to 1873 when the silver dollar was not worth more
than the gold dollar. With the exception of a very few years it was
worth fully three cents more. Did any of you ever see a silver dollar
in circulation prior to 1878? I never did.