5. John Cragg, The Mint (London: Cambridge University Press, 1953), p. 61.
6. The quotation is from section 18 of the act of April 2, 1792, “Establishing a mint and regulating the coins of the United States.”
7. Ibid., section 19.
8. See Thomas K. Delorey, “The Trial of the Pyx,” at http://www.hjbltd.com/departments/articles/details.asp?inventorynumber=33&linenum=23.
9. The full quote is “To annul the use of either of the metals as money, is to abridge the quantity of circulating medium, and is liable to all the objections which arise from a comparison of the benefits of a full, with the evils of a scanty circulation.” See Hamilton, “On the Establishment of a Mint,” p. 93.
10. The earliest coins discovered by archeologists were made of silver and date from the middle of the Iron Age, 800–900 BCE. See Raz Kletter and Etty Brand, “A New Look at the Iron Age Silver Hoard from Eshtemoa,” Zeitschrift des Deutschen Palästina-Vereins Bd. 114, H. 2 (1998): 139–154; and Christine M. Thompson, “Sealed Silver in Iron Age Cisjordan and the ‘Invention’ of Coinage,” Oxford Journal of Archaeology 22, no. 1 (2003): 67–107. This discovery negates the story of Greek historian Herodotus, who attributed the invention of coins to King Croesus of Lydia around 600 BCE. See Peter Bernstein, The Power of Gold: The History of an Obsession (New York: Wiley, 2000), pp. 27–37.
11. See Arthur J. Rolnick and Warren E. Weber, “Gresham’s Law or Gresham’s Fallacy,” Journal of Political Economy 94, no. 1 (1986): 17–24, for a more precise discussion.
12. Feavearyear, Pound Sterling, p. 155, cites Newton’s report, “Gold and Silver Coin,” Cobbett’s Parliamentary History (London, T.C. Hansard, 1811), 7:525–30, showing that he did not foresee the dominance of gold: “If things be let alone till silver money be a little scarcer the gold will fall of itself.”
13. Gold flakes made the New York Times on December 21, 2016, p. A25, with the headline “Police Identify Man They Say Took Gold Flakes from Truck.” The flakes, which are shed as jewelers work with gold, are collected and stored in buckets before being shipped by armored truck to a depository. The stolen bucket weighed eighty-six pounds and was valued at $1.6 million.
14. Hamilton, “On the Establishment of a Mint,” p. 94.
15. Section 9 of the act specifies the one-dollar coin as containing 371.25 grains of pure silver and the ten-dollar eagle as containing 247.5 grains of pure gold. These translate into prices as follows: An ounce contains 480 grains, so to get an ounce of pure silver you need 480/371.25 or $1.29293. The ten-dollar eagle contains 247.5 grains, so to get 480 grains of gold (an ounce) you need 480/247.5 or $19.3939.
16. The increased relative value of gold during this period arose from expanded silver production in Mexican mines that entered the United States via trade. For details see J. Laurence Laughlin, The History of Bimetallism in the United States (New York: D. Appleton and Company, 1897), pp. 47–48. Also see Peter Temin, “The Economic Consequences of the Bank War,” Journal of Political Economy 76, no. 2 (1968), esp. pp. 267–70, for details on imports of silver from Mexico and exports to China.
17. Congress lowered the gold content of a dollar from 24.75 grains to 23.2 grains in 1834 and then made it 23.22 in 1837. Less gold in the dollar meant it cost more dollars to buy an ounce. Since there are 480 grains in a troy ounce, it took $20.67 (480/23.22) to buy an ounce of gold. See Leavens, Silver Money, p. 20.
18. Laughlin, History of Bimetallism, p. 61, says that there was a purposeful overvaluation of gold in 1834 to accommodate political pressure in Congress after gold was discovered in North Carolina and other southern states. Laughlin also suggests (p. 65) that Congress overvalued gold “inasmuch as the value of silver relatively [sic] to gold had been steadily falling for many years, [and Congress thought] it was quite likely to continue to fall still more in the future.” The 16 to 1 ratio was designed to anticipate a further deterioration in relative market prices, which did not occur, hence the overvaluation remained and drove silver out of circulation.
19. Data on average silver prices in each year between 1833 and 1935 (based on London quotations) are in the Annual Report of the Director of the Mint, p. 89. Two other sources are available with similar (within a penny) numbers over that time period. Page 88 of the Annual Report provides estimates of the New York price from 1874 through 1935. And the NBER Macrohistory Database at http://www.nber.org/databases/macrohistory/contents/chapter04.html also records London prices like those on page 89 of the Annual Report. Monthly data from the Commodity Research Bureau are available from 1910 through 1946 and then are available daily beginning January 1947.
20. The annual average price of silver was $1.578 per ounce (an average of monthly data on cash silver from the Commodity Research Bureau database) in 1967, the first time the annual average exceeded $1.36 since 1859. Two spikes in daily silver prices (New York quotations) in 1919 and 1920 exceeded $1.36 (see page 88 in the Annual Report) but the annual averages in those years were below $1.36. Roy Jastram, Silver: The Restless Metal (New York: John Wiley & Sons, 1981), p. 86, reports that silver “exploded to $1.375 in November 1919.” Bratter, Silver Market Dictionary, p. 113, writes: “The maximum price of silver recorded in New York was $1.38¼ on November 25, 1919.”
21. Ronald M. James, The Roar and the Silence: A History of Virginia City and the Comstock Lode (Las Vegas: University of Nevada Press, 1998), esp. p. 35.
22. See the discussion and table on page 1 of the “Special Report to the Monetary Commission on the Recent and Prospective Production of Silver in the United States, Particularly from The Comstock Lode,” in Report and Accompanying Documents of the United States Monetary Commission, organized under Joint Resolution of August 15, 1876, 2 vol., 44th Cong., 2d sess. S. Rept 703 (Washington, DC: Government Printing Office, 1877). The total production during this period for the entire United States was $100 million in silver. During 1861 the output was $2 million, all from Comstock, and in the last year output was $16 million, of which $5 million came from Comstock. I used 5/16 as my estimate for Comstock for the entire period, which is probably too low.
23. See James, Roar and Silence, pp. xix–xx.
24. These data on average silver prices are for the bullion market in London and come from the Annual Report of the Director of the Mint, p. 89.
25. The last year silver averaged less than $1.30 was in 1845, when it was $1.298.
CHAPTER 2: SOLVING THE CRIME OF 1873
1. For background see chapters 1 and 2 in John Sherman’s Recollections of Forty Years in the House, Senate, and Cabinet (Chicago: Werner Company, Chicago, 1895), available at https://archive.org/details/johnshermansreco00sher.
2. See William Kolasky, “Senator John Sherman and the Origin of Antitrust,” Antitrust 24, no.1 (2009): 85.
3. Ibid., for the nicknames. In American Statesman: John Sherman (Boston: Houghton Mifflin Company, 1906), p. 384, Theodore Burton writes about the senator’s personality: “The General was fond of meeting friends and loved society. … The Senator … was much more at home in the intellectual laboratory in which his work was performed.”
4. See section 14 of the Coinage Act of 1873, more formally titled, “An Act revising and amending the Laws relative to the Mints, Assay offices, and Coinage of the United States,” 42d Cong., 3rd sess., February 12, 1873. Statutes at Large, vol. 17, chap. 131.
5. Section 15 of the Coinage Act of 1873 omits the silver dollar from the list of silver coins to be minted, and section 17 states: “That no coins, either of gold, silver, or minor coinage, shall hereafter be issued from the mint other than those of the denominations, standards, and weights herein set forth.”
6. “An Act Regulating Foreign Coins, and for Other Purposes” (February 9, 1793), Statutes at Large, 1:300–301.
7. This discussion relates to an earlier version of the bill, S. 859, introduced by Sherman in April 1870 and revised in December 1870, which also established gold as sole legal tender and made subsidiary silver coins legal tender only for pa
yments up to one dollar (see sections 14, 15, and 18).
8. The Congressional Globe, January 9, 1871, p. 374.
9. These details are memorialized in the formal title of the legislation, “An Act revising and amending the Laws relative to the Mint, Assay Offices, and Coinage of the United States,” 42d, sess. 3 (February 12, 1873).
10. See Robert R. Van Ryzin, Crime of 1873: The Comstock Connection, (Iola, Wisc.: Krause Publications, 2001), chap. 10.
11. Walker, “Free Coinage of Silver,” p. 17n1.
12. See Paul M. O’Leary, “The Scene of the Crime of 1873 Revisited: A Note,” Journal of Political Economy 68, no. 4 (1960): p. 390, for the reference to Weston. The quote is from Report and Accompanying Documents of the United States Monetary Commission, 1, p. 193.
13. Paul Barnett, “The Crime of 1873 Re-Examined,” Agricultural History 38 (July 1964): p. 178.
14. Walker, “Free Coinage of Silver,” p. 170.
15. He became chairman on March 4, 1867, when the fortieth Congress was sworn in. See Sherman, Recollections, p. 334. The flightless dodo became extinct during the seventeenth century.
16. Ibid., pp. 339, 420.
17. Ibid., pp. 342–43, describes this incident.
18. Ibid., p. 343.
19. See Report of the International Conference on Weights, Measures, and Coins, held in Paris, June 1867; and Report of the International Monetary Conference, held in Paris, June 1867 (London: Harrison and Sons, 1868), available at http://babel.hathitrust.org/cgi/pt?id=mdp.35112103466761;view=1up;seq=1. Propositions 5 and 6 (p. 51) discuss the advantages of gold as international money.
20. See Report of the International Monetary Conference. Page 52 discusses the consequence of gold discoveries: “Before the discovery of the rich mines of California, Australia, the North-west of the United States, and the American possessions of Great Britain, gold coins having a price greater than the legal rate were the first to go out of circulation, and could only be procured at a premium. After these discoveries the contrary was the case; gold having become lower than the legal rate, silver disappeared.” See page 55 for the discussion of Proposition 7 (against the double standard), which was put to a vote and “adopted by a great majority.”
21. In relation to the coinage of gold and silver, S. 217, 40th Cong., 2d sess., January 6, 1868, included the preamble: “Mr. Sherman asked, and by unanimous consent obtained, leave to bring in the following bill; which was read twice, referred to the Committee on Finance, and ordered to be printed.”
22. “Opposition of Senator Morgan to the Plan of the Paris Conference for Monetary Unification,” New York Times, June 12, 1868, p. 5.
23. S. 859 was introduced on April 28, 1870, 41st Cong., 3d sess.
24. Section 5 of the Coinage Act of 1873.
25. For example, an article in the Chicago Tribune, May 5, 1870, entitled “Coinage,” put the demonetization of silver in the sixth paragraph.
26. Sherman, Recollections, p. 393.
27. See Leavens, Silver Money, p. 23.
28. Sherman, Recollections, p. 393.
29. See Henry Parker Willis, A History of the Latin Monetary Union (Chicago: University of Chicago Press, 1901), p. 115.
30. See Steven P. Reti, Silver and Gold: The Political Economy of International Monetary Conferences, 1867–1892 (Westport, Conn.: Greenwood Press, 1998), pp. 53–54. The Imperial Coinage Law did not demonetize silver, but it stopped the coinage of legal tender silver and anticipated the shift to gold with the phrase: “Till the passing of a law dealing with the withdrawal of silver coins.” See the discussion “Demonetization of Silver in Germany,” Report and Accompanying Documents of the United States Monetary Commission, 1:74–78, esp. p. 75.
31. Jastram, Silver, p. 75.
32. Willis, History of the Latin Monetary Union, p. 117.
33. See Leavens, Silver Money, p. 33.
34. See 1) Report and Accompanying Documents of the United States Monetary Commission, 1, p. 98; 2) Report from the Select Committee on Depreciation of Silver, together with the proceedings of the Committee, minutes of evidence, and appendix, ordered by the House of Commons to be printed 5 July 1876, available at https://catalog.hathitrust.org/Record/001118659, p. iv; and 3) U.S. Department of the Treasury, Annual Report of the Secretary of the Treasury on the State of the Finances for the Year 1889 (Washington, DC: Government Printing Office, 1889), esp. p. LXII, “Causes of the Depreciation of Silver.”
35. See Laughlin, History of Bimetallism, p. 75, and John Walton Caughey, The California Gold Rush (Berkeley: University of California Press, 1948), pp. 8–10.
36. See Laughlin, History of Bimetallism, pp. 283, 285.
37. See Report on Weights, Measures, and Coins, p. 52.
38. See Feavearyear, Pound Sterling, pp. 211–13, for a discussion of Lord Liverpool’s Coinage Act of 1816.
39. In 1894 the average quote in London was 63.5¢ per ounce. Annual Report of the Director of the Mint, p. 89.
40. See Laughlin, History of Bimetallism, chap. 15, for a full discussion of Bland-Allison.
41. Ibid., chap. 16.
42. This quote from Sherman, Recollections, p. 830, also appears in Leavens, Silver Money, p. 41.
43. See Friedman, Money Mischief, p. 72, for confirmation that the United States would have been on silver. Friedman also argues (p. 76) that the United States would have benefited from a more stable price level.
44. The annual rate of deflation equaled 1.5% according to Friedman, Money Mischief, p. 76.
45. The best interpretation is Hugh Rockoff, “The ‘Wizard of Oz’ as a Monetary Allegory,” Journal of Political Economy 98, no. 4 (1990): pp. 739–60. The remainder of this paragraph uses his analogies with one exception: I interpret the cyclone as the economic and political upheaval (similar to the teacher’s guide at http://www.roadmaptolastbesthope.com/files/Chapter12Lesson_LessonPlan.pdf), but he considers it the free-silver movement itself (p. 745).
46. Rockoff, “Wizard of Oz,” p. 750.
47. “Denouncing the ‘Goldbugs,’ ” New York Times, August 2, 1893, p. 2.
CHAPTER 3: FREE SILVER
1. “Fame Won in an Hour,” Washington Post, March 20, 1892, p. 3.
2. Ibid.
3. Louis W. Koenig, Bryan: A Political Biography of William Jennings Bryan (New York: G. P. Putnam, 1971), p. 95.
4. Paxton Hibben, The Peerless Leader: William Jennings Bryan (New York: Farrar and Rinehart, 1929), p. 129.
5. Ibid., pp. 30–31, for this and the next quote.
6. Ibid., p. 34.
7. Ibid., p. 38.
8. Koenig, Bryan, p. 84.
9. See Bryan, First Battle, p. 39, for his debating record.
10. Hibben, Peerless Leader, p. 80.
11. Paolo Coletta, William Jennings Bryan, vol. 1, Political Evangelist, 1860–1908 (Lincoln: University of Nebraska Press, 1964), p. 25.
12. Hibben, Peerless Leader, p. 124.
13. Ibid.
14. Bank suspensions in 1893 numbered 496 and the annual average for the ten years between 1883 and 1892 was 42. See U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, Part 2 (Washington, DC: 1975), p. 1015 (Series X 741–55).
15. See Friedman, Money Mischief, p. 107, for the comparison with the 1930s. Also see Rockoff, “Wizard of Oz,” p. 742.
16. Hibben, Peerless Leader, p. 145.
17. Coletta, William Jennings Bryan, p. 71.
18. Ibid., p. 150.
19. From Annual Report of the Director of the Mint, p. 89.
20. “Bryan’s Speech for Silver Monometallism,” Chicago Tribune, August 18, 1893, p. 4.
21. “Kansas May Be Lost,” New York Times, July 2, 1896, p. 5.
22. This quote is from “Western Farm Mortgages,” Omaha Daily Bee, January 20, 1890, p. 3. The newspaper article goes on to criticize the report by the New York Superintendent, defending the quality of Nebraska mortgages.
23. New York Times, July 18, 1896, p. 8.
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br /> 24. Coletta, William Jennings Bryan, p. 203.
25. Ibid., p. 575.
26. Koenig, Bryan, p. 202.
27. This quote and the remaining ones in this paragraph are from Bryan’s speech reprinted in “Boy Orator Scores a Great Hit,” Chicago Daily Tribune, July 10, 1896, p. 11.
28. Ibid.
29. “The Noisy Georgians: They Took a Conspicuous Part Yesterday,” Atlanta Constitution, July 10, 1896, p. 4.
30. Hibben, Peerless Leader, p. 161.
31. See U. S. Bureau of the Census, Historical Statistics of the United States, Part 1, p. 135.
32. Coletta, William Jennings Bryan, pp. 197–98.
33. R. Hal Williams, Realigning America (Lawrence: University Press of Kansas, 2010), p. 144.
34. Coletta, William Jennings Bryan, p. 300.
35. Williams, Realigning America, pp. 149–50.
36. Coletta, William Jennings Bryan, p. 164.
37. “Not Caught by Silver,” New York Times, July 18, 1896, p. 8.
38. “The Battle of the Standards,” Washington Post, August 24, 1896, p. 4.
39. “The Pivotal Point,” Washington Post, September 13, 1896, p. 6.
40. The silver dollar contained 371.25 grains of pure silver. An ounce contains 480 grains, so the silver content of a dollar averaged (371.25/480) times 63.5, which is equal to 49¢.
41. See William L. Silber, When Washington Shut Down Wall Street (Princeton, N.J.: Princeton University Press, 2007), p. 151.
42. Coletta, William Jennings Bryan, p. 330.
43. Ibid.
44. “Bryan’s Egg Illustration,” Chicago Daily Tribune, September 24, 1896, p. 6.
45. “Eggs Thrown at Orator Bryan,” San Francisco Chronicle, October 28, 1896, p. 3.
46. “How Bryan’s 129 Cents Would Work,” Chicago Daily Tribune, October 8, 1896, p. 6.
47. “Bismarck and Silver,” Chicago Daily Tribune, September 30, 1896, p. 8.
48. See Friedman, Money Mischief, esp. pp. 119–21.
49. The Presidential Succession Act of 1947 changed the order to what it is today: vice president, Speaker of the House, president pro tempore of the Senate, and then secretary of state.
The Story of Silver Page 29