965,924, of which $7,689,036 were presented for redemption.

24. The free silver controversy.-Shortly after the revision of the coinage laws in 1873, which suspended the free coinage of the silver dollar, the gold value of silver depreciated greatly and the silver question became the leading economic and political issue for a generation. From 1792, when our first coinage law was passed, to 1873, the commercial ratio of gold and silver had fluctuated between comparatively narrow margins, never falling below 16 to 1 or rising above 15 to 1. In 1875, however, the market ratio fell to 16.62 to 1; by 1880 it was 18.04 to 1; and in 1895 the ratio was 31.60 to 1. Among the circumstances that contributed to this great change in the relative values of the two metals, the following stand out prominently: (1) The opening up of rich silver mines in the Western States; (2) the stoppage of free and unlimited coinage of silver by several European countries; (3) a falling off in the demand for silver in India; (4) an increase in the value of gold as shown by the fall in the general price level of commodities. Reference has been made to the very large issues of legal tenders by the Government during the war. These notes were simply the Government's promise to pay and did not specify how and when they were to be redeemed. Upon the restoration of peace and the return of normal financial conditions, the business interests of the country demanded the redemption of these pledges. Despite strong opposition to the retirement of the greenbacks on the part of those who wished to check the fall in prices which set in after the panic of 1873, Congress in 1875 committed itself to the resumption of specie payments. Then arose a clamorous demand, particularly from those interested in the new silver mines in the West, for the remonetization of silver, that is, the opening of the mints to the free and unlimited coinage of silver dollars at the ratio of 16 to 1. This demand on the part of the silver interests who wanted to check the falling price of their product was supported by the so-called currency "inflationists" who opposed the

resumption of specie payments and the retirement of the greenbacks. The silver agitation appealed also to the Western farmers who, after a period of high prices, were going through an era of falling prices and who believed that more money would bring higher prices; and many believed that the demonetization of the silver dollar in 1873 was an injustice.

25. The Bland-Allison Act, 1878.-Though the silver agitation did not result in the restoration of free coinage of silver, two compromise measures were passed by Congress under which enormous quantities of silver were added to 57 the country's circulation. The first of these measures was the Bland-Allison Act passed in 1878, which required the Treasury Department to purchase not less than $2,000,000 worth nor more than $4,000,000 worth of silver bullion a month and to coin it into standard silver dollars of grains, which were again made legal tender. Under the operations of this act about 25,000,000 silver dollars were coined each year for the following twelve years. The act of 1878 provided for the deposit of silver dollars with the United States Treasury and the issue therefor of silver certificates redeemable on demand in the dollars.

26. The Sherman Act, 1890.-Despite this aid to silver its price measured in gold continued to fall, and the advocates of free silver kept up their agitation both in and out of Congress. In 1890, therefore, another compromise measure, known as the Sherman Act, was passed, which required the Secretary of the Treasury to purchase monthly 4,500,000 ounces of silver at the market price to be paid for by the issue of treasury notes. These notes were made full legal tender, and were redeemable in gold or silver coin at the discretion of the Secretary of the Treasury. They were known as "coin notes," also as "Sherman notes." The silver purchased was to be coined only as rapidly as was necessary to redeem the notes, but the act of 1890 provided that when the notes were redeemed or received for dues they might be reissued. As a result of these two silver purchase acts over 576,000,000 standard silver dollars were

coined. Because of the awkwardness of the silver dollars, however, only about 80,000,000 of them got into actual circulation. The rest have been represented by silver certificates redeemable in silver dollars on demand, and by treasury notes.

This very large addition of overvalued silver to the currency of the country caused a corresponding withdrawal of gold from circulation, and for a time after 1890 seriously embarrassed the Treasury in its efforts to maintain an adequate gold reserve. At this time no specific gold reserve was required by law, but custom had established a minimum of $100,000,000. The tariff act of 1890 reduced revenues $50,000,000 and at the same time increased appropriations were voted, including $50,000,000 a year for pensions. Large exports of gold had to be made in the years 1891 to 1893. The Government was required to redeem in gold coin on demand the greenbacks and the treasury notes of 1890, and to maintain the silver dollars and silver certificates at a parity with gold. The greenbacks were redeemable in gold at the Treasury, but the law provided for their immediate reissue. The banks were experiencing great difficulty in securing gold for their reserves, so they promptly returned the reissued greenbacks to the Treasury for redemption in gold. To aggravate this serious situation the Sherman notes were used in the same way. These notes were redeemable in either gold or silver, but under the circumstances everyone asked for gold. Thus, both legal tenders and treasury notes were acting as an "endless chain" to drain the Treasury of its gold. The gold reserve fell from $190,000,000 in 1890 to $97,000,000 in 1893, and the Treasury was threatened with complete exhaustion of its gold reserve. Alarm spread throughout the country, precipitating the disastrous panic of 1893. President Cleveland called a special session of Congress in August of that year, and the silver-purchase clauses of the Sherman Act of 1890 were repealed. In 1898 an act was passed providing for the coinage into silver dollars of the bullion purchased under the act of 1890.

27. Bond issues.-The repeal of the Sherman Act did not relieve the Treasury of its embarrassment nor provide a remedy for the currency ills. The gold reserve of the Treasury continued to decline until it had reached $65,000,000 in January, 1894. President Cleveland tried to get legislation authorizing the issue of bonds to replenish the gold reserve. Failing in this the Government was compelled to fall back upon the Resumption Act of 1875, which provided for the sale of bonds to redeem the legal tender notes. Though two bond issues of $50,000,000 each, paying 5 per cent, were made in 1894, they brought only temporary relief, the gold paid for the bonds being drawn from the Treasury in advance or later by the presentation of greenbacks for redemption. Within a few weeks following the second loan, $80,000,000 was drawn from the Treasury in gold. People had begun to doubt the ability of the Government to maintain its credit.

In this emergency President Cleveland made an arrangement with a syndicate of New York bankers to provide the Treasury with gold to the amount of $65,000,000, at least one-half of which was to be imported from Europe, and the syndicate agreed to do all in its power to protect the gold reserve in the Treasury. The gold was to be purchased with 4 per cent thirty-year bonds at 104, at which rate the interest would be about 33 per cent. The syndicate proposed to accept the bonds on a 3 per cent basis if they were made payable in gold. This would have effected a saving to the Government of over $16,000,000 in interest, but Congress, being out of sympathy with the President, rejected the proposition. Because of its strong foreign connections the syndicate was able to prevent withdrawals of gold from the Treasury for several months, and the gold reserve rose above $100,000,000. After the syndicate's contract had expired, however, withdrawals of gold began again and by the close of the year 1895 the treasury reserve had fallen below $50,000,000. On January 6, 1896, the Treasury announced a new issue of 4 per cent 30-year bonds to be offered at public subscriptions to the highest

bidder. The $100,000,000 loan was largely oversubscribed at bids ranging from 110ğ to 120, and within a few weeks the Treasury reserve rose above $128,000,000.1 Though gold exports continued for some months longer, reducing the reserve to $90,000,000 in July, 1896, the success of the loan did much to restore public confidence, and after the decisive victory of the gold standard party in the elections that year the Treasury experienced no further trouble in maintaining an adequate reserve.

During the period, 1893-1896, in which the Government was struggling to maintain adequate gold reserves, factionalism prevented all attempts to reform the currency system. President Cleveland had recommended the retirement of the greenbacks and the Sherman notes to relieve the Treasury from the obligation of maintaining a gold reserve for their retirement, but Congress sullenly refused to take any action. Meantime the agitation for the free and unlimited coinage of silver was kept up and became the sole issue in the presidential contest of 1896. This election resulted in a victory for the champions of the gold standard and plans were at once formed to safeguard it for all time. In 1897 a convention of business men representing the leading commercial organizations of the country met in Indianapolis and formulated a plan of currency and coinage reform which was presented to Congress. After several years of public discussion and agitation, Congress enacted the so-called "Gold Standard Act," March 14, 1900, which formally and definitely recognized the single gold standard.

28. The Gold Standard Act, 1900.—The single gold standard was legally established in 1873, and after resumption of specie payments in 1879 gold became the actual standard. The act of 1900, therefore, in providing that the gold dollar consisting of 25.8 grains should be the standard of value of the United States, merely reaffirmed the earlier acts. The act provided that all forms of money issued or coined by the United States should be maintained at par 1 Noyes: Forty Years of American Finance, p. 254.