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2d Session.

GOLD COINS OF THE UNITED STATES.

FEBRUARY 22, 1921. Read, and, with the bill, committed to the Committee of the Whole House on the state of

the Union.

Mr. WHITE, of New York, from the select committee to whom was refer.

red the bill from the Senate concerning the gold coins of the United. States, made the following

REPORT:

The Select Committee on Coins, to whoin was referred the bill from the

Senate, entitled " An act concerning the gold coins of the United States,beg leave respectfully to report:

That the subject presented to them involves in its consequences the highest attribute of sovereignty, the delicate relations which subsist between debtor and creditor, the important interests of industry, and ultimately the value of all property; and emanating from a source entitled to great respect, they have given to it the most mature examination; but finding themselves obliged to dissent from the conclusions at which the Senate have arrived, they now submit the result of their inquiry to the considerationof the House.

The bill from the Senate proposes to alter the standard which has regulated the measure of contracts for nearly forty years. The change intended to be effected is to raise the relative value of gold from 1 for 15, to 1 for 15.9 of silver, equivalent to an alteration of six per centum in the existing standard.

It was judiciously remarked by the distinguished and enlightened states. man who presided over the Treasury Department, when the present regulation was adopted by Congress, that “ There is scarcely any point in the economy of national affairs of greater moment than the uniform preservation of the intrinsic value of the money unit; on this the security and steady value of property essentially depend.”

The committee, duly impressed with the wisdom of that sentiment, feel it incumbent on them to examine, with care and deliberation, the reasons adduced in support of such an important alteration in a regulation of great public interest.

It is alleged in the report of the Committee of the Senate

Ist. That “this proportion (1 to 15) was too low a valuation of gold in the year 1792, and much too low a valuation of gold in relation to silver at this time."

2d. That, “during the last three hundred years, gold has, with sonte. temporary exceptions, been gradually advancing in value. During the last twenty years, the enhancement of gold, in respect to silver, has been quite as great as it had ever before been during any equal period; and gold still. continues to rise."

3d. That “the general course of our exchanges with Europe is against us; and when remittances cannot be advantageously made by bills, gold is sent to Europe, and especially to Great Britain, so long as gold is not evidently too dear in this country, in comparison with silver. But, in order that both gold and silver should circulate as money, it is necessary that demands for exportation should fall upon both metals, that when a demand for exportation occurs, it should, in general, be as profitable to export one of them as the other; and the relative valuation which will ensure this object is that which exists when both metals are, or may be, exported with equal profit.”

4th. That "much more of the two metais is now coined upon the basis that gold is in value to silver as 16 10 1, than according to any other proportion. If it is expedient to conform our ratio to the existing proportion of any other country, it must be expedient to adopt that proportion which prevails most widely, and the ratio of 16 to lis now far the most extensive example. A rule so extensive is entitled to respect; but the practical operation of the rule is much more instructive, since it shows that this relative valuation of the two metals secures their concurrent circulation in coins in a very large part of the world.”

. 5th. That “our public coinage of gold is now wholly without any publie benefit. If we will not reetify the legal proportion between the coins of the two metals, we ought to abolish the coinage of gold, save a useless expense, and leave gold to be treated like other metals not coined as money."

The recommendations suggested, and the advantages anticipated, are

Ist. That " our system of money established in the year 1792, fully adopts the principle, that it is expedient to coin and use both metals as money; and such has always been the opinion of the people of the United States."

2d. That each of the two metals is peculiarly convenient for purposes to which the other is not well adapted. .Silver is divisible into pieces of small weight and small value, and is convenient for payments of moderate amount, but is very inconvenient when large sums are paid or transported. And these different advantages cannot be enjoyed without the use of both metals.”

. 3d. “Where the circulating coins are both gold and silver, paper money is less used than it is where all the coins are of silver; and the currency of gold coins in our country will tend to repress this constant tendency to excess of påper money. Our money now in use is bank notes and silver. Bank notes are pressed into every channel of circulation; though no man is legally bound to receive them, they are generally received. So great is the amount of bank notes in circulation, so widely are those notes diffused through our extensive country, and so much is silver banished from circulation, that the option to demand silver, is not within the reach of the great body of the people.” .

“ The creditor, and especially the poor man, who can neither wait for payment, nor go to a bank to demand silver, accepts the bank notes which are offered to him, not because he prefers them to silver, but, in a multitude of cases, because he is, in effect, constrained to accept them or nothing

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One of many causes which swell this torrent, and impose upon the people a species of necessity to use paper money, is the want of gold coins. The end of coining the two metals is, that they may circulate together; that every person who has coins of either silver or gold may easily exchange them for coins of the other metal, and that the people may enjoy the advantage of using either species of coins, according to convenience or pleasure."

4th. “Bank notes are frequently received in preference to silver, when gold coins would be more convenient or desirable than bank notes. In such cases, gold would be used if it could be procured, and it should be attainable. To refuse to coin gold for the sake of paper money, or because paper money occupies a place which gold would fill, would be a mischievous error. A bad state of the coins is a great evil; but when such a state of the coins is continued for the purpose of promoting the use of paper money, the end is pernicious, and the means are an abuse of power. Our banks have the right to pay their notes in silver, and they ought not also to enjoy the advantage of an entire banishment of gold coins from the United States. There will surely be sufficient scope for the circulation of bank notes, when the coins which they do not expel from use shall consist partly of both metals; and if it is the interest of the banks that we should have no gold coins, the public interest of the country is, that we should have coins of gold as well as coins of silver."

The regulation proposed will produce, if adopted, a very important alteration in the existing standard of value; and as it has apparently originated from the views now detailed, which comprise a full consideration of the monetary system of the United States, the committee feel reluctantly compelled to undertake the investigation of an important, difficult, and intricate subject, upon which the most acute and enlightened intellects have disagreed.

This examination will necessarily involve the consideration of general principles, the standard of value, the practice of commercial nations, and a particular reference to the currency of the United States; which various and perplexing questions, the committee will endeavor to discuss with all practicable brevity.

Gold and silver are the money of commerce--the merchandise for which all other commodities are freely exchanged by the general consent of mankind. They are the measure of value, and are universally received as the intrinsic equivalent in all exchanges. These precious metals were adopted, and are maintained, as the currency or money of the world, from their being less variable than other metals, and homogeneous in respect to durability and divisibility.

They are, however, exposed to two important variations.

Ist. In reference to other commodities, if the mines become more or less productive, or from any cause that will alter the relative proportions which the gold and silver, used as money, bear to that of the aggregate amount, or real value of exchangeable commodities, money price being regulated by these respective proportions; and

2d. The value of gold in respect to silver is very fluctuating.

Their relative values may vary with the amount of supply furnished by the mines respectively. It will change with the variations in the relative amount of labor expended on the production of these metals. If the quantity produced be appropriated to manufacturing purposes, and as currency, in different relative proportions, at different periods, an alteration in value will ensue; a great diminution or an extensive increase of demand for either of the precious metals, arising from a change in the usual course of trade, or from an alteration in the circulating medium of a wealthy nation, will pro- . duce an important change in their relative value, whether silver be affected, as instanced in the Asiatic trade; or gold, as we have sensibly experienced in our intercourse with England.

Silver, in reference to silver, is unchangeable, and equivalent to the like quantity of fine metal, in all tinies, and in all countries. It is, besides, universally current; and it is the instrument principally used as the money of commerce.

Gold possesses the same peculiar properties, although it is not so extensively used in effecting exchanges. Either of them are received freely as the money of the world; and each, in a state of purity, preserves its identity and immutability.

Gold and silver, used as a common standard, are, in the nature of things, subject to various and frequent fluctuations; while the regulation of the standard of value, in either metal, is liable to variation only in reference to commodities.

Governments and political economists all agree in opinion as to the necessity or utility of an uniform measure. They, nevertheless, differ as to the expediency of regulating the standard of value in one or in both metals, although the nearer approach to invariableness, in the selection of one metal, is obvious and incontrovertible.

The bill under consideration contemplates such a regulation of the standand as will not only obviate prejudicial variations, but secure such “concurrent circulation in coins" of both metals, “that every person, who has coins of either silver or gold, may easily exchange them for coins of the other metal, and that the people may enjoy the advantage of using either. species of coins, according to convenience or pleasure" .

The committee would have the greatest pleasure in aiding with their most zealous efforts in the establishment of any regulations calculated to contribute to the convenience or gratification of the community, entertaining, however, serious doubts of the practicability of securing the desirable objects contemplated through the medium of legislative enactments. They think it espe dient, as an evidence of their sincere desire to effect a satisfactory and impartial investigation, to note, briefly, the sentiments of some of the most distinguished and eminent writers.

General Hamilton, who was the founder of our present system, distinctly recognised the correctness of the position, that the single standard is the least variable measure, and he was inclined to select gold.

He states, that the “inducement to such a preference (one metal) is to render the unit as little variable as possible, because on this depends the steady value of all contracts, and, in a certain sense, of all other property; and it is truly observed, that if the unit belong indiscriminately to both the metals. it is subject to all the fluctuations that happen in the relative value which they bear to each other; but the same reason would lead to annexing it to that particular one which is itself the least liable to variation, if there be, in this respect, any discernible difference between the two.

“Gold may, perhaps, in certain senses, be said to have greater stability than silver, as being of superior value. Less liberties have been taken with it in the regulations of other countries.” He was finally of opinion that,

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* upon the whole, it seems to be most advisable, as has been observed, not to attach the unit exclusively to either of the metals, because this cannot be done effectively without destroying the office and character of one of them as money, and reducing it to the situation of a mere merchandise, which accordingly at different times has been proposed from different and very respectable quarters, but which would probably be a greater evil than occasional variations in the unit, from the fluctuations in the relative value of the metals, especially if care be taken to regulate the proportions between them with an eye to the average commercial value. 'To annul the use of either of the metals is to abridge the quantity of circulating medium, and is liable to all the objections which arise from the comparison of the benefits of a full, with the evils of a scanty circulation.”

Sir William Petty, in his posthumous work, published in 1691, is stated to be the first who suggested that the coin which was to be the principal measure of property ought to be made of one metal only. Money is understood to be the uniform measure and rule for the value of all commodities; that one of the two precious metals is only a fit matter for money; and, as matters now stand, silver is the matter of money.

That profound philosopher, Mr. Locke, thus expresses himself: “I have spoken of silver coin alone, because that makes the money of account and measure of trade all through the world; for all contracts are, I think, every where made, and accounts kept, in silver. I am sure they are so in England and in the neighboring countries. Silver, therefore, and silver alone, is the measure of commerce. Two metals, gold and silver, cannot be the measure of commerce both together in any country, because the measure of commerce must be perpetually the same, invariable, and keeping the same proportion of value in all its parts. But so only one metal does, or can do, to itself. So silver is to silver, and gold to gold; but gold and silver change their value one to another; for supposing them to be in value as sixteento one now, perhaps the next month they may be as fifteen and three-fourths, or fifteen and seven-eighths to one; and one may as well make a measure to be used as a yard, whose parts lengthen and shorten, as a measure of trade of materials that have not always a settled invariable measure to one another. One 'metal, therefore, alone can be the money of account and contract in any country. The fittest for this use, of all others, is silver. Gold, though not the money of the world, and the measure of commerce, nor fit to be so, may, and ought to be coined, to ascertain its fineness and weight, and such coin may safely have a price as well as a stamp set upon it by public authority, so the value set be under the market price.” • Lord Liverpool, who was Master of the Mint in England, and whose system of money is now in practical operation in that country, thus remarks: * Experience has proved, that when coins of two metals are made legal tenders at given rates, those who have any payments to make will prefer to discharge the debt or obligation, by paying in that coin which is overrated; and in this manner gold, being overrated, became the practical currency of England. In the reign of King William, by proclamation, gold guineas, worth but 20$. 8d., were made current at 21s., which, being 4d. more or 11 per centum too high, made gold the principal measure or tender in payments.” He was of opinion. “that the money or coins of any country, which are to be the measure of property, can be made of one metal only;" and that gold was the fittest metal for a rich country like England. He

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