Can somebody explain bimetallism to me in a way a middle school kid would understand?
hchcoin
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Here is what I have read:
In 1834, the proportional value of gold to silver in all coins was required to be 16 to 1 and this lasted until 1873 I think.
A twenty dollar gold piece has .9675 troy ounces of gold.
A seated liberty dollar has .77344 troy ounces of silver.
Prior to 1873, someone could bring silver to the mint and get it made into coin for a small fee. I am assuming I would need .77344 troy ounces of silver to make one silver dollar.
In my simple mind, I should be able to multiply 20X.77344 and get 16. Please help me understand where and how the 16 to 1 ratio works using these 2 coins as an example. Thanks!
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The 16 to 1 ratio is basically made up by proponents of silver.
You could take gold bullion to the mint and deposit and and have it made into a gold coin.
But you couldn't do it with silver.
The Federal Reserve creates fiat, which is currency defined by the government.
The real ratio of gold to silver elements is about 17.5 to 1 in the Earth's crust.
Sorry can't help you as to explain it as your in middle school I'd have to convert my math into common core
That was funny!
The ratio of silver mined vs. gold has run about 9-1 for decades. That's also about the same ratio that silver contracts trade to gold on the London Bullion market.
The price of gold was $20.67. Therefore, 0.77344 x 20.67 = 15.986 comes out pretty close to your expected 16.00. There were some years in the 19th century where the price of gold varied from $20.67.
That's what I was looking for roadrunner. Thank you!!!!!!!!!!
20.67X.9675=$20 gold piece
20.67/16 = $1.291875 price of silver
1.291875X.77344 = $1 Seated Liberty Dollar.
As I understand it, bimetallism was all about increasing the money supply by making both gold AND silver legal tender. Increasing the money supply causes inflation. Inflation helped farmers who had borrowed money to buy farm land by allowing them to repay the loans in cheaper dollars.
From 1792 to 1853 The U.S. was on a Bimetallic system. You could bring silver and gold to the Mint and have it coined into money one-to-one. After 1853 we were on a gold standard. Only gold was paid out one-to-one with coins of the same weight. Silver was supposed to be purchased at market, but the Mint Director J.R. Snowden disobeyed the law and paid over market, feeling that he didn't want to cheat depositors. From 1861 to 1879 the U.S. was on a paper (Greenback) standard. From 1879 until 1900 were were on a de-facto gold standard as currency could be exchanged for gold. This was the time when the populists lead by W.J. Bryan fought for bimetallism. From 1900 to 1933 the gold standard was the law.
The numbers do come close if you take the weight of the silver dollar x 20, as you stated but then you have to divide this number by the weight of the gold $20, which is the .9675 and you get your answer of 16 to 1 (15.988).
0.9675 / 20 = 0.048375 troy ounces of gold per dollar
0.77344 troy ounces of silver per dollar
0.77344 / 0.048375 = 15.988
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Can somebody explain bimetallism to me in a way a middle school kid would understand?
without getting into a bunch of numbers that confuse even an adult, bi-metallism just means that two different metals, Gold and Silver, are accepted as legal tender in commerce at a fixed rate/weight.
This "Bryan dime" summed up the problem with William Jennings Bryan's free silver campaign. He didn't put any limits upon how much silver could be turned into coinage. Bryan's plan would have allowed anyone to bring silver to the mint and have it made in coins, mostly silver dollars. As hard as it is to believe, silver was almost a "junk metal" in the last quarter of the 19th century because the western silver mines were pumping it out faster than the economy could use it. Mine owners were looking for a market, then their best target was the Federal Government.
The battles in Congress started with "The Crime of '73" which demonized silver and continued through the Bland - Allison Act which gave us the Morgan Dollar, and the Sherman Silver Purchase Act which almost bankrupted the country. That act allowed silver producers to deposit silver for coinage in exchange for paper money that could be redeemed in gold or silver coinage.
The mine owners' mothers didn't raise any fools. They redeemed those notes in gold, which was much more valuable to silver, which brought the Federal Governments gold holding down to dangerous levels. If the dollar was not backed by gold, the argument and concerns went, it would lose its value as it had during the Civil War. That resulted in the repeal of the Sherman Act which was spearheaded by President Grover Cleveland. Cleveland got the blame for the Panic of 1893, which was a relatively short but nasty economic depression.
That set the stage for the free silver forces to take control of the Democratic Party. Going into the convention Richard "Silver Dick" Bland (who was a co-author of the Bland - Allison Act) was the frontrunner for the presidential nomination, but then 36 year old William Jennings Bryan got up and made his "Cross of gold" speech, and the nomination was his.
A good case could have been made to have increased the money supply in 1893, but given that the nation was on the gold standard, that could not be done by fiat. Bryan was half right, but he went wrong when he did not put any limits on his proposal to increase the money supply.
There are many political items from the 1896 and 1900 presidential campaigns that should appeal to coin collectors. This anti-Bryan button does not become available very often, but it has an interesting slogan.
Love your posts Bill!
There are two concepts:
1. A unit of money is defined as a certain weight of pure gold or silver (or other things -- might be whipped egg whites).
2. The government attempts to make two different metals - gold and silver in this case - equal standards.
That creates a "bimetallic standard." (Except in North Carolina where you have to have a birth certificate about that.)
The problem with any bimetallic (or two-standard) system is that no government has the level of financial control necessary to overcome open market tendencies to value each standard metal separately. Thus, it is impossible to maintain an exact monetary ratio between gold and silver (or whipped egg whites and the NC Legislature).
A recent article by Denga stated that after 1853 the leftover silver from gold deposits was paid out in silver dollars. The silver in the dollar was not lowered to be in-line with the half, quarter and dime when they were reduced in weight in 1853. It would have been a disadvantage to coin silver dollars at all, except to settle account for depositors.
The "Crime of 1873" was the cancellation of the silver dollar from the list of coins. This place-holder coin was barely used and had more silver than the subsidiary coinage anyway (see above). When the politics of the time argued whether we wanted to be on a bimetallic system or a gold standard, the cancellation of the silver dollar in 1873 was used as the smoking gun.
The "Crime of '73" was the conspiracy theory or Fake news story of the 19th Century.
It is legal in most states. Bimetalism : the act of mixing metal and counting it as chump change. See CuNi for details.
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( Blank Stares from Middle Schoolers )
"Money" was "valued" in relation in many countries to a metal (gold) and sometimes silver, but the Mint made coins out of copper and nickel but nickles are mostly copper, and also paper which may or may not be backed up by gold, and now pennys (cents) are made out of zinc covered in copper but during the big WW2 they were steel and brass, and there are big value coins made out of platinum which is legal tender, but not circulated, and even postage stamps in little glass containers, but in other countries money can be made of aluminum or zinc shells stone or plastic or who knows what but it is all an academic drill because the amount of "money" is thousands of times higher than the amount of "gold" or silver backing it up, so it is really symbolic of an ancient age that has no bearing at all on using a credit card or your IPHONE to pay for something.
Most of your "money" is just electrons being slightly inconvenienced for a few nanoseconds of work.