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Coin’s Financial School - Bruce Frohnen, The American Nation: Primary Sources 
The American Nation: Primary Sources, ed. Bruce Frohnen (Indianapolis: Liberty Fund, 2008).
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Coin’s Financial School
The Money Unit
“In money there must be a unit. In arithmetic, as you are aware, you are taught what a unit is. Thus, I make here on the blackboard the figure 1. That, in arithmetic, is a unit. All countings are sums or multiples of that unit. A unit, therefore, in mathematics, was a necessity as a basis to start from. In making money it was equally as necessary to establish a unit. The constitution gave the power to Congress to ‘coin money and regulate the value thereof.’ Congress adopted silver and gold as money. It then proceeded to fix the unit.
“That is, it then fixed what should constitute one dollar, the same thing that the mathematician did when he fixed one figure from which all others should be counted. Congress fixed the monetary unit to consist of 371¼ grains of pure silver, and provided for a certain amount of alloy (baser metals) to be mixed with it to give it greater hardness and durability. This was in 1792, in the days of Washington and Jefferson and our revolutionary forefathers, who had a hatred of England, and an intimate knowledge of her designs on this country.
“They had fought eight long years for their independence from British domination in this country, and when they had seen the last red-coat leave our shores, they settled down to establish a permanent government, and among the first things they did was to make 371¼ grains of silver the unit of values. That much silver was to constitute a dollar. And each dollar was a unit. They then provided for all other money to be counted from this unit of a silver dollar. Hence, dimes, quarters and half-dollars were exact fractional parts of the dollar so fixed.
“Gold was made money, but its value was counted from these silver units or dollars. The ratio between silver and gold was fixed at 15 to 1, and afterward at 16 to 1. So that in making gold coins their relative weight was regulated by this ratio.
“This continued to be the law up to 1873. During that long period, the unit of values was never changed and always contained 371¼ grains of pure silver. While that was the law it was impossible for any one to say that the silver in a silver dollar was only worth 47 cents, or any other number of cents less than 100 cents, or a dollar. For it was itself the unit of values. While that was the law it would have been as absurd to say that the silver in a silver dollar was only worth 47 cents, as it would be to say that this figure 1 which I have on the blackboard is only forty-seven one-hundredths of one.
“When the ratio was changed from 15 to 1 to 16 to 1 the silver dollar or unit was left the same size and the gold dollar was made smaller. The latter was changed from 24.7 grains to 23.2 grains pure gold, thus making it smaller. This occurred in 1834. The silver dollar still remained the unit and continued so until 1873.
“Both were legal tender in the payment of all debts, and the mints were open to the coinage of all that came. So that up to 1873, we were on what was known as a bimetallic basis, but what was in fact a silver basis, with gold as a companion metal enjoying the same privileges as silver, except that silver fixed the unit, and the value of gold was regulated by it. This was bimetallism.
“Our forefathers showed much wisdom in selecting silver, of the two metals, out of which to make the unit. Much depended on this decision. For the one selected to represent the unit would thereafter be unchangeable in value. That is, the metal in it could never be worth less than a dollar, for it would be the unit of value itself. The demand for silver in the arts or for money by other nations might make the quantity of silver in a silver dollar sell for more than a dollar, but it could never be worth less than a dollar. Less than itself.
“In considering which of these two metals they would thus favor by making it the unit, they were led to adopt silver because it was the most reliable. It was the most favored as money by the people. It was scattered among all the people. Men having a design to injure business by making money scarce, could not so easily get hold of all the silver and hide it away, as they could gold. This was the principal reason that led them to the conclusion to select silver, the more stable of the two metals, upon which to fix the unit. It was so much handled by the people and preferred by them, that it was called the people’s money.
“Gold was considered the money of the rich. It was owned principally by that class of people, and the poor people seldom handled it, and the very poor people seldom ever saw any of it.”
The Crime of 1873
“We now come to the act of 1873,” continued Coin. “On February 12, 1873, Congress passed an act purporting to be a revision of the coinage laws. This law covers 15 pages of our statutes. It repealed the unit clause in the law of 1792, and in its place substituted a law in the following language:
“That the gold coins of the United States shall be a one-dollar piece which at the standard weight of twenty-five and eight-tenths grains shall be the unit of value.
“It then deprived silver of its right to unrestricted free coinage, and destroyed it as legal tender money in the payment of debts, except to the amount of five dollars.
“At that time we were all using paper money. No one was handling silver and gold coins. It was when specie payments were about to be resumed that the country appeared to realize what had been done. The newspapers on the morning of February 13, 1873, and at no time in the vicinity of that period, had any account of the change. General Grant, who was President of the United States at that time, said afterwards, that he had no idea of it, and would not have signed the bill if he had known that it demonetized silver.
“In the language of Senator Daniel of Virginia, it seems to have gone through Congress ‘like the silent tread of a cat.’
“An army of a half million of men invading our shores, the warships of the world bombarding our coasts, could not have made us surrender the money of the people and substitute in its place the money of the rich. A few words embraced in fifteen pages of statutes put through Congress in the rush of bills did it. The pen was mightier than the sword.
“But we are not here to deal with sentiment. We are here to learn facts. Plain, blunt facts.
“The law of 1873 made gold the unit of values. And that is the law to-day. When silver was the unit of value, gold enjoyed free coinage, and was legal tender in the payment of all debts. Now things have changed. Gold is the unit and silver does not enjoy free coinage. It is refused at the mints. We might get along with gold as the unit, if silver enjoyed the same right gold did prior to 1873. But that right is now denied to silver. When silver was the unit, the unlimited demand for gold to coin into money, made the demand as great as the supply, and this held up the value of gold bullion.”
Here Victor F. Lawson, Jr., of the Chicago Evening News, interrupted the little financier with the statement that his paper, the News, had stated time and again that silver had become so plentiful it had ceased to be a precious metal. And that this statement believed by him to be a fact had more to do with his prejudice to silver than anything else. And he would like to know if that was not a fact?
“There is no truth in the statement,” replied Coin. “On page 21 of my Handbook you will find a table on this subject, compiled by Mulhall, the London statistician. It gives the quantity of gold and silver in the world both coined and uncoined at six periods—at the years 1600, 1700, 1800, 1848, 1880, and 1890. It shows that in 1600 there were 27 tons of silver to one ton of gold. In 1700, 34 tons of silver to one ton of gold. In 1800, 32 tons of silver to one ton of gold. In 1848, 31 tons of silver to one ton of gold. In 1880, 18 tons of silver to one ton of gold. In 1890, 18 tons of silver to one ton of gold.
“The United States is producing more silver than it ever did, or was until recently. But the balance of the world is producing much less. They are fixing the price on our silver and taking it away from us, at their price. The report of the Director of the Mint shows that since 1850 the world has produced less silver than gold, while during the first fifty years of the century the world produced 78 per cent more silver than gold. Instead of becoming more plentiful, it is less plentiful. So it is less, instead of more.
“Any one can get the official statistics by writing to the treasurer at Washington, and asking for his official book of statistics. Also write to the Director of the Mint and ask him for his report. If you get no answer write to your Congressman. These books are furnished free and you will get them.
“At the time the United States demonetized silver in February, 1873, silver as measured in gold was worth $1.02. The argument of depreciated silver could not then be made. Not one of the arguments that are now made against silver was then possible. They are all the bastard children of the crime of 1873.
“It was demonetized secretly, and since then a powerful money trust has used deception and misrepresentations that have led tens of thousands of honest minds astray.”
William Henry Smith, Jr., of the Associated Press, wanted to know if the size of the gold dollar was ever changed more than the one time mentioned by Coin, viz., in 1834.
“Yes,” said Coin. “In 1837 it was changed from 23.2 to 23.22. This change of 2/100ths was for convenience in calculation, but the change was made in the gold coin—never in the silver dollar (the unit) till 1873.
“We have seen,” replied Coin, “how the commercial value of the two metals were parted. By the same laws that produced this result, silver was made redeemable in gold, and ceased to be redemption money. Silver now circulates like paper money, both redeemable in gold. It is now subsidary coin or token money.
“Strictly speaking, nothing is money but redemption money—all other forms of so called money are money only in the sense that certified checks are money.
“In the sense in which you say silver is money, nickel and copper are money, but they form no part of our stock of redemption money. Gold now takes the place formerly occupied by both gold and silver, and is our only redemption money. Silver, as now treated, cuts no figure in our currency that could not be substituted by paper or other metals. What is meant by demonetization is, that silver has been destroyed as primary money.
“We are now on a single gold standard, and have come to it through a period of limping bimetallism.”
“We express values in dollars, the unit of our monetary system. That unit is now the gold dollar of twenty-three and two-tenths grains of pure gold, or twenty-five and eight-tenths grains of standard gold. If we were to cut this amount in two and make eleven and six-tenths grains pure gold a unit or dollar, we would thereby double the value of all the property in the United States, except debts.
“If we were to double the weight of the unit or dollar by putting forty-six and four-tenths grains in it, we would thus reduce the value of all the property in the world, as expressed in dollars, except debts, as they call for so many dollars.
“If you don’t understand this proposition as I have stated it, you will by enlarging the scale. Keep on adding gold to the dollar, till it takes one hundred grains—five hundred grains—one thousand grains—to make a legal unit or dollar. Go on making it larger till you have all of the gold in the world in one thousand units, or dollar pieces.
“Who could give up property enough to buy one of them? To buy a single dollar? Suppose you owed a note calling for $100.00 payable in gold, one-tenth the gold of the world—how could you pay it? Think of the property that would have to be slaughtered to get it.
“Carry the illustration still further and put all the gold in the world in one dollar. A note for one dollar would require all the gold to pay it. When you reduce the number of primary dollars, you reduce the value of property as expressed in dollars accordingly, and make it that much more difficult for debtors to pay their debts.
“And yet this is the kind of injustice that was committed when silver was demonetized. It struck down one-half the number of dollars that made up our primary money and standard of values for measuring the values of all property. It reduced the average value of silver and all other property one-half, except debts.
“It is commonly known as the crime of 1873. A crime, because it has confiscated millions of dollars worth of property. A crime, because it has made thousands of paupers. A crime, because it has made tens of thousands of tramps. A crime, because it has made thousands of suicides. A crime, because it has brought tears to strong men’s eyes, and hunger and pinching want to widows and orphans. A crime, because it is destroying the honest yeomanry of the land, the bulwark of the nation. A crime, because it has brought this once great republic to the verge of ruin, where it is now in imminent danger of tottering to its fall. [Applause.]
“Pardon me for an expression of feeling. We are not here to comment on the effects of demonetization, but “I now think we understand,” said Coin, “what to learn what money is, and wherein our financial system has been changed.”
The little speaker, without intending it, through a feeling of honest indignation, had burst forth in a recital of this catalogue of crimes. It had a perceptible effect on the audience. His earnest eloquence was melting hearts that never before had thawed to the presentation of the subject.
It is one of the wonders of the world—how the people have been so slow in grasping the financial problem—in learning what it is that measures values, and that the lesson should have to be learned through an experience so bitter.
A physician, psychologist, and self-trained philosopher, William James (1842-1910) is best known as the principal founder and exponent of the philosophical school of Pragmatism. This school was highly influential in the United States for several decades and helped shape the Progressive tradition in politics. It quickly became known as a particularly American philosophy because of its emphasis on analyzing particular concepts by looking at their concrete, practical consequences or “cash value.” James also published highly influential works on human psychology and the nature of religious experience. The essay reprinted here is one of eight lectures dedicated to the English utilitarian John Stuart Mill and published in Pragmatism: A New Name for Some Old Ways of Thinking.