Bimetallism
[4] This distinguishes it from "limping standard" bimetallism, where both gold and silver are legal tender but only one is freely coined (e.g. the monies of France, Germany, and the United States after 1873), and from "trade" bimetallism, where both metals are freely coined but only one is legal tender and the other is used as "trade money" (e.g. most monies in western Europe from the 13th to 18th centuries).
[7] Some scholars argued that bimetallism was inherently unstable owing to Gresham's law, and that its replacement by a monometallic standard was inevitable.
It became completely academic after the 1971 Nixon shock; since then, all of the world's currencies have operated as more or less freely floating fiat money, unconnected to the value of silver or gold.
Croesus is credited with issuing the Croeseid, the first true gold coins with a standardised purity for general circulation,[1] Herodotus mentioned the innovation made by the Lydians:[1] "So far as we have any knowledge, they [the Lydians] were the first people to introduce the use of gold and silver coins, and the first who sold goods by retail"Many ancient bimetallic systems would follow, starting with Achaemenid coinage.
[16] Unlike many metallic standards, the system was very decentralized: no national monetary authority existed, and all control over convertibility rested with the five banks of issue.
[22] After the suspension of metal convertibility from 1797 to 1819, Peel's Bill set the country on the gold standard for the remainder of the century; however advocates of a return to bimetallism did not cease to appear.
After the crash of 1825, William Huskisson argued strongly within the Government for bimetallism, as a way to increase credit (as well as to ease trade with South America).
[23] Similarly, after the banking crisis of 1847, Alexander Baring headed an external bimetallist movement hoping to prevent the undue restriction of the currency.
[24] It was, however, only in the last quarter of the century that the movement for bimetallism gathered real strength, drawing on Manchester cotton merchants and City financiers with Far East interests to offer a serious (if ultimately unsuccessful) challenge to the gold standard.
[25] In 1792, Secretary of the Treasury Alexander Hamilton proposed fixing the silver to gold exchange rate at 15:1, as well as establishing the mint for the public services of free coinage and currency regulation "in order not to abridge the quantity of circulating medium".
[28] Proponents of monetary silver, known as the silverites, referred back to the Fourth Coinage Act as "The Crime of '73", as it was judged to have inhibited inflation, and favored creditors over debtors.
[30] The Republican Party itself nominated William McKinley on a platform supporting the gold standard, which was favored by financial interests on the East Coast.
"[31] However, his presidential campaign was ultimately unsuccessful; this can be partially attributed to the discovery of the cyanide process by which gold could be extracted from low-grade ore.
The McKinley campaign was effective at persuading voters in the business East that poor economic progress and unemployment would be exacerbated by the adoption of the Bryan platform.
In 1992, economist Milton Friedman concluded that abandonment of the bimetallic standard in 1873 led to greater price instability than would have occurred otherwise, and thus resulted in long-term harm to the US economy.
