Silver standard
These silver dollar coins played the role of an international trading currency for nearly four hundred years.
By 1935 China and the rest of the world abandoned the silver and gold standards, respectively, in favour of government fiat currencies pegged to the pound sterling or the U.S. dollar.
Sometime before 2500 BC the silver shekel became their standard currency, with tablets recording the price of timber, grains, salaries, slaves etc.
[1][2] For millennia it was also silver, not gold, which was the real basis of the domestic economies: the foundation for most money-of-account systems, for payment of wages and salaries, and for most local retail trade.
Gold functioned as a medium for international trade and high-value transactions, but it generally fluctuated in price versus everyday silver money.
During the heyday of the Athenian empire, the city's silver tetradrachm was the first coin to achieve "international standard" status in Mediterranean trade.
Great Britain's early use of the silver standard is still reflected in the name of its currency, the pound sterling, which traces its origins to the early Middle Ages, when King Offa of Mercia introduced a 'sterling' coin made by physically dividing a pound (mass) of silver in 240 parts.
The economic power of Great Britain was such that its adoption of a gold standard put pressure on other countries to follow suit.
By the American Revolution in 1775, Spanish dollars backed paper money authorised by the individual colonies and the Continental Congress.
This was codified in the 1792 Mint and Coinage Act, and by the federal government's use of the Bank of the United States to hold its reserves, as well as establishing a fixed ratio of gold to the US dollar.
In 1853 the US reduced the silver weight of coins, to keep them in circulation, and in 1857 removed legal tender status from foreign coinage.
The Coinage Act of 1873, enacted by the United States Congress in 1873, embraced the gold standard and de-monetised silver.
As it would be several months before the new $1 Federal Reserve Notes could enter circulation in quantity, there was a need to issue silver certificates in the interim.
In response to the perceived shortcomings of U.S. monetary policy in the 21st century, some states have explored making silver and gold legal tender.
During the Song dynasty, for the first time in history the government became the sole issuer of paper currency after 1024, but cast coins and silver ingots were still used as a medium of exchange.
In the Shanyuan Treaty, signed with the state of Liao in 1004, Song China agreed to pay an annual indemnity or tribute of 100,000 tael of silver and 200,000 bolts of silk.
Paper money was first issued in 1375 by the founder Hongwu Emperor amid the ban of silver as medium of exchange.
But due to the increasing depreciation, the paper money became basically worthless and the ban on silver usage was finally lifted in 1436 (1st year of the Zhengtong Emperor).
Meanwhile, silver was made much available through foreign trade with the Portuguese (through Macau) and the Spanish (through the Manila galleons), in the beginning of the 16th century.
It was not until 1910 that the "yuan" (Chinese: 圓, literally "roundness"), was officially announced as the standard monetary unit.
The next year, 1911, the so-called "Great Qing Silver Coin" one yuan (dollar) was issued, but soon after the dynasty was replaced by the Republic.
These changes were responses to the deflation in China caused by the US Silver Purchase Program in 1933 after London Economic Conference.
Following the Fowler report, India adopted the gold exchange standard in the year 1898, fixing the value of the rupee at exactly one shilling and four pence (1s 4d) sterling.
Iran's rulers repeatedly issued orders against coin exports, but since the merchants could easily escape the regulations by bribing the officers, their results were temporary.
Zand Although Karim Khan was known as the "greatest ruler of Iran" since 1764 with broad, independent or semi-autonomous sectors, there was no monetary unity in the country.
The regional monetary system continued to work even when the national mint began to beat coins of equal weight and purity.
In short, in this system, the common currency was coins that were manually multiplied in the mint of all major cities and managed by privileged holders who paid royalties.
[17] The law of March 13, 1932 stipulated that until the return to normal economic situation and the stability of the possibility of paying with gold or gold-based foreign currency suspended due to the economic crisis, the National Bank (Bank Melli Iran) was allowed to receive no silver coins or paper money in circulation which may be offered with a gold purchase (coin, bullion, or foreign currency).
At the same time, revolutions in Latin America interrupted the supply of silver dollars (pieces of eight) that were being produced at the mints in Potosi, Mexico, and Lima, Peru.
By 1935 China and the rest of the world has abandoned the silver and gold standards, respectively, in favour of currencies pegged to the pound sterling and the U.S. dollar.
