Gold Dollars Versus Silver Dollars?

1849? Think San Francisco 49ers and you'll be on track for the Gold Dollar. Most of the Silver Dollars in this era were pork barrel projects. Neither of these coins were widely popular in U.S. during this time frame.

@BH1964 is correct. Although I forget the details, think William Jennings Bryan and the free silver movement. As I recall, there was terrific lobbying (and legislation) to mandate the minting of silver dollars, to a large extent by western interests. As you recall, millions were unused in vaults until the silver price spike in the 1960s.

It was also illogical to have a silver dollar minted to a different standard than the subsidiary coins, but it happened.

Fundamentally, the reason is availability. America was a country that had both gold and silver mines in its territory. In an age when government-owned bullion was turned into coinage and put to use in the economy, it was cheaper and easier to use whatever metal was available to turn into coinage, rather than try to exchange one metal (eg gold) for another (eg. silver).

A bimetallic monetary standard, where the face values of gold and silver coins are locked together, is never stable long-term because the availability (and therefore the price) of the two metals is impossible to keep constant, because the quantities of gold and silver being mined are never at a constant ratio. For example, if the old gold mines dried up and new silver mines opened, the availability of gold would drop and the price of gold relative to silver would rise. Attempting to maintain a constant bimetallic standard forces a government to keep the price of one metal or the other at an artificially high or low level. In an age of global precious metal markets, no government can keep this up indefinitely - one metal or the other will end up in demand by that government's trade partners and disappear from circulation.


No, that's actually quite logical. It costs the government almost exactly the same amount of money, in terms of labour costs, die wear etc, to make one $1 coin as it does to make one dime. But they're getting much less seigniorage per coin for a dime than for a dollar. Or, to put it another, way, making a dollar's worth of dimes requires ten times as much effort as making a dollar's worth of dollars and this "effort" does not come for free. Making dimes and other small change coins is therefore more expensive.

One way of offsetting this increased expense is to use less silver in a dollar's worth of dimes than in the dollar. Many countries did this my making the larger coins of finer silver (eg. the Latin Monetary Union pre-WWI European standard used .900 fine for the large 5 franc coin, but used .835 fine silver for the smaller coins), America chose to keep the fineness constant but simply make the dollar coin slightly heavier (or, from the other point of view, all the smaller coins were slightly lighter).

That was true before the Act of Feb 1853. Anyone with gold or silver could bring it to the mint and have it coined (in what ever denomination they wanted) almost free of charge. After the Act they could bring gold in for free coinage but not silver. Silver was only coined on the governments account. After 1853 the only free coinage of silver by citizens was for Trade dollars.

As for the different weight standards, what SAP said might have made sense before 1853, because after then the coins were all made for the government and the silver in a silver dollar was worth more than the face value and the subsidiary coins contained their full value there was no real seigniorage profit on the smaller coins and a loss on the dollar coin. Before 1849 there was no seigniorage profit to the government and there was also no differing weight standards between the coins.

The Coinage act of 1834 was created to get the US on a single monetary standard based on gold by decreasing the amount of gold in the coin. It worked because silver bullion was being brought to the mint to be converted to gold. There was a problem the government did not anticipate the disappearance of small denomination silver coinage in circulation as speculators were melting the silver coinage and converting it to gold coins at the mint. This put a hardship on the retailer to make change.

The government addressed the problem above in the coinage act of 1853 as the silver content was reduced 7% in all silver coins except the silver dollar. I am sure that the silver dollar weight was untouched because it was needed for international trade. Until the Trade dollar was minted in 1873 the international traders were still having a hard time getting enough US silver dollars for trade. In fact the US traders would have to buy Mexican dollars or Spanish dollars at a premium to be used for trade. When the Trade dollar was minted, it worked great in international trade for a couple of years. Another problem happened the US was producing more silver from the Nevada Comstock than demand could handle and the price of silver fell and the US Trade dollar was no longer wanted on the international market. In 1877 the Trade dollar was worth about 95 cents. Some unscrupulous US business men started taking bullion silver to the mint and would get a Trade dollar for 95 cents of silver and pay their employees with Trade dollars. This is how the Trade dollar ended up in US circulation. Silver continued to fall and merchants started to refuse to accept the Trade dollar as tender or would only take the Trade dollar at a large discount. Because of the problems with the Trade dollar being accepted as tender the US Government demonetized the Trade dollar and called for a redemption of the coin.

Money is always a compromise between convenience and security. Coins are more convenient than the cows, iron sticks and copper ingots that preceded them, but they were more easily counterfeited. Paper money is more convenient than coins, but it was both more easily counterfeited and more easily lost or destroyed.

Remember, the original purpose of paper money was that it be exchanged on demand for coins. Thus, the coins could be kept safely locked away in banks in the big cities and people travelling between the cities wouldn't have to lug sacks of heavy coins around with them; they could just carry a small bundle of notes, and exchange the notes for coins at their convenience - or simply spend the notes and have someone else go to the bother of exchanging them.

I remember having a pretty good amount of confederate money handed down to me as a young child by my grandmother. You can be sure they cursed that CSA money since they were often forced to take it and it was not worth but a fraction of its value in gold or silver during the war and nothing after the war.

Because they WEREN'T at hand. The government didn't start printed paper money until 1862 by which time most of the gold and silver had been hoarded out of circulation. And most of that paper money was for funding the war effort. They were "Legal Tender" notes and had no gold or silver backing, nor were they exchangeable for gold or silver on demand. (Paper backed by gold was issued in 1863 but not for general circulation, only between banks. Precious metal backed currency for the people did not arrive until silver certificates in 1878 and gold certificates in 1882) The only reason they were acceptable at all was because at that time legal tender DID mean it had to be accepted if tendered in payment. (This is not true today.) Merchants handled that by quoting prices in silver, gold, or paper. Gold being the lowest and paper the highest. During the war the paper reached a low of around 30 cents in gold. (If it cost $1 in gold, it cost over $3 in paper.) Even after the war gold and silver didn't really return to circulation until around 1874 when paper finally reached par with gold. Unbacked Federal paper continued because the government was still paying off war debts.