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almost universally differs from the coins in use. Coins being national, and in a great measure local, are subject to alterations and debasements by governments; but moneys of exchange, though rarely established by design, become widely established by the mutual consent of nations for convenience, and are in a measure beyond the reach of legislation. While we, through English custom, had taken our ideal dollar from the Spanish dollar of Charles V, custom has established in Spain itself a different ideal dollar. The "peso duro," or "hard dollar," was once a Spanish coin of eight reals, but was afterward altered to a greater value of ten reals. The first coinage of the "hard dollar," however, had been accepted by other nations as the standard of exchange with Spain, and though the value of the coin was altered so that eight hard dollars were worth ten and five-eighths dollars of exchange, the ideal dollar remained unchanged.

The ideal unit of values in the United States until 1873 was a dollar of 514 pence, and the ideal dollar of exchange adopted in London was 54 pence. Our coinage never agreed with either of these values. But in 1816 a new monetary system was adopted in Great Britain, and it was enacted that gold coins only should be legal tender in all payments, and that silver coins should be legal tender for only 40s.* The original pound of silver which previous to 1816 was coined into 62 shillings was then coined into 66 shillings, and the

*From 1664 down to 1717 the relation of gold to silver was not fixed by authority, and silver being then the only legal tender, the value of gold coins fluctuated according to the fluctuations in the relative worth of the metals in the market. In 1717 the ancient practice was again reverted to, and it was fixed that the guinea should be taken as the equivalent of 21 shillings, and conversely. -McCulloch's Commercial Dictionary, page 352.

sovereign was declared to be a pound. Thus the monetary unit of Great Britain agrees with its principal coin.

By the coinage law of February 12, 1873, the monetary unit of the United States was changed from a silver dollar of 412 grains standard (3714 grains pure) silver to a gold dollar of 25 8-10 grains standard gold, and the legal tender function of all silver coins was reduced to five dollars. But as far as the half dollars, quarters and dimes were concerned, this was only a reiteration of the law of February 21, 1853. By the law of July 13, 1876, the trade dollar was declared not to be a legal tender at all.

As shown in the preceding pages, the only "dollar” known in British finance was the dollar of 54 pence. This was distinctly defined by a proclamation of Queen Anne in 1704, to the effect that the Spanish and Mexican "pieces of eight," or dollars, were of the value of 4s. 6d. When, after 1860, the bonds of the United States payable in "dollars" were put upon the London market, though issued by a government whose nominal unit of values was a dollar of 51 pence, English brokers and bankers, still adhering to their old established idea of a dollar as the equivalent of 54 pence sterling, quoted the market prices of Unites States. bonds in dollars of 54 pence. Thus when the bonds were really at par they were quoted in London at 91.33, this being the equivalent of a dollar of American gold expressed in the old dollar of 54 pence sterling. This custom was maintained in London until December 30, 1873, when a new "dollar" of four shillings having been adopted by the London Stock Exchange, United States bonds were, and are yet, quoted in that ideal standard. This new dollar is not represented by any coin of any

nation, and is the equivalent of 96 cents and 96 hundredths of a cent in American gold. It will thus be seen that while the old London quotations made United States bonds appear to be nearly 8 per cent lower than they were in fact, the new Stock Exchange dollar makes them appear to be about 3 per cent higher (in London) than they are in fact. By this rule of the London Stock Exchange, and by the United States law in regard to the computations of sterling exchange, the old "dollar" of 54 pence appears to have passed entirely out of use as an ideal standard. This dollar, however, should not be confused with the American silver dollar established as the unit of values by the law of 1792, and which remained as such until abrogated by the law of February 12, 1873.

In Frankfort the quotations of the market prices of United States bonds are made in still another assumed "dollar," which is the equivalent of 41 marks. The gold mark being equivalent to 23 8-10 cents in American gold, makes the Frankfort stock exchange dollar, used for quoting United States bonds, equal to $103.05 in American gold. The Frankfort quotations, therefore, for United States bonds make them appear to be nearly 3 per cent lower than they would quoted in American gold dollars.

Still another fact complicates the foreign quotations for American bonds, viz.: In London the bonds are quoted "flat"; that is, including accrued interest to the date of quotation; while in Frankfort they are quoted exclusive of interest.*

*The following practical illustration of the various methods of quoting United States bonds in European markets is furnished by a banker for this publication:

"London assumes in the calculation of American bonds the gold dollar at 4



HERE has been no politico-economical question so much discussed in the United States during the last ten years as the amount of the outstanding volume of currency, and none which has been so much misrepresented. The public mind having been concentrated upon the "currency question," the opposing political parties have continually ascribed all changes and crises in commercial and industrial affairs to changes in the volume of the currency of the United States. They have started out in all cases with the erroneous assumption that the foundation of all the prosperity, or the cause of all the depression as the case may have been -experienced in the last ten years, was to be found in

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shillings including coupon. If, therefore, say, on the 28th of August a new 5 per cent bond is quoted in London 107 (while demand sterling in New York is 4.89) a $100 bond will cost:

107×4 shillings £21 88. @489..

.$104.65 gold.

"Frankfort assumes in the calculation of American bonds the gold dollar at 44 marks exclusive of coupon. The above bond quoted in Frankfort August 28 at 1034 (while demand exchange on Germany in New York is 95 cents gold per 4 mark) will cost:

1034×44 mark 438.81 @ 954..

Accrued interest, August 1 to 28..

.$104.49 gold.


$104.90 gold. "On the same day new fives were quoted in New York 116%. Gold being then 111, made the bond worth $104.95 gold. This comparison, based on actual market reports, will show the quotations of 1034 in Frankfort, 107 in London, and 116 in New York to stand very near to each other. It may be added that Paris assumes the gold dollar at 5 francs including coupon, while Amsterdam assumes it at 2% guilders excluding coupon. Berlin and the other German places figure exactly the same as Frankfort."

either the contraction or the inflation of the paper currency of the United States. In accordance with this narrow view of finance the partisans of one party or another have been continually printing in pamphlets and newspapers tables and estimates of the volume of · currency in existence at one time as compared with another. The fault with all these estimates and tabulations has been that they have been made to sustain a preconceived theory of the causes of the changes in the financial situation at various times. The facts have in all cases been made secondary to the theories, and consequently only such facts as sustained the theories have been given, while all others- which in many cases, if fairly stated, would have completely upset the theories -have been omitted.

A great majority of the misstatements of the volume of currency in circulation have probably not been intentional; they are due simply to that proneness of all men to rest satisfied when they have found certain facts to sustain their preconceived notions. Indeed, the believers in theories founded upon a few indisputable facts, but ignoring others of equal importance, are always most thoroughly convinced of the truth of their own doctrines. Out of just such half-truths have arisen all the great errors of mankind on any subject. It is an error to presume that the apparent prosperity — the "flush times" experienced in this country from 1867 to 1872 were due entirely, or even very largely, to a greater volume of currency then than now. A broader view of finance would show that the progress of financial affairs in the United States has been in accordance with the general situation throughout the commercial world, and as this little book is intended as a handbook

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