Gold and the Gold Standard.pdf

GOLD AND GOLD MONEY IN U.S. PR10R TO 1914
which originated with a law of 1863, authorizing the
Secretary pf the Treasury to issue them against
deposits at par of gold coin and bullion, the gold so
deposited for or representing the certificates to be
retained 100 per cent in the Treasury for the payment
of the certificates on demand. While the certificates
were true money and circulated freely, they partook
of the nature of warehouse receipts. The gold belonged
to the owner of the certificate and"it circulated
by proxy" in the form 'of the certificate.
During this period, gold certificates were not legal
tender. Their circulation amounted to about $15
million in 1879, $131 million in 1890, $201 million
in 1900, and $1,026 million in 1914.
The unit of value, as we have seen, was the gold
,dollar containing 23.22 grains of pure gold. Inasmuch
as there are 480 grains of gold in an ounce, an ounce
of gold could be coined into $20.67 of United States
gold coin. Since we had free coinage of gold, anyone
could take pure gold bullion in any quantity to an
American mint and have it minted into gold coin,
receiving for each ounce $20.67 (less certain petty
charges for assaying, refining, partage, etc.,), while
anyone melting down American gold coins of full
weight could get an ounce of pure gold out of every
$20.67 worth of gold coin melted. Thus in the United
States at that time, to say that an ounce of gold
was worth $20.67 was like saying that a foot was
12 inches long; $20.67 was, in reality,an ounce of
pure gold put up in. the form of money.
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