Gold and Silver Standards

Stable(?) Prices, 1815-1914

Copyright © 1994, 1999 by Hugo S. Cunningham

first posted ca 980321
latest minor change 20040513


written 4 Mar 94
revised 2 Apr 94
first posted: 980321
last updated: 990327

1. References

    Chester L. Krause and Clifford Mishler, 1994 Standard Catalog of World Coins, Krause Publications, Iola WI, 1993

    Chester L. Krause and Clifford Mishler, Standard Catalog of World Coins-- Eighteenth Century, Krause Publications, Iola WI, 1993

    Richard G. Doty, The MacMillan Encyclopedic Dictionary of Numismatics, MacMillan, New York, 1982

    Albert R. Frey, Dictionary of Numismatic Names, Barnes & Noble, 1947

    R.S. Yeoman, A Guide to U.S. Coins: 43rd Edition, Western Publishing Co., Racine WI, 1989

      An additional source, used later, on old British coinage, is
      Sir Albert Feavearyear, The Pound Sterling: A History of English Money, Oxford University Press/Clarendon Press, London, 1963.

2. Overview

Currencies of most major trading nations lacked long-term inflation from the end of the Napoleonic Wars (1815) to the beginning of World War I (1914). This long-term stability was ensured by convertibility to bullion (precious metals): gold or, in some countries lacking gold, silver. Paper money was much easier to carry around than gold or silver, but had a dubious reputation; most governments could not resist the temptation to print more paper money than they could redeem. Bank of England notes (first appearing in 1695) were one of few honorable exceptions. The US Federal government did not print paper money before the "greenbacks" of the US Civil War (1861-65).

Over the short term, prices were influenced by new discoveries of precious metals. Gold strikes in California and Australia in the early 1850s set off a mild inflation and global boom. A lack of gold discoveries in the 1880s and early 1890s caused deflation, depression, and economic radicalism. In the late 1890s, new gold strikes in Alaska and South Africa brought a new inflationary boom.

With Spain's conquest of the Americas (1492 and after), increased production of silver eroded its value in relation to gold, from ancient ratios like 1 to 13 1/2 (Lydia, 550 BCE) and 1 to 12 (Augustan Rome, 27 BCE to 14 CE) to more recent ratios like 1 to 15 1/2 (Revolutionary France, 1803) and 1 to 16 (USA, 1834). Silver's relative decline accelerated in the 1870s and later.

The stable rates of the gold era look good at a distance, but less so close up. In periods of gold scarcity, falling prices ("deflation") punished those who took risks (eg loans) to create business opportunities and jobs. Ideally, a currency would be absolutely stable, but in the real world, where some instability is unavoidable, inflationary periods (if kept within reason) are less harmful than deflationary periods.

3. Weights

ounce troy (standard bullion measure)48031.10320
pound troy (12 oz. troy)5760373.242240
ounce avdp (avoirdupois)437.528.35
pound avdp (16 oz. avdp)7000453.6

4. US Gold and Silver Standards

The 19th Century gold dollar veered in purchasing power between 10 and 20 dollars today (2001).
(For example check the "inflation calculator" at URL:
Low values (about $10) after the price inflations of the War of 1812 (1815) and the US Civil War (1865) were followed by decades of uneven price deflation. Between 1900 and 1920, the gold dollar's value gradually declined from $20 (2001) to $10 (2001). The price deflation of the Great Depression (1929-1933) raised it up to $12.50 (2001), where it stayed until WW II.

In the early years after US independence was recognized (1783), the USA was a minor trading power. In 1792, the US "dollar" was established and pegged to the Spanish Empire's 8-real peso ("piece of eight"), a large silver coin. America continued to accept Spanish-American pesos as late as 1857.

In 1834, the US Congress set up a "bimetallic" system, based on both silver and gold:
1 ounce (troy) of gold = $20.67. (This valuation lasted until 1934.)
(Note that this is only about $200 in today's money, while gold today (Mar 1998) is valued at about $300. Gold's higher real value today may reflect the 20th Century's unhappy experience with inflation.)
1 ounce (troy) of silver = 1/16 ounce of gold, or $1.29.

This 1/16 ratio had to be abandoned in 1873, as huge deposits of silver were discovered and mined. In 1878, however, as a subsidy for politically influential silver producers, the Bland-Allison Act required the government to buy a limited amount of silver ($2,000,000 to $4,000,000 a month) at $1.29 per ounce and coin it. This compromise bimetallism, the so-called "limping standard," was replaced by a gold standard in 1900. In 1896, when Presidential candidate William Jennings Bryan called for the "free and unlimited coinage of silver" at $1.29 per ounce, the free-market value of silver was only half that. Its value has been erratic in recent years, as documented in site
. Rising very briefly to $50 per ounce in an unsuccessful speculation by the Hunt brothers in 1979-1980, it would dip below $4 per ounce in the early 1990s, but now (Mar 1998) has risen again to $6 an ounce, perhaps equivalent to $0.60 in 1896.

The 16 to 1 ratio can be seen in the weights of US bullion coins.

    Consider an 1878 silver dollar. A new one would weigh 26.73 grams. It is an alloy of 90% silver and 10% copper (This alloy is stronger than pure silver), meaning its silver component weighs 90% x 26.73 grams = 24.06 gm = 0.7736 ounces troy.

    To convert this figure to its gold equivalent, divide by 16: 0.7736/16 = 0.0484 ounces troy, which is in fact the weight of the gold (90%) in an 1852 one-dollar gold piece. An 1878 "Eagle" (10-dollar gold piece) contained ten times as much gold: 0.4839 ounces, or 15.05 grams. (The coin itself actually weighed more at 16.72 grams, because it was an alloy 90% gold and 10% copper.)

In 1934, in the Great Depression, President Franklin D. Roosevelt forbade private possession of gold bullion and artificially devalued the dollar from $20.67 per ounce of gold to $35 per ounce of gold, hoping to make American exports cheaper and more competitive. This over-valuation of gold became more realistic as World War II inflated the US dollar. A US promise to redeem foreign-bank dollars in gold at $35/ounce formed the basis of the Bretton Woods Agreement (1944) for fixed foreign exchange rates. Bretton Woods collapsed in the 1960s, partly because continued US inflation made gold convertibility unworkable.

5. Currencies of Other Countries

Explanations for tables below
    Rates for "computed" valuation:
    Gold coins: $1 = 1.505 grams (0.0484 oz troy) of gold
    Silver: $1 = 24.06 grams of silver. Note: This was accurate up to 1873, but for later years it overvalues silver.

    "Source" of a valuation:
    E = "estimated"
    C = "computed"

6. Exchange Rates just before World War I (1914)

Let the reader beware: the US currency equivalents given below are not authoritative, not derived from contemporary financial records. Mostly I "computed" them by going through the Krause/Mishler "1994 Standard Catalog of World Coins" listed in Section 1 above, comparing the weight of a country's gold coins with US gold coins, and noting whether the coins had shrunk at all in the years up to 1914. If a country wasn't using gold coins in 1914, I compared silver coins. Valuations prefaced by "(silver)" are especially likely to be overstated, since the nominal $1.29/ounce valuation of silver used here was twice its free market valuation.

I attempted to check these figures against the 1914 "Financial Times" (of London) and "New York Times," but neither carried exchange rates for more than a handful of currencies.

countryunitvalue (1800s US)valuation sourcedatemonetary union
Austria-Hungarycorona or krone("crown")$0.202C1892-1914
Bulgarialev ("lion")$0.193E1882-1914Latin
Chinayuan(silver) $1E1907-1914
Denmarkkrone ("crown")$0.268C1873-1914Scandinavian
Finland (Russian)markka$0.193C1878-1914
German Empiremark$0.238C1872-1914
Great Britainpound$4.86C1821-1934
India (British)rupee(silver) $0.444C1862-1939
Japanyen(silver) $1E1871-1880
(gold) $0.50E1897-1914
Mexicopeso(silver) $1E1866-1905
Norwaykrone ("crown")$0.268C1873-1914Scandinavian
Perusol(silver) $1E1864-1914
Swedenkrona ("crown")$0.268C1873-1914Scandinavian
Ottoman Empire (Turkey)kurush (piaster)(inflation)

7. Scroll ahead to historical table of widely accepted
trade coins, 600 BCE to 1830 CE

The American Numismatic Association ANA web site has links to many articles on coins, currency, etc.

Correspondents (links to this page):

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