The Gold-Silver Ratio and U.S. Coinage Part Two

After consultations with financial experts, Congress in January 1837 slightly increased the weight of the gold coins, effectively reducing the ratio to 15.998 to 1; the mint value of an ounce of gold was now fixed at $20.67, a figure which remained in place until 1933. This minor adjustment solved the problem, and for the first time there was true bimetallism in the United States. Gold and silver coins now circulated at par and there were sufficient quantities of both for the marketplace.

Until 1849, the coinage law of 1837 was very effective but in the latter year another problem arose which would, within a short time, destroy bimetallism in this country. The discovery of massive quantities of gold in California and Australia upset, with the exception of Britain, the monetary systems of the Western world. Silver was now undervalued, especially in the United States, and bullion speculators brought gold to America, purchasing silver in large quantities. The metal was shipped to Europe or the Orient and thus lost to the U.S. By the summer of 1850, there was a severe shortage of coined silver for daily marketplace needs.

One of the interesting solutions to this problem was the heavy coinage of gold dollars. With silver leaving the scene, this was the smallest gold coin available and thus was supposed to help the ordinary