Editing Gold standard (section)

==In the United States==
{{See also|United States dollar}}
<div style="width:auto;margin:0 auto;">[[File:Price of gold.webp|thumb|upright=2|The price of gold, as denominated in [[United States dollar|dollars]], was steady until the collapse of the [[Bretton Woods system]] in the mid-1970s.|left]]</div>
{{Clear}}

===Inception===
In the 1780s, [[Thomas Jefferson]], [[Robert Morris (financier)|Robert Morris]] and [[Alexander Hamilton]] recommended to Congress that a decimal currency system be adopted by the United States. The initial recommendation in 1785 was a [[silver standard]] based on the [[Spanish dollar|Spanish milled dollar]] (finalized at 371.25 grains or 24.0566&nbsp;g fine silver), but in the final version of the [[Coinage Act of 1792]] Hamilton's recommendation to include a [[eagle (United States coin)|$10 gold eagle]] was also approved, containing 247.5 grains (16.0377 g) fine gold. Hamilton therefore put the [[U.S. dollar]] on a [[bimetallism|bimetallic standard]] with a gold–silver ratio of 15.0.{{sfn|Walton|Rockoff|2010}}

American-issued dollars and cents remained less common in circulation than Spanish dollars and [[Spanish real|reales (1/8th dollar)]] for the next six decades until foreign currency was demonetized in 1857. $10 gold eagles were exported to Europe where it could fetch over ten Spanish dollars due to their higher gold ratio of 15.5. American silver dollars also compared favorably with Spanish dollars and were easily used for overseas purchases. In 1806 President Jefferson suspended the minting of exportable gold coins and silver dollars in order to divert the [[United States Mint]]'s limited resources into fractional coins which stayed in circulation.

===Pre-Civil War===
The United States also embarked on establishing a national bank with the [[First Bank of the United States]] in 1791 and the [[Second Bank of the United States]] in 1816. In 1836, President [[Andrew Jackson]] failed to extend the Second Bank's charter, reflecting his sentiments against banking institutions as well as his preference for the use of gold coins for large payments rather than privately issued banknotes. The return of gold could only be possible by reducing the dollar's gold equivalence, and in the [[Coinage Act of 1834]] the gold–silver ratio was increased to 16.0 (ratio finalized in 1837 to 15.99 when the fine gold content of the $10 eagle was set at 232.2 grains or 15.0463 g).

[[California gold rush|Gold discoveries in California]] in 1848 and later in Australia lowered the gold price relative to silver; this drove silver money from circulation because it was worth more in the market than as money.{{sfn|Elwell|2011}} Passage of the Independent Treasury Act of 1848 placed the U.S. on a strict hard-money standard. Doing business with the American government required gold or silver coins.

Government accounts were legally separated from the banking system. However, the mint ratio (the fixed exchange rate between gold and silver at the mint) continued to overvalue gold. In 1853, silver coins 50 cents and below were reduced in silver content and cannot be requested for minting by the general public (only the U.S. government can request for it). In 1857 the legal tender status of Spanish dollars and other foreign coinage was repealed. In 1857 the final crisis of the free banking era began as American banks suspended payment in silver, with ripples through the developing international financial system.

===Post-Civil War===
[[File:McKinley Prosperity.jpg|thumb|upright|[[William McKinley]] ran for president on the basis of the gold standard.]]
Due to the inflationary finance measures undertaken to help pay for the U.S. [[US Civil War|Civil War]], the government found it difficult to pay its obligations in gold or silver and suspended payments of obligations not legally specified in specie (gold bonds); this led banks to suspend the conversion of bank liabilities (bank notes and deposits) into specie. In 1862 paper money was made legal tender. It was a [[fiat money]] (not convertible on demand at a fixed rate into specie). These notes came to be called "[[Demand Note|greenbacks]]".{{sfn|Elwell|2011}}

After the Civil War, Congress wanted to re-establish the metallic standard at pre-war rates. The market price of gold in greenbacks was above the pre-war fixed price ($20.67 per ounce of gold) requiring [[deflation]] to achieve the pre-war price. This was accomplished by growing the stock of money less rapidly than real output. By 1879 the market price of the greenback matched the mint price of gold, and according to Barry Eichengreen, the United States was effectively on the gold standard that year.<ref name=":5"/>

The [[Coinage Act of 1873]] (also known as the Crime of ‘73) suspended the minting of the standard silver dollar (of 412.5 grains, 90% fine), the only fully legal tender coin that individuals could convert silver bullion into in unlimited (or [[Free silver]]) quantities, and right at the onset of the silver rush from the Comstock Lode in the 1870s. Political agitation over the inability of silver miners to monetize their produce resulted in the [[Bland–Allison Act]] of 1878 and [[Sherman Silver Purchase Act]] of 1890 which made compulsory the minting of significant quantities of the silver [[Morgan dollar]].

With the resumption of convertibility on June 30, 1879, the government again paid its debts in gold, accepted greenbacks for customs and redeemed greenbacks on demand in gold. While greenbacks made suitable substitutes for gold coins, American implementation of the gold standard was hobbled by the continued over-issuance of silver dollars and [[Silver certificate (United States)|silver certificates]] emanating from political pressures. Lack of public confidence in the ubiquitous silver currency resulted in a run on U.S. gold reserves during the [[Panic of 1893]].

During the latter part of the nineteenth century the use of silver and a return to the bimetallic standard were recurrent political issues, raised especially by [[William Jennings Bryan]], the [[People's Party (United States)|People's Party]] and the [[Free Silver]] movement. In 1900 the gold dollar was declared the standard unit of account and a gold reserve for government issued paper notes was established. Greenbacks, silver certificates, and silver dollars continued to be legal tender, all redeemable in gold.{{sfn|Elwell|2011}}

===Fluctuations in the U.S. gold stock, 1862–1877===
{| class="wikitable floatright"
|-
! colspan=2|US gold stock
|-
| 1862 || 59 tons
|-
| 1866 || 81 tons
|-
| 1875 || 50 tons
|-
| 1878 || 78 tons
|}
The U.S. had a gold stock of {{convert|1.9|e6ozt|t|abbr=unit}} in 1862. Stocks rose to {{convert|2.6|e6ozt|t|abbr=unit}} in 1866, declined in 1875 to {{convert|1.6|e6ozt|t|abbr=unit}} and rose to {{convert|2.5|e6ozt|t|abbr=unit}} in 1878. Net exports did not mirror that pattern. In the decade before the Civil War net exports were roughly constant; postwar they varied erratically around pre-war levels but fell significantly in 1877 and became negative in 1878 and 1879. The net import of gold meant that the foreign demand for American currency to purchase goods, services, and investments exceeded the corresponding American demands for foreign currencies. In the final years of the greenback period (1862–1879), gold production increased while gold exports decreased. The decrease in gold exports was considered by some to be a result of changing monetary conditions. The demands for gold during this period were as a speculative vehicle, and for its primary use in the foreign exchange markets financing international trade. The major effect of the increase in gold demand by the public and Treasury was to reduce exports of gold and increase the Greenback price of gold relative to purchasing power.{{sfn|Friedman|Schwartz|1963|p=79}}