Of the many singular features in the present overheated controversy, probably the most singular is the fact that comparatively few bimetallists know of, or, at any rate, say much about, this demonetization of gold, while the monometallists ignore it entirely, and many of them, who ought to know better, absolutely deny it.
So extensive was this demonetization of gold, and so far-reaching were its consequences, that it may easily be believed that it was the beginning of all our misfortunes, and that the crime of the century, instead of being the demonetization of silver in 1873, was really the demonetization of gold in 1857; for that was the first general or preconcerted international action to destroy the monetary functions of one of the metals and throw the burden upon the other, and it first familiarized the minds of financiers, and especially of the creditor classes, with the fact that the thing might easily be done and that it would work enormously to their advantage.
It may also be said that it led logically to the action of 1867, which was but the beginning of a general demonetization of silver.
The history of gold demonetization is full of instruction and is here given in detail.
In 1840-45 the world was hungering for gold. All the leading nations had just passed through financial convulsions which shook the very foundations of society. Several American states had either repudiated their debts outright or scaled them in ways that to the English mind looked dishonest, and there was a general uneasiness among the creditor classes of the world. A universal fall of prices had produced the same results with which we are now so painfully familiar. In the half century terminating with 1840 the world had produced but $529,942,000 in gold, coinage value, and $1,364,697,000 in silver, or some forty ounces of silver to one of gold; yet their ratio of values had varied but little, and the variation was not increasing. Why? Monometallists have raked the world in vain for an answer. Bimetallists point to the only one that is satisfactory, namely, the persistence of France in treating both metals equally at her mints. But there were grave apprehensions that France alone could not maintain the parity, and so, as aforesaid, all the world was hungry for gold.
And in all the world there was not one observer who dreamed that this hunger would soon be far more than satiated, and the philosopher who should have predicted half of what was soon to come would have been jeered at as a crazy optimist. In 1848 gold was discovered in California, and three years later in Australia. The supply from Africa and the sands of the Ural Mountains had previously increased, so that in 1847-8 it was equal to that of silver. But how trifling was this increase to what followed. In 1849 there was still a slight excess of silver production, and in 1850 the proportion was but $44,450,000 of gold to $39,000,000 in silver. Then gold production went forward by great leaps and bounds. How much was produced?