Sec. 11. #The movement for national bimetallism in America#.  When all hope of international bimetallism failed, the efforts of many of its advocates were turned to the plan of legalizing national bimetallism in the United States at a ratio of 16 to 1.  This was very different from the market ratio.  Gold had become before 1860, in fact, the standard of our money system, and after 1873 it was the only metal admitted to free coinage.  Silver, little by little, had been losing purchasing power in terms of gold, until from being worth, in 1873, one-sixteenth as much, ounce for ounce, it became, in 1896, worth but one-thirtieth as much as gold.  The power of silver to purchase general commodities fell much less than the change in its ratio to gold would indicate, gold having risen in terms of most other goods as well as of silver.  Nevertheless, the proposal to open the mints to the free coinage of silver at the ratio of 16 to 1 in the year 1896 threatened a sudden and marked cheapening of money.[18] Probably gold would have been entirely driven out as money and silver would have taken its place as the standard.  In any event “free silver” would have accomplished the purpose of making the standard of deferred payments cheaper.  It was at first a debtors’ movement, but to succeed it had to enlist the support of other large classes of voters.  And thus it developed into the more sweeping theory that wages, welfare, and prosperity were favored by a larger supply of money quite apart from the effect it would have upon debts.

In its extreme form the free-silver plan was a fiat scheme, for some of its supporters believed that by the mere passage of the law the two metals could be made to bear to each other any ratio desired.  But its most intelligent advocates recognized that the force of the law was limited by economic conditions.  The victory of the gold standard in the campaign of 1896 was, it would seem, due more to the well-founded fear that a sudden change of the money standard would cause a panic than to a popular understanding of the question.

The free-silver advocates got what they desired, a reversal of the movement of general prices, through an occurrence for which no political party could claim the credit.  In 1883 the gold production of the world was less than $100,000,000.  From that date, with the opening of newer gold-yielding territory in South Africa and in the Klondike, the annual output of gold had been increasing rapidly and almost steadily.  The methods of extracting gold theretofore had still been in large part of a primitive sort.  But intricate machinery was taking the place of crude tools, chemical processes had been introduced (notably, the cyanide process), and the principal product began to come from the regular and certain working of deep mines rather than from chance surface discoveries.  In many parts of the world were enormous deposits of low-grade ores, before useless, that could be worked economically by the new methods.