On March 14, 1900 the United States congress passed an act that standardized the value that allowed to brought parity among all forms of currency issued by United States. A long-standing debate about values of gold and paper notes among other things were settled with President. McKinley signing the act that is famously known as the Gold Standard. Prior to this act, it was in 1890 that currency regulations were set with the establishment of the First Bank as a national bank. This 1790 regulations were signed after a huge debate between Hamilton and Madison.
Important benefits of this Gold Standard Act were to fix the value of gold and silver, as United States notes could be redeemed for gold at the rate of $ 20.67 per ounce i.e.Treasury gold: “Twenty-five and eight-tenths grains of gold nine-tenths fine.” In a way this act helped form an international exchange rate, causing value to soar around the world. Because of the exchange of gold and currencies among countries grew in the process, trade agreements were established.
The Gold Standard also weakened bimetallism; until then allowed for legal tending of gold and silver coins for random values. In 1834 with the rise in gold values, then US Government put forth a raised standard for gold and silver exchange rates to 16:1 ratio; but, still the price of gold varied. Gold Standard Act also paved a way for unification of American paper currency.
Ever wondered how the US currency were valued and divided? The Great Thomas Jefferson revised a congressional committee report to authorize the Spanish dollar as the reference for value tables and added an intriguing concept. He divided the currency by decimals, later paving way for simple value calculations. Jefferson was a true polymath in every sense. In 1785,he also printed his work Notes on Coinage and submitted it to Congress. He also contributed for the opening of US mint and in 1790, he came out with a proposal that would standardize the unit of money using the weights and measures decimal system. In a way these initiatives were the first foundations for US values.
The Gold Standard Act of 1900 has been overwritten a few times in the US. First, during the great depression inflation forced President. Franklin Roosevelt to overwrite the Gold Standard and adapt a gold price of thirty-five dollars per ounce. The Gold reserve Act of 1934 also abandoned the Gold Standard rules, when it asked to remove all gold and other metal coins from circulation. Dire effects of World War II forced the US government to overwrite the Gold Standard Act once more. US formed an alliance with Britain to establish the International Monetary Fund (IMF). But finally, President. Nixon abolished the US international exchange of gold in 1971 in the process negating the fundamentals values of the Gold Standard Act.
American model and actress Suzy Parker famously said, the advantage of the Gold Standard is one can have solid lumps and melt them down when needed. One of the lasting Legacies of the Gold Standard Act of 1900 is its role in the standardization of the US Currency value and of course gold.
Opinion By Vikas Vemuri