sovereign was declared to be a pound. Thus the monetary unit of Great Britain agrees with its principal coin.

By the coinage law of February 12, 1873, the monetary unit of the United States was changed from a silver dollar of 4123 grains standard (3711 grains pure) silver to a gold dollar of 25 8-10 grains standard gold, and the legal tender function of all silver coins was reduced to five dollars. But as far as the half dollars, quarters and dimes were concerned, this was only a reiteration of the law of February 21, 1853. By the law of July 13, 1876, the trade dollar was declared not to be a legal tender at all.

As shown in the preceding pages, the only "dollar” known in British finance was the dollar of 54 pence. This was distinctly defined by a proclamation of Queen Anne in 1704, to the effect that the Spanish and Mexican "pieces of eight," or dollars, were of the value of 4s. 6d. When, after 1860, the bonds of the United States payable in "dollars" were put upon the London market, though issued by a government whose nominal unit of values was a dollar of 51 pence, English brokers and bankers, still adhering to their old estab lished idea of a dollar as the equivalent of 54 pence sterling, quoted the market prices of Unites States bonds in dollars of 54 pence. Thus when the bonds were really at par they were quoted in London at 91.33, this being the equivalent of a dollar of American gold expressed in the old dollar of 54 pence sterling. This custom was maintained in London until December 30, 1873, when a new "dollar" of four shillings having been adopted by the London Stock Exchange, United States bonds were, and are yet, quoted in that ideal standard. This new dollar is not represented by any coin of any

nation, and is the equivalent of 96 cents and 96 hundredths of a cent in American gold. It will thus be seen that while the old London quotations made United States bonds appear to be nearly 8 per cent lower than they were in fact, the new Stock Exchange dollar makes. them appear to be about 3 per cent higher (in London) than they are in fact. By this rule of the London Stock Exchange, and by the United States law in regard to the computations of sterling exchange, the old "dollar" of 54 pence appears to have passed entirely out of use as an ideal standard. This dollar, however, should not be confused with the American silver dollar established as the unit of values by the law of 1792, and which remained as such until abrogated by the law of February 12, 1873.

In Frankfort the quotations of the market prices of United States bonds are made in still another assumed "dollar," which is the equivalent of 44 marks. The gold mark being equivalent to 23 8-10 cents in American gold, makes the Frankfort stock exchange dollar, used for quoting United States bonds, equal to $103.05 in American gold. The Frankfort quotations, therefore, for United States bonds make them appear to be nearly 3 per cent lower than they would quoted in American gold dollars.

Still another fact complicates the foreign quotations for American bonds, viz.: In London the bonds are quoted "flat"; that is, including accrued interest to the date of quotation; while in Frankfort they are quoted exclusive of interest.*

* The following practical illustration of the various methods of quoting United States bonds in European markets is furnished by a banker for this publication:

"London assumes in the calculation of American bonds the gold dollar at 4

PAPER MONEY AND COIN IN THE UNITED STATES.

HERE has been no politico-economical question so Tmuch discussed

much discussed in the United States during the last ten years as the amount of the outstanding volume of currency, and none which has been so much misrepresented. The public mind having been concentrated upon the "currency question," the opposing political parties have continually ascribed all changes and crises in commercial and industrial affairs to changes in the volume of the currency of the United States. They have started out in all cases with the erroneous assumption that the foundation of all the prosperity, or the cause of all the depression - as the case may have been -experienced in the last ten years, was to be found in

shillings including coupon. If, therefore, say, on the 28th of August a new 5 per cent bond is quoted in London 107 (while demand sterling in New York is 4.89) a $100 bond will cost:

107×4 shillings = £21 8s. @ 489....

$104.65 gold.

Frankfort assumes in the calculation of American bonds the gold dollar at 44 marks exclusive of coupon. The above bond quoted in Frankfort August 28 at 1034 (while demand exchange on Germany in New York is 954 cents gold per 4 mark) will cost:

"On the same day new fives were quoted in New York 116%. Gold being then 111, made the bond worth $104.95 gold. This comparison, based on actual market reports, will show the quotations of 1031⁄4 in Frankfort, 107 in London, and 116% in New York to stand very near to each other. It may be added that Paris assumes the gold dollar at 5 francs including coupon, while Amsterdam assumes it at 2 guilders excluding coupon. Berlin and the other German places figure exactly the same as Frankfort."

either the contraction or the inflation of the paper currency of the United States. In accordance with this narrow view of finance the partisans of one party or another have been continually printing in pamphlets and newspapers tables and estimates of the volume of currency in existence at one time as compared with another. The fault with all these estimates and tabulations has been that they have been made to sustain a preconceived theory of the causes of the changes in the financial situation at various times. The facts have in all cases been made secondary to the theories, and consequently only such facts as sustained the theories have been given, while all others- which in many cases, if fairly stated, would have completely upset the theories have been omitted.

A great majority of the misstatements of the volume of currency in circulation have probably not been intentional; they are due simply to that proneness of all men to rest satisfied when they have found certain facts to sustain their preconceived notions. Indeed, the believers in theories founded upon a few indisputable facts, but ignoring others of equal importance, are always most thoroughly convinced of the truth of their own doctrines. Out of just such half-truths have arisen all the great errors of mankind on any subject. It is an error to presume that the apparent prosperity — the "flush times" experienced in this country from 1867 to 1872- were due entirely, or even very largely, to a greater volume of currency then than now. A broader view of finance would show that the progress of financial affairs in the United States has been in accordance with the general situation throughout the commercial world, and as this little book is intended as a handbook

of financial facts rather than of theories, the following table of the various kinds of paper currency in existence in the United States each year since 1853 has been compiled, in order, if possible, to remove the question of the exact amount of currency in circulation each year from the confusion to which it has heretofore been subject.

The propriety of including the 7 3-10 per cent notes, the compound interest notes, the 3 per cent certificates, and the various other forms of unfunded debt of the government among the forms of currency, will doubtless be questioned by some; but it is well known that all these did circulate to a large extent as money, though not so rapidly as the non-interest-bearing treasury notes. Reference to the law authorizing the 7 3-10 per cent. notes will also show that they were intended to circulate as money; the Secretary was authorized to issue them as legal tender to all creditors for the amount of the principal, together with the interest accrued on any such note at the date of tender.* A large proportion of the $672,578,850 of 7.30 notes, and the $159,012,140 of compound interest notes, outstanding on July 1, 1865, were issued under authority of the law of June 30, 1864, which made them a legal tender for the face value of the notes and the accrued interest. The 3 per cent certificates, also authorized by the act of March 2, 1867, were intended as a substitute for $50,000,000 of United States notes, which were by that means released from the vaults of the national banks, where they had been held according to law as a reserve against circulation and deposits. These certificates were therefore practically an addition of $50,000,000 to the currency in 1867.

* See Digest of Laws, Act of June 30, 1864, and March 3, 1865.