A government can write so many ounces of silver to one ounce of gold into the Mint’s rules and stand ready to coin either metal into full-weight money at that fixed mint ratio. Bimetallism is that arrangement. The market does not have to agree: when the market ratio — the price of gold in silver out in trade — drifts from the legal one, Gresham’s pattern appears, because a law does not repeal arbitrage.
In the United States the loudest fight over that drift was the Crime of 1873, and the arithmetic had started at the founding, with early U.S. coinage. The same price of gold in silver, with no legal number attached, is what the gold–silver ratio still records.
Mint ratio versus market ratio
A mint ratio is a law that so many units of silver equal one unit of gold at the Mint. The Coinage Act of 1792 used fifteen to one, and later American practice, along with the free-silver campaigns, often spoke of sixteen to one. Those numbers were statutes or political demands, not geology.
A market ratio is two prices divided on a given date: the price of gold over the price of silver, or what one metal fetches in the other. Mines, industry, war, and the demand for money all move it, so the Mint’s number can sit still while the market’s number moves.
When the two come apart, the Mint is overpaying for one metal, so people bring the overvalued metal to be coined and melt or export the undervalued one, and the coins in circulation skew toward a single metal. Neither metal has failed. It is arithmetic under a fixed legal price.
Gresham’s pattern at the mint
“Bad money drives out good” is the slogan. Under bimetallism the mechanism is sharper. The metal the Mint overvalues relative to the market tends to stay in coin; the metal it undervalues tends to leave circulation. “Bad” and “good” mean mispriced by law, not better or worse metal.
States could change the mint ratio, stop coining one metal freely, or drift onto a gold or silver standard in practice while keeping the other metal as small change. Europe’s late-nineteenth-century turn to gold and America’s 1834 correction in gold’s favor are examples. The Crime of 1873 was a different move — the United States dropped free coinage of the standard silver dollar rather than rewriting the ratio — but the same pressures were behind it.
A fight over a mint ratio is a different animal from a warehouse receipt that outruns its metal, or from the 1980 Hunt squeeze. It is a quarrel between a law and a price.
Europe’s gold turn and the Latin Monetary Union
Several European states entered the nineteenth century with silver or two-metal habits and left it closer to gold. After unification in the early 1870s, Germany moved to gold and sold silver onto the market, putting pressure on other mints. France and its partners in the Latin Monetary Union, founded in 1865, tried to coordinate gold and silver coinage across borders. It was a treaty about fineness and circulation, not a single central bank.
As silver’s price in gold fell and the major trading states came to prefer gold for large payments, fixed ratios grew harder to defend. Silver could survive as small change with limited legal-tender status while the main unit went to gold. That European turn sits behind America’s 1873 politics without being the same thing.
Union members still faced Gresham’s arithmetic whenever the market ratio drifted from the mint ratio. Coordinating coin designs does not freeze the world price of silver. The pressure was the same everywhere: a world market for silver, creditors and large-payment systems that preferred gold, and mint ratios that no longer matched trade.
America’s version of the same problem
The United States wrote gold and silver into law in 1792 at fifteen to one. When the world ratio drifted, the undervalued metal left. In 1834 Congress moved the ratio in gold’s favor. After the Civil War’s greenbacks and the long fight to resume gold payments, the Coinage Act of 1873 dropped free coinage of the standard silver dollar. Free silver at sixteen to one became the farmers’ demand. It peaked with William Jennings Bryan’s campaign of 1896.
Every one of those laws was fighting over the same mechanism: two metals, one legal unit, and a ratio the market would not hold still.
In 1900 the United States defined the dollar in gold by statute. The campaign to remonetize silver cooled. Silver’s memory as money, and its growing use in industry, carried on. The lesson of the mint ratio stayed: a legal number is not a market price, and renaming the fight does not stop the arbitrage.
A short timeline
The legal number can sit still for decades. The market price of silver rarely does.
- 1792: U.S. Coinage Act — gold and silver at a 15:1 mint ratio.
- 1834: The U.S. ratio is corrected in gold’s favor.
- 1865: The Latin Monetary Union begins coordinating coin standards among its members.
- Early 1870s: Germany shifts to gold; the world silver price comes under pressure.
- 1873: U.S. Coinage Act drops free coinage of the standard silver dollar.
- 1878–1890: The Bland–Allison and Sherman silver-purchase compromises.
- 1896: Bryan’s free-silver campaign; the gold side wins the election.
- 1900: U.S. Gold Standard Act — the dollar is defined in gold.
Law versus the scale
Bimetallism comes down to a law and a price. The law says fifteen or sixteen to one. The market says whatever gold and silver fetch that week. When they disagree, one metal goes to the mint and the other goes abroad or into the melting pot.
The same quotient still prints every day, with no law behind it now — it is the gold–silver ratio. The American politics of the old legal ratio run through the Crime of 1873, and the wider arc through silver in history.