Silver Certificates
The Crime of 1873
Milton Friedman

The U.S. Coinage Act of 1873 eliminated provision for the free coinage of silver. That act cast the die for a gold standard. The conventional view is that "the act of 1873 was a piece of good fortune." This paper indicates that it was the opposite - a mistake that had highly adverse consequences. This is a judgment about 1873, not 1896. By 1896, when William Jennings Bryan ran for president on a "free-silver ticket," it was too late to undo the damage. Bryan was trying to close the barn door after the horse had been stolen.

"I am persuaded history will write it [the act of 1873] down as the greatest legislative crime and the most stupendous conspiracy against the welfare of the people of the United States and of Europe which this or any other age has witnessed." - SENATOR JOHN H. REAGAN 1890

"[The demonetization of silver] was the crime of the nineteenth century."- SENATOR WILLIAM M. STEWART 1889


CRIME OF 1873, pg 1161
I have italicized two terms that are critical to understanding the "crime of '73." "Free coinage" is critical because it gave practical content to a specie standard by providing that the government mint would convert specie that individuals chose to bring to the mint into legal tender currency denominated in "dollars" (initially solely in the form of coins; later in paper certificates as well) at the stated metallic equivalent. "Both" is critical because it effectively established the United States on a bimetallic standard, that is, a monetary standard that authorized free coinage, and hence the use as money, of either of two metals, silver or gold. These two provisions were equivalent to saying that the government would buy all silver or gold offered to it at prices of $1.2929... per troy ounce of pure silver and $19.3939... per troy ounce of fine gold, that is, 15 times as much for an ounce of gold as for an ounce of silver; whence the "ratio of 15 to 1."3

Friedman, Milton. “The Crime of 1873.” Journal of Political Economy, vol. 98, no. 6, 1990, pp. 1159–94. JSTOR, http://www.jstor.org/stable/2937754. Accessed 25 Jan. 2024.