The silver standard is the monetary system in which the standard economic unit of accounts is fixed weight silver. Standard silver specimens are widespread from the fall of the Byzantine Empire until the 19th century. After the discovery of the 16th century large silver deposits at Cerro Rico in Potosa, Bolivia, the international silver standard emerged along with eight Spanish pieces. This silver dollar coin plays the role of international trade currency for nearly four hundred years.
In 1704, after the Queen Anne's proclamation, the West Indies of England became one of the first areas to adopt the gold standard along with golden doubloon gold coins. In 1717, the Royal Mint master Sir Isaac Newton introduced a new mint ratio like silver and gold, and this had the effect of putting England into a de facto gold standard. After the Napoleonic Wars, Great Britain introduced a gold coin and formally adopted the gold standard in 1821. At the same time, the revolution in Latin America disrupted the supply of silver dollars (pieces of eight) produced in candies in Potosi, Mexico, and Lima, Peru. The British gold standard was initially extended to several British colonies, including the Australasian and South African colonies, but not to the North American colonies, British Indians, or to Southeast Asia. The Canadian Province adopted the gold standard in 1853, as did Newfoundland in 1865. In 1873, the German Empire turned into a gold standard in conjunction with a new golden sign coin. The United States turned into de facto gold in the same year, and over the next 35 years, all other countries turned gold, leaving only China and the British colonies of Hong Kong and Weihaiwei in standard silver. The silver standard finally ended when abandoned by China and Hong Kong in 1935.
Video Silver standard
The relative value of silver and gold
Since then silver was discovered by Spain in the New World on the 16th, until the second half of the 19th century, the value of gold in relation to silver maintains a relatively stable ratio of 15½: 1. The reason for the subsequent sharp decline in the relative value of silver to gold has been attributed to the German decision to stop the printing of silver coins in 1871. On November 23, 1871, after the French defeat in the Franco-Prussian War, Bismarck was ordered. a billion dollars in gold compensation, and then began moving Germany toward a new gold standard that emerged on 9 July 1873 with the introduction of the golden mark.
It has also been suggested by Nevada Senator John Percival Jones in 1876 in a speech to the US Senate, that the downward pressure on the silver market value began somewhat earlier with the formation of the Latin Monetary Union in 1866. Jones argues that the Latin Monetary Union involves partial demethe- silver.
Silver made a partial comeback in the first decade of the 20th century, so silver dollar coins from the Straits Settlements and Philippine peso silver coins had to be made smaller in size, and with silver content reduced to prevent them the value of silver beyond the gold exchange rate they just form. An even greater increase in silver prices after the First World War caused the Royal Mint in London to reduce the silver of the sterling currency. But silver never returned to the 15 ½: 1 ratio in the first half of the 19th century, and the dominant long-term trend is that silver continues to decline in value against gold. Currently the ratio in relation to the gold value, although variable, is more than the order of 70: 1.
Maps Silver standard
Bohemia
Beginning in 1515, silver coins were printed in a silver mine in Joachimsthal - JÃÆ'¡chymov (St Joachim's Valley) in Bohemia, now part of the Czech Republic. Although officially called Guldengroschen , they are known as Joachimsthalers , then shortened to thaler . The coins were widely circulated, and became a silver model of thalers issued by other European countries. The word thaler becomes dollars in English.
China
China has long used silver ingots as a medium of exchange, along with copper alloys. The use of silver ingots can be traced back as far as the Han dynasty (206 BC-220 AD). But before the Song Dynasty (960-1279), silver ingot was used primarily to accumulate wealth. During the Song dynasty, for the first time in history the government became the sole issuer of paper currency after 1024, but silver coins and silver are still used as a medium of exchange. In the Shanyuan Treaty, signed with Liao County in 1004, Song China agreed to pay annual compensation or tribute of 100,000 taels of silver and 200,000 silk scrolls. This is the first time silver in tael (Chinese: ??) is used as a compensation in an agreement with foreign powers. Silver ingots have a shape similar to a Chinese boat or shoe during the Yuan dynasty (1279-1368). This became the usual form for silver ingots for the following centuries.
The use of silver as money was largely determined at the time of the Ming dynasty (1368-1644). The banknote was first issued in 1375 by Hongwu Emperor founder amid a silver ban as a medium of exchange. But because of the increase in depreciation, paper money became worthless and the ban on the use of silver was finally repealed in 1436 (the 1st year of Emperor Zhengtong). Meanwhile, silver was made widely available through foreign trade with Portuguese and Spanish, beginning in the 16th century. The great tax reform by statesman Zhang Juzheng in 1581 (9th year of Emperor Wanli) simplified taxation and required that all taxes and korves be paid for silver. This can be seen as an indication of the firmly positioned silver in the Ming monetary system. But the reforms will not work or even be feasible if a large amount of silver is not yet available through trade and imports from America, mainly through Spain.
During the Qing dynasty (1644-1911), silver ingots were still used, but various foreign silver dollars had become popular in the South Coast region through foreign trade since the middle of the Qing era. It is clear that silver ingots become awkward and more complicated to use the foreign silver dollar, which can be calculated easily, given the fixed specifications and silver smoothness. However, the Qing dynasty strongly opposed the idea of ​​printing their own silver coins. It was not until the end of Qing, in 1890, that the first silver coin in circulation was introduced by Guangdong province. The coin is equivalent to a Mexican peso, and soon this problem is imitated by other provinces. For this silver coin, tael is still seen as the right monetary unit, since the coin denomination is given as 0.72 taels (special: 7 maces and 2 candareens). Note to the agreement signed between the Qing dynasty and the foreign powers of compensation are all in tael silver, except for the Nanking Agreement, where silver dollars are shown. (See Tianjin Agreement, Peking Convention, Shimonoseki Agreement and Boxer Protocol). It was not until 1910 that the "yuan" (Chinese: ?, literally "roundness"), was officially announced as a standard monetary unit. Yuan is divided into 10 jiao or 100 fen, and is defined as 0.72 tael of 900 silver smoothness. The following year, 1911, the so-called "Great Qing Silver Coins" one yuan (dollars) was issued, but soon after the dynasty was replaced by the Republic.
The silver standard was again adopted and codified in 1914 by a newly established republic, with one yuan still equal to 0.72 tael of 900 silver smoothness. After the Chinese Nationalist Party (Kuomintang) united the country in 1928, the yuan was re-announced as a standard unit in 1933, but this time the yuan relationship with tael was abolished, since one yuan is now equivalent to 26,6971 grams of 880 silver fineness. In the same year, 1933, while most Western countries (especially Britain and the United States) have abandoned the gold standard because of the Great Depression, it is said that China almost avoids depression completely, mainly because it stuck to the standard of silver.. However, the act of purchasing US silver in 1934 created an intolerable demand on Chinese silver coins, so in the end the silver standard was officially abandoned in September 1935 to support four "legal issues" of China's national banks. China will be the last to abandon the silver standard, along with the British crown colonies of Hong Kong.
The use of Chinese silver as exchange media is reflected in the name for the bank "??" (Literally "silver house" or "silver office") and for precious metal and gems traders "??" (literally "silver building" or "silver shop").
Germany
After his victory in the Franco-Prussian War (1870-71), the Germans extracted large sums of France from  £ 200,000,000 of gold, and used it to join England with the gold standard. The waiver of Germany's silver standard puts further pressure on other countries to switch to the gold standard.
Ancient Greek
The first metal used as currency was silver, more than 4,000 years ago, when silver ingots were used in trade. During the heyday of the Athens empire, silver tetradrachm was the first coin to achieve an "international standard" status in the Mediterranean trade.
Hong Kong
The British colony of Hong Kong would be the last, along with China, to abandon the silver standard in September 1935. Hong Kong then adopted the gold exchange standard and the Hong Kong dollar took the exact value of one shilling and three pence (1s 3d) sterling.
India
Indian rupee comes from R? Paya (silver is called r? Pa in Sanskrit) silver coins introduced by Sher Shah Suri during his reign from 1540 to 1545. Since it was around the same time that Spain found silver in Cerro Rico in PotosÃÆ', the value of silver rupees maintained a stable relationship with gold until the early 1870s. From 1871, the value of silver depreciated relative to gold, due to a decrease in demand for silver in European and North American candies, as these countries turned into the gold standard. It has severe consequences for the rupee and it resulted in the fall of the Rupee. After the Fowler report, India adopted the gold exchange standard in 1898, fixing the rupee value precisely on one shilling and four pence (1s 4d) sterling.
Persian
Dirhams are silver coins originally printed by Persians. The Caliphate in the Islamic world adopted these coins, beginning with the Khalifah Abd al-Malik (685-705). Silver remains the most commonly used metallic metal in ordinary transactions up to the 20th century.
Spanish
The rich silver deposit in Spanish colonies in the New World allows Spain to print large quantities of silver coins. The Spanish Dollar is a Spanish coin, "real de a ocho" and then a peso, worth eight real (hence the nickname "piece of eight"), which was widely circulated during the 18th century.
With the American Revolution in 1775, the Spanish dollar supported the banknotes passed by each colony and the Continental Congress. In addition to the American dollar, the 8-real coin became the basis for the Chinese yuan.
United Kingdom
The early use of the British silver standard is still reflected in the name of its currency, the pound sterling, which traces its origins in the early Middle Ages (see Anglo-Saxon pound), when King Offa of Mercia introduced the silver money, which copied the denarius from the Frank Charlemagne Empire.
Early silver penny was struck from fine silver (as pure as available). However, in 1158, King Henry II introduced Tealby cents . The British currency was almost exclusively silver until 1344, when noble gold was put into circulation. However, silver remains the legal basis for sterling until 1816.
In 1663, new gold coins were introduced based on a 22-karat fine guinea. Fixed the weight at 44 / 2 to troy pound from 1670, the value of this coin varied up to 1717, when repaired at 21 shillings (21/-, 1.05 lbs). However, this assessment is considered too high against gold compared to other European countries. British merchants send silver abroad in payments while exports are paid with gold. As a result, silver flows out of the country and gold flows in, which leads to a situation where the UK is effectively at the gold standard. In 1816, the gold standard was officially adopted, with silver standards reduced to 66 shillings (66/-, 3.3 pounds), making silver coins a "token" problem (ie, not containing their value in precious metals).
The economic power of Great Britain is such that the adoption of the gold standard puts pressure on other countries to follow it.
United States
The United States adopted a silver-based silver dollar standard by Spain in 1785. It was codified in the Mint and Koinage Act 1792, and by the use of the federal government of the Bank of the United States to hold its reserves, as well as establish a fixed gold ratio to the US dollar. This is, in essence, a derivative silver standard, because banks are not required to retain silver to support all their currencies. It started a long series of efforts for America to create bimetallic standards for the US dollar, which will continue into the 1920s. Gold and silver coins are valid payment instruments, including Spanish real estate. Due to the huge debt taken by the US federal government to finance the Revolutionary War, silver coins were struck by the government to abandon the circulation, and in 1806 President Jefferson suspended the printing of silver coins.
The US Treasury uses strict hard cash standards, doing business only in the form of gold or silver coins as part of the Independent Treasury Act of 1848, legally separating federal government accounts from the banking system. However the fixed rate of gold to silver silver is too high in relation to the demand for gold to trade or borrow from the UK. Following Gresham's law, silver flows to the US, which is traded with other silver countries, and gold moves. In 1853 the US reduced the weight of silver coins, to keep them in circulation, and in 1857 removed the legal auction status of foreign currency.
In 1857, the last crisis of the era of free international financial banking began, when American banks suspended silver payments, rippled through the very young international financial system of the central banks. In 1861, the US government halted gold and silver payments, effectively ending efforts to establish a silver standard for the dollar. During the period 1860-1871, attempts to revive bi-metal standards were made, including those based on gold and silver francs; However, with the rapid influx of silver from new deposits, the expectation of silver scarcity is over.
The combinations that result in economic stability are restrictions on supply of new records, government monopolies on the issuance of direct and indirect records, central banks, and a unit of value. When the notes are devalued, or silver stops circulating as a store of value, or there is depression, governments are demanding speculation when payments deplete the medium of circulation out of the economy. At the same time there was a dramatically increasing need for credit, and major banks were being hired in various states, including in Japan in 1872. The need for stability in monetary affairs would result in rapid acceptance of the gold standard in the period that followed.
The Coinage Act of 1873, passed by the United States Congress in 1873, embraced the gold standard and silver de monetization. The interests of Western mining and others who want silver in this labeled circulation measure "Crime '73". For about five years, gold was the only metal standard in the United States until the passing of the Bland-Allison Act on 28 February 1878, requiring the US Treasury to buy domestic silver to be molded into legitimate tender coins that coexisted with gold. coin. The 1878 Series Silver Certificate is issued to join the outstanding gold certificates.
With Congressional action in 1933, including the Golden Reserve Act and the Silver Purchase Act of 1934, the domestic economy was taken from the gold standard and put on the silver standard for the first time. The Ministry of Finance is empowered to issue paper currency that can be exchanged for silver and gold dollars, thereby divorcing the domestic economy from bimetallism and abandoning it to the silver standard, even though the international settlement is still within gold.
This means that for every ounce of silver in the US Treasury vault, the US government can continue to spend money on it. The silver certificate is broken at the time of redemption because the redeemed silver is no longer in the Treasury. With world market prices of silver having exceeded $ 1.29 per troy ounce since 1960, silver began to flow out of the Treasury at an increasing rate. To slow the disposal, President Kennedy ordered a termination to issue a silver certificate of $ 5 and $ 10 in 1962. It left a $ 1 silver certificate as the only denomination issued.
On June 4, 1963, Kennedy signed Public Law 88-36, which marked the beginning of the end even for a $ 1 silver certificate. The law allows the Federal Reserve to issue $ 1 and $ 2, and repeal the Silver Act of 1934, which authorizes the Minister of Finance to issue a silver certificate (now limited to a $ 1 denomination). Because it will be a few months before the new $ 1 Note Federal Reserve can enter circulation in the amount, there is a need to issue a silver certificate for a while. Because the Agricultural Adjustment Act of 1933 granted the right to issue silver certificates to the president, Kennedy issued an Executive Order 11110 to delegate the authority to the Minister of Finance during the transitional period.
Silver certificates continued to be issued until the end of 1963, when the Federal Reserve Notes Notes were released to the circulation. For several years, existing silver certificates could be redeemed for silver, but this practice was discontinued on 24 June 1968.
Finally, President Richard Nixon announced that the United States would no longer exchange currency for gold or other precious metals, forming the final step in abandoning the gold and silver standards. This announcement is part of the economic action now known as the "Nixon Shock".
Due to the monetary policy of the US Federal Reserve, the call to return to the gold standard has returned. Some countries have chosen to use loopholes in Federal Reserve actions that give individual countries the right to issue gold coins or silver coins or rounds. This is done because the Federal Reserve Act does not allow them to print their own currency if they wish. In January 2012, Utah allowed debt repayments to be settled in silver and gold, and the value of American silver or gold rounds used was pegged to the price of the precious metal provided. Payments in some cases may be required to be made in silver or gold. In 2011, eleven other US states are exploring their options for the possibility of making similar changes like Utah.
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Source of the article : Wikipedia
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