Gold Standard Act

Gold Standard Act
Great Seal of the United States
Long titleAn Act to define and fix the standard of value, to maintain the parity of all forms of money issued or coined by the United States, to refund the public debt, and for other purposes.
NicknamesGold Standard Act of 1900
Enacted bythe 56th United States Congress
EffectiveMarch 14, 1900
Citations
Public lawPub. L. 56–41
Statutes at Large31 Stat. 45
Legislative history
  • Introduced in the House as H.R. 1
  • Passed the House on December 18, 1899 (192–152)
  • Reported by the joint conference committee on March 6, 1900; agreed to by the Senate on March 6, 1900 (44–26) and by the House on March 13, 1900 (172–127)
  • Signed into law by President William McKinley on March 14, 1900

The Gold Standard Act was an Act of the United States Congress, signed by President William McKinley and effective on March 14, 1900, defining the United States dollar by gold weight and requiring the United States Treasury to redeem, on demand and in gold coin only, paper currency the Act specified.[1]

The Act formalized the American gold standard that the Coinage Act of 1873, which demonetized silver, and the Resumption Act of 1875, which made all legal tender notes redeemable in gold at the Treasury, had established by default.[2][3] Before and after the Act, silver currency including silver certificates and the silver dollar circulated at face value as fiat currency not redeemable for gold.[4]

The Act fixed the value of one dollar at 25.8 grains of 90% pure gold, equivalent to about $20.67 per troy ounce, very near its historic value. American circulating gold coins of the period comprised an alloy of 90% gold and 10% copper for durability.

After the realigning election of 1932 following the onset of the Great Depression, from March 1933 the gold standard was abandoned, and the Act abrogated, by a coordinated series of policy changes including executive orders by President Franklin D. Roosevelt,[5] new laws,[6] and controversial Supreme Court rulings.

After World War II international agreements comprising the Bretton Woods system formally restored foreign central banks' ability to exchange United States dollars for gold at a fixed price. World trade growth increasingly stressed this system, which was abandoned in the Nixon shock of 1971.[7] Attempts to reform the Bretton Woods system quickly proved unworkable and failed. All modern currencies thus became fiat currencies freely floating and subject to market forces despite capital controls imposed by some central banks, with gold as a commodity.[dubious – discuss]

  1. ^ Including gold certificates, United States notes, Treasury notes, and later Federal Reserve notes, but excluding silver certificates and National Bank notes which were secured by government bonds issuing national banks had deposited with the Treasury. Though the Act did not require national banks to redeem their issued National Bank notes in gold coin, ordinarily they would, as might other banks.
  2. ^ Taussig, F. W. (1900). "The Currency Act of 1900". The Quarterly Journal of Economics. 14 (3): 394–415. doi:10.2307/1882566. ISSN 0033-5533. JSTOR 1882566.
  3. ^ Falkner, Roland P. (1900). "The Currency Law of 1900". The Annals of the American Academy of Political and Social Science. 16: 33–55. ISSN 0002-7162.
  4. ^ Johnson, Joseph French (1900). "The Currency Act of March 14, 1900". Political Science Quarterly. 15 (3): 482–507. doi:10.2307/2140799. ISSN 0032-3195. JSTOR 2140799.
  5. ^ Federal Reserve. "Roosevelt's Gold Program".
  6. ^ Wikisource. "Joint Resolution of June 5, 1933".
  7. ^ James Stuart Olson. Historical Dictionary of the Great Depression, 1929–1940. p. 131.