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Bimetallism,[a] also known as the bimetallic standard, is a monetary standard in which the value of the monetary unit is defined as equivalent to certain quantities of two metals, typically gold and silver, creating a fixed rate of exchange between them.[3]
For scholarly purposes, "proper" bimetallism is sometimes distinguished as permitting that both gold and silver money are legal tender in unlimited amounts and that gold and silver may be taken to be coined by the government mints in unlimited quantities.[4] This distinguishes it from "limping standard" bimetallism, where both gold and silver are legal tender but only one is freely coined (e.g. the moneys of France, Germany, and the United States after 1873), and from "trade" bimetallism, where both metals are freely coined but only one is legal tender and the other is used as "trade money" (e.g. most moneys in western Europe from the 13th to 18th centuries). Economists also distinguish legal bimetallism, where the law guarantees these conditions, and de facto bimetallism, where gold and silver coins circulate at a fixed rate.
During the 19th century there was a great deal of scholarly debate and political controversy regarding the use of bimetallism in place of a gold standard or silver standard (monometallism). Bimetallism was intended to increase the supply of money, stabilize prices, and facilitate setting exchange rates.[5] Some scholars argued that bimetallism was inherently unstable owing to Gresham's law, and that its replacement by a monometallic standard was inevitable. Other scholars claimed that in practice bimetallism had a stabilizing effect on economies. The controversy became largely moot after technological progress and the South African and Klondike Gold Rushes increased the supply of gold in circulation at the end of the century, ending most of the political pressure for greater use of silver. It became completely academic after the 1971 Nixon shock; since then, all of the world's currencies have operated as more or less freely floating fiat money, unconnected to the value of silver or gold. Nonetheless, academics continue to debate, inconclusively, the relative use of the metallic standards.[b]
- ^ Metcalf, William E. (2016). The Oxford Handbook of Greek and Roman Coinage. Oxford University Press. pp. 49 49–50. ISBN 978-0-19-937218-8. Archived from the original on 7 August 2022. Retrieved 16 November 2018.
- ^ Wilson, Alexander Johnstone (1880), Reciprocity, Bi-metallism, and Land-Tenure Reform, London: Macmillan & Co., archived from the original on 1 January 2017, retrieved 1 January 2017
- ^ "bimetallism, n.", Oxford English Dictionary, archived from the original on 11 January 2008, retrieved 1 January 2017.
- ^ Velde; et al., A Model of Bimetallism, Minneapolis: Federal Reserve Bank of Minneapolis Research Department.
- ^ "Bimetallism", Encyclopædia Britannica.[clarification needed]
- ^ Kindleberger, Charles (1984), A Financial History of Western Europe, London: Allen & Unwin
- ^ Redish, Angela (1995), "The Persistence of Bimetallism in Nineteenth Century France", Economic History Review, pp. 717–736
- ^ Friedman, Milton (1990), "Bimetallism Revisited", Journal of Economic Perspectives, vol. 4, American Economic Association, pp. 85–104
- ^ Flandreau, Marc (1996), "The French Crime of 1873: An Essay on the Emergence of the International Gold Standard, 1870–1880", The Journal of Economic History, vol. 56, pp. 862–897
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