4T? What 4T?

[Kinser79]

(06-02-2016, 10:01 AM)Mikebert Wrote: [Kinser]When the Dollar was defined as 3/4ths of a troy ounce of silver the dollar was worth exactly that.

No.  It was a GOLD standard, not a silver standard.  Didn't you even look at the link I gave?

I did, and yes there was a gold standard in place. The existence of the gold standard at the time is irrelevant, again you're seeing trees but not the forest. That is a common problem for you, actually. However, silver coinage has traditionally held the amount of silver that was worth the value of the coin, minus alloying for wear (which is expected and not general debasement).

 

Quote:The value of the silver in a silver dollar was LESS than a dollar.  It had to be so, or people would have melted down to coins to get the silver.

Actually no they wouldn't. It is the same reason that people wouldn't melt down pre 1982 pennies to get the copper after a economic collapse and the use of those copper coins as a medium of exchange in the absence of other, better coins. The reason is rather simple, a lump of silver of an undetermined purity is not fungible whereas a coin with the likeness of a ruler is known and fungible.

Money whether it is representational (IE paper and token coinage convertable into gold and/or silver) or otherwise must have various properties.

1. It must be a store of value. (That is why bananas are not money...they rot rather quickly)
2. It must be easily divisible. (in olden times silver pennies would be cut on a cross to make halfpence and farthings).
3. It must be portable.
4. It must be numeraire: This means that goods and services can be valued easily in one term of measurement.
5. It must serve as a medium of exchange. Other people have to be willing to take it for goods and services, and in turn it is generally accepted for that purpose.

As such it would make more sense in a situation where the US Dollar ceases to exist to keep small copper (cents prior to 1982) and cupronickle (nickles currently) coinage in its state. Furthermore, the existance of bullion coins break your theses that people would melt the coins to get the silver. American Silver Eagles have a face value of 1 dollar but contain a troy ounce of fine silver (.999 purity) which is closer to 16 dollars in value.

Why would one not melt down those coins? Simple. When metal is in the form of a coin everyone knows its weight, its purity, its value.

Quote:  Since the ratio of silver to gold tended to rise over time, under a gold standard this would likely remain the case.

Not always. Britain went to a gold standard because the ratio of gold to silver fell and gold was pushing silver out circulation.

Quote:  As I wrote this was the crux of the issue the free silver folks had.  The gold standard was flawed because the supply of gold rose too slowly, since silver grew more rapidly it was preferred to gold for a growing economy.

No the free silver crowd wanted to inflate the economy with silver. It just so happened that a large deposit of silver had been recently discovered. Ever hear of the Comstock Lode?

Quote:  The too-restrictive gold standard penalized productive folks to the benefit of rentiers.  On the other side the bankers were opposed to a silver standard because they (rightly) saw it as inflationary, and so bad for holders of money, stocks* and bonds.

Not quite true. Productive folks have never had a problem with deflationary pressures. If anything deflation assists in the accumulation of capital as liquid money appreciates in value over time. The problems with deflation arise with those who are indebted to others. Debtors always seek to borrow gold (or silver) and pay back with paper whenever they can. It is their class interest as debtors.

Quote:*Until 1916 stocks were priced like bonds, and thought to be no different than the perpetual bonds (e.g. British Consols) developed in the 18th century that had been called government "stock".

Totally irrelevant.