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{{about|the monetary standard|the standards of millesimal fineness for the silver alloy used in the manufacture or crafting of silver objects|Silver standards}}

The '''silver standard'''{{efn|The silver standard is also sometimes known as '''silver metallism''' and '''silver monometallism'''.}} is a [[monetary system]] in which the standard [[economics|economic]] [[unit of account]] is a fixed weight of [[silver]].  The silver specie standard was widespread from the fall of the [[Byzantine Empire]] until the 19th century. Following the discovery in the 16th century of large deposits of silver at the [[Cerro Rico]] in [[Potosí]], [[Bolivia]], an international silver standard came into existence in conjunction with the [[Spanish dollar|Spanish pieces of eight]]. These silver dollar coins played the role of an international trading currency for nearly four hundred years.

In 1704, following [[Queen Anne of Great Britain|Queen Anne]]'s proclamation, the [[British West Indies]] became one of the first regions to adopt a [[gold standard]] in conjunction with the Spanish gold [[doubloon]] coin. In 1717, the master of the [[Royal Mint]], Sir [[Isaac Newton]], introduced a new mint ratio as between silver and gold, and this had the effect of putting Britain onto a ''[[de facto]]'' gold standard. Following the [[Napoleonic Wars]], the United Kingdom introduced the [[gold sovereign]] coin and formally adopted a gold standard in 1821. At the same time, revolutions in Latin America interrupted the supply of silver dollars (pieces of eight) that were being produced at the mints in Potosi, Mexico, and [[Lima]], Peru. The British gold standard initially extended to some of the British colonies, including the Australasian and [[Southern Africa]]n colonies, but not to its North American colonies, [[British India]], or to Southeast Asia. The [[Province of Canada]] adopted a gold standard in 1853, as did [[Dominion of Newfoundland|Newfoundland]] in 1865. In 1873, [[Imperial Germany]] changed over to the gold standard in conjunction with the new [[gold mark]] coin. The United States changed over to gold ''[[de facto]]'' in the same year, and over the next 35 years, all other nations changed to gold, leaving only China and the British colonies of Hong Kong and [[Weihai]]wei on the silver standard. The silver standard finally came to an end when it was abandoned by China and Hong Kong in 1935.

==Relative value of silver and gold==
Since the time that [[silver]] was discovered by the Spanish in the [[New World]] in the 16th, until the latter half of the 19th century, the value of gold in relation to silver maintained 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 Germany's decision to cease minting the silver [[thaler]] coins in 1871. On 23 November 1871, following the defeat of France in the [[Franco-Prussian War]], [[Otto von Bismarck|Bismarck]] exacted one billion dollars in gold indemnity, and then proceeded to move Germany towards a new [[gold standard]] which came about on 9 July 1873 with the introduction of the [[gold mark]].<ref>[http://www.silver-investor.com/charlessavoie/cs_3-29-05_monetarymadhouse.htm  "Monetary Madhouse", Charles Savoie]</ref>{{reliable source?|date=August 2017}}

It has also however been suggested by Nevada Senator [[John Percival Jones]] in 1876 in a speech to the [[US Senate]], that the downward pressure on the market value of silver began somewhat earlier with the formation of the [[Latin Monetary Union]] in 1866. Jones argues that the [[Latin Monetary Union]] involved a partial demonetization of silver.

Silver made a partial comeback in the first decade of the 20th century, such that the silver dollar coins of the [[Straits Settlements]] and silver [[peso]] coins of the [[Philippines]] had to be made smaller in size, and with a reduced silver content in order to prevent their silver value exceeding their recently established gold exchange value. An even larger rise in the price of silver after the First World War caused the [[Royal Mint]] in London to reduce the silver content of the [[Pound sterling|sterling]] coinage. But silver never returned to the 15½:1 ratio of the first half of the 19th century, and the predominant long term trend was that silver continued to decline in value against gold. Nowadays the ratio in relation to the value of gold, although variable, is more of the order of 70:1.<ref>[http://goldinfo.net/silver600.html  'Austin' gold information network] {{webarchive|url=https://web.archive.org/web/20101226145705/http://goldinfo.net/silver600.html |date=2010-12-26 }}</ref>

==Bohemia==
Beginning in 1515, silver coins were minted at the silver mines at [[Joachimsthal]] - [[Jáchymov]] (St. Joachim's Valley) in [[Bohemia]], now part of the Czech Republic.  Although formally called ''[[Guldengroschen]]'', they became known as ''[[Joachimsthalers]]'', then shortened to ''[[thaler]]''.<ref>{{cite book
| last =Rhodes
| first =Richard
| authorlink =Richard Rhodes
| title =The making of the atomic bomb
| publisher =Simon and Schuster
| year =1986
| location =New York
| page =118 }}</ref>
The coins were widely circulated, and became the model for silver ''thalers'' issued by other European countries.  The word thaler became ''dollar'' in the English language.

==China==
China had long used silver [[ingot]]s as a medium of exchange, along with the [[casting|cast]] copper-alloy [[cash (currency)|cash]]. The use of silver ingots can be traced back as far as the Han dynasty (206 BC–220 AD). But prior to the [[Song Dynasty]] (960–1279), those silver ingots were used mainly for hoarding wealth. During the [[Song dynasty]], for the first time in history the government became the sole issuer of paper currency after 1024, but cast coins and silver ingots were still used as a medium of exchange. In the [[Shanyuan Treaty]], signed with the state of [[Liao dynasty|Liao]] in 1004, [[Song dynasty|Song]] China agreed to pay an annual indemnity or tribute of 100,000 [[tael]] of silver and 200,000 bolts of [[silk]]. This was the first time bulk silver in tael (Chinese: 銀兩) was used as indemnity in a treaty with a foreign power. Silver ingots had a shape similar to a boat or a Chinese shoe during the [[Yuan dynasty]] (1279–1368). This became an ordinary shape for silver ingots during the following centuries.

The use of silver as money was very established at the time of the [[Ming dynasty]] (1368–1644). [[Paper money]] was first issued in 1375 by the founder [[Hongwu Emperor]] amid the ban of silver as medium of exchange. But due to the increasing depreciation, the paper money became basically worthless and the ban on silver usage was finally lifted in 1436 (1st year of the [[Zhengtong Emperor]]). Meanwhile, silver was made much available through foreign trade with the Portuguese and the Spanish, beginning in the 16th century. The great tax reform by the statesman [[Zhang Juzheng]] in 1581 (9th year of the [[Wanli Emperor]]) simplified the taxation and required all the tax and corvee to be paid in silver. This can be seen as an indication of the firm position of silver in the monetary system of the Ming. However the reform would not have been a success or even feasible if the enormous amounts of silver had not been available through trade and imports from the Americas, mainly through the Spanish.

During the [[Qing dynasty]] (1644–1911), silver ingots were still used, but various foreign [[trade dollar|silver dollars]] had become popular in the Southern coastal region through foreign trade since the mid-Qing era. It was apparent that the silver ingots became awkward and more complicated to use ''vis à vis'' the foreign silver dollars, which could be counted easily, given their fixed specification and fineness of silver. However, the Qing dynasty very much resisted the idea of minting a silver coin of their own. It was not until late Qing, in 1890, that the first circulating silver coin was introduced by [[Guangdong]] province. The coin was at par with the [[Mexican peso]], and soon this issue was emulated by other provinces. For these silver coins, the [[tael]] was still seen as the proper monetary unit, as the denomination of the coins were given as 0.72 tael (specifically: 7 [[Mace (unit)|mace]] and 2 [[candareen]]s). Note for the treaties signed between the Qing dynasty and the foreign powers the indemnities were all in tael of silver, except for the [[Treaty of Nanking]], where the silver dollar was indicated. (See the [[Treaties of Tianjin]], [[Convention of Peking]], [[Treaty of Shimonoseki]] and [[Boxer Protocol]]). It was not until 1910 that the "[[Chinese yuan|yuan]]" (Chinese: 圓, literally "roundness"), was officially announced as the standard monetary unit. The yuan was subdivided into 10 [[jiao (currency)|jiao]] or 100 fen, and specified as 0.72 [[tael]] of 900 fineness silver. The next year, 1911, the so-called "Great Qing Silver Coin" one yuan (dollar) was issued, but soon after the dynasty was replaced by the Republic.

The silver standard was again adopted and codified in 1914 by the newly established republic, with one yuan still being equal to 0.72 tael of 900 fineness silver. After the [[Chinese Nationalist Party]] (Kuomintang) unified the country in 1928, the yuan was again announced as the standard unit in 1933, but this time the relationship of the yuan to the tael was abolished, as one yuan was now equal to 26.6971 grams of 880 fineness silver. In the same year, 1933, while most of the Western countries (especially Britain and USA) had left the [[gold standard]] because of the [[Great Depression]], it was said that China almost avoided the depression entirely, mainly due to having stuck to the silver standard.{{Citation needed|date=December 2015}} However, the US silver purchase act of 1934 created an intolerable demand on China's silver coins, and so in the end the silver standard was officially abandoned in September 1935 in favor of the four Chinese national banks' "legal note" issues. [[Republic of China|China]] would be the last to abandon the silver standard, along with the British crown colony of Hong Kong.

China's use of silver as a medium of exchange is reflected in the name for bank "銀行" (literally "silver house" or "silver office") and for the precious metal and jewel dealer "銀樓" (literally "silver building" or "silver shop").

==Germany==
After its victory in the [[Franco-Prussian War]] (1870–71), Germany extracted a huge indemnity from France of £200,000,000 in gold, and used it to join Britain on a gold standard.  Germany's abandonment of the silver standard put further pressure on other countries to move to the gold standard.

==Ancient Greece==
The first metal used as a currency was silver, more than 4,000 years ago, when silver [[ingot]]s were used in trade.  During the heyday of the [[Athenian empire]], the city's silver [[tetradrachm]] was the first coin to achieve "international standard" status in Mediterranean trade.

==Hong Kong==
The British colony of Hong Kong would be the last, along with [[Republic of China|China]], to abandon the silver standard in September 1935. Hong Kong then adopted the [[gold exchange standard]] and the [[Hong Kong dollar]] took on the exact value of one shilling and three pence (1s 3d) [[pound sterling|sterling]].

==India==
The Indian [[rupee]] is derived from the ''Rūpaya'' (silver is called ''rūpa'' in [[Sanskrit]]) a silver coin introduced by [[Sher Shah Suri]] during his reign from 1540 to 1545.  Since this is around about the same time that the Spanish discovered silver at the Cerro Rico in [[Potosí]], the silver value of the rupee maintained a stable relationship with gold right up until the early 1870s. From 1871, the value of silver depreciated relative to gold, due to the drop in demand for silver in the mints of Europe and North America, as those countries changed over to the [[gold standard]]. This had severe consequences for the rupee and it resulted in [[history of the rupee#The fall of the Rupee|the fall of the Rupee]]. Following the [[Indian Currency Committee|Fowler report]], India adopted the [[gold exchange standard]] in the year 1898, fixing the value of the rupee at exactly one shilling and four pence (1s 4d) [[Pound sterling|sterling]].<ref>[https://books.google.com/books?id=qkEfsYRRlYIC&pg=PA138 "India's Balance of Indebtedness 1898-1913"]</ref>

==Persia==
The [[dirham]] was a silver coin originally minted by the Persians. The [[Caliphate]]s in the [[Islam]]ic world adopted these coins, starting with Caliph [[Abd al-Malik ibn Marwan|Abd al-Malik]] (685&ndash;705).  Silver remained the most common monetary metal used in ordinary transactions until the 20th century.

==Spain==
Rich deposits of silver in the Spanish colonies of the New World allowed Spain to mint great quantities of silver coins.  The [[Spanish dollar]] was a Spanish coin, the "real de a ocho" and later [[peso]], worth eight [[Spanish real|reals]] (hence the nickname "pieces of eight"), which was widely circulated during the 18th century.

By the [[American Revolution]] in 1775, Spanish dollars backed paper money authorized by the individual colonies and the [[Continental Congress]].<ref>{{cite magazine
| last =Julian
| first =R. W.
| title =All About the Dollar
| publisher =Numismatist
| year = 2007
| pages =41 }}</ref>  In addition to the American dollar, the 8-real coin became the basis for the [[Chinese yuan]].

==Great Britain==
Great Britain's early use of the silver standard is still reflected in the name of its currency, the [[pound sterling]], which traces its origins to the early Middle Ages (see [[Anglo-Saxon pound]]), when King [[Offa of Mercia]] introduced the [[History of the English penny (c. 600-1066)|silver penny]], which copied the ''denarius'' of [[Charlemagne]]'s [[Frankish Empire]].

The early silver pennies were struck from fine silver (as pure as was available). However, in 1158, King [[Henry II of England|Henry II]] introduced ''Tealby penny''. English currency was almost exclusively silver until 1344, when the gold [[noble (English coin)|noble]] was put into circulation. However, silver remained the legal basis for sterling until 1816.

In 1663, a new gold coinage was introduced based on the 22 [[Carat (purity)|carat]] fine [[guinea (coin)|guinea]]. Fixed in weight at {{frac|44|1|2}} to the [[troy pound]] from 1670, this coin's value varied considerably until 1717, when it was fixed at 21 shillings (21/-, 1.05 pounds). However, this valuation overvalued gold relative to silver compared to other European countries. British merchants sent silver abroad in payments while exports were paid for with gold. As a consequence, silver flowed out of the country and gold flowed in, leading to a situation where Great Britain was effectively on a [[gold standard]]. In 1816, the gold standard was adopted officially, with the silver standard reduced to 66 shillings (66/-, 3.3 pounds), rendering silver coins a "token" issue (i.e., not containing their value in precious metal).

The economic power of Great Britain was such that its adoption of a gold standard put pressure on other countries to follow suit.

==United States==
The United States adopted a silver standard based on the [[Spanish milled dollar]] in 1785. This was codified in the 1792 [[Coinage Act (1792)|Mint and Coinage Act]], and by the [[Federal Government of the United States|federal government]]'s use of the [[First Bank of the United States|Bank of the United States]] to hold its reserves, as well as establishing a fixed ratio of gold to the [[United States dollar|US dollar]]. This was, in effect, a derivative silver standard, since the bank was not required to keep silver to back all of its currency. This began a long series of attempts for America to create a [[Bimetallism|bimetallic]] standard for the [[US dollar]], which would continue until the 1920s. Gold and silver coins were legal tender, including the [[Spanish real]]. Because of the huge debt taken on by the US federal government to finance the [[American Revolution|Revolutionary War]], silver coins struck by the government left circulation, and in 1806 [[Thomas Jefferson|President Jefferson]] suspended the minting of silver coins.

The [[United States Department of the Treasury|US Treasury]] was put on a strict hard money standard, doing business only in gold or silver coin as part of the [[Independent Treasury Act]] of 1846, which legally separated the accounts of the federal government from the [[banking system]]. However the fixed rate of gold to silver overvalued silver in relation to the demand for gold to trade or borrow from England. Following [[Gresham's law]], silver poured into the US, which traded with other silver nations, and gold moved out. In 1853 the US reduced the silver weight of coins, to keep them in circulation, and in 1857 removed legal tender status from foreign coinage.

In 1857, the final crisis of the free banking era of international finance began, as American banks suspended payment in silver, rippling through the very young international financial system of [[central bank]]s. In 1861 the US government suspended payment in gold and silver, effectively ending the attempts to form a silver standard basis for the dollar. Through the 1860–1871 period, various attempts to resurrect bi-metallic standards were made, including one based on the gold and silver [[franc]]; however, with the rapid influx of silver from new deposits, the expectation of scarcity of silver ended.

The combination that produced economic stability was restriction of supply of new notes, a government monopoly on the issuance of notes directly and indirectly, a central bank, and a single unit of value. As notes devalued, or silver ceased to circulate as a store of value, or there was a depression, governments demanding [[money|specie]] as payment drained the circulating medium out of the economy. At the same time there was a dramatically expanded need for [[Credit (finance)|credit]], and large banks were being [[charter]]ed in various states, including those in Japan by 1872. The need for stability in monetary affairs would produce a rapid acceptance of the [[gold standard]] in the period that followed.

The [[Coinage Act of 1873]], enacted by the United States Congress in 1873, embraced the gold standard and de-monetized silver. Western mining interests and others who wanted silver in circulation labeled this measure the "Crime of '73". For about five years, gold was the only metallic standard in the United States until passage of the [[Bland–Allison Act]] on February 28, 1878, requiring the US Treasury to purchase domestic silver bullion to be minted into legal tender coins co-existent with gold coins. [[Silver certificate (United States)|Silver Certificate]] Series 1878 was issued to join the gold certificates already in circulation.

By acts of Congress in 1933, including the [[Gold Reserve Act]] and the [[Silver Purchase Act of 1934]], the domestic economy was taken off the gold standard and placed on the silver standard for the first time. The Treasury Department was re-empowered to issue paper currency redeemable in silver dollars and bullion, thereby divorcing the ''domestic'' economy from bimetallism and leaving it on the silver standard, although ''international'' settlements were still in gold.<ref>
A History of Money and Banking in the United States; Murray Rothbard. {{ISBN|0-945466-33-1}}. (2005)</ref>

This meant that for every ounce of silver in the U.S. Treasury's vaults, the U.S. government could continue to issue money against it. These silver certificates were shredded upon redemption since the redeemed silver was no longer in the Treasury. With the world market price of silver having been in excess of $1.29 per troy ounce since 1960, silver began to flow out of the Treasury at an increasing rate. To slow the drain, President Kennedy ordered a halt to issuing $5 and $10 silver certificates in 1962. That left the $1 silver certificate as the only denomination being issued.

On June 4, 1963, Kennedy signed [[Executive Order 11110#Public Law 88-36|Public Law 88-36]], which marked the beginning of the end for even the $1 silver certificate. The law authorized the Federal Reserve to issue $1 and $2 bills, and revoked the Silver Purchase Act of 1934, which authorized the Secretary of the Treasury to issue silver certificates (by now limited to the $1 denomination). Because it would be several months before the new $1 Federal Reserve Notes could enter circulation in quantity, there was a need to issue silver certificates in the interim. Because the Agricultural Adjustment Act of 1933 granted the right to issue silver certificates to the president, Kennedy issued [[Executive Order 11110]] to delegate that authority to the Treasury Secretary during the transition.

Silver certificates continued to be issued until late 1963, when the $1 Federal Reserve Note was released into circulation. For several years, existing silver certificates could be redeemed for silver, but this practice was halted on June 24, 1968.

Finally, President [[Richard Nixon]] announced<ref>https://www.youtube.com/watch?v=iRzr1QU6K1o</ref> that the United States would no longer redeem currency for gold or any other precious metal, forming the final step in abandoning the gold and silver standards. This announcement was part of the economic measures now known as the "[[Nixon Shock]]".

Due to the monetary policy of the U.S. Federal Reserve, calls for a return to the gold standard have returned.{{citation needed|date=January 2012}} Some states have chosen to use a loophole in the [[Federal Reserve Act]] that gives individual states the right to issue currencies of gold or silver coins or rounds.{{citation needed|date=January 2012}} This was done because the Federal Reserve Act does not allow them to print their own currency if they wished.{{citation needed|date=January 2012}} As of January 2012, Utah allowed the payment of debt to be settled in silver and gold, and the value of the American silver or gold rounds used was pegged to the price of the given precious metal.{{citation needed|date=January 2012}} Payment in some cases can be requested to be made in silver or gold rounds. As of 2011, eleven other U.S. states were exploring their options to possibly make similar changes like Utah.<ref>http://money.cnn.com/2011/03/29/news/economy/utah_gold_currency/index.htm</ref>

==Digital Tokens==
The creation of Block-chain technology has led to Silver Backed Digital Tokens. On August 19, 2017 [Http://www.SilverToken.com SilverTokens] was the first to emerge as a digital token. Each token = 1 troy ounce of .999 silver and is redeemable on demand at any of eight secure storage vaults around the world, thus, creating a new type of medium of exchange.

==See also==
{{Portal|Numismatics}}
{{div col|colwidth=25em}}
* [[Bimetallism]]
* [[Digital gold currency]]
* [[Executive Order 11110]]
* [[Free silver]]
* [[Full-reserve banking]]
* [[Fungibility]]
* [[Gold standard]]
* [[Legal tender]]
* [[Representative money]]
* [[Silverite]]
* [[Silver as an investment]]
* [[Silver certificate (United States)]]
* [[Silver coin]]
* [[Store of value]]
* [[United States one-dollar bill]] — details of the silver certificates of 1878–1963
{{div col end}}

==Notes==
{{Noteslist}}

==References==
{{Reflist|30em}}

{{DEFAULTSORT:Silver Standard}}
[[Category:Early Modern economics]]
[[Category:History of banking]]
[[Category:History of international trade]]
[[Category:Monetary policy]]
[[Category:Metallism]]
[[Category:Silver]]