The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver.
The silver standard was widespread until the 19th century, when it was replaced in most countries by the gold standard.
Sterling, at 92.
5 % silver, is just one of the silver standards in the U.
S.
today.
Today, common standards include the following: * Coin Silver -This is a U.
S.
standard and is an alloy of 90% silver and 10% copper.
* Sterling Silver -This describes any alloy that contains at least 92.
5% silver.
* Mexican Silver -This standard from our friends to the south is an alloy of 95% silver and 5% other metal(s) -- usually copper.
(Most silver jewelry from Mexico is using the sterling standard these days.
) * Britannia Silver -Even more pure than Mexican silver, Britannia silver has no less than 958.
4 parts per 1000 of silver, and no more than 41.
6 parts per 1000 of copper.
Operationally, silver of this quality is marked in the U.
K.
and Ireland as "958 silver.
" * Fine Silver -Most of us would rather have a sterling reputation than a fine one, but in the world of silver, "fine silver" is almost as good as it gets.
Fine silver is 999 parts per 1000 of silver.
This level of purity is found in bullion bars bought for the underlying value of the silver, fine silver is usually too soft to be used in most applications.
The United States adopted a silver standard based on the "Spanish milled dollar" in 1785.
This was codified in the 1792 Mint and Coinage Act, and by the Federal Government's use of the "Bank of the United States" to hold its reserves, as well as establishing a fixed ratio of gold to the U.
S.
dollar.
This was, in effect, a derivative silver standard, since the bank was not required to keep silver to back up all of its currency.
This began a long series of attempts for America to create a bi-metal standard for the U.
S.
Dollar, which would continue until the 1920s.
Gold and silver coins were legal tender, including the Spanish Real, a silver coin struck in the Western Hemisphere.
Because of the huge debt taken on by the U.
S.
Federal Government to finance the Revolutionary War, silver coins struck by the government left circulation, and in 1806 President Jefferson suspended the minting of silver coins.
The U.
S.
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 1848, 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 U.
S.
, which traded with other silver nations, and gold moved out.
In 1853 the U.
S.
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 banks.
In the United States this collapse was a contributing factor in the American Civil War, and in 1861 the U.
S.
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-metal 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 interaction between central banking and currency basis formed the primary source of monetary instability during this period.
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.
Attempts to evade these conditions produced a periodic monetary crisis, as notes devalued, or silver ceased to circulate as a store of value, or there was a depression as governments, demanding coinage as payment, drained the circulating medium out of the economy.
At the same time there was a dramatically expanded need for credit, and large banks were being chartered 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 Fourth Coinage Act 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.
On June 4, 1963, president John F.
Kennedy signed Executive Order No.
11110 that gave the Treasury Department the power "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury.
" This order has never been acted upon, but has yet to be repealed.