Bimetallist Regimes Functioned As Alternating Monometallic Standards Due to Differences Between the Legal and Market Bimetallic Ratios

The bimetallist regimes that were legally in force in France, Belgium, Switzerland, Italy, and the U.S. actually ended up functioning as alternating monometallic standards. In the face of fixed legal bimetallic ratios (i.e., the official mint values at which silver could be exchanged for gold) in these nations, developments in the market for precious metals that caused the international market bimetallic ratio (i.e., the price at which silver bullion exchanged for gold bullion on the open market) to change also caused one of the metals to drive the other out of circulation.

In the U.S., for instance, the period before 1834 was a de facto silver standard owing to the fact that the market bimetallic ratio was consistently greater than the legal ratio (15-to-1) that prevailed in the U.S. Reacting to a shortage of circulating gold, Congress raised the legal ratio to 16-to-1 in 1834. This now placed the legal ratio above the market ratio, which meant that it would now be profitable for individuals to take silver out of circulation (which was now the undervalued rather than overvalued metal at the mint) and bring their gold (which was now the overvalued metal) to the mints. Quite expectedly, gold now displaced silver in circulation. In 1853, the revision of the coinage laws did not alter the legal ratio so as to bring silver back into circulation. Hence, the U.S. was actually practicing a gold standard de facto from the 1830s.

—Giulio M. Gallarotti, The Anatomy of an International Monetary Regime: The Classical Gold Standard, 1880-1914 (New York: Oxford University Press, 1995), 21.