Bimetallism

Bimetallism is a monetary standard under which the legal unit of account is defined simultaneously in terms of two metals — historically gold and silver — at a fixed statutory ratio. Coins of both metals circulate as full legal tender, and holders can bring bullion to the mint to be coined on demand. The system contrasts with monometallism (a single-metal standard, such as the classical gold standard) and with fiat money, which has no metallic backing.

The mechanics depend on the mint ratio set by law versus the market ratio of the two metals. When the two diverge, Gresham's law operates: the metal undervalued at the mint is hoarded, melted, or exported, while the overvalued metal dominates circulation. Sustaining true bimetallism therefore requires either that the market ratio stay close to the legal ratio or that the country be large enough to anchor world prices.

France operated a functioning bimetallic standard from 1803, under a legal ratio of 15.5:1, and through the Latin Monetary Union (founded 1865 with Belgium, Italy, and Switzerland) extended that ratio across much of continental Europe. The system unraveled in the 1870s as new silver discoveries depressed silver's market price and as Germany demonetized silver after the Franco-Prussian War, prompting a cascade of countries to adopt the gold standard.

In the United States, bimetallism became a defining political issue in the late 19th century. The Coinage Act of 1873 ended the free coinage of silver — denounced by agrarian and Western interests as the "Crime of '73." William Jennings Bryan's 1896 "Cross of Gold" speech at the Democratic National Convention demanded a return to free silver coinage at 16:1. Bryan lost to William McKinley, and the Gold Standard Act of 1900 formally placed the dollar on gold alone.

For IR and economic-history researchers, bimetallism is a key case study in monetary regime choice, network effects in international finance, and the political economy of deflation.