	Introduction

The U.S. monetary system is based on paper money backed by the full faith and credit of the federal government. The currency is neither valued in, backed by, nor officially convertible into gold or silver. Through much of its history, however, the United States was on a metallic standard of one sort of another. On occasion, there are calls for Congress to return to such a system. Such calls are usually accompanied by claims that gold or silver backing has provided considerable economic benefits in the past. This report briefly reviews the history of the gold standard in the United States. It is intended to clarify the dates during which the standard was used, the type of gold standard in operation at the various times, and the statutory changes used to alter the standard and eventually end it. It is not a discussion of the merits of such a system. Full-bodied gold or silver coins may be issued without making them legal tender. Basically Silver: 1792-1834

Officially, the United States began not with a gold standard, but with a bimetallic standard in which both gold and silver were used to define the monetary unit. The ratio of silver to gold in a given denomination was 15 to 1. The ratio was changed to 16 to 1 by reducing the gold in gold coins. Paper Money in the Antebellum Period

Throughout the period before the Civil War, there was no legal-tender paper money in the United States. Circulating Treasury Notes

Starting for the first time during the War of 1812, the Treasury issued Treasury notes that promised to pay gold or silver at a future date. The government had returned to a gold standard; but two important changes had taken place with respect to paper money: (1) the government now was an issuer of paper money redeemable on demand and (2) the paper money was legal tender. Because of the fall in the value of silver, the silver dollars and certificates under this legislation—like the silver subsidiary coins—had a metallic value on the world market much less than their mint value. The new national bank notes were of uniform design. In 1900, the government reaffirmed its commitment to the gold standard. In 1913, this problem was addressed by the creation of the Federal Reserve System (Fed). The dollar was still defined in terms of gold. Federal Reserve notes were redeemable in lawful money. The End of the Gold Standard: 1933

In 1933, the gold standard was ended for the United States. Convertibility into gold was suspended. Private holdings of gold were nationalized. Quasi-Gold Standard: 1934-1973

Under the system adopted by the Gold Reserve Act of 1934, the United States continued to define the dollar in terms of gold. This "closing of the gold window" was not an official action, so that it did not constitute an official abandonment of gold. The new price was the official price of the dollar, and policies were pursued to maintain the dollar's value relative to other currencies. However, there continued to be no convertibility into gold—even for international transactions. After 1933, it was a quasi-gold standard that gradually became a pure fiat standard over the period 1967-1973. A central bank and a metallic standard are not mutually exclusive. A genuine metallic standard is one in which the public is able to freely shift gold from exchange to other uses, and paper issued by the government freely convertible into gold. It occurred by default as links to gold became impossible to maintain.
The U.S. monetary system is based on paper money backed by the full faith and credit of the federal government. The currency is neither valued in, backed by, nor officially convertible into gold or silver. Through much of its history, however, the United States was on a metallic standard of one sort or another.
On occasion, there are calls for Congress to return to such a system. Such calls are usually accompanied by claims that gold or silver backing has provided considerable economic benefits in the past. This report briefly reviews the history of the gold standard in the United States. It is intended to clarify the dates during which the standard was used, the type of gold standard in operation at the various times, and the statutory changes used to alter the standard and eventually end it. It is not a discussion of the merits of such a system.
The United States began with a bimetallic standard in which the dollar was defined in terms of both gold or silver at weights and fineness such that gold and silver were set in value to each other at a ratio of 15 to 1. Because world markets valued them at a 15½ to 1 ratio, much of the gold left the country and silver was the de facto standard.
In 1834, the gold content of the dollar was reduced to make the ratio 16 to 1. As a result, silver left the country and gold became the de facto standard. In addition, gold discoveries drove down the value of gold even more, so that even small silver coins disappeared from circulation. In 1853, the silver content of small coins was reduced below their official face value so that the public could have the coins needed to make change.
During the Civil War, the government issued legal tender paper money that was not redeemable in gold or silver, effectively placing the country on a fiat paper system. In 1879, the country was returned to a metallic standard; this time a single one: gold. Throughout the late 19th century, there were efforts to remonetize silver. A quantity of silver money was issued; however, its intrinsic value did not equal the face value of the money, nor was silver freely convertible into money. In 1900, the United States reaffirmed its commitment to the gold standard and relegated silver to small denomination money.
Throughout the period under which the United States had a metallic standard, paper money was extensively used. A variety of bank notes circulated, even without being legal tender. Various notes issued by the Treasury also circulated without being legal tender. This use of paper money is entirely consistent with a gold standard. Much of the money used under a gold standard is not gold, but promises to pay gold. To help ensure that the paper notes theretofore issued by banks were honored, the government created the national bank system in 1863. In 1913, it created the Federal Reserve System to help ensure that checks were similarly honored. The creation of the Federal Reserve did not end the gold standard.
The gold standard ended in 1933 when the federal government halted convertibility of notes into gold and nationalized the private gold stock. The dollar was devalued in terms of its gold content, and made convertible into gold for official international transactions only. Even this quasi-gold standard became difficult to maintain in the 1960s. Over the period 1967-1973, the United States abandoned its commitment to covert dollars into gold in official transactions and stopped trying to maintain its value relative to foreign exchange. Despite several attempts to retain some link to gold, all official links of the dollar to gold were severed in 1976.