Milton Friedman’s (1990) counterfactual analysis of what would have happened if the United
States had not abandoned bimetallism in 1873 is revisited in a general equilibrium model
of bimetallism. I find that bimetallism would have survived and the gold-silver ratio would
have remained stable for another twenty years. If countries such as India that abandoned
silver because of its depreciation are assumed not to, bimetallism survives to World War I.
But the United States would have experienced a sharp bout of inflation in the early 20th
century, although milder if India stays on silver.