80

MONEY: THE GOLD AND SILVER IN THE WORLD.

We have no intention, in referring to M. Michel vexations questions is, to suggest that the original Chevalier's recently-published work on "Money," principle on which all money was coined-dividing to trouble our readers with any of the ordinary the metals into aliquot parts by weight, and redisputes amongst writers on the currency. Whe- fraining from declaring the existence of any fixed ther "promises to pay on demand" should be paid relation of value between gold and silver, or or not seems to us a moral rather than a political between them and other things, a principle which question; and when the State released the Bank is at once moral and strictly scientific-should be of England from that obligation, voluntarily con- re-established. Those who departed from it had tracted, and written on every note, on the faith of no knowledge of its precision and beauty, and those which it had borrowed some ten million sterling who have continued the deviation have acted from of the public, the State trespassed more on the unreasoning habit more than from enlightened laws of morality than on the principles of political judgment. By reverting to the original principle of economy. Whether the ounce of gold be worth coinage, certifying by authority that pieces of metal fifteen ounces, or sixty-six shillings, or any other are of a certain weight and fineness, and leaving quantity of silver, seems a fact to be ascertained everything else that concerns money to the care of by consulting price-currents, not to be fixed by the merchant and the higgling of the market, Act of Parliament. Whether it be possible to Government would shake off a load of impractiform a standard of value is not yet decided by poli- cable responsibility, and society would be relieved tical economists; and till it be, we hold ourselves from the tedious and endless discussions that have excused from discussing their projects concerning long made the currency the most confused, most it. History tells us that some nations have used tedious, and most profitless of political themes. silver, and others gold, for their chief money; All the subjects that we have adverted to, conthat the same nations have sometimes used one nected with the currency, and all that can be conmetal and sometimes the other; that sometimes nected with it, are embraced by M. Michel Chevathey have used both together; and at all times, lier in this thick octavo volume of 600 pages, and and under all circumstances, have derived advan-treated, on the exhausting method, with minuteness tage from the use. They have only found money and care. He starts from the principle that money injurious when Sovereigns, abusing their power, have supposed they could promote the public happiness by ordaining general fraud.

must possess intrinsic value; he describes gold and silver as possessing the qualities necessary for money; he explains the distinction between natural History tells us, too, that all coins had originally or necessary price, market price, and remunerative the same denominations as weights. They were, price; he inquires whether labour and corn supply in fact, as they still are, being ultimately tested at a measure of value, and explains the occasions on the bank counter by a pair of scales, weighed por- which they may be usefully employed for this tions of the precious metals, testified to be of a purpose. In respect to fabricating money, he certain fineness, and called pounds, ounces, half discusses the duties of Government concerning ounces, and quarter ounces. When the principle it-seignorage, the weight of coins, the expense of of weight was departed from, and the coins con- the coinage, &c. He inquires whether money tinued to be called by their primitive denomina- should be composed of one standard metal, or tions, a public fraud was committed, and confusion whether more than one should be used, and which was introduced into money, which has ever since should be preferred. He recounts, historically, the continued. Nations have been unable to shake progress of mining in America, and the successive themselves clear of the consequences of the wrongs changes which have taken place in the value of the they permitted their rulers to practise in retaining precious metals; he describes the gold-production for the coins the denominations of weights, while of Russia and California, and gives us estimates of they reduced the quantity of precious metal in the quantities of the precious metals annually them so as to make them less than weight. That supplied, and of the quantities in the world; he vitiated, and still vitiates, the monetary systems of adverts to money as capital, and to its relations to all Europe, and the ideas of all the writers on cur- the wealth of a society, and enters at length into rency. Like false dealers, who used to be flogged the variations in the prices of commodities, and at the cart's tail, and whom our municipal autho- the probabilities of a speedy fall in the value of rities appointed aleconners to detect and bring to the precious metals. M. Chevalier, long known punishment, the regal coiners cheated their cus- for his contributions to the Paris press, has protomers, by giving short weight to those who duced a good marketable book, with no great force purchased at the royal Mint a pound or an ounce of silver, certified to be a pound or an ounce by the image and superscription of Cæsar.

of thought, and no marks of a peculiar genius. It will be useful to his countrymen, if they can be induced to read it. That a bookseller now underThe only remark we shall make on all these takes to publish it is a sign of their returning * Cours d'Economie Politique, fait au College de France.

Par fare. He confidently believes that they will find a sobriety, and a good augury for their future welsomewhat dry work on the most abstruse subject of

M. Michel Chevalier. Troisième Volume, La Monnaie. Paris:
Capelle. 1350.

political economy as interesting as the wild non- | worth. The Government interferes no further sense of the Socialists, and the more contemptible with the matter; and thus the whole business of intrigues of the Tuileries and the Elysée.

importing bullion, converting it into coin, and supplying the nation with money--the Government only watching over the goodness of the coin-is performed by private individuals, from motives of private interest.

The peculiarities of nations seem destined to be trained to one general end, and to universal good, by the equal, uniform, and regular action, on all, of the external world. By the unsettled condition of the French, and their disastrous revolutions, we are convinced that they have misappre-finers; hended its lessons. On no subject do they appear to have erred so widely as in regulating and restricting industry. The source of wealth, and of the means of life-the origin of all man possesses, to prevent its growth and expansion is to maim the soul of the nation. To the restrictive policy of the French there is one remarkable exception, little known, and deserving attention as a confirmation of the principle of free industry which they habitually violate. Their monetary system, which, with some changes, survived the destruction of 1793, has now, in spite of some gross financial blunders, passed underanged through the ordeal of the late revolution. It was invigorated by the removal of a restriction on the issue of notes for 100 francs, and remains to testify to the advantages of trusting even what is supposed to be an important part of the administration of national affairs to private interest. We must glean and abridge a brief account of it from M. Chevalier's large volume.

In France, as in other monarchies, the privilege of coining was at an early period assumed by the Sovereign. He would allow no false coiners but his own servants; though it must be stated to his credit that, subsequently to 1726, when there was a general recoinage, he was never guilty of fraud. The successive Governments have always claimed the privilege of being the exclusive coiners. Subsequently, also, to the introduction of the decimal system, the coinage of France has been extremely well divided. For beauty of execution, famous as the French are as medallists, their coins are inferior to ours, and they are not made with equal precision. They are comparatively coarse and rough; but, on the whole, superior to the generality of the coins of Europe.

The coiners also carry on the business of reand much of the bullion brought to them containing alloys of different kinds, a part of their profits is derived from their skill as metallurgists. Prior to the Revolution, it cost about twenty-four francs per kilogramme to separate from the ingots of silver of commerce the small quantity of gold with which they are usually mixed. At present, the same object is effected at the cost of one franc, or a little more; an improvement in the art of refining that is appropriately characterised as equivalent to the discovery of a mine of the precious metals. To the success of the operation quantity is requisite; and thus the cinders of silversmiths at Paris, and the dust of their shops, which were formerly sold to the people of Sheffield and Birmingham, are now operated on in Paris with advantage. If the metallurgist obtains 4-10,000th part of precious metal from the refuse, it suffices to cover his expenses.

The operations of the coiners being performed at their own expense, their profit is derived from the skill they use in the conversion. They are not paid by the State, though the State watches over their occupations, and inspects the results. In respect to payment at least, these are very remarkable. While, as the rule, the expense of all public officers, or their salaries, has increased, the progress of the arts has gradually reduced the remuneration of the coiners, and the tax paid to them for the conversion of the bullion into coin has been lowered. In fact, the State has reaped a large profit in the reduction of the sums paid for coinage, by the continued improvement in their skill. Prior to the first revolution, the Government levied a seignorage on coining, which, however, had been successively lowered. The revolutionary Government first levied on the coinage only a sum sufficient to cover the expenses; in 1835 this Now, most of the functions of the Mint are per-sum was reduced one third; and from that time to formed in France by private individuals. Under the existing law, preserving the principle of the old law, the State contents itself with maintaining, by means of inspectors, a supervision of the coinage. The Mint operations are carried on in offices belonging to the Government, under the eye of a special commissioner; and not a single coin can be put into circulation without the consent of the representative of the Government. With this restriction, the directors of the Mints in these public offices coin the money, according to the prescribed pattern, on their own account, at their own risk, out of bullion which they purchase. They are bound, indeed, to exchange any bullion carried to them for an equivalent quantity of coin, retaining a small sum fixed by the law for the conversion of the bullion into coin; but they have to decide or higgle with the owner of the bullion as to its purity, its value, &c., or how much coin it is

VOL. XVIII-NO. CCVI.

1849 remained, for silver, about 1 per cent. As metallurgy, however, improved, this sum was found to be exorbitant; and in 1849 it was reduced to three-fourths, or 1 franc 50 centimes per kilogramme of silver coined into 200 francs. In practice the Mint masters are contented with this sum, and even a smaller sum suffices to remunerate them. The cost of coining gold is about 6 francs on every 3,100 francs.

In England there is but one Mint for the whole empire, as our readers know: and a bungling concern it is. In France there are seven Mints (hotels-des-monnaies). Prior to 1837 there were thirteen. Our example has led a party in France to desire the establishment of one Mint; and they allege that the coinage of the provincial Mints is

A kilogramme, we may remind our readers, is 2lbs. 8oz. 3dwts. 2gns. troy.

G

and from a report of Mr. Butler King, who, being much biassed in favour of California, is rather to be distrusted. M. Chevalier concludes that, from what we know of Russia, California, and the Indian Archipelago, it is not impossible to obtain, a few years hence, a regular annual supply of 200,000 or even 300,000 kilogrammes of gold, or four times as much as at present. He admits the possibility of a fall in the value of gold of two-thirds; and believes, with such a quantity produced, while the quantity in use is less than 3,000,000 kilogrammes, that no long period will be required to effect that reduction.

not equal to that of the Paris Mint. Unpractised | derived from the American and our own journals, eyes detect no differences. Some other trifling imperfections in the coinage have induced Messrs. Dumas and Colmont, who were appointed to inquire into the subject, to recommend that the whole of the Mint operations shall be carried on, as in England, by persons under the control of the State. To this M. Chevalier justly replies, that to place the coinage wholly under the direction of the State would put an end to the higgling between the coiners and the bullion-merchants; and the consequence would be that, in France as in England, the State must be at the whole expense of the coinage, to the dissatisfaction of the tax-payers, which is now defrayed by the bullion-merchant. and the metallurgist, to their mutual satisfaction and mutual profit.

M. Chevalier, too, informs us, after analysing and describing the English process, in which the Bank of England requires the certificate of the royal assayer before it will receive any bullion brought to it, which costs time and loses interest, from the Bank, taking one penny-halfpenny on every ounce of gold, and from other causes, that our gratuitous mode of coining costs the public 8 francs 52 cents per kilogramme of gold, in lieu of the 6 francs which it costs in France. We need not transcribe any of the statements made by M. Chevalier, on the authority of parliamentary committees, such as that our Mint is otherwise so ill-managed that the Sycee silver belonging to the Government could not be assayed in London, and was in part sent to Paris to be assayed; that, taken as a whole, it is extremely costly in proportion to its work; so that, instead of being a model worthy of imitation, it is undergoing, though not before it was required, a thorough revision. The French system-distinguished from ours by the coinage being conducted by individuals at their cost, under the inspection of an officer of State, and so far a free system, while ours is carried on wholly by the Government, at the cost of the public, for the benefit of a corporation of moneyers, the Bank of England being supposed not to derive any profit from the part it performs in the trans

action is already superior to ours. It is a part of the administration of France in which the principle of free industry has been more carried out than in the corresponding part of our administration; and this exception to the usual conduct of the two nations is in its results a striking testimony to the value of the principle generally followed here, and generally there neglected, or openly set at defiance.

We content ourselves with this example of what M. Chevalier says of coinage and Mints, but the reader in search of information on those and similar topics will find it in his book. We pass to the other subject mentioned in our title, the more generally interesting topic, the quantity of gold and silver in the world. The recent great importations of gold from California have made the question of the future effects on prices in Europe of continued importations of present importance. Though M. Chevalier discusses this

The fall in the value of silver, obtained chiefly by art and the expense of mining, and of which we cannot expect any great quantity easy of access to be discovered, as quantities of gold have been discovered, will necessarily be slower than that of gold. But M. Chevalier believes that if the quantity of gold annually obtained should reach 500,000 kilogrammes, it will not be sufficient to reduce gold to the value of silver. Some light may be thrown on this subject by considering the following tables. M. Chevalier tells us that the quantity of gold and silver annually brought into the general market at the commencement of the present century, was as follows:

The comparative results at an interval of forty

question, he has no more information on the quan-years, that is, just prior to 1810 and 1848, are as tities of bullion obtained from California than is follows:

Total...

122,050,724 27,122

2,910,977 10,026

37,148

According to this statement, the annual increase of the precious metals between 1810 and 1848 was We have a right to assume that the bulk of this 182,843,000 francs, or 643 per cent. ; but during the immense mass of the precious metals continues in greater part of that period, notwithstanding the won-existence. They are so nearly indestructible that derful economy in the use of coin occasioned by the extension and improvement of banking, prices of all commodities have been gradually falling, or the value of the precious metals, though they, too, have probably been obtained by improvements in mining at less cost of production, has been rising. The fact, which is equally observed of corn and of calico, is a remarkable illustration of the effect of industry and skill in reducing cost, even in the present condition of over-peopled Europe. If that be true of the last forty years, we may anticipate, now that the disposition of mankind is generally inclined to peace, and that the recent alteration towards freedom in our commercial code has given a great impulse to productive power and skill, that it will be in a great measure true hereafter. The progress of society, the increase of population, the rapid improvement in knowledge and ingenuity, will effect a continued diminution of cost for all those commodities which can be indefinitely multiplied, and a proportionate increase in the relative value of the precious metals to all commodities. The discovery of immense masses of gold in California, instead of leading to a great rise in prices, has probably been made just in time to prevent a great and a continuous fall, which might at this period have been most disastrous to the interest of producers and the principles of free-trade.

it is probable some of the ornaments of the Incas and of the temples of the Aztecs may still circulate in the coins, or be in use in the spoons or watchcases, of Europe, connecting, by a mysterious affinity --as we are connected by our alphabet with Egypt and Assyria-the labours of those early inhabitants of America with our present tasks and enjoyments. To the whole bulk of the precious metals the annual importations to 1848 bear a proportion of 1-126 silver, or 1-41 of gold. Considering the very rapid progress of population, both in the old world and in the new, and the still more rapid increase of wealth-there being few or none of the great countries of the world in which the people do not increase faster than silver, while in several, as England, her colonies, and the United States, they increase faster than gold-we conclude that there is no probability of there being a redundancy of the precious metals on the whole, or any great rise in prices. It is seen, however, by inspecting the tables, that the increase of silver. annually brought into the general market between the beginning of the century and 1848 was little more than six per cent., or the difference between 900,000 and 975,470 kilogrammes, while the increase of gold was more than trebled. It had increased at the rate of 203 per cent., the difference between 23,700 and 71,850 kilogrammes. was before the discovery of the Californian mines, The fact will be illustrated by adverting to the which will probably increase the quantity at least whole quantity of the precious metals obtained one-third more, while there is no probability of from America, the principal source of our supply, there being any similar increase in the quantity and by remembering the comparative indestructi- of silver. Hence arises a very important conbility of the metals. Some waste from their gene-sideration for those States which, in spite of experal use as ornaments and coin there undoubtedly is, rience, persist in one standard of value, and make but the amount is not known. It has been vaguely that standard gold. From the greater rapidity estimated at one per cent. of the annual produc- with which gold has increased than silver since the tion, implying the destruction of the whole produce mines in Russia were worked, and the still greater every hundred years. Europe obtained from rapidity with which it has increased since CaliAmerica, to the 1st of January, 1848, 122,000,000 fornia was explored, there is room for apprehension kilogrammes, or about 289,000,000 lbs. troy, of that the gold standard may be debased in relation silver, and nearly 3,000,000 kilogrammes, or to silver. The foreseeing Governments of Holland 7,125,000 lbs., of gold. This bullion would coin and Belgium have on this account returned to into thirty-seven milliards of francs, of which about a silver standard; but the appropriate remedy twenty-seven would be silver and ten gold; or, in English money, 1,200,162,488., of which 333,162,4887. would be gold, and 867,000,000. silver. The following table shows the total produce of the silver and gold mines of America till the discovery of California :—

That

is obviously a return to the practice of merchants, the originators of money, who always use that metal for payments which is most to their advantage. Following their practice and principle, Government will obviate all danger from a fall in the value of gold by abstaining from enforcing the

use of one standard, and permitting the use of two or even more standards or measures of value, as the people find convenient.

Another consideration of great importance suggested by M. Chevalier is, the superior value of the products of other species of industry. In fact, many of them being the necessaries of life, may attain any conceivable value under circumstances of great scarcity, in relation to the precious metals. However dazzling the large sum 464,000,000 francs may be, as the annual supply of the precious metals, or the still larger sum of thirty-seven milliards as the total quantity in the world, both sink into insignificance in comparison to the wealth annually created by agricultural labour, by the labour in collieries, and mines, and in factories. As a much greater number of persons are employed on them than in mining for the precious metals, and as much greater skill is displayed in them, so their products are infinitely more valuable. They go on increasing from year to year; and some of them are supposed to become dearer and dearer, or to require more and more labour to produce them, as society advances. They, indeed, are generally consumed pretty nearly as fast as they are prodaced; but this continued production of things greater in value than the precious metals, some of which rise in value, increases the doubt whether the production of the precious metals, on the whole, will keep pace with it, while it seems certain that the production of them will not long be in excess, and that we shall not have any great, continued, and alarming general rise in prices.

are raised, more of the precious metals is required to circulate them; the precious metals rise in value, and then comes the providential discovery of America, or of the gold in the Ural mountains, or of the diggings in California, to renew the cycle, give a fresh stimulus to production, and provide for a further increase of mankind. Now gold is scarce, and now corn is scarce: neither scarcity is foreseen nor provided for by man, and the means of remedying it, when discovered, appear to him to be altogether fortuitous. But the cycle we have briefly explained teaches that these phenomena, if the stated periods in which they occur be not yet discovered, are determined by positive and regular laws; and some of those who cannot see the hand of the Divinity influencing the every-day actions of man may see it in the progress of society, thus closely connected with the annual variations of the seasons, and with the revealed deposits of gold placed in some of the carliest geological formations. Such a doctrine, which may be clearly deduced from alternations of price, connects political economy, when carried to its proper end, with the highest theology.

and

We have not learned that from M. Chevalier's book; but it is not deficient in curious deductions and anecdotes, and with one of each we will conclude. Considering the many passions that have been at all times grouped around money, we learn with astonishment the small space the precious metals in use occupy. We hear of mountains of gold and silver; will the reader, then, believe, on M. Chevalier's authority, that all the silver The precious metals are much used for other ever obtained from the mines of America would purposes than coins, but in what proportion they form a volume of only 11,657 cubic metres, are so used is difficult to ascertain. It has been that all the gold, if smelted into one mass, would variously estimated at from one-eighth to one-fill 151 cubic metres? The silver, in the form of fourth of the annual produce; but whatever it a sphere, placed by the side of the column of the may be, the quantity required increases with the Place Vendome, would rise only to two-thirds of progress in civilisation, population, and luxury, its height; it would have a radius of fourteen and diminishes the proportion of the precious metres. All the gold described in such fabulous metals to be applied as coins. It is also to be abundance, the ransom of Atahualpa alone having observed that, great as is the value or use of the sufficed, it was said, to fill a church, might be stowed precious metals as coins, that is, as it were, but a in a moderately-sized room. An apartment eight secondary use, and it is because they have an in- metres long, eight broad, and five high, contains trinsic or original value that they are used as coins. 320 cubic metres, or twice the volume of all Now this primary or original use increasing as the gold extracted from the mines of America. other wealth increases, creates an additional demand We have not verified the statement we have tranfor gold and silver, independent of their use as scribed, and state it on the authority of M. Checoins, and will, most probably, be ample to prevent valier. Trusting in him, too, we place the followthat great fall in their value which is, perhaps, ing anecdote before our readers:inconsiderately dreaded.

A more important doctrine may be inferred from such events as discoveries of new gold mines, than consequent changes in relative values, the goal of the economist's reasoning. It is very well known that alterations in price have a great influence in determining production. When the price of wheat, or iron, or cotton cloth rises, more of the article is sure to be produced with all convenient speed. Thus, the discovery of fresh supplies of the precious metals, raising the price of one article after another, in the succession, probably, of their utility or necessity, beginning with food, leads to an increased production of useful commodities. In turn, they nourish more people; more commodities

"M. Mollien, who was Finance Minister under Bona

parte, and wrote 'Memoirs d'un Ministre du Trésor, informs us that his predecessor, M. Barbé Marbois, had allowed himself to be circumvented by an association of financiers, at the head of which was M. Ouvrard. These faiseurs de service, as they were officially called, had obtained from the Treasury a sum of 141,800,000f., giving as security the precious metals belonging to Spain in America, where she had some, but much less than was pretended. M. Mollien made it his business to get back this sum. By a treaty with Spain it was agreed that she should pay 60,000,000f. on account of the faiseurs de service; and three-fifths of these 60,000,000f. were to be obtained from Mexico. At that time, 1806-7, the precious metals could not be sent from the ports of Mexico without encounter

*A metre is one yard, three inches, and nearly four-tenths of an inch; or 39-37100 inches.