Effect of Duties on Im]iorts upon the Value of Gold. 77 



THE EFFECT OF DUTIES ON IMPORTS UPON THE 



VALUE OF GOLD. 



BY JOHN Y. SMITH, ESQ., MADISON. 



That the paper currency of the United States is depreciated 

 below the common money of the world — gold and silver — 

 is universally admitted, and the cause generally recogniz- 

 ed, viz ; the excessive quantity of paper in circulation. It 

 is also a fact well understood by every careful student of eco- 

 nomic science, though not so generally understood by others, 

 that the nominal premium of gold over paper, as it has existed 

 for several years past, does not mark the true depreciation of 

 the paper. A careful comparison of present general prices 

 with those of ante-war times, fourteen or fifteen years ago, dem- 

 onstrates that gold itself, in this country, is depreciated even 

 farther below its value in other countries than our paper is be- 

 low our gold. 



Thus far economists see their way clear, and are substan- 

 tially agreed. But what is the cause and what the extent of 

 this depreciation of gold, are problems which they have not yet 

 been able satisfactorily to solve. Prof Perry and others have 

 attributed this depreciation to the demonetization of gold in this 

 country. It is true that if we impair the utility of an object we 

 depreciate its value ; and as gold derives most of its value from 

 its use as money, if gold were universally demonetized, the great- 

 er part of its value would be destroyed. If a small portion only 

 of the general stock of the world is demonetized, only a cor- 

 respondingly small portion of its value will be destroyed. The 

 little gold which we have demonetized has long since been ex- 

 ported and distributed itself throughout the commercial world, 

 adding a trifle to the specie volume of all other countries. In 

 accordance with the law of money, that as its total quantity 



