I'AI'KR MoN'i:^' AND CuLD i:XC 11 A N( ilC. 163 



lliosc, ami ilio coin had ceased to possess the iinifoniiit\- of weij^ht 

 and tineness which had established its circulation. The 

 Treasury therefore thought it best to introduce I'ji.i,di>h silver 

 and copper throutjhout the bjn])ire. 



provided the same l)e made convertible, at the will of tlie itolder, 

 into the standard gold currency of tlie I'nited Kingdom. 



Thus came abotit an early experinieiu in the ( iold l''.xchan<^e 

 Standard. 



At the Cai)e, the average value of the rixdollar in bills on 

 Eui^land had been 2/6 from j8ii to i^iS- I'rom 1816 to 1820 

 it was i/io, and 1/6 from 1821 to 1825. In fixing exchange, 

 the 'lYeasury ado])ted the current value, and directed that the 

 rixdollar, nominally worth 4/-, should be declared equal to 1/6 

 in British money. To prevent its falling below that value it was 

 to be exchangeable, at the will of the holder, for bills ui)on the 

 Treasury in London at the rate of £103 in value of rixdollars, 

 comptited at 1/6 each, for every iioo bill. As in the other colonies, 

 bills were to be issued for silver at the same premiuin of £3 

 l^er cent. There was no intention to adopt compulsory methods 

 to withdraw the paper currency, but money brought in for the 

 purchase of bills was not to be reissued. In future, public ac- 

 counts at the Cape were to be kept in British money. On 6th 

 June, 1825. Somerset accordingly proclaimed that British silver 

 should be legal tender at the rate of 1/6 for each paper rix- 

 dollar. This proclamation roused sitch an agitation that. ])end- 

 ing the result of a petition to England, Somerset gave notice on 

 28th June that persons who wished to exchange British silver. 

 received in payment of debts, for rixdollars, might do so at 

 the same rate of one dollar for 1/6. The privilege was withdrawn 

 in December, when it was found that the Treasury intended to 

 adhere to its original decision. 



All classes at the Cape protested against the calling down 

 of the dollar, but naturally the ground of protest varied. There 

 was, however, a general agreement that so long as the quantity 

 issued had been limited, the value of the paper " was maintained 

 without the prop of the precious metals," and that the subse- 

 quent depreciation was due to over-issue. The only objection 

 that can be raised to this statement is that it was not recognised 

 how^ early depreciation had set in. Most of the petitions went 

 on to state that the proximate cause was the great excess of 

 imports over exports. Now the Quantity Theory of Money 

 show^s that the value of money depends both on the quantity 

 of money and the quantity of goods offered for sale. Other 

 things equal, an increase in the quantity of goods would have 

 resulted in a fall in prices or an ap])reciation of money. It was 

 only because of the excessive issues that this result was not 

 obtained. But it did operate to check the rise in the price of 

 commodities, though the rise in the price of bills was accelerated 

 Undoubtcdlv those were correct who stated that the internal 



