CHAMBERS'S INFORMATION FOR THE PEOPLE. 



that the former stands in need of, no exchange 

 can be made between them. ... In order to avoid 

 the inconveniency of such situations, every pru- 

 dent man in every period of society after the first 

 establishment of the division of labour, must 

 naturally have endeavoured to manage his affairs 

 in such a manner as to have at all times by him, 

 besides the peculiar produce of his own industry, 

 a certain quantity of some one commodity or 

 other, such as he imagined few people would be 

 likely to refuse in exchange for the produce of 

 their industry. 



' Many different commodities, it is probable, 

 were successively both thought of and employed 

 for this purpose. In the rude ages of society, 

 cattle are said to have been the common instru- 

 ment of commerce ; and though they must have 

 been a most inconvenient one, yet in old times we 

 find things were frequently valued according to 

 the number of cattle which had been given in 

 exchange for them. 



' In all countries, however, men seem at last to 

 have been determined by irresistible reasons to 

 give the preference for this employment to metals 

 above every other commodity. 



' Iron was the common instrument of commerce 

 among the ancient Spartans ; copper among the 

 ancient Romans ; and gold and silver among all 

 rich and commercial nations. 



'Those metals seem originally to have been 

 made use of for this purpose in rude bars, with- 

 out any stamp or coinage. But to prevent abuses, 

 to facilitate exchanges, and thereby to encourage 

 all sorts of industry and commerce, it has been 

 found necessary, in all countries that have made 

 any considerable advances towards improvement, 

 to affix a public stamp upon certain quantities of 

 such particular metals as were in those countries 

 commonly made use of to purchase goods. Hence 

 the origin of coined money, and of those public 

 offices called mints institutions exactly of the 

 same nature with those of the aulnagers and 

 stamp-masters of woollen and linen cloth. All 

 of them are equally meant to ascertain, by means 

 of a public stamp, the quantity and uniform good- 

 ness of those different commodities when brought 

 to market'* 



It must be understood that money is only an 

 article which can be conveniently used in ex- 

 changing. It is in this, and in nothing else, that 

 its usefulness lies. Its value in exchange is 

 determined in the same way as the value of other 

 minerals : in the long-run, by the cost of pro- 

 duction ; temporarily, by demand and supply. If 

 there were an increase in the commerce of the 

 world, without a corresponding increase in the 

 quantity of gold in circulation, gold would rise 

 in value that is, a given quantity of the produce 

 of human industry would buy less gold than it 

 did before the supposed increase in production. 

 Now, this increase in commerce may be said to 

 be continually going on, but the effect of it is to 

 stimulate the production of the precious metals ; 

 so that there are two counteracting forces. It 

 may at first sight appear that the tendency is 

 towards the production of gold outstripping the 

 force which sets it in motion, and towards gold 

 consequently becoming cheaper ; and no doubt 

 it does require a much greater weight of it now 



486 



* Smith's Wealth of Nations, book i. chap. 4. 



to purchase a given quantity of the produce of 

 human labour, or of most things constituting the 

 real wealth of the world, than it did a hundred 

 years ago. But the increase of real wealth must 

 not be lost sight of in the question. While the 

 social power of a given income, say .100 a year, 

 has greatly diminished during the last century,, 

 and continues to diminish, owing to the increas- 

 ing quantity of gold in circulation, the given, 

 income will probably purchase more comfort and 

 luxury now than it did then. Five sovereigns 

 will not buy so much coal now as then, but they 

 will enable their possessor to light his room with 

 gas, to send a message in an instant across the 

 Atlantic, or to go from Edinburgh to London in 

 ten hours in a luxurious carriage not one of 

 which things could the purse of Fortunatus have 

 enabled its possessor to do a hundred years ago. 

 But that the value of a given income relatively 

 to incomes in general has been diminishing for 

 centuries, there can be no doubt. Even in a 

 village, the days are gone of ' passing rich on forty 

 pounds a year.' And this diminution in the social 

 force of a given sum is plainly owing to influx 

 of gold. It has been especially rapid during 

 recent years, owing to the immense crops, so to 

 speak, yielded by the mines of California and 

 Australia. To those engaged in commerce, or 

 in certain professions, this change is unimportant, 

 as they get a corresponding increase in the 

 quantity of gold which they receive for their 

 commodities ; but as it is this social power of 

 gold which men chiefly regard, it is a very serious 

 fact to those who depend on a fixed income that 

 there is a tide ever running against its social 

 weight that is, influx of gold. The fact is also 

 important in questions connected with national 

 expenditure, and payment of the national debt. 

 From the fact that, owing to causes stated, there 

 is a tide continually running in favour of the 

 borrower, and against the lender, it follows that 

 the weight of a national debt is continually 

 diminishing, even though it remains nominally 

 the same. We hear a great outcry among certain 

 politicians about the annual expenditure of the 

 United Kingdom having risen during the last 50 

 years from 50 to 85 millions. But the increase, 

 owing to the steady influx of gold, is not nearly 

 so great as it seems. In the eight years 1858-65, 

 the total importation of gold into England was 

 ^219,166,344; the exportation was i9S,7S9, l S ( > 

 shewing an excess of importation of ^23,407,194. 

 The value of gold and silver imported in 

 1871 was ,38,140,327; total exported, ^33,760,67 1. 

 Excess of import, ,4,379,656. In the five 

 years 1876-80, there was an excess of imports 

 of gold and silver coin and bullion, over exports, 

 f ;3>6o3757 ; the imports and exports being 

 respectively 147,039,419 and ^143,435,662. 



Money being useful only as an instrument for 

 effecting exchanges, it follows that the world does 

 not become possessed of a large quantity of those 

 useful and agreeable things that really form 

 wealth, by merely having more money to employ 

 in making exchanges among them. But money 

 being, from many causes, closely associated in- 

 the mind with wealth, it has not unnaturally been 

 imagined that the more money a nation could 

 draw to itself and retain, the more prosperous 

 and satisfactory its condition. Hence exports of 

 goods, for which money would be imported, were 



