717 



MONEY. 



taring labour reduces the real value of commodities. Their nine is 

 al-> liable to temporary depreciation from other cauces, from too abun- 

 dant a (apply, or from an inmtticiiMit demand, lint if money maintain 

 the MOM value, in relation to iteelf, notwithstanding the dimininhed 

 value of other articles, its proportionate value is practically increasing. 



In all age* of the world, and in nearly all countries, metals Mem to 

 hare been used, as it were by common consent, to serve the purposes 

 of money. It is true that other articles have also been used, and still 

 are uned, such as paper in highly civilised countries, and cowrie shells 

 in the leas civilised parts of Africa ; but in all some portion of the 

 currency has been and is composed of metals. We read of metals 

 amongst the Jews, the Chinese, the Egyptians, the Persians, the Greeks, 

 the Romans. In the earliest annals of commerce they are spoken of as 

 objects of value and of exchange ; and wherever commerce is carried on 

 they are still used as money. But as they were introduced for thin 

 purpose in very remote times, it is not probable that they were selected 

 because their value was supposed to be less variable than that of other 

 commodities. Mure than two thousand years ago, indeed, Aristotle 

 aw clearly (but what did he not see clearly P) that the principal use 

 of metallic money was that its value was less fluctuating than that of 

 tnost other substances (' Ethic. Nicom.' v. 5). But however clearly 

 this grrat philosopher may have observed the true character of money, 

 many ages after the circulation of metals, those who first used them 

 were men engaged in common barter, who considered their own con- 

 venience and security without reference to any general objects of 

 public utility. They must have used metals not as a standard of 

 value but as an article of exchange, which facilitated their barter. All 

 metals are of great utility and have always been sought with eagerness 

 for various purposes of use and ornament : but gold and silver are 

 especial object* of desire. Their comparative scarcity, the difficulty 

 and labour of procuring them, their extraordinary beauty, their singular 

 purity, their adaptation to purposes of art, of luxury, and display; their 

 durability and compactness ; must all have contributed to render them 

 most suitable objects of exchange. They were easily conveyed from 

 place to place ; a small quantity would obtain large supplies of other 

 articles; they were certain to find a market; none would refuse to 

 accept articles in payment which they could immediately transfer to 

 others : and thus gold and silver naturally became articles of commerce, 

 readily exchangeable for all other articles, before they were circulated 

 as money, and were acknowledged as such by law and custom. 



The transition of the precious metals from the condition of mere 

 articles uf exchange, amongst many others, to that of a recognised 

 standard of value by which the worth of all other articles was estimated, 

 was very natural. Merchants carrying their wares to a distant market 

 would soon find it necessary to calculate the quantity of gold and silver 

 which they could obtain, r.itber than the uncertain quantities and bulk 

 of other commodities. They would not know what articles it would 

 be prudent to buy until they reached the market and examined their 

 quality and prices : but a little experience would enable them to 

 predict the quantity of gold and silver which would be an equivalent for 

 their own merchandise. Merchants from different parts of the world, 

 meeting one another in the same markets, and finding the convenience 

 of assessing the value of their goods in gold and silver, would begin to 

 ofier them for certain quantities of those metals, instead of engaging, 

 inure directly, in bartering one description of goods for another ; and 

 thus, by the ordinary course of trade, without any law or binding 

 cuatoin, the precious metals would become the measure of value and 

 the medium of exchange. 



But when gold and silver bad attained this position in commerce, 

 they were not the less object* of barter ; nor were they distinguuhable 

 in character from any other articles of exchange They were weighed, 

 and being of the required fineness, a given weight was known as a 

 denomination of value, but in the same manner only as the value of a 

 bushel of wheat may be known. In the earliest ages gold and silver 

 seem to have been universally exchanged in bars, and valued by weight 

 and fineness only. The same custom exists at the present day in 

 China. There is no silver coinage, ' but the smallest payments, if not 

 made in the coppiir irhm, are effected by exchanging bits of silver, 

 whose weight is ascertained by a little ivory balance on the principle of 

 the steelyard." (Davis's ' China.' c. 2li.) 



Notwithstanding the ease with which gold and silver are divided 

 into the smallest portions, each of which is of the same intrinsic 

 l"i ity and value as the others, the trouble of weighing each piece, 

 and the difficulty of assaying it in order to detect alloys of baser 

 metals, render these metals in bars, or other unfashioued forms, ex- 



Ifiojr Important principles of political economy, the discovery of which li 

 attributed u. Adam Smith and other modern w.ltcru, nuy b> fouml In the worst 

 of Aifiotlr, ii. reatd with wonderful precl'lon and deurneaa. Mr. M'Cull.rch, 

 foi rumple, refer* to Locke a. the II rt who laid It down that labour la the 

 soarae "I v.luc ; but thf ume principle a- afflrtmd by Ari totlc In more than 

 one part of hi- works, snd more nccuratelr than by Locke (' Ethic. Nlcom. 1 

 . A. in, h- p. revived, perhapa di-linct.y a any other wrili-r, the 

 aUMIMtlon brtvecn productive and Unproductive labour ( Mi-Upn.' li. ). Ai 

 HawT example we miM refer I. Im ac ..unt of Ihe nriirin < birter, Ita 

 derrlopwnt Into eosmaaSTe*. and he connection of the l.tt. r with the u<- of 

 aw> *y f I'd.' L ). And, Uily. any rti*omi.t mui be itruck wah hl clear 

 perception of Ihe rrlaUon- between s division of employment, and the exchange 

 of Ihe pradueu of UV.iu (Ib. U. 1). 



MONKY. TJt 



tremely imperfect instrumenta of exchange, especially when they are 



used in small quantities. However accurately they may be w< 



i*. requires considerable skill and labour to auay them, which in small 



pieces would scarcely be repaid. Even in large quantities the dii 



of assaying their fineness, in countries which have made considerable 



advances in the arts, is greater than might be expected. To obviate 



this difficulty coinage was introduced, by which portions of 



silver, copper, and other inetaU have been impressed wit: 



marks, denoting their character, and have became current under certain 



denominations, according to their respective weight, fineness, and value. 



These coins have always been issued by the government of each 



country as a guarantee of their genuineness ; and the counterfeiting of 



them has been punished as a serious offence against the state. 



In rich countries these three metals of gold, silver, and copper, or 

 of a mixed metal, such as bronze, are very convenient substances for 

 the manufacture of coins, on account of the differences in their relative 

 value. Gold coins, containing a high value in small compass, are con- 

 venient for large payments, silver coins for smaller payments, and 

 copper or bronze coins for those of the lowest value ; while all the 

 larger coins are multiples of the smaller. These several descriptions 

 of coin serve the ordinary purposes of trade sufficiently well : they are 

 universally received as money within the country in which they circu- 

 late, and the principal part of all payments of moderate amount is 

 made in them. But payments of large amounts cannot conveniently be 

 made in coins of any metal ; and in this and other countries paper 

 money and various forms of credit have been used as substitute 

 these we shall speak presently ; but it will first be necessary to con- 

 sider the suitableness of gold and silver coins as standards of value. 



Coins made of these metals are not exempt from the laws which 

 go\< in the prices of other commodities. They have accordingly 

 varied in their own value in successive periods, and are at no time 

 secure from variation. In the 16th century new mines of extraordinary 

 richness were opened in America, from which a large amount of the 

 precious metals was poured into Europe ; this gave a great stimulus to 

 commerce and industry, and a material change took place in the 

 relative prices of these metals, and other commoditi 



The discovery of the gold deposits in California has brought such 

 considerations into the class of debateable questions in our own u :v. 

 The duttingished political economist, M. Michel Chevalier, in Ids 

 lectures before the College of France, published in 1850, predicted 

 that if Russia and California continued to produce gold at the 

 rate they were then doing, the value of gold would be ultimately 

 reduced by five sixths, or even nine-tenths. He admits, however, that 

 the fall, though rapid at first, would be greatly retarded by tlie 

 adaptability and greater beauty of gold for purposes of ornaii; 

 use, for which silver is IM.V used. This opinion, slightly modified, U 

 repeated in his work ' On the probable Fall in the Value of Gold,' 

 translated in 1859 l>y Mr. Cobden ; and he attributes the little effect 

 hitherto produced, even with the addition of the immense quantity 

 imported from Australia, to the absorption of a large propor; -on of it 

 by France iu exchange for her silver. In these predictions, how,-. . i-. 

 he is thought by some to overlook many material facts, the influence 

 of which the experience of twenty years has in a great degree 

 substantiated. The addition of gold or silver forms on addition to 

 the world's capital, and this capital forms a fresh labour fund; 

 such additions therefore give a great stimulus to increased industry, 

 and the wages for this industry require and absorb a Urge though 

 an indefinite quantity of the precious metals. M. Chevalier saw 

 this to some extent, for he says ('La Monnaie,' p. 473), "that 

 such an increase as was then taking place would compel England, 

 for the purposes of her commerce, to increase ninefold the amount of 

 her coined gold." The anticipated fall has not followed ; the ; 

 increase of manufacturing industry, the exports from Knglaud in 

 a few years mounting from SO.OOO.OOW to 1 30,000,0001, has neces- 

 sitated a corresponding increase in the sum distributed as wages, 

 which has been accompanied by a great increase of imported articles 

 for homo consumption by the classes so benefited; the imp, >n 

 for instance, increasing from 40,000,000 Ibs iu 1838, to 75,0()0.00n Ibs. 

 in 1858. This again has occasioned a re-action not contemplated 

 by M. Chevalier. China takes little except silver in exchange for 

 her tea ; the East Indies also require silver for their commodities, 

 and in this way from 15,000,000i to 20,000,000/. in silver are ab- 

 stracted from Europe, which deficiency must be filled either with 

 gold or silver from the various mines in work. Thus in the year 1859, 

 the total quantity of gold and silver bullion imported into the United 

 KiiiK'lom wan valued at 37,070,1567.; of which l!0,:!7i>,'. 1 ('l/. from tlie 

 United States, Australia, and Kussia, was probably gold : and 7,302,3082. 

 from France, and 6,123,t>82/. from Mexico and South Amen 

 probably represent the silver. The exportation* amounted in value to 

 35,38VOo7., of which 10,384,371/. went to France, no doubt in gold to 

 replace her abstracted silver ; and 16,ul6,5Sl/ to Egypt, for transmis- 

 sion to India and China, nearly all of which mint have been in silver. 

 The influx of the precious metals (for the produce of silver eon 

 to be large) has had, as yet, little visible etlect on the prices of < om- 

 moditiiM in general, and none whatever in the relative values of the 

 two metals; at least none beyond the slight variations occasioned by 

 the wanU of commerce for the one or the other. Articles of con- 

 sumption for food or clothing are not higher in price than before the 



