m 



Konr. 



HOMY 



reducing the quantity of pure metal and increaaing the quantity of 

 alloy In all those way* hare the ooina of England been deba**d at 

 dilfmnt period* of our history ; and to ao great an extent were they 

 debased by successive kings, that from the Conquest to the reign of 

 Queen Elizabeth the total debasement* of the silver coin* have Dean 

 ettiiuated at 65 per cent ( Lord Liverpool, ' On Coins.') By expedient* 

 of an opposite character the standard of coin* may be artificially railed ; 

 and the reeult of pleasures connected with the coinage of this country 

 wa, that in a period of 115 yean, from the lt Jams* I. to the 1ft 

 George I., the value of gold ooina, a* compared with nilver coin*, wan 

 tailed 88 per cent ( Ibid. ) No further example* are needed to 

 prove the inconstancy of coin* as a standard, when they form the 

 *ole currency of a country. 



But notwithstanding these imperfections, the convenience of gold or 

 silver coinage, a* money, ha* led to the universal adoption of one or 

 the other, or of both conjointly, a* the standard of value. The objec- 

 tion* to a double standard have already been noticed, but throughout 

 a long period of the history of this country we find gold and silver pie . 

 vailing equally a* standard*. There appear* to have been no public 

 coinage of gold at the royal mints prior to the 41st Henry III. The 

 gold pennies coined at that time were expressly declared not to be a 

 legal tender, and never obtained a very general circulation. Silver wa.-. 

 then the universal medium of exchange, and the people were unac- 

 .t-d to the iwe of gold a* money : but a* their commerce and 

 ricbe* increased, gold naturally became more convenient for large pay- 

 ment*. The result* of thi* progress became apparent in the reign of 

 Edward III., who established a general circulation of gold coins, which, 

 though partially introduced nearly a hundred year* before, by 

 Henry III., had not been continued by his successors. From this 

 time gold and silver coins circulated together, and were both legal 

 tender*. To what an extent their relative value varied at different 

 periods, ha* already been noticed ; but they were equally recognised 

 by law a* authorised standards of value in all payments whatever, until 

 the year 1774, when it was declared by statute (14 Geo. III. c. 42) 

 that, in future, silver coins should not be a legal tender in payment of 

 any sum exceeding 25/., except according to their value by weight, at 

 the rate of &t. 'id. an ounce. Thin was a temporary law, but wan con- 

 tinued by several statutes until the year 1S16, when the legal tender of 

 silver coins was further restricted to payments not exceeding forty 

 hilling* (56 Qeo. III. c. 68). And thus, as all large payments were 

 made and calculated in gold coins, gold became the solo standard of 

 value, so far a* coinage alone was the real medium of exchange. 



The expediency of adopting gold as the standard instead of silver, 

 ha* been a question of much controversy amongst the highest autho- 

 rities upon monetary affairs. It was the opinion of Locke, of Harris, 

 and Sir William Petty (all great authorities), that silver was the general 

 money of England, and the measure of value in its commercial dealings 

 with other countries. It* general adoption for such purposes waa 

 urged as a proof of it* superiority aa money over gold ; and of this 

 opinion are some writers of high authority at the present day. On the 

 other hand it ha* been argued, that the metal of which the chief 

 medium of exchange is fabricated, should hive reference to the wealth 

 and commerce of the country for which it is intended ; that copper 

 or silver coin* of the lowest denominations suffice for the convenience 

 of a very poor country ; but that a* a country advance* in wealth iU 

 commercial transactions are more costly, and require coins of corres- 

 ponding value. A* a matter of convenience this is und><ul>tu<lly true. 

 Gold is the standard in England ; silver is the standard in Holland 

 and other countries ; France ha* a double standard, silver and gold ; 

 and the comparative facility for effecting large payment* in the current 

 coin* of thu*e countrie* can admit of little doulit. Habit will 

 familiarine the use of silver, and render a people insensible to it* incon- 

 venience ; but it is certain tliat in England fifty sovereigns can be 

 carried about in a man's waistcoat pocket, while in France the value 

 of that sum in silver would weigh about 15 lb*. troy. The jual 

 price of gold, of the coinage standard of 22 carat* fine to 2 of alloy, 

 at the Mint or Bank of England is at the rate of SI. 17. 9rf. per ox. 

 There is no fixed price for silver ; but the average on a long number 

 of year* is almfftt exactly 5. The Mint coins one ounce of silver 

 (Hint standard) into 6s. 6d. t and obtain* therefore id. or 6d. on 

 the ounce profit for coinage. For gold coinage it only charges a 

 small aeignorage ; the Bank of England, by an arrangement with the 

 Government, receiving gold at the fixed rate of 31. 17. 9(1. per ounce 

 (Mint standard), and returning it coined at the rate of 8/. 17*. l<Hrf. 

 per ounce. The price of gold is therefore kept at a standard deviating 

 only by 1 4<f. per ounce. 



But th* convenience of coin for a certain das* of payment* is a 

 question quit* distinct from that of it* fitness for a standard of value, 

 ft is not necemary to exclude gold from the coinage because it is not 

 adopted as th* standard ; it may be circulated a* freely aa the people 

 de*ir* to us* it, while, instead of being the legal standard, it* value 

 may be calculated in silver. If silver be the standard, a large (old 

 coinage may circulate at th* same time for the convenience of larger 

 payments, just ax ulv.tr circulates for *mall payment* where gold is th* 

 standard. In either case, however, that metal which is chosen by the 

 tote a* the lawful standard governs all calculations and bargains, while 

 th* other metal merely conform* to it* standard, and is subsidiary to 

 it. But (Ten if the relative convenience of gold or silver as a standard 



were the sole question, it could not be determined by the mode* of 

 effecting large payment* only. All payment* are calculated as easily 

 In the coin* of one metal as of another, in whatever form they may be 

 actually effected. lint by fir tlu> greater ininiKer of bargains are 

 made for article* of small value. It is in silver and copper that 

 the consumption of all commodities is m.mlv pi.,1 i..i Tin- wage* 

 of the country are paid and expended in that torui ; and in tlir, 

 the prices of nearly all the ordinary articles of daily use are calculated. 



The fitness of a standard however cannot be determined so; 

 considerations of convenience; for we must chiefly regard its iir 

 ijualitifl* aa a permanent measure of value. How shall unituri:. 

 value be maintained as far as practicable in the money of a country .' 

 in the main question to bo determined ; and nut. Which U the most 

 C'liv. -incut form in which to moke bargains? In what medium shall 

 the whole property of the country be valued, from one year to an 

 By what standard shall the relative value of all things be compared ? 

 How shall fluctuations be restrained in the value of thin standard 

 itself ? These are the questions to be answered. 



In favour of gold as a standard it is argued that being leas extensively 

 used for plate and other manufactures, it is less an ai Amerce 



than silver, and is confined more specially to the purposes of i 

 Ou the other hand, it is contended that gold is used in large qua- 

 for jewellery, watches, and decorative purposes, aud that being a 

 more costly material, its consumption in this affects its quantity and 

 value to a greater extent than the use of plate affect* the price of 

 silver. And in this argument there is much weight, for it is estimated 

 that the quantity of gold compared with the quantity of silver is as 1 

 to 50 ; aud their r le is as 1 to 15. (See 'Bullion Report,' 



1810. All n'- Evidence.) Vet in a long series of years the relative prices 

 of the two in, t >!.s have not materially varied; but the Hurt nation 

 has been very much more in the price of silver than in the price, of gold; 

 a difference of !</. un onn.-e in each being equal to a variation of 15 to 

 1 against the standard price of silver as compared with gold. 



But it is not aulliciunt to consider the demand for tlic p 

 metals as articles of consumption only; they are nuddi-n. 

 in large quantities for other purposes. If the exchanges be unfavourable 

 to a country, its precious metals are in greater demand for exportation 

 than its commodities ; or if there be a foreign war, its metals arc. in 

 demand for the payment of the troops aud for the purchase < 

 and munitions of war, simply because of their re., .l.ility. 



This applies with peculiar force to gold. It is because of iu supe- 

 riority as a medium of exchange aud standard of value that it is taken. 



If it should happen that one country has a large gold coinage in 

 circulation in addition to all the bullion which is required for the 

 purposes of commerce, while all the adjacent countries use a silver 

 currency, and possess very little more gold than is necessary for its 

 consumption, it is clear that whenever a large demand for gold arises, 

 it must be directed to the country in which there is a gold currency. 

 The gold in the other countries has, in fact, become higher iu value 

 from the increased demand, and so soon as the increased value mokes 

 it worth while, the gold in the country where it has n, will 



be immediately used by all others as a rich gold mine, whence 

 abundance of metal without alloy, and assayed ready to their hands, 

 may at once be grasped, without digging in the earth. Mo laws and 

 no vigilance con restrain its export : as soon as it is wanted abroad, it 

 disappear* like water through a sieve. \\ 1 never gold is wanted, the 

 coinage of England, if there is not a sulhcieut supply of bullion, 

 supplies it to those countries having a silver standard ; while it 

 England requires silver it is rapidly drained from those countries. 

 The extent to which gold is exported when the foreign exchanges are 

 unfavourable may be seen from thn returns of bullion retained by the 

 Bank at many different periods. We have already stated the large 

 amount of silver obtained from France ill 1859. 



But it must be recollected that, independently of fluctuations in the 

 prices of bullion, a diminution in the quantity i HL- in 



a country raise* the value of the remainder, and disturbs its i 

 to the price* of other commodities. It is in this form that the 

 of on abstraction of gold must be felt rather than in the price of 

 bullion; aud though its influence upon price* is very injurious, the 

 cause i* not alway* perceptible. When paper money is added 

 to gold and silver coin as part of the circulation, a country can always 

 command a sufficient quantity of money ; but the drain of its metals 

 has an important influence upon the value of its circulating medium, 

 and upon the operations of commerce. 



But the precious metals, even gold, have an inconvenience from their 

 bulk, the danger* of transit in large quantities, and the need of at least 

 occasional assaying. In all commercial nations the use of paper money 

 is almost imperative, and it* convenience make* it in various respects 

 desirable even in the internal trade of a country. Its value however 

 a* a medium of exchange is merely that it is a guaranteed representative 

 of real value. Thi* guarantee may be afforded by the issue of paper 

 either immediately by a government, or by it* delegated agents ; and 

 no paper can be kept up to it* nominal value unless it is known to be 

 readily convertible into real value at any time at the desire of the 

 holder. The paper money of most of the continental state* is at a 

 considerable discount from not being so convertible, and the state 

 iUeU doe* not receive it in payment of taxes or duties, for instance, at 

 the full amount it nominally represents, Further information 



