4:3 



BULLION. 



BULLION. 



451 



fore mostly finds a ready market all over the civilised world, and to 

 send so much of that commodity into England as may, by its sale 

 there, realise such a sum as will pay his debt there. The commodity, 

 of all others, best conforming to this condition is bullion, for which, 

 owing to its adaptation to many purposes and its supplying many 

 wants, real or imaginary, there is always a steady demand in com- 

 mercial emporiums. The French debtor therefore buys the requisite 

 quantity of gold or silver in bars (sometimes called specie in commerce) 

 and transmits it to Kugland in time to pay his debt at the expiration 

 of the credit that has been given him. Thus bullion acts as a medium 

 of international exchange, and performs a most valuable service to 

 society. 



In England, bullion, and chiefly bullion in bars, discharges another 

 function of vast importance, as the basis of the paper currency, so far 

 as that currency consists of the promissory notes of the Bank of 

 England, which are practically equivalent, for all the purposes of money, 

 to gold and silver coins, being made by law a legal tender at all places 

 and in payment of all debts and purchases, except at the Bank of 

 England and its branches. [See further, BANKING ; CUKREXCY.] By 

 the expression that bullion is the basis of the Bank paper currency, is 

 meant, briefly, that there must always be a certain proportion main- 

 tained between the value represented by the Bank of England notes 

 that are issued and outstanding in the hands of the public, and the 

 value of the bullion which the Bank has in its possession in its vaults 

 in Threadneedle Street, London. This is fully explained in that part 

 of the article BASKING which treats of the Bank of England. 



At the Mint, gold bullion of the standard fineness is bought at an 

 uniform price of SI. 17. lO^d. an ounce; and the meaning of the 

 expression is, that in return for 40 Ibs. of gold the Mint gives 1869 

 sovereigns, or pieces of equal fineness, weighing 40 Ibs. (See ' Edinburgh 

 Keview,' Oct. 1846, p. 328.) No seignorage is charged for this service. 

 At the Bank of England, all standard bullion offered for sale is 

 bought ; it is not discretionary with them whether they will buy or 

 not ; that is to say, as any person taking the proper quantity of gold 

 bullion to the Mint may have it coined into a sovereign, so any person 

 biking five times that quantity of gold bullion to the Bank may obtain 

 a 51. Bank of England note for it. Or in other words the Government 

 are bound by law, through the issue department of the Bank of 

 England, to do what is practically to coin into 51. notes all the gold 

 and silver that is offered for sale there. (' Evidence before Committee 

 of House of Commons, 1858, on Bank Acts, &c.,' pp. 144, 147, 148, 153, 

 155, 186, 187, 191.) 



In practice it is considered to be somewhat more desirable, for the 

 importer of bullion, to take it to the Bank than to the Mint, because at 

 the latter he must wait for the payment of the price until the bullion 

 can be coined intj sovereigns or silver money as the case may be, 

 thereby losing interest ; at the former he receives the payment imme- 

 diately in Bank notes, the Bank charging only a commission of one 

 puiinv pur ounce. But there does not appear to be much ground for 

 the preference of the one mode of exchanging the bullion over the 

 other, as it is probable that the loss of interest, by the delay at the 

 Mint, is pretty accurately measured by the charge for commission made 

 at the Bank. However, these two modes being open to him, the law 

 gives to the importer of bullion a perfect freedom, without the leave of 

 anybody, to convert his commodity into one or other of the circulating 

 mediums either the metallic or the paper currency of the country, 

 as he pleases, at an extremely small cost. 



The bullion thus obtained by the Bank of England, hi ordinary periods 

 of trade and commerce, is found i9 accumulate, and frequently it has 

 risen to very large amounts. On the other hand, all panics or periods 

 of pressure and stagnation and want of confidence in the commercial 

 b<xly of this country, have been observed to be preceded by a continuous 

 drain of the bullion out of the coffers of the Bank, arising from bullion 

 being in demand for exportation. The panics of 1783, 1793, 1795, 

 1797, 1816, 1825, 1836, 1840, 1847, 1857, were each of them preceded 

 l>y such a drain. The exports of the precious metals in the course of 

 1825 repeatedly, it has been stated, amounted to a million sterling a 

 month. Hence the state of the bullion in the Bank, as shown in the 

 lTiodiual returns of its state which the Bank is by law obliged to 

 publish, furnishes a criterion of the state of commerce, and of the money 

 market, of great value to bankers and merchants ; enabling them, to a 

 li:rable extent, to be early aware of the approach of a season of 

 pressure and failure of confidence, when there will be a demand for 

 the legal tender in payment of debts, and to make their preparations 

 iingly. This is done by converting outstanding securities into 

 iii>.iii-y and Bank of England notes, by reducing the number and 

 magnitude of their transactions, and by other measures. Bullion, 

 therefore, in this point of view, is closely connected with questions of 

 currency and commercial prosperity. [CDRUBCT.l I* ua8 been 8U P' 

 posed that the oblig.ition upon the Bank of England to give their notes 

 for all the bullion that may be offered to them, whether they want it 

 or not, hod an effect, by increasing beyond the wants of the country 

 the circulating medium, to depress the current rate of interest, and so 

 cause lirit.irth capital to seek investment in countries, such as America, 

 \vhrn- higher interest was, and sometimes in the event fallacimiHly, 

 lirl'l out; but the highest authorities on the subjects of circulation, 

 tin: iimncy market, and commerce, are confidently of opinion that no 

 jiart of the cause of the low rate of interest, which sometimes prevails 



in this country, is to be attributed to this source. Perhaps this question 

 deserves further investigation ; because, whatever tends materially to 

 depress the rate of interest has been shown, by modern experience, to 

 be a source of evil upon the whole ; it not being in these times true, 

 as perhaps it might have been according to the experience of the less 

 speculative times in which David Hume wrote, that " Interest is the 

 barometer of the state, and its lowness is a sign, almost infallible, of 

 the flourishing condition of a people." (' Essay on Interest.') 



Until of late years, there was no means of ascertaining the quantities 

 of bullion imported and exported in this country ; the official tables 

 not taking notice of transactions in specie. (Hamilton, ' Progress of 

 Society,' p. 315.) Now (1859), however, it is otherwise; and the fol- 

 lowing table,, which was prepared by the authorities of the Bank of 

 England in 1858 for the use of the Committee of the House of Commons 

 named above, gives an interesting view of the additional supplies of 

 the precious metals which have been poured into Europe. In 1849, 

 the newly-discovered gold mines of California began to add perceptibly 

 to the arrivals of gold in Europe ; in 1851, the supply was increased 

 by the still more fertile discoveries in. Australia, &e. The result is 

 this: 



ESTIMATED INCREASE op THE EUROPEAN STOCK OP BULLION IN SEVEN YEARS. 



Imports from the producing 

 Countries. 



Exports to the East from Great 

 Britain and the Meditei raneau. 



Years. 



1851 , 



1852 , 



1853 , 

 1854 

 1855 

 1856 

 1857 



130,878,000 



29,870,000 



5,420,000 



56,676,01)0 



Thus the total import of gold in the seven years may be put at 130 

 millions sterling ; the exports of gold bullion and British gold coin to 

 India, China, Australia, the Cape of Good Hope, Brazils, West Indies, 

 Uniti'd States of North Ajnerica, &c., may be taken at 224 millions; 

 leaving an increase in the European stock of gold bullion of 107 ^ mil- 

 lions sterling. Then the imports of silver from the producing countries 

 in the same seven years being 29,870,000/., and the exports to India 

 and China, 56,676, OOO/.; make the quantity of silver withdrawn from 

 the European stock to be 26;800,000/. Therefore, on the whole, the 

 estimated increase on the stock of European bullion is equal to 

 80,700,000^ (' Companion to the Almanack,' 1859, p. 170 ; ' Report of 

 Committee on Bank Acts,' 1858, pp. iii., iv.) 



It may be worth noting, however, that from 1810 to 1833 the supply 

 of the precious metals was considered to have decreased to an extent 

 unknown for three centuries previously ; according to Jacob, at a rate 

 not less than 20 per cent. ; and in proportion as the European and 

 American trade with India and China increases, the stock of silver 

 bullion may be expected to decrease in Europe, because that trade, to 

 a great degree, is carried on by means of silver ; that is, instead of 

 exports from the East being paid for in European or American manu- 

 factures, the returns for the most part are made in silver bullion. 

 Therefore, until a change takes place in the habits of the people of 

 China and India, causing a demand for the articles in general demand 

 among more advanced and civilised populations, and in the absence of 

 an increase in the average supplies of silver from the mines, the stock 

 of it in Europe must necessarily diminish. 



The increase in the uses to which bullion, especially gold bullion, 

 has been applied of late years in this country is very perceptible. Gold 

 is much more extensively anct'generally used for plate, in the making of 

 watch and pencil cases, spectacles and eye-glasses, earrings, studs and but- 

 tons, &c., and much of tener met with in the shape of trinkets and articles 

 of bijouterie, than formerly. The gold consumed in gilding at Birming- 

 ham alone is worth 50,0001. annually. (Whately, ' Lectures on Polit. 

 Econ.,' p. 156.) Also, the quantity of bullion thus employed never 

 suffers any perceptible diminution ; because, in general, articles of 

 plate, ornament, bijouterie, and trinkets are not melted down when the 

 price of bullion in the general market is high, with the intention of 

 replacing them when bullion falls : it is found by experience that the 

 cost of manufacturing is such as to prevent that : over and above the 

 consideration that a peculiar pride is felt in the possession of such 

 articles, which causes, in most persons, a strong reluctance to part with 

 them. Hence the quantity of bullion which is employed in the foims 

 of decoration and ornament, and generally in application to the arts, in 

 any of the civilised countries of the world, would supply a kiud of test 

 or measure of the wealth of the country ; because it is, in ordinary 

 times, subject to no variation except that of increase : but there are 

 no means of ascertaining the quantities of bullion thus used. 



Nor is it more practicable to ascertain the amount of bullion which 

 is in the hands of the people, in this country, at any given time ; because 

 large proportions of the metallic, especially the gold, currency, are at 

 times withdrawn from the circulation in order to be exported as bul- 

 lion, when the state of the exchanges renders such exportation profit- 

 able. [ExciiANUKS.] It may however be interesting to see the amount 



