242 



CUERENCY. 



1821, this country sold gold to England at a 

 premium of from 5 to 8 per cent. In more 

 recent times France sold silver to India at a 

 Jarge profit; and at the present time the Ger- 

 mans are paying a heavy premium on gold, 

 which is inaccurately described as the sale of 

 silver at a discount. This premium on gold is 

 for them a loss without any compensation, and, 

 so far HS they have proceeded in the policy of 

 establishing a gold standard, it has proved an 

 unmitigated injury to the commercial and in- 

 dustrial interests of the world, and especially 

 of Germany." 



The world's gold-yield has diminished since 

 1856 considerably more than the silver-yield 

 has increased. According to the estimates of 

 Tooke and Newmarch, the Californian and 

 Australian gold-production averaged per an- 

 num, during the 5 years ending 1856, 29,176,- 

 000, and during the 5 years ending 1875, 20,- 

 308,200, showing an average annual reduction 

 of over 44 million dollars; according to Sir 

 Hector Hay, the reduction of the world's an- 

 nual production was from 29,935,000 in the 

 former period to 19,640,000, making the de- 

 crease in the annual yield over 51 million dol- 

 lars. The products of the gold-diggings are 

 still annually decreasing. The world's stock 

 of the precious metals in coin, bars, and plate, 

 in 1848, the year of the California gold-dis- 

 coveries, is estimated to have been 2,800 mill- 

 ion dollars in gold and 4,000 millions in silver, 

 and in coin and bullion alone, 1,200 million 

 dollars in gold and 2,200 millions in silver. 

 During the 5 years ending with 1856, the 

 total production was 950 million dollars in gold 

 and silver, and 750 millions in gold alone, an 

 addition to the total stock of 14 per cent., and 

 to the stock of coin and bars of 28 per cent., 

 and to the stock of gold of 25 per cent., and 

 to the stock of gold, exclusive of plate, of 

 62 per cent. During the 28 years ending 

 in 1875, the aggregate production of gold 

 and silver was 4,582 million dollars, which was 

 an addition of 67 per cent, to the stock of 1848, 

 and of 135 to the stock of coin and bullion 

 alone ; the gold-production of the world during 

 the same period aggregated 3,215 million dol- 

 lars, an increment of 115 percent, to the gold- 

 supply in 1848, and of 268 to the gold coin and 

 bullion. This large increase in the gold-yield 

 affected prices but very slowly, each year's 

 production increasing the total stock but by a 

 small percentage. In 1856, although the effect 

 of the new gold-supplies was visible in in- 

 creased commercial activity, there was no in- 

 crease in the average prices of commodities. 

 Prices reached their highest level in 1865. 

 The influence on prices of a new accession to 

 the world's stock of the precious metals is al- 

 ways very slow. The influx of gold and silver 

 into Europe, after the discovery of America, 

 did not begin to affect^vah>es until 1570, 50 

 years after the entrance of the Spaniards in- 

 to Mexico, and 30 years after the discovery 

 of the Potosi silver mines, and the highest 



range of prices was not attained until 1640. 

 The stock of gold and silver in Europe, at the 

 time of the discovery of America, is estimated 

 by Chevalier to have been only 193 million dol- 

 lars, while that of Asia may have been 1,500 

 millions. The metallic money of the Roman 

 Empire, in the beginning of the Christian era, 

 amounted to 1,800 million dollars. The whole 

 course of the 15 centuries, during which this 

 stock shrank to less than one-ninth that amount, 

 was marked by economic stagnation ; popula- 

 tions dwindled, and endless miseries weighed 

 upon the Western world. It was the silver from 

 America which revived Europe from the leth- 

 argy of the Dark Ages. Periods of increasing 

 money have always been times of productive 

 activity and universal prosperity, while periods 

 of shrinking money and falling prices are ne- 

 cessarily accompanied by commercial stagna- 

 tion and all the miseries which follow in its 

 train. The modern history of prices reveals 

 that, from the outbreak of the revolutions in 

 the Spanish-American states, there was a con- 

 tinuous rise in the value of money until the 

 discovery of the Californian gold-diggings, in 

 1849 ; during this period, according to Jevons, 

 money gained 145 per cent, in purchasing 

 power, or, in other words, prices fell 60 per 

 cent. After the opening of the Californian 

 and Australian mines there was a gradual fall 

 in the relative value of money ; the highest 

 range of prices was not attained until 1865, 

 the mean fall in the value of money being 

 about 15 per cent. Since 1865 this decrease 

 in the purchasing power of money has been 

 quite regained, and prices stand to-day on as 

 low a level as they did in 1849. Since 1873 

 another period of commercial depression and 

 popular misery and destitution has set in all 

 over the world, whose only cause is that which 

 occasioned a similar condition of affairs before 

 the gold-discoveries in California, namely, a 

 diminution in the world's supplies of money, 

 and the consequent shrinkage in prices. This 

 is partly due to the decreased yield of the 

 mines, and partly to the folly of the govern- 

 ments, who began, at the date when the pres- 

 ent troubles commenced, to deprive one of the 

 precious metals of its monetary functions. 

 The amount of silver now in circulation is 

 about equal to that of the gold currency. The 

 pressure of the stationary or diminishing sup- 

 plies of money furnished by both metals to- 

 gether on the business of the world, whose 

 natural growth demands a moderate increase 

 of the medium of exchanges, has been relieved, 

 though not entirely, by the liberation of the 

 metallic currency of countries which have sus- 

 pended specie payments, to wit, Russia in 1857, 

 the United States in 1862, and Italy in 1866. 

 The suspensions in the Argentine Confedera- 

 tion in 1857, in Peru and Austria in 1868, and 

 in France in 1870, also contributed, though in 

 a less degree, to augment the stock of specie 

 in the metal-paying countries, and to lessen 

 the demand for the annual out-turn of the 



