178 



ON THE PROVINCIAL CURRENCY. 



[1853. 



per coinage may be left out of consideration as of inferior impor- 

 tance. 



In the system of the United States, since the year 1834, the 

 unit adopted as standard is the Silver Dollar, contain 371^ grs. 

 pure silver, and this is subdivided into 100 cents of copper. The 

 Gold Coin which is also in use, is the Eagle, containing 232 1-5 

 grs. pure gold, and fixed by law as the equivalent of 10 dollars. 



In each case altjiough the standard is ostensibly of one metal, 

 gold in sterling- and silver in the other, yet by reason of the exis- 

 tence of these fixed legal equivalents of coins of the other metal 

 to the standard, it is plain that each country in reality uses a 

 double standard. Now, Gold and Silver, being metals each pos- 

 essiug an intrinsic value, will always like other commodities have 

 a market value relatively to each other, a value which is quite 

 independent of legislative enactments, and rarely if ever coincides 

 ■with that fixed by law : so that the I'atio between the metals is 

 by law said to be constant, while in fact it is perpetually varying, 

 and in all double currencies of this kind, one metal is certain to 

 be under^•alued as compared with the other. Thus it was in 

 France and England, towards the close of the 18th century: 

 England over-valued gold, and France over-valued silver, and 

 the effect was the disappearance of gold from France and of silver 

 from England. The inconvenience resulting in this way does 

 not appear to be capable of evasion altogether ; its efiects are 

 somewhat obviated in sterling by the enactment that silver is not 

 a legal tender to the amount of more than £2, and this confines 

 the evil within small limits, and render's a change in the amount 

 of metal contained in one of the coins necessary only at long in- 

 tervals. How it will then be effected is not stated, but most 

 probably it will be by altering the amount of silver in the lesser 

 coins. In the United States, however, no such restriction exists, 

 nor indeed could it exist so long as the small coin is the standard, 

 for all large payments are made in gold and no legal limitation 

 to the amount of tender could possibly be made. Here, there- 

 fore, the evil exhibits itself in its full eiiects, and the only remedy 

 will be by successive enactments reducing the amount of gold in 

 the Eagle — this has ah-eady occurred even in the short period 

 that has elapsed since the construction of the federal coinage, 

 namel)', in 1834, when the Eagle was reduced from 247^grs."of 

 pure gold to 232 1-5, more than 15 grs., or about 6^ per cent. 

 In this respect Great Britain seems to have a decided advantage 

 over the States.* 



"Before the discovery of the mines in America the value of gold 

 as compared with that of silver seems to have varied in the difl'er- 

 rent mines of Europe between the proportions of 1 to 10 and 1 

 to 12, but about the middle of the l7th century it came to be 

 regulated at 1 to 14 or 15 from which it not has since varied 

 much." In sto'ling an ounce of gold is worth a little more than 1 5 

 ozs. of silver, and in federal money, an oz. of gold is worth a little 

 less than 1 6 ozs. of silver : it thus appeai-s " that gold has been ris- 

 ing in its nominal value or in the quantity of silver exchanged for 

 it: both metals have sunk in real value or in the amount of labour 

 they could pniclinsc.but siKer has sunk more than gold." Whether 

 the em.riii. Ills. lis.os,..ii,^,,f gold in Australia and California will 

 check this duwiiwanliciiduncy of silver is not easy to sa3% 



The diflerence pointed out between the relative values 

 of the two metals as regulated in England and Ame- 

 rica renders it difficult to institute a strict comparison 

 between their respective coins. The £ sterling compai'ed with 

 the Eagle by means of the amounts of pure gold contained in 

 each is worth $4 S6|, wliich is its value as fixed by the United 

 States Mint, and its legalized value is $4 84. Again, the ster- 

 ling shilling compared with the silver dollar by the amounts of 



• Since the above wns wrillen a Bill lias passed the United Slates Senate, 

 assimilating the practice b( the Stales in this respect to that of Great Britain, 

 and in efTecl nbanduning the silver standard. 



pure silver contained in each, should be worth 21.74 cents, while 

 its leo-al value is 23 cents, and its mint value, calculated ajjpar- 

 ently on the English scale, is 24-3-. 



With regard to the utility of each system for the convenience 

 of internal traffic, the American is, without doubt, theoretically 

 the most perfect that can be conceived, while the sterling sub- 

 division of 4, 12 and 20 are about as awkward as can be. The 

 sterling, howevei', has the advantage of possessing coins of more 

 con\enieut amount, and embracing a larger range, the £ being 

 much better than the dollar for large transactions, and the far- 

 thing more useful than the cent in retail trade. The reasons, 

 however, which have caused the practical working of the Ameri- 

 can system to be so far removed from its theoretical perfection 

 will be touched on bye and bye. 



It is clear that the two systems cross each other in such an 

 inextricable manner as to gi\e no hope of accommodation between 

 them, and the construction of any system to harmonize perfectly 

 with both would be altogether an insane attempt; let us examine 

 then how for our present Provincial Currency succeeds in the 

 adaptation. I hei'e speak of the Provincial Currency as estab- 

 lished by the Acts 4th and 5th, 13th and 14th Victoria, and not 

 of the various currencies of exchange in use in different depart- 

 ments, which it would be only a waste of time to enter into. 



Our currency is subdivided by 20, 12, 4, starting from the £ 

 with shillings, pence and farthings, thus adopting the sterling 

 measure in its most objectionable part. The £ sterling is said to 

 be the standard of value, and denominated £1 4s. 4d.: as the 

 £ sterling might have been called by any other name, the 

 denomination being quite arbitrary, it will be curious to examine 

 the origin of this extraordinaiy number £1 4s. 4d. which is our 

 unit. It appears to have taken its rise in the state paper-system 

 adopted b}^ the ancient British Colonies of America. " The 

 paper currencies of North America, says Adam Smith, ' consisted, 

 not in bank notes payable to the bearer on demand, but in a 

 government paper, of which the payment was not exigible till 

 several yeai-s after it was issued ; and though the colon}' govern- 

 ments paid no interest to the holders of this paper, they declared 

 it to be, and in f;wt rendered it, a legal tender of payment for the 

 full value for which it was issued. But allowing the colony 

 security to be perfectly good, £100, payable for example 15 years 

 hence in a country where interest is at 6 per cent, is worth little 

 more than £40 ready money. To oblige a creditor, therefore, to 

 accept of this as full payment of a debt of £100 actually paid 

 down in ready money was an act of such violent injustice as has 

 scarce, perhaps, been attempted by the government of any other 

 country which pretended to be free." 



Of course this ingenious "scheme of fraudulent debtors to 

 defraud their creditors," as Smith calls it, failed as all leg- 

 islative interference with the natural laws of trade must fail, 

 and in course of time the exchange with Gi'eat Britain varied so 

 widely that £100 sterling came to be cousidered the equivalent 

 in some colonies of £130, and in others of so groat a sum as 

 £1100 currenc}', this diflerence in the value arising from the 

 difference in the quantity of paper emitted in the different colo- 

 nies, aud in the distance and probability of the term of its final 

 discharge and redemption. 



Another instance I will quote from the same authority. 



The colony of Pennsylvania, before any emission of paper 

 money, had raised the denomituition of its coin and had, by act 

 of assembly, ordered 5s. sterling to pass in the colonies for 6s. 3d., 

 and afterwards for 6s. 8d. 'Ihe pretence for doing so was to 

 prevent the exportation of gold and siher, by makiiif; equal 

 quantities of these mct;ils pass for greater sums in the colony than 

 they did ill the mother country. It was found, however, that the 

 price of all goods from the mother country rose ex.actly in pro- 



