149 



In 1775, Adam Smith attempted to ascertain the depreciation 

 of the precious metals from a comparison of the average prices of 

 wheat in England at different periods, and he inferred that there was 

 no very sensible depreciation before 1570; but from this period to 

 about 1640, that gold had depreciated to a third, and silver to a fourth 

 of its former value; and that there either had been no subsequent de- 

 preciation to his time, or that silver had somewhat risen in value. 



If these views of Dr. Smith be correct, we ought not to expect any 

 depreciation of both the metals until the quantity now in Europe shall 

 have received an accession of 54 per cent, which, amounting to 2528 

 millions, would require a net annual addition of 50 millions for 50 

 years, or of 100 millions for 25 years. And as the amount now in 

 Europe and America is about fifteen times its amount before the dis- 

 covery of America, we should not experience the same depreciation 

 as was produced by that discovery, until the quantity now in exist- 

 ence had, in like manner, received a fifteen fold increase, that is, had 

 reached the incredible sum of 70,000 m llions. 



It indeed appears highly probable, from various facts, that Smith 

 has underrated the depreciation in the first 70 years before 1560, and 

 overated it in the 70 years succeeding. Yet, after making ample al- 

 lowance for these errors, the result will not be materially different. 



There seems then to be no ground to apprehend a depreciation of 

 both metals, and a consequent general and permanent rise of money 

 prices. But not so with gold. The extraordinary additions lately 

 made to that metal by the Russian mines, and yet more by those of 

 California, and which are still greatly on the increase, must neces- 

 sarily depreciate that metal. The quantity drawn from all those 

 mines during the present year will, judging from the amount already 

 received, be not less than 60 millions, which is nearly five times as 

 much as was produced by the American mines at the period of their 

 greatest productiveness. It is nearly 4 per cent, on the supposed 

 amount of gold in Europe and America; while the annual increase 

 of gold from the American mines, during the period of depreciation, 

 never exceeded 3 per cent. Great as is the amount now yielded, it 

 may in a year or two be more than doubled. 



The probable effects of this enormous increase are — 



1. An alteration between the price of gold and silver. From 16 

 for 1, as is now the proportion, gold may fall to what it was in many 

 countries before the discovery of America, to 10 for 1, or yet lower, 

 before the natural checks of a decreased production and increased con- 

 sumption restore the equilibrium. 



VOL. V. X 



