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• Translator's Preface
• Section I.: Preliminary Observations.
• Chapter I.: The Question Stated
• Chapter II.: Preliminary Observations On the Rise of Prices Which Has Characterised the Last Few Years.
• Section II.: An Appeal to Some of the Fundamental Notions Upon the Nature and Characteristics of Money.
• Chapter I.: What We Ought to Understand By Value and Price.—twofold Definition of Money.—the Standard Or Fineness of Money.
• Chapter II.: Of the Meaning of the Word Standard.— the Metal-standard Is That From Which Is Derived the Monetary Unit.—the Two Ideas Standard and Monetary Unit Imply Each the Other.
• Chapter III.: Of the Character of Exchanges As Affected By the Invention of Money —how the Rise and Fall of the Precious Metals Are Manifested In the Course of Trade.—phenomena of the Rise and Fall In Commodities.
• Chapter IV.: On the Possibility of Conferring the Quality of Standard Upon Two Metals At Once.
• Chapter V: Of the Meaning of Certain Words Specially Applicable to Money and the Precious Metals.—price, Value, Premium, Dearness, Cheapness
• Section III.: Of the Present Production of Gold and Its Outlet.
• Chapter I.: Of the Increase In the Present Production of Gold As Compared With the Past —the Extended Coinage of Gold Which Has Followed.
• Chapter II.: Diminished Coinage of Silver In France—gold Is Already At a Discount In Comparison With Silver.
• Chapter III.: Extraordinary Exportation of Silver From the Civilised Countries of the Western World Towards India and China —to What Extent It Is Likely to Continue.
• Chapter IV.: France Serves Temporarily As a Parachute to Retard the Fall of Gold.
• Chapter V.: Whether the Extraordinary Production of Gold Ought to Be Considered As an Ephemeral Accident.—the Crushing of the Quartz Veins —mines In Siberia and Elsewhere.
• Section IV.: On the New Outlet That May Be Expected For the Production of the New Gold Mines, and Whether It Will Be In Proportion to the Extent of This Production.
• Chapter I.: Of the Outlet Afforded By Those Countries Which At Present Have Evidently an Insufficient Proportion of Metal In Their Currencies.
• Chapter II.: Of the Increase of Gold Money Which May Arise From the Development of Business, and the Increase of Population.—of Wear and Tear.—of Hoarding.—of Shipwrecks.
• Chapter III.: On the Employment Which Habits of Luxury May Offer to the Gold of the New Mines.
• Chapter IV.: Conclusion of the Preceding Chapters.—the Fall of Gold Very Probable, If Not Inevitable, In Relation to All Other Commodities.
• Section V.
• Chapters I. to V.: On the Part Assigned to Gold In the Monetary Legislation of France.
• Section VI.: Consequences of the Fall In the Value of Gold.
• Chapter I.: A General Distinction Between Those Private Incomes Which Will, and Those Which Will Not Be Affected. of a Certain Collective Loss Which the People of France Will Suffer.
• Chapter II.: Of the Sufferings and Difficulties Which Will Accompany the Transition.
• Chapter III.: On the Gain Which Would Result to Certain Classes of Persons, and to Society, From the Fall In Gold. the Saving to the State From the Payment of the Dividends On the Public Debt.
• Section VII.: Of the Measures to Be Taken to Avert the Evil Effects of the Fall of Gold.
• Chapter I.: Case of a State Like England, Where Gold Is the Standard, and Where There Is No Other Money But Gold.
• Chapter II.: Case of a State Such As France, Where There Is a Silver Standard, But Also a Gold Currency.
• Chapter III.: The Measure Here Recommended Is a Necessary Complement of the Law of Germinal, Year XI.
• Chapter IV.: On Some Inconveniences Inherent In the Combination, Respecting a Gold Currency, Recommended In This Work.
• Chapter V.: Of a Plan Recommended For Maintaining the Parallel Circulation of Silver and Gold.
• Chapter VI.: Of the Resolutions of a Commission Appointed By the Minister of Finance In Mdccclvii.
• Chapter VII.: Of Various Acts Which the Legislation of the Ancient Regime Upon Money Treated As Crimes, and With Regard to Which Some Persons of Our Day Propose to Establish Penalties. —selecting, and Melting; Trade In Coins; Exportation.
• Chapter VIII.: Of a Different Solution Which Has Been Recommended, and Which Would Consist In the Adoption of a Gold Standard.
• Chapter IX.: Appreciation of the System Which Consists In Adjourning Indefinitely the Legislative Solution.

SECTION I.

preliminary observations.

CHAPTER I.

the question stated

If we go back in imagination three centuries, and picture to ourselves the most striking characteristic which the aspect of Europe then presented, we shall behold a universal excitement caused by the discovery of a new continent, which had been, sixty years previously, brought to light by a Genoese navigator, whose genius and persistent daring had been stimulated by a lucky miscalculation of the geographical position of China. In this new world, to which Columbus had traced the path—not merely for Castille and Leon, as is alleged in the inscription placed on his tomb by the tardy gratitude of posterity, but for the whole civilized world—mines of gold and afterwards of silver (especially the latter), of unheard of richness, presented themselves to the cupidity of the conquerors. The most enterprising spirits of the Iberian peninsula hastened across the ocean to possess themselves of treasures, the splendour of which had been exaggerated in their excited imaginations; and they were followed by a multitude of daring adventurers from all parts of Europe, who precipitated themselves on the coast of America, all in quest of mines of gold and silver.

It was in Peru and Mexico, the provinces containing the richest mines and the greatest supply of labour, that the precious metals were first obtained by an organised system of production. From 1492, the year of the discovery of the New World, to 1500, it is doubtful whether it yielded on an average a prey of more than 1,500,000 francs (£60,000) a year. From 1500 to 1545, if we add to the treasure produced from the mines, the amount of plunder found in the capital of the Montezumas, Ténochtitlan (now the city of Mexico), as well as in the temples and palaces of the kingdom of the Incas, the gold and silver drawn from America did not exceed an average of sixteen million francs (£640,000) a year. From 1545, the scene changes. In one of the gloomiest deserts on the face of the globe, in the midst of the rugged and inhospitable mountain scenery of Upper Peru, chance revealed to a poor Indian, who was guarding a flock of llamas, a mine of silver of incomparable richness. A crowd of miners was instantly attracted by the report of the rich deposits of ore spread over the sides of this mountain of Potocchi—a name which for euphony the European nations have since changed to Potosi. The exportation of the precious metals from America to Europe now rose, rapidly, to an amount which equalled, weight for weight, sixty millions of francs (£2,400,000) of our day, and it afterwards rose even to upwards of eighty millions. At that time such a mass of gold and silver represented a far greater amount of riches than at present. Under the influence of so extraordinary a supply, the value of these precious metals declined in Europe, in comparison with every other production of human industry, just as would be the case with iron or lead, if mines were discovered which yielded those metals in superabundance, as compared with their present consumption, and at a much less cost of labour than previously, just in fact as occurs in the case of manufactures of every kind, whenever, by improved processes, or from natural causes of a novel kind, they can be produced in unusual quantities, and at a great reduction of cost.

This fall in the value of gold and silver, in comparison with all other productions, revealed itself by the increased quantity of coined metal which it was necessary to give in exchange for the generality of other articles. and it was thus that the working of the mines of America had necessarily for effect a general rise of prices, in other words, it made all other commodities dearer.*

The fall in the value of the precious metals, or that which means the same thing, the general rise of prices, does not appear to have been very great, out of Spain, till after the middle of the 16th century. Shortly after the commencement of the 17th century, the effects of the productiveness of the new mines and of the diminished cost of working them were realised in all parts of Europe. For the silver, which had been extracted in greater proportion than the gold, and on more favourable terms, the fall in value had been in the proportion of 1 to 3. In transactions where previously one pound of silver, or a coin containing a given quantity of this metal, had sufficed, henceforth three were required,† At Paris a quantity of wheat, which we now call a hectolitre, cost, before the voyage of Columbus, from 12 to 15 grammes weight of silver, which is the metal contained in from 2 francs 67 centimes to 3fr. 33c. (2s. 6d. to 2s. 9d.) This quantity was henceforth worth at least from 45 to 50 grammes, or the silver contained in from 10 to 11 francs and upwards (of our money, 8s. 4d. to 9s. 2d.); it was even much higher, for some time, at Paris, after the first quarter of the 17th century. The change in gold, although obvious, was not so great as in silver.

After having been arrested for awhile in this downward course, and even after having witnessed for a time a tendency to an upward movement, the fall in the value of the precious metals, and the corresponding rise in prices, resumed their course, under the influence of the same causes, until towards the end of the 18th century, without however manifesting their influence so widely or intensely as had been witnessed after the first development of the great American mines. We find, as the result, that during the first half of the 19th century, the value of silver fell to about the sixth of what it was before the discovery of America, when compared with the price of corn, which people have agreed, somewhat arbitrarily it must be confessed, to take for a fixed measure of value. The hectolitre has sold on an average, during this half century, at Paris, for about 20 francs (16s. 8d.), or 90 grammes of silver.

In our day we seem destined, like our fathers of three centuries ago, and from the same causes, to witness the spectacle, or in other words the shock and crisis, of a universal rise in prices;—with this difference, however, that up to the present time the new discoveries affect only the production of one of the precious metals, gold, of which vast deposits of immense richness hitherto unknown have been successively discovered and attacked with astonishing impetuosity. In California, in the very year when the rule of an industrious people, full of energy and intelligence, superseded the drowsy authority of a handful of monks maintained there by Mexico, splendid mines of gold were opened upon the banks and in the beds of rivers watering the valley in which San Francisco is situated, and no sooner were they heard of than they were vigorously assailed by crowds of settlers who threw themselves headlong upon the spot from all parts of the world. This was in 1848. In three years more, beyond the great ocean, the continuation of the magnificent mines of California was discovered in Australia. In that remote region, a gold-seeker, who had made his first essays in the neighbourhood of San Francisco, discovered treasures not inferior to those of the vaunted valleys of the Sacramento, and the San Joaquim. But California and Australia do not contain the only rich mines towards which the civilized world of our day have stretched forth an active and greedy hand. It is about thirty years ago that those auriferous slopes, known to the ancients, and revealed to us in a narrative, fabulous though it be, by the father of history, but forgotten by the generations who succeeded him, began to give forth a notable supply of gold in Northern and Eastern Kussia, among the Oural Mountains, and especially in Siberia, where the field of enterprise is almost boundless. The gold regions of the Empire of Eussia, of which Herodotus had given us a description, tinged with the dreams of romance, were only re-discovered by the moderns in 1774. It was in the chain of the Oural that the first discovery was made, and to which the workings were confined till a very recent year. The riches of these mines were, however, but slightly developed till after 1810. In 1816, the production was only about 96 'kitogramfnes of metal (£13,440). From 1823 a progressive increase took place. In 1830, the production according to official accounts was 5,779 kilogrammes, or about 18 millions of francs (£720,000). About this time, the auriferous deposits of Siberia became known, and from 1840 they yielded a far greater mass of gold than that extracted from the mines of the Oural.

Under the influence of this greatly increased and cheapened production of gold, it is reasonable to expect, at least in all those countries where gold circulates in large quantities, and where it is or tends to be the sole medium of exchange, a general disturbance of prices, a deeply felt derangement of interests, and a modification more or less radical in the different relations of society. To examine the causes and consequences of such a revolution, and the good or the evil which, if they have not already commenced, must hereafter spring from it, can hardly be deemed an unprofitable task. With reference to certain countries, and more especially France, it is well to consider how far this influx of gold into the monetary system is in conformity with existing laws, with the intentions of the legislator, the national honour, and the respect due to engagements contracted by the State. If it were proved that what is taking place is in violation of the spirit and letter of legislation, the best means should be sought for returning as quickly as possible to the scrupulous observance of the law.

The work which I offer to the judgment of the public will naturally divide itself under different heads. In the first place let us try to form an idea of the chances of a rise in prices, of the forces which tend to produce that result, and of those which are calculated to prevent it; and next let us see in what sense we ought to understand the monetary legislation of France, and what steps should succeed to the solution of this problem. Afterwards, we will pass to a brief explanation of the principal inconveniences which, in a political and social, as well as in an economical point of view, will attend a general rise of prices, caused by the depreciation of gold, as well as of the advantages which society and the State may derive from such a depreciation to compensate for the disorganisation it must occasion. We shall conclude with an attempt to decide what arrangements will be proper for preventing or diminishing the evil effects of an extraordinary production of the precious metal.

Simultaneously with these new discoveries of gold, a fact of grave import develops itself with reference to silver. For a few years past this metal has become, in the European market, the object of unusual demand for exportation to the East. This is evidently calculated to make the fall in gold more sensibly felt, especially in comparison with the other precious metal; for whilst the gold increases rapidly, silver becomes more scarce, and thus the divergence operates from both sides. We could not dispense with a brief investigation of the change going on in the demand for silver, were it only to endeavour to estimate its probable duration, and to form an idea of the influence which it is likely to exercise upon the fall, apparent or real, in the value of gold. The natural course of this work will soon furnish an occasion for this investigation.

CHAPTER II.

preliminary observations on the rise of prices which has characterised the last few years.

Before entering upon the consideration of the mode in which the new gold discoveries must be considerd as the probable cause of the general rise of prices, in the countries where gold is by law or practice the monetary standard, it may not be out of place to say a few words in order to avert a possible confusion. This dearness is not a fact appertaining to a future more or less distant; the present time is characterised by an all but universal rise of prices, at least it has been so up to the reaction which dates from the close of 1857. There are few productions which had not risen in price during the last five or six years. Even after the violent crisis which shook the four quarters of the globe, the high prices of several articles are still sustained. Many persons have not hesitated to attribute this unyielding rise to the influence of the new gold mines. I do not deny that the unusual production of this metal may have been in part the cause; but other causes may be mentioned which have weighed considerably in the scale.

Speaking of a great number of productions of the first necessity, of the raw materials of industry, and consequently of manufactured articles, especially of those upon which the price of the raw material exercises the greatest influence—they are in general the commonest qualities— we may trace a rise in price quite distinct from that which could have arisen from an increased production of gold. It arises from the fact that, in the case of these raw materials or manufactures, the relation between the supply and demand in the market, which necessarily decides the price, has undergone a great change. The demand having surpassed the supply, the consumer has found himself placed at the great disadvantage of being obliged to buy in a dearer market. This rise in prices, special and distinct in its origin, must be attributed to causes which in their effects at least, if not in their very nature, are transitory.

In the first place it may be traced to the fact that various classes of society have indulged in an increased consumption, either from their having greater resources, or from their habits of economy having undergone an unfavourable change. In France a great number of persons have been enriched by the immense rise in the value of railway shares, and they have set an example of extravagance which has not wanted imitators. As respects the working classes, the impulse given to public works, and to various industrial undertakings, has caused an extraordinary demand for their labour, and the consequent increase in their wages has enabled them to consume a greater quantity of certain articles of subsistence, and of those manufactured products which are most accessible to the masses of mankind. One of the effects traceable to this cause is the high price of butcher's meat which we have lately witnessed in France.

In the next place the moderate, not to say the inferior harvests, have in later years been a sufficient reason for the high price of many articles. Bread and wine have risen because of the scarcity of corn, and of the disease which has ravaged our vineyards. The rise in bread has produced a similar effect upon other articles of ordinary subsistence. A raw material, in great use among the manufacturers of Europe, silk, is one of the objects which have undergone the greatest advance; and this also has arisen from a failure of the crop in the Western World. This has been sufficient to account for the high price of the woven fabrics, for the cost of the raw material is a principal, if not the very first element, in the price of silk goods.

Moreover, it cannot be doubted that a spirit of wild speculation has spread itself more or less throughout the commercial world, and that this has not been without its effect upon the prices of some commodities.

I only allude to these circumstances lest we should confound the effects, which must be regarded as accidental and transient, with the results produced by the new discoveries of gold.

In the following pages, I shall generally reason as if these new gold mines had not yet produced any appreciable effect. I trust I shall not be blamed for this reserve. It strikes me that it will not weaken the conclusion to which this work will lead,—but have a contrary effect.

[*]This phenomenon, sufficiently clear in itself, will be still further explained in Chapter III. of Section II.

[†]In assigning this proportion, it is hardly necessary to say that I assume other things to be equal; I mean that other articles were in the same abundance, and produced under the same circumstances as before. For a commodity which might have become relatively more abundant, and of which the process of production should have been improved, there would have been a cause for the reduction of price, and this cause would have to a certain extent counterbalanced the dearness caused by the fall in the value of the metals from which money is coined.