Front Page Titles (by Subject) 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. - On the Probable Fall in the Value of Gold: The Commercial and Social Consequences which may ensue, and the Measures which it invites
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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. - Michel Chevalier, On the Probable Fall in the Value of Gold: The Commercial and Social Consequences which may ensue, and the Measures which it invites 
On the Probable Fall in the Value of Gold: The Commercial and Social Consequences which may ensue, and the Measures which it invites. Translated from the French, with preface, by Richard Cobden, Esq. (New York: D. Appleton and Co., 1859).
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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.
What are the additional purposes to which gold may be applied, and will they be sufficiently extensive to balance the increased production? And, first, as to the place it will find in the monetary system of the various countries where at present paper forms the principal instrument of exchange, and which are desirous of giving to their circulation the ballast of a greater quantity of metal, and particularly of gold. The United States and Austria are especially cited as being of this category. Turkey is also spoken of as a country where money of every kind is very rare. In the next place we are reminded of the necessity which exists in those countries sufficiently supplied with a metallic currency of calling in and restoring the coinage; that is, of replacing the portions of each coin which have been lost in circulating from hand to hand, and which, in the aggregate, amounts to a large sum; it is called the wear and tear. With reference to all the countries where gold is used for money, we are told also that the quantity of coins in circulation must be augmented in proportion to the constantly increasing population, and to the progressive movement of commercial affairs throughout the civilised world. Then it is said that the growing luxury will call for the fabrication of a great quantity of jewellery, of plate, and gold lace; that to this must be added an increase in gilding, of which so much is in use, especially in Paris. Some other modes are cited, by which we are told a certain proportion of metal is to be absorbed; as, for instance, by hoarding and by shipwrecks.
Let us try to form an idea of the quantity of gold that may be required for all these different destinations. Let us inquire whether the outlets which they offer, naturally and without effort, to this precious metal, be likely to be such that a large floating mass of it will not remain upon the market; for if it be otherwise, if the various employments which have just been enumerated, should not be sufficient to absorb nearly the whole quantity of gold to be produced, and that, in spending it, almost on the same conditions as at present, that is to say, in exchanging it for nearly the same quantity of corn or labour, the consequence will be inevitable: gold, to find a market, will be obliged to submit to the law which governs all commodities in excess—to lower its price; in other words, the phenomenon of a rise in the price of raw materials, articles of subsistence, and merchandise, will infallibly present itself.
of the outlet afforded by those countries which at present have evidently an insufficient proportion of metal in their currencies.
It is true that the United States, after having adopted gold as their monetary standard, have more recently proposed to employ a considerable quantity of that metal, and which they have indeed coined; but how much of it have they retained, and how much do they really require? Gold, which in France is found extremely portable, because there the people had been accustomed to a silver currency, appears somewhat inconvenient to the inhabitants of the United States, in consequence of their having adopted the use of bank notes for the money required to be carried about their persons; in that country the bank note supplies all the daily and current wants, it being issued for very small sums. In those States, where they are the most restricted, bank notes are in use for as small sums as five dollars (26 francs 20s. lOd.) In other States, and particularly in New York, they have dollar notes (4s. 2d.), and the notes of one State, when they are in good repute, circulate freely in others. It must also be remembered that, in the United States, private individuals have generally an account current at a bank, through which they make all kinds of payments, even down to the expenses of their households, which renders it unnecessary to retain at home any considerable sum, even in bank notes. Under these circumstances we may fairly assume that the currency of the United States would be sufficiently supplied with specie, if the circulation contained a milliard of francs (£40,000,000), independently of the silver coins which are to a certain extent in use. I should say much less, but for the exigencies of the federal government, which, for several years, has adopted the absolute law of receiving nothing but specie in its treasuries, and which thus compels foreign merchants, as well as the purchasers of the public lands, to keep by them a considerable amount of gold currency.
As respects this estimate of a milliard (£40,000,000), as the amount of gold which would suffice for the United States, it must be borne in mind that for along time this sum has been considered sufficient for England, whose population is equal to that of the United States, but where they have no bank notes of a lower denomination, excepting in Scotland,* than 124 francs (£5). In our day, it is not likely that the United Kingdom will require, under ordinary circumstances, much more than a milliard and a half of gold currency (£60,000,000). Moreover, where, as in England, in all payments below 125 francs (£5), specie is required, it is natural that gold should form a large part of the currency. But there can be very little occasion for gold, on the contrary, where, as in the United States, every payment of 26 francs (20s. 10d.), and frequently those of 5 francs (4s. 2d.) can be made in paper. It is silver that is required in countries where bank notes of so small a denomination are in use. Besides, at this very time, the United States ought to have been in possession of a milliard (£40,000,000), or more, of gold currency, if such a sum had been felt to be necessary. Since the discovery of California their mints have been in an almost unnatural state of activity, in comparison with past times. In the fifty years, from 1793 to the end of 1848, the year in which the Californian mines were discovered, their gold coinage amounted to only 81 millions of dollars (£16,200,000), or an annual average of 1,470,000 dollars (£294,000). In the seven years, from the 1st January, 1850, to the 1st January, 1857,† their mints have coined 369 millions of dollars, or upwards of 1 milliard, 900 millions of francs (£76,000,000). It is at the rate of 53 millions of dollars, or 274 millions of francs (£10,960,000) per annum, for the average of the seven years, and of 56 millions of dollars, or 290 millions of francs (£11,600,000), for the average of the last six years. Since the 1st January, 1857, this rate of production will have certainly continued. Thus, to the present time, the emission of gold coins in the United States, since the discovery of the mines of California, must have reached nearly two milliards and a half (£100,000,000); and although that country may have exported a large portion of its gold, it probably retains at this moment all that it requires, and therefore it is not to North America that we must look for an outlet for the gold of the new mines. It may not, on this point, be superfluous to add that, probably, that country may-have kept a part of the gold which it had coined prior to 1850, and which had attained, relatively, increased proportions during the later years. In 1847, the gold coined in the United States amounted to more than 20 millions of dollars, or 104 millions of francs (£4,160,000).
I come next to Austria. Let us suppose that she coins gold to the amount of half a milliard (£20,000,000); it is more than there is reason to expect from her, and for many reasons. In the first place, it is not possible to see how the Austrian Empire could suddenly have need of such an extensive gold coinage. The country has hitherto had a silver rather than a gold currency. The pieces of silver, 20 kreutzers, or 87 centimes (9d.), were the money most generally met with there, before the Empire fell under the regime of paper money, which, as is known, dates from 1848, and the greater part of those pieces, though withdrawn from circulation, are doubtless in the country. The metallic currency of this Empire presented these two characteristics; it was scarce; and it consisted principally of silver coins of a small denomination, because the Austrian public has been accustomed to the notes of the Bank of Vienna, which were issued for very small sums, even before they had a forced circulation. Notes of 10 florins or 26 francs (20s. 10d.), and of 5 florins or 13 francs (10s. 5d.) were in abundance. To this day, we have no reason to believe that the Austrian government, in its efforts to return to specie payments, which, unhappily, it has not yet accomplished (Spring, 1858), contentplates any change'of system by which notes of a small denomination will be abolished. Now, when a people have bank notes of 13 francs (10s. 5d.), what occasion can they have for gold coins? Besides, there is another decisive fact: in consequence of the new monetary system, recently adopted by Germany, Austria, in common with the rest of the Germanic Confederation, has placed herself in circumstances which will henceforth make gold play a secondary part in her circulation, even if, contrary to all probability, she were to renounce her bank notes of 26 francs (20s. 10d.), and 13 francs (10s. 5d.) In this system of currency, it is silver and not gold which serves for the pivot, and is the standard. The monetary unit is in silver; and although it is true that, consistent with this fact, it might be possible, by means of certain contrivances, to secure for gold a considerable circulation, we do not see that any such contrivances have been adopted by the Germanic Confederation in general, or by Austria in particular, or that they have great chance of being adopted; the tendencies seem rather in an opposite direction.
I am, therefore, going beyond the bounds of probability in admitting that the monetary system of Austria will, in the course of a few years, offer to the new production of gold an outlet of half a milliard of francs, or 145,000 kilogrammes of gold (£20,000,000); but I desire to make the most liberal concessions to those who insist that it will be easy to find a market for the gold of the new mines.
As to Turkey, I find it impossible, however well disposed, to make her play a serious part in my calculations. Turkey has neither commerce nor credit; the gold bullion which she can attract or keep is insignificant in comparison with the quantity of this metal produced, and we cannot assign the slightest weight to her in the present argument.
And, since we are taking into account those States which may absorb large quantities of gold, why not also include in our calculation those which may be induced to demonetise this metal? This may not be a chimerical precaution, for the Dutch, who possess in the highest degree a practical sense, have almost taken this great step; in Belgium, a country where business is understood, the same policy has been adopted.* The East India Company has pursued the same course throughout its vast dominions. Spain has so far made a beginning, that she has withdrawn the attribute of money from foreign gold coins; it is certainly possible that she may go further.
We must not lose sight of the fact that one of the reasons why the precious metals have, simultaneously, or separately, been invested with the functions of money, consists in the fact that they are generally more fixed in value than other commodities. The relative fixedness of value is one of the essential conditions for qualifying an object to serve as money, for if this fixedness did not exist, how could the money of which it was made serve as the measure of values? From the moment that either of the two precious metals loses this attribute, or that it remains in suspense for a certain length of time, it is neither more nor less than the loss of the condition which qualifies it for the purposes of money. This is so well understood by persons versed in these matters, that, in England, -where the fall in the value of gold is imminent, and even already in course of realisation, able men have advised the abandonment of the gold standard, and the adoption of a standard of silver. According to these writers, gold ought henceforth to be demonetised in England. I shall have, by and bye, to cite a remarkable publication, where this opinion is sustained with much force. With much more reason, for a country like Spain, where the two metals, gold and silver, circulate simultaneously, without either being qualified positively as a standard in relation to the other, may such a measure be anticipated, or at least ranked among the number of possibilities?
I think I may pass over in silence the outlets afforded by Asia and Africa. Everybody knows that in the Bar-bary Eegencies, in the Levant, in China, and in the East generally, silver is the metal preferred. Silver, and not gold, is almost exclusively the metal exported from Europe to those countries. It is not that in some of the regions of distant Asia, in India, for example, gold is not appreciated and sought after; but the local mines, and those of the islands of Sunda, particularly of the island of Borneo, which are important, are sufficient to supply their wants.
In fine, according to the preceding statement, if we seek to estimate the quantity of gold which may be in request for the next ten years to complete, or re-establish on a sound basis, the currency of States which notoriously require a metallic currency, or which, subjected to the regime of paper money, are prepared to make great sacrifices to escape from it, we arrive at no very considerable result. Austria, alone, seems likely to receive a certain portion of the precious metal; and it is on a very generous hypothesis that I have carried to 145,000 kilogrammes of gold (£20,000,000), the amount which may be absorbed, by the process indicated in the previous chapter, in that Empire. However, to remove all pretext for opposition, I will put at more than double, at 300,000 kilogrammes (£41,380,000), the total mass of gold which may during the next decennial period find a market in the Empire of Austria, and in the other States where a similar want prevails.
Here, then, is the first outlet of an extraordinary kind, which offers itself to the gold of California and Australia, as well as to that which we have reason to expect will he extracted from the mines of Northern Russia.
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.
I come to the second of the outlets which have been indicated, and which I have denominated above; it relates to countries where the coinage is in a different state from that considered in the preceding chapter. According to those who maintain that there will he no excess of supply beyond the demand for this metal, and that consequently a fall in its value is not probable, it is not only in those countries where at present there is little or no specie in circulation, and where there is a desire to escape from the regime of paper money, that a large outlet will be afforded to the new gold for monetary purposes. All civilised countries, those at least where gold is a legal tender, are to acquire a new supply, to he coined into money, for two reasons at least:—in the first place, the progress of commerce,- and the constantly increasing number of transactions; and next the growth of population. Besides which, the coinage must be maintained, that is, the loss from wear and tear must be replaced.
On the first point, the multiplication of money which must take place in consequence of the extension of commerce, it may be well, in order to form a rational opinion on the subject, to take into account the contrivances by which great civilised communities modify the machinery of their exchanges, in proportion as commerce extends its operations and enlarges its sphere. Now, it may be shown that the progress of commercial institutions, such as credit establishments, for instance, with the intelligent employment of the substitutes which they put forth, the written contracts and instruments which they enable the public to keep in active use, allow of a very great increase of commercial transactions with only a small augmentation of the metallic basis to pay the balance of exchanges. The employment of bank notes, the transfer of sums from party to party in accounts current, letters of credit or drafts to order, of cheques such as are in use in England, the creation of establishments similar to the Clearing House of London, the judicious adoption of every possible contrivance for facilitating the transactions between house and house, city and city, state and state—all this tends to put limits to the extension of those metallic wheels which give motion to the machine by which commercial exchanges adjust themselves. This machine has undergone and is undergoing continually great improvements, almost as great as those of the steam engine.
Fifty years ago a steam engine of forty horse-power would have cost 100,000 francs (£4,000): in our day, in France, Farcot, Cave, Cavé, and a dozen others, will produce one at 25,000 (£1,000). It is the same in other countries. This arises from the great improvements made in the steam engine during the half century; it is lighter than heretofore, contains less cast or wrought iron, and yet it is as strong and safe as before, if not more so. It is the same with the instrument of exchanges. Formerly it called into requisition a large quantity of metal, gold or silver. Now, for the same extent of business a much smaller quantity suffices. How is this? Because by a number of ingenious contrivances, like those in existence in England, and which France and other countries are not slow in imitating, the greater part of the operations of commerce are conducted without the intervention of a single crown-piece, or, at least, without calling into requisition any metallic money excepting as a matter of account. Letters of credit, bills, cheques, and other instruments of the same kind, are multiplied in proportion to the extension of commerce, but the specie required for these transactions experiences hardly any increase.
It is well to give prominence to the fact of the nearly stationary character of the metallic currency in countries where the commercial machinery is well organised. Bank notes are, it is known, another species of coin, not metallic it is true, but serving for a direct substitute to metallic money, which alone, however, constitutes money properly so called. It may be considered that they should expand or contract in the circulation, nearly the same as specie, if it were alone in use, according to the necessities of commerce, inasmuch as the mass of these notes minister to the operations* of commerce. This is particularly the case where, as with the notes of the Bank of England, they are invested with the attribute of a legal tender. We know that in England, by virtue of this privilege, the debtor can pay his creditor in these notes, without the latter having the power of refusal, with this reserve, however, that at the same time the Bank of England shall redeem them on demand in specie. Under these conditions nearly all the reasons, drawn from the necessities of commerce, which call for an augmentation of the mass of gold coins in circulation, are also applicable to the bank note, and we are justified in arguing from the sovereign to the bank note, and reciprocally. Now, we know, in the most exact manner, the variations which in England the quantity of paper money necessary for her transactions undergoes; the official returns show periodically the amount of bank notes in circulation. A glance at these returns is sufficient to show that the sum total is almost stationary, in spite of the astonishing rapidity with which her commerce has increased. In ten years, from 1846 to 1856, for Great Britain alone, which is the great seat of the commerce of the United Kingdom, the circulation of bank notes has only increased £75,904 upon £30,925,-123;* or an annual average of the insignificant sum of £7,590 only, or in the proportion of 1 to 4,000; a progression, so to speak, imperceptible alongside of that of its population, and especially of that of its commerce, as it is disclosed to us among other signs by the tables of importations and exportations.
If we confine ourselves to England and Wales, which comprise the most populous, the most industrial, and the richest portion of the United Kingdom, it will be found that from 1846 to 1856 the average circulation instead of increasing had diminished, and that even for the very considerable sum of £1,592,500.
Here is another fact illustrating to what an extent the improvement in commercial institutions permits an increase in transactions, without requiring an addition to the metallic currency, or even to the credit currency, that is to say, to bank notes. The Clearing House of London is, as its name indicates, an establishment to which every day the accounts of individuals, traders, and others come for liquidation, through the intermediation of their bankers. In 1839, this establishment had already attained such efficiency that for the annual liquidation of 950 millions sterling, or three millions daily, it only required, on an average each day, £200,000 in sovereigns, or rather in bank notes. At present, with a mass of transactions amounting to 1,500 millions, or 2,000 millions sterling annually, instead of a proportionate addition to the £200,000 required for the daily balance being necessary, not a shilling is wanted: the Clearing House now dispenses completely with the use of bank notes. All is settled by the transfer of sums from one account to another in the books of the Bank of England.
This is the place to point out the increase that has taken place in the employment of bills of exchange, and to compare it with the stationary state of the amount of bank notes in circulation. An estimate, somewhat conjectural, but still plausible, made by an English banker,* Mr. Leatham, taking for his point of departure the produce of the stamps on commercial bills, makes the mass of bills of exchange drawn in the United Kingdom in 1839 amount to 528 millions sterling. The augmentation was continual; from 1832 it was at the rate of 24 millions per annum. A more interesting fact probably is the amount of bills of exchange at one time in circulation, which it would seem, from the same calculations, amounted at a given date in 1839 to 132 millions sterling; according to this the average annual increase, since 1832, must have been more than 18 millions sterling.
The statistical accounts of Mr. “William Newmarch, the able fellow-labourer of Mr. Thomas Tooke upon the two last volumes of the History of Prices, which appeared in 1857, give the total number of bills of exchange in circulation at a given moment, in the United Kingdom, in 1856, at about 180 millions sterling; or probably, as he adds, nearly 200 millions:* 200 millions of bills of exchange against less than 40 millions of bank notes, what more need be said to prove that in a country where the commercial institutions are in an advanced state, the currency of every kind, whether metallic or paper, fills in respect of quantity but a secondary part?†
It is not denied that everywhere, in proportion as population increases, more money is required for transactions, other than those of commerce strictly so called, as for example those which take place in civil life, for retail purchases, for wages, and a thousand minor payments. This influence of the number of the population upon the amount of the metallic currency, and particularly of gold, may be sensibly felt, especially in countries where, as in England, there are no bank notes for less than £5, or even of 100 francs (£4), as was the case in France until the law which was voted at the end of the session of 1857; but population augments everywhere slowly compared with the increase that has taken place in the production of gold. In Europe it varies in the different States from ½ per cent, per annum to 1½ per cent.† In the United States, by a sole exception, it is 3 per cent, if not more. Let us admit the average increase to be 1½ per cent., which, for the whole, is an exaggeration. Now, what is the mass of gold currency to take for our starting point? It would be very difficult to estimate at more than 6 milliards (£240,000,000) the sum required for the circulation, independently of silver money, of all the nations of Christendom.† Now, 1½per cent. on this sum amounts to 75 million francs, or 22,000 kilogrammes of gold (£3,000,000).
But here it will be said that we ought not to look merely at the growth of population, that the increase of general wealth, as well as the diffusion of comfort among the working-class, must also be taken into account. Again, it will be shown that the retail transactions, which can only be carried on with a metallic currency, are much more extended when people are in prosperous circumstances than when they are suffering from privations. It is true; but is it a gold currency that is wanted for this purpose? It is rather, as it appears to me, silver or copper money that is required for the daily purchases of the greater number of households. Gold is never coined into pieces of less than 5 francs (4s. 2d.), and even the success of these coins of five francs, which have lately issued from the French Mint, remains very doubtful, notwithstanding the pains that have been taken, by giving them the largest surface possible, to prevent their slipping between the fingers: and still the piece of five francs is a large sum for transactions of this kind.
It may here be remarked that the introduction of the bank note of fifty francs (£2) into the circulation of France, which has just been authorised by law, will be calculated considerably to diminish the proportion of gold employed in the currency. This restrictive effort will, in France at least, be a counterpoise to the expansive force which may be imparted to the circulation of gold. It may be said, it is true, that the Bank of France, which has not shown an excess of zeal in giving to the note of 100 francs (£4) all the circulation to which this representative sign might pretend, is far more likely to delay indefinitely the issuing of the note of 50 francs (£2). Nevertheless, the Bank's aversion to novelties has its limits, and its ears are not shut to the voice of reason. In the same way as latterly it has consented to distribute the 100 franc note with a less niggardly hand, it will yield to the demand of the public, if a somewhat strong opinion be pronounced in favour of the note of 50 francs.
By the entire of these considerations, I should perhaps be warranted if I made no addition, on account of the extension of business, to the 22,000 kilogrammes of gold (£3,000,000), which have been indicated above as sufficient to supply the wants of an increased population, —an addition which has been amply sufficient. However, to place my calculations beyond all possible objection, I will double the sum of 22,000 kilogrammes, which will raise to 44,000 (£6,000,000), the extension which will annually be occasioned in the gold currency, as well by the augmentation of business, as by the growth of population. I cannot, however, withhold the remark that I think I have been extremely liberal: 44,000 kilogrammes is more than double the mass of gold which Europe received from 1800 to 1825, for every kind of use.
Let us now inquire into the consumption of gold by the abrasion of money in passing from hand to hand. It amounts in a great State to a very appreciable quantity of metal every year. On this subject some facts of a varied character have been furnished by observation and experiment, the most remarkable being those which have been made at different times in England, but especially in 1798, by a celebrated chemist, Hatchett, and a distinguished physician, Cavendish; and, more recently, in France, by Messrs. Dumas and De Colmont, in the name of the Commission on Coins, of which Thénard was president; and quite lately in Holland, on the occasion of the change made in the currency of that country. It has thus been proved that, taking coins of equal dimensions, those pieces which contain a slight alloy of copper, and especially of silver, suffer much less from usage than those made entirely of silver. It has also been found that, in proportion as we descend to coins of a smaller denomination, the wear increases, even rapidly, perhaps because they pass more frequently than others from hand to hand, or because they present a larger surface in proportion to their weight. There is reason to believe that, in adopting the proportion of 2 to 1000, or of 1 to 500, we shall greatly exaggerate the annual loss by the wear of a gold currency. At this rate, upon the six milliards of francs (£240,000,000), Which would more than suffice to saturate with gold the whole circulation of Europe, and the other States of Christendom, there would be a yearly loss of 12 millions of francs, or, in round numbers, of 3,500 kilogrammes* of metal (£480,000).
Taking into account the whole of the employments to the examination of which this chapter has been devoted, and calculating them with a liberality which must be admitted to be excessive, we arrive at an annual consumption of 47,500 Kilogrammes, (£6,650,000) of gold; for ten years this would be 475,000 kilogrammes (£66,500,000.)
There is yet another possible means for the consumption of gold to be noticed; I allude to the practice of hoarding. To hoard, that is, to hide money in secret places, is a habit belonging to an uncivilised state of society, where riches take refuge underground to escape spoliation, or in which loans on interest are hardly known, either from their being condemned by prejudice, or from the fear that money once parted with, would be given up to rash adventures. It is a habit which for a long time not merely withdrew large sums from circulation, but actually occasioned their loss; because, in the midst of revolutions, invasions, and other public calamities, their place of concealment was forgotten; the secret was lost by the death or exile of its possessor. But in the Europe of our day, the quantity of the precious metals which issue from their hiding-places is, in all likelihood, greater than that which seeks refuge there. The practice, therefore, of hoarding can scarcely be any longer cited as occasioning a void in the circulation, which the mines will have to fill up. However, to avoid absolutely the charge of not having taken sufficient account of all the possible outlets for the metal extracted from the new gold mines, I will suppose that 50 millions (£2,000,000) are abstracted from the circulation by this process; but then it will not be taken amiss if I include in this the quantity of gold which may be lost by a variety of accidents, and particularly through shipwrecks.
There is also a particular outlet, of a transient character, for gold money in certain States, such as France; I mean that portion of the circulation which is carried on the person. Until recently, when silver money circulated almost exclusively in France, people used but very small sums for pocket money; it was really burdensome to find 25 or 30 francs in one's pocket. But since gold has taken the place of silver, a person who unwillingly found on himself four or five 5-franc pieces, carries in his purse at least four or five pieces of 20 francs, or an equal sum in smaller coins. There is no doubt that, for the mass of society in France, the quantity of gold thus carried about the person amounts to a very considerable sum. Nevertheless, it would be probably sufficient to assume that there are a million of persons who, on an average, thus permanently charge themselves with 100 francs each. Let us, however, say double the amount, which will give us 200 millions of francs (£8,000,000). But France is almost the only country where this condition of things applies, for it could only occur in a State where, before the discovery of the new mines, silver, was the current money, and where, owing to legislative provisions, gold could be substituted for a silver currency,—and such countries are very few in number. There are many more communities where, in the same period, gold has been reduced to a subsidiary rank, or even banished from the circulation altogether. Let us, however, double the above sum of 200 millions (£8,000,000), in order to meet the case of similar phenomena which may have occurred elsewhere, and we shall then have 400 millions of gold (£16,000,000). But it must he remarked that the fact in question does not remain to be accomplished, that the operation has already been carried out wherever it is likely to be effected; that it is not, therefore, an employment offered to gold for the future; that it is only an outlet which has absorbed a fraction of the large quantity of gold which, in addition to the old production, has been already yielded by the new mines.
on the employment which habits of luxury may offer to the gold of the new mines.
What are the outlets which may be created by the constantly increasing developments of luxury? On this subject we must avoid falling into a delusion: the age is less pompous than it is supposed to be, or rather it does not exhibit its pomp by a display of gold ornaments. It loves gilding, and judging from what is seen in Paris, this species of display is extending in rooms, on furniture, wainscots, and ceilings; but, as respects jewellery, what is now made is very light. Many gold rings are manufactured, as well as gold watch-cases, but very few articles are now made which consume a considerable weight of that metal. This may be verified by referring to the returns of those establishments which, in France, are called bureaux de garantie.
Who would not suppose that in Great Britain, where a wealthy aristocracy spends its riches freely, and where, since the peace of 1815, commercial fortunes have increased and multiplied to a surprising extent, the manufacture of articles of gold must have undergone a considerable augmentation? The contrary, however, is the fact. I have before me the return of the duty paid on gold plate in England, from the commencement of the century to” 1850 inclusive, which appears in Mr. Porter's excellent work, the Progress of the Nation. According to this table, the progress of the manufacture of articles of gold remains, incredible as it may appear, behind that of the population. From the first quinquennial period of the century to that which closed in 1850, the increase in the quantity of gold which paid duty was 50 per cent.; during the same time the increase of population was much greater; it doubled. Then, if we take into account the quantity of gold required for this manufacture, we are amazed at its smallness. It is an atom in comparison with the total production. During the last quinquennial period of the half-century, the annual average has only been 7,636 ounces. Independently of these statistics of Mr. Porter, I have been enabled to procure the returns for two recent years (1855 and 1856). The average is 10,420 ounces, including that which is destined for exportation. It must be stated that many articles, such as watch-cases, are excluded from this return; but let the amount be doubled or trebled, let it be quadrupled, quintupled, or even more, and still how little will it amount to in comparison with the present production of gold?
From England let us pass to France. Here also may be observed a movement slower than the progress of the population; if we embrace also an interval of half a century, in which, it is true, is comprised all the period of the revolution. Necker, who must have been well-informed, estimated in 1789, the jewellery manufactured in France, both gold and silver, at 20 millions (£800,000); in 1821, it was only 21,750,000 francs, (£870,000), which drew from Baron Humboldt the remark that,—'” The tables published by the Count de Chabrol would prove, if the estimates of M. Necker are correct, that the state of the manufacture of jewellery has not greatly altered,”* Baron Humboldt might have added that, since for the two metals together the alteration had been insignificant, whilst there had been a considerable increase in the use of silver plate, it necessarily followed that there must have been a diminished employment of gold. Since 1821 a certain progress is observable in France. According to the bureaux de garantie, the average of the years 1822-3-4 gives 3,059 kilogrammes (108,065 oz.) for gold; and the average of the two years ending 1st Jan., 1857, is 8,185 (289,205 oz.); but from these quantities a portion must be deducted, as will be seen, on account of the old metal and jewellery returned to the crucible. There are, then, grounds for saying, both of France and England, that an outlet so limited, and augmenting so gradually, could not tend seriously to raise the consumption of gold to the level of its greatly increased production.
In 1827, Baron Humboldt estimated the quantity of gold employed in all Europe, by the goldsmiths and jewellers, at 9,200 kilogrammes (325,100 ounces); but from this must be deducted the old gold which Necker estimated at the half, but which others, with no better opportunities of being well-informed, put down at much less. Let us carry to double this amount the gold at present worked up by these industries, and make no deduction for the metal derived from the remelting of old jewellery and ornaments; this will, if we admit Necker's hypothesis of the proportion of old gold entering into the composition of the new, quadruple the effective consumption of gold in 1827. Here, then, is an outlet for 18,400 kilogrammes (650,200 ounces) of the production of the mines. To take a liberal view, let us put down 25,000 kilogrammes (875,000 ounces) for the ensuing ten years, as the consumption for the same purposes in the civilised States of North and South America. It is a very high estimate, for this amount, set apart for the goldsmiths and jewellers, is exclusive of the gold required for lace and gilding, with which I shall have to deal in the present chapter, and for which an ample allowance will be made. It may thus be seen how far the demand for jewellery and ornaments can counterbalance the excessive supply of this metal in the market; it is very far from being sufficient for the purpose.
But, it will be said, the world has absorbed the mass of nearly 40 milliards (1,600 millions sterling) of gold and silver which has been supplied by America since the time of Columbus. True enough, but on what condition? On condition that the value of silver fell in the proportion of 6 to 1, and that of gold in the proportion of 4 to 1. and it is only by a similar process (though I do not pretend to assign the proportion) that the large supplies which are now being produced by the new mines will find an outlet. The present essay is written to prove, not that this extraordinary production of the precious metal cannot be employed on any terms, which would be absurd, but simply that it cannot be absorbed and maintain its present value in relation to other commodities: mankind is not rich enough, nor will it soon be, to pay so dearly for so large a mass. To find an outlet, it is absolutely requisite that so vast a production should be accompanied with a great reduction in value.
But not to anticipate the conclusion, let us pursue the enumeration of the extraordinary channels which may be opened to absorb the extraordinary supply from Australia and California; and, first, let us, by way of finishing the account with luxury, allude to gold lace and gilding. Paris gilds itself not a little, and is surprisingly addicted to gold lace. Is there not in these two employments a consumption large enough to enable the producers of gold to dispose of their precious commodity, almost indefinitely, without any reduction in value? In order to reply to this question, let us calculate the quantity of metal which is required to gild a given surface. Gold, as is known, is the most malleable of metals; it is so to a degree of which it it would be difficult without ocular illustration to form an idea. The goldbeater makes it into leaves, which, thanks to the progress of his art, are now so thin that fourteen thousand form only the thickness of a millimetre, and, consequently, 14 millions of leaves laid one upon another would make a thickness of only a metre (about 39 inches). A cubic metre of solid gold, which in truth would not weigh less than 19,258 kilogrammes (680,440 ounces), would suffice to gild a surface of 1,400 hectares (about 3,450 acres), and 1,000 kilogrammes (35,300 ounces) would cover 720,000 square metres, or 72 hectares with gold (about 179 acres.) It is a result which quite confounds the imagination. and yet the metal used in the manufacture of gold lace is spread over a much larger surface. The substance of the threads of which this lace is made consists of silver, the surface alone being of gold, and one gramme of gold, worth 3 francs 44 centimes (2s. lOd.) suffices to gild a thread 200 kilometres in length (120 miles). In a piece of 20 francs (16s. 8d.), there is gold enough to cover a thread which would extend from Calais to Marseilles.
I might also remark that in the calculation of the quantity of gold leaf to be made from a cubic metre, or 1,000 kilogrammes of gold, I have spoken as though the gold employed was of an absolute fineness, which is not quite correct. Experience shows that the malleability of gold is increased by a slight mixture of alloy, and which diminishes proportionably the consumption of the precious metal. It is true that this proportion is not great, it is about 4 per cent., and we must make a corresponding abatement from our estimate.
Let us now suppose that a room, suitably gilded, consumes five “square metres (a metre is 39 inches) of gold leaf, which is, I believe, sufficient At this rate 1,000 kilogrammes (35,300 ounces) would gild one hundred and forty-four thousand saloons or apartments, that is to say, at least twenty times the number which are thus embellished in one year in all those cities where the houses are of a character to require their interiors to be gilded. With the remainder what a multitude of picture-frames, books, kettle-drums, cloths, epaulettes, and all kinds of objects might be clothed in a dazzling covering of gold! Let the number of gold leaves required for each apartment be multiplied, let the number of books and picture-frames be augmented, and still we shall arrive at no result which deserves a moment's consideration. At Paris, where nearly all the gold leaf is beaten which is consumed in France, and a part of Europe, the quantity of gold operated upon does not exceed 1,150 to 1,200 kilogrammes (40,650 to 42,400 ounces). I give this fact upon the authority of a man of high integrity who was at the head of this industry, and was well versed in its statistics.*
The fluid process of gilding, that is by means of a solution of a salt of gold in water, consumes but very little metal; so that a very moderate number of kilogrammes of gold are sufficient for the thread required by all the lace manufactories of Paris and Lyons.
In fine, for all descriptions of gilding, as well as for every kind of gold lace, we shall exceed the truth in putting down at 10,000 kilogrammes (353,330 ounces), the quantity of gold which may be required annually for the next ten years. I am always arguing on the assumption that the metal does not fall in value; for, let it be reiterated, if a considerable depreciation should occur, it will be followed in the case of gold, as it would be in that of any other article under similar circumstances, by its extended use, and its increased consumption. It is probable that, at the present moment, 5,000 kilogrammes (176,665 ounces) is more than the amount consumed. If we add to the quantity, hypothetically admitted, of 10,000 kilogrammes, the amount already computed, in the same spirit of liberality, for ornaments and jewellery, we shall reach an annual consumption of 35,000 kilogrammes (1,236,655 ounces), for the different arts which minister to the various forms of luxury. Here, then, is the limited employment, which luxury, in all its bearings, offers to the gold furnished by the new mines. It is a real deception to the statistician, who might have expected to find a limitless outlet. Let us not, however, omit to mention one rather insignificant mode of consumption. The display of gold in utensils, more or less massive, is the luxury of the less refined part of the community, whose eye is instinctively attracted by the glare of a dazzling metal, and whose desire is excited for an object to which there is vulgarly attached the idea of great riches. It is a species of magnificence which was reserved for the sovereigns of primitive nations; it constituted the splendour of the Incas, and that of Attila, and of Grenseric; it was the pride of the savage races whom the Europeans discovered in America: these poor natives carried lumps of gold suspended from their noses and ears. But our intelligent communities, with their cultivated minds, decorate their apartments with stuffs tastefully arranged, and which present to the eye patterns of elegant form, and brilliantly or delicately coloured. They adorn them with works of art, with sculpture of every kind, and pictures of the various schools, and exquisite engravings. This is a more enlightened luxury, and more suited to an advanced civilisation.
Not that I would here maintain the opinion that, in a fit of ideal refinement, civilised nations will henceforth despise the. glitter of gold; I merely mean to say that the observation of what is passing every day under our eyes, warrants the belief that luxury is seeking its gratification in other directions. In such an undertaking, as devoting a large sum to the purchase of an object for embellishing a residence, people generally prefer something which has other recommendations than the weight it contains of so valuable a commodity as gold. The man of little taste may be flattered by the possession of some grand vase of a material which is worth sixteen hundred times its weight in copper, ten or fifteen thousand times its weight in iron, thirteen thousand times its weight in' wheat; but this price is so excessively high, that persons with any taste for the beautiful, however rich they may be, pause and turn aside. Nevertheless, gold has lost none of its incomparable splendour, and if it were to fall considerably in price, it is probable that then, and only then, it would become, to some extent, the fashion, on condition that the merit of the form equalled the beauty of the material.
conclusion of the preceding chapters.—the fall of gold very probable, if not inevitable, in relation to all other commodities.
It is not difficult to draw a conclusion from the preceding analysis. In no direction can a new outlet be seen sufficiently large to absorb the extraordinary production of gold, which we are now witnessing, so as to prevent a fall in its value. There is but one way of disposing of these masses of gold, it is by coining them and forcing them into the current of circulation into countries which are already sufficiently provided with a gold currency. This current will absorb them, for it is, so to speak, insatiable; it receives and carries off all that is thrown into it; but the process of absorption and assimilation is on one condition, namely, that gold diminishes in value, so that in those transactions where heretofore ten pieces of gold had for example sufficed, eleven, twelve, fifteen, or even more, will be henceforth required. In a word, if gold is to enter into the circulation in indefinite quantities, it is by being subjected to the rigorous law of a continually increasing depreciation.
And here is exhibited a disadvantage under which gold suffers in comparison with silver. The latter metal has, besides being used for money, other somewhat extensive employments. The requisites of the table, such as dishes, plates, spoons, forks, &c, silver kettle-drums, and church ornaments, consume a large quantity. Silver plating, so much on the increase for some years, will, doubtless, take off a considerable amount; we are probably only in the infancy of this interesting industry, and the consumption of metal to which it gives rise is small in comparison with what may be expected for the future. Gold has, doubtless, its employments in the arts, and perhaps, ere long, gilding may become as general as plating; but to gild properly a given surface requires much less gold than it would of silver to cover it with the latter metal; in this manner, the peculiar attribute of gold, of being infinitely malleable, or of holding together in layers infinitely thin, only tends to diminish its employment. Thus not less than 6 grammes of silver (92 grains, troy), are put upon a couvert, in the manufacture of the house of Cristofle; whereas the gilding needed for covering utensils, picture frames, or even ceilings, requires but the merest atoms of gold.
I have explained the consumption for gilding rooms, picture frames, and gold lace; I have also included articles of jewellery made in imitation of gold, by dipping them rapidly in a solution containing a portion of nitrate of gold. The strongest gilding given in M. Cristofle's establishment consumes 7 2/10 grammes (107 grains troy) on a dozen dessert converts; whilst for silver, with couverts, it is true, of a larger size, it is 72 grammes (1,104 grains troy); but there are summary processes of gilding which do not consume more than one-tenth of this proportion of metal. From the particulars obligingly communicated to me by M. Cristofle, it appears that his establishment for gilding and plating consumed, in 1856, 4,022 kilogrammes [142,110 ounces] of silver, and only 17 kilogrammes [601 ounces] of gold. In no one year has this house, whose business is considerable, consumed in gilding, more than 27 kilogrammes [954 ounces] of the latter metal. M. Cristofle estimates that the gilding of metals consumes, for all that is done in France, only 400 or 450 kilogrammes [14,130 or 15,900 ounces] of gold yearly. Now France is a producer of these articles, not only for her own use, but for exportation.
To fix these ideas, and give precision to our deductions, let us now recapitulate the various employments for gold which we have just designated, representing them in figures.
It has been seen that the currencies of those States which are short of gold are not likely to require for the next ten years more than 300,000 kilogrammes of this metal (£42,000,000). To arrive at this result, it has been necessary to resort to very forced anticipations. As for the increase of money rendered necessary by the additional population, and the extension of well-being among the people of Europe and America, I have made a large estimate in calculating it at 22,000 kilogrammes (£3,080,-000) a year, or 220,000 kilogrammes (£30,800,000) for the ten years.
In order to satisfy the most exacting, I have estimated at an equal amount, 220,000 kilogrammes (£30,800,000), the addition which, in ten years, ought to be made to the currency to keep pace with the extension of commercial operations, strictly so called.
For wear and tear, it has been shown that we run no risk of valuing it too low in putting it down at 3,500 kilogrammes (£490,000), or, in ten years, at 35,000 (£ 4,900,000). And, then, for hoarding, with the addition of accidental losses, there has been more than an ample allowance made in the estimate of 15,000 kilogrammes yearly (£ 2,100,000), or 150,000 in ten years (£ 21,000,000).
It is an exaggeration, beyond allowable bounds, to put down the quantity of new gold required by jewellers, also for the various modes of gilding, and for gold lace, at an average for the next ten years of 35,000 kilogrammes (£ 4,900,000), or, for the decennial period, at 350,000 kilogrammes (£ 49,000,000).
We thus arrive, exaggerating everything, at a total of 1,275,000 kilogrammes (£ 178,500,000), as the mass of the precious metal which may find a natural employment during the next ten years. By the words natural employment, I mean that it should be absorbed on the same conditions as heretofore, and consequently without being aided by a fall in the value of gold. In estimating the average annual production, for the period of ten years, now commencing, at 250,000 kilogrammes only (£ 35,000,000); and it may fairly be expected to reach 300,000 (£ 42,000,-000), the floating mass which would remain, and the weight of which would at the end of the decennial period operate to depress the value of gold, would amount to 1,225,000 kilogrammes (£ 171,500,000), that is to say, to nearly the half of all the gold that America has furnished from the first voyage of Columbus to the discovery of the mines of California in 1848, a period of three hundred and fifty-six years.
Let 200,000 or 300,000 kilogrammes more (£ 28,000,-000 or £ 42,000,000) be subtracted, to provide in the most ample manner against all contingencies, even the most improbable, and still an enormous mass will remain to exert on the market a pressure beyond all precedent. To express in other words the same idea, in proportion as the gold shall be extracted from the new mines, all which shall not have been absorbed by the industrial arts, will enter into the currencies of all those countries which will admit it in that capacity, and in each of them it will diffuse itself, all other things being equal, in proportions measured by the facilities which legislation may offer it. But in these countries it will be in great excess, relatively, of all that could have been required for the medium of exchange, if the metal had preserved its full value; that is to say, gold will circulate there on precisely the conditions which would be indicated if we had to demonstrate the process necessary for determining infallibly its fall.
It may not be out of place to add that the new mines have already yielded a considerable quantity of new gold, hardly to be valued at less than 1,200,000 kilogrammes (£ 168,000,000); so that the circulation, in all those countries where this metal is admitted as an essential element of the monetary system, is already saturated. This is perceptible enough where business is in its normal state, and not under the influence of those crises which give rise to an extraordinary want of all the instruments of commercial liquidation, and when it seems as if it were impossible to have enough of the precious metals. As soon as affairs resume their natural course, we see, in those countries just mentioned, gold flowing into the banks, and into the great establishments of credit and deposits. It cannot, therefore, now be justly said that there are great voids to fill up in the monetary mechanism of the principal States, and that thus the production of new- gold is a welcome event. There are, on the contrary, grounds for preoccupying ourselves with the indications, already apparent, of a state of plethora.
Unless, then, we possess a very robust faith in the immobility of human affairs, we must regard the fall in the value of gold as an event for which we should prepare without loss of time. and who can he ignorant that the value of gold in relation to productions generally, and in relation to silver in particular, instead of being fixed, has experienced very numerous variations—that it has been undergoing modifications, sometimes in one sense, sometimes in another, from the beginning of the world, under the influence of forces far less energetic than those which are in action in our day? I refer those who desire information on this subject to a work, where an illustrious authority, Baron Humboldt, has treated it with the superiority which distinguishes him, shedding upon the question some of that vivid light which he carries everywhere with him. There will be seen, for example, that in throwing into the circulation of the Roman world a mass of gold very important, it is true, Julius Caesar occasioned for that metal a fall so great that some time after it had been worth seventeen times its weight in silver it fell to be only worth nine times.* If the value of gold has varied every time that new circumstances have modified the relation between the supply and demand, and if it has risen or fallen in proportion to the change which manifested itself in this relation, by what strange witchcraft are the natural causes of the fall of gold to be paralysed, now that they are displaying themselves in such unusual proportions?
Independently of all detailed calculation like the preceding, there is a general way of convincing oneself of the impending fall of gold, at least if some cause, at present impossible to foresee, should not suddenly put an end to its extraordinary production. The metal which is now being extracted in such abundance, in comparison with the past, must, if converted into money, affect its value by its mass. To prevent it from rushing into the currency, the demand for luxury must find it a sufficient outlet; but is this possible? There has been no scarcity of gold in the market since the working of the mines in Northern Russia. The chief part of that which has been yielded by Australia and California has, therefore, constituted a real surplus; now, how can the developments of luxury absorb it? A few of our newly enriched men, who, because existence is suddenly transformed for them, suppose that every thing on the face of the earth is changed for the better, may well imagine that pomp and luxury will offer to the metal which issues from the mines a limitless outlet: but any one who reflects, observes, and calculates, will form a different opinion. No, mankind is not in a condition to spare from the fruits of its labour the large portion which it would be necessary to hand over to the producers of gold, to avert a fall in the value of their metal, for mankind is still poor, even in the most civilised countries. To pretend that, to satisfy its taste for pomp and display, it will continue to take, at its old price, all the gold of the new mines, is as if one were to say that mankind is suddenly become sufficiently rich to devote 4 or 500 millions (£ 16 to £ 20,000,000), if not more, to the acquisition of a supplement of articles of luxury, and of that very kind, too, which most deserves the name of superfluities;—4 or 500 millions, seeing that at the price which gold has maintained, almost intact up to the present time, the quantity of this metal annually thrown upon the general market, approaches, in round numbers, a, milliard (£ 40,000,000), and that the employments which may be reasonably foreseen will not, perhaps, consume the half of it. The civilised world, far from being able to indulge in such caprices, has all sorts of pressing necessities to provide for, and with which it is more seriously preoccupied. People are still badly fed, badly clothed, badly lodged, and badly supplied with all those objects which minister to the intelligent wants and the purer satisfactions of an elevated humanity,—satisfactions which, whatever may be said, are every day more and more appreciated. Even among the easy classes, how many wants are there, to satisfy which will claim precedence of the taste for arraying themselves in the splendour of gold? The currency, then, offers the one sole channel by which the principal part of this enormous production of gold can find an outlet. Already, several nations have closed the door against it. How then can it fail to encumber the channels of circulation in those countries which remain faithful to a gold currency? In other words, how shall we escape a general dearness of commodities in France, if we maintain for gold, in our monetary system, the place which in faet it now occupies?
[*]In population, Scotland is only the tenth of the United Kingdom.
[†]American Almanac for 1858, p. 215.
[*]In Holland and Belgium, a gold currency continues to circulate, but purely and simply as merchandise, the daily value of which is regulated by commerce, and, consequently, it is very little used.
[*]Independently of the operations of commerce, properly so called, the bank note is of use in many payments which may be called civil, as, for instance, the dividends of the public debt, and the salaries of public functionaries.
[*]In 1846, the average circulation of bank notes in Great Britain was £30,925,123; namely:—
[*]The calculations of Mr. Leatham have received the explicit approval of Mr. Tooke, in his publication,—An Inquiry into the Currency Principle, p. 26.
[*]History of Prices, Vol. VI., p. 587.
[†]I refer to the Principles of Political Economy of Mr. J. S. Mill for an explanation concerning the diverse scope of the part which the different mechanisms of credit play with the same nominal power; Book III, Chap. IV.: and to the Inquiry into the Currency Principle, by the same author.
[†]In France, the increase of the population, as measured by the excess of births over the deaths, has only been on an average, during the triennial period from 1st January, 1851, to 31st December, 1853, at the rate of 152,738. To have been ½ per cent., it ought to have exceeded 175,000. The three following years must be considered exceptional, for under various adverse influences they exhibit a decreasing population.
[†]The amount of money, whether gold or silver, which circulated in Europe thirty years ago, was estimated at less than 9 milliards (£360,000,-000.) Baron Humboldt quoted as probable, in 1827, the sum of 8,600 millions (£344,000,000).—Essay on New Spain, Vol. III., p. 469.) The amount must have since increased; but the employment of contrivances for dispensing with the use of money, through, the instrumentality of institutions of credit, or for balancing commercial transactions, has increased in a still greater ratio, and must have largely dispensed with an increase in the amount of metallic money in proportion to the growth of commerce. If it is borne in mind that America has yielded almost constantly, until 1848, much more silver than gold, nearly in the proportion of 3 francs of the former against 1 franc of the latter, the assertion will appear probable that, taking into account the silver money possessed by Europe, and the Christian world generally, and the present improved mechanism for facilitating exchanges, the whole of Christendom would not have had occasion for a circulation of more than 6 milliards (£240,000,000) of gold currency, so long as gold should not have suffered any depreciation in value; it is making a great concession to admit so large a sum. I put the word circulation in italics, because I wish it to be understood that I do not mean to include that which has been concealed or hoarded from any cause whatever.
[*]The facts which we possess, as to the wear of a metallic coinage, are much less precise respecting gold than silver, and even as regards the latter they do not always agree very well. With respect to silver, it has been proved that the French five-franc piece, the weight of which is 25 grammes, loses only four milligrammes per annum; that is 16 parts in 100,000, or 1 in 6,250. In England, according to the experiments of Cavendish and Hatchett, quoted by Mr. Jacob, the loss was, upon the five-shilling piece, 18 in the 100,000, or 1 in 5,555; and on the shilling, which had a much more rapid circulation, 1 in 219. Returns on a much larger scale have been furnished from Holland, obtained a few years ago during the general recoinage of her silver money, and they have been justified in a work which was, by the order of the government, published on the occasion of that vast operation, by M. Vrolic, the president of the Commission on the Coinage of the Low Countries, and subsequently minister of finance. It appears that the wear of silver coins, of a small denomination, is much less in Holland than has been estimated by Mr. Jacob for England Mr. Jacob concludes, from the experiments made at the Mint of London, in 1826, that gold coins lose annually 1 part in 800. The experiments of 1807, according to the quotation given by the same author, would indicate a loss of 1 in 1,050 on guineas, and of 1 in 160 on half-guineas. If, then, we bear in mind that the guineas, or more properly speaking the sovereigns, form the principal part of the gold coins in circulation in England, the average annual wear will be about 1 in 950. In France, where the prevailing gold coin seems destined always to be the 20-franc piece (16s. 8d.), which does not differ considerably in volume or circumference from the English sovereign, but where the silver contained in the ingots, which would add to the hardness of the money, is more carefully extracted before it is coined than in England, the proportion of loss is a little greater; but there is good ground for concluding that it is less than 2 in 1,000, or 200 in 100,000. When we compare 20-franc pieces of a rather old date, but which have not been “sweated,” with five-franc pieces of the same date, they appear less worn. Now, the latter, as has been shown, lose only 1 in 6,250.
[*]Essay on New Spain, edition of 1827, Vol. III., p. 467.
[*]The late M. Favrel, one of the most eminent men of business in Paris.
[*]This work of the patriarch of the sciences of observation is anterior, by several years, to the discovery of the mines of California; it dates from 1838. The Journal des Economistes, numbers for April and May, 1848, give a good translation of it, by M. Michel Rempp. Upon the same subject of the numerous variations that the value of gold has undergone in relation to silver, I could cite a great number of other works: I will mention, for example, the treatise of Lord Liverpool, for England; the Traité des Monnaies, of Leblanc: the work of Mr. Jacob, of which I have here made frequent use; and also the memoirs of M. Charles Lenormant, my learned colleague of the Institute, and of his son M. Francois Lenormant. I have already referred above to the Traité d'Economic Politique of M. Roscher.