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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.

CHAPTER VI.

of the resolutions of a commission appointed by the minister of finance in mdccclvii.

After the discovery of the mines of California, and before that of the auriferous deposits of Australia, a commission had been appointed by the French government to examine into the probable effects of the great and rapid arrivals of gold consequent on the operations in the valleys of the Sacramento and the San Joaquim. This commission came to no conclusion; the indications of experience were then too incomplete. The facts having been afterwards much strengthened, a new commission was named the 7th Feb., 1857, by the minister of finance.

The commission received instructions “to inquire into the principal causes of the monetary situation, to investigate the various questions which arise out of it, and to report its opinion on the measures called for by the general interests of the country,” In these terms, the outline traced for the labours of the commission was extensive. In February, 1858, it had finished its labours, according to a more restricted plan which it had traced for itself, or, to speak more correctly, which had been suggested to it, and which it accepted, and in its name a report was presented, which it is impossible to pass by in silence.

In the programme of which I have just spoken, as having been received and accepted, California and Australia were not upon the first plan; the fact of the exportation of silver from France was the phenomenon to which the greatest importance was attached, and everything was made subordinate to it. Australia and California are not even mentioned, no direct allusion is made to them.*

Thus the point of departure for the deliberations of the commission was not, perhaps, the best that could have been chosen. As to its conclusions, they are of a nature to astonish those who are conversant with economical questions; here is, in fact, the substance of the report:— The principal cause of the disturbance witnessed for several years in the monetary system of France, is to be traced to the extraordinary demand for silver for exportation to the remote East. This unusual demand has caused a rise in the value of silver as compared with other commodities. As for gold,—it does not seem to have fallen, notwithstanding the large production of California and Australia. The best mode of remedying the difficulty which we encounter would be to maintain, compulsorily in France, the relation of 1 to 15½ established, or rather confirmed, by the legislation of the year 11. To prevent the foreign market from exercising in this respect any influence on the market of France, it is only necessary to put a duty on the exportation of silver, and to establish penalties against the heads of establishments who engage in or connive at the trade. Thus the conclusion of the commission is that a duty should be laid on the exportation of silver. The commission even adds that it should be a high duty. Moreover, the better to impede exportation, the selecting or assorting of pieces of money shall be an act punishable under the penal law.

Now, if there be anything confirmed by history, it is that the efforts of governments are powerless to regulate the value of gold and silver in relation to other commodities, or to one another, and that they are equally so to compel the precious metals to remain in the interior of a State, should commerce give the impulse to their exportation. This twofold observation is a truism which one regrets to have to revive. If there be in political economy anything universally acknowledged, and with which intelligent governments are in accord, it is that the precious metals should be treated as merchandise, and left to the free action of commerce, including, of course, the liberty of melting and all that appertains to it. The conclusion of the commission is right in the teeth of these well accredited doctrines. On the subject of the currency, we should be thus embarking with all sails set upon the waters of the ancient regime, when other civilised countries, led by the voice and example of France, had agreed to follow another course.

It may then be believed, on its own simple announcement, that the unanimous opinion of competent men, will be against its recommendations. They rest, in fact, on ideas which, thank Heaven, time has disposed of.

In fine, the commission proceeded, as will be seen, in a manner to deprive of all authority its chief proposal for preventing the efflux of silver by means of a duty on exportation. Before coming to that vote, it took the laudable course of consulting the most eminent and enlightened members of the commercial and banking interests, eight of whom, of the highest standing, were summoned to its presence. They were examined separately upon this special subject, and the question was presented to them in every form. The reiterated testimony of these eight persons was unanimous: they persisted in repelling the idea of a duty on exportation. Under these circumstances, the decision of the commission is presented in not very favourable colours. When the commission decided to call before it, one after the other, eight important persons, in order to consult them in detail on a given subject, that is, the propriety of stopping, by a resort to the material obstacle of a custom-house, the export of silver, it was because it felt the necessity of obtaining further enlightenment. But, then, how could it decide against the unanimous and very decided opinion of those eight counsellors whom it had chosen as the most competent to edify it?

In the history of the European currencies, the commission would have found, at an epoch not very remote from our own time, a precedent which seemed almost expressly made for it, so well was it adapted to the circumstances in which it deliberated, and especially to the position of the very question which it had accepted.

Towards the commencement of the eighteenth century, the monetary system of England underwent a perturbation, of which the most apparent phenomenon was the same as has been repeated in France since the discovery of the mines of California and Australia: the silver was either sent abroad in coins, or was cast into the crucible to be exported in bars, and gold took its place in the circulation. The British government, alive to this state of things, asked the advice of the great Newton, who was then director of the Mint, and who brought to the performance of the duties of his office the same care, the same acuteness in the observation of facts, and the same earnest spirit of analysis to which he owed, in the progress of science, the admirable discoveries which have immortalised his name. To the question which was submitted to him, the 12th August, 1717, to determine the causes of the exportation of silver, and to indicate a mode of putting an end to it, Newton replied, the 21st September, in terms which I will shortly explain.

At that time, custom-house duties were used and abused for all sorts of purposes, and every kind of restriction, besides, was placed on the industry of the country. At the same time, the extension and exaggeration of the penal laws were expedients to which authority eagerly resorted, and which were very convenient, because they relieved them from the necessity of maturely studying the questions which presented themselves, and of comprehending the origin and nature of things. Newton would have, therefore, been excusable if he had recommended more rigorous acts against the exportation of silver, and the application of a severe penalty directed against tokens and light weights. But measures of this Jrind were not those towards which a man like Newton directed his mind, and in England already more intelligent traditions had established themselves, more care for public opinion, and more respect for human liberty, in its relations with industry, as well as with the other aspects of civilised life. Thus, then, proceeded Newton:—

After having passed in review the value of gold and silver in the different States, and having shown that in England the legal relation gave too much to gold to the detriment of silver, he argued in the following manner:— If silver leaves the shores of England in crowns or in ingots, the produce of coins remelted, and gives place to gold, it is. because the value which the monetary legislation assigns to it, in relation to gold, is not correct. The law supposes, in fact, that the relation between gold and silver is that of one to a little more than 15½,* whilst in the general market of Europe it is barely 1 to 15.* That, let the legal relation between gold and silver be re-established upon the true basis, and by that act we shall have destroyed the temptation to export from England silver in preference to gold. To effect this, nothing more need be done than to withdraw 10 or 12 pennyweights from the value assigned to the guinea in silver money. For greater prudence, Newton advised the reduction to be made in two operations, and to commence by an abatement of six pennyweights.†

The note of Newton is a model of logic and precision. We recognise in it that firmness and justness of mind which laid hold of the foundation of questions, threw aside accessories and extraneous or indifferent objects, and went straight to the end in view. The reasoning of his note applies word for word to the problem which Our Commission had to solve. Here is in effect what may be said in our day:—for several years, silver has been leaving the shores of France, in crowns, or in ingots, the produce of coins remelted, and giving place to gold, because the value which the monetary laws assign to it in relation to gold is not correct. The law supposes, in fact, that the relation between gold and silver is that of 1 to 15½, whilst in the general market of Europe, it is sensibly less. Let the legal relation between gold and silver be re-established upon the true basis, and by that act we shall have destroyed the temptation to export from France silver in preference to gold. To effect this, nothing more need be done than to withdraw from the value attributed to pieces of gold in silver money a given quota, certain to retouch periodically this relation, so that it shall always be in harmony with the real state of things. I put aside here the question whether we should render the monetary system of France more conformable to principle, and whether the application of this mechanism to the geld coins would not be better effected by replacing the quantities of metal which constitute the coins in usage, by others which contained a round number of grammes, of five or ten, for example.

It is much to be regretted that a commission which, deliberating in 1858, at Paris, the centre of European intelligence, and the metropolis of the civilized world, as we are in the habit of calling it, should have refused to adopt the opinion of so great an authority as Newton, so competent in the matter,—an opinion put forth under circumstances from which what is passing in our day in France respecting silver money might have been borrowed, and which was, moreover, sanctioned forthwith by government at the instance of parliament.** It is difficult to conceive how, repudiating such an authority, this commission should have permitted itself to draw its inspiration from the edicts of the ancient regime upon money, which are monuments of ignorance and despotism.

[*]The following was the programme:

1st Question.—What is, in fact, the importance of the exportation of silver?

2nd Question.—To what cause, direct or indirect, must this fact be attributed?

The premium of silver over gold. Its degree, its variability.

The natural movement of our international commerce with the countries which prefer silver.

Private and direct speculation of the money-changers and refiners.

What part belongs to each of these causes?

3rd Question.—What may be, in a general point of view, the influence for good or evil of the destruction or the exportation of the silver currency?

What good can arise beyond the private benefit which may be derived by the money-changers and refiners?

What harm can ensue:

To the Bank, and in consequence to commerce, by the weakening of the reserves of specie?

To the State, in obliging it to interfere at its cost, to replace constantly with new coins those which the refiners had melted?

To commerce, in depriving it, as might happen very speedily, of a description of money which is very necessary to it in its relations with other countries; or in compelling it to pay for it the premium which the money-changers shall have gained?

4th Question.—In face of the fact and its consequences, is there nothing for the government to do?

If so, what steps ought it to take?

Many have been suggested:

• 1. To demonetise gold, and bring it to the state of simple merchandise, excepting the fixing officially its value at periodical epochs;
• 2. To transform silver money into a conventional currency, by giving it a nominal value, superior to its real value, as in England;
• 3. To transform the silver money, by giving it a nominal value, equal to its actual real value, that is, by changing the relation established by law between gold and silver;
• 4. To prohibit the exportation of silver;
• 5. To raise the duty on the export of silver;
• 6. To lower the recognised weight and fineness;
• 7. To attack directly the evil in its material and immediate source by a law against the destruction of money, assuming that the ancient laws are no longer in force; and with this view to prohibit the selecting and purchasing of coins at a premium for the purpose of melting.

It will be well for the commission to examine successively these different questions, without prejudice to those which may arise out of the inquiry.

To make a subsidiary inquiry whether the State ought not to reserve to itself the exclusive right of withdrawing from the circulation the coins bearing the inscription of Charles X., and of Napoleon I., which contain a quantity of gold, the melting of which constitutes the chief benefit to the refiners. What measures should be taken to carry out this object? 12

[*]Newton says that I pound, troy weight, of fine gold is worth legally 15 pounds, 6 ounces, 17 dwts., and 5 grains of silver. The pound troy is-only 12 ounces.

[*]Newton saya 14 4/5 to 15.

[†]This report of Newton has been reprinted in a volume of documents upon the currency, which has been published by the London Political Economy Club, to which I hare previously referred.—Select Tracts on Money, p. 274.

[*]The reduction of six pennyweights per guinea was made before the and even of the year 1717, by royal proclamation.