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CHAPTER VI.: of the resolutions of a commission appointed by the minister of finance in mdccclvii. - 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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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:
It will be well for the commission to examine successively these different questions, without prejudice to those which may arise out of the inquiry.
[*]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.