The value attached to the precious metals in their character of money,
is not of an arbitrary nature. Neither governments nor councils can
change it at their will and pleasure. The power publicly possessed
in this respect is but the organ of facts, which it submits to and
proclaims as law. The head of the Government stamped on the coin
creates a value only by the declaration of its intrinsic weight and
fineness; but the price of the gold and the silver is exactly that of
their commercial value in exchange. In this consists the stability and
the regularity of the circulation of money.
The cause which determines the value of the precious metals is the same
as that which affects the price of every other article of merchandize;
the supply and the demand--the comparative abundance or scarcity of
gold or silver in the market. The larger the metallic supply, the
smaller value will it bear; its commercial value will vary in exact
proportion to the increase in quantity. On the other hand, the smaller
the quantity of money in circulation, the larger will be the value
attaching to each separate piece; a smaller quantity of such money
will then suffice to buy a larger amount of goods, and goods are said
to be cheap--or what if in effect the same, money,--may be called
dear. This money, in the time of Charlemagne, possessed a power eleven
times greater than at present--that is to say, it was eleven times more
scarce. It is well-known that the discovery of America, in overpowering
with a fresh supply of the precious metals the metallic circulation of
Europe, brought about a sudden and large depreciation of their value,
which, notwithstanding a variety of oscillations, has been generally
maintained to the present time. Not only does the state of the market
mark the value of _gold_ and _silver_ with reference to other articles;
but there is positively no other base on which the comparative value
between the two metals can be determined, but the _abundance_ or
_scarcity_ of either.
The relation between gold and silver is variable in its nature. In vain
has Garnier, the commentator on Adam Smith, attempted to establish
his position, that the value of gold in ancient times differed little
from its value in our days; and that it then represented, according
to Herodotus, and under Darius in Persia; and again, during the time
of Plato, in Greece, weight for weight and purity for purity, about
fifteen times the value of silver. Criticism has not failed to demolish
entirely this ingenious but frail hypothesis. It has been clearly
demonstrated that silver did not hold in ancient days, the important
place it has obtained in ours, and which has subsequently rendered it
the all-powerful agent of circulation.
When we seek to examine minutely the various monetary changes which
have occurred, and to lay hold upon some principle to guide our
inquiry, we quickly recognize the fact, that the difference in value
between gold and silver increases in proportion to the development of
civilization and industry. It is not without some show of reason, that
mythology, transporting the analogy of the physical into the moral
world, made the age of silver succeed that of gold. Historically, in
fact, the discovery of and the working of gold preceded that of silver.
Gold is almost always found either pure or mixed with silver. In
searching the beds of rivers and streams, it has been obtained by the
mere process of washing. This work is within the reach of the rudest
state of society. It appears like a treasure spread over the surface
of the earth, under the very feet of the first occupier of the soil.
Silver, on the contrary, is embedded in rocks of primitive formation,
and is seldom found near the surface of the earth; its extraction
requires a combination of science, machinery, and capital. It is
the work of a state of civilization already far advanced and firmly
established.
In almost every age, whatever its social position, the use and the
value of gold has been known. From India to Iberia, and from Ethiopia
to the Poles, there is not a race which has not attempted to discover
this source of wealth on its surface. What country has not had its
Pactolus! What Prince or Satrap has not been a gold collector, like
Midas or Crœsus! The luxuries of ancient monarchs appear to prove an
abundance of metallic treasure, which has been subsequently unequalled,
but the sources of the supply have faded away in their turn. Dureau de
la Malle observes, that from the death of Alexander, the golden sands
of Asia and Greece appear to have been exhausted; those of Gaul and
Spain seem to have been abandoned after the fall of the Roman Empire.
Gold has long since disappeared from the surface of the older inhabited
countries; there is only now to come, in quantities of appreciable
amount, or capable of affecting the circulation, the produce of those
countries which have been unknown to European commerce, or which have
been discovered in modern times.
Referring to history, we find that the employment of silver as money
is of no very ancient date, and that it was introduced as a medium of
exchange, not by conquerors, but by people of industry and of commerce.
It would be sufficient to cite the Phœnicians, those planters of
colonies,--the Athenians, and the Carthagenians. On the first discovery
of America, silver money was found in use amongst only two nations
holding any political position--Peru and Mexico. And again, if silver
at a later period has taken the place of gold in circulation, it has
been maintained with more regularity and permanence. The mines--from
wherever it has been extracted, penetrating into and ramifying
throughout the bowels of the earth,--are almost inexhaustible. It
is thus shewn that the production of silver is found to continue
where that of gold is at an end, and hence the variations which past
experience has shown to exist in the relative position of the precious
metals.
The learned researches of Boeckh, Letronne, Humboldt, Jacob, and Dureau
de la Malle have thrown much light on the causes, and on the importance
of these monetary oscillations. They agree in the admission, that
originally the value of silver in some countries has equalled, if not
exceeded, that of gold. The laws of _Manon_ state a value of gold as 2½
times that of silver. M. Dureau de la Malle considers that between the
fifth and sixth century before our era, everywhere, excepting in India,
the relative value of gold to silver, had been 6 or 8 to 1, as it was
in China and in Japan at the end of the last century. It has been found
to have been as 10 to 1 in Greece, in the time of Xenophon, 350 years
before the Christian era; and even 100 years later, the treaty between
Rome and Etolia proves a similar ratio.
In the present day, the discovery and the working these new metallic
stratifications are the only causes which can materially change the
relative value of the precious metals. Formerly, conquest, by which one
nation became rich at the expense of another, or the pillage of those
great reservoirs of money called public treasures, throwing suddenly
vast sums of money into circulation, could not fail to depreciate
either one or other, if not both, of the precious metals. It was
thus that the conquests of Alexander, opening the gates of the East,
inundated the Greek world with the precious metals, which were lowered
in value by their abundance, and dissipated from their very excess.
After the capture of Syracuse by the Romans, silver, the foundation
of the treasure they had seized, fell suddenly in price, so that
seventeen pounds of silver were valued at one of gold. A little later
the relative price was as 12 to 1, when Cæsar, having plundered the two
milliards contained in the public chest, so reduced the value of gold,
which then predominated, that the proportion fell to 9 to 1. Under the
Roman Emperors, the production of gold began to slacken,--the progress
of mechanical science, on the other hand, gave a constant impetus
to the working of the silver mines of Asia, Thrace, and Spain. The
comparative value of the two metals again changed; it was as 18 to 1 in
the time of Theodosius the Younger, 412 years after the birth of Christ.
At the commencement of the fall of the Roman Empire, in the 4th
century, the value of the precious metals approached that of our own
days. The invasion of the barbarians, in dispersing and dissipating the
accumulated treasures of the West, destroyed for a time the industry
required for their renewal. Money, on account of its scarceness,
acquired an extraordinary power; the price of every article fell,
or, in other words, the value of silver rose to a most extraordinary
degree. Not only did the value of money and of the precious metals
increase in that long dark night of the middle ages, but the relative
value between silver and gold, which had been established by the
progress of industry, again changed. The value of gold, in relation
to other commodities, was preserved longer than that of silver, owing
to its greater general value, and to its being the less destructible
metal; and also because its supply was fed by the washings of the
golden sands; a fit occupation for the knowledge and tastes of an
ignorant people. The working of the silver mines, on the other hand,
being a work befitting a civilized and scientific people, was naturally
interrupted, and languished during a period of spoliation and endless
warfare. Hence, as we may suppose, arose the scarcity, both relative
and absolute, of silver; the comparison with gold remained at 11 and
12 to 1 from the 9th to the middle of the 16th century. It required
the excessive and sudden abundance, springing from the working of the
mines of Potosi, and in Peru, and of Zacatecas in Mexico, to reduce
the proportion to 14 and 15, the average rate at which it remained in
Europe until the end of the last century.