Revolution In Prices.—Influence Of The Non-Monetary Use Of Gold And
Silver.
To understand why so great an increase in the production of the precious
metals produced so small a decline of their value in exchange, we must
turn our attention to the other and further uses of gold and silver. The
amount devoted to these uses can never be very accurately determined,
since governmental stamping of every new gold or silver article would
afford no evidence as to the number of such articles manufactured out of
old articles etc.(857) Certain it is, however, that the aggregate amount
of gold and silver thus employed, increases with the increase of luxury
and wealth among modern nations, and that a quantity of the precious
metals thus used, especially when used for purposes of gilding for
instance, is irrestorably lost.(858) In addition to this, there is the
wear and tear of coin in circulation, which is naturally greater in the
case of large pieces than of small, and, therefore, in the case of silver
than of gold. There is, further, the damage caused by the loss of coin in
conflagrations and shipwrecks, and that occasioned by buried and forgotten
treasure.(859)
But, lastly, the principal cause consists in the powerful increase of the
demand for money, which, during the last two centuries, the great impulse
given to the rapidity of circulation, and the great increase in the
substitutes for money, have scarcely been able to outweigh. Besides the
great growth of population and of wealth, at least in Europe and the new
world, I need call attention only to the immense advance made in the
division of labor, and to the transition from trade by barter to trade
through the instrumentality of money. The entire war and merchant marine
of England, about 1602, had, according to Anderson, a capacity of only
45,000 tons,—that is, not one-fifth of what the small city of Bremen has
now; a capacity which at the close of the year 1873 amounted to 237,206
tons—while in 1872 its merchant marine alone had a capacity of 7,213,000
tons. The aggregate foreign trade of England, France, Russia and the
United States, in 1750, amounted to about 260,000,000 thalers; in 1864, it
was over 5,400,000,000, and between 1871 and 1872, in one year, over
9,000,000,000 thalers. Nor should it be forgotten that Europe’s trade with
the East, since the beginning of the sixteenth century, increased
immensely. This, at present, produces uniformly a very “unfavorable
balance” for Europe, which can be made up for only by very large shipments
of silver to foreign parts.(860) If China and India were suddenly to draw
on us for other commodities instead of gold and silver, the result would
be a great revolution in prices in Europe.