received from Austria alone 1,300,000 florins yearly for hogs.
(_Ranke_, Serb. Revolution, 95.) In 1864, Servia’s total exports
amounted to 62,500,000 piasters, of which 28,162,260 were for hogs,
7,043,000 for wool, 7,662,000 for the skins of sheep and deer,
5,732,000 for cattle, 1,222,400 for tallow. (_Kanitz_, Serbien, 598
ff.) Great production of hogs also in the Moldau and in Wallachia,
in the United States and Mexico, where, instead of butter, only lard
and suet are used; also in Lombardy, the Prussian Rhine province,
Belgium, the English milk-producing districts, Gloucester, Wilt,
Dumfries, Galloway and the districts where agricultural proletarians
abound—Ireland and Yorkshire. It is a consequence of the same law
that, among the South Sea Islanders, the hog was the principal
domestic animal, as it still is among the Chinese. Similarly in the
whole of Asia, beyond the Ganges (_Ritter_, Erdkunde, IV, 938,
1101); in semi-barbarous upper Italy in the time of _Polybios_ (II,
15); in Gall itself, in the time of Augustus. (_Strabo_, IV, 192,
197.) The America of the ancient Greeks, Sicily, exported hogs,
mainly, in the time of Hermippos. (_Athen._, I, 27.) And even among
the Romans, the consumption of pork was much greater than the
consumption of beef. (_Marquard-Becker_, Handbuch, V, 2, 39.)
806 In the cities of Prussia subject to a tax for the privilege of
maintaining slaughter houses, a pound of beef cost on an average, in
1846, from 2 silver groschens, 5 _pfennigs_, to 3 s. gr. 4 pf.;
pork, from 3 s. gr. 2 pf. to 4 s. gr. 4 pf. (_Dieterici._) In
Moscow, also, the latter is dearer at present. Before the time of
Peter the Great, it was cheaper. (_Storch_, Handbuch I, 364.) It was
a sign of high civilization, too, that in Florence, in the fifteenth
century, veal cost, on an average, 2-½ soldi; mutton, 2-⅓ soldi; but
pork, 4 soldi. (_Pagnini_, Saggio sopra il giusto Pregio delle Cose,
325 f., Cust.) It is especially the lower middle class who ask for
fat meats. The very fat English sheep are taken not to London, but
into the manufacturing districts. (_Lauderdale_, Inquiry, 322 f.) As
to whether the relatively high price of pork, and the fact that in
the later times of Rome, the wild boar was the most fashionable
dish, compare _Becker_, Gallus, II, 186.
807 The production of fowl is similar in this, that they are frequently
fed from remains of consumption; only their production is not
adapted to uncivilized countries, because it is difficult to protect
them there. In Texas, it is said, it costs more to raise ten
chickens than to bring up ten children. (_Kennedy_, Czarnkowski’s
translation, 1846, 115.) The independent breeding of fowl is
advisable only where there are a great many rich consumers; for the
reason that they are naturally a delicacy. Enormous production of
pigeons in Cambridge, Huntington etc. (_McCulloch_, Statistical
Account, I, 189.) In Paris the consumption of pork and fowl has
gained somewhat since the Revolution. (_M’Chevalier_, Cours. I,
113.)
808 According to _Schuckburg_, Philosophical Transactions of 1798, and
_Kraus_, Vermischte Schriften, I, tab. I, the prices of the
following species of animals rose in England between 1550 and 1795:
horses, 904 per cent.; oxen, 896 per cent.; sheep, 876 per cent.;
cows, 2050 per cent.; hogs, 1964 per cent.; geese, 300 per cent.;
butter rose from 5d. per pound to 11-½d.; beer from 1d. per gallon
to 2-¾d.; agricultural day wages from ½s. to 1s. 5-¼d.; wheat 326
per cent. Compare, however, Edinburg Review, III, 246 ff. In Germany
also, cows and hogs have increased much more in price than horses
and sheep. (Tübinger Ztschr., 1871, 342.) _Dutot_, Réflexions, 946
ff., éd. Daire, says that the value of the precious metals in France
decreased in value between the times of Louis XII. and Louis XV. in
the ratio of 3-79/91:1. On the other hand, the prices of different
commodities rise in very different degrees:
Fat sheep, from 7 sous to 10 livres.
Lean sheep, from 5 sous to 5 livres 10 sous.
Hogs, from 10 sous to 25-35 livres.
Capons, from 1 sou to 12 sous.
Hens, from 1-½ sous to 6 sous.
Pigeons, from 1-½ sous to 3 sous.
Deer, from 1-½ sous to 15 sous.
809 Thus, in Thuringia, the average price in silver of corn from the
sixteenth century until the period 1848-61 increased in the ratio of
from 1 to 3-4; the price of the different kinds of animals, on the
other hand, from 1 to 5-10. (_Knies_, in _Hildebrand’s_ Jahrbb.,
1863, 78.) The price of the different kinds of corn as compared with
one another may, however, be modified by many different
circumstances. Thus the Capitulare Saxoniæ of 797, c., II, estimated
the prices of rye, barley and oats to be to one another as 30:30:15;
while the Magdeburg Chamber of 1804 estimated them to be as 17:14:8.
In the kingdom of Saxony, in 1841-9, the average prices of wheat,
rye, barley and oats stood to one another in the ratio of
144:100:75:47 (_Engel_); while, in the middle ages, wheat, rye and
oats were as 9:6:3 (_Gersdorf_, Cod. Depl. Sax., II, p. XXXIV);
under Prince August, corn, barley and oats were as 24:22:12.
Assuming the price of rye to be equal to 100, the cost was:
At Brussels, in the 16th century, wheat 126.7, barley 80, oats 50
At Brussels, in the 17th century, wheat 138.8, barley 82.9, oats
51.9
At Brussels, in the 18th century, wheat 147, barley 86.7, oats 55.2
At Brussels, 1815-1844, wheat 156
At Brussels, 1841-1850, wheat 153, barley 82.7, oats 51
At Berlin, 1789-1818, wheat 135, barley 74.8, oats 54
At Berlin, 1819-1832, wheat 143.5, barley 74.9, oats 52
(_Rau_, Lehrbuch, I, § 183.) To understand this, it is necessary to
bear in mind the relatively great increase of wheat bread, beer made
of barley, and horses, as objects of luxury. The unusually low price
of oats in North America, as compared with the price of wheat, is
dependent on the facility of exporting the latter. In Florence, in
the fifteenth century, the price of wheat was 22-⅔, of rye, 12, of
barley, 8 _soldi_. (_Pagnini_, Sopra il giusto Pregio delle Cose,
325.)
810 The English so called custom-house prices (_Zollhauspreise_)
correspond to the market prices of 1696. If these are assumed = 100,
the price
Of steel and iron was, in 1826, 83, in 1831, 56
Of coal was, in 1826, 47, in 1831, 45
Between 1835 and 1850, Scotch iron had already become cheaper by
one-half (_Meidinger_, 387), and coal in London by one-third
(_Porter_).
_ 811 Rogers_, History of Agriculture, I, 67.
812 In England, in 1172, an ox cost 2 shillings; in 1175, green cloth
cost per ell, 2-10/12 shillings; red cloth, 5-½ shillings. (_Eden._)
In the western states of North America, the farmer gives two pounds
of coarse wool for one pound of woolen yarn; he sends 4 bushels of
wheat to the miller for the flour of three bushels (Ausland, 1843,
No. 68), while in Ravenna, in the thirteenth century, the miller’s
fee was 1/10 (_von Raumer_, Hohenstaufen II, 437); according to the
fixed prices in _Fantazzi_, (Monumen. Ravennet.); in Germany, during
the last centuries of the middle ages, 1/8 (_J. Grimm_, Weisthümer,
III, 8); at the end of the sixteenth century from 1/8 to 1/5
(_Coler_, Oeconomia, II, 3); in modern Germany, generally 1/16 of
the raw material, and in the steppes of southern Russia, when the
wind is still, in summer, even the half. (Mitth. der freien ökonom.
Gesellsch. zu Petersburg, 1853, 85.) In Guiana, in 1806, a very
ordinary saddle and bridle could not be had under 10-½ guineas.
(_Pinckard_, Notes on the West Indies, III, 1806.) _Count Görtz_ was
obliged to pay 2 dollars, in Demarara, for the cleansing of a rifle,
and another person for the oiling of a carriage, 5 dollars. (Reise
um die Welt, 1864, 327.) A lady’s dress in Mobile costs four times
as much as in London or Paris. (_Ch. Lyell_, Second Visit to the
United States, II, 70.) In Athens, articles of clothing, even for
the poorer classes, were never as cheap as they are in civilized
countries to-day. (Compare _Plutarch_, De Tranquill. Anim., 10.)
813 In Upper Italy, between 1261 and 1400, a lady’s chemise and the
making of it cost 14.77 lire; Rheims linen, 7.04; ordinary mourning
cloth, O.45; black cloth from Moriana, 2.83; cloth from Mecheln,
43.83; from Ypres, 47.04; scarlet cloth, 80.44 per ell. (_Cibrario_,
1. 1.) On the other hand, to-day, in the Leipzig market, the
difference in price of the dearest and of the cheapest cloth will
scarcely surpass the ratio 18:1. Even _Scaruffi_, Sulle Moneta,
1679, 163, Cust, remarks that hemp-linen and similar coarse articles
had increased much more in price than brocades; but he ascribes this
circumstance to the disordered state of the coinage. It is much
better accounted for by _Adam Smith_, Wealth of Nations, I, 386, ed.
Basil.
814 Before the plague in the fourteenth century, the cwt. of lead was
worth 10-½d.; of iron, 4s. 1d. (_Rogers_, I. 599.) On the other
hand, between 1848 and 1856, the average January price of bar-iron
was £7, 11s.; of lead, over £20. (_Newmarch._)
815 Thus, in England, the price:
Of glass was, in 1826, 387; in 1831, 369 per cent.
Of leather was, in 1826, 285; in 1831, 123 per cent.
Of silk goods was, in 1826, 158; in 1831, 249 per cent.
of the price of the same articles in 1796. (_Rau._) Of 29 chemical
products of the Parisian manufacture, the wages of labor is on an
average only 7.4 per cent. of the selling price; and, in some cases,
only from 1 to 2 per cent. (_Chabrol_, Richerches Statistiques sur
la Ville de Paris, 1821; _Hermann_, Staatsw. Untersuch., 137.) In
Buschtiehrad, between 1670 and 1870, barley rose from 1 to 4.8; hops
to 6.52; fire wood to 6.14; the excise to 6.54; but beer only to
2.81; although wages increased ten fold. (_Inama Sternegg_, Gesch.
der Preise im österreich. Ausstellungsbericht von 1873, 43.)
816 A silk cloak lined with fur cost in the time of Charlemagne, 400
scheffels of rye, one not so lined 200. (_Hullmann_,
Finanzgeschichte, 212 ff.) In Florence in the fifteenth century, one
pound of sugar was equal in value to 15 pounds of mutton.
(_Pagnini_, 326.) In Turin, in the fourteenth century, 1 pound of
pepper was equal in value to 28 pounds of salt. (_Cibrario_, III,
359, 362.) As late as the middle of the fifteenth century, the court
of Duke William of Saxony paid for one pound of sugar 1 thaler and 8
groschens, while ducal fees paid to servants and workmen seldom
exceeded 2 gr. Hence, even at a princely meal, often scarcely ½ a
pound was consumed. (_Büsching_, Ritterzeit, I, 137 f.)
817 Charlemagne’s capitularies suppose a merchant’s profits to be from
100 to 200 per cent. (a. 809, c. 34.) And even in our own day,
merchants in the markets of Cabul are frequently not satisfied with
a profit of from 300 to 400 per cent. (_K. Ritter_, Erdkunde, VII,
244), and the caravans which leave Maroc for the Soudan are wont, in
exchange for commodities amounting in price to 1,000,000 piasters,
to return with a supply of other commodities worth 10,000,000.
(_Stein-Wappäus_, Handbuch, Africa, 33.) According to _Büsch_,
Geldumlauf, II, 10, the price of East Indian products in Hamburg was
some 70 per cent. higher than at home, while _Pliny_, H. N. IV, 26,
speaks of a price one hundred times (?) as high; and its spices, at
the time of Portuguese dominion, were sold at a profit of at least
600 per cent., in Europe. (_Crawfurd_, History, VII, 360; _Ritter_,
Erdkunde, V, 872.)
818 When Humboldt found a missionary near Cumana who paid 7 piasters for
a cow, and was obliged to pay 17 piasters for blood-letting, rather
unskilfully performed, he found an illustration of one of the
peculiarities of colonial life—to have all the wants of higher
stages of civilization but not the means of satisfying them.
(Relation historique, I, 374.)
819 Enormous payments made to distinguished virtuosi, actors, sophists
and hetares at the time in question, also to Appelles, Aristides
etc., for works of art. (_Plin._, XXXIV, 19, 2, XXXV, 36, 19.) The
actor Aesopus (see § 233, note 6) had a fortune worth 20,000,000
sesterces, while Pompey, for instance, had 70,000,000. Roscius
received from the state for every day he played, 286 thalers, and
earned 43,000 a year. (_Mommsen_, Römische Geschichte, III, 483,
547.) Compare _Cicero_, pro Roscio Comœdo, 10, and _Plin._, H. N.
IX, 59, X, 72. The zither-player, Amoebaeos, received one talent for
each appearance. (_Athen._ XIV, 623.) According to _Pliny_, H. N.
XXIX, 5, the Roman _principes_ gave the most distinguished doctors
yearly 250,000 sesterces, and even more as an honorarium. At the end
of the eighteenth century, the greatest Parisian actors received
from 4,000 to 5,000 francs per annum. Now 100,000 is considered a
moderate income for one. (Journ. des Economistes, May, 1854, 279.)
It is said that Frederick Hase earned $30,000 in America in ten
weeks. (Leipz. Tagebb., 15 Jan., 1871.) _Steuart_, Principles, II,
ch. 30. _Adam Smith_ frequently represents it as a rule, that
superfluous goods like gold and silver, are dearest among the
richest nations, necessary goods among the poorer, and _vice versa_.
But the supply has much more to do with the permanent price of a
commodity than the demand for it has. And the principle above
mentioned applies only in so far as the supply is here an unlimited
and there a limited one. Hence, the comparison of silver with
painters’ and sculptors’ works is not an apposite one—in the case of
these there is a natural monopoly, while the former, on account of
its durability and capacity for transportation, may, on the
contrary, be increased almost at pleasure.
820 Besides _Böckh._, Staatshaushalt der Athener, 1817, Book I, compare
_Arbuthnot_, Tables of ancient Coins, Weights and Measures, 2d ed.,
1754, _Reitmeyer_, Ueber den Bergbau der Alten, 1785, and Michaelis,
De Pretiis Rerum apud veteros Hebræos, in the Comment. Societ.
Gottingensis, vol. III. The principal sources of information among
the ancients are _Diodor._, V; _Strabo_, III, V; _Plin._, H. N.,
XXXIII.
821 The money revenue of the Persian king, to the amount of 14,560
talents yearly, was transformed into bars and thus deposited in the
treasury. _Herodot._, III, 95 f. Even the little vassal prince
Pythios of Celænæ had a treasure of 2,000 talents of silver and
4,000,000 pieces of gold. (Ibid, VII, 26 f.) On the money stores of
private persons, see _Plin._, H. N., XXXIII, 47.
822 An ox was worth, in Solon’s time, 5 drachmas; in 410 B.C., 51 dr.;
374 B.C., 77¼ dr.; a medimnos of wheat in Solon’s time, 1 dr., about
390, 3 dr., under Alexander the Great, on an average, 5 dr.
(_Böckh._, I, 102, f.) The usual amount of ransom paid for a
prisoner of war, in Kleomenes’ time, was 2 minæ (_Herodot._, V, 77,
VI, 79); under Dionys., I, 300 m. (_Aristot._, Oeconom, II, 21);
under Philip of Macedon, from 300 to 400 m. (_Demosth._, De fals.
Legat., 394); under Demetrios Poliorketes, 1,000 for a free man, 5
for a slave. (_Diod._, XX, 84.)
823 This booty for Susa alone amounted to from 40,000 to 50,000 talents;
for Persepolis, to 120,000; for Pasargadæ, to 600. _Curtius_, V, 2,
6; _Strabo_, XV, 731; _Justin_, XI, 14; _Arrian_, III, 16; _Diod._,
XVII, 66, 71; _Plutarch_, Alex., 36.
_ 824 Oros._, VI, 19; _Dio, C._, LI, 21; _Suet._, Aug., 41. Decline of
the value of money under Constantine the Great, when the precious
objects of the heathen temples were coined. (Monitio ad Theod., Aug.
de inbidenda Largitate, _Thes._, Antt. Renn., XI, 1415; _Taylor_, ad
Warm. Sandvic, 38.)
825 Compare I Kings, 10, 14, 27 ff.; I Chron., 22, 2 ff.; II Chron., 9,
15 f., 12, 10 ff. On Ophir: _K. Ritter_, Erdkunde, XIV, 407 f.; on
the wonders of the discovery of Spain: _Herodot._, IV, 152.
_Aristot._, De Mirab., 146; Diodor, V, 35 ff. On the other hand, of
Greece, _Athen._ VI, 19 ff.
826 Compare _Plin._, H. N., XIV, 1. Yet the value of money in the time
of the Cæsars seems to have stood much higher than it is now, as is
proved, for instance, by the endowments by Trajan (16 sesterces per
month for boys, and 12 sesterces per month for girls), as the
_alimenta_ furnished them according to Digest XXXIV, 1, embraced
their entire support. Compare the excellent essay on this subject by
_Rodbertus_, in _Hildebrand’s_ Jahrbb., 1870, I.
827 The conquest of the Avares seems to have temporarily produced a
considerable cheapness of the precious metals. (_Guérard_,
Polyptiques, I, 141.) Increase of the value of money in Scandinavia,
during the later part of the middle ages. (_Wilda_, Gesch. des
deutschen Strafrechts, I, 323 ff.)
828 In England, from 1279 to 1509, there were coined on an average only
6,868½ pounds sterling; from 1603 to 1830, on the other hand,
819,415 pounds sterling. The average in the time of George IV., per
annum, was 4,262,652 (_Jacob_, ch. IV.) An evidence of the
uncertainty of the history of prices in the middle ages is, that
_Jacob_, ch. 12, infers, from the price of corn, that the price of
silver remained rather stationary from 1120 to 1550, while _Adam
Smith_, I, ch. 11, 3, infers from the same fact, a remarkable rise
in the price of silver from 1350 to 1570. Concerning the latter, see
_Leber_, Fortune privée au moyen Age, 16 f. _Tooke-Newmarch_,
History of Prices, VI, 391; whereas _Rogers_, Statist. Journ., 1861,
544 ff., finds that in England, between 1300 and 1532, there was no
change whatever in the price of silver. According to _Soetbeer_,
Forschungen zur deutschen Geschichte, VI, 94, wheat and rye were, as
compared with silver, worth during the Carolingian period, about
one-fourth of its value, between 1750 and 1850. _Hegel_, Shassburger
Chroniken, II, 1012, ascribes to gold over 2½ times as great a
purchasing power in the 13th and 14th centuries as in the 19th
century; and to silver, a purchasing power about three times as
great.
829 The silver ores of Peru and Mexico yield, on an average, only from 2
to 3 per 1,000 of metal; those of Potosi, at present, scarcely 1 per
1,000; those of Mexico, according to _Humboldt_, on an average, from
3 to 4 ounces per cwt.; so that many of the European ores are
decidedly richer. While the veins of the Saxon mine, Himmelsfürst,
have a breadth of only from 0.2 to 0.3 meters; the Veta-Madre of
Guanaxuato, is in few parts less than 8, and it is sometimes even 50
meters broad; and the Veta-Grade of Zacatecas is from 5 to 10 meters
in breadth. In Pasco there are veins of silver ore which have 114
and even 123 meters. _Tschudi_, Reise in Peru, K., 12; _Chevalier_,
Cours, III, 184 ff., 241 ff. According to _Humboldt_, Essai sur la
Nouvelle Espagne, III, p. 413, eleven times as many miners are
needed at Himmelsfürst as at Valenciana to obtain the same quantity
of silver.
830 Thus, for instance, the celebrated ransom-money of Athahualpa (even
according to _Garcilaso de la Vega_) amounted to only 5,000,000
thalers, while the French King John, after the battle of Poitiers,
in 1356, had to pay 41,000,000 francs for his ransom. (_Leber_,
Fortune privée au moyen Age, 121 ff.)
831 Compare _M. Chevalier_, III, 190 ff. Discovery of the quicksilver
mines of Guancavelica, 1567.
832 The yield of Potosi amounted from 1545 to 1638, to 395,619,000
pesos. (_Ulloa_, Viage, II, I, 13.) Up to the present time, the
aggregate yield there has been estimated at from 6,000 to 7,000
million francs.
833 On the worse grounded assumptions of former writers, see _Humboldt_,
N. Espagne, IV, 237.
834 There was really introduced into Spain, about 1525, not much over
2,000,000 francs annually; and after 1550, six times as much. (_L.
Ranke_, Fürsten und Völker, I, 347 ff.) Compare _Humboldt_, Ueber
die Schwankungen der Goldproduction, in the Vierteljahrsschrift,
1838, IV, 18.
835 On the Brazilian exports of gold in the 18th century, see _Schäfer_,
Gesch. von portugal, V, 192 ff.
836 According to _Humboldt_, N.E., IV, 218, the amount up to the
beginning of this century was 17,000 kilogrammes of gold and 800,000
kilogrammes of silver.
837 Thus, for instance, Mexico, during this period yielded, on an
average, 65,000,000 francs, instead of the former amount of from
130,000,000 to 140,000,000. In Carro de Potosi, there were, in 1826,
of the former 132 pool-works only 12 in operation. Compare _Adams_,
The Actual State of the Mexican Mines, 1822. _Jacob_ assumes that
about 1830, the quantity of money in Europe and America was 1/6th
less than in 1809. (Ch. 28.)
838 Of this, 1,800 kilogrammes of gold from the United States.
_ 839 Fischer_, Geschichte des deutschen Handels, 2d ed., II, 616 ff.,
673 ff. But the Schwaz mines, in the Tyrol, are said to have
produced, until 1523, 55,000 marks annually; the Freiberg silver
mine, from 1542 to 1616, 16,000 marks annually. Compare _von
Langen_, Kurfürst Moritz, II, 56.
840 The Russian gold ores, quite insignificant before the year 1814,
have made very great progress since 1840. Their aggregate yield,
between 1814 and 1861, not taking into account the amount embezzled,
amounted to 37,000 _puds_, the _pud_ being equal to 16.3
kilogrammes. The best year, 1847, gave a yield of 1,757 _puds_;
1852-1861, an average of 1,556 _puds_; 1861 alone, 1,442 _puds_, of
which 1,041 came from the private Siberian gold-sand washings.
(_Walcker_, in Faucher’s Vierleljahrsschrift, 1869, II, 115.)
841 Spanish silver production yielded, in 1845, over 184,000 marks; in
1850, over 291,000. (_Willkomm_, Halbinsel der Pyranäen, 1855, 537.)
842 Annales des Mines, X, 831 ff.
843 Of this amount, there came to Europe, not including Russia, 150,000
kilogrammes of silver, 2,650 kilogrammes of gold; to Russia, 24,000
kilogrammes of silver and 30,000 kilogrammes of gold (embracing the
quantities probably withdrawn without the knowledge of the custom’s
authorities); to the rest of Asia, 100,000 kil. of gold; to Africa,
4,000. (_M. Chevalier._)
844 According to _Humboldt’s_ assumption before the time of Columbus,
Europe had a circulation of 170,000,000 piasters; about 1600, of
600,000,000; about 1700, of 1,400,000,000; in 1809, of about
1,824,000,000. Up to 1803, there was produced in America, 9,915,000
marks (Spanish) of gold, and 512,700,000 of silver. (N.E., 245.)
_Gallatin_ estimates that, before Columbus, there were 1,600,000,000
francs; in 1830, in Europe and America, from 22,000,000,000 to
27,000,000,000 francs. (Considerations on the Currency and Banking
System of the United States, 1831.) According to _M. Chevalier_,
1850, all the silver which America produced had a volume of only
11,657 cubic meters; and all the gold of only 151 cubic meters. The
latter, therefore, would not even fill the half of a French
gentleman’s _salon_.
845 All the more in favor with governments because they affect
principally foreign consumers. Thus, the Spanish government at first
imposed a tax of 50 per cent. of the gross yield of the raw
material, on the purchaser of silver; since 1503, under Orando, of
33-⅓ per cent.; and later yet, of 20 per cent. This last tax was
therefore in full force under Cortes. This tax was reduced in
Mexico, in 1725, and in Peru in 1736, to 10 per cent., and later, in
the case of gold, to 3 per cent. Heavy taxation of Russian gold ore
(35 per cent. of the raw material), by virtue of the ukase of April
14, 1849. Compare _M. Chevalier_, III, 274.
_ 846 Cantillon_, Nature du Commerce, 215, 236, shows very clearly how
the increase of the price of commodities was produced, in the first
instance, by the increased consumption of the possessors of gold,
and how it, therefore, first affected those commodities which they
especially desired.
847 This is the opinion of _Adam Smith_. Similarly of _David Hume_, On
Money. According to _Letronne_, Considérations sur l’Evaluation des
Monnaies Grecques et romaines, 119, and _Böckh_, Staatshaushalt, I,
88, the average value of wheat in relation to silver was, in Athens,
400 B.C., as 1:3146; in Rome, 50 B.C., as 1:2681; in France, shortly
before 1520 after Christ, as 1:4320; in the nineteenth century it is
as 1:1050. _Th. Smith_, De Republ. Anglorum, I, assumes that the
price of silver, from the age of chivalry to 1625, decreased in the
ratio of 120:40. The Spaniard, _Moncado_ (1619), says as 6:1.
(_Jacob_, ch. 19.) _Jacob_, himself, in comparison with his own
time, as 7:1 (ch. 15.) Much more moderate is _Newmarch_ in _Tooke’s_
History of Prices, VI, 345 ff., who assumes an increase in the
prices of commodities of about 200 per cent. The estimated value of
tithe-wine (_Zehntwein_) about doubled in lower Austria, during the
sixteenth century. (_Oberleitner_, Finanzlage N. Oesterreichs im 16
Jahrhundert, 36.) According to the important researches of
_Mantellier_, Mémoires de la Société Archéologique de l’Orleanais,
vol. 1, 103 ff.; extract of _Lespeyres_ in _Hildebrand’s_ Jahrb.,
1865, I, 1, the purchasing power of silver as compared with the
average value of twenty-seven commodities, assuming it to have been
1 from 1750 to 1850, was, from 1350 to 1450, 2.9; from 1450 to 1550,
2.8; from 1550 to 1650, 1.5; from 1650 to 1750, 2.1. According to
_Rogers_, the prices of corn in relation to silver were from 1596 to
1636, at most 2.3 times as high as from 1260 to 1400; from 1637 to
1700, 2.6 times; from 1701 to 1764, 2.1 times; from 1726 to 1820,
3.2 times. (_Rogers_, I, 180.)
848 In Germany, the rise in prices was first observed in the price of
foreign groceries, which partly rose 400 per cent. Popular opinion
looked for the cause in the evil disposition of the large commercial
houses. In order to facilitate the competition of the smaller houses
with the larger, the Reichstag, in 1522, prohibited all companies
with a capital of more than 50,000 florins; and, in 1524, the royal
treasury wished to bring suit against the violators of this law. But
the cities contrived to avert the blow. (_L. Ranke_, Geschichte der
Reformation, II, 42 ff., 134 ff.) In Spain, the government,
especially between 1550 and 1560, endeavored to oppose the growing
dearness of goods of all kinds, by prohibiting the exportation of
the most important commodities, and by putting obstacles in the way
of retail trade. The lower classes in England ascribed the rise to
the suppression of the monasteries (_Percy_, Reliques of ancient
Poetry, II, 296), while Henry VIII. endeavored to improve the
condition of things by laws against luxury, the governmental
establishment of fixed prices, the expulsion of foreign merchants
etc. (21 Henry VIII.) The first writer who seems to have clearly
seen the true cause of the changes in price was _Bodinus_, Response
aux Paradoxes de Mr. de Malestroit touchant l’Enchérissement de
toutes Choses et des Monnaies (1568). This work was translated into
Latin by _H. Conring_, 1671; and done over in the work: Discours sur
les Causes de l’extrême Cherté, qui est aujourd’hui en France
(1574). Next, we have the English author _W. S._, A Compendious or
briefe Examination of certayne ordinary Complaints of divers of our
Countrymen of these our Days, London, 1581. In _Befold’s_ Vitæ et
Mortis Consideratio politica, 1623, 13 f., we have a right
explanation of the _caritas sine inopia_ which is to be considered
as the common property of his time.
849 Similarly _Quesnay_, 77, Daire. _Sir J. Stewart_, Principes, ch. 3.
_Kraus_, Vermischte Schriften, II, 131 ff. _Hermann_, Staatsw.
Unters., 127. _Helferich_, Von den periodischen Schwankungen im
Werth der edlen Metalle, 1843, 70 f.
850 According to _Cibrario_, a hectolitre of wheat was worth, in Turin,
from 1289 to 1379, on an average, 905 gr. of fine silver; that is,
about three times as much as in Paris before the discovery of
America, and as much as in Paris from 1546 to 1556. In Turin, from
1825 to 1835, it was worth about 1702 gr. In the fifteenth century
even, the foreign embassadors complain of the enormous cost of
living there. So, for instance, _Raumer’s_ histor. Taschenbuch,
1833, 162. Compare also, _Carli_, Del Valore della Proporzione dei
Metalli monetati con i Generi in Italia prima delle Scoperte dell’
Indie, 1760, in which he, indeed, exaggerates the matter, and seeks
to prove his views by the coarsest sophistry.
851 The chief result of _Helferich’s_ excellent researches.
(_Helferich_, loc. cit.) The general opinion, indeed, is that this
_statu quo_ of the value of the precious metals was interrupted
about the middle of the eighteenth century by another decline, and
that the latter yielded to a subsequent rise in 1815 and afterwards.
Thus _David Hume_, History of England, ch. 44, App. 31, ch. 49, App.
A. _Young_, Political Arithmetics, ch. 6. More recently, _Rau_,
Lehrbuch, I, § 176. _M. Chevalier_, Cours, III, 320 ff. One of the
principal advocates of the opinion that every increase made in the
medium of circulation produces a corresponding depreciation is
_Nebenius_, Deutsche Vierteljahrsschrift (1841). In England a
quarter of wheat was worth, on an average, 38s. 8/9d., from 1595 to
1685. On a similar stability of corn prices in Belgium, see
_Schwerz_, Belgische Landwirthschaft, III, 37. According to Suckburg
(l.c.), the value in exchange of money from 1640 to 1700 declined
32-2/9 per cent.; from 1700 to 1760, 43 per cent.; from 1760 to
1806, 84 per cent.
852 From 1637 to 1700 the price of corn in England averaged 51
shillings; from 1701 to 1764 only 40½ shillings.
853 Thus, the dearness of wheat in Germany, during the first thirty
years after the Thirty Years’ War was caused, in large part, by the
depopulation produced by the War.
854 In Germany, also, the cause of the enhanced dearness of so many
goods during the Thirty Years’ War is to be sought for in the goods
themselves.
855 Since 1815, most Birmingham and Sheffield wares have fallen from 50
to 70 or 80 per cent. in price—at least from 20 to 30. (_McCulloch_,
Statist. Account, I, 705.) The Quarterly Review, May, 1830, speaks
even of an average decline of prices of English commodities in
general, of 50 per cent.
856 Excellently carried out in _Tooke_, History of Prices, III, 1838.
That the world’s market is not so very readily affected by an
increase of the medium of circulation, is established by this fact,
among others, that the immense exportation of French metallic money
in consequence of the issue of paper money between 1716 and 1720,
and again in 1790 and the following years, is coincident with very
low prices of wheat in the neighboring countries. (_Helferich_, loc.
cit., 139, 190 ff.) And yet, in the former case, the amount was
400,000,000 francs, and in the latter, at least 1,000,000.
_ 857 Jacob_ estimates this part at only 2-½ per cent., _McCulloch_, at
20, _Lowe_ at 25, _Necker_ and _Helferich_ at 50, _Humboldt_ at 66-⅔
of the whole quantity worked. It certainly is, in our day, on
account of the ever growing aggregate supply, greater than hitherto;
but it is very different in different countries. _Nebenius_,
Deutsche Vierteljahrsschrift, 1851, 56 seq., estimates the aggregate
consumption of new gold and silver for industrial purposes at 14-½
piasters yearly, and in addition to this seven millions of old gold
and silver (_Bruchgold und Bruchsilber_). The annual wear and tear
of previously existing articles of gold and silver, it is estimated,
amounts to 4,420,000 piasters (1/420); the annual increase of their
aggregate amounts in Europe to 6,000,000 piasters (1-½ per cent.,
corresponding to the increase of population), and 4,200,000
(one-fifth of the entire consumption), is employed, as he claims, in
gilding, plating etc. The last item is probably much increased by
galvanic silver-plating, the invention of photography etc.
_ 858 Jacob_ embraces in the amount of metal employed in industrial
purposes, in the sixteenth and seventeenth centuries, 1/5 of the
amount which, after deducting the loss in Asiastic trade, was added
to the gold and silver stores of Europe; i.e., in the seventeenth
century, about 2,500,000 piasters yearly; in the eighteenth century,
⅔ (!); that is, annually, 15,000,000 piasters; in 1830, in England,
£2,457,221; in France, 120,000; Switzerland, 350,000; in the rest of
Europe, 1,605,490; in North America, about 300,000; altogether,
£5,900,000. _Humboldt’s_ estimate is 21,000,000 piasters;
_McCulloch’s_, £6,050,000. According to the records of the Paris
_Monnaie_, the amount of silver ware in France increased seven fold
between 1709 and 1759. (_Humboldt_.) In England, between 1807 and
1814, 8,290,000 ounces of silver were stamped for manufacturing
purposes, from 1830 to 1837, only 7,387,000; in 1851, 924,000.
_McCulloch_ estimates the annual consumption of silver, in
Birmingham alone, for plating purposes, at 150,000 ounces; in
Sheffield, at 500,000; and the gold consumption in the pottery
districts at £650 per week. Birmingham consumed (1831) for gilding
purposes, £1,000 gold yearly. (_Whately._) It now employs weekly
3,000 ounces of gold and 6,000 ounces of silver in the manufacture
of gold and silver ware, besides the quantity intended for gilding
and silver-washing purposes. (Quart. Rev., April, 1866, 381.) The
jewelers of New York manufacture yearly 3,000,000 of dollars worth
of gold and silver ware, mostly new material. (Economist, April 16,
1853.) There were in Vienna, in 1781, only 167 workers in gold and
silver; in 1840, 229; in 1847, 539. (_Baumgartner_, in the Wiener
Akademie, May 3, 1857.) _Jacob_ estimates the aggregate mass of gold
and silver ware, in plate, instruments etc., in Europe and America,
to be 1-¼ as great as that of the ready money; and in England alone
to be twice as great (ch. 28); while _Tengoborski_ thinks that at
the beginning of the nineteenth century, the coin constituted ⅔ of
the entire amount of the precious metals. Sometimes a movement in
the opposite direction takes place, as, for instance, in those
revolutions in which the silver of the church was confiscated; in
the unfortunate wars of Louis XIV., etc. _Nebenius_, loc. cit., 17,
mentions a South German silversmith who melted down in the years
succeeding 1802, monastery silver to the amount of 11,000,000
guldens.
859 On the wear and tear of coin, see § 120, and _Hermann_, in the
Archiv. der politischen Oek., I, 1841. Compare also, _Faust_,
Concilia pro Aerario, 1641, 263 ff. This wear and tear is so great
that _M. Chevalier_ supposes that it alone would suffice to reduce
an amount of money under Constantine the Great of 5,000 millions to
300 millions, in the time of Philip IV. (ob. 1314.) Cours, II, 322.
How great a number of coins, especially of the smaller
denominations, are entirely lost is evident from the fact, that at
the time of the demonetization of the 15-sous and 30-sous pieces of
1791-92, amounting to 25,000,000, only 16,000,000 were presented for
redemption. Of the 10-centime pieces stamped with an N, amounting to
3,286,932 francs, there were only 2,000,000 left when they were
withdrawn from circulation, and this although individuals had added
to the coinage. (_M. Chevalier_, III, 321.) The total loss caused on
this score, _McCulloch_ estimates at 1 per cent. per annum, and
_Helferich_, at ¾ per cent. The greater the aggregate stock of gold
and silver, the greater the absolute amount of wear and tear. If,
therefore, there were annually an equal influx of mineral products
to the markets, the pressure of this increase of supply from that
cause alone would take the shape of a converging series of prices.
(_Tooke_, History of Prices, II, 151 ff.)
860 The British East India Company exported gold and silver on an
average per annum from:
1711-1720, £434,000
1721-1730, 532,000
1731-1740, 487,000
1741-1750, 631,000
1751-1760, 571,000
1761-1770, 152,000
1771-1780, 43,000
1781-1790, 393,000
1791-1800, 352,000
1801-1807, 852,000
_Milburn_, Oriental Commerce, 1813, 419. According to _M.
Chevalier_, Introduction aux Rapports de l’Exposition de 1867, the
trade of Europe and North America, with India, China, Japan and the
Australian islands, amounted in 1800, to only 410 million francs, in
1866, to 4,024 million. Yet, for a time, the largely increased
exportation of English manufactures to East India and of East Indian
opium to China, had changed the relation so that the exportation of
the precious metals from South Asia, by a great deal, more than
counterbalanced the imports. On the other hand, between 1853 and
1856 240,000,000 thalers were shipped to India and China from
England and the Mediterranean harbors; in 1863 and 1864, even as
much as 300 millions, to be, for the most part, buried there.
Moreover, the immense quantity of cash money—often as much as from
12 to 15 million in pounds sterling—in the state treasury, and
silver ornaments (§§ 44, 123) customary in India, demand a
considerable yearly supply to make up for wear. _Newmarch_ speaks of
400 million pounds sterling which can be maintained in its condition
hitherto by a yearly increase of 1 per cent. (History of Prices, VI,
723.) From 1865 to 1869, English steamships carried gold and silver
to the East in the following quantities, yearly: 93.9, 66.3, 24.6,
70.2 and 60.4 million thalers, in addition to which almost as much
came directly from California. Statist. Journ., 1871, 122 seq.
_ 861 Tooke-Newmarch_, History of Prices, VI, 147 ff., estimates the
aggregate stock of gold at the end of 1848 at £5,600,000; in 1856,
at £172,000,000 more. According to _Lavasseur_, the amount of silver
in the East increased, between 1848 and 1857, from 22 to 24
milliards of francs; and the amount of gold from 9-½ to 15-½
milliards. (Annuarie d’Economie politique, 1858, 632.) The total
amount of gold and silver in the civilized world, _Wolowski_
estimated at from 55 to 60 milliards of francs, in 1870. (L’Or et
l’Argent, Enquête, 19.) Compare _Mason_, The Gold Regions of
California from the Official Reports, 1848. _Tengoborski_, Sur les
Gîtes aurifères de la Californie et de l’Australie, 1853.
Goldfield’s Statistics issued from the Mining Department in
Victoria, 1862. _W. R. Blake_, The Production of the precious
Metals, or statist. Notice of the principal Gold and Silver
producing Regions of the World (New York, 1869).
_ 862 Soetbeer’s_ Denkschrift betr. die deutsche Münzeinigung Mai, 1869,
and earlier yet, in _Faucher’s_ Vierteljahrsschrift, 1865, II.
According to _M. Chevalier_, all the mines of the world, a short
time previous to 1865, produced 284,000 kilogrammes of gold, and
190,000 kilogrammes of silver in a year: a total of 373,000 thalers
(Journal des Economistes, June, 1866), while, in 1848, the total
amount of gold coinage in the world was estimated at 560,000,000;
Great Britain, France, North America and Sidney had, since that time
and up to 1871, added to this £597,780,000. The additions have been
made in decreasing quantities: thus, 1857-59, 37.2 millions
annually; 1869-71, 16.99 millions annually. (Statist. Journ., 1872,
376 ff.) The estimates as to how much a gold-digger might make in a
day have been variously estimated. Thus, _Larkin_ estimates it from
$25 to $50; _Mason_, at $10; _Folson_, at $25 to $40; _Butler King_,
at $16, reckoning one ounce at $16. All these estimates seem to give
an altogether too high average. In Australia, according to _Khull_,
Colonial Review, June, 1853, a digger can produce only one ounce
daily, or less than 4 thalers. According to _W. Stamer_,
Recollections of a Life of Adventure, II, 1866, a gold-washer in
Victoria earned in 1858, on an average, £250 per year; in 1865, only
£70; while day labor was worth 15 shillings. Hence, great hopes have
to be built on the lottery-nature of gold-washing. On the Rhine, a
gold-washer is satisfied with ⅔ of a gramme of gold, that is worth
from 13 to 18 silver groschens. (_Daubrée_, Comptes rendus de l’
Académie des Sciences, XXII, 639.) It should be borne in mind,
however, that the Rhine-lander devotes to gold-washing only the
leisure time which his avocation as a fisherman leaves him, while
the gold-washer in the new world, as a rule, devotes his whole time
to it; and that his labors are interrupted by the long rainy season,
attacks of fever etc. To this must be added the great difference of
the average prices of the means of subsistence and the difference of
all social conditions.
863 Compare, for instance, on the early productiveness of the Brazilian
gold districts which soon ceased: _Spix und Martius_, Reise nach
Brasilien, I, 262 f., 350. _Gardner_, Travels in the Interior of
Brazil, 1846. On Hispaniola, see _Benzoni_, N. Mundo, I, 61, and
_Peschel_, Gesch. der Entdeckungen, 304, 556. Hitherto, gold had
been obtained by the usual mining process, only in very few places.
As a rule, it has been found in alluvial land not far from the
surface. Compare _Ansted_, The Gold-Seekers’ Manual, 1849. These
circumstances have made the production of gold important from the
first; and they still make it comparatively easy, while it causes
little demand for capital but for great skill. As soon, therefore,
as the greater part of the country washed for gold has been worked,
which does not require a long time, the whole is abandoned, while in
the production of silver the great amount of capital fixed in pits,
shafts, kilns etc. ties the parties engaged in the enterprise to the
spot, and necessitates the continuation of the enterprise. In recent
times, however, Australia and California have developed the mining
and machine production of gold to a surprising extent. According to
_Laur_, La Production des Métaux précieux en Californie, 1862, 33,
and the Journal des Economistes, Nov. 1862, Californian gold-quartz
produced, in 1851, on an average, 635 francs per ton; in 1860, only
from 80 to 85 francs; but the gold-washing methods have become
cheaper in the ratio of 2,500:1. However, the production of the
precious metals seems even now to be decreasing. According to the
Statist. Journal, 1866, 99, it amounted on an average to:
in 1849-51, gold £23.9 million, silver £15.5 million.
in 1852-56, gold 38.7 million, silver 16.1 million.
in 1857-59, gold 36.5 million, silver 17.1 million.
in 1860-63, gold 33.5 million, silver 18.2 million.
in 1864-68, gold 30.0 million, silver 19.5 million.
The number of gold-diggers in Victoria steadily decreased from
125,764 in 1857, to 63,053 in 1867.
864 One of the chief difficulties in the way of the production of gold
is the loss by embezzlement, which is estimated at an average of 20
per cent. Small companies of men working on their own account would
be less exposed to temptation, and the Anglo-Saxon races and the
North Americans are very well adapted thereto. (_M. Chevalier_, III,
261.)
865 Gold is in a certain sense one of the most widespread of metals,
although it is found anywhere only in small quantities; so that on
the Rhine, for instance, it takes from 17 to 22 millions of gold
grains to make a kilogramme. An extraordinary large number of places
owe their civilization to gold-seekers. Compare _Tacitus_, Agr., 12.
I select the following “finds” from _Ritter’s_ Erdkunde. The
Shangallas (I, 249); still more the terrace of Fazoglu itself (I,
253, compare _Bruce_, Travels, V, 316, VI, 255, 342), in Monomotapa
(I, 140); in Manica, west from Sofala (I, 145), especially since the
suppression of the slave trade (I, 305, 471); in Mandigo land (I,
360, 372); on the road from Gambia to Timbuctoo (I, 457); on Lake
Mangara (I, 493); between Timbuctoo and Finnin (I, 445); in Nubia
(I, 667, seq.); unused silver and quicksilver mines on the lower
Bagradas (I, 493); gold wealth at Malacca, _aurea chersonesus_ (V, 6
f., 27); Tonkin, Lao and Ava (III, 926, 1, 216, IV, I, 213); Assam
(IV, 294); smaller Thibet (III, 657); Kashmere (III, 1,155); on
upper Setledsch (III, 654 ff., 668); in the mountainous sources of
the Indus (III, 508, 529, 593, 608); on the Cabool (VII, 23); in
Peshaver (VII, 223); Badakschan (VII, 795); rich silver mines
abandoned for want of wood near Herat (VIII, 243); in Armenia (X,
273). It is said that in southern China there are great treasures of
the precious metals, the removal of which has been opposed thus far.
(IV, 756.) Arabia’s richness in gold mines, spoken of by _Diodor._,
II, 50, III, 45, and _Agatharch_, De Mare rubro, 60, is of doubtful
existence, as no traces of them are to be found in the country
to-day. On the other hand, on both shores of the Pacific Ocean, the
portions of the earth richest in volcanoes seem to possess almost
everywhere quantities of gold equal to those of California and
Victoria. (Edinburgh Review, Jan., 1863, 82 ff.) What an amount of
treasure can be obtained at times from old and long since forgotten
“finds” is proved by the Altai (that is gold mountain), which even
the old Tschudi had rummaged (_K. Ritter_, II); and where Herodotus’
(III, 16) love of truth, so frequently called in question, has
recently been so brilliantly vindicated. Compare _v.
Ungern-Sternberg_, Gesch. des Goldes, 1835. _A. Erman_, Ueber die
geographische Verbreitung des Goldes, 1835. According to
_Murchison_, Siberia, ch. 17, gold is to be found only “in
crystalline and paleozoic rocks, or in the drift from these rocks,
which is a tertiary accumulation of the pliocene age;” and that it
is found most abundantly “in quartz-ore, vein-stones and traverse
altered Silurian slates, chiefly lower Silurian, frequently near
their junction with eruptive rocks.”
866 Compare _Humboldt_, N. Espagne, IV, 147 ff.; _St. Clair Duport_,
Essai sur la Production des Metaux précieux en Mexique, 1843; _M.
Chevalier_, Cours., III, 483 ff.
867 The cost of a kilogramme of silver, expressed in terms of silver
itself, up to the moment that it is shipped, is estimated by
_Duport_ as follows: salt and _magistral_, 61 grammes; quicksilver,
112 grammes; stamping it, 171 grammes; transformation of the ore, 72
grammes; rent and superintendence, 38; duties etc., 145; smelting,
transportation and shipping, 35. There remains as profit for mining
it, 336 grammes. As to how the production of American silver
increases and runs parallel with the cheapness of quicksilver, see
_Humboldt_, N. Espagne, IV, 91 ff.
_ 868 Wolowski_ calculates that the absolutely much smaller yearly
increment to the amount of the precious metals in the sixteenth
century, frequently 1/12, now constitutes only 1/50 of the greater
existing amount. (L’Or et l’Argent Enquête, 50.)
869 In the United States the stock of cash money in 1820 was estimated
at 5.1 thalers per capita; in 1849, at 8.6 thalers; in 1854, on the
other hand, at 13 thalers.
870 The weight of the mass of gold introduced into Europe annually stood
to that of silver in the ratio of 1:60-65 in the seventeenth
century; in the first half of the eighteenth century, in that of
1:30; in the second half, in that of 1:40; and yet the variations in
price were not in the least parallel. According to _Sœtbeer_
(Beiträge und Materialien zur Beurtheilung von Geld und Bankfragen,
1855, 102 seq.), the average silver-course (_silbercurs_) of gold
had, 1852-54, sunk only 2.05 per cent., as compared with that of
1800-40. And yet the value of the annual production of gold stood to
the annual production of silver, in the beginning of the nineteenth
century, as 29 to 71; in 1846, as 47 to 53; in 1848-56, as 3 to 1.
871 While the public, even since 1850, think they have noticed a
depreciation in the value of money, there are a great many learned
political economists who are by no means prepared to grant it. The
principal advocates of this opinion are _Tooke_, and _Newmarch_, in
vol. VI. of the History of Prices (1857). Also _Lavergne_, in the
Journal des Economistes. And really the enhanced dearness of many
kinds of goods up to 1857, might have been accounted for by causes
affecting the goods themselves: diminished supply by reason of bad
harvests, commercial gluts etc.; increased demand by capitalization
on a gigantic scale, speculation, but especially by the elevation of
the lower classes etc.
The London wholesale prices were on the 1st day of January, 1869,
nearly all lower by 10 per cent. than on the 1st day of July, 1857.
Only indigo, cotton and meat had risen. (_Hildebrand’s_ Jahrb.,
1870, I, 328.) In many instances the enhanced dearness is entirely
local, by reason of the greater facilities for transportation in
places where prices were already higher. But as new truths are very
easily exaggerated by their discoverers, much of Tooke’s view
concerning these events depends upon a polemic carried too far
against the theory of the balance of trade which was customary in
the so-called currency school. Compare, in opposition to Tooke,
_Lavasseur_, in the Journal des Economistes, March, 1838, and _M.
Chevalier_, La Baisse probable de l’Or, 1858. _Lavasseur_, from the
difference between the official and real custom-house prices in
France, calculates that raw materials in 1856 were on the average 63
per cent., and in 1858, 20 per cent. higher than in 1826; and that
manufactured articles were in 1856, just as high, and in 1858, 6 per
cent. lower than in 1856. An average made of all commodities showed,
in 1856, an enhancement of 30 per cent, and in 1858 of 9 per cent.
(_Hildebrand’s_ Jahrb., 1864, II, 118.)
In the Hamburg market in 1847-65, 87 articles declined in price, 183
rose in price, and 24 remained about stationary. (Amtl. Statistik
von 1887, 18 ff.) _Jevons_ assumes a general rise in the price of
commodities between 1849 and 1869 of about 18 per cent. (Economist,
May 8, 1869.) He makes this estimate from the average March prices
of 50 of the principal articles. Assuming the average March price of
1849=100, we have, according to him, for the following years,
respectively: 101, 103, 101, 116, 130, 125, 129, 132, 118, 120, 124,
123, 124, 123, 122, 121, 128, 118, 120, 119. Previous years showed:
1789=133; 1799=202; 1809=245; 1819=175; 1829=124; 1839=144. (Compare
supra, § 129, note 1.) The budget of a Swiss teacher’s family
consisting of five persons has become dearer since 1840 ff., their
consumption remaining the same and of only the simplest articles, by
72.5 per cent. (Böhmert, Arbeiterervhältnisse etc., I, 302 ff.,
355.) That, however, the depreciation is under-estimated most
precisely in England and over-estimated in Germany, _Knies_ very
well accounts for by the price-leveling effects of the more modern
means of communication. (Tübinger Zeitschr., 1858, 280 ff.)
872 Compare _Leibnitz_, on the consequences which would follow the
realization of the dreams of the alchemists. It would be a great
misfortune, since then a pocket would no longer suffice for the
transportation of money, and people would have to use wheel-barrows
as they do now in Sweden. (Opera ed. Dutens, V, 199, 401.)
_ 873 Beccaria_ considers it equitable that the debtor should always pay
the original value of the metal. (E.P., IV, 2, 17.) _Galiani_, on
the other hand, would not permit individuals, even when the state
arbitrarily causes a diminution in the real value of money, to
maintain the real value of the coinage in their contracts. (Della
Moneta, V. 3.)
874 It is precisely this class which first comes to an understanding of
the essential nature of the change effected.
875 Thus the English lessees, who in the sixteenth century had leases
for a long term of years, saw themselves rise in the social scale in
consequence of the revolutions in price—a fact of importance in the
political struggles of the seventeenth century. Compare _Sir F. M.
Eden_, State of the Poor, I, 119 ff.
876 Too much stress is laid upon this by _Tooke-Newmarch_, who, on that
account, considers almost every increase of the precious metals as a
blessing. As a matter of fact, the population of Australia, of the
United Kingdom, and of the United States, increased, between 1848
and 1871, 44.5 per cent.; the production of coal and of railroads in
England, between 1856 and 1869, by about 60.6 per cent.; the English
production of woolen goods, linen and cotton and yarn, between 1848
and 1870, by from 110 to 335 per cent. (Statist. Journal, 1872, 376
ff.)
_ 877 Luther’s_ complaint concerning the poor condition of the clergy.
See _Schmoller_, in the Tübinger Ztschr., 1860. This very clearly
shows how much surer for the crown domains are than a civil list,
and donations of land to a church than payments in money. Law of
Elizabeth, 18 Eliz., that, in the case of university property, ⅔ of
the lease rent should be paid in metal and ⅓ in corn. In _Adam
Smith’s_ time, this latter third was worth as much again as the
other two. (I, ch. 5.)
878 In the sixteenth century, this class was of small importance in most
countries; in our times, their ruin would cause general disturbance.
The wiser class of capitalists would, indeed, find means to exchange
their credits for more certain values, or make it a condition that
they should receive in the end a large sum.
879 Thus, for instance, the son of a deceased land owner who retains the
lands as his own acquits himself towards his brothers who have
entered the military or civil service of their country by paying
them a certain sum periodically. If a revolution were really
impending, the owners of land would soon emulate one another to
improve their estates by borrowing capital, if for no other reason,
to turn the depreciation of the medium of circulation to their own
advantage. In the sixteenth century, the indebtedness of land owners
was relatively unimportant.
880 It appears from _Roger’s_ Tables, Statist. Journal, 1861, 551 ff.,
that, between 1583 and 1620, a time during which the population of
England increased neither in wealth nor in numbers, there was a
considerable increase in the price of nearly all English
commodities. Thus, for instance, wheat was, from 1591 to 1600, 468
per cent., and from 1611 to 1620, even 495 per cent. higher than
from 1530 to 1533. The Saxon laborer earned, in 1599, in corn, only
half as much as in 1455. (Tübinger Ztschr., 1871, 354.)
881 When labor is indispensable to employers, it may happen that a small
decline in the supply may largely raise the price. Wages, in almost
all branches of labor, rose between 1851 and 1856, by about from 15
to 20 per cent.
882 This, also, was of little significance in the sixteenth century, but
how important now!
883 Income taxes, _ad valorem_ duties and tithes rise and fall in their
nominal amount as the price of the medium of circulation falls and
rises.
884 Thus, for instance, the victory of the English Parliament over the
unlimited power of the crown, in the first half of the seventeenth
century, was very much promoted by the fact that the crown, in spite
of all its economy, was always in financial straits in consequence
of the depreciation of money. (Power of the purse, power of the
sword!) However, any force kept steadily in action is a two-edged
sword. While under favorable circumstances, it may be thereby
developed, under unfavorable circumstances it may be thereby
exhausted. How great a number of representative assemblies, during
the revolutions in prices in the sixteenth and seventeenth
centuries, allowed their energies to grow dormant!
885 Most of the above points are very well discussed in the work _W.
S._, cited above, § 137.
886 As no one then doubted: Compare _W. Raleigh_, The Discovery of
Guiana, Pref. I refer to Philip of Macedon.
887 Compare _Roscher_, Kolonien, Kolonialpolitik und Auswanderung, 1856,
145 ff.
888 Something similar might have been observed in England in 1819 etc.,
at the restoration of a depreciated paper currency. Among nations in
a comparatively low stage of civilization, a variation in the medium
of circulation is of less importance than among more highly
civilized nations, because trade in money, and still more, credit,
are relatively speaking undeveloped.
_ 889 Fawcett_ greatly exaggerates when he says that with an increase of
population and wealth, an increase of money is as much a want as
hunger. (Manual, 370.)
_ 890 Galiani_, Dellab Moneta, III, 1. At the time of the Lex Salica,
10:1. After the Edictum Pistense of Charles II., ch. 24 (_Pertz_,
Mon. Germ., III, 488), 12:1. At the time of the Sachsenspiegel (III,
45), again, 10:1. Under Saint Louis, King of France, 12.5:1.
(_Leblanc_, Traité historique des Monnaies de la France, ch. 1, 2.)
In Poland, 1356, 12:1. (_Muratori_, Dissertt. Medii Aevi, II, 28.)
In England, 1262, 9.6; 1272 = 12.5; 1345 = 13.7:1. (_Rogers_, 1, 593
ff.) Under Henry VI., and in 1494 = 12:1. (_Anderson_, Origin of
Commerce, a. 1422, 1494.) In Denmark, under the former Kings of the
Union = 8:1. (_Dahlmann_, Dänische Geschichte, III, 52.) And so
throughout almost the whole of Scandinavia’s medieval period, as for
instance in the Graugans. (_Wilda_, Gesch. des deutschen
Strafrechts, I, 329.) In Italy, 1579 = 12:1. (_Scaruffi_, Sopra le
Moneta, 1582.) In Holland, 1589 = 11.6:1. _Bodinus_, De Republ.,
1584, II, 3, maintains 12:1 as the general ratio; but the Apostolic
Chamber adopted the ratio of 12.8:1. In Germany, according to the
instances cited by _A. Riese_, 1522 = 10:1. The monetary laws of
Germany give it in 1524 = 11-⅓:1, in 1551 = 11:1, 1559 = 11-3/7:1;
_Budelius_, De Monetis, 1591 = 11-¼:1. At the beginning of the
seventeenth century the relation in Spain was = 13.3; in Germany =
12.16; in Flanders = 13.22; in England = 13.5:1. (_Forbonnais_,
Finances de la France, I, 52.) About 1641, in Flanders, it was 12.5;
in France, 13.5; in Spain, 14.1. Immediately after Colbert’s death
it was, in Genoa, 15.03; in Milan = 14.75:1. (_Montanari_, Della
Moneta, 80.) While in the seventeenth century gold rose, it sank in
the eighteenth, on account of the Brazilian gold washings and the
many bank notes in circulation, which were for the most part of a
large denomination. (_Steuart_, Principles, III, ch. 13.) Still it
was in Amsterdam in 1751 = 14.5:1.
891 In Hamburg, the relation of the price of gold to that of silver
bars, varied, between 1816 and 1852, from between 15.11-16.2 to 1
(_Soetbeer_); in London, from 1816 to 1837, between 15.80 and 14.97
to 1.
892 In Asia, it is generally lower than in Europe—for centuries mostly =
10:1. But in Birmah it is = 17:1, mostly on account of the extent to
which indulgence in luxury is carried there. (_Crawfurd_, Embassy,
433. _Ritter_, Erdkunde, V, 244, 266.) Concerning China, see _M.
Chevalier_, Cours, III, 359. In Africa, gold is low as compared with
silver, in proportion to the distance from the civilized world.
Thus, an ounce of gold in Shenaar cost 12 piastres; in Suakim, 20;
in Djidda, 22. (_Ritter_, Erdkunde, I, 538.) In Timbuctoo, Mungo
Park found the relation of gold to silver to be as 1-½:1. Compare
Marco Polo, II, 39 seq.
893 In antiquity, a similar course is to be observed. According to
Manu’s Indian laws, VIII, 134 seq., = 2-½:1; in the East, for a long
time, = 10:1; under Darius Hystaspis, = 13:1. (_Herodot._, 111, 95.)
In Greece, in the time of Lysias, = 10:1 (_Lysias_, pro bonis
Arist., Conon); according to _Plato,_ = 12:1 (_Hipparch._, 231);
according to _Demosthenes_, adv. Phorm., 214, = 14:1 (_Böckh_,
Staatst., I, 43); Menander’s estimate, = 10:1, probably because
Alexander’s victory had made gold cheaper. (_Pollux_, IX, 76.) Among
the Romans, about 189 B.C., = 10:1 (_Livy_, XXXVIII, 11); somewhat
later, = 11.9:1 (_Mommsen_, in the histor. phil. Berichten der K.
Sächs. Gesellschaft, 1851, 184 ff.); in the fourth century after
Christ, = 14:1. (_Theod._, Cod. VIII, 4, 27.) We sometimes find
sudden variations. Thus, according to _Polyb._, XXXIV, 10, gold, in
Italy, sank about ⅓ in consequence of the opening of the mines at
Aquilea. It sank to the proportion of 9:1 when Cæsar spent the
contents of the Roman treasure, which consisted of gold. (_Surton._,
Cæs., 54.) The ratio of 17:1, during Hannibal’s wars, was a species
of National bankruptcy. See _Plin._, H. N., XXXIII, B.
894 After the February revolution, the gold-agio, as compared with
silver, rose from 10-17 to 70 per 1,000. (_M. Chevalier_ Cours, III,
346.) On the other hand, since the discovery of America, gold, as
compared with commodities, has declined much less than silver.
Compare _Hermann_, Ueber den gegenwärtigen Zustand des Münzwesens,
in _Rau’s_ Archiv., I, 151 ff. According to _Lord Liverpool_,
Treatise on the Coins of the Realm, the value of gold coin in the
London market, as compared with bank notes, varied in 40 years,
almost 5½ per cent.
895 In recent times, it has become possible to extract from ancient
silver coins a small quantity of gold, and with some advantage.
European industry produced in this way about 1,600 kilogrammes of
gold per annum. One half of this amount is obtained in France and
the rest in Hamburg, Amsterdam, Brussels and St. Petersburg.
(_Michel Chevalier_, Cours, III, 302.)
_ 896 Senior_, On the Value of Money, 77 ff. It is certain that a simple
variation in prices would not induce people to have gold table
services, or architectural ornaments of silver.
_ 897 Rau_, Lehrbuch, 6th ed., I, § 277 c. In Rau’s opinion (loc. cit.)
we may, in the course of the next decades, expect a decline of the
price of gold of about 76 per cent., and of only 10 percent. of the
price of silver (because of the low prices of quicksilver.) But here
he seems to overlook entirely what influence a change of standard in
important commercial districts would have.
898 Compare the works already mentioned. _Fleetwood_, Chronicon
preciosum, or an Account of English Gold and Silver Money, the Price
of Corn and other Commodities etc., for Six Hundred Years last past,
1707; _Dupré de Saint Maur_, Essai sur les Monnaies ou Réflexions
sur les Rapports entre les Denrées et l’Argent, 1746; _Unger_,
Ordnung der Fruchtpreise, 1752; _Paucton_, Métrologie ou Traité des
Mesures etc., des anciens Peuples et les modernes, 1780; the
appendix to _Macpherson’s_ Annals of Commerce, 1805; the tables in
_Garnier’s_ translation of Adam Smith, vol. II, 1822; _A. Young_,
Inquiry into the progressive Value of Money in England, as marked by
the Price of Agricultural Products, 1812; _W. F. Lloyd_, Prices of
Corn in Oxford, in the Beginning of the fourteenth Century, and also
from 1583 to the present Time, 1830; _Helferich_, in the Tüb.
Zeitschrift, 1858, 471 ff. There are some very interesting notes on
the history of prices during the Merovingian and Carolingian periods
in _Guérard_, Polyptiques, I, 141 ff.
899 Thus, for instance, the bonds (and their coupons) of states, cities,
great corporations, certificates of stock, mortgages, bills of
exchange, checks.
900 A Prussian regulation of 1765 (_Goldschmidt_, Handbuch des
Handelsrechts, I, 550), calls money-paper (_Effecten_), instruments
of trade in which a value or a _valuta_ is designated.
_ 901 Garnier_, French translation of Adam Smith, II, 143 ff.,
distinguishes between coin-paper and promise-paper: the latter is
never found in circulation at the same time with the capital which
it represents. _Say_ says that, for instance, evidences of state
indebtedness, state bonds, call for money if they would circulate,
but they seldom act as money in circulation. (Traité, III, ch. 2.)
_Sismondi_ very well determines the difference in his Richesse
Commerciale, I, 160. _Rau_, Lehrbuch, I, § 293, requires of all good
paper money: a., that its mere transfer, even without any proof of
its rightful acquisition, should suffice to vest the property in it
in the receiver; b., that the power emitting it should enjoy
universal confidence or be able to compel universal recognition; c.,
that its redemption should not be fixed for any definite point of
time.
902 That it is not possible to keep paper money from declining in value,
by the payment of interest, the people of North America learned from
more than one experiment during the eighteenth century. (_Benjamin
Franklin_, Remarks and Facts relative to the Paper Money of America,
1765.) The same phenomenon was observed in the case of the Spanish
_vales_, which were created during the North American war in
consequence of the absence of the silver fleet. (_Bour-going_,
Tableau de l’ Espagne, II, 38 ff. _Humboldt_, N. Espagne, II, 808.)
When the Portuguese _apolices_ (since 1797) still bore six per cent.
they depreciated in value; and when the payment of the interest was
suddenly stopped, the rate of exchange did not become any lower.
(_Balbi_, Esai statist. sur le Portugal, I, 323.) In Austria, in
September, 1820, the bank notes which bore no interest were at a
premium as compared with the imperial treasury notes, which did bear
interest of 1 per cent., although the credit of both kinds of paper
had ultimately the same foundation, namely, Austrian state-credit.
903 The attempt to make paper money pay interest suggests (as the Saint
Simonists recommend it should, with much ado; _Enfantin_, Ser les
Banques, d’ Escompte in the Producteur, 1826), that awkward sword,
invented by Count Wilhelm von Bückeburg, to the blade of which a
pistol is affixed! Shortly before each term for the payment of
interest, the circulation of such paper money would be arrested. If
the rate of discount should sink below the rate of interest such
notes bore, they would be sought after eagerly and disappear in
quantities, and, not be ever seen again until the rate of discount
had risen to a high figure, when they would be suddenly presented
for redemption. Such interest-bearing paper money, therefore, would
be a serious element to aggravate the fluctuations of the
money-market between good and bad times. When interest-bearing paper
money pays interest at the rate usual in the country, it is hoarded
by misers, (_v. Struensee_. Abhandlungen, III, 387.) Compare
_Forbonnais_, Principes économiques, p. 234, ed. Guill., whereas _v.
Prittwitz_, Kunst reich zu werden (1840, 359), takes delight in
elaborating the idea of an interest-bearing paper money.
904 Of jurists, see _Thöl_, Handelsrecht, I, § 51, and the authorities
for and against in _Goldschmidt_, Handelsrecht, II, Kap. 4, 1, 2.
The compulsory circulation of paper money is an essential element
only in reference to the person that issues it. Of political
economists, especially _A. Wagner_ in _Bluntschli’s_
Staatswörterbuch, Art. Papiergeld, Band, VII, who, however, is very
soon compelled to oppose to paper money “proper,” another kind not
“proper.” _Adam Smith_ unhesitatingly accounts bank notes also
paper-money. (W. of N., II, ch. 2, p. 28, Bas.) _Huskisson_
understands by “paper-money” only the irredeemable paper-money of
the state, while bank notes should be considered as “paper
currency.” (The Question concerning the Depreciation of our
Currency, 1810.)
_ 905 Seyd_, Münz, Währungs- und Bankfragen in Deutschland, 50 ff.,
distinguishes four classes of paper-money: 1st class, paper-money
covered by cash; 2d class, bank notes covered after the manner of
banks; 3d class, state paper-money; 4th class, such paper money as
the notes of the Southern Confederacy after its defeat.
906 Even _Plato_, De Legg., V, 742, was acquainted with money after the
Spartan type, intended only for internal trade: νόμισμα ἐπιχώριον,
αὐτοῖς μὲν ἔντιμον τοῖς δὲ ἄλλοις ἀνθρώποις ἀδόκιμον. Besides the
state kept for foreign trade a supply of the universal Hellenic
money, of which in case of need, private individuals could acquire
what portion they needed by exchange. When Dionysius I. issued tin
instead of silver money, all the Syracusans, although they noticed
the forgery, acted in their intercourse with one another as if they
considered the coins genuine. (_Aristot._, Œcon., II, 21, _Pollux_,
IX, 79.) Timotheos behaved more honorably when, pressed by the
dearth of money, he gave his troops copper coin tokens, which passed
for the time being for their full value in the camp; but which were
later to be redeemed at their full value in silver. (_Aristot._, Œc.
II, 22.) Compare _Polyæn_, Strateg., IV, 10, 2. The iron money which
the Klazomenians exchanged with the rich for silver, which bore
interest, but which the rich were forced to take, had a longer
duration; the silver was used to pay foreign state creditors, the
iron money circulated for the time being in the city, and was
gradually redeemed. (_Aristot._, loc. cit, II, 17.)
We are still more forcibly reminded of paper money by the
Carthaginian leather money, where any object whatever of the size of
a coin was shut up in a leather envelope with the state seal, and
then circulated as if it were the coin it purported to be. _Mieris_,
Beschryving der Munstn, 1726, explains the saga of Dido’s ox-skin by
means of this leather money. Certain it is, however, that the
surprise with which the sophistical dialogue, Eryxias, mentions the
matter, is a proof how foreign it was to the Greeks. Concerning the
Roman plated denarii which were stamped with the silver coins, but
which were also accepted by the state treasury, see _Mommsen_, R.
G., I, 405.
907 In the middle ages, leather money was issued as a promise of future
payment: by the doge of Venice in the wars of 1122 and 1126
(_Montanari_, Della Moneta, 34); by King John, of England, during
the struggle of the barons (_Camden_); Emp. Frederick II. at the
siege of Faventia (_Malespini_, Hist. Fior., 130, _Villani_, Hist.
Fior., VI, 21); by Louis IX. during his captivity (_v. Raumer_
Hohenstaufen, V, 461), John of France, 1360 (_Anderson_, Origin of
Commerce). On the Frankfurt lead marks which were afterwards
redeemed by the _Rechnerei_: _Kirchner_, I, 541. Lavallette’s copper
tokens during the siege of Malta had the inscription: _non æs sed
fides_. The paper money which was issued during the siege of Leyden,
the inhabitants afterwards would rather preserve than have redeemed,
_ad perpetuam liberationis divinæ memoriam_. (_Bornitii_, De Nummis,
1605, I, 15. Distress coins, _melacs_, during the siege of Landau
and of the Hungarian _Ragoczy_, _Marpurger_, Beschreibung der
Banquen, 213. _Krones_, Zur Geschichte Ungarns im Zeitalter R’s,
1870.)
908 The Chinese have had various kinds of paper-money in their country
since the 7th century after Christ. Sometimes they called them
“flying coins, convenient coins,” and sometimes _coupons_, _bons_,
_conventions_ (_Klaproth_, Mémoires relatives à l’Asie, I, 375 ff.),
against which the caravans, as soon as they had passed the limits
were obliged to exchange their silver (_Pegolotti_, Pratica della
Mercatura in Della decima etc., III, 3). These had compulsory
circulation in China. The great Mongolian khans here became
acquainted with paper-money. (_M. Polo_, II, 21.) Thus, especially
in Persia, where refusal to accept such money and the imitation of
it was punished with death (1340). Compare _Ferishta_, ed. _Briggs_,
I, 414 ff. _d’Ohsson_, Hist. des Mongols, IV, 101 ff.; II, 487. Even
here there occurred cases of state bankruptcy and finally
withdrawals of the depreciated paper. (_Klaproth_, loc. cit.) In
Japan, according to _Oliphant_, Narrative of L. Elgin’s Mission to
China and Sapan (1859), all foreign coins were required to be
exchanged against paper-money at the offices of the state bankers.
909 Adam Smith mentions North American paper money of the amount of 1
shilling, and Yorkshire bank notes of the amount of 1-½ shillings.
Sweden had, until 1828, notes of 28 _pfennigs_.
910 Hence in Sweden, with its copper standard of long duration, the
system of banks of issue was developed very early. The
transport-notes (_Transportzettel_) (to be found in that country as
far back as 1661) of the Stockholm bank are considered the oldest
bank notes. Compare, however, _Palgrave_, in the Statist. Journal,
1873. When, in 1768, Catherine II. introduced paper money into
Russia, the people gladly paid ¼ per cent. exchange to the state
treasury for it. (_Brückner_, in _Hildebrand’s_ Jahrbücher, 1863,
49.) According to _Cancrin_, Oconomie der menschl. Gesellschaft,
116, private individuals in from four to five months exchanged 40
millions of silver roubles for paper. And thus, in 1780, Berlin bank
notes stood a few per cent. above par, and the notes of the S.
Carlos-Bank, in 1788, from 1 to 1-½ per cent. (_Rau_, Archiv., II,
161.)
911 When at times in which paper money is looked upon with diffidence,
peasants and others bury their metallic money, this advantage of
course is lost. On the other hand, the exportation of precious metal
money, caused by the emission of paper money, must not be considered
a necessary evil, but rather as the condition precedent which in
most cases makes the above advantages of the paper money possible
for the first time. Compare _Ad. Wagner_, Die russische
Papierwährung (1868), 22, 24, 33. _Ricardo_, Proposals for an
economical and sure Currency, 1816, estimated that England, after
the abolition of the bank restriction, needed twenty million pounds
sterling. The interest on this amount of capital inclusive of wear
and tear etc., should be estimated at at least ten percent.; that is
for the whole kingdom at at least from two and one-half to three
millions a year. On this _Ricardo_ founded his proposal to base the
bank notes on gold bars. In its time, the essay: Guineas an
unnecessary and expensive Incumbrance on Commerce, or the Impolity
of repealing the Bank-Restriction Bill considered (London, 1802),
met with great approval.
_ 912 Adam Smith_ calls attention to the analogous case in which a
manufacturer replaces a costly machine by a cheap one, sells the
former and employs the difference between the old one and the new in
enlarging his business. (W. of N., II, ch. 2.) When, indeed, all
nations have introduced the use of paper money, the greater portion
of the advantages which the one nation was able to obtain by its
means cease, and the only ultimate result is a depreciation of the
value of money and of the precious metals. Formerly the advantage
reaped by the single nation that emitted paper money was greater
than its share in the depreciation. (_Wolowski_, Enquête de 1865,
108.)
913 When E. Seyd calls bank notes more costly than metallic money,
because the former in England require an outlay for administration
of 1-½ per cent. per annum, while the wear and tear of metallic
money amounts to 1 per cent. only in 20 years (Statist. Journal,
1872, 511), he overlooks the loss in interest and the costs of
coinage in the latter case.
914 Related to this is the fact that in France, during the
assignat-crisis, the large bills of 10,000 francs were harder to get
rid of than the small ones. (_A. Schmidt’s_ Pariser Zustände, III,
22.)
915 The numbering of paper money. A state which should neglect this
would not only reserve to itself the possibility of an unlimited
increase, but would surrender all control of its officials charged
with the emission of the paper money. _Law_, Trade and Money, 162,
advises that a large money reward should be paid to any one who
should show the existence of a higher number than allowed by law, or
of a duplicate number. And indeed, as comptroller-in-chief, he
caused the _prévôt des marchands_ to be removed, because charged
with the duty of burning the paper withdrawn from circulation, he
(the _prévôt_) noticed that the same number reappeared several
times.
916 If a traveler wished to pay his inn-keeper in the note of a bank
entirely unknown in the place, the latter would certainly refuse it.
If, on the other hand, the traveler were to offer him a silver coin,
the stamp and inscription of which were not familiar, still it would
be taken at the value of the metal it contained, after deduction
made of the costs of testing it, re-coining it, and compensation for
the trouble caused. Ignored by _Berkeley_, who, indeed, considered
metallic money nothing but “counters” or tickets (Querist, No. 23,
26, 441, 475), and who ascribes important advantages to paper
money,—which by “stamp” and “signature” is made as costly as gold
(440)—over metallic money (226).
917 Any person who has witnessed a tax-execution, or sale of property
for the non-payment of taxes (_Stuerexecution_) will admit that a
tax receipt is at least as real goods as an umbrella or a glass
window that protects one from the storm. _Michælis_ considers the
amount of running payments to the state for duties, taxes etc., as
the only right basis for full-value paper money. (Berliner
Vierteljahrsschrift, 1863, III.) Better yet when _Höfken_ advises
that only as much paper money should be issued as amounted to the
average balance (_Bestand_) in the national treasury. The tax-basis
is defended with great warmth by _L. Stein_. Louis XIV., in 1704
issued paper money bearing 7 per cent. interest, the acceptance of
which by all the royal officers of the treasury was prohibited!
(_Dutot_, Réflexions, 863, Daire.) _Law_, Trade and Money (1705)
ascribes to parcels of land the greatest constancy of value, because
they cannot be replaced, because they can be neither increased nor
decreased, and because they help to produce all other goods (p.
170). While silver cannot but depreciate, they have a prospect but
to rise (188). Hence _Law_ recommended notes based on parcels of
land as the best money. (163, 191, 195.) Similarly, _Benjamin
Franklin_, Modest Inquiry into the Nature and Necessity of a Paper
Currency: and the Paper Money of Pennsylvania, New York and New
Jersey was actually based on parcels of land, and was to be
extinguished by the enfeoffed owners, and the interest paid by them.
(_Ebeling_, Gesch. und Erdbeschreib, von N. Amerika, III, 621, IV,
649.)
_ 918 F. Renonard de Ste Croix_, Voyage aux Indes orientales (1810), I,
32, describes a species of paper money based on parcels of land
which had lost 40 per cent. of its nominal value, although the
holders of them were invested with the fief at only one-half their
value. The French _mandats territoriaux_ of 1796, declined in five
months to 5 per cent. of their nominal value, although they
contained the provision that the holders might, without public sale
(_Auction_), have a certain amount of the national estates allotted
to them in exchange for the _mandats_. The assignats were still more
defective after their redemption (at the _Caisse de
l’extraordinaire_), which was at first intended, and their drawing
of interest were not fulfilled. Leaving the tax-basis out of
consideration, the notes might, at the sale of the national estates,
be brought in as means of payment: a thing which would not have been
inoperative, provided the amount of the paper money had been
strictly limited to the price of the pieces of land estimated in
money. On the 1st of April, 1790, 400,000,000 francs in assignats
were issued, and in September, 800,000,000 more, both together about
equal to the secularized property of the church. (_Ad. Schmidt_,
Pariser Zustände, II, 97.) But as afterwards all proportion between
these two magnitudes ceased, or rather as up to January 1, 1793,
3,626,000,000 assignats were issued; up to September, 1794, over
8,800,000,000; up to September, 1795, 19,700,000,000; and finally up
to September, 1796, 45,578,000,000 francs, of which perhaps
6,500,000 were either burned or demonetized, the price of the
national estates on lands must naturally have risen as vastly as the
assignats declined.
919 The paper money issued by Colbert’s successor, Chamillard, soon lost
on account of its too great amount, 25 per cent. of its value, spite
of the fact that it bore interest, and that ¼ of all payments to
private persons had to be made in it. (_Forbonnais_, Recherches et
Considérations, II, 182.) When the people of the United States, in
1775, issued paper money, it did not decline in value up to the end
of 1776, so long as the amount did not exceed $20,000,000, as it was
considered a matter of honor to take it at par. Afterwards, when the
amount issued continued to increase, not even the law that a refusal
to accept it, or insisting on taking it below par, should be
punished with the loss of the commodity, and that the guilty party
should be declared a national enemy, could keep it from declining in
value; so that in May, 1871, a dollar in specie was worth $200.5 in
paper. Compare _Franklin_, Works, ed. Sparks, II, 421, VIII, 328,
505.
France, during the Reign of Terror, on the 2d day of April 1793,
threatened the claiming of a discount in the taking of assignats
with six years’ confinement in chains, and on the 1st day of August,
on Couthon’s motion, with twenty years’ confinement. In addition to
this, maximum prices for the principal necessities of life were
fixed and the exceeding of them was punished by severe penalties;
and in France, and still more in the neighboring conquered
countries, there were many persons who preferred to take assignats
instead of payment rather than permit themselves to be robbed by
requisitions. And yet on the 4th of June, 1796, one franc in specie
exchanged for 800 francs assignats. Compare _Büsch_, Geldumlauf, III
(§ 58 ff., _d’Ivernois_, Etat. des Finances Française, 1796).
920 The Prussian treasury notes of 1806, by virtue of a decree published
in 1807, were to be taken by all at a rate of exchange to be
officially published from time to time. Between December 1, 1807,
and February 28, 1809, the highest “normal course of exchange” was
71, and the lowest 27 per cent. In January, 1815, a refusal to take
them at par, except in certain cases, was threatened with from 500
to 1,000 thalers of a money-fine or from 6 to 12 months’
imprisonment. But indeed, in December, 1812, of 8,000,000 thalers,
there were only 731,625 still circulating. Compare § 7 of the decree
of the 19th of January, 1813. In April, 1815, it was ordered that
the half of all taxes should be paid in such notes, or that if not,
8-½ per cent, should be added as a penalty. This penalty, reduced in
1827 to 1 silver groschen, was not formally abolished even in 1870,
although it had long fallen into disuetude. There was a run of the
owners of the notes in 1830, for redemption, and again in 1841 and
1848; in 1848 to the extent of at most 40,000 thalers in one day,
and altogether not over 100,000 thalers. (_Bergius_, in the Tübinger
Zeitschr., 1870, 226 ff.) About 1846, it was estimated that scarcely
1/250 a year of Prussian paper money was presented for redemption,
while ⅓ of the state receipts came in in the shape of paper money.
(_Rau_, Archiv., V, 125, 207.) The Saxon treasury notes never lost
over 2 per cent., although the state treasury redeemed them up to
1804 only at an _agio_ of 9 _pfennigs_ per thaler, and afterwards of
1 _pfennig_.
921 Those entitled to make money claims are either compelled to accept
the paper money at its nominal value or only at its current value
for the time being. In the latter instance, the unjust compulsion is
much smaller, but at the same time the whole expedient is much less
productive to the state; and hence the former is the more usual. It
was provided in Austria on the 22d of May and the 2d of June, 1848,
that the former should be the rule, and that the latter should
govern in cases in which gold or foreign silver had been stipulated
for. (_Höfken_, Oesterreichs Finanzprobleme, p. 53.) On the 7th of
February, 1856, it was permitted to contract by express promise for
loans in the metallic currency of the country, both for the interest
and the repayment of the principal. Hence a species of
parallel-currency. If it be made entirely impossible for private
individuals to protect themselves against the compulsory circulation
of paper money, the more prudent are forced to send their capital
into foreign countries, which operates very disadvantageously to
poor countries especially. (_Wagner_, Tübing. Zeitschr., 1863, 441.)
922 Thus, for instance, the Frederick coins, and for a time the French
assignats were helped by the popular enthusiasm, while Gustavus
III., of Sweden, could give little value to his paper. (_v.
Struensee_, Abh., III, 577.) In France, in 1796, 2,400,000,000
_mandats_ were issued instead of all the outstanding assignats; that
is, as many as there were assignats at the close of the year 1792.
And yet the latter were then only 25 per cent. below par; the
former, before one month had elapsed, 80, and in nine months, almost
98 per cent. below par. (_St Chamans_, Nouvelle Essai sur la
Richesse des Nations, p. 150. _A. Schmidt_, Parisier Zustände, III,
121 ff.) In Austria, in 1811, the volume of paper money was
contracted, but in a manner so violent and destructive of credit
that its rate of exchange did not rise in consequence. (Tub.
Zeitschr., 1763, 1874.) After 1848, also, the rate of exchange of
Austrian paper money was much more perceptibly influenced by the
variations in the political state of affairs than by the changes in
its volume. (Tub. Zeitschr., 1856, 129.) In the summer and winter of
1866, about 650,000,000 paper rubles circulated, with scarcely any
increase or decrease; and yet the ratio of exchange was, during a
part of the summer, 66, and in winter, 84 per cent. of the silver
value of the ruble. (_Wagner_, Russ. Papierwährung, 74.) Instances
in which the increase in the price of commodities began to be more
general only after the volume of paper money had decreased; in
Austria, in 1851 and 1866; in Russia, in 1857 (loc. cit).
923 Then precious metal money becomes a commodity of which great stores
may be collected in the country itself, at the banks, but chiefly
for foreign trade. It is said that Austrian business men in 1860 and
the following years invested “hoards” to the amount of several
hundred million florins in exchange on metallic-currency countries.
(Tüb. Zeitschr., 422.) Good paper money will never drive out the
whole supply of cash money out of a country, because a good portion
must always be kept for purposes of redemption; depreciated paper
money operates much farther in this direction. Even the exportation
of small change may become a profitable speculation as soon as the
amount of depreciation of paper money exceeds the seigniorage. Then
usually small change of a worse kind is stamped, as, for instance,
in Austria, copper instead of silver; and in 1860, 12 millions
florins of paper small change. Here the exportation of the better
money is not a consequence, but the motive to the manufacturing of
the worse.
924 During the assignat-period it could happen that a land owner, after
the term for which he had farmed out his land, might be compelled to
surrender it to the farmers, for the reason that the taxes,
requisitions, etc., paid by the farmers, amounted to more than the
farm rent. In the case of the former, the calculation was based on
the recent depreciated value of the assignats; in the case of the
latter, on the higher value the assignats had at the moment that the
contract was concluded. (_Büsch_, Geldumlauf, III, 62.) A writer in
the Revue des deux Mondes, April 15, 1865, thinks that one reason
why the American civil war was so popular in the northwest was
because the paper money issued during the rebellion made it easy for
that part of the country to pay off the mortgage-debts which had
burthened it since 1848. Even of the two law catastrophes, _Duclos_,
in his memoirs, remarks that they produced a great admixture of
those who had been formerly separated by differences of class and
wiped out the previous ideas of decorum, fitness, etc.
925 During the time that the clipping of the coin was practiced, it is
scarcely possible to show that money was debased below 11 per cent.
of what its value should have been. See, on the other hand, § 3. In
Austria, in 1810, a person had to give 1,200 florins in paper money
for 100 florins in silver. (Tüb. Zeitschr., 1861, 593.) In North
America, in 1781, it took $280 in paper to purchase $1 in silver.
(_Ebeling_, Gesch. und Erdbeschreib., von N.A., 1856, III, 580; IV,
440; V, 437.) During the American civil war, the paper money of the
Southern States declined to ½ (December, 1863) and even to 1/35
(October, 1864) of its nominal value. Compare _Hock_, Finanzen der
V. Staaten, 514 ff. Observed even by _Storch_, Handbuch, _Rau’s_
translation, III, 141 ff. (See, on the other hand, _C. King_,
Thoughts, p. 113.) In Paris in July, 1795, the greater number of
commodities estimated in assignats were worth as much as if the rate
of exchange of the latter was 6-14 per cent. of their nominal value,
while it actually amounted to only 3-½ per cent.
926 Where an _agio_ of exchange of metallic money as compared with paper
is prohibited, the decline of the latter will manifest itself not
only in foreign rates of exchange, but also in the price of bars of
the precious metals.
927 The changes of the agio or premium depend mainly on the supply and
demand of the precious metals, that is, on the extent and intensity
of the business transactions which have to be made in these metals
themselves. (_Wagner,_ Russ. Papierw., 87.) Hence, for short periods
of time, it may be said in a paper currency country, that business
transactions based on cash money have a great element of variation
in them. (_Wagner_ in _Bluntschli’s_ Staats-wörterbuch, III, 971.)
The purchase and lease-hold prices of fixed capital, of houses, for
instance, rise much less because most people look upon the distress
as transitory, and of short duration. (_A. Walker_, Sc. of W., 133.)
In Austria in 1859, the rise of the agio of exchange of silver from
par to 40 per cent., and its subsequent fall within 7 months to 20
per cent., left the price of coin almost entirely unaffected. (_A.
Wagner_, Gött. Anz., 1860, 114.) That country people in general
suffer more from a bad paper currency than the towns people and
inhabitants of cities, see _Bonamy Price_, Currency and Banking,
175, seq. In the northern states of the American union, in 1864, 12
home kinds of commodities had risen 148 per cent., 7 foreign kinds
of commodities, 164 per cent., and 7 which could be obtained only
from the southern states, 353 per cent. (_v. Hock_, 186 seq.) As too
great issues of paper money are so frequently made on account of
war, it is comparatively easy to understand why it is that articles
for which war creates a demand should rise in price very soon and
very high; while the very opposite happens in times of
taxation-distress, in the case of a great many articles of luxury,
which can readily be dispensed with. _Büsch_ remarks (Werke, VII,
91), that retail dealers frequently raise their prices in order not
to be obliged to pay out so many small coins as change for the paper
dollar.
928 Compare _Hufeland_, N. Grundlegung, II, 241. Self-seeking
undertakers (_Unternehmer_ = men of enterprise) have, on this
account, both in Austria and Russia (_Wagner_, Russ. P.W., 105), but
more so in North America (_v. Hock_, 556 ff.), opposed measures
intended to restore values (_Valuta_), on the ground that they were
anti-national. Even _Sperausky_ experienced this in 1809, when he
published very correct ideas on paper money, while in the “fairy”
times of Catherine II., no one even thought that state paper money
is a state debt. (_Bernhardi_, Russ. Geschichte, II, 2, 636.) One of
the principal representatives of this course is _H. C. Carey_, Our
Resources (1866), and in the New York Herald, 1865. On the other
hand, _Faucher_ rightly calls the more active exportation of
countries, with a bad paper currency, an exportation of barbarous
nations, the commerce of misery, to which any price paid in metal or
in any higher-standing product of civilization is acceptable.
(Vierteljahrsschrift, 1868, IV, 167.) The nation in the aggregate
loses in international trade for the simple reason that its foreign
creditors will accept its paper money at most at its current rate of
exchange against specie, while foreign debtors force it upon the
nation at its nominal value.
929 The different provinces also of a large empire may have very
different degrees of depreciation of the same paper money. Thus, in
the interior of Russia its rate of exchange against specie had for a
long time not declined beyond 50 per cent. of its nominal value;
while the foreign rate of exchange supposed a decline to 33-⅓ per
cent. (_Cancrin_, Weltreichthum, 68.)
930 An enhancement of duties, taxes (_Abgaben_) etc., will seldom be
able to progress in the same measure as the paper money sinks; in
any case, a law would be necessary to effect this, which, however,
comes always later than the decline. (_Sismondi_, Du Papier Monnaie,
27.)
_ 931 Wagner_, Russische Papierwährung, 142, estimates that the Crimean
war depreciated the average current rate of exchange of Russian
paper money by 11.1 per cent., the Italian war of 1859 by 14.5 per
cent., the German war of 1866 by 19.4 per cent., spite of the fact
that Russia did not participate directly in the last two wars.
932 The more than forty-five milliards French assignats, estimated at
their rates current, really produced to the state only about six
milliards. (_Gentz_, Histor. Journ., 1800, II, 317, after
_Lecoulteux_.)
933 Very well explained by _H. Thornton_, Paper Credit of Great Britain,
ch. 10. As to how, in Austria, the paper-money crisis contributed to
bring the rigid national resources into a molten state, and to shake
off the national inertia by the feeling of insecurity, see _Buquoy_,
Theorie d. Wirthschaft, 1816, 347 ff. _Schäffle_, System, 3 aufl.,
254 seq., thinks that if Austria should first adjust its values, and
then, in case of another war, have recourse to a second
depreciation, the disastrous disturbances of its national economy
consequent herein would be produced twice instead of once, and not
without reason.
934 The Prussian treasury-bills stood, in June, 1809, at 36 per cent. of
their nominal value; June, 1810, 84-½ per cent.; January, 1812,
13-½; December, 1812, 44-½; June, 1813, 26-½; July, 1813, 24-½;
December 31, 1813, 49-½; January, 1815, 88; January 5, 1816, 99 per
cent. Austrian paper money expressed in terms of metallic money,
amounted, on an average, between 1849 and 1855, to 292,000,000
florins: but at certain moments, it fluctuated from 231,000,000 to
337,000,000. (Tübing. Zeitschr., 1856, 124.) The agio of silver
fluctuated during the _Bancozettel_ (bank-billets, a species of
Austrian paper money) period from one day to another on Change 40
and even 100 per cent.: thus, on the news of Napoleon’s entry into
Paris, between the 25th of March and the 4th of April, from 330 to
440; on the receipt of the news of the result of the battle of
Waterloo, in three days, from 458 to 412; after Napoleon’s
abdication, from 412 to 320. (_Gentz_, Werke, V, 62.) _Huskisson_
rightly calls a depreciated paper currency a much worse thing than
clipped coin: the clipping of the coin is, so to speak, one great
blow after which people can again calculate with certainty; but bad
paper money is one continual fluctuation.
935 “The only difference here is that it is not left to individuals to
say whether they will join in the game or not.” (_Helferich._)
936 During the later assignat-period every house was full of
commodities, every pocket of samples; every “exquisite” and every
lady was a merchant, because no one had any further confidence in
the money. People had retrograded to the barbarous condition of
trade by barter. (_Goncourt_, Histoire de la Société française
pendant le Directoire, 1854.) The French constitution of 1795 fixed
the salaries of members of the Directory at the value of 50,000
_myriogrammes_ of wheat (art. 173, 68). In Delaware, while the
depreciation of paper money lasted, farm rent was usually required
to be paid in produce. (_Ebeling_, V, 37.)
937 “Of all contrivances for cheating mankind, none has been more
effectual than that which deludes them with paper money.” (_D.
Webster._) The American Secretary of the Treasury, _McCulloch_,
says, in the report of December 7, 1868, of the legal tender notes:
“there can be no doubt that these acts have tended to blunt and
deaden the public conscience, and they are chargeable in no small
degree with the demoralization which so generally prevails.”
_Niebuhr_ attributes the decline of old Spanish honesty which was
formerly so much relied on in all great money centers, principally
to the _vales_. (Nichtphilol. Nachlass, 489.)
938 This calls to our mind the impersonal mass-crimes to which our own
times so frightfully incline, when many a man who would recoil in
horror from an ordinary act of pocket-picking or from manslaughter
with intent to commit larceny, robs thousands in cold blood by means
of a swindling enterprise, or, for the sake of a fraudulent
insurance, destroys the lives of a whole ship’s crew.
939 Saxon loans of two million thalers treasury notes (_Kassenbillets_),
August, 1813, which were then to bear interest in silver and to be
paid in silver. The purchase of the precious metals, or loans made
by the state in foreign countries, with the intention of redeeming
paper money, effect the same end at a much greater cost. (_Peschel_,
D. Vierteljahrsschrift, 1858, III, 254.) If the currency consists of
bank notes endowed by the state with compulsory circulation and an
irredeemable character, such a metallic loan made in order to
reimburse the bank for a loan to the state in depreciated notes is a
gift made to the bank without reason; and the metallic money brought
into the country flows back into foreign parts when the bank
restriction is removed, because it, together with the appreciated
notes, creates a too abundant circulation.
940 Although in England the suspension of the redemption of notes had
lasted from 1797 to 1819, depreciation of notes during the greater
part of this time either did not occur at all (Summer of 1797 to
1799, 1802 ff.) or was very small; and even during the last five war
years, it did not amount to much over 30 per cent. About 1817, the
notes of themselves again rose to par, and had lost but little
during the following years, in consequence of the great loans of the
continental powers in the English market. Under such circumstances,
the repeated promise of the state to make the notes redeemable at
their full nominal value was certainly a cogent reason for the
Peel’s Act of 1819. In favor hereof are especially _Tooke_, Hist. of
Prices, II, p. 60 ff., and _J. S. Mill_, Principles, III, ch. 13.
Opposed to it, the so-called Birmingham-Atwood school and also _Lord
Ashburton_, in his statement before the Agricultural Committee,
1836. But according to _Rob. Muschet_, Tables, exhibiting the Gain
and Loss to the Bondholders arising from the Fluctuations in the
Value of the Currency (1826), the state creditors, on the whole,
lost more by the depreciation of the notes than they gained by their
subsequent rise. _Ad. Wagner_ also is decidedly in favor of the
course A.
941 This has occurred not unfrequently in the case of the paper money of
subdued revolt: thus, for instance, the Hungarian of 1849; in the
case of the Southern Confederacy. But the assignats, too, came to
this end, although, according to _Büsch_ (Werke IX, 526), the
intentions of the country at first were good; and in Austria, in
1810, many prophecies looking in this direction were made. (Per
contra _Rehberg_, Sämmtl. Schriften. IV, 334.) Not very differently
did it fare with the Swedish coin-tokens (_Münzzeichen_) of Charles
XII, which were altered 7 times between 1715 and 1718; and where
besides, the tokens called in in a much too short space of time were
transformed into small change coins 1/32 their value hitherto.
(_Brückner_ in _Hildebrand’s_ Jahrb. 1864, I, 161, ff.)
942 Thus it was, for instance, in Austria, in 1811 and 1820, at 1/5 and
2/5 of the nominal value, in 1799 in the United States, in 1813 in
Denmark with the currency notes (_Courantzettel_), in 1816 in Norway
with the royal bank dollar notes, in Sweden in 1814 with the bank
notes (_Bancozetteln_) at 37-½ per cent., in 1839 in Russia with the
_bankassignationen_, at 2/7 of their nominal value. Of theoretical
writers this course is recommended among others by _Jacob_,
Staatsfinanzwissenschaft, § 980 ff.; _Nebenius_, Œff. Credit, 2
Aufl., ff.; Deutsche Vierteljahrsschrift, 1841, I, 65; _Rau_,
Lehrbuch, III, § 528; _Helferich_, Tüb. Ztschr., 1856, 435 ff.
According to _v. Rotteck_, Lehrbuch, IV 402, it may be assumed that
paper money is spread among the people of a country in proportion to
their resources: which is also the hypothesis on which all direct
taxation is based. Hence the gradual depreciation of paper money
operates like the imposition of a tax and the _reduction of value_
(_Deralvirung_) is, so to speak, only the release of the same.
Besides _Gentz_ (Werke by Schlezier, IV, 58) shows from the example
of Austria in 1811, that in the case of the taking up of a
depreciated paper currency it makes a better impression to give 100
florins in specie for 1,000 florins in paper, than 200 florins in a
new kind of paper. The holders of the old paper money have now lost
confidence in all paper currency. Of similar import is the immediate
abolition of the compulsory circulation of paper money at its
nominal value (_Prince Smith_ in _Faucher’s_ Vierteljahrsschrift,
VII, 126 ff.), and the introduction of compulsory circulation in
accordance with the day’s quotations of the actual value of the
paper as compared with specie. (_Strache_, Die Valuta in Œsterreich,
1861; _per contra_, _Ad. Wagner_, Tüb. Zeitschr., 1861, 606 ff.)
943 Such measures as were adopted in Austria, in 1811, where a
“redemption and extinction deputation,” independent of the
government was established and sworn to prevent a further increase
of paper money, are not sufficient of themselves alone.
944 The Code Civil (art. 1895) makes the nominal value entirely
conclusive; so, also, the Prussian Landrecht (I, § 790): which is to
proclaim the omnipotence and infallibility of the state power in the
most ingenuous or else in the most brutal manner. The power given by
_Puchta_ to metallic value (Pandecten, VII, aufl., § 38) is
applicable neither to paper money nor to small coin; and it ignores
entirely that stamped coins and currency money are something
different from mere metallic commodities and even from metallic
bars. The Austrian civil law (_bürgerliche Gesetzbuch_) decides in
favor of the current value (986 seq.): a view which most modern
jurists since _Savigny_ (Obligationenrecht, I, 404; earlier yet,
_Hufeland_, Ueber die rechtliche Natur des Geldschulden, 180)
entertain. But they even fail to recognize that the depreciation,
for instance, of paper money as compared with specie and general
decrease of purchasing power are identical only in the case of such
paper money or reduced coins which have no compulsory circulation.
(_A. Wagner_, Tüb. Ztschr., 1863, 478 ff.)
945 Let us suppose that at the moment the state could perform its duty
to its servants only to the extent of one half. If it should frankly
admit this, pay one-half in good money and remain in debt for the
other half, it might subsequently, in better times, make good to
them or to their heirs what it had now refused; and thus private
credit, from the disturbance of which the state can only suffer,
suffer no diminution. Both are quite different when the state
disguises its insolvency under the mask of apparent full payment in
paper money which has lost 50 per cent. of its nominal value. In
opposition to the myth that the assignats saved France, see
_Levasseur_, in the Acad. des Sc. m. et. p.
946 It not unfrequently happens that a nation’s paper money has been
directly or indirectly affected by an unfriendly state. Thus for
instance, England, in 1794, tolerated an assignat manufactory at
Lambeth, while Frenchmen imitated English bank notes. (_Archenholz_,
Aenalen XI, 429.) Napoleon in 1812 issued forged Russian bank notes.
(_Cancrin_, Œconomie der menschl. Gesellschaft, 136. _Niebuhr_,
Gesch. der Revolution, II, 314.) When Maria Theresa first wished to
introduce paper money, Bolza, her minister of finance, in his urgent
appeal to her to desist from adopting such a measure, foretold the
subsequent bankruptcy etc. (_Mailath_, Oesterr. Gesch., V., 83.)
_Adam Smith_ compares gold and silver circulation to a highway
which, indeed, produces nothing directly. Paper money is an advance
similar to that which would be produced by the construction of a
machine adapted to the carriage of persons and goods through the
air, and which permit the highways hitherto used to be turned into
meadows, arable land etc. _Ad. Smith_ very strongly emphasizes the
insecurity of these “Dædalian wings” as compared with the “solid
ground of gold and silver,” especially in the transitory misfortune
produced by war. (W. of N., II, p. 78, Bas.) _David Hume_ says of
all paper media of exchange, that they share all the harmfulness of
an increase of specie money, enhancement of the price of
commodities, aggravation of the obstacles to exportation; but that
they do not share in the useful properties of specie money.
(Discourses, On Money and on the Balance of Trade.) The younger
_Mirabeau_ kept Necker from pursuing his plan to issue paper money
with the words: _du papier monnaie c’est la peste circulante!_
Inconsistent as Napoleon was in his bank policy (compare _Horn_,
Bankfreiheit, 304), he always rejected paper money. As in 1805 he
wrote to the minister of justice: _je ne veut pas de papier
monnaie_: so, in opposition to the minister of the interior, he in
1810 compared it to the plague: _le plus grandfléau des nations_.
(Acad. des Sciences m. et p., 1864, II, 212.) _Sismondi_, too,
compares paper money to the paper cannons of the Chinese, which
render a cheap service until the hour of danger comes. (N.
Principles, II, 107.) Of the banks he says: _les avantages
aussi-legers les dangers aussi graves_. (Eludes, II. 421).
_Cancrin_, Œkonomie der menschl. Gesellschaft, 1845, 152 ff., says
he thinks that possibly it might have been well never to have
established banks, but that yet the craving for the new is
preponderately good, it brings inventions and improvements with it.
Even _Tooke_ considers the insecurity of paper money a disadvantage
which more than counterbalances its cheapness. (Considerations on
the State of the Currency, 1829, 85.) On the doubts of _Jefferson_
and _Gallatin_, see _Wolowski_, Enquête, 170, seq. _Webster_ called
paper money “the most effectual of inventions to fertilize the rich
man’s field by the sweat of the poor man’s brow.” _Tout papier
monnaie par lui même est un mensonage._ (_M. Chevalier_, Cours, III,
428.) _M. Niebuhr_ calls banks a poison which should be used with
moderation. (Bankrevolution und Bankreform, 1846, 37.) Compare the
writers named in § 2.
_ 947 Avec la liberté un peuple n’a jamais de mauvaises monnaies_ (_F.
Lenormant_): entirely so, provided _liberté_ be translated “true and
insured freedom.”
948 Law’s giddy projects under the regents of Orleans and the assignats
of the first republic; Austria, Russia and the United States; the
Danish absolute monarchy, and Sweden, both under Charles XII., and
its oligarchical times. The history of Rhode Island paper money is
peculiarly scandalous. All debts had to be paid within two years, or
to be held invalid, and juries were dispensed with in such cases.
(_Ebeling_, Gesch. und Erdbeschreib. von N. America, II, 173 ff.)
_ 949 Ad. Müller_ compares “cosmopolitan” metallic money to a universal
language: paper money ties one to the country, as people do not like
to travel in foreign parts when they understand only their native
language. As paper money compels subjects to take an interest in the
state, a state like Austria would act very foolishly if it should
begin its reorganization by enhancing its depreciated values
(_Valuta_). (Elemente der Staatskunst, 180, III, 171; II, 339 ff.)
Even in 1830, he found fault with the Austrian loan for the payment
of the paper money. (Briefwechsel mit Gentz, 321 seq.) He lauded
paper money because he claimed it led a country back to the barter
And service-economy of the middle ages. (Verm. Schriften, I, 59 ff.)
Similarly, _Gentz_, in his later writings. Compare _Roscher_,
Gesch., der N. Œk., in Deutschland, II, 762.
950 Who, for instance, would lay by a paper dollar in the savings bank
for his godchild? In this respect, too, oriental countries have
preserved much of the medieval. Concerning the aversion of the
Egyptians of our day for all paper money, see _Stephan_, Ægypten,
250 seq. This is all the more surprising since during several months
after the harvest, there are from 4,000,000 to 8,000,000 piasters in
specie sent every day from Alexandria by post to private individuals
in the provinces. In addition to this there is the immense
difference in the French, English and Austrian coins circulating in
the country, and which have very different rates in the different
provinces. It is still worse in Arabia. (_v. Maltzan_, Reise, I,
27.)
951 Compare _v. Schlozer_, Anfangsgründe, I, 140 ff. _M. Niebuhr_ (Rau’s
Archiv. N.F. II, 125) finds paper money best adapted to countries
without any exchange-trade, but which at the same time require a
species of money easily computed and easy of transportation
(Russia); countries whose national economy has an extraordinarily
rapid growth (the United States); and in unusually solid countries
(Scotland).
_ 952 List_, Nat. System der politischen Œk., I, 394. A private
individual of small means who should go on his travels without money
would be subject to all sorts of annoyances; a king or a Rothschild,
just as soon as he was recognized as such, would find credit
everywhere. Thus, English businessmen have outstanding claims in all
parts of the world, which might without any great difficulty be
called in in the precious metals. The more the division of labor is
developed, the better may the condition of a nation’s whole economy
be seen reflected in the course of its banking system and its
exportation and importation.