The system of relying upon the precious metals as money has long been
known as the Automatic system. Accurately, it should be called the
_Accidental_ system. It has been called "automatic" because, so long as
money was made to depend solely upon the yield of the mines, the supply
regulated itself by what was believed to be a natural method, namely, by
the expenditure of labor in its production, and was limited only by the
rude obstacles which nature opposes to the production of the metals. The
necessity of expending this labor placed the money volume of any country
beyond the control of the kings and conquerors who, in the primitive
periods of society, exercised despotic sway over their subjects. It was
undoubtedly better for the people of those early times to risk the
accidents of production than the follies and sinister designs of rulers.
This automatic system grew out of barter. It is a survival from the
period when articles were exchanged directly, not for gold and silver as
money, but for gold and silver as commodities--on the basis of their
cost of production--as in the case of the articles for which they were
exchanged.
There have been the same evolutions of progress in money as in all other
things. In the rude original of society no kind of money was possible.
The first trade was by barter, after which, some one or more commodities
attainable in the vicinage, and in general use and demand were selected
as the common media through which all exchanges were filtered. The use
for that purpose of various metals by weight followed next, and, at a
succeeding stage, gold, silver, and copper by weight, and after this
their use in the form of coins, the value of which coincided with the
bullion-value, which must necessarily be the case when free coinage is
permitted.
It may be not uninteresting in this connection to have a general view of
the materials which, at different epochs of the world's history, have
been used as money. I therefore present a tabular statement giving those
particulars in chronological order.
_Table showing some of the substances which have, at various periods
and in various countries, been used as money._
---------+-----------------+--------------------------+---------------
Period. | Country. | Substance used as money. | Authority.
---------+-----------------+--------------------------+---------------
B. C. | | |
1900 |Palestine |Cattle, and gold and |The Scriptures.
| | sliver, by weight. |
|Arabia |Gold and silver coins |Jacob.
|Phoenicia |Gold, silver, and copper |Anonymous.
| | coins |
|Phoenician colony|Same (some still extant) |Carter.
| in Spain. | |
1200 |Phrygia |Coins, by Queen of Pelops |Julius Pollux.
1184 |Greece |Brass coins |Homer.
862 |Argos |Gold and silver coins, by |Dictionary of
| | Phidon. | Dates.
70-500 |Rome |Brass, by weight |Jacob.
578 |Rome |Copper coins |Ibid.
Uncertain|Carthage |Leather or parchment |Socrates, Dial.
| | money, first "paper | on Riches,
| | bills" known. | Journal des
| | | Economistes,
| | | 1874, p. 354.
B. C. 491|Sicily |Gold coins, by Gelo (some |Jacob.
| | still extant). |
480 |Persia |Gold coin, by Darius (two |Ibid.
| | still extant). |
478 |Sicily |Gold coin, by Hiero (some |Ibid.
| | still extant). |
407 |Athena. |Debased gold coins, |MacLeod, 476.
| | foreign |
400 |Sparta. |Iron, overvalued |Boeckh.
360 |Macedonia |First gold coins coined |Jacob.
| | in Greece, by Philip. |
266 |Rome |First silver coins coined |Ibid.
| | in Rome. |
54 |Britain |Pieces of iron |Ibid.
50 |Rome |Tin and brass coin |Dic. of Dates.
Uncertain|Arabia. |Glass coins |N. Y. Tribune.
| | | July 2, 1872.
---------+-----------------+--------------------------+---------------
_Period following the failure of the ancient mines._
---------+-----------------+--------------------------+---------------
A.D. |Rome. |Lead coins silvered, and |Anonymous.
212 | (Caracalla.) | copper coins gilded. |
1066 |Britain |Living money, or human |Henry's History
| | being made a legal | of Great
| | tender for debts at | Britain, vol.
| | about L2 16_s._ 3_d._, | iv, p. 243.
| | per capita. |
1160 |Italy |Paper invented; bills of |Anderson.
| | exchange introduced by |
| | the Jews. |
1240 |Milan, Italy |Paper bills a legal tender|Arthur Young.
1275 |China |Paper bills a legal tender|Marco Polo.
|Africa, part of |"Machutes" (ideal money; |Montesquieu.
| | this view doubted.) |
1470 |Granada, Spain |Paper bills a legal tender|Irving.
1574 |Holland |Pasteboard bills, |Dic. of Dates.
| | representative. |
Uncertain|Iceland |Dried fish |Anonymous.
Uncertain|Newfoundland |Codfish, dried |Anonymous.
Uncertain|Norway and |Seal skins and blubber |Anonymous.
| Greenland. | |
Uncertain|Hindostan and |Cowry shells |Jacob, 372.
| parts of | |
| Africa. | |
Uncertain|North America |Agate, carnelian, jasper, |Anonymous.
| Indian tribes | lead, copper, gold, |
| | silver, terra-cotta, |
| | mica, pearl, lignite, |
| | coal, bone, shells, |
| | chalcedony, wampumpeag, |
| | etc. |
Uncertain|Oriental pastoral|Cattle, grain, etc. |Anonymous.
| tribes | |
Uncertain|Abyssinia |Salt |Anonymous.
Uncertain|China and India |Rice |Anonymous.
Uncertain|India |Paper bills |Patterson,
| | | p. 13.
Uncertain|China |Pieces of silk cloth |Ibid.
Uncertain|Africa |Strips of cotton cloth |Ibid.
|Not stated |Wooden tallies or checks |Ibid.
---------+-----------------+--------------------------+---------------
_Period following the discovery of the American mines._
---------+-----------------+--------------------------+---------------
A.D. | | |
1631|Massachusetts |Corn a legal-tender at |Macgreggor.
| | market prices |
1635|Massachusetts |Musket-balls |Anonymous.
1690|Massachusetts |Paper bills, colonial |Macgreggor.
| | notes |
1694|England |Bank-notes |McCulloch.
1700|Sweden |Copper and iron coins |Voltaire's
| | | Charles XII.
1702|South Carolina |Colonial notes |Macgreggor.
1712|South Carolina |Bank notes |Ibid.
1716|France |Interconvertible paper |Murray.
| | bills a legal-tender |
1723|Pennsylvania |Paper bills, colonial |Macgreggor.
| | notes |
1732|Maryland |Indian corn a legal-tender|Anonymous.
| | at 23d. per bushel |
1732|Maryland |Tobacco a legal-tender at |Anonymous.
| | 1d. per pound |
1776|Scotland |Tenpenny nails for small |Adam Smith.
| | change |
1785|Frankland, State |Linen at 3s. 6d. per yard,|Wheeler's
| of (now part of| whisky at 2s. 6d. per | History of
| North Carolina)| gallon, and peltry as | North
| | legal-tender | Carolina, 94.
1810-1840|All commercial |Great era of bank-paper |
| countries | bills |
1826|Russia |Platinum coins |App. Encyc.
| | (discontinued in 1845) |
1847|Mexico, parts of |Cocoa beans; and at Castle|Anonymous.
| | of Perote, soap. |
---------+-----------------+--------------------------+---------------
_Period following the openings of California and Australia._
---------+-----------------+--------------------------+---------------
1849 |California |Gold dust by weight, also |
| | minute gold coins for |
| | small change, coined in |
| | private mints. |
1855 |Australia |Gold dust by weight |
185- |Communist |Paper bills, each |Private
| settlement in | representing "one | information.
| Ohio, called | hour's labor." |
| "Utopia." | |
1862 |United States |Paper bills a legal tender|Act of Feb. 25.
1863 |North Carolina |Tenpenny nails, at 5 cents|Anonymous.
| | each, for small change. |
1863 |Camp at Florence,|Potatoes for small change |Yorkville
| S. C. | | Enquirer.
1863 |United States |Postage-stamps for small |
| | change, temporary. |
1865 |Philadelphia, Pa.|Turnips for small change, |Philadelphia
| | temporary and local. | Ledger, April.
1865 |United States |Nickel coins for small |Act of March 3.
| | change, overvalued. |
---------+-----------------+--------------------------+---------------
An analysis of this table will show how carefully even the most
primitive communities guarded against a too restricted money volume.
The materials chosen to serve the purpose of money in each country
during the early history of society were, it will be observed, such as
at the time and place would be of sufficient quantity or volume to
insure against any sudden deprivation of supply. In countries where the
chase was common, the skins of wild animals were used as money; in
maritime communities, shells; in pastoral countries, cattle; in the
early history of agriculture, grain; in early mining periods, base
metal; in primitive manufacturing ages, nails, glass, musket-balls,
strips of cotton, etc.
As communities developed, and commerce between them began, substances
somewhat common to all countries, portable and indestructible, such as
the precious metals, came to be more, and other substances less,
resorted to. By reason of their great beauty those metals were always in
demand, even among barbarous peoples, for purposes of ornament and
decoration. Because of their universal use for such purposes they came
to be recognized as things for which anything else could with safety be
exchanged, and as society advanced, and it came to be recognized that
some medium should be adopted in which to make all exchanges, those
metals were naturally selected for the purpose, so that, together, they
became, as it were, a common denominator of value. Their selection
proved a convenient method of storing away wealth in a form that
commanded at all times every other form of wealth. They had always
passed by weight wherever used, but as society became better organized,
and its methods more complex, it became necessary, in order to insure
against fraud, to form them into pieces convenient for handling, and to
invest them distinctly with the function of money, so that, by law, they
became a universal solvent for debts and demands, the stamp of the
government placed on the coin testifying to its weight and fineness.
Both metals, as shown by the table, have been concurrently used as money
for thousands of years--not only since the dawn of history, but from a
period anterior to any historical records. The oldest annals show that
they had already been employed as circulating media and that their
relative values, or the ratio of their exchange for one another, had
already been established. Gold and silver were used as money in
Palestine as early as the year 1900 B. C. We read in the Bible that
Abraham weighed to Ephron the Hittite 400 shekels of silver, "current
money with the merchant." An inscription on the temple of Karnak, of the
date of 1600 B. C. mentions those metals as materials in which tribute
was paid.
But long anterior even to these dates, both metals had been used, as,
among the relics of the bronze age of the prehistoric era, ornaments of
both gold and silver have been found. Gold, being the less abundant of
the two metals, has had the higher value; but the ratio between the two
has been marvelously steady, taking into account the great sweep of
ages during which they have been used as money. This will be seen by
reference to the following tables of ratios. I will first take their
relative values during ancient times.
_Table showing the ratio of gold and silver in various countries of
the world up to the Christian era._
----------------------------------------------------------------------
B. C. | Ratio. | Authorities.
----------------------------------------------------------------------
1600 | 1 to 13.33 | Inscriptions at Karnak; tribute lists of
| | Thutmosis. (Brandis.)
708 | 1 to 13.33 | Cuneiform inscriptions on plates found in
| | foundation of Khorsabad.
| 1 to 13.33 | Ancient Persian coins; gold darics at
| | 8.3 grams = 20 silver siglos, at 5.5 grams.
500 | 1 to 13.00 | Persia. Darius. Egyptian tribute. Herod.
| | III,.95. (Boeckh, page 12.)
490 | 1 to 12.50 | Sicily. Time of Gelon. "At least" 12.50.
| | (Boeckh, page 44.)
470 | 1 to 10.00 | Doubtful. Asia Minor. Xerxes's treasure.
| | (Boeckh, page 11.)
440 | 1 to 13.00 | Herodotus's account of Indian tributes.
| | 360 gold talents = 4,680 silver.
420 | 1 to 10.00 | Asia Minor. Pay of Xenophon's troops in silver
| | darics. (Anab.; Boeckh, page 34.)
407 | 1 to ---- | Spurious and debased gold coins at Athens.
| | (MacLeod, Polit. Econ., page 476; Boeckh,
| | page 35.)
400 | 1 to 13.33 | Standard in Asia, according to Xenophon.
400 | 1 to 12.00 | Standard in Greece according to "Hipparchus";
| | attributed to Plato.
400 | 1 to 12.00} | Various authorities adduced by Boeckh.
400 | 1 to 13.50} |
| |
| {12.00}| Values in Greece from the Peloponnesian war to
404-336 | 1 to {13.00}| the time of Alexander, according to hints in
| {13.33}| Greek writers. There were variations under
| | special contracts--unit, the silver drachma.
| |
340 | 1 to 14.00 | Greece. Time of Demosthenese. (Boeckh,
| | page 44.)
338-326 | 1 to 11.50 | Special contracts in Greece.
343-323 | 1 to 12.50 | Egypt under the Ptolemies.
300 | 1 to 10.00 | Greece. Continued depression of gold, caused
| | by great influx under Alexander.
207 | 1 to 13.70 | Rome. (Boeckh, page 44.) Gold scriptulum
| | arbitrarily fixed at 17.143 for 1.
100 | 1 to 11.91 | Rome. General rate of gold pound to silver
| | sesterces to date.
58-49 | 1 to 8.93 | Rome. Continued depression of gold, caused
| | by influx of Caesar's spoil from Gaul.
| | [N. B.--Caesar's headquarters were at
| | Aquileia, at the head of the Adriatic,
| | where there was also a gold mine, which
| | at this period became very prolific.]
50 | 1 to 11.90 | Rome. "About the year U. C. 700," the rate
| | was 11 19-21. (Boeckh, page 44.)
29 | 1 to 12.00 | Rome. Normal rate in the last days of the
| | republic.
----------------------------------------------------------------------
By reference to the foregoing table it will be observed that the
increase in the supply of gold in Europe, consisting of the spoils of
the Orient, gathered by Alexander the Great, and brought by him to
Greece, had the effect of decreasing the value of that metal so that
instead of being exchangeable at the ratio of 1 to about 13-1/2 of
silver, as formerly, gold became depressed, 1 ounce of it exchanging for
only 10 ounces of silver. Later, when Julius Caesar extended his
conquering arms into Gaul, and sent to Rome the accumulations of
treasure amassed by him, the value of gold by reason of the increased
supply was again depressed, so that an ounce of it was exchangeable for
only 8.93 ounces of silver. With these exceptions it may be said that
the relation of silver to gold for sixteen hundred years before the time
of Christ had varied only from the ratio of 1 to 12 to that of 1 to
13.33. Silver at no time during all this period fell below 13.50 to 1 of
gold.
Looking, now, at the relative values of gold and silver from the time of
Christ to the discovery of America, we find the ratio between the two
metals to be as follows:
Table showing the ratio of gold and silver in various countries of the
world from the opening of the Christian era to the discovery of America:
----------------------------------------------------------------------
A. D. | Ratio. | Authorities.
----------------------------------------------------------------------
1-37 | 1 to 10.97 | Rome. Rate under Augustus and Tiberius.
37-41 | 1 to 12.17 | Rome. Reign of }
| | Caligula. } The silver coinage
54-68 | 1 to 11.80 | Rome. Reign of Nero. } much debased,
69-79 | 1 to 11.54 | Rome. Reign of } consequently the
| | Vespasian. } ratio of the
81-96 | 1 to 11.30 | Rome. Reign of } metals pure was
| | Domitian. } about 1 to 11.
138-161 | 1 to 11.98 | Rome. Reign of }
| | Antoninus. }
312 | 1 to 14.40 | Byzantium. Reign of Constantine. Arbitrary.
438 | 1 to 14.40 | Byzantium and Rome. Theodosian code.
| | Arbitrary.
864 | 1 to 12.00 | Probable ratio, as shown by the Edictum
| | Pistense, under the Carlovingian dynasty.
1260 | 1 to 10.50 | Average ratio in the commercial cities of
| | Italy. Local or doubtful.
1344-1660 | 1 to ---- | England. Numerous mint indentures given in
| | McLeod's Political Economy, page 475. The
| | ratio, except when fixed arbitrarily and
| | in violation of market price, varied
| | between about 1.12 and 1.14 during the
| | two hundred and fifty-seven years
| | included in this period.
1351 | 1 to 12.30 } |
1375 | 1 to 12.40 } | Ratio in North Germany as shown by the
1403 | 1 to 12.80 } | very accurate rules of the Lubeck mint,
1411 | 1 to 12.00 } | corroborated in the main by the accounts
1451 | 1 to 11.70 } | of the Teutonic Order of Knights,
1463 | 1 to 11.60 } | averaged in periods of forty years.
1453-1494 | 1 to 10.50 | Ratio according to the accounts of the
| | Teutonic knights. As the ratio fixed in
| | England by numerous mint indentures from
| | 1465 to 1509 was about 1.12 this German
| | ratio is considered local or doubtful.
----------------------------------------------------------------------
It will thus be observed that during the one thousand four hundred and
ninety-two years from the coming of Christ to the discovery of America,
silver never went below the ratio of 14.40 to one of gold.
The relations which the metals have borne to each other since the
discovery of the New World will appear from the following:
_Table showing the relative values of gold and silver in the various
countries of the world from the discovery of America to 1680._
----------------------------------------------------------------------
A. D.| Ratio. | Authorities.
----------------------------------------------------------------------
| |
1497 | 1 to 10.70 | Spain. Reign of Isabella. Edict of Medina. Local.
1500 | 1 to 10.50 | Germany. Adam Riese's Arithmetic. Local or
| | doubtful.
1551 | 1 to 11.17 | Germany. Imperial mint regulations. Arbitrary or
| | local.
1559 | 1 to 11.44 | German Imperial mint regulations.
1561 | 1 to 11.70} | France. Mint regulations.
1575 | 1 to 11.68} |
1623 | 1 to 11.74 | Upper Germany. Mint regulations.
1640 | 1 to 13.51 | France. Mint regulations. Transition period.
1665 | 1 to 15.10 | France. Mint regulations.
1667 | 1 to 14.15 | Upper Germany. Mint regulations. Doubtful.
1669 | 1 to 15.11 | Upper Germany. Mint regulations.
1679 | 1 to 15.00} | France. Mint regulations.
1680 | 1 to 15.40} |
| |
----------------------------------------------------------------------
Table showing the ratio of silver to 1 of gold from 1687 to the
demonetization of silver by Germany and the United States and the
closing of the Mints to its free coinage.
[From the Report (1890) of the Director of the U. S. Mint on the
Production of the Precious Metals in the United States.]
[NOTE.--From 1687 to 1832 the ratios are taken from Dr. A. Soetbeer;
from 1833 to 1878 from Pixley and Abell's tables; and from 1879 to 1889
from daily cable-grams from London to the Bureau of the Mint.]
----------------------------------------------------------------------
Year. | Ratio.|| Year. | Ratio.|| Year. | Ratio.|| Year. | Ratio.
-------+--------++-------+--------++-------+--------++-------+--------
1687 | 14.94 || 1721 | 15.05 || 1755 | 14.68 || 1789 | 14.75
1688 | 14.94 || 1722 | 15.17 || 1756 | 14.94 || 1790 | 15.04
1689 | 15.02 || 1723 | 15.20 || 1757 | 14.87 || 1791 | 15.05
1690 | 15.02 || 1724 | 15.11 || 1758 | 14.85 || 1792 | 15.17
1691 | 14.98 || 1725 | 15.11 || 1759 | 14.15 || 1793 | 15.00
1692 | 14.92 || 1726 | 15.15 || 1760 | 14.14 || 1794 | 15.37
1693 | 14.83 || 1727 | 15.24 || 1761 | 14.54 || 1795 | 15.55
1694 | 14.87 || 1728 | 15.11 || 1762 | 15.27 || 1796 | 15.65
1695 | 15.02 || 1729 | 14.92 || 1763 | 14.99 || 1797 | 15.41
1696 | 15.00 || 1730 | 14.81 || 1764 | 14.70 || 1798 | 15.59
1697 | 15.20 || 1731 | 14.94 || 1765 | 14.83 || 1799 | 15.74
1698 | 15.07 || 1732 | 15.09 || 1766 | 14.80 || 1800 | 15.68
1699 | 14.94 || 1733 | 15.18 || 1767 | 14.85 || 1801 | 15.46
1700 | 14.81 || 1734 | 15.39 || 1768 | 14.80 || 1802 | 15.26
1701 | 15.07 || 1735 | 15.41 || 1769 | 14.72 || 1803 | 15.41
1702 | 15.52 || 1736 | 15.18 || 1770 | 14.62 || 1804 | 15.41
1703 | 15.17 || 1737 | 15.02 || 1771 | 14.66 || 1805 | 15.79
1704 | 15.22 || 1738 | 14.91 || 1772 | 14.52 || 1806 | 15.52
1705 | 15.11 || 1739 | 14.91 || 1773 | 14.62 || 1807 | 15.43
1706 | 15.27 || 1740 | 14.94 || 1774 | 14.62 || 1808 | 16.08
1707 | 15.44 || 1741 | 14.92 || 1775 | 14.72 || 1809 | 15.96
1708 | 15.41 || 1742 | 14.85 || 1776 | 14.55 || 1810 | 15.77
1709 | 15.31 || 1743 | 14.85 || 1777 | 14.54 || 1811 | 15.53
1710 | 15.22 || 1744 | 14.87 || 1778 | 14.68 || 1812 | 16.11
1711 | 15.29 || 1745 | 14.98 || 1779 | 14.80 || 1813 | 16.25
1712 | 15.31 || 1746 | 15.13 || 1780 | 14.72 || 1814 | 15.04
1713 | 15.24 || 1747 | 15.26 || 1781 | 14.78 || 1815 | 15.26
1714 | 15.13 || 1748 | 15.11 || 1782 | 14.42 || 1816 | 15.28
1715 | 15.11 || 1749 | 14.80 || 1783 | 14.48 || 1817 | 15.11
1716 | 15.09 || 1750 | 14.55 || 1784 | 14.70 || 1818 | 15.35
1717 | 15.13 || 1751 | 14.39 || 1785 | 14.92 || 1819 | 15.33
1718 | 15.11 || 1752 | 14.54 || 1786 | 14.96 || 1820 | 15.62
1719 | 15.09 || 1753 | 14.54 || 1787 | 14.92 || 1821 | 15.95
1720 | 15.04 || 1754 | 14.48 || 1788 | 14.65 || 1822 | 15.80
----------------------------------------------------------------------
Year. | Ratio. || Year. | Ratio. || Year. | Ratio. || Year. | Ratio.
-------+--------++-------+--------++-------+--------++-------+--------
1823 | 15.84 || 1836 | 15.72 || 1849 | 15.78 || 1861 | 15.50
1824 | 15.82 || 1837 | 15.83 || 1850 | 15.70 || 1862 | 15.35
1825 | 15.70 || 1838 | 15.85 || 1851 | 15.46 || 1863 | 15.37
1826 | 15.76 || 1839 | 15.62 || 1852 | 15.59 || 1864 | 15.37
1827 | 15.74 || 1840 | 15.62 || 1853 | 15.33 || 1865 | 15.44
1828 | 15.78 || 1841 | 15.70 || 1854 | 15.33 || 1866 | 15.43
1829 | 15.78 || 1842 | 15.87 || 1855 | 15.38 || 1867 | 15.57
1830 | 15.82 || 1843 | 15.93 || 1856 | 15.38 || 1868 | 15.59
1831 | 15.72 || 1844 | 15.85 || 1857 | 15.27 || 1869 | 15.60
1832 | 15.73 || 1845 | 15.92 || 1858 | 15.38 || 1870 | 15.57
1833 | 15.93 || 1846 | 15.90 || 1859 | 15.19 || 1871 | 15.57
1834 | 15.73 || 1847 | 15.80 || 1860 | 15.29 || 1872 | 15.63
1835 | 15.80 || 1848 | 15.85 || | || |
-------+--------++-------+--------++-------+--------++-------+--------
By the foregoing table it will be seen that in the three hundred and
seventy-five years from 1497 to 1872 the maximum separation of the
metals was only as 1 to 16.25--notwithstanding the widest divergencies
during that long period in the yield of the two metals from the mines.
It will be observed that all the later quotations are from the London
market, but it is a significant fact that in France, where, by the law
of 7 Germinal, _An_ XI, (1803,) free coinage was permitted to both
metals, at the ratio of 15-1/2 of silver to 1 of gold, for a period of
seventy years, and until the coinage of silver was limited, there was at
no time the slightest variance from that relation.
When silver was deprived of the full money function, and all the
money-work of society was placed on gold, the metals began to separate.
The following table shows the degree of that separation from year to
year:
Table showing the ratio of silver to 1 of gold since the demonetization
of silver by Germany and the United States, and the closing of all mints
of the western world to its free coinage:
1873 15.92 | 1882 18.19
1874 16.17 | 1883 18.64
1875 16.59 | 1884 18.57
1876 17.88 | 1885 19.41
1877 17.22 | 1886 20.78
1878 17.94 | 1887 21.13
1879 18.40 | 1888 21.99
1880 18.05 | 1889 22.10
1881 18.16 |
The foregoing figures show that it is only since the legislative
proscription of silver by Germany and the United States, and the closing
of all the European mints to its coinage, that any material change took
place in the ratio between the two metals, which conclusively
demonstrates that the present divergence in the relative values of the
two metals is directly due to the legal outlawry of silver and not to
natural causes.
Not only has the concurrent use of the two metals as money had the
sanction of all time, but the approval of the greatest minds of history,
and, when not blinded by self-interest, the approval of practical and
experienced financial minds. So well recognized is this fact that I need
only cite a few instances of such approval.
Alexander Hamilton said:
To annul the use of either of the metals as money is _to abridge
the quantity of circulating medium_, and is liable to all the
objections which arise from a comparison of the _benefits of a
full with the evils of a scanty circulation_. (Report to
Congress, 1791.)
Thomas Jefferson, in a letter to Hamilton, indorsed this view, saying:
I return you the report on the mint. I concur with you that the
unit _must stand on both metals_. (Letter to Hamilton, February,
1792.)
In his "Recherches sur l'or et sur l'argent," 1843, Leon Fanchet said:
If all the nations of Europe adopted the system of Great Britain,
the price of gold would be raised beyond measure, and we should
see produced in Europe a most lamentable result. The Government
can not decree that legal tender shall be only gold, in place of
silver, for that would be to decree a revolution, and the most
dangerous of all, because it would be a revolution leading to
unknown results (_qui marcherait vers l'inconnu_).
In a memoir read before the French Institute in 1868, M. Wolowski said:
The suppression of silver would bring on a veritable revolution.
Gold would augment in value with a rapid and constant progress,
which would break the faith of contracts and aggravate the
situation of all debtors, including the nation. It would add at
one stroke of the pen at least three milliards to the twelve
milliards of the public debt.
In a debate in the French Senate on January 28, 1870, Senator Dumas
eloquently pleaded for caution in dealing with a subject of such
farreaching importance as the demonetization of one of the money metals.
He said:
Those who approach these questions for the first time decide them
at once. Those who study them with care hesitate. Those who are
obliged practically to decide doubt and stop, overwhelmed with
the weight of the enormous responsibility.
The quantities of the precious metals which are now sufficient
may become insufficient, and we should proceed with great
prudence before we diminish that which constitutes a part of the
riches of the human race. Sometimes gold takes the place of
silver. Sometimes silver takes the place of gold. _This keeps up
the general equilibrium._ Nobody can guaranty that the present
vast production of gold will continue. The _placers_ are found on
the surface of the earth, and may be exhausted by the very
facility of working them. Silver presents itself in the form of
subterranean veins. Science may contribute to accelerate its
extraction. In presence of the unknown, which dominates the
future, we should practice a prudent reserve.
Before a French monetary convention in 1869 testimony was given by M.
Wolowski, by Baron Rothschild, and by M. Rouland, governor of the Bank
of France.