University of California. 
 
 FROM THK LIBRARY OF 
 
 -\ 
 
 DR. FRANCIS LTE B I-: K , 
 
 I'rofe.-^or <>f History nd Law in Columbia Ollcjre, Now York. 
 
 
 
 THK CIKT OK 
 
 MICHAEL REESE 
 
 Of Xan 
 
ON THE 
 
 PROBABLE FALL 
 
 THE 
 
 VALUE OF GOLD: 
 
 THE 
 
 COMMERCIAL AND SOCIAL CONSEQUENCES WHICH MAY 
 ENSUE, AND THE MEASURES WHICH IT INVITES. 
 
 MICHEL CHEVALIEK, 
 
 MEMBER OF THE INSTITUTE OF FRANCE, ETC. ETC. 
 
 TRANSLATED FROM THE FRENCH, WITH PREFACE, 
 
 BY 
 
 RICHAKD COBDEN, ESQ. 
 
 YOEK: 
 D APPLETON AND COMPANY, 
 
 346 & 348 BROADWAY. 
 1859. 
 
TKANSLATOR'S PEEFACE. 
 
 THE substance of tlie work, of which, the following pages 
 are a translation, appeared originally in the Revue des 
 deux Mondes, in the autumn of 1857, and was after- 
 wards reprinted in a pamphlet form. The author has 
 since rewritten and enlarged it to double the original 
 size. The present translation will appear simultaneously 
 with the French edition. 
 
 The question of the probable fall in the value of gold, 
 and the consequent rise in that of all other commodities, 
 wherever gold is the standard of value, has not hitherto 
 attracted so much attention in this country as it has in 
 France, or as its great importance would seem to demand. 
 In introducing the Bank Act of 1844, Sir Kobert Peel 
 said : " There is no contract, public or private, no 
 engagement, national or individual, which is unaffected 
 by it. The enterprises of commerce, the profits of trade, 
 the arrangements made in all the domestic relations of 
 society, the wages of labour, pecuniary transactions of 
 the highest amount and the lowest, the payment of the 
 national debt, the provision for the national expenditure, 
 the command which the coin of the smallest denomina- 
 tion has over the necessaries of life, are all affected by 
 
TRANSLATOR'S PREFACE. 
 
 the decision to which we may come on that great question 
 which I am ahout to submit to the consideration of the 
 committee/' The main object which the author of the 
 present Bank Act had in view, was to prevent those 
 fluctuations in the amount of the currency which were 
 alleged to have arisen from the arbitrary action of the 
 Bank of England, and which rarely exceeded two or three 
 millions in the course of a long series of years. With 
 much greater force, then, must his expressions apply to 
 the present state of things, when an annual increase in 
 the production of gold of nearly thirty millions has sud- 
 denly taken place, more than the half of .which finds its 
 way to our shores. 
 
 It is estimated by M. Chevalier that the present yield 
 of gold amounts, in ten years, to about as much as the 
 entire production during the 356 years which intervened 
 between the date of the discovery of America by Colum- 
 bus, and the year 1848, when the mines of California 
 were discovered. It is probable that the present produc- 
 tion of gold amounts to five times that of the year 1847. 
 Had such an increase occurred in the supply of any 
 article, such as corn, sugar, or cotton, of which the whole 
 annual produce is consumed within a couple of years, it 
 would have probably caused a depreciation to the extent 
 of nine-tenths of its value. But owing to the large stock 
 of gold in existence, amounting to probably more than 
 twenty or thirty times even its present yearly production, 
 it takes some time to affect its volume to any appreciable 
 extent. UMess, however, the cardinal rule of commerce, 
 that quantity governs price, which applies infallibly to 
 all other commodities, loses its force when gold is con- 
 
TRANSLATOR'S PREFACE. 5 
 
 cerned ; this sudden and great increase must be followed 
 by a reduction of value. 
 
 That so little effect should have hitherto been pro- 
 duced upon the value of this precious metal, especially as 
 measured by its relation to silver, is accounted for by a 
 reference to what is now passing in France, where the 
 gradual substitution of a gold for a silver currency has. 
 during the last eight years, absorbed the greater portion 
 of the gold imported into Europe from the new mines. 
 On this subject, M. Chevalier has given us some very 
 striking statistical facts.* France has in this way, to 
 use his expression, been the "parachute" which has 
 retarded the fall in gold. It will be seen that his main 
 object has been to induce the French government to put 
 an end to this, by adopting in practice, what he main- 
 tains has always been the theory of the French law, a 
 silver standard. Should his arguments be successful 
 (and it is difficult to see how the French government 
 can resist his facts and reasonings certainly it can never 
 answer them), or should the process of absorption cease, 
 from the exhaustion of the stock of silver held in France, 
 then we may anticipate a more rapid fall in the value 
 of gold. 
 
 It will be seen that M. Chevalier does not recommend 
 the adoption of any legislative measures to meet the 
 change in this country. He considers that gold having 
 been avowedly the legal tender and the sole standard of 
 
 * At page 59 will be found a statement of the gold coined at the Paris 
 mints. It is brought down to the end of 1857. I have since ascertained 
 that the amount coined in the year 1858 exceeded 480,000,000 francs 
 (19,600,000). 
 
TRANSLATOR'S PREFACE. 
 
 value in England, and all existing contracts having been 
 entered into with that knowledge, the parties to them 
 must, so far as the legislature is concerned, abide the 
 consequences of any natural disturbance of the value of 
 this metal. 
 
 But although government may have no right to inter- 
 fere with the past, it ought not to be so summarily 
 excluded from all interference with the future, at least 
 to an extent necessary to facilitate voluntary contracts 
 involving payments otherwise than in gold. An able 
 writer on the currency* has recommended the establish- 
 ment of life assurance companies on the basis of a silver 
 standard. Should a great and rapid depreciation of gold 
 take place, some such precaution as this, in all contracts 
 extending over a long period of time, may be necessary. 
 It would then be a convenience to have the relative 
 values of gold and silver periodically published under the 
 authority of a law, by the Bank of England for instance, 
 computed from the exchanges of the day with those 
 countries, such as Holland and Belgium, where a silver 
 standard exists. 
 
 Another mode of evading the consequences of a depre- 
 ciation of the currency might be found in a resort to 
 something like the primitive practice of paying in kind. 
 Where long engagements, such as farm leases, -are entered 
 into, the parties might stipulate for a rent to be regulated 
 by the prices of produce, upon the principle of the tithe 
 commutation rent charge. In this, as in all other bar- 
 gains and investments, it will only remain for individuals 
 
 * Mr. James Maclaren. 
 
TRANSLATOR'S PREFACE. 7 
 
 to take such precautions as are in their power to guard 
 themselves from the consequences of the impending 
 change. Should the views of M. Chevalier be realised, 
 there will be much anxious deliberation as to the best 
 mode of escaping from the effects of a universal derange- 
 ment in the value of labour and property. Wages and 
 salaries of all kinds would eventually rise in proportion to 
 the enhanced price of commodities, but the transition 
 would, I fear, be accompanied with much inconvenience 
 and suffering. The rise would not be steady and continu- 
 ous, but would be effected by leaps, and after struggles 
 which would tend to derange and convulse the relations 
 of capital and labour. With respect to those who have 
 property to invest, they would, as a rule, avoid those 
 investments which yield incomes of a fixed amount of 
 money, such as dividends from the funds, interest from 
 bonds and mortgages, as well as annuities, rent charges, 
 ground rents, guaranteed stock, &c. ; whilst property of 
 an expansive nature, which rises in proportion to the 
 depreciation of the currency, such as land, houses, shares, 
 &c., would be preferred. 
 
 The merchant and trader who balance their transac- 
 tions in two, or three, or at the utmost six months, 
 would be but slightly affected, in so far as the value of 
 their capital is concerned, by the depreciation of the 
 standard ; but they would experience the evil in another 
 form. The tendency to a general rise of prices would 
 lead to an expansion of credit, and an increase of specu- 
 lation, which would be followed by panics and convulsions 
 of greater violence and more frequent recurrence than 
 have been hitherto experienced. Instead of a crisis 
 
8 
 
 TRANSLATOR'S PREFACE. 
 
 visiting the commercial world once in each decade, its 
 return might be expected every five years. The manu- 
 facturer would probably find it more difficult to procure 
 the raw material of his industry at remunerating prices, 
 for speculation will always be directed towards raw pro- 
 ducts in preference to manufactured articles. This was 
 the case previous to the late panic ; and even at the 
 present moment, whilst we are still in the eddy of a 
 crisis, the prices of the raw materials of our staple 
 manufactures maintain a high value, as compared with 
 any corresponding previous period. The very nature of 
 the trade created by the new gold mines is calculated to 
 increase this evil : for it cannot be denied that it is a 
 sterile commerce which yields neither raw material nor 
 capital. I speak of that portion of the new gold, proba- 
 bly more than seven-eighths of the whole, which passes 
 through the Mint and enters into the currency ; the 
 effect of which is, instead of increasing the supply of food, 
 raw material, or capital, simply to render more bulky and 
 abundant an instrument of exchange, the chief merit of 
 which before consisted in its scarcity and portability. 
 
 It may be well to caution the reader against falling 
 into any misapprehension as to the author's views respect- 
 ing the amount of depreciation to be expected. Although 
 throughout his argument he assumes that gold will fall 
 to the half of its present value, yet he more than once 
 explains that he does so only for clearness of illustration, 
 and not because he predicts any certain amount of 
 depreciation. At the same time he draws the conclu- 
 sion, from the facts of the case, that there must be a 
 fall in the value of gold in consequence of its greatly 
 
TRANSLATOR'S PREFACE. 9 
 
 increased quantity, In this view he will be supported 
 by all our great authorities on the currency, to whatever 
 party they may belong. 
 
 There have been two schools in this country, on the 
 monetary question, the one having at its head Lord Over- 
 stone, who has attributed great fluctuations in the prices 
 of commodities to the action of the Bank on the cur- 
 rency ; and the other, represented by the late Mr. Tooke, 
 who maintained that, so long as the notes of the Bank 
 were convertible into gold on demand, they could not 
 become depreciated or cause a rfee of prices. Bui. the 
 latter authority would have been as ready as the former to 
 admit that any large addition to the quantity of metallic 
 money must lead to a diminution in .its value. It seems, 
 however, that the disciple,* and, in a certain sense, the 
 literary heir of Mr. Tooke, is pushing his doctrines beypnd 
 the limits prescribed by his eminent master.* At a public 
 meeting last summer, this gentleman is reported to have 
 brought forward, as a proof that no rise had been caused 
 by the new gold in the price of commodities in the years 
 preceding 1857, the fact that, at the time wlien lie ivas 
 speaking, a great fall had taken place in the value of all 
 articles of commerce. The circumstance, however, that, 
 at the moment when he spoke, the country was still 
 under the influence of the great commercial crisis which 
 had occurred a few months before, rendered any" such 
 comparison of prices quite valueless. It is in the nature 
 of things that any extraordinary rise of prices should be 
 followed by such a rebound as we have lately witnessed. 
 
 * Mr. Newmarch. 
 
10 
 
 TRANSLATOR'S PREFACE. 
 
 The only useful comparison that could be drawn is by 
 comparing the range of prices, a few months after the 
 panic of 1857, with the prices of a corresponding period 
 after the panics of 1825, 1836, and 1847. From the 
 cursory reference which I have been able to make to the 
 valuable tables in Mr. Tooke's work on prices, I am in- 
 clined to the opinion that the comparison would be found 
 to confirm the views of M. Chevalier. 
 
 The accomplished author of the following treatise is 
 already known among us as one of the most earnest of 
 living writers in favour of free trade, and as the champion 
 of every cause which tends to promote the progress of 
 an elevated civilisation, and the best interests of hu- 
 manity. He has qualified himself for the present task 
 by a long and laborious study of the currency question, 
 having given to the world some essays on money and the 
 precious metals, which are recognised as standard works, 
 and invest his name with an authority on such subjects, 
 hardly second to that of Humboldt himself. In the fol- 
 lowing pages will be found almost every fact and argu- 
 ment necessary for the formation of an opinion on one of 
 the most important problems of our day, and they are 
 presented with all the care and conscientiousness for 
 which the writer is so distinguished. 
 
 I wish I could believe, that either in the original 
 (where a brilliant style is added to its other merits) or 
 in the translation, this work will be read as widely as, 
 from its great importance, it deserves to be. The very 
 topic forbids such a hope. It is, nevertheless, a subject 
 on which the early possession of knowledge, and the 
 exercise of forethought, will confer great advantages over 
 
TRANSLATOR'S PREFACE. 11 
 
 ignorance and indifference, and afford the only safeguard 
 against probable loss. It has been with the view to 
 awaken public attention to a question which may involve 
 the most important social consequences, and to offer 
 greater facilities for obtaining information upon it, that 
 I have undertaken the most humble of literary tasks, 
 that of the translator, in presenting to the English reader 
 the ablest and most complete treatise on the new gold 
 
 discoveries. 
 
 K. C. 
 
 JANUARY, 1859. 
 
CONTENTS. 
 
 SECTION I. 
 
 PRELIMINARY OBSERVATIONS. 
 
 PAGE 
 
 CHAP. I. The question stated, . . . . . .15 
 
 CHAP. II. Preliminary observations on the rise of prices which has charac- 
 terised the last few years, . . . . . . .21 
 
 SECTION II. 
 
 AX APPEAL TO SOME OF THE FUNDAMENTAL NOTIONS UPON THE NATURE AND 
 CHARACTERISTICS OF MONEY. 
 
 CHAP. I. What we ought to understand by value and price. Twofold defi- 
 nition of money. -The standard or fineness of money, . . .24 
 
 CHAP. II. Of the meaning of the word standard. The metal standard is 
 that from which is derived the monetary unit. The two ideas standard 
 and monetary unit imply each the other, . . . . .32 
 
 CHAP. III. O.f the character of exchanges as affected by the invention of 
 
 x money. How the rise and fall of the precious metals are manifested in 
 
 ^ the course of trade. Phenomena of the rise and fall in commodities, 34 
 
 CHAP. IV. On the possibility of conferring the quality of standard upon 
 two metals at once, . . . . . . . .38 
 
 CHAP. V. Of the meaning of certain words specially applicable to money 
 and the precious metals : Price, value, premium, dearness, cheapness, 46 
 
 SECTION III. 
 
 OF THE PRESENT PRODUCTION OF GOLD AND ITS OUTLET. 
 
 CHAP. I. Of the increase in the present production of gold as compared 
 with the past. The extended coinage of gold which has followed, . 54 
 
 CHAP. II. Diminished coinage of silver in France. Gold is already at a 
 discount in comparison with silver, . . . . .60 
 
 CHAP. III. Extraordinary exportation of silver from the civilised countries 
 of the Western World towards India and China. To what extent it is 
 likely to continue, . ; . . . . .64 
 
 CHAP. IV. France serves temporarily as a parachute to retard the fall of 
 gold, 73 
 
 CHAP. V. Whether the extraordinary production of gold ought to be con- 
 sidered as an ephemeral accident. The crushing of the quartz veins. 
 Mines in Siberia. and elsewhere, . . . . . .76 
 
14 
 
 CONTENTS. 
 
 SECTION IV. 
 
 ON THE NEW OUTLET THAT MAT BE EXPECTED FOR THE PRODUCTION OF THE NEW 
 GOLD MINES, AND WHETHER IT WILL BE IN PROPORTION TO THE EXTENT OF THIS 
 PRODUCTION. 
 
 PAGB 
 
 CHAP. L Of the outlet afforded by those countries which at present have 
 evidently an insufficient proportion of metal in their currencies, . 87 
 
 CHAP. II. Of the increase of gold money which may arise from the devel- 
 V opment of business, and the increase of population. Of wear and tear. 
 Of hoarding. Of shipwrecks, . . . . . .94 
 
 CHAP. III. On the employment which habits of luxury may offer to the 
 gold of the new mines, ....... 106 
 
 CH/P. IV. Conclusion of the preceding chapters. The fall of gold/very 
 
 V probable, if not inevitable, in relation to all other commodities, . 118 
 
 SECTION V. 
 
 CHAPS. I. to Y. On the part assigned to gold in the monetary legislation of 
 France, . 121 
 
 SECTION VI. 
 
 CONSEQUENCES OF THE FALL IN THE VALUE OF GOLD. 
 
 CHAP. I. A general distinction between those private incomes which will, 
 and those which will not be, affected. Of a certain collective loss 
 which the people of France will suffer, ..... 124 
 
 CHAP. II. Of the sufferings and difficulties which will accompany the 
 transition, . . . . . . . . 128 
 
 CHAP. III. On the gain which would result to certain classes of persons, 
 and to society, from the fall in gold. The saving to the State from the 
 payment of the dividends on the public debt, .... 137 
 
 SECTION VII. 
 
 OF THE MEASURES TO BE TAKEN TO AVERT THE EVIL EFFECTS OF THE FALL OF GOLD. 
 
 CHAP. I. Case of a State like England, where gold is the standard, and 
 where there is no other money but gold, .... 144 
 
 CHAP. II. Case of a State, such as France, where there is a silver standard, 
 but also a gold currency, . . . . . . . 148 
 
 CHAP. III. The measure here recommended is a necessary complement of 
 the law of Germinal, year 11, ...... 164 
 
 CHAP. IV. On some inconveniences inherent in the combination, respect- 
 ing a gold currency, recommended in this work, . . . 167 
 
 CHAP. V. Of a plan recommended for maintaining the parallel circulation 
 of silver and gold, . . . . . . . 170 
 
 CHAP. Vl. Of the resolutions of a commission appointed by the Minister 
 of Finance in 1857, . . . . .175 
 
 CHAP. VII. Of various acts which the legislation of the ancient regime 
 upon money treated as crimes, and with regard to which some persons 
 of our day propose to establish penalties. Selecting and melting ; trade 
 in coins ; exportation, ....... 183 
 
 CHAP. VIII. Of a different solution which has been recommended, and 
 which would consist in the adoption of a gold standard, . . 198 
 
 CHAP. IX. Appreciation of the system which consists in adjourning indefi- 
 nitely the legislative solution, . . . . . .209 
 
SECTION I. 
 
 PRELIMINARY OBSERVATIONS. 
 
 CHAPTER I. 
 
 THE QUESTION STATED. 
 
 IF we go back in imagination three centuries, and picture 
 to ourselves the most striking characteristic which the 
 aspect of Europe then presented, we shall behold a uni- 
 versal excitement caused by the discovery of a new conti- 
 nent, which had been, sixty years previously, brought to 
 light by a Genoese navigator, whose genius and persistent 
 daring had been stimulated by a lucky miscalculation of 
 the geographical position of China. In this new world, 
 to which Columbus had traced the path not merely for 
 Castille and Leon, as is alleged in the inscription placed 
 on his tomb by the tardy gratitude of posterity, but for 
 the whole civilized world mines of gold and afterwards 
 of silver (especially the latter), of unheard of richness, 
 presented themselves to the cupidity of the conquerors. 
 The most enterprising spirits of the Iberian peninsula 
 hastened across the ocean to possess themselves of treas- 
 ures, the splendour of which had been exaggerated in 
 their excited imaginations ; and they were followed by a 
 multitude of daring adventurers from all parts of Europe, 
 
16 
 
 PRELIMINARY OBSERVATIONS. 
 
 who precipitated themselves on the coast of America, all 
 in quest of mines of gold and silver. 
 
 It was in Peru and Mexico, the provinces containing 
 the richest mines and the greatest supply of labour, that 
 the precious metals were first obtained by an organised 
 system of production. From 1492, the year of the dis- 
 covery of the New World, to 1500, it is doubtful whether 
 it yielded on an average a prey of more than 1,500,000 
 francs (60,000) a year. From 1500 to 1545, if we add 
 to the treasure produced from the mines, the amount of 
 plunder found in the capital of the Montezumas, Tenoch- 
 titlan (now the city of Mexico), as well as in the tem- 
 ples and palaces of the kingdom of the Incas, the gold 
 and silver drawn from America did not exceed an average 
 of sixteen million francs (640,000) a year. From 1545, 
 the scene changes. In one of the gloomiest deserts on 
 the face of the globe, in the midst of the rugged and in- 
 hospitable mountain scenery of Upper Peru, chance re- 
 vealed to a poor Indianj who was guarding a flock of 
 llamas, a mine of silver of incomparable richness. A 
 crowd of miners was instantly attracted by the report of 
 the rich deposits of ore spread over the sides of this moun- 
 tain of Potocclil a name which for euphony the Euro- 
 pean nations have since changed to Potosi. The expor- 
 tation of the precious metals from America to Europe 
 now rose, rapidly, to an amount which equalled, weight for 
 weight, sixty millions of francs (2,400,000) of our day, 
 and it afterwards rose even to upwards of eighty millions. 
 At that time such a mass of gold and silver represented a 
 far greater amount of riches than at present. Under the 
 influence of so extraordinary a supply, the value of these 
 precious metals declined in Europe, in comparison with 
 every other production of human industry, just as would 
 be the case with iron or lead, if mines were discovered 
 which yielded those metals in superabundance, as com- 
 
PRELIMINARY OBSERVATIONS. 17 
 
 pared with their present consumption, and at a much less 
 cost of labour than previously, just in fact as occurs in 
 the case of manufactures of every kind, whenever, by 
 improved processes, or from natural causes of a novel kind, 
 they can be produced in unusual quantities, and at a 
 great reduction of cost. 
 
 This fall in the value of gold and silver, in comparison 
 with all other productions, revealed itself by the increased 
 quantity of coined metal which it was necessary to give in 
 exchange for the generality of other articles. And it was 
 thus that the working of the mines of America had neces- 
 sarily for effect a general rise of prices, in other words, it 
 made all other commodities dearer.* 
 
 The fall in the value of the precious metals, or that 
 which means the same thing, the general rise of prices, 
 does not appear to have been very great, out of Spain, till 
 after the middle of the 16th century. Shortly after the 
 commencement of the 17th century, the effects of the pro- 
 ductiveness of the new mines and of the diminished cost 
 of working them were realised in all parts of Europe- 
 For the silver, which had been extracted in greater pro- 
 portion than the gold, and on more favourable terms, the 
 fall in value had been in the proportion of 1 to 3. In 
 transactions where previously one pound of silver, or a coin 
 containing a given quantity of this metal, had sufficed, 
 henceforth three were required.f At Paris a quantity of 
 
 * This phenomenon, sufficiently clear in itself, will be still further ex- 
 plained in Chapter III. of Section II. 
 
 f In assigning this proportion, it is hardly necessary to say that I assume 
 other things to be equal ; I mean that other articles were in the same abun- 
 dance, and produced under the same circumstances as before. For a com- 
 modity which might have become relatively more abundant, and of which 
 the process of production should have been improved, there would have ' 
 been a cause for the reduction of price, and this cause would have to a cer- 
 tain extent counterbalanced the dearness caused by the fall in the value of 
 the metals from which money is coined. 
 
 2 
 
18 
 
 PRELIMINARY OBSERVATIONS. 
 
 wheat, which we now call a hectolitre, cost, before the 
 voyage of Columbus, from 12 to 15 grammes weight of 
 silver, which is the metal contained in from 2 francs 67 
 centimes to 3fr. 33c. (2s. 6d. to 2s. 9d.) This quantity 
 was henceforth worth at least from 45 to 50 grammes, or 
 the silver contained in from 10 to 11 francs and upwards 
 (of our money, 8s. 4d. to 9s. 2d.) ; it was even much high- 
 er, for some time, at Paris, after the first quarter of the 
 17th century. The change in gold, although obvious, was 
 not so great as in silver. 
 
 After having been arrested for awhile in this down- 
 ward course, and even after having witnessed for a time a 
 tendency to an upward movement, the fall in the value 
 of the precious metals, and the corresponding rise in prices, 
 resumed their course, under the influence of the same 
 causes, until towards the end of the 18th century, without 
 however manifesting their influence so widely or intensely 
 as had been witnessed after the first development of the 
 great American mines. We find, as the result, that dur- 
 ing the first half of the 19th century, the value of silver 
 fell to about the sixth of what it was before the discovery 
 of America, when compared with the price of corn, which 
 people have agreed, somewhat arbitrarily it must be con- 
 fessed, to take for a fixed measure of value. The hectoli- 
 tre has sold on an average, during this half century, at 
 Paris, for about 20 francs (16s. 8d.), or 90 grammes of 
 silver. 
 
 In our day we seem destined, like our fathers of three 
 centuries ago, and from the same causes, to witness the 
 spectacle, or in other words the shock and crisis, of a uni- 
 versal rise in prices ; with this difference, however, that 
 up to the present time the new discoveries affect only the 
 production of one of the precious metals, gold, of which 
 vast deposits of immense richness hitherto unknown have 
 been successively discovered and attacked with astonish- 
 
PRELIMINARY OBSERVATIONS. 19 
 
 ing impetuosity. In California., in the very year when the 
 rule of an industrious people, full of energy and intelli- 
 gence, superseded the drowsy authority of a handful of 
 monks maintained there by Mexico, splendid mines of gold 
 were opened upon the banks and in the beds of rivers 
 watering the valley in which San Francisco is situated^ 
 and no sooner were they heard of than they were vigorous- 
 ly assailed by crowds of settlers who threw themselves 
 headlong upon the spot from all parts of the world. This 
 was in 1848. In three years more, beyond the great 
 ocean, the continuation of the magnificent mines of Cali- 
 fornia was discovered in Australia. In that remote region, 
 a gold-seeker, who had made his first essays in the neigh- 
 bourhood of San Francisco, discovered treasures not in- 
 ferior to those of the vaunted valleys of the Sacramento, 
 and the San Joaquini. But California and Australia do 
 not contain the only rich mines towards which the civiliz- 
 ed world of our day have stretched forth an active and 
 greedy hand. It is about thirty years ago that those 
 auriferous slopes, known to the ancients, and revealed to 
 us in a narrative, fabulous though it be, by the father of 
 history, but forgotten by the generations who succeeded 
 him, began to give forth a notable supply of gold in 
 Northern and Eastern Kussia, among the Oural Moun- 
 tains, and especially in Siberia, where the field of enter- 
 prise is almost boundless. The gold regions of the Em- 
 pire of Russia, of which Herodotus had given us a descrip- 
 tion, tinged with the dreams of romance, were only re-dis- 
 covered by the moderns in 1774. It was in the chain of 
 the Oural that the first discovery was made, and to which 
 the workings were confined till a very recent year. The 
 riches of these mines were, however, but slightly developed 
 till after 1810. In 1816, the production was only about 
 96 kilogrammes of metal (13,440). From 1823 a pro- 
 gressive increase took place. In 1830, the production ac- 
 
20 PRELIMINARY OBSERVATIONS. 
 
 cording to official accounts was 5,779 kilogrammes., or 
 about 18 millions of francs (720,000). About' this 
 time, the auriferous deposits of Siberia became known, 
 and from 1840 they yielded afar greater mass of gold than 
 that extracted from the mines of the Oural. 
 
 Under the influence of this greatly increased and 
 cheapened production of gold, it is reasonable to expect, 
 at least in all those countries where gold circulates in large 
 quantities, and where it is or tends to be the sole medium 
 of exchange, a general disturbance of prices, a deeply felt 
 derangement of interests, and a modification more or less 
 radical in the different relations of society. To examine 
 the causes and consequences of such a revolution, and the 
 good or the evil which, if they have not already com- 
 menced, must hereafter spring from it, can hardly be 
 deemed an unprofitable task. With reference to certain 
 countries, and more especially France, it is well to consid- 
 er how far this influx of gold into the monetary system is 
 in conformity with existing laws, with the intentions of 
 the legislator, the national honour, and the respect due to 
 engagements contracted by the State. If it were proved 
 that what is taking place is in violation of the spirit and 
 letter of legislation, the best means should be sought for 
 returning as quickly as possible. to the scrupulous observ- 
 ance of the law. 
 
 The work which I offer to the judgment of the public 
 will naturally divide itself under different heads. In the 
 first place let us try to form an idea of the chances of a 
 rise in prices, of the forces which tend to produce that re- 
 sult, and of those which are calculated to prevent it ; and 
 next let us see in what sense we ought to understand the 
 monetary legislation of France, and what steps should 
 succeed to the solution of this problem. Afterwards, we 
 will pass to a brief explanation of the principal incon- 
 veniences which, in a political and social, as well as in an 
 
PRELIMINARY OBSERVATIONS. 21 
 
 economical point of view, will attend a general rise of 
 prices, caused by the depreciation of gold, as well as of the 
 advantages which society and the State may derive from 
 such a depreciation to compensate for the disorganisation 
 it must occasion. We shall conclude with an attempt to 
 decide what arrangements will be proper for preventing or 
 diminishing the evil effects of an extraordinary production 
 of the precious metal. 
 
 Simultaneously with these new discoveries of gold, a 
 fact of grave import develops itself with reference to silver. 
 For a few years past this metal has become, in the Eu- 
 ropean market, the object of unusual demand for exporta- 
 tion to the East. This is evidently calculated to make 
 the fall in gold more sensibly felt, especially in comparison 
 with the other precious metal ; for whilst the gold in- 
 creases rapidly, silver becomes more scarce, and thus the 
 divergence operates from both sides. We could not dis- 
 pense with a brief investigation of the change going on in 
 the demand for silver, were it only to endeavour to esti- 
 mate its probable duration, and to form an idea of the in- 
 fluence which it is likely to exercise upon the fall, ap- 
 parent or real, in the value of gold. The natural course 
 of this work will soon furnish an occasion for this investi- 
 gation. 
 
 CHAPTER II. 
 
 PEELIMtNAEY OBSEEVATIONS ON THE EISE OF PEICES WHICH HAS 
 CHAEACTEEISED THE LAST FEW YEAES. 
 
 BEFORE entering upon the consideration of the mode in 
 which the new gold discoveries must be considerd as the 
 probable cause of the general rise of prices, in the coun- 
 tries where gold is by law or practice the monetary 
 standard, it may not be out of place to say a few words in 
 order to avert a possible confusion. This dearness is not 
 
22 PRELIMINARY OBSERVA: 
 
 a fact appertaining to a future more or less distant ; the 
 present time is characterised by an all but universal rise 
 of prices, at least it has been so up to the reaction which 
 dates from the close of 1857. There are few productions 
 which had not risen in price during the last five or six 
 years. Even after the violent crisis winch shook the four 
 quarters of the globe, the high prices of several articles 
 are still sustained. Many persons have not hesitated to 
 attribute this unyielding rise to the influence of the new 
 gold mines. I do not deny that the unusual production 
 of this metal may have been in part the cause ; but other 
 causes may be mentioned which have weighed considerably 
 in the scale. 
 
 Speaking of a great number of productions of the first 
 necessity, of the raw materials of industry, and conse- 
 quently of manufactured articles, especially of those upon 
 which the price of the raw material exercises the greatest 
 influence they are in general the commonest qualities 
 we may trace a rise in price quite distinct from that which 
 could have arisen from an increased production of gold. 
 It arises from the fact that, in the case of these raw mate- 
 rials or manufactures, the relation between the supply and 
 demand in the market, which necessarily decides the price, 
 has undergone a great change. The demand having sur- 
 passed the supply, the consumer has found himself placed 
 at the great disadvantage of being obliged to buy in a 
 dearer market. This rise in prices, special and distinct 
 in its origin, must be attributed to causes which in their 
 effects at least, if not in their very nature, are transitory. 
 
 In the first place it may be traced to the fact that 
 various classes of society have indulged in an increased 
 consumption, either from their having greater resources, or 
 from their habits of economy having undergone an unfa- 
 vourable change. In France a great number of persons 
 have been enriched by the immense rise in the value of 
 railway shares, and they have set an example of extrava- 
 
PRELIMINARY OBSERVATIONS. 23 
 
 gance which has not wanted imitators. As respects the 
 working classes, the impulse given to public works, and to 
 various industrial undertakings, has caused an extraordi- 
 nary demand for their labour, and the consequent increase 
 in their wages has enabled them to consume a greater 
 quantity of certain articles of subsistence, and of those 
 manufactured products which are most accessible to the 
 masses of mankind. One of the effects traceable to this 
 cause is the high price of butcher's meat which we have 
 lately witnessed in France. 
 
 In the next place the moderate, not to say the inferior 
 harvests, have in later years been a sufficient reason for the 
 high price of many articles. Bread and wine have risen 
 because of the scarcity of corn, and of the disease which has 
 ravaged our vineyards. The rise in bread has produced a 
 similar effect upon other articles of ordinary subsistence. A 
 raw material, in great use among the manufacturers of 
 Europe, silk, is one of the objects which have undergone the 
 greatest advance ; and this also has arisen from a failure of 
 the crop in the Western World. This has been sufficient 
 to account for the high price of the woven fabrics, for the 
 cost of the raw material is a principal, if not the very first 
 element, in the price of silk goods. 
 
 Moreover, it cannot be doubted that a spirit of wild 
 speculation has spread itself more or less throughout the 
 commercial world, and that this has not been without its 
 effect upon the prices of some commodities. 
 
 I only allude to these circumstances lest we should con- 
 found the effects, which must be regarded as accidental 
 and transient, with the results produced by the new dis- 
 coveries of gold. 
 
 In the following pages, I shall generally reason as if 
 these new gold mines had not yet produced any appreci- 
 able effect. I trust I shall not be blamed for this reserve. 
 It strikes me that it will not weaken the conclusion to 
 which this work will lead, but have a contrary effect. 
 
SECTION II. 
 
 AN APPEAL TO SOME OF THE FUNDAMENTAL 
 NOTIONS UPON THE NATURE AND CHARAC- 
 TERISTICS OF MONEY. 
 
 CHAPTER I. 
 
 WHAT WE OUGHT TO UNDEESTAND BY VALUE AND PEICE. TWOFOLD 
 DEFINITION OF MONEY. THE STANDAED OE FINENESS OF MONEY. 
 
 In order to clear the ground as much, as possible, it may 
 be well, before entering further upon our task, to call at- 
 tention to some fundamental notions upon the subject of 
 money, which may be found more or less ably expounded 
 in almost every treatise upon political economy. I repeat 
 them here, however, that I may spare such of my readers 
 as have not these writings fresh in their recollection, the 
 trouble of referring to some special work for information.* 
 
 * We know that France is of all the countries of Europe, or of Christen- 
 dom, that in which political economy is the least taught. There are but 
 two professorships : the one public, that of the College of France, and the 
 other restricted to a special class of functionaries attached to the school of 
 the Board of Works. Everywhere else, whether in Europe or America, 
 each university has at least one chair of political economy ; this will be 
 found equally in Russia and in England, in Prussia and in Spain. The little 
 kingdom of Portugal supports three professors of political economy. In 
 France, instead of extending, we seem to be curtailing this useful branch ol 
 instruction. The chair of industrial economy, which was filled with such 
 success by M. Blanqui, at the Conservatoire des Arts et Metiers, and which, 
 
NATURE AND CHARACTERISTICS OF MONEY. 25 
 
 Gold and silver are articles of commerce, that is to say, 
 objects having relations to our wants, and which are bought 
 and sold. Like all other commodities, they have their 
 own peculiar value for which they are in request ; and 
 this demand, arising from their utility, combined with the 
 circumstances of their production, and particularly of 
 their quantity, determines their value. 
 
 Let it here be observed that value is a word the mean- 
 ing of which is relative, inasmuch as the attribute to 
 which it relates always implies a comparison. If I say 
 that meat is worth twice as much as bread, I establish a 
 relation between these two articles ; and in thus express- 
 ing myself I compare meat with bread. 
 
 When we speak of the value of an object, we ought, 
 for the sake of a rigorous precision in expressing our 
 meaning, to point out the other object with which we 
 compare it. It is true, that very often it is understood 
 that we compare it with the generality of other commod- 
 ities ;* or pretty frequently, indeed, it is the price that 
 is meant. 
 
 The price of a certain thing is its value in relation to 
 a substance specially designated, that is to say, to the 
 material of which money is made. Thus, whilst in ordi- 
 nary language we often confound these two words, value 
 and price, and use them as synonymous terms, they have 
 in reality a distinct meaning. Both have a relative 
 sense ; but value is a more general and indeterminate ex- 
 
 as its title indicates, was devoted to but one branch of political economy, 
 has been suppressed since the death of that brilliant professor. Another 
 chair has been founded in its place, but it has been, by an accident no 
 doubt, filled by a person whose chief claim to public attention consists in 
 the propensity he has shown to throw insults on political economy and 
 those who study it. 
 
 * It is this meaning which must be nearly always accepted in the course 
 of the following arguments. 
 
26 
 
 NATURE AND CHARACTERISTICS OF MONEY. 
 
 pression, or to use a better word, more vague ; price is 
 more special, and has a meaning perfectly precise.* 
 
 Money is a certain commodity out of which we create 
 an instrument that serves, in exchanges, as a common 
 measure of value, because it is with it that, in transac- 
 tions, all other commodities are compared. But it is not 
 merely a measure ; it figures in exchanges in another 
 capacity, that of a material recompense or equivalent. 
 The twenty francs with which a hectolitre of wheat can 
 ordinarily be bought, and which are also at the present 
 moment the price of a hectolitre of common wine in many 
 departments, give me the measure of the value of the 
 wheat and wine, as compared with other commodities of 
 which the price is known ; but they do more, they serve, 
 at the moment of the transaction, and in the market 
 where it takes place, as an equivalent for the hectolitre 
 of wheat or the hectolitre of wine. We must, therefore, 
 guard ourselves from viewing money as simply and purely 
 a representative sign of value, although this meaning is 
 sanctioned by usage in nearly every class of society. 
 Money is not a sign ; each piece of money is a certain 
 fixed quantity of a definite fineness, very real and very 
 effective, of the metal of which money is made ; and it is 
 no more true to say that the twenty francs are the sign 
 of the hectolitre of wheat or the hectolitre of wine, than it 
 would be to pretend that the hectolitre of wheat or wine 
 is the sign of the twenty francs. The definition of the 
 word money which I have given, namely, that it is at 
 once a measure and an equivalent, is that which is 
 acknowledged by all modern authorities. It is remarka- 
 
 * On the subject of the true meaning to be attached to the word value, I 
 entreat the reader to consult a work of the highest order, for which we are 
 indebted to one whose premature loss the student of political economy will 
 long deplore ; I allude to the " Harmonies Economiques " of Frederic Bas- 
 tiat. 
 
NATURE AND CHARACTERISTICS OF MONEY. 27 
 
 ble that it should agree exactly with that which Aristotle 
 has given us. 
 
 " It was agreed/' says he, " to give and to receive a 
 substance which, useful in itself, was easily transferred 
 from hand to hand in the ordinary transactions of life ; 
 it was iron, for instance, or silver, or some other substance 
 of which the size and weight were in the first place deter- 
 mined, and on which, to escape from the inconvenience of 
 continual measurings, a particular stamp was affixed as a 
 sign of its value."' :: " 
 
 From the moment that man forms a society and how 
 can we conceive it otherwise ? money becomes necessary 
 to him. The division of labour, by which the sociability, 
 as well as the different aptitudes, of mankind is mani- 
 fested, has existed ever since a few individuals were 
 grouped together, and it has been developed in proportion 
 to the progress of civilisation. It subjects man to the 
 necessity of exchanging, incessantly, the material products 
 of his labour, or the services which he is in a position to 
 render, against the productions and the services of others. 
 If money did not exist, this exchange could only be car- 
 ried on by barter. The man who had harvested his corn, 
 and was in want of a pair of shoes, would be obliged to 
 seek a shoemaker who had not supplied himself with corn, 
 and was willing to deal with him. And even when he 
 had found one, he would have had to bargain with him as 
 to the proportionate value at which the article of clothing 
 
 * Aristotle, Politics, Book I., Chap. III. This definition of the word 
 money is that which Lord Liverpool has given in his treatise " On the Coins 
 of the Eealm." He probably derived it from a work by Mr. Harris, Assayer 
 General of the Mint, which appeared in two parts in 1757 and .1758. This 
 valuable pamphlet, entitled "Essay upon Money and Coins," has just been 
 reprinted under the auspices of the London " Political Economy Club" in 
 a volume of old tracts upon money, with a preface by Mr. McCulloch, whose 
 eminent qualifications are known to all political economists. (For the defi- 
 nition of money, by Mr. Harris, see p. 370 of the above volume.) 
 
NATURE AND CHARACTERISTICS OF MONEY. 
 
 he wanted, and the corn he desired to sell, ought to he 
 exchanged. From the moment when, among all kinds of 
 merchandise, one article has heen selected to serve as a 
 standard by which the relative prices of all others may he 
 measured, in other words where money is used, transactions 
 become simplified and facilitated. " In a system of barter," 
 says M. Koscher,* "how difficult it would be to find ex- 
 actly the man in a condition to be able to supply our 
 wants, and at the same time to have occasion for our super- 
 fluities ! How much more rarely would it happen that 
 the want and the superfluity met each other in equal pro- 
 portions, that, for example, the manufacturer of nails, who 
 wished to barter his goods for a cow, should find a grazier 
 who had occasion for as many nails as would pay for a 
 cow/' Again, says the same writer : " Under this sys- 
 tem, the strongest party, in an economical sense, would, 
 in every bargain, enjoy an advantage much greater than 
 he possesses at present ; the buyer of bread, for instance, 
 might be half-starved before he came to terms with a 
 baker upon the price of the articles he had to offer him 
 in exchange." 
 
 When once the use of money is adopted, the grower of 
 corn exchanges his product for a certain quantity of money 
 which is its price, and with this money he afterwards goes 
 in quest of any other commodity for which he has occasion 
 to those who make it the object of their industry. At 
 first view it might seem that the use of money compli- 
 cates transactions, inasmuch as it necessitates two ex- 
 changes, where otherwise there would be but one ; but, 
 in truth, its use is of enormous advantage, and we should 
 take an immense step backwards in civilisation if we were 
 to return to barter. It has been wisely said that there is 
 
 * Principles of Political Economy; translated, with notes, by M. 
 Wolowski, Book II., Chapter III 
 
NATUKE AND CHARACTERISTICS OF MONEY. 29 
 
 no machine which economises labour like money, and its 
 adoption has been likened to the discovery of letters. 
 
 Gold and silver were not, in the earliest stages of so- 
 ciety, invested with the attributes of money. In their 
 primitive communities men resorted for a medium of ex- 
 change to those objects which were more immediately at 
 their command, as, for example, cattle. But almost from 
 the very dawn of civilisation it was some kind of metal, 
 and especially copper, which served the purposes of money. 
 In proportion as society advanced, first silver, and then 
 gold, became the instrument of exchange, and it may be 
 said that, from time immemorial, these metals have been 
 chosen as the preferred commodities, the constant inter- 
 mediaries in transactions. For this purpose, they offer a 
 combination of advantages which no other product pos- 
 sesses to anything like the same extent. 
 
 1. In the first place, these commodities are very much 
 prized by mankind. 2. Independently of the facility with 
 which they can be coined, they are more portable than 
 almost any other products, that is to say, within the same 
 weight and volume they comprise a greater relative value. 
 3. Of all bodies they are the most unalterable. 4. They 
 are completely homogeneous, and being substances simple 
 in their nature, their verification is easy. It is even not 
 difficult to ascertain that which is called the standard, in 
 other words the degree of fineness, or the proportion which 
 each ingot contains of pure metal exempt from all alloy. 
 5. They are very easily divided, so as, in case of need, to 
 represent small values without thereby impairing any of 
 their advantages ; for the detached pieces can be reunited 
 almost without expense ; and, on the other hand, they can 
 be separated very cheaply from most of the combina- 
 tions into which they can enter with other substances, and 
 particularly so from their union with other metals. 6. 
 They are admirably adapted for receiving a delicate im- 
 
30 
 
 NATURE AND CHARACTERISTICS OF MONEY. 
 
 pression, which they faithfully preserve, and this, added to 
 their sonorous quality, affords an almost infallible test by 
 which to recognise with readiness their value. Finally, 
 they are less liable than other commodities to the influence 
 of those causes which might tend to lower or to raise their 
 value. Undoubtedly, their value varies in comparison 
 with other goods, but this almost always arises from causes 
 belonging to these, and is not attributable to motives 
 originating with themselves. 
 
 Originally, in the operations of buying and selling, the 
 quantity of gold or silver delivered by the buyer of a com- 
 modity to the seller was weighed by the parties. After- 
 wards, to simplify and shorten transactions, certain discs 
 of unvarying size were invented, containing quantities of 
 metal fixed by law, which, by being struck or moulded, 
 received an official stamp serving for a public voucher of 
 the weight of fine metal contained in each piece of money. 
 For a long succession of ages, all the nations of the 
 West have adopted this system in the constitution of their 
 currency, whilst, on the contrary, the most populous and 
 the most civilised nation of the East has remained faithful 
 to the old system of weighing, the same as was practised 
 by the patriarch Abraham, when he paid for his burial 
 ground ; by King Priam, when he ransomed the body of 
 his son Hector from Achilles ; and by the ancient Egyp- 
 tians. Nevertheless, in China, of which I was about to 
 speak, to give to the operations of commerce a security 
 which the process of weighing in the time of Abraham did 
 not sufficiently afford, since there was no assurance there 
 that the pieces of metal put into the scales were absolutely 
 pure, or of a known degree of purity, another process has 
 been added. The metal is tested by an assayer, by which 
 means the quality as well as quantity of each ingot or 
 fragment is known. In a word, in every commercial 
 transaction in China, the metal counts botJi for its quan- 
 
NATURE AND CHARACTERISTICS OF MONEY. 31 
 
 tity and fineness. The various pieces of silver which there 
 pass from hand to hand are ingots of a certified weight and 
 fineness like our own money ; but there is this difference, that 
 with the Chinese the certificate of quality and quantity 
 emanates from individuals, whereas in Europe it comes 
 from the government, and, moreover, in China the weight 
 and standard are variable from ingot to ingot, whilst in 
 every country of Europe they are fixed for each descrip- 
 tion of coin. 
 
 Let us insist upon this truth, which may be given 
 for another definition of money a definition that can 
 hardly be kept too much in mind, for it carries with it the 
 refutation of many sophisms which have borne disastrous 
 fruits in times past, and which some persons would still 
 like to revive from the oblivion in which they appeared to 
 be buried : pieces of money are merely ingots of uniform 
 weight and fineness for each description of coin, and certi- 
 fied as such by government, by means of an impression 
 which it stamps upon them. They are so much and no 
 more. Government places its mark on them in order to 
 attest their uniformity, but there its mission and its duty 
 end. The form which it gives them, the effigies and in- 
 scriptions with which they are impressed, are of precisely 
 the same character as the marks stamped upon silver 
 plates or spoons, and which are a guarantee'-' that the 
 government has verified its fineness. 
 
 * It has been the custom for governments to levy a tax on plate and 
 jewellery, in addition to the cost of affixing these stamps ; but for the con- 
 venience of commerce it is necessary that nothing of the kind should take 
 place in the case of money, and all the civilised states of our day recognise 
 this principle and act upon it. 
 
32 
 
 NATURE AND CHARACTERISTICS OF MONEY. 
 
 CHAPTER II. 
 
 .X 
 
 OF THE MEANING OF THE WOED STANDARD. THE METAL-STANDAED 
 IS THAT FEOM WHICH IS DEEIVED THE MONETAEY UNIT. THE 
 TWO IDEAS STANDAED AND MONETAEY UNIT IMPLY EACH THE 
 OTHEE. 
 
 IN the preceding chapter the reader may have remarked 
 the expression the matter, or the substance of wliicli money 
 is made. Nevertheless, in most countries, it is not of one 
 material that money is made ; but pieces of gold and sil- 
 ver circulate together indiscriminately. Yet it must not 
 from that be assumed that the two metals, gold and silver, 
 figure in the monetary system with the same prerogatives. 
 We are about to call attention to a word of which it is 
 important to fix the meaning, I mean the term, standard. 
 
 On this subject it is necessary to guard ourselves 
 against a certain confusion of language. Some persons 
 apply the name of monetary standard to pieces of a metal 
 to indicate that they cannot be refused in payment. 
 That is not the way in which the word standard will be 
 employed in the course of this work, nor is it its legitimate 
 meaning. When it is the privilege of a metal that the 
 coins of which it is made cannot be refused in payment, 
 it is because it is endowed with the attribute of legal ten- 
 der, which is very different from that of the standard. 
 
 When it is said that such or such a metal is the stand- 
 ard, it means that the monetary unit is a certain weight, 
 settled once for all, of this metal, which is, however, quite 
 reconcileable with a state of things where coins of another 
 metal might be equally a legal tender. Thus in France, 
 at the present time, gold is a legal tender, although sil- 
 ver alone is the standard, and constitutes the sole mone- 
 tary unit. 
 
 In a word, standard and monetary unit are terms 
 allied in the closest manner to each other, and they are 
 
NATURE AND CHARACTERISTICS OF MONEY. 33 
 
 synonymous the one with the other, as far as the materials 
 of which a thing is made can be confounded with the 
 thing itself. Beyond that the word standard has but a 
 vague meaning, and its indecisiveness may give rise to all 
 sorts of errors and misunderstandings. Let it be added 
 'that, in questions of money, mistakes, when sanctioned 
 by government, resolve themselves of necessity into inju- 
 ries, falling on this or that legitimate interest, into 
 injustice and iniquity more or less disastrous- in its con- 
 sequences. 
 
 The most rigorously exact meaning, perhaps, of the 
 word standard would be to say that it is the monetary 
 unit, the latter itself being defined by the three following 
 conditions : the metal of which it is composed, its weight, 
 and its fineness. It is in this sense that we shall some- 
 times use it in the course of the following pages ; but 
 more frequently it is to the metal itself, constituting the 
 monetary unit, that, for brevity of language, we shall 
 assign the attribute of the standard. The circumstances 
 themselves, under which we shall introduce the expression 
 standard, will render any double meaning impossible. 
 
 From the intimate and almost indissoluble connection 
 that exists between the idea of the standard and the mon- 
 etary unit, spring consequences not unimportant. If, for 
 example, we observe the legislation of a particular State, 
 where, too-, the government is fully alive to the conditions 
 essential to a sound system of currency, in other words, is 
 convinced of the necessity of having one standard, and 
 not two ;* and if, in the tendency of the laws thus 
 brought under our notice, we find the institution of a 
 monetary unit expressly designed in such terms as these, 
 such a weight of such a metal, of such a fineness, con- 
 stitutes this unit, doubt is no longer possible, it is not 
 
 * This point will be established in Chap. IY. of the present Section, 
 3 
 
34 
 
 NATURE AND CHARACTERISTICS OF MONEY. 
 
 even permitted ; the metal in question is alone invested 
 with the legal attribute of the standard. 
 
 This last observation may to some persons seem like a 
 truism, which it is superfluous and almost childish to 
 utter, so completely is it in accordance with proof. Yet 
 it will be seen, by-and-bye, that it is not so needless as it 
 appears, for it has escaped the notice of certain persons 
 in the controversy which is now going on respecting the 
 monetary system of France. 
 
 CHAPTER III. 
 
 OF THE CHARACTER OF EXCHANGES AS AFFECTED BY THE INVENTION 
 OF MONEY. HOW THE RISE AND FALL OF THE PRECIOUS METALS 
 ARE MANIFESTED IN THE COURSE OF TRADE. PHENOMENA OF THE 
 RISE AND FALL IN COMMODITIES. 
 
 THERE is another point of view in which exchanges have 
 been to a certain extent modified by the invention of 
 money, and which it may not be unnecessary here to no- 
 tice ; it has permitted the postponement of payments 
 which were almost always made promptly under the sys- 
 tem of barter. Thus the door has been opened to all 
 those transactions in which credit performs its part. In 
 return for what may have been received in the form of a 
 variety of goods, or of different services, a party who, in- 
 deed, may be a city, a county, or a state, is enabled to 
 bargain to pay, after a certain interval, a number, fixed 
 at the time, of pieces of money, that is to say of metal. 
 In many cases, but particularly where the contracting 
 party was, as has been said, a city, a county, or a state, 
 the engagement to pay has taken the form of a rent or 
 annual interest, consisting of a quantity of metal exactly 
 agreed upon. In such a case, the fluctuations in value 
 which, owing to time and circumstances, the metal of 
 
NATURE AND CHARACTERISTICS OF MONEY. 35 
 
 which money is made might undergo, would possibly 
 affect seriously the interests of the debtor or creditor. 
 
 If the value of the metal declined, the creditor would 
 suffer a loss upon the quantity he had to receive ; if, on 
 the contrary, it rose, the debtor would have to pay more 
 than he had calculated upon. In this manner it would seem 
 that the chances between debtor and creditor were about 
 equal. There is, however, a general cause which forbids a 
 perfect equality. Doubtless we are correct in saying that 
 the precious metals, of which money is made, are liable to 
 fluctuations, which as often raise as depress them in value, 
 although in this respect they possess a certain relative 
 stability which we vainly seek in any other products of 
 human industry. But there is a general cause tending to 
 produce a depreciation, which, by its continuous action, 
 prevails finally over the accidental causes which create 
 fluctuations in their value. I speak of the unceasing 
 progress of the arts. The working of the mines is ever an 
 improving industry, and the same law of progress applies 
 to the metallurgic processes for separating the metals from 
 the rude ore which is extracted from the bowels of the 
 earth. If, therefore, the mines continued always of the 
 same richness, and there were no decided disturbance in 
 the relation between supply and demand, the cost price 
 of a given weight of gold or silver would constantly di- 
 minish with the lapse of ages ; and since, at least with 
 a great and fluctuating disproportion between the supply 
 and demand, the value of an article varies pretty nearly 
 in conformity with its cost price, the value of gold and 
 silver should, under this influence, experience a constant 
 decline. Thence springs a process of depreciation obvi- 
 ously disadvantageous to the creditor, which operates 
 gradually, or rather in a series of rebounds, but against 
 which there is no safeguard from the time contracts are 
 
Ob NATURE AND CHARACTERISTICS OF MONET. 
 
 payable in gold and silver,* a custom now all but univer- 
 sal. Here, at least, is a reason why, in a wise spirit of 
 equity, we should preserve for creditors all the favourable 
 chances which legitimately belong to them. 
 
 It is rarely that circumstances occur, proper to the 
 two metals of which money is made, which in a marked 
 degree affect their value ; they arise from changes in the 
 conditions of their production, and the consequent supply 
 in the market. It cannot be too often repeated that the 
 very rarity of these occurrences is one of the principal 
 reasons why gold and silver are more suited than any 
 other commodities to perform the part assigned to them 
 in commercial exchanges. Still, circumstances of this 
 kind do recur at certain intervals with much violence. 
 The most memorable example that can be cited is that of 
 the discovery of the mines of gold and silver in America. 
 History, however, records a certain number of similar 
 events, regarding which the reader is referred to the works 
 that specially treat of the matter.f 
 
 The effects of a rise or fall in the precious metals are 
 displayed in a manner peculiar to themselves, owing to 
 the attribute of money with which they are invested. 
 When it is said that a commodity falls in value, it means 
 that we must give a larger proportion of it than previously 
 to procure in exchange the same quantity of any other ar- 
 ticle of commerce. The price of that article, whether it 
 
 * To meet this, a plan has been recommended, and sometimes put in 
 force, of paying in specified measures of corn instead of gold or silver, 
 where the contract extends over a long period, or where it involves the 
 payment of perpetual rents or annuities. These stipulations have, in some 
 instances, endured for centuries in England, and the annuitants interested 
 have derived great advantage therefrom. 
 
 On this subject, Lord Liverpool's treatise may be consulted with advan- 
 tage. He cites, in particular, some examples of rents payable to colleges at 
 Oxford and Cambridge. (Page 117, edition of*1805.) 
 
 f See among others, the Principles of Political Economy, by M. 
 Roscher, translated by M. Wolowski, Yol. I., Book II., Chap. IY., p. 338. 
 
NATURE AND CHARACTERISTICS OF MONEY. 37 
 
 be iron, lead, corn, wine, or any other product, excepting 
 the metal or metals of which money is made, falls accord- 
 ingly ; for the price of a thing is its value, specially com- 
 pared with -those metals, or, to express differently the same 
 idea, it is the number of monetary units which it is neces- 
 sary to give in exchange for a certain weight or volume of 
 another commodity. A diminution in the value of the metal 
 from which money is essentially coined is shown differently, 
 in this respect that its price remains the same ; but then 
 the price of all other commodities, without exception, 
 rises if its value compared with itself has fallen, and falls 
 if it has risen. I say that its price as measured by itself 
 remains the same, since, for this metal, specially and ex- 
 clusively, the price is its value compared with itself. If, 
 for example, the value of silver falls one half, as the mone- 
 tary unit, the/rawe consists, in France, of four grammes 
 and a half of silver,* a kilogramme in weight of fine metal 
 will still be worth 222 francs, 22 cents, because one 'kilo- 
 gramme contains four grammes and a half, 222 times and 
 a small fraction ; but in this case the price of lead, iron, 
 wheat, wine, and all other commodities will be doubled, 
 because, to obtain the same quantity of these articles, it 
 is necessary to give double the quantity of silver. 
 
 * When in the course of this work we speak of a fixed weight of gold or 
 silver, without indicating its degree of fineness, the reader will be pleased 
 to bear in mind that we mean those metals when absolutely pure and free 
 from alloy. It is this which is ordinarily meant by the standard of 1,000 
 milliemes. We know that the standard of fineness of French coins is 900 
 milliemes, or nine-tenths, that is to say that they contain one-tenth of alloy. 
 
38 NATURE AND CHARACTERISTICS OF MONEY. 
 
 CHAPTER IV. 
 
 ON THE POSSIBILITY OF CONFEEEING THE QUALITY OF STANDAEI> 
 UPON TWO METALS AT ONCE. 
 
 INASMUCH as money is at the same time a measure of 
 value and an equivalent, common sense would seem to tell 
 us how more than difficult it must be to have two monies, 
 equally invariable, and permanently in use together ; for 
 how could it be possible for a given quantity of merchan- 
 dise .to have for equivalent indiscriminately a certain 
 quantity of gold and a certain quantity of silver, which 
 should always bear the same relation to each other, seeing 
 that there is not and cannot be a fixed relation between 
 these two metals ? The value of gold and that of silver 
 depend, in fact, to a large extent upon circumstances pe- 
 culiar to each of them, they being identical in this respect 
 with iron or copper, bread or meat. It would, doubtless, 
 be an exaggeration to say that they are absolutely inde- 
 pendent of each other ; for whenever two substances have 
 a common use, the value of one exercises a certain influ- 
 ence upon that of the other ; but between gold and silver 
 this relation is not closer than that between corn and 
 wine, or between bread and meat. Now, who has ever 
 maintained that so close a connection exists between these 
 two products that the price of one being given, that of the 
 other can thereby be determined ? It is now a long time 
 since Locke has said, " Two metals such as gold and 
 silver cannot serve at the same time, in the same country, 
 for the medium of exchange, because this medium ought 
 to be always the same and retain the same proportionate 
 value. To adopt, as a measure of the exchangeable value 
 of commodities, substances which have not a fixed and in- 
 variable relation to each other, is as if we were to choose for a 
 
NATURE AND CHARACTERISTICS OF MONEY. 39 
 
 measure of length an object which was subject to the pro- 
 cess of distending and contracting itself. In each country 
 there should be but one rnetal to serve for the money of ac- 
 count, the payment of contracts, and the measure of value." 
 Even before Locke had thus expressed himself the 
 same idea had presented itself to the intelligence of man- 
 kind, and been carried out in practice. At the origin of 
 a metallic currency,* it was only one metal that was en- 
 dowed with the attribute of money. It was not the more 
 vulgar of the two to which was always reserved the par- 
 ticular appellation of the precious metals. It was here 
 iron, and elsewhere copper. We know that for many 
 centuries, copper constituted the money of Kome.f After- 
 wards, society having become richer, copper money was 
 no longer sufficient ; with the increase of wealth, payments 
 became too cumbrous, and a more valuable metal than 
 copper was found better adapted for the bulk of transac- 
 tions ; it was thus that silver money came into use. This 
 was soon after followed at Home, and for the same reason, 
 by a gold currency, and thenceforth the two metals con- 
 tinued to coexist.^ The history of the currencies in the 
 monarchies which were reared upon the ruins of the Ko- 
 man Empire reveals the same process. The first man of 
 genius who then arose, endowed with a commanding spirit 
 of reorganization, Charlemagne, took for his monetary 
 
 * In a great many countries, metals were preceded as instruments of 
 exchange by other objects. Thus, in Rome, we are warranted by the very 
 word pecunia in believing that different articles of merchandise were valued 
 and paid for in heads of cattle. 
 
 f The foundation of Rome dates from the year 753 B. c. Silver money 
 was not introduced till five centuries later (269 B. c.) 
 
 \ Copper thenceforth performed but a subsidiary part ; it did not, prop- 
 erly speaking, constitute money, that is to say, both an equivalent and a 
 measure. With the Romans, as with us, copper coins were thenceforth 
 merely tokens, inasmuch as they had a value in exchange greater than their 
 intrinsic value ; but then, as now, they were merely used for the smallest 
 payments. 
 
40 NATURE AND CHARACTERISTICS OF MONET. 
 
 unit the pound weight of silver. A gold currency made 
 its appearance in France under St. Louis, and from that 
 time the two metals have, whether for good or evil, circu- 
 lated side by side of each other. In England, William 
 the Conqueror established also for his monetary unit the 
 pound of silver, of the Saxon or Tour weight ; and it was 
 only under Edward III. that a gold currency was estab- 
 lished. In the extreme East, at least in China, silver has 
 from the first continued to be the sole instrument of ex- 
 change for all commercial operations on a great scale. In 
 India, silver is the prevailing money ; gold formerly filled 
 a secondary place in the currency throughout the vast 
 territories of the East India Company, in the form of 
 coins, bearing the name of moJiur, which had been given 
 them by the ancient Moguls ; but at present they have 
 been completely demonetised by the Company. 
 
 In itself, the desire to make gold and silver circulate 
 together in the currency of a State is justifiable upon 
 good reasons, an equal value of the one being much more 
 portable than the other ; but, on the other hand, being 
 little suited for small sums, owing to the risk of the coins 
 slipping but of sight, a division of their employment 
 seems to be indicated, for silver the smaller, and for 
 gold the larger payments, especially when they pass from 
 hand to hand. Each metal thus having its special use, 
 the idea of employing both, which has been found to pre- 
 vail in almost all countries, has really a reasonable origin. 
 
 But the question of a simultaneous circulation of the 
 two currencies being decided in the affirmative, others 
 presented themselves : On what conditions and in what 
 form should this process be carried out ? Should the two 
 metals be treated alike, and invested with the same dig- 
 nity ? In a word, should each of them be the standard, 
 or, what comes to the same thing, the monetary unit ? 
 The preceding statement shows that this duality of the 
 
NATURE AND CHARACTERISTICS OF MONEY. 41 
 
 monetary unit would be opposed to the very nature of 
 things. It might absolutely be possible to have for unity 
 of length simultaneously the metre and the foot, because 
 the relation of one to the other is fixed and invariable. It 
 would be very different, however, with two weights, one 
 of gold and the other of silver, which should have been 
 determined, once for all, as the measures of value. The 
 relation of one metal to the other is variable, and has 
 never ceased to vary, more or less, from the commence- 
 ment of the world. 
 
 Unfortunately, however impracticable it may be to treat 
 money as though each of the two metals constituted equally 
 the monetary unit, that is no reason why it should not 
 have been resolved upon in times of ignorance, or under 
 governments disposed to believe, in their greediness, that 
 this combination would be more favorable to the frauds 
 which it suited them to perpetrate on the currency. 
 
 If people had not, wilfully or otherwise, forgotten 
 whence money is derived, and if submitting to the nature 
 of things, which, in such matters, cannot be thwarted with 
 impunity, they had laid down the principle that one of the 
 two metals was the standard, that is to say, the substance 
 constituting the monetary unit, the other would then have 
 been quite obviously a subordinate metal, and this sub- 
 ordination itself would have permitted it to have been de- 
 voted in various forms, to uses not 'necessarily the same for 
 gold as silver, as we shall have occasion to show in the 
 course of this essay. The confusion, real or simulated, 
 which has so long and so often prevailed on the subject of 
 the currency, in official quarters, is the reason why we have 
 departed from that simplicity which would have averted 
 much embarrassment, but which would also have, subjected 
 governments to the laws of honesty, a burden which they 
 have found it difficult to bear. In fact, however, govern- 
 ments have incessantly undertaken the task of fixing the 
 
42 
 
 NATURE AND CHARACTERISTICS OF MONEY. 
 
 relative value of gold and silver, according to the effective 
 value of the two metals compared one with the other. 
 Hence have sprung many changes in the currency. Un- 
 fortunately, as these changes have been, in the majority of 
 cases, effected without regard to recognised principles, or 
 rather in contempt of all principle, they have occasioned 
 much disorder and led to many evils. 
 
 The plan of a double standard, or the system of plac- 
 ing gold and silver absolutely on the same footing in the 
 currency of a State, would be an injustice as regards all 
 creditors, who would always be paid in that metal which 
 should happen to be at the lowest value at the moment 
 when the payment fell due. As we have already said, the 
 adverse risk to the creditor is from the fall of the material 
 from which money is made, whilst the debtor has, on the 
 other hand, to encounter the chance of a rise. Where 
 there is but one standard, and provision is made that the 
 legal value of the coins of the other metal shall be in con- 
 formity with the quotations of its value in the metal mar- 
 ket (I here argue upon the assumption, which is true in 
 most countries, that the two metals are used for money), 
 the debtor and creditor have equal chances,* and, whatever 
 happens, neither of them has the right to complain of be- 
 ing the victim of an injustice. But, if, instead of estab- 
 lishing one standard, the law assigns this attribute to two 
 metals, or if, which amounts to the same thing, neither of 
 the metals is invested with the attribute, the equality of 
 chances ceases between the debtor and creditor. The 
 latter has in effect against him all the chances of a fall 
 which one or the other metal may undergo. If it be the na- 
 tional creditor, for example, he will lose, in the first place, 
 by the fall in the value of silver, and he will encounter a 
 second loss when the same process takes place in gold. In 
 
 * Excepting, however, the inequality before alluded to, as consequent 
 on the progress of the arts. 
 
NATURE AND CHARACTERISTICS OF MONEY. 43 
 
 order that the debtor should, on the contrary, sustain a loss, 
 it would be necessary that the two metals experienced at 
 the same moment a rise, which is a tolerably improbable 
 occurrence. 
 
 However striking may be the inequality established 
 between the situation of the debtor and creditor, by the 
 system of the double standard, which might, I repeat, be 
 more properly described as no standard, that is not the 
 sole or even the strongest objection to which it is exposed. 
 If the two metals are equal before the law, that is to say, 
 if it be not declared that one is the standard, and the 
 other for subservient uses, the government, having the 
 power, will yield to the temptation, of manoeuvring with 
 the one and the other ; for, governments being proverbi- 
 ally always more or less needy, they will find the way of 
 relieving themselves of a portion of their engagements, 
 by discharging their debts with whichever of the two 
 metals shall have had the greatest relative fall in value. 
 It will only be necessary, for example, to compare, alter- 
 nately, the value of gold with that of silver, and the 
 value of silver with that of gold, to diminish successively 
 the burden of the national debt, thereby injuring the pub- 
 lic creditor, outraging public morals, and causing great 
 derangements to private interests. Thus, when gold shall 
 have risen in value in comparison with silver, the State 
 will only pay in the latter metal, and private debtors will 
 not fail to follow the example : the law will have author- 
 ized them to do so. Fortune changes ; rich mines of gold 
 are discovered ; gold instead of being worth fifteen-and-a- 
 half times its weight in silver, is worth only fourteen 
 times, afterwards thirteen, and then falls to twelve, and 
 even to ten. Things are left to take their course, and 
 some fine day, under pretext of confirming an established 
 state of things, a law decides that the relation between 
 the two metals, instead of being expressed by the number 
 
44 
 
 NATURE AND CHARACTERISTICS OF MONEY. 
 
 15J, shall be expressed by 14 or 13. Some time after- 
 wards this proportion is altered to that of 10. By "virtue 
 of these successive combinations, the silver coins, the value 
 of which had remained stable, are melted again and again, 
 and each time greatly diminished. The debtor henceforth 
 acquits himself with one kilogramme of gold, or with ten 
 of silver, whereas the creditor had thought he was to re- 
 ceive fifteen-and-a-half of the latter metal, or an equiva- 
 lent quantity of gold. 
 
 A little later, the silver mines are more productive, the 
 production of that metal begins to increase, and its value 
 to fall ; now follows another deviation : from the relation 
 of 1 to 10 there is a rise successively to that of 1 to 12, 
 13, 14, 15, 15J, or even beyond if the comparison between 
 the market value of the two metals warrant it. Then the 
 State and other debtors discharge their debts only in sil- 
 ver ; or, if they pay in gold, it is a quantity diminished, 
 compared with what they would have paid during the pre- 
 ceding period, in proportion to the fall in silver. Another 
 oscillation reduces the value of gold ; this depreciated 
 metal then becomes the preferable type, and it is made 
 the standard of comparison for silver, the coins of which 
 lose another portion of their weight. These double-deal- 
 ings are perpetrated by virtue of a law, against which, 
 whatever may be thought by those who regard it from an 
 impartial and equitable point of view, there is really 
 nothing to be said from the moment that we recognise the 
 fallacious principle of a double standard. At each change 
 the creditor is deprived of something, until with sufficient 
 time it ends in his losing nearly everything. 
 
 Supposing this scene to be enacted in a country where 
 the franc is in use, this coin, which originally contained 
 five grammes of silver of nine-tenths fineness, is succes- 
 sively reduced till it contains but four, then three, and 
 always less and less. This alternate adjustment, by vir- 
 
NATURE AND CHARACTERISTICS OF MONEY. 45 
 
 tue of which, under the false theory of a double standard, 
 the depreciated nietal is always practically the type, would 
 be a new mode of arriving at precisely the same result as 
 was sought and obtained by the ancient princes when, 
 stealthily or boldly, they mixed copper with their silver, 
 or altered, by proclamation, the pound in their established 
 coinage. In this manner, with the principle of a double 
 standard, the franc might be reduced to the seventy- 
 second part of & franc, just as the royal clippers and coin- 
 ers of olden times degraded the pound to the seventy- 
 second part of a pound by the continual admixture of the 
 baser metals. 
 
 We will explain more clearly this result by a hypo- 
 thetical case. The franc being 5 grammes of silver of 
 the standard of nine-tenths fineness, the equivalent in 
 gold consists actually of 32 J- centigrammes of the same 
 fineness. If in consequence of gold falling to ten times 
 its weight in silver, it be decided that the franc shall still 
 remain equal to this quantity of gold, then the silver 
 must be recoined so that the franc shall comprise only 3J 
 grammes, of the same fineness of nine-tenths. Suppose 
 that silver in its turn falls ; if the fall be such that the 
 relative value rises to 15J, and if in the system of the 
 double standard, 3J grammes of silver for the franc is to be 
 preserved, then the gold ought to be recoined, so that 
 there shall not be more in one franc than 21 centi- 
 grammes. A fresh fall in gold following, if it be such 
 that to restore the relation of 1 to 10 between the two 
 metals, a similar operation is necessary, the franc will 
 then only contain 2 grammes and one-tenth of silver. 
 Thus it will be seen by how rapid a process the currency 
 of a country may be swallowed up. 
 
 Nothing more need be said to induce us in our day to 
 resist all the efforts which, under various pretexts and 
 forms, are made to restore the double standard to favour, 
 or to revive it in practice. 
 
46 NATURE AND CHARACTERISTICS OF MONEY. 
 
 For the very reason that the plan of a double standard 
 leads, by the deduction of an irresistible logic, to conse- 
 quences so manifestly contrary to an equitable security of 
 contracts, it is right in studying the monetary system of a 
 country to require the clearest and best proofs before decid- 
 ing that it is avowedly founded on the principle of a 
 double standard. For it is in fact to declare that the 
 legislators of such a country are, in monetary affairs, guilty 
 of ignorance or of injustice and bad faith, and such an 
 imputation ought not to be made excepting on sufficient 
 grounds. 
 
 CHAPTER V 
 
 OF THE MEANING OF CERTAIN WORDS SPECIALLY APPLICABLE TO 
 MONEY AND THE PRECIOUS METALS : PRICE, VALUE, PREMIUM, 
 DEARNESS, CHEAPNESS. 
 
 BEFORE bringing these preliminary generalities to a close, 
 and entering upon the core of the subject, I beg to be 
 allowed to define the true meaning of some expressions 
 which are frequently used in our day in discussing the 
 question of the currency. On this point we find persons 
 who are not without influence on public opinion, deluding 
 themselves with phrases of dubious meaning, and it is 
 against this danger that I would wish to warn the reader, 
 and those persons themselves. 
 
 The expressions which I have here more particularly 
 in view are those of value and price, applied not as has 
 already been done to commodities in general,* but es- 
 pecially to the currency, and the precious metals of which 
 it is made. I allude also to the expressions, premium, 
 clearness, and cheapness, taken in relation to the same 
 objects, the currency and the precious metals. 
 
 * See Section II., Chapter I. 
 
NATURE AND CHARACTERISTICS OF MONEY. 47 
 
 In ordinary language, the words value and price are 
 often used as synonymes. They are different, however, in 
 their meaning, as has been already shown in reference to 
 commodities in general. It is well here to define this differ- 
 ence in regard to the currency, and the precious metals of 
 which it is made. It is such that one could indicate in- 
 stances where, if the value of one of the precious metals 
 fell, its price would rise. This is not a scholastic subtle- 
 ty, imagined for the amusement of trifle rs ; it is a fact 
 presented to us in even vast proportions, in history. 
 Thus, from the time of the discovery of America to our 
 day, the value of gold in ingots or in coins has certainly 
 diminished, since at the present time a given quantity of 
 gold in coins or ingots is exchanged for a smaller quantity 
 of corn, or of other ordinary products, or for fewer days' 
 labour. However, the price of gold, in silver money, has 
 increased ; and in thus expressing myself, I do not allude 
 to the circumstance of the coins having been altered, to 
 such an extent that the weight of metal which was de- 
 nominated a silver pound, under Saint Louis, would have 
 made twenty pounds under Louis XVI. A rise in price 
 of this kind is only nominal. That which is meant, and 
 which is incontestable, is that, supposing that the currency 
 in France had never been altered, and that its coins had 
 continued of the same weight and fineness as in 1492, the 
 year of the first voyage of the great Genoese navigator, 
 the gold coin which would then have exchanged for ten 
 or eleven silver coins of the same weight would in the 
 nineteenth century have regularly exchanged for fifteen or 
 sixteen. In a word, the price of gold has positively and 
 effectively risen, from 1492 to our day, in the ratio of 10 
 to 15r,, whilst its value has declined. 
 
 The price of a thing, as has already been said, is its 
 value in relation to money. When the precious metals 
 are in question, it is convenient to distinguish between in- 
 
48 NATUKE AND CHARACTEKISTICS OF MONEY. 
 
 gots and coined money, and also to particularise the species 
 of money in which the price is measured. If, for example, 
 I speak of gold, I am bound for clearness not only to in- 
 dicate whether I refer to the ingot or the twenty-franc 
 piece, but also whether I reckon the price in silver or gold 
 coins. Assuming the coinage to be accurately struck, a 
 fair assumption in these days when the operations of the 
 Mint are brought to such perfection, and that every piece 
 of . gold is of full and equal value, then the price in gold 
 currency, of a thousand francs in gold coin, or say fifty 
 pieces of twenty francs, can only be a thousand francs. 
 But the price of an ingot, containing weight for weight, 
 and fineness for fineness, the same quantity of gold as the 
 fifty pieces, may according to circumstances exceed them 
 in value. It would be worth more if, under circumstances 
 of real or supposed exigency, there were a great demand 
 for ingots for coining at the same time that there were 
 very few on offer in the market. It is a case which occurs 
 but seldom, but which has happened in our day. Thus, 
 between the 1st July, 1855, and the 1st January, 1858, 
 the Bank of France purchased at a premium gold to the 
 amount of 1,363 million francs (54,520,000), the pre- 
 mium on which in some instances amounted to 15 per 
 1,000. The sum total paid by the Bank for premiums, 
 in this interval of two years and a half, exceeded fourteen 
 million francs (560,000).* 
 
 On the contrary, the ingot will be worth more than 
 
 * On this subject some persons are of opinion that the Bank submitted 
 to terms which might have been avoided. Without noticing in detail all 
 that has been urged in this sense, I may call to mind the information af- 
 forded by Lord Liverpool (p. 150, edition of 1805, of his treatise on the 
 English currency), that when the Bank of England in 1797 struggled With 
 all its might to avoid a suspension of specie payments, she purchased no 
 gold above the money standard, that is to say at more than 3. 17s. 10-Jd. 
 an ounce, of metal of the legal fineness. For the twenty years that pre- 
 ceded the suspension of specie payments, the average of the price paid by 
 her for gold was 2|d. an ounce under the standard or Mint price. 
 
NATURE AND CHARACTERISTICS OF MONEY. 49 
 
 coins of the same metal, always assuming them to be of 
 full weight and fineness, when bullion flows to the Mint 
 to be coined. Its destination being the coinage, it is natu- 
 ral that it should be at a disadvantage in comparison with 
 coined money to the extent of the expense of the operation, 
 including the loss of interest during the time that the bul- 
 lion is retained at the Mint. The case now indicated, in 
 which the ingot sells for less than an equal weight of coined 
 metal, is that which usually presents itself to our view 
 in European countries. 
 
 Another case, in which the ingot may be worth more 
 than coins, is that of a country, for example, where a gold 
 currency abounds, and from which this metal may be ex- 
 ported to other countries in which the coins of the export- 
 ing State are not current. It might be r#ore advantageous 
 in such a case to export ingots than coins, or, to express 
 the same thing in other words, it might be necessary to 
 convert the coins into ingots before forwarding them to 
 their destination ; then the ingot would necessarily be 
 worth more than the coins, weight for weight, and fineness 
 for fineness. 
 
 A directly opposite case to the preceding is that where 
 the money of the exporting country enjoys, through preju- 
 dice or otherwise, great favour in other regions. Com- 
 merce then finds it advantageous to withdraw coined 
 money rather than ingots from this country, to transport it 
 to those regions. Hence a sufficient reason why the money 
 should be at a greater or less premium over the raw metal. 
 It is thus that Spanish dollars, especially those called pil- 
 lars, were, and still are, in great request in China, and 
 pass in some localities at a value quite disproportioned to 
 the quantity of metal they contain. There needs no other 
 motive why they should be sought for, not only in the 
 country of their production, but all over the world, and 
 paid for in ingots at a premium. 
 4 
 
50 NATURE AND CHARACTERISTICS OF MONEY. 
 
 It would be a very different hypothesis from the fore- 
 going, to suppose that the coins have become worn by the 
 process of circulation, so as to have lost an appreciable 
 part of their weight, as always occurs after the currency 
 has remained a long time without being renewed. It is 
 quite clear that, in such a case ; an ingot of gold, contain- 
 ing weight for weight, and fineness for fineness, the quan- 
 tity of metal contained in fifty perfect twenty-franc pieces, 
 would be worth more than fifty of the same pieces when 
 rendered light from excessive usage. Consequently, the 
 price of an ingot in the current coins would be at a great 
 premium. But then the fifty twenty-franc pieces, with- 
 drawn from the circulation, would not really and sub- 
 stantially be pieces of twenty-francs. They would be 
 simply pieces of "nineteen francs, or eighteen francs, to 
 which, by an abuse of language, or by the neglect of the 
 authorities to resort to a recoinage, they had preserved the 
 name and the currency of twenty-franc pieces. 
 
 It is needless to add that what has been said of coins 
 and ingots of gold, applies equally to silver coins in rela- 
 tion to ingots of silver, and vice versa. 
 
 Examples of differences of this kind between the price 
 of ingots and that of coins of the same metal abound in 
 history. To observe the phenomenon. in all its simplicity, 
 and, if I may so speak, in all its purity, it is better to 
 consult the history of England than that of other states, 
 because out of England, the facts relating to the currency 
 have been almost everywhere complicated with the inci- 
 dents of a falsification of the standard. In England, then, 
 the reduction in the intrinsic value of the currency by the 
 passage from hand to hand, a loss to which the sweaters 
 of coins have not failed to contribute their proportion when 
 once they have ceased to possess their full legal weight, 
 has sometimes, been so great that the ingot corresponding 
 legally with a certain number of coins, contained a quarter, 
 
NATURE AND CHARACTERISTICS OF MONEY. 51 
 
 a third, or even a half more of metal than these did, taken 
 from the average of the current circulation. It followed 
 that the ingot bore an enormous premium, a premium 
 moreover which was quite apparent. This is what befel. 
 the silver currency in the reign of William III., before the 
 recoinage of 1695. The ingot of silver was at a great pre- 
 mium in the current coins of the same metal ; indeed, the 
 English gold coin so well known under the name of the 
 guinea, and which was at that time of good weight, passed 
 for much more than its value in shillings. From the mo- 
 ment that the silver money had been recoined, and was 
 thus perfect, the premium which the ingot had gained 
 disappeared ; that of the guineas, in relation to the silver 
 money, fell to the insignificant amount which corresponded 
 to the slight difference in the market quotations for these 
 two metals, and the current value conferred by law or 
 usage upon these gold coins as compared with good silver 
 money. * 
 
 It is not an uncommon thing in France to hear it 
 affirmed that gold has lost none of its value since the dis- 
 covery of the Australian and Californian mines, and as a 
 proof the fact is cited that, in the market of Paris, ingots 
 of gold are at par, or at least that they are only at a small 
 premium. Persons who reason thus fall into a confusion, 
 which, however, it becomes necessary to treat with some 
 care, for men of very distinguished talent have fallen into 
 it ; I will soon quote an example. To know with cer- 
 tainty whether gold is dearer or cheaper, whether it be at 
 a premium or not, the method is not to compare ingots of 
 this metal with gold coins. Between the ingot and coins 
 of full weight and fineness there can only be by accident 
 a sensible difference. It is limited, in fact, by the charge 
 
 * See Lord Liverpool's treatise, p. 69. There is also a very interesting 
 expose of the monetary situation of Great Britain at this time, in the bril- 
 liant History of England, by Lord Macaulay, Chap. XXL 
 
52 NATURE AND CHARACTERISTICS OF MONET. 
 
 at the Mint, including the interest of capital during the 
 interval of time absorbed in the process of coining. A 
 better, and the only good measure of the rise or fall oc- 
 curring in the value of gold is that which takes place in 
 its price in silver money, or, which amounts to- the same 
 thing, in the price of silver ingots in gold coins ; and then 
 it must be premised that no disturbance shall have arisen 
 to cause a sudden change in the value of silver. 
 
 Thus, at the present time, the very decided premium 
 which silver is acquiring, represents exactly the divergence 
 that has occurred between gold and silver, for this premium 
 indicates the excess of the price of silver as compared with 
 the legal par in gold coins. Now, for how much does the 
 fall in gold enter into this divergence ? and for how much 
 the rise in silver, if any rise have really taken place ? 
 This is not the question at present under discussion, and 
 if it were, I doubt the possibility of solving it with any 
 precision in figures. I have merely wished to point out 
 the error into which some persons fall who try to estimate 
 the exact rise or fall of gold by comparing the market 
 price of ingots of this metal with the coins into which they 
 are or may be converted. 
 
 This error, however, occurs, without any qualifying 
 circumstances, in Lord Liverpool's treatise. * After dem- 
 onstrating that silver has a less stable value than gold, 
 that statesman, gifted nevertheless with a rare intelli- 
 gence, estimates the variations which gold and silver com- 
 modities had undergone, by a reference to their price in 
 current money, at a time when the currency consisted ex- 
 clusively of gold or of bank notes convertible on demand 
 into gold. One could hardly succeed in finding a device 
 better calculated to persuade the mystified reader that 
 silver alone undergoes any variations, and that gold by 
 some inexplicable privilege escapes all appreciable altcra- 
 
 * Page 149 ; edition, 1805. 
 
NATURE AND CHARACTERISTICS OF MONEY. 53 
 
 tions. Such a mistake, on the part of an authority of so 
 high an order, whose good faith, moreover, is above all 
 suspicion, shows how much attention must be brought to 
 the study of the currency, and to the qualification of mon- 
 etary facts, if we would avoid vulgar errors, and not be- 
 come the dupes of false appearances. 
 
SECTION III. 
 
 OF THE PRESENT PRODUCTION OF GOLD AND 
 ITS OUTLET. 
 
 CHAPTER I. 
 
 OF THE INCKEASE IN THE PEESENT PEODUCTION OF GOLD AS 
 COMPAEED WITH THE PAST.-THE EXTENDED COINAGE OF GOLD 
 WHICH HA^ FOLLOWED. 
 
 AT the commencement of the century, the quantity of 
 gold yielded by the various countries, whose production 
 flows to the general market of the civilised Western* or 
 Christian States, was about 24,000 kilogrammes^ of pure 
 metal (about 3,312,000). 
 
 But to arrive at this quantity it is necessary to in- 
 clude the production of several countries which then had 
 but little commercial intercourse with the principal na- 
 tions of Christendom, as, for instance, the Island of Bor- 
 neo, and several other localities in the Indian Archipelago. 
 
 * The word Western is here used in contradistinction to the extreme 
 East, which consists of remote Asia, and especially of India and the Empires 
 of China and Japan. 
 
 f I prefer using kilogrammes of fine gold rather ih&n francs in the state- 
 ment of accounts. Fewer figures will be required, and they will be more 
 easily compared with one another. The kilogramme of gold, by the terms 
 of the law 7 Germinal, year 11, is equal to 3,444 francs 44 cents (138). 
 
THE PRESENT PRODUCTION OF GOLD. 55 
 
 Confining himself to the production of the American 
 continent, of Europe, and of Asiatic Kussia, M. von 
 Humboldt calculates that it then amounted to 15,800 
 kilogrammes* (2,180,400.) It is doubtful if the gold 
 which the civilised Christian nations drew from other 
 sources, and especially from Africa, added to this supply 
 a weight of 2,0'00 kilogrammes (276,000). We might 
 thus estimate at 18,000 kilogrammes (2,484,000) the 
 amount of gold which, at the beginning of this century, 
 arrived every year, to augment the metallic wealth of the 
 nations of Christendom. It underwent very little increase 
 until the working of the gold mines of the Oural, and 
 afterwards of those of Siberia, contributed, with the aid 
 of other secondary sources, to sw T ell somewhat suddenly 
 the supply to threefold the above. amount. Thus matters 
 stood at the commencement of 1848, when took place 
 the discovery of the rich deposits of California, destined to 
 be so soon followed by a similar event in Australia. At this 
 moment we may estimate, in round numbers, the mass of 
 gold furnished to the Christian States at 275,000 kilo- 
 grammes (37,950,000), if not more. The increase, then, 
 is at the rate of 1 to 15 in the course of forty years, and 
 nearly in the proportion of 1 to 5 since 1848. In silver, 
 on the contrary, there has been but little change. The 
 production, at the beginning of the century, was 900,000 
 kilogrammes (7,965,000; at present it is estimated 
 slightly to exceed a million kilogrammes (8,850,000). 
 
 The real revolution which has taken place in the sup- 
 ply of gold may be expressed in another way. The region 
 which, until the discovery of the mines of Siberia, was 
 the chief seat of production for the European nations, I 
 mean the whole continent of America, has, since the firs 
 voyage of Columbus down to the discovery of the mines 
 of California, that is to say, during the 356 years which 
 
 * Essay on New Spain, "Vol. 3, p. 456 ; edition of 1827. 
 
56 THE PRESENT PRODUCTION OF GOLD. 
 
 intervened between 1492 and 1848, and inclusive of the 
 gold extracted from silver ore as well as that from 
 the gold mines, only produced 2,910,000 kilogrammes 
 (401,580,000) of pure metal. At this time the yield 
 being nearly 300,000 kilogrammes (41,400,000), the 
 civilised world receives of this metal, in a single year, 
 about the tenth part of the total which had been fur- 
 nished by America from the first departure of Columbus 
 down to 1848. 
 
 We might present under another form, perhaps still 
 more striking, the productive power of the new auriferous 
 deposits of California and Australia, by indicating the 
 quantity of metal which a miner extracts in an average 
 day's work. With regard to California, we have the Ke- 
 port of Dr. Trask, from which an extract has been given 
 by M. Delesse, Inspector of Mines, in the Annales des 
 Mines, third report of 1856 (5th series, vol. 9th, p. 649).* 
 It is there * seen that in 1854, by the labour of eight 
 months, each miner produced a quantity of gold valued 
 at 700 dollars (140), or about 1,100 grammes of gold. 
 At twenty-five days 7 work a month, which is certainly an 
 over-estimate, it is an average daily extraction of 5J 
 grammes of gold, which, at the standard of French money 
 is 19 francs (15s. lOd.) An intelligent officer of the French 
 navy, who, on his return from the second campaign of the 
 Kamtschatka, travelled in the interior of California in 
 1855, and applied himself to the collection of some exact 
 information, M. Armand Coste, gives the sum of 15 francs 
 as the minimum of what a man can, on the average, gain 
 at the mines, an estimate at least equal to that which I 
 have just quoted- from Dr. Trask. 
 
 In Australia, the situation of the miner is not less 
 favourable. Thus in 1854, in the district of Ballarat, one 
 of the most productive in the colony of Victoria, which is 
 
 * See page 80 of the Report of M. Trask. 
 
THE PRESENT PRODUCTION OF GOLD. 57 
 
 itself the richest in gold, the ordinary wages of a miner, 
 according to the Parliamentary Return of 1856,* was 30 
 shillings a day. The sum of 15 shillings is indicated as 
 the minimum in the same document ; and these remunera- 
 tions apply to the wages of a miner, which implies that 
 the average produce of a day's work in gold is superior to 
 the quantity of metal contained in 15 and 30 shillings, 
 for, of course, the capitalist who pays the labourer must 
 have his profit. Hence we shall not exaggerate if we 
 adopt for Australia as for California the sum of 19 francs 
 (15s. lOd.) as the ordinary earnings of the miner. Nine- 
 teen francs ! In passing, let us remark, what a contrast 
 with the gold-washer of the Rhine, whose day's work 
 yields him gold dust of the value of 1 franc 50c. or 2 
 francs^ (15d. or 20d.), and who still follows the occupa- 
 tion ! If then the auriferous regions preserved indefinitely 
 the same richness, the value of gold might fall until the 
 sum of 19 of our present francs in gold (15s. lOd.) was 
 only equal to the ordinary price of a day's labour in Cali- 
 fornia and Australia, after the cost of subsistence and the 
 rate of wages should have there found their permanent 
 level. Now, we are justified in concluding that in Cali- 
 fornia and Australia, the day's labour must gradually be 
 assimilated to the rate which prevails in temperate cli- 
 mates, among the most prosperous nations of Christendom, 
 and which in our day is about five francs (4s. 2d.)J It 
 
 * Report of the Commission appointed by the governor of the province 
 of Victoria to report on the state of the mines. This report is comprised 
 in the Blue Book, entitled Further Papers relative to the Discovery of Gold 
 in Australia. February, 156. 
 
 f According to a curious memoir by the engineer of mines, Daubree, 
 which goes back for a few years, the washing of the auriferous sands of the 
 Rhine is a branch of industry which still subsists, although for a long time 
 it has only been carried on upon a small scale. The production amounts 
 yearly to from 12 to 15 kilogrammes (1,600 to 2,000). 
 
 \ The hypothesis here indicated, according to which the price of a day's 
 work, in Australia and California, should finally fall to a sum representing 
 in food and other enjoyments that which is procurable among civilised 
 
58 THE PRESENT PRODUCTION OF GOLD. 
 
 follows that the value of gold might fall till the weight of 
 5i grammes of pure metal, representing at present 19 
 francs (15s. 10cL), might correspond only to the amount 
 of well-being which can in our day be procured for the 
 quantity of metal comprised in five francs. By this cal- 
 culation the fall would in the end amount to three-fourths, 
 in other words, to procure the same amount of ' subsist- 
 ence as at present, it would be requisite, all other things 
 being equal, to give a quantity of gold greater in the pro- 
 portion of about four to one. According to this we are 
 still vqry far from the end of the crisis. 
 
 I am far from saying that the fall will not, long before 
 it reaches that point, encounter obstacles which will arrest 
 it. Assuredly it may so happen in the very nature of 
 things, and for example, in the conditions of production. 
 It is a subject on which I will shortly offer some further 
 facts. But, at least, it seems to me quite incontestable 
 that there remains a great margin of depreciation. 
 
 As regards the force, nay the violence, with which the 
 new gold is diffusing itself through the monetary system 
 of the civilized world, and particularly that of France, 
 here are some facts which speak in a significant manner: 
 
 During the government of Napoleon I., the coinage 6f 
 gold amounted to 527 million francs (21,080,000), or 
 an average of 48 millions per annum (1,812,000).* Un- 
 people in temperate regions for the sum of five francs in our day, seems 
 reasonable. California and Australia are healthy countries, where the 
 European race can labour, and where food ought to be, if it is not already, 
 at a moderate price, either from the abundant production of the soil, or 
 from the facilities for importation by sea. Doubtless, if the number of 
 hands remained as insufficient as at present, the wages of manual labour 
 would remain very high ; but we know with what facility emigrants can be 
 transported to the most remote regions, and new and more economical 
 means of conveyance are now being organised between Europe and Aus- 
 tralia, as well as between the eastern shores of America and California. 
 
 * The coining of gold was only continued for eleven years of this reign. 
 It did not commence till after the promulgation of the law of 7 Germinal, 
 year 11. 
 
THE PKESENT PRODUCTION OF GOLD. 59 
 
 der Louis XVIII., it was a smaller proportion, amounting 
 to a total of 389 million francs (15,560,000), or an 
 average of 39 millions per annum (1,560,000). Under 
 Charles X., a great decline is observable ; for the whole 
 reign the gold coinage amounted to only 52 mill ion francs 
 (2,080,000). During the seventeen years of Louis 
 Philippe's reign, gold was only coined to the amount of 
 215 million francs (8,600,000), or 12-*- millions annual- 
 ly (500,000). The ascending reaction began to manifest 
 itself in 1848, for, in the general distress caused by the 
 revolution of that year, many persons carried their gold 
 plate to the Mint to be converted into money ; but the 
 influence of the new mines is not perceptible till after 1850. 
 During the period of eight years, ending the 31st Decem- 
 ber 1857, the gold coined at the Paris Mint amounted to 
 2 milliards 750 million francs (110,000,000), or an 
 average of 343 millions (13,720,000) yearly.* During 
 the period of forty-five years, comprised between the 7th 
 Germinal, year 11, and the 1st January, 1848, it had only 
 been 1 milliard 186 millions (47,440,000), or 22,300,000 
 francs (892,000) per annum. The greatest amount 
 coined in one year was in 1857, when it reached 572,561,- 
 225/rawcs (22,902,449); and then we have for 1856 the 
 sum of 508,281,995 francs (20,331,279). In no other 
 country does the coinage of gold attain these proportions, 
 
 * It may not be useless to know from year to year the progress of the 
 coinage of gold in France during this period. It is as follows : 
 
 FRANCS. POUNDS STERLING. 
 
 1850 85,192,390 3,407,695 
 
 1851 .. 269,709,570 '10,788,382 
 
 1852 27,028,270 1,081,130 
 
 1853 312,964,020 12,518,560 
 
 1854 526,528,200 21,061,128 
 
 1855 447,427,820 17,897,112 
 
 1856 508,281,995 20,331,279 
 
 1857 572,561,225 22,902,449 
 
 Total francs... 2,749,693,490 109,987,735 
 
 1858, during the first six months, 9,483,250. 
 
60 THE PRESENT PRODUCTION OF GOLD. 
 
 or anything like them. In England, where, properly- 
 speaking, gold alone constitutes the currency, the period 
 of the last seven years, for which we have returns from 
 January 1st, 1850, to the 31st December, 1856, presents 
 only a total of 45,749,868 sterling, or an annual average 
 of 6,535,605 sterling. This is a considerable increase 
 upon the British coinage in the previous years; for, during 
 the septennial period immediately preceding, the total of 
 gold coined amounted to only 28,539,711 sterling, or a 
 yearly average of 4,077,101; but the increase is far less 
 than in France. 
 
 CHAPTER II. 
 
 DIMINISHED COINAGE OF SILVER IN FEANCE GOLD IS ALEEADY AT 
 A DISCOUNT IN COMPARISON WITH SILVER. 
 
 WHILST in France the coinage of gold takes this unex- 
 ampled development, the like process with regard to sil- 
 ver is diminishing, and bids fair to cease altogether. In 
 the period of forty-eight years, from the 18th Brumaire, 
 year 8, to 1848, there had been coined 3,891,000,000 
 francs in silver (155,640,000), or a yearly average of 
 81,065,000 francs (3,242,600). During the eight 
 years, terminating the 31st December, 1857, the coinage 
 has only amounted to 323,660,000 francs, or a yearly 
 average of 40,457,000 francs (1,618,280).* It should, 
 
 * The following are the details, year by year: 
 
 FRANCS. POUNDS STERLING. 
 
 1850 86,458,485 3,458,339 
 
 1851 59,327,308 2,373,092 
 
 1852 71,918,445 2,876,738 
 
 1853 20,099,488 803,979 
 
 1854 2,123,887 84,955 
 
 1855 25,500,305 1,020,002 
 
 1856 54,422,214 2,176,888 
 
 1857 3,809,611 152,384 
 
 Total 323,659,743 12,946,377 
 
THE PKESENT PRODUCTION OF GOLD. 61 
 
 moreover, be observed that the coinage of silver during 
 the latter years has only taken place in consequence of 
 the great influence exerted in that respect by the govern- 
 ment upon the directors of the mints. Left to themselves, 
 they would not perhaps have struck a single five-franc 
 piece since 1853. 
 
 Not only is much less silver money coined, but even 
 that which the country possessed has been rapidly disap- 
 pearing. The Custom House returns afford upon this 
 subject only proximate indications, as the declarations are 
 not always exact, though they nevertheless must be taken 
 for authority. Formerly, France imported much more of 
 silver commodities* than she exported. It appears from 
 a report made in 1839 to a commission on the currency, 
 over which M. Thenard presided, that during the period 
 from the 1st January, 1816, to the 1st January, 1839, 
 the excess of the importation of silver over the exporta- 
 tion amounted to 1,822,824,818 francs (72,912,992). 
 Nearly the same proportions were preserved until 1851, 
 inclusively ; but then commenced an inverse movement 
 which gathered strength every year. 
 
 In 1852, the exportation surpassed the importation 
 ty 2,700,000 francs (108,000). In 1853, the excess 
 amounted to 117 millions (4,680,000). It rose suc- 
 cessively to 164 millions (6,560,000) in 1854 ; to 197 
 millions (7,880,000) in 1855 ; to 284' millions (11,- 
 360,000) in 1856 ; to 362 millions (14,480,000) in 
 
 1857. From the 1st January, 1852, to the 1st January, 
 
 1858, the total excess of exportations over importations 
 amounted to 1,127 millions (45,080,000), which would 
 be about two-fifths of the silver money possessed by 
 France a few years since, according to the . opinion of 
 
 * That which here, and in the returns of the Customs, is named silver 
 commodities, comprises both ingots and coins. 
 
62 THE PRESENT PRODUCTION OF GOLD 
 
 many persons.* There are not two ways, there is only one 
 way of explaining these facts : gold is imported into 
 France in masses, and takes the place in the circulation 
 formerly filled by silver, which disappears, because it is 
 profitable to come from abroad to barter gold for silver, 
 on the footing of one kilogramme of the former for fifteen- 
 and-a-half of the latter, the proportion established in the 
 French currency, for how long and under what qualifi- 
 cations, will be seen by referring to the law of 7 Germi?ial, 
 year 11. 
 
 The merchant possessing ingots of gold has only to 
 carry them to the Mint to obtain the same amount in 
 pieces of ten francs or twenty francs, weight for weight, 
 
 * The following is a table of the importations and exportations of silver 
 since 1846." 
 
 IMPORTATIONS : 
 
 FRANCS. POUNDS STERLING. 
 
 1846 106,858,680 4,274,347 
 
 1847 138,307,280 5,532,291 
 
 1848 233,330,020 9,333,200 
 
 1849 291,414,760 11,656,590 
 
 1850 147,693,360 5,907,734 
 
 1851 178,629,800 7,145,192 
 
 1852 179,857,460 7,194,298 
 
 1853 112,568,040 4,502,721 
 
 1854 99,848,480 3,993,937 
 
 1855 120,891,400 4,835,656 
 
 1856 109,895,300 4,397,812 
 
 1857 97,408,440 3,896,337 
 
 Total 1,816,703,020 72,670,115 
 
 EXPORTATIONS : 
 
 FRANCS. POUNDS STERLING. 
 
 1846 60,086,980 2,403,479 
 
 1847 84,678,220 3,387,128 
 
 1848 19,396,560 775,862 
 
 1849 46,847,060- 1,873,882 
 
 1850 82,308,900 3,292,356 
 
 1851 100,680,840 4,027,233 
 
 1852 182,574,720 7,302,988 
 
 1853 229,453,480 9,178,139 
 
 1854 263,542,200 10,541,688 
 
 1855 318,051,040 12,722,041 
 
 1856 393,518,600 15,740,744 
 
 1857 459,929,300 18,397,172 
 
 Total 2241,067,900 89,642,712 
 
THE PRESENT PRODUCTION OF GOLD. 63 
 
 and fineness for fineness, save only the small charge to 
 cover the expense of coining.* In this way every kilo- 
 gramme of gold introduced into France, enters into the 
 circulation on the footing, just described, of an equality 
 with 15 J kilogrammes of silver. The creditor is obliged 
 to take it in discharge of his claim on that basis. 
 
 From the very fact of the parallel circulation of gold 
 and silver, on the footing of one of the former to fifteen- 
 and-a-half of the latter, it is easy to withdraw the silver 
 coins from circulation, and export them, giving gold in 
 exchange. From the moment that numbers of persons 
 devote their time and capital to the carrying out of this 
 substitution, we must conclude that it is a profitable trade, 
 for, if the relation of 1 to 15| were not advantageous for 
 the holders of gold, they would take good care not to carry 
 on the operation upon the large scale on which they have 
 proceeded. 
 
 To say that the exchange of a kilogramme of gold for 
 15 J kilogrammes of silver is a profitable transaction, is in 
 other terms to prove that in the general market of Eu- 
 rope, or rather of the world, the relative value of gold and 
 silver has undergone a change. Their relation is no long- 
 er that of 1 to 15o. Gold is no longer worth fifteen-and- 
 a-half times its weight of the other metal. In the French 
 market, silver is at this time at a premium ; the bullion 
 merchants will pay to those who bring them a certain 
 quantity of coined silver, a certain sum beyond its legal 
 equivalent in gold money, and the amount of the premium 
 is the measure of the change which the relation of 1 to 
 15 has undergone. This premium is a notorious fact ; it 
 is quoted every clay ; every morning the newspapers an- 
 nounce it. During the last two years, it has varied ordi- 
 narily between 20 and 30 francs per 1,000. Sometimes 
 
 * The charge is & francs, 70 centimes (5s. 7d.) per kilogramme of coined 
 gold, making 3,100 /rcmcs (124.) 
 
64 THE PRESENT PRODUCTION OF GOLD. 
 
 it has been lower, but it has also risen to 40 francs. 20, 
 30, and 40 per 1,000, is 2, 3, and 4 per cent. ; such a 
 difference, insignificant after all, has been sufficient to 
 create the vast movement which has brought into France 
 so much gold, and expelled by the reflux so great a mass 
 of silver. It is a proof of the force with which the pre- 
 cious metals everywhere tend to find their level. The 
 fact of gold being appreciated in France 2 per cent., or 
 even less, is a sufficient reason why it should be precipi- 
 tated upon the market of that country ; on the contrary, 
 let silver be depreciated to the same extent, and it will 
 flow away with equal impetuosity. 
 
 Nor is there any ground for surprise at this kind of 
 fluidity which characterises the two metals : the simple 
 truth is they are commodities which in a small volume 
 possess a great value, and which it is therefore easy to 
 transport a great distance at very small expense. 
 
 CHAPTER III. 
 
 EXTEAOEDINAEY EXPORTATION OF SILVEE FEOM THE CIVILISED 
 COUNTEIES OF THE WESTEEN WOELD TOWAEDS INDIA AND CHINA. 
 TO WHAT EXTENT IT IS LIKELY TO CONTINUE. 
 
 IT is not 'only to the fall of gold that we must attribute 
 the divergence which has exhibited itself in the reciprocal 
 value of gold and silver as regards the proportion of 15 J 
 recognised, under qualifications to be hereafter explained, 
 in the law of the 7 Germinal, year 11. Undoubtedly, the 
 enormous production of gold is in great part the cause of 
 the phenomenon, but to a certain extent the origin may 
 be found elsewhere. Simultaneously with the cause which 
 has produced this divergence by lowering the value of gold, 
 there is another, the activity of which cannot be denied, 
 
THE PRESENT PRODUCTION OF GOLD. 65 
 
 which raises that of silver. The value of silver rises at 
 present, owing to the sudden demand for this metal for 
 exportation to the remote East. According to the state- 
 ments published by Mr. James Low, and derived from the 
 books of the Peninsular and Oriental Steam Navigation 
 Company, by whose agency nearly the whole of this 
 precious freight is transported, the vessels of this com- 
 pany carried from England to Asia the sum of 12,118,- 
 985, in silver, in 1856 ; and of 16,795,232 in 1857. In 
 1851 it was only 1,716,100. Besides, from the ports of 
 the Mediterranean, there have been sent to the Levant 
 and the remote East (India, China, and the adjacent re- 
 gions), in 1856, 1,989,616 ; and in 1857, 3,350,689. 
 This is for the year 1857 a total of 20,145,921, that is 
 to say, of more than double the yield of all the silver 
 mines that supply the markets of the Western World, I 
 mean of Europe and America. This efflux of silver is in- 
 dependent of an exportation of probably one-tenth of the 
 above amount in gold, which has been going on during the 
 last few years. It is true that we ought to deduct from 
 these exportations of silver to the East a certain quantity 
 of imports, because, in these articles, alongside of the gen- 
 eral stream there is always a certain counter-current. But 
 we have reason to believe that for the last few years it 
 has been but a limited sum ; at any rate the amount is 
 unknown to us. 
 
 To form a tolerably correct idea of the disturbance 
 which the former relation of gold and silver has undergone, 
 owing to the extraordinary demand for the second of these 
 metals, it may not be amiss to recall to mind what have 
 been in former times the exportations of silver from Eu- 
 rope and America to the Levant and the remote East. 
 
 From ancient times, the commerce of the civilised na- 
 tions of the West with Asia, which passed by Suez, the 
 Euphrates or the Black Sea, involved the transmission of 
 5 
 
66 THE PRESENT PRODUCTION OF GOLD. 
 
 a certain quantity of silver which the Europeans gave in 
 exchange for the spices and perfumes which they received. 
 According to Pliny, * the quantity of silver which took 
 this direction amounted to 100 millions of sesterces, which, 
 according to the tables prepared by Dureau de la Matte, 
 in his Political Economy of the Romans, f was equal to 
 two millions and a half of francs (100,000), or rather 
 less than 2,000,000 (80,000), as estimated "by Letronne. 
 In our day the trade between Europe and remote Asia is 
 greatly developed. The Europeans draw from India cot- 
 ton manufactures and indigo ; from China certain manu- 
 factures of silk, and also tea, the quantity of which has 
 since acquired great proportions. More recently, other 
 manufactures, such as those of Cashmere, and later still, 
 some further articles, including sheeps' wool, have been 
 derived from India ; on its side China has engaged in fur- 
 nishing Europe with an additional supply of raw silk. 
 
 At the commencement of the 19th century, Baron 
 Humboldt estimated that the mass of silver sent annually 
 from Europe and America into Asia, both by sea and the 
 land route which passes through Southern Siberia and the 
 North of China, including even that which remained in 
 the Levant, that is to say, the Mussulman ports of the 
 Mediterranean, amounted to 25 millions and a half of 
 dollars,^ or 612,000 kilogrammes of pure silver, or 137 
 
 * Natural History, Book XII., Chap. XVIII. 
 f At the end of the 1st volume. 
 \ As follows : 
 
 By the Cape of Good Hope 17 millions dollars. 
 
 By way of the Levant (a 
 portion remaining in^the 
 
 Levant itself) 4 " " 
 
 By Southern Siberia and 
 the North of China 4 " " 
 
 25| millions dollars. 
 (Humboldt. Essay on New Spain, Vol. III., p. 413. 2nd edition. 
 
THE PRESENT PRODUCTION OF GOLD. 67 
 
 million francs (5,480 ,,000), which was nearly three- 
 fourths of the silver then yielded by the whole of the 
 mines of America, But even for the epoch to which it re- 
 fers, this valuation should be regarded as altogether for- 
 tuitous ; and, as an average for any particular period, it 
 must be considered as greatly exaggerated.* More re- 
 cently, Mr. Jacob has endeavoured to ascertain what the 
 average drain of silver amounted to at the commencement 
 of the century, by examining the valuable records of the 
 East India Company, which then enjoyed the monopoly 
 of the trade of Great Britain with India and China, and 
 was moreover the medium through which the merchants 
 of the United States remitted the precious metals to 
 China, but not to India. This conscientious writer esti- 
 mates, that by the principal channel, that is to say by the 
 direct ocean navigation, Europe and America did not then 
 export annually of the precious metals to India and China 
 more than about 25 millions of francs (1,000,000), and 
 that even a very small part of this amount was in gold.f 
 In admitting, without deduction, that the trade of the 
 Levant, and that through Siberia, absorbed the sums in- 
 dicated by Baron Humboldt, we should arrive at 70 mil- 
 lions of francs (2,800,000), in lieu of 137 as the total 
 at the commencement of the century. 
 
 After the first years of this century, notwithstanding 
 the considerable extension which the peace soon gave to 
 the commerce between the civilised regions of the West 
 and Asia, the exportation of silver never increased to an 
 extent to raise its value, for the merchants of the West- 
 ern World had discovered other means of effecting their 
 
 * We are warranted in concluding, from the language of M. Humboldt 
 himself, in the second edition of the Essay on New Spain, published in 
 1827, that, with his proverbial truthfulness, he has since discovered that 
 the above estimate was excessive, even for the first years of this century. 
 
 f An Historical Inquiry into the Production and Consumption of tJie 
 Precious Metals, Vol. II., Chapter XXIV., p. 196. 
 
68 THE PRESENT PRODUCTION OF GOLD. 
 
 remittances. On this subject, all the authorities are unan- 
 imous. The official returns, published by Mr. Jacob, and 
 the other information furnished by him, have led him to 
 the conclusion that, from 1810 to 1830, the average ex- 
 portation of the precious metals by sea, to Asia, both from 
 Europe and America, did not exceed 50 millions of francs 
 (2,000,000), and it was less towards the end than' at the 
 commencement and middle of the period. It must, how- 
 ever, be remembered that of this amount a small portion 
 consisted of gold. As respects the two other routes indi- 
 cated by Baron Humboldt, that by land through Kussia, 
 and that by the Levant, including, in the latter, the sil- 
 ver which remained there, as well as the portion which 
 reached the remote regions of Asia, Mr. Jacob observes 
 that, at the period when he wrote, in 1831, it was no 
 longer necessary to include in the estimate the amount of 
 silver which flowed through those channels. The quantity 
 of silver which passed from Russia into Asia, by Kiachta 
 and Tobolsk, had fallen to nothing. The goods, chiefly 
 woollen cloths, that Eussia sold to the Chinese, were equal 
 to the teas and other products which China sold to Eus- 
 sia, and it even left a small amount due to the Eussian 
 merchants, which the Chinese paid in silver. If, in their 
 trade. through Tiflis, the Eussians were obliged to liqui- 
 date a certain balance with silver, it was an inconsiderable 
 amount, and in any case it was, at least, compensated by 
 the remittances which the Chinese made through Siberia. 
 
 As for the commerce of the Levant, or through the Le- 
 vant, Mr. Jacob states that, at the time when he- wrote, 
 the exchanges of merchandise which were made by that 
 route balanced one another. 
 
 Baron Humboldt himself, always ready to welcome the 
 development of new facts, acknowledged in the second 
 edition of his Political Essay on New Spain* published 
 
 * New Spain, edition of 1827, Vol. III., p. 473. 
 
THE PRESENT PRODUCTION OF GOLD, 69 
 
 four years only before the work of Mr. Jacob, that the ex- 
 portation of the precious metals to the destination of the 
 Levant, of Hindostan, of China, and the adjacent regions, 
 such as the Indian Archipelago, had considerably dimin- 
 ished, since the publication of the first edition of his work. 
 He added, even, " It is now a generally received opinion, 
 that Great Britain has created a reflux of gold and silver 
 from the peninsula of India into Europe." 
 
 Thus, towards 1830, the remittances in silver, which 
 the civilised Western World had to make to the Asiatics, 
 were far from being extensive ; they were certainly much 
 below 50 millions of francs (2,000,000). More recently, 
 the amount was still further diminished, not only because 
 the merchandise of Europe and America found a greater 
 vent in Asia, but, above all, because the importation of 
 opium into China operated powerfully to change the bal- 
 ance of trade. The commercial delegates who accompa- 
 nied the French embassy to China, in some publications, 
 prepared with great care,* establish the fact that after 
 1830 China came to be a much larger exporter than im- 
 porter of silver ; and they give as their estimate for 1842 
 that China would have that year imported a million of 
 dollars, or five millions and a half of francs (220,000), 
 and exported 11,160,000 dollars, or 60 millions of francs f 
 (2,400,000) ; they add that up to the time at which 
 they wrote, that is to say subsequently to 1845, the com- 
 merce in opium alone had caused an exportation of silver 
 from China, to the amount of about 20 millions of dollars, 
 or 108 millions of francs (4,320,000). Of late, the com- 
 merce with India and China has undergone great changes, 
 
 * See these documents in the Annales du Commerce Exterieur, a collec- 
 tion issuing from the department of commerce : they are to be found under 
 the head of China and Indo-China, Commercial Facts, Nos. 13 to 20, partic- 
 ularly No. 13. Consult especially page 19. 
 
 fPage 18 of No. 13, as ahove. 
 
70 THE PRESENT PRODUCTION OF GOLD. 
 
 or to speak more properly, a violent shock. The Chinese 
 government, by prohibiting the importation of opium, has 
 sought in vain to destroy the trade, or even to restrain it. 
 The civil war which is convulsing a large part of the Chi- 
 nese empire, by spreading disquiet and alarm, has caused 
 a demand for the precious metals, because of all wealth 
 they are the most easily concealed. In India, a formi- 
 dable insurrection has threatened the British dominion, from 
 which arose a disturbance in the exchanges between Eu- 
 rope and those vast possessions ; and, besides, to meet the 
 expenses, England has been obliged to despatch large quan- 
 tities of silver to the seat of war. All these causes have 
 operated in a manner to attract towards Asia a much lar- 
 ger proportion of silver than previously, and thus explain, 
 to a certain extent, the unexampled increase which has 
 during the last few years taken place in the exportation of 
 silver from Europe and America into Asia. 
 
 The commercial relations of Europe and Asia have 
 been, moreover, considerably modified by other circum- 
 stances. On the one hand, the bad harvests have com- 
 pelled the people of Europe to resort to the East for rice ; 
 whilst on the other, the crop of silk having failed in 
 France, Italy, and elsewhere, the silk manufacturers, so 
 numerous in France, Switzerland, England, and Germany, 
 have been obliged to resort for a much larger portion than 
 heretofore of their raw material to China, where it is cul- 
 tivated in great quantities ; and we all know that silk is a 
 very costly article. 
 
 It is under these influences that the exportation of 
 silver from tjie nations of the West into Asia has experi- 
 enced, since 1852 and 1853, the enormous augmentation 
 mentioned above. 
 
 It must be borne in mind that the magnitude of the 
 amount of silver absorbed annually by Asia, is of recent 
 date ; it is an unforeseen phenomenon which has abruptly 
 
THE PRESENT PRODUCTION OF GOLD. 71 
 
 presented itself, and one could not conscientiously take it 
 for a fact definitely and unchangeably established ; it 
 would be exposing oneself too much to the risk of decep- 
 tion, to assume that the present will be the rule of the 
 future. 
 
 If asked formally to express an opinion as to what is 
 likely to be the future in this respect, I should decidedly 
 withhold it even with reference to an early period ; it 
 seems to me that there are insurmountable difficulties in 
 the way of making a rational prediction on the subject, so 
 numerous, and, moreover, so fleeting and intangible, are 
 the elements which it would be necessary to take into ac- 
 count. 
 
 Doubtless India will soon return again entirely under 
 British rule ; but will order be so speedily re-established, 
 and will the exchanges with that country immediately re- 
 sume their accustomed course ? On this point it would 
 be premature to predict anything. And then will it not 
 be necessary to maintain there, at a great expense, a large 
 European army, which may, and indeed must, necessitate 
 heavy remittances of specie ? Is it not also possible that 
 India, restored to peace, and intersected with railroads, 
 which were in active progress before the insurrection, may 
 soon become a great storehouse, whence Europe may derive 
 her cotton, the supply of which has been, up to this time, 
 a monopoly in the hands of the United States ? That 
 would be a powerful cause for the continuance of the flow 
 of silver from Europe to the East Indies. On the con- 
 trary, is there not ground for presuming that the numer- 
 ous population of India may become so changed in their 
 social habits, under the vigorous administration of Eng- 
 lishmen, as to accustom themselves to the consumption of 
 the manufactures of Europe and the United States, which 
 would dispense with the necessity of their sending the 
 precious metals in payment for the raw materials which 
 
72 THE FRESENT PRODUCTION OF GOLD. 
 
 are furnished by India, and thus tend to restore the ex- 
 changes to nearly the state in which they were about the 
 year 1845 ? 
 
 As respects China, there is room for similar observa- 
 tions, but in a sense the opposite of each other. China 
 offers to Europe raw materials of great value, and, espe- 
 cially, as has been seen, silks in immense quantities, as 
 well as that article which has taken so important a place 
 in the alimentary habits of the two great Anglo-Saxon 
 communities. The exportation of tea from China to Eng- 
 land, and its numerous dependencies, and also to the Uni- 
 ted States, has only acquired its interesting proportions 
 within the period of a century ;* but in our day it is very 
 considerable, and is constantly increasing. In return, the 
 products of Western industry are trying to adapt them- 
 selves to the habits of the Chinese consumer : aided by a 
 recourse to the various productions of India, will they be 
 sufficient to balance the amount of the productions fur- 
 nished by China to the Western world ? When, one way 
 or another, the civil war which now ravages the Celestial 
 Empire shall have been brought to an end, and when the 
 campaign undertaken by England and France to compel 
 the Chinese government to renounce its system of isola- 
 tion shall have succeeded, is it not credible that the 350 
 
 * The quantity of tea sold by the East India Company did not exceed a 
 million of kilogrammes (2,200,000 Ibs.) until about 1750. From 1748 to 
 1759, the average annual sales of the Company were 2,558,081 Ibs. It is 
 true that the Dutch and other nations also imported some tea from China. 
 Of the above 2,558,081 Ibs., a certain portion was exported, which so far 
 reduced the amount retained for consumption at home. At present the 
 quantity consumed in the United Kingdom amounts to 63,295,643 Ibs. The 
 23rd volume of the large statistical work of Mr. John Mac.Gregor contains, 
 on the history of the trade in tea, a chapter full of interesting details, to 
 which the reader is referred (page 292). The Annals of Foreign Trade 
 (No. 983 of the 3rd series of the Miscellaneous Intelligence, Ci ,ina, and Indo- 
 China, Commercial Facts, No. 24,) estimates at 169,443,786 Ibs. the total 
 exportation of tea from China in 1855. 
 
THE PRESENT PEODUCTION OF GOLD. 73 
 
 or 400 millions of industrious men, attached to the enjoy- 
 ments of life, comprised in the Chinese provinces, will be 
 inclined to adapt to their usages a multitude of commodi- 
 ties with which the trade of Europe and America can 
 supply them ? In assuming it to be probable that such 
 will be the case, how long will it take to put this new 
 state of things, this vast system of exchanges between 
 China and the people of the Western World, on such a 
 footing that the productions bartered between the two 
 parties shall balance, or nearly so, one another ? On this 
 subject we can only hazard conjectures. It is clear, how- 
 ever, that the actual state of the exchanges which is bal- 
 anced by the annual remittance to Asia of from 400 to 
 500 millions of francs (from 16 to 20 millions sterling), 
 by the Europeans and Americans, can only be regarded as 
 accidental, and 'that it has not yet received that sanction 
 from experience, without which the facts ought not to be 
 made the grounds of conclusions by enlightened men, or 
 of the calculations of governments. 
 
 CHAPTER IV. 
 
 FEANCE BEEVES TEMPOEAEILY AS A PAEACHTJTE TO EETAED THE 
 FALL OF GOLD. 
 
 IT is at first sight surprising that a production of gold so 
 vast, so colossal as that which has been just described, in 
 comparison with all that has been seen previous to our 
 day, should not have produced a greater fall of gold rela- 
 tively to the other precious metal. The surprise redoubles 
 if we take into account the enormous increase that has 
 taken place in the demand for silver in the European 
 market, or, more properly speaking, in the whole Western 
 
74 THE PRESENT PRODUCTION OF GOLD. 
 
 World, for exportation to the East. But here a powerful 
 cause has intervened to retard temporarily the fall of gold. 
 France is a market which has hitherto offered to the gold 
 of the new mines an indefinite outlet, on the basis of one 
 kilogramme against 15^ silver ; for the foreigner who 
 owes a Frenchman a certain number of francs., that is to 
 say, a certain number of times 4| grammes .of silver, ac- 
 quits himself legally in paying him the same number of 
 times 29 centigrammes of gold, a quantity 15^ times 
 smaller. As to the bullion merchant who wants to ex- 
 change his gold for silver, he obtains it on nearly the 
 same terms, for, beyond the quantity indicated by the 
 relation of 1 to 15J, he has only to pay the premium, and 
 of necessity up to this moment it has been but slight, and 
 must continue so some time longer, for a reason easy to 
 perceive. So long as much silver remains in France, 
 persons residing there who may receive coins of this metal, 
 will think themselves fortunate to exchange them for gold 
 at a small premium beyond the relation established by the 
 law of the 7 Germinal year 11, because in the payments 
 which they have to make they could not compel their 
 creditors to take them for more than the proportion of 
 gold indicated by this law, viz., 1 against 15J. 
 
 Such is the actual effect of the provisions of the law 
 of the 7 Germinal, year 11. We will not at present in- 
 quire whether the intention of the legislator was, that 
 under the circumstances which now present themselves, 
 this comparative value of gold and silver should be main- 
 tained ; it is a subject to be hereafter discussed. But the 
 truth is, that so long as the provisions of the law of the 
 year 11, on this point, are allowed to remain, and so long 
 as France shall continue to offer great masses of silver, 
 the merchant will find it easier to barter his gold in that 
 country for the other metal, on terms which will deviate 
 little from those prescribed in the year 11. It follows, 
 
THE PRESENT PRODUCTION OF GOLD. 75 
 
 also, whilst this state of things lasts, that it will be im- 
 possible, at London, Brussels, Hamburg, or even at New 
 York, or any other great centre of commerce, for gold to 
 fall much below 15^ times its weight in silver. It is from 
 the same reason that if, at any moment, when the price 
 of corn tended strongly to decline, a Paris merchant 
 bought in the open market all the corn brought to him at 
 20 francs the hectolitre, it would be impossible that at 
 the market of Saint Denis the quotation should greatly 
 deviate from the same price. But the aspect of affairs 
 will be very different from the day when the movement 
 which at present attracts the silver of France, shall have 
 led to the exportation from our territory of nearly all our 
 five-franc pieces, and when, consequently, this money 
 shall have become so rare as to render it impracticable, or 
 even difficult to exchange a kilogramme of gold against 
 15^ kilogrammes of silver. From that moment the fall 
 in gold will be rapid. In a word, if, down to the present 
 time, the immense production, of which Australia and 
 California have been the theatre, has not produced a 
 greater fall in the value of gold, it is France which is the 
 cause. It is she that has retarded the depreciation of 
 gold. She plays, in relation to this metal, the part of a 
 parachute, and she plays it at her own expense ; she will 
 understand it well when the great fall occurs ; but then 
 it will be too late. 
 
 That the premium on silver should have reached even 
 4 per cent., under the circumstances in which the trade 
 in the precious metals is placed, seems to me to indicate 
 the force with which gold tends towards a depreciation ; 
 and they who argue from the slightness of the premium, 
 that there is little ground for anticipating any great fu- 
 ture change, seem to me to fall into a singular error. 
 
 We know that what is now to be seen taking place in 
 silver, occurred a few years previously in gold. Gold was 
 
76 THE PRESENT PRODUCTION OF GOLD. 
 
 at a premium in the French market ; at the same time 
 that the coinage of this metal had fallen to an insignifi- 
 cant sum, and the amount which had been in circulation 
 in France was escaping abroad. The returns of the Cus- 
 tom-House show that from the 1st January, 1816, to the 
 1st January, 1839, the exportation of gold exceeded the 
 importation by 541,000,000 francs (21,640,000), with- 
 out counting that which travellers carried with them. 
 During this period, the relative value of gold remained 
 nearly fixed at 15| times that of silver, instead of the 
 proportion of 15J, indicated by the law of the 7 Germinal, 
 year 11. Now 15| in relation to 15J, represents only a 
 deviation of 1J per cent.* Such a slight divergence from 
 the legal proportion, sufficed, however, to cause the disap- 
 pearance of gold from the circulation, and to lead to the 
 exportation of the larger portion of it. This proves how 
 small a difference suffices to effect the displacement of the 
 precious metals. 
 
 CHAPTER V. 
 
 WHETHER THE EXTRAORDINARY PRODUCTION OF GOLD OUGHT TO BE 
 CONSIDERED AS AN EPHEMERAL ACCIDENT. THE CRUSHING OF THE 
 QUARTZ VEINS.-MINES IN SIBERIA AND ELSEWHERE. 
 
 THE new gold mines, will they continue to be what they 
 are ? The abundance of metal, will it remain indefinitely 
 the same, and will there be always the same facilities for 
 working it ? To sum up in a word, will the production 
 remain as great, or, like a meteor, will it dazzle for an 
 
 * In this interval, the value of gold never rose above 15 8 %oo or 15 R1 /ioo, 
 excepting during a part of 1829, and the four following years, 1830-1-2-3. 
 It may be concluded, at least for the last four years, that the agitations in 
 France were the cause of this rise. In times of alarm, there is usually an 
 extraordinary demand for gold, owing to the facih'ty with which it can be 
 concealed. 
 
THE PRESENT PRODUCTION OF GOLD. 77 
 
 instant, suddenly to disappear ? On this subject, there 
 might be room for a long controversy, of which the result 
 must still be liable to some uncertainty, owing to the 
 want of sufficiently precise and authentic information. 
 However, we are warranted in saying that the continuance 
 of a large production presents itself in the perspective, 
 surrounded with a very great probability. 
 
 Eminent geologists, at the time when the first news of 
 the marvels of California arrived, remarked, with truth, 
 that the alluvial deposits in which gold is found, and on 
 which to the present day nearly all the successful workings 
 have been carried on, are liable to speedy exhaustion. 
 They, on that occasion, reminded us that many countries 
 have had, in the earlier period of their civilisation, mines 
 of gold and silver, and that after a short time all remains 
 of them disappeared, even to the extent of leaving no 
 traces of their existence in the traditions of the inhabi- 
 tants. Might not this be taken as a warning of the early 
 exhaustion of the mines of California and Australia ? 
 
 There are very striking calculations to be produced in 
 an opposite sense. Supposing that the soils the most ad- 
 vantageously workable of these regions yield in gold the 
 huridred-thousandth part of their weight,* it would be 
 necessary, for obtaining one kilogramme of metal, to 
 wash 50 cubic metres of gravel or sand. It follows that, 
 supposing an auriferous bed to be of the thickness of a 
 metre (about 39 inches), then a hectare (about 2|- acres) 
 
 * This is the quality or rather the yield (which is very different when 
 worked in an inferior manner) of the rich fields of production in Siberia. 
 In the Oural mountains they wash with success sands which contain only a 
 fourth or a fifth of the above proportion, that is to say, one kilogramme in 
 400,000 or 500,000. In the valley of the Rhine, the most favoured spots, 
 those which the gold-washers hunt for, and on which they concentrate all 
 their efforts, contain only 1 kilogramme in 7- millions. According to various 
 accounts, the yield of good soils in California and Australia is often as much 
 as 1 in 100,000. 
 

 78 THE PRESENT PRODUCTION OF GOLD. 
 
 will have been exhausted with the extraction of 200 kilo- 
 grammes, and that thus an annual extraction of 120,000 
 kilogrammes of fine gold, which, on the basis established 
 by the law of the year 11, would be equal to 400 millions 
 of francs in gold coins (16,000,000), would exhaust 600 
 hectares ; and 60 ; 000 hectares would be sufficient for an 
 extraction, at this rate, of a century. Now 60,000 hec- 
 tares are only half the area of one French department, 
 a very small space in comparison with the total superficies 
 of countries so vast as Australia and California. The 
 conditions in which the deposits of ore are found in Cali- 
 fornia and Australia are such that it is not a very sanguine 
 view to suppose that in each of these countries alluvial 
 ground will be found, equal to 60,000 hectares of deposits 
 of a metre in thickness, and of the richness of 1 to 100,- 
 000. There are several ways in which such a field of op- 
 erations may be arrived at, for it must be borne in mind 
 that frequently these auriferous banks are much more than 
 a metre in thickness ; nor must it be forgotten that their 
 richness may greatly exceed that of 1 to 100.000. In 
 fact this return is not the minimum below which the ex- 
 traction would necessarily cease to be profitable ; it is 
 very far from it. There have been worked, and are now 
 being worked, in all the auriferous regions, some banks, the 
 produce of which is not one-fifth or one-sixth as much as 
 the above. 
 
 It will be readily conceived, after the considerations I 
 have submitted to the reader, that we should soon exhaust 
 the deposits in those countries where the auriferous ground 
 was very limited in extent, and was only met with in the 
 bottoms of valleys. But that is not the case in California, 
 or Australia. The golden alluvions are there spread over 
 a far wider space ; they are found not only on the banks 
 of rivers, and in their beds, but are-scattered over the sur- 
 face of vast plains. 
 
THE PRESENT PRODUCTION OF GOLD. 79 
 
 It has been seen also that hitherto the miners of Aus- 
 tralia and California have confined themselves to the more 
 tempting deposits, that they have been skimming the 
 cream, and that henceforth they must expect their work 
 to be much less productive. There is, undoubtedly, some 
 truth in this observation. But then it must also be re- 
 membered that they have not yet explored the whole sur- 
 face, and that there is reason to believe that, in California 
 and Australia, there are many rich and extensive deposits 
 still to discover ; indeed, they are constantly in the course 
 of discovery. It may also be urged that, if the natural 
 facilities for extraction do not remain unimpaired, the pro- 
 cesses of working may be so improved as to compensate, in 
 some degree, for the diminished fertility of the mines ; 
 and this improvement is not something appertaining to 
 the remote future ; it is a fact which is realised every day. 
 The report of Dr. Trask shows a marked increase in the 
 productive force of the miner between 1852 and 1854. 
 On the contrary, in Australia, in the colony of Victoria, 
 the most important of all the mining districts, the com- 
 mission which presented the report already referred to de- 
 scribes the deposits as declining in richness continually 
 from 1852 to 1854 ; but, at the same time, it reckoned 
 on the improved processes of extraction for compensating 
 to some extent the impoverishment of the mines, even if 
 the falling off were to be permanent,, which is doubtful ; 
 subsequently to this report, that is to say in 1855 and 
 1856, the results of the workings appear to have improved 
 in Australia. 
 
 It is a fact, however, upon which there is now hardly 
 room to doubt, that the miners will no longer confine 
 themselves to the washing of the metal from the alluvions 
 where nature had deposited it, after having herself pul- 
 verised and ground the rocky mass in which it had been 
 imprisoned. In California and Australia, but especially 
 
80 THE PRESENT PRODUCTION OF GOLD. 
 
 the former of these countries, the industry of man, armed 
 with a powerful instrument, does not fear to attack the 
 veins of quartz which conceal, in scattered grains, the 
 precious metal. The alluvions themselves are worked with 
 more intelligence and a better organisation of labour than 
 heretofore. Companies, more or less powerful, have con- 
 structed or are constructing canals to bring the water re- 
 quired for washing the auriferous earth. A better division 
 of labour has been established among the mining popula- 
 tion, and, in fine, the utensils and the processes of wash- 
 ing are greatly improved. 
 
 If it were necessary to sum up with the expression of 
 an opinion on the future of Australia and California, I 
 should say, that, even if it were admitted to be quite im- 
 probable that the production of the precious metal which 
 has been maintained to our day should be permanent, or, 
 to repeat the same thing in other words, that the average 
 yield of a day's labour should be undiminished, it is diffi- 
 cult not to admit our belief that the mines of thdse two 
 countries must, for yet a long series of years, produce gold 
 in such quantities and on such conditions as to render a 
 marked decline in its value inevitable. This is exactly as 
 if we said that in all those countries where, as in England, 
 gold is unquestionably the monetary standard, as well as 
 in those where, as in France, it is left in possession of this 
 attribute, there is ground for predicting a progressive rise 
 in the price of articles of subsistence and raw materials. 
 The price of manufactures would rise in the same pro- 
 portion, if the improvements in machinery, much more 
 easily effected in manufacturing than in agricultural pro- 
 cesses, did not partially or completely counteract this ris- 
 ing tendency. 
 
 In the preceding statement I have hardly alluded to 
 the gold mines of Kussia, the production of which has hith- 
 erto remained considerably below that of the mines of 
 
THE PRESENT PKODUCTION OF GOLD. 81 
 
 Australia and California, although in one year they have 
 yielded 30,000 kilogrammes, or upwards of 100 millions 
 of francs (4,000,000). The two following facts, how- 
 ever, ought not to be lost sight of: 1st. The auriferous 
 deposits of the Northern and Eastern regions of the Kus- 
 sian Empire are literally of a gigantic extent ; from all 
 the information we at present possess they would appear 
 to be even the largest in the world. 2ndly. In richness 
 by which I mean the quantity of gold contained in a 
 cubic metre of the sand or gravel composing the beds of the 
 auriferous alluvions they are hardly surpassed by those of 
 Australia and California. 
 
 The mines of Siberia have had this advantage, that 
 eminent scientific men have made them the subject of 
 their most serious study, having, for that purpose, person- 
 ally visited those regions. At the request of the Emperor 
 Nicholas, Baron Humboldt himself made in 1829, in com- 
 pany with some very distinguished savans, a long journey 
 in the countries through which extend the chains of the 
 Oural and Altai mountains, and from that time he has 
 carefully collected and condensed all the information that 
 has transpired respecting this quarter of the world ; and 
 hence sprung his work upon Central Asia, published in 
 1843. Towards this latter period an English geologist of 
 deserved celebrity, Sir Koderick Murchison, explored a 
 portion of the gold mines of Russia, the results of which 
 he has published.'* 
 
 For a series of years the Eussian government has been 
 careful to make Europe directly acquainted with all that 
 passes in these auriferous regions. A special publication, 
 which has been for some years suspended, I'Annuair* des 
 
 * The reader is referred to an address delivered to the Geographical 
 Society of London, the 27th of May, 1844, by Sir Roderick Murchison, then 
 President of the Society. (Address to the Anniversary Meeting of the Royal 
 Geographical Society.^ 
 6 
 
82 THE PRESENT PRODUCTION OF GOLD. 
 
 Mines de Hussie, contained periodically on this subject 
 some reports and memoirs of very great interest. We thus 
 know that the region occupied by the chain of the Oural, 
 which is that to which for the first years the mining oper- 
 ations were confined, offered an immense field for the in- 
 dustry of man, for this chain is not less than 1,900 kilo- 
 metres (about 1.200 miles) in length ; but to the East of 
 the Oural, in Siberia, the gold regions expand to prodigious 
 dimensions. From the Kamschatka and the Ouskoi 
 mountains, the foot of which is washed by the Pacific 
 Ocean, as far as the meridian of Perm, to the West of the 
 Oural, over a distance which embraces the half of a circle 
 which would be described in making the circuit of the 
 globe on those latitudes, the auriferous deposits are dis- 
 tributed in numerous groups and over a large surface, and 
 the zone over which they are spread is of an average width 
 of 900 kilometres (about 550 miles). Baron Humboldt 
 has remarked that the presence of gold over this immense 
 surface is one of the phenomena the most general to be 
 found on the globe. Moreover, the richness of these au- 
 riferous alluvions is very decidedly superior to that of 
 those found in the Oural. 
 
 With the new and improved spirit displayed by the 
 Eussian administration since the accession of the present 
 Emperor, and with the more active impulse given to in- 
 dustry in this vast Empire, we may reasonably expect that 
 the production of gold in Northern Russia will henceforth 
 experience a large increase. The Emperor Nicholas, in 
 1849, (edict of the 14th-26th April), raised an obstacle 
 to the development of the mining operations of Siberia. 
 He subjected them to a progressive tax ; which for the 
 larger undertakings, those which returned upwards of 40 
 poods of metal (655 kilogrammes or 2,170,000 francs, 
 86,800), amounted to 30 or 35 per cent, on the gross 
 produce, independent of the special tax for police pur- 
 
THE PRESENT PRODUCTION OF GOLD. 83 
 
 poses : for the great undertakings, this was 9 to 10 rou- 
 bles (36 to 40 francs 30s. to 33s. 4d.) the pound of metal 
 of the Mint standard. Such heavy charges could not fail 
 to limit the extraction. Previously the State levied on 
 private enterprise a tax of 15 per cent., independently of 
 a rate for the police, and which was sufficiently heavy ; 
 these regulations are still in force in the mining districts 
 of the Oural. 
 
 This is not the place to inquire whether the govern- 
 ment of the Emperor Nicholas had good reasons for in- 
 creasing to this extent the amount of taxation imposed 
 upon the miners of Siberia. At the period when the duty 
 of from 30 to 35 per cent, was established, there might 
 have been good arguments to justify it. But with the 
 competition which the mining operations of California and 
 Australia offer to those of Siberia, these high duties cannot 
 be sustained. It is the interest of Kussia to bring her 
 gold to market before the fall assumes a more decided 
 character, for she will otherwise incur a loss by retarding 
 the production of the metal. 
 
 It is not out of place here to allude to some contin- 
 gencies which, in addition to the production of new gold, 
 may cause an increased quantity to flow towards the 
 Christian nations. There is one among others of which I 
 may say that it is not altogether without probability ; I 
 allude to the breaking down of the barrier of exclusive- 
 ness, which has hitherto completely shut out the nations 
 of the West from the Empire of Japan. The tendency 
 of events passing in the remote east, the direct steps that 
 have been taken by the American and Russian squadrons 
 with the Japanese government, and the treaties concluded 
 in consequence of these visits, not only with Russia and 
 the United States, but also with Holland, all presage for 
 an early period the establishment of important relations 
 between the Japanese Archipelago and the Christian 
 
84 
 
 THE PRESENT PRODUCTION OF GOLD. 
 
 world. Now, the information we already possess relative 
 to Japan, leaves no room to doubt that gold is there at a 
 comparatively low price ; persons go so far as to say that 
 the relation between gold and silver in Japan is hardly 
 above that of 1 to 3. Such is, for instance, the statement 
 in a letter, dated the 6th July, 1857, addressed by the Con- 
 sul of the United States, at Simoda, Mr. Townsend Har- 
 ris, to his colleague at Hong Kong. He there very expressly 
 states that the relation between gold and silver is only as 
 1 to S^. The sole object of the letter is to bring the fact 
 to the knowledge of the Americans who trade with China, 
 in order that they may profit by it, so that, from this mo- 
 ment, they possess the faculty of doing so. Can there be 
 a doubt, then, that there will soon be an exportation of a 
 large portion of the gold to be found in Japan ? It is 
 well, however, to add that the quantity of this gold is not 
 known, and that probably it is not very considerable. 
 
 It is not irrelevant here to add that a Mexican prov- 
 ince, which is supposed to conceal very rich mines of gold, 
 comparable to the deposits of California itself, that of 
 Sonora, appears destined to share the same fate as Cali- 
 fornia, of which it is the neighbour, by falling into the 
 hands of the United States. There are many indications 
 which warrant the belief that this event is not distant. 
 If it were to occur, and if, moreover, the mines of Sonora 
 were to justify the reputation they have acquired with 
 very enlightened travellers, whose testimony has been fa- 
 vourably quoted by Baron Humboldt himself,* we might 
 expect a considerable force added to the effects produced 
 by California and Australia ; for the inhabitants of the 
 
 * Essay on New Spain, Vol. II., p. 240. See also the work of M. Saint 
 Clair Duport, Production des Metaux Precieux au Mcxique, p. 202 ; and 
 that of M. Duflot de Mofras, Exploration du Territoire de V Oregon, des 
 Calif ornies, et de la mer vermeille pendant les annees 1840, 1841 r and 1842. 
 Volume I., p. 206 to 212. 
 
 I 
 
THE PRESENT PRODUCTION OF GOLD. 85 
 
 United States would not display less energy and enter- 
 prise there than they have already exhibited in the valleys 
 of the Sacramento and the San Joaquim. 
 
 Under circumstances similar to those which I have 
 rapidly enumerated, the only way to prevent a fall in the 
 value of gold, and a consequent rise in the price of com- 
 modities, would be the discovery of a new demand, equal 
 in extent to the increased supply thrown upon the mar- 
 kets of the Western World. Thus only, the relation of 
 supply and demand remaining the same, would people be 
 able to procure the precious metal on the same conditions 
 as at present, that is, they would be obliged to give in 
 exchange the same quantity of corn or labour. Is the 
 opening of such an outlet possible or probable ? Let us 
 investigate the subject. 
 
SECTION IT. 
 
 ON THE NEW OUTLET THAT MAY BE EXPECTED 
 FOR THE PRODUCTION OF THE NEW GOLD 
 MINES, AND WHETHER IT WILL BE IN PRO- 
 PORTION TO THE EXTENT OF THIS PRO- 
 DUCTION. 
 
 WHAT are the additional purposes to which gold may be 
 applied, and will they be sufficiently extensive to balance 
 the increased production ? And, first, as to the place it 
 will find in the monetary system of the various countries 
 where at present paper forms the principal instrument of 
 exchange, and which are desirous of giving to their circu- 
 lation the ballast of a greater quantity of metal, and 
 particularly of gold. The United States and Austria 
 are especially cited as being of this category. Turkey is 
 also spoken of as a country where money of every kind is 
 very rare. In the next place we are reminded of the 
 necessity which exists in those countries sufficiently sup- 
 plied with a metallic currency of calling in and restoring 
 the coinage ; that is, of replacing the portions of each 
 coin which have been lost in circulating from hand to 
 hand, and which, in the aggregate, amounts to a large 
 sum ; it is called the wear and tear. With reference 
 to all the countries where gold is used for money, we are 
 told also that the quantity of coins in circulation must be 
 augmented in proportion to the constantly increasing pop- 
 ulation, and to the progressive movement of commercial 
 
NEW OUTLET FOR GOLD. 87 
 
 affairs throughout the civilised world. Then it is said 
 that the growing luxury will call for the fabrication of a 
 great quantity of jewellery, of plate, and gold lace ; that 
 to this must be added an increase in gilding, of which so 
 much is in use, especially in Paris. Some other modes 
 are cited, by which we are told a certain proportion of 
 metal is to be absorbed ; as, for instance, by hoarding and 
 by shipwrecks. 
 
 Let us try to form an idea of the quantity of gold that 
 may be required for all these different destinations. Let 
 us inquire whether the outlets which they offer, naturally 
 and without effort, to this precious metal, be likely to be 
 such that a large floating mass of it will not remain upon 
 the market ; for if it be otherwise, if the various employ- 
 ments which have just been enumerated, should not be 
 sufficient to absorb nearly the whole quantity of gold to 
 be produced, and that, in spending it, almost on the same 
 conditions as at present, that is to say, in exchanging it 
 for nearly the same quantity of corn or labour, the conse- 
 quence will be inevitable : gold, to find a market, will be 
 obliged to submit to the law which governs all commodi- 
 ties in excess to lower its price ; in other words, the 
 phenomenon of a rise in the price of raw materials, articles 
 of subsistence, and merchandise, will infallibly present it- 
 self. 
 
 CHAPTER I. 
 
 OF THE OUTLET AFFORDED BY THOSE COUNTRIES WHICH AT PRESENT 
 HAVE EVIDENTLY AN INSUFFICIENT PROPORTION OF METAL IN 
 THEIR CURRENCIES. 
 
 IT is true that the United States, after having adopted 
 gold as their monetary standard, have more recently pro- 
 posed to employ a considerable quantity of that metal, 
 and which they have indeed coined ; but how much of it 
 
88 NEW OUTLET FOR GOLD. 
 
 have they retained, and how much do they really require? 
 Gold, which in France is found extremely portable, be- 
 cause there the people had been accustomed to a silver 
 currency, appears somewhat inconvenient to the inhabi- 
 tants of the United States, in consequence of their having 
 adopted the use of bank notes for the money required to 
 be carried about their persons ; in that country the bank 
 note supplies all the daily and current wants, it being 
 issued for very small sums. In those States, where they 
 are the most restricted, bank notes are in use for .as small 
 sums as five dollars (26 francs 20s. lOd.) In other States, 
 and particularly in New York, they have dollar notes (4s. 
 2d.), and the notes of one State, when they are in good 
 repute, circulate freely in others. It must also be re- 
 membered that, in the United States, private individuals 
 have generally an account current at a bank, through 
 which they make all kinds of payments, even down to the 
 expenses of their households, which renders it unnecessary 
 to retain at home any considerable sum, even in bank 
 notes. Under these circumstances we may fairly assume 
 that the currency of the United States would be sufficient- 
 ly supplied with specie, if the circulation contained a mil- 
 liard of francs (40,000,000), independently of the silver 
 coins which are to a certain extent in use. I should say 
 much less, but for the exigencies of the federal govern- 
 ment, which, for several years, has adopted the absolute 
 law of receiving nothing but specie in its treasuries, and 
 which thus compels foreign merchants, as well as the pur- 
 chasers of the public lands, to keep by them a considera- 
 ble amount of gold currency. 
 
 As respects this estimate of a milliard (40,000,000), 
 as the amount of gold which would suffice for the United 
 States, it must be borne in mind that for along time this sum 
 has been considered sufficient for England, whose popula- 
 tion is equal to that of the United States, but where they 
 
NEW OUTLET FOB GOLD. 89 
 
 "have no bank notes of a lower denomination, excepting in 
 Scotland/* than 124 francs (5). In our day, it is not 
 likely that the United Kingdom will require, under ordi- 
 nary circumstances, much more than a milliard and a 
 half of gold currency (60,000,000). Moreover, where, 
 as in England, in all payments below 125 francs (5), 
 specie is required, it is natural that gold should form a 
 large part of the currency. But there can be very little 
 occasion for gold, on the contrary, where, as in the United 
 States, every payment of 26 francs (20s. lOd.). and fre- 
 quently those of 5 francs (4s. 2d.) can be made in paper. 
 It is silver that is required in countries where bank notes 
 of so small a denomination are in use. Besides, at this 
 very time, the United States ought to have been in pos- 
 session of a milliard (40,000,000), or more, of gold cur- 
 rency, if such a sum had been felt to be necessary. Since 
 the discovery of California their mints have been in an al- 
 most unnatural state of activity, in comparison with past 
 times. In the fifty years, from 1*793 to the end of 1848, 
 the year in which the Californian mines were discovered, 
 their gold coinage amounted to only 81 millions of dollars 
 (16,200,000), or an annual average of 1,470,000 dollars 
 (294,000). In the seven years, from the 1st January, 
 1850, to the 1st January, 1857,f their mints have coined 
 369 millions of dollars, or upwards of I .milliard, 900 mil- 
 lions of francs (76,000,000). It is at the rate of 53 
 millions of dollars, or 274 millions of francs (10,960,000) 
 per annum, for the average of the seven years, and of 56 
 millions of dollars, or 290 millions of francs (11,600,000), 
 for the average of the last six years. Since the 1st Jan- 
 uary, 1857, this rate of production will have certainly con- 
 tinued. Thus, to the present time, the emission of gold 
 coins in the United States, since the discovery of the mines 
 
 * In population, Scotland is only the tenth of the United Kingdom. 
 + American Almanac for 1858, p. 215. 
 
90 NEW OUTLET FOR GOLD. 
 
 of California, must have readied nearly two milliards and 
 a half (100,000,000) ; and although that country may 
 have exported a large portion of its gold, it probably re- 
 tains at this moment all that it requires, and therefore it 
 is not to North America that we must look for an outlet 
 for the gold of the new mines. It may not, on this point, 
 be superfluous to add that, probably, that country may 
 have kept a part of the gold which it had coined prior to 
 1850, and which had attained, relatively, increased pro- 
 portions during the later years. In 1847, the gold coined 
 in the United States amounted to more than 20 millions 
 of dollars, or 104 millions of francs (4,160,000). 
 
 I come next to Austria. Let us suppose that she coins 
 gold to the amount of half a milliard (20,000,000) ; it 
 is more than there is reason to expect from her, and for 
 many reasons. In the first place, it is not possible to see 
 how the Austrian Empire could suddenly have need of such 
 an extensive gold coinage. The country has hitherto had 
 a silver rather than a gold currency. The pieces of silver, 
 20 kreutzers, or 87 centimes (9d.) ? were the money most 
 generally met with there, before the Empire fell under the 
 regime of paper money, which, as is known, dates from 
 1848, and the greater part of those pieces, though with- 
 drawn from circulation, are doubtless in the country. The 
 metallic currency of this Empire presented these two 
 characteristics ; it was scarce ; and it consisted princi- 
 pally of silver coins of a small denomination, because the 
 Austrian public has been accustomed to the notes of the 
 Bank of Vienna, which were issued for very small sums, 
 even before they had a forced circulation. Notes of 10 
 florins or 26 francs (20s. 10d.), and of 5 florins or 13 
 francs (10s. 5d.) were in abundance. To this day, we 
 have no reason to believe that the Austrian government, 
 in its efforts to return to specie payments, which, unhap- 
 pily, it has not yet accomplished (Spring, 1858), contem- 
 
NEW OUTLET FOR GOLD. 91 
 
 plates any change of system by which notes of a small 
 denomination will be abolished. Now, when a people 
 have bank notes of 13 francs (10s. 5d.), what occasion 
 can they have for gold coins ? Besides, there is another 
 decisive fact : in consequence of the new monetary sys- 
 tem, recently adopted by Germany, Austria, in common 
 with the rest of the Germanic Confederation, has placed 
 herself in circumstances which will henceforth make gold 
 play a secondary part in her circulation, even if, contrary 
 to all probability, she were to renounce her bank notes of 
 26 francs (20s. 10d.), and 13 francs (10s. 5d.) In this 
 system of currency, it is silver and not gold which serves 
 for the pivot, and is the standard. The monetary unit is 
 in silver ; and although it is true that, consistent with 
 this fact, it might be possible, by means of certain 
 contrivances, to secure for gold a considerable circulation, 
 we do not see that any such contrivances have been adopted 
 by the Germanic Confederation in general, or by Austria 
 in particular, or that they have great chance of being 
 adopted ; the tendencies seem rather in an opposite di- 
 rection. 
 
 I am, therefore, going beyond the bounds of proba- 
 bility in admitting that the monetary system of Austria 
 will, in the course of a few years, offer to the new pro- 
 duction of gold an outlet of half a milliard of francs, or 
 145,000 kilogrammes of gold (20,000,000) ; but I de- 
 sire to make the most liberal concessions to those who 
 insist that it will be easy to find a market for the gold of 
 the new mines. 
 
 As to Turkey, I find it impossible, however well dis- 
 posed, to make her play a serious part in my calculations. 
 Turkey has neither commerce nor credit ; the gold bullion 
 which she can attract or keep is insignificant in compari- 
 son with the quantity of this metal produced, and we can- 
 
92 NEW OUTLET FOR GOLD. 
 
 not assign the slightest weight to her in the present argu- 
 ment. 
 
 And, since we are taking into account those States 
 which may absorb large quantities of gold, why not also 
 include in our calculation those which may be induced to 
 demonetise this metal ? This may not be a chimerical 
 precaution, for the Dutch, who possess in the highest 
 degree a practical sense, have almost taken this great 
 step ; in Belgium, a country where business is understood, 
 the same policy has been adopted.* The East India 
 Company has pursued the same course throughout its vast 
 dominions. Spain has so far made a beginning, that she 
 has withdrawn the attribute of money from foreign gold 
 coins ; it is certainly possible that she may go further. 
 
 We must not lose sight of the fact that one of the 
 reasons why the precious metals have, simultaneously, or 
 separately, been invested with the functions of money, 
 consists in the fact that they are generally more fixed in 
 value than o.ther commodities. The relative fixedness of 
 value is one of the essential conditions for qualifying an 
 object to serve as money, for if this fixedness did not ex- 
 ist, how could the money of which it was made serve as 
 the measure of values ? From the moment that either of 
 the two precious metals loses this attribute, or that it 
 remains in suspense for a certain length of time, it is nei- 
 ther more nor less than the loss of the condition which 
 qualifies it for the purposes of money. This is so well 
 understood by persons versed in these matters, that, in 
 England, where the fall in the value of gold is imminent, 
 and even already in course of realisation, able men have 
 advised the abandonment of the gold standard, and the 
 adoption of a standard of silver. According to these 
 
 * In Holland and Belgium, a gold currency continues to circulate, but 
 purely and simply as merchandise, the daily value of which is regulated by 
 commerce, and, consequently, it is very little used. 
 
NEW OUTLET FOE GOLD. 93 
 
 writers, gold ought henceforth to be demonetised in Eng- 
 land. I shall have, by and bye, to cite a remarkable 
 publication, where this opinion is sustained with much 
 force. With much more reason, for a country like Spain, 
 where the two metals, gold and silver, circulate simulta- 
 neously, without either being qualified positively as a 
 standard in relation to the other, may such a measure be 
 anticipated, or at least ranked among the number of pos- 
 sibilities ? 
 
 I think I may pass over in silence the outlets afforded 
 by Asia and Africa. Everybody knows that in the Bar- 
 bary Regencies, in the Levant, in China, and in the East 
 generally, silver is the metal preferred. Silver, and not 
 gold, is almost exclusively the metal exported from Europe 
 to those countries. It is not that in some of the regions 
 of distant Asia, in India, for example, gold is not appre- 
 ciated and sought after ; but the local mines, and those of 
 the islands of Sunda, particularly of the island of Borneo, 
 which are important, are sufficient to supply their wants. 
 
 In fine, according to the preceding statement, if we 
 seek to estimate the quantity of gold which may be in re- 
 quest for the next ten years to complete, or re-establish 
 on a sound basis, the currency of States which notoriously 
 require a metallic currency, or which, subjected to the re- 
 gime of paper money, are prepared to make great sacrifi- 
 ces to escape from it, we arrive at no very considerable 
 result. Austria, alone, seems likely to receive a certain 
 portion of the precious metal ; and it is on a very gener- 
 ous hypothesis that I have carried to 145,000 kilogrammes 
 of gold (20,000,000), the amount which may be absorb- 
 ed, by the process indicated in the previous chapter, in 
 that Empire. However, to remove all pretext for opposi- 
 tion, I will put at more than double, at 300,000 kilo- 
 grammes (41,380,000), the total mass of gold which may 
 during the next decennial period find a market in the Em- 
 
NEW OUTLET FOR GOLD. 
 
 pire of Austria, and in the other States where a similar 
 want prevails. 
 
 Here, then, is the first outlet of an extraordinary kind, 
 which offers itself to the gold of California and Australia, 
 as well as to that which we have reason to expect will be 
 extracted from the mines of Northern Kussia. 
 
 CHAPTER II. 
 
 OF THE INCREASE OF GOLD MONEY WHICH MAY AEISE FEOM THE DE- 
 VELOPMENT OF BUSINESS, AND THE INCREASE OF POPULATION. OF 
 WEAK AND TEAR. OF HOARDING. OF SHIPWRECKS. 
 
 I COME to the second of the outlets which have been 
 indicated, and which I have denominated above ; it re- 
 lates to countries where the coinage is in a different state 
 from that considered in the preceding chapter. According 
 to those who maintain that there will be no excess of sup- 
 ply beyond the demand for this metal, and that conse- 
 quently a fall in its value is not probable, it is not only in 
 those countries where at present there is little or no specie 
 in circulation, and where there is a desire to escape from 
 the regime of paper money, that a large outlet will be af- 
 forded to the new gold for monetary purposes. All civil- 
 ised countries, those at least where gold is a legal tender, 
 are to acquire a new supply, to be coined into money, for 
 two reasons at least : in the first place, the progress of 
 commerce, and the constantly increasing number of trans- 
 actions ; and next the growth of population. Besides which, 
 the coinage must be maintained, that is, the loss from 
 wear and tear must be replaced. 
 
 On the first point, the multiplication of money which 
 must take place in consequence of the extension of com- 
 merce, it may be well, in order to form a rational opinion 
 
NEW OUTLET FOR GOLD. 95 
 
 on the subject, to take into account the contrivances by 
 which great civilised communities modify the machinery 
 of their exchanges, in proportion as commerce extends its 
 operations and enlarges its sphere. Now, it may be shown 
 that the progress of commercial institutions, such as 
 credit establishments, for instance, with the intelligent 
 employment of the substitutes which they put forth, the 
 written contracts and instruments which they enable the 
 public to keep in active use, allow of a very great increase 
 of commercial transactions with only a small augmenta- 
 tion of the metallic basis to pay the. balance of exchanges. 
 The employment of bank notes, the transfer of sums from 
 party to party in accounts current, letters of credit or 
 drafts to order, of cheques such as are in use in England, 
 the creation of establishments similar to the Clearing 
 House of London, the judicious adoption of every possi- 
 ble contrivance for facilitating the transactions between 
 house and house, city and city, state and state all this 
 tends to put limits to the extension of those metallic wheels 
 which give motion to the machine by which commercial 
 exchanges adjust themselves. This machine has under- 
 gone and is undergoing continually great improvements, 
 almost as great as those of the steam engine. 
 
 Fifty years ago a steam engine of forty horse-power 
 would have cost 100,000 francs (4,000) ; in our day, in 
 France, Farcot, Cave, Gail, and a dozen others, will pro- 
 duce one at 25,000 (1,000). It is the same in other 
 countries. This arises from the great improvements made 
 in the steam engine during the half century ; it is lighter 
 than heretofore, contains less cast or wrought iron, and 
 yet it is as strong and safe as before, if not more so. It 
 is the same with the instrument of exchanges. Formerly 
 it called into requisition a large quantity of metal, gold 
 or silver. Now, for the same extent of business a much 
 smaller quantity suffices. How is this? Because by a 
 
96 NEW OUTLET FOR GOLD. 
 
 number of ingenious contrivances, like those in existence 
 in England, and which France and other countries are not 
 slow in imitating, the greater part of the operations of 
 commerce are conducted without the intervention of a sin- 
 gle crown-piece, or, at least, without calling into requisi- 
 tion any metallic money excepting as a matter of account. 
 Letters of credit, bills, cheques, and other instruments of 
 the same kind, are multiplied in proportion to the exten- 
 sion of commerce, but the specie required for these trans- 
 actions experiences hardly any increase. 
 
 It is well to give prominence to the fact of the nearly 
 stationary character of the metallic currency in countries 
 where the commercial machinery is well organised. Bank 
 notes are, it is known, another species of coin, not metallic 
 it is true, but serving for a direct substitute to metallic 
 money, which alone, however, constitutes money properly 
 so called. It may be considered that they should expand 
 or contract in the circulation, nearly the same as specie, 
 if it were alone in use, according to the necessities of 
 commerce, inasmuch as the mass of these notes minister 
 to the operations* of commerce. This is particularly the 
 case where, as with the notes of the Bank of England, 
 they are invested with the attribute of a legal tender. 
 We know that in England, by virtue of this privilege, the 
 debtor can pay his creditor in these notes, without the 
 latter having the power of refusal, with this reserve, how- 
 ever, that at the same time the Bank of England shall 
 redeem them on demand in specie. Under these condi- 
 tions nearly all the reasons, drawn from the necessities of 
 commerce, which call for an augmentation of the mass of 
 gold coins in circulation, are also applicable to the bank 
 
 * Independently of the operations of commerce, properly so called, the 
 bank note is of use in many payments which may be called civil, as, for 
 instance, the dividends of the public debt, and the salaries of public func- 
 tionaries. 
 
NEW OUTLET FOE GOLD. 97 
 
 note, and we are justified in arguing from the sovereign to 
 the bank note, and reciprocally. Now, we know, in the 
 most exact manner, the variations which in England the 
 quantity of paper money necessary for her transactions 
 undergoes ; the official returns show periodically the 
 amount of bank notes in circulation. A glance at these 
 returns is sufficient to show that the sum total is almost 
 stationary, in spite of the astonishing rapidity with which 
 her commerce has increased. In ten years, from 1846 to 
 1856, for Great Britain alone, which is the great seat of 
 the commerce of the United Kingdom, the circulation of 
 bank notes has only increased 75,904 upon 30,925,- 
 123 ;* or an annual average of the insignificant sum of 
 7,590 only, or in the proportion of 1 to 4,000 ; a pro- 
 gression, so to speak, imperceptible alongside of that of 
 its population, and especially of that of its commerce, as 
 it is disclosed to us among other signs by the tables of 
 importations and exportations. 
 
 If we confine ourselves to England and Wales, which 
 comprise the most populous, the most industrial, and the 
 richest portion of the United Kingdom, it will be found 
 that from 1846 to 1856 the average circulation instead of 
 
 * In 1846, the average circulation of bank notes in Great Britain 
 30,925,123; namely: 
 
 Notes of the Bank of England 20,786,500 
 
 Ditto other Banks of England and Wales 7,645,855 
 
 Ditto of Scotland 7. 2,492,768 
 
 Total 30,925,123 
 
 In 1856, this circulation was 31,001,027, namely: 
 
 Notes of the Bank of England 20,083,000 
 
 Ditto other Banks of England and Wales 6,756,872 
 
 Ditto of Scotland 4,161,155 
 
 Total 31,001,027 
 
98 NEW OUTLET FOB GOLD. 
 
 increasing had diminished, and that even for the very con- 
 siderable sum of 1,592,500. 
 
 Here is another fact illustrating to what an extent the 
 improvement in commercial institutions permits an in- 
 crease in transactions, without requiring an addition to 
 the metallic currency, or even to the credit currency, that 
 is to say, to bank notes. The Clearing House of London 
 is, as its name indicates, an establishment to which every 
 day the accounts of individuals, traders, and others come 
 for liquidation, through the intermediation of their bank- 
 ers. In 1839, this establishment had already attained 
 such efficiency that for the annual liquidation of 950 mil- 
 lions sterling, or three millions daily, it only required, on 
 an average each day, 200,000 in sovereigns, or rather in 
 bank notes. At present, with a mass of transactions 
 amounting to 1,500 millions, or 2,000 millions sterling 
 annually, instead of a proportionate addition to the 
 200,000 required for the daily balance being necessary, 
 not a shilling is wanted : the Clearing House now dis- 
 penses completely with the use of bank notes. All is 
 settled by the transfer of sums from one account to 
 another in the books of the Bank of England. 
 
 This is the place to point out the increase that has 
 taken place in the employment of bills of exchange, and 
 to compare it with the stationary state of the amount of 
 bank notes in circulation. An estimate, somewhat con- 
 jectural, but still plausible, made by an English banker,* 
 Mr. Leathani, taking for his point of departure the pro- 
 duce of the stamps on commercial bills, makes the mass 
 of bills of exchange drawn in the United Kingdom in 
 1839 amount to 528 millions sterling. The augmentation 
 was continual ; from 1832 it was at the rate of 24 mil- 
 
 * The calculations of Mr. Leatham have received the explicit approval 
 of Mr. Tooke, in his publication, An Inquiry into the Currency Principle, 
 p. 26. 
 
NEW OUTLET FOR GOLD. 99 
 
 lions per annum. A more interesting fact probably is the 
 amount of bills of exchange at one time in circulation, 
 which it would seem, from the same calculations, amount- 
 ed at a given date in 1839 to 132 millions sterling ; 
 according to this the average annual increase,* since 1832, 
 must have been more than 18 millions sterling. 
 
 The statistical accounts of Mr. William Newmarch, the 
 able fellow-labourer of Mr. Thomas Tooke upon the two 
 last volumes of the History of Prices, which appeared in 
 1857, give the total number of bills of exchange in circula- 
 tion at a given moment, in the United Kingdom, in 1856, at 
 about 180 millions sterling; or probably, as he adds, near- 
 ly 200 millions :* 200 millions of bills of exchange against 
 less than 40 millions of bank notes, what more need be 
 said to prove that in a country where the commercial in- 
 stitutions are in an advanced state, the currency of every 
 kind, whether metallic or paper, fills in respect of quantity 
 but a secondary part ?f 
 
 It is not denied that everywhere, in proportion as 
 population increases, more money is required for transac- 
 tions, other than those of commerce strictly so called, as 
 for example those which take place in civil life, for retail 
 purchases, for wages, and a thousand minor payments. 
 This influence of the number of the population upon the 
 amount of the metallic currency, and particularly of gold, 
 may be sensibly felt, especially in countries where, as in 
 England, there are no bank notes for less than 5, or even 
 of 100 francs (4), as was the case in Erance until the 
 law which was voted at the end of the session of 1857 ; 
 but population augments everywhere slowly compared with 
 
 * History of Prices, Vol. VI., p. 587. 
 
 f I refer to the Principles of Political Economy of Mr. J. S. Mill for an 
 explanation concerning the diverse scope of the part which the different 
 mechanisms of credit play with the same nominal power ; Book III., Chap. 
 IV. : and to the Inquiry into the Currency Principle, by the same author. 
 
100 NEW OUTLET FOR GOLD. 
 
 the increase that has taken place in the production of 
 gold. In Europe it varies in the different States from } 
 per cent, per annum to 1-|- per cent.* In the United 
 States, hy a sole exception, it is 3 per cent, if not more. 
 Let us admit the average increase to be 1J per cent., 
 which, for the whole, is an exaggeration. Now, what is 
 the mass of gold currency to take for our starting point ? 
 It would be very difficult to estimate at more than 6 mil- 
 liards (240,000,000) the sum required for the circula- 
 tion, independently of silver money, of all the nations of 
 Christendom.f Now, 1 \ per cent. on this sum amounts to 75 
 million francs, or 22,000 kilogrammes of gold (3,000,000). 
 But here it will be said that we ought not to look 
 merely at the growth of population, that the increase of 
 
 * In France, the increase of the population, as measured by the excess 
 of births over the deaths, has only been on an average, during the triennial 
 period from 1st January, 1851, to 31st December, 1853, at the rate of 
 152,738. To have been \ per cent., it ought to have exceeded 175,000. 
 The three following years must be considered exceptional, for under various 
 adverse influences they exhibit a decreasing population. 
 
 f The amount of money, whether gold or silver, which circulated in 
 Europe thirty years ago, was estimated at less than 9 milliards (360,000,- 
 000.) Baron Humboldt quoted as probable, in 1827, the sum of 8,600 mil- 
 lions (344,000,000). Essay on New Spain, Vol. III., p. 469.) The 
 amount must have since increased ; but the employment of contrivances for 
 dispensing with the use of money, through the instrumentality of institu- 
 tions of credit, or for balancing commercial transactions, has increased in a 
 still greater ratio, and must have largely dispensed with an increase in the 
 amount of metallic money in proportion to the growth of commerce. If it 
 is borne in mind that America has yielded almost constantly, until 1848, 
 much more silver than gold, nearly in the proportion of 3 francs of the 
 former against 1 franc of the latter, the assertion will appear probable that, 
 taking into account the silver money possessed by Europe, and the Chris- 
 tian world generally, and the present improved mechanism for facilitating 
 exchanges, the whole of Christendom would not have had occasion for a 
 circulation of more than 6 milliards (240,000,000) of gold currency, so long 
 as gold should not have suffered any depreciation in value ; it is making a. 
 great concession to admit so large a sum. I put the word circulation in 
 italics, because I wish it to be understood that I do not mean to include 
 that which has been concealed or hoarded from any cause whatever. 
 
NEW OUTLET FOR GOLD. 101 
 
 general wealth, as well as the diffusion of comfort among 
 the working-class, must also be taken into account. 
 Again, it will be shown that the retail transactions, which 
 can only be carried on with a metallic currency, are much 
 more extended when people are in prosperous circumstances 
 than when they are suffering from privations. It is true; 
 but is it a gold currency that is wanted for this purpose ? 
 It is rather, as it appears to me, silver or copper money 
 that is required for the daily purchases of the greater num- 
 ber of households. Gold is never coined into pieces of less 
 than 5 francs (4s. 2d.), and even the success of these coins 
 of five francs , which have lately issued from the French 
 Mint, remains very doubtful, notwithstanding the pains 
 that have been taken, by giving them the largest surface 
 possible, to prevent their slipping between the fingers : 
 and still the piece of five francs is a large sum for trans- 
 actions of this kind. 
 
 It may here be remarked that the introduction of the 
 bank note of fifty francs (2) into the circulation of 
 France, which has just been authorised by law, will be 
 calculated considerably to diminish the proportion of gold 
 employed in the currency. This restrictive effort will, in 
 France at least, be a counterpoise to the expansive force 
 which may be imparted to the circulation of gold. It may 
 be said, it is true, that the Bank of France, which has not 
 shown an excess of zeal in giving to the note of 100 francs 
 (4) all the circulation to which this representative sign 
 might pretend, is far more likely to delay indefinitely the 
 issuing of the note of 50 francs (2). Nevertheless, the 
 Bank's aversion to 'novelties has its limits, and its ears are 
 not shut to the voice of reason. In the same way as lat- 
 terly it has consented to distribute the 100 franc note 
 with a less niggardly hand, it will yield to the demand of 
 the public, if a somewhat strong opinion be pronounced in 
 favour of the note of 50 francs. 
 
102 NEW OUTLET FOR GOLD. 
 
 By the entire of these considerations, I shonld perhaps 
 be warranted if I made no addition, on account of the ex- 
 tension of business, to the 22,000 kilogrammes of gold 
 (3,000,000), which have been indicated above as suffi- 
 cient to supply the wants of an increased population, an 
 addition which has been amply sufficient. However, to 
 place my calculations beyond all possible objection, I will 
 double the sum of 22,000 kilogrammes, which will raise 
 to 44,000 (6,000,000), the extension which will annual- 
 ly be occasioned in the gold currency, as well by the aug- 
 mentation of business, as by the growth of population. I 
 cannot, however, withhold the remark that I think I have 
 been extremely liberal : 44,000 kilogrammes is more than 
 double the mass of gold which Europe received from 1800 
 to 1825, for every kind of use. 
 
 Let us now inquire into the consumption of gold by 
 the abrasion of money in passing from hand to hand. It 
 amounts in a great State to a very appreciable quantity 
 of metal every year. On this subject some facts of a 
 varied character have been furnished by observation and 
 experiment, the most remarkable being those which have 
 been made at different times in England, but especially in 
 1798, by a celebrated chemist, Hatchett, and a distinguish- 
 ed physician, Cavendish ; and, more recently, in France, 
 by Messrs. Dumas and De Colmont, in the name of the 
 Commission on Coins, of which Th6nard was president ; 
 and quite lately in Holland, on the occasion of the change 
 made in the currency of that country. It has thus been 
 proved that, taking coins of equal dimensions, those pie'ces 
 which contain a slight alloy of copper, and especially of 
 silver, suffer much less from usage than those made en- 
 tirely of silver. It has also been found that, in proportion 
 as we descend to coins of a smaller denomination, the wear 
 increases, even rapidly, perhaps because they pass more 
 frequently than others from hand to hand, or because they 
 
NEW OUTLET FOR GOLD. 103 
 
 present a larger surface in proportion to their weight. 
 There is reason to believe that, in adopting the proportion 
 of 2 to 1000, or of 1 to 500, we shall greatly exaggerate 
 the annual loss by the wear of a gold currency. At this 
 rate, upon the six milliards of francs (240,000,000), 
 which would more than suffice to saturate with gold the 
 whole circulation of Europe, and the other States of Chris- 
 tendom, there would be a yearly loss of 12 millions of 
 francs, or, in round numbers, of 3,500 kilogrammes* of 
 metal (480,000). 
 
 * The facts which we possess, as to the wear of a metallic coinage, are 
 much less precise respecting gold than silver, and even as regards the latter 
 they do not always agree very well. With respect to silver, it has been 
 proved that the French five-franc piece, the weight of which is 25 grammes, 
 loses only four milligrammes per annum; that is 16 parts in 100,000, or 1 in 
 6,250. In England, according to the experiments of Cavendish and Hatch- 
 ett, quoted by Mr. Jacob, the loss was, upon the five-shilling piece, 18 in 
 the 100,000, or 1 in 5,555 ; and on the shilling, which had a much more, 
 rapid circulation, 1 in 219. Returns on a much larger scale have been fur- 
 nished from Holland, obtained a few years ago during the general recoinage 
 of her silver money, and they have been justified in a work which was, by 
 the order of the government, published on the occasion of that vast opera- 
 tion, by M. Vrolic, the president of the Commission on the Coinage of the 
 Low Countries, and subsequently minister of finance. It appears that the 
 wear of silver coins, of a small denomination, is much less in Holland than 
 has been estimated by Mr. Jacob for England. Mr. Jacob concludes, from 
 the experiments made at the Mint of London, in 1826, that gold coins lose 
 annually 1 part in 800. The experiments of 1807, according to the quota- 
 tion given by the same author, would indicate a loss of 1 in 1,050 on guin- 
 eas, and of 1 in 160 on half-guineas. If, then, we bear in mind that the 
 guineas, or more properly speaking the sovereigns, form the principal part 
 of the gold coin's in circulation in England, the average annual wear will be 
 about 1 in 950. In France, where the prevailing gold coin seems destined 
 always to be the 20-franc piece (16s. 8d.), which does not differ considerably 
 in volume or circumference from the English sovereign, but where the silver 
 contained in the ingots, which would add to the hardness of the money, is 
 more carefully extracted before it is coined than in England, the proportion 
 of loss is a little greater ; but there is good ground for concluding that it is 
 less than 2 in 1,000, or 200 in 100,000. When we compare 20-franc pieces 
 of a rather old date, but which have not been " sweated," with five-franc 
 pieces of the same date, they appear less worn. Now, the latter, as has 
 been shown, lose only 1 in 6,250. 
 
104 NEW OUTLET FOE GOLD. 
 
 Taking into account the whole of the employments to 
 the examination of which this chapter has been devoted, 
 and calculating them with a liberality which must be ad- 
 mitted to be excessive , we arrive at an annual consump- 
 tion of 47,500 kilogrammes, (6,650,000) of gold ; for ten 
 years this would be 475,000 kilogrammes (66,500,000.) 
 
 There is yet another possible means for the consump- 
 tion of gold to be noticed ; I allude to the practice of 
 hoarding. To hoard, that is, to hide money in secret 
 places, is a habit belonging to an uncivilised state of soci- 
 ety, where riches take refuge under ground to escape spo- 
 liation, or in which loans on interest are hardly known, 
 either from their being condemned by prejudice, or from 
 the fear that money once parted with, would be given up 
 to rash adventures. It is a habit which for a long time 
 not merely withdrew large sums from circulation, but 
 actually occasioned their loss ; because, in the midst of 
 revolutions,, invasions, and other public calamities, their 
 place of concealment was forgotten ; the secret was lost 
 by the death or exile of its possessor. But in the Europe 
 of our day, the quantity of the precious metals which 
 issue from their hiding-places is, in all likelihood, greater 
 than that which seeks refuge there. The practice, there- 
 fore, of hoarding can scarcely be any longer cited as occa- 
 sioning a void in the circulation, which the mines will 
 have to fill up. However, to avoid absolutely the charge 
 of not having taken sufficient account of all the possible 
 outlets for the metal extracted from the new gold mines, I 
 will suppose that 50 millions (2,000,000) are abstracted 
 from the circulation by this process ; but then it will not 
 be taken amiss if I include in this the quantity of gold 
 which may be lost by a variety of accidents, and particu- 
 larly through shipwrecks. 
 
 There is also a particular outlet, of a transient charac- 
 ter, for gold money in certain States, such as France ; I 
 mean that portion of the circulation which is carried on 
 
NEW OUTLET FOR GOLD. 105 
 
 the person. Until recently, when silver money circulated 
 almost exclusively in France, people used but very small 
 sums for pocket money ; it was really burdensome to find 
 25 or 30 francs in one's pocket. But since gold has taken 
 the place of silver, a person who unwillingly found on 
 himself four or five 5-franc pieces, carries in his purse at 
 least four or five pieces of 20 francs, or an equal sum in 
 smaller ceins. There is no doubt that, for the mass of 
 society in France, the quantity of gold thus carried about 
 the person amounts to a very considerable sum. Never- 
 theless, it would be probably sufficient to assume that 
 there are a million of persons who, on an average, thus 
 permanently charge themselves with 100 francs each. Let 
 us, however, say double the amount, which will give us 
 200 millions of francs (8,000,000). But France is 
 almost the only country where this condition of things 
 applies, for it could only occur in a State where, before 
 the discovery of the new mines, silver was the current 
 money, and where, owing to legislative provisions, gold 
 could be substituted for a silver currency, and such 
 countries are very few in number. There are many more 
 communities where, in the same period, gold has been re - 
 duced to a subsidiary rank, or even banished from the 
 circulation altogether. Let us, however, double the above 
 sum of 200 millions (8,000,000), in order to meet the 
 case of similar phenomena which may have occurred else- 
 where, and we shall then have 400 millions of gold 
 (16,000,000). But it must be remarked that the fact 
 in question does not remain to be accomplished, that the 
 operation has already been carried out wherever it is likely 
 to be effected ; that it is not, therefore, an employment 
 offered to gold for the future ; that it is only an outlet 
 which has absorbed a fraction of the large quantity of 
 gold which, in addition to the old * production, has been 
 already yielded by the new mines. 
 
106 NEW OUTLET FOR GOLD. 
 
 CHAPTER III. 
 
 ON THE EMPLOYMENT WHICH HABITS OF LUXUEY MAY OFFEE TO 
 THE GOLD OF THE NEW MINES. 
 
 WHAT are the outlets which may be created by the con- 
 stantly increasing developments of luxury ? On this 
 subject we must avoid falling into a delusion : the age is 
 less pompous than it is supposed to be, or rather it does 
 not exhibit its pomp by a display of gold ornaments. It 
 loves gilding, and judging from what is seen in Paris, this, 
 species of display is extending in rooms, on furniture, 
 wainscots, and ceilings ; but, as respects jewellery, what is 
 now made is very light. Many gold rings are manufac- 
 tured, as well as gold watch-cases, but very few articles 
 are now made which consume a considerable weight of 
 that metal. This may be verified by referring to the re- 
 turns of those establishments which, in France, are called 
 bureaux de garantie. 
 
 Who would not suppose that in Great Britain, where 
 a wealthy aristocracy spends its riches freely, and where, 
 since the peace of 1815, commercial fortunes have in- 
 creased and multiplied to a surprising extent, the manu- 
 facture of articles of gold must have undergone a consid- 
 erable augmentation ? The contrary, however, is the 
 fact. I have before me the return of the duty paid on 
 gold plate in England, from the commencement of the 
 century to 1850 inclusive, which appears in Mr. Porter's 
 excellent work, the Progress of the Nation. According 
 to this table, the progress of the manufacture of articles 
 of gold remains, incredible as it may appear, behind that 
 of the population. From the first quinquennial period of 
 the century to that which closed in 1850, the increase in 
 the quantity of gold \vhich paid duty was 50 per cent. ; 
 
NEW OUTLET FOR GOLD. 107 
 
 during the same time the increase of population was much 
 greater ; it doubled. Then, if we take into account the 
 quantity of gold required for this manufacture, we are 
 amazed at its smallness. It is an atom in comparison 
 with the total production. During the last quinquennial 
 period of the half-century, the annual average has only 
 been 7,636 ounces. Independently of these statistics of 
 Mr. Porter, I have been enabled to procure the returns 
 for two recent years (1855 and 1856). The average is 
 10,420 ounces, including that which is destined for ex- 
 portation. It must be stated that many articles, such as 
 watch-cases, are excluded from this return ; but let the 
 amount be doubled or trebled, let it be quadrupled, quin- 
 tupled, or even more, and still how little will it amount 
 to in comparison with the present production of gold ? 
 
 From England let us pass to France. Here also may 
 be observed a movement slower than the progress of the 
 population ; if we embrace also an interval of half a cen- 
 tury, in which, it is true, is comprised all the period of 
 the revolution. Necker, who must have been well-in- 
 formed, estimated in 1789, the jewellery manufactured in 
 France, both gold and silver, at 20 millions (800,000) ; 
 in 1821, it was only 21,750,000 francs, (870,000), which 
 drew from Baron Humboldt the remark that, " The 
 tables published by the Count de Chabrol would prove, if 
 the estimates of M. Necker are correct, that the state of 
 the manufacture of jewellery has not greatly altered." * 
 Baron* Humboldt might have added that, since for the 
 two metals together the alteration had been insignificant, 
 whilst there had been a considerable increase in the use of 
 silver plate, 'it necessarily followed that there must have 
 been a diminished employment of gold. Since 1821 a 
 certain progress is observable in France. According to 
 the bureaux de garantie, the average of the years 1822-3-4 
 
 * Essay on New Spain, edition of 1827, Vol. III., p. 467. 
 

 108 NEW OUTLET FOR GOLD. 
 
 gives 3,059 kilogrammes (108,065 oz.) for gold ; and 
 the average of the two years ending 1st Jan., 1857, is 
 8,185 (289,205 oz.) ; but from these quantities a portion 
 must be deducted, as will be seen, on account of the old 
 metal and jewellery returned to the crucible. There are, 
 then, grounds for saying, both of France and England, 
 that an outlet so limited, and augmenting so gradually, 
 could not tend seriously to raise the consumption of gold 
 to the level of its greatly increased production. 
 
 In 1827, Baron Humboldt estimated the quantity of 
 gold employed in all Europe, by the goldsmiths and jew- 
 ellers, at 9,200 kilogrammes (325,100 ounces) ; but from 
 this must be deducted the old gold which Necker esti- 
 mated at the half, but which others, with no better oppor- 
 tunities of being well-informed, put down at much less. 
 Let us carry to double this amount the gold at present 
 worked up by these industries, and make no deduction 
 for the metal derived from the re melting of old jewellery 
 and ornaments ; this will, if we admit Necker's hypothesis 
 of the proportion of old gold entering into the composition 
 of the new, quadruple the effective consumption of gold 
 in 1827. Here, then, is an outlet for 18,400 kilogrammes 
 (650,200 ounces) of the production of the mines. To 
 take a liberal view, let us put down 25,000 kilogrammes 
 (875,000 ounces) for the ensuing ten years, as the con- 
 sumption for the same purposes in the civilised States of 
 North and South America. It is a very high estimate, 
 for this amount, set apart for the goldsmiths and jewellers, 
 is exclusive of the gold required for lace and gilding, with 
 which I shall have to deal in the present chapter, and for 
 which an ample allowance will be made. It may thus 
 be seen how far the demand for jewellery and ornaments 
 can counterbalance the excessive supply of this metal in 
 the market ; it is very far from being sufficient for the 
 purpose. 
 
NEW OUTLET FOK GOLD. 109 
 
 But, it will be said, the world has absorbed the mass 
 of nearly 40 milliards (1,600 millions sterling) of gold 
 and silver which has been supplied by America since the 
 time of Columbus. True enough, but on what condition ? 
 On condition that the value of silver fell in the proportion 
 of 6 to 1, and that of gold in the proportion of 4 to 1. 
 And it is only by a similar process (though I do not pre- 
 tend to assign the proportion) that the large supplies 
 which are now being produced by the new mines will find 
 an outlet. The present essay is written to prove, not that > 
 this extraordinary production of the precious metal cannot 
 be employed on any terms, which would be absurd, but 
 simply that it cannot be absorbed and maintain its pre- if 
 sent value in relation to other commodities : mankind is 
 not rich enough, nor will it soon be, to pay so dearly for 
 so large a mass. To find an outlet, it is absolutely requi- 
 site that so vast a production should be accompanied with 
 a great reduction in value. 
 
 But not to anticipate the conclusion, let us pursue the 
 enumeration of the extraordinary channels which may be 
 opened to absorb the extraordinary supply from Austra- 
 lia and California ; and, first, let us, by way of finishing 
 the account with luxury, allude to gold lace and gilding. 
 Paris gilds itself not a little, and is surprisingly addicted 
 to gold lace. Is there not in these two employments a 
 consumption large enough to enable the producers of gold 
 to dispose of their precious commodity, almost indefinitely, 
 without any reduction in value ? In order to reply to this 
 question, let us calculate the quantity of metal which is re- 
 quired to gild a given surface. Gold, as is known, is the 
 most malleable of metals ; it is so to a degree of which it 
 it would be difficult without ocular illustration to form 
 an idea. The goldbeater makes it into leaves, which, 
 thanks to the progress of his art, are now so thin that 
 fourteen thousand form only the thickness of a millimetre, 
 
110 NEW OUTLET FOB GOLD. 
 
 and, consequently, 14 millions of leaves laid one upon 
 another would make a thickness of only a metre (about 
 39 inches). A cubic metre of solid gold, which in truth 
 would not weigh less than 19,258 kilogrammes (680,440 
 ounces), would suffice to gild a surface of 1,400 hectares 
 (about 3,450 acres), and 1,000 kilogrammes (35,300 
 ounces) would cover 720,000 square metres, or 72 hec- 
 tares with gold (about 179 acres.) It is a result which 
 quite confounds the imagination. And yet the metal used 
 in the manufacture of gold lace is spread over a much 
 larger surface. The substance of the threads of which 
 this lace is made consists of silver, the surface alone being 
 of gold, and one gramme of gold, worth 3 francs 44 
 centimes (2s. lOd.) suffices to gild a thread 200 kilometres 
 in length (120 miles). In a piece of 20 francs (16s. Sd.), 
 there is gold enough to cover a thread which would ex- 
 tend from Calais to Marseilles. 
 
 I might also remark that in the calculation of the 
 quantity of gold leaf to be made from a cubic metre, or 
 1,000 kilogrammes of gold, I have spoken as though the 
 gold employed was of an absolute fineness, which is not 
 quite correct. Experience shows that the malleability of 
 gold is increased by a slight mixture of alloy, and which 
 diminishes proportionably the consumption of the precious 
 metal. It is true that this proportion is not great, it is 
 about 4 per cent., and we must make a corresponding 
 abatement from our estimate. 
 
 Let us now suppose that a room, suitably gilded, con- 
 sumes five square metres (a metre is 39 inches) of gold 
 leaf, which is, I believe, sufficient. At this rate 1,000 
 kilogrammes (35,300 ounces) would gild one hundred and 
 forty-four thousand saloons or apartments, that is to say, 
 at least twenty times the number which are thus embel- 
 lished in one year in all those cities where the houses are 
 of a character to require their interiors to be gilded. 
 

 NEW OUTLET FOR GOLD. HI 
 
 With the remainder what a multitude of picture-frames, 
 books, kettle-drums, cloths, epaulettes, and all kinds of 
 objects might be clothed in a dazzling covering of gold ! 
 Let the number of gold leaves required for each apartment 
 be multiplied, let the number of books and picture-frames 
 be augmented, and still we shall arrive at no result which 
 deserves a moment's consideration. At Paris, where 
 nearly all the gold leaf is beaten which is consumed in 
 France, and a part of Europe, the quantity of gold oper- 
 ated upon does not exceed 1,150 to 1,200 kilogrammes 
 (40,650 to 42,400 ounces). I give this fact upon the 
 authority of a man of high integrity who was at the head 
 of this industry, and was well versed in its statistics.* 
 
 The fluid process of gilding, that is by means of a so- 
 lution of a salt of gold in water, consumes but very little 
 metal ; so that a very moderate number of kilogrammes 
 of gold are sufficient for the thread required by all the lace 
 manufactories of Paris and Lyons. 
 
 In fine, for all descriptions of gilding, as well as for 
 every kind of gold lace, we shall exceed the truth in put- 
 ting down at .10,000 kilogrammes (353,330 ounces), the 
 quantity of gold which may be required annually for the 
 next ten years. I am always arguing on the assumption 
 that the metal does not fall in value ; for, let it be reiter- 
 ated, if a considerable depreciation should occur, it will 
 be followed in the case of gold, as it would be in that of 
 any other article under similar circumstances, by its ex- 
 tended use, and its increased consumption. It is probable 
 that, at the present moment, 5,000 'kilogrammes (176,665 
 ounces) is more than the amount consumed. If we add 
 to the quantity, hypothetically admitted, of 10,000 kilo- 
 grammes, the amount already computed, in the same 
 spirit of liberality, for ornaments and jewellery, we shall 
 
 * The late M. Favrel, one of the most eminent men of business in Paris. 
 
112 NEW OUTLET FOR GOLD. 
 
 reach an annual consumption of 35,000 kilogrammes 
 (1,236,655 ounces), for the different arts which minister 
 to the various forms of luxury. Here, then, is the limited 
 employment, which luxury, in all its bearings, offers to the 
 gold furnished by the new mines. , It is a real deception 
 to the statistician, who might have expected to find a lim- 
 itless outlet. Let us not, however, omit to mention one 
 rather insignificant mode of consumption. The display of 
 gold in utensils, more or less massive, is the luxury of the 
 less refined part of the community, whose eye is instinct- 
 ively attracted by the glare of a dazzling metal, and whose 
 desire is excited for an object to which there is vulgarly 
 attached the idea of great riches. It is a species of mag- 
 nificence which was reserved for the sovereigns of primi- 
 tive nations ; it constituted the splendour of the Incas, 
 and that of Attila, and of Grenseric ; it was the pride of 
 the savage races whom the Europeans discovered in Amer- 
 ica : these poor natives carried lumps of gold suspended 
 from their noses and ears. But our intelligent communi- 
 ties, with their cultivated minds, decorate their apartments 
 with stuffs tastefully arranged, and which .present to the 
 eye patterns of elegant form, and brilliantly or delicately 
 coloured. They adorn them with works of art, with sculp- 
 ture of every kind, and pictures of the various schools, and 
 exquisite engravings. This is a more enlightened luxury, 
 and more suited to an advanced civilisation. 
 
 Not that I would here maintain the opinion that, in 
 a fit of ideal refinement, civilised nations will henceforth 
 despise the glitter of gold ; I merely mean to say that the 
 observation of what is passing every day under our eyes, 
 warrants the belief that luxury is seeking its gratification 
 in other directions. In such an undertaking, as devoting 
 a large sum to the purchase of an object for embellishing a 
 residence, people generally prefer something which has 
 other recommendations than the weight it contains of so 
 
NEW OUTLET FOR GOLD. 113 
 
 valuable a commodity as gold. The man of little taste 
 may be flattered by the possession of some grand vase of a 
 material which is worth sixteen hundred times its weight 
 in copper, ten or fifteen thousand times its weight in iron, 
 thirteen thousand times its weight in wheat ; but this 
 price is so excessively high, that persons with any taste 
 for the beautiful, however rich they may be, pause and 
 turn aside. Nevertheless, gold has lost none of its incom- 
 parable splendour, and if it were to fall considerably in 
 price, it is probable that then, and only then, it would be- 
 come, to some extent, the fashion, on condition that the 
 merit of the form equalled the beauty of the material. 
 
 CHAPTER IV. 
 
 CONCLUSION OF THE PEECEDING CHAPTERS. THE FALL OF GOLD VEEY 
 PEOBABLE, IF NOT INEVITABLE, IN EELATION TO ALL OTHER COM- 
 MODITIES. 
 
 IT is not difficult to draw a conclusion from the preceding 
 analysis. In no direction can a new outlet be seen suffi- 
 ciently large to absorb the extraordinary production of 
 gold, which we are now witnessing, so as to prevent a fall 
 in its value. There is but one way of disposing of these 
 masses of gold, it is by coining them and forcing them into 
 the current of circulation into countries which are already 
 sufficiently provided with a gold currency. This current 
 will absorb them, for it is, so to speak, insatiable ; it receives 
 and carries off all that is thrown into it ; but the process 
 of absorption and assimilation is on one condition, namely, 
 that gold diminishes in value, so that in those transactions 
 where heretofore ten pieces of gold had for example suffi- 
 ced, eleven, twelve, fifteen, or even more, will be hence- 
 forth required. In a word, if gold is to enter into the cir- 
 8 
 
114 NEW OUTLET FOR GOLD. 
 
 dilation in indefinite quantities, it is by being subjected to 
 the rigorous law of a continually increasing depreciation. 
 
 And here is exhibited a disadvantage under which gold 
 suffers in comparison with silver. The latter rnetal has, 
 besides being used for money, other somewhat extensive 
 employments. The requisites of the table, such as dishes, 
 plates, spoons,' forks, &c., silver kettle-drums, and church 
 ornaments, consume a large quantity. Silver plating, so 
 much on the increase for some years, will, doubtless, take 
 off a considerable amount ; we are probably only in the 
 infancy of this interesting industry, and the consumption 
 of metal to which it gives rise is small in comparison with 
 what may be expected for the future. Gold has, doubt- 
 less, its employments in the arts, and perhaps, ere long, 
 gilding may become as general as plating ; but to gild 
 properly a given surface requires much less gold than it 
 would of silver to cover it with the latter metal ; in this 
 manner, the peculiar attribute of gold, of being infinitely 
 malleable, or of holding together in layers infinitely thin, 
 only tends to diminish its employment. Thus not less 
 than 6 grammes of silver (92 grains, troy), are put upon 
 a convert, in the manufacture of the house of Cristofle ; 
 whereas the gilding needed for covering utensils, picture 
 frames, or even ceilings, requires but the merest atoms of 
 gold. 
 
 I have explained the consumption for gilding rooms, 
 picture frames, and gold lace ; I have also included arti- 
 cles of jewellery made in imitation of gold, by dipping 
 them rapidly in a solution containing a portion of nitrate 
 of gold. The strongest gilding given in M. CristonVs es- 
 tablishment consumes 7fV grammes (107 grains troy) on 
 a dozen dessert converts ; whilst for silver, with converts, 
 it is true, of a larger size, it is 72 grammes (1,104 grains 
 troy) ; but there are summary processes of gilding which 
 do not consume more than one -tenth of this proportion of 
 
NEW OUTLET FOB GOLD. 115 
 
 metal. From the particulars obligingly communicated to 
 me by M. Cristofle, it appears that his establishment for 
 gilding and plating consumed, in 1856, 4,022 kilogrammes 
 [142,110 ounces] of silver, and only 17 kilogrammes [601 
 ounces] of gold. In no one year has this house, whose 
 business is considerable, consumed in gilding, more than 
 27 kilogrammes [954 ounces] of the latter metal. M. 
 Cristofle estimates that the gilding of metals consumes, 
 for all that is done in France, only 400 or 450 kilogram- 
 mes [14,130 or 15,900 ounces] of gold yearly. Now 
 France is a producer of these articles, not only for her 
 own use, but for exportation. 
 
 To fix these ideas, and give precision to our deduc- 
 tions, let us now recapitulate the various employments for 
 gold which we have j ust designated, representing them in 
 figures. 
 
 It has been seen that the currencies of those States 
 which are short of gold are not likely to require for the 
 next ten years more than 300,000 kilogrammes of this 
 metal (42,000,000). To arrive at this result, it has 
 been necessary to resort to very forced anticipations. As 
 for the increase of money rendered necessary by the addi- 
 tional population, and the extension of well-being among 
 the people of Europe and America, I have made a large es- 
 timate in calculating it at 22,000 kilogrammes (3,080,- 
 000) a year, or 220,000 kilogrammes (30,800,000) for the 
 ten years. 
 
 In order to satisfy the most exacting, I have estimated 
 at an equal amount, 220,000 kilogrammes (30,800,000), 
 the addition which, in ten years, ought to be made to the 
 currency to keep pace with the extension of commercial 
 operations, strictly so called. 
 
 For wear and tear, it has been shown that we run no 
 risk of valuing it too low in putting it down at 3,500 
 kilogrammes (490,000), or, in ten years, at 35,000 
 
116 NEW OUTLET FOR GOLD. 
 
 (4,900,000). And, then, for hoarding, with the addi- 
 tion of accidental losses, there has been more than an 
 ample allowance made in the estimate of 15,000 'kilo- 
 grammes yearly (2,100,000), or 150,000 in ten years 
 (21,000,000). 
 
 It is an exaggeration, beyond allowable bounds, to put- 
 down the quantity of new gold required by jewellers, also 
 for the various modes of gilding, and for gold lace, at an 
 average for the next ten years of 35,000 kilogrammes 
 (4,900,000), or, for the decennial period, at 350,000 
 kilogrammes (49,000,000). 
 
 We thus arrive, exaggerating everything, at a total of 
 1,275,000 kilogrammes (178,500,000), as the mass of 
 the precious metal which may find a natural employment 
 during the next ten years. By the words natural em- 
 ployment, I mean that it should be absorbed on the same 
 conditions as heretofore, and consequently without being 
 aided by a fall in the value of gold. In estimating the 
 average annual production, for the period of ten years, now 
 commencing, at 250,000 kilogrammes only (35,000,000) ; 
 and it may fairly be expected to reach 300,000 (42,000,- 
 000), the floating mass which would remain, and the 
 weight of which would at the end of the decennial period 
 operate to depress the value of gold, would amount to 
 1,225,000 kilogrammes (171,500,000), that is to say, to 
 nearly the half of all the'gold that America has furnished 
 from the first voyage of Columbus to the discovery of the 
 mines of California in 1848, a period of three hundred 
 and fifty-six years. 
 
 Let 200,000 or 300,000 kilogrammes more (28,000,- 
 000 or 42,000,000) be subtracted, to provide in the 
 most ample manner against all contingencies, even the 
 most improbable, and still an* enormous mass will remain 
 to exert on the market a pressure beyond all precedent. 
 To express in other words the same idea, in proportion as 
 
NEW OUTLET FOR GOLD. 
 
 the gold shall be extracted from the new mines, all which 
 shall not have been absorbed by the industrial arts, will 
 enter into the currencies of all those countries which will 
 admit it in that capacity, and in each of them it will diffuse 
 itself, all other things being equal, in proportions meas- 
 ured by the facilities which legislation may offer it. But 
 in these countries it will be in great excess, relatively, of 
 all that could have been required for the medium of ex- 
 change, if the metal had preserved its full value ; that is 
 to say, gold will circulate there on precisely the conditions 
 which would be indicated if we had to demonstrate the 
 process necessary for determining infallibly its fall. 
 
 It may not be out of place' to add that the new mines 
 have already yielded a considerable quantity of new gold, 
 hardly to be valued at less than 1,200,000 kilogrammes 
 (168,000,000); so that the circulation, in all those 
 countries where this metal is admitted as an essential 
 element of the monetary system, is already saturated. 
 This is perceptible enough where business is in its normal 
 state, and not under the influence of those crises which 
 give rise to an extraordinary want of all the instruments 
 of commercial liquidation, and when it seems as if it were 
 impossible to have enough of the precious metals. As 
 soon as affairs resume their natural course, we see, in 
 those countries just mentioned, gold flowing into the 
 banks, and into the great establishments of credit and 
 deposits. It cannot, therefore, now be justly said that 
 there are great voids to fill up in the monetary mechanism 
 of the principal States, and that thus the production of 
 new gold is a welcome event. There are, on the contrary, 
 grounds for preoccupying ourselves with the indications, 
 already apparent, of a state of plethora. 
 
 Unless, then, we possess a very robust faith in the 
 immobility of human affairs, we must regard the fall in 
 the value of gold as an event for which we should pre- 
 
218 NEW OUTLET FOR GOLD. 
 
 pare without loss of time. And who can be ignorant that 
 the value of gold in relation to productions generally, and 
 in relation to silver in particular, instead of being fixed, 
 has experienced very numerous variations that it has 
 been undergoing modifications, sometimes in one sense, 
 sometimes in another, from the beginning of the world, 
 under the influence of forces far less energetic than those 
 which are in action in our day ? I refer those who desire 
 information on this subject to a work, where an illustrious 
 authority, Baron Humboldt, has treated it with the supe- 
 riority which distinguishes him, shedding upon the ques- 
 tion some of that vivid light which he carries everywhere 
 with him. There will be seen, for example, that in throw- 
 ing into the circulation of the Koman world a mass of 
 gold very important, it is true, Julius Ceesar occasioned 
 for that metal a fall so great that some time after it had 
 been worth seventeen times its weight in silver it fell to be 
 only worth nine times. If the value of gold has varied 
 every time that new circumstances have modified the re- 
 lation between the supply and demand, and if it has risen 
 or fallen in proportion to the change which manifested itself 
 in this relation, by what strange witchcraft are the natu- 
 ral causes of the fall of gold to be paralysed, now that 
 they are * displaying themselves in such unusual propor- 
 tions ? 
 
 Independently of all detailed calculation like the pre- 
 
 * This work of the patriarch of the sciences of observation is anterior, 
 by several years, to the discovery of the mines of California ; it dates from 
 1838. The Journal des Eeonomistes, numbers for April and May,. 1848, 
 give a good translation of it, by M. Michel Rempp. Upon the same subject 
 of the numerous variations that the value of gold has undergone in relation 
 to silver, I could cite a great number of other works: I will mention, for 
 example, the treatise of Lord Liverpool, for England ; the Traite des Mon~ 
 naies, of Leb'lanc : the work of Mr. Jacob, of which I have here made fre- 
 quent use ; and also the memoirs of M. Charles Lenormant, my learned 
 colleague of the Institute, and of his son M. Francois Lenormant. I have 
 already referred above to the Traite d'Economie Politique of M. Roscher. 
 
NEW OUTLET FOR GOLD. 119 
 
 ceding, there is a general way of convincing oneself of the 
 impending fall of gold, at least if some cause, at present 
 impossible to foresee, should not suddenly put an end to its 
 extraordinary production. The metal which is now being 
 extracted in such abundance, in comparison with the past ? 
 must, if converted into money, affect its value by its mass. 
 To prevent it from rushing into the currency, the demand 
 for luxury must find it a sufficient outlet ; but is this pos- 
 sible ? There has been no scarcity of gold in the market 
 since the working of the mines in Northern Russia. The 
 chief part of that which has been yielded by Australia and 
 California has, therefore, constituted a real surplus ; now, 
 how can the developments of luxury absorb it ? A few of 
 our newly enriched men, who, because existence is suddenly 
 transformed for them, suppose that every thing on the face 
 of the earth is changed for the better, may well imagine that 
 pomp and luxury will offer to the metal which issues from 
 the mines a limitless outlet : but any one who reflects, ob- 
 serves, and calculates, will form a different opinion. No, 
 mankind is not in a condition to spare from the fruits of 
 its labour the large portion which it would be necessary to 
 hand over to the producers of gold, to avert a fall in the 
 value of their metal, for mankind is still poor, even in the 
 most civilised countries. To pretend that, to satisfy its 
 taste for pomp and display, it will continue to take, at its 
 old price, all the gold of the new mines, is as if one were 
 to say that mankind is suddenly become sufficiently rich 
 to devote 4 or 500 millions (16 to 20,000,000), if not 
 more, to the acquisition of a supplement of articles of lux- 
 ury, and of that very kind, too, which most deserves the 
 name*of superfluities ; 4 or 500 millions, seeing that at 
 the price which gold has maintained, almost intact up to 
 the present time, the quantity of this metal annually 
 thrown upon the general market, approaches, in round 
 numbers, & milliard (40,000,000), and that the employ- 
 
120 NEW OUTLET FOR GOLD. 
 
 ments which may be reasonably foreseen will not, perhaps, 
 consume the half of it. The civilised world, far from be- 
 ing able to indulge in such caprices, has all sorts of press- 
 ing necessities to provide for, and with which it is more 
 seriously preoccupied. People are still badly fed, badly 
 clothed, badly lodged, and badly supplied with all those 
 objects which minister to the intelligent wants and the 
 purer satisfactions of an elevated humanity, satisfactions 
 which, whatever may be said, are every day more and more 
 appreciated. Even among the easy classes, how many 
 wants are there, to satisfy which will claim precedence of 
 the taste for arraying themselves in the splendour of gold ? 
 The currency, then, offers the one sole channel by which 
 the principal part of this enormous production of gold can 
 find an outlet. Already, several nations have closed the 
 door against it. How then can it fail to encumber the 
 channels of circulation in those countries which remain 
 faithful to a gold currency ? In other words, how shall 
 we escape a general dearness of commodities in France, 
 if we maintain for gold, in our monetary system, the place 
 which in fact it now occupies ? 
 
SECTION Y. 
 
 CHAPTERS I. ioV. 
 
 ON THE PAET ASSIGNED TO GOLD IN THE MONETAEY LEGISLATION 
 OF FEANCE. 
 
 THIS section is devoted to an inquiry into the origin of 
 the monetary laws of France, with a view to determine 
 whether its legislators contemplated the existence of the 
 double standard which is now causing a substitution of 
 gold for silver in the currency of that country. The ques- 
 tion is of the utmost importance to the French reader, and 
 its solution is probably the main object which the author 
 has had in view ; but as England stands in a totally dif- 
 ferent position, having a well-defined gold standard and 
 legal tender, with an expressed legal demonetisation of 
 silver for "sums above forty shillings, the argument has no 
 practical bearing upon the interests of this country, and I 
 have obtained M. Chevalier's consent to omit the detailed 
 translation of this section. I refer, therefore, to the orig- 
 inal work for an able, elaborate, and, as I think, conclu- 
 sive argument, showing that all the leading statesmen who 
 took a part in framing the existing monetary law of France, 
 agreed in the propriety of having one standard, of selecting 
 
122 GOLD IN FRENCH MONETARY LEGISLATION. 
 
 silver for that purpose, and of making the franc the 
 monetary unit, and that it has been only by the unforeseen 
 and unexpected increase of gold, owing to the new dis- 
 coveries, that the obvious and avowed intentions of the 
 French legislators have been defeated. 
 
 The author relies especially on the Report of the Min- 
 ister of Finance, Gaudin, to the Consular Government, 
 which led to the Act of the 7th germinal ', year 11 (28th 
 March, 1803), and which definitively constituted the pres- 
 ent monetary system of France. He gives the following 
 extract : " Whoever lends 200 francs shall never at any 
 future time be repaid with less than one kilogramme of 
 silver, which shall always be worth 200 francs, and shall 
 never be worth more or less." 
 
 The conclusion to which our author comes, after an 
 elaborate appeal to facts and official documents, is that 
 "the creditor of the State who is entitled to 100 francs 
 a year, for example, has an inalienable, imprescriptible, 
 and absolute right to receive a hundred times 5 grammes 
 of silver, of the standard of 9-10ths fineness. He would be 
 despoiled of his property if he were paid with a quantity 
 of gold less than this equivalent, in the same way as if 
 his claim were discharged with only 80 or 75 discs of sil- 
 ver, of the weight of 5 grammes, of the fineness of 9-10ths ; 
 instead of 100 ; or as if he were paid with 100 discs con- 
 taining 4 grammes of fine silver only, instead of 4J." 
 And he finally makes the following appeal to the con- 
 science and self-respect of France : 
 
 " It is true that there is no tribunal before which the 
 State can be made to appear and hear itself condemned 
 to pay the arrears of its dividends in silver to the public 
 creditor ; or, if gold has been resorted to, to pay a real 
 equivalent of the quantity of silver which corresponds to 
 the number of francs borne upon the dividend warrant. 
 But, if no such jurisdiction has been established, it is be- 
 
GOLD IN FRENCH MONETARY LEGISLATION. 123 
 
 cause it has been supposed that the State would interpret 
 with exactitude the law, both when it is against and when 
 it is in favour of itself, and is it well that society should 
 have to repent that it has adopted this hypothesis ? In 
 this case exactitude assumes another name honesty. 
 And even if there be no precise jurisdiction before which 
 the State can be summoned by the instrumentality of a 
 bailiff, and be compelled to make an appearance, there 
 exists, nevertheless, a tribunal by which it can be judged, 
 and whose decisions, though tardily given, and involving 
 no material consequences, are yet not less formidable, and 
 strike with terror even the most powerful. It is the tri- 
 bunal of history, by which all governments know they 
 must one day be judged with an impartiality which they 
 sometimes anticipate with hope, but which ought always 
 to be felt as a restraint. In dealing with a government 
 which respects itself, it suffices to invoke this august tri- 
 bunal, the last argument of a people, the supreme support 
 of right, and the bulwark of the feeble against the strong, 
 to confirm it in the sentiment of justice even when it 
 shall find itself under the temptation to swerve from it." 
 
SECTION VI. 
 
 CONSEQUENCES OF THE FALL IN THE VALUE 
 OF GOLD. 
 
 CHAPTER I. 
 
 A GENEEAL DISTINCTION BETWEEN THOSE PRIVATE INCOMES WHICH 
 WILL, AND THOSE WHICH WILL NOT BE AFFECTED. OF A CERTAIN 
 COLLECTIVE LOSS WHICH THE PEOPLE OF FEANCE WILL SUFFEE. 
 
 I WILL suppose the case of an inhabitant of London, who 
 is possessed at the present time of a certain income, for 
 example, of 1,000 sterling. Assuming the event of the 
 fall in the value of gold to have been completely consum- 
 mated, he will continue to receive, as at present, for every 
 pound sterling composing his revenue a metallic disc con- 
 taining 7 grammes, 318 milligrammes (113 grains) of fine 
 gold, for that is what constitutes the piece called a sov- 
 ereign, or the pound sterling. But the fall being accom- 
 plished, if gold has lost the half of its value, then, in trans- 
 actions where one piece of gold was previously sufficient, 
 two will be required, so that with the same number of discs 
 the individual in question will only be able to procure in 
 bread, in meat, in all kinds of articles, in every descrip- 
 
FALL IN THE VALUE OF GOLD. 125 
 
 tion of gratification., the half of what he would have ob- 
 tained before this monetary revolution. Thus, in order 
 that he might not be impoverished, in other words, 
 that he might have the same subsistence, it would be 
 necessary that his income should have nominally doubled 
 itself, that it should be 2,000 instead of 1,000. This 
 observation relative to a person residing in London would 
 apply equally to an inhabitant of Paris, provided we still 
 continue the tolerance, not to say the negligence, by virtue 
 of which gold is unduly circulated on the footing estab- 
 lished by the law 7 Germinal, year 11, notwithstanding 
 that events have since overthrown the hypothesis on 
 which, so far as gold is concerned, that law was framed. 
 
 It follows, therefore, that if we would particularise the 
 persons who will be more or less deeply affected by the 
 fall in gold, we have only to select those whose income, 
 expressed in monetary units (the pound sterling in Eng- 
 land, and the franc in France), will not find itself aug- 
 mented, naturally and by a self-adjusting process, in exact 
 proportion to the fall, and by the very fact of the fall in 
 gold. 
 
 All those persons, whose incomes expressed in mone- 
 tary units remain the same, would be injured, by the 
 change to the extent of the half of their income, all other 
 things being equal. The national creditor is the charac- 
 teristic type of this class of sufferers. 
 
 The proprietor of government stock is in fact the 
 holder of a title by which a certain State engages to pay 
 yearly a given number, agreed upon previously, of francs 
 or pounds sterling ; in other words, a well-defined quan- 
 tity of metal. The current value of the capital of the 
 public funds in each State is regulated by this very 
 quantity ; all other things, such as the solvency of the 
 government, the degree of confidence which it inspires, 
 and the abundance of capital upon the market, being 
 equal. 
 
126 CONSEQUENCES OF THE FALL 
 
 All commodities excepting gold, and every kind of 
 property excepting that of which the income is from the 
 present fixed, as is the case with the government funds, 
 ought, from the moment that the monetary crisis is ter- 
 minated, to have attained in a gold currency double the 
 price which they are at present worth, upon the supposi- 
 tion, quite arbitrary I admit, of the depreciation reaching 
 fifty per cent. Thus, a house or a landed estate now 
 worth 4,000 or 100,000 francs, would then sell for 
 8,000 or 200,000 francs. The hectolitre of corn or of 
 wine, the quintal of iron, or the metre of calico will un- 
 dergo the same rise, at least if no change conducive to 
 cheapness be introduced into the conditions of their pro- 
 duction, or into the relations between the supply and 
 demand. It will be the same eventually with the wages 
 , of labour, and with all personal services, whether rendered 
 in the factory or the farm, or from the liberal professions : 
 we are warranted in believing that their value will have 
 doubled. 
 
 Thus, as a definitive analysis, the proprietors of lands, 
 houses, and other real estates, manufacturers, merchants, 
 and their auxiliaries of every kind ; public functionaries of 
 all ranks' ; and also those who follow the different learned 
 professions, will all find themselves in the end compensa- 
 ted in the new state of things with advantages equal to 
 those which they now enjoy, all other things being equal. 
 It is another class of persons, whom we have previously 
 defined in a general way, who would have to submit to a 
 sacrifice in proportion to the fall in the precious metal. 
 
 Looking merely to the substitution which would have 
 to be made in the currency of a country like France, where 
 gold is taking the place of silver, that country would ex- 
 perience a sense of very serious disappointment at having 
 exchanged a commodity which has actually a fixed value 
 . its coined silver for another metal the value of which 
 
IN THE VALUE OF GOLD. 127 
 
 is declining and must fall one half, according to the sup- 
 position which we have made, and which we have adopted 
 solely for clearness of speech and precision of argument. 
 The quantity of silver on which this disastrous exchange 
 had been effected to the 1st January, 1858, was not less 
 than a milliard (40,000,000), which has been bartered 
 for gold at the rate of 15^ kilogrammes of silver against 
 1 kilogramme of gold. At this rate, France will find at 
 the close of the fall that she has been on an immense 
 scale, almost imitating the trade of a certain sporting in- 
 dividual who, for a wager, passed a morning on London 
 Bridge offering sovereigns to the passengers in exchange 
 for shillings. Assuming that at the point of departure 
 the silver currency of France amounted to 2J milliards, 
 (100,000,000), this beautiful operation would cost her 
 a very considerable amount, a sum so much the nearer to 
 1,250 millions (50,000,000) in proportion as the ab- 
 straction of her silver had been more rapidly effected ; and 
 down to the commencement of 1858, the silver was flow- 
 ing out of France at a very great speed. It would be 
 more than the above large sum, if the depreciation of gold 
 were upwards of one half, or if, being one half only, the 
 silver currency of France had been at the point of depart- 
 ure upwards of 2^ milliards (100,000,000). 
 
 The sum of 1,250 millions (50,000,000) is too large 
 to be lightly sacrificed, and yet it is not the loss which 
 seems to me the most to merit our attention. The great 
 danger and the great evil are the anxieties, the uncer- 
 tainty, and, finally, the injuries which will fall upon a 
 multitude of interests calling for our consideration by 
 their mass, and for our respect by the justice of their case 
 and the sympathy which it excites. 
 
128 CONSEQUENCES OF THE FALL 
 
 CHAPTER II. 
 
 OF THE SUFFEEINGS AND DIFFICULTIES WHICH WILL ACCOMPANY 
 THE TEANSITION. 
 
 IT is not merely the ultimate result that should be con- 
 sidered : the statesman and the administrator ought also 
 to take largely into account the transition, that is to say, 
 the rather lengthened period which must intervene before 
 gold shall have achieved its fall, and regained almost a 
 stable value ; or, it might be more proper to say, the 
 space of time which must elapse before the full effects of 
 the fall in gold shall have been realised in all their bear- 
 ings. This transition will be an interval painful to pass 
 over, and will be marked by innumerable shocks and suf- 
 ferings, of which I am about to give a summary idea : it 
 will be the occasion for offering a few details upon the 
 different interests which are likely to be affected by the 
 fall in the value of tfo.e precious metal. 
 
 During this transition, then, the value of all proper- 
 ties will be subjected to a painful uncertainty, and to in- 
 jurious fluctuations. It will be still worse for those per- 
 sons to whom I have already alluded, whose incomes con- 
 sist of a sum of money (Napoleons or sovereigns) fixed in 
 advance. They will live in a perpetual state of trouble, 
 anxiety, and uneasiness. They will sink by whole sec- 
 tions from their present state to another in which they 
 will enjoy only the half of their previous comforts ; rea- 
 soning, as I always do, upon the assumption that gold falls 
 to the half of its present value. They will be flung head- 
 long, without rule or measure, down to a lower station, 
 and without ever having the chance of preparation, for it 
 is the very essence of changes of this kind, subjected as 
 they are to many opposing influences, to pursue an irregu- 
 
 
IN THE VALUE OF GOLD. 129 
 
 lar and disorderly course. Now, the persons of whom I 
 am here speaking, comprise a very numerous and various 
 class. They are, in the first place, the creditors of the 
 State, of departments, of cities, and of joint -stock com- 
 panies. To form an idea of the number of persons and 
 families who would be comprehended under this head, it 
 suffices to call to mind that, in England, the capital of 
 the national debt amounts to 20 milliards of francs 
 (800,000,000). I am unable to say what may be the 
 amount of the debts owing by local bodies, and by public 
 companies in the British islands ; but I run no risk of de- 
 ceiving myself in asserting that it is an enormous sum. 
 In France, the capital of the funded debt is nearly 7J 
 milliards (290,000,000), deducting the amount belong- 
 ing to the sinking fund. The number of persons interested, 
 if it were determined by that of the entries in the books, 
 would amount to more than a million.* The departments 
 and the cities owe a very large sum, and the bonds of the 
 railway companies, without speaking of the debts of other 
 companies, rise to a very great amount. 
 
 There would be, besides, all the superannuated public 
 servants, from whose salaries had previously been deducted 
 the amount of their pensions, as well as all those who 
 might undergo a similar ordeal up to the time when the 
 law should have fixed a new scale of pensions ; all per- 
 sons who should have lent money for a long term on 
 mortgage ; all those who lived upon fixed incomes of long 
 duration ; individuals or companies like that of the credit 
 fonder, who were in the receipt of annuities in payment 
 
 * On the 1st January, 1857, the capital of the funded debt amounted to 
 8,031,992,446 francs (321,279,700). The interest of the sinking fund 
 amounted to 25,462,159 francs (1,018,486), which is equal to a capital of 
 about 750 millions (30,000,000). The number of entries in the great book 
 was 1,028,284. The interest, including that of the sinking fund, amounted 
 to 299,099,242 francs (11,963,970). 
 
 9 
 
130 CONSEQUENCES OF THE FALL 
 
 for loans of capital ; those who might have invested their 
 property for life ; and all those proprietors who might 
 have let their land on long leases. In the latter case, 
 until the metal had found a stable value, long leases, so 
 much advocated by agriculturists, would be a serious evil 
 to the landowner, and thus the monetary crisis would re- 
 act in a disastrous manner on agriculture, and tend to 
 place it in a retrograde position. 
 
 We might add to this list, in a great measure, the 
 multitude of public servants, civil and military. Not that 
 they would be precluded from the hope, under such cir- 
 cumstances, of an augmentation of salary ; we may sup- 
 pose that a time would come, when by successive additions 
 to their pay, they would receive in the number of francs 
 double their present salary ; but it is in the nature of things 
 that additions of this kind arrive by a very slow process. 
 This is proved by what we see taking place with regard to 
 many functionaries, even those who enjoy the greatest public 
 esteem, as, for instance, the magistracy. For how many 
 years has the same tale been told them, that they are 
 always on the eve of an increase of their incomes, which 
 are notoriously inadequate, but the morrow never comes. 
 The painful and almost humiliating position of a peti- 
 tioner for an increase of salary, would have to be again 
 and again submitted to by the government employes, be- 
 cause the force which -causes the depreciation in the value 
 of gold, acting only successively, it would be by three or 
 four intermediate steps, with difficulty climbed, that they 
 would have to pass before their salary reached its normal 
 rate. For them, then, there would be a constant anxi- 
 ety ; they would always feel themselves in danger of being 
 left with insufficient means for the subsistence of their 
 families. 
 
 There is reason to believe that the administration of 
 the affairs of the country would suffer from this sad condi- 
 
IN THE VALUE OF GOLD. 131 
 
 tion, moral and material, of the servants of the State. It 
 is natural that they who believe themselves insufficiently 
 rewarded for the pains they bestow, and the services they 
 render, should fall off in their devotion and slacken in 
 their zeal. There may be exceptional cases of individuals 
 who are above these worldly motives ; but the majority 
 bow to them, especially after a little time. We are not 
 justified, after ail, in requiring from functionaries all the 
 activity and care which the business of the State demands, 
 if we persist in paying them badly. Inadequate salaries 
 deter numbers of men, who know their own value, from 
 entering the public service, and drive them into private 
 employments. The best of natures may, under such cir- 
 cumstances, become embittered. No one can be more 
 inclined than myself to bear testimony to the disinterest- 
 edness of French functionaries. They are, at least, in this 
 respect, upon a par with those of any other nation. But 
 there is no reason why they should be subjected to the 
 temptation which flows from straitened circumstances, and 
 which has perverted the administrative morals of a certain 
 great State which I could mention. 
 
 All the liberal professions, such as barristers, physi- 
 cians, professors of every kind, engineers, architects, and a 
 multitude of agents of every description, would also have 
 to raise, again and again, the amount of their fees, a pro- 
 cess which would often endanger their position, which they 
 had flattered themselves to be secure. 
 
 For the working classes it would be a trying ordeal. 
 In a certain point of view they may be said to work for 
 fixed salaries ; because, in those countries, especially, where 
 population is somewhat dense, the employers of labour re- 
 sist the increase of wages, which deranges their plans and 
 baffles their calculations. Experience shows that when 
 provisions rise wages are not necessarily raised in the same 
 proportion. Not that an upward movement of wages does 
 
132 CONSEQUENCES OF THE FALL 
 
 not follow a continued dearness of provisions, but in the 
 majority of employments it follows far behind. The 
 working population are of all classes of society the most 
 dependent, because they are the most necessitous. Being 
 the least able to wait, owing to the pressure of want, they 
 are the more apt to resign themselves to the terms offered 
 them. Hence it is that the benefits which they expect to 
 derive from a rise of wages are only yielded to them after 
 many delays. It were easy to cite examples in proof of 
 this assertion. It has been the subject of remark by Mr. 
 Tooke, in his important work the History of Prices. In 
 his historical inquiry respecting the precious metals,* Mr. 
 Jacob has several remarks in the same sense, and among 
 others he states his opinion that the institution of the 
 Poor-Law, which it is known dates from the reign of Eliz- 
 abeth, was in England the effect of the changes caused by 
 the fall in the precious metals. This opinion has been re- 
 cently reproduced by an English writer, Mr. James Mac- 
 laren, in a remarkable publication, the title of which even 
 is calculated to excite an interest, and to which I shall 
 again shortly refer.f 
 
 The same observation applies to the numerous class of 
 other employes in manufactures and commerce, because 
 these employments are also overburdened. Those only, 
 who by their talents are above the average, would be able 
 to command an immediate increase of remuneration in 
 metallic money ; men of capacity, in whatever walk of life, 
 are the exceptions ; manufacturing capitalists, or intelli- 
 gent merchants, are too happy to find them, and neglect no 
 means of retaining them. But it is not with the exceptions, 
 but the masses, that we ought to occupy ourselves. 
 
 * On the Precious Metals, Vol. II., Chap. XX. 
 
 f Letter to the Chancellor of the Exchequer, on the resolution to whjch 
 the German States have come to adopt the silver standard, and on some 
 circumstances which render an invariable measure of value of more im- 
 portance to England than to any other country. 
 
IN THE VALUE OF GOLD. 133 
 
 Landed proprietors would be a privileged class in the 
 midst of this general derangement, inasmuch as the value 
 of land would increase gradually in proportion to the fall 
 of gold ; at the same time that the price of provisions, 
 which constitutes their income, would also rise. Yet even 
 they would, during the transition, have their share of care 
 and embarrassment. Their path would be strewn with 
 difficulties every time they had to sell their land ; for 
 what was at each instant the legitimate rise, the justifia- 
 ble increase of price, would be difficult if not impossible 
 to determine with any accuracy. In this article, as with a 
 multitude of others, transactions would assume a gambling 
 character. 
 
 It would be easy to cite many investments, at present 
 very much sought after, which would become hazardous, 
 inasmuch as the capital would diminish by a self-acting 
 process, and waste away, so to speak, by a species of con- 
 sumption. Such investments, so long as the transition 
 lasted, would lose the favour with which they are now re- 
 garded. In this category I should include all those which 
 may be termed financial investments, that is to say, those 
 of which not only the capital is valued in money, but 
 which will or may at a given moment be converted into a 
 sum of money fixed or nearly so beforehand, I mean into 
 a weight of metal previously determined with greater or 
 less precision. I have already cited the public funds and 
 railway bonds. Bank shares, and those of similar estab- 
 lishments, partake of the same character. In the countries 
 to which my present statement refers, and I repeat that 
 it is those which should possess in their monetary system 
 the gold standard, as well as those which should leave 
 things to take their course as if gold were legally invested 
 with that attribute, the loans of the State, of provinces, 
 and of cities, as well as those of public companies, would, 
 as we have already said, be- negotiated, so long as the 
 
134 CONSEQUENCES OF THE FALL 
 
 transition lasted., on harder terms than they had been pre- 
 viously. 
 
 But there are grounds for apprehending many other 
 difficulties, political or administrative. It would be ne- 
 cessary to enlarge the budget, for wherever the State ap- 
 peared as a customer, it would have to pay dearer than 
 formerly. It would, besides, be necessary to increase the 
 salaries of all its employes, civil and military. Even to 
 half satisfy only the just demand of its impoverished func- 
 tionaries, it would be obliged to call for further contribu- 
 tions from the taxpayers, for how numerous in certain 
 countries, in France for example, are the servants of the 
 State ! The augmentation of the budget, assuming it to 
 be considerable, means an aggravation of the public bur- 
 dens, which excites, even when justifiable, the popular 
 discontent, just in proportion to the degree to which tax- 
 ation is increased. I believe I run no risk of contradiction, 
 by any politician, in saying that a government which 
 should have to double the taxes in the course of a few 
 years would thereby incur very great perils. 
 
 Not but that several taxes could be named, and some 
 of them very productive, which, in the event of a fall in 
 gold, would yield spontaneously an increased revenue, just 
 in proportion to the fall in the precious metal. The du- 
 ties which adjust themselves to the value of the articles 
 taxed are of this number. This would be the case in 
 France with the registration tax, which is nearly always a 
 percentage on the amount of capital employed in the 
 transaction subjected to the tax. It is the same with the 
 duties on beverages sold by retail. As for the customs du- 
 ties, those which are levied ad valorem, would afford this 
 natural increase ; but in nearly all countries, and especially 
 in France, they are the exception. But such imposts as 
 the land tax, which are expressed by fixed sums of money, 
 would have to be augmented by law, to be made to yield 
 
IN THE VALUE OF GOLD. 135 
 
 to the treasury a revenue of equal value. Now, is the 
 government of France disposed to present itself before the 
 legislative body to demand the doubling of the land tax, 
 by successive additions extending over ten or fifteen, or 
 even twenty years ? Does it believe that such a process 
 would benefit it much, or increase its popularity ? And 
 yet to some such measure as this would it have to resort. 
 
 Thus the budget would be subjected to a perpetual 
 revision, both in its expenditures and receipts. Every 
 three or four years it would be necessary to re-arrange the 
 tariff of the different imposts ; and to fix the rate of all 
 the salaries, from the pay of the soldier and sailor, or that 
 of the rural policeman, or the Custom-House officer, to 
 the income of the prefect, or the marshal of France, the 
 stipend of the great officers of State, and, in all conscience, 
 the civil list of the sovereign himself. It would also be 
 necessary to revise, more or less often, the scale of charges 
 of ministerial officers or agents of every kind, lawyers, bar- 
 risters, registrars, &c., a class of persons with whom there 
 is no escaping a reckoning, as recent experience has shown. 
 
 A similar operation would be necessary with the tariffs 
 of charges which have been fixed for a multitude of com- 
 panies, such as those of railways, canals, docks, and 
 bridges. In some cases these have been fixed so high, 
 originally, that the companies have not found it necessary 
 to levy the full rates. Of this number, however, we can 
 hardly specify more than those which relate to the freight 
 traffic on the railways ; beyond that, as, for instance, for 
 passenger fares, the full charge allowed by law is (in 
 France) levied. It would seem to me only consistent 
 with equity that the fares should be raised from the mo- 
 ment that a state of things, so unforeseen and so uncon- 
 trollable, arose as a recognised fall in the value of the 
 metal of which money was made. All these changes 
 of tariffs would be a labour of infinite difficulty for gov- 
 
136 CONSEQUENCES OF THE FALL 
 
 ernment, and an endless source of discussions with the 
 legislative body. 
 
 The endowments and incomes of charitable institu- 
 tions, which are frequently invested in the public funds, 
 a mode of investment which they are now urged to adopt 
 in preference to all others, would gradually diminish in 
 value, and, to maintain them on their original scale, it 
 would be necessary to resort for assistance to the State, or 
 to the localities. 
 
 Optimists will tell us that the inconveniences which 
 have been here indicated as the consequence of an increase 
 of the budget will not be serious, inasmuch as the value 
 of the pieces of money having fallen, the taxpayer will 
 not find himself surcharged if he be only called upon to 
 pay an increased number of pounds sterling, or of francs 
 corresponding simply with the depreciation of the metal. 
 But it must be borne in mind that it is only after a cer- 
 tain lapse of time that the public at large will have fa- 
 miliarised itself with the idea of a depreciation of the cur- 
 rency, and will have become reconciled to the consequence 
 in the form of an increase of taxation. If the rise in 
 every description of property, and in incomes of all kinds, 
 such as salaries, fees, &c., were to be effected uniformly, 
 according to the same gradation, the public intelligence 
 would soon accommodate itself to the change ; but mat- 
 ters would take a very different course. It is in the very 
 nature of things, I repeat, that such an event as the fall 
 in gold would be accomplished, so to speak, by jerks, and 
 by very unequal steps as respects the various objects af- 
 fected. It would be a confused state of things, arising 
 out of the action of accidental causes, which would fre- 
 quently and unexpectedly arise, and which would baffle 
 all control. To some extent it would be a justification for 
 the instinctive antipathy which the people feel for an in- 
 
IN THE VALUE OF GOLD. 137 
 
 crease of taxation, and supply them with arguments which 
 in their minds would have considerable force. 
 
 I do not believe I exaggerate in saying that the transi- 
 tion period, which it would be necessary to pass over be- 
 fore the fall had achieved its full effect, and gold had 
 regained a somewhat stable value, would offer features of 
 instability and discontent characteristic of revolutionary 
 epochs. On this subject I shall be excused if I here quote 
 an observation made by Mr. Jacob, in his work on the 
 Precious Metals, when describing the effects of the rise 
 of prices which followed the discovery of the mines of 
 America. 
 
 " There is some ground for the opinion," says he, 
 " that the tendency to increased expenditure (caused by 
 this rise of prices), whilst a large part of the revenue of 
 the crown remained stationary, was one of the causes 
 which gave rise to the civil war under Charles I., the 
 result of which was the loss of that unfortunate prince's 
 life." * 
 
 CHAPTER III. 
 
 ON THE GAIN WHICH WOULD EESULT TO CEETAIN CLASSES OF 
 PEESONS, AND TO SOCIETY, FEOM THE FALL IN GOLD. THE SAVING 
 TO THE STATE FEOM THE PAYMENT OF THE DIVIDENDS ON THE 
 PUBLIC DEBT. 
 
 WE have explained, rapidly and incompletely, the de- 
 plorable consequences which a fall in the value of gold 
 would entail. It is right to examine whether this revo- 
 lution would not also present some results of an advan- 
 tageous character. There is one very easy to comprehend ; 
 supposing that the fall of gold be to the half of its value, 
 
 * On the Precious Metals, Yol. II., p. 103. 
 
138 CONSEQUENCES OF THE FALL 
 
 a proportion that I enounce solely by way of example and 
 for clearness of illustration, it will follow that, at the end 
 of a given time, the raw material of certain articles of 
 luxury, altogether made of gold, will have fallen one-half. 
 Then we shall be able to strike our gold medals at a 
 cheaper rate ; the gold snuff-box will be a luxury within 
 the reach of a greater number of purses ; and our Croesuses 
 will be able on their fete-days to adorn their sideboards a 
 little more easily* with cups of gold. I say a little more, 
 and that is all ; for in these objects the art and design, 
 which form a considerable part of the price, will not have 
 fallen, but the contrary ; the fall will be confined to the 
 raw material. Still clearer is it that gilding will not ex- 
 perience a great reduction, for it is not the weight of gold 
 employed in it that constitutes its chief expense. I see 
 no other permanent advantages which a people, free from 
 the burden of a heavy national debt, can hope to derive 
 from this depreciation of gold, after the epoch when the 
 crisis of the transition shall have passed. The advantage 
 is not great, it must be confessed. There are few articles 
 in which a fall to the same extent would not be a greater 
 benefit. What a contrast, for example, with the service 
 that would be rendered to all classes of society by a re- 
 duction of one-half in the value of coal or iron, or even of 
 copper or lead ! I do not speak of bread or meat, in 
 which a reduction of price to the same extent would pro- 
 duce incalculable effects. 
 
 Independently of the facilities which the fall in the 
 value of gold would afford for procuring plate and articles 
 of luxury, into the composition of which this metal enters, 
 a certain compensation must be noticed, which would not 
 be unimportant. Having indicated the classes which 
 would suffer from the fall of gold, it must be added that 
 there would be gainers as well as losers. If the creditor 
 be obliged to give a discharge, on receiving a value smaller 
 
IN THE VALUE OF GOLD, 139 
 
 than that for which he believed himself assured, if, for 
 example, the 100 pounds sterling paid to him represent 
 only the enjoyments which he would have previously pro- 
 cured for fifty, he is assuredly a loser ; but the debtor 
 benefits to the same extent. The 100 pounds sterling 
 which he will have repaid, will have been procured with 
 one-half less labour or privations. Against the majority 
 of the losses which we have enumerated, there will, then, 
 be a set-off of gain of the same importance. On this 
 point two questions arise, which deserve our attention : 
 the one is whether for society, taken in its mass, there is 
 compensation ; and the other, whether equity sanctions 
 the loss which the one suffers, and the gain which the 
 other acquires. 
 
 On the first subject, I shall only add a word to the 
 remarks I have already submitted to the reader. Changes 
 which affect deeply, and suddenly, or in a brief interval, 
 a very great mass of interests, are nearly always to be 
 regretted, even when at the same time, and by the same 
 act, a considerable number of persons find themselves de- 
 riving advantages. It is for society a perilous trial, es- 
 pecially when the working population find themselves 
 among the number of the suffering classes ; it is, in fact, 
 they to whom patience is most difficult, since they possess 
 the fewest resources. Society would, under these circum- 
 stances, have to pass through an ordeal, which, I think, 
 I have justly characterised as revolutionary. If the qual- 
 ification be just, it enables us to appreciate all the dan- 
 gers of the transition. With skilfulness, and in a season 
 of tranquillity, a people may pass without disaster through 
 such a trial ; but it requires also good fortune. Now, 
 can any one, without presumption, flatter himself that 
 he will possess at any one moment, and enjoy during a 
 succession of years, these three gifts of heaven tran- 
 quillity, skill, and good fortune ? 
 
140 CONSEQUENCES OF THE FALL 
 
 Let us rather insist on the second question, that of 
 equity. It is not without its bearings on the first ; for 
 when events are in conformity with right, it is in human 
 nature generally to resign itself to them. On the con- 
 trary, indignation and resentment easily take possession 
 of a man when he feels that justice is violated in his per- 
 son. 
 
 Among the results which may be expected to arise 
 from the fall of gold in those countries where this metal 
 forms the sole or the dominant currency, I will recur to 
 one of the most important for the purpose of examining 
 it from an equitable point of view ; I return to the case 
 of a proprietor of government stock. Let us suppose the 
 case of an inhabitant of London, living on an income of 
 1,000 a year from Consols. During and after the depre- 
 ciation of gold, as well as before, he will receive his 1,000 
 discs of metal, containing, altogether, 7 kilogrammes and 
 318 grammes of fine gold ; but with this sum he will 
 have only the half of the enjoyments which he possessed 
 previously. Is there or is there not in such a diminution 
 of subsistence anything which can be taxed with spolia- 
 tion ? I do not think there is, in the case of England. 
 For what is the engagement into which that State has 
 entered ? By the very fact that England has a gold 
 standard, the creditor to whom the British government 
 owes a pound sterling can claim no more than the quan- 
 tity of gold, to which the law, once for all, has attached 
 the denomination of a pound, that is to say, 7 grammes, 
 318 milligrammes. The State is bound to furnish to 
 the creditor for a pound this quantity of metal ; it has, 
 strictly, no other obligation. If in paying the British 
 creditor in former times, when the value of gold rose in 
 proportion to other commodities, the government had at- 
 tempted to deduct from the dividend 2 or 3 per cent, or 
 more, it would have been denounced as an act of spolia- 
 
IN THE YALUE OF GOLD. 141 
 
 tion. In the possible case that the mines of Australia, 
 California, and Northern Kussia had remained undiscov- 
 ered till half a century later, and that the productiveness 
 of the old mines had diminished, the English government 
 would not have been justified in reducing the amount of 
 interest, and paying only three-fourths or two-thirds of a 
 sovereign instead of a whole one, under pretext that gold 
 had risen in proportion. The law is the same for the 
 debtors as the creditors. The latter have no claim beyond 
 the quantity of gold which has been agreed upon as form- 
 ing the pound sterling, if gold, instead of rising, should 
 fall in value. The two parties have run the risk of a va- 
 riation in the value of gold ; and to whichever side the 
 chance turns there is a legitimate profit. Thus, for Eng- 
 land, which has the gold standard, strict equity is not 
 violated by the change, unlucky though he be who may 
 prove to be the creditor of the State. There remains, 
 however, a question of social and political propriety on 
 which we shall afterwards offer some observations. 
 
 Would the case of France be similar to that of Eng- 
 land ? Would the former State, by the letter of the law, 
 or in equity, be warranted in profiting by the fall of gold, 
 and paying its debts in a cheapened currency ? Can it 
 take advantage of the circumstance, that the 29 centi- 
 grammes of gold which in the year 11 were equal to 4J- 
 grammes of fine silver, constituting the/rawc, appear now 
 for the moment to be of much less value, to pay its credi- 
 tors in gold ? This is a question of good faith, the solu- 
 tion of which, after the statements already submitted, 
 ought not to be very difficult. It would be a violation of 
 justice, because France has a silver standard. In the 
 French currency, silver, according to the preamble to the 
 law of the year 11, is the fixed point, and this fixed point 
 is the guarantee of the equity and honesty of transactions, 
 the security for the preservation of property. Nor is it 
 
142 CONSEQUENCES OF THE FALL 
 
 possible to swerve from this fixed point, without wanting 
 in probity, the rules of which States are bound, even 
 more than individuals, to observe. 
 
 If silver had fallen in value, the French government 
 would have been justified in paying its creditors in silver 
 as before. It is in silver that the agreement has been 
 made. The law has declared, once for all, that 4J 
 grammes of fine silver shall make a franc, neither more 
 nor less. Thus, as was declared by Gaudin, in a passage 
 which I have already quoted more than once : " He who 
 shall lend 200 francs can at no future time be repaid with 
 less than a kilogramme of silver,* which shall always be 
 worth 200 francs, and never be worth more or less." 
 
 Nobody can say that some day silver may not also 
 undergo a great fall, brought about by a production which 
 should be distinguished by the two following character- 
 istics : of being much greater in comparison with the em- 
 ployments to which it had hitherto been applied, and of 
 being produced under more favourable circumstances, 
 that is, at less cost per kilogramme for the metal obtained. 
 There are strong reasons for thinking that if the United 
 States annexed Mexico, and penetrated further into the 
 regions of Central America, this event would not be of 
 tardy accomplishment, under the auspices of a race so in- 
 dustrious and so enterprising as the Anglo-Saxons.f 
 
 It may be doubted, however, whether, unless under 
 circumstances of a most extraordinary character, the 
 change in the case of silver could be so sudden as it has 
 been in that of gold. The nature of the argentiferous de- 
 posits, the obstacles they offer to the miners, and the 
 complicated processes by which the metal is abstracted 
 from the ore, combine to reject the hypothesis of a rapid 
 
 * Of the standard of nine-tenths fineness. 
 
 f I have alluded to this subject in the third volume of my Political 
 Economy, Section III., Chapters I. and II. 
 
IN THE VALUE OF GOLD. 143 
 
 change in the value of silver. Nevertheless, a fall in 
 silver is an event to be anticipated, an event even proba- 
 ble at no very distant date, and it offers to the French 
 government a chance, and the only one, of profiting le- 
 gally at the expense of its creditors. 
 
 Owing to the discovery of the new gold mines, (if 
 those mines should continue to be what they have been up 
 to the present day,) a time will come when a change will 
 come over the British treasury, as if some genii, an enemy 
 of its creditors, had spirited away their dividend warrants, 
 and substituted others of only half their value. Not that 
 the number of pounds sterling due to them as principal, 
 and of which the interest is counted to them every six 
 months, will be diminished ; not that the quantity of gold 
 contained in the pound sterling will be lessened ; but the 
 British treasury will henceforth draw from the taxpayers' 
 each pound sterling, with as little difficulty to them, as it 
 previously took to pay a half sovereign ; and the unlucky 
 fundowners will obtain for the pound only half of the en- 
 joyments which it now procures for them ; and yet, in 
 strict right, they will have no reason to complain. As for 
 the French treasury, it will have no right, unless by a fla- 
 grant iniquity, to expect any similar profit from the dis- 
 covery of the new gold mines. 
 
SECTION VII, 
 
 OF THE MEASURES TO BE TAKEN TO AVERT THE 
 EVIL EFFECTS OF THE FALL OF GOLD. 
 
 CHAPTER 1. 
 
 CASE OF A STATE LIKE ENGLAND, WHERE GOLD IS THE STANDARD, 
 AND WHERE THERE IS NO OTHER MONEY BUT GOLD. 
 
 SUCH, then, is the perspective which presents itself to the 
 inhabitants of a certain number of States, and particu- 
 larly of France and England. Simultaneously with the 
 fall of gold, there will be a period of great suffering for a 
 very large number of interests worthy of consideration and 
 sympathy, a period full of danger to the tranquillity even 
 of States, and to the regular progress of society. In Eng- 
 land, an inflexible law seems to warrant these hardships 
 and sufferings. In France, which is threatened with the 
 same danger, we find a legislation which was matured half 
 a century ago, an intelligent, honest legislation, in the 
 name of which the aggrieved interests might loudly pro- 
 test, and declare that in them a sacred right had been de- 
 nied and violated. In these circumstances what ought to 
 be done ? 
 
 In the countries where gold is the monetary standard, 
 
TO AVERT THE EFFECTS OF THE FALL OF GOLD. 145 
 
 as in England, it is not easy to indicate what should be 
 done ; it may even be contended that there is no ground 
 for doing anything. Yet, even in England, some persons 
 have put forth the advice that the standard should be al- 
 tered, and that silver should be substituted for gold. 
 They ground their opinion primarily upen the plea of 
 principle, in maintaining that gold having ceased for an 
 interval of time, which may possibly be rather long, to 
 satisfy the essential condition of having a value relatively 
 stable, it thereby loses its aptitude for the functions of 
 money. 
 
 A change in the standard is a serious act, to which we 
 have no right to resort till after the gravest deliberation, 
 and until we are well assured that we have reason and jus- 
 tice on our side, as well as the highest and most legitimate 
 public interests. Still, the substitution of one precious 
 metal for another, for the important attribute of a 
 standard, would be far more easy to justify in the case of 
 abandoning the metal which was threatened with or had 
 already experienced a gradual fall, than if it were propos- 
 ed, as has been done by some persons in France, to divest 
 of the quality of the standard a metal which preserves a 
 relatively stable value, to bestow it upon another, the 
 value of which is undergoing a fall. Still, a change of 
 standard, even under the circumstances in which gold 
 would be replaced by silver, in England, at the present 
 time, would be open to very serious objections. Debtors 
 of every kind, to whom this substitution would necessarily 
 be prejudicial, would say, not without justice, that if it be 
 true that in the present state of the law, as regards the 
 standard, a fall in the value of gold must turn to their ad- 
 vantage, it is equally true that a rise, if it had taken 
 place, would have been to their detriment, and to the ben- 
 efit of their creditors : if fate has decided in their favour, 
 it is for their creditors to submit, as they should them- 
 10 
 
146 TO AVERT THE EVIL EFFECTS 
 
 selves have done in the opposite event : and, they might 
 add, have not there been periods in the modern history of 
 England when the debtor has had to suffer from the rise 
 in gold, either by comparison with its past value, or by 
 comparison with the paper money which he, the debtor, 
 had received when he borrowed in the period from 1797 to 
 1821, and which he has since the latter date had to repay 
 in gold ? And has not this been attended with precisely 
 the same result as if the theory of a rise in the precious 
 metals had been realised ? If, in these circumstances, 
 they had demanded a change in the monetary system of 
 the country, they would certainly not have been successful. 
 By the same reason, may they say, there would be no 
 ground now for entertaining the remonstrances which the 
 creditor might offer on the occasion of a depreciation in 
 gold. 
 
 An argument which, in the eyes of the public author- 
 ities of England, will weigh with great force, and incline 
 the balance towards the maintenance of the present stand- 
 ard, is furnished by the enormous amount of the public 
 debt, the annual interest of which amounts to about 28 
 millions sterling, or 700 millions of francs. It is a burden 
 which, whilst it remained nominally the same, would, in 
 fact, be alleviated to the extent of one half to the tax- 
 payer, provided that the present standard were preserved 
 whilst the value of gold had fallen in the above proportion ; 
 and, in effect, when once the fall in the metal was accom- 
 plished, it would be as easy, on this assumption, to pay 
 two pounds sterling of taxes as one pound at the present 
 time. A less decided reduction of the heavy burden of 
 the national debt, would, in all probability, be a powerful 
 argument with such an assembly as the parliament, which 
 leans naturally in the direction where relief may be had 
 for the contributors to the revenue, and which in the pres- 
 
OF THE FALL OF GOLD. 147 
 
 ent case would have powerful reasons for justifying such a 
 course. 
 
 With regard, however, to this advantage, which it 
 would be warranted in strict right to claim for the tax- 
 payer, parliament ought to weigh the mass of inconveni- 
 ences, and even of perils, which must necessarily result 
 from the maintenance of a currency in a decided course of 
 depreciation. I have indicated what are the changes 
 which a fall in the metal, of which money is made, might 
 occasion to a multitude of interests. It ought, I think, to 
 be enough to kindle the emotions of even a statesman 
 possessed of the firmness which distinguishes peculiarly 
 the governments and people of England. But yet, it 
 would be easy to add to the generalities which I have 
 already presented, other facts springing from the social 
 life and habits of England. The part performed by the 
 British funds is very extended. Consols are the invest- 
 ment of a mass of capitals which are worthy of the par- 
 ticular solicitude of the legislator. The funds, which are 
 held by trustees, or under the guardianship of the Court 
 of Chancery, and which constitute the fortune of a multi- 
 tude of minors, are all placed in the public funds, or on 
 mortgage, which amounts to the same thing ; I mean, 
 runs the same risk. The endowments of a multitude of 
 churches, schools, hospitals, and valuable institutions of 
 all kinds, are also invested in the public funds. In a 
 great number of cases, the fortunes which a father leaves 
 to his younger children are represented by sums of money 
 charged upon his estate, the interest of which the oldest 
 son discharges. The number of persons who live upon 
 life-incomes, or who have already made payments with a 
 view of some day securing one, is very considerable in 
 England. Life assurance, with a view of securing to a 
 person a certain income in case of such or such an event- 
 uality, is practised by the English to an extent of which 
 
148 MEASURES TO AVERT THE EVIL EFFECTS 
 
 we have no idea in France. The consequence is, 
 however, clear. Under these various forms, and even 
 under others, myriads of existences would be troubled ; 
 the very foundation of property would be assailed in the 
 mode of its partition among children ; habits worthy of 
 encouragement, such as assurances of lives, with their 
 multiplied combinations, would be destroyed. The cus- 
 tom of making investments in the public funds, which is 
 eminently favourable to the credit of the State, and at 
 the same time tends to perpetuate prudence among the 
 people, would be deprived, during a considerable lapse of 
 time, of the advantage which it now offers of guarantee- 
 ing for the future a certain degree of comfort, thus 
 necessarily weakening, if it did not destroy, this motive 
 to accumulate. Taking into account the whole of these 
 circumstances, and the discouragement which would be 
 thrown upon habits which are so favourable to society, 
 and even to the British treasury, there is enough to make 
 parliament pause even when in presence of the temptation 
 which an effective reduction of the public debt could not 
 fail to exercise.* 
 
 CHAPTER II. 
 
 CASE OF A STATE SUCH AS FEANCE, WHEEE THEEE IS A SILVEE 
 STANDAED, BUT ALSO A GOLD CUEEENCY. 
 
 IN States, like France, where the law acknowledges only 
 a silver standard, and where of right gold fills in the 
 monetary system but a subordinate rank, the remedy of 
 the evil is, in a great measure at least, less difficult to 
 discover, and the legislators, in corning to a decision. 
 
 * These considerations, among others, are presented with great force by 
 Mr. James Maclaren, in the work which I have already cited. 
 
OF THE FALL OF GOLD. 149 
 
 would have fewer perplexities to surmount than in the 
 case of England. It would suffice if we were to put an 
 end to the toleration, contrary evidently to the spirit of 
 our laws upon the matter, in virtue of which gold will 
 continue indefinitely, unless provided against, to take its 
 place in the circulation on the same conditions as if it 
 always preserved, in comparison with silver, the same 
 value that it had done half a century ago. 
 
 In the system of French legislation, if gold instead of 
 being worth, as in the year 11, 15^ times its weight in 
 silver, were only worth the half, that is, 7f times, it would 
 be necessary to take such measures with regard to the 
 currency, that that which should be a franc in gold, that 
 is to say, the legal equivalent of the piece of 5 grammes 
 of silver, of nine-tenths fineness, should comprise 58 centi- 
 grammes of the precious metal. Such is the spirit and 
 even the text of the law. It would be necessary to sub- 
 ject the gold coinage to an analogous change, should gold, 
 instead of falling one-half, only fall to ten times the value 
 of silver, or to twelve, or fourteen, or even to fifteen times. 
 Now, by what mode is this transformation to be arrived 
 at ? Would it be by recoining the pieces of 10, 20, or 
 40 francs, so as to just double the fine metal which they 
 contain, on the hypothesis of a fall of one-half? 
 
 So understood, the process of recoining would encoun- 
 ter, in its execution, a difficulty which appears to me in- 
 surmountable : to have always coins of a fixed value, of 
 20 francs for instance, it would be necessary to repeat, 
 indefinitely, the process of melting; it would have to be 
 resorted to whenever gold declined 3 or 4 per cent, in 
 comparison with silver, or, more properly speaking, at even 
 shorter intervals.* Gold coins would have hardly left the 
 
 * I remember that a change of one and a half per cent, in favour of gold, 
 about 30 or 40 years ago, caused it to disappear entirely from commercial 
 payments. 
 

 150 MEASURES TO AVEET THE EVIL EFFECTS 
 
 scales before it would be necessary to return them there 
 again. Such a fluctuation in the intrinsic value of a gold 
 coinage is repugnant to common sense, and is absolutely 
 inadmissible. Such a process of remelting may have been 
 tolerated when a slight variation in the value of gold was 
 foreseen, and also on the supposition not a very probable 
 one that the period of the disturbance would only last, 
 so to say, for a moment, and be followed immediately by 
 an almost mathematical stability. From the moment 
 that there is a prospect of a considerable variation, which, 
 from its very magnitude, cannot be completed until after 
 a considerable lapse of time, and which seems likely to be 
 attended with many fluctuations, this expedient becomes 
 impracticable, nay, let me say, chimerical. 
 
 It would be better to recoin the gold once for all, and 
 adapt it to another system, by giving the coins a fixed 
 weight, in relation, simply, with the base of the metrical 
 system, instead of always trying to bring them, by altera- 
 tions of weight, to a fixed value, such as 40 francs, 20 
 francs, or 10 francs. Pieces of gold might be coined of 5 
 grammes or of 10 grammes, like the piece of one franc in 
 silver, which weighs just 5 grammes, and the piece of two 
 francs, which weighs ten. It would be to revert to the 
 plan which was recommended by Mirabeau, by the old 
 authorities of the mint, by the Institute as a body, which 
 was adopted by the legislature in the year 3, and to which, 
 in the year 6, it gave a renewed proof of its adhesion.* 
 It is, also, the idea which was recommended by the sec- 
 tion of finance in the Council of State during the discus- 
 sions of the year 11. The value of these pieces, that is 
 to say, the number of francs and fractions of francs which 
 they would be worth, would vary according to the mar- 
 ket value of gold in comparison with silver. To save in- 
 
 * See Section IV., Chapter III., for what passed on the occasion in the 
 two legislative councils. 
 
OF THE FALL OF GOLD. 151 
 
 dividuals from the annoyance of bargaining over each pay- 
 ment, this value might be fixed every six or twelve 
 months, by an official regulation which should give, for 
 the basis of the value of the gold coinage, the market 
 value of this metal, in comparison with gold on the prin- 
 cipal exchanges of Europe, such as London, Paris, Ham- 
 burg, or even the average of the exchange between these 
 different States having different metals for their standards. 
 This would be to adopt the first idea of Prieur, and the 
 Committee of the Five Hundred, perfected by Cretet and 
 the Committee of the Ancients. 
 
 Nevertheless, it is a question for consideration, whether 
 the payments from individual to individual, to which this 
 legal quotation of gold applies, should not be limited to 
 a certain maximum, such as, for instance, the sum of 
 1,000 francs (40), and whether for larger sums the 
 transactions of individuals ought not to be left to the con- 
 tract of the parties. 
 
 The arrangement which I have just indicated, I mean 
 the recoining of the gold currency into new pieces, con- 
 taining a round number of grammes, is of all plans the 
 most philosophical, and the most in conformity with the 
 best established views respecting the currency : habit 
 would soon easily accommodate itself to it, and it is that 
 which gives to the future the surest guarantees against 
 such monetary derangements as we are now undergoing. 
 The only fault to be alleged against it, is the necessity not 
 only for a general but an immediate recoinage. With a 
 little reflection, however, it will be found that the incon- 
 venience is not serious, for it will be very easy, and at lit- 
 tle expense, to melt and recoin one or two milliards (40,- 
 000,000 or 80,000,000), and the circulation of France 
 restored to its normal state, will not require two milliards 
 of gold, alongside of the silver money and bank notes.* 
 
 * The cost would be 6 francs, 70 centimes (7s. lid.) for a kilogramme of 
 
152 MEASURES TO AVERT THE EVIL EFFECTS 
 
 Another and more simple expedient might be adopted, 
 provisionally, until the new coinage was determined upon, 
 and which would change the state of things instantly and 
 without expense. A law might be passed declaring that 
 henceforth the piece of 20 francs shall only be worth 19, 
 or 19 francs, 50 centimes ; afterwards, when the fall of 
 metal shall have been more decided, a new law might pro- 
 nounce it to be worth 18 francs, 50 centimes, or IS francs, 
 and so on. This is what was done in Kussia, where the 
 edict of 1810, which offers a great analogy to the French 
 law of Germinal, year 11, had ordered the fabrication of 
 imperials and half imperials, in gold, of 10 and 5 roubles, 
 the rouble being a silver coin serving for the monetary 
 unit. In consequence, many pieces of gold of 5 roubles 
 have been struck, bearing the inscription in letters, of five 
 roubles, as our Napoleons bear that of twenty francs. 
 The edict of the 1st (13) July, 1839, which is the com- 
 plement of that of 1810, finding the relation of the metals 
 a little altered, gold having risen in value in Kussia and 
 throughout the world, enacted that henceforth the half 
 imperials, called pieces of 5 roubles, should pass for 5 
 roubles and 15 copeks, which was found to work very well, 
 notwithstanding the name of Jive roubles inscribed on 
 these coins. I do not see why the same process should 
 not be resorted to in France, and in the countries where 
 the monetary legislation is the same ; only in an inverse 
 way to that which was practised in 1839 ; for gold having 
 now fallen in value instead of rising, it should not be by 
 an addition being made to the value of the gold coins, but 
 by subjecting them to a deduction, and this deduction 
 might be more decided at a later period, when occasion 
 
 coined gold, that is of the fineness of nine-tenths, making at present 3,100 
 francs (129. 3s.) For 325,000 kilogrammes of gold, which would make 
 more than a milliard (40,000,000), it would be 2,177, 300 francs ; thus for 
 2 milliards it would be a little more than 4 millions (160,000). 
 
OF THE FALL OF GOLD. 153 
 
 arose, which would be seen by a comparison of the mar- 
 ket value of the two metals. 
 
 In the same way in Spain, where a succession of edicts 
 changed the relations between the quadruple of gold, and 
 the silver dollar, in conformity with the variations which 
 these two metals had undergone in their respective values. 
 One of these edicts is dated July 17, 177& There is, 
 however, this difference,, that in Spain the quadruple did 
 not bear an inscription declaring it to be equivalent to such 
 or such a number of dollars, the same as under the an- 
 cient regime ; in France the gold coins, the louis and the 
 double-louiSj did not bear an inscription which said that 
 they were worth 24 and 48 livres. The law assigned to 
 them this value in relation to silver coins, which were 
 either the livre or the multiples of the livre; but the law 
 could be modified in this respect without leaving the in- 
 scription on the gold coins in contradiction with the new 
 value which had been given them. 
 
 In a State where the currency is regulated by laws 
 such as those which subsist in France, this inscription of 
 the words forty francs, twenty francs, or ten francs, on 
 the gold coins, or any similar inscription which might be 
 used in another country, where, moreover, the law should 
 have laid down the principle of a silver standard, is not 
 of a nature to prevent the legislator from assigning to the 
 existing gold coins a successively diminished value, and 
 conformably at each instant to the relation between the 
 value of gold and that of silver. 
 
 So far as I understand the monetary legislation of the 
 Empire of Kussia, the government of the Czar was per- 
 fectly warranted in altering the value of the gold imperial 
 in roubles, in the manner I have just indicated. In the 
 same way with France, in virtue of her monetary constitu- 
 tion, the government would be doing nothing which was 
 not in conformity with reason and justice in modifying the 
 
154 MEASURES TO AVERT THE EVIL EFFECTS 
 
 value in francs of her gold coins, of, say, 10, 20, and 40 
 francs, conformably with the variations in the value of 
 gold in relation to silver, which is the metal of her mone- 
 tary unit. What is, in fact, the meaning of the words 
 ten francs, twenty francs, or forty francs stamped upon 
 our pieces of gold ? Do they mean that these coins shall 
 he necessarily, and forever taken for the sum of 10, or of 
 20, or of 40 francs ? Assuredly not, for this interpreta- 
 tion would be contrary to the spirit and letter of the law. 
 It would, in fact, be to say, that gold, as well as silver, is 
 the standard. The quality of standard implies immuta- 
 bility of value ; it reveals itself only by this immutability, 
 and the immutability in its turn implies the quality of 
 standard. The words inscribed on the gold coins struck 
 since 7th Germinal, year 11, have only a restricted and 
 provisional meaning, they express a material fact, name- 
 ly, that at the moment when these pieces have been coin- 
 ed, the relation between the two metals was such that the 
 weight of gold contained in the coins called 10, 20, or 40 
 francs is the equivalent of 10, 20, or 4:0 francs, that is to 
 say of 10, 20, and 40 times 5 grammes of silver of nine- 
 tenths fineness, or that, if there is a difference, it is so 
 slight that in small transactions, it is not worth notice. I 
 say small transactions, for under the regime of the law of the 
 7th Germinal, year 11, gold ceased to figure in operations 
 a little considerable, since it acquired an appreciable pre- 
 mium. People carried their gold to the money-changer, 
 in order to pocket the premium, and, as all the world 
 knows, they made their payments exclusively in silver. 
 
 The French legislator intended that where the variation 
 in the value should become sufficiently sensible to destroy 
 the equilibrium between the respective weights in gold and 
 silver, represented by the numbers 1 and 15 J, the govern- 
 ment should not only have the right, but the duty of ef- 
 fecting a recoinage, with a view to protect the interests 
 
OF THE FALL OF GOLD. 155 
 
 towards which the legislator contracted a solemn engage- 
 ment in the year 11, interests perfectly respectable, and 
 in fact, the interest of society in the mass. This obliga- 
 tion is especially binding in the case, which is now immi- 
 nent, in which the variation of gold has been in the direc- 
 tion of a fall ; for, in the opposite case, that of the rise of 
 this metal, no wrong can possibly arise. In fact, no one 
 could then be wronged, unless it were the debtor who dis- 
 charged his obligations in gold ; but it is evident that 
 the debtors would in such a case pay in silver, nothing but 
 silver. How can it be supposed that a debtor would go 
 in search of the dearer metal, and not make his payments 
 in the cheaper ? In fine, what payment of any impor- 
 tance was made in gold coins in the twenty years which 
 preceded the discovery of the mines of California and Aus- 
 tralia ? 
 
 Now, if the legislator has the right and duty to recoin 
 the gold currency, in order that in the piece of 20 francs, 
 to speak only of this particular coin, there shall hence- 
 forth be a larger quantity of gold, he has equally the right 
 to effect another operation, in substance identically the 
 same, that of enacting that the piece actually called 20 
 francs shall only be worth 19J, or 19J, or 19, and after- 
 wards 18, if such is the value which results from the com- 
 parison of the market price of the two metals. 
 
 Substantially, in all the systems of recoining, as in the 
 case where we might adopt, provisionally, the plan of leav- 
 ing the present gold coins to circulate, assigning to them 
 a less value than that inscribed on their reverse, the only 
 embarrassing question is to know who shall bear the loss 
 representing the diminished value of the metal. For every 
 particular coin, in the actual state of things, this loss would 
 be very limited ; but bearing in mind the enormous amount 
 of coinage which has taken place, the total loss would 
 amount to a very large sum. Whatever was the expense 
 
156 MEASURES TO AVERT THE EVIL EFFECTS 
 
 to which it might be necessary to submit, that would be 
 no sufficient reason why the State should shrink from its 
 responsibility and falsify the natural meaning of the law, 
 if it was really in equity bound to support the loss. How- 
 ever, on this point, it seems to me that there are sufficient 
 reasons for maintaining that the diminution of value would 
 fall legitimately on the private holders of the coins, in- 
 stead of being made a charge upon the State. What are 
 the grounds in virtue of which the State should be made 
 to bear this sacrifice ? The persons who maintain this 
 opinion urge that the State in issuing these pieces, having 
 assigned to them the value of 20 francs, that is to say of 
 a hundred grammes of nine-tenths fineness, has made it- 
 self responsible, and that it is bound to redeem them on 
 this footing, if it decides that they shall cease to circulate 
 at their present value. This argument has but one fault, 
 that of wanting a foundation, for the fact on which it 
 rests does not exist. It is not the State which has issued 
 the pieces of gold money any more than the pieces of sil- 
 ver ; it is by private individuals that the emission has 
 been made. In France, the part of the State, with re- 
 gard to the coining of money, reduces itself to a simple 
 surveillance. It certifies, with solemn forms, and the so- 
 lemnity is here well-placed, that the coins which issue from 
 the scales possess the weight and fineness intended by the 
 law. The directors of the mint undertake to work by con- 
 tract, according to a tariff which the government has set- 
 tled for private individuals, who, possessing gold and silver, 
 wish to convert those metals into coins. They do not 
 manufacture on account of the State. Under the ancient 
 regime, when Louis le Bel committed scandalous frauds 
 on the currency, the mints worked on account of the king. 
 It may have always been so whilst the sovereign appro- 
 priated to himself, under the name of seignorage, or any 
 other name, an exorbitant profit upon the coinage. On 
 
OF THE FALL OF GOLD. 157 
 
 the contrary, it is now a settled principle that the State 
 should gain nothing by the mint, and that the charge to 
 be levied on the gold and silver brought to be coined should 
 be as moderate as possible, so as to represent merely the 
 expenses and interest of capital.* So true is this, that 
 we see in France that, in proportion as the process of 
 coining is perfected, the tariff of charges at the mint di- 
 minishes. There are even States where, as in England, 
 the public treasury supports the expenses of coining. 
 Under such circumstances, can there be any ground for 
 saying that in France, the State has guaranteed anything 
 to the public, on the subject of the gold coins, beyond the 
 exactness of the weight and fineness decreed by the law ? 
 And if it be settled that the law, both in spirit and letter, 
 decides that the gold coins remain the equivalent of 20 or 
 of 40 francs, in payments, only so long as the respective 
 value of the two precious metals shall continue to be de- 
 fined by the relation of 1 to 15J-, would those individuals 
 who should not take advantage of their pretended igno- 
 rance of the law, be warranted in showing their astonish- 
 ment at learning, some fine day, that the disc of gold 
 which they have in their pocket, which had been previously 
 worth 20 francs, was, henceforth, worth only 19J or per- 
 haps 19J? 
 
 The argument attempted to be drawn from a pretended 
 ignorance of the law, with a view to relieve the holders of 
 coins from the charge which will fall on them in case of 
 the recoinage of which we are speaking, cannot be received; 
 it is a matter of right, well determined ; but here there 
 can be no pretext for invoking it, for the law of the year 
 11 could not be represented as an improvisation, some- 
 thing dispatched privately, without previous warning. 
 
 * In reality, the directors of the mints come to an agreement with the 
 capitalists who carry on the commerce of the precious metals, and their real 
 benefit consists in the profits inherent in this commerce. 
 
158 MEASURES TO AVERT THE EVIL EFFECTS 
 
 Far from it, this law, finally drawn up with much deliber- 
 ation, in the silence, it is true, in which the legislative 
 mechanism under the Consulate worked, had been pre- 
 ceded, and announced by a great number of discussions, 
 of projects of laws, of laws even, ever since the year 1789. 
 Under the Constituante, the voice of Mirabeau thundered 
 forth the fundamental conditions of this law, and from 
 this moment to the year 11, during fourteen consecutive 
 years, the most remarkable unanimity of opinion was dis- 
 played in favour of the general ideas, which were defin- 
 itively embodied in the law of the year 11. It was diffi- 
 cult to be more thoroughly warned than was the public 
 in this affair. 
 
 To this opinion, that the State would not have to in- 
 demnify any one in changing the gold currency, two prece- 
 dents are opposed, drawn from the practice of two govern- 
 ments distinguished for their intelligence, their integrity, 
 and their knowledge of business. Belgium and Holland 
 have modified their legislation on the subject of their gold 
 currency, and, in this operation, the diminution of value 
 which the gold coins have undergone, in consequence of 
 the fall of the metal, has been placed to the charge of the 
 State. In Belgium, and in Holland, the State, in with- 
 drawing from the gold coins the legal tender, offered to 
 the holders the nominal value at which they had previously 
 passed, in silver. We are asked whether this is not a rea- 
 son why the State should do the same in France. 
 
 The example of Belgium, which had a monetary legis- 
 lation analogous to that of France, cannot, however, have 
 here much weight. Belgium had no gold coinage until 
 1847. A law then authorised the fabrication of national 
 gold pieces of 25 francs, and of 10 francs; but the issue 
 was expressly limited by the law to 20 million of francs 
 (800,000), and it only attained to 14,646,025 francs 
 
OF THE FALL OF GOLD. 159 
 
 (585,841).* This money was only in an experimental 
 state in Belgium when it was thought that it might be 
 proper to deprive it of its legal attribute. The adminis- 
 tration received., by the law of 28th December, 1850, 
 powers to this effect, which it might use when it should 
 judge the circumstances opportune. It only availed itself 
 of the law in 1854 (royal edict of the 15th August). At 
 this time the depreciation of gold in comparison with sil- 
 ver was very trivial. In engaging to pay the nominal 
 value of the gold pieces in silver currency, the State in- 
 curred no risk of any serious loss. In fact, this restitution 
 has cost it nothing. The National Bank and the Societ& 
 Generate have supported, each the moiety, the moder- 
 ate loss to which the operation has given rise.f By this 
 proceeding, the Belgian government contrived to parry be- 
 forehand, without in the least compromising its finances, 
 the objections which discussions on such matters will raise 
 in a parliament. I do not pretend that Belgium has done 
 wrong ; but it does not seem to me that what she has done 
 should be a precedent to bind France. 
 
 In Holland, the question of reimbursement in silver 
 presented greater difficulties, for there had been coined a 
 much larger mass of gold money. The pieces of 5 and 10 
 florins formed a total of 172,583,995 florins, or 370 mil- 
 lions of francs^ (14,800,000). In proportion to the 
 population it is as 5 milliards for France (200,000,000). 
 Nevertheless, the Dutch government did not hesitate to 
 
 * When these gold pieces were demonetised, only 11,987,300 francs 
 (479,692) were presented for payment. 
 
 f It appears from the published account of the National Bank that its 
 loss by this transaction amounted to 140,032 francs, 67 centimes (5,601). 
 It found a compensation in the use of the funds which the treasury had left 
 in its charge. 
 
 \ It is curious that less than a third should have been presented for re- 
 imbursement, exactly 49,790,970 florins. On this subject, however, it must 
 be borne in mind, that of the sum of about 173 millions of florins which had 
 been coined, 96,490,590 had been struck in Brussels. 
 
160 MEASURES TO AVERT THE EVIL EFFECTS 
 
 assume the charge for reimbursement in silver. But, was 
 the legislation of Holland the same as our own ? Did 
 not the Dutch law admit of the two standards ? If it 
 did, the State was bound in honesty by an engagement, 
 tacit at least, to barter the coins made of one of these 
 metals for a value, nominally equal, in coins of the other, 
 whenever it should decide to modify its monetary system, 
 by demonetising its gold currency. There is nothing in 
 that which is applicable to France. 
 
 I have said that the legislation of Holland recognised 
 the two standards. The text of the law of the 28th Sep- 
 tember, 1816, which was the fundamental monetary act 
 of the Netherlands, warrants a doubt on this point, and 
 it may be said that that law did not solve the question of 
 the double or single standard ; the question was never 
 mentioned, but that was itself sufficient to solve it. If 
 it had been intended that there should be only one stand- 
 ard, which would have been regarded as an innovation 
 upon the old usages which they were reviving, the exposS 
 des motifs would have made it known ; but there is noth- 
 ing said, absolutely, either in that document, or in the 
 preamble at the head of the act : moreover, the Dutch 
 legislator himself, of 1816, the period in question, appears 
 always to have thought that the country was under the 
 regime of the double standard. The text of several laws 
 proves it. We may refer, for example, to the preamble 
 of the law of the 26th November, 1847. 
 
 Another difference, worthy of being cited, between the 
 monetary legislation of the Dutch and that of France, 
 consists in this, that in Holland the gold pieces of 5 and 
 and of 10 florins, which are those that the government 
 withdrew from circulation, paying for them in silver, florin 
 for florin, had been issued by itself and on its own respon- 
 sibility. It had expressly reserved to itself the monopoly 
 of this issue, and it was only just that it should support 
 
OF THE FALL OF GOLD. 161 
 
 all the risks.* The part played at the mint by the 
 French government is, as we have seen, very different 
 from this. 
 
 Upon the point under discussion, that is as to the 
 party on whom should fall the expense of a recoinage, or 
 the loss on the value of a piece of gold, it may "be here re- 
 marked that the case had been already foreseen in some 
 of those documents which served for a preparation for the 
 law of 7 Germinal, year 11, particularly in the first report 
 of Gaudin to the consuls. Now, on the course to be taken, 
 Gaudin never hesitates ; he says in express terms " The 
 expense shall be borne by private individuals." It is a 
 passage in his report which I have repeatedly quoted in 
 the course of this work. Nothing occurred to impair the 
 force of the words of Gaudin in the course of the long 
 preparation which the law underwent ; and this, if I mis- 
 take not, is an argument of some weight. 
 
 It must not be supposed that, in the present state of 
 things the loss would be serious for the bulk of individu- 
 als, even of the rich. At this moment the depreciation 
 of gold, in comparison with silver, is very small ; and con- 
 sequently for a sum of 1,000 or 2,000 francs, which is as 
 much as a person in easy circumstances has ordinarily in 
 hand, with very few exceptions, the loss, supposing it to 
 be 1 per cent,f would be 10 or 20 francs ; let us double 
 it, and still it is insignificant compared with the fortunes 
 
 * The article 11 of the fundamental law on the currency of Holland, of 
 the 28th September, 1816, runs thus : "The coins for the convenience of 
 commerce shall only be fabricated for the account of individuals. The 
 pieces of 1 florin and of 3 florins may also be fabricated on account of indi- 
 viduals ; but the pieces of gold of 10 florins, the pieces of fractional parts of 
 the florin, and coins of copper, shall not, absolutely, be fabricated for the 
 account of individuals, but only for the account and by order of the gov- 
 ernment." Later, when it was decided to coin pieces of gold of 5 florins, 
 they were subjected to the same regime as those of 10. 
 
 f In Belgium, where, in consequence of the new legislation on the cur- 
 ency, tlie phenomenon of the variations of value between the two metals 
 11 
 
 \ 
 

 162 MEASURES TO AVERT THE EVIL EFFECTS 
 
 of those persons. Besides, to those who complained, there 
 would be the right to reply that the government imposes 
 no sacrifices on them, that it limits itself to the putting 
 an end to a fiction and a confusion prejudicial to the 
 public interest, and that, if they find themselves injured, 
 it arises out of the nature of things exactly the same as 
 when a fall takes place in wheat, wine, cattle, or cotton 
 goods. 
 
 But one word more. Even if we should be of opinion 
 that it is the State which ought to bear the diminution 
 of value which the gold coins have now sustained, that 
 would be no reason for not proceeding with the change. 
 Imperious motives, economical and political, command us 
 to take a decided course. We should prepare for our- 
 selves much future regret, if we were longer to delay. 
 The expense of a recoinage, made even at the cost of the 
 State, is as nothing compared with the losses to which we 
 shall subject ourselves if we do not hasten to act in accord- 
 ance with sound principles, and to the prescriptions of the 
 law faithfully interpreted. Nevertheless, however small 
 may be the chance one has in France, where he sustains the 
 public interest against the interests of individuals, I can- 
 not refrain from repeating that from the terms of the 
 documents which define the sense of the law, and accord- 
 ing to the text, reasonably interpreted, of the law itself, 
 
 is more apparent than with us, the 20 franc gold pieces have never lost 
 much, in comparison with silver ; at the outside \ per cent : they are re- 
 ceived at par in the hotels, and in the large shops. It is probable, how- 
 ever, that if France abolished the legal relation of 1 to 15- between the two 
 precious metals, the fall in gold would be more decided, because Franco 
 now plays the part, at her own expense, as I have already shown, of a para- 
 chute for gold. So long as she offers to the bullion merchants a market 
 where they can barter their gold for silver on the footing of 1 against 15, 
 the value of gold in its relation to silver cannot, in Europe, deviate much 
 from this relation. The deviation will only become more decided from the 
 moment when France shall have been exhausted of her silver, unless she 
 shall have previously renounced that fixation, henceforth arbitrary. 
 
OF THE FALL OF GOLD. 163 
 
 the State is not bound to offer any indemnity to the hold- 
 ers of the gold coins. 
 
 If the legislator were now to adopt the conservative 
 measures which have been indicated above, and to which 
 he is led by a fair interpretation of existing legislation, we 
 are warranted in believing that everything would pass 
 without shock, and that the instrument of exchanges 
 would remain in the condition of abundance required for 
 the ordinary extent of our transactions. There is, in fact, 
 still a good deal of silver in the departments. At the 
 height of the extraordinary demand for silver which has, 
 of late years, manifested itself for India and China, but 
 which has slackened in 1858, Belgium and Holland, which 
 have now no legal currency but silver, have, experienced 
 no want of metallic money, and this is a double experience 
 which is convincing. Then we must not forget that, with 
 the combination which I have quoted from the proposition 
 of the Council of the Five Hundred, modified by the 
 Committee of the Ancients, gold would not cease to circu- 
 late in France in large proportions. There is no visible 
 reason why under this regime, much less absolute than 
 that which has been adopted in Belgium and in Holland, 
 gold should retire from the circulation. Everything, on 
 the contrary, leads to the belief that it would remain to 
 the extent to which we should require it. With' respect 
 to the precious metals, that which would be thenceforth 
 interrupted, and it would be so to the great advantage of 
 the public, is the current, so violent for several years, 
 which replaces, in the circulation of France, the silver 
 money by a gold currency, and which, if it be not arrest- 
 ed, will overturn the monetary system which the legisla- 
 ture of France, regenerated by the Kevolution, flattered 
 itself it had firmly established upon immutable founda- 
 tions. 
 
164 
 
 MEASURES TO AVERT THE EVIL EFFECTS 
 
 CHAPTER III. 
 
 THE MEASUllE IIEKE EECOMMENDSD IS A NECESSAEY COMPLEMENT 
 OF THE LAW OF GEEMINAL, YEAK XI. 
 
 I BEG the reader to observe that the combination which 
 has been discussed in the preceding chapter, relative to a 
 gold currency, ought not to be represented asy in any de- 
 gree, the negation of the law of the year 11. It is, on the 
 contrary, its complement, the necessity of which has been 
 demonstrated by experience. The object which the minis- 
 ter of finance, Gaudin, had in view, and which the legisla- 
 tor decided resolutely to carry out, was to prevent all dis- 
 pute between private individuals relative to the value of a 
 gold currency in francs, or, in other words, in pieces of 
 silver, since the law has defined the franc to be a weight 
 of silver agreed upon once for all. The means employed 
 was a legislative fixation, which should be conformable to 
 the commercial value of the two metals, in their relation 
 the one to the other. The adversaries of Gaudin, as may 
 be seen by the reports of Berenger, vainly objected that 
 this fixation by the law appeared superfluous, and cited 
 some States where gold circulated simultaneously with 
 silver without difficulty, without any intervention from 
 the legislative or administrative authority. The majority 
 of the Council of State, and afterwards the Tribunal of 
 the Legislative Body, both of which deliberated very 
 maturely, thought that, to insure the parallel circulation 
 of gold and silver coins, a fixation by law of the relation 
 existing between the two metals was the best course to 
 follow. 
 
 It was well known, and Gaudin knew it perfectly, as 
 the reports emanating from him prove, that the relation 
 of the value of the two metals is mobile ; it has not ceased 
 to vary more or less since the origin of civilisation. It 
 
OF THE FALL OF GOLD, 165 
 
 was well understood that if gold, for example, fall in value 
 in relation to silver, so as to be no longer worth fifteen and a 
 half times its weight of that metal, the proportion recog- 
 nised in the year 11, the consequence is, that it will be- 
 come superabundant in the circulation, and that silver, on 
 the contrary, will gradually disappear ; since the natural 
 tendency of debtors can never fail to be, to make their pay- 
 ments with the cheapest commodity : just as in the case 
 in which gold should acquire a superior value to that 
 which it possessed previously, gold would disappear. 
 Phenomena of this kind have been observable in all times 
 and in all countries. Gold and silver, like all other com- 
 modities, shun the markets where they are not taken for 
 their full value, and flow towards those where they meet 
 with better terms ; consequently, it was well understood, 
 and it is intimated in twenty passages of the documents 
 which served as the preparation for the law, as well as in 
 the expose des motifs, that whenever a reciprocal change 
 between the two metals should be manifested,* the gold 
 currency should undergo a modification. 
 
 But the elements were wanting necessary for determin- 
 ing the extent of the change of the reciprocal value be- 
 tween the two metals, which might derange the monetary 
 mechanism, as it was then agreed upon, and which might 
 be of a nature to prevent the parallel circulation of gold 
 and silver coins. It was not then thought necessary to 
 say, there shall be a recoinage whenever the relation of 
 1 to 15J, which now exists between the two metals in the 
 market, and which is for the present given as the basis of 
 the fabrication of the gold coinage, shall have been modi- 
 fied one per cent, or two, or three, or more or less. It 
 was understood, and in that we have a proof of the good 
 sense which is one of the qualities of the legislature, that 
 
 * I have already remarked above that the fact resulted from the very 
 context of the law. 
 
 
166 MEASURES TO AVERT THE EVIL EFFECTS 
 
 it was left to experience to decide. It was agreed that 
 they should wait until the signal was given by events : 
 the word is Gaudin's, as may be seen in his first report. 
 He trusted to the intelligence of future governments, to 
 their good faith, and public spirit, for comprehending the 
 language of events. 
 
 It is thus that it was left undetermined, in the system 
 of the law of the year 11, by any positive sign, when the 
 day would come for recoining the gold pieces, and chang- 
 ing the proportion of metal which corresponds with a 
 franc. It is this indeterminateness which furnishes the 
 excuse, or pretext, for the tolerance with which gold is 
 now treated, as if it continued to be worth 15 \ times its 
 weight in silver, a tolerance which falsifies our monetary 
 system, and which threatens to open the door to the in- 
 convenience and injustice which I have attempted to ex- 
 plain. 
 
 The measure which has been indicated in the preced- 
 ing chapter has for its object to put an end to this deplor- 
 able indeterminateness, while still remaining faithful to 
 the idea adopted by the legislator in the year 11, that 
 there should always be a legal fixation of the relative 
 value of gold and silver, but also never forgetting the en- 
 gagement which was at the same time entered into by the 
 legislator when he said, in his expose des motifs, that the 
 monetary system of France would henceforth offer "a 
 guarantee for the fulfilment of commercial transactions 
 and the conservation of property which we do not see" 
 (they could say so in the year 11) " in the monetary legis- 
 lation of any other people/' 
 
OF THE FALL OF GOLD. 167 
 
 CHAPTER IV. 
 
 ON SOME INCONVENIENCES INHEEENT IN THE COMBINATION, RESPECT- 
 ING A GOLD CUEEENCT, EECOMMENDED IN THIS WOEK. 
 
 THE plans recommended in this work, respecting a gold 
 currency, are they absolutely free from all inconveniences ? 
 I do not pretend that they are. It would result that from 
 the fact that the cashier had in his charge gold coins 
 which he was justified, on the 31st December, in consid- 
 ering worth a certain sum, he would, without having 
 touched, or added to or deducted from them, on the 1st 
 January, when the periodical revision of the tariff took 
 place, possess the same gold coins in true relation with 
 silver. What is said of cashiers would also be true of 
 every private individual having in his house or pocket any 
 gold coin. In what concerns the receivers of the public 
 revenues the objection is serious. It seems, in fact, that 
 they would be placed in a false position, and every six 
 months (I assume that the revision would be half-yearly) 
 be exposed to a clear loss, or find themselves in the way 
 of making an unmerited profit. This difficulty, however, 
 is not insurmountable. Would it not suffice, for example, 
 if the cashiers were to state the amount which they had 
 separately in gold and silver coins ? It would also be 
 well if they distinguished the sums which they held in 
 bank notes. Such a task need not be very difficult. 
 
 With regard to the public in general, it would not be 
 impossible to prevent private interests % from suffering a 
 serious loss at the end of each six months, in consequence 
 of the depreciation of the gold which each individual 
 might have on hand. In fact, everybody might so arrange 
 as only to have just so much as he pleased in his posses- 
 sion. This rule might be easily observed, if, adopting an 
 idea which has been thrown out, the law were to limit to a 
 
168 MEASUEES TO AVERT THE EVIL EFFECTS 
 
 certain maximum, such as the sum of a thousand francs, 
 the amount which the creditor should be forced to receive 
 in gold ; so that in private transactions, beyond this sum, 
 it should be left to the voluntary agreement of parties to 
 decide the nature of the money in which payment should 
 be made. But it is a clause which would give rise to 
 great difficulties in regard to the State, and to certain 
 large establishments, such as the bank. 
 
 In all this I do hot trouble myself about those indi- 
 viduals who should have hoarded large sums to keep them 
 indefinitely concealed. If, at last, after a long lapse of 
 time, they experienced a great loss, they would have only 
 themselves to blame. 
 
 In fine, we must not forget that the evil of which, at 
 this moment, we are seeking the remedy, that is, the 
 loss which the holder of gold specie might in spite of him- 
 self encounter, in consequence of the fall of that metal in 
 the course of six months, would not, in all probability, be 
 anything considerable. In fact, the case we are examin- 
 ing is rather imaginary than real. It is one of those hy- 
 potheses which we discuss in books when we are in the 
 mood for argumentation, but to which the administrator 
 and statesman attach but little importance. 
 
 Let us, however, acknowledge, without hesitation, that 
 the system which is here submitted to the appreciation of 
 the public, and which is destined to maintain the parallel 
 circulation of the two metals, without violating the sacred 
 principle of a single standard, will not insure at each in- 
 stant an absolute compensation or a mathematical equi- 
 librium. It is a mechanism which in its movement may 
 rub a little. But, I repeat, the question is not whether 
 it be perfect. It is rather, what is the combination 
 which deviates the least from perfection, and which offers 
 the fewest inconveniences ? When once we have proposed 
 and accepted a plan for maintaining, parallel with each 
 
OF THE FALL OF GOLD, 169 
 
 other, the two metals in circulation, still remaining faith- 
 ful to the principles which prescribe but one standard, 
 and always respecting the law and the precedents which 
 very opportunely in France assign this attribute to silver, 
 the only question is, are the accidental derangements 
 which might affect the system, such as ought to frighten 
 us, and are they comparable with the evil effects which 
 we have reason to expect from the other combinations ? 
 There is the question, the whole question ; and thus stated 
 I think it will be answered in the negative. In any case, 
 the worst of all systems is that of which France has offered 
 the spectacle for several years, not in the name of the law, 
 but in opposition to the letter and text of legislation, and 
 in consequence of the inattention of the public authori- 
 ties, I mean that in which we see affairs proceeding as 
 if the two metals were placed on the same footing in the 
 currency, and were one as well as the other invested with 
 the dignity of the standard. 
 
 I am acquainted with some intelligent persons who 
 are of opinion that the best system would be that which 
 has prevailed in Belgium, in Holland, in the Germanic 
 Confederation, and in Naples, the principle of which is to 
 leave absolutely to commerce the care of fixing the value 
 of the gold coins in relation to silver recognised as the 
 standard. The combination here recommended, has, in 
 relation to the above plan, the fault of a certain degree of 
 complication ; but having regard for the habits and man- 
 ners of life of the French public, I think it preferable. It 
 is more in conformity with the traditions established by 
 the law of the year 11, and with the object of that law, 
 to establish the parallel circulation of the two precious 
 metals, while starting from the principle that silver is the 
 standard. Doubtless, the system which I shall call Dutch, 
 on account of the nation which was the first, in these 
 later times, to put it into practice, presents itself with 
 
170 MEASURES TO AVERT THE EVIL EFFECTS 
 
 the authority of several governments who have adopted it 
 after mature deliberation, and to whose enlightenment I 
 render homage. Such a preference is an argument of 
 great weight. This system subsists, and is in operation 
 in several States which have adopted it to the satisfaction 
 of their populations. But it must also be admitted that 
 it is a weighty argument in favour of the combination 
 which I have developed, that it is the continuation of 
 our antecedents, at the same time that it is in its whole 
 extent desirable as consistent with scientific principles. 
 Moreover, if experience should develop any unforeseen and 
 grave inconvenience, we should always be able to revert 
 to the plan which has been preferred by the above-named 
 governments. 
 
 
 CHAPTER V. 
 
 OF A PLAN EECOMMENDED FOE MAINTAINING THE PAEALLEL CIE- 
 CULATION OF SILVEE AND GOLD. 
 
 M. GUSTAVE DE MOLINABI, the distinguished professor of 
 political economy, at the Musee Royal de I'lndustrie, in 
 Belgium, and at the Institut Superieur du Commerce, at 
 Antwerp, has recommended a monetary mechanism calcu- 
 lated to maintain in France the double circulation of sil- 
 ver and gold, whilst recognising in silver the sole quality 
 of standard. To assure to gold, in all the latitude possi- 
 ble, the function of auxiliary which the law of the year 
 11 has assigned to it, and to prevent at the same time the 
 possibility of its being surpassed, M. de Molinari would 
 have gold coins containing a quantity of metal sensibly 
 inferior to that which corresponds with the value of gold 
 in its relation to silver. This would, according to him, be 
 giving to gold coins the character of tokens, in the same 
 
OF THE FALL OF GOLD. 171 
 
 way as in England is managed with silver. In this sys- 
 tem, the French government would reserve to itself the 
 sole right to issue gold coins, as the English government 
 does in the case of silver ; and, as the circulation of France 
 is becoming saturated with gold, it would be necessary, 
 provisionally at least, to stop its fabrication. Besides, to 
 give to the holders of the gold currency a guarantee against 
 excessive issues, to assure in some degree the value of this 
 auxiliary money, made from a metal subject in our day to 
 a depreciation, it would be necessary to make it always 
 payable on demand, in silver, like bank notes. These 
 conditions complied with, the value of the gold currency 
 would be as stable as that of the silver on which it was 
 based, and, as gold is more convenient in use than silver 
 in the generality of transactions, it would be resorted to 
 in preference. The gold actually in circulation would not 
 be withdrawn to be exchanged for silver, any more than 
 are the bank notes, and the monetary regime of France 
 would unite the security of the system of Holland 
 and Belgium, which is based on silver, with the conveni- 
 ence of the English system, which rests upon gold.* 
 
 This system is certainly somewhat seducing ; at first 
 sight, it seems calculated to remove all difficulty ; we 
 should have, for example, gold coins of the weight of 5 
 grammes of nine-tenths fineness, to which would be as- 
 signed the value of 25 francs, notably superior to their 
 real value. Owing to the power of converting them at 
 will into pieces of silver of the effective value of 25 francs, 
 there would be a 'guarantee that they would circulate 
 with the public for the nominal value which the legisla- 
 ture had assigned to them, and for the excess even of that 
 value relatively to the real value, and thus the monetary 
 mechanism in which these coins should figure, would seem 
 
 * This description is extracted from the Economiste Beige, of the 10th 
 February, 1857, where M. de Molinari has developed his idea. 
 
 
172 MEASURES TO AVERT THE EVIL EFFECTS 
 
 to be forever beyond the reach of the perturbations which 
 the fall in gold can occasion. 
 
 Let us in the first place offer an observation on the 
 name which M. de Molinari gives to the operation which 
 he recommends. Would it really be the issue of a gold 
 token ? In the accurate sense of words which could never 
 escape a person so highly versed in economical questions, 
 the denomination of token is not that which is appropriate 
 in the present case. The function of a token is, in fact, 
 to be admitted into payments only to make up an amount. 
 In France, the token, which is in bronze, is limited to five 
 francs ; in England, the silver token is limited to pay- 
 ments of two pounds sterling, or about fifty francs. The 
 pieces of gold of M. de Molinari having no such limit, 
 they could not be considered as tokens. What would 
 they be then ? Signs of credit, like bank notes, with 
 this difference, considerable however, that the sub- 
 stance instead of being of paper would consist of the most 
 precious of the metals. But this difference even is not 
 perhaps to the advantage of the system : if we are to have 
 bank notes, it is more simple and advantageous to make 
 them of paper. 
 
 M. de Molinari has felt the analogy between his gold 
 counters and the bank note, and he has formally recog- 
 nised the necessity of giving them the support of a volun- 
 tary exchange for silver money. The guarantee is, un- 
 doubtedly, valuable, but it is also one of the weak sides 
 of the system, in so far as it would be an expense. It 
 would be necessary to establish special treasuries, with a 
 reserve of specie in silver sufficient for the purpose, or it 
 would be necessary for certain public establishments to 
 take upon themselves the obligation of holding always 
 for this purpose a considerable sum in five-franc pieces, 
 which would, in point of expense, amount to the same 
 thing, and besides would be contrary to the rules estab- 
 
OF THE FALL OF GOLF. 173 
 
 lished by the French administration for the good order 
 and security of the finances of the State. 
 
 I repeat the opinion just expressed ; if it be a question 
 of putting into circulation signs of credit, of twenty-five 
 francs, it were better that they should be in paper. In 
 fact, an instrument of exchange, composed of pieces of 
 silver and of bank notes of 25 francs, would be acceptable, 
 except for the circumstances which I am about to note. 
 
 Germany has for forty years carried on its affairs with 
 an instrument of exchanges, composed almost exclusively 
 of pieces of silver, thaler s or florins, and of bank notes or 
 notes of the State, both of small amount. Gold figures 
 there only as an accessory of small importance and almost 
 accidental. . 
 
 In France, the law of 1857, which prolonged the 
 privilege of the Bank of France, allows the circulation of 
 notes of 50 francs ; with notes of this denomination and 
 with silver money, the instrument of exchanges would be 
 complete without anything else. 
 
 It must not be concealed that bank notes of 25 or of 
 50 francs (1 or 2) present some inconveniences, and 
 expose the public interest to some errors. Notes under 
 five pounds sterling have been prohibited in the United 
 Kingdom, excepting in Scotland, where the smallest note 
 authorised by law is one pound sterling. What are the 
 grounds on which a great number of men versed in affairs, 
 and familiar with economical science, have pronounced 
 against these small notes ? It is primarily the danger of 
 forgery : if these small notes are left to circulate after 
 being soiled and torn, there is reason to fear that they will 
 be imitated. Then, there is also the possibility of a 
 panic which might seize the holders of small notes more 
 easily than the richer and more intelligent classes, to whose 
 use the notes of 5 are chiefly restricted. The effect of 
 this panic might be to lead a mass of individuals to pre- 
 
174 MEASURES TO AVERT THE EVIL EFFECTS 
 
 cipitate themselves upon the banks to obtain the imme- 
 diate payment of their notes, and then these establish- 
 ments might be obliged to suspend their payments. 
 
 Now, these two dangers would also subsist to a suffi- 
 ciently marked degree with the gold token of M. de Moli- 
 nari, at least from the moment that it should offer, very 
 decidedly, one of the distinctive characters of the token, 
 of having a nominal value notably superior to its intrinsic 
 value. If there is a violent temptation to coin paper 
 money, in imitation of the signs generally accepted by 
 the public, such as the real bank notes, we have only to 
 wait until the dishonest speculation of issuing gold pieces 
 passing for 25 francs, and being only worth 15, shall be- 
 come also profitable. It would be even more easy to fab- 
 ricate these counters than to forge the bank notes. The 
 imitation of these latter is far from easy, and might be 
 rendered very difficult. On the contrary, the reproduction 
 of gold coins, of which the impression should have been 
 more or less defaced by the circulation, would be a work 
 of great facility. It would be a mere joke for the manu- 
 facturers of livery buttons, furnished with such machinery 
 as is now found in workshops of that kind in certain towns 
 like Birmingham. 
 
 The danger of a panic, which might lead the mass of 
 the population to come and demand payment for these 
 counters of gold, in their nominal amount in silver, would 
 be almost as great as with the small bank notes, on the 
 hypothesis of which I am speaking of a, great divergence 
 between the nominal and the real value. 
 
 It is true that we should escape from these two perils 
 by imposing the rule of having, between the nominal and 
 the real value, only a deviation of five, or at the utmost of 
 ten per cent. But then the combination would become 
 burdensome on account of the sum which it would be 
 necessary to keep in hand, in silver money, to meet the 
 
OF THE FALL OF GOLD. 175 
 
 demand for payments. Suppose an issue of a milliard of 
 francs (40,000,000) in gold tokens : if the divergence is 
 7J per cent, that will be a saving of 75 millions (3,000,- 
 000) in the capital required to furnish the instrument of 
 exchanges ; hut if the public treasuries destined to guar- 
 antee the payment on demand absorb for this purpose a 
 reserve of 100 millions in silver money, the operation ends 
 in a loss. 
 
 CHAPTER VI. 
 
 OF THE RESOLUTIONS OF A COMMISSION APPOINTED BY THE MINISTER 
 OF FINANCE IN MDCCCLVII. 
 
 AFTER the discovery of the mines of California, and before 
 that of the auriferous deposits of Australia, a commission 
 had been appointed by the French government to examine 
 into the probable effects of the great and rapid arrivals of 
 gold consequent on the operations in the valleys of the 
 Sacramento and the San Joaquim. This commission 
 came to no conclusion ; the indications of experience were 
 then too incomplete. The facts having been afterwards 
 much strengthened, a new commission was named the 
 7th Feb., 1857, by the minister of finance. 
 
 The commission received instructions " to inquire into 
 the principal causes of the monetary situation, to investi- 
 gate the various questions which arise out of it, and to re- 
 port its opinion on the measures called for by the general 
 interests of the country." In these terms, the outline 
 traced for the labours of the commission was extensive. 
 In February, 1858, it had finished its labours, according 
 to a more restricted plan which it had traced for itself, 
 or, to speak more correctly, which had been suggested to 
 it, and which it accepted, and in its name a report was 
 presented, which it is impossible to pass by in silence. 
 
176 MEASURES TO AVERT THE EVIL EFFECTS 
 
 In the programme of which I have just spoken, as 
 having been received and accepted, California and Austra- 
 lia were not upon the first plan ; the fact of the exporta- 
 tion of silver from France was the phenomenon to which 
 the greatest importance was attached, and everything 
 was made subordinate to it. Australia and California 
 are not even mentioned, no direct allusion is made to 
 them.* 
 
 * The following was the programme : 
 
 1st Question. What is, in fact, the importance of the exportation of sil- 
 ver? 
 
 2nd Question. To what cause, direct or indirect, must this fact be at- 
 tributed ? 
 
 The premium of silver over gold. Its degree, its variability. 
 
 The natural movement of our international commerce with the countries 
 which prefer silver. 
 
 Private and direct speculation of the money-changers and refiners. 
 
 What part belongs to each of these causes ? 
 
 3rd Question. What may be, in a general point of view, the influence 
 for good or evil of the destruction or the exportation of the silver cur- 
 rency ? 
 
 What good can arise beyond the private benefit which may be derived 
 by the money-changers and refiners ? 
 
 What harm can ensue : 
 
 To the Bank, and in consequence to commerce, by the weakening of 
 the reserves of specie ? 
 
 To the State, in obliging it to interfere at its cost, to replace constantly 
 with new coins those which the refiners had melted ? 
 
 To commerce, in depriving it, as might happen very speedily, of a de- 
 scription of money which is very necessary to it in its relations with other 
 countries ; or in compelling it to pay for it the premium which the money- 
 changers shall have gained? 
 
 4th Question. In face of the fact and its consequences, is there nothing 
 for the government to do ? 
 
 If so, what steps ought it to take ? 
 
 Many have been suggested : 
 
 1. To demonetise gold, and bring it to the state of simple merchandise, 
 excepting the fixing officially its value at periodical epochs; 
 
 2. To transform silver money into a conventional currency, by giving it 
 a nominal value, superior to its real value, as in England ; 
 
 3. To transform the silver money, by giving it a nominal value, equal 
 to its actual real value, that is, by changing the relation established by law 
 between gold and silver ; 
 
OF THE FALL OF GOLD. 177 
 
 Thus the point of departure for the deliberations of 
 the commission was not ; perhaps, the best that could have 
 been chosen. As to its conclusions, they are of a nature 
 to astonish those who are conversant with economical 
 questions ; here is, in fact, the substance of the report : 
 The principal cause of the disturbance witnessed for sev- 
 eral years in the monetary system of France, is to be traced 
 to the extraordinary demand for silver for exportation to 
 the remote East. This unusual demand has caused a rise 
 in the value of silver as compared with other commodities. 
 As for gold, it does not seem to have fallen, notwith- 
 standing the large production of California and Australia. 
 The best mode of remedying the difficulty which we en- 
 counter would be to maintain, compulsorily in France, the 
 relation of 1 to 15 J established, or rather confirmed, by 
 the legislation of the year 11. To prevent the foreign mar- 
 ket from exercising in this respect any influence on the 
 market of France, it is only necessary to put a duty on 
 the exportation of silver, and to establish penalties against 
 the heads of establishments who engage in or connive at 
 the trade. Thus the conclusion of the commission is that 
 a duty should be laid on the exportation of silver. The 
 commission even adds that it should be a liigJi duty. 
 
 4. To prohibit the exportation of silver ; 
 
 5. To raise the duty on the export of silver ; 
 
 6. To lower the recognised weight and fineness ; 
 
 7. To attack directly the evil in its material and immediate source by a 
 law against the destruction of money, assuming that the ancient laws are no 
 longer in force ; and with this view to prohibit the selecting and purchasing 
 of coins -at a premium for the purpose of melting. 
 
 It will be well for the commission to examine successively these differ- 
 ent questions, without prejudice to those which may arise out of the in- 
 quiry. 
 
 To make a subsidiary inquiry whether the State ought not to reserve to 
 itself the exclusive right of withdrawing from the circulation the coins bear- 
 ing the inscription of Charles X., and of Napoleon I., which contain a quan- 
 tity of gold, the melting of which constitutes the chief benefit to the refiners. 
 What measures should be taken to carry out this object ? 
 12 
 
178 MEASURES TO AVERT THE EVIL EFFECTS 
 
 Moreover, the better to impede exportation, the selecting 
 or assorting of pieces of money shall be an act punishable 
 under the penal law. 
 
 Now, if there be anything confirmed by history, it is 
 that the efforts of governments are powerless to regulate 
 the value of gold and silver in relation to other commod- 
 ities, or to one another, and that they are equally so to 
 compel the precious metals to remain in the interior of a 
 State, should commerce give the impulse to their exporta- 
 tion. This twofold observation is a truism which one re- 
 grets to have to revive. If there be in political economy 
 anything universally acknowledged, and with which intel- 
 ligent governments are in accord, it is that the precious 
 metals should be treated as merchandise, and left to the 
 free action of commerce, including, of course, the liberty 
 of melting and all that appertains to it. The conclusion 
 of the commission is right in the teeth of these well ac- 
 credited doctrines. On the subject of the currency, we 
 should be thus embarking with all sails set upon the waters 
 of the ancient regime, when other civilised countries, led 
 by the voice and example of France, had agreed to follow 
 another course. 
 
 It may then be believed, on its own simple announce- 
 ment, that the unanimous opinion of competent men, will 
 be against its recommendations. They rest, in fact, on 
 ideas which, thank Heaven, time has disposed of. 
 
 In fine, the commission proceeded, as will be seen, in 
 a manner to deprive of all authority its chief proposal for 
 preventing the efflux of silver by means of a duty on ex- 
 portation. Before coming to that vote, it took the lauda- 
 ble course of consulting the most eminent and enlightened 
 members of the commercial and banking interests, eight 
 of whom, of the highest standing, were summoned to its 
 presence. They were examined separately upon this 
 special subject, and the question was presented to them in 
 
OF THE FALL OF GOLD. 179 
 
 every form. The reiterated testimony of these eight per- 
 sons was unanimous : they persisted in repelling the idea 
 of a duty on exportation. Under these circumstances, the 
 decision of the commission is presented in not very favour- 
 able colours. When the commission decided to call before 
 it, one after the other, eight important persons, in order 
 to consult them in detail on a given subject, that is, the 
 propriety of stopping, by a resort to the material ob- 
 stacle of a custom-house, the export of silver, it was be- 
 cause it felt the necessity of obtaining further enlighten- 
 ment. But, then, how could it decide against the unani- 
 mous and very decided opinion of those eight counsellors 
 whom it had chosen as the most competent to edify it ? 
 
 In the history of the European currencies, the com- 
 mission would have found, at an epoch not very remote 
 from our own time, a precedent which seemed almost 
 expressly made for it, so well was it adapted to the cir- 
 cumstances in which it deliberated, and especially to the 
 position of the very question which it had accepted. 
 
 Towards the commencement of the eighteenth century, 
 the monetary system of England underwent a perturba- 
 tion, of which the most apparent phenomenon was the 
 same as has been repeated in France since the discovery 
 of the mines of California and Australia : the silver was 
 either sent abroad in coins, er was cast into the crucible 
 to be exported in bars, and gold took its place in the cir- 
 culation. The British government, alive to this state of 
 things, asked the advice of the great Newton, who was 
 then director of the Mint, and who brought to the per- 
 formance of the duties of his office the same care, the 
 same acuteness in the observation of facts, and the same 
 earnest spirit of analysis to which he owed, in the progress 
 of science, the admirable discoveries which have immor- 
 talised his name. To the question which was submitted 
 to him, the 12th August, 1717, to determine the causes 
 
180 MEASURES TO AVERT THE EVIL EFFECTS 
 
 of the exportation of silver, and to indicate a mode of 
 putting an end to it, Newton replied, the 21st Septem- 
 ber, in terms which I will shortly explain. 
 
 At that time, custom-house duties were used and 
 abused for all sorts of purposes, and every kind of restric- 
 tion, besides, was placed on the industry of the country, 
 At the same time, the extension and exaggeration of the 
 penal laws were expedients to which authority eagerly re- 
 sorted, and which were very convenient, because they 
 relieved them from the necessity of maturely studying 
 the questions which presented themselves, and of com- 
 prehending the origin and nature of things. Newton 
 would have, therefore, been excusable if he had recom- 
 mended more rigorous acts against the exportation of 
 silver, and the application of a severe penalty directed 
 against tokens and light weights. But measures of this 
 kind were not those towards which a man like Newton 
 directed his mind, and in England already more intelli- 
 gent traditions had established themselves, more care for 
 public opinion, and more respect for human liberty, in its 
 relations with industry, as well as with the other aspects 
 of civilised life. Thus, then, proceeded Newton : 
 
 After having passed in review the value of gold and 
 silver in the different States, and having shown that in 
 England the legal relation gave too much to gold to the 
 detriment of silver, he argued in the following manner : 
 If silver leaves the shores of England in crowns or in in- 
 gots, the produce of coins remelted, and gives place to 
 gold, it is because the value which the monetary legisla- 
 tion assigns to it, in relation to gold, is not correct. The 
 law supposes, in fact, that the relation between gold and 
 silver is that of one to a little more than 15J,* whilst in 
 
 * Newton says that 1 pound, troy weight, of fine gold is worth legally 
 15 pounds, 6 ounces, 11 dwts., and 5 grains of silver: The pound troy is 
 enly 12 ounces. 
 
OF THE PALL OP GOLD. 181 
 
 the general market of Europe it is barely 1 to 15* That, 
 let the legal relation between gold and silver be re-estab- 
 lished upon the true basis, and by that act we shall have 
 destroyed the temptation to export from England silver 
 in preference to gold. To effect this, nothing more need 
 be done than to withdraw 10 or 12 pennyweights from the 
 value assigned to the guinea in silver money. For greater 
 prudence, Newton advised the reduction to be made in 
 two operations, and to commence by an abatement of six 
 pennyweights.f 
 
 The note of Newton is a model of logic and pre- 
 cision. We recognise in it that firmness and justness 
 of mind which laid hold of the foundation of questions, 
 threw aside accessories and extraneous or indifferent ob- 
 jects, and went straight to the end in view. The reason- 
 ing of his note applies word for word to the problem which 
 Our Commission had to solve. Here is in effect what 
 may be said in our day : for several years, silver has 
 been leaving the shores of France, in crowns, or in ingots, 
 the produce of coins remelted, and giving place to gold, 
 because the value which the monetary laws assign to it 
 in relation to gold is not correct. The law supposes, in 
 fact, that the relation between gold and silver is that of 
 1 to 15J-, whilst in the general market of Europe, it is 
 sensibly less. Let the legal relation between gold and 
 silver be re-established upon the true basis, and by that 
 act we shall have destroyed the temptation to export from 
 France silver in preference to gold. To effect this, 
 nothing more need be done than to withdraw from the 
 value attributed to pieces of gold in silver money a given 
 
 * Newton says 14% to 15. 
 
 f This report of Newton has been reprinted in a volume of documents 
 upon the currency, which has been published by the London Political Econ- 
 omy Club, to which I have previously referred. Select Tracts on Money, 
 p. 2Y4. 
 
182 MEASURES TO AVERT THE EVIL EFFECTS 
 
 quota, certain to retouch periodically this relation, so that 
 it shall always be in harmony with the real state of things. 
 I put aside here the question whether we should render 
 the monetary system of France more conformable to prin- 
 ciple, and whether the application of this mechanism to 
 the gold coins would not be better effected by replacing 
 the quantities of metal which constitute the coins in usage, 
 by others which contained a round number of grammes, of 
 five or ten, for example. 
 
 It is much to be regretted that a commission which, 
 deliberating in 1858, at Paris, the centre of European 
 intelligence, and the metropolis of the civilized world, as 
 we are in the habit of calling it, should have refused to 
 adopt the opinion of so great an authority as Newton, so 
 competent in the matter, an opinion put forth under 
 circumstances from which what is passing in our day in 
 France respecting silver money might have been borrowed, 
 and which was, moreover, sanctioned forthwith by govern- 
 ment at the instance of parliament.* It is difficult to 
 conceive how, repudiating such an authority, this commis- 
 sion should have permitted itself to draw its inspiration 
 from the edicts of the ancient regime upon money, which 
 are monuments of ignorance and despotism. 
 
 * The reduction of six pennyweights per guinea was made before the 
 end even of the year 1717, by royal proclamation. 
 
OF THE FALL OF GOLD. 183 
 
 CHAPTER VII. 
 
 OF VARIOUS ACTS WHICH THE LEGISLATION OF THE ANCIENT EEGIME 
 UPON MONEY TEEATED AS CEIMES, AND WITH EEGAED TO WHICH 
 SOME PEESONS OF OUR DA.Y PEOPOSE TO ESTABLISH PENALTIES. 
 -SELECTING, AND MELTING ; TEADE IN COINS ; EXPOETATION. 
 
 IN the course of this work I have already offered some 
 explanations of the various operations on the currency 
 which the ancient regime punished with the utmost 
 rigour. This scaffolding of penal laws, pronouncing 
 almost in every article the pain of death or the galleys, 
 accompanied with confiscation and fines, generally of 
 enormous amount, was overturned, after the Revolution, 
 by the precise dispositions of the laws and ordonnances, or 
 implicitly by the effect of the new direction, eminently 
 conformable to reason, as well as to the experience of ages, 
 which the legislation upon money has taken since 1789. 
 
 In the opinion of the moderns, an opinion which has 
 passed into the laws of the great civilised States, gold 
 and silver are commodities which, in exchanges, pass for 
 the value which belongs to them. The trade in these 
 metals is free, like that of other merchandise. A piece 
 of coined money is a certified ingot, as to its weight and 
 fineness, and the certificate consists in the impressions 
 which it has received. Between this sort of ingot and an 
 ordinary ingot, the difference of value is restricted to the 
 expense which attends the affixing of the certificate, in- 
 cluding the previous operation by which the metal is 
 brought to the legal fineness, and these expenses are very 
 trifling. Not only is the trade in the precious metals, 
 whether coined or in ingots, perfectly free in the interior 
 of States ; but it has been acknowledged even in countries 
 which have maintained a very restrictive system of interna- 
 tional commerce France is in this predicament, that 
 
184 MEASURES TO AVERT THE EVIL EFFECTS 
 
 the importation and exportation of gold and silver, both 
 in coins and ingots, ought to be perfectly free. Inasmuch 
 as the precious metals, whether coined or not, are mer- 
 chandise ; it follows, that the private individual who has 
 received a piece of money can do with it what he will, 
 and, consequently, can melt it. The only use of it which 
 is interdicted to him is to put it in circulation again after 
 having diminished its weight by " sweating," or otherwise, 
 because the quantity of metal which it contains is no 
 longer consistent with its impression, and to pass it to 
 another for legal weight would be a deception as to the 
 quantity of merchandise, or. indeed, a sort of forgery of a 
 public document. In a word, the modern doctrine on the 
 subject of money a doctrine accepted not only in the 
 writings of philosophers, but also in the codes of the great 
 civilised States, is in almost every way the very opposite 
 of the ideas of the ancient regime. 
 
 However, the Moniteur, about a year since, contained 
 an announcement which would seem to indicate that the 
 government considered as still in force the laws and edicts 
 of the ancient regime relative to money, and especially 
 against the following operations : 
 
 1st. Picking, or selecting, which some persons think to 
 stigmatise under the affected name of billonage or 
 trebucJiage; 
 
 2nd. Melting ; 
 
 3rd. Buying and selling at a premium. 
 
 Proceedings were actually commenced, at the end of 
 the year 1857, against some of the principal money- 
 changers of Paris, who resorted, without concealment, to 
 these practices. It is true, that the proceedings were 
 almost instantly suspended ; doubtless, because the gov- 
 ernment, after a more careful inquiry, found that the 
 
OF THE FALL OF GOLfc. 185 
 
 statements inserted in the Moniteur were very doubtful. 
 But the commission appointed in 1857 by the minister of 
 finance, appears to have been inclined to give some va- 
 lidity to the revived pretensions of the ancient regime, of 
 which the official journal had made itself the echo. It 
 alluded to the point whether the old Draconic laws, which 
 were in existence prior to 1789, were still in force, without 
 solving the question, and it expressed itself in severe 
 terms upon tho whole of the operations referred to above ; 
 and it has been seen in the preceding chapter that, with 
 regard to some of them, it recommended the enactment of 
 penalties if none already existed. With such tendencies, 
 avowed and patronised by an important commission, a 
 few more observations respecting these operations may 
 not be superfluous. 
 
 Let us take successively the acts in question ; and 
 first, let us speak of billonage or trebuchage, which we 
 will call by the modern and more simple and significant 
 name of picking or selecting: we will speak of it without 
 separating it from the remelting, which is the object for 
 which the coins are generally selected. 
 
 The reader has seen, above, that the " picking," such 
 as was begun to be practised in France on a large scale, 
 about 1825 or 1830, had for its object to withdraw from 
 the circulation, for profitable use, the pieces of 5 francs, 
 which, owing to the imperfection of the ancient processes 
 both for proportioning the quantity of silver, and for ex- 
 tracting the gold from the ingots of this metal, contain- 
 ed a value superior to 5 francs. We think we have 
 shown that this special case of selecting, dating about 
 thirty years ago, and of which we are now speaking, was 
 not merely an operation licit in itself, but useful to soci- 
 ety ; and that apart from these accidental and temporary 
 circumstances, and with money well made, that is, where 
 the standard of weight and fineness fixed by law had 
 
186 MEASURES TO AVERT THE EVIL EFFECTS 
 
 been observed, the practice of " picking " would have been 
 impossible ; from whence it follows that, if the government 
 wishes to prevent this practice, it has the power of doing 
 so ; it has only to take care to fulfil its duty, which is 
 to see that the money is struck in conformity with the 
 law. 
 
 Nevertheless, the advocates of the resurrection of the 
 edicts of the ancient regime on the coinage, with the view 
 of justifying the severities which they call for against 
 " picking " and melting the coins, have represented that 
 these operations are nothing less than the perpetration of 
 a robbery, to the prejudice of the State ; for, according to 
 them, and one of the organs of this opinion has said as 
 much in round terms, money is in a certain sense public 
 property, from which they draw the logical consequence 
 that a private individual can not touch it without com- 
 mitting a fault or crime. Nay, more, these acts would 
 constitute the crime of treason, inasmuch as they would be 
 a want of respect for the work of the State. Such words 
 have actually been employed. 
 
 How, and in what respect, can money be public prop- 
 erty ? I have exchanged my merchandise, say, for ex- 
 ample, the hectolitre of corn, for another commodity, which 
 shall be 100 grammes of silver of nine- tenths fineness, and 
 these 100 grammes consist of four discs of 25 grammes 
 each, commonly called 5-franc pieces. Why should the 
 100 grammes of silver be public property more than the 
 hectolitre of corn ? Is it because the public has need of 
 discs making 100 grammes of metal ? But it seems to 
 me that the public has greater need of the corn. Is it 
 because these discs have been by the care of the State 
 made of a certain weight and fineness, and certified as such 
 by the impressions stamped on the obverse and reverse ? 
 But the very moderate cost of these operations has been 
 paid to the directors of the mints who have performed 
 
OF THE FALL OF GOLD. 187 
 
 them ; the private individual who brought the ingots, from 
 which the discs were produced, to be coined, paid the 
 coiner. Besides, the State has also certified the hectolitre 
 of corn, since it has verified the measure through which 
 the corn has passed. If the piece of money which I carry 
 in my pocket is in a certain sense public property, or the 
 property of the State, there is no form of riches, no spe- 
 cies of property which is not in the same predicament ; 
 for there is none which does not contribute to the national 
 prosperity, to assure our existence or subsistence, and 
 which has not more or less the guarantee of the State, were 
 it only by the public force and the courts of law which 
 check or prevent deception in the quantity and quality of 
 merchandise. This would be especially true, in a certain 
 sense, of landed property, which, in fact, by the taxation 
 which it supports, may be considered up to a certain 
 point as belonging to the State. Inasmuch as the land 
 pays on an average (in France) the eighth of its revenue 
 for income tax, it may be said to that extent to be the 
 property of the State. If, then, it were finally admitted 
 that money is in a certain sense public property, and that, 
 in consequence, those who receive it in payment are pro- 
 hibited from disposing of it as they please, the writers who 
 at all times, and under all circumstances, are so fond of 
 appealing to authority, would have no great difficulty in 
 proving that the State is the co-proprietor of every real 
 estate, and that the assent of the government is necessary 
 before any landowner can alienate or even improve his 
 property. This lands us in simple communism. Nor 
 ought it to surprise us, if we commence with a programme 
 in which are inscribed the inventions of the Kegency, the 
 reminiscences of the system of Law, and the ordinances of 
 the worst days of Louis XIV., a prince who, if he exhibit- 
 ed a grandeur of genius and character, was still an un- 
 mitigated despot, and one who showed less respect for the 
 
188 MEASURES TO AVERT THE EVIL EFFECTS 
 
 rights of property than any other sovereign who has occu- 
 pied the throne of France.* 
 
 A piece of money in the hands of its owner is his pri- 
 vate property as much as his field, his furniture, his food, 
 or his clothing. The holder may cast it into the river ; how 
 much more reasonably, then, may he be entitled to select 
 from the hundred 5 franc pieces, which he has in his cash- 
 box, ten pieces to be melted, if such should be his interest 
 or pleasure. It were to subvert all sound doctrines re- 
 specting property, to admit that the State retains any 
 right whatever over money, excepting it be to require that 
 it should constantly possess its prescribed weight and 
 value ; because, money being a measure, as well as a mer- 
 chandise, it is the duty of the State to see that it remains 
 in conformity with its type, the same as the metre, or the 
 gramme, or the litre. 
 
 As to the imputation of a want of respect for the icork 
 of the State, with the best possible intention, I cannot 
 understand it ; but it seems to me that they who put forth 
 this grievance would be better employed in considering the 
 respect due to the rights of private property. Are they 
 to be understood to mean that coins ought to be assimi- 
 lated to public monuments, and that he who degrades 
 them by throwing them into the crucible, deserves the 
 same punishment as the person who should have muti- 
 lated a statue in a public place ? But there is nothing in 
 common between a piece of money, which is only a cer- 
 
 * In one of the works which were published by the members of the 
 Academy of Moral and Political Sciences, in 1848, during the commotion 
 caused by the Revolution of the 24th February, M. Troplong brought out 
 conspicuously the communistic character of the opinions of Louis XIV. on 
 property, and the contrast which they present to the ideas which formed 
 the basis of the Code Napoleon. On this subject the writings themselves 
 of Louis XIV. may be consulted. Some very significant extracts will be 
 found in M. Henry Martin's History of France, Vol. XIII., p. 259, edition 
 of 3858. 
 
OF THE FALL OF GOLD. 
 
 tified ingot, and a statue, which the public gratitu-de may 
 have erected to a great man ; the artistic portion is quite 
 an accessory to the coin, and moreover the piece of money 
 is private property, whilst the statue belongs to the com- 
 munity. 
 
 But, perhaps, in alleging that to melt the money is to 
 show a want of respect for the work of the State, it is 
 meant that as it bears the effigy of the prince, to destroy 
 that effigy would be an outrage on the sovereign. This view 
 would have the disadvantage of being borrowed from the 
 official doctrines of the evil days of the Koinan Empire, 
 when the Emperor was the object of a hypocritical idol- 
 atry, and when the cases of high treason were multiplied 
 indefinitely. But if it be a crime to destroy, by remelting 
 a piece of money, the effigy or the armorial bearings of a 
 prince, it will also be a crime to tear a stamp which shall 
 represent the one or the other ; and to be indictable at the 
 assizes, it will suffice to have thrown into the fire an old 
 sheet of stamped paper. 
 
 The pieces of money which pass through the hands of 
 the State, are, during the time that they remain in the 
 possession of the receivers, public property, or property of 
 the State. The State has then clearly the right to make 
 such use of them as the public authorities shall have 
 deemed advisable ; and thus, for example, after 1825, it 
 might have subjected the 5 franc pieces, with which the 
 public treasuries were gorged, to the operation of re- 
 fining, and so have secured the profit which has fallen into 
 the hands of the refiners. It may even be observed that 
 the movement of the taxes brought naturally, and without 
 effort, an immense number of pieces of 5 francs into the 
 hands of the agents of the State, whereas the refiners were, 
 and are, obliged to procure them at much expense, and 
 even by the payment of premiums. In this point of view, 
 the operation would have been easier for the State than 
 
190 MEASURES TO AVERT THE EVIL EFFECTS 
 
 any one ; * but even in the very narrow point of view as 
 to the profits to he derived from the refining of the 5 franc 
 pieces, to extract the small excess of silver, and the mi- 
 nute proportion of gold which, thirty years ago, were left in 
 them, the right of the State does not exclude that of indi- 
 viduals. The one and the other occupy similar ground ; 
 they have the same point of departure and the same goal. 
 They co-exist for the same reason, and, under this aspect 
 as under every other, there is no ground for saying that 
 the operation of " selecting" and remelting is a robbery 
 perpetrated to the prejudice of the State. 
 
 But it is insisted that, if private individuals are free to 
 select the coins, so as to separate the heaviest for remelt- 
 ing them, the light pieces only will be left, and the cur- 
 rency will be vitiated. To console those persons who feel 
 this apprehension, it is only necessary to remark, that with 
 money properly made, that is to say where the coins shall 
 be in conformity, both as to weight and fineness, with the 
 requirements of the law of the year 11, the speculation of 
 " selecting " and remelting is no longer to be feared, since 
 those who undertook it would assuredly be ruined. There 
 is reason to believe that, at the present time, thanks to 
 the perfection at which the mechanical and chemical arts 
 have arrived, the limits of weight and fineness might be 
 diminished especially the former, which would still 
 further tend to render the operation impossible. Doubt- 
 less, when the coins have circulated for a long time, they 
 lose a sensible fraction of their weight. The careful ex- 
 periments of Messrs. Dumas and De Colmont, prove that 
 a 5 franc piece, which has passed from hand to hand for 
 a century, will have lost a gramme and a half, making 
 
 * The administration, however, refused to embark in the undertaking, 
 when advantageous proposals were addressed to it, for taking the place of 
 the private refiners, and refining the 5 franc pieces paid in for taxes. These 
 proposals were made several years previously. 
 
OF THE FALL OF GOLD. 191 
 
 about 3 centimes ; thus the private individual, who wished 
 to export the silver coins after having remelted them, 
 would avoid the old pieces, and would make a selection of 
 those only which were new and almost perfect. In this 
 way, it is true that, if the government has taken no pre- 
 caution for withdrawing the coins which are worn with 
 time, selecting and remelting will have the effect of leaving 
 only those pieces which are of diminished weight in circu- 
 lation. But does it follow that, to prevent this process of 
 vitiating the currency, the best mode is to invent new pen- 
 alties, or to revive the old edicts against " selecting " and 
 remelting ? 
 
 It is not necessary to resort to the argument that the 
 power of " selecting" and remelting pieces of money is the 
 natural and necessary corollary of the rights of property. 
 Apart from this consideration, however decisive, it would 
 be easy to cite a score of cases in which the operations of 
 " selecting" and remelting are of palpable convenience, 
 and of an evidently legitimate character. A jeweller 
 wishes to make use of some of the silver money in circu- 
 lation to meet the necessities of his business. It would 
 be unreasonable to interdict him from taking in preference 
 the heaviest coins ; and, however much it might be for- 
 bidden, he could not be prevented from doing so. The 
 merchant who wishes to discharge a debt abroad with sil- 
 ver specie, will in the same manner prefer the coins which 
 are of full weight, because the foreigner is too shrewd to 
 accept in any other way than by weight the pieces of 
 money that are sent across the frontiers. 
 
 In truth, we are dwelling too long on these ideas, 
 which public opinion has already condemned, and which 
 have for ever disappeared from the codes of all civilised 
 States. We know what was the origin in former times 
 of the interdicts levelled against the melting of money, 
 and the " selecting" which usually preceded it. The 
 
192 MEASURES TO AVERT THE EVIL EFFECTS 
 
 spirit of cupidity and spoliation dictated that prohibition 
 in times of ignorance, and it was afterwards perpetuated 
 under the financial pressure to which unscrupulous gov- 
 ernments have been constantly exposed. 
 
 Let us call to mind a remark which has been made, 
 that to prohibit the " selecting" or remelting of coins, be- 
 came a useless severity from the moment that the expor- 
 tation of money was permitted. It was thenceforth only 
 necessary to transport the specie across the frontier to be 
 enabled to carry out the remaining process with impunity. 
 There is, then, every kind of motive why the laudable 
 idea of maintaining the integrity of the French coinage, 
 and its conformity with the type determined by the law, 
 should not be diverted into a question of proceeding with 
 rigour against the operations of ." selecting" and melting. 
 It is otherwise that it must be realised, and it is in an- 
 other direction that the problem must be solved. To carry 
 on the government with a penal code, is consistent enough 
 with barbarous nations, where the ruling power practises 
 unmitigated despotism at all times, and, between two 
 courses, prefers that which is the most convenient for its 
 idleness and ignorance ; but it is not becoming to those 
 civilised States where the government professes to respect 
 their citizens in their persons and property. With civil- 
 ised nations, the penal code should reserve its severities 
 for acts which the conscience condemns ; but it must not 
 be allowed to strike with the sole object of sparing the 
 government the vigilance and care which are among the 
 number of its imperative duties. 
 
 The case thus stated, where is the difficulty which we 
 shall now encounter, and whence does it arise ? With 
 time, an inequality may and must inevitably manifest 
 itself between pieces of money of the same denomination. 
 Some, which are old and worn with long circulation, will 
 weigh less than the others which are new, and it is feared 
 
OF THE FALL OF GOLD. 193 
 
 that if, in these circumstances, the practice of " select- 
 ing" be permitted, private individuals will make a profit 
 out of the withdrawal of the latter, so that the former 
 only will remain in circulation. Very well. It is well to 
 foresee the fact, for history attests that it has frequently, 
 if not always, occurred. But it is also proper to ask if 
 the motive for which private individuals put aside coins 
 of full weight, is not precisely the existence in juxtaposi- 
 tion of the pieces of light weight which the vicious or in- 
 complete wording of the law, or its unwarrantable inter- 
 pretation, would assimilate to coins of full value. The 
 cause of the evil is this favour which, in contempt of prin- 
 ciple, it is attempted to accord to coins of light weight. 
 Let the government and the legislator, acting up to their 
 mission, banish from the circulation these defective coins, 
 or authorise them to pass in payments for only what they 
 are worth, and from that moment no one will have any 
 further interest in separating the pieces of full weight. In 
 a word, the true solution, that which does violence to no 
 one, that which troubles no citizen in his industry and 
 liberty, is either to withdraw the light coins, or to declare 
 by law that they shall only be taken in payments accord- 
 ing to their weight. 
 
 It may not be useless here to remark, that in conform- 
 ity with what has been done in other countries, where the 
 law has declared that light coins should only be taken for 
 their weight, it would be well, in case such a measure 
 should be adopted in France, to admit that, in small pay- 
 ments up to a certain sum, the pieces should pass for 
 their full nominal value. The English law of 1774 upon 
 the silver currency fixed this limit at 25 sterling (about 
 630 francs). We might, by analogy in France, fix the 
 limit at 500 to 600 francs. It seems, however, that it 
 would be better to name a still lower sum, 100 francs, for 
 example. 
 
 13 
 
194 MEASURES TO AVERT THE EVIL EFFECTS 
 
 As a general proposition, the withdrawal of the light 
 coins would he easy. We know that in the United King- 
 dom, the Bank of England takes charge gratuitously of 
 this service, and supports the expense. She weighs a]l 
 the money which the movement of trade brings to her 
 counter. For this purpose she has a machine which effects 
 the object very skilfully. Similar machines might be 
 used in France, at the bank as well as in its branches, 
 and in the offices of the principal Keceivers General. 
 They would thus intercept every piece which should be 
 below the standard weight. If a machine of this kind 
 were kept at every mint, for the verification of the coins 
 which issue from the balance, the necessity for the estab- 
 lishments which we have just enumerated would be nota- 
 bly simplified. The expedient which consists in deciding 
 legislatively that coins should only be received by weight 
 in payments beyond a certain sum is quite practical, and 
 has for authority many precedents. This would, perhaps, 
 be in itself sufficient. However, for permanent exactness 
 in the monetary system, which is important in the rapid- 
 ity of transactions, it would be well to combine this act 
 with the withdrawal of the light coins, by establishing 
 weighing machines in the public establishments through 
 which the money flows. 
 
 Experience, in all nations, has shown the impossibility 
 of maintaining in parallel circulation, under the same de- 
 nomination, coins of full weight and fineness, and pieces 
 of inferior value, because it is contrary to the very nature 
 of things to which we must all conform ourselves. The 
 light pieces have always and everywhere expelled those of 
 full weight and fineness, and to keep the latter in circu- 
 lation it has been always necessary to throw the others 
 into the crucible of the Mint, or to give them a circula- 
 tion according to their value. On this point, the annals 
 of England may be consulted with peculiar interest. 
 
 
OF THE FALL OF GOLD. 195 
 
 In France, at the present time, the withdrawal of the 
 light coins, which have accumulated since the year 11, 
 would only be a serious operation as regards the 5 franc 
 pieces, and we may form an approximate estimate of what 
 it would cost so far as they are concerned. The ivear has 
 not yet had time to be very considerable ; the French 
 and foreign refiners have withdrawn from the circulation, 
 from the motives already explained, the chief part of the 
 coins anterior to 1825, and even to 1830. The oldest 
 pieces have, therefore, been hardly a quarter of a century 
 in circulation ; the corresponding loss would not be more 
 than eight centimes per piece. Upon the sum of a mil- 
 liard (40,000,000), which would have the average cir- 
 culation of about fifteen years, the loss would be 48,000 
 kilogrammes or 9,600,000 francs (384,000). There 
 would also be the expense of melting and recoining, which, 
 according to the tariff of the Mint, would, supposing it to 
 be general, amount to 7,500,000 francs (300,000). 
 We thus reach a total expense of 17,100,000 francs 
 (684,000). If the mass of 5 franc pieces remaining in 
 France at this time, amount, as some persons suppose, to 
 1,500,000,000 francs (60,000,000), the expense would 
 amount to 25, 650,000 francs (1,026,000), always with 
 the supposition, evidently forced, that the recoinage would 
 be general. The sum is large assuredly, but the advan- 
 tage of having thenceforth a sound currency is well worth 
 it. These charges would be spread over two operations, 
 or three at the utmost, because in cases of this kind suc- 
 cess depends on rapidity of movement. It must be added 
 that the sum of 25,650,000 francs is the maximum, which 
 for several reasons would never be reached. It is likely 
 that for an undertaking so vast, the State would come to 
 an agreement with the directors of the Mint for a reduc- 
 tion of the tariff. In the next place, the coins of a date 
 anterior to 1825 and 1830, which are still in circulation, 
 
196 MEASURES TO AVERT THE EVIL EFFECTS 
 
 would yield a profit rather than a loss. And, besides., 
 some of the pieces would be found above the legal weight 
 and fineness, and consequently would not require to be 
 returned to the crucible. - 
 
 Under William III., a century and a half since, par- 
 liament voted eagerly 1,200,000 sterling to re-establish 
 on a sound basis, that is in conformity with its type, the 
 silver money which had been worn by circulation or exces- 
 sively " sweated." Weight for weight, 1,200,000 would 
 ' make 30,000,000 francs of our money ; but taking into 
 account the greater value of silver at that time, it would 
 be equal to 70 or 75 millions of francs of our day. 
 
 A word or two upon the purchase and sale of coins at a 
 premium. Latterly, some persons have made violent ef- 
 forts to incriminate those who are engaged in these opera- 
 tions. The vehemence with which they are attacked is 
 hardly explicable, inasmuch as they follow a commercial 
 pursuit, that of the money-changer, perfectly understood, 
 and duly licensed. In every age and in all countries this 
 commerce has existed, because it is useful and necessary, 
 and because it is not condemned by any of the principles 
 on which society is founded. Ignorant governments have 
 often tried to subject it to unjust restrictions, opposed to 
 the public interest, but they have always failed in their 
 efforts. In France, previous to 1850, every one who went 
 on a journey bought gold at the changers at a premium of 
 about 10 or 20 centimes per piece of 20 francs : neither 
 justice nor the government frowned on these operations ; 
 everybody admitted that they were quite practical and 
 legitimate, both on the part of the changer who sold, and 
 the traveller who bought. At present, the premium has 
 passed from the gold to the silver ; by what sorcery is it 
 that what was formerly innocent should now become 
 criminal ? 
 
 A fact, however, has occurred, the announcement of 
 
OF THE FALL OF GOLD. 197 
 
 which has cooled the ardour with which certain persons 
 have set about demanding the application of the edicts of 
 the ancient regime agrinst the purchase and sale of coins 
 at a premium, and also against the trade in ingots, as often 
 as they were at a premium in relation to the tariff of the 
 Mint. It has been observed that the Bank of France, 
 which is treated with merited consideration by the State, 
 gave itself up to this commerce on a grand scale at the 
 very moment when it was denounced with so much hub- 
 bub, as a crime against the rights of the State. The 
 monthly returns in the Moniteur, upon the subject of the 
 Bank of France, contained a prominent announcement 
 during the latter part of 1855, and the whole of the years 
 1856 and 1857, in the following words : Premiums paid 
 for the purchase of gold and silver bullion. These trans- 
 actions were mostly in ingots, but they also included coin- 
 ed specie, which even for the Bank were preferable, inas- 
 much as the Bank purchased ingots only to send them to 
 the Mint. Besides, there is no way of distinguishing 
 them : the trade in ingots and that in coins are insepara- 
 bly connected ; they are so practically, as well as in the 
 ideas of those retrograde writers who have astonished the 
 public with their passionate appeals for the intervention 
 of the government. The old edicts were equally merciless 
 towards the one and the other of these operations. The 
 edict of the 24th October, 1711, the application of which 
 has been demanded recently in France, contains, in the 
 very article which prohibits the melting of money by pri- 
 vate individuals, an interdict against the purchase of gold 
 or silver bullion at a higher rate than the tariff of the 
 mints, and the penalty consisted of confiscation, with the 
 addition of " an arbitrary fine " (I quote the words of 
 the text) "which shall not be less than the value of the 
 specie confiscated." At this rate, the Bank ought to be 
 condemned to pay, for confiscation and fine, a fabulous sum, 
 
198 MEASURES TO AVERT THE EVIL EFFECTS 
 
 something like 2 milliards (80,000,000), if not more : 
 for it probably purchased more than a milliard in the 
 course of the three years 1855, 1856, and 1857. In virtue 
 of the salutary principle of equality before the law, it would 
 have been impossible to have summoned before a magis- 
 trate the money-changers, without placing beside them at 
 the bar, the governor and directors of our great financial 
 institution. 
 
 On the subject of the exportation of specie, of the 
 penalties with which it was formerly visited, and of the 
 idea which has been recently put forth, of either reviving 
 them in full vigour, or with some mitigation, or of sub- 
 stituting for them a custom-house duty, I will add nothing 
 to that which has already been said previously (Section 
 V., Chap. V.), and again, more specially, in the preceding 
 chapter. 
 
 CHAPTER VIII 
 
 OF A DIFFEKENT SOLUTION WHICH HAS BEEN EECOMMENDED, AND 
 WHICH WOULD CONSIST IN THE ADOPTION OF A GOLD STANDARD. 
 
 IN the midst of the difficulties with which our monetary 
 system is now surrounded, some persons have proposed a 
 solution which would consist in withdrawing from silver 
 the quality of the standard, and attaching it to gold. It 
 would be understood that the franc, deprived thenceforth 
 of all connection with our metrical system, would be com- 
 posed of about 29 centigrammes of fine gold, or of 32 cen- 
 tigrammes and a fraction of gold of the fineness of nine- 
 tenths. As regards silver, the only choice is between the 
 two following courses : either to reduce it to the condition 
 of a token as in England, or to lessen the proportion of 
 metal contained in the piece hitherto called a franc ; it 
 
OF THE FALL OF GOLD. 199 
 
 might contain 4 grammes of fine silver instead of 4J^ 
 grammes., with the power of afterwards making another 
 diminution if the divergence between gold and silver in- 
 creased. These two combinations resemble each other very 
 mueh ; they spring from the same source, and are tainted 
 with the same vice. In both cases the franc would cease 
 to be what the law has established : 4.1 grammes of fine 
 silver. But the attempt may as well be given up, for do 
 what we will, it can be called nothing but coining false 
 money. When Philippe le Bel diminished the quantity 
 of silver contained in the crowns of his time, he never did 
 anything more serious or more characteristic. In vain will 
 it be said that the law, in giving the name of a piece of 
 20 francs to a certain weight of gold, has assimilated 29 
 centigrammes of gold to the franc ; to this argument 
 there is a peremptory answer : the law has not said that 
 the franc was 29 centigrammes of gold ; it has said, very 
 expressly, that the franc was 4J grammes of silver, and 
 when it assimilated 29 centigrammes of gold to 4J 
 grammes of silver, it was in a temporary manner, and this 
 provisional arrangement should cease from the moment 
 that 29 centigrammes of gold ceased to be effectively the 
 equivalent of 4\ grammes of silver. However well dis- 
 posed we may be, it is impossible that the franc can con- 
 tinue to be 29 centigrammes of gold, after there has been 
 a serious divergence between this weight of gold and 4J 
 grammes of silver ; unless we altogether obliterate the 
 general disposition which is at the head of the law of the 
 year 11, and also give a direct denial both to the affirma- 
 tions relative to what is called a fixed point in the pream- 
 ble, and to these words of Gaudin, that the kilogramme 
 of silver shall always be worth 200 francs, and shall never 
 be worth more or less, and to those of the same minister 
 indicating the obligation we should be under to remelt the 
 gold coins when the relative value of the two metals should 
 
200 MEASURES TO AVERT THE EVIL EFFECTS 
 
 be changed ; not to mention those of Cretet upon the fix- 
 edness of the nominal value of silver, those of Prieur, upon 
 . the same subject ; and twenty passages from the docu- 
 ments which served as a preparation for the law of the 
 year 11, and which are all explicitly in the same sense. 
 
 But, it is said, did not the legislator of the year 11 
 exceed his powers ? What right could he have to chain 
 us to a silver standard, and to decide that the franc 
 should for ever be the weight of 5 grammes of silver, of 
 nine-tenths fineness, or, which comes to the same thing, 
 of 4J grammes of fine silver ? Here there is a distinction 
 to be drawn : if it be meant that at the time when the 
 two metals presented the same fixedness of value, and 
 when there was no reason to believe in the approaching 
 depreciation of the one more than the other, it would have 
 been perfectly legitimate and correct, in the point of view 
 of strict probity, to change the standard, and to invest 
 with that dignity gold instead of silver, then nothing 
 could be advanced more consistent with truth. Only that 
 it would have been very like changing for the sake of 
 change, for it is by no means proved, in the judgment of 
 those who have reflected on these matters, that in a gen- 
 eral sense, and taking all the circumstances and qualifica- 
 tions into account, gold may not have better claims than 
 silver to be invested with the functions of the monetary 
 standard. I know more than one good judge who is of an 
 opposite opinion. It would have been possible, in thus 
 changing the monetary unit from silver to gold, to pre- 
 serve the relation established between this unity and the 
 metrical system : to this end it would have sufficed to 
 have adopted for the monetary unit the gramme of gold, 
 of nine-tenths fineness, or 5 grammes, or even 10 grammes. 
 On these terms, and under these conditions, the change in 
 the standard might have been justified ; it would have 
 been effected in the spirit which animated the legislator of 
 
OF THE FALL OF GOLD. 201 
 
 the year 11, continuing the most honourable and judicious 
 traditions of the French Kevolution. It would not have 
 contravened the engagements in the preamble of the law 
 of the year 11, which invokes the execution of transactions 
 and the preservation of property. But it would be another 
 thing to alter the standard, and transfer that attribute to 
 gold, at the very moment when it is impaired in value and 
 launched in a movement of depreciation. It were vain to 
 dissimulate, under such circumstances, that the real mo- 
 tive for the change consists precisely in that depreciation 
 in near perspective, by which the State would benefit ille- 
 gitimately at the expense of its creditors, and which de- 
 serves to be severely characterised. 
 
 Doubtless, the legislator of the year 11 has bound us, 
 but wherefore ? What is the servitude which he has im- 
 posed on us ; what more than that which all honest people 
 accept, of paying exactly their debts, and of fulfilling faith- 
 fully their promises ? Yes, thus far, the legislator of the 
 year 11 controlled our liberty ; but in so doing he did not 
 exceed his powers. If he did dispose of us, it was by the 
 same right as that by virtue of which he defined all the 
 conservative laws of property. He also disposed of us, and 
 restricted our liberty when he enacted that the State 
 should pay at certain intervals, and without deduction, the 
 interest of the public debt, when he laid down the princi- 
 ple that the State should not deprive the humblest citizen 
 of his field, otherwise than paying him its full value, and 
 until after the expropriation should have been proved by 
 solemn forms to be necessary for the public interest ; he 
 disposed of us and fettered our liberties when he inscribed 
 in the code the means of coercing the debtor who, being 
 indebted 100 francs, should pretend to acquit himself by 
 the payment of 50 or 75. Who has ever discovered that 
 when these bonds were forged by the legislator he exceeded 
 his powers ? Such a servitude as this, instead of being 
 
202 MEASURES TO AVERT THE EVIL EFFECTS 
 
 repudiated by a free people, is the very yoke which they 
 are proud of bearing. Let us mistrust the liberty which 
 would consist in releasing us from the engagement by vir- 
 tue of which the franc, under present circumstances, 
 ought not to be anything but 5 grammes of nine-tenths 
 fineness, or else the quantity of gold which is freely ex- 
 changed in the market for that quantity of silver. In this 
 pretended liberty there is nothing to be seen but false 
 money, and State bankruptcy. 
 
 England may be regarded as having effected in 1816 
 the delicate operation of the alteration of the standard. 
 She then substituted the standard of gold, frankly avowed, 
 for the standard of silver which had been expressly chosen 
 in ancient times, but of which the titles had become some- 
 what obscured in people's minds, without, however, being 
 quite forgotten. At that time, the men who exercised 
 the greatest influence on the government and on public 
 opinion, allowed themselves to be unduly influenced by the 
 advantage which gold possesses of being more portable 
 than silver. They thought also that gold fulfilled better, 
 or at least less imperfectly than silver, the important con- 
 dition of fixedness of value. In that, they probably de- 
 ceived themselves, and if at the present time the most 
 competent judges in such matters in England were con- 
 sulted, a great number would pronounce themselves in an 
 opposite sense. But it is essential to add that in 1816 
 there was nothing which warranted the expectation that 
 the relation of gold and silver would be modified. It was 
 still less probable that, if a change did occur, it would con- 
 sist in a fall in the value of gold. The fact is, that the 
 relation between the two metals underwent in the succeed- 
 ing years a very slight modification, which was maintained 
 until 1848 or 1849, but it was in the direction of a rise of 
 gold relatively to silver, and not of its depreciation. 
 
 It may be here remarked that, at the time in question, 
 
OF THE FALL OF GOLD. 203 
 
 England was in a position to make a free choice on the 
 subject of a monetary system, inasmuch as, for about 
 twenty years previously, she had been under the regime of 
 paper money, owing to the suspension of payments in 
 specie by the Bank, which dated from the month of Feb- 
 ruary, 1797. 
 
 It is still more important to observe, if history is, as I 
 believe it to be, warranted in saying that in 1816, England 
 altered the monetary standard and substituted gold for 
 silver, which previous to the period of paper money per- 
 formed this part, it should also add that the British legis- 
 lator of 1816 by no means thought that he was perform- 
 ing an act of so wide a bearing, but on the contrary he be- 
 lieved himself to be remaining faithful to ancient tradi- 
 tions. In fact, throughout this affair, parliament followed 
 almost blindly the ideas and opinions which Lord Liver- 
 pool had developed in his Treatise on the Coins of the 
 Realm, written in 1805, a work which is a sort of public 
 document, for it appeared in the form of a letter to the 
 king. This statesman, in opposition to other authorities, 
 older and, if I may be allowed to say so, more versed than 
 he in such matters, maintained in his treatise the opinion 
 that silver had for a long time ceased to be the monetary 
 standard in England, and that, consequently, the British 
 legislature was perfectly free to choose between gold and 
 silver. 
 
 Whatever may be the case in England, the idea of 
 altering the standard in France, in these later times, finds 
 determined partisans. I regret to have to cite among the 
 writers who have espoused this view, M. E. Levasseur, one 
 of the young men whose career has been marked with 
 great distinction. The sagacity of which he has already 
 given such repeated proofs, in the collection and verifica- 
 tion of facts, would not allow M. Levasseur to deceive 
 himself on the real character of the legislation of the year 
 
204 MEASURES TO AVERT THE EVIL EFFECTS 
 
 11. He does not deny that the intention of the legislature 
 at that time was to have one sole standard., and to confer 
 that attribute upon silver. He regrets that in 1848 and 
 1849, at the origin of the working of the mines of Califor- 
 nia, a more decided stand was not taken against gold. 
 But in the state to which matters have now arrived, he 
 considers that the simplest and best course is to bow to 
 the authority of what he believes to be accomplished facts, 
 and to .consider gold as having taken by main force the 
 place of silver, a place which it must of necessity be left 
 to occupy, without troubling ourselves to inquire whether 
 it has been usurped or not.* In a word, he would here 
 apply the doctrines of the fatalist school, which is so easily 
 resigned to accept that which morality would urge us to 
 reject, under the pretext that destiny has pronounced its 
 judgment. Nevertheless, it does not seem to me that we 
 are yet reduced to quite so much philosophy ; it seems to 
 be still possible to keep each in its proper place, to the 
 great honour of principles, and to the great satisfaction of 
 a multitude of respectable interests. There is much silver 
 money still remaining in France, sufficient to compose, 
 with bank notes, and with gold itself, which it is not in- 
 tended to proscribe, an instrument of exchange quite 
 efficacious, and very firmly established, in conformity with 
 the idea which animated the legislation of the year 11. 
 
 There are plenty of selfish interests, plenty of minds 
 which' from levity, presumption, or unscrupulousness, are 
 in constant coalition against the right, which is a sufficient 
 motive why those who are guided by reason and the pub- 
 lic interest, should defend sound principles when they are 
 in danger. One of the titles by which science recommends 
 itself most, is that it keeps constantly unfurled the banner 
 of principle, which it never deserts ; and it must not be 
 
 * The views of M. Levasseur are given in a very interesting volume, 
 entitled, Question de FOr; Book IV., Chap. IX. 
 
OF THE FALL OF GOLD. 205 
 
 found sanctioning those infractions and violations of prin- 
 ciple to which politicians, for their convenience or repose, 
 or the success of their combinations, are always inclined. 
 
 The argument which appears to have seduced M. 
 Levasseur, is that the entire effect to be apprehended 
 from the new mines is already produced, the dreaded per- 
 turbation already consummated ; to use his own words, if 
 we were to take the necessary steps for maintaining the 
 silver standard, ^ we should not avert a revolution already 
 effected, but only make a counter-revolution." M. Le- 
 vasseur has here fallen into a grave error : we are very far 
 from the time when the full effects of the new gold mines 
 will have been accomplished. It is even remarkable that 
 up to tin's time the fall in gold, as compared with silver, 
 has been hardly perceptible. In this, the predictions which 
 would have been thought the most justifiable have for the 
 moment failed, and this theory seems to have suffered a 
 defeat; but the circumstances of the case have admitted 
 of explanation. 
 
 M. Levasseur's mode of arguing has, if I mistake not, 
 a great defect ; it tends, in fact, assuredly against his 
 own intentions, to sanction a practice deserving of con- 
 demnation. It would furnish a specious pretext for the 
 successive degradation of the coinage in the following 
 manner : whenever, by the inattention or negligence of 
 the government, the coins in circulation should not have 
 been gradually renewed by recoinage, so as to furnish a 
 circulating medium which had always the full legal weight, 
 it would be possible, by applying the reasoning of M. Le- 
 vasseur, to pretend that it is warrantable to proceed to a 
 new coinage of lighter pieces, that is to say, by the re- 
 production not of the primitive type, but only of the mean 
 weight of the pieces in actual circulation. It is not thus 
 that, in the country where the monetary system has pre- 
 served the strictest relations with the principles of hon- 
 
206 MEASURES TO AVEBT THE EVIL EFFECTS 
 
 esty, statesmen and philosophers have reasoned, men to 
 whose influence is due the testimony of respect for the 
 rights of property and the security of transactions : it is 
 not thus that reasoned, under William III., the illustrious 
 Chancellor of the Exchequer, Montague, and the eminent 
 thinker Locke, in whose footsteps the parliament felt 
 bound in honour to march. 
 
 It must be plainly said that the proposal to adopt the 
 gold standard at the present time in France, is opposed to 
 the best established views upon the essence of money. 
 An English writer, whom I have already had occasion to 
 cite, Mr. J. Maclaren, has in a very recent publication 
 maintained, with reason, that gold has to some extent 
 forfeited its claim, to the quality of a standard. " The 
 institution of a measure of value, by which the distribu- 
 tion of the property of the society can be regulated, is, 
 confessedly, a necessity in a civilised community ; men 
 must have such a measure by which to arrange their 
 transactions. Again, every one would allow that the chief 
 point to be attended to, in the choice of this measure, 
 should be invariability ; and it would seem to follow, as a 
 matter of course, that when the commodity chosen for 
 this purpose had lost a portion of the quality which origi- 
 nally fitted it for its office, another commodity, if any one 
 could be found, possessing the requisite qualities in a su- 
 perior degree, should be at once substituted for it 
 before any change in the distribution of the property of 
 the society had taken place ; and this seems so plain 
 that it is almost a waste of time to state it." * From 
 hence Mr. Maclaren concludes that it is now the duty 
 of parliament to return from a gold to a silver stand- 
 ard. I do not undertake to say that parliament will 
 yield to the suggestions of Mr. Maclaren, though he has 
 
 * "A Sketch of the History of the Currency," comprising a brief review 
 of the opinions of the most eminent writers on this subject, page 358. 
 
OF THE FALL OF GOLD. 207 
 
 furnished very good arguments in their favour ; but, as- 
 suredly, his reasoning condemns, in toto, the proposition 
 which would at this juncture tend to induce France to 
 adopt a gold in lieu of a silver standard. 
 
 In the commission appointed in France in 1857, this 
 proposition had nevertheless an advocate, and it was in 
 the person of one not the least considerable of its mem- 
 bers. But the system of this eminent functionary is un- 
 sound from its very foundation. In fact, according to him, 
 the law of the year 11, instead of resolving in favour of 
 silver the question of a single standard, would admit the 
 system of a double standard. The sole response to be 
 made to such an assertion is by appealing from the author 
 to himself better informed. It is only necessary to beg 
 him to read attentively the law of the year 11, and if the 
 wording and arrangement of the law leave him in any 
 doubt, to cast an eye upon the expose des motifs. 
 
 To the preceding considerations, and which appear to 
 me of more than sufficient weight to incline the balance 
 in favour of an immediate intervention of the legislature, 
 with a view of guaranteeing our monetary system from 
 the dangers which menance it (the system as defined and 
 understood by the law of the year 11), other reasons might 
 be added, especially those which appear of a minor order 
 to certain minds who believe themselves more practical 
 and shrewd than their neighbours, because they exclude 
 from their politics all honourable regard for great thoughts 
 and great principles. At the present time there may be 
 observed among the civilised nations a certain movement 
 in favour of the adoption of a uniform system of weights 
 and measures, which would inevitably be the metrical 
 system of France. Several States in both hemispheres 
 have officially given in their adhesion to it ; and the idea 
 is gaining ground, noiselessly and slowly it is true, among 
 the great nations of the world, in England, Germany, and 
 
208 MEASURES TO AVERT THE EVIL EFFECTS 
 
 the United States. It will, perhaps, be remembered that 
 at the conclusion of the Universal Exposition of 1855, all 
 the commissioners, and all the juries then present in 
 Paris signed a declaration which called the attention of 
 government to the utility and great convenience of a gen- 
 eral convention for. this object, and an international asso- 
 ciation was formed for the purpose.* Such innovations 
 as these, if they do not resolve themselves into a profit 
 measurable in shillings and pence, are yet not without 
 their price. It seems also that France, which took the 
 initiative in the metrical system, and which called on all 
 the nations to concur in its adoption, as it was afterwards 
 in the free exercise of her reason and for the common in- 
 terest adopted by herself, should be the last country from 
 whom should be expected any acts calculated to weaken 
 or thwart the tendency to imitate her example. If so, it 
 is not superfluous to add that in abandoning the silver 
 standard, and substituting one of gold, according to the 
 process recommended, which would consist in enacting 
 that henceforth the monetary unit should be the twentieth 
 part of the actual pieces of gold of 20 francs, we should 
 make a breach in the metrical system, we should destroy 
 the prestige which it enjoys among the civilised nations, 
 
 * The most remarkable manifestation which resulted from this fact has 
 emanated from the English committee, which formed part of the Inter- 
 national Association. In a series of publications, this committee, after 
 having maturely considered the subject, has declared that a decimal system 
 of weights and measures, of which the units shall be allied to each other by 
 decimal relations, is for the interest of the public, and that the best basis to 
 give to the whole system is the metre, such as was determined by the Inter- 
 national Commission under the French Republic. I wish to draw the at- 
 tention of enlightened men to the last of these publications, entitled, What 
 is the best Unit of Length ? It is from the pen of Mr. James Yates, one of 
 the vice-presidents of the International Association, and one of the men who 
 in the two hemispheres have devoted most labour to the task of spreading 
 the fruitful idea of a uniform system of weights and measures for the whole 
 civilised world. 
 
OF THE FALL OF GOLD. 209 
 
 so as to render impossible its universal adoption, which 
 might otherwise be very probable. In fact, the franc, 
 such as it is at this time, forms an integral part of the 
 metrical system. Until the year 11, inclusive, the legis- 
 lature of France, of 1789, attached the greatest impor- 
 tance to its remaining so, and its intention has, down to 
 our day, been religiously respected. Now, would not the 
 franc be banished from the metrical system, if it were 
 henceforth understood that the monetary unit is the twen- 
 tieth part of the quantity of the precious metal contained 
 in the pieces of gold of 20 francs ?* 
 
 CHAPTER IX. 
 
 APPRECIATION OF THE SYSTEM WHICH CONSISTS IN ADJOURNING 
 INDEFINITELY THE LEGISLATIVE SOLUTION. 
 
 I WILL conclude with a reflection. There are two ways 
 of infringing the prescriptions of the legislator of the year 
 11, and of drawing upon French society the violations of 
 right, as well as the sufferings and the perturbations of all 
 kinds, of which we have fully sketched the perspective in 
 the course of this work ; it may also be said that there are 
 two ways of subjecting the State to those injurious accu- 
 sations which it would not be easy to refute. The first, 
 more frank or more audacious, would be to lay to-morrow 
 before the legislative body a bill providing that henceforth 
 silver is deprived of the attribute assigned to it by the 
 legislation of the year 11 (in that respect a faithful inter- 
 preter of all the national assemblies which had succeeded 
 since 1789), and that, for the future, gold shall be the 
 
 * Instead of weighing exactly 5 grammes, the franc would have a weight 
 represented by an indefinite fractional number (0 gramme 32258, &c.) 
 14 
 
210 MEASURES TO AVERT THE EVIL EFFECTS 
 
 standard metal under the conditions which I have just 
 narrated. The other, more timid, would be to remain 
 with our arms crossed, and to leave things to follow in- 
 definitely the course which they have taken for themselves. 
 From that time, our silver money would continue to flow- 
 out of the country until the last 5 franc piece had left 
 France. To retain even the smaller pieces it would be 
 necessary to reduce them to the condition of tokens, by 
 withdrawing a part of the fine metal which they contain. 
 The demonetisation of silver would then be an accom- 
 plished fact. At whatever point of view I place myself, 
 whether I regard it as a question of interest, of equity, or 
 of honour, I cannot perceive a great difference between 
 the one and the other of these two processes. The effects 
 would be the same, they would be equally disastrous, 
 equally condemnable. On some future day, History, 
 when its pen shall be held by judges firmly devoted to the 
 cause of principle, such as was Tacitus for his time, will 
 visit the one or the other of these projects with its sever- 
 est condemnation. In many respects omission is almost 
 as culpable as action. This is especially true in relation 
 to that particular social force, the destination of which is 
 to show itself in action, and that force is called the gov- 
 ernment. 
 
 The abatement which has taken place since the com- 
 mencement of 1858, in the exportation of silver from the 
 French territory, is a fortunate circumstance, inasmuch 
 as it renders more practicable the conservation of the 
 monetary regime prescribed by the law of the year 11 ; so 
 far we have reason to congratulate ourselves. This must 
 not, however, be made an excuse for inactivity, or for an 
 indefinite temporisation. The current which drew the 
 silver from within our frontiers has not ceased to exist, 
 and nothing indicates that it is likely to cease. On the 
 contrary, it is probable that it will recommence with great 
 
OF THE FALL OF GOLD. . 211 
 
 vivacity. Let the event then only be taken for what it 
 really is, a respite given to the authorities of France to 
 enable them to act. It would be, perhaps, better to say 
 that it is a pause on the part of the sole authority to 
 which governments own themselves amenable, Divine 
 Providence, to enable every one do to his duty. 
 
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