Encyclopædia Britannica, Ninth Edition/Money

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2195400Encyclopædia Britannica, Ninth Edition, Volume XVI — MoneyCharles Francis Bastable

MONEY

1. Definition and Functions of Money.—The precise definition of Money is a question presenting no small difficulty, and it has been complicated by the attempts of some writers to define the term so as to lend support to their favourite theories. The real difficulties of the subject are, however, chiefly connected with paper-money, and as that side of the question has been dealt with in the article Banking (q.v.) it will here be sufficient to adopt the clear and careful description of money given by a distinguished American economist as being “that which passes freely from hand to hand throughout the community in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it and without the intention of the person who receives it to consume it or enjoy it or apply it to any other use than in turn to tender it to others in discharge of debts or payment for commodities.”^[1] In this passage the essential features of money are plainly set forth, though, as is frequently the case in economics, particular cases hard to bring within the description may be found.^[2]

The functions which money discharges in the social organism are—at least in the opinion of all writers worth noticing here—clearly manifest. The most important is that of facilitating exchanges. It is not necessary to dwell on the great importance of this office. The mere consideration of industrial organization shows that it is based on the division of employments; but the earliest economic writers saw clearly that division of employments was rendered possible only by the use of a medium of exchange. They saw that the result of increasing specialization of labour was to bring about a state of things in which each individual produced little or nothing directly adapted to satisfy his own wants, and that each one was to live by exchanging his products for those of others. They saw, moreover, that this was not feasible without some object which all would be willing to accept for their peculiar products, for otherwise, the difficulty of getting those together whose wants were reciprocal would be a complete hindrance to the development of exchange, which alone made division of labour possible. A second function hardly inferior in importance to the one just mentioned is that of affording a ready means of estimating the comparative value of different commodities, Without some common commodity as a standard of comparison this would be almost impossible. “If a tailor had only coats and wanted to buy bread or a horse, it would be very troublesome to ascertain how much bread he ought to obtain for a coat or how many coats he should give for a horse;”^[3] and as the number of commodities to be dealt with increased the problem would be come harder, “for each commodity would have to be quoted in terms of every other commodity.” Indeed it may be reasonably maintained that the idea of general value could not be formed without the existence of money, and all that is known of savage races tends to bear out this view.^[4] The adoption of some one commodity renders the comparison of values easy. “The chosen commodity becomes a common denominator or common measure of value in terms of which we estimate the values of all other goods,”^[5] and thus money, which in its primary function renders exchanges possible by acting as an intermediate term in each exchange, also makes exchanges easier by making them definite. Another function of money comes into being with the progress of society. One of the most distinctive features of advancing civilization is the increasing tendency of people to trust each other. Thus there is a continual increase in relations of contract, as may be seen by examining the development of any legal system. Now a contract implies something to be done in the future, and for estimating the value of that future act a standard is required; and here money, which already acts as a medium of exchange and as a measure of value at a given time, performs a third function, by affording an approximate means of estimating the present value of the future act, and in this respect may be regarded as a standard of value, or, if the phrase be preferred, of deferred payments.^[6] Some writers attribute a fourth function to money, inasmuch as they regard it as being a means of easily storing up value. Doubtless it does supply this need, which is a specially pressing one in early civilizations owing to the insecurity which then exists, but with the progress of settled government the need becomes less extreme. Other forms of investment grow up, and the habit of hoarding money becomes unusual. It is therefore better to regard the functions of money as being only three in number, viz., to furnish—(1) the common medium by which exchanges are rendered possible, (2) the common measure by which the comparative values of those exchanges are estimated, and (3) the standard by which future obligations are determined.

2. Causes which Determine the Value of Money. Quantity of Money needed by a Nation.—The problem of the determining causes of the value of money is a particular case of

the general problem of values, but there are circumstances which render the inquiry more than usually complicated. Before considering these it will be well to deal with a use of the phrase “value of money" which has led to much confusion. In mercantile phraseology the value of money means the interest charged for the use of loanable capital. Thus, when the market rate of interest is high money is said to be dear, when it is low money is regarded as cheap. Whatever may be the force of the reasons in favour of this use, it is only mentioned here for the purpose of excluding it. For our present subject, “the value of a thing is what it will exchange for; the value of money is what money will exchange for, or its purchasing power. If prices are low, money will buy much of other things, and is of high value; if prices are high, it will buy little of other things, and is of low value. The value of money is inversely as general prices, falling as they rise and rising as they fall.”^[7] Now in the general theory of value it appears that the proximate condition which determines it is the equation between supply and demand; and this is clearly the case with reference to money. These terms, supply and demand, need, however, some elucidation. Let us consider what is meant by the supply of, and demand for, money. The supply of a commodity means the quantity of it which is offered for sale. But in what shape does the sale of money take place? By being offered for goods. “The supply of money, then, is the quantity of it which people are wanting to lay out;” or, to put the point more concisely, it is “all the money in circulation at the time.” Again, to take the case of demand,—the demand for a commodity is the purchasing power offered for it.^[8] Demand in the special case of money consists of all the goods offered for sale. There is, however, a peculiar feature in the case of money which arises from its position as the medium of exchange, viz., that money is, so to say, in a “constant state of supply and demand,” since its principal service is to act as the means of purchasing commodities.^[9] From this it follows that the factors which determine the value of money within a given time are: (1) the amount of money in circulation, and (2) the amount of goods to be sold. On closer examination it will, however, appear that there are other elements to be taken into account. In the first place, the quantity of money is not by itself the sole element on the supply side. In some instances a coin will not circulate more than two or three times in a year, while another coin may make hundreds of purchases. In determining the value of money these varying rates of circulation have to be considered, and by taking an average we may establish the existence of a fresh element to be estimated, namely, the average rapidity with which money does its work, or, to use Mill's expression, “the efficiency of money.” On the side of demand, again, it is not the quantity of commodities that is the determining element, but the amount of sales, and the same article may, and generally does, pass through several hands before it reaches the consumer. From this it follows that (if the consideration of credit in its various forms be omitted) the value of money is inversely as its quantity multiplied by its efficiency, the amount of transactions being assumed to be constant. This formula requires, however, some further explanations before it can be accepted as a full expression of the truth on the subject. It must be noticed that it is not commodities only that are exchanged for money. Services of all kinds constitute a large portion of the demand, while the payment of interest on the various forms of obligation requires a large amount of the circulating medium. The potent influence of credit also must be dwelt on. This latter force is the main element to be considered in dealing with variations of prices; but so far as it is based on a deposit of metallic money it may be looked on as a means of increasing the efficiency of money, and therefore as coming within the formula given above. In its other aspects it lies outside the range of this article. Some interesting conclusions may be deduced from the results we have arrived at. One of these is that the “increased development of trade,” or “expansion of commerce,” of itself tends to lower not to raise prices; for, by increasing the work which money has to do while the amount remains the same, it raises its value.^[10] Another consequence is that a large addition may be made to the money in a country without any effect being produced on prices. This is evident, since money only acts on prices by being brought into circulation; therefore, if the money which is added to the national stock is not used in this

way, prices will remain unaffected.

We have now sufficiently considered the proximate conditions which determine the value of money; the next step

is to inquire: What is the ultimate regulator of its value? The value of freely-produced commodities is—according to the ordinary theory of economists—determined by their “cost of production,” or, where the article is produced at different costs, by the cost of production of the most costly portion. We have now to consider how far this theory applies to the special case of money. Gold and silver, the principal materials of money, are the products of mines, and are produced at different costs; therefore the cost of the part produced at greatest cost ought to determine their value. This theory is, however, true only under certain conditions—namely, that competition is perfectly free, and that there are accurate data for computing the cost of production, and even then it is true only “in the long run.” Moreover, cost only operates on value by affecting supply. “The latent influence,” says Mill,^[11] “by which the values of things are made to conform in the long run to the cost of production is the variation that would otherwise take place in the supply of the commodity.” From these considerations it follows that cost of production does not so influentially affect the value of money as some writers have supposed. In former periods it was a common proceeding on the part of the state to either restrict or stimulate coinage and mining for the precious metals. At all times the working of gold and silver mines has been rather a hazardous speculation than a legitimate business. “When any person undertakes to work a new mine in Peru,” says Adam Smith,^[12] “he is universally looked upon as a man destined to bankruptcy and ruin, and is upon that account shunned and avoided by everybody. Mining, it seems, is considered there in the same light as here, as a lottery, in which the prizes do not compensate the blanks;” and all subsequent experience confirms this view. With regard to the adjustment of supply to meet an altered cost of production, the difficulties are, if possible, still greater. The supply of money is so large compared with the annual production, that any change can operate but slowly on its value. The total stoppage of fresh supplies from the mines would not be felt for some years in the increased value; and an increased amount of production, though more rapid in its operation, takes some time to produce an effect. “Hence the effects of all changes in the conditions of production of the precious metals are at first, and continue to be for many years, questions of quantity only, with little reference to cost of production.” On these grounds it is apparent that cost of production is not, for short periods, the controlling force which governs the value of money, and even for long periods the speculative nature of the industries connected with the production of money renders the cost of production an element very hard to ascertain. Another consideration which gives a peculiar feature to the problem of money-value is that in the case of other commodities a change in cost of production affects value without any actual change in the supply. The knowledge that a commodity can be produced at a lower cost will cause a reduction in its value. This is not true of money. Either the quantity or the efficiency of money must be altered to change its value. This is, of course, a result of its position as the circulating medium. When all these circumstances are taken into account it becomes clear that the most correct way to regard the question of money-value is that which looks on supply and demand, as interpreted above, as the regulator of its value for a limited time, while regarding cost of production as a force exercising an influence of uncertain amount on its fluctuations during long periods. Where the coinage of a state is artificially limited, the value of its money plainly depends on supply and demand as we

have interpreted it.

The next question which arises is: What quantity of money does a nation require? What amount of the circulating medium is necessary for the proper working of the industrial organism? To this puzzling problem the earlier economists gave answers in the shape of definite formulæ. Thus, Sir W. Petty was of opinion that the amount of coin required by a country was one-half the rent of land, one-fourth the amount of building rent, and one fifty-second part of the annual wages of labour. Locke's view was that one-fiftieth of labourers' wages, one-fourth landowners' revenue, and one-twentieth of traders' yearly returns, was the proper amount. Modern statisticians, however, though having command of much greater resources, decline to attempt a quantitative answer, and content themselves with indicating the conditions which the problem involves. In fact we must first examine the work which money has to perform, and this depends on several conditions. The first of these is the population; cæteris paribus, twice as many people will want twice as much money. The second is the amount of transactions; for, if the amount of business done is doubled, the amount of money must be also doubled, unless at the same time some improvement in credit is introduced. The efficiency of money is a third element which affects the quantity needed, and this is largely dependent on the habits of the people and the facilities for communication. Other elements which can be only briefly indicated are—“the degree in which credit exists between man and man; the amount of travelling which takes place; and the commercial and banking organization which exists.”^[13] Another factor which requires to be estimated is the extent to which habits of hoarding exist; for all money hoarded is withdrawn from circulation, and therefore increases the total amount needed. The habits of saving in the rural districts of France remarkably exemplify this element in the question. Again, the existence of barter does away with the use of so much money as would be required to carry on the exchanges effected by barter. The custom of paying wages in kind has a similar effect. This bare statement shows how insoluble the question is. When we contemplate the matter from an international point of view, the amount needed, after allowance is made for the cost of transporting goods, is plainly that which will keep a country's prices at a level with those of the countries with which it has commercial relations.^[14] For otherwise the country would have an excess either of importation or of exportation, which would necessitate a flow of money to the country whose prices were lower than the general level. This, then, is the condition which determines comparative prices between different countries; and, prices being so determined, the quantity of money needed to keep up those prices depends on the conditions above indicated. In the case of England reliable statistics tend to show that the gold in circulation was, in 1872, about £105,000,000, and the note circulation £43,000,000. In any Continental country the amount would probably be proportionally much greater, owing to the fact that there is in England a greater development of credit.

3. Early Forms of Currency.—Up to the present we have considered money as being fully established and properly adapted to fulfil its various functions. We have now to trace the steps by which a suitable system of currency was evolved from a state of barter. It is important for a right understanding of the question to grasp the fact that exchanges took place originally between groups, and not between individuals. This explains the slow growth of exchanges, as each group produced most of the articles necessary for itself, and such acts of barter as took place were rather reciprocal presents than mercantile exchanges. Such is actually the case at present among modern savages. “It is instructive to see trade in its lowest form among such tribes as the Australians. The tough greenstone valuable for making hatchets is carried hundreds of miles by natives, who receive from other tribes in return the prized products of their districts, such as red ochre to paint their bodies with; they have even got so far as to let peaceful traders pass unharmed through tribes at war, so that trains of youths might be met, each lad with a slab of sandstone on his head to be carried to his distant home and shaped into a seed-crusher. When strangers visit a tribe they are received at a friendly gathering or corrobboree, and presents are given on both sides. No doubt there is a general sense that the gifts are to be fair exchanges, and if either side is not satisfied there will be grumbling and quarrelling; but in this roughest kind of barter we do not yet find that clear notion of a unit of value which is the great step in trading.”^[15] This vivid description of what is going on at present among lower races enables us to realize the way in which money came into existence. When any commodity becomes an object of desire, not merely from its use to the persons desiring it, but from their wanting it as being readily exchangeable for other things, then that article may be regarded as rudimentary money. Thus the greenstone and ochre are on their way to being promoted to the position of currency, and the idea of a “unit of value” is all that is needed to complete the invention. “This higher stage is found among the Indians of British Columbia, whose strings of haiqua-shells worn as ornamental borders to their dresses serve them also as currency to trade with,—a string of ordinary quality being reckoned as worth one beaver's skin.”^[16] These shells, therefore, are in reality money, inasmuch as they discharge its functions.

On a review of existing savage tribes and ancient races of more or less civilization we are surprised at the great variety of objects which have been used to supply the need of a circulating medium. Skins, for instance, seem to be one of the earliest forms of money. They are to be found at present among the Indians of Alaska^[17] discharging this service, while accounts of leather money seem to show that their use was formerly more general. As the hunting stage gives place to the pastoral, and animals become domesticated, the animal itself, instead of its skin, becomes the principal form of currency. There is a great mass of evidence to show that, in the most distant regions and at very different times, cattle formed a currency for pastoral and early agricultural nations. Alike among existing barbarous tribes and in the survivals discovered among classical nations, sheep and oxen both appear as units of value. Thus we find that at Rome, and through the Italian tribes generally, “oxen and sheep formed the oldest medium of exchange, ten sheep being

{{11fine|reckoned equivalent to one ox. The recognition of these objects as

universal legal representatives of value, or, in other words, as money, may be traced back to the epoch of a purely pastoral economy.“^[18] The Icelandic law bears witness to a similar state of things; while the various fines in the different Teutonic codes are estimated in cattle. The Latin word pecunia (pecus) is an evidence of the earliest Roman money being composed of cattle. The English fee and the famous term feudal, according to its most probable etymology, are derived from the same root. In a well-known passage of the Iliad^[19] the value of two different sets of armour is estimated in terms of oxen. The Irish law tracts bear evidence as to the use of cattle as one of the measures of value in early Irish civilization.^[20] Within the last few years it has been prominently brought before the public that oxen form the principal wealth and the circulating medium among the Zulus and Kaffres. On the testimony of an eye-witness we are assured that, “as cattle constitute the sole wealth of the people, so they are their only medium of such transactions as involve exchange, payment, or reward.”^[21] We find that cattle-rents are paid by the pastoral Indian tribes to the United States Government.^[22] From the prominence of slavery in early societies it is natural to suppose that slaves would be adopted as a medium of exchange, and one of the measures of value in the Irish law tracts, cumhal, is said to have originally meant a female slave. They are at present applied to this purpose in Central Africa, and also in New Guinea. On passing to the agricultural stage a greater number of objects are round capable of being applied to currency purposes. Among these are corn—used even at present in Norway—maize, olive oil, cocoa-nuts, and tea. The most remarkable instance of an agricultural product being used as currency is to be found in the case of tobacco, which was adopted as legal tender by the English colonists in North America. Another class of articles used for money consists of ornaments, which among all uncivilized tribes serve this purpose. The haiqua-shells mentioned before are an instance, cowries in India, whales teeth among the Fijians, red feathers among some South Sea Island tribes, and finally, any attractive kinds of stone which can be easily worked. Mineral products, so far as they do not come under the preceding head, furnish another class. Thus salt was used in Abyssinia and Mexico, while the metals—a phenomenon which will require a more careful examination—have succeeded in finally driving all their inferior competitors out of the field, and have become the sole substances for money at present.}

}

4. Metallic Forms of Money. Their Superiority over other Substances. Special Advantages of Silver and Gold.—The use of metals as a form of money can be traced far back in the history of civilization, but, as it is not possible to ascertain the historical order of their respective adoptions for this purpose, we will take them in the order of their value, beginning with the lowest. Iron, judging from the statement of Aristotle, was extensively employed as currency. One remarkable instance of this which at once occurs to the mind is the Spartan money, which is clearly a survival of the older system that had died out among the other Greeks, though by modern writers it has been attributed to ascetic policy. In conjunction with copper, iron formed an early Chinese currency, and till recently it was a subsidiary coinage in Japan. Iron spikes are used in Central Africa, while Adam Smith notices the use of nails for money in Scotland.^[23] Lead has also served as money, as it does at present in Burmah. Copper has been more widely employed than either of the previously-mentioned metals. Its use in China as a parallel standard with iron has just been mentioned. The early Hebrew coins were chiefly composed of it, while down to 269 B.C. the sole Roman coinage was an alloy of copper. Till a very recent period it formed the principal money of some poorer European states (as Sweden), and was the subsidiary coinage of the United Kingdom till the present bronze fractional currency was introduced. Tin was not so favourite a material for money as copper, but the early English coinages were composed of it, probably on account of the fertile tin mines of Cornwall, and in later times halfpence and farthings of tin have been struck. The next metal which comes into notice is silver, which up to the last few years was the principal form of money, and even still is able to dispute the field with its most formidable rival. It formed the main basis of Greek coins, and was introduced at Rome in 269 B.C. The mediæval money was principally composed of silver, and its position in recent times will have to be subsequently noticed more at length. Gold, which is the most valuable of the metals widely used for monetary purposes, has been steadily gaining ground with the growth of commerce. The earliest trace of its use in common with that of silver is to be found “in the pictures of the ancient Egyptians weighing in scales heaps of rings of gold and silver.”^[24] The only other metals used for money—platinum and nickel—may be easily disposed of. The former of these was coined for a short time by the Russian Government, and then given up as unsuitable. The latter is only used as an alloy.

The examination of the forms of currency, both metallic and non-metallic, in which we have been engaged leads to certain definite conclusions as to the course which the evolution of currency is pursuing. It appears (1) that the metals tend to supersede all other forms of money among progressive peoples, and (2) that certain metals tend to supersede the others. From this we are led to consider the qualities which are desirable in the material of money, and to conclude that the presence or absence of those qualities is the reason of the adoption or rejection of any given substance.

(1) In the first place, it is necessary that the material of

money should be desirable, or, in other words, possess value; and to this condition all the commodities we have reviewed conform, for otherwise they would never have attained the position of being a medium of exchange. This quality, then, is not the reason for the preference of some forms over others. (2) The second requisite clearly is that the value of the article shall be high in proportion to its weight or bulk, or, to put the same truth in another way, it is requisite that it shall be portable. Want of this quality has been a fatal obstacle to many early forms of money retaining their place. Skins, corn, and tobacco were found very difficult to transfer from place to place. Iron and copper too suffered from the same defect, while sheep and oxen, though moving themselves, were expensive to transfer. (3) It is further desirable that the material of money shall be the same throughout, and that one unit shall be equal in value to another. This is a reason for rejecting the widespread currency composed of cattle, as the difference between one and another head is of course often considerable. The metals possess a particular advantage in this respect, as, after being refined, they are almost exactly homogeneous. (4) A fourth requisite is that the substance used as money can without damage be divided and, if needed, united again; here also the desired quality is peculiarly possessed by the metals, as they are easily fusible, while skins or precious stones suffer greatly in value by division, and it need hardly be added that the same is the case with regard to animals. (5) Money must also be durable. This at once removes from the articles suitable for money all animal and many vegetable substances. Eggs or oil will not keep, and consequently soon lose their value. Iron, too, is liable to rust, which, combined with its low value, is a reason for its disuse as currency. (6) Money should be easily distinguishable, and there should be no trouble in ascertaining its value. This condition is one of the reasons why precious stones have never been much used as money, their value being hard to estimate. The same objection applies to most non-metallic currencies, and is only obviated even in their case by the process of assaying. (7) The last condition which appears desirable for the money material is, that its value shall be steady. This, however, is of but slight importance in early societies, and it is only as deferred payments become a prominent feature of industrial life that this requisite is much needed. It is enough for the other purposes of money that it shall not vary within short periods, which is found to be a feature of metals, and especially of silver and gold, while corn especially varies widely in value from season to season. From the foregoing examination of the requisites desirable in the material of money it is easy to deduce the empirical laws which the history of money discloses, since metals, as compared with non-metallic substances, evidently possess those requisites in a great degree. They are all durable, homogeneous, divisible, and recognizable, and in virtue of these superior advantages they are the only substances now used for money by advanced nations. Nor is the case different when the decision has to be made between the different metals. Iron has been rejected because of its low value and its liability to rust, lead from its extreme softness, and tin from its tendency to break. Both these metals, as well as copper also, are unsuitable from their low value, which hinders their speedy transmission

so as to adjust inequalities of local prices.

The elimination of these metals leaves silver and gold as the only suitable materials for forming the principal currency. Of late years there has been a movement towards the adoption of the latter as the sole monetary standard, silver being regarded as suitable only for a subsidiary coinage. Indeed this question, which is reserved for subsequent discussion, may be regarded as the principal matter of controversy in the field of metallic currency. The special features of gold and silver which render them the most suitable materials for currency may here be noted. “The value of these metals changes only by slow degrees; they are readily divisible into any number of parts which may be reunited by means of fusion without loss; they do not deteriorate by being kept; their firm and compact texture makes them difficult to wear; their cost of production, especially of gold, is so considerable that they possess great value in small bulk, and can of course be transported with comparative facility; and their identity is perfect.”^[25] The possession by both these metals of all the qualities needed in money is more briefly but forcibly put by Cantillon when he says that “gold and silver alone are of small volume, of equal goodness, easy of transport, divisible without loss, easily guarded, beautiful and brilliant, and durable almost to eternity.”^[26] This view has even been pushed to an extreme form in the proposition of Turgot, that they became universal money by the nature and force of things, independently of all convention and law, from which the deduction has been drawn that to proscribe silver by law is a violation of the nature of things.^[27]

5. Coinage: its Advantages, and the Principal Questions connected therewith.—The development of monetary systems

has now been traced down to the establishment of metallic currencies. These, in the early stages of their existence, passed by weight. The Hebrew records bear witness to this fact, as also do the Greek writers. Aristotle, for example, after indicating the circumstances which led to the invention of currency, proceeds to point out that it was “afterwards determined in value by men putting a stamp upon it, in order that it may save them from the trouble of weighing it.”^[28] There are two distinct stages in the introduction of coining. In the first, only the quality or fineness of the metal is denoted by the stamp, no attempt being made to fix the weight. In other words, the stamp acts as a kind of hall-mark. The Chinese cubes of gold may have been the earliest money. Herodotus attributes the first use of coined gold and silver to the Lydians,^[29] while in another passage he mentions that the first Greek coinage was at Ægina, by Pheidon of Argos.^[30] The second step was to certify the weight as well as the fineness of the metal, thus completing the invention. The necessity of preventing any interference with the coin after it had been stamped led to the adoption of a regular form, and, though hexagonal or octagonal coins are to be found, the received shape of a coin is that of a flat circle, each side of which is stamped, as well as in many cases the edge. By this contrivance all persons into whose hands the coin came had a guarantee as to its quality and quantity, and we may reasonably infer that the great improvement in coinage among the Grecian colonies was the effect, and also in some degree the cause, of the expansion of their commerce in the 6th century B.C. From Greece the art of coining spread to Italy, being introduced by the Greek colonists in Lower Italy. Since then coinage as an art has always existed in the more advanced societies. The progress of invention, however, does not end with the introduction of the art of coining, since a number of practical questions arise with reference to the best system to be adopted, which for a protracted period present great difficulties to those who are called upon to solve them. One of these, before touched on, is: What is the best shape for coins? The answer has finally been in favour of the circular, but square and oblong pieces are also to be found.^[31] Closely allied with this is the question of the most suitable limits of size. The inferior limit is plainly fixed by the convenience of those using the coins. They ought not to be so small “that they can be easily lost, or can with difficulty be picked up.”^[32] Instances of violations of this principle occur in the case of the English threepenny piece and the American one-dollar gold piece. The superior limit is a more difficult point. Its determination turns partly on the difficulty of coining large pieces, and partly on the facilities which such large coins as the American gold double-eagle give for improper treatment. It is an easy process to drill holes, which can be concealed by hammering, while in some cases the coin has been sawn in two, and the interior gold removed, the outside surfaces being soldered together, while platinum is put in the midst to maintain the weight. As a general rule it may be laid down that no gold coin much larger than the English sovereign, or silver one at all larger than the half-crown, should be issued. Another consideration to be borne in mind when determining the proper size of coins is the relative amount of wear which takes place. Experience proves that large coins are less worn than small ones. “According to experiments made at the mint in 1833, the loss per cent. per annum on half-crowns is about 2s. 6d., on shillings, 4s., and on sixpences, 7s. 6d.” This result has been confirmed by other inquiries. From this it follows that the larger coins are less expensive, but their size is limited by the fear of their being tampered with. Again, the character of the stamp to be impressed is a matter requiring much care. The objects aimed at in imposing the stamp are (1) to prevent the coin being counterfeited, and (2) to prevent any of the metal being abstracted. The former of these objects can be best attained by making the device such as can be obtained only by powerful and expensive machinery. The most improved methods must be adopted, and the greatest pains taken to have the device perfectly executed. The latest improvement in the process of coining is the introduction of the knee-joint press. The latter difficulty is best obviated by using special care in marking the edges of the coins. Ancient coins were issued with unstamped edges which presented no impediment to clipping, but modern coins, at least those of any size, are protected by the edge being milled or by a legend being inscribed round it. The combination of milled edges with a raised legend would be a still more effectual

means of protecting the coinage from interference.

Another matter of importance in the process of coining is the nature and proportion of alloy to be used. The necessity for some mixture arises from the fact that gold and silver are both naturally soft, and, to obviate this, copper has been mixed with them, so as to produce a harder substance. The Austrian ducat is the nearest approach to purity among the principal coins of Europe, being composed of seventy-one parts of pure gold to one of alloy. The English gold coins are eleven-twelfths pure gold, while the silver ones are thirty-seven-fortieths pure silver. The origin of the difference is purely historical. The general gold proportion is nine-tenths gold to one-tenth alloy, while in some coinages the proportion of silver to alloy is nearly five to one, the countries composing the Latin Union having adopted that proportion in order to reduce their smaller silver coins to tokens. Copper is the usual material for alloying, but the Melbourne mint used silver for some time. It is this silvery alloy that accounts for the yellow appearance of many Australian sovereigns. They, however, are rapidly disappearing, as it is profitable to melt them down. It has been mentioned above that the wear of small coins is greater than that of large ones, and it may be added here that the wear of coins in general is an important question in connexion with their legal circulation. The English sovereign is believed to remain above the least current weight for from fifteen to twenty years. For the technical processes of coining, &c., reference may be made to the article Mint.

The next topic to be considered is: Who should issue money? In the earlier stages of currency the question was not so prominent, but the establishment of coining brought it forward. In Greece each city being autonomous claimed and exercised the right of freely coining as it desired, the coins being, of course, received in other cities only at their real value. The consequences of this system were generally beneficial. The Greek coins were usually up to their nominal value, as debased coinage was unable to circulate beyond the place of issue, and therefore extremely inconvenient to the members of the state issuing it.^[33] Under the Roman republic private persons were probably allowed to bring metal to be coined, though the coins seem generally to have had the name of one of the consuls for the year on them. Under the empire the doctrine became established that the right of coining belonged exclusively to the emperor, and till the fall of the Western empire this was acted on. After the establishment of the various barbarian kingdoms, each sovereign assumed the privilege of coining, a right which in France was extended to or rather usurped by the principal nobles.^[34] In England the king alone coined silver.^[35] At present the control of the operations of the mint is completely in the hands of the executive; and, until recently, no question on theoretical grounds as to the propriety of this method has ever been raised.^[36]

In close connexion with the right of coining comes

the consideration as to the proper persons to bear the expense of the process. At first sight the answer seems plain enough. Coins are a manufactured article quite as much as plate, and are rendered more valuable by being assayed, weighed, and certified. It appears therefore quite proper that those who bring metal to be coined should bear the expense of the coinage, or, in other words, should give up a part of the metal to the mint, thus paying for the service rendered to them in the same manner as those sending letters pay the postal department for their transmission. This course has been usually adopted. England, however, has taken a different line. In order to encourage the coining of the precious metals, no charge was made at the mint beyond that involved in the necessary delay in the operation; and this is at present the case with gold. Though this arrangement was originally introduced in obedience to the prejudices of the mercantile system which regarded gold and silver as being peculiarly wealth, it may be defended on reasonable grounds: for (1) the expense of the mint is very small compared with the amount of coin turned out, and (2) the coins produced are used by the nation, and therefore their expense may quite fairly be defrayed from the national revenue. Again, as the profit on the silver coinage (owing to circumstances to be subsequently discussed) is large, that may be set off against the free coinage of gold. The charge levied on coining, if confined to the expenses incurred, is called brassage; if it is anything above that cost it is known as seigniorage, which latter term is also used to denote both kinds of charge. The effect of seigniorage (using the term in its more extended sense) on the value of coins is to lower them, in fact, as Tooke has put it, seigniorage is always a kind of debasement, unless accompanied with limitation.^[37] If the same quantity of metal be in circulation there will be a greater number of coins, and therefore nominal prices will be higher. It is, however, possible that the increased prices may check the production of the precious metals, thus making the value of the metal higher than it would otherwise be. Whether this will happen or not depends on the actual conditions of production, and is incapable of being predicted. One advantage which undoubtedly results from a charge on coinage is that it checks the tendency to melt coin when exported, for where a seigniorage is imposed coins are more valuable than the uncoined metal by the amount of the seigniorage. It therefore becomes the interest of the holder not to melt down the coins, as in doing so he loses the extra value given by the coining. Another factor in the expense of currency is the loss which arises from the wear and tear which money undergoes, and the consequent cost of replacing the light or missing pieces. The last and largest item is the interest on the total amount of money in use. To take the case of England, the value of the metallic currency is estimated at about £130,000,000. The interest on this at 5 per cent. would amount to £6,500,000. This apparently heavy charge is justified by the fact that it is desirable to have a currency possessing, or at least based on, value. The expense of a metallic currency is, however, combined with its weight, a strong reason for the great developments of representative money and credit in modern times, with the result that gold and silver are hardly ever used in large domestic transactions, all such payments being made by cheques, which are cleared off against one another. For a full account of the modern organization of credit, see the

article Banking.

6. Historical Outline of Depreciations.—The earliest systems of currency whose progressive debasements it is possible in any degree to trace are those of the various Greek states, though even here many details remain in obscurity. The Roman currency system is comparatively better known; while for the mediaeval currencies from the time of Charlemagne (800 A.D.) elaborate materials are available, which naturally increase in bulk and precision as we approach more modern times. The general treatment of the history of coins belongs to Numismatics (q.v.) but the history of monetary depreciations is important in connexion with the theory of money as illustrating the value of sound economic knowledge.

Until coinage became a state function a continued debasement was impossible, since it was open to any one to refuse the money offered in payment if it was not up to the proper standard. When, however, coinage became a function of government strong motives for debasement soon presented themselves. (1) The cost of coinage falling on the state, and being generally defrayed by a seigniorage, led to the idea that this seigniorage could be made more profitable by making it larger, while the existence of any deduction veiled the injustice of a charge exceeding the expense incurred in the operation of coining. (2) The position of most Governments was that of debtors, and as a debasement favoured all debtors at the expense of all creditors it was only natural that rulers, ignorant of the ultimately ruinous effects of a series of debasements, should seek to relieve themselves without exciting the odium incurred by the levy of heavy taxes. A more pressing case than the foregoing, and one where more justification exists, is that of a severe social crisis, when large numbers of the community are burdened with debt, and a depreciation of the monetary standard seems the simplest mode of escaping from so critical a situation. Whatever may be the inducements to enter on the perilous course of tampering with the monetary standard, a long experience has incontestably proved its disastrous effects. One of the great causes of the weakness of France during the “hundred years' war” was the extremely debased state of its currency, and the dread of further reductions in the value of the coins.^[38] Lord Macaulay has given a graphic picture of the evils which England suffered from its depreciated silver currency towards the end of the 17th century.^[39] And a debasement brought about by design possesses a further element of evil by creating a belief that similar devices will soon be again resorted to. So manifest are the evils that result from debasement that it may be reasonably hoped that all civilized Governments have abandoned the practice for ever; though, unfortunately, similar bad effects are produced by the over-issue of inconvertible paper currencies, and this is still an expedient adopted under the pressure of difficulties. “It is proper to observe that coins may be debased in three different ways—(1) by diminishing the quantity or weight of the metal of a certain standard of which any coin of a given denomination is made; (2) by raising the nominal value of coins of a given weight and made of a metal of a certain standard, that is, by making them current or legal tender at a higher rate than that at which they passed before; (3) by lowering the standard or fineness of the metal of which coins of a given weight and denomination are made, that is, by diminishing the quantity of pure metal and proportionally increasing the quantity of alloy.”^[40] The last of these methods is the most dangerous, since the detection of it is more difficult, as it is so much easier to discover the weight than the fineness of the metal in a coin; but all of them produce the same results and are adopted for the same reasons.

Greek Depreciations.—The first debasement of coinage known to us on good evidence is that of the Athenian coinage by Solon in 594 B.C.^[41] ln order to obviate the severe distress of that period in Attica, he reduced the quantity of silver in the coins more than 25 per cent., so that 138 new drachmæ (the standard Athenian coin) were only equivalent to 100 pieces of the older coinage. This proceeding was perhaps justified by the critical state of things previously existing, and was a decided success. It is probable that another debasement of the gold coinage took place at Athens in 408 B.C. during the strain of the Peloponnesian War, though doubts have been cast on the reality of this debasement.^[42] It may, however, be said that generally the Greek cities fairly maintained the standard of money, though some states were notorious for dishonesty in this respect. The existence of an electrum coinage is no proof of a tendency to debasement, since it was regarded as a separate substance, and issued at its cost value, allowing for the expense of coining. As remarked before, this comparative honesty in relation to the coinage may be partly explained by the small extent of the Greek states, so that a debased coinage was unable to circulate beyond the boundaries of the issuing state. The keen perceptions of the more advanced Greek thinkers and their teachings on this subject may have also contributed to the same result.^[43]

Roman Depreciations.—The earliest Roman coinage was composed of an alloy of copper (æs), and this continued unaltered up to the time of the First Punic War. Silver was introduced in 269 B.C., the proportion between it and the older copper being fixed at 250:1.^[44] The copper currency was first debased during the Punic wars at the most critical period of the Hannibalic invasion—“the Romans had debased the silver and copper coin, raised the legal value of the silver currency more than a third, and issued a gold coinage far above the value of the metal.”^[45] Soon after this period the copper money, whose successive debasements are recorded by Pliny,^[46] seems to have been reduced to the position of a subsidiary currency, so that it is not really a case of debasement of the standard. The silver denarius which at first was $\scriptstyle {\frac {1}{72}}$ d of a Roman pound, had been debased to $\scriptstyle {\frac {1}{84}}$ th of a pound. In 91 B.C. a number of plated denarii were issued at the rate of one for every seven silver pieces issued. This proceeding, which was simply for political purposes, was proposed by Drusus, but in 84 B.C. a proposal for calling in these plated pieces was passed, and was extremely popular. It is probable that a slight debasement took place under Sulla, and one of the Cornelian laws seems to state the so-called fiat theory of money.^[47] The denarius was lowered under Nero to $\scriptstyle {\frac {1}{96}}$ th of a pound, while the later period of the empire is a scene of continual tampering with the currency. The gold aureus was at first $\scriptstyle {\frac {1}{40}}$ th of a pound, but at the time of Augustus it was only $\scriptstyle {\frac {1}{45}}$ th, while under Constantine it had come to be only $\scriptstyle {\frac {1}{72}}$ d. The comparison of Hellenic with Roman monetary history seems to show that a considerable number of small states, all issuing coins, are less likely to meddle with the standard than the mint of a single large empire. It also proves the value of an acquaintance with monetary theory, if we can judge by contrasting the views of the Greek thinkers with those of the Roman lawyers.^[48] A few words of caution may here be added against the danger of a careless comparison of values, as expressed in ancient or even mediæval money with those of modern times. It is extremely hard to accept the

prices given by any ancient writer, since the varying factors necessary to be estimated are so many, viz., (1) the weight of the coin, (2) its purity, (3) the value of the monetary metal at the time, (4) the value of the commodity sold in relation to other things, (5) the question whether the commodity was in its normal state as regards supply and demand; to all these may be added (6) the difficulty of determining whether the figures have not been altered.^[49] After the fall of the Western empire, the various barbarian sovereigns adopted silver as their principal coinage, combined with the greatest diversity in the systems adopted. On the revival of the empire under Charlemagne an effort was made by him to establish a general system of currency, based on the silver pound as a unit, and thus corresponding to the unit of weight. This system was introduced into England, and thence into Scotland, but the rapid decay of the Carlovingian empire prevented any uniformity being preserved in these different countries, while the different debasements in each produced widely divergent systems, which will require separate notice.

English Depreciations.—The first debasement undergone by the English silver coinage was in 1300, when Edward I. reduced the amount of metal in the coins by 1 $\scriptstyle {\frac {19}{81}}$ per cent., or, in other words, 20 shillings and 3 pence were coined out of the Tower pound instead of 20 shillings as previously.^[50] This was the prelude to a series of changes which were carried out during the next three centuries, and which terminated in 1600, when the pound troy of silver was coined into 62 shillings; since that time the silver coinage has not been debased, the reduction carried out in 1816, by which 66 shillings were coined from the troy pound, being accompanied by a limitation of its use in discharging debts to a maximum amount of £2, as well as by the abolition of the public right of coining silver at the mint. The period extending from 34th Henry VIII. to 6th Edward VI. (1543–1552) has been specially noted by Lord Liverpool as a time of peculiar interference with the fineness of the metal.^[51] The old proportion of 11 oz. 2 dwts. of metal to 18 dwts. of alloy, was altered to 10 oz. of metal per pound, then to 6 oz. or one-half, 4 oz. or one-third, and finally in 1551 to 3 oz. of pure metal and 9 oz. of alloy. A tendency to reformation began under Edward VI., and was finally carried out under Elizabeth in the recoinage of 1560, which has been fully described by Mr Froude.^[52] Various proposals to depreciate the silver currency have been made since then, and one of these, as above mentioned, was accepted in 1600. The most remarkable of the unsuccessful schemes for debasing the standard was that of Lowndes, which was advanced in 1695, when the discussions preparatory to the recoinage of 1696 were being carried on. Lowndes's plan was to coin the pound troy of standard silver into 77s. 6d., thus debasing it 25 per cent.. He was resisted by Locke, who, in his Further Considerations concerning Raising the Value of Money, contributed materially to the development of monetary theory; and the recoinage was, mainly in consequence of his efforts, in combination with those of Newton and Montague, based on thoroughly sound principles.^[53] The first English gold coinage, so far as has been clearly proved, was that of 1257, in the reign of Henry III., when a small number of gold pennies were coined at the ratio of 10 to 1 to the existing silver coins. Previously to this date the need of gold for business transactions could not have been felt, as the commerce of the country was necessarily limited. It is probable that for the few transactions of foreign trade a species of gold coins issued by the Greek emperors at Constantinople, and thence called byzants, were used.^[54] Another gold coin, known as a florence, from the place where it was first coined, was also used after 1250. The regular series of English gold coinage begins in 1344, when Edward III. coined, in imitation of the foreign coin just mentioned, a large number of florins at the rate of 50 to the Tower pound. The gold coinage was, however, for a long period a secondary part of the monetary system, and suffered a series of changes, the last of which took place in 1717.^[55] The present English coinage system is regulated by the Coinage Act of 1870,^[56] which amends and consolidates previous Acts on the subject. The schedule to that Act, which is reproduced at p. 484 of the present volume, gives full information as to existing coins, their weight, fineness, “remedy,” &c.

Scotch Depreciations.—The coinage of Scotland was derived from the primitive Carlovingian system through the medium of England, and for a long period remained the same as at first. The pressure under which the resources of Scotland suffered during the constant wars with England, as well as perhaps the example of their close ally France, led the Scottish sovereigns to debase their coins out of all proportion to the English system. This was the reason for the prohibition of Scotch coins as currency by tale in England, the variation in course of time being so great that in 1600 the pound of silver, which contained about three pounds sterling English, was made into thirty-six pounds Scotch, the latter being thus twelve times as much debased. After the union of the crowns in 1603 no steps were taken to assimilate the two systems, which continued as before till the complete union of the two countries in 1707. At the latter date a complete recoinage on the basis of the English system was carried out, thus rendering the coinage of both countries exactly similar. This most valuable reform was at first viewed with suspicion by the Scotch people, and a large amount of the old Scotch currency was hoarded or exported.

Irish Depreciations.–No coined money existed in Ireland before the English invasion in 1170. The English colony, as a matter of course, used the same coinage as the mother-country, but on several occasions inferior money was introduced, as being good enough for a subject country. At the recoinage of 1560 it was proposed to send the bad coins that were called in to Ireland, but to this Elizabeth refused to assent. From 1689 to 1825 the nominal value of the coinage was 8 $\scriptstyle {\frac {1}{3}}$ per cent. higher in Ireland than in England. In the latter year Irish money was reduced to the English standard,^[57] from which time the United Kingdom has possessed a perfectly uniform system of metallic money.

French Depreciations.—The monetary system established by Charlemagne throughout his dominions soon disappeared in Italy and the German provinces. It continued to exist in France proper. The general state of confusion, however, and the weakness of the central authority, led to local issues by the various feudal lords. “At the accession of Hugh Capet as many as a hundred and fifty are said to have exercised this power.”^[58] The increase of the power of the Capetian kings enabled them to restrict this freedom of coinage, and to reserve to themselves this profitable function, the seigniorage on the process of coining being a special branch of the royal revenue. They were unfortunately not inclined to confine their gains to this legitimate source. The French coinage was recklessly debased during the many centuries from Philip I. (ob. 1108) to Louis XV. (ob. 1774). The management of the mint under Louis IX. was always regarded as a model for imitation,^[59] but even in his time the livre, originally a pound, was debased to less than one-fourth of its primitive value. The dealings with the currency were still more unscrupulous during the protracted wars with England, the result being that at the accession of Louis XI. (1461), when the English had been finally expelled from France, the livre was only about one-fifteenth of its original value. Nor did the depreciation of the currency rest here. The period of something over a century, extending from 1497 to 1602, presents a remarkable series of changes in a downward direction, no less than nineteen depreciations having taken place, many of them consisting of changes in the fineness of the metal.^[60] There is in this respect a remarkable analogy between this epoch of French coinage and the English period from 1543 to 1552.

The history of French depreciations did not terminate, as that of the English ones did, with the close of the 16th century; under Louis XIV. the livre was only one-half of what it had been under Henry IV. The final result was that in 1789 the livre had come to be only one seventy-eighth of its weight in the time of Charlemagne. At the Revolution it was converted into the franc, at the rate of 81 livres to 80 francs.^[61] It is not, however, to be supposed that the changes in the French currency were always towards debasement. The terrible evils arising from the debased coinage led to a general outcry, which in some cases was so strong as to force the king of the time to reform the monetary standard; one striking instance occurred in the reign of Philip IV.,^[62] whose dealings with the currency led to his receiving the epithet of “le faux monnoyeur.”

Depreciations in other Countries.—The very brief notice of the depreciations in the originally uniform currencies of England and France which has just been given is sufficient to establish the general tendency, and throws light enough on the resulting consequences: a similar course was followed in the other countries of Europe, but the details are too unconnected to be conveniently presented. A few facts will suffice. Thus, the German florin “was originally a gold coin of the value of about 10 shillings of our present money; it is now become a silver coin of the value of

only 20d.”^[63] Similar depreciations took place in the cases of the Spanish maravedi and the Portuguese rei. At the present these coins are so subordinate, where they have not been abolished, as to possess little practical interest.

It is well to notice before concluding the question of depreciations that it is the poorer classes who especially suffer from a change in the coinage. The reasons of this are very plain, for from their ignorance they are less able to understand the nature of the alteration, and, even if it were not so, the absence of available resources places them at a disadvantage in comparison with others. Masters and dealers are quick to discount—so to speak—the nominal value of the depreciated money, and prices are much more speedily adjusted to the new state than wages, so that it may be confidently asserted that a debased coinage is especially injurious to the more helpless classes of society. The same remark applies to an over-issue of inconvertible paper.^[64]

7. Economic Aspects of the Production of the Precious Metals.—In considering various monetary questions it is essential to have some acquaintance with the economic aspects of the production of gold and silver. The technical matters connected with the processes of preparing those metals for use are to be found in the articles Gold and Silver (q.v.). The first point to which we will here direct attention is the field over which production extends. At one time or other these two metals have been found in every continent. Asia Minor in early times possessed its gold fields, or rather auriferous sands.^[65] Ceylon also undoubtedly contained gold mines. China and India both produced silver to a considerable extent. Egyptian remains show that gold was commonly known in that country, probably procured from Nubia and Abyssinia, On the opposite side of Africa, too, the name of Gold Coast shows that that metal was thence exported. Neither Asia nor Africa, however, has been the main contributor to the stock of money in more modern times. The mines of Laurium in Attica were a source of supply to the Greeks, and were worked as a state monopoly. At an earlier date the Babylonian and Assyrian empires had each large accumulated stores of gold. The Phœnician importations of gold from the Red Sea coasts (Ophir) are known from Scripture.^[66] The Persian kings from the time of Darius levied tribute on all their provinces, in gold from India, in silver from the remaining districts; and the larger part of this was stored up in the royal treasuries.^[67] This tendency of sovereigns to accumulate had all through ancient history important effects on the economic structure of society. At present it is quite natural to assume that the materials of money are distributed by means of international trade, and tend to keep at an equal level all the world over, an assumption which is in general well grounded, though an important exception exists. Ancient history presents a widely different set of forces in operation. Gold and silver were produced by slaves under the pressure of fear, and were drawn towards the ruling parts of the great empires; in a word, war, not commerce, was the distributing agency. From this condition of affairs it is easy to see that whatever may be the reasons for assigning to cost of production a potent influence over the value of money in modern times (and grounds have been already advanced for the belief that this influence has been exaggerated), no such reasons then existed. The production of the precious metals was carried on, as the great buildings and other works of those periods, on non-economic grounds, and therefore produced quite different effects. The whole history of the Persian monarchy to its overthrow by Alexander (330 B.C.) shows that the mass of the precious metals hoarded up continued constantly to increase. On the capture of Persepolis by the Grecian army an enormous treasure was found there, some estimates placing it as high as 120,000 talents of gold and silver (£27,600,000).^[68] All the temples, too, were receptacles for the precious metals, so that the stock accumulated at about 300 B.C. must have been very great. The only causes which tended to diminish the store were the losses arising from wars, when the various treasuries were liable to be plundered and their contents dispersed.^[69] There was therefore a more unequal distribution of the material of money than at present. The growth of the Roman dominion led to important results, since under their rule the Spanish mines were developed and became a leading source of supply. The great masses of treasure set towards Rome, so that it became the monetary centre of the world. The overthrow of the Republican government and the peace which followed also affected the conditions of production. The inefficiency of the Roman administration made it advantageous to let out the mines to farmers, who worked them in a wasteful and improvident manner, while the supply of slaves was reduced, thus depriving the lessees of their principal agency for carrying on production. The result was a continuous decline in the store of money. Mr Jacob has made an attempt to estimate the amount at the death of Augustus (14 A.D.), and he arrives at the conclusion that it was £358,000,000.^[70] Without placing much value on this necessarily conjectural estimate, it is safe to assume that this period marked the highest point of accumulation.

The succeeding centuries exhibit a steady decline, though

it is of course impossible to attach any value to even the most carefully-guarded numerical estimates. The phenomenon which has since so often attracted notice—the drain of the precious metals to the East—began at this time, and was a subject of complaint to the Roman writers,^[71] while the stock of gold and silver being thrown into more general circulation suffered more from abrasion, and was more likely to be lost than when stored up in the royal treasure-houses and temples. These causes tended to depress the scale of prices, while the barbarian invasions produced a strong effect on the supply by drawing off the mining population and damaging the various erections used for working the mines. The conjectural estimate is, that about 800 A.D. the total supply had been reduced to £33,000,000 (or about one-eleventh of what it had been at the death of Augustus).^[72] A new period in the history of gold and silver production may be fixed at this date. The Moors, now firmly established in Spain, began to reopen the mines in that country which had been allowed to fall into disuse. Other European mines also were opened.^[73] The international system of currency based on the pound of silver as a unit which was introduced by Charlemagne must have tended to economize the wear of the metals. We may therefore conclude that from this date (800 A.D.) the supply was sufficient to counteract the loss by wear and exportation,^[74] and accordingly regard the metallic supply as fixed in amount until the next change in the conditions of production, which was the result of the discovery of America. Though 1492 is the date of the first landing, yet for some time no important additions were made to the supply of money. The conquest of Mexico (1519) gave opportunities of working the silver mines of that country, while the first mines of Chili and Peru were almost simultaneously

discovered, and in 1545 those of Potosi were laid open.

Table I.—Estimated production of gold and silver from 1493.

Period.	No. of Years.	Amount in Kilos.	Value in Millions of Francs.	Ratio of Value of Gold to Silver.
Gold.	Silver.	Gold.	Silver.
1493–1520	28	162,400	1,316,000	560		292		11·3
1521–1544	24	171,800	2,165,000	592		481		11·2
1545–1580	36	273,000	10,976,000	940		2,439		11·5
1581–1600	20	147,600	8,378,000	508		1,862		11·9
1601–1620	20	170,400	8,458,000	587		1,880		13·0
1621–1640	20	166,000	7,872,000	572		1,749		13·4
1641–1600	20	175,400	7,326,000	604		1,628		13·8
1661–1680	20	185,200	6,740,000	638		1,498		14·7
1681–1700	20	215,300	6,838,000	742		1,520		15·0
1701–1720	20	256,400	7,112,000	883		1,580		15·2
1721–1740	20	381,600	8,624,000	1,314		1,916		15·1
1741–1760	20	492,200	10,663,000	1,695		2,370		14·8
1761–1780	20	414,100	13,055,000	1,426		2,900		14·8
1781–1800	20	355,800	17,581,000	1,226		3,906		15·1
1801–1810	10	177,800	8,942,000	612		1,987		15·6
1811–1820	10	114,400	5,408,000	394		1,202		15·5
1821–1830	10	142,200	4,606,000	490		1,023		15·8
1831–1840	10	202,900	5,964,000	699		1,325		15·7
1841–1850	10	547,600	7,804,000	1,886		1,734		15·8
1851–1855	5	987,600	4,431,000	3,402		985		15·4
1856–1860	5	1,030,000	4,525,000	3,549		1,006		15·3
1861–1865	5	925,600	5,506,000	3,188		1,223		15·4
1866–1870	5	959,500	6,695,000	3,305		1,488		15·6
1871–1875	5	853,400	9,847,000	2,940		2,188		16·0
1876	1	171,700	2,365,000	591	·5	525	·5	17·8
1877	1	182,800	2,428,000	629	·8	539	·5	17·19
1878	1	183,700	2,603,000	632	·6	578	·3	17·96
1879	1	156,900	2,557,000	540	·3	568	·2	18·39
1876–1879	4	695,100	9,953,000	2,394		2,211		17·40
1493–1850	358	4,752,100	149,828,000	16,368		33,292		14·05
1851–1879	29	5,451,200	40,957,000	18,778		9,101		15·85
1493–1879	387	10,203,300	190,785,000	35,146		42,393		· ·

From this latter date we may regard the American supply as an influential factor in the matter,^[75] and look upon the stock of money as increasing. The annual addition to the store of money has been estimated as £2,100,000 for the period from 1545 to 1600. At this date the Brazilian supply began. The course of distribution of these fresh masses of the precious metals is an interesting point, which has been studied by Mr Cliffe Leslie.^[76] The flow of the new supplies was first towards Spain and Portugal, and from thence they passed to the larger commercial centres of the other European countries, the effect being that prices were raised in and about the chief towns, while the value of money in the country districts remained unaltered. The additions to the supply of both gold and silver during the two centuries 1600–1800 continued to be very considerable; but, if Adam Smith's view be correct, the full effect on prices was produced by 1640,^[77] and the increased amount of money was from that time counterbalanced by the wider extension of trade.^[78] At the commencement of this century, the annual production of gold has been estimated as being from £2,500,000 to £3,000,000. The year 1809 seems to mark an epoch in the production of these metals, since the outbreak of the revolts of the various Spanish dependencies in South America tended to check the usual supply from those countries, and a marked increase in the value of money was the consequence. During the period 1809–1849 the value of gold and silver rose to about two and a half times their former level, notwithstanding fresh discoveries in Asiatic Russia.^[79] The annual yield in 1849 was estimated at £8,000,000. The next important date for our present purpose is the year 1848, when the Californian mines were opened, while in 1851 the Australian discoveries took place. By these events an enormous mass of gold was added to the world's supply. The most careful estimates fix the addition during the years 1851–1871 at £500,000,000, or an amount nearly equal to the former stock in existence. The problems raised by this phenomenon have received the most careful study by several distinguished economists,^[80] to whose writings those desiring more extensive information may refer. The main features of interest may be briefly summed up. (1) The additional supply was almost entirely of gold, thus tending to produce a distinction between the two principal monetary metals and an alteration in the currency of bimetallic countries. Under this influence France, from being a silver-using, became a gold-using, country. (2) The contemporaneous development of the Continental railway systems, and the partial adoption of free trade, with the consequent facilities for freer circulation of commodities, led to the course of distribution being different from that of the 16th century. The more backward districts were the principal gainers, and a more general equalization of prices combined with a slight elevation in value was the outcome. (3) The increased supply of gold rendered a general currency reform possible, and made the use of a gold monometallic standard appear feasible. The movements for currency reform, as will be seen, all arose after these discoveries. (4) The change in the value of money, which may for the period 1849–1869 be fixed at 20 per cent., enabled a general increase of wages to be carried out, thus improving the condition of the classes living on manual labour. It may be added that the difficulty of tracing the effects of this great addition to the money stock is a most striking proof of the complexity of modern economic development. (5) The last point to be noticed is the very small influence exercised on the value of silver by the new gold.^[81] Hardly had the gold discoveries of 1848–1851 ceased to produce a decided effect when new silver mines of unusual fertility came into working. During the period immediately succeeding the gold discoveries the production of silver remained at an annual amount of from £8,000,000 to £9,000,000. This amount suddenly, about 1870, increased to £15,000,000,^[82] and remained at that amount for the next five years. More than half of the supply came from new mines opened in Nevada. This increased supply was accompanied by a marked depreciation in the gold price of silver, though the prices of commodities in countries having a silver standard did not rise. The result of the close investigations to which all aspects of the question were subjected was to show that the increased production of silver was only a minor element in causing its depreciation. The policy pursued by various states—viz., (1) Germany and the Scandinavian states in adopting a single gold standard, (2) the countries composing the Latin Union in limiting the coinage of silver, (3) the Indian Government by adopting a new method of drawing bills—proved to be the really influential causes for the decline in the value of silver as contrasted with gold.^[83]

Before closing this notice of the economical aspects of gold and silver production, the consumption of those metals must be considered. It may be classed roughly under three heads, viz., (1) their use as merchandise, (2) their use as money, (3) the export to the East. With regard to the first of these, while it is impossible to give precise data, it may be still held with some confidence that the demand for this purpose tends, after society has passed a certain not very advanced stage, to decline. The desire for personal adornment is with most civilized persons not a strong one. It is, so far as it exists, gratified by other articles than those made of silver or gold. Their use as manufactured goods continues to be large, and is one of the principal forms of use at present. The second head with which we have here to deal is the one by which prices are affected. The laws regulating the value of the metals as money have been considered above, p. 721, the primary one being “that the value of money varies inversely as its quantity multiplied by its efficiency,” though this proposition needs limitation and explanation. Under the third head a remarkable exception occurs to the general theory of the tendency to equal diffusion of the precious metals. For a period extending over nearly 2000 years the movement of silver from West to East has been noticed. Humboldt has made the ingenious remark that these metals move in the opposite direction to civilization, and history bears out his view. During the Middle Ages the chief Eastern products used in Europe were silks and spices, and to pay for these commodities silver was sent from Europe. The discovery of the passage round the Cape of Good Hope increased the Eastern trade, and added to the drain of silver. Humboldt and Sötbeer have given copious details. In more recent times the flow has continued, the amount of silver which passed to Asia by the Isthmus of Suez during the twelve years from 1851 to 1862 being £110,000,000.^[84] There are two points requiring some further notice with reference to the form and the reason for this drain. Silver is the metal which is exported from Europe, since gold is not used for currency purposes in the East, and even as merchandise silver possesses a higher relative value than it does in Europe. Those European countries that had a double standard were the natural source of supply for exportation, their silver currency being replaced by gold. The unceasing drain of the precious metals to the East may further be explained by the fact that the greater part of the new metal is used for ornamental and not for currency purposes, and thus the demand is not checked by a rise of prices. Another reason, not generally noticed, is that Eastern prices are very much influenced by custom, and thus do not depend on supply and demand. But it is this tendency of an increased quantity of money to raise prices which forms the basis of the economical theory of the distribution of the precious metals.^[85] This explains the otherwise unaccountable phenomenon of a continual drain of the money material towards those countries where custom has remained most powerful in regard to commercial transactions, or, in other words, the backward countries of India and China.

One of the technical features of the production of the precious metals may sometimes produce remarkable economic effects,—namely, the fact that gold is generally found near the surface, while silver is obtained by deep mining. It follows from this that the production of the former metal depends more on accidental circumstances, while the production of silver is affected chiefly by the state of mechanical skill. In the Nevada mines gold and silver are found together, and their value in a given mass is nearly equal.

8. Miscellaneous Questions regarding Metallic Money.—The recent discussions of matters relating to currency, and the increased intercourse among the more advanced nations, have led to the raising of some questions with regard to the proper constitution of monetary systems. Each country possessing any claim to enlightenment has directed its attention to its own monetary arrangements, and compared them with those of others, while the effect which the currency system of any nation exercises on its neighbours leads to the exciting of a lively interest in its monetary legislation. The principal problems may be summed up under three heads: (1) The proper standard to use, the discussion of which in practice turns on the comparative merits of a single standard of gold or silver and of a double standard of gold and silver at a fixed ratio; (2) the system of subdividing the currency, which is generally discussed under the title of proposals for decimal coinage; (3) proposals made in many quarters to assimilate the various currency systems of the world. These take one of two forms. It is either desired that a group of nations shall assimilate their currencies, in which case the coinage may be called an international one; or a wider view is taken, and a single system is advocated for all states. This may be styled universal coinage. The question of the proper standard may be deferred for the present, as it is of a more complex nature than the others. Before discussing even the simpler of these questions it is desirable to state some elementary facts involved in all such points. Every currency system must be based on a standard unit of value which consists of a “fixed quantity of some concrete substance defined by reference to the units of weight or space.” Thus the English unit is the pound, which consists of a definite quantity of gold (123·27447 grs. standard fineness), while the French unit is the franc (composed of 5 grammes of silver $\scriptstyle {\frac {9}{10}}$ ths fine). It is not, however, necessary that the standard unit shall be a coin. All that is needful is that the current coins shall be multiples or submultiples of the unit, or at all events easily reducible to it. The Portuguese rei is too small to be coined, and the pound of silver which formed the unit of the early French and English currency was too large. Distinct from both the actual coins and the unit of value is the money of account, though in practice it is usually identical with one of them. In Russia in early times the rouble was an imaginary money of account not coined, while the copper copeck was the unit of value. Another distinction must be pointed out, namely, that between standard and token money, the former being of the same value as the metal it is made of, while the latter is rated at a nominal value higher than that of its material. The silver and copper coins in England and the smaller silver coins in the Latin Union are merely tokens, being in the case of the English silver coins about 30 per cent. below their nominal value. The French coins are of inferior fineness (835 per 1000). Token coins are only admissible in small payments, as otherwise—in accordance with an elementary principle to be presently explained—the standard coins would be driven out of circulation. The maximum amount in payment for which they are legal tender is in England 40s. One of the functions of money being to afford a standard for estimating deferred payments,^[86] it is generally used as the means of discharging obligations when they become due, and in this aspect is styled legal tender. The principal coinage of any country is legal tender to an unlimited amount, and, when offered, discharges any pecuniary obligation. It is only the standard coinage which possesses this property, or rather the standard coinage is that which does possess it.

In discussing monetary questions it is also important to

remember that a metallic currency has to circulate among the most diverse classes of society, and must be suited to the wants, and even to the prejudices, of the population using it. Many curious instances of the preference of a community for some particular coin could be given. The Austrian Maria Theresa dollar is a special favourite on the coast of Africa, and is still coined exactly as it was in 1780. The inhabitants of California refused to accept the greenbacks issued during the American civil war, and consequently gold was always used in payments in that State. Many apparently well-devised reforms have miscarried owing to the habits of the people not having been attended to. Some writers have, however, misconceived the principles of currency and extended this influence to cases where it does not apply. Thus it has been sought to explain the adoption of gold as the principal English coinage after 1696 by assuming that the English deliberately preferred that metal.^[87] The fact of different nations possessing different currencies, as the prevalence of gold in England and of silver in France during the 18th century, is to be otherwise accounted for. The great mass of a population, it is true, take and give money without particularly observing it. It is enough if the coin conforms to the usual type. There exists, however, in all mercantile communities a class of dealers in money^[88] who make a profit by selecting the best coins for exportation, or, if two metals are in concurrent use, the coins of that metal which is undervalued in the proportion fixed. The mode in which self-interest thus operates produces an effect which may be briefly formulated by saying that bad money drives out good money. It is often now called “Gresham's law,” from a former master of the English mint,^[89] who observed it. The illustrations of its working are numerous. Under its action the gold which was overvalued relatively to silver in England in 1696 became the main English coinage, as above stated. And in order to meet the want of silver coins, Sir I. Newton advocated, and secured, the reduction of the guinea from 21s. 6d. to 21s. The exportation of metallic money when an over-issue of inconvertible paper takes place is another case of the theorem. By means of this principle we can easily explain the tendency of currency to depreciation, for when once, either by wear or by the issue of inferior coins, a currency has become debased, no reformation is possible unless the debased coins are removed from circulation, as otherwise they will be preferred for payments by dealers, and will not be melted down or exported. All demands for foreign trade will be met from the best part of the coinage. An argument in favour of state coinage has been founded on Gresham's law. It is argued that private coinage would lead to the issue of depreciated money.^[90] It is, however, overlooked in this argument that the action of the law arises from the fact that the depreciated currency is legal tender; were it not so, coins less than the proper weight would be at once rejected. It may be added that

Greek monetary history bears out this view.^[91]

Having disposed of these elementary questions, the general groups into which all currency systems fall may now be stated. The simplest form of currency seems to be that in which the state coins ingots of different metals, and allows them to circulate freely, without any ratio being fixed. This, which is the lowest form of currency proper,^[92] has arisen in many countries through the introduction of coins of various other nations. Turkey is a European example. Many of the South American republics possess a currency of this description. A theoretical form of this system has been advocated in France. It is proposed to issue coins of one, two, five, and ten grammes of gold, and to allow the present silver coins which are multiples of the gramme to circulate along with them. The difficulties of this plan are so obvious that there is no likelihood of its being adopted. The arguments in its favour are of little force, since it is hardly correct to contend that it is a natural system, when it has never been willingly adopted by any country. The next system to be noticed is that of a single metal being fixed as legal tender. This in early times is the really natural arrangement, and has been widely adopted. It is needless to recapitulate the instances which have already been given in dealing with other matters. There is, however, a difficulty which soon arises under this system. If the metal chosen is not very valuable, it is too cumbrous for large payments; if, on the other hand, it possesses a high value, it is hard to coin pieces suitable for small transactions. Thus, even silver would be too bulky for such payments as frequently occur. £100 in silver at its present value would weigh nearly 40 ℔, while it would be impossible to coin gold pieces of the value of a penny or even a shilling. This system thus naturally leads to the use of other metals besides the standard one, and when the state fixes the ratio between these metals a new system has come into existence, which has been called the multiple tender system. In it the ratios between the metals are fixed, either once for all, or until changed by state authority. This system was in force in England from 1257 (or rather 1344) to 1664, the ratio between gold and silver being fixed from time to time by proclamation. France, too, adopted it during the Revolution, the ratio of 15 $\scriptstyle {\frac {1}{2}}$ to 1 being that fixed between gold and silver. The fluctuation of currencies arranged on this method, owing to the action of Gresham's law, has led in England and Germany to a modified system, which seeks to combine any advantages of the multiple standard with the principle of the single standard. By this method one metal is fixed as the principal legal tender, while the smaller coins are made of a less valuable material, and circulated at a nominal value somewhat above their real one, or, in other words, as token coins, but they are only legal tender to a limited amount. This has been called the composite legal tender system.^[93]

For further details reference may be made to Tables II. and III., and the notes appended. Every currency system requires the existence of subsidiary coins, and, as stated before, this want is met by using a less valuable metal, generally silver, and for smaller payments copper or bronze. But, apart from the question of the material of the smaller coins, it is important to determine the best ratio between them. The simplest of all would be the binary. In it each coin would be the half of the next highest one, and double the one immediately below it. Nothing, apparently, is plainer or simpler than this scale, but the objection to it is the great number of coins that would be required, as well as the want of conformity with the general arithmetical scale. In a modified form it does prevail in many countries. Thus in England we have the penny, half-penny, and farthing. At a higher stage we have the florin, shilling, sixpenny piece, and threepenny piece, and, again, the sovereign, half-sovereign, five-shilling piece,^[94] and half-crown. The coinages of the Latin and Scandinavian Unions, as also those of Germany and the United States, have several binary series in their coins.^[95] There is, however, no completely binary system known. The old English scale was partly duodecimal, and the arguments in favour of this arrangement are by no means weak. At present the shilling is duodecimally divided. It is urged in favour of this scale that the main divisions of time (year and month, day and hour, are duodecimally related, and that time is one of the elements in all questions of value.^[96] Another argument is that 12 is capable of being resolved into several factors (2 and 6, 3 and 4), and therefore enables a large series of coins to be formed.^[97] The main reason, however, for the adoption of a duodecimal system appears to have been the preference for the number 12 so frequently shown by early societies; thus, among the Semitic races, the Jews were organized in 12 tribes, and in Italy the Etruscan league consisted of two groups, each of 12 cities. In connexion with this it may be noted that a duodecimal system of currency prevailed south of the Apennines. At Rome the as was divided into 12 unciæ. The modern tendency, however, has been to adopt a decimal scale. This method of notation, which is found very widely in use among savage tribes, is undoubtedly derived from the ten fingers of the human hands. Though the base 10 is not so convenient as 12, it is firmly established as the only system of counting, and is in process of extension to weighing and measuring.^[98] For the purposes of currency this scale is not very convenient, as 10 can be only resolved into two factors (2 and 5), and one of these is a rather high number. This disadvantage has retarded the adoption of decimal coinage, and is the base of the objections made to it. It has been contended that it is unsuitable for small purchases, and for such fractions as one-third.^[99] France adopted the decimal system of coinage in 1799, and it has now extended over all the countries of the Latin Union (see Table II.). It is also in use in Germany, Denmark, Sweden and Norway, the Netherlands, and Finland, as well as in the United States. But none of these countries has a decimal coinage pure and simple.

Intermediate coins are introduced, e.g., in France, 2-franc and 5-franc pieces. In fact, most modern currencies are a combination of the decimal and binary systems, England alone adhering to a modified duodecimal scale. A decimal coinage has for the last sixty years been proposed for England, and it is almost certain that if any one scheme could be pointed out as much preferable to any other it would be accepted. As it is, there are two or three proposals, each commanding some support, while many advocates of the decimal system prefer to wait till an international agreement for its adoption can be obtained. One of the schemes advanced takes the present farthing as its base; then 10 farthings=1 doit (2 $\scriptstyle {\frac {1}{2}}$ d.); 10 doits=1 florin (2s. 1d.); 10 florins=1 pound (20s. 10d.). The advantages of this plan are: (1) that the smaller coins now in use could be preserved (the penny being 4 farthings), (2) retail prices, which are for the smaller articles estimated in pence, need not be altered, (3) nor need those which affect postage, tolls, and mileage charges. Against these may be set the loss of the unit of value, the pound, which should be raised to 20s. 10d., so that all accounts, and all large

price quotations, would have to be altered, while the new unit of the farthing would not be assimilated to any other unit. This plan has therefore no chance of acceptance. Another proposal starts from the present pound as unit. It is to be divided into 10 florins (2s.), which would contain 100 mils (or farthings reduced 4 per cent.). A new coin, 10 mils (2s. 4d.), would probably have to be introduced. The advantages of this plan are: (1) the pound would be preserved as unit, (2) the florin and shilling would also be retained—the latter being 50 mils, (3) accounts for large amounts need not be altered. The objections are such as follow—(1) the copper coins, which are those most used by the poor, would all be changed, thus causing great confusion, (2) all charges expressed in pence would be altered to the loss of one of the parties. Still, this scheme is much to be preferred to the one first mentioned. A third plan is based on the fact that 8s. in English money is only

\scriptstyle {\frac {3}{4}}

d. more than 10 francs. Having regard to this link between the English and French systems, it is proposed to coin a 10-franc piece in gold to serve as a token for 8s. If the penny were then reduced by 4 per cent. this piece would contain 100 pence, and, by coining a franc or tenpenny piece in silver, a perfect decimal currency would be obtained. This arrangement would involve the abolition of the pound as well as of most of the present English coins. In fact, it is as yet premature to expect a system which will be international as well as decimal, and the most that can be hoped for is some progress towards that ultimate end. All that can be said at present is that all schemes for the introduction of the decimal system should be considered with regard to their tendency to help towards the assimilation of the English system to other currencies. The problem of international money has during the last twenty years acquired much prominence. In previous historic periods the idea was partially realized. Thus the drachme was an international Hellenic coin, though it had three different values.^[100] Under the Roman hegemony and the succeeding empire the denarius became the coin of the west, the drachme that of the east.^[101] The next currency which can be called international was the frequently-mentioned Carlovingian system. The growth of the different European nationalities, and their frequent wars, prevented any common coinage system being adopted by them. Each state debased its own coin at different times, so that any original resemblances disappeared. The question of unification of the various monetary systems was thus left open for the present century, when increased facilities for intercourse have led to more complex international relations. An association for promoting unity in weights, measures, and coins was founded in Paris in 1855, and actively advocated its principles. In pursuance of this object a series of conferences and congresses were held on the subject, the first of them in 1860. The congress of 1863 was held at Berlin, and adopted a series of important resolutions. Its report advocates the superior convenience of a gold system with a subsidiary coinage of silver; the millesimal scale of 900 as to fineness of the higher coins was also approved of, as well as the definition of the weights of coins on the metric system. The first practical outcome of the movement was in the monetary convention of 1865, which founded the so-called Latin Union, by which France, Belgium, Italy, and Switzerland became a single monetary region, with the franc or lira as unit. The subsequent accessions to the Union are given in the note to the French coinage system (Table II.). In 1867 a monetary conference was held at the same time as the Exhibition of that year, when the idea of a universal coinage was advocated, and three leading principles were laid down as necessary to that result, viz.—(1) the universal adoption of a single gold standard, (2) the general use of the decimal scale for this coinage, (3) that all coinages should be co-ordinated with the French system.^[102] Owing to the accidents of historical development, certain points of connexion existed between the leading European systems. Thus, the franc being regarded as a unit, the Austrian florin was as 2·47, the American gold dollar as 5·18, and the English pound as 25·22. Very slight changes would bring these coins into a series of 1 : 2

\scriptstyle {\frac {1}{2}}

: 5 : 25, and it was proposed by the congress of 1863 that, when thus modified, they should have international currency in all countries where any of the four units prevailed. All outside nations were recommended to select whichever of these units they preferred. The subsequent monetary changes in the various European systems have, however, ended rather in the formation of international systems without any tendency towards the establishment of a universal one. Thus, of the three principles laid down by the conference of 1867, two only have been adopted in recent currency reforms. On the creation of a united Germany after the Franco-German war of 1870–1871, it was the aim of the rulers of that country to develop as much as possible all outward expressions of that unity, and, in accordance with that conception, a German currency was devised which was monometallic and decimal (see Table II.), but which was not easy to assimilate to the French system, thus rejecting the third principle laid down by the Paris conference, and rendering future progress more difficult. The Scandinavian Union proceeded on very much the same lines as the German reform, and was, in fact, mainly caused by it. The Dutch Government, under the pressure of circumstances, have abandoned the silver standard and coined some gold, but their position is still undecided. The Austrian Government have made a slight step by issuing as gold coins 8- and 4-gulden pieces, which are the same as the 20- and 10-franc coins. In one part of the Russian dominions, Finland, the French system has been introduced, the new mark being equivalent to the franc. The main Russian system has not been changed, nor have any alterations been made by England, Turkey, or Portugal.^[103] The question of universal coinage has become implicated with the question of the proper standard, and the strong ground taken up in 1867 has certainly to some extent been abandoned. It may, however, be considered that the present systems of coinage are capable of being assimilated. A comparison of the amount of pure metal in English, French, German, United States, and even Japanese coin shows how small is the difference.^[104] An ingenious proposal was made in 1868 to the English commission on the question, by which the sovereign would be made identical with the French 25-franc piece (if that were coined). It was based on the fact that the sovereign contained only about 1 grain more of gold than the amount in 25 francs. It was proposed to deduct this small amount from the bullion brought for coinage as seigniorage, so that no change need be made. The advocates of this scheme contended that prices would not be affected by the alteration. This reasoning did not commend itself to the commission. They accepted the view put forward by Newmarch, who argued that all contracts would have to be altered to allow for the depreciation caused by the change, and this position seems impregnable, so long as metallic currency alone is considered. Another ingenious plan was that of Bagehot to assimilate the English and American systems, as a step towards a wider change.^[105] At the present moment the great monetary systems of (1) France and her allies, (2) England and the larger part of her colonies, and (3) the United States are so firmly established in their several countries, and the advantages of each system are so equal, that it is hard to see which is to give way. The wide area of the Latin Union, and the perfect decimal division of its coinage, are arguments in favour of the franc; the greater value of the pound, and the immense extent of the English colonies and English trade, are in favour of the British unit of value; while the dollar, from its convenient size and the prospect of the future growth of the United States, has claims to be considered in the discussion. The most probable conclusion, however, seems to be that the future unit will not be any of these coins, but the result of a compromise, which will lead to a new system being established. The difficulties which arise when universal coinage schemes are brought forward ought not to conceal from us the solid advantages which such an institution would confer on the world. The arguments urged in its favour are various, and are regarded as being of different relative importance by their advocates. They may, however, all be stated as follows. (1) Increased facility of travelling. Though there is a tendency to under-estimate this element of the question, it seems impossible to doubt that the saving of trouble to travellers by any universal coinage system would be very great. The abolition even of the local currencies of Germany and Italy, and their replacement by uniform national systems, has been a great boon to tourists, but an arrangement which would obviate the necessity for procuring any different money whatever would be a still greater advance. In the interests of peace, which is greatly promoted by extended international communication, it is very desirable to remove any obstacle which retards increased intercourse among persons of different countries. (2) Greater ease in adjusting the foreign exchanges. This argument has been sometimes pushed too far. It has been apparently held that, were a universal currency adopted, the problems of the foreign exchanges would no longer exist. There are, however, other factors in the question, namely, those of time and place, which could not be eliminated by the adoption of a single coinage system.^[106] Still, the removal of even one complicating element would simplify exchange dealings. The question of mint pars would no longer arise, and the specie points would be stated more simply. The friction which sometimes arises from the necessity of recoining the exported gold would also be removed, and the profits of those dealers who gain by their special knowledge would be saved to ordinary traders. (3) The improvement of the currencies of backward states. Many countries still possess those mixed currencies which were once common all over Europe, and much confusion consequently arises. The commercial coins have been introduced for international circulation,^[107] and a universal currency would perform their function more satisfactorily. (4) Greater facility in comparing price-lists, &c. This advantage, which is reserved for the last, has been regarded by competent judges as the greatest.^[108] It has a practical and a theoretical interest: the former, since trade with foreign countries would be rendered easier and safer; the latter, since statistical inquiries would be very much facilitated. At present, it is quite impossible for an ordinary trader to understand a set of foreign price-lists, each perhaps expressed in terms of a different currency from the others,—a difficulty which is enhanced by the variations of gold and silver values, not to add the case of an inconvertible paper currency. The existence of a common monetary language would remove these difficulties, and the premium on gold could be allowed for in the case of depreciated paper. A much wider development of smaller trading transactions would become possible, and would add to the world's wealth. Nor would the greater ease of statistical inquiry be unimportant; the rates of wages in different countries, and the profits on different transactions, would lie readily compared, and the movements of labour and capital to the most advantageous points rendered more rapid. Against these great gains can be set only a certain and a possible disadvantage—namely, the loss and trouble involved in change, which would, of course, for the time be considerable, but would soon be over, and the chance that some states might issue a depreciated currency, which would expel the other and better coins. In the case of a universal coinage this case would hardly arise, since there would be no field of employment for the purer coins, and they would consequently remain in circulation, but the whole currency would become depreciated. Proper mint regulations, however, would obviate this danger, and could surely be devised. It may be said that the principal hindrance to one coinage system for all civilized states is the as yet unsettled question of the standard to be employed. Till the debate on this problem is closed it is vain to expect monetary unification. The establishment of a universal system based on gold seemed quite feasible to the conference of 1867, but doubtful to that of 1878, while a double standard was the proposal discussed in 1881.

Table II.—The Coinage Systems of Continental Europe, exhibiting the gold and silver coins, their weight, fineness, remedy, and approximate value in English and United States money.

Coins.	Material.	Weight in Grammes.	Millesimal Fineness.	Rem. p. 1000	Approximate Money Value.		Coins.	Material.	Weight in Grammes.	Millesimal Fineness.	Rem. p. 1000	Approximate Money Value.
In Fineness.	In Weight.	English.	United States.	In Fineness.	In Weight.	English.	United States.
Austria-Hungary*^{[table2 1]}—									£	s.	d.		$	c.		Netherlands^{[table2 2]}—										£	s.	d.		$	c.
100 Kreutzer	8	Gulden	piece	Gold	6·	45161	900·	2·		2·	5	0	15	10		3	86		100 Cents = 1	10	Guilder	piece	Gold	6·	720	900·		1·	5	2·		0	16	6		4	2
= 1 Gulden.	4	,,	,,	,,	3·	22580	900·	2·		2·	5	0	7	11		1	93		Guilder.	5	,,	,,	3·	360	900·		1·	5	2·		0	8	3		2	1

	2	,,	,,	Silver	24·	6914	900·	2·		2·	5	0	3	11	$\scriptstyle {\frac {1}{2}}$	0	96			2 $\scriptstyle {\frac {1}{2}}$	,,	Silver	25·		945·		2·	5	2·	5	0	4	2		1	0
	1	,,	,,	,,	12·	3457	900·	2·		2·	5	0	1	11	$\scriptstyle {\frac {1}{2}}$	0	48			1	,,	,,	10·		945·		2·	5	2·	5	0	1	8		0	40
	$\scriptstyle {\frac {1}{4}}$	,,	,,	,,	5·	3419	520·	2·		2·	5	0	0	5	$\scriptstyle {\frac {3}{4}}$	0	12			$\scriptstyle {\frac {1}{2}}$	,,	,,	5·		945·		2·	5	2·	5	0	0	10		0	20
	20	Kreutzer	,,	,,	2·	666	500·	2·		2·	5	0	0	4	$\scriptstyle {\frac {3}{4}}$	0	10			25	Cents	. . . . . .	,,	3·	575	640·		2·	5	2·	5	0	0	5		0	10
	10	,,	,,	,,	1·	666	400·	2·		2·	5	0	0	2	$\scriptstyle {\frac {3}{8}}$	0	5			10	,,	. . . . . .	,,	1·	400	640·		2·	5	2·	5	0	0	2		0	4
																	5	,,	. . . . . .	,,	0·	685	640·		2·	5	2·	5	0	0	1		0	2
Belgium. See France.								Norway. See Denmark.
								Portugal^{[table2 3]}—
Denmark^{[table2 4]}.}}—																1000 Reis = 1	Crown or $10·000	Gold	17·	735	916·	666̇	2·		2·		2	4	5		10	80
100 Öre = 1	20	Kroner	piece	Gold	8·	960572	900·	1·	5	1·	5	1	2	1		5	36		Milrei.	Half-Crown or $5·000	,,	8·	867	916·	666̇	2·		2·		1	2	2	$\scriptstyle {\frac {1}{2}}$	5	40
Krone.	10	,,	,,	,,	4·	480286	900·	1·	5	2·		0	11	0	$\scriptstyle {\frac {1}{2}}$	2	68			One-fifth Crown or $2·000	,,	3·	547	916·	666̇	2·		2·		0	8	10		2	16
																	One-tenth Crown or $1·000	,,	1·	773	916·	666̇	2·		2·		0	4	5		1	8
	2	,,	,,	Silver	15·	000	800·	3·		3·		0	2	2	$\scriptstyle {\frac {2}{3}}$	0	53
	1	Krone	,,	,,	7·	500	800·	3·		3·		0	1	1	$\scriptstyle {\frac {1}{3}}$	0	27			500	Reis	. . . . . . . .	Silver	12·	500	916·	666̇	2·		3·		0	2	2	$\scriptstyle {\frac {1}{2}}$	0	54
	50	Öre piece	. . . .	,,	5·	000	600·	3·		3·		0	0	6	$\scriptstyle {\frac {2}{3}}$	0	13			200	,,	. . . . . . . .	,,	5·	000	916·	666̇	2·		3·		0	0	10	$\scriptstyle {\frac {1}{2}}$	0	21
	40	,,	. . . .	,,	4·	000	600·	3·		3·		0	0	5	$\scriptstyle {\frac {1}{3}}$	0	10			100	,,	. . . . . . . .	,,	2·	500	916·	666̇	2·		3·		0	0	5	$\scriptstyle {\frac {1}{4}}$	0	11
	25	,,	. . . .	,,	2·	420	600·	3·		3·		0	0	3	$\scriptstyle {\frac {1}{3}}$	0	6	$\scriptstyle {\frac {1}{2}}$		50	,,	. . . . . . . .	,,	1·	250	916·	666̇	2·		3·		0	0	2	$\scriptstyle {\frac {5}{8}}$	0	5
	10	,,	. . . .	,,	1·	450	400·	3·		3·		0	0	1	$\scriptstyle {\frac {1}{3}}$	0	2	$\scriptstyle {\frac {1}{2}}$	Roumania. See France.
																Russia*^{[table2 5]}—
France^{[table2 6]}—																100 Copecks	Imperial or
100 Centimes	100	Franc	piece	Gold	32·	25806	900·	2·		1·		3	19	3	$\scriptstyle {\frac {1}{3}}$	19	30		= 1 Rouble.	10	Rouble	piece	Gold	13·	088	916·	666̇	nil	2·		1	11	8		7	72
= 1 Franc.	50	,,	,,	16·	12903	900·	2·		1·		1	19	7	$\scriptstyle {\frac {3}{4}}$	9	65			Half Imperial or
	20	,,	,,	6·	45161	900·	2·		2·		0	15	10		3	86			5	Rouble	piece	,,	6·	544	916·	666̇	,,	2·		0	15	10		3	86
	10	,,	,,	3·	22580	900·	2·		2·		0	7	11		1	93			3	,,	,,	3·	926	916·	666̇	,,	2·		0	9	6		2	31
	5	,,	,,	1·	61290	900·	2·		3·		0	3	11	$\scriptstyle {\frac {1}{2}}$	0	96
																	1	,,	Silver	20·	7315	868·	056	,,	2·		0	3	2		0	77
	5	,,	Silver	25·		900·	2·		3·		0	3	11	$\scriptstyle {\frac {1}{2}}$	0	96			$\scriptstyle {\frac {1}{2}}$	,,	,,	10·	3660	868·	056	,,	2·		0	1	7		0	38
	2	,,	,,	10·		835·	3·		5·		0	1	7		0	38			$\scriptstyle {\frac {1}{4}}$	,,	,,	5·	183	868·	056	,,	2·		0	0	9	$\scriptstyle {\frac {1}{2}}$	0	19
	1	,,	,,	5·		835·	3·		5·		0	0	9	$\scriptstyle {\frac {1}{2}}$	0	19			20	Copecks	. . . .	,,	4·	146	750·	0	,,	2·		0	0	7	$\scriptstyle {\frac {1}{2}}$	0	15
	50	Centimes	. . . .	,,	2·	5	835·	. .	. .	0	0	4	$\scriptstyle {\frac {3}{4}}$	0	10			10	,,	. . . .	,,	2·	073	750·	0	,,	2·		0	0	3	$\scriptstyle {\frac {3}{4}}$	0	7
	20	,,	. . . .	,,	1·		835·	. .	. .	0	0	2		0	4			5	,,	. . . .	,,	1·	037	750·	0	,,	2·		0	0	2		0	4
																Servia. See France.
Germany^{[table2 7]}—																Spain.^{[table2 8]}.
100 Pfennige	20	Mark piece	. .	Gold	7·	964954	900·	. .	. .	0	19	7		4	76		Sweden. See Denmark.
= 1 Mark.	10	,,	. .	,,	3·	982477	900·	. .	. .	0	9	9	$\scriptstyle {\frac {1}{2}}$	2	38		Switzerland. See France.
	5	,,	. .	,,	1·	991239	900·	. .	. .	0	4	10	$\scriptstyle {\frac {3}{4}}$	1	19		Turkey*^{[table2 9]}—
																100 Piastres	Medjidie or Lira	Gold	7·	216	916·	666̇	2·		2·		0	18	0		4	40
	5	,,	. .	Silver	27·	7777̇	900·	. .	. .	0	4	10	$\scriptstyle {\frac {3}{4}}$	1	19		= 1 Medjidie	$\scriptstyle {\frac {1}{2}}$	,,	,,	3·	608	916·	666̇	2·		2·		0	9	0		2	20
	2	,,	. .	,,	11·	1111̇	900·	. .	. .	0	1	11	$\scriptstyle {\frac {1}{2}}$	0	48			$\scriptstyle {\frac {1}{4}}$	,,	,,	1·	804	916·	666̇	2·		2·		0	4	6		1	10
	1	,,	. .	,,	5·	5555̇	900·	. .	. .	0	0	11	$\scriptstyle {\frac {3}{4}}$	0	24
	50	Pfennige	. . . .	,,	2·	7777̇	900·	. .	. .	0	0	6		0	12			20	Piastres	. . . .	Silver	24·	055	830·		3·		3·		0	3	7		0	88
	20	,,	. . . .	,,	1·	1111̇	900·	. .	. .	0	0	2	$\scriptstyle {\frac {1}{2}}$	0	5			10	,,	. . . .	,,	12·	027	830·		3·		3·		0	1	9	$\scriptstyle {\frac {1}{2}}$	0	44
																	5	,,	. . . .	,,	6·	013	830·		3·		3·		0	0	10	$\scriptstyle {\frac {1}{2}}$	0	22
Greece.* See France.																	2	,,	. . . .	,,	2·	405	830·		3·		3·		0	0	4		0	9
Italy. See France.																	1	,,	. . . .	,,	1·	202	830·		3·		3·		0	0	2		0	4

* Inconvertible paper currency.

↑ Present system introduced in 1870, in place of system of 1857; 8-gulden piece equivalent to 20 francs; silver not freely coined. The Maria Theresa dollar (28·0644 grammes, $\scriptstyle {\frac {5}{6}}$ ths fine) is coined as commercial money.
↑ The Dutch standard has been several times changed. In 1847 a silver standard was adopted, and continued till 1872, the unit being the silver guilder. In June 1875 the free coinage of gold was decreed, the silver coinage having been restricted since 1872. The ratio of gold to silver is 15·625 to 1, but practically the "limping standard" exists.
↑ The single gold standard is in force in Portugal. The English sovereign is legal tender for 4500 reis.
↑ The system now in use in the Scandinavian Union (Denmark, Sweden, and Norway) came into force 1st January 1875. It is a monometallic gold standard on the Decimal Coinage See {{sc|France
↑ The Medjidie coinage was introduced in 1844. English sovereigns circulate at 125 piastres, 20-franc pieces at 100 piastres.

Table III.—Currencies of the more important non-European States.

Coins.	Material.	Weight in Grammes.	Millesimal Fineness.	Rem. p. 1000	Approximate Money Value.		Coins.	Material.	Weight in Grammes.	Millesimal Fineness.	Rem. p. 1000	Approximate Money Value.
In Fineness.	In Weight.	English.	United States.	In Fineness.	In Weight.	English.	United States.
A. NORTH AMERICA.									States of Colombia^{[table3 1]}—						£	s.	d.		$	c.
British Dominions^{[table3 2]}—									100 Centavos	20	Peso piece	. .	Gold	32·	258	900·	. .	. .	3	19	3	$\scriptstyle {\frac {1}{2}}$	19	30
100 Cent = 1 Dollar.									= 1 Peso.	10	,,
Mexico^{[table3 3]}—						£	s.	d.		$	c.			(Condor)	. . . .	,,	16·	129	900·	. .	. .	1	19	8		9	65
100 Cents	16	Dollar piece	Gold	27·	067	875·	. .	. .	3	4	9		15	74		5	Peso piece	. .	,,	8·	065	900·	. .	. .	0	19	10		4	82
= Dollar.	8	,,	,,	13·	533	875·	. .	. .	1	12	4	$\scriptstyle {\frac {1}{2}}$	7	87		2	,,	. .	,,	3·	225	900·	. .	. .	0	7	11	$\scriptstyle {\frac {1}{4}}$	1	93
	4	,,	,,	6·	767	875·	. .	. .	0	16	2	$\scriptstyle {\frac {1}{2}}$	3	93
	2	,,	,,	3·	383	875·	. .	. .	0	8	1		1	96		1	,,	. .	Silver	25·	0	900·	. .	. .	0	3	11	$\scriptstyle {\frac {1}{2}}$	0	96
	1	,,	,,	1·	692	875·	. .	. .	0	4	0	$\scriptstyle {\frac {1}{2}}$	0	98		20	Centavos	. . . .	,,	5·	0	835·	. .	. .	0	0	9	$\scriptstyle {\frac {3}{4}}$	0	19
										10	,,	. . . .	,,	2·	5	835·	. .	. .	0	0	5		0	10
	1	,,	Silver	27·	067	900·	. .	. .	0	4	0	$\scriptstyle {\frac {1}{2}}$	0	98		5	,,	. . . .	,,	1·	25	835·	. .	. .	0	0	2	$\scriptstyle {\frac {1}{2}}$	0	5
	50	Cent piece	. .	,,	13·	533	900·	. .	. .	0	2	0		0	24
	25	,,	,,	6·	767	900·	. .	. .	0	1	0		0	24	Peru*^{[table3 4]}—	,,
United States^{[table3 5]}—									100 Centesimos	20	Sol piece	. . . .	Gold	32·	258	900·	. .	. .	3	19	3	$\scriptstyle {\frac {1}{2}}$	19	30
100 Cents	20	Dollar piece									= 1 Sol	10	,,	. . . .	,,	16·	129	900·	. .	. .	1	19	8		9	65
1 Dollar.	(Double Eagle)	,,	33·	436	900·	2·	1·	4	2	6		. .			5	,,	. . . .	,,	8·	065	900·	. .	. .	0	19	10		4	82
	10	Dollar piece										2	,,	. . . .	,,	3·	225	900·	. .	. .	0	7	11	$\scriptstyle {\frac {1}{4}}$	1	93
	(Eagle)		. . . .	,,	16·	718	900·	2·	2·	2	1	3		. .			1	,,	. . . .	,,	1·	613	900·	. .	. .	0	3	11	$\scriptstyle {\frac {1}{2}}$	0	96
	5	Dollar piece	,,	8·	359	900·	2·	2·	1	0	7	$\scriptstyle {\frac {1}{2}}$	. .
	3	,,	,,	5·	015	900·	2·	2·	0	12	4	$\scriptstyle {\frac {1}{2}}$	. .			1	,,	. . . .	Silver	25·	0	900·	. .	. .	0	3	11	$\scriptstyle {\frac {1}{2}}$	0	96
	2 $\scriptstyle {\frac {1}{2}}$	,,	,,	4·	179	900·	2·	3·	0	10	4		. .			50	Centesimos	. .	,,	12·	5	900·	. .	. .	0	1	11	$\scriptstyle {\frac {1}{2}}$	0	48
	1	,,	,,	1·	671	900·	2·	3·	0	4	7	$\scriptstyle {\frac {1}{2}}$	. .			20	,,	. .	,,	5·	0	900·	. .	. .	0	0	9	$\scriptstyle {\frac {1}{2}}$	0	19
										10	,,	. .	,,	2·	5	900·	. .	. .	0	0	4	$\scriptstyle {\frac {3}{4}}$	0	10
	1	,,	Silver	26·	729	900·	3·	5·	0	4	7	$\scriptstyle {\frac {1}{2}}$	. .			5	,,	. .	,,	1·	25	900·	. .	. .	0	0	2	$\scriptstyle {\frac {1}{2}}$	0	5
	50	Cent piece	. .	,,	12·	500	900·	3·	5·	0	2	0	$\scriptstyle {\frac {1}{2}}$	. .
	25	,,	,,	6·	250	900·	3·	5·	0	1	0	$\scriptstyle {\frac {1}{4}}$	. .		Venezuela. See Colombia.
	10	,,	,,	2·	500	900·	3·	. .	0	0	5		. .
	5	,,	,,	1·	250	900·	3·	. .	0	0	2	$\scriptstyle {\frac {1}{2}}$	. .		C. ASIA.
	3	,,	,,	0·	802	750·	3·	. .	0	0	1	$\scriptstyle {\frac {1}{2}}$	. .		India (British)^{[table3 6]}—
B. SOUTH AMERICA.									3 Pie=1 Pice.	30	Rupee piece
Argentine Republic*^{[table3 7]}—									4 Pice=1 Ana.	(Double Mohur)	Gold	23·	321	916·6̇	. .	. .	3	0	0		14	58
100 Centesimos	20	Peso piece	. .	Gold	33·	333̇	900·	. .	. .	4	1	8		19	94	16 Anas=1 Rupee.	15	Rupee piece
1 Dollar	10	,,	,,	16·	666̇	900·	. .	. .	2	0	10		9	97			(Mohur)	. . . .	,	11·	665	916·6̇	. .	. .	1	10	0		7	29
(Peso).	5	,,	,,	8·	333̇	900·	. .	. .	1	0	5		4	98		10	Rupee piece	,,	7·	772	916·6	. .	. .	1	0	0		4	86
	1	,,	Silver	27·	11	900·	. .	. .	0	0	4		0	99		5	,,	,,	3·	886	916·6	. .	. .	0	10	0		2	43
Brazil*^{[table3 8]}—
1000 Reis	20	Milreis piece	Gold	17·	927	916·6̇	. .	. .	2	4	10	$\scriptstyle {\frac {1}{2}}$	10	91		1	,,	Silver	11·	665	916·6	. .	. .	0	2	0		0	48
= 1 Milreis	10	,,	,,	8·	963	916·6̇	. .	. .	1	2	5		5	45		$\scriptstyle {\frac {1}{2}}$	,,	,,	5·	832	916·6	. .	. .	0	1	0		0	24
										$\scriptstyle {\frac {1}{4}}$	,,	,,	2·	916	916·6	. .	. .	0	0	6		0	12
	2	,,	Silver	25·	500	916·6	. .	. .	0	4	5		1	9		$\scriptstyle {\frac {1}{8}}$	,,	,,	1·	458	916·6	. .	. .	0	0	3		0	6
	1	,,	,,	12·	250	916·6	. .	. .	0	2	2	$\scriptstyle {\frac {1}{2}}$	0	55
	$\scriptstyle {\frac {1}{2}}$	,,	,,	6·	375	916·6	. .	. .	0	1	1		0	27	Japan*^{[table3 9]}—
Chili*^{[table3 10]}—									100 Sen = 1 Yen.	20	Yen piece	. .	Gold	33·	333̇	900·	. .	. .	4	2	0		19	94
100 Centavos	10	Peso piece										10	,,	. .	,,	16·	666̇	900·	. .	. .	2	1	0		9	97
= 1 Peso.		(Condor)	. . . .	Gold	15·	253	900·	. .	. .	1	17	6		9	10		5	,,	. .	,,	8·	333̇	900·	. .	. .	1	0	6		4	98
	5	Peso piece	. .	,,	7·	626	900·	. .	. .	0	18	9		4	55		2	,,	. .	,,	3·	333̇	900·	. .	. .	0	8	2		1	99
	2	,,	. .	,,	3·	051	900·	. .	. .	0	7	6		1	82		1	,,	. .	,,	1·	666̇	900·	. .	. .	0	4	1		0	99
	1	,,	. .	Silver	25·	00	900·	. .	. .	0	3	9		0	91
	50	Centavos piece	,,	12·	50	900·	. .	. .	0	1	10	$\scriptstyle {\frac {1}{2}}$	0	45		50	Sen piece	. .	Silver	10·		800·	. .	. .	0	2	0	$\scriptstyle {\frac {1}{2}}$	0	50
	20	,,	,,	5·	00	900·	. .	. .	0	0	9		0	18		20	,,	. .	,,	4·		800·	. .	. .	0	0	10		0	20
	10	,,	,,	2·	50	900·	. .	. .	0	0	4	$\scriptstyle {\frac {1}{2}}$	0	9		10	,,	. .	,,	2·		800·	. .	. .	0	0	5		0	10
	5	,,	,,	1·	25	900·	. .	. .	0	0	2		0	4		5	,,	. .	,,	1·		800·	. .	. .	0	0	2	$\scriptstyle {\frac {1}{2}}$	0	5

* Inconvertible paper currency.

Remarks.—The currencies of such of the non-European States as were capable of being presented in tabular form have been given above, but a brief outline of the currencies of less-advanced countries where a settled coinage does not prevail may be here added. The systems of the various European colonies in America are, as a rule, similar to their mother-countries. Some of the English possessions acquired by conquest preserve their original currency. In Cayenne the pre-Revolution French money is retained. In Paraguay and Uruguay a much-depreciated paper currency circulates. The Central American states reckon in dollars. The Australian colonies have a currency identical with that of England; the same currency exists in South Africa. In Mauritius the Indian system has been recently introduced. The various Turkish vassal states possess peculiar coinages. In Egypt, the coins of various European nations form the chief money. The Asiatic currencies are generally composed of silver. Ceylon has the Indian rupees. The money of Java has since 1877 been assimilated to the latest form of the Dutch monetary system. In China the cash forms the unit, and is made of copper, iron, and tin; silver passes by weight—a tael, which varies from place to place, being the unit; while the silver sycee is the usual medium of exchange. The other Asiatic currencies do not require particular notice.

↑ The Colombian States have the Latin Union system, with a ratio of 1 to 15 $\scriptstyle {\frac {1}{2}}$ .
↑ There is no currency issued in Canada; English and American coins circulate. The standard is gold (£1 = $4·80). There were formerly different methods of counting, viz., English sterling, Halifax currency, and Canadian sterling, the respective ratios being 100 : 120 : 108.
↑ The decimal coinage has existed in Mexico since 1867. The gold coins are practically commercial money, and command a premium.
↑ When Peru returns to cash payments the system will be almost identical with that of Colombia.
↑ The dollar was introduced in 1786 as the unit. In 1794 the ratio of gold to silver was fixed at 1 to 15. This valuation underrated gold, consequently silver became the standard. In 1834 the ratio was altered to 1 to 16, and it was again changed in 1837. In these changes gold was overrated, and silver was driven out of circulation. This led, in 1853, to the reduction of the metal in the silver coins, which therefore became a token currency. The suspension of cash payments took place in 1861. In 1873 silver was demonetized, and gold became the standard. In 1878 the "Bland Bill" was passed, making the silver dollar a legal tender, but confining its coinage to the executive, and fixing the amount at from two to four million dollars per month. These silver dollars have not got into circulation. The United States coin a trade dollar of 420 grs. (27·212 grammes), to compete with the Mexican dollar.
↑ British India has a single silver standard, as the gold coins are only commercial money. The price of the rupee varies; generally in recent years it has been about 1s. 8d. (=40 cents).
↑ The Argentine Confederation professes to have a gold standard. The old South American onza weighed 27 grammes, was 875· fine, and worth £3, 4s. 6d.
↑ The Brazilian system is a depreciated form of the Portuguese.
↑ The old Japanese coinage consisted of gold cobangs and silver itzibus, with a ratio of 1 to 4. The system was recast in 1871, and the present decimal coinage adopted, the ratio being 1 to 16·17. The standard is now practically silver. In 1875 a trade dollar exactly similar to the American trade dollar was introduced.
↑ Chili has nominally a double valuation at 1 to 16 $\scriptstyle {\frac {24}{61}}$ . Gold coins are no longer struck.

9. Considerations on the Questions arising from the Conflict of Standards.—In the preceding section the various possible monetary systems were set forth, but no discussion

was entered into with respect to their comparative merits. Only three of these systems need be here examined, namely, the single standard system, the multiple standard system, and, lastly, the composite system. Nor even is there any need for examining the various possible single or multiple standards. The single silver standard is the only one of the former, as the double gold and silver standard is the only one of the latter, which need be taken into account. It is true, historical inquiry has shown that the problem of the proper proportion between two different metals when used together presented itself to the Chinese with regard to their iron and copper coinages; but the course of monetary evolution, as discussed in section 3, has resulted in the rejection of the less valuable metals and in confining the material of the principal coins to silver and gold. The use of silver as a principal coinage was, as we have seen, widely diffused. The Hellenic coins were composed of that metal, gold being afterwards introduced as a variable commercial money; and copper was brought in still later as a token currency. Though copper preceded silver as money in Rome, the latter, soon after its introduction, succeeded in displacing it, the ratio first fixed being 1 to 250. A regular gold coinage did not exist at Rome till the empire, but gold in bars passed, the legal ratio being 1 to 11·91. Still the questions connected with the use of a double standard do not seem to have arisen.^[109] The various European monarchies had silver as their principal money (see p. 726 sq., above), gold where it was used being, as in Greece, a commercial money. The advance of gold to a position parallel to silver was commenced in the 13th and continued in the 14th century, the method of regulating the mixed gold and silver currencies being by proclamation, which fixed the varying ratios from time to time. In England this course was followed from the first introduction of gold coins (1257) to 1663.^[110] From 1663 to 1717 silver was the standard, and the gold coins passed at their market value. As the silver coins were very much debased, the gold guinea sometimes was deemed equivalent to 30s. After the recoinage of 1696 the guinea passed at 21s. 6d. At this ratio silver was underrated, and was accordingly exported to Continental Europe and to India. The loss of the silver coins aroused the public attention, and the matter was submitted to Sir I. Newton, whose answer was given in his Third Representation. He proposed to reduce the guinea from 21s. 6d. to 21s. as an experimental measure.^[111] The proper reduction for the object in view would have been to 20s. 8d. The silver drain, therefore, continued, and England came to have a gold currency. An opposite arrangement gave France a silver coinage. The recent facts of French monetary history, as well as those of the United States, illustrate the same condition of affairs. The difficulty of constituting a double standard system on a secure basis is thus made clear, so far at least as regards a single country. For the continuance of the two metals in the currency depends on the market ratio and the legal ratio between gold and silver being the same. The slightest examination of the history of these metals will show how variable they have been. Without accepting the estimates which regard silver as being more valuable than gold,^[112] the well-attested variations of the precious metals have been very considerable. Thus, Herodotus estimates the ratio as 1 to 13, Plato 1 to 12, Menander 1 to 10, and in Cæsar's time the ratio was 1 to 9.^[113] Table I. contains the variations since the discovery of America. In the 14th century the value of gold rose remarkably, and the gradual movement has ever since been towards an appreciation of gold relatively to silver. Another point, previously noticed, is the tendency, as wealth increases, to adopt a more valuable form of currency. Greece, Rome, and England all afford illustrations of this movement. The experience of the evils of a mixed currency led the earlier writers on coinage in England to regard a single standard system as the best, and silver as the most suitable metal for the standard. Locke, Petty, and Harris all advocated this view. The earlier Italian writers proposed to combine gold and silver at a ratio of 1 to 12, which they conceived to be the actual proportion. The theory of a composite system was, as before mentioned, first given by Lord Liverpool.^[114] This method of regulating the metallic currency was established in England, as it were, accidentally, and deliberately adopted only in 1816. The practical good results which followed made all English economists of that period warm advocates of the composite system. Thus, M‘Culloch and Tooke agree in supporting the English system, as also does J. S. Mill.^[115] On the Continent the weight of authority was more divided, and the existence of the French bimetallic system gave support to the advocates of a double standard. The result of the gold discoveries in Australia and California was to greatly increase the supply of that metal, and, under the action of Gresham's law, to change the French currency from silver to gold, while Holland, to avoid the evils which were anticipated from the reduced value of that metal, adopted silver as the standard. The movements in favour of a universal currency described above, combined with the course of events, brought the standard question into greater prominence. The proposal of the Paris conference of 1867 for a single gold standard, and a universal coinage on that basis, raised the question to great prominence. Wolowski and Courcelle Seneuil strongly opposed the recommendation, the former predicting that a disastrous appreciation of gold would follow. This view seems borne out by the result, for, although a universal coinage was not created, yet Germany and the Scandinavian Union both changed from a silver to a gold standard, while Holland and the United States both made movements in the same direction by demonetizing silver and making preparations for adopting gold. The Latin Union at the same time restricted their silver coinage, which had nearly the same effect as the adoption of a gold standard.^[116] The result of these extensive changes was to cause much confusion. The more ardent advocates of a double standard, too, attributed most of the continued trade depression to this cause. The altered condition of opinion on the question was seen at the monetary conference held at Paris in 1878, where the universal demonetization of silver was considered to be dangerous. The “Bland Act” of the United States, which theoretically decreed the double standard (1878), was another instance of reaction. The great depreciation of silver, which resulted mainly from its having ceased to be money over a large part of the civilized world, severely affected the Indian finances,^[117] and thus the advocates of a double standard were able to command some attention in England. The conference held in Paris in 1881 reflected these changed views. The supporters of the double standard took the initiative and proposed a treaty based on the double standard at a fixed ratio, but no conclusion was arrived at—England, Germany, and the

Scandinavian Union upholding the gold standard.

Such, in brief, has been the recent history of the standard question, and it now becomes desirable to examine more closely the conflicting arguments in the various shapes they have taken. The older English advocates of the gold standard have found their best representatives in Lord Liverpool and Tooke. The former of these adopted the argument used by Petty, Locke, and Harris, that only one metal can be the standard of value at a given time, but he held that the advance of England in wealth rendered gold a more suitable material than silver for the principal money. He added that by law the power lay in the sovereign to settle the standard, and, as a matter of fact, he contended that gold was actually at that time (1805) the English standard in common estimation. These arguments were supported by a mass of historical examples.^[118] Tooke, who dealt with the subject in his History of Prices, severely criticizes the double standard. He points out that it would be impossible to keep both metals in circulation, and that it would be the inferior one which would remain. He also indicates a more refined objection, namely, the difficulty of constituting a bank reserve under the double standard. Thus, if silver were the more valuable, and the reserve consisted mainly of it, there would be an inducement to make a run on the reserve, so as to drain out the small quantity of gold and then get the more valuable silver.^[119] The silver standard was preferred by Ricardo, who fully accepted the arguments against the double standard as conclusive; his view was, that silver was steadier in value than gold, and was the standard money in other countries, while the objection to it on account of its greater bulk was, he thought, obviated by the use of paper money for circulation.^[120] J. S. Mill pronounces no opinion as to the comparative merits of gold and silver, but he objects to the double standard on the usual ground that the cheaper metal is the only one used in payments, and that therefore the fluctuations are more frequent under a double standard régime. The advocates of the concurrent use of the two metals, prominent among whom were Wolowski on the Continent and Seyd in England, contended that these objections were ill-founded, for (1) the double standard, though it produced (i.e., admitting the assumption of their opponents) more frequent fluctuations, still did not vary so widely from the mean, since in each case it was the cheaper metal which determined the value,^[121] and (2) the action of Gresham's law would produce a compensatory action. Thus, if silver be undervalued in a double-standard system, a drain sets in to other countries where it is more valuable. The quantity of silver is thus reduced and its value raised, while gold is imported, its quantity increased, and its value lowered. Were gold the under valued metal, the converse process would take place. The soundness of this position is illustrated by the case of the great transformation of the French currency (1849–1860). During the rapid increase of the gold supplies the value of silver only rose about 3 per cent.; in fact the depreciation was spread over the two metals, and not confined to gold.^[122] In addition to the above arguments, it was urged by Wolowski that any attempts to establish a universal gold standard as contemplated by the Paris conference of 1867 would cause a great appreciation of gold, which would be disastrous to commercial interests, while silver would lose most of its value. The services which the double-standard countries rendered by acting as intermediaries between gold and silver standard countries was also dwelt on, the ease with which the mass of silver needed for exportation to the East was supplied from France during the years 1853–56 being an instance in point. The monetary difficulties, as indicated above, which followed the adoption of gold by Germany and the Scandinavian Union, as well as the embarrassment of the Indian Government, from the resulting depreciation of silver, revived the double-standard advocates. Cernuschi and De Laveleye came forward as supporters of what the former called bimetallism, that is to say, the establishment of a universal, or at all events a large international, currency, based on the concurrent circulation of the two metals gold and silver at a fixed ratio. This plan has gained many supporters, though the tendency among English economists was at first to decline even to consider it; and not even yet does the question appear to have received that careful examination by monometallists which would be desirable.^[123]

The bimetallists start with a discussion as to the causes which determine the value of money. They point out that there are two extreme theories: one that the value of money depends on the will of the sovereign (the fiat theory); the other that the value of money is entirely independent of state control, and determined by economic conditions (the free trade theory). Neither of these is accepted by the bimetallists. They take up a middle ground and hold that, by its power of deciding what substance shall be deemed legal tender and discharge all obligations, the state is able to determine, within limits, what substances shall be money and what the

value of those substances shall be. They argue from history that several metals have been successively demonetized, that different ratios have been fixed between metals circulating together, that inconvertible paper currencies have been kept in circulation by the will of the state.^[124] The doctrine of cost of production as determining the value of money is also assailed by them. They hold that it is the quantity of money which governs its value,^[125] and that cost of production has little or no influence in the matter. The next step in the bimetallic argument is to contend that their proposed ratio for gold to silver (1 to 15 $\scriptstyle {\frac {1}{2}}$ ) can be maintained by the legal regulations to that effect. The common objection to bimetallism is, that whichever metal was undervalued would be exported. They answer that the same ratio existing over all, or a great part of, the world, there would be no inducement to export either metal, and in support of their argument they appeal to the passage from Newton quoted above, and claim him as the inventor of modern bimetallism.^[126]Thirdly, a greater stability as regards value is claimed for the two metals combined than for either singly, since the fluctuations are distributed over a wider field, and, the conditions of production of gold and silver being somewhat different, fluctuations in them tend to counterbalance each other. A fourth point consists in the greater facilities which would exist for trade, since the fluctuations of the exchanges which arise from the existence of gold and silver currencies, and the variations of relative value of these metals, would under a bimetallic system disappear. The fifth argument for bimetallism is the advantages which would result from the increased prices caused by the greater abundance of money, or at all events from the check to any fall in prices which might arise from a diminution in the production of gold. The final argument is that a universal currency is desirable, and that, a single gold currency being by general consent practically impossible, this advantageous reform can be realized in no other way than by adopting a plan which permits the concurrent circulation of two metals. Most of these positions are contested by the monometallists, and even where any concession is made the value of the advantage to be reaped is estimated at a much smaller amount. The contention that the value of money is largely influenced by state demand is met by the assertion that cost of production is the ultimate regulator of value, and that any artificial regulation would stimulate the production of the cheaper metal, and thus flood the world with it. The fixing of a ratio different from the market one is derided by them as absurd, and an extreme case is instanced for this purpose. Is it possible, they ask, to make the value of silver equal to that of gold? If not, how can it be possible to alter the market ratio in even the slightest degree? Is there not a great demand for the precious metals in the various trades? And would not the ratio of this demand be affected by the fixing of a new ratio? The argument of bimetallists that their system would produce greater stability in the value of money is met by the answer that there is no proof of this. It is quite possible that a single metal may be steadier in value than two combined, and the evidence of history shows that silver is more liable to depreciation than gold. The argument derived from the advantages to exchange transactions is to a slight extent admitted, but it is pointed out that the factors which affect the foreign exchanges are so numerous, and are so rapidly eliminated in the course of trade, that a radical currency change need not be adopted for this purpose. It is also shown that, even when most European countries were bimetallic, fluctuations in the exchange price of silver took place; and still more that, where it is the less valuable metal that is in course of depreciation, bimetallism can afford no aid. The assumed tendency of the bimetallic scheme to produce a higher scale of prices than would otherwise prevail is dwelt on by opponents as a proof of its inherently vicious character. The claim to benefit the world by adding to its stock of money places bimetallists in the same class with the advocates of inconvertible paper money, and shows the absence of reason in their views. Their position becomes the same as that of the Birmingham currency school. The proposition that the quantity of money is of no consequence since prices vary in proportion to it is cited as conclusive, and the contempt so frequently expressed for bimetallists is accounted for by their advocacy of this principle of the beneficial effects of an increased amount of money. To the contention that bimetallism is the necessary condition for a universal coinage system the answer is, that the idea of universal coinage is premature, and that the gradual introduction of the gold standard is desirable as preparing the way for a future universal coinage based on gold monometallism. On the practical question as to the actual introduction of the system, the monometallists deny the possibility of forming a universal bimetallic league which would not be liable to be broken up by war, or impaired by some of the states which composed it issuing inconvertible paper. On the other hand, the various international conventions for postal purposes, extradition, commercial arrangements, and other matters of interest, are considered by bimetallists as evidences of the feasibility of their plan.^[127]

The above summary gives the main arguments on each side of the discussion as given by the advocates of the contending principles. A short consideration will show that the controversy may be suitably divided into three heads, viz.—(1) the possibility of constructing a universal bimetallic system which shall be in accordance with sound economic principle; (2), if the first question be answered in the affirmative, the comparative merits of this system as opposed to the present variety of systems, or a future universal gold-standard system; and (3) the expediency under present circumstances of nations in general, and England in particular, joining in the proposed convention. Each of these topics calls for some remark. (1) The possibility of a bimetallic system can hardly be denied. Under all the difficulties attending its existence in a single country, it was retained in practical working in France during the early part of the 18th century, and it is plain that a widely-extended league would afford a better field for its action. It is quite possible that national preferences for one metal or the other would be displayed, but this would be no hindrance, since the exchanges would be regulated by the legal rate, and prices would depend on the total quantity of both metals (the amount of gold being multiplied by the legal ratio, and added to the amount of silver).^[128] The objection which denies the power of Governments to fix the relative values of gold and silver, and which is supported by the instance of the extreme case of silver being made equal in value to gold, may be set aside by the consideration that the use of the precious metals takes two forms—(a) their use as commodities, (b) their use as money. Since the state can influence the demand for these metals as money, and since therefore it can raise the value of either of them by this increased demand, it follows that, within assignable limits, it can fix the ratios between them, and that these limits are “the ratio which would subsist between their values if gold were demonetized, and that which would subsist if silver were demonetized.”^[129] The possibility of bimetallism, if all nations were agreed, is allowed by some monometallists (e.g., Professor Jevons), and an unconscious argument to this effect was given by the proposal of Chevalier, at the time of the Australian gold discoveries, to adopt silver as the standard and demonetize gold, which is a clear recognition of the force of law in monetary questions. It is therefore reasonable to answer in the bimetallists' favour the question first raised. (2) The considerations to be taken into account under the second head are far more complex, and do not admit of accurate determination. The present currency systems of England and the Scandinavian Union are based on the composite system, and afford the greatest satisfaction to the inhabitants of those countries. The bimetallic system of the Latin Union has been suspended, the introduction of silver as the principal money not being desired by the various peoples concerned. Germany has lost considerably by the sales of depreciated silver, and, were a gold standard once firmly established, it is not likely that any wish for change would be manifested. With silver countries the case is different. They have to receive masses of depreciated silver and to give commodities in exchange, while their purchasing power is reduced owing to the greater relative value of gold to silver. It would therefore be clearly advantageous for silver-using countries that a system should be adopted which would raise the value of their money, and save them from the necessity of importing large quantities of silver to produce a proper adjustment. The ultimate consequences of the complete demonetization of silver as regards silver-using countries are not so clear. The supply of gold might suffice for all wants, and might furnish a better currency than the heavier silver. The preservation of two separate monometallic systems, of gold for the more advanced countries of Europe and the United States, of silver for Russia and India, would, when the superfluous stock of silver had passed to the East, present little difficulty after equilibrium was attained. The new ratio between silver and gold would become established, and silver prices in silver-using countries would be higher in proportion to the fall in the value of silver. It is therefore plain that a suitable adjustment would be reached under any variety of currency systems, and it may therefore be concluded that the comparative merits of the competing standards are not capable of

being decided at present. The immediate introduction of a universal gold currency is by the admission of all parties eminently undesirable, and this is the only settled point in the controversy. (3) The last head which the bimetallic question embraces is the practical expediency of joining in a bimetallic league with a ratio of 1 to 15 $\scriptstyle {\frac {1}{2}}$ . With regard to this aspect of the question the answer, for England at least, ought to be a negative one. The present English monetary system has worked well. It is firmly rooted in English habits, and is not therefore to be lightly abandoned. Again, the interests of English creditors are plainly opposed to any movement calculated to raise the value of silver relatively to gold, and to depreciate prices in general. The threat of some bimetallists, that all nations will be driven to adopt a gold standard, and thus produce a crisis in the English money market by the resulting gold drain, is of no weight; any drain of English gold will have to be paid for at a high price, and the simple expedient of raising the bank-rate will restore as much bullion as is needed in England. The interests of other countries cannot be so clearly determined. A state like Germany, holding a large store of depreciated silver, may desire other states to become bimetallic, but will hardly desire to do so herself. The interests of India and other silver-standard countries have been considered before. When all these aspects of the question have been examined the most probable conclusion is, that the chances of a bimetallic league in the immediate future are very small, and that future monetary evolution will be ruled rather by the course of events, and the pressure of circumstances in each separate state, than by the conscious deliberations of an international conference.

Bibliography.—The literature of the various questions connected with money is very extensive, and only a brief notice of it can be given here. The principal authority among the Greeks is Aristotle, who in two passages (Nic. Eth., v. 5; Pol., i. 9) has discussed the qualities of money, and pointed out its functions with great clearness. Xenophon also, in his work On the Athenian State, dealt with the value of the precious metals, though his views are partially erroneous. The only passages worth noticing in Latin literature are those of Pliny, who seems to have held a form of the mercantile theory, and Paulus, who, in a fragment preserved in the Digest, has treated of the origin of money. The medieval literature embraces several works dealing specially with the question of changes in the standard of money, which were condemned by the theologians. The first treatise professedly on the special subject of money is a work by Nicholas Oresme, bishop of Lisieux (ob. 1382), entitled De Origine, Natura, Jure, et Mutationibus Monetarum, reprinted in 1864 (Paris) by Wolowski, and even now worth reading. The next work to be noticed is the De Monetarum Potestate simul et Utilitate libellus (Nuremberg, 1542), a fragment of a larger treatise on economics, of Gabriel Biel (ob. 1495). It has been remarked that “the favourite subject of the economists of the 16th century was that of money.” The first of these works to be noticed is De Monetæ Cudendæ Ratione by Copernicus, reprinted along with the work of Oresme above mentioned. At a later date the Jesuit Mariana discussed the variations in prices under the title De Monetæ Mutatione. In the same century an anonymous work appeared in German, with the title Gemeine Stimmen von der Muntze (1530). In 1588 Davanzati issued Lezione delle Monete, advocating a bimetallic system. The problem of the elevation of prices caused by the American mines led to the issue of several works, one of the most remarkable being the Dialogues of William Stafford (1581).

In the 17th century Sir W. Petty dealt with money in a tract, Quantulumcumque (1682). The recoinage of 1696 called forth Lowndes's Essay for the Amendment of the Silver Coins, and Locke's Further Considerations concerning raising the Value of Money. In the 18th century the Reports of Sir I. Newton, as Master of the Mint, are valuable. Cantillon's Essai (Paris, 1755) contains in its 2d and 3d parts a sound account of currency. Harris's Essay on Money and Coins (1757) is also useful. An earlier tract by Rice Vaughan, Discourse of Coin and Coinage (1675), is brief, but correct in principle. Adam Smith's Wealth of Nations (London, 1776) discusses the subject of money in B. i. chs. 4 and 5, while seigniorage is examined in B. iv. ch. 6. The treatise, The Coins of the Realm (London, 1805), by the first earl of Liverpool, elaborately discussed the question of the proper standard, and has powerfully influenced monetary legislation in England and Germany. Ricardo's pamphlets on the bullion question added to the knowledge of the laws which regulated a depreciated currency. Senior, in his Lectures on the Cost of obtaining Money (London, 1829), developed the theory of the international distribution of the precious metals.

The last half century has been a time of active discussion regarding monetary questions,—the gold discoveries, international coinage, decimal coinage, bimetallism, the resumption of specie payments in countries where an inconvertible currency has existed, each of these topics having had its special literature. Some of these works have been mentioned when dealing with the special questions they refer to, and these, in turn, refer to many others. It will suffice here to mention more general works. The theory of money is dealt with by the leading English economists in their systematic works (Mill, Principles, B. iii. chs. 7–10, 19, 21; Fawcett, Manual, B. iii. chs. 5, 6, 15, 16; Shadwell, System, B. iii. chs. 1–3 and 8), also by Cherbuliez (Précis, B. ii. ch. 3, vol. i. and B. ii. ch. 3, vol. ii.). Chevalier has devoted the third volume of his Cours (Paris, 1842–50) to the subject, with the title of “La Monnaie.” The late Professor W. S. Jevons's valuable work, Money and the Mechanism of Exchange, and Professor Hussey Walsh's concise Treatise on Metallic Currency (Dublin, 1853) may also be used. More elaborate than either of these is F. A. Walker's Money, the most comprehensive work on the subject in English; his smaller work, Money in its Relation to Trade and Industry, is likewise very good. Wolowski's L'Or et l'Argent contains much information, as does also Knies's Das Geld. E. Seyd's Bullion and Foreign Exchanges is serviceable, but the changes since its publication (1869) deprive it of most of its value. The various editions of Tate's Cambist give the most accurate (though often imperfect) statements as to the facts of currency. Jacob's work on The Production and Consumption of the Precious Metals gives many interesting details, though the conclusions are often fanciful, and the authorities relied on not trustworthy. The recent work of Del Mar, History of the Precious Metals (London, 1880), furnishes a criticism and continuation of Jacob, and supplies many new details. His criticism of the “cost of production” theory as applied to gold and silver is especially useful. Some of his views on the moral aspects of the question need qualification. Professor Sumner's History of the American Currency may be relied upon for its facts. The Reports of the various conferences also supply abundant information on their special topics. Among these may be mentioned the Proceedings of the Paris conferences of 1867, 1878, and 1881; the Decimal Coinage Commission (1868); the French Enquête Monétaire (1870); and the Report of the Committee of the House of Commons on the Depreciation of Silver (1876). The Reports of the (English) Mint furnish information as to the coinage changes of each preceding year.

(c. f. b.)

↑ F. A. Walker, Money, Trade, and Industry, p. 4.
↑ For further information as to the discussions relative to the proper definition of “Money,” the reader may consult J. S. Mill, Prin. of Pol. Econ., B. iii. ch. 12, § 7; Jevons, Money, pp. 248 sq.; É. de Laveleye, Marché Monétaire, pp. 226 sq.; and especially Mr H. Sidgwick's article “What is Money?” in the Fortnightly Review (April 1879), also his Principles of Political Economy, pp. 231 sq.
↑ Mill, Prin., B. iii. ch. 7, § 1.
↑ W. Bagehot, Economic Studies, pp. 42–43.
↑ Jevons, Money, p. 5.
↑ For an ingenious argument against the use of the terms “measure” and “standard” of value, see F. A. Walker, Money, pp. 4 sq., 12, and Money, Trade, and Industry, pp. 27 sq., 60 sq. The shorter title is uniformly used here for his larger treatise.
↑ Mill, Prin., B. iii. ch. 8, § 1.
↑ For a clear statement of this, see J. E. Cairnes, Leading Principles, part i. ch. 2.
↑ The leading exception to this is in the case of money which is hoarded for an indefinite period, and is therefore withdrawn from circulation.
↑ This view, which seems to most persons a paradox, is well put by Adam Smith, Wealth of Nations, p. 81 (ed. M‘Culloch); also by J. E. Cairnes, Essays on Political Economy, p. 4.
↑ Prin., B. iii. ch. 3, § 2.
↑ Wealth of Nations, p. 78 (ed. M‘Culloch).
↑ F. A. Walker, Money, p. 73.
↑ Ib., p. 57.
↑ E. B. Tylor, Anthropology, pp. 281–282.
↑ Tylor, loc. cit.
↑ Whymper, Alaska, p. 285.
↑ Mommsen, Hist. of Rome (Eng. trans.), i. p. 203.
↑ The episode between Diomede and Glaucus in the 6th book.
↑ Maine, Early History of Institutions, Lect. vi.; Brehon Law Tracts (ed. by Drs Hancock and Richey).
↑ Rev. H. Dugmore, quoted by Maine, op. cit., p. 143.
↑ F. A. Walker, Money, Trade, and Industry, p. 22.
↑ Wealth of Nations, p. 11.
↑ Tylor, p. 283.
↑ Ency. Brit. (8th ed.), art. “Money,” vol. xv. p. 417.
↑ W. S. Jevons in the Contemporary Review, January 1881. See also Lord Liverpool, Coins of the Realm (Bank of England reprint), p. 10.
↑ See Cairnes, Logical Method of Pol. Econ., p. 131, note; and for an application of the argument to Bimetallism, see É. de Laveleye, Fort. Rev., July 1881.
↑ Pol., i. 9, 8. The whole passage is worthy of quotation, as showing how clearly Aristotle conceived the primary function of money: διὸ πρὸς τὰς ἀλλαγάς τοιοῦτόν τι συνέθεντο πρὸς σφᾶς αὐτοὺς διδόναι καὶ λαμβάνειν, ὃ τῶν χρησίμων αὐτὸ ὂν εἶχε τὴν χρείαν εὐμεταχείριστον πρὸς τὸ ζῆν, οἷον σίδηρος καὶ ἄργυρος, κἂν εἴ τι τοιοῦτον ἕτερον, τὸ μὲν πρῶτον ἁπλῶς ὀρισθὲν μεγέθει καὶ σταθμῷ, τὸ δὲ τελευταῖον καὶ χαρακτῆρα ἐπιβαλλόντων, ἵνα ἀπολύσῃ τῆς μετρήσεως αὐτούς.
↑ Herodotus, i. 94.
↑ Ib., vi. 127. See also for a discussion of Pheidon's coinage, Grote, Hist. of Greece, ii. pp. 319 sq. (Cabinet ed.).
↑ An instance of the latter is the itzibu of the Japanese coinage, which is an oblong flat piece of silver.
↑ Jevons, Money, p. 155.
↑ See Lenormant, Contemp. Rev., February 1879.
↑ Hallam, Middle Ages, i. pp. 205–206.
↑ Lord Liverpool, Coins of the Realm, cli. v.
↑ “We may take as an example the function (which is a monopoly too) of coining money. . . . No one, even of those most jealous of state interference, has objected to this as an improper exercise of the powers of government.” Mill, Princ., B. v. ch. 1, § 2. But see, for objections, H. Spencer, Social Statics, pp. 400–402, and J. L. Shadwell, System of Pol. Econ., p. 264.
↑ Tooke, Hist. of Prices, i. 121 sq. It is impossible, however, to agree with Tooke that uncoined bullion would be higher in value than coin when a seigniorage is charged on the latter. He seems to ignore the fact that the value of the precious metals is partly dependent on their use as currency, and that the seigniorage represents a tax levied on the extra value resulting from the use of the metal as money.
↑ J. E. T. Rogers, Historical Gleanings, i. p. 97.
↑ Hist. of Eng., ch. xxi.
↑ Lord Liverpool, Coins of the Realm, p. 37.
↑ Grote, Hist. of Greece, part ii. ch. 11.
↑ Ib., vol. iii. p. 116, note 1.
↑ For a full discussion of this point, see Lenormant in Contemp. Rev., February 1879.
↑ Mommsen, Hist. of Rom. (Eng. trans.), i. p. 458.
↑ Ib., ii. p. 173.
↑ H. N., xxxiii. ch. 13.
↑ Mommsen, iii. pp. 413–414; Lenormant, op. cit.
↑ Compare, for instance, the passage previously cited from Aristotle with the following:—“Quia non semper nec facile concurrebat ut, cum tu haberes quod ego desiderarem, invicem haberem quod tu accipere velles, electa materia est cujus publica ac perpetua æstimatio difficultatibus permutationum æqualitate quantitatis subveniret; eaque materia forma publica percussa usum dominiumque non tam ex substantia præbet quam ex quantitate.” Paulus, Dig., xviii. 1, 1.
↑ As to the various elements requisite for a proper estimate of mediæval prices, see Cibrario, Della Economia Politica del Medio Evo, 1. iii. c. 8.
↑ The Tower pound, which was three-quarters of an oz. troy less than the troy pound, was used in England until the 18th of Henry VIII. (1527), when it was replaced by the troy weight. This should be always remembered in considering the precise amount of depreciation at any given time.
↑ Coins of the Realm, ch. xiii.
↑ Hist. of Eng., vii. p. 2.
↑ Macaulay's account of this recoinage, which is written in his typical manner, has made this episode of English monetary history very generally known.
↑ Lord Liverpool, Coins of the Realm, p. 47.
↑ The third great English recoinage was that of the gold coin, which took place in 1773–1775. It is commonly known as the recoinage of 1774.
↑ 33 & 34 Vic. c. 10.
↑ A survival of this older system is to be found in many charges on Irish lands, which are reduced to English money by deducting one-thirteenth from the nominal amount.
↑ Hallam, Middle Ages, i. p. 206.
↑ Stephen, Lectures on French History, i. p. 459.
↑ Tooke and Newmarch, Hist. of Prices, vol. vi. p. 374. The views there given are based on those of M. Levasseur, who had specially studied the question.
↑ The silver franc was made to weigh exactly 5 grammes.
↑ Stephen, Lect. on French Hist., i. p. 482.
↑ Lord Liverpool, Coins of the Realm, p. 125.
↑ Readers requiring full details on the subject of the various currency changes may consult Lenormant, Monnaie dans l'Antiquité, for ancient times; Lord Liverpool, Coins of the Realm, for England; and the works of Le Blanc and Paucton for France.
↑ The Pactolus in Lydia was widely famed for its “golden sands.”
↑ 1 Kings ix. 28.
↑ See Herodotus, iii. c. 96; also Grote, Hist., iv. pp. 162 sq.
↑ Grote, xi. p. 499, note 3.
↑ A commercial agency which existed for the distribution of gold and silver was the Phœnician system of trading, which extended all over the Mediterranean.
↑ Jacob, Production and Consumption of the Precious Metals, i. p. 224.
↑ See Pliny, H. N., xii. c. 18.
↑ Jacob, i. p. 237.
↑ It was at this time that the most productive European mines were discovered, namely, those of Saxony and the Harz Mountains, as well as the Austrian mines, which were the chief sources of supply during the Middle Ages.
↑ Jacob, i. p. 311.
↑ Adam Smith assumes 1570 as the date when prices were affected in England, Wealth of Nations, p. 88. Humboldt estimated the total production (1492–1545) as being about £17,000,000; but see Table I., which contains Dr Sötbeer's estimates, based on the best available data.
↑ Essays in Pol. and Mor. Phil., Essay xx.
↑ Wealth of Nations, p. 88.
↑ The total production is roughly computed at over £1,200,000,000 for the two centuries 1600–1800; but see Table I. for more precise estimates.
↑ The Russian supply became important after 1823.
↑ The following maybe specially consulted:—Chevalier, Depreciation of Gold (trans. by Cobden); Tooke and Newmarch, Hist. of Prices, vol. vi., pp. 135–236 (Part vii.); article “Precious Metals,” Ency. Brit. (8th Ed.); J. E. Cairnes, Essays in Pol. Econ., pp. 1–165; T. E. C. Leslie, Essays, pp. 264–374; W. S. Jevons, Serious Fall in the Value of Gold.
↑ The price of silver in London rose from 59 $\scriptstyle {\frac {3}{4}}$ d. per oz. to 62 $\scriptstyle {\frac {1}{2}}$ d. per oz., or 2 $\scriptstyle {\frac {3}{4}}$ d. per oz.—that is, only 3 to 4 per cent.
↑ See Report of Select Committee on the Silver Question, 1876; and for another estimate see Table I.
↑ See, for details, the Report of Mr Goschen's Committee, 1876, and W. Bagehot, Papers on the Depreciation of Silver.
↑ See A. Sötbeer in the Vierteljahrschr. für Volkswirthsch., iii., 1863.
↑ See Ricardo, Principles of Pol. Econ., p. 79 (ed. M‘Culloch).
↑ See p. 720, above.
↑ R. Giffen, Essays in Finance, p. 303.
↑ The Jewish and Lombard merchants discharged this function in the mediæval period; Hallam, Middle Ages, iii. p. 369, note t.
↑ Aristophanes (Ran. 719–733) appears to recognize this principle. Grote (vol. iii. 116 note) has misunderstood him, and seems to deny the principle stated.
↑ Jevons, Money, p. 82.
↑ See p. 726, above.
↑ In his discussion of this subject Prof. Jevons, on whose excellent work much of this section is based, mentions currency by weight as the simplest form, but it is hardly correct to regard this as a currency system; it is rather a primitive stage, closely akin to barter.
↑ This system came into existence in England accidentally, through silver being overvalued by the mint regulations, but its theoretical basis was given by the often-quoted work of Lord Liverpool, Coins of the Realm (1805), which contains even now the best explanation of its principles.
↑ This piece is now almost extinct.
↑ For instance, the 20-franc, 10-franc, and 5-franc pieces, and, again, 2-franc, 1-franc, and 50-centime pieces in France, &c.; 20-kroner and 10-kroner pieces, and 4-kroner, 2-kroner, 1-krone, 50-öre, and 25-öre pieces in Denmark, &c.; 20-, 10-, and 5-mark pieces, and 2-mark, 1-mark, and 50-pfennige pieces in Germany; while the United States have eagle, half-eagle, and quarter-eagle, and also dollar, half-dollar, and quarter-dollar.
↑ See S. Laing, Notes of a Traveller, pp. 57–59.
↑ J. R. M‘Culloch in Ency. Brit., art. "Money," vol. xv. p. 431 (8th ed.).
↑ Tylor, Anthropology, pp. 311–312.
↑ Laing and M‘Culloch, as quoted above. The former unfortunately prophesies that "the decimal division never will come into general use in France or anywhere else."
↑ The Attic, Euboic, and Æginetan; see Smith, Dict. Gr. and Rom. Ant., s. v. “Drachma.”
↑ Mommsen, Hist. of Rome, iii. p. 415.
↑ See E. de Parieu in Journal des Économistes (Feb. 1, 1878).
↑ As Austria, Russia, and Turkey possess inconvertible paper currencies, and various foreign coins circulate in the last-named country, the question does not possess much importance for them. Portugal is closely connected with England, and will probably follow her example. It may also be noticed that the gold coins of all these countries have a fineness of $\scriptstyle {\frac {11}{12}}$ ths.
↑

Sovereign = 7·32 grammes fine gold.

25 francs = 7·25 ,, ,,

U. S. half-eagle = 7·52 ,, ,,

German 20 mark = 7·16 ,, ,,

Japanese 5 yen = 7·50 ,, ,,
↑ See his pamphlet reprinted from the Economist. It is nearly the same as the first proposal mentioned above, but it differs in contemplating the assimilation of American money, the 5-dollar piece being equivalent to the new pound.
↑ See, for this, Goschen, Foreign Exchanges, p. 5, and the article Exchange (vol. viii. p. 784 sq.). A practical illustration is the case of Australia, where, though the currency is identical with that of England, bills on England are at a premium.
↑ The principal of these are the Austrian Maria Theresa dollar, the Mexican dollar, and the United States trade dollar, which is 7 grs. heavier than the national coin of the same name. See also Tables II. and III.
↑ E.g., Bagehot and Prof. Jevons. The former dwells on the commercial aspect; the latter naturally places the scientific side first.
↑ See Mommsen, Hist. of Rome, ii. p. 382 and iv. p. 553.
↑ The various changes made can be estimated from the Tables given in James's Essays on Money, &c.; see also Ency. Brit., 8th ed., article “Money.” A careful statement will be found in Lord Liverpool's work, ch. xi.
↑ Newton's report will be found in Select Tracts on Money, edited by J. R. M‘Culloch for the Political Economy Club (1856). One passage is worth quoting. “The demand for exportation arises from the higher price of silver in other places than in England in proportion to gold, . . . and may therefore be diminished by lowering the value of gold in proportion to silver. If gold in England, or silver in East India, could be brought down so low as to bear the same proportion to one another in both places, there would be here no greater demand for silver than for gold to be exported to India. And if gold were lowered only so as to have the same proportion to the silver money in England which it hath to silver in the rest of Europe, there would be no temptation to export silver rather than gold to any other part of Europe” (p. 277). The italics are in the original passage, which has been much discussed in recent controversies.
↑ Del Mar, Hist. of the Precious Metals, p. 221. According to this writer, the variation has been 200 degrees—i.e., from silver being 10 times as valuable as gold, gold has come to be 20 times more valuable than silver.
↑ See Smith, Dict. of Ant., s. v. “Argentum.”
↑ See above, p. 731.
↑ Lord Ashburton was the only person of influence who advocated the double standard.

↑ The amounts decreed to be coined each year were as follows:—

		Frs.
1874	=	120,000,000
1875	=	150,000,000
1876	=	120,000,000
1877	=	65,000,000
1878	=	9,000,000	}	For Italy only.
1879	=	20,000,000		For Italy only.

↑ See, for a full discussion, W. Bagehot, Depreciation of Silver.
↑ Coins of the Realm, pp. 128–165.
↑ This objection to the double standard is also urged by Prof. Thorold Rogers and by Bagehot. Actual instances of the difficulty occurred in 1860, and again in 1876, with the Bank of France.
↑ “Proposals for an Economical and Secure Currency,” Works (ed. M‘Culloch), p. 403.
↑ The superposition of two curves, each representing the variations of one metal, and the formation of a third curve representing the lowest concurrent points of each, will make this clear. See Jevons, Money, p. 138.
↑ See J. E. Cairnes, Essays in Pol. Econ., pp. 140–143.
↑ Mr A. J. Wilson has collected a series of articles on Reciprocity, Bimetallism, and Land Tenure Reform, and Prof. Bonamy Price dealt with Bimetallism and Fair Trade in his address to the Social Science Congress in 1882. But there is no fair reason for placing É. de Laveleye, Luzzati, Cernuschi, Dana Horton, and other supporters of bimetallism—and we may add Prof. F. A. Walker—in the same category with the advocates of (so-called) “Reciprocity.”
↑ See Dana Horton's paper on the Position of Law in the Doctrine of Money, presented to the monetary conference of 1881 (Appendix ix. C).
↑ On p. 721, above, the theory of money value has been stated, and the objections to the cost of production theory given. It is strange to find Jevons arguing (in common with Bagehot and Prof. Price) that the value of money ultimately depends on cost of production, when his examination of that doctrine in general is considered. Compare Contemp. Rev. (May 1881) with Jevons's Theory of Pol. Econ., p. 201 sq.
↑ Modern bimetallists freely admit that two different bimetallic systems—i.e., having different ratios—could not exist, for each would drain the other of one metal.
↑ The principal sources for the above summary, besides works before cited, are the pamphlets of Seyd, Cernuschi, and De Laveleye, on the bimetallism side, as well as the articles of the latter in the Fort. and Contemp. Reviews. The monometallist arguments are given by Prof. Jevons (Contemp., May 1881), Mr R. Giffen (Essays in Finance, pp. 286–310), and Lord Sherbrooke (Nineteenth Century, April 1882). See also the Report of the Paris conference, 1881, and Mr T. H. Farrer, The State in its Relation to Trade, pp. 49–52.
↑ It is assumed that the other factors which influence the value of money (see p. 722, above) remain constant.
↑ Mr J. J. Murphy in Dublin Statistical Journal, vol. viii. p. 282. See also M. Walras, Journal des Économistes, May 1881, “Théorie Mathématique du bimétallisme.”

[109] Present system introduced in 1870, in place of system of 1857; 8-gulden piece equivalent to 20 francs; silver not freely coined. The Maria Theresa dollar (28·0644 grammes, $\scriptstyle {\frac {5}{6}}$ ths fine) is coined as commercial money.

[110] The Dutch standard has been several times changed. In 1847 a silver standard was adopted, and continued till 1872, the unit being the silver guilder. In June 1875 the free coinage of gold was decreed, the silver coinage having been restricted since 1872. The ratio of gold to silver is 15·625 to 1, but practically the "limping standard" exists.

[111] The single gold standard is in force in Portugal. The English sovereign is legal tender for 4500 reis.

[112] The system now in use in the Scandinavian Union (Denmark, Sweden, and Norway) came into force 1st January 1875. It is a monometallic gold standard on the Decimal Coinage See {{sc|France

[117] The Medjidie coinage was introduced in 1844. English sovereigns circulate at 125 piastres, 20-franc pieces at 100 piastres.

[118] The Colombian States have the Latin Union system, with a ratio of 1 to 15 $\scriptstyle {\frac {1}{2}}$ .

[119] There is no currency issued in Canada; English and American coins circulate. The standard is gold (£1 = $4·80). There were formerly different methods of counting, viz., English sterling, Halifax currency, and Canadian sterling, the respective ratios being 100 : 120 : 108.

[120] The decimal coinage has existed in Mexico since 1867. The gold coins are practically commercial money, and command a premium.

[121] When Peru returns to cash payments the system will be almost identical with that of Colombia.

[122] The dollar was introduced in 1786 as the unit. In 1794 the ratio of gold to silver was fixed at 1 to 15. This valuation underrated gold, consequently silver became the standard. In 1834 the ratio was altered to 1 to 16, and it was again changed in 1837. In these changes gold was overrated, and silver was driven out of circulation. This led, in 1853, to the reduction of the metal in the silver coins, which therefore became a token currency. The suspension of cash payments took place in 1861. In 1873 silver was demonetized, and gold became the standard. In 1878 the "Bland Bill" was passed, making the silver dollar a legal tender, but confining its coinage to the executive, and fixing the amount at from two to four million dollars per month. These silver dollars have not got into circulation. The United States coin a trade dollar of 420 grs. (27·212 grammes), to compete with the Mexican dollar.

[123] British India has a single silver standard, as the gold coins are only commercial money. The price of the rupee varies; generally in recent years it has been about 1s. 8d. (=40 cents).

[124] The Argentine Confederation professes to have a gold standard. The old South American onza weighed 27 grammes, was 875· fine, and worth £3, 4s. 6d.

[125] The Brazilian system is a depreciated form of the Portuguese.

[126] The old Japanese coinage consisted of gold cobangs and silver itzibus, with a ratio of 1 to 4. The system was recast in 1871, and the present decimal coinage adopted, the ratio being 1 to 16·17. The standard is now practically silver. In 1875 a trade dollar exactly similar to the American trade dollar was introduced.

[127] Chili has nominally a double valuation at 1 to 16 $\scriptstyle {\frac {24}{61}}$ . Gold coins are no longer struck.

[1] F. A. Walker, Money, Trade, and Industry, p. 4.

[2] For further information as to the discussions relative to the proper definition of “Money,” the reader may consult J. S. Mill, Prin. of Pol. Econ., B. iii. ch. 12, § 7; Jevons, Money, pp. 248 sq.; É. de Laveleye, Marché Monétaire, pp. 226 sq.; and especially Mr H. Sidgwick's article “What is Money?” in the Fortnightly Review (April 1879), also his Principles of Political Economy, pp. 231 sq.

[3] Mill, Prin., B. iii. ch. 7, § 1.

[4] W. Bagehot, Economic Studies, pp. 42–43.

[5] Jevons, Money, p. 5.

[6] For an ingenious argument against the use of the terms “measure” and “standard” of value, see F. A. Walker, Money, pp. 4 sq., 12, and Money, Trade, and Industry, pp. 27 sq., 60 sq. The shorter title is uniformly used here for his larger treatise.

[7] Mill, Prin., B. iii. ch. 8, § 1.

[8] For a clear statement of this, see J. E. Cairnes, Leading Principles, part i. ch. 2.

[9] The leading exception to this is in the case of money which is hoarded for an indefinite period, and is therefore withdrawn from circulation.

[10] This view, which seems to most persons a paradox, is well put by Adam Smith, Wealth of Nations, p. 81 (ed. M‘Culloch); also by J. E. Cairnes, Essays on Political Economy, p. 4.

[11] Prin., B. iii. ch. 3, § 2.

[12] Wealth of Nations, p. 78 (ed. M‘Culloch).

[13] F. A. Walker, Money, p. 73.

[14] Ib., p. 57.

[15] E. B. Tylor, Anthropology, pp. 281–282.

[16] Tylor, loc. cit.

[17] Whymper, Alaska, p. 285.

[18] Mommsen, Hist. of Rome (Eng. trans.), i. p. 203.

[19] The episode between Diomede and Glaucus in the 6th book.

[20] Maine, Early History of Institutions, Lect. vi.; Brehon Law Tracts (ed. by Drs Hancock and Richey).

[21] Rev. H. Dugmore, quoted by Maine, op. cit., p. 143.

[22] F. A. Walker, Money, Trade, and Industry, p. 22.

[23] Wealth of Nations, p. 11.

[24] Tylor, p. 283.

[25] Ency. Brit. (8th ed.), art. “Money,” vol. xv. p. 417.

[26] W. S. Jevons in the Contemporary Review, January 1881. See also Lord Liverpool, Coins of the Realm (Bank of England reprint), p. 10.

[27] See Cairnes, Logical Method of Pol. Econ., p. 131, note; and for an application of the argument to Bimetallism, see É. de Laveleye, Fort. Rev., July 1881.

[28] Pol., i. 9, 8. The whole passage is worthy of quotation, as showing how clearly Aristotle conceived the primary function of money: διὸ πρὸς τὰς ἀλλαγάς τοιοῦτόν τι συνέθεντο πρὸς σφᾶς αὐτοὺς διδόναι καὶ λαμβάνειν, ὃ τῶν χρησίμων αὐτὸ ὂν εἶχε τὴν χρείαν εὐμεταχείριστον πρὸς τὸ ζῆν, οἷον σίδηρος καὶ ἄργυρος, κἂν εἴ τι τοιοῦτον ἕτερον, τὸ μὲν πρῶτον ἁπλῶς ὀρισθὲν μεγέθει καὶ σταθμῷ, τὸ δὲ τελευταῖον καὶ χαρακτῆρα ἐπιβαλλόντων, ἵνα ἀπολύσῃ τῆς μετρήσεως αὐτούς.

[29] Herodotus, i. 94.

[30] Ib., vi. 127. See also for a discussion of Pheidon's coinage, Grote, Hist. of Greece, ii. pp. 319 sq. (Cabinet ed.).

[31] An instance of the latter is the itzibu of the Japanese coinage, which is an oblong flat piece of silver.

[32] Jevons, Money, p. 155.

[33] See Lenormant, Contemp. Rev., February 1879.

[34] Hallam, Middle Ages, i. pp. 205–206.

[35] Lord Liverpool, Coins of the Realm, cli. v.

[36] “We may take as an example the function (which is a monopoly too) of coining money. . . . No one, even of those most jealous of state interference, has objected to this as an improper exercise of the powers of government.” Mill, Princ., B. v. ch. 1, § 2. But see, for objections, H. Spencer, Social Statics, pp. 400–402, and J. L. Shadwell, System of Pol. Econ., p. 264.

[37] Tooke, Hist. of Prices, i. 121 sq. It is impossible, however, to agree with Tooke that uncoined bullion would be higher in value than coin when a seigniorage is charged on the latter. He seems to ignore the fact that the value of the precious metals is partly dependent on their use as currency, and that the seigniorage represents a tax levied on the extra value resulting from the use of the metal as money.

[38] J. E. T. Rogers, Historical Gleanings, i. p. 97.

[39] Hist. of Eng., ch. xxi.

[40] Lord Liverpool, Coins of the Realm, p. 37.

[41] Grote, Hist. of Greece, part ii. ch. 11.

[42] Ib., vol. iii. p. 116, note 1.

[43] For a full discussion of this point, see Lenormant in Contemp. Rev., February 1879.

[44] Mommsen, Hist. of Rom. (Eng. trans.), i. p. 458.

[45] Ib., ii. p. 173.

[46] H. N., xxxiii. ch. 13.

[47] Mommsen, iii. pp. 413–414; Lenormant, op. cit.

[48] Compare, for instance, the passage previously cited from Aristotle with the following:—“Quia non semper nec facile concurrebat ut, cum tu haberes quod ego desiderarem, invicem haberem quod tu accipere velles, electa materia est cujus publica ac perpetua æstimatio difficultatibus permutationum æqualitate quantitatis subveniret; eaque materia forma publica percussa usum dominiumque non tam ex substantia præbet quam ex quantitate.” Paulus, Dig., xviii. 1, 1.

[49] As to the various elements requisite for a proper estimate of mediæval prices, see Cibrario, Della Economia Politica del Medio Evo, 1. iii. c. 8.

[50] The Tower pound, which was three-quarters of an oz. troy less than the troy pound, was used in England until the 18th of Henry VIII. (1527), when it was replaced by the troy weight. This should be always remembered in considering the precise amount of depreciation at any given time.

[51] Coins of the Realm, ch. xiii.

[52] Hist. of Eng., vii. p. 2.

[53] Macaulay's account of this recoinage, which is written in his typical manner, has made this episode of English monetary history very generally known.

[54] Lord Liverpool, Coins of the Realm, p. 47.

[55] The third great English recoinage was that of the gold coin, which took place in 1773–1775. It is commonly known as the recoinage of 1774.

[56] 33 & 34 Vic. c. 10.

[57] A survival of this older system is to be found in many charges on Irish lands, which are reduced to English money by deducting one-thirteenth from the nominal amount.

[58] Hallam, Middle Ages, i. p. 206.

[59] Stephen, Lectures on French History, i. p. 459.

[60] Tooke and Newmarch, Hist. of Prices, vol. vi. p. 374. The views there given are based on those of M. Levasseur, who had specially studied the question.

[61] The silver franc was made to weigh exactly 5 grammes.

[62] Stephen, Lect. on French Hist., i. p. 482.

[63] Lord Liverpool, Coins of the Realm, p. 125.

[64] Readers requiring full details on the subject of the various currency changes may consult Lenormant, Monnaie dans l'Antiquité, for ancient times; Lord Liverpool, Coins of the Realm, for England; and the works of Le Blanc and Paucton for France.

[65] The Pactolus in Lydia was widely famed for its “golden sands.”

[66] 1 Kings ix. 28.

[67] See Herodotus, iii. c. 96; also Grote, Hist., iv. pp. 162 sq.

[68] Grote, xi. p. 499, note 3.

[69] A commercial agency which existed for the distribution of gold and silver was the Phœnician system of trading, which extended all over the Mediterranean.

[70] Jacob, Production and Consumption of the Precious Metals, i. p. 224.

[71] See Pliny, H. N., xii. c. 18.

[72] Jacob, i. p. 237.

[73] It was at this time that the most productive European mines were discovered, namely, those of Saxony and the Harz Mountains, as well as the Austrian mines, which were the chief sources of supply during the Middle Ages.

[74] Jacob, i. p. 311.

[75] Adam Smith assumes 1570 as the date when prices were affected in England, Wealth of Nations, p. 88. Humboldt estimated the total production (1492–1545) as being about £17,000,000; but see Table I., which contains Dr Sötbeer's estimates, based on the best available data.

[76] Essays in Pol. and Mor. Phil., Essay xx.

[77] Wealth of Nations, p. 88.

[78] The total production is roughly computed at over £1,200,000,000 for the two centuries 1600–1800; but see Table I. for more precise estimates.

[79] The Russian supply became important after 1823.

[80] The following maybe specially consulted:—Chevalier, Depreciation of Gold (trans. by Cobden); Tooke and Newmarch, Hist. of Prices, vol. vi., pp. 135–236 (Part vii.); article “Precious Metals,” Ency. Brit. (8th Ed.); J. E. Cairnes, Essays in Pol. Econ., pp. 1–165; T. E. C. Leslie, Essays, pp. 264–374; W. S. Jevons, Serious Fall in the Value of Gold.

[81] The price of silver in London rose from 59 $\scriptstyle {\frac {3}{4}}$ d. per oz. to 62 $\scriptstyle {\frac {1}{2}}$ d. per oz., or 2 $\scriptstyle {\frac {3}{4}}$ d. per oz.—that is, only 3 to 4 per cent.

[82] See Report of Select Committee on the Silver Question, 1876; and for another estimate see Table I.

[83] See, for details, the Report of Mr Goschen's Committee, 1876, and W. Bagehot, Papers on the Depreciation of Silver.

[84] See A. Sötbeer in the Vierteljahrschr. für Volkswirthsch., iii., 1863.

[85] See Ricardo, Principles of Pol. Econ., p. 79 (ed. M‘Culloch).

[86] See p. 720, above.

[87] R. Giffen, Essays in Finance, p. 303.

[88] The Jewish and Lombard merchants discharged this function in the mediæval period; Hallam, Middle Ages, iii. p. 369, note t.

[89] Aristophanes (Ran. 719–733) appears to recognize this principle. Grote (vol. iii. 116 note) has misunderstood him, and seems to deny the principle stated.

[90] Jevons, Money, p. 82.

[91] See p. 726, above.

[92] In his discussion of this subject Prof. Jevons, on whose excellent work much of this section is based, mentions currency by weight as the simplest form, but it is hardly correct to regard this as a currency system; it is rather a primitive stage, closely akin to barter.

[93] This system came into existence in England accidentally, through silver being overvalued by the mint regulations, but its theoretical basis was given by the often-quoted work of Lord Liverpool, Coins of the Realm (1805), which contains even now the best explanation of its principles.

[94] This piece is now almost extinct.

[95] For instance, the 20-franc, 10-franc, and 5-franc pieces, and, again, 2-franc, 1-franc, and 50-centime pieces in France, &c.; 20-kroner and 10-kroner pieces, and 4-kroner, 2-kroner, 1-krone, 50-öre, and 25-öre pieces in Denmark, &c.; 20-, 10-, and 5-mark pieces, and 2-mark, 1-mark, and 50-pfennige pieces in Germany; while the United States have eagle, half-eagle, and quarter-eagle, and also dollar, half-dollar, and quarter-dollar.

[96] See S. Laing, Notes of a Traveller, pp. 57–59.

[97] J. R. M‘Culloch in Ency. Brit., art. "Money," vol. xv. p. 431 (8th ed.).

[98] Tylor, Anthropology, pp. 311–312.

[99] Laing and M‘Culloch, as quoted above. The former unfortunately prophesies that "the decimal division never will come into general use in France or anywhere else."

[100] The Attic, Euboic, and Æginetan; see Smith, Dict. Gr. and Rom. Ant., s. v. “Drachma.”

[101] Mommsen, Hist. of Rome, iii. p. 415.

[102] See E. de Parieu in Journal des Économistes (Feb. 1, 1878).

[103] As Austria, Russia, and Turkey possess inconvertible paper currencies, and various foreign coins circulate in the last-named country, the question does not possess much importance for them. Portugal is closely connected with England, and will probably follow her example. It may also be noticed that the gold coins of all these countries have a fineness of $\scriptstyle {\frac {11}{12}}$ ths.

[104] 

Sovereign = 7·32 grammes fine gold.

25 francs = 7·25 ,, ,,

U. S. half-eagle = 7·52 ,, ,,

German 20 mark = 7·16 ,, ,,

Japanese 5 yen = 7·50 ,, ,,

[105] See his pamphlet reprinted from the Economist. It is nearly the same as the first proposal mentioned above, but it differs in contemplating the assimilation of American money, the 5-dollar piece being equivalent to the new pound.

[106] See, for this, Goschen, Foreign Exchanges, p. 5, and the article Exchange (vol. viii. p. 784 sq.). A practical illustration is the case of Australia, where, though the currency is identical with that of England, bills on England are at a premium.

[107] The principal of these are the Austrian Maria Theresa dollar, the Mexican dollar, and the United States trade dollar, which is 7 grs. heavier than the national coin of the same name. See also Tables II. and III.

[108] E.g., Bagehot and Prof. Jevons. The former dwells on the commercial aspect; the latter naturally places the scientific side first.

[128] See Mommsen, Hist. of Rome, ii. p. 382 and iv. p. 553.

[129] The various changes made can be estimated from the Tables given in James's Essays on Money, &c.; see also Ency. Brit., 8th ed., article “Money.” A careful statement will be found in Lord Liverpool's work, ch. xi.

[130] Newton's report will be found in Select Tracts on Money, edited by J. R. M‘Culloch for the Political Economy Club (1856). One passage is worth quoting. “The demand for exportation arises from the higher price of silver in other places than in England in proportion to gold, . . . and may therefore be diminished by lowering the value of gold in proportion to silver. If gold in England, or silver in East India, could be brought down so low as to bear the same proportion to one another in both places, there would be here no greater demand for silver than for gold to be exported to India. And if gold were lowered only so as to have the same proportion to the silver money in England which it hath to silver in the rest of Europe, there would be no temptation to export silver rather than gold to any other part of Europe” (p. 277). The italics are in the original passage, which has been much discussed in recent controversies.

[131] Del Mar, Hist. of the Precious Metals, p. 221. According to this writer, the variation has been 200 degrees—i.e., from silver being 10 times as valuable as gold, gold has come to be 20 times more valuable than silver.

[132] See Smith, Dict. of Ant., s. v. “Argentum.”

[133] See above, p. 731.

[134] Lord Ashburton was the only person of influence who advocated the double standard.

[135] The amounts decreed to be coined each year were as follows:—

Frs.

1874 = 120,000,000

1875 = 150,000,000

1876 = 120,000,000

1877 = 65,000,000

1878 = 9,000,000 } For Italy only.

1879 = 20,000,000

[136] See, for a full discussion, W. Bagehot, Depreciation of Silver.

[137] Coins of the Realm, pp. 128–165.

[138] This objection to the double standard is also urged by Prof. Thorold Rogers and by Bagehot. Actual instances of the difficulty occurred in 1860, and again in 1876, with the Bank of France.

[139] “Proposals for an Economical and Secure Currency,” Works (ed. M‘Culloch), p. 403.

[140] The superposition of two curves, each representing the variations of one metal, and the formation of a third curve representing the lowest concurrent points of each, will make this clear. See Jevons, Money, p. 138.

[141] See J. E. Cairnes, Essays in Pol. Econ., pp. 140–143.

[142] Mr A. J. Wilson has collected a series of articles on Reciprocity, Bimetallism, and Land Tenure Reform, and Prof. Bonamy Price dealt with Bimetallism and Fair Trade in his address to the Social Science Congress in 1882. But there is no fair reason for placing É. de Laveleye, Luzzati, Cernuschi, Dana Horton, and other supporters of bimetallism—and we may add Prof. F. A. Walker—in the same category with the advocates of (so-called) “Reciprocity.”

[143] See Dana Horton's paper on the Position of Law in the Doctrine of Money, presented to the monetary conference of 1881 (Appendix ix. C).

[144] On p. 721, above, the theory of money value has been stated, and the objections to the cost of production theory given. It is strange to find Jevons arguing (in common with Bagehot and Prof. Price) that the value of money ultimately depends on cost of production, when his examination of that doctrine in general is considered. Compare Contemp. Rev. (May 1881) with Jevons's Theory of Pol. Econ., p. 201 sq.

[145] Modern bimetallists freely admit that two different bimetallic systems—i.e., having different ratios—could not exist, for each would drain the other of one metal.

[146] The principal sources for the above summary, besides works before cited, are the pamphlets of Seyd, Cernuschi, and De Laveleye, on the bimetallism side, as well as the articles of the latter in the Fort. and Contemp. Reviews. The monometallist arguments are given by Prof. Jevons (Contemp., May 1881), Mr R. Giffen (Essays in Finance, pp. 286–310), and Lord Sherbrooke (Nineteenth Century, April 1882). See also the Report of the Paris conference, 1881, and Mr T. H. Farrer, The State in its Relation to Trade, pp. 49–52.

[147] It is assumed that the other factors which influence the value of money (see p. 722, above) remain constant.

[148] Mr J. J. Murphy in Dublin Statistical Journal, vol. viii. p. 282. See also M. Walras, Journal des Économistes, May 1881, “Théorie Mathématique du bimétallisme.”

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Sovereign	=	7·32	grammes	fine gold.
25 francs	=	7·25	,,	,,
U. S. half-eagle	=	7·52	,,	,,
German 20 mark	=	7·16	,,	,,
Japanese 5 yen	=	7·50	,,	,,