Page:Encyclopædia Britannica, Ninth Edition, v. 16.djvu/763

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,^[1] 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.^[2] 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.

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.^[3] 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.^[4] 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.^[5] 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,^[6] 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.^[7] 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.^[8] This method

---

1. 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.
2. E.g., Bagehot and Prof. Jevons. The former dwells on the commercial aspect; the latter naturally places the scientific side first.
3. See Mommsen, Hist. of Rome, ii. p. 382 and iv. p. 553.
4. 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.
5. 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.
6. 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.
7. See Smith, Dict. of Ant., s. v. “Argentum.”
8. See above, p. 731.