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ART. VII.--UNIFORM CURRENCY.
Essays on the Progress of the Nations in Productive Industry,
Civilization, Population, and Wealth. By Ezra C. SHAMAN.
New York. '1851. Bartlett's Commercial and Banking Tables, adapted to the Cur
rencies of all Commercial Nations. By R. M. BARTLETT. Cincinnati. 1853.
The discovery of gold in California and Australia is producing changes and disturbances in every department of business. Its influence has already been decided and real, even in the brief period that has elapsed since it began to operate. In five or six years its effects could not be very large, but they have been sensible and measurable, indicating how great they will become when they have been allowed time for accumulation. The progress is slow and noiseless, but it is wide-spread and all-penetrating. As the annual supplies of the precious metals are poured into the channels of trade, they swell the magnitude of the current, change the prices of merchandize, interfere with the contracts between man and man, and disturb all the operations of commerce. By altering the relative proportions of gold and silver, they encourage governments to call in their old coins, and stamp then with new values, or to change one standard for another, thus wronging their credit ors, and violating the contracts they have made with the people. As the advance in some products will take place sooner than in others, prices will be changed irregularly. Inequality and injustice will be introduced into almost every branch of trade, and where long contracts are made, as in railroad bonds or government stocks, the depreciation of the metallic currency cannot fail to work a large and serious injury.
Many questions of importance are suggested by these changes : the adoption of a single standard of value, instead of the double one of gold and silver; uniformity in the coinage of the different countries; the extension of the decimal system of France and the United States to the several countries of Europe; these and other questions are important, because they relate to the subject of money, in which such deep interest is felt by all classes of society, and to the justice or injustice of governments, whose highest duty is to preserve honesty and good faith among the peoplo.
It is doubted by some persons whether the large supplies of gold from the mines of Russia, California, and Australia, bave yet produced any appreciable effect upon its value. But the changes already effected in the currency of the United States and of France, and the knowledge we possess of the amount of coin in Europe and America, and of the annual supplies received from the mines, forbid us to indulge in any doubt on this subject.
The history of our gold currency in the United States is, of itself, decisive of this question. Twenty-five years ago our gold eagle would not circulate with our silver dollar, although their comparative weight is nearly the same as now, when both metals are daily exchanged for each other. Before 1834 we had no gold coin in our currency: Every eagle that was issued from the mint was immediately bought up and exported to foreign markets. The importer of French sisks and wines could discharge more of his indebtedness by one hundred cagles than by a thousand silver dollars. When these were carried to the mint of Paris, and melted down into bullion, and restamped as French coin, the gold made a larger number of francs than the silver. The same was trne at London, where the two metals had no legal relation to each other. The half-eagle was heavier than the English guinea, but five silver dollars would not sell for twenty-one shillings, sterling money. The New York merchant, therefore, who desired to pay his debt in England with coin, when the exchanges between New York and Liverpool were unfavourable, preferred to send eagles rather than dollars. In fact, the price of the ten dollar gold piece was quoted from $10.40 to $10.60 ; that is, one hundred eagles were worth 1,010 to 1,060 dollars of silver.
At present, both our metallic coins circulate together. Ten eagles are equivalent to one hundred silver dollars. Neither is quoted at a discount. When an export of the precious metals takes place, both are shipped together. The difference of value is 80 slight as to be inappreciable to the brokers who are sending coin abroad to meet their bills of exchange, or pay their foreign indebtedness. The quotations of bullion in the Liverpool market
, during the year 1855, placed gold of our standard at 75 shillings per ounce, and silver of the same fineness, from 5 shillings to 5 shillings 13 pence. The average of these quotations gives å ratio of 14.81 between the two precious metals. As our eagle contains 258 grains, and ten silver dollars contain 3,840 grains of the same fineness, their ratio is 14.89. The market value of bullion, at Liverpool, being thus nearly the same as the mint valuation, there is little if any choice which metal should be selected for exportation. At the average quotations just given, it would be best to remit silver, since gold is valued a little higher at the mint than at Liverpool. But the difference is too small to be of any import
Under the old coinage law of 1792, which remained in force until 1834, the eagle contained 270 grains 22 carats fine, and the dollar 416 grains, of a fineness of 8,924 ten-thousandths. This gave a relative value of 15; that is, every thousand dollars of silver contained fifteen times as many grains of the pure metal, as a thousand dollars of gold.
It thus appears that when our gold dollar was lighter than it now is, compared with silver, containing of pure metal only 61 per
cent. of the weight of the silver dollar, it was all exported as soon as it came from the mint, being sold in the market at 4 or 5 or 6 per cent. premium; and that now, when it contains a larger proportion of gold, 6.71 per cent., it circulates freely with the silver, and is not preferred at all for exportation.
This history is decisive of the fall of gold or the rise of silver, because it shows that the price of gold, measured in silver, has declined in the last thirty years. As, however, the supply of silver has been nearly stationary, and the demand for it nearly the same, while the supply of gold has largely increased, it is evident that it is the gold which has depreciated, and not the silver that has risen in value.
The history of our currency from 1834 to 1853 is a confirmation of the conclusion just mentioned. Under the influence of Gen. Jackson and Col. Benton, our Congress passed a law, in 1834, lessening the weight of the gold eagle from 270 to 258 grains. In 1837, its fineness was altered from 22 carats to 900-thousandths. The fineness of the silver dollar was also changed to 900-thousandths, but its weight was so altered that the amount of pure silver in the coin remained the same as before. The changes in the gold coin were, however, both in the same direction. It was made lighter and less pure. The alloy was increased from 1 to io, and the weight was lessened twelve grains.
The effect of this alteration in the mint value of gold, was to introduce it freely into our circulation. It did not come in rapidly, so as to exclude the silver, but it came in abundantly. The two metals circulated together, and were readily exchanged for each other. The country banks generally held their specie in silver, and often sold gold at a premium, but the city banks held both the precious metals in their vaults, and generally paid out both at their counters without any decided preference. Everything moved on without disturbance, until the discovery of the California mines in 1818. The treasures of Australia were opened in 1851, and the production of the two countries soon told upon our currency. The silver coin was rapidly bought up for export. The country merchants carried the dollars and half dollars received at their stores to New York, and sold them at a premium. The banks, finding their silver above par, sold it for gold, gaining three or four per cent. by the exchange. Their vaults were replenished with eagles instead of dollars, to redeem their bills and pay their depositors. The brokers sent our silver abroad until all the channels of circulation were drained, and small change became so scarce, that it caused great inconvenience in our daily transactions of business. In 1853
Congress interfered, and reduced the weight of the dollar from 4123 grains to 384, to prevent its exportation. The mint came into the market, and by paying 3 or 4 or 5 per cent. premium for the silver in circulation, and by stamping a less quantity
than before with the old names of half dollar and dime, it has supplied is again with a silver currency. This interference of Congress was an acknowledgement of the depreciation of gold. The object anal intention of the act of 1853 was to prevent the exportation of the silver coin, and it effected this object by delvasing the dollar so as to put it on a par with the gold that had already been depreciated by its abundance.
These two periools in our history tell, therefore, the same story. In 1930 and 1856, the comparative weight of the gold and silver coins of the same name was nearly the same; but in 1830 the gold was withdrawn from circulation on account of its superior value, while in 1856 it circulates freely. In 1810 and in 1852, the two were of exactly the same comparative weight; but the silver was withdrawn in 18.32, while both circulated together in 1840. In the first case, the mint valuation in 1830 was below the market price, but its depreciation in 1851; brought the two together. the second case, the value at the mint and in the market in 1840, were the same; but the depreciation of the gold ir 1852 brought it below the market price of silver, and drove the silver out of circulation.
The movements of the currency in other countries, accord with this conclusion. In England gold is the only legal tender, except for small sums under torty shillings. Silver being estiinated higher by the mint than it is in the bullion market, the depreciation in voll has not yet made itself apparent in the withdrawal of the silver. The inferior currency, when both circulate together, will always drive out the superior. But the English silver of 18:40, although inferior, could not displace the gold because of its illegality in large transactions, and the limited amount in circulation. By the act of Parliament passed in 1819, the silver crown of 5 shillings was made to contain +03.6 grains of pure silver, and as the pound contains 11:3 grains of pure gold, the ratio of the two metals at the mint is only 11.27. “And as gold, although it has now depreciated considerably, is yet nearly 15 times higher than silver, its legal value in the current coip is so low that it is more profitable to export it than silver. No disturbance has therefore taken place in the English currency, on account of the depreciation of gold in the markets of the world. The silver coin is never exported, because it is rated too high at the English mint. It cannot push out the gold from circulation because it is not a legal tender for large amounts, and thus all is quiet and steady. In France, however, where the two metals have both been legal currencies, the equilibrium has been disturbed precisely as in the United States. The inint price of gold is 15 times that of silver. Before 1850 this was lower than the market value, and by consequence silver was the great inedium of circulation, and gold was at a premium. The price of gold was but
little higher in the market than at the mint, but still the excess was appreciable. The agio, or per centage above par, was seldom more than 1 or 11 per cent. Twelve-thousandths was a common quotation at Paris, and, as gold was more convenient than silver for many of the uses of currency, this premiun was readily given. Silver was generally used in trade and in the small transactions of business; the gold by travellers and in the larger operations of commerce where bank notes inight not be employed. The currency was therefore mainly of silver ; on the principle well known and universally acknowledged, that, if two mediums be both current, the inferior will always exclude the superior. The exclusion was not complete, because gold was wanted for some purposes in which it was preferable to silver. The estimate of the circulating coin in France, by M. Leon Fancher, a banker and financier of high authority, gave 3,000 millions of silver francs, and 350 millions of gold, making a proportion of more than eight to one.
But since 1850, all this is changed. The agio on gold has entirely disappeared, and silver is now quoted at a premium. The bankers are busy buying up the five franc pieces, which have so long been the principal currency of France, and sending them abroad to meet their foreign indebtedness. Gold is flowing into the country to supply its place. The Paris mint is busy coining napoleons and not francs. Slowly, but surely, the silver is drawn from the provincial channels of circulation and its place supplied with the new treasures of California and Australia. During the year 1855, the exports of silver were 318 millions of francs against an import of 121, showing a loss of 197 millions in a single year. At the same time the imports of gold were 381 millions against an export of 163, showing a gain of 218 millions, which slightly exceeds the loss of silver. During the last three years, the imports of gold over silver were 923 millions, and the exports of silver over gold were over 479 millions.
For a long period of time the currency of France has been stable, when suddenly it is disturbed throughout the whole extent of the empire. The jewellers and manufacturers of plate have been melting down the silver for the arts and the luxuries of the people, the friction of constant handling is abrading and lightening the circulating coin, and to meet these demands no new supply is introduced. On the contrary, the bankers are busy shipping it abroad and importing gold in its stead. The new gold has to supply the place not only of the silver exported but of all that is consumed in the arts. Before 1850 the inint at Paris coined about 15 millions of gold francs every year; now it sends forth about 250 millions. In the last five or six years, probably one-fourth of the three thousand millions of French silver coin has been changed by the substitution of gold. Such a decided movement of specie furnishes an unanswerable argument for the depreciation of gold