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Received from America between 1560 and 1600, $605,000,000, minus $120,000,000....

Received between 1600 and 1640, according to Humboldt's averages, $13,800,000 a year, for 40 years...





From this amount a large deduction should be made for the extra loss by wear, &c., beyond the product of the mines of Europe, and for what had been sent to the East-probably from $250,000,000 to $300,000,000. Let it, however, be reckoned at only $200,000,000, leaving the whole amount to be $807,000,000, and the increase from 1560 to 1640 will then have been from $463,000,000 to $837,000,000+ $463,000,000 $1,300,000,000, or 280 per cent, instead of 300 or 400 per cent, as the depreciation is supposed to have been by Dr. Smith. Besides, a part of the increased supply of the precious metals went no doubt to meet the increased demand for them, in consequence of the admitted increase of population and wealth, and such part would have no effect on depreciation. So large a part of the gold and silver received from America has been absorbed in this way, that though the quantity in Europe and America is believed to have increased fifteen-fold in three centuries and a half, the depreciation is never estimated at over onefourth.

But whatever was the depreciation between 1560 and 1640, inasmuch as it was caused by an increase of the precious metals of 280 per cent, we must suppose that some depreciation would have also been caused by the increase from 1492 to 1540 of 54 per cent that is to say, if 280 per cent produced so much effect, 54 per cent would not have been inoperative. It is true that Dr. Smith supposes, on grounds apparently good, that before the discovery of America the supply of the precious metals was less than the demand, and that they were therefore rising in value; and he rightly considers that such part of the products of the American mines as supplied the deficiency would have no effect in producing depreciation. But no indication that we have of that deficiency, and of the consequent rise of gold and silver, can lead us to estimate it at as much as 54 per cent in 68 years. We must, therefore, infer, that while a part of what was drawn from America met the increasing den.and for the precious metals and arrested their rise in price, a part also contributed to their depreciation.

But again: Dr. Smith, always regarding the price of wheat as the standard of value, considers that there was no depreciation of the precious metals in Europe from 1640 to the time he wrote, or rather to 1784, when he published his last edition. In that period of 144 years, however, gold and silver had very greatly increased, and were, as we have seen, as follows :

From 1640 to 1700, $1,600,000,000, minus $552,000,000,000.....
From 1700 to 1750

From 1750 to 1784, according to Humboldt's averages, $33,000,000
a year, for 34 years.

In all.....

$1,048,000,000 1,125,000,000



Although from this enormous amount we must deduct largely for wear and loss, and for the trade to the East, which had been steadily increasing; yet if we make that deduction as much as one-half, the residue, $1,647,500,000 -being an increase from $1,300,000,000 of more than 126 per cent-would lead us to the opinion that, while the larger part of the $1,647,500,000 might have answered the demands of increasing numbers and wealth, a part

also would have caused depreciation. Taking Baron Humboldt, then, as our guide in what before he wrote was a labyrinth of uncertainty and conjecture, we must believe that Dr. Smith has underrated the depreciation in the first and the last of the three periods on which he speculates, and has overrated it in the second period.

These objections to Dr. Smith's inferences are confirmed by some facts recorded in that valuable repository, Anderson's History of Commerce, to which we may briefly advert.


He cites passages from an act of Parliament passed in 1534, which afford satisfactory evidence that even then gold and silver had fallen in value, though the fact seemed not to have been suspected by the legislature. It states that a good sheep, that used to be sold for two shillings and four pence, or three shillings at most, is now sold for six shillings, or five shillings, or four shillings at least; and a stone of wool, which used to be sold for one shilling and six pence, or even one shilling and eight pence, is now sold for four shillings, or three shillings and four pence at least." The act attributes the rise of price to the inordinately large flocks which many persons then kept, by which they secured to themselves a sort of monopoly, and by way of remedy strangely enacted that no one should keep, except on his own land, more than 2,400 sheep.


In 1670 Sir Josiah Child notices the increase of money in England within the preceding twenty years, which is after the point of time when Smith supposed that depreciation had ceased. He says we give generally now onethird more money with apprentices than we did 20 years before. "The course of trade," he remarks, "from the increase of our money, is strangely altered within these 20 years; most payments from merchants and shopkeepers being now made with ready money," instead of a credit as formerly of 3, 6, 9, and 18 months.

In 1681 Puffendorf states the revenue of the king of France to be 150,000,000 livres, "whereas," he observes, "in the last age it did not amount to above 9,000,000 or 10,000,000; in Henry IV.'s time to 16,000,000, and in the year 1639 to 77,000,000;" "which vast difference," says Anderson, "is in part to be ascribed to the different value of money since those times, and partly also to the great taxes paid by his subjects."

According to D'Avenant, the general rental of England in 1600 was £6,000,000, at 12 years' purchase, worth £72,000,000; but in 1688 the rental was £14,000,000, and worth, at 18 years' purchase, £252,000,000. But the increase of coin was yet greater. According to the same author, the coin in England in 1600 did not exceed £4,000,000, and in the beginning of the next century it was £12,000,000.


Anderson, after referring to a proclamation by Charles I. in 1633, to fix the prices of poultry, butter, game, &c., remarks:- "From the above rates, appears that most of the usual eatables for the middling or lower ranks of people were near one-third cheaper than in our days; and he concludes that the rate of living then, compared with the rate in 1762 was as about 2 to 3. If we suppose, as is generally done, that at the time Anderson wrote the depreciation of silver since the discovery of America had been to onefourth as 12 to 3; and he was right in estimating it between 1633 and 1762 as 3 to 2, or as one-third; then, by deducting one-third of the whole depreciation, it appears that the remainder that which took place before 1633-was as 8 to 3; and this was only three years before Adam Smith supposed it had been 3 or 4 for 1.

In truth, the standard adopted by Dr. Smith, though better than any other, cannot be implicitly relied on. As the demand for wheat, when it constitutes the bread of a community, is more steady than that of almost any other article, its price rises more in scarce years, and falls more in years of plenty. There being less variation in the demand, there must be a greater variation in the price. Thus we find in Dr. Smith's tables that in the sixteenth century the price of wheat ranged from 8s. the quarter to £4 2s. The improvements of husbandry tend to lessen this irregularity; but, in the seventeenth century, the price ranged from 28s. to 85s.; and in the eighteenth century from 26s. to 76s. 6d. An unusual number of good or bad seasons, as occasionally occur, may greatly affect the average, and thus give us false views of the value of the articles with which wheat has been compared. Besides, if the population of a country increases faster than its improvements in husbandry, the money-price of wheat will rise without any depreciation.

While, then, we must infer that the depreciation of the precious metals began sooner and continued much longer than Dr. Smith supposed-probably to the early part of this century-we must see, after making ample allowance for these errors, that the precious metals, taken together, are not likely to undergo any sensible depreciation until their increase has made a near approach to 50 per cent of their present amount, or near one-half of $4,663,000,000; nor to experience the same decline in value as was caused by the discovery of America, whatever that depreciation may be, until the quantity now in existence has also been multiplied fifteen-fold—that is, until it has reached the unsupposable sum of $70,000,000,000!

We have hitherto considered gold and silver together, because they were not distinguished in Humboldt's annual averages, and have been generally blended by those who have speculated on their depreciation, and because, moreover, it is possible that the increase of silver may be somewhat correspondent to that of gold. But since California has as yet produced only gold, and the extraordinary richness and extent of its deposits of this metal are now beyond dispute, let us suppose that the product of silver will remain stationary, or at least that its increase will not be greater than will meet the growing demand for an increase of population and wealth, and inquire into the probable effects of so large an addition to the gold of the world.*

Before the discovery of America the quantity of gold annually drawn from the mines was supposed to be to that of silver as about 60 to 1; and their proportionate values were as 10 or 12 to 1. After several subsequent fluctuations in the relative quantities and values of the two metals, the proportion of gold to silver, in weight, annually drawn from the mines, has been for about a century as 1 to 40 or 41; and such also has been the proportion in Europe, before the mines of the Oural mountains were extensively worked. The proportion of gold has been greatly augmented by those mines, and is likely to experience a far greater increase by the mines of California. The present value of gold compared to that of silver is 15 or 16 to 1. It has

* It is true that the annual product of silver has recently very much increased. Spain is now estimated to produce $10,000,000 a year; the Mexican mines bid fair to yield more than they ever did; and mines of that metal as well as of gold, of extraordinary richness, are known to exist in the Mexican province of Sonora; but it seems not at all probable that, from all the sources together, the present yearly product can be more than double; and this addition, being scarcely 1 per cent on the quantity now existing in Europe and America, will not have, according to our past experience, a perceptible effect on depreciation. The increase of silver, whatever it may be, will indeed lessen or retard the comparative depreciation of gold; but while its rate of increase is so much slower, it cannot prevent that depreciation.

been rising to its present price from about 14 to 1 for the last 50 or 60 years; but the extraordinary productiveness of the Siberian and Californian mines, which, it deserves to be remarked, are on directly opposite sides of the same hemisphere, are about to make its price vary in the opposite direction. It is generally supposed that, of the precious metals in Europe and America, about one-third part in value was gold, which, on the computation we have made, would be $1,554,000,000. For three or four years the Siberian mountains have yielded from $18,000,000 to $20,000,000 a year, which is believed to exceed the yearly product of all the rest of the world. The mines of California, though scarcely known to the world more than two years, appear to have produced from $12,000,000 to $14,000,000 last year; and from present indications the quantity this year will be much more than doubled. There have been already received at the mint of the United States $11,352,000, and large amounts have also been sent to England, China, Valparaiso, and other places. In January last the number of persons at the mines, chiefly seekers for gold, were computed to be 40,000; and the average product of a laborer who is steady, is estimated there at $1,000 a month. Let us suppose that only one-half of the 40,000 are working in the mines; that they work only six months in the year--though many also work in the winter (in the dry diggings); and that their whole product for the year is but $2,000, or one-third the supposed average the whole amount they would then produce would be $40,000,000; making the extraordinary accession of gold from the Russian and Californian mines for the year $60,000,000; which is nearly 4 per cent on the supposed amount of that metal in Europe and America, and 3 per cent, if we raise that amount, as some do, to $1,800,000,000. Now the average annual product of the American mines between 1560 and 1640-the period when Adam Smith supposes that nearly the whole depreciation took place-was less than $13,000,000, (12.9,000,000) and consequently less than 3 per cent, or $454,000,000, the whole supposed amount in Europe in 1560, the commencement of that period.

But the quantity yielded by the California mines will continue to increase, if they make any tolerable approach to the confident representations given of their fertility and extent. They will be wrought by greater numbers, and to greater advantage. They will attract immigrants from every part of the United States, and even from other countries; and time only can show to what degree their products will be multiplied. Should they reach $100,000,000 a year-and they may pass greatly beyond that amountthe annual addition would be 63 per cent on $1,800,000,000, which more than doubles the past contributions of the American mines in their greatest productiveness.

What are to be the effects of this enormous and unprecedented increase of gold?

1. One of the most obvious and necessary results will be to alter the proportion between the value of silver and gold. Whatever may be the depreciation of gold, it will be shown by this alteration, if the value of silver be stationary. We have seen that gold compared with silver rose in the course of three centuries and a half from 10 or 12 to 1 up to 15 or 16 to 1. We have even seen it rise, in little more than half a century, 6 or 7 per cent ; and the alterations which thus took place in the comparative facility of pro

* On the 17th of June, 1850.

curing those metals, and consequently in their relative abundance and price in many years, will now take place in a few years, and produce a similar effect. The annual product is already five or six times as great as it formerly was from the mines of Brazil and Spanish America; and it is likely, in a few years, to be ten, probably twenty, times as great. In some three or four years-perhaps sooner-we may expect gold to fall from 16 for 1 to 15 for 1 of silver; and the same cause continuing, it will probably go on declining to 14, 12, 10, for 1, as it was in some parts of Europe before the discovery of America, and yet lower. The point at which it will stop time only can show.

There are indeed natural checks to this downward course, to which we may briefly advert, though dependent as they are on so many contingencies, we cannot now measure the extent of their operation. The sure effect of the depreciation of gold will be both to increase the demand for it, not only in quantity, but in value, and to discontinue the working the least productive mines; by which double operation on the supply and demand an equilibrium between the two will, sooner or later, be restored. Should gold fall to one-half of its present price--that is, to be only eight times the valne of silver--the real value expended for it in utensils and ornaments would be not merely double, but greatly beyond that proportion, as we have seen in the demand for both metals since the discovery of America; and this extra demand tends to check depreciation. So, on the other hand, many mines that were profitably worked when gold was sixteen times as valuable as silver, will cease to reward the laborer, or to reward him sufficiently, when it has fallen to only eight for it, by which means one source of supply will be cut off.

2. Another consequence will be that in all countries in which gold continues to be a legal tender, its depreciation will injure creditors and benefit debtors, according to the extent of the depreciation and the duration of their contracts. This of course applies to all national debts. Legislatures in countries in which gold is the standard, either solely or jointly with silver, if at once prudent and just, will make the latter metal the exclusive standard. When the question of a single or double standard was agitated in this country some years since, Congress, apparently influenced by the opinion of Mr. Gallatin, decided in favor of both metals. It then appeared to some that that distinguished man, usually so sound and practical in his views, had not, in relying on the example of France, where both metals are legal tenders, sufficiently regarded two important points of difference between that country and this, to wit: the greater proportion of paper currency in this country, and that here coinage is gratuitous, while in France it is subjected to a seignorage; which circumstances defend her from the inconveniences of a double standard to which we are exposed.* The experience of Russia, and indeed our own experience, show that gold will not cease to circulate as coin because it is not a legal tender.

3. The greater cheapness of gold will benefit the world by making that beautiful metal attainable by a larger number of persons, and to a greater extent. In this way it will multiply gold watches, gold ornaments for the person, silver-gilt utensils, and gilding generally; but it will, at the same time, also

* The advantages of a double over a single standard, and of silver over gold for that standard, were fully discussed by the writer of this article in his essay on Money and Banks, published in 1839, to which he begs leave to refer the reader.

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