Senator Jones John Percival JONES
Senator from Nevada.
In the Senate, on April 24, 1876.


Money has been fitly described as an instrument designed to equitably measure commodities and services with the view to effect their exchange either at present or in the future, and throughout the world.  This is its specific function, and it has no other.  The money of the world at the present time, the substance in which prices are quoted, contracts made, and debts lawfully paid consists of gold and silver coins.  In most countries silver coins alone ;  in many countries both gold and silver coins at a relation of weight and value fixed by law as nearly as possible to the market or commercial relation ;  in a few countries gold coins alone.  In some countries some form of paper notes, either representing or promising to pay one or both of the precious metals are employed at intervals as convenient substitutes or temporary expedients for money.  In some countries silver tokens or partly representative coins ;  and in all countries tokens of copper, bronze, or other inferior metals are employed for small payments.  The preference for silver and gold for money is the result of thirty centuries of every conceivable sort of experiment to obviate the use of the precious metals ;  and for this reason it is deemed hardly necessary in this place to advert more particularly to the numerous and well-marked characteristics which have procured for the precious metals this high preferment.  Briefly, these are :

1.  Eligibility of voluntary interchange into and with other forms of capital.  This is the first and most necessary characteristic of money, the one without which it must prove useless.  If its interchangeability instead of being voluntary is merely sustained by law, the money cannot equitably measure future exchanges, for human law is mutable and subject to vicissitude, alteration, and overthrow.  If its interchangeability is costly, as it would be if the money were made of iron or cotton, the money would be of inferior eligibility to money made of the precious metals, which are easily and cheaply convertible from coins into plate and other forms of capital, and from these forms into coins.

This quality of voluntary and economical interchangeability furnishes constant security to the, holder of gold and silver money, a security which no act of legal tender can enhance.  Money possessing this and the other characteristics hereafter named needs no law to make it current throughout the world.  It is these characteristics which alone can give it currency ;  not the force of law, which is only the force of one nation at one time and as modified by the defects of administration and the friction of evasion.  Since the arts of smelting and refining iron and the other more common and now more useful metals, and of making china and glass, were discovered and perfected, the forms of capital into which the precious metals can be economically converted are perhaps less numerous or important than formerly, many of the materials or instruments of reproduction or ornamentation which are now made of iron, glass, &c., having been formerly made of the precious metals ;  for example, saddlery-hardware, buttons, buckles, thimbles, bells, lamps, goblets, plates, ewers, basins, &c.  Nevertheless the use of the precious metals for these and other and newer purposes, whence they are readily converted into coin, is still very important, as e.g. watchmaking, plate and plated ware, jewelry, regalia, pens, dentistry, &c.  They are also largely employed in photography, sign-painting, bookbinding, printing, medals, &c.

The security thus afforded to the owner of gold and silver money is not merely confined to an assurance that he may obtain for it at the present time and anywhere a full equivalent for the commodities or services it costs ;  it extends that assurance, or the nearest possible approximation to it, over all time.  The cheap convertibility of such money into other and numerous forms of usefulness is a check against the heaping up of such money ;  the cheap convertibility of plate, and many of the other forms into which the precious metals are usually cast, is a check against the depletion of such money.  The relation between the supply and demand for the precious metals is by no means a constant one as to either or both metals ;  this relation varies, but the variation is less, and is spread over longer periods of time than is the case with any other commodity.  Did the precious metals possess no other advantage over other commodities which might be suggested as useful for money, this one of minimum variability alone would be sufficient to render them pre-eminently fitted for that purpose.

2.  Adequateness and steadiness of supply to the world.  These characteristics are shared with the precious metals by many other commodities or instruments capable, or supposed to be capable, of measuring present and future values.  On the other hand, there are others which do not share it, as the principal articles of food, clothing, and shelter, whose inadequacy and unsteadiness are proved by the limits which their supply puts upon population ;  it having been demonstrated that population would double in at least every twenty five years, did the supply of the means of subsistence permit.  Even the precious metals themselves have sometimes failed of adequate or steady supply, and never, without occasioning the direst calamities ;  but the dander is less with them than with any other commodities known to man, both because of their profuse and diffused distribution in the earth and of their lasting qualities when produced.

3.  Diffusion, of supply and consumption throughout the world and ease of recovery.  The precious metals are found in all countries and used in all countries for purposes other than money.  The diffusion of their supply and consumption is greater than that of any other commodities.  In some countries there is no iron, in others no cotton, in others no wool, in others no grain can be grown or cattle raised, and even in many countries where iron is found there is no fuel for smelting it.  The competition in smelting causes it to be essentially a monopoly in countries possessing the cheapest fuel.  Similar considerations affect all commodities, but gold and silver the least.  These metals are often found in a pure state, and were obtained in the early ages of mankind with the aid of a flint-chisel and sometimes even with the fangs of a boar.  (Jacob, 17.)  It is within the power of the humblest and most solitary adventurer to extract, refine, and coin these metals, processes which can be pursued with the other metals only by the help of co-operation and capital.  The supply of the money of the world must be a monopoly to no country and to no class of men ;  otherwise the fortunes of all the rest might stand in imminent jeopardy from those who monopolized it.

4.  Exemption from decay.  The precious metals will neither corrode, oxydize, nor evaporate.  They resist not only the atmosphere but the strongest acids.  There is still extant a legible specimen of gold coins issued in Ionia about nine centuries before Christ.  (App. Cyc.,12, p. 443.)  There was a legible stamped gold coin in the Earl of Pembroke’s collection which was issued by Darius of Persia, about four hundred and eighty years before Christ.  (Jacob, 17.)  The gold coins of Alexander the Great, about 330 B.C., which have never been excelled in purity of metal or boldness and beauty of design, are still so abundant that collectors regard them as less rare than any American gold piece of the last century.  (App. Cyc., 12, p. 444.)  There are legible silver coins still circulating in England which were issued by the governments of ancient Rome.  (MacLeod.)

In times of war and civil commotion, when the solemn earth becomes the womb of man’s rehabilitation, as it had once, been that of his existence, and is always that of his support, the duality of exemption from decay of the precious metals is not the least valuable one, nor are these the only times when such a characteristic proves valuable.  Accidents from fire, water, and many other causes are continually happening to destroy man’s possession ;  but the precious metals survive them all.

5.  The two precious metals are naturally complementary to each other.  Hitherto the precious metals have been mentioned together, and the advantages ascribed to them attributed to both.  This is quite correct if both be taken together, but not entirely so if either metal is taken singly.  Some countries which produce gold do not produce silver; as Great Britain and its colonies.  Others produce more silver than gold, as the United States, Mexico, and the South American states.  In others, again, the gold and silver occur in the same matrix, as in the Comstock lode.  Some countries consume little or no gold ;  others little, or no silver.  Hence the distribution of supply and demand varies ;  so does its steadiness.  During certain periods of time the world’s current supply, as compared with its current consumption, of silver, outruns that of gold, as it did from the beginning to nearly the middle of this century.  During other periods gold outruns silver, as from about the year 1837 to 1870.  Thus, taken separately, the precious metals do not exhibit those advantages which they possess together.  Moreover, in many countries, the use of both metals for money is rendered necessary by reason of their very different value as compared with bulk or weight.  These considerations will be alluded to again ;  they are only mentioned in this place in order to justify the employment of the dual term precious metals, and to account for their forming together the money of the world.

6.  The superior ductility and malleability of the precious metals is one of the most important of their characteristics, for it renders the cost of manufacturing coins so small, as practically to entail no loss upon the owners in case it became desirable to reduce them to bars.  This is always the case when legal enactments place a false or mistaken value (as respects commodities or services already sold, or contracted to be sold in future) upon the coins.  The comparative cheapness and ease of transforming the coins into bars, in which form the metal is certain to command its true market value, affords a continual check upon legislation and defeats its every attempt to misvalue coins.  Metals possessing inferior ductility are lacking in this advantage, the cost of making them into coins and the loss by reducing them to bars proving in obstacle to their quick and ready transmutation.  Substances other than metals do not possess this characteristic at all.  The cost of manufacturing coins is called brassage, and is about onehalf of 1 per cent.  In some countries another and wholly indefensible charge, in addition to this, is imposed.  It is called seigniorage, and consists of brassage and a profit.  This profit is a royal prerogative, and, as its name indicates, is a relic of the feudal ages of medieval Europe.

There are other well-marled characteristics which render the precious metals superior to all other instruments or services susceptible of being employed to measure values.  The homogeneity of these substances renders their genuineness and purity easy to test and difficult to counterfeit or impair ;  enables all bodies of them, however large or small, easy to divide or unite, and without adding to, or diminishing, the labor or service which they represent.  They are easier to transport and conceal, less liable to abrasion, and, being inodorous, are less offensive to handle than other substances.

It is difficult to estimate what relation the cost of this instrument bears to that of the commodities and services it measures, because the commerce of the world is carried on largely by means of paper instruments, some of which are indeed based upon the metals and merely represent them, while others are based upon private or corporative credit, and still others on no credit at all but mere force of law.  There is another difficulty in making such a calculation ;  that which arises from the well-known fact that a vast number of the largest transactions consist of stock jobbing, or mere bets clothed in the garb of business operations.  Making a reasonable allowance for these facts, it has been calculated that specie measures ten thousand times its own value every year, and that taking gold and silver together in the actual proportions in which they exist in the currencies of the world, specie will last, as against abrasion, loss by accident, &c., about a thousand years.1  Upon this basis ;  the actual cost of this instrument is an infinitessimal charge upon each transaction, probably as little as that caused by the wear and tear of any other measure, as a tape-line, a pint-pot, a bushel-basket, &c.

On the other hand, money made of the precious metals has several defects.  It is somewhat costly to produce, it is somewhat expensive to transport.  It is always a misfortune to society, as well as to the individual, when specie is lost at sea, or buried in hoards the secret of which does not transpire.  It is subject to loss from abrasion, it fluctuates in value, and the two metals fluctuate unevenly.

Some of these defects have been remedied by the invention of expedients.  Transportation and loss are measurably obviated by bills of exchange and places and certificates of deposit ;  abrasion is lessened by the use of alloy in coins ;  the uneven fluctuation of the two metals is remedied by a double standard, which, by fixing a mean relation covering a long period of time, past and prospective, enables both metals at that relation to be employed all the time.

There remain two other defects :  the first cost of the precious metals and their fluctuating value as a duality even after such fluctuation has been lessened by using them together.  These defects are extremely small and are of a nature which renders them unavoidable by any safe or practicable means.

Let us begin with the question of cost.  Present and future values cannot be equitably or nearly equitably measured by anything that is not capable of being voluntarily and readily interchanged with other forms of capital ;  in a word, by anything that of itself does not contain or represent an amount of labor or service easy to determine, and of a kind appreciable to and exchangeable with all mankind.

Value, which is not to be confused with either worth, utility, or desirability, is the quantitative relation between two services exchanged.  (Bastiat, Harmonies Political Economy, pages 108 and 109.)  This relation can only arise in the social state ;  while worth, utility, and desirability are qualities appreciable to the isolated man as well as to society.  Value is not a quality inherent in a service ;  as worth, utility, and desirability are ;  it is simply a relation between two services exchanged.

A measure of value must therefore be a service of some sort, and the more universally such service is appreciated the better measure will it afford.  An abstraction, as an imaginary money of account or an irredeemable credit, cannot measure the quantitative relation between two services, and hence cannot be a measure of value.

There is an easy method of testing this assertion.  Repeal the promise of payment which now causes Treasury notes to usurp the place of specie, and observe what kind of money will continue current and what not.  It will then be seen that the precious metals will circulate as before without the least abatement, indeed with a slight enhancement of their purchasing power.  This, indeed, is the case in China, a country which tried fiat currency six hundred years ago, but in which, in spite of the fact that there are now neither legal-tender nor coinage laws, gold and silver both circulate at even a higher value than in countries where such laws are in full force and effect.

If the impracticability of employing irredeemable credit for the purpose of money be admitted, and it is still claimed that some form of redeemable credit, as national, or bank, or individual notes, may with advantage be used as money in order to save the cost of the precious metals, the claim is admitted.  There is and can be no objection to the use of such credit so long as its use, like that of the Scotch back-notes, is entirely voluntary.  The moment that legislation or any arbitrary act interferes to place it above this level, its use is fraught with danger.  The advantage to be gained, which is merely that of saving the cost of the precious metals in a currency of safe and universally acceptable material, is wholly inadequate to the risk run.  And on this point it is never to be lost sight of that so long as we continue to be, as we are, one of the principal producers of the precious metals, we lower to a small extent the value and selling price of all the metal we may have to export, by every expedient, the effect of which is to throw it out of employment in our own country.

In saying this, it is not intended to deny the advantage of employing credit as a convenient and economical medium of exchange ;  but such credit must rest upon so firm and broad a foundation of the precious metals as not to need the aid of legislation to prop it up.  In other words, its use must rest upon the same foundation as the use of the precious metals themselves—common and voluntary consent.

As to the other unavoidable defect of money made of the precious metals, its fluctuating value, it can only be replied that this fluctuation is exceedingly slow.  That is all the defense of it there is, and there can be no better one, for all measures of value must fluctuate, though none of them less than the precious metals.  There are men who have imagined an absolute and fixed measure of value, as there have been others who imagined a fixed earth or a fixed sun, an absolute or unconditioned quality or quantity, &c.  To such men it need only be replied that there is nothing fixed or absolute ;  nothing, at least, that the senses of man can perceive or his mind imagine.  All is in motion, all is conditioned.  The universe and all it contains is incessantly in action, and even the adjectives of language which are employed to qualify or characterize the objects brought to our conception are themselves relative and conditioned.  A fixed measure of value is an inconceivability ;  we can but prefer for such a measure the commodities or services which fluctuate in value the least, and these are the precious metals.

This brief exposition of the functions and characteristics of money may be still more briefly summarized as follows :

1.  Money is an instrument voluntarily adopted to equitably measure values, present and future.

2.  Value is the relation between two commodities or services exchanged.

3.  Hence money is the measure of the relation between commodities and services exchanged.

4.  This measure is formed most conveniently and equitably of both the precious metals taken together.

5.  Legislation cannot make or unmake money.  It may temporarily exalt or depress the value of one metal as against the other, but only temporarily ;  it may disturb, but it cannot permanently alter or destroy.  Gold and silver are money in virtue of their own superiority, and they owe none of their rank to law.

The extent to which legislation can be beneficially exercised with regard to money is to quantitatively define the names of coins, to ward against confusion, counterfeiting, &c., by manufacturing them in a public mint, and to save the transportation and abrasion of them by receiving them on deposit and issuing certificates therefor, (Herbert Spencer, in New York Social Science Preview, page 137.)

To insure the fourth provision, that both the precious metals shall form the ingredients of money, it is essential that no legal obstacle shall be placed in the way of the voluntary use of either ;  that one, equally with the other, shall be legal tender to an unlimited amount, at a quantitative relation fixed from time to time in view of the past and probable future market ratio of these metals.  To these must be added copper tokens for petty sums, and upon the whole will naturally arise a paper credit peculiar to each country ;  a credit whose volume will regulate itself in view of the basis beneath it, in view of its command of the precious metals, in view of the wants of industry and of the conditions of security which exist within the social or political organization to which it belongs.

These are the essential principles of money which seem to be deducible from the united testimony of history, experience, and reflection.  When we come to apply these principles to any existing monetary system not in accordance with them, as is the case with that of this country, we are in the position of a physician who, believing himself to be acquainted with the laws of health, may nevertheless be puzzled how to prescribe for a given case of disease.  Happily I have no such task before me.  My single object is to remove an impediment to recovery, an impediment the nature and importance of which will, I believe, be recognized as promptly by those who may differ with me as to what are the true principles of money as by those who may agree with me in regard to those principles.  The removal of this impediment, while it will afford that ease which one school of currency demands, nevertheless affords it entirely within the scope of action which the other school prescribes.  It simply proposes the re-establishment of the double standard, unwisely abolished by the act of 1373, a piece of legislation whose evil effects can only be estimated by referring to that history of money from which I have ventured for a few moments to digress.

These views are not merely those of the ablest men who have devoted their attention to the subject ;  they are gathered from the history of money from the time when this instrument was first known to mankind to the present.  They are enforced not only by precept, but by example ;  they are written in the rise and fall of states and of social systems, in revolutions, in wars, in the annals of freedom and in those of feudalism and slavery.  They are imprinted in sweat, and tears, and blood ;  and to disregard them is to disregard the lessons of thirty centuries of time.

The use of gold and silver for money is not a recent one, neither were these costly metals adopted for the purpose until after every other expedient practicable at the time had been tried. 

It will be observed that the commodities selected to serve the purpose of money during those early ages when the countries of the world were not connected by  commerce were always those of adequate, steady, and diffused supply, and therefore of most common acceptation in each country.  Thus, in forestal ages, the skins of wild animals were usually employed ;  in pastoral ages, cattle ;2  in early agricultural ages, grain ;  in early mining ages, base metal ;  in early manufacturing ages, glass, musket-balls, nails, strips of cotton, &c.

The significance of this deduction will not fail to be appreciated.  After commerce had connected many of the countries, substances common to all countries, namely, the precious metals, were found to be necessary for the purpose of money, and later still, balances of trade were settled by means of bills of exchange representing those metals ;  and it is worthy of remark that gold and silver are the only substances which have ever been universally used for money.

Development from the early agricultural to the mining, manufacturing, and commercial ages indicates not only a development of occupation, but also a development of political organization.  The hunter, the shepherd, the early agriculturist, needed neither social organization nor government.  He could prosecute his occupations alone ;  and in these stages of development mankind lived in isolated families or small tribes of freemen.  The progress of agriculture and of mining, which must have followed agricultur,3 of manufacturing and of commerce, rendered fixed residences and division of labor necessary, and the protection of the one and regulation of the other demanded the offices of government.  The hunter and shepherd could defend himself and his possessions or convey them out of the reach of enemies ;  the agriculturist, miner, manufacturer, and merchant needed the protection of a military force and the security of well-executed laws.

Following the local or feudal powers which sprang into existence to meet these demands came also those abuses which always, sooner or later, accompany the exercise of power.

The warrior classes reduced the working classes to a condition of predial servitude, and those who at first were mere chieftains of choice became arbitrary and despotic lords paramount.  Not least among the powers which they abused were those relating to the coinage and denomination of the precious metals.

Up to this period in the history of countries it is to be remarked that, whatever substance came to be employed for money in each country, whether, as at first, the peculiar and most common product of each respective country, or, as afterward, those substances more or less common to all countries and most convenient everywhere, namely, the precious metals ;  such substance was employed, as it is now in China, without command or force of law.  The importance of this fact cannot be overestimated, for its recognition must ever form the basis of all sound legislation upon this subject.  The precious metals do indeed, no doubt, derive some small element of their purchasing power from the fact that now all governments provide that, when coined in a certain way, they shall be a legal tender for the payment of debt ;  but this element of value is very small, and probably does not exceed the seigniorage or charge for coinage.  Whatever it may be, it is so small that there can be no risk in asserting that, were all the legal-tender laws of the world repealed to-day and forever, neither gold nor silver would lose an appreciable atom of their power to purchase present commodities, secure future contracts, or pay past debts.  Indeed, with the example of China before us, an example which in this respect at least is not without utility, it is believed to be more than probable that their purchasing power would increase ;  for setting aside the effect of such repeal upon the continuance of unrepresentative paper notes, it would dissipate the very considerable fears that now attach themselves to every contract wherein the words dollar, pound, or franc are employed to express a given weight of metal.

It has been stated that with the growth of governmental power came abuses in coinage and the denomination of coins.  These abuses, like all others, were of gradual growth.  The power and authority of feudal lords and monarchs were first employed in this respect beneficially and government was exercised within its proper scope.  Local, separated, and diverse systems of weights and measures and of the weights and measures of gold and silver pieces gave way to national, united, and uniform systems.  Isolated and anomalous measures of values, adopted in small localities for greater temporary convenience—as pieces of iron in Africa and Sparta and of glass in some parts of Arabia—were prohibited by legal-tender laws ;  for, so long as they were suffered to exist, they promoted provincial isolation and defeated national homogeneity and political unity.  The same laws also provided in what substances debts were to be paid in cases unadjudicable either by express stipulation or common usage.

In these early ages, while men yet retained the power to resist misgovernment, the names attached to pieces of the precious metals were always those of the weights contained in such pieces, as the Jewish shekel, of nearly one-half of an ounce troy ;  the Attic drachma, of little more than one-fourth of an ounce troy, &c.

To prevent counterfeiting4 and economize time, and thus facilitate exchanges, these pieces of metal were ordered to be coined, and governments monopolized, as governments do still, the function of coining.  To the coins thus manufactured were given the names of their weights, and thus far the laws regulating the coinage of the precious metals were honestly conceived and probably as honestly executed.

With the lapse of time, however, coupled with use of coins and the increasing power of authority, abuses crept into the coinage which have lasted to this day.  The names of coins, which at first were literal weights, came, for convenience’ sake, to be used as symbols ;  and men no longer bargained for so much gold or silver as would weigh a shekel or a drachma, but for so many shekels or drachmas “current with the merchant.”  In this state of affairs the temptation on the part of rulers and the classes who environ power to commit abuses became too strong for resistance.

Owing to the frequency of the practice of degrading and debasing the coins in all countries and ages, the quantitative meaning attached to the names of coins has been so often changed, that to interpret these names or the sums of money mentioned in them, in ancient or medieval historical works, into modern weights is almost an unsafe proceeding, even in the hands of professional metrologists.5

In order to deceptively reduce the pay of the army, what more easy method offered itself to a ruler than that of diminishing by decree and recoinage the weight of pure metal in the “drachma ?”  In order, at other times, to exact greater fees or subsidies, what more easy expedient suggested itself to a feudal lord than to increase the weight of the “drachma?”6  In cases where the ruler was not unscrupulous enough to tamper with the coin for his own profit, there were never wanting powerful classes of men, both ecclesiastical and secular, to urge him to similar practices for their advantage.  Though instances occur in history where the standard was restored after the coins bad been debased, the general course of affairs was in the opposite direction—a fact due to the inability of the government to redeem the debased coin.7

I do not propose at this time to enter any further into the history of these events ;  my object thus far having been merely to show that money, in the early ages, whatever it was made of, came into use voluntarily ;  was always composed of substances of supposed adequate and steady supply ;  owed none of its utility to legal-tender laws, which were originally enacted for other and more practicable purposes ;  and up to the period of the Dark Ages in Europe had consisted for at least three thousand years of gold and silver coins only.

We have now to consider three other points in this connection :  the world’s supply and consumption of the precious metals, the effects of an inadequate or monopolized supply, and the necessity of adhering to both of the precious metals for the basis of a national currency, whether the same shall consist wholly of the precious metals or partly of convertible paper credits or representative money.


The repeated destructions of historical works previous to the invention of paper, and the subsequent one of printing, have left us but little exact information on this subject.  We only know generally that previous to the Macedonian empire both of the precious metals were comparatively common in farther Asia8 and scarce in Europe.  This much we gather from the sizes of the pieces that were coined and used for circulating money in the respective regions, the prices of commodities and services, the enumeration of royal and princely treasures, and the employment of the precious metals in the arts.  The relation of gold to silver in ancient and farther Asia has not been determined.

At a later period, about B.C. 500, we hear of it in Persia, at 1 to 13.  After this period and on this point the annals of the Orient were closed for many centuries.  At about the same period the relation of gold to silver in Europe was about 1 to 12.5.  From this relation gold rose to 1 to 13½ and even 15, until the time of the expeditions of Alexander the Great.  These, through the influence of the vast treasures in gold of which they despoiled the eastern countries, brought gold down again to 1 to 10, at which rate it stood in the time of the comic poet Menander, about B.C. 300.  That it was the fluctuations in the supply of gold, and not those of silver, which occasioned the most of these changes in relation, we are assured from the sporadic influxes of gold alluded to, and from Xenophon’s encomium on silver, written about B.C. 383 ;  while Bœckh himself, in his work on The Public Economy of the Athenians, from which these details are gleaned, says generally that “ the value of gold is more fluctuating than that of silver,” and that “ the latter, therefore, may be considered the scale for determining the price of gold as well as of other commodities.” ? (Bœckh, 33.)

After the Macedonian conquests the stock of the precious metals, in Europe increased very rapidly until at about the beginning of our era, when, according to the estimate of Mr. William Jacob, it amounted throughout the Roman empire to a quantity equal in value to about $1,740,000,000 of the present time.  The relative proportions of gold and silver are not calculated.  The relation of value between the metals in the Roman empire was, about B.C. 207, 1 to 13.7 ;  and about B.C. 50, or sixty-four years before the period of Jacob’s estimate, 1 to 11.9.

From about the beginning of the Christian era to the present time the history of the precious metals has been traced very closely and with great labor and acumen by three great historians :  William Jacob, whose work covers the entire period from the year 14 to the year 1830 ;  Baron Von Humboldt, whose work covers the period from the discovery of America until the early part of the present century ;  and Michel Chevalier, whose work brings the history up to within twenty years of the present time.

The salient points of this long though extremely interesting history are :  First, the separation of the Asian and European histories of money from the downfall of the Roman military power until the eastern trade was re-opened in part by the medieval Italians and Arabians and wholly by the Portuguese navigators ;  and, second, the failure of the European mines previous to the downfall of Rome and the gradual decline of the stock of precious metals thenceforward until the ninth century ;  its stationary condition until the discovery of America ;  its rapid increase thereafter until about the beginning of the present century ;  its subsequent temporary decline from the year 1809 to 1830 ;  its slow increase thereafter ;  its rapid increase from the time when the effects of the opening of the Russian, American, and Australian mines were felt until within late years ;  and its stationary condition at the present time.

Omitting from further mention all that is not necessary for the purposes of this review, let its briefly follow Mr. Jacob’s history of the precious metals from the beginning of the Christian era.

From the enormous wealth of individuals, the high prices of commodities and services, the vast revenues of the state, and other circumstances, Mr. Jacob conjectured that in the time of Augustus Cæsar the quantity of money in existence in ancient Rome, which then substantially comprised the whole civilized world, was £358,000,000, or about $1,740,000,000.  The correctness of this sum is deemed to be rendered the more probable from the fact that Vespasian, when afterward he succeeded to the imperial dignity, asserted that a sum equivalent to £322,916,600 was necessary to support the commonwealth—meaning, not the government, for neither the annual revenue nor the accumulation of the treasury bore any proximate relation to this vast sum, but the nation at large.  It is believed that he mentioned a sum which coincided, as far as is known, with the whole mass of coined money then believed to exist, and upon this supposition, and the inferences to which it leads, historical writers have hitherto been content to rest.

A few instances of the abundance of money at that period may not be out of place.  Crassus possessed in lands bis millies, (£1,615,000,) besides many slaves and furniture valued at much more.  Seneca possessed ter millies, (£2,420,000;) Pallas an equal sum ;  Lentulus, quater Millies, (£3,230,000;) Augustus Cæsar obtained from private legacies guarter decies millies, (£32,300,000,) and Tiberius left at his death vigesies ac septies millies, (£21,800,000,) which Caligula lavished away in a single year.  Cæsar when he went to Spain was in debt £2,018,000, and Antony squandered of the public money more than £5,600,000 sterling.

These facts were compiled by Jacob chiefly from Adams’s Roman Antiquities, while the sterling sums were computed by Arbuthnot.  I prefer to retain them as originally computed.

Augustus frequently gave congiaria, ranging from 4s. 10d. to £2 2s. 1d. per head, to the whole population, men, women, and children ;  and at his death left all the common men £2 8s. 5d. each.  In this prodigious liberality he was even exceeded by several other emperors, but the instances demand too much space.  Milo gave each voter a bribe of £32 8s. 10d.  Claudius promised each soldier for his vote £113, and Julian £210 16s.  Otho promised to the retainers of Galba a reward of £403 12s. each, and paid them £80 14s. in advance, &c.

In the time of Augustus the gold and silver mines which had kept good Rome’s supply of treasure gave out and ceased to be worked.  Moreover, there was no more spoil of the precious metals to be obtained in Asia or Northern Europe.

This was due to the exhaustion of those conquered countries, to the unsettled condition of the empire, to wars, the incursions of barbarians, the insufficiency of mechanical resources, the loss of life and hardships of the slaves employed in the mines, which induced them to desert their occupation whenever civil commotion afforded them a convenient opportunity, and to other causes set forth by our author.9

From that time, therefore, the stock of money decreased

The gradually deepening misery of the populations of Europe during the mediaeval ages, the decay of the civil law, the demoralization of society, the disintegration of government and authority, the institution (probably re-institution) of feudalism, the poverty, filth, pestilences, abominable crimes, ignorance, and wretchedness that characterized this period of history and gave to it its well-deserved name of the Dark Ages—these facts are too well known to need repeating.  That such a condition of affairs was promoted solely by means of a gradual and constant diminution of the currency is not contended ;  though it would not be difficult to argue the result from the predicate.  But that the diminution of the currency largely contributed to bring it about and maintain it may be affirmed with entire confidence ;  and the careful thinker will find it difficult to discern a cause that will more satisfactorily account for that extraordinary breaking up of governments and arrest of social development and of the growth of population which occurred in Europe from about the beginning of the present era to the time of the discovery of America.

From the age of Augustus Caesar to that of Charlemagne and the Saxon heptarchy is like going from the mouth to the bottom of the ancient mines ;  above, all lightness, happiness, and life ;  below, all darkness, misery, and death.

These were the ages of alchemists and false coiners.  They both sought to obtain gold from base metals ;  the first by transmutation, the others by arrant roguery.  The base pieces they produced were known by the names of pollards, crocards, schuldings, brabants, eagles, leonines, sleepings, &c.  Those who were pitched upon as the fabricators of these pieces were visited with fearful punishment.  Racking, pressing to death, burning, drowning, and tramping were common enough.  Whole families were exported, whole communities robbed and banished, under the pretense of punishing coiners.

Such was the scarcity of the precious metals that living money was used instead.  This consisted of men and women, who were thus passed from hand to hand as a legal tender.  (Henry’s History of Great Britain.)  The poverty and degradation of the people were inconceivable.  The price of a hawk was the same as that of a man, and robbing the nest of one was as great a crime as depriving of life the other.  (Jacob on Precious Metals, p. 170.)  Famine and pestilence, superstition and tyranny, terror and outrage, reigned supreme.  These were the Dark Ages ;  and so profound were the depths into which they cast humanity that nearly a thousand years later Arthur Young thus quoted from the cahiers of the “tiers état” of that feudal system to which the Middle Ages had given birth :

Fixed and heavy rents ;  vexations processes to secure them ;  appreciated unjustly to augment them ;  rents solidaires and reveulbables ;  rents cheantes, and levantes ;  fumages.  Fines at every change of the property, in the direct as well as collateral line ;  feudal redemption (retraite) fines on sale to the eighth and even the sixth penny, (part ;)  redemptions (rachats) injurious in their origin, and still more so in their extension ;  banalié of the mill, of the oven, and of the cider-press ;  corvées by custom ;  corvées by usage of the fief ;  corvées established by unjust decrees ;  corvées arbitrary, and even fantastical ;  servitudes ;  prestations, extravagant and burdensome ;  collections by assessments incollectible ;  aveux, minus, impunissement ;  litigations, ruinous and without end ;  the rod of seigmeural finance, forever shaken over our heads ;  vexation, ruin, outrage, violence, and distinctive servitude, under which the peasants, almost on a level with Polish slaves, can never but be miserable, vile, and oppressed.

Even the liberty to bruise between two stones a measure of barley was sold to these miserable creatures, while the names of the tortures to which they were subjected are eloquent in their very jargon and variety.

In order to preserve the game, in the pursuit of which the nobles trampled down the wretched crops and rode over the very bodies of the poor, there were numerous edicts, which prohibited weeding and hoeing, lest the young partridges should be disturbed ;  steeping seed, lest it should injure the game ;  manuring with night-soil, lest the flavor of the partridges should be injured by feeding on the corn produced, &c.

Recollect that this was nearly a thousand years later than the period from which we have digressed, when, instead of tending downward, as it did until the middle of the twelfth century, society, under the combined influences of an increasing stock of coin, an increasing diffusion of wealth, and increasing industrial activity, was rapidly progressing toward liberty and affluence.  Consider, then, what must have been the condition of affairs in the year 806 ;  a period so unspeakably wretched that we have not even a contemporary account of its wretchedness.

Gold was nowhere to be had, and the few gold pieces in circulation were of an ancient Byzantine coinage, (Jacob, 169;) while silver was so scarce that, together with gold, it was at a subsequent period forbidden by an act of Henry V to be used in the arts.  (Ibid., 167.)

These instances could be multiplied almost indefinitely, but it is not necessary.  It is sufficient if they attest the poverty, wretchedness, and tyranny that attend a decline in the quantity of money or of the only bases upon which any system of money, representative or partly representative, can stand—the precious metals.

I am aware that the reply to this implication may be that it makes no difference how much the stock of coin is, if its only function is to measure value which is merely a relation.  This position I adroit to be well taken if the stock of money remains forever stationary, or rather stationary per capita of population.  In such case a grain of silver will measure quite as effectually the relation between a day’s work and its equivalent in commodities its a pound of silver will, with it stock of coin fifty-seven hundred and sixty times as great, and if money was already not concentrated in a few hands and there were no debts.  The only limitation to the perfect equality of these two conditions of affairs would be that in the one case coins might have to be made too small for convenient handling, or in the other too large.

But in point of fact there is not and never can be a continuously stationary amount of money in existence or even a stationary amount per capita.  Money, as related to population, has a natural tendency to increase in quantity, because increase of money quickens industry and distributes wealth.  Opposed to this tendency are wars, the failure of mines, the abrasion and loss of the precious metals, the insufficiency of mechanical resources, and the influence of wealthy classes.  We have seen to what an appalling strait the first three of these causes brought, or assisted to bring, the European world—a strait in which it remained for nine hundred years, until it was freed by the discovery of the mines of Potosi.  We shall yet see how the fourth cause operated at about the beginning of this century, and how the fifth cause is operating now.

These opposing tendencies, operating with varying force, alternately diminish and increase the stock of precious metals, and place the subject quite beyond the category of fixed things.  There is nothing fixed about it, and legislation must deal with it with all its eyes and ears opened.  Left to itself and the industry and self-seeking of mankind, money would increase as all other commodities increase, and society would rapidly undergo that equalization of wealth which the vagaries of fortune would stamp with equity ;  but reduced to an unwilling wardship by monarchs and legislatures, dragged hither and thither at the nod of plutocrats, legal-tendered, single-standarded, royaltied, taxed, and bedeviled in every imaginable manner, it has been restrained and dwarfed in its increase, and made to become the instrument of half the misrule and misery which the world has undergone.

Though there was no increase in the European world’s stock of coin from the beginning of the ninth century until the discovery of America, nevertheless there was no diminution.  This arrest in the shrinkage of money is due to the invention, or, more probably, the reinvention of bills of exchange, which served to quicken money and enable a limited stock to perform the work of a large one.

The bill of exchange was unknown to the ancient Greeks and Romans.  They were even without the use of paper upon which to inscribe these instruments, obligations of debt even so late as the time of the Roman empire having been inscribed upon tablets of wax ;  the limited supply of parchment being reserved for the higher purposes of literature.  Paper was made in China so early as the second century before Christ, at about which time papyrus was invented in Egypt and parchment in Europe.

It is difficult to conceive of a great commercial nation—and there certainly was such a one at the time mentioned—having the use of paper and ignorant of the device known as bills of exchange.  Be this as it may, an instrument known as the hoondee, and corresponding precisely with the modern bill of exchange, was known in India at a very early date ;  and the Hebrews, always a trading race, who were among the first to trade with India, “ by Tadmor in the desert,” very likely learned its use from that country.

These historical conjectures are, however, of little practical value in this connection.  The material point is that no sooner was paper invented or introduced into Europe, and possibly a little before,10 than bills of exchange came into use, and that these events correspond with the time of lowest diminution in the stock of coin in Europe.

It has been suggested by some writers that the invention or introduction into Europe of the bill of exchange is due less to the ingenuity of the Jews or the art of making paper than to that improvement in social organizations and extension of political authority which distinguished the Italian republics of the medieval ages.  To this suggestion it need only be repeated that bills of exchange were unknown to the Greek and Roman civilizations, and that long after they came into use their use was confined to the Jews, who, whatever may have been their confidence in medieval society and medieval justice and political security, took great care never to trust to them, and traded chiefly with each other.

Following the introduction of bills of exchange came the establishment of those great fairs which for ages performed the functions of so many clearing houses for the inland commerce of Europe ;  and next the establishment of banks in Italy, Spain, and Holland.  The first fair dates from the year 883 ;  the first bank, from which however no circulating notes were issued, was that of Venice, in 1167.  These dates are oases in a desert of wretchedness and gloom.

But by far the most important of the several methods of relief which society so eagerly sought in this long era of money dearth was that adopted in Milan A.D. 1240, this being the year in which, according to Arthur Young, (Travels, 2, 173,) paper circulating notes were first used in Europe.  From the fact that at about the same time, or within a few years afterward, paper notes of the same character were employed in China, (Marco Polo,) there is some ground for the belief that the dearth of money in Europe was felt also in that distant and almost unconnected part of the world.  In both these instances the notes used were issued by government and made a legal tender for the payment of debts.

Severe bullionists may scoff at this, at the debasement of coins, and at the many other financial dishonesties and enormities, as they are pleased to call them, of the Dark Ages ;  but let me tell them, who am also a bullionist in so far that I recognize the superior economy, stability, and justice of a money system consisting of, or at least based representatively, wholly or in part, upon, the precious metals, that society could not have been preserved without these measures.  Mankind had paid dearly enough in nine long centuries of tyranny, anarchy, and slavery for the boon of a common medium of exchange.  To have paid anymore for it would have been to pay with life itself for that which at the best could only economize its labor and alleviate its burdens.

These fiscal measures not only eked out the scanty and stationary stock of coin which existed at that period ;  they economized its use, saved it from abrasion and loss, added to the rapidity of its circulation, made it perform double work, and thus bridged over the five hundred years of further dearth of money which was to continue until the discovery of America.

It is hardly worth while to specifically trace the wonderful and beneficial effects of the relief thus obtained or the era of industrial activity, commercial enterprise, and political enfranchisement to which it contributed, and which it is quite safe to say could not have occurred without it.  The financial history of the past three hundred years is sufficiently familiar to every one, and all that is necessary in this place is to insert Mr. Jacob’s hypothetical table of the increasing stock of the precious metals following the Dark Ages :

Year A.D. Stock of coin.
1500....... 34,000,000
1546....... 49,400,000

The ancient mode of obtaining the precious metals has been described.  It consisted of washing auriferous sands and picking with rude instruments such scanty deposits of pure metal as could be found.  With the invention of bronze tools and of smelting-furnaces a great impetus was afforded to mining, and this was increased by the invention of iron tools.  It was in this condition that the art stood at the Roman era, the use of mercury in quickening and perfecting the process of recovering the precious metals not having been acquired until after the discovery of America.  The sixteenth and seventeenth century therefore gave to the European world three great sources of increase to its stock of the precious metals :  1.  The stock despoiled of the West India islanders, the Mexicans, and the Peruvians.  2.  The new and great mines of Central America and Peru.  3.  The use of mercury in the amalgamation of ores.

Notwithstanding all these new and additional sources of supply, so utter had been the exhaustion of the European world’s stock of gold and silver, so eager was the demand for these metals, so rapidly were they absorbed in the arts, in the Asiatic trade,11 and by abrasion and loss, that the world’s supply again came to a stand-still shortly after the beginning of the present century. 

The social phenomena of this period are too widespread and too directly traceable to monetary disturbances to admit of much doubt as to their connection with the decline in the world’s stock of coin.  To say nothing of the French revolution and the wars and great political events to which it gave rise—all of which, if they did not spring from, were certainly precipitated by, the unendurable poverty and suffering of the French peasantry, which culminated in riots for bread and the distribution of wealth—this period is characterized by disorders all over Europe.  The Newcastle and Scotch banks in Great Britain suspended in 1793, the Bank of St. Petersburg suspended in 1796, the Bank of England in 1797, and again in 1822.12  It was during this period that arose the State and provincial banking systems of this country and Great Britain, through which the actual and threatened dearth of money was alleviated by means of circulating notes representing but a small basis of specie.  These desperate and unsafe expedients always evince a scarcity of the precious metal.  It was during this period that these systems failed over and over again, not, however, without answering for precious intervals of time the important purpose of their establishment.  The State banks of the United States failed in 1816, 1819, and 1827, and signally in 1837 ;  the provincial banks of England in 1826 and 1847.  Specie payments were suspended in France in 1790, and an enormous issue of assignats and mandats followed.  As for the American suspension of 1837, it was felt all over the commercial world, which it shook to its foundations.

What had happened ?  Some people say wars ;  others, overspeculation.  Perhaps they are right.  Causation is a difficult science.  But certainly the well-attested decrease in the stock of the precious metals which occurred at about the beginning of the century may have had, and in my opinion did have, much to do with these events.  In fact, as Mr. Patterson has shown in his Economy of Capital, they were in every case preceded by an export and local scarcity of specie.

Be this as it may, two new sources of relief were hastening to the assistance of society :  1.  The adaptation of steam to the processes of mining ;  2.  The discovery or rather the rediscovery of the Ural mines, and the subsequent and more important opening of California and Australia.  The new mines were discovered first.  The adaptation of steam to their development came much later—indeed, belongs to the past few years.

With this vast and refreshing increment of specie, which more than filled the void left by the failure of the superficially worked mines of Mexico and South America at the close of the last century, a new era of industrial activity, progress, and development awaited society ;  an era which, if entered upon without reserve, might have crowded ten years into one, advanced us a century beyond the present time, and conferred upon each individual of to-day the practical benefits of longevity.

But it was not entered upon without reserve.  The plutocrats of Europe took alarm at the rapid increase of specie.  They could manage to dispose of the surface-washings of gold in California and Australia, but they feared the application of steam machinery to the quartz veins of the Sierra Nevadas, and they put their long heads together and conspired to cheat labor and enterprise of their reward, and mankind of the main element of its circulating media.  This was effected by the demonetization of silver.

To succinctly trace the narrative of this ingenious financial device carries us back to the point from which I diverged in order to sketch the history of the supply and consumption of the precious metals in Europe.

The course of the narrative will now be in respect of the relative value of gold and silver.


This history naturally divides itself into four parts :  The ancient, Medieval, modern, and recent.  The first extending from the most remote times to the beginning of the Christian era, or failure of the ancient mines ;  the second extending from the last-named period, when the effects of the discovery of Potosi were first felt ;  the third from that period to the year 1865, or the date of the arbitrary partial demonetization of silver by five nations ;  the fourth period to the present time.  The accounts which have come down to us of the ancient period are inexact and partial.  The relation is either stated in round figures by some careless author or calculated from laws the precise meaning and application of which are not beyond dispute.  Each of these accounts relates to a single country, sometimes to a single city, and centuries occur between the date of one account and another.

None but the gravest events—events which affected many nations and were felt through long periods of time—sufficed to disturb this relation.  The two most noteworthy of these were the vast spoil of Alexander, which he gathered in the Orient and brought into Europe, and the spoil of Caesar in Gaul, which he sent to Rome by way of Aquileia.  These events temporarily depressed gold from the ratio of 12 to that of 10, in the first instance, and from 12 to 8 in the second ;  but the depression was both local and temporary.  Omitting these temporary aberrations, the general range of the ratio in ancient times, so far as the evidence now available furnishes ground for opinion, seems to have been about from 12 to 13.33.

The accounts relating to the medieval period partake more or less of the characteristics peculiar to the ancient.  Lesser intervals of time intervene between the dates, lesser distances between the countries, and lesser differences between the rates in one country compared with another.  Nevertheless, the condition of medieval society was too unconnected, and the arbitrary and conflicting laws governing the production, consumption, and legal attributes of the precious metals in various countries are too little understood at the present day, if, indeed, they ever were fully understood, to render these quotations of practical value. 

The extreme range of quotations which are considered even measuredly reliable is from 11.44 to 13.51, the latter a single instance at the close of the period and after the opening of the American mines.  Most of the quotations come within the range of from 11.70 to 12.40, which serves to show the remarkable constancy of the relation between the metals.

From the time of the conquest of England, A.D. 1066, until the reign of Edward III, there was no gold coined in England,13 and probably none in circulation, and this was doubtless substantially the case also in Continental Europe.  Taking this inference in connection with the commonness and large size of gold coins in ancient times, we are justified in ascribing the decrement of coin during the medieval ages rather to the falling off in the supplies of gold than to that of silver, and the fluctuation of the ratio, such as it was, to the aberrations of the gold supply.

We have thus an additional corroboration of the superior stability of silver to gold ;  a corroboration still further strengthened by the fact that silver alone was, in fact, if not always legally, the standard in England, (Harris, i, 61; ii, 85; ii, 106-7,) and throughout Europe up to about the beginning of the present century.

For the modern period we have more reliable data.  This results from the fact that during this period countries became united by commerce ;  and quotations in one hold good with slight variation for all the others.  As at about the commencement of this period all those events occurred which have had any material influence in altering between the metals the relation which previously existed, to wit, the opening of the East India and China trade, the opening of the American mines, and the use of quicksilver in the amalgamation of ores, it is wholly useless in this or any other practical connection to consult any other data concerning the relation of the metals with the view of determining such relation for the future.


1 According to Jacob, the stock of coin in Europe at the beginning of the present era received little or no addition until the discovery of America.  This was a period of fifteen hundred years, during which the stock dwindled down to little more than 10 per cent of its original dimensions.

2 Shekel, a lamb ;  pecus, (whence pecunia, pecuniary, &c.,) cattle ;  feoh, (whence fee, Saxon, German, &c.,) cattle.

3 Mining doubtless originated in that up-turning of the soil which occurs in the pursuit of agriculture.  Indeed, history affords an instance of the kind.  “ In Pæonia the husbandman, while plowing, found pieces of gold.”  Strabo, VII, (Chrestom,) page 331, as quoted in Bœckh, page 10.

4 False gold coins from Samos were successfully passed in Sparta so early as B.C. 540.  (Bœckh. 233.)

5 The “dollar” of a few grains weight was formerly the “ thalor” of more than an ounce, and anciently the “talent” of many pounds.

6 See instance of Lord King’s exaction of his tenants’ rents in gold during the bank suspension.  (MacLeod’s Dictionary, Polit. Econ., 1, 98.)

7 The gold scriptulum was debased in Rome so early as B.C. 207. (Bœckh, 44.)

8 There is an instance in Strabo’s sixteenth book of an eastern country, (possibly India,) bordering on that of the Sabaeis, (Arabia?) where gold to silver was only 1 for 2, and to bronze only 1 for 3.  With the instance before us of modern Japan, where gold (parity not stated) was quoted in 1853 at 1 to 4 of silver, it may seem bold to challenge this assertion ;  but other instances in regard to China assure us that oriental quotations are unreliable, from the fact that in the early ages gold and silver ingots, impure and largely hardened with base substances, circulated as money, and the quoted relation referred to the value of these impure ingots, and not to the value of the pare metals.  Consult a pamphlet by “ a disciple of Franklin,” in American philosophical Society library, Philadelphia, No. 6332, page 9, where it is stated that Chinese gold from Sumatra, Celebes, &c., was but 16 to 18 carats line, and that the relation in China in about the year 1810 was 1 in gold, as thus found, to 12 in (pure) silver.  At least we can feel fully assured that the relations mentioned by Strabo were local and only referred to the particular locality indicated.  Consult Bœckh, page 43.  Another anomalous and still more extraordinary though possibly not unauthentic instance of the kind is related in Jacob’s History of the Precious Metals, page 57.

9 An ancient law of the Roman senate actually forbade the Italian mines to be worked at all.  (Pliny, book III, chapter 6, quoted in Jacob, 51.)

10 Some authors (e.g. Putnam’s Cyclopedia) date the bill of exchange in Europe as far back as the year 808 ;  others (e.g. Anderson is his Hist. of Corn.) date it, with greater probability, in A.D. 1160.

11 Humboldt’s statement on this subject would lead to the inference that Asia had taken two-thirds of the entire American supply.  Forbonnais supposes that between 1492 and 1724 Asia took one-half of the American supply, and Gerboux’s estimate even exceeds this.  Mr. Jacob, who reviewed them all, settled down to the opinion that Asia took two-fifths of the American supply between 1700 and 1810.  (Jacob, page 307.)

12 An abortive attempt to resume specie payments was made in 1817.  (MacLeod’s Dict Polit. Econ., I, 99.)

13 Essay on coins by Martin Foulkes London about 1750 quoted in Harris on Coins, ii, 2.