On the Probable Fall in the Value of Gold - Michel Chevalier - ebook

On the Probable Fall in the Value of Gold ebook

Michel Chevalier



The accomplished author of this treatise has been known as one of the most earnest writers in favour of free trade, and as the champion of every cause which tends to promote the progress of an elevated civilisation, and the best interests of humanity. He has qualified himself for this task by a long and laborious study of the currency question, having given to the world some essays on money and the precious metals, which are recognised as standard works, and invest his name with an authority on such subjects, hardly second to that of Humboldt himself. In the pages of this book will be found almost every fact and argument necessary for the formation of an opinion on one of the most important problems of our day, and they are presented with all the care and conscientiousness for which the writer is so distinguished.

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On the Probable Fall in the Value of Gold







On the Probable Fall in the Value of Gold, M. Chevalier

Jazzybee Verlag Jürgen Beck

86450 Altenmünster, Loschberg 9



ISBN: 9783849651534



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Translator: Richard Cobden (1804 – 1865)














































The substance of the work, of which the following pages are a translation, appeared originally in the Revue des deux Mondes, in the autumn of 1857, and was afterwards reprinted in a pamphlet form. The author has since rewritten and enlarged it to double the original size. The present translation will appear simultaneously with the French edition.

The question of the probable fall in the value of gold, and the consequent rise in that of all other commodities, wherever gold is the standard of value, has not hitherto attracted so much attention in this country as it has in France, or as its great importance would seem to demand. In introducing the Bank Act of 1844, Sir Robert Peel said:—” There is no contract, public or private, no engagement, national or individual, which is unaffected by it. The enterprises of commerce, the profits of trade, the arrangements made in all the domestic relations of society, the wages of labour, pecuniary transactions of the highest amount and the lowest, the payment of the national debt, the provision for the national expenditure, the command which the coin of the smallest denomination has over the necessaries of life, are all affected by the decision to which we may come on that great question which I am about to submit to the consideration of the committee,” The main object which the author of the present Bank Act had in view, was to prevent those fluctuations in the amount of the currency which were alleged to have arisen from the arbitrary action of the Bank of England, and which rarely exceeded two or three millions in the course of a long series of years. With much greater force, then, must his expressions apply to the present state of things, when an annual increase in the production of gold of nearly thirty millions has suddenly taken place, more than the half of which finds its way to our shores.

It is estimated by M. Chevalier that the present yield of gold amounts, in ten years, to about as much as the entire production during the 356 years which intervened between the date of the discovery of America by Columbus, and the year 1848, when the mines of California were discovered. It is probable that the present production of gold amounts to five times that of the year 1847. Had such an increase occurred in the supply of any article, such as corn, sugar, or cotton, of which the whole annual produce is consumed within a couple of years, it would have probably caused a depreciation to the extent of nine-tenths of its value. But owing to the large stock of gold in existence, amounting to probably more than twenty or thirty times even its present yearly production, it takes some time to affect its volume to any appreciable extent. Unless, however, the cardinal rule of commerce, that quantity governs price, which applies infallibly to all other commodities, loses its force when gold is concerned, this sudden and great increase must be followed by a reduction of value.

That so little effect should have hitherto been produced upon the value of this precious metal, especially as measured by its relation to silver, is accounted for by a reference to what is now passing in France, where the gradual substitution of a gold for a silver currency has, during the last eight years, absorbed the greater portion of the gold imported into Europe from the new mines. On this subject, M. Chevalier has given us some very striking statistical facts. Ref. 001 France has in this way, to use his expression, been the “parachute” which has retarded the fall in gold. It will be seen that his main object has been to induce the French government to put an end to this, by adopting in practice, what he maintains has always been the theory of the French law, a silver standard. Should his arguments be successful (and it is difficult to see how the French government can resist his facts and reasonings—certainly it can never answer them), or should the process of absorption cease, from the exhaustion of the stock of silver held in France, then we may anticipate a more rapid fall in the value of gold.

It will be seen that H. Chevalier does not recommend the adoption of any legislative measures to meet the change in this country. He considers that gold having been avowedly the legal tender and the sole standard of value in England, and all existing contracts having been entered into with that knowledge, the parties to them must, so far as the legislature is concerned, abide the consequences of any natural disturbance of the value of this metal.

But although government may have no right to interfere with the past, it ought not to be so summarily excluded from all interference with the future, at least to an extent necessary to facilitate voluntary contracts involving payments otherwise than in gold. An able writer on the Ref. 002 has recommended the establishment of life assurance companies on the basis of a silver standard. Should a great and rapid depreciation of gold take place, some such precaution as this, in all contracts extending over a long period of time, may be necessary. It would then be a convenience to have the relative values of gold and silver periodically published under the authority of a law, by the Bank of England for instance, computed from the exchanges of the day with those countries, such as Holland and Belgium, where a silver standard exists.

Another mode of evading the consequences of a depreciation of the currency might be found in a resort to something like the primitive practice of paying in kind. Where long engagements, such as farm leases, are entered into, the parties might stipulate for a rent to be regulated by the prices of produce, upon the principle of the tithe commutation rent charge. In this, as in all other bargains and investments, it will only remain for individuals to take such precautions as are in their power to guard themselves from the consequences of the impending change. Should the views of M. Chevalier be realised, there will be much anxious deliberation as to the best mode of escaping from the effects of a universal derangement in the value of labour and property. Wages and salaries of all kinds would eventually rise in proportion to the enhanced price of commodities, but the transition would, I fear, be accompanied with much inconvenience and suffering. The rise would not be steady and continuous, but would be effected by leaps, and after struggles which would tend to derange and convulse the relations of capital and labour. With respect to those who have property to invest, they would, as a rule, avoid those investments which yield incomes of a fixed amount of money, such as dividends from the funds, interest from bonds and mortgages, as well as annuities, rent charges, ground rents, guaranteed stock, &c.; whilst property of an expansive nature, which rises in proportion to the depreciation of the currency, such as land, houses, shares, &c., would be preferred.

The merchant and trader who balance their transactions in two, or three, or at the utmost six months, would be but slightly affected, in so far as the value of their capital is concerned, by the depreciation of the standard; but they would experience the evil in another form. The tendency to a general rise of prices would lead to an expansion of credit, and an increase of speculation, which would be followed by panics and convulsions of greater violence and more frequent recurrence than have been hitherto experienced. Instead of a crisis visiting the commercial world once in each decade, its return might be expected every five years. The manufacturer would probably find it more difficult to procure the raw material of his industry at remunerating prices, for speculation will always be directed towards raw products in preference to manufactured articles. This was the case previous to the late panic; and even at the present moment, whilst we are still in the eddy of a crisis, the prices of the raw materials of our staple manufactures maintain a high value, as compared with any corresponding previous period. The very nature of the trade created by the new gold mines is calculated to increase this evil: for it cannot be denied that it is a sterile commerce which yields neither raw material nor capital. I speak of that portion of the new gold, probably more than seven-eighths of the whole, which passes through the Mint and enters into the currency; the effect of which is, instead of increasing the supply of food, raw material, or capital, simply to render more bulky and abundant an instrument of exchange, the chief merit of which before consisted in its scarcity and portability.

It may be well to caution the reader against falling into any misapprehension as to the author's views respecting the amount of depreciation to be expected. Although throughout his argument he assumes that gold will fall to the half of its present value, yet he more than once explains that he does so only for clearness of illustration, and not because he predicts, any certain amount of depreciation. At the same time he draws the conclusion, from the facts of the case, that there must be a fall in the value of gold in consequence of its greatly increased quantity, In this view he will be supported by all our great authorities on the currency, to whatever party they may belong.

There have been two schools in this country, on the monetary question, the one having at its head Lord Overstone, who has attributed great fluctuations in the prices of commodities to the action of the Bank on the currency; and the other, represented by the late Mr. Tooke, who maintained that, so long as the notes of the Bank were convertible into gold on demand, they could not become depreciated or cause a rise of prices. But the latter authority would have been as ready as the former to admit that any large addition to the quantity of metallic money must lead to a diminution in its value. It seems, however, that the disciple, Ref. 003 and, in a certain sense, the literary heir of Mr. Tooke, is pushing his doctrines beyond the limits prescribed by his eminent master. At a public meeting last summer, this gentleman is reported to have brought forward, as a proof that no rise had been caused by the new gold in the price of commodities in the years preceding 1857, the fact that, at the time when he was speaking, a great fall had taken place in the value of all articles of commerce. The circumstance, however, that, at the moment when he spoke, the country was still under the influence of the great commercial crisis which had occurred a few months before, rendered any such comparison of prices quite valueless. It is in the nature of things that any extraordinary rise of prices should be followed by such a rebound as we have lately witnessed.

The only useful comparison that could be drawn is by comparing the range of prices, a few months after the panic of 1857, with the prices of a corresponding period after the panics of 1825, 1836, and 1847. From the cursory reference which I have been able to make to the valuable tables in Mr. Tooke's work on prices, I am inclined to the opinion that the comparison would be found to confirm the views of M. Chevalier.

The accomplished author of the following treatise is already known among us as one of the most earnest of living writers in favour of free trade, and as the champion of every cause which tends to promote the progress of an elevated civilisation, and the best interests of humanity. He has qualified himself for the present task by a long and laborious study of the currency question, having given to the world some essays on money and the precious metals, which are recognised as standard works, and invest his name with an authority on such subjects, hardly second to that of Humboldt himself. In the following pages will be found almost every fact and argument necessary for the formation of an opinion on one of the most important problems of our day, and they are presented with all the care and conscientiousness for which the writer is so distinguished.

I wish I could believe, that either in the original (where a brilliant style is added to its other merits) or in the translation, this work will be read as widely as, from its great importance, it deserves to be. The very topic forbids such a hope. It is, nevertheless, a subject on which the early possession of knowledge, and the exercise of forethought, will confer great advantages over ignorance and indifference, and afford the only safeguard against probable loss. It has been with the view to awaken public attention to a question which may involve the most important social consequences, and to offer greater facilities for obtaining information upon it, that I have undertaken the most humble of literary tasks, that of the translator, in presenting to the English reader the ablest and most complete treatise on the new gold discoveries.

R. C.

January, 1859.


SECTION I.: preliminary observations.




the question stated


If we go back in imagination three centuries, and picture to ourselves the most striking characteristic which the aspect of Europe then presented, we shall behold a universal excitement caused by the discovery of a new continent, which had been, sixty years previously, brought to light by a Genoese navigator, whose genius and persistent daring had been stimulated by a lucky miscalculation of the geographical position of China. In this new world, to which Columbus had traced the path—not merely for Castille and Leon, as is alleged in the inscription placed on his tomb by the tardy gratitude of posterity, but for the whole civilized world—mines of gold and afterwards of silver (especially the latter), of unheard of richness, presented themselves to the cupidity of the conquerors. The most enterprising spirits of the Iberian peninsula hastened across the ocean to possess themselves of treasures, the splendour of which had been exaggerated in their excited imaginations; and they were followed by a multitude of daring adventurers from all parts of Europe, who precipitated themselves on the coast of America, all in quest of mines of gold and silver.

It was in Peru and Mexico, the provinces containing the richest mines and the greatest supply of labour, that the precious metals were first obtained by an organised system of production. From 1492, the year of the discovery of the New World, to 1500, it is doubtful whether it yielded on an average a prey of more than 1,500,000 francs (£60,000) a year. From 1500 to 1545, if we add to the treasure produced from the mines, the amount of plunder found in the capital of the Montezumas, Ténochtitlan (now the city of Mexico), as well as in the temples and palaces of the kingdom of the Incas, the gold and silver drawn from America did not exceed an average of sixteen million francs (£640,000) a year. From 1545, the scene changes. In one of the gloomiest deserts on the face of the globe, in the midst of the rugged and inhospitable mountain scenery of Upper Peru, chance revealed to a poor Indian, who was guarding a flock of llamas, a mine of silver of incomparable richness. A crowd of miners was instantly attracted by the report of the rich deposits of ore spread over the sides of this mountain of Potocchi—a name which for euphony the European nations have since changed to Potosi. The exportation of the precious metals from America to Europe now rose, rapidly, to an amount which equalled, weight for weight, sixty millions of francs (£2,400,000) of our day, and it afterwards rose even to upwards of eighty millions. At that time such a mass of gold and silver represented a far greater amount of riches than at present. Under the influence of so extraordinary a supply, the value of these precious metals declined in Europe, in comparison with every other production of human industry, just as would be the case with iron or lead, if mines were discovered which yielded those metals in superabundance, as compared with their present consumption, and at a much less cost of labour than previously, just in fact as occurs in the case of manufactures of every kind, whenever, by improved processes, or from natural causes of a novel kind, they can be produced in unusual quantities, and at a great reduction of cost.

This fall in the value of gold and silver, in comparison with all other productions, revealed itself by the increased quantity of coined metal which it was necessary to give in exchange for the generality of other articles. and it was thus that the working of the mines of America had necessarily for effect a general rise of prices, in other words, it made all other commodities dearer. Ref. 004

The fall in the value of the precious metals, or that which means the same thing, the general rise of prices, does not appear to have been very great, out of Spain, till after the middle of the 16th century. Shortly after the commencement of the 17th century, the effects of the productiveness of the new mines and of the diminished cost of working them were realised in all parts of Europe. For the silver, which had been extracted in greater proportion than the gold, and on more favourable terms, the fall in value had been in the proportion of 1 to 3. In transactions where previously one pound of silver, or a coin containing a given quantity of this metal, had sufficed, henceforth three were required, Ref. 005 At Paris a quantity of wheat, which we now call a hectolitre, cost, before the voyage of Columbus, from 12 to 15 grammes weight of silver, which is the metal contained in from 2 francs 67 centimes to 3fr. 33c. (2s. 6d. to 2s. 9d.) This quantity was henceforth worth at least from 45 to 50 grammes, or the silver contained in from 10 to 11 francs and upwards (of our money, 8s. 4d. to 9s. 2d.); it was even much higher, for some time, at Paris, after the first quarter of the 17th century. The change in gold, although obvious, was not so great as in silver.

After having been arrested for awhile in this downward course, and even after having witnessed for a time a tendency to an upward movement, the fall in the value of the precious metals, and the corresponding rise in prices, resumed their course, under the influence of the same causes, until towards the end of the 18th century, without however manifesting their influence so widely or intensely as had been witnessed after the first development of the great American mines. We find, as the result, that during the first half of the 19th century, the value of silver fell to about the sixth of what it was before the discovery of America, when compared with the price of corn, which people have agreed, somewhat arbitrarily it must be confessed, to take for a fixed measure of value. The hectolitre has sold on an average, during this half century, at Paris, for about 20 francs (16s. 8d.), or 90 grammes of silver.

In our day we seem destined, like our fathers of three centuries ago, and from the same causes, to witness the spectacle, or in other words the shock and crisis, of a universal rise in prices;—with this difference, however, that up to the present time the new discoveries affect only the production of one of the precious metals, gold, of which vast deposits of immense richness hitherto unknown have been successively discovered and attacked with astonishing impetuosity. In California, in the very year when the rule of an industrious people, full of energy and intelligence, superseded the drowsy authority of a handful of monks maintained there by Mexico, splendid mines of gold were opened upon the banks and in the beds of rivers watering the valley in which San Francisco is situated, and no sooner were they heard of than they were vigorously assailed by crowds of settlers who threw themselves headlong upon the spot from all parts of the world. This was in 1848. In three years more, beyond the great ocean, the continuation of the magnificent mines of California was discovered in Australia. In that remote region, a gold-seeker, who had made his first essays in the neighbourhood of San Francisco, discovered treasures not inferior to those of the vaunted valleys of the Sacramento, and the San Joaquim. But California and Australia do not contain the only rich mines towards which the civilized world of our day have stretched forth an active and greedy hand. It is about thirty years ago that those auriferous slopes, known to the ancients, and revealed to us in a narrative, fabulous though it be, by the father of history, but forgotten by the generations who succeeded him, began to give forth a notable supply of gold in Northern and Eastern Kussia, among the Oural Mountains, and especially in Siberia, where the field of enterprise is almost boundless. The gold regions of the Empire of Eussia, of which Herodotus had given us a description, tinged with the dreams of romance, were only re-discovered by the moderns in 1774. It was in the chain of the Oural that the first discovery was made, and to which the workings were confined till a very recent year. The riches of these mines were, however, but slightly developed till after 1810. In 1816, the production was only about 96 'kitogramfnes of metal (£13,440). From 1823 a progressive increase took place. In 1830, the production according to official accounts was 5,779 kilogrammes, or about 18 millions of francs (£720,000). About this time, the auriferous deposits of Siberia became known, and from 1840 they yielded a far greater mass of gold than that extracted from the mines of the Oural.

Under the influence of this greatly increased and cheapened production of gold, it is reasonable to expect, at least in all those countries where gold circulates in large quantities, and where it is or tends to be the sole medium of exchange, a general disturbance of prices, a deeply felt derangement of interests, and a modification more or less radical in the different relations of society. To examine the causes and consequences of such a revolution, and the good or the evil which, if they have not already commenced, must hereafter spring from it, can hardly be deemed an unprofitable task. With reference to certain countries, and more especially France, it is well to consider how far this influx of gold into the monetary system is in conformity with existing laws, with the intentions of the legislator, the national honour, and the respect due to engagements contracted by the State. If it were proved that what is taking place is in violation of the spirit and letter of legislation, the best means should be sought for returning as quickly as possible to the scrupulous observance of the law.

The work which I offer to the judgment of the public will naturally divide itself under different heads. In the first place let us try to form an idea of the chances of a rise in prices, of the forces which tend to produce that result, and of those which are calculated to prevent it; and next let us see in what sense we ought to understand the monetary legislation of France, and what steps should succeed to the solution of this problem. Afterwards, we will pass to a brief explanation of the principal inconveniences which, in a political and social, as well as in an economical point of view, will attend a general rise of prices, caused by the depreciation of gold, as well as of the advantages which society and the State may derive from such a depreciation to compensate for the disorganisation it must occasion. We shall conclude with an attempt to decide what arrangements will be proper for preventing or diminishing the evil effects of an extraordinary production of the precious metal.

Simultaneously with these new discoveries of gold, a fact of grave import develops itself with reference to silver. For a few years past this metal has become, in the European market, the object of unusual demand for exportation to the East. This is evidently calculated to make the fall in gold more sensibly felt, especially in comparison with the other precious metal; for whilst the gold increases rapidly, silver becomes more scarce, and thus the divergence operates from both sides. We could not dispense with a brief investigation of the change going on in the demand for silver, were it only to endeavour to estimate its probable duration, and to form an idea of the influence which it is likely to exercise upon the fall, apparent or real, in the value of gold. The natural course of this work will soon furnish an occasion for this investigation.




preliminary observations on the rise of prices which has characterised the last few years.


Before entering upon the consideration of the mode in which the new gold discoveries must be considerd as the probable cause of the general rise of prices, in the countries where gold is by law or practice the monetary standard, it may not be out of place to say a few words in order to avert a possible confusion. This dearness is not a fact appertaining to a future more or less distant; the present time is characterised by an all but universal rise of prices, at least it has been so up to the reaction which dates from the close of 1857. There are few productions which had not risen in price during the last five or six years. Even after the violent crisis which shook the four quarters of the globe, the high prices of several articles are still sustained. Many persons have not hesitated to attribute this unyielding rise to the influence of the new gold mines. I do not deny that the unusual production of this metal may have been in part the cause; but other causes may be mentioned which have weighed considerably in the scale.

Speaking of a great number of productions of the first necessity, of the raw materials of industry, and consequently of manufactured articles, especially of those upon which the price of the raw material exercises the greatest influence—they are in general the commonest qualities— we may trace a rise in price quite distinct from that which could have arisen from an increased production of gold. It arises from the fact that, in the case of these raw materials or manufactures, the relation between the supply and demand in the market, which necessarily decides the price, has undergone a great change. The demand having surpassed the supply, the consumer has found himself placed at the great disadvantage of being obliged to buy in a dearer market. This rise in prices, special and distinct in its origin, must be attributed to causes which in their effects at least, if not in their very nature, are transitory.

In the first place it may be traced to the fact that various classes of society have indulged in an increased consumption, either from their having greater resources, or from their habits of economy having undergone an unfavourable change. In France a great number of persons have been enriched by the immense rise in the value of railway shares, and they have set an example of extravagance which has not wanted imitators. As respects the working classes, the impulse given to public works, and to various industrial undertakings, has caused an extraordinary demand for their labour, and the consequent increase in their wages has enabled them to consume a greater quantity of certain articles of subsistence, and of those manufactured products which are most accessible to the masses of mankind. One of the effects traceable to this cause is the high price of butcher's meat which we have lately witnessed in France.

In the next place the moderate, not to say the inferior harvests, have in later years been a sufficient reason for the high price of many articles. Bread and wine have risen because of the scarcity of corn, and of the disease which has ravaged our vineyards. The rise in bread has produced a similar effect upon other articles of ordinary subsistence. A raw material, in great use among the manufacturers of Europe, silk, is one of the objects which have undergone the greatest advance; and this also has arisen from a failure of the crop in the Western World. This has been sufficient to account for the high price of the woven fabrics, for the cost of the raw material is a principal, if not the very first element, in the price of silk goods.

Moreover, it cannot be doubted that a spirit of wild speculation has spread itself more or less throughout the commercial world, and that this has not been without its effect upon the prices of some commodities.

I only allude to these circumstances lest we should confound the effects, which must be regarded as accidental and transient, with the results produced by the new discoveries of gold.

In the following pages, I shall generally reason as if these new gold mines had not yet produced any appreciable effect. I trust I shall not be blamed for this reserve. It strikes me that it will not weaken the conclusion to which this work will lead,—but have a contrary effect.


SECTION II. an appeal to some of the fundamental notions upon the nature and characteristics of money.




what we ought to understand by value and price.—twofold definition of money.—the standard or fineness of money.


In order to clear the ground as much as possible, it may be well, before entering further upon our task, to call attention to some fundamental notions upon the subject of money, which may be found more or less ably expounded in almost every treatise upon political economy. I repeat them here, however, that I may spare such of my readers as have not these writings fresh in their recollection, the trouble of referring to some special work for information. Ref. 006

Gold and silver are articles of commerce, that is to say, objects having relations to our wants, and which are bought and sold. Like all other commodities, they have their own peculiar value for which they are in request; and this demand, arising from their utility, combined with the circumstances of their production, and particularly of their quantity, determines their value.

Let it here be observed that value is a word the meaning of which is relative, inasmuch as the attribute to which it relates always implies a comparison. If I say that meat is worth twice as much as bread, I establish, a relation between these two articles; and in thus expressing myself I compare meat with bread.

When we speak of the value of an object, we ought, for the sake of a rigorous precision in expressing our meaning, to point out the other object with which we compare it. It is true, that very often it is understood that we compare it with the generality of other commodities; Ref. 007 or pretty frequently, indeed, it is the price that is meant.

The price of a certain thing is its value in relation to a substance specially designated, that is to say, to the material of which money is made. Thus, whilst in ordinary language we often confound these two words, value and price, and use them as synonymous terms, they have in reality a distinct meaning. Both have a relative sense; but value is a more general and indeterminate expression, or to use a better word, more vague; price is more special, and has a meaning perfectly precise. Ref. 008

Money is a certain commodity out of which we create an instrument that serves, in exchanges, as a common measure of value, because it is with it that, in transactions, all other commodities are compared. But it is not merely & measure; it figures in exchanges in another capacity, that of a material recompense or equivalent. The twenty francs with which a hectolitre of wheat can ordinarily be bought, and which are also at the present moment the price of a hectolitre of common wine in many departments, give me the measure of the value of the wheat and wine, as compared with other commodities of which the price is known; but they do more, they serve, at the moment of the transaction, and in the market where it takes place, as an equivalent for the hectolitre of wheat or the hectolitre of wine. We must, therefore, guard ourselves from viewing money as simply and purely a representative sign of value, although this meaning is sanctioned by usage in nearly every class of society. Money is not a sign; each piece of money is a certain fixed quantity of a definite fineness, very real and very effective, of the metal of which money is made; and it is no more true to say that the twenty francs are the sign of the hectolitre of wheat or the hectolitre of wine, than it would be to pretend that the hectolitre of wheat or wine is the sign of the twenty francs. The definition of the word money which I have given, namely, that it is at once a measure and an equivalent, is that which is acknowledged by all modern authorities. It is remarkable that it should agree exactly with that which Aristotle has given us.

“It was agreed,” says he, “to give and to receive a substance which, useful in itself, was easily transferred from hand to hand in the ordinary transactions of life; it was iron, for instance, or silver, or some other substance of which the size and weight were in the first place determined, and on which, to escape from the inconvenience of continual measurings, a particular stamp was affixed as a sign of its value,” Ref. 009

From the moment that man forms a society—and how can we conceive it otherwise?—money becomes necessary to him. The division of labour, by which the sociability, as well as the different aptitudes, of mankind is manifested, has existed ever since a few individuals were grouped together, and it has been developed in proportion to the progress of civilisation. It subjects man to the necessity of exchanging, incessantly, the material products of his labour, or the services which he is in a position to render, against the productions and the services of others. If money did not exist, this exchange could only be carried on by barter. The man who had harvested his corn, and was in want of a pair of shoes, would be obliged to seek a shoemaker who had not supplied himself with corn, and was willing to deal with him. and even when he had found one, he would have had to bargain with him as to the proportionate value at which the article of clothing he wanted, and the corn he desired to sell, ought to be exchanged. From the moment when, among all kinds of merchandise, one article has been selected to serve as a standard by which the relative prices of all others may be measured, in other words where money is used, transactions become simplified and facilitated,” In a system of barter,” says M. Eoscher, Ref. 010 “how difficult it would be to find exactly the man in a condition to be able to supply our wants, and at the same time to have occasion for our superfluities! How much more rarely would it happen that the want and the superfluity met each other in equal proportions, that, for example, the manufacturer of nails, who wished to barter his goods for a cow, should find a grazier who had occasion for as many nails as would pay for a cow,” Again, says the same writer:—” Under this system, the strongest party, in an economical sense, would, in every bargain, enjoy an advantage much greater than he possesses at present; the buyer of bread, for instance, might be half-starved before he came to terms with a baker upon the price of the articles he had to offer him in exchange,”

When once the use of money is adopted, the grower of corn exchanges his product for a certain quantity of money which is its price, and with this money he afterwards goes in quest of any other commodity for which he has occasion to those who make it the object of their industry. At first view it might seem that the use of money complicates transactions, inasmuch as it necessitates two exchanges, where otherwise there would be but one; but, in truth, its use is of enormous advantage, and we should take an immense step backwards in civilisation if we were to return to barter. It has been wisely said that there is no machine which economises labour like money, and its adoption has been likened to the discovery of letters.

Gold and silver were not, in the earliest stages of society, invested with the attributes of money. In their primitive communities men resorted for a medium of exchange to those objects which were more immediately at their command, as, for example, cattle. But almost from the very dawn of civilisation it was some kind of metal, and especially copper, which served the purposes of money. In proportion as society advanced, first silver, and then gold, became the instrument of exchange, and it may be said that, from time immemorial, these metals have been chosen as the preferred commodities, the constant intermediaries in transactions. For this purpose, they offer a combination of advantages which no other product possesses to anything like the same extent.