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began in economic and industrial affairs. Bank notes were scarcely known in Italy before 1860, but between 1866 and 1874 the six banks of issue in the kingdom had increased their branches from fifty-two to ninetyfive, and productive and manufacturing industries were greatly stimulated. From 1869 to 1872 the imports of foreign goods increased 25 per cent, and the value of the total annual exports increased 50 per cent. But with all this increase of traffic and industry the annual expenditures of the government exceeded the revenue by nearly $50,000,000 each year, and the aggregate of these deficits from 1861 to 1873 was about $500,000,000. Notwithstanding this continued increase of debt and the increase of the inconvertible paper money from $49,000,000 in 1865 to $300,000,000 in 1874, the value of the paper money, as compared with gold and silver, advanced from an average of about 80 cents in 1865–6 to about 93 to 95 cents in 1874–6. There were, of course, many concurrent features in the political and industrial affairs of the country which exercised their influence to cause fluctuations in the prospect of redemption; but coin had been practically expelled from the country, and the volume of paper money being limited, the premium paid for it over its real value, though not sufficient to raise it to par, was, I think, largely the cause of the advance of 12 to 15 per cent from 1866 to 1876.
Third. The temporary depreciation in the value of gold and silver, either brought from abroad and forced into the market by coinage and issue by the government, as in the instance in Brazil, or by production, as in our own country. The inconvertible paper currency having deprived the gold and silver of their function as money, the latter become only commodities, and as such, being cheaper than in countries where they are used both as a commodity and as money, they are immediately exported. I am aware that some political economists deem it almost a heresy to say that the value of gold can be less in one country than in another. But to me it seems plain that gold, like wheat or cotton, flows to the market where it bears the highest value relatively to other things. The precious metals have always been selected as standards of valuation, not because their value was unchangeable, but because they changed less than those of other commodities. Paper money has no intrinsic value, but only a prospective one, viz., the prospect of redemption. It is, therefore, impossible for paper money to be a standard of values. It may appear to be so, but in reality the values that seem to be measured by a "paper money standard,” are measured by the gold and silver standards modified by the prospect of redemption of the paper money. The paper money price of anything is only the gold or silver price with an allowance made for the uncertainty of ever getting the gold and silver promised in the paper money. But this temporary depreciation of gold or silver, in any country, is concealed by the use of paper money; consequently the prices of other commodities do not immediately decline, buyers and sellers are slow to adjust prices to a change in the value of the precious metals, and in nearly all cases the accumulation of cheapened precious metals flows out in exportation before any change is made in the currency prices of commodities; but, in the meantime, the inconvertible paper money has been overvalued.
GOLD AND SILVER COIN IN EUROPE.
Kingdom was estimated at only £8,000,000. In 1844, the total of gold coin in the kingdom was estimated by Newmarch at £36,000,000, this amount including the coin in the bank. The same authority also estimated the total of gold and silver coin in the kingdom, at the close of 1856, at £70,000,000.
In 1868, Professor W. Stanley Jevons made a partial census of the gold and silver coins in the United Kingdom, and, upon this as a basis, made an estimate of the whole amount. His conclusion was that the total amount of gold coin in the kingdom in March, 1868, was not to exceed £80,000,000, and that it was possibly £3,000,000 to £5,000,000 less than that aggregate. The result of his estimate, which included the gold in bank, was as follows: Sovereigns in circulation ..
.£64,500,000 Sovereigns undistributed, in bank.
3,500,000 Half sovereigns (24,000,000).
12,000,000 Total gold circulation...
£80,000,000 The amount of silver coin in the kingdom was at the same time estimated at £14,000,000.
The London Economist of March 15, 1873, estimated that the amount of gold coin in the kingdom had been increasing at the rate of about £2,000,000 per annum for several years. This estimate of increase was based
upon the annual movements of coin to and from the Bank of England and the interior at the seasons of the spring and fall settlements and crop movements.
Assuming this ratio of increase to be correct, Dr. Edward Young, of the Bureau of Statistics, at Washington, made an estimate of the amount of gold and silver coin in the United Kingdom at the close of 1872, with the following result, viz. : Total amount of gold coin circulating in the United Kingdom at the close of 1872 .
. £84,551,000 Total amount of silver coin circulating in the United Kingdom at the close of 1872.
15,000,000 Total amount of bronze coin circulating in the United Kingdom at the close of 1872..
1,148,000 Assuming that silver coin constituted about the same proportion of the whole in 1856 as in 1868, we have the following approximate statement of the amounts of gold and silver coin in Great Britain and Ireland at the periods stated, viz. :
1856. 1868 1872 1876.
£60,000,000 £10,000,000 80,000,000 14,000,000 84,551,000 15,000,000 88,500,000 16,000,000
Owing to the fact that previous to 1795 the gold coins of France were very much undervalued as a legal tender, gold was almost entirely banished from France, and even after there was a modification of this, in 1795, silver continued almost the exclusive metallic currency of France until a comparatively recent period. In 1848, also, the Bank of France suspended specie payments in consequence of the revolution, and its notes to the amount of 350,000,000 francs were made a legal tender, which condition of things lasted until 1851. It may therefore be presumed that what coin was not driven out of the country by the suspension of specie payments was at least three-fourths silver. The population of France in 1848 was not to exceed 35,000,000, and allowing eighty francs per capita as an estimate of the probable amount of coin and notes in use at that time, we have an aggregate of 2,800,000,000 francs, from which deduct 350,000,000 francs of notes, and it leaves an approximate estimate of 2,450,000,000 francs of coin, which, if one-fourth gold, would leave silver coin to the amount of 1,840,000,000 francs.
Roswag estimated the amount of coined money in France in 1856 at 4,000,000,000 francs, and expressed the belief that in the nine years to 1865 the aggregate had declined to 3,000,000,000.
M. Louvet, minister of agriculture and commerce, and also M. Charles le Touze, estimated the amount of coined money in France in 1870 at from 5,000,000,000 to 6,000,000,000 francs.
The French indemnity to Germany, in accordance with the treaty signed at Paris February 26, 1871, was 5,000,000,000 francs, of which 1,000,000,000 was to be paid in 1871, and the rest within three years. Not
* M. Wolowski, a member of the Institute and a deputy to the National Assembly, printed an article in the Journal des Economists, in December, 1874, in which he summed up the French payments to Germany as follows, viz.: To sum up the totals of remittances made to Germany, we delivered:
Francs. C. In notes on the Bank of France.
125,000,000 00 In French gold....
273,003,058 10 In French silver.
239,291,875 75 In German specie and bank notes.
105,039, 145 18 In thalers...
2,185,313,721 04 In Frankfort florins.
235, 128,152 79 In marks banco of Hamburg
265,260,990 29 In marks of the Empire.
72,072,309 62 In florins of Holland.
250,540,821 46 In Belgian francs..
295,704,546 40 In pounds sterling.
637,349,832 28 4,990,660,453 29