GOLD.
The fable of Midas, whose touch transformed even his food into gold, testifies that the ancients felt the limits, while they adored the virtues of the wonderful metal. Since the morning of the world, gold has been the chief object of desire of mankind; and it is highly probable that a very large percentage would still make the same selection as the son of Gordius, were the opportunity afforded, even with the knowledge of all it implied. For from the days of Midas until now this gold,
Bright and yellow, hard and cold,
Molten, graven, hammered, and rolled;
Heavy to get and light to hold,
has been
Hoarded, bartered, bought and sold,
Stolen, borrowed, squandered, doled;
Spurned by the young, but hugged by the old
To the very verge of the churchyard mould.
No other material object has retained in a like degree the united devotion of man in all ages. And not merely because gold is the synonym of money. By money we mean that by which the riches of the world can be expressed and transferred. But money may exist in various forms. It may be rock-salt, as in Abyssinia; cowries and beads, as in Africa; tobacco, as formerly in Virginia. Gold is greater than money, because gold includes money, and makes money possible. Upon gold rests the whole superstructure of the wealth of the world. Let us consider for a moment why this is, and how this is.
And first of all, it is desirable because it is scarce. Abundance begets cheapness, and rarity the reverse. That is most valuable which involves the greatest amount of effort to acquire. But we must not jump from this to the conclusion that were gold to become as plentiful as iron, and be as easily obtained, it would recede in value to the equivalent of iron, bulk for bulk. Gold has an intrinsic value superior to that of all other metals because it has useful properties possessed by none other. It is more durable than any, and is practically indestructible, as Egyptian excavations and Schliemann’s discoveries in Greece have shown. It may be melted and remelted without losing in weight. It resists the action of acids, but is readily fusible. It is so malleable that a grain of it may be beaten out to cover fifty-six square inches with leaves—used in gilding and in other ways innumerable—only the twenty-eight thousand two-hundredth of an inch in thickness. It is so ductile that a grain of it may be drawn out in wire five hundred feet in length. The splendour of its appearance excels that of all other metals. Its supereminent claims were symbolised by the Jews in the golden breastplates of the priests, as they are by the Christian in his highest hopes of a Golden City hereafter. We signalise the sacredness of the marriage-tie with the gold-ring.
Professors of what Carlyle called the ‘dismal science’ have not unfrequently expressed a contempt for gold; but in doing so, they have regarded it merely as the correlative of money. As money, according to them, is merely a counter with little or no intrinsic value, therefore gold has no intrinsic value beyond its adaptability in the arts. John Stuart Mill held that were the supply of gold suddenly doubled, no one would be the richer, for the only effect would be to double the price of everything. Stanley Jevons went so far as to say that the gold produced in Australia and California represented ‘a great and almost dead loss of labour.’ He held that ‘gold is one of the last things which can be considered wealth in itself,’ and that ‘it is only so far as the cheapening of gold renders it more available for gilding and for plate, for purposes of ornament and use other than money, that we can be said to gain directly from gold discoveries.’ Another writer, Bonamy Price, asserts that it is a ‘wonderful apostasy,’ a ‘fallacy full of emptiness and absurdity,’ to suppose that gold is precious except as a tool. We might multiply quotations all tending to show that while a certain class of philosophers admit a limited value in gold as a metal, they claim that it loses the value immediately it is transformed into a coin.
This contention is not tenable in reason. It is directly against the concentrated faith of the ages. Gold is desirable for the sake of its own special virtues, and it becomes additionally valuable when employed as the medium of exchange among nations. It is because of the universal desire of nations to possess it, that it enjoys its supremacy as money. By its comparative indestructibility it commands and enjoys the proud privilege of being the universal standard of value of the world. It is, therefore, elevated, instead of being degraded, by the impress of the mint stamp, for to its own intrinsic value is added that of being the passport of nations. This is a dignity attained by no other metal. It has been urged that the government guarantee of a solvent nation stamped upon a piece of tin, or wood, or paper, will form a counter quite as valuable as gold for a medium of exchange. So it might, but the circulation would only be within certain limits. A Scotch bank-note is passed from hand to hand with even more confidence than a sovereign—in Scotland. But take one to England and observe the difficulty and often impossibility of changing it. The pound-note is worth a sovereign, but its circulating value is local. Even with a Bank of England note, travellers on the continent occasionally experience some difficulty in effecting a satisfactory exchange. But is there a country in the most rudimentary condition of commerce, where an English sovereign, or a French napoleon, or an American eagle, cannot be at once exchanged at the price of solid gold?
It is true that a nation may form a currency of anything, but only a currency of the precious metal can be of universal circulation; and that is simply because the metal is precious.
Now, when Bonamy Price said that gold is only wealth in the same sense as a cart is—namely, as a vehicle for fetching that which we desire, he said merely what could be said of wheat or cotton, or any other product of nature and labour usually esteemed wealth. You cannot eat gold, nor can you clothe yourself with wheat; and the trouble of Midas would have been quite as great had his touch transformed everything into cotton shirts. Wealth does not consist in mere possession, but in possessing that which can be used. Wheat and cotton constitute wealth, because one can not only consume them, but in almost all circumstances can exchange them for other things which we desire. But they are perishable, which gold is not—at least for all practical purposes. At the ordinary rate of abrasion, a sovereign in circulation will last many years without any very perceptible loss of weight. Gold, as a possession, is a high form of wealth, because one can either use it or exchange it at pleasure. The fact of there being cases where a man would give all the gold he possesses for a drink of water, does not prove that gold then becomes valueless, but simply that something else has become for the time-being more valuable.
Again, if it be true, as Jevons says, that gold is one of the last things to be regarded as wealth, and the labour expended in its production almost a dead loss, and therefore a wrong to the human race, the world should be very much poorer for all the enormous production of the last half-century. On the contrary, the world has gone on increasing in the appliances of wealth, in conditions of comfort, and in diffusion of education.
The addition to the world’s stock of gold has permitted the creation of an enormous amount of gold-certificates, as bank-notes and bills of exchange may be regarded, the existence of which has facilitated commercial operations which otherwise would not have been possible. In theory, we exchange our coal and iron for the cotton, wheat, &c., of other countries; but as we cannot mete out the exactly equal values in ‘kind,’ we settle the difference nominally in gold, but actually in paper representing gold. But the gold must nevertheless exist, or the operation would be impossible. It is as when a man buys, let us say, five hundred tons of pig-iron in Glasgow. He does not actually receive into his hands five hundred tons of iron, but he receives a warrant which entitles him to obtain such iron when and how he pleases. Though the purchaser may never see the iron which he has bought, the iron must be there, and producible at his demand. On the faith of the transaction, he knows that he has command over five hundred tons of iron; none of which may perhaps, save the ‘sample,’ have come under his cognisance.
Of course there is no complete analogy between an iron warrant and a paper currency, but it serves for the moment as a simple illustration. To discuss the differences would lead us beyond the design of the present paper.
Probably one great reason why gold so early in the history of the world assumed its leading position as a standard of value is, that it is found in a pure state. So also is silver, which is the nearest rival of gold. Primitive races used these metals long before the art of smelting was discovered. These two metals were both rare, both found pure, both easily refined, both admitting of a splendid polish, both malleable and ductile, both durable. Silver is more destructible than gold, less durable, less rare, and even less useful in some respects. It has, therefore, always had a lower value than gold.
It has been shown by several writers, among whom may be named William Newmarch and Professor Fawcett, that up to the year 1848, the world had outgrown its supplies of the precious metals, and that commerce was languishing for want of the wherewithal to adjust the exchanges of communities. Previous to that year, the principal sources of supply were South America, the West Coast of Africa, Russia in Europe and Asia, and the islands of the Malay Archipelago. According to the calculations of M. Chevalier, the total production of both gold and silver from these sources between 1492 and 1848 was equal in value to seventeen hundred and forty millions sterling. The importation of gold, however, was small; and the total stock of the metal in Christendom in 1848 is estimated to have been only five hundred and sixty millions sterling. The production since that year has been very remarkable. Most of us are familiar with the gilded obelisks or pyramids erected in various International Exhibitions to illustrate the bulk of gold yielded in different quarters of the globe; but these things only arrest the eye for the moment. Let us look at the figures. In 1848 Californian gold began to come forward; and in 1851 the Australian fields were opened. Between 1849 and 1875 the production of the world is estimated at six hundred and sixteen millions sterling, so that in twenty-seven years the stock of gold was more than doubled. The average annual supply previous to 1848 was eight millions sterling; in 1852 the production was thirty-six and a half millions sterling. An Australian authority estimates the yield of the colonies from 1851 to 1881 as two hundred and seventy-seven millions sterling; and Mr Hogarth Patterson gives the total production of the world between 1849 and 1880 as seven hundred and ten millions sterling. The old sources of supply have not, we believe, increased in yield, so, if we calculate their production on the average at eight millions annually, we shall easily arrive at the donation of the American and Australian mines.
The statisticians of the United States Mint estimate that the total production of gold in the world during the four hundred years ending in 1882 was ten thousand three hundred and ninety-four tons, equal in value to £1,442,359,572. During the same period the production of silver was one hundred and ninety-one thousand seven hundred and thirty-one tons, of the value of £1,716,463,795. On the basis of the last three years, the average annual production of gold in the world is now twenty-one and a half millions sterling. Taking 1881 as an illustration, the largest contributors were—
| United States | £6,940,000 |
| Australasia | 6,225,000 |
| Russia | 5,710,200 |
| Mexico | 197,000 |
| Germany | 48,200 |
| Chili | 25,754 |
| Colombia | 800,000 |
| Austria | 248,000 |
| Venezuela | 455,000 |
| Canada | 219,000 |
We need not give the smaller contributions of other countries. There are twenty gold-yielding countries in all, but eight of them yield an aggregate of little over half a million sterling.
As regards the employment of gold, it is estimated that fifteen million pounds-worth annually is required for ornament and employment in the arts and manufactures. This, on the production of 1881, would leave only six and a half million pounds-worth for coining purposes each year.
No greater proof of the universal desire of man to possess gold could be afforded than by the heterogeneous mass of peoples who flocked to the gold-diggings. Men of every colour, of every religion, and from every clime, were drawn thither by the attraction of the yellow metal. It is not too much to say that nothing else could have concentrated on one object so many diverse elements. And it may be said further, that but for the discoveries of gold, the rich wheat-plains of California and the verdant pastures of Australia might have been lying to this day waste and unproductive.
Mr Hogarth Patterson has attempted to prove that to this increase in our supplies of gold is due the unparalleled expansion of the commerce of the world within the present generation. We do not need to accept this extreme view, while we can clearly perceive that the volume of gold has not proved the dead-weight to strangle us, which other writers had predicted. Mr Patterson may to a certain extent be mixing up cause and effect, but he is nearer the truth than those who refuse to consider gold as one of the first elements of wealth.
But the increase in the supply of gold has had another effect. It has, concurrently with an increase in the production of silver, helped to reduce the relative value of the latter metal. The consequences are curious. Previous to 1816, silver was what is termed a legal tender in England to any amount; but in that year the sovereign was made the sole standard of the pound sterling. In other words, if one man be owing another, say, a hundred pounds, the latter is not legally bound to accept payment doled out in either silver or copper. Other countries have since de-monetised silver, which has thus become so depreciated in relation to gold, that Mr Leighton Jordan, in an able book called The Standard of Value, affirms that the interest on the National Debt has now to be paid in a currency fifteen to twenty per cent. more valuable than was in the option of the lender prior to 1816. According to the bi-metallists, the de-monetisation of silver has depreciated the metal, and unduly appreciated gold, or at all events has prevented the cheapening of the latter metal, which should have resulted from the greater abundance of silver.
Against the plea for a dual standard there is a great deal to be urged. The question, however, is too wide to be entered upon at this stage, and we will content ourselves with stating one great objection to bi-metallism, and that is, that it would be inoperative unless its adoption were universal; and that so deeply is gold rooted in the affections of mankind, the universal adoption of silver also, is practically hopeless. Into the world of commerce, into the arena of industry, into the storehouses of wealth, ‘’tis Gold which buys admittance.’