From public authorities, alarm has spread to private interests, and the price of the precious metals has experienced in European markets a very sensible disturbance in value. In the space of only a few months, the premium of gold has given way to a reaction, only checked by the tariff. From 1st July to the 25th December, 1850, the price of English sovereigns in Paris has fallen about 2 per cent. On the Amsterdam Exchange, the fall in the price of gold, in the same year, amounted to 4 per cent.; at the same time silver rose in London almost as much (from 4s. 11½d. the ounce, to 5s. 1⅝d.); the relative value of gold to silver, which our laws had fixed at 15½ ounces of fine silver to one of pure gold, and which the constant premium on gold in Europe had raised in the Spanish tariff to 15¾, fell to 15¼ in Holland, Belgium, and Hamburg; in all places where gold, from having been demonetized, had become a mere article of merchandize; almost realizing, in fact, the tariff of Russia, a country where the abundance of gold and the scarcity of silver had induced a legal relative value of 15 to 1.
However great the present depreciation of gold, the depression appeared likely to increase still further, and the gloomy forebodings of the press have added to public alarm. Newspapers of all parties, and of all countries, prophesied that, under the combined influence of California and Siberia, the value of gold would soon fall to nine times that of silver. Whilst crowds of emigrants were forcing their perilous way across the Rocky Mountains, or doubling, for economy, Cape Horn, or, in their impatience, taking the shorter but dearer passage by Panama, hurrying on to the capture of the golden fleece, this very treasure which they were unduly appreciating, was becoming as unduly depreciated in Europe; the article, which but six months before bore the greatest fixity of value, seemed rapidly undergoing an important change, and to the Auromania of ages, an Aurophobia appeared to be succeeding. England alone has shown no sign of fear. During the period of continental alarm, the Bank of England was not afraid even to check the export of its gold; as in the beginning of 1851, the directors raised the rate of discount from 2½ to 3 per cent., and almost immediately the exchange turned. The pound sterling, which fell for a short time to 24 fr. 70 cents., equal to a fall of 2 per cent., rose in a few days to 24 fr. 95 cents.; it oscillates now between 25 fr. 35 cents., and 25 fr. 45 cents., which is equal to a premium of ½ to ¾ per cent. upon gold. Again, the mint of Paris, which received gold by millions in December, 1850, and January, 1851, has seen this influx slacken until its weekly receipt now scarcely equals its former daily supply. At the present moment, the oscillations of the market seem to have terminated; a calm has succeeded the storm, and the value of the precious metals seems to be in almost a normal state. The present moment, then, appears to be a fitting one to examine if the late disturbing causes were of an ephemeral nature, or whether they are likely to be permanent in their effect.
On this important subject, the French Government, which at first appeared ready to attempt an immediate solution of the question, did not hesitate to recognize the necessity of more profound examination. In the Moniteur of the 15th January, 1851, it is stated, “that the commission of 14th December, presided over by Mr. Fould, Minister of Finance, for the examination of the subject of money, is of opinion, that the late depreciation in the value of gold has been produced by causes of an accidental nature, which are beginning to be less sensibly felt; that influences of a permanent character bearing upon this depreciation cannot at present be sufficiently ascertained; and in such a state of affairs it is necessary to have precise information as to the production of the precious metals in California and in Russia; and that with its present knowledge of facts, the Commission is of opinion, that there is no ground for a modification in our monetary system.”
This determination was a wise one, and subsequent events have justified it; while on the one hand gold has again risen to nearly its former value, and on the other, the discovery made in 1851 of rich deposits of gold in Australia, renders the subject worthy of further investigation; the present seems a suitable opportunity for the renewal of a controversy by no means exhausted.
In default of official documents, we have the stories of the adventurer, and the statistics of commerce. Sufficient light appears to come from the north, the south, and the west, to enable us to form some opinion of the results of the general movement regarding the precious metals. I would add, that we can approach the subject now, freed from some of the questions which appeared to encumber it; the trade in the precious metals appears to be again in its natural channels. The phantom of rise or fall does not appear to be materially affecting trade: quite lately, to prevent the export of gold, the Bank of France raised the premium for purchase. In London and in Paris, the metallic reserves are full. The Bank of England has above [1]500,000,000 francs, and the Bank of France above [2]600,000,000 in their vaults. The import of the precious metals goes on but slowly. Nothing opposes, then, such a patient and careful examination of the subject as can alone satisfy the inductions of science.
I.
The value attached to the precious metals in their character of money, is not of an arbitrary nature. Neither governments nor councils can change it at their will and pleasure. The power publicly possessed in this respect is but the organ of facts, which it submits to and proclaims as law. The head of the Government stamped on the coin creates a value only by the declaration of its intrinsic weight and fineness; but the price of the gold and the silver is exactly that of their commercial value in exchange. In this consists the stability and the regularity of the circulation of money.
The cause which determines the value of the precious metals is the same as that which affects the price of every other article of merchandize; the supply and the demand—the comparative abundance or scarcity of gold or silver in the market. The larger the metallic supply, the smaller value will it bear; its commercial value will vary in exact proportion to the increase in quantity. On the other hand, the smaller the quantity of money in circulation, the larger will be the value attaching to each separate piece; a smaller quantity of such money will then suffice to buy a larger amount of goods, and goods are said to be cheap—or what if in effect the same, money,—may be called dear. This money, in the time of Charlemagne, possessed a power eleven times greater than at present—that is to say, it was eleven times more scarce. It is well-known that the discovery of America, in overpowering with a fresh supply of the precious metals the metallic circulation of Europe, brought about a sudden and large depreciation of their value, which, notwithstanding a variety of oscillations, has been generally maintained to the present time. Not only does the state of the market mark the value of gold and silver with reference to other articles; but there is positively no other base on which the comparative value between the two metals can be determined, but the abundance or scarcity of either.