The relation between gold and silver is variable in its nature. In vain has Garnier, the commentator on Adam Smith, attempted to establish his position, that the value of gold in ancient times differed little from its value in our days; and that it then represented, according to Herodotus, and under Darius in Persia; and again, during the time of Plato, in Greece, weight for weight and purity for purity, about fifteen times the value of silver. Criticism has not failed to demolish entirely this ingenious but frail hypothesis. It has been clearly demonstrated that silver did not hold in ancient days, the important place it has obtained in ours, and which has subsequently rendered it the all-powerful agent of circulation.
When we seek to examine minutely the various monetary changes which have occurred, and to lay hold upon some principle to guide our inquiry, we quickly recognize the fact, that the difference in value between gold and silver increases in proportion to the development of civilization and industry. It is not without some show of reason, that mythology, transporting the analogy of the physical into the moral world, made the age of silver succeed that of gold. Historically, in fact, the discovery of and the working of gold preceded that of silver. Gold is almost always found either pure or mixed with silver. In searching the beds of rivers and streams, it has been obtained by the mere process of washing. This work is within the reach of the rudest state of society. It appears like a treasure spread over the surface of the earth, under the very feet of the first occupier of the soil. Silver, on the contrary, is embedded in rocks of primitive formation, and is seldom found near the surface of the earth; its extraction requires a combination of science, machinery, and capital. It is the work of a state of civilization already far advanced and firmly established.
In almost every age, whatever its social position, the use and the value of gold has been known. From India to Iberia, and from Ethiopia to the Poles, there is not a race which has not attempted to discover this source of wealth on its surface. What country has not had its Pactolus! What Prince or Satrap has not been a gold collector, like Midas or Crœsus! The luxuries of ancient monarchs appear to prove an abundance of metallic treasure, which has been subsequently unequalled, but the sources of the supply have faded away in their turn. Dureau de la Malle observes, that from the death of Alexander, the golden sands of Asia and Greece appear to have been exhausted; those of Gaul and Spain seem to have been abandoned after the fall of the Roman Empire. Gold has long since disappeared from the surface of the older inhabited countries; there is only now to come, in quantities of appreciable amount, or capable of affecting the circulation, the produce of those countries which have been unknown to European commerce, or which have been discovered in modern times.
Referring to history, we find that the employment of silver as money is of no very ancient date, and that it was introduced as a medium of exchange, not by conquerors, but by people of industry and of commerce. It would be sufficient to cite the Phœnicians, those planters of colonies,—the Athenians, and the Carthagenians. On the first discovery of America, silver money was found in use amongst only two nations holding any political position—Peru and Mexico. And again, if silver at a later period has taken the place of gold in circulation, it has been maintained with more regularity and permanence. The mines—from wherever it has been extracted, penetrating into and ramifying throughout the bowels of the earth,—are almost inexhaustible. It is thus shewn that the production of silver is found to continue where that of gold is at an end, and hence the variations which past experience has shown to exist in the relative position of the precious metals.
The learned researches of Boeckh, Letronne, Humboldt, Jacob, and Dureau de la Malle have thrown much light on the causes, and on the importance of these monetary oscillations. They agree in the admission, that originally the value of silver in some countries has equalled, if not exceeded, that of gold. The laws of Manon state a value of gold as 2½ times that of silver. M. Dureau de la Malle considers that between the fifth and sixth century before our era, everywhere, excepting in India, the relative value of gold to silver, had been 6 or 8 to 1, as it was in China and in Japan at the end of the last century. It has been found to have been as 10 to 1 in Greece, in the time of Xenophon, 350 years before the Christian era; and even 100 years later, the treaty between Rome and Etolia proves a similar ratio.
In the present day, the discovery and the working these new metallic stratifications are the only causes which can materially change the relative value of the precious metals. Formerly, conquest, by which one nation became rich at the expense of another, or the pillage of those great reservoirs of money called public treasures, throwing suddenly vast sums of money into circulation, could not fail to depreciate either one or other, if not both, of the precious metals. It was thus that the conquests of Alexander, opening the gates of the East, inundated the Greek world with the precious metals, which were lowered in value by their abundance, and dissipated from their very excess. After the capture of Syracuse by the Romans, silver, the foundation of the treasure they had seized, fell suddenly in price, so that seventeen pounds of silver were valued at one of gold. A little later the relative price was as 12 to 1, when Cæsar, having plundered the two milliards contained in the public chest, so reduced the value of gold, which then predominated, that the proportion fell to 9 to 1. Under the Roman Emperors, the production of gold began to slacken,—the progress of mechanical science, on the other hand, gave a constant impetus to the working of the silver mines of Asia, Thrace, and Spain. The comparative value of the two metals again changed; it was as 18 to 1 in the time of Theodosius the Younger, 412 years after the birth of Christ.
At the commencement of the fall of the Roman Empire, in the 4th century, the value of the precious metals approached that of our own days. The invasion of the barbarians, in dispersing and dissipating the accumulated treasures of the West, destroyed for a time the industry required for their renewal. Money, on account of its scarceness, acquired an extraordinary power; the price of every article fell, or, in other words, the value of silver rose to a most extraordinary degree. Not only did the value of money and of the precious metals increase in that long dark night of the middle ages, but the relative value between silver and gold, which had been established by the progress of industry, again changed. The value of gold, in relation to other commodities, was preserved longer than that of silver, owing to its greater general value, and to its being the less destructible metal; and also because its supply was fed by the washings of the golden sands; a fit occupation for the knowledge and tastes of an ignorant people. The working of the silver mines, on the other hand, being a work befitting a civilized and scientific people, was naturally interrupted, and languished during a period of spoliation and endless warfare. Hence, as we may suppose, arose the scarcity, both relative and absolute, of silver; the comparison with gold remained at 11 and 12 to 1 from the 9th to the middle of the 16th century. It required the excessive and sudden abundance, springing from the working of the mines of Potosi, and in Peru, and of Zacatecas in Mexico, to reduce the proportion to 14 and 15, the average rate at which it remained in Europe until the end of the last century.
II.
A change in the relative production of the precious metals does not necessarily alter their monetary value. In order to create an alteration in the relative values of gold and silver with the quantities annually produced, the disturbing cause must be of a somewhat permanent nature. Moreover, it is necessary to examine, in connection, either with a greater or less production, the causes which might add to or diminish these results; such as expenses in working, the varied wants of consumption, and the greater or less destruction of coin by wear and tear, &c.