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Money: Speech of Hon. John P. Jones, of Nevada, on the Free Coinage of Silver · John P. Jones — chapter 3 of 38 · ~3,272 words · public domain

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It is my firm conviction that the inexpressible miseries inflicted upon mankind by war, pestilence, and famine have been less cruel, unpitying, and unrelenting than the persistent and remorseless exactions which this inexorable enemy has made upon society. As the volume of money contracts prices decline, and with the decline of prices comes stagnation of industry, and the relegation to idleness of thousands of willing workmen. Capitalists become unwilling to invest their money in enterprises that employ labor while the products of that labor are constantly decreasing in price. During all periods of falling prices therefore money capital is withdrawn from active industry and seeks investment in bonds and other forms of money-futures yielding fixed incomes. For although the rate of interest in many such cases may be low, the capitalist is compensated for this by the enhancement in the purchasing power of each dollar of the principal and by the necessarily greater command it secures over the products of labor.

Avoiding the very purpose for which it was devised, money at such times seeks seclusion and declines to circulate. Its owner finds that he can better afford to leave it idle in a vault or bury it in the earth, than subject it to the probability of diminution by investing it in business on a constantly falling market. Thus, contrary to all principles of progress and of natural justice, the man who keeps his money idle, and deprives society of its use, is rewarded by an unearned increment, while he who puts his money into active business, where industry and labor may profit by it is punished by unmerited loss.

Under such conditions it is impossible for a community to reach that degree of material progress which, under proper circumstances, it would readily attain. At every turn distress and discouragement stare the people in the face. In every town and village men, willing to work, stand idle. Even their misfortune does not end with themselves, for not only are they a tax upon their friends, lessening to some extent the meager income of those who give them temporary assistance, but their necessary and eager competition for the little work that offers, tends to reduce the compensation of those to whom they are thus indebted. Stores, workshops, and factories, unoccupied and unused, are found in every direction. Crime increases, bankruptcies multiply, and even though the aggregate of wealth augments, it is unjustly distributed, and consequently barren of beneficent results.

A GLANCE AT THE HISTORY OF MONEY.

The system of relying upon the precious metals as money has long been known as the Automatic system. Accurately, it should be called the Accidental system. It has been called "automatic" because, so long as money was made to depend solely upon the yield of the mines, the supply regulated itself by what was believed to be a natural method, namely, by the expenditure of labor in its production, and was limited only by the rude obstacles which nature opposes to the production of the metals. The necessity of expending this labor placed the money volume of any country beyond the control of the kings and conquerors who, in the primitive periods of society, exercised despotic sway over their subjects. It was undoubtedly better for the people of those early times to risk the accidents of production than the follies and sinister designs of rulers.

This automatic system grew out of barter. It is a survival from the period when articles were exchanged directly, not for gold and silver as money, but for gold and silver as commodities--on the basis of their cost of production--as in the case of the articles for which they were exchanged.

There have been the same evolutions of progress in money as in all other things. In the rude original of society no kind of money was possible. The first trade was by barter, after which, some one or more commodities attainable in the vicinage, and in general use and demand were selected as the common media through which all exchanges were filtered. The use for that purpose of various metals by weight followed next, and, at a succeeding stage, gold, silver, and copper by weight, and after this their use in the form of coins, the value of which coincided with the bullion-value, which must necessarily be the case when free coinage is permitted.

It may be not uninteresting in this connection to have a general view of the materials which, at different epochs of the world's history, have been used as money. I therefore present a tabular statement giving those particulars in chronological order.

Table showing some of the substances which have, at various periods and in various countries, been used as money.

Period following the failure of the ancient mines.

Period following the discovery of the American mines.

---------+-----------------+--------------------------+--------------- A.D. | | | 1631|Massachusetts |Corn a legal-tender at |Macgreggor. | | market prices | 1635|Massachusetts |Musket-balls |Anonymous. 1690|Massachusetts |Paper bills, colonial |Macgreggor. | | notes | 1694|England |Bank-notes |McCulloch. 1700|Sweden |Copper and iron coins |Voltaire's | | | Charles XII. 1702|South Carolina |Colonial notes |Macgreggor. 1712|South Carolina |Bank notes |Ibid. 1716|France |Interconvertible paper |Murray. | | bills a legal-tender | 1723|Pennsylvania |Paper bills, colonial |Macgreggor. | | notes | 1732|Maryland |Indian corn a legal-tender|Anonymous. | | at 23d. per bushel | 1732|Maryland |Tobacco a legal-tender at |Anonymous. | | 1d. per pound | 1776|Scotland |Tenpenny nails for small |Adam Smith. | | change | 1785|Frankland, State |Linen at 3s. 6d. per yard,|Wheeler's | of (now part of| whisky at 2s. 6d. per | History of | North Carolina)| gallon, and peltry as | North | | legal-tender | Carolina, 94. 1810-1840|All commercial |Great era of bank-paper | | countries | bills | 1826|Russia |Platinum coins |App. Encyc. | | (discontinued in 1845) | 1847|Mexico, parts of |Cocoa beans; and at Castle|Anonymous. | | of Perote, soap. | ---------+-----------------+--------------------------+---------------

Period following the openings of California and Australia.

---------+-----------------+--------------------------+--------------- 1849 |California |Gold dust by weight, also | | | minute gold coins for | | | small change, coined in | | | private mints. | 1855 |Australia |Gold dust by weight | 185- |Communist |Paper bills, each |Private | settlement in | representing "one | information. | Ohio, called | hour's labor." | | "Utopia." | | 1862 |United States |Paper bills a legal tender|Act of Feb. 25. 1863 |North Carolina |Tenpenny nails, at 5 cents|Anonymous. | | each, for small change. | 1863 |Camp at Florence,|Potatoes for small change |Yorkville | S. C. | | Enquirer. 1863 |United States |Postage-stamps for small | | | change, temporary. | 1865 |Philadelphia, Pa.|Turnips for small change, |Philadelphia | | temporary and local. | Ledger, April. 1865 |United States |Nickel coins for small |Act of March 3. | | change, overvalued. | ---------+-----------------+--------------------------+---------------

An analysis of this table will show how carefully even the most primitive communities guarded against a too restricted money volume.

The materials chosen to serve the purpose of money in each country during the early history of society were, it will be observed, such as at the time and place would be of sufficient quantity or volume to insure against any sudden deprivation of supply. In countries where the chase was common, the skins of wild animals were used as money; in maritime communities, shells; in pastoral countries, cattle; in the early history of agriculture, grain; in early mining periods, base metal; in primitive manufacturing ages, nails, glass, musket-balls, strips of cotton, etc.

As communities developed, and commerce between them began, substances somewhat common to all countries, portable and indestructible, such as the precious metals, came to be more, and other substances less, resorted to. By reason of their great beauty those metals were always in demand, even among barbarous peoples, for purposes of ornament and decoration. Because of their universal use for such purposes they came to be recognized as things for which anything else could with safety be exchanged, and as society advanced, and it came to be recognized that some medium should be adopted in which to make all exchanges, those metals were naturally selected for the purpose, so that, together, they became, as it were, a common denominator of value. Their selection proved a convenient method of storing away wealth in a form that commanded at all times every other form of wealth. They had always passed by weight wherever used, but as society became better organized, and its methods more complex, it became necessary, in order to insure against fraud, to form them into pieces convenient for handling, and to invest them distinctly with the function of money, so that, by law, they became a universal solvent for debts and demands, the stamp of the government placed on the coin testifying to its weight and fineness.

Both metals, as shown by the table, have been concurrently used as money for thousands of years--not only since the dawn of history, but from a period anterior to any historical records. The oldest annals show that they had already been employed as circulating media and that their relative values, or the ratio of their exchange for one another, had already been established. Gold and silver were used as money in Palestine as early as the year 1900 B. C. We read in the Bible that Abraham weighed to Ephron the Hittite 400 shekels of silver, "current money with the merchant." An inscription on the temple of Karnak, of the date of 1600 B. C. mentions those metals as materials in which tribute was paid.

But long anterior even to these dates, both metals had been used, as, among the relics of the bronze age of the prehistoric era, ornaments of both gold and silver have been found. Gold, being the less abundant of the two metals, has had the higher value; but the ratio between the two has been marvelously steady, taking into account the great sweep of ages during which they have been used as money. This will be seen by reference to the following tables of ratios. I will first take their relative values during ancient times.

Table showing the ratio of gold and silver in various countries of the world up to the Christian era.

---------------------------------------------------------------------- B. C. | Ratio. | Authorities. ---------------------------------------------------------------------- 1600 | 1 to 13.33 | Inscriptions at Karnak; tribute lists of | | Thutmosis. (Brandis.) 708 | 1 to 13.33 | Cuneiform inscriptions on plates found in | | foundation of Khorsabad. | 1 to 13.33 | Ancient Persian coins; gold darics at | | 8.3 grams = 20 silver siglos, at 5.5 grams. 500 | 1 to 13.00 | Persia. Darius. Egyptian tribute. Herod. | | III,.95. (Boeckh, page 12.) 490 | 1 to 12.50 | Sicily. Time of Gelon. "At least" 12.50. | | (Boeckh, page 44.) 470 | 1 to 10.00 | Doubtful. Asia Minor. Xerxes's treasure. | | (Boeckh, page 11.) 440 | 1 to 13.00 | Herodotus's account of Indian tributes. | | 360 gold talents = 4,680 silver. 420 | 1 to 10.00 | Asia Minor. Pay of Xenophon's troops in silver | | darics. (Anab.; Boeckh, page 34.) 407 | 1 to ---- | Spurious and debased gold coins at Athens. | | (MacLeod, Polit. Econ., page 476; Boeckh, | | page 35.) 400 | 1 to 13.33 | Standard in Asia, according to Xenophon. 400 | 1 to 12.00 | Standard in Greece according to "Hipparchus"; | | attributed to Plato. 400 | 1 to 12.00} | Various authorities adduced by Boeckh. 400 | 1 to 13.50} | | | | {12.00}| Values in Greece from the Peloponnesian war to 404-336 | 1 to {13.00}| the time of Alexander, according to hints in | {13.33}| Greek writers. There were variations under | | special contracts--unit, the silver drachma. | | 340 | 1 to 14.00 | Greece. Time of Demosthenese. (Boeckh, | | page 44.) 338-326 | 1 to 11.50 | Special contracts in Greece. 343-323 | 1 to 12.50 | Egypt under the Ptolemies. 300 | 1 to 10.00 | Greece. Continued depression of gold, caused | | by great influx under Alexander. 207 | 1 to 13.70 | Rome. (Boeckh, page 44.) Gold scriptulum | | arbitrarily fixed at 17.143 for 1. 100 | 1 to 11.91 | Rome. General rate of gold pound to silver | | sesterces to date. 58-49 | 1 to 8.93 | Rome. Continued depression of gold, caused | | by influx of Caesar's spoil from Gaul. | | [N. B.--Caesar's headquarters were at | | Aquileia, at the head of the Adriatic, | | where there was also a gold mine, which | | at this period became very prolific.] 50 | 1 to 11.90 | Rome. "About the year U. C. 700," the rate | | was 11 19-21. (Boeckh, page 44.) 29 | 1 to 12.00 | Rome. Normal rate in the last days of the | | republic. ----------------------------------------------------------------------

By reference to the foregoing table it will be observed that the increase in the supply of gold in Europe, consisting of the spoils of the Orient, gathered by Alexander the Great, and brought by him to Greece, had the effect of decreasing the value of that metal so that instead of being exchangeable at the ratio of 1 to about 13-1/2 of silver, as formerly, gold became depressed, 1 ounce of it exchanging for only 10 ounces of silver. Later, when Julius Caesar extended his conquering arms into Gaul, and sent to Rome the accumulations of treasure amassed by him, the value of gold by reason of the increased supply was again depressed, so that an ounce of it was exchangeable for only 8.93 ounces of silver. With these exceptions it may be said that the relation of silver to gold for sixteen hundred years before the time of Christ had varied only from the ratio of 1 to 12 to that of 1 to 13.33. Silver at no time during all this period fell below 13.50 to 1 of gold.

Looking, now, at the relative values of gold and silver from the time of Christ to the discovery of America, we find the ratio between the two metals to be as follows:

Table showing the ratio of gold and silver in various countries of the world from the opening of the Christian era to the discovery of America:

---------------------------------------------------------------------- A. D. | Ratio. | Authorities. ---------------------------------------------------------------------- 1-37 | 1 to 10.97 | Rome. Rate under Augustus and Tiberius. 37-41 | 1 to 12.17 | Rome. Reign of } | | Caligula. } The silver coinage 54-68 | 1 to 11.80 | Rome. Reign of Nero. } much debased, 69-79 | 1 to 11.54 | Rome. Reign of } consequently the | | Vespasian. } ratio of the 81-96 | 1 to 11.30 | Rome. Reign of } metals pure was | | Domitian. } about 1 to 11. 138-161 | 1 to 11.98 | Rome. Reign of } | | Antoninus. } 312 | 1 to 14.40 | Byzantium. Reign of Constantine. Arbitrary. 438 | 1 to 14.40 | Byzantium and Rome. Theodosian code. | | Arbitrary. 864 | 1 to 12.00 | Probable ratio, as shown by the Edictum | | Pistense, under the Carlovingian dynasty. 1260 | 1 to 10.50 | Average ratio in the commercial cities of | | Italy. Local or doubtful. 1344-1660 | 1 to ---- | England. Numerous mint indentures given in | | McLeod's Political Economy, page 475. The | | ratio, except when fixed arbitrarily and | | in violation of market price, varied | | between about 1.12 and 1.14 during the | | two hundred and fifty-seven years | | included in this period. 1351 | 1 to 12.30 } | 1375 | 1 to 12.40 } | Ratio in North Germany as shown by the 1403 | 1 to 12.80 } | very accurate rules of the Lubeck mint, 1411 | 1 to 12.00 } | corroborated in the main by the accounts 1451 | 1 to 11.70 } | of the Teutonic Order of Knights, 1463 | 1 to 11.60 } | averaged in periods of forty years. 1453-1494 | 1 to 10.50 | Ratio according to the accounts of the | | Teutonic knights. As the ratio fixed in | | England by numerous mint indentures from | | 1465 to 1509 was about 1.12 this German | | ratio is considered local or doubtful. ----------------------------------------------------------------------

It will thus be observed that during the one thousand four hundred and ninety-two years from the coming of Christ to the discovery of America, silver never went below the ratio of 14.40 to one of gold.

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