Part Iv) Give to Illustrate How, When the Supply Was Smallest,

prices were lowest and vice versa! It was so almost always after the market was over-filled, when a great many speculators had lost and no one dared to purchase anew. Montanari (ob. 1687) furnishes us with an excellent theory of prices. (Della Moneta, 64 ff., Custodi.) And a still better one, Sam. Pufendorf, Jus Naturæ et Gentium, 1672, V. 1, who must be considered the best authority on the laws of prices before Stewart. Boisguillebert, Traité des Grains, II, 1, 10. Galiani, Della Moneta, I, 2, knows only the factors utilità, and rarità, although in his exposition of the latter, he discusses many points which would be called the cost of production in our time. The wisdom of Providence has granted us the most useful things in the greatest abundance to make them cheap. Stewart, Principles II, 2, 4, rendered a great service to the theory of prices, tracing back supply to the cost of production, demand to want and ability to pay; and his deserves to be called the immediate predecessor of Hermann’s remarkable theory. (Hermann, Staatsw. Untersuchungen, 66 ff.) For a peculiar theory of prices, see Paganini, Saggio sopra il giusto Pregio delle Cose, 189 ff. Neri, Osservazioni, 1751, 127. Gust. Menger, Grundsätze, I, 179 ff., has made an interesting attempt to explain the formation of prices in its simplest shape, in the supposition of a monopoly in the seller, and by then going over to the subsequent modifications introduced by the competition of many sellers.

610 “Instead of separating, in the same matter, the points of view of the buyer and seller, we may distinguish the consideration of the thing to be acquired and the thing to be given by one and the same person.” (Rau.) The possessor of the more current commodity appears especially as demanding, that of the less current as offering or supplying, (v. Mangoldt.)

611 This is for free goods=0, for monopolized goods=1/0.

612 The obvious fact that every price supposes a comparison of two commodities, and that every buyer is, at the same time, a seller, has been overlooked by only too many writers. And hence Dutot’s opinion, that, as all men buy and few only sell, the state, in case of doubt, should favor the buyer. (Réflexions sur le Commerce et les Finances, 1738, 962, éd. Daire.) And so the often-mooted question whether universal dearness or cheapness is more useful: the latter advocated, for instance, by Herbert, Police générale des Grains, 1755; Verri, Meditazioni, V; the former by Boisguillebert, Traité des Grains, I, 7, II, 9; and by the Physiocrates. (Quesnay, Maximes générales, Nr. 18 ff., I, Problème Économique; also by A. Young, Polit. Arithmetics, ch. 8.) The laity in Political Economy understand by dearness only the general cheapness of the medium of circulation or exchange, and vice versa.

613 Thus, even a poor man in Naples sometimes requires a glass of ice-water. The introduction of the extensive use of snow into Sicily improved the condition of the public health. (Rehfues, Gemälde von Neapel, I, 37 ff.) On the other hand, furs, in the far north, are articles of prime necessity. Newspapers in a free country satisfy a want much more urgent than in countries which are not free. And so, Senior says that shoes are “necessaries” to all Englishmen, since without them, their health would suffer. To the lower classes of Scotland they are “luxuries.” Custom permits them to go barefoot without hardship or degradation. For the middle classes of the same country, they are “decencies.” Shoes are worn there, not to protect the feet but one’s civil position. In Turkey, tobacco is a decency and wine a luxury. The reverse is the case in England. (Outlines, 36 ff.)

614 As to the relativity of the opposites of “temperance” and “excess,” every person should attend to the following points: a, not to exceed one’s income; b, to provide for one’s self and one’s family; c, to lay by something for a rainy day; d, to place one’s self in a position to care for the poor; e, to indulge in no pleasure injurious to body or mind; f, to give no bad example. (Tucker, Two Sermons, 29 ff.) Menger, Grundsätze, I, 92 ff., endeavors to compare the value in use of different commodities from the point of view, that the means of gratification of a less urgent want, when the more urgent wants of the present are satisfied completely, should be preferred to the means of over-gratifying the latter.

615 Thus the price of many dark articles of apparel rises in a moment of unexpected universal mourning. A very remarkable case in Paris, at the death of Henry II. (Montanari, Delia Moneta, 85, Custodi.) On the other hand, a change of fashion may greatly depress the price of many commodities. Such a change may take place even in the case of precious stones; as, for instance, now in London, a perfect emerald is most highly prized. (King, Precious Stones and Metals, 1871.) The rise of many drugs in times of cholera, and of leeches, for example, in Paris, 600 per cent. Rise of the price of powder, horses etc. at the outbreak of a war, and of the price of iron caused by extensive railroad building. In Circassia, a good shirt of mail was formerly worth from 10 to 200 oxen: but since it was discovered not to be a protection against cannon balls, its price fell 50 per cent. (Bell, Journal of a Residence in Circassia, I, 403.)

616 On “connected” (connexen) goods, the use of one of which supposes the use of the other, as, for instance, sugar and coffee, wood and stone used in the construction of buildings, see Schäffle, Nat.-Oek, II. Aufl., 179.

617 Observed by Necker, Sur la Législation et le Commerce des Grains, 1776. Compare Roscher, Ueber Kornhandel und Theuerungspolitik, 1853, 1 ff. In Athens, for instance, the medimnos of wheat cost ordinarily five drachmas, but during the siege by Sulla it rose to 1000 drachmas. (Demosth. adv. Phorm., 918. Plutarch, Sulla, 13.) Compare II. Kings, 6, 25, 7, 1. In Paris during the siege by Henry IV. it rose to 5000 per cent. of the ordinary price. (Lauderdale, Inquiry, 60 ff.) During the siege of Breisach, in 1638, a mouse was finally worth 1 florin, the quarter of a dog, 7 florins, a quarter of wheat, 80 thalers. (Röse, Leben H. Bernhards, M., 11, 269.) Compare Strabo, V, 248 seq.

618 Wheat is still more indispensable than meat. Hence, in the ten principal markets of Prussia, the price of rye rose much more from 1811 to 1860 than the price of beef; the former between 0.32 and 1.03 silver groschens and the latter between 2.32 and 4.94 silver groschens. (Annalen der preussischen Landwirthschaft, 1869, No. 9.) And so in the Rhine district, the wine harvests have undergone much greater changes in price than the prices of must, although the years differed very largely in the quality of the yield. Thus the crop of 1830 was only 225, that of 1868, 10,845 pieces, and yet the minimum price between 1831 and 1865 was only from 3 to 58 flr. per ome. (Engel, Preuss. Statist., Ztschr., 1871, 168 ff.)

619 In England, the price of wheat has not unfrequently risen from 100 to 200 per cent. when the harvest was from one-sixth to one-third under the average, and when a supply from abroad had modified even this condition of things. (Tooke, History of Prices, I, 10 ff.) Tooke is of opinion that in a country with poor-laws like those of England, a deficit of one-third in the wheat crop, if there were no stores remaining and no importation from abroad, would cause the price of wheat to rise, 500, 600, and even 1000 per cent (p. 15.)

620 See Davenant, Political and Commercial Works, London, 1771, II, 224. Tooke was somewhat acquainted with Davenant. According to this law, a deficit in the harvest of 10 per cent. would raise the price of corn 30 per cent.; one of 20 per cent. would raise the price of corn 80 per cent.; one of 30 per cent. would raise the price of corn 160 per cent.; one of 40 per cent. would raise the price of corn 280 per cent.; one of 50 per cent. would raise the price of corn 450 per cent.

621 In England, it is 38.8 per cent. of the supply that comes to the market. (Quart. Review, XXXVI, 425.) In Belgium 40, and in Saxony at least 50 per cent. (Engel, Jahrb. der Statistik etc. von Sachsen, I, 276.) In Germany, the farmers consume on an average two-thirds themselves. (v. Viebahn, Zoll.-v-Statist., II, 958.) With this Plato, De Legg., VIII, agrees remarkably well.

622 On the difference in this respect between England, Germany and northwestern Norway, see Hermann, p. 71.

623 Hence it not unfrequently happens that grain grows dear not from any real want of it, but because it is generally supposed that such want exists. For an explanation of why it is that wheat and similar commodities have an almost invariable price, when the average is taken of a long series of years, see infra § 129.

624 Case in Naples in which after a poor harvest the price of corn remained very low, because the oil-harvest had also failed, and the poor could earn nothing in that industry in which they were largely employed, and vice versa. (Galliani, Della Moneta, II, 2.) Thus Adam Smith, Wealth of Nations, I, ch. 7, distinguishes between “effectual” and “absolute” demand. Similarly J. Steuart, Principles I, ch. 18. Care should be taken to distinguish in this respect between desire and demand.

625 Thus, in the famine in Ireland in 1821, during which potatoes rose to fabulous prices, but wheat scarcely at all, and had therefore to be exported.

626 In Tooke, History of Prices (2d edition of the Thoughts and Details etc.), we meet repeatedly with the assertion that when the price of wheat rises, the price of colonial products and manufactured articles sinks, and vice versa. Thus, in England, the price of the evidences of national debt increases from two to three per cent. in fruitful years above what it is after a bad harvest. (Lauderdale, Inquiry, 93.) The British nation paid for the cotton it needed for their own consumption in 1845 over £19,500,000; in 1847 only £9,500,000. (Banfield, Organization of Industry, 162.)

627 Hence J. B. Say has said that the disposable wealth of a people is like a pyramid, with the scale of prices of the various commodities inscribed on its side. The higher a commodity is in this scale of prices, the smaller is the corresponding section of the pyramid. Compare Sir W. Temple, Essay on the Origin and Nature of Government, Works I, 23 ff.

628 This fact, in connection with the preceding, explains the well known puzzle, why the remnant of a piece of goods is comparatively cheaper than the whole piece, while a small share in the public debt is dearer than a large one. (Lauderdale, ch. 1.)

629 Rhode Island was, it is said, bought from the Indians in 1638 for a pair of spectacles. (B. Franklin, Political ... Pieces, 1707.) According to Chalmers, it was bought for 50 threads of coral, 12 hatchets and 12 overcoats. (Political Annals of the U. States.) Compare Ebeling, II, 108. Holland cloths and opium were exchanged for a long time at Sumatra for gold dust worth ten times their value. (Saalfeld, Geschichte des holl. Kolonialwesens, I, 260.) The Hudson Bay Company realized, it is said, at the beginning of this century, in trading with the Indians, a profit of 2000 per cent. (Anderson, Origin of Commerce, a. 1751.) When Altai was discovered, the natives gave as many sable-skins for a Russian kettle or boiler as could be crammed into it. With 10 rubles in iron it was an easy easy matter to gain 500-660 rubles. Storch, Gemälde des russ., R., II, 16; K. Ritter, Erdkunde, II, 557. Similar cases among the Germans: Tacit., Germ., 5.

630 A seller not actually engaged in the business of selling for a livelihood, and who has not purchased or produced with the intention of selling, is apt to consider instead of this the market price, towards the determination of which those actually engaged in trade have coöperated. Somewhat inaccurately, the amount of the cost of production is called by Adam Smith and Ricardo, “natural price,” by J. B. Say, prix naturel, also prix originaire, because the commodity at its first entrance into the world cost so much. Sismondi and Storch call it prix nécessaire, and Lotz, Kostenpreis. P. Cantillon, Nature de Commerce, 33 ff., understands by the prix intrinsique of a commodity, the amount of land and labor, taking the quality of both also into consideration, necessary to its production.

631 The cheapest cotton thread is numbered from 60 to 80. The coarser is dearer on account of the quantity of raw material in it, and the finer because of the greater amount of labor in it. (Babbage.) For similar reasons, the Venetian chains cost per braccio, No. 0, the finest, 60 francs; No. 1, 40 francs; Nos. 2 and 3, 20 francs; No. 24, coarsest, 60 francs. (Rau.)

632 If a person engaged in production has himself furnished certain of the elements of production; if, for instance, he has worked with his own hands, employed his own capital etc., he is wont to charge as much for these as they would be worth, if he hired himself out or loaned his capital.

633 The greater number of political economists consider the cost of production only from the standpoint of the individual engaged in production. Thus Darjes, Erste Gründe, 218 seq.; Ad. Smith, Wealth of Nations, I, ch. 6. J. B. Say calls even production an exchange in which the productive services of natural forces, of labor and of capital are parted with in order to obtain products. The estimate put upon the value of these services is the cost of production. For some interesting examples as to how the cost of production, in this sense, is calculated, see Hermann, I ed., 136 ff.

634 Jacob translated by Say, 1807, II, 450. Hufeland, N. Grundelgung, I, 309.

635 Compare L. Lauderdale, Inquiry, 124, against the Physiocrates. (Riedel, Nat.-Oekonomie, 1838, I, 68.) A country which possesses advantages over other countries, in respect to the cost of production of a commodity, can offer it in the market cheapest. Where, for instance, with the employment of the same amount of capital, a specially large quantity of wheat can be produced, whether it be because of the unusual fertility of the soil, or because of the extensiveness of agriculture (farming over a large area), wheat will, the demand being the same, be specially cheap, whatever the proportion of the three branches of income may have been. If relatively a great number of workmen have been employed in its cultivation, each will receive smaller wages, and vice versa.

636 Copper and steel engraving affords an example of the different kinds of wear of fixed capital, and the influence it may have on prices. Canard, Principes, ch. IV, considers that one of the most important elements in the cost of production is the length of time that capital must “stagnate” for the sake of production.

637 On this risk depends, for instance, the high price of vanilla (Humboldt, N. Espagne, IV, 10,), sparkling wines and articles of fashion.

638 Mangoldt, Lehre vom Unternehmergewinn, 1855, 81 ff. Compare v. Thünen, Der isolirte Staat, II, 1, 80 ff.

639 Wool and mutton, brandy and fattened cattle, calves and milk, honey and wax, gas and coke, hens and eggs etc.

640 Adam Smith himself remarked that all artificial lowering of the price of skins or wool must necessarily raise the price of the meat, and vice versa. (Wealth of Nations, I, ch. 11, 3.) For a very elaborate theory on this subject, see J. S. Mill, Principles, III, ch. 16, § 1. Thus Australian wool did not rise as much in price as the production of gold there might have led us to suppose, for the reason that mutton rose to an exceedingly high price.

641 It is an important and correct remark of Carey’s, that the price of a commodity depends much more on the cost of producing its like than on its own cost of production, which already belongs to the past.

642 Compare J. S. Mill, III, ch. 3, § 1. A much too high price, caused by speculation, or a much too low one, by depreciation, is regularly followed by an ebb or flow just as much too great. (Tooke, History of Prices, III, 55.) And Law, Trade and Money, 41, remarks that the price of a commodity always tends to coincide with the “first cost.” This fact Adam Smith expresses by saying that the cost of production is the center about which the market price always gravitates. (I, ch. 7.) But here there is still the error lurking, that the producer’s profit is a part of the cost of production. Compare Malthus, Definitions, ch. 6.

643 The English view, one very characteristic of the people, is that the equilibrium of prices depends on this, that all commodities should have a value equal to that of the labor they have cost. (Compare Aristot., Eth. Nicom., V, 5.) The same doctrine is to be found in its germinal state in Hobbes, Leviathan, 24, 1651, and Rice Vaughan, Discourse of Coin and Coinage, 1675. More exhaustively in Petty, Treatise of Taxes and Contributions, 1679, 24, 31, 67. (Compare Locke, Civil government, II, § 40 ff.; B. Franklin, Inquiry into the Nature and Necessity of a paper Currency, 1729; Works, ed. Sparks, vol. II.) Adam Smith admits this to be true only of the first beginnings of society, before the origin of property in land and in capital. (Wealth of Nations, I, ch. 5.) Most largely developed in Ricardo, Principles, ch. I, 4, 30. Marx, Zur Kritik der polit. Œkonomie, 1859, 6, endeavors to improve on this by calling all values in exchange “a determinate quantity of thickly curdled working-time,” meaning by work an averaged qualitätslose, social work of production. Per contra, compare Hufeland, N. Grundlegung, I, 134, 156 ff.; and Malthus, Principles, ch. 2, secs. 2, 3, who claims very earnestly that price is not determined by the cost of production, but by the relation existing between demand and supply, the cost of production influencing it only to the extent that it influences this relation. He calls attention to the poor-rates by which the cost of production of labor is raised, but its wages decreased; also to the case of bank notes etc. (Tooke, History of Prices, V, 49 ff; J. S. Mill, Principles, III, ch. 16, 2.) For a very marked case of reaction against Adam Smith and Ricardo, see Macleod, Elements, ch. 2, who, however, is much too one-sided in considering only the amount necessary to the purchaser, and his means. Even Condillac had said: une chose n’a pas une valeur, parcequ’elle coûte, mais elle coûte (du travail ou de l’argent), parcequ’elle a une valeur. (Commerce et Gouvernement, 16.) Ricardo’s doctrine is more tenable than appears at first blush. We need only to interline his theory of rent, admit that capital is accumulated labor, subtract all objects constituting a natural monopoly, and not forget that the intrinsic value of labor is one of the causes of the difference of price of different sorts of labor. Ricardo does justice to value in use even en passant. A strange effort by McCulloch to make labor the cause of the non-use of capital. (Principles, III, ch. 6, 2.) McCulloch has not unfrequently exaggerated the half-truths of his doctrines to such an extent as to produce unwittingly a reductio ad absurdum. According to Torrens, before any separation of capitalists from workmen, price depends entirely on the work done, and afterwards on the capital expended, inasmuch as wages, rent etc. are covered by the capital of the person who engages in the enterprise. (Production of Wealth, ch. 1.)

644 Ce que l’ on appelle chereté, c’est l’ unique remède à la chereté. (Dupont de Nemours.) Tenders of division in common, in England, increase and decrease according to the higher or lower price of corn during the preceding year. (Tooke, Thoughts and Details, III, 105 ff.) The cotton famine after 1861 increased the price of flax-yarn in a short time fifty per cent., although the raw material of flax did not rise in price, but only because care was not taken to increase the number of flax-spinners. (Ausland, I, 1865.) However, there were in 1864, 490,000 flax-machine spindles in course of erection. (Report of the Chemnitz Chamber of Commerce, 1864, 101.)

645 By the discovery, for instance, of new natural forces, the invention of machines, improved division of labor, improved roads etc. In France, in consequence of technic improvement, a quintal of saltpeter fell from 100 to 9 francs. See a similar instance in Chaptal, De l’ Industrie française, II, 64, 70, 434.

646 Hermann, Staatsw. Untersuchungen, 212.

647 The highest but unattainable ideal of such progress would consist in this, that all products should be obtained without cost. If this ideal were attainable, every one would be infinitely rich and all wealth would be free, like the air and the sunshine. (Compare J. B. Say, Traité, II, 2.) The complete victory of mankind over nature would consist in that all men should be free and all the forces of nature the slaves of man. (Smitthenner.) Carey intimates something similar when he says that, with the advance of civilization the tendency is for men to become more and more valuable and commodities to have less of “value.”

648 We might here speak of an aristocratic and democratic principle of the determination of prices. The greater utility of the latter is advocated in the Discourse of Trade, Coyn and Credit, London, 1697. Bacon has a good word to say for the maxim: “Light gains make heavy purses; for light gains come thick, whereas great come now and then.” Similarly, Gurnay in Cliquot de Blervache, Considérations sur le Commerce etc., 1758, 48, 54. As to how Morrison, the celebrated merchant, became rich by adhering to the principles: “to sell cheap as well as to buy cheap,” and “always tell the truth,” see Chadwick, in the Statistical Journal, 1862, 503. Compare the related opinion of Adam Smith’s continuator in an ethical direction, Garve, zu Cicero’s Pflichten, III, 100. The contrary principle, the cunning of the Judæans, according to Strabo, XVII, 800, was followed by the Dutch East India Company, when it, in 1652, caused the greater number of the vegetable roots on the Moluccas to be destroyed. Saalfeld, Geschichte des holländischen Kolonialwesens, I, 272. Also, when great quantities of roots were destroyed by burning in the East Indies. (Huysers Beschryving der Oostindischen Etablissmenten, 1789, 22.) For a clever argument against such practice, see de la Court, Anwysing der heilsame Gronden, 1663. The principle similar to that of the patent, mentioned in the text, works at the same time democratically and aristocratically, both words understood in their best sense.

649 This is true, first of all, in those industries which are intimately connected with one another, or of those which are carried on with scarcely any fixed capital; also in lower stages of civilization, where the lights and shades caused by a highly developed division of labor are not very intense. On the numerous difficulties overlooked by Ricardo in every other case, see Sismondi, N. P., II, ch. 2. The workman thereby loses his former skill, that is his principal capital, and can certainly not wait until he has acquired other and different skill.

650 When a lowering of prices is expected, demand is less than consumption: “postponed demand;” whereas, an expectation that the price will rise, produces “anticipated demand.” Tooke, History of Prices, II, 155.

651 Thus, for instance, if the workmen were exposed to starvation, or were likely to take their departure; if great stores of raw material were in danger of spoiling; if fixed capital of great value were engaged in one industry and could not be easily transferred to another. The first and third causes are frequently met with in mining, and give rise to the mode of carrying on the operation known as Zubusgruben, that is, a species of working mines upon shares. In England, after the spring of 1862, cotton yarn was not so much dearer than raw cotton, that the loss caused by the decline could be made up. (Ausland, 24 Sept., 1862.)

652 Besides, in the time immediately following, the price lowered by too great a supply, may produce a species of desperation among producers, which would lead them, in the hope of covering their losses, to increase the supply still more, until many of them were ruined. Generally, when a time of high prices is followed by a time of low prices, we find an interval during which sellers endeavor to defend themselves against the decline, and during which, as a consequence, scarcely any business is transacted, while high prices are nominally continued. And so vice versa. Tooke, History of Prices, II, 62.

653 Thus, for instance, when the change of fashion brought about the disuse of long periwigs in every-day life, their price did not cease to fall until they had entirely disappeared. But, if a person wishes to have one made to-day for a masquerade, for the stage, etc., he would pay as much for it as its former price. On the other hand, the price of whalebone has never been again as high as it was in the time when hooped petticoats were worn.

654 The great plague in the time of Edward III. caused during the first year, on account of the decreased consumption, an extraordinary cheapness of provisions. In the following year, however, they became alarmingly dear, because there were few producers, especially among the humble classes. A quarter of wheat cost in 1348, 4s. 2d.; in 1349, 5s. 5d.; in 1350, 8s. 3d.; in 1351, 10s. 2d.; while in 1346 and 1347, its average price was 6s. 8-7/8d. Rogers, History of Agriculture and Prices, I, 232.

655 As for instance when new taxes or excises are imposed. Generally when the cost of production has largely increased, purchasers do not wait until a decrease of competition among sellers compels them to exact higher prices, but meet them half way, especially when many greatly desire the commodity, and the increase of the cost is only small. (Rau, Handbuch, I, § 163.)

656 Under this rule fall, according to § 33, most products of industry properly so called. “If we lose a market for a year, we generally lose it for all time,” said an experienced manufacturer before the parliamentary hand-loom weavers’ committee, 1840-42. Of course the cost of transportation as far as the market must be estimated as part of the cost of production. In consequence of this, as well as of the difference of taxation duties etc., the superiority of one producer to another may be more than overcome. In the case of colonial commodities, which go into the interior of a country from different sea-ports, the territory supplied from each port is determined for the most part by these data. Thus, in Switzerland, for instance, we find the districts supplied by Havre, Genoa and Rotterdam; in Austria, the districts supplied by Hamburg and Triest contiguous, but the boundary line subject to many changes. (Rau, Lehrbuch, I, § 164.) It must be understood that we do not here speak of abnormal expenses made by producers individually, whether in consequence of want of skill or because of accident.

657 This is true especially of agricultural production, in which, as a rule, beside the most fertile and most advantageously situated land, the worse must be used. What Whately calls “surplus-profit” appears here in the form of rent, whereas, in other cases, it takes the shape of unusually high wages, or profit on capital. This is very beautifully and systematically developed by Schäffle, N. Œk., II; Aufl., 192 ff. According to Senior, Outlines, 15, the price-relation of two commodities to each other depends not on the quantities of them which come to market, but on the relative power of the difficulties which stand in the way of an increase in these quantities. If the same producers can pursue the cheaper mode of production which does not suffice to supply the market, as well as the dearer, we have, generally, a price which is the mean between the two costs of production. The same is true in the case of “smuggled” goods which ought to have paid duty. (Hermann, loc. cit., 83, seq.)

658 To this section belong the secrets of production which may be taken advantage of either ad libitum or within certain limits. In agriculture, advantages of production can seldom remain secret. Compare, however, the case mentioned in Garnier’s translation of Adam Smith, V, 119, and that of the orchards which yielded £1,000 yearly for every 32 acres, and which were a result of the recent introduction of the culture of the cherry in Kent, in the reign of Henry VIII. (Anderson, Origin of Commerce, a, 1540.) There is therefore, a certain odium attached by agricultural producers to keeping secret a means of agricultural improvement.

659 Compare Boisguillebert, Traité des Grains, II, ch. 2. John Stuart Mill speaks of an equation: the price of a commodity in a given market is always high enough to produce a demand corresponding to the present supply, or to an expected supply. The price of such commodities only which may not be increased to any desirable extent depends on supply and demand. In the case of all others, on the other hand, demand and supply depend on the price, and this on the cost of production. Supply and demand always tend to an equilibrium which is never really attained where the price is high enough to cover the cost of production (?). (Principles, III, ch. 2, § 4; ch. 3, § 2.) Schäffle’s theory of prices is topped by the proposition that all competing sellers and all competing buyers, after an economic fashion, do not wish to sell below individual cost-value, nor to rise above individual value in use, in purchasing. Hence, in a throng of competition of supply the costliest productions step out of the field of competition in a descending cost-value series; and in a throng of competition of demand, the most wearied cravings in an ascending value-in-use series; until the quantities offered in supply and asked for cover each other without loss, and have placed each other in quantitative equilibrium. (N. Œk. Aufl., I, 188 ff.; compare 173, 185.) It is, however, to say the least, an instance of baseless solicitude, when Wade, History of the middle and working Classes, 214, says that one unemployed workman might depress the aggregate wages of labor, almost ad infinitum.

660 Hufeland, N. Grundlegung, I, 78; Ricardo, Principles, ch. 31.

661 Dunoyer, Liberté du Travail, VIII, ch. 4; Rau, Lehrbuch, I, § 158.

662 For a good classification of monopolies, see Senior, Outlines, 103 ff. Menger, Grundsätze, I, 195, shows that no monopolist can arbitrarily determine the extent of the market for his monopoly-product when the price is fixed, nor when the extent of the market is known, the height of the price. Moreover, the price may remain longer above than under the cost of production, for the reason that it is easier to abandon a business than to begin one, and that the fear of loss is more frequently an incentive to action than the hope of gain. Hence the price of corn, when everything else is very dear, is more apt to vary from the average price, than in times when everything is very cheap. For instance, the Munich prices from 1750 to 1800 show that its highest price was 147 per cent. above, and its lowest 47 per cent. below the average of twenty years. (Rau, Lehrbuch, § 162, 182.)

663 Chance plays a great part here. Thus, Murillo’s Conception which Marshal Soult had offered several times for 150,000 francs, but in vain, was sold in May, 1852, for 586,000 francs. Paul Potter’s young bull at the Hague, which cost 625 florins in 1748, was valued before the middle of the nineteenth century at 200,000 florins. (Dethmar.)

664 The purchaser resolves to do so because it would, in all probability, cost him more to go to India or Brazil in search of precious stones. Besides after the working of the Brazilian mines in 1728, and again after the French Revolution, the price of diamonds fell greatly; in the one case, from an increase of the supply, in the other from a decrease of the demand. (Ritter, VI, 355, 365.)

665 Thus, the Champagne and Johannisberg grapes, when transplanted to the Crimea, lost most of their native taste. On China’s practical monopoly of tea culture, and Ceylon’s, especially in its southwestern part, of cinnamon, at least so far as the peculiar aroma is concerned, compare Ritter, Erdkunde, VI, 123 ff. The small deer of Angora no sooner leave the little district of Asia Minor to which they belong, than they are in danger of degenerating. (Revue des deux Mondes, May 15, 1850.) Indian birds-nests cost no more than 11 per cent. to gather, dry etc., of the market price. (Crawfurd, East India Archipelago, III, 432 ff.; Hogendorp, Sur l’Ile de Java, 201.)

666 Poor material for fuel, poor day-laborer work—dwellings, medical attendance. (Menger, Grundsätze, I, 116.)

667 Thus sea fish, oysters etc. were formerly much cheaper during the summer than during the winter, at Ostend and Scheveningen, because during winter they could be sent to a distance. At Billingsgate market, in the mackerel season, fish cost per hundred 48 to 50 shillings at 5 o’clock in the morning, 36 shillings at 10 o’clock, and 24 shillings in the afternoon. (H. Schulze, Nat-Œkonomische Bilder aus England, 1853, 241.) In the Rhine country, the price of fruit does not vary so much as in Saxony, because it is customary there to employ the surplus in the manufacture of cider, of preserves etc., thus making it transportable and durable. Frequently, after a very abundant crop of grapes or olives, under-prices prevail, sometimes on account of a want of vessels, cellar-room etc.; they must, therefore, be sold rapidly.

668 Compare Adam Smith, Wealth of Nations, I, ch. 7.; Tooke, History of Prices, I, 97. Furs vary very much in price, sometimes 300 per cent. in a year, because, in the case of this entirely natural product, every thing depends on the stores of them, on the temperature etc. (McCulloch, Commerc. Dict., s.v.) On the other hand, the price of coffee usually varies only after periods of a number of years, because new plantations produce only after a lapse of years. (Ibid.) Pigs vary much more than cattle in price, because the former may be made ready for the slaughter house in one-third of the time required for the latter. (Thaer, Rationelle Landwirthschaft, IV, 374.)

669 Thus the rent of farms, where a numerous proletarian population will live exclusively from agriculture, depends on scarcely anything but the number of people and the extent of the land. (J. S. Mill, Principles, III, ch. 2.) In retail trade, where personal want comes in question, prices are much more subject to be modified by small circumstances, than in wholesale trade, where both parties are only intent on “doing business.” (J. S. Mill, III, ch. 1, § 5. Tooke, II, 72 f.)

670 Hucksters, butchers, dealers in corn, inn-keepers etc. A remarkable case where Parisian dealers in hare-skins attempted to ruin the new fashion in silk hats by distributing a great number of them among the rabble, at mock-prices. (Hermann, 1st ed., 91.) The author witnessed a similar but unsuccessful attempt in Berlin in 1838-39, by the tailors against the so-called Macintosh coat. On the conspiracy of the English dealers in second-hand goods against auctions, see Athæneum, Dec. 5, 1863. It is one of McCulloch’s characteristic exaggerations, that he says that conspiracies to raise the price of a commodity by artificial means, are broken just as soon as they begin to obtain their object by the interest of the individual members to profit by the advanced prices. (Edition of Adam Smith, Edinb., 1863, p. 59.)

671 J. S. Mill, Principles, II, ch. 4.

672 Monopolies universally prohibited: L. un. C. De Monopol. (IV, 59.) Police-order of the Empire, 1548, tit. 18.

673 Privileges which the purchaser voluntarily accords to the seller are wont to be useful to both parties. (Hermann, loc. cit. 155, 158.)

674 Besides, guilds, castes, corporations etc. may, when the vent diminishes, produce under-prices as readily as they may monopoly-prices when the vent is very good. (See Adam Smith, Wealth of Nations, I, ch. 7.)

675 Thus, for instance, the traveler who wanted to cross a stream, would find himself delivered over to the tender mercies of the ferry-man, without protection of any kind against his demands. But repeated impositions in the matter of prices would have for effect to bring a point into disrepute as a place of crossing, and would induce the public to seek another. Similarly in the case of hackney-coachmen and carriers in large cities, and in that of innkeepers, at hotels and postal termini etc.

676 Fixed prices by governmental authority were soonest attempted after bad harvests, but, indeed, with a strange ignorance of the natural grounds of the increase in price of bread-stuffs. Thus in the time of Charlemagne. (Capitul. a, 805; Baluz, I, 423.) Similarly in the case of other articles of universal necessity, when oppressively but necessarily dear. (See § 175.) During the last centuries of the middle ages, with their multitude of actual monopolies, and at the beginning of the modern era, fixed prices became more and more general. The earliest instance in the history of England of a fixed price for bread was in 1202 (v. Raumer, Hohenstaufen, V, 372), and in 1266, 51 Henry III. The earliest in Prussia was in 1393. (Voigt, Geschichte von Preussen, II, 659.) Many instances of fixed prices in the Rhine provinces of Austria in 1530. In Mylius, Corp. Const. March, V, 2, 587 ff., we find an ordinance of 1653 fixing prices in Berlin, and including 72 industries. There is a very complicated system of fixed prices in the police ordinance of the electorate of Saxony of 1612, and in the decree concerning the coin of 1822. As to how, in Saxony in 1578, an attempt was made to ascertain the cost of the production of shoes by shoemakers, see Joh. Falke, Gesch. des Kurf. August in volkswirthschaft. Beziehung, 1868, 252. There was an enormous extension of governmental fixing of prices under Philip II.; one of the principal causes why Castile was so far behind Aragon economically. (Townsend, Journey through Spain, II, 221.) Sometimes these measures were adopted to prevent distress-prices; as in Hochheim, in favor of the vintners. (Becher, Polit. Discurs, II, 1652.) The predilection especially of German authorities for the fixing of prices by governmental power, in the sixteenth and seventeenth centuries is very remarkable. Thus Luther, vom Kaufhandel und Wucher, 1524; Calvin, Leben Calvins, by Henry, II, Beilage, 3, 23; Bornitz, De Rerum Sufficientia, 1625, 246; Seckendorff, Teutscher Fürstenstaat, 5th ed., 1776, 210; Becher, II, 1823 ff.; Horneck, Oesterrich über Alles, wenn es will, 1684, 123; Leibniz ed. Dutens, VI, I, 250; Thomasius, Göttl. Rechtsgelahrtheit, 1709, 209; even Frederick the Great, Mylius, N. Corp. Const. March, I, 190. Similarly, Mariana, De Rege et Regis Institutione, III, c. 9. Compare, however, III, c. 8, and Bacon, Serm., 15; Historia Henrici, 1037, 1040. On the other hand, Child, 1690, and North, 1691, reprove all such measures. Roscher, Zur Geschichte der englischen Volkswirthschaftslehre, 65, 90 f. Earlier yet, Salmasius, who would allow the free fori ratio to govern. (De Usuris, 1638, 583.) For a very rigorous price-tariff in the old Indian laws, by which, inter alia, the price of provisions was to be fixed anew every fourteen days, see Menu, Laws, VIII, ch. 401 ff.

677 Where trade is free, the filet de boeuf, for instance, is worth four times as much as the flesh of the ox’s neck or throat; but prices fixed by a government can scarcely take cognizance of the difference. How easily might not a fixed price for beer, for instance, be evaded by diluting that beverage with water, or fixed prices for inn-keepers by dealing out portions smaller in quantity or of an inferior quality. Moreover, as early a writer as De la Court, Polit. Discoursen, 1662, c. 4, remarks that the establishment of fixed prices by governmental authority raises the average price of all commodities rather than lowers it, for the reason that the few who are sellers by trade can do more to influence the authorities than the many buyers, whose interests are divided among numberless different commodities.

678 Schäffle, Nat.-Œkonomie, II, 384 f.

679 Banfield, Organization of Industry, 120. “Where the economic life of a people is still undeveloped, and the production of one enterprise is not from the first based on the estimated consumption of another, the circulation of goods brings with it great profits and great losses; whereas, profits and losses grow smaller, but at the same time more uniform and regular, in proportion as the circulation of goods increases in rapidity and regularity.” (Stein, Lehrbuch, 212.)

680 In Belgium, during the last forty years, the price of wheat has become more constant every year, while the price of rye has become more variable; for the reason that rye has gradually ceased to be an article of popular consumption, and therefore to be an important article in trade, and is consumed almost entirely and directly by its producers. (Horn, Statist. Gemälde von B., 1853, 185.) Rodbertus rightly conjectures that the price of wheat was much more variable in ancient times than it is with us. (Hildebrand’s Jahrb., 1870, I, 36.) That it was so may be inferred from the surprisingly large family supplies which were laid in, as appears from Digest, XXXIII, De Penu legato.

681 In Würtemberg even officials etc. buy their own wine almost always directly from the vintner. This causes prices there to be exceedingly variable, frequently from hour to hour. (v. Reden, Statist. Zeitschrift, Nov. 1847, 1008.) How greatly the mere presence of a regular market has contributed to make prices more constant, may be seen in the suburbs of Hamburg, where fish offered for sale on the street are sold in the evening for one-third of the price asked for them in the morning. Besides, purchases made with a view to speculation may increase the variations of price, if the speculation is unskillfully conducted, especially when a low rate of interest, and of the profit of the person engaged in it, has produced a blind race among the speculators. Here the price of a commodity rises, not from any natural cause, but because it once rose before, and vice versa. (Senior, Outlines, 17 ff.; Hermann, 90 ff.)

682 That fixed prices suppose that men are engaged in the production of the commodity in question, as their calling in life, see Garve, Zu Cicero’s Pflichten, III, 64 ff. Chess-like commerce of colporteurs, and in caravans etc. Concerning the dreadful higgling of the Bedouins, see Wellsted, Reise in Arabien, Rödiger’s translation, I, 147; and the still worse bantering in Cashmere, where the merchant, in the first place, always denies that he possesses the desired commodity, then begins to search for it, in order to discover what value the purchaser puts upon it etc. (K. Ritter, Erdkunde, III, 475.) On the practices in Indian fairs, see Th. Skinner, Excursion in India, 1832, I, ch. 6; on the bazaars in Asia, Andree, Globus XII, 7, 211. Herberstein says of the Russians in the sixteenth century: mercantur fallacissime et dolosissime nec paucis verbis ... mercatores nonnunquam non uno tantum aut altera mense suspensos detinent, verum ad extremam desperationem perducere solent. Hence the great variations in prices and commodities. (Rerum Moscov. Commentt., ed. Starczewski, 39 f.) Similarly also, in 1674, according to Kilburger: Büsching’s Magazin, III, 249. But, on the contrary, it is said of the Plescovers, educated by intercourse with the Hanse; tanta integritas ... in contractibus, ut uno tantum verbo res ipsas indicarent omni verbositate in fraudem emptoris omissa. (Herberstein, 52.) In the England of the present day, the custom of marking each piece of goods with its price is very general. Concerning the rapidity and the paucity of words with which prices are settled in that country, where business men do not even salute their customers, nor customers the business man, see C. G. Simon, Observations recueillies en Angleterre, 1835, I, 129 f. The Athenian laws (?), that fixed prices should be asked, and that sellers should not sit down that that they might sell more rapidly, points to something similar. (Athen., VI, 226 f. Plato, De Legg., XI, 916 f.) Athenian law prohibiting mendacity in the markets. (See Demosth., Lept., 459.)

683 Thus the German book-trade has fixed prices. Many merchants never make an offer to their educated customers who are wont to do so with peasants etc.; because they are aware that the latter purchase only after they have compelled the seller to come down greatly from his first proposed price. Among the Quakers it has been a rule from the beginning, never to ask more for their wares than they were determined to accept. (Hume, History of England, ch. 62.)

684 Sir William Temple, Observations upon the Netherlands, Works I, 134, compares honor in trade to discipline in an army. Similarly, Law, Trade and Money, 209 f. Ferguson, History of Civil Society, III, 4. Where the seller is not obliged to make known the existence of certain defects in his wares to the purchaser before sale, there is always scope for fraud. Compare Digest De Edict. aedilit., XXI, I. On the meaning of the German legal maxims: Hand muss Hand wahren, and Ein Wort, ein Mann, see Eisenhart, Deutsches Recht in Sprüchwörtern, 311 f., 319 f. It is a principle in matters of business, that the person who through malice or carelessness recommends a man of whose probity there is already some doubt, should bear the damage caused by his recommendation. (Martens, Grundriss des Handelsrechtes, 24 ff.) Many attempts at dishonesty are prevented by laws which in important contracts, especially in sales of land etc., require the presence of witnesses, and this particularly in the lower stages of civilization. (Meier and Schömann, Attischer Process, 522; Roman, Emancipatio; Grimm, Deutsche Rechtsalterthümer, 608 f.), or even a public proclamation before the assembled community, at least written documents invested with all legal formalities as practiced among civilized peoples. On Greek laws of this nature, see especially, Theophrast., in Stobaeus, Sermon., XLIV, 22. Very remarkable in Sparta. Schol. Aristophan., Aves, 1284.

685 Compare Lotz, Revision, I, 255 ff. In England the price of wheat scarcely ever varied more than from 1 to 2. In Ireland the price of potatoes varied from 1 to 6. (McCulloch, Comm. Dict., v. Potatoes.) Compare Engel, Jahrbuch für Sachsen, I, 491 ff. The custom of asking enormous prices with the expectation of being beaten down, is usual in Italy and carried to a frightful extent, and related to the bad custom prevalent there of begging a little after-payment to every little gratuity or drink-money which has been received.

686 Storch, Handbuch, I, 311. J. B. Say, Traité I, ch. 16. As to how commerce, when fully developed, is wont to be more moral than when only half developed, see Garve, loc. cit., and Versuche IV, 149 ff. How fortunate for the public economy of nations that the prices of corn especially have been growing more steady all the time since the middle ages. See Roscher, Ueber Kornhandel, 56, 61.

687 Trade by barter was very general in several states of the American Union about the close of the eighteenth century. In Vermont, for instance, it was usual for a doctor to exchange his medicines against a horse, and for the printer to buy corn, butter etc. with a newspaper. (Ebeling, Geschichte und Erdbeschreibung, II, 537.) In Maryland, the Assembly fixed by law the relative proportions at which tobacco, pork, corn and wheat should be exchanged the one against the other. (Ebeling, V, 435 ff. Douglas, Summary of the British Settlements in N. America, 1670, V, 2, 359.) Even as late as 1815, children were wont to run the streets of Corrientes, crying: “Salt for candles, tobacco for bread etc.” It was commerce with England that first led to trade by money in the United States. (Robertson, Letters on South America, 1843, I, 52.) Similarly in Rhokand until the end of the eighteenth century, where the cities, as a consequence, presented the appearance of a fair the whole year round. In the beginning of this century, the khan introduced the use of copper money made from Persian cannons; and much later yet, there were scarcely a million rubles in money to a million men. (Ritter, Erdkunde, VII, 753.) Basil Hall found the uncivilized inhabitants of the Loo-Choo Islands ignorant of the use of money. (Voyage of Discovery, 1818.) Concerning trade by barter in the Homeric age, see the Iliad, VII, 472 ff. A supposed law of Lycurgus prohibited the use of money in purchases, and allowed barter only. (Justin., III, 2.) According to Pausan., III, 12, only barter existed in India (?) in his time.

688 The person who has been used to paying for four pounds of meat with twenty pounds of bread, and is asked to give twenty pounds of bread in exchange for some other article, must of course have some unit of measure in his mind to serve as a means of comparison between the value of that article and that of four pounds of meat. In Denmark, during the rule of the aristocracy, there were fixed prices sanctioned by the tradition of long usage, in accordance with which the prices of all commodities were estimated in relation to a ton of barley or rye—a natural consequence, apparently, of the want of a common measure to govern in the greater number of transactions. Bergsoe, Archiv der Polit. Œk., IV, 314; Graugan’s Icelandic Code contains a remarkable fixed price of this nature in the supplement to the Kaupa-Balkr or Commercial Code, I, p. 500. Similarly among the ancient Persians. Reynier, Economie publique des Perses, 308.

689 That is, (200x(200-1))/2. Compare Rau in Storch, Handbuch, III, 253. The “at least” has reference to the fact, that in barter, the many different kinds of most commodities has to be borne in mind. (Knies, Geld und Credit, I, 218.)

690 This transportation of values supposes an equality of values of the money in two places, while the transportation of goods supposes different values of the same kind of goods in both places. (Knies, Geld und Credit, I, 218.)

691 While the words pecunia, danaro, dinero, and argent, are all derived from unessential qualities, the German word for money, Geld, corresponds with the essential quality of money, since it denotes that which is of value everywhere (gilt). On the other hand, nummus and νόμισμα from νόμος, (Bœckh. Metrolog. Unters., 310.), moneta (the English, money), are from the temple of Juno Moneta, in which the Roman coins were for a long time stamped. In old German, the word for money, Geld, means everything that is paid by any one. (Grimm, D. Rechtsalterth., 382.) The present meaning of the word is to be met with in a very old document of 1327. (Arnold, z. Geschichte des Eigenthums in den deutschen Städten, 89.)

692 The wrong definitions of money may be divided into two classes: those which convey the idea that it is more than a commodity, and those which imply that it is less.

This was a point which was contested even among the Greeks. There were many who claimed that wealth consisted exclusively in the possession of much money; as we find, for instance, in the pseudo-Platonic dialogue Eryxias; while others insisted that money was something purely imaginary (λῆρος), and the creation, exclusively, of human laws. (Aristot., Polit., I, 3, 16, Schn.) Νόμισμα σύμβολον τῆς ἀλλαγῆς ἔνεκα. (Plato, De Rep., II, 371.) Anacharsis compares money to counters. (Plutarch, De Profectt in Virtute.) Aristotle, himself, subscribed to the second opinion, although he saw clearly, that only useful and current things (χρείαν εὐμεταχείριστον πρὸς τὸ ζῆν) could be used as money. (Polit., I, 3, 14 ff. Eth. Nicom., V, 5, 6, Rhet., II, 16.) Xenophon ascribed properties to money which no other commodity possessed; especially when he said that it could never be too plentiful, and that its price could never fall. (De Vectt. Ath., 4.) The finest ancient explanation of the nature of money is that of the jurisconsult Paullus, L. I.; Digest, XVIII, 1; and it well deserves the long commentary devoted to it by P. Neri, Osservazioni etc., in Custodi, P.A., VI, 324, ff.

Among the moderns, Melancthon., Corp. Ref., XVI, 498, and Seb. Frank, Chronik., 760, consider money as a mere symbol. On the other hand, the over-estimation in which the precious metals were held by the adherents of the Mercantile System was owing, without doubt, to their very superior utility as money; for we very frequently find that the adherents of that school insist that the precious metals must circulate. (See § 9 and § 210.) v. Schröder, Fürstl. Schatz- und Rentkammer, III f., considers new copper coins as an increase of the national wealth, but not other copper which is merely a commercial commodity. He frequently calls money, the pendulum commercii, and expresses ideas concerning it as enthusiastic as they are obscure (p. 86.) Horneck, in his Oesterreich über Alles wenn es will, 1864, calls gold and silver “our best blood, the very marrow of our strength,” and “the two most indispensable universal instruments of human activity and existence.” (p. 188.) Th. Mun, England’s Treasure by forraign Trade, 1664, (ch. 2) considers cash-money and resources as synonymous in every way. Only, he says (ch. 4) that it is sometimes advisable to allow one’s money to remain in foreign countries, and to use bills of exchange, banks etc., at home, as a substitute. F. Gee, Trade and Commerce of Gr. Britain, edition of 1738, laments the “stiff-necked folly of those who think money a commodity like any other.” It is one of the most common demands of the adherents of the Mercantile System that the home mines of gold and silver should be worked at no matter what sacrifice, since the money employed in working them continues to remain in the country and the newly coined precious metal is clear gain. Compare Schröder, loc. cit. 109 ff., 181. Horneck, loc. cit. 173. Broggia, Della Monete, 1743, cap. 33; v. Fusti, Staatswirthschaft, 1755, I, 246: Forbonnais, Finances de France, 1758, I, 148. Ulloa, Noticias Americanas, 1772, ch. 12. We seldom meet with the correct view on this subject in the seventeenth century. Sully, of whom Henry IV. said that he never found anything to be possessed of beauty which cost double its real value, had it at times. (Economies royales, LXXIII.) So had v. Seckendorff, Teutscher Fürstenstaat, 1655, 5th edition.

It is in accordance with the usual course of human development that the exaggerations of the Mercantile System led to a reaction characterized by an exaggeration in the opposite direction. Even Davanzati, Sulle Monete, 1588, traces the value of money back to human convention and refuses to find it in nature. A natural calf, he thinks, is più nobile than a golden one; although he elsewhere expresses his admiration of the precious metals, calls them cagioni seconde della vita beata, and lauds them because they procure us tutt’essi beni (20, 21, Cust.) Montanari (ob., 1687) demonstrates from the use of leather money etc., that the authority of the state is the only power which gives money its character as money. (Della Moneta, 35.) Davenant (ob., 1714) carries his inclination to call money “the servant of trade, measure of trade,” so far as to compare it to a ticket or counter. (Works, I, 355, 444.) Strongly as Law, himself, opposes the convention theory (Trade and Money, ch. I; Sur l’ Usage des Monnaies, 1720, p. 1.), his disciple Dutot, in his Réflexions polit. sur le Commerce et les Finances, 1738, 905, éd. Daire, contrasts not only paper money but also gold and silver as representative wealth, with real wealth. Berkeley, Querist, 1735, teaches that the real notion of money is not that of a “commodity, standard, measure, pledge, but [No. 23] ticket or counter, entitling to power and fitted to record and transfer such power.” (441, 475.) Even if the names, livre, shilling etc., remain, and the metal is dropped, every article may still as well as before be counted and sold, industry promoted and the course of commerce preserved. (p. 440.) According to Montesquieu, Esprit des Lois, XXI, 22, gold and silver are a richesse de fiction ou de signe. Compare Lettres persanes, II, 18. Benjamin Franklin also maintains that the value of gold, for instance, is principally a credit-value. Remarks relative to the American Paper-Money, 1765, Works, II, Sparks’ edition. Forbonnais, Finances de France, I, 86 f., calls money, simply a means to put commodities, which alone have value originally, in circulation. Hence it is, in itself, a matter of indifference whether, for a given quantity of coin, a person gives one thaler, or ten. In the Elements de Commerce, I, 11, II, 67 ff., he draws a distinction between richesses naturelles (raw material), artificielles (manufactured products), and richesses de convention (money.) von Schlözer, Aufangsgründe, 1805, 100, 138, calls money something imagined; and Th. Smith, Essay on the Theory of Money and Exchange, 1807, asserts, that true money is only an ideal measure of value, of which coins in turn are only the representatives. Compare, however, Edinb. Review, Oct., 1808. Oppenheim, Die Natur des Geldes, 1855, grants that in the beginnings of trade, money possessed the character of a commodity; but says that as soon as the services of circulation of the money-commodity prevailed over its services in consumption, it lost all its importance for the latter purpose, and that all relations dependent thereon ceased. At present, he claims money is only the representative of commodities, but no commodity itself. See, on the other hand, Roscher’s critical analysis in the Literarisches Centralblatt, 1855, December.

The true doctrine was advocated in a classic form by Nicolaus Oresmius (ob. 1382). See his Tractatus de Origine et Jure nec non et Mutationibus Monetarum, newly edited by Wolowski: Paris, 1864. See Roscher’s essay in the Comptes rendus of the Académie des Sciences morales et politiques, vol. 62, 435 ff. Based on the latter we have Gabr. Biel (ob. 1495), De Monetarum Potestate simul et Utilitate, 1542, and G. Agricola, De Re metallica, 1556, I, 4 ff. This true doctrine was acclimated earliest in England and Holland, and before the mercantile system invaded them. Compare Hobbes, Leviathan, 24, in which the concoctio bonorum is described by means of money, and the full and clear chapter 12 of Salmasius, De Usuris (1638), who, among other things, shows how Midas, who turned everything into bread, died of thirst. Petty shows very clearly that national wealth does not consist exclusively nor mainly in money. Every country, he says, needs a certain quantity of money to carry on trade. It would be a waste to increase the former, the latter remaining the same. But the precious metals, by reason of their durability and universally recognized value, possess the character of wealth in a higher degree than other commodities.

On the whole, the use of money in a nation is like the use of fat in the individual. (Quantulumcunque concerning Money, 1682.) Compare Roscher, z. Geschichte der eng. Volkswirthschaftslehre, 80 f. Davanzati and Hobbes had compared it to the blood, as has recently Schmitthenner, Staatswissenschaften, 1839, I, 459. North calls money a commodity of which there may be an excess as well as a want. (Discourse on Trade, preface and postscript.) Compare Locke, Considerations on the Lowering of Interest, 1691, Works II, 13 ff., 19. Galiani, 1750, Della Moneta, IV, holds a very happy middle place between the alchymists and the philosophic contemners of gold. See, further, Quesnay, éd. Daire, 64, 75 ff. Turgot, Sur la Formation des Richesses, § 30 ff, had many clear views on this subject. Verri, Meditazioni, 1771, II, 1, calls money the universally current commodity. The expressions, measure of value, pledge, representative of all commodities might be true also of all other wares. It cannot, however, be denied that most modern political economists have not borne sufficiently in mind the peculiarities which distinguish money from all other commodities, as is apparent from the doctrine of the balance of trade prevalent in Hume’s and Adam Smith’s time. To this extent, therefore, the semi-mercantilistic reaction instituted by Ganilh, Théorie de l’Economie politique, 2822, II, 380 ff., 426; St. Chamans, N. Essai sur la Richesse des Nations, 1824, ch. 3; and Colton, Public Economy for the United States, 1849, 203 ff., who bring into relief the difference between “money as the subject” and “money as the instrument of trade,” was not wholly unfounded. Ad. Müller exaggerates a correct thought, and causes it to degenerate into a species of mystic pleasantry, when he calls every individual in the state and every commodity that possesses value, in exchange or a social character, money.

The highest object of the state is to develop this money-character more and more. (Elemente der Staatskunst, II, 194, 199.) The statesman, he says, should be money. (III, 206.) A very valuable monograph on this subject is M. Chevalier’s De la Monnaie, 1850, constituting the third volume of his Cours d’Economie polititique. Knies, Geld und Credit, I, 1873, is here most thorough and acute, especially in keeping separate, by well defined lines of demarcation, the five different functions of money: measure of value (by proper division into parts: price-measure), instrument of exchange, means of transportation of values, and means of storing up and preserving values.

693 Knies shows how the making of money legal tender by the state, although of only secondary importance, is by no means an irrelevant matter, since persons must then have it, even if they do not want it for purposes of use or exchange, to discharge their liabilities thereby etc., etc. (Tübinger, Zetschrift, 1858, 272.)

In all these cases, barter-economy (Naturalwirthschaft) meets with greater and greater difficulties as civilization advances. How, for instance, could 50 days annually of socage-service or labor be redeemed by the achievement at one time of 1,000 days of socage-service or labor? The rich man requires money principally as a means of payment, the poor man as a medium of exchange. The requirement or need of a people of media of payment is much more susceptible of extension or contraction, than that of media of exchange, made especially so by the intervention of claim-rights instead of money. (Knies, loc. cit, 200 ff.) Ravit, Beitr. z. Lehre vom Gelde, emphasizes this feature of money altogether too much after the manner of a jurist. But he is entirely right in adopting the exclusion of the rei vindicatio against the honest possessor as necessary to the completion of the idea of money.

694 Sismondi, N.P., I, 131, very rightly remarks that this has made practice as much easier as it has theory more difficult.

695 Law, Trade and Money, 19. Hence, before the invention of money, scarcely anything but the things most indispensable to existence were produced. Were there no money, there would be very few scholars, artists etc.; for the classes who produce most of the things indispensable to existence make but few demands for them. Büsch, Geldumlauf, I, 11 ff., 36, II, 54.

696 Turgot, Formation et Distribution, § 48 ff. Commodities which perish rapidly could be produced by persons devoting themselves to their production as a business only after the invention of small coin. (Lueder, N. Œk., 1820, 283.)

697 Compare Knies, Geld und Credit, I, 219.

698 Compare Schmitthenner, loc. cit., I, 457. One of the principal advantages of money consists in this, that every producer can discover what there is an over-supply or under-supply of in the nation, by means of the relation of the price in money of his products to the cost of producing them, estimated in money, (v. Thünen, Isolirte Staat, II, 2, 235.)

699 Hence it is that so many socialists attack money. Th. More assures us that with the simple abolition of money, vice and misery would, for the most part, disappear of themselves. Hence in his Utopia, criminals are bound in golden chains and the chamber-pots are made of gold and silver in order to make these metals contemptible. (Ed. 1555, ff., 197 ff.) Similar views among the over-cultured Romans. (Compare §§ 79, 204.) Auri sacra fames. Virgil, Æneid, III, 56. Pliny, too, would recall the days of trade by barter. (H. N., XXXIII, 3.) Even in Boisguillebert, Factum de la France, ch. 4, we find, together with many correct views on the nature of money, passionate declamation against it because of its darker side. Argent criminel. (Détail de la France, 7. Dissertation sur la Nature des Richesses etc.) More recently this darker side has been dwelt upon by F. Möser, Patriot. Phant., I, 28; Ortes, Economia nazionale, II, 17, and the would-be restorer of the middle ages, Ad. Müller. While the latter writer lauds the feudal system as a “sublime fusion of person and thing” (Elemente I, 221), the present system of wages, because it is a system of compensation, he blames, and prefers the feudal for the opposite reason (?). “The only merit which the state recognizes in our day is one of service.” (III, 259.) Kosegarten, Geschichtliche systematische, Uebersicht der N. Oek., 1856, 146 ff., is no friend to the economic system to which money gives a distinctive character. Per contra, compare Bastiat, Maudit Argent, 1849.

700 Mirabeau, Philosophie rurale, 1763, ch. 2, adds as the third great invention the tableau économique of the Physiocrates. For a comparison of money and language, see Hamann, Werke, II, 135 ff., 509. Hehn, Kulturpflanzen und Hausthiere, finds it characteristic of the race, that wine, writing with letters, and money, all owe their origin to the monotheistic stem of the Semitic people.

701 Where every man becomes a merchant, and the society itself a commercial society. Ad. Smith, Wealth of Nations, I, ch. 4.

702 Just as descriptive is the German word billig (equitable) for cheap. Here it is plain that language takes sides with the possessor of money!

703 The contrast between barter-economy and money-economy is of great and fundamental importance. It repeats itself with so much regularity in the history of every highly developed nation, that political economists gifted with perception for the historical, could not possibly overlook it. Thus, Aristotle, for instance, establishes with the utmost care and accuracy the difference between οἰκονομικὴ and χρηματιστικὴ, that is, between natural economy and artificial economy, corresponding to the difference between value in use and value in exchange. (Polit., I, 3, Schn.) Similarly D. Hume, who allows a period of luxury, culture, industry, of trade and manufactures, of freedom and circulation of money, to be preceded by one in which the feeling of wants is not awakened, in which coarseness and idleness prevail, one in which agriculture is alone pursued, and monetary economy and freedom decline, and trade by barter obtains. (Discourses, passim, especially On Interest and on Money.) A similar contrast we find frequently, and as one of his fundamental thoughts, in J. Steuart.

As to how the transition from barter-economy to monetary-economy is generally effected, see F. G. Hoffmann, Lehre vom Gelde, 1838, 176 ff. In the Tyrol, as late as 1820, the greater portion of purely mechanical work, such as that of the smith, the carpenter, and the washerwoman, were purely feudal duties. On the other hand, payment in money was the rule, in the beginning of the fourteenth century. (F. Beidermann, Technische Bildung in Oesterreich, 3.) Yet, for a long time after, the functions of a measure of value were performed by pieces of land, and those of an instrument of exchange by cattle and natural products. (Arnold, Gesch. des Eigenth., 207.) In France, money-economy, i.e., trade by money, had grown to importance earlier. (Nitsch., Ministerialität und Bürgerthum, im 11. und 12. Jahr., 143.) Even in the time of Mary Stuart, the Scotch estimated the rent of land in “cauldrons of victuals.” (Moryson, Itinerary, 1617, III, 155.) In ancient Italy, during the first three centuries of Rome, there was, with the exception of the Greek colonies, only trade by barter. Mommsen, Römische Gesch., I, 293, shows that the oldest ases were not money in the higher sense of the word, but belonged rather to the stage of barter-economy. On the other hand, we find in the time of the classic jurists, much as slavery had limited the sphere of action of money, the principle: pecuniæ nomine non solum numerata pecunia, sed omnes res, tam soli quam mobiles, et tam corpora quam jura continentur. (L. 222, Digest L. 16; compare 4, 5, 178.) Similarly in Cicero, Top. 6. De Invent, II, 21. De Legg, II, 19, 21; III, 3. Compare Dionys. Hal., N.R. IV, 15.

704 Were money nothing but a measure of values in exchange, it should on that account, if on no other, have value in exchange itself, as a measure of length must necessarily have length itself. (We measure time on a clock by means of the revolution of the hands on the dial.) Again, value in exchange supposes value in use. The so-called “money of account,” such as the East Indian lac de roupies, the Portuguese reis, and the earlier English pound sterling are no imaginary magnitudes, which would disappear with the figures of our system of counting (see Hufeland, N. Grundlegung, II, 33, in reply to Struensee, Abh., III, 501); but real coin-values which can not be represented by only single pieces of coin, units of value for the most part no longer recognized by the state, but which the people still retain. See M. Park’s (Travels, 27) refutation of the fable circulated by Montesquieu, Esprit des Lois, XXII, 8, that the regular standard money of the Mandingo negroes was a mere imaginary standard. Hobbes, Leviathan, 24, exhibits a very good knowledge of this subject.

705 Compare P. Neri, Osservazioni, 1751, VI, 1. Lord Liverpool, Treatise on the Coins of the Realm, 1805. The person who takes money as such must always harbor the hope of being able to dispose of it again as money. Hence, such an acceptance always supposes the existence of a certain amount of commercial confidence. The savage Goahiros, between Rio de la Hacha and Maracaibo, are too “distrustful” to take anything in trade but commodities fit for the most immediate use. (Depons, Voyage dans la Terrefirme, I, 314.) Similarly in the twelfth century, the heathen Laplanders. (Arndt, Liefl. Chronik, II, 3.) Commodities which barbarians can consume immediately are objects of the first necessity, whereas more civilized people, who are in a condition to undergo greater expense, look more to the technic qualities of money, such as divisibility, capacity for transportation and durability. v. Scheel shows in a very happy manner how, as commerce increases, money comes to be, as it were, subjected to a process resembling that of distillation: first mere increase of stores for use, next preponderating values in exchange, lastly mere orders for the same possessing no independent value. Hildebrand’s Jahrbb., 1866, I, 16.

706 The last circumstance continues to be one of great importance for a long period of time in the frigid zones. Thus, the beaver-skin continues still to be the unit of measure of trade in much of the territory of the Hudson Bay Company. Three martens are estimated to be equal in value to one beaver, one white fox to two beavers, one black fox or a bear to four beavers, a rifle to fifteen beavers. (Ausland, 1846, No. 21.) The Esthonian word, raha, money, means in the related language of the Laplanders, fur. (Krug, Zur Münzkunde Russlands, 1805.) Concerning skin-money in the middle age of Russia, see Nestor, Schlözer’s translation, III, 90. The old word kung, money, means marten. By degrees it came to pass that instead of whole skins, only two “snouts” were given or other pieces of leather about a square inch in size, which were probably stamped by the government and redeemed in whole skins at the government magazines. Hence, there is here supposed a species of assignats, and of disturbances of credit. The Mongolian conquerors would not recognize them, and they therefore became suddenly valueless. In Novgorod and Pskow, the system continued some time longer, for the reason that these places had little trade with the Mongols. In the rest of the kingdom it now became necessary to introduce silver money, and in the north to return to real squirrel and beaver skins. Karamsin, Russ. Gesch., I, 203, 385; I, 96, 191 f. Voyage de Rubruquis, in Bergeron, Voyages I, 91. Herberstein, Rer. moscov. Commentt, 58 ff. Even in 1610, a Russian military chest was captured by the enemy, and in it were found 5450 silver rubles, and 7000 fur rubles. (Karamsin, XI, 183.)

707 When the Danes progressed so far as to practice agriculture, they used grain instead of cattle, in quantities corresponding to the value of one cow or one sheep, for money, to the end that their idea of a unit of measure might not become obscured. (Ravit, Beiträge, 3.)

708 Homeric determination of prices in oxen. Iliad, II, 449; VI, 236; XXI, 79; XXIII, 703 ff; Odyss., I, 431. Compare, however, II, VII, 473 ff. In Draco’s time, money-fines were imposed in cattle (Pollux, IX, 60 ff.), and in Athens, before Solon’s time, even the metal coins were, for the most part, stamped with the figure of an ox. Plutarch, Theseus, 25. Böckh., Metr. Uuntersuch., 121 ff. Among the most ancient Romans (Cicero, de Rep., II, 35) the imposition of fines in property, the coins first stamped by Servius, boum oviumque effigie (Plin., H. N., XVIII, 3, Cassiodor., Var., VII, 32), and the words pecunia, peculium, peculatus, derived from pecus, point to something analogous. (Varro, De L. L., V, 19; De Re rust., II, 1; Cicero, De Rep., II, 9; Ovid, Fast., V, 281; Plutarch, Publicola, 11.) Old German fines in cattle, in Tacitus, Germ., 12, 21; Lex Ripuar, 36, 11; Lex Saxonum, 19. Ulfilas translates αργύριον δοῦναι (Mark, 14, 11), faihu giban. Very old German documents, of the seventh and eighth centuries, name horses as purchase-price. (Grimm, Deutsche Rechtsalterth., 586 f.) Otho the Great imposed cattle-fines. (Widuk Corb., II, 6.) Similarly, in King Stephen’s laws of Hungary (Wachsmuth, Europäische Sitturgesch., II), in the old Irish Brehon laws (Leland; History of Ireland, 36 ff.), as well as in the Scotch collection of laws, Regiam Majestatem, of 1330. (Honard, II, 263 f, 537.) Viva pecunia of the Anglo-Saxons in the laws of William I. In ancient Sweden, all property was estimated in fä=cattle (Geijer, Schw. Gesch., I, 100), just as now, in Icelandic, fe=property. In Berne, the German vieh, cattle, is used to express commodities. Among really nomadic races this is, of course, still more the case. Thus the Kirghises use horses and sheep as money, and wolf-skins and lamb-skins for small change. (Pallas, Reise durch Russland, 1771, I, 390.) Among some of the Tartar tribes, everything is stipulated for in cows. (v. Haxthausen, Studien, II, 371.) Among the Persian nomads, sheep are used as money; or when they are held in subjection in the cities, corn, straw and wool. (Ritter, Erdkunde, VIII, 386.) Oxen in use as money among the Tscherkessens. (Klemm, Kulturgeschichte, IX, 16.) W. B. Hermann doubts, however, whether cattle were ever used as a medium of exchange. He thinks rather they were employed only as a measure of price. (Münchener Gel. Anz., 580.)

709 That of vanity which presents itself among some people sooner than that of clothing.

710 In Genesis, 1, 24, gold appears only as a valuable ornament. Abraham paid for his purchases in silver.

711 For this reason, zinc-money is just as natural with the Malays and Chinese as iron-money with the Senegambians. (Mungo Park, Travels, 27.) And so Plutarch, Lysand., 17, may be right when he calls iron the earliest universal means of payment. In Sparta, too, where industrious efforts were made to maintain the lower stage of culture, this medium of payment was longest maintained. Compare, however, St. John, The Hellenes, III, 260 ff. The first copper coins were stamped a short time before Philip, father of Alexander the Great. (Eckhel, Doctr. Numm, I, XXX ff.) On the other hand, Italy, partly because it had mines of its own, and partly because of its intercourse with Carthage (Cyprus), had become, at a very distant period, so rich in copper that the circulation of copper, or to speak more accurately, of bronze, was naturally introduced. Compare Niebuhr, Röm. Gesch., I, 475 ff. (Aes alienum, obæratus, ærarium, æstimare.) Copper was all the more adapted to this end the more frequently it was found unmixed. It was generally used in preference to iron because of the greater facility of working it. (Hesiod., Opp., 150 f.; Lucret., V, 1285 f.) In modern nations copper money seems to have been employed only after silver money. Thus, it was not stamped in England before the time of James I. (Adam Smith, I, ch. 5), nor in Sweden before 1625. (Geijer, Schwed., Gesch., III, 56.) Money was struck from the metal of molten bells during the French Revolution!

712 In Russia, between 1763 and 1788, there were 76 million rubles of gold and silver coins struck, against 54 million of copper rubles. (Hermann). On the other hand, in France, between 1727 and 1796, there were struck only 40 million francs of copper, 10 million of billon or base coin, and 3967 million of gold and silver.

713 Michaelis, De Pretiis Rerum apud veteres Hebræos, 183.

714 Strabo, VIII, 358. Hiero, tyrant of Syracuse, found it exceedingly difficult to obtain gold. When the Spartans wished to make an offering of gold at Delphi they were obliged to have recourse to Crœsus. (Herodot., I, 69; Theopomp., in Athen, VI, 231 ff.) Aristoph., Ranae, 720, calls gold “new” in contradistinction to the “old money,” that is, silver.

715 Plin., H. N., XXXIII, 13. Compare, however, Dureau de la Malle, Economie polit. des Romans, I, 69, after Varro, apud Charisium, I, 81. (Putsch.) It is certain, however, that when Italy was conquered, the Romans had introduced a circulating medium of silver, and that it was the prevailing medium; but in the time of Cæsar and Augustus, a gold circulation was the prevalent one. Yet the state treasure was deposited in gold during the period of silver circulation, because gold was, without question, better adapted to storing up and transportation.

716 Muratori, Antiquitt., IV, Diss., 28.

717 Henry was obliged to issue an order to the mayor and sheriffs of London, to get his gold into circulation; but he soon saw himself compelled to desist from executing his design. Edward III. was able only after a voluntary circulation of them had continued for a long time, to prohibit any one’s refusing the rose-nobles. (L. Liverpool, loc. cit.)

718 German., 5. Still more striking is the example cited by Herbelot, Bibliothéque Orientale (1697), 485. Rubruquis, Voyage, ch. 13. In the time of Nadir-shah, the Kurds gave, without the slightest hesitation, a pound of gold for a pound of silver or copper. (Ritter, Erdkunde, VIII, 395.)

719 Recommended even by Adam Smith, ch. 5, and for Germany by F. G. Hoffmann, Drei Aufsätze über das Münzwesen, 1832. In Egypt, also, for a long time the wealthiest country of the middle ages, the circulation of gold prevailed until the twelfth century. (Macrisi, Historia Monetae Arab., cap. 3 ed., Tychsen.) Harun Alraschid’s income was estimated at about 7,500 cwt. of gold. (Ritter, Erdkunde, X, 235.) Something similar related of the Carnatic, “the land of ancient emporiums.” Ritter, Erdkunde, V, 564, after Ferishta.

720 The use of the cauris (Cypræa moneta) in India this side and beyond the Ganges, in upper Asia, and in southern Africa depends on their employment for purposes of ornament, on their greater uniformity, and on the rarity of copper which would otherwise be better suited to purposes of change. In Calcutta, 1280 cauris are equivalent to about half a shilling. (McCulloch.) Compare K. Ritter, Africa, 149, 324, 422, 1038; Asien, I,964; II, 120; III, 233, 739; IV, 53, 420; Salin, III, 62; Botz, in the Tübinger Ztschr. Similarly among the fishing population of Northwestern America. (Stein-Wappäus, Handbuch I, 352.) Salt as money on the Chinese-Birman boundary (Marco Polo, 38), but especially in the interior of Africa, where nature does not at all produce it, but into which it is brought by caravans from the deserts, where salt is found in great quantities. M. Polo, Travels, 305, found the current price of a salt-tablet, two and a half feet long, one foot, two inches broad, and two inches thick, to be equal to the value of two pounds sterling among the Mandingos. In Abyssinia, the salt-bars are generally six inches long, three inches broad, one and a half inches thick, and they are bound with an iron ring to protect them against fracture. Sixty of them are worth one thaler. (Ausland, 1846, No. 35.) Slaves used as money: Barth, Reise, III, 338, 344. Tea-blocks in upper Asia and Siberia; and they are given by the Chinese to the Mongols as pay for troops. (Ritter, Asien, III, 252,) In Keachta, a tea-block is equal in price to one paper ruble. (Ausland, 1846, No. 20. Timkowski, Reise nach China, 143.) Date-money in the Sivah oasis. (Hornemann, Reise, 21.) Also in the Persian date-country, where, formerly, the lowest silver piece of money was coined in the form of a date (Ritter, Asien, VIII, 752, 819.)

The ancient Mexicans used as money cocoa-nuts, in bags of 24,000 pieces, cotton-stuffs, small pieces of copper, and gold dust in quills. (Humboldt, N. Espagne, IV, 11.) Cocoa-beans are still used as small change there. (Ibidem, IV, 10.) On the Amazon, wax-cakes weighing one pound are used. (Smyth, Journey from Lima to Para, 1836.) Among the ancient inhabitants of Rügen, linen (Helmold, I, 39); and still among the Icelanders, the so-called Vadhmâl. During the middle ages, 120 ells of Vadhmâl were equal in value to one milch cow or six milch sheep, or two and a half ounces of silver. (Leo in Raumer’s histor. Taschenbuch, 1835, 515.) That the ancient northern mode of valuation, by the Vadhmâl and in cows is older than by the mark is shown by Wilda, Gesch. des deutschen Strafrechts, I, 331. The cod-fish money used by the Icelanders was, on account of its great commercial importance as an article of export, an advance upon the use of the Vadhmâl. Among the Caffirs, besides cauris, mats, javelins, glass corals, but particularly brass rings, are used as money. From three to four hundred of these rings are strung together, and two such strings are equal in value to one cow. (Klemm, Kulturgeschichte, III, 308, 320 f.) Ivory used as money in the neighborhood of the Portuguese colonies in Africa. (Martius, Reise, II, 670.) In Logone, Denham (1822) ff., had met with pieces of iron as a medium of circulation; but on the other hand, Barth (1849), with small strips of cotton from 2 to 3 inches in breadth, and shirts for larger sums. (A. R., III, 274, 297, 538.) In colonies, money of this nature is continued for a long time. Thus cod-fish used in Newfoundland, sugar in the English West Indies (Adam Smith, I, ch. 4), tobacco in Maryland and Virginia. (Douglas, V, 2, 389; Ebeling, V, 435 ff.) The last was related to the inspection and storage of the tobacco intended for exportation. Payment was made in orders on the stored and inspected tobacco, even as late as the end of the eighteenth century. In 1618, the forced circulation of tobacco was decreed in Virginia, and under severe penalties. (Gouge, History of Paper-Money and Banking in the United States, ch. 1.)

721 When the caravans no longer touched at the oasis Agades, gold and silver money fell into disuse, and grain, stuffs etc. did service as instruments of circulation. (Barth, Reisen und Endeckungen, I, 144.)

722 Ad. Müller says very pertinently, but in a very mystical vein, that the precious metals combine in a very high degree and yet in a very simple manner, the principal qualities in which man’s greatness finds expression: rarity, flexibility, uniformity, mobility, durability and beauty. (Elemente, II, 266.) In another place, he says, the highest ideal good is God, the highest material good, gold! (III, 65.) The mysticism of gold was most highly developed among the alchymists of the sixteenth and seventeenth centuries.

723 Iron beds are worked only when they contain at least 18 per cent. of metal. Generally it is estimated that the furnace should yield 30 per cent. In the copper mines of Mansfield, Norway, Agordo and Venice, it goes as low as from one to three per cent. On the other hand, silver mines which yield 0.17 per cent. of metal are considered worth working. Lastly, gold is so rare that generally it can be extracted only from time to time by the ordinary mining processes. As a rule, men are content to gather it where nature has charged itself with its refining. The extreme limit of the working of gold appears, according to Plattner and Haussmann, at Goslar, to be reached when in 5,200,000 parts of mineral earth there is one of gold. Spite of this, however, by reason of their great ductility, the precious metals have been able to penetrate even into the meanest huts in one form or another. It has been estimated that a silver leaf may be attenuated by beating to a thickness of only 0.00001 of an inch, and a gold leaf to 0.0000035 of an inch. An ounce of gold spread on a silver thread may attain a length of 13,000 English miles. (McCulloch.)

724 How easily, for instance, could leather-money, such as was used by the ancient Galls (Cassiodor., Varia, II, 32,) be increased to any desired quantity, and thus its price brought down.

725 Engel, at the usual tariff for land and railroad freight (10 and 5 pfennigs per mile and hundredths of a mile) estimates the enhancement of the price of the following commodities, for one mile of transportation of a custom-hundred-weight (Zollcentner) at the following percentage of their average value:

Gold, value 47610 German Reichsthaler per cwt., 0.000007 by land, 0.0000035 by railroad. Silver, value 3000, 0.00111 by land, 0.00055 by railroad. Cotton, value 45, 0.074 by land, 0.037 by railroad. Tin, value 24, 0.1389 by land, 0.0694 by railroad. Lead, value 8, 0.416 by land, 0.208 by railroad. Iron, value 2.5, 1.333 by land, 0.666 by railroad. Rye, value 2, 1.666 by land, 0.833 by railroad. Potatoes, value 0.6, 5.555 by land, 2.777 by railroad. Coal, value 0.12, 27.777 by land, 13.888 by railroad.

Their great specific gravity, also, makes the precious metals easy of transportation. Thus Cazeau calculates that a given value of gold is 17,222 times as easy to transport as the same value in wheat. But as, where the weight is the same, the labor of transportation is inversely as the volume, this number must be multiplied by 26, and we therefore have 447,772 times. In the case of silver, the relation to wheat is as 1:15,554. Concerning copper, see Storch, Handbuch 1, 488. Chevalier, Cours, III, 17 ff.

726 This, at bottom, is also true, of the various kinds of copper; only, here, complete refining is impracticable on account of the relation between the cost of production and the product-price.

727 On the other hand, copper, and still more zinc, tin and lead lose much of their value in the fire. Pearls may lose their entire value by fire, and diamonds more than half of it.

728 Aqua-regia, a mixture of nitric and muriatic acid, dissolves gold. Chlorine and bromine attack it. It has been noticed to vaporize at a very high temperature. A gold thread vaporizes when a strong electric current is passed through it. A small ball of gold gives off a great deal of vapor if placed between two carbon points and subjected to the action of a powerful galvanic pile. (K. F. Naumann.)

729 Compare Hatchett, Experiments and Observations of the various Alloys, On the specific Gravity and comparative Weight of Gold, 1863. The French five-franc pieces wear away, on an average, in a year, 0.00016; the English crown, 0.00018; the half crown, about 0.00173; and the shilling, about 0.00456. (L. Liverpool, Treatise on the Coins. 204; M. Chevalier, Cours, III, 128 ff.) The wear from use of the south German gulden is 0.292 per 1,000. (Rau, in the Archiv. N.F.X, 256.) According to Jacob, the average wear of coin is 2.38 per 1,000. (Historical Inquiry into the Production and Consumption of the Precious Metals, ch. 23.)

730 Adam Smith, Wealth of Nations, I, ch. II, Digr.

731 Solera, Sur les Valueurs, 1785, 271 ff.; Custodi. Half an ox, for instance, is worth half the value of a whole one only for a few well defined purposes. As to how much the value of the diamond varies with the size etc., see Dufrênoy, Traité de Minéralogie, II, 77 f. On the other hand, the separated parts of a piece of metal are very readily reduced to a whole.

732 In the case of the ox, it is impossible to imagine a mark which might not be eluded by its losing flesh.

733 The cost of coinage since 1849 has been ¾ of 1 per cent. in the case of silver, and in that of gold not quite 2 per 1,000. (M. Chevalier, Cours, III, 110.)

734 Platinum possesses many of the properties necessary to an instrument of exchange in as high a degree as gold and silver,—great value in exchange, great specific gravity and great durability. On the other hand, its pliability as to form is very small, and therefore the cost of coining it would be high. The conversion of platinum coins into utensils, and of utensils into coin, which would contribute to the supply of money when needed, and to a diminution of that supply when the demand decreased, would be much more difficult on this account; and also because of the small degree of beauty possessed by that metal, which renders it little adapted to purposes of luxury. Under these circumstances, the rarity in nature of the metal is a great drawback; for the discovery of a new mine would create a great perturbation in prices. For this reason, the Russian platinum coins have been generally very much undervalued since 1828 in the commercial world, and the whole experiment was given up in 1845-46. Compare J. Schòn, National Œkonomie, 128 ff. Aluminum, discovered by Wöhler, and which can be prepared from argillaceous earth, is capable of manipulation in a very high degree (malléable et ductile à peu près sans limite, excessivement fusible), almost as indestructible as the precious metals, but easily distinguished from silver by a fine bluish color, which has been compared to that of tin; by its small specific gravity, from 2.5 to 2.67, and its ring like that of iron. Hence it is very doubtful whether aluminum can be made to play the part of a substitute for silver, and still more so whether it can be used for coining.

735 Lingot, bullion. In India, beyond the Ganges, and in China, bars are very much used. (Sycee.) In the latter country, besides these bars, there is no coinage except that of a mixture of copper and lead, for small change. (Th. Smith, An attempt to define some of the first Principles of Political Economy, 31. Timkowski, Reise nach China, III, 366.) Concerning Brazilian trade by bars, see Spix und Martius, Reise, I, 346 f. They are stamped with the national coat of arms, the sign of the mint, the number by which registered, that of the year and of the degree of fineness. Concerning the Persian bars, the laries, see Noback, Handbuch der Munzverrh., III, Taf. 29.

736 Concerning the utility of the precious metals for purposes of money, see Pliny, A.N. XXXIII, 3; Oresmius, De Mutatione Monetarum, ch. 2; Law, Sur l’ Usage des Monnaies, 683 f. Daire, where we read that before the invention of money, silver had served all kinds of useful purposes, but that now it served its most important purpose, namely the making of the best material for money on many accounts. Yet Law’s book, Money and Trade considered (1705) is based mainly on the idea that pieces of land are much better adapted for purposes of money than the precious metals (185)! Galliani, Della Moneta, 1750, I, 3, 4, and P. Neri, Osservazioni, 1751 ff, Cust., have very correct ideas on this subject.

737 North, Discourses upon Trade, 16. The capacity of money to act as a storer of wealth has been as much over-estimated by the so called Mercantile System, as its capacity to transfer wealth has been by the so called currency-school.

738 Adam Smith compares money to a large wheel, by means of which a due share of the means of subsistence and of enjoyment is distributed to each member of society. Elsewhere he compares its utility to streets and roads. (Wealth of Nations, II, ch. 2.) Hume, On Money, Pr., prefers to compare it to the oil with which the wheels of circulation are greased. Sismondi compares money to porters. (N. Principes, II, ch. 2.) “Money is to commerce what railways are to locomotion, a contrivance to diminish friction.” (J. S. Mill.) According to Schmitthenner, 455, it bears the same relation to other commodities that the written language of a people’s literature does to their dialects.

739 Law’s views on money are, in part, excellent. Thus, for instance, he says that the debasement of the coin from financial necessity is as great a folly as it would be to try to enlarge a piece of goods too small for the purpose for which it was intended, by diminishing the length of the yard-stick. (Sur l’Usage des Monnaies, 697.) A country entirely isolated from all others could get along as well with one hundred pounds sterling as with a million. (Money and Trade, p. 88.) Elsewhere, he confounds money and capital to such a degree that he considers every increase of the amount of money in a country as an enrichment of the people, a means to give employment to the poor, to carry on manufactures etc. (Money and Trade, 23, 26 ff., 168.) A given quantity of money is capable of giving employment at most only to a certain number of men. (21.) A nation’s power and wealth depend on the population and its stores of goods, these on commerce, and commerce in turn on the amount of money. (Pp. 110, 220.) The advice given, in 1848, to the National Assembly of France, but which it had the good sense to reject, to overflow all France with the so-called bons hypothécaires, is akin to Law’s practical propositions. M. Chevalier, Cours, III, 8, rightly ridicules the literal construction of the words: l’argent est abondant, when merchants find it easy to obtain credit, and considers it as well grounded as it would be to infer from the maxim: l’argent est le nerf de la guerre, that rifles and bullets were made of silver.

740 Adam Smith was not entirely clear, in his own mind, on this point. Thus inconsistently enough, he calls money unproductive—“dead stock,” for the reason that it leaves no material traces behind it of the goods which it has transferred from one hand to another. (II, ch. 2.) Is not the same true of trade itself? And yet Adam Smith calls trade productive. His error is doubtless a remnant of the Physiocratic doctrine, to which Smith still held. Compare Quesnay, 94, éd. Daire. Even Twiss says that money employed as money is unproductive, but that, when employed as a commodity, it is productive. (View of the Progress of Political Economy, since the sixteenth Century, 1847.) Besides it is not a peculiarity of money alone, that, after it has served the purposes of production, it comes out of the product unaltered. The same is true of quicksilver employed in amalgamation. (Hermann, 2nd edition, 302.)

741 Senior, Three Lectures on the Value of Money, 1840, is, in so far, not wrong when he says that the value in exchange of the precious metals is still ultimately determined by the want of such commodities as are luxuries. This last determines to what extent the production shall be extended by the working of the poorest mines, whereas the wants of circulation can be met as well by small as large quantities of the metals.

742 The good or bad result of this production depends on many different elements which may compensate on another. In California and Australia gold is to be found in large quantities, and is easily mined; but the workmen make large demands which the nature of the country renders it difficult to meet. In the Harz mines, where the cost is scarcely covered, (Lehzen, Hannover’s Staatshaushalt, 1853, I, 139), the shafts are sometimes 175-½ fathoms deep, but this is made up for in a measure by the moderate demands of the workmen and their skill in mining. Among the Mandingos, the auriferous material is so rich that ⅓ per 1,000 of the weight of the sand is washed out into pure gold in ten minutes (M. Park, Journal, 53 ff., addenda, XIX), while in Europe, where the proportion is only 1/100 per 1,000, mines are still considered worth working. But then, what workmen there are there! In Peru, the burdensome height of the mines above the level of the sea and the want of combustible material more than counterbalance many favorable advantages, while in Norway the cheapness of wood compensates for a great many disadvantages. Another thing which contributes towards the uniformity of the price of the precious metals is the circumstance that the great amount of fixed capital required in the greater number of mining enterprises, postpones for a long time the working of good mines as well as the abandonment of poor ones.

743 Older writers have estimated the amount of money necessary in a country at 1/5, 1/10 (Petty), 1/15, and even 1/30 of the yearly income of a people (Adam Smith, II, ch. 2.) According to Cantillon, Sur la Nature du Commerce, p. 73, it is from 1/6 to 1/10 of the annual gross production of a nation.

744 Davanzati, Lezione sulle Moneta, 1588, 32 ff., Cust., thinks that all terrestrial things which serve to satisfy the wants of men are, by virtue of agreement, equal in value to all the gold, silver and copper; and that the parts comport themselves as the whole. The price of a commodity is based on this, that men find in it as much of their beatitudine as is afforded them by a given quantum of gold etc. Similarly, Montanari, who adds as a limitation the quantity of money spendibile in commercio. (Della Moneta, 45, 64, Cust.) The same opinion leads Locke to the singular conclusion, that, as there is now in the world, ten times as much silver as there was previous to the discovery of America, each single piece of silver, separately considered, and taken in relation to such commodities as have not varied, is worth only one-tenth of what it was then. Locke, here, starts out with the gross assumption, shared even by Ganilh, Théorie, II, 386 ff., that in the case of money the demand is always, relatively speaking, equally strong and just as great as the supply, or as the amount in the market. (Works, II, 23 ff.) Further, Montesquieu, Esprit des Lois, XXII, 7, 8. Per contra, however, see Montesquieu, ibid. XXII, 5, 6, and Hume, On Money and on the Balance of Commerce, Essays II, 1752.

Hume knew perfectly well, that only circulating money and circulating commodities operated on price, but failed to take the rapidity of circulation into account. Similarly, Forbonnais, Eléments du Commerce, II, 212; even Canard, Principes, ch. 6; Fichte, Geschloss. Handelstaat, 93 ff., and Stein, Lehrbuch, 58. Contested by Law, Trade and Money considered, 140, a work directed especially against the Mercantilistic essay, Britannia languens; 1680, by Mélon, Essai politique sur le Commerce, ch. 22; Genovesi, Economia civile, 1764, II, 1, 15; Steuart, Principles, II, ch. 28; Verri, Meditazioni, XVII, 3 ff.; Büsch, Gedlumlauf, II, 40. The simple taking of an inventory of most private resources which possess so much greater value in other commodities than in money is enough to demonstrate the error of Davanzati’s doctrine. Thus, in France, in Necker’s time, the cash money in the kingdom was estimated at 2,200,000,000 livres, and the average value of the wheat crop alone at 1,000,000,000. Necker, Législation et Commerce des Grains, 1776, I, 215. Recently, Michel Chevalier, estimated the amount of money in France at from 3-½ to 4 milliards, while the official estimate of its immovable property alone was over 83 milliards.

745 When money becomes dearer, less of it is of course needed; and when cheaper, more, for the same purpose.

746 In contradistinction to presents, acts of spoliation, but especially to barter.

747 The discoverer of this truth is supposed by many to be Bandini, Discorso economico, 1737, 141 f., Cust. Berkely, however, in the Querist, 1735, 477 f, writes: “A sixpence twice paid is as good as a shilling once paid.” Much earlier yet, in 1797, Boisguillebert, Détail de la France, II, 19, had the germ of this doctrine, but he confounds circulation with consumption. And Locke, Considerations, II, 13 ff., presented it in 1691 with great clearness, although he did not always remain true to his theory. Compare Quesnay, éd. Daire, 64; Cantillon, 159 ff., 382.

748 If the number of annual exchanges effected by 1 dollar = u; the total number of dollars in the store of money = m; the rapidity of circulation, that is the number of exchanges effected on an average by each dollar in a year, = s: then is u = m s, s = u/m, m = u/s.

749 Since good money is so easily stored away and preserved, no one is in haste to get rid of it. St. Chamans, N. Essai sur la Richesse des Nations, 122 ff.

750 Among the Kurds, all the money in their camps is used for head-ornaments for their women. (K. Ritter, Erdkunde, X, 887.)

751 Thus, Sir David North, Discourse on Trade, 1691, Postscr.

752 Lotz, Handbuch, 377, is of opinion that even in England £100,000 employed in trade in land can scarcely effect exchanges to the amount of £1,000,000 in a year. The same sum employed for the same purpose in London, in stocks and in the trade in commodities, will effect exchanges to the amount of £160,000,000.

753 Cernuschi, Mécanique de l’Échange, 1865, 132 ff.

754 Thus Petty (ob. 1687) is of opinion that England needed as much money as ½ of all its ground-rents amounted to, as the ¼ of all house-rents, and 1/52 of all the wages of labor for a year; for the reason that ground-rents are paid semi-annually, house-rents quarterly, and wages weekly. (Several Essays, 179; Political Anatomy of Ireland, 116.) Locke, on the other hand, assumes 1/50 of the wages of labor, ¼ of all the revenue of land owners, and 1/20 of the amount cash money taken in in a year by merchants. Of these amounts, there should be always, at least, one-half in ready money on hand, if commerce would not be brought to a stand-still. If leases were to be paid for on short terms, a great saving of money would be possible. (Works, II, 13 ff.) Pinto, Traité du Crédit et de la Circulation, 34, calls special attention to the case of Tournay, in which the commandant, during the siege of 1745, made 7,000 florins serve him for seven weeks to pay the garrison; by borrowing that sum anew every week from the inn-keepers etc.; which they, again, had received from the soldiers.

755 If all were to commit their payments to the care of the same banker, it would be possible to do with almost no money. But even now, if 100 separate merchants were obliged to keep each 3,000 dollars in their money-chests for unforseen contingencies, a banker might accomplish the same for them with 50,000 dollars, because it is not probable that the unforseen contingencies in question would occur to all at the same time.

756 In the London Clearing-House, in 1839, £954,401,600 were paid by means of the use of £66,275,600 as a circulating medium, for the most part notes of the Bank of England. (Tooke, Inquiry into the Currency Principle, 27.) From May, 1868, until May, 1869, £7,068,078,000. (Statist. Journal, 1869, 229.) The New York Clearing House, in 1867, effected payments to the amount of £5,735,031,900 (Ibid., 1867, 577), and in 1868, $30,880,000,000. (Hildebrand’s Jahrb., 1869, II, 168.)

757 This system began in the middle of the seventeenth century. (A Discourse of Trade Coyn and Paper Credit, 64.) As early a writer as Sir J. Child, N. Discourse on Trade, 46, says, that for some time, every man who had from £50 to £100 in money, sent it to his banker, and that since that time, all the money flowed towards London and the country was deprived of it. (127 ff.) As a rule, the goldsmiths were also bankers. One such smith had at the time of the Great Fire of 1666, emitted £1,200,000 in notes. (A Discourse etc., 67.) The Bank of England, as a money center, dates from 1694. The London banks developed into intermediaries principally before the time of the French Revolution. (Thornton, Paper-Credit of Great Britain, 1802.) This remarkable institution had grown to vast dimensions even in Thornton’s time, although it has been much enlarged since 1825. (Tooke, History of Prices, 152 f.) Similar conditions among almost all highly civilized peoples. Thus in Greece, compare Becker, Charicles, I, 294. Concerning a person who had 14 talents’ worth of resources, 26 minæ, and therefore three per cent. in cash, see Lysias, adv. Diog., 6. In Rome, compare Polyb., XXXII, 13. Cicero, pro Font., I, 1. For Italian analogous cases, part of which may be traced back as far as the twelfth century, see Lobero, Memorie storiche della Banca de S. Georgio, 1832; or the Dutch “cassiere” Richesse de Hollande, I, 376, ff. In France an ever increasing centralization of the money-trade is to be noticed in Paris (M. Chevalier, Cours., III, 418); and now of the money-trade of Germany in Berlin.

758 Compare Fullarton, On the Regulation of Currencies, 1845. Among the Dutch, the custom of using all commercial commodities as much as possible, as a basis of the circulating medium, was much earlier developed. (Child, Discourse on Trade, 65, 264 f.) In Great Britain, the aggregate amount of bills of exchange put in circulation was, in 1839, £528,000,000, which sum has been increased annually at the rate of about £24,000,000. (Tooke, Inquiry into the Currency Principle, 26.) Between 1828 and 1847, there circulated at the same moment, on an average, £79,127,000 in bills of exchange in England, and in Scotland, £17,380,000 (Athenæum, 1850, No. 175), and in Great Britain and Ireland, from £180,000,000 to £200,000,000. (Tooke, History of Prices, VI, 588,) According to Macleod, the bills of exchange and promissory notes together amounted to £500,000,000; bills of exchange, bank-notes and bank-credits, to over £600,000,000. (Elements, 12, 325.) Macleod calls the currency the sum total of all debts due by every individual in the country. (Elements, 43.)

759 A case in England, in 1857, in which a house with £10,000 capital failed with liabilities amounting to £900,000. (Report of the select Committee on the Bank Act, 1858, XV.) Or where a speculator with £1,200 made purchases on credit to the amount of £80,000, and then failed with a deficit of £16,000. (Fawcett, Manual, 442 f.)

760 Remarked by as early a writer as Davenant, Works, IV, 106 ff. Compare, however, II, 238. Quesnay, éd. Daire, 75 ff. Lord King, Thoughts on the Effects of the Bank Restriction, 1804, 17 ff. Exhaustively treated by Chevalier, Cours., III, 397 ff. He very much laments the fact that the customs of France cause it to need from 3½ to 4 milliards of cash money, while England does a much larger trade with 1,200 millions. (I, 207 ff.) In France, it is said that the amount of money, in 1812, was 1,500,000,000 francs(?). (Peuchet, Statistique élémentaire, 473.) In Prussia, in 1805, it was 90,000,000 thalers. (Krug, Betracht. über den Nationalwohlstand des preuss. St., I, 244.) The annual amount of production in the former country was, 7,036,000,000 francs; in the latter it was estimated at 261,000,000 thalers, so that in Prussia the relation of money to national income was, as 1:2.9; in France, as 1:4.69.

761 It is scarcely possible to determine exactly the amount of money in a country; for the reason that, outside of the suppositions of bankers etc., there is no authority which can be safely relied on, unless it be the reports concerning the coinage, and of the emission of paper money. The information, no less necessary, to be derived from the statistics of the importation and exportation of money, the melting down of coin by gold smelters etc., can never be exactly obtained. In England, at the end of the sixteenth century, the circulating medium was estimated at £4,000,000 (Hume, History of England, ch. 44, App.); under Charles II., at £6,000,000, when the population was 6,000,000. (Petty, Several Essays, 179.) About 1711, Davenant, New Dialogues, 11 ff., mentions £12,000,000 as the amount; and Anderson, Origin of Commerce, a., 1659, £16,000,000 in 1762. The circulation of gold, shortly before 1797, was estimated by Rose at, at least, £40,000,000; by Lord Liverpool, at £30,000,000; by Tooke, at only £22,500,000. (History of Prices, V, 130 ff.) Moreau de Jonnés, 1837, assumed £43,500,000 (Statistique, I, 329), and Helferich (Schwankungen der edlen Met., 1843, 147), £45,000,000. Sir Robert Peel, estimated the amount in 1845 at £59,000,000, to which was to be added an average of £28,000,000 in bank notes, after deduction made of the metallic reserve. According to Jevons, the amount of British money is now £80,000,000 in gold, £14,000,000 in silver, £1,000,000 in copper; the sum total, including bullion and bank notes, after the deduction of their metallic representatives, £134,000,000. (Economist, December, 1868, July, 1869.) In France, Vauban, Dîme royale, 104 (Daire), estimated the cash money at about 500,000,000 livres, over 750,000,000 francs, with which Voltaire, Siècle de Louis, XIV, ch. 30, agrees so far as the year 1683 is concerned. In 1730, Voltaire, assumes the amount to be 1,200,000,000 of the coins of that time. Necker, Administration des Finances, III, 66, estimated it, in 1784, at 2,200,000,000 livres; Mollien, about 1806, at 2,300,000,000. The valuations in Louis Philippe’s time varied from 2,400,000,000 to 2,500,000,000 (Chamber of Deputies, April, 13, 1847), and 4,000,000,000. (Blanqui.) The valuations of 1870 were, according to Wolowski, 4 milliards; and to Bonnet, from 5 to 6 milliards. Compare Wolowski, L’Or et l’Argent, 383 ff., Euquête, 42. The German Zollverein is said to have had, at the beginning of 1870 (Soetbeer) 480,000,000 or 520,000,000 thalers (Weibezahn) cash money.

In Wirtemberg, Memminger, 1840, estimated the resources of the country at 1,600,000,000 guldens, of which 36,000,000 were cash; and the yearly gross income at 179,000,000 guldens; so that the money was 20 per cent. of the latter and 2¼ per cent. of the former. The annual sales = 226,000,000. Therefore the coin currency must have circulated on an average between six and seven times in a year. In the electorate of Hesse, there were per capita 4 thalers, 18 sgrs., 9 hellers, metallic money, and 3 thalers, 9 sgrs., 4 hellers, paper-money. (B. Hildebrand, Statist. Mitth., 1853, 185.) The amount of money in Naples, in 1840, was estimated at 42,000,000 ducats. (Scialoja.) It has been estimated that, in 1830, Spain possessed 1,725,000,000 francs. (Barrego von Rottenkamp, 330.)

762 Montanari, Della Moneta, 52 ff.

763 David Hume’s very influential essay on the balance of trade does not give expression to this error, but he certainly was the occasion of making a great many of his disciples advocate it. It is related to the error mentioned in § 123. Quesnay, 101 (Daire) saw this point in a much clearer light. So did Graumann, Gesammelte Briefe vom Gelde (1762), 12 ff.; 73 ff.

764 This is seen, for instance, when paper money is issued, in times when trade is thriving, and is withdrawn when this conjuncture ceases.

765 Very well elaborated by Fullarton, On the Regulation of Currencies, 71 ff., 139 ff. Compare, however, Becaria, Economica publica, IV, 4, 27. When England on the occasion of the removal of the bank restriction in 1821 and 1822, caused £9,520,759 and £5,356,788 to be stamped, this powerful demand scarcely affected the gold-agio in Paris. (M. Chevalier, Cours, III, 157.) And, on the other hand, the system of assignats, developed during the first French Revolution, on so large a scale, had no influence on the price of silver in the rest of Europe. (Lord King, Thoughts on the Bank Restriction, 1804.) And so, Tooke, History of Prices, I, 205, describes a very large increase of the medium of circulation, after which the prices of commodities remained unchanged, corn fell, colonial products rose in price, both as they had done before, and from causes inherent in the commodities themselves. During the first years of the bank restriction, 1799-1801, grain rose very rapidly in price, while all trans-Atlantic products sank. (Tooke, I, 232 ff.) The unusually large importation of wheat from January 1, 1846, to January 14, 1847, was paid in France by a decrease of the bank metallic reserve (encaisse) to the extent of 172,000,000 francs. (M. Chevalier, Cours, III, 470.) An experienced practitioner in England is of opinion that an increase of bank notes to the amount of about £5,000,000 would not raise prices nor increase the tendency to speculation, but only enlarge the deposits of the bankers. But, if on the other hand, £5,000,000, by any sudden contingency, were to be put into the hands of the working classes, this money would, for the most part, enter immediately into circulation; the price of commodities would, therefore, rise and continue to rise until that amount had come into closer fists, as it would after some time. (Tooke, III, 156 ff., II, 323.)

766 This explains the high price of gold in Farther Asia, which was formerly separated from America, the principal source of supply of the precious metals, by a journey around the earth, the then usual course of the world’s trade.

The precious metals are generally higher in country places than in large cities, and in the interior than on the sea-coast. Since the public highways etc. in Germany have been so much improved, the difference in the value of money in upper and lower Germany has almost disappeared. (Rau, in the Archiv der polit. Oek., III, 338.)

767 Happy beginning of this doctrine in Hume, On the Balance of Trade. Further, Thornton, The Paper Credit of Great Britain, ch. 11. Adam Smith, on the other hand, claims that gold and silver, because they are costly superfluities are uniformly paid most dearly for, in the richest countries. (Wealth of Nations, I, ch. 11, 3: Digr.)

768 Similarly in China, and even in Upper Egypt, the China, so to speak, of antiquity! Compare Herodot., II, 112 ff; Homer, Od., IV, 354 ff. The religion of the Egyptians prescribed to them a mode of life which was scarcely practicable in foreign parts. They were systematically inspired with a horror for everything foreign. They had a strong antipathy for salt, fish and pilots. In Egyptian mythology, Osiris represents the Nile, Typhon the desert and the sea! (Plutarch, De Iside, 32.)

769 The other party, of course, makes a profit also. He is in a better condition than if he wished to produce the desired commodity in his own country.

770 The first clear germ of this doctrine, which is one of the most important theoretical principles of international-trade politics, is to be found in David Hume, On Interest; Cantillon, Nature du Commerce, 226, 369 ff. Ricardo, Principles, ch. 7. “Gold and silver having been chosen for the general medium of circulation, they are, by the competition of commerce, distributed in such proportions amongst the different countries of the world, as to accommodate themselves to the natural traffic which would take place if no such metals existed, and the trade between countries were purely a trade of barter.” Rebenius, Oeff. Credit, I, 29 ff. Still further developed, especially by John Stuart Mill, Elements, 1821, III, 4, 13 f.; Torrens, The Budget, 1844. John Stuart Mill, Essays on some unsettled Principles of Political Economy, 1844, No. 1, and Principles, III, ch. 19, § 3, 5th ed.: “The opening of a new branch of export trade from England; an increase in the foreign demand for English products, either by the natural course of events or by the abrogation of duties; a check to the demand in England for foreign commodities, by the laying on of import duties in England, or of export duties elsewhere; these and all other events of similar tendency, should make the imports of England, bullion and other things taken together, no longer an equivalent for the exports; and the countries which take her exports would be obliged to offer their commodities, and bullion among the rest, on cheaper terms, in order to re-establish the equation of demand; and thus England would obtain money cheaper, and would acquire a generally higher range of prices.”

Obscurely surmised by Beccaria, E.P., 3, 18, and even by Galiani, Della Moneta, II, 2. Senior’s admirable work, Three Lectures on the Cost of Obtaining Money, 1830, follows up the thought that every country obtains indigenous and foreign products at a cost which grows smaller in the same proportion as the productiveness of its people’s labor is large. This would, certainly, explain why it is that perhaps one hundred English days’ work in cotton manufactures will exchange against as much silver as is produced by two hundred days’ work in Mexican mines and foundries. This would not, by any means, produce a lowering of the price of the precious metals relatively to other English commodities, but the influence would be felt equally by all the products of English national industry.

771 To be found in germ in Cantillon, Nature du Commerce, 1755, 249 ff. 307. Büsch, Geldumlauf, 14. Kaufmann, Untersuchungen, I, 75 ff. Many of the doctrines of the so-called Mercantile System, of which I shall treat in my projected work on the Political Economy of Commerce, have given expression to this truth in an inexact and exaggerated way; but they were not entirely erroneous, as is supposed by the adherents of Hume and Smith. However, J. S. Mill, Principles II, ch. 19, § 2, does not fully admit the degree of the cheapness of money in England usually assumed. According to him it is wants of luxury (luxury-wants) become such through habit, that produce “the dearness of living in England.”

772 Petty considers the search for a measure which could be applied both to land and labor as one of the principal problems of Political Economy. (Political Anatomy of Ireland, 62 ff.) Sir J. Steuart, Principles, III, ch. I, took the matter very easy by considering the so-called “coin of account,” for instance, “bank-money,” as an invariable value-magnitude. Compare Jacob, Grundsätze der National Œkonomie, II, 441 ff. Cazaux, Economie politique et privée, 1825, 16 ff., has a not uninteresting study on this subject; but he goes, throughout his argument, on the assumption that the rate of interest is the price of money! If the rate of interest in two countries = I and i, the prices of the same commodity = P and p, the true thing-values, V and v; then we have v: V:: i p: I P!

773 Law, Trade and Money, 181. Before him, and quite correctly, Montanari, Della Moneta, I, p. 84 ff., compares the means employed of measuring one commodity by another, to the means used to estimate time in terms of space, as when it is measured by the revolutions of the hands of a clock, and again, space in terms of time.

774 The solvability or capacity to pay of buyers cannot be taken into consideration here, because it is synonymous with the amount of counter-values which are to be measured.

775 Adam Smith, Wealth of Nations, I, ch. 5. Similarly Luther, vom Kaufhandel: Werke, ed. Walch, X, 1098 f. B. Franklin considered the labor employed in the production of wheat as the best measure of prices. (Letter to Ld. Kames: Works, ed. Sparks, VII.) As Adam Smith, so also Sismondi, Richesse commerciale, I, 371 f.; Kraus, Staatswirthschaft, I, 84,; v. Schlözer, Anfangsgründe, I, 41. Also Malthus, in the second and succeeding editions of his Principles, ch. I, 6, and Definitions, ch. 8, 9. The Measure of Value, 1823. Zachariä, Vierzig Bücher, VII, 53 f., maintains that, at least within the limits of every separate nation, the average labor-power of one man is invariable. Assuming this principle, therefore, to be true, the means of subsistence necessary to support a laborer for one work-day constitutes, indirectly, a measure of prices. Tooke, History of Prices, I, 56, says that the amount of a day’s wages is always a better measure of the price of the precious metals than the price of wheat. Even in 1750, Galiani, Della Moneta, II, 2, had denied the impossibility of an entirely invariable measure of price in this world of change, but he considered man himself the least variable of measures, and in a country where slavery prevailed, slaves. He thought that the macuta of the negroes were a part of the average price of slaves. Practically, Adam Smith’s proposed measure was used in the French constitution of 1791, in as much as it provided that participation in primary assemblies should depend on the participant’s paying an annual tax equal to the wages of three days’ work, and eligibility as an èlecteur, on the possession of an income equal in value to the wages paid for two hundred days’ day-labor. Owen endeavored to base the value of the paper money in circulation in his Utopian commonwealth, not on any metal of a certain weight or stamp, but on hours of labor as the unit. (Reybaud, Réformateurs Contemporains, I, 255.)

776 The wretched condition, until within a short time since, of the Irish working class, is well known; how they dwelt in mud cabins without windows, board-floors or chimneys etc., in the same apartment with their pigs; how they lived almost exclusively on potatoes, and went about in rags. These same Irish, coelum, non animum mutantes, received in North America for the coarsest kind of labor, 50 to 75 cents wages, besides wheat bread and meat three times a day, coffee and sugar twice a day, butter once, and seven or eight glasses of whisky or brandy. (M. Chevalier, Lettres sur l’Amérique du Nord, I, 159.)

777 Thus in Mauritius, the immigration of the coolies has produced a decrease of negro wages, but an increase of negro industry. In the Barbadoes, the negroes are more industrious and their wages lower than in Jamaica. The wages of good workmen, as for instance during the commercial crisis in Manchester, often sink, while the wages of bad workmen rise; as, for example, in a village through which a railroad is made to pass. Compare Lauderdale Inquiry, ch. 1; Sartorius, Abhandlungen, 1806, I, 16 ff.; Lotz, Revision, I, 99 ff.; M. Chevalier, Cours, III, 88 f.

778 Besides the passages cited in § 107, compare also Harris, On Money and Coins, II, 1757 f.; Jacob also preceded Ricardo. See the German translation of Say, II, 435, 507.

779 The introduction of the words “the socially necessary time of labor” into the formulæ does not make the measure any more practical for political economists or for socialists.

780 Cantillon, who reduces all the cost of production to land and labor, considers the “at par” between these two to be this: that the labor of the meanest slave corresponds to the quantity of land which the owner is obliged to employ for his support, and the support of the slave and of the children who are to take his place. (Nature du Commerce, 42.) The Physiocrates thought that the internal (innere) value of two commodities stood in the same relation to each other as the area of land directly or indirectly necessary to their production. Schlettwein, Grundfeste der Staaten, 1792, 230.

781 The so-called Sachwerth (thing-value, real-value) of Hermann, St. Untersuchungen, 101 ff. Thus Poulett Scrope recommended a “tabular standard,” to be officially established and renewed from time to time, to serve as an anchor to those persons who wished permanently to fix their money in such a manner as to make it exchangeable for an equal value in things. (Principles of Political Economy, 1833, 406.) Something of this kind was tried for 50 commodities, between 1833 and 1837, by Porter, Progress of the Nation, 1st ed., II, 236 ff., then for 40 commodities by Jevons in the Statistical Journal, 1865. Of course, all commodities of a given price are not equally important in this respect. Thus, for instance, a fluctuation in the price of diamonds would have no effect on the thing-value or real-value of a day’s wages, but it certainly would on the thing-value of a princely income. There are some excellent remarks on this very important subject in Lowe’s work, On the Actual Condition of England, chs. 8 and 9. The controversy carried on between Jevons, A serious Fall in the Value of Gold, and its social Effects, 1863; Statist. Journal, 1865; and Laspeyres, Hildebrand’s Jahrb., 1864, 81 ff.; 1871, I, 296 ff; in which the former recommends the geometric mean of the relative prices of separate commodities at different points of time, in order to calculate the average relative price: and the latter, as usual, the arithmetical mean, is very thoroughly reviewed and criticised by Drobisch, who shows that neither of these methods is sufficient, but that the quantity of every separate commodity must also be taken into account, for which he furnishes practical formulæ. (Math. phys. Berichte der K. Sächs. Gesellsch., 1871, I, 143 ff, 416 ff.) It is certain that a fixed income in money could maintain its real value or thing-value (Sachwerth) just as little if the cwt. of bread rose by as many dollars as the cwt. of pepper had fallen; as if the increasing price of bread depended on a decreasing price of pepper.

782 Senior, Outlines, 187. In addition to this, we may draw from the thing-value of a day’s wages a right conclusion as to the economic condition of the majority of the people; and assuming the customary division of the national wealth, also as to the degree, to which the people have subjected the forces of nature to their service.

783 Ricardo, ch. 22, refuted, indeed, only the view that an increase in the wages of labor produced by the higher prices of corn, would necessarily make all goods or products of labor, correspondingly dearer.

784 Compare § 103. In Paris, in 1817, the setier of wheat cost March 5, 55½ francs; April 2, 57 fr.; April 23, 60 fr.; May 14, 63 fr.; May 21, 66 fr.; May 28, 75 fr.; June 4, 82 fr.; June 11, 92 fr. (Tooke, History of Prices, II, 17.)

785 Locke, 98. When Condillac asserts that wheat is the best measure of prices, he adds, when free trade in wheat obtains. (Commerce et Gouvernement, 1, 23.) Fichte, on the other hand, while advocating the despotic guidance of all trade by the state, would employ wheat as the fundamental measure of prices. (Geschl. Handelstaat, 47 ff.) That grain does not afford a good measure of prices in very highly cultivated nations nor in barbaric ones, see Hermann, II, Aufl., 451.

786 The average price must be based on the prices of a great many years, since crops vary not only from year to year in price, but from decade to decade. See Roscher, Nationalökonomik des Ackerbaues, § 152, and Roscher, Kornhandel und Theuerungspolitik, 47 ff. Great wars are wont to disturb agriculture in such a manner that the price of corn is very much increased by them. Hence, it is not unfrequently possible to use the prices of grain as a species of barometer to determine the real pressure of a war upon the economic life of a people. Judging by this standard, England suffered much less from the War of the Roses in the fifteenth century, than from the civil wars in the seventeenth; and less than France from the religious wars of the sixteenth. The war year 1631-2, in which Gustavus Adolphus and the emperors had to spare the country, must have been far less oppressive for Saxony than the later Swedish campaigns. Roscher, in the Tübinger Zeitschrift, 1857, 471.

787 Most countries go through these successive periods in their corn trade: in the first, exportation preponderates; in the second, there is an equilibrium; in the third, importation preponderates. (M. Chevalier, III, 74 ff.) Compare Tacit., Ann., XII, 43. Omitting the two dearest and the two cheapest years, the Prussian provinces were circumstanced as follows:

In The Whole Kingdom, the price of Rye, 1816 to 1837, was 40. silver groschens. The population per square mile, 2,776 In Prussia, 32.2 silver groschens, and 1,827 In Posen, 34.3 silver groschens, and 2,180 In Brandeburg, Pomerania, 38.4 silver groschens, and 2,093 In Saxony, 40.3 silver groschens, and 2,366 In Silesia, 38.0 silver groschens, and 3,612 In Westphalia, 47.7 silver groschens, and 3,600 In Rhine Province, 49.4 silver groschens, and 5,078

Rau, Lehrbuch, I, § 183. As to when it may be assumed that the price of corn has remained unchanged, see Hermann, loc. cit., 125 ff.

788 Petty recommended the average daily food necessarily required by one man as the measure of price, estimated on the basis of the cheapest means of subsistence. (Polit. Anatomy of Ireland, 62 ff.) Thaer used as such a measure the smallest day’s wages; as he supposed, expressed in rye, that is, 1/9 of the Prussian scheffel. Similarly, Malthus, in his first edition, and Buquoy, Theorie der Nationalwirthschaft, 240. But this is simply to substitute for wheat an arbitrarily determined quantity and quality of the same as a measure of prices. For practical experiments of this kind, made by the depreciation of paper money during the French Revolution, see M. Chevalier, Cours, III, 98; and Constitution de 1795, V, 68, VI, 173. Count Soden, Nat. Œk., II, 338 f., demands that all taxes, salaries of state officials etc., should be regulated in accordance with the price of corn. This same view has been suggested recently in many German States.

789 Recognized generally by Locke, Considerations 24. Further, Galliani, Della Moneta, II, 2; Adam Smith, I, ch. 5. Schäffle, N. Œk., II, Aufl., 127, maintains that a constant measure of price, such as would enable a person to stipulate for a salary for instance that would be always of the same value, is impossible. Similarly, Hildebrand’s Jahrb., 1871, 315 ff.

790 Compare J. Tucker, Four Tracts on political and commercial Subjects, 28 ff., who maintains that it is a rule, almost without exception, that “operose or complicated manufactures” are cheapest in rich countries; “raw materials,” in poor ones. Thus, for instance, corn (?), garden products in the former; cattle, wool, milk, skins, flesh-meat, in the latter. Ships and movable property are cheaper in the former, whereas wood may be said to be almost the free product of nature here. See especially Adam Smith, Wealth of Nations, ch. 11, Digr.

791 Senior, Outlines 119 f., makes the following calculation: Of the 15d. which a loaf of bread costs in England, 10d. goes to buy the wheat, the other 5d. to the miller, baker etc. If now, we suppose, that in consequence of an increased demand, and therefore of increased production under more unfavorable circumstances, the price of wheat should rise to 20d., the cost of production would possibly, because of an improved division of labor, come down to 3-¾d., and hence the price of the loaf of bread would be increased to 23-¾d. It is quite the reverse in the case of lace, because here a piece of raw material worth only 2 shillings may, by reason of the labor expended on it, become worth as much as £105. If the consumption of lace should increase so that the value of the raw material rose to 4 shillings, the simultaneous decrease of the cost of manufacture to the extent of one-quarter of the aggregate price, would leave the price of the manufactured article £78, 19s.

792 When, for instance, the inhabitants of the Baltic coasts, by way of preference, kept up their relations with the Hanseatic cities, the Dutch and English, that is with the most important industrial and commercial nations in their own sphere, they in all this pursued only their own interest. As to how this intercourse between “old” and “new” countries is susceptible of the very highest development, see Torrens, The Budget: On Commercial and Colonial Policy, 1844, and earlier, Wakefield, England and America, II, 1823.

793 The clearing up of primeval forests, the cultivation of natural meadows, etc.

794 In Hungary, during the sixteenth century, the choicest venison was consumed by plebeians and nobles alike. Herberstein, Rer. Moscov. Comm., 97. In Russia, even the lowest classes not unfrequently partake of roast hare and duck etc. Kohl, Reise in Russland, II, 386. Still, in St. Petersburg, wild-fowl game rose between the time of Peter the Great and Alexander I. 600 per cent. in price. (Storch, Handbuch, I, 368.) In Pittsburg, in 1807, mutton, beef and veal cost from 4 to 6 cents a pound, and game only from 3 to 4-½ cents a pound. (Melish, Travels through the United States, II, 57.) The more the game laws are enforced, the longer does the low price of game continue, especially when it is not easy for the poor to procure them. The moderns have seldom thought of raising game artificially; among the Romans, artificial raising was confined to the hare and fieldfare. (Varro, R.R., III, 12 ff.; Columella, R.R., VIII, 10.) Hence, the enormous prices paid for game, of which Pliny, H. N. X., 43, relates an example from the time of the emperors. On the other hand, Polybius assures us that, in his time, game was to be had as good as gratis in Lusitania. XXXIV, 8, 7.

795 In Buenos Ayres, in the nineteenth century, beggars on horseback were to be seen. (Robertson, Letters on South America, II, 294.) In Krasnojarsk, in 1770, 1-½ rubles was the price of an ox, 1 ruble of a cow, from 2 to 3 of a horse, from O.3 to O.5 of a sheep; O.15 of a deer. (Pallas, Sibirische Reise, III, 5, II 12.) According to the Tables of Prices in Sir F. M. Eden, State of the Poor, Append. I, and Rogers, History of Agriculture and Prices (1866), I, 245, 361, the following prices obtained in England;

(On an average.)

in 1125-26, one ox, 1 shilling; one quarter of wheat, 20 shillings; in 1260-1400, one ox, 13 shillings 1-¼d; one quarter of wheat, 5 shillings 10-¾d; in 1406, one ox, 9-½ shillings; one quarter of wheat, 4-½ shillings; in 1463, one ox, 10-20 shillings; one quarter of wheat, 1-⅔-4-⅔ shillings.

Compare Hume, History of England, a. 1327. Under Henry VIII. veal, beef, mutton and pork were food for the poor in England, and cost on an average 1-½d per pound; while wheat cost from 7 to 8 shillings a quarter. (24 Henry VII, c. 3. Price, Observations, II, 148 f.) The same appears from the “reasonable prices” which Charles I, in 1663, had established by sworn juries viz.: that the different kinds of meat were much cheaper comparatively than corn in our days. (Rymer, Foedera, XIX, 511. Anderson, Origin of Commerce, a. 1633.) In many places in the highlands of Scotland, in the middle of the seventeenth century, one pound of oat-bread cost as much or more than one pound of the best meat. The union of Scotland with more highly civilized England soon changed the relation, so that in Adam Smith’s time, good meat, in nearly all parts of Great Britain was worth from 2 to 4 times as much as the same weight of wheat bread. (Wealth of Nations, I, ch. 11, 1.) The Thomas Hospital in London paid, on an average, for good beef per stone weight:

1701-1710: 1s. 7.9d. 1764-1773: 1s. 3.7d. 1794-1803: 1s. 5.d. 1804-1821: 1s. 10.9d. 1822-1842: 1s. 1.5d.

(Porter, Progress of the Nation, III, 112.) Among the most certain proofs of the high degree of economic civilization attained in upper Italy about the close of the medieval times is the fact, that the price of cattle, compared with that of wheat in the thirteenth and fourteenth centuries, varies very little from what it is to-day. (Cibrario, Economia politica del medio Evo, III, 335-383.) Compare Rau, Lehrbuch I, § 185. In Athens, the cost of a medimnos of wheat was as great as that of a sheep in Solon’s time. In the age of Demosthenes, it cost only half as much. (Böckh, Staatshaushalt der Athener, I, 107, 132.) It is obvious, however, that the price of meat compared with that of corn, was lowered by the great extension of the artificial cultivation of meadows; for, when the former has reached its maximum, it becomes a great spur to the promotion of the latter. Thus, in England, the price of meat, at the beginning of the sixteenth century, was on an average, higher than in Adam Smith’s time. (loc. cit.) To the same cause is to be ascribed the state of things in Prussia mentioned by v. Podewils, Wirth schaftserfahrungen, II, 15.

As a common basis for such calculations, the following may be accepted. It is plain that meadows, pasturages and forage-fields must yield as much in meat, as corn-fields of the same dimensions of equal goodness, and situated as favorably, in corn. According to Block, a Prussian acre (Morgen) of the best quality, used as a meadow, produces a hay-value equal to 1,000 pounds, a clover-value equal to 2,420; as a vegetable field, a beet or potato-value equal to 6,050-6,930 pounds, v. Lengerke’s estimate is that 110 pounds of cattle-fodder expressed in terms of hay, produces on an average 40 pounds of milk, and from 3-½ to 4 pounds of meat. This would, at most, give 36, 88 and 220-252 pounds of meat. The yield of wheat, v. Lengerke estimates, on the best soil, and on an average, at 14 Prussian scheffels (at 80 pounds, i.e. 1,120 pounds) yearly per acre (Morgen). The three periods in the history of the prices of cattle were clearly recognized by Thaer, Landw. Gewerblehre, 1815, 100.

796 It is a very characteristic fact, in relation to the river fisheries, that the fable that servants formerly stipulated not to eat salmon except twice a week is to be found in so many places. Thus on the Elbe and the Rhine. Compare Thaarup, Dänische Statistik, I, 112. In Scotland, about the end of the seventeenth century, the story in places ran, that it was five times a week. (Walter Scott, Old Mortality, ch. 8.) In England, fish seems to have been a tid-bit among the poorer classes in the fourteenth century. (Rogers, I, 606.) It was dearer especially during Lent. (Statist. Journ., 1861, 544 ff.) The artificial production of sea-fish seems to have been tried only by the ancient Romans. On the whole, Adam Smith’s law that a ten-fold demand can, as a rule, be met only by a greater than ten-fold labor, applies here. (I, 370, ed. Basil.) But this relation is obscured to a certain extent, from the fact that the source of the production of sea-fish, the ocean, which may be claimed at any time by occupation, is, practically, boundless. Here, therefore, the improvements made in nautical science, and the progress of geographical knowledge, may yet for a long time compensate for the exhaustion of the nearer seas, and even more than counterbalance it.

797 Among a great many nations in a low stage of civilization, agriculture consists in the burning down of the forest. In 1594, the Lauenförder forest produced 1,110 thalers’ worth of food for hogs, and wood to the amount of 44 thalers. (v. Berg, Staatsforstwirthsch., 213.) The Harzgerode woods, at the ducal line of Anhalt-Bernburg, were estimated at 6,000 thalers. A hundred years later, they brought in yearly 70,000 thalers, although, in the meantime, very little progress was made in the science of cultivating them, (v. Justi, Staatswirthschaft, II, 211.) We may form a notion of the relativity of the idea of the dearness of wood from the fact that in Bavaria, for instance, in 1840, there was a great deal of complaint, that in the district of Isark the price rose from 6 to 9 florins; in the districts of Regen and the lower Maine, from 11 to 14 florins to from 15 to 18; in the Rhine district, from 20 to 26 florins per cord (Klafter). (Rau, Lehrbuch, III, § 150, a.) Besides, the price of wood in the forest rises, with an advance in civilization, much more rapidly than it does in the market; in which last, labor and capital play a greater part. (Rau, I, § 385.)

798 Plan for the artificial production of pearl oysters. (Novara-Reise, I, 303.) Ostriches seem now to be ceasing to be objects of mere occupation, and to be becoming objects of breeding. (Ausland, 1869, § 13.)

799 Thus Wolff’s experiments made at Möckern have shown that in the case of sheep fed with hay, the wool becomes much heavier and the flesh leaner than those of sheep fed with a more concentrated food. While it is estimated in England, at the present time, that the wool of South-Down sheep is worth scarcely one-tenth what their flesh is (Jacob, On Corn Trade, 166), mutton, from the year 1260 to 1400, was, on an average, worth 17 pence; and this even at a time when prices were gradually rising; but the wool of one animal (1 lb., 7-¾ ounces), 5-¼ pence. (Rogers, I, 362, 395.) Even under Anglo-Saxon kings the fleece was worth 40 per cent. of the value of the whole sheep, (David Hume.) And so W. Macann, Two Thousand Miles Ride through the Argentine Provinces, 1853, I, 151, says that in the interior of Buenos Ayres, he purchased 8,000 sheep at 18 pence a dozen, and after a march of 200 English miles, sold the skins for sixty pence a dozen. In Goya, formerly, a live horse cost 3 pence, its skin on the coast 12 pence; and the slaughtering of the beast cost 3 pence, the removal and cleaning of the skin 3 pence; and 3 pence were paid for transportation. (Robertson.)

In Ireland, in 1763, it not unfrequently happened that the skin and tallow of an ox cost as much in a commercial city as the whole ox had cost in the nearest market town. (Temple, Works III, 13.) In England, from 1260 to 1400, the average price of a whole cow was 9s. 9d.; of the hide 1s. 8d., and cows were cheapest in the first decade, i.e., 6s. 2d., and the hides dearer than they were generally afterwards, i.e., by from 1-9-¼d. (Rogers, I, 361, 451.) In Saxony, according to Engel (1853), the average price of horned cattle was about 46 thalers; of their hide, 4 thalers and 21 silver groschens. Russia exported, 1842-1847, 72,636,166 silver rubles worth of tallow, 1,832,137 silver rubles worth of horse hair, 10,811,735 worth of bristles (Borsten), 7,387,140 of uncured skins, 36,159,452 of sheep’s wool, but flesh-meat only to the amount of 370,362 rubles, and entire animals to the value of 6,853,241 rubles. (P. Storch, Der Bauernstand Russlands, 289 ff.) Tallow is there ten times dearer than the same volume of wheat. (Steinhaus, Russlands industrielle und commercielle Verhältnisse, 294 ff.); while in Saxony, according to Engel (1821), a pound of wheat cost on an average 7.8 pfennigs, and a pound of tallow 30 p. However, Russia’s recent progress in civilization has had for effect: that the exportation of tallow (1833 = 4-½ million puds; 1869 = 2-¼ mill.) has greatly fallen off; while that of butter and live stock has increased. (v. Lengefeld, R. im 19. Jahrh., 220 ff.)

In England, during the fourteenth century, a pound of meat cost, on an average, ¼d.; of lard, from 1-½ to 2. (Rogers, I, 411.) On the other hand, from 1848 to 1856, the average January price of beef from America was 110 shillings; of tallow from St. Petersburg, 48s. 11d. per cwt. (Newmarch.) And so, in the time of Pallas, the Cossacks chased the deer of their steppes only for the sake of its skin and horns. (Pallas, Reise, III, 524.) While the Greeks got horn from Macedonia and Thrace (Herodot., VII, 156), it is a striking proof of high civilization that at Athens (?), about the time of the hundredth Olympiad, an ox-hide was worth only 3 drachmas, and the whole ox 77 drachmas. (Böckh, Staatshaushalt, I, 105 ff.)

As the ox is primarily serviceable as an object of food and an instrument of labor, and the sheep on the other hand, only an instrument to produce wool, it is easy to understand why, with the further advance of civilization, the price of oxen rises comparatively much more than the price of sheep. In Athens, during the time of Solon, an ox was equal in value to five sheep. (Plutarch, Solon, 23.) So also in countries with a low civilization in the time of Polybius. (Polyb., XXXIV, 8; Gell., XI, 1.) Why the same was the case in Rome at the beginning of the Republic? (Plut., Popl., 11). In England the proportion between the price of an ox and that of a sheep was,

in 927 as 6:1 (Henry.) in 1125 as 3:1 in 1182 as 6.3:1 in 1197 as 9:1 in 1229 as 8:1 (Eden.) in 1260-1492 (av.) as 9.2:1 (Rog.) in 1497 as 10:1 in 1500 as 11.6:1 in 1511 as 8:1 in 1528 as 10:1 in 1529 as 12.8:1 in 1531 as 9.4:1 in 1551 as 10.6:1 in 1597 as 8.2:1 (Eden.)

At present the proportion may be from 10 to 20:1. In Saxony, it is as 48 thalers to 5.27. (Engel.)

800 About 1793, Russia exported 10,000 rubles worth of fish, 452,000 of sturgeon bladders, 188,000 of caviar. (Storch, Russland, II, 184.) But this had undergone a great change even in 1850. At present, there are 64 per cent. of sturgeon bladders, 27 of caviar, and 7 of whole fish. (Steinhaus, Russland’s industrielle und commercielle Verhältnisse, 102, 368.) Yet the Astrakan fishermen still throw the greater number of the sturgeon they catch back into the water. (Pallas, Reise im süd. Russland, I, 189; Steinhaus, 99.) Salt fish are adapted for transportation to a distance not only because they can be preserved, but also because they may be caught and prepared on the great highway of the water. Athens got from the Black Sea besides wood, tar, wool, hides, cordage, honey, wax and slaves, also salt fish. (Wolf, z. Demosth. Leptin., 252; Bockh, Staatshaush. I, 51.) The latter from Sardinia, Egypt and Spain. (Pollux, VI, 48.)

801 The principal countries that produce potash are Russia and North America. It is estimated that a cwt. of potash requires, on an average, 480 cwt. of wood. (Pfeil, Grundsätze der Forstwirthsch. in Bezug. auf National-Oekon. etc., I, 128.) From 1800 to 1840, wood for fuel in Würtemberg trebled its price; for building material the price increased 1.6 times. (Deutsche Vierteljahrsschrift, 1847, No. 4, 104.)

802 Whereas barbarous nations take little trouble to turn the milk from their cows to account (Roscher, Ideen z. Politik und Statistik der Ackerbausysteme, Archiv. der politische Œkonomie, neue Folge, III, 202), Reuning, in 1844, calculated that the milk from all the cows in Saxony amounts to a value of 10,000,000 thalers, their meat to over 2,000,000, and the labor performed by them in various ways to 3,000,000. In Silesia, in the last decade of the eighteenth century, a quart of milk was estimated to be worth 2 pfennigs (Festschrift der deutschen Landwirthschaftsversammlung, 1869, 343), whereas as now it is sold almost everywhere for 12 pfennigs. (Schmoller.) In the rather high state of civilization which Saxony had reached at the end of the sixteenth century, when game was already dear, and the prices of other meat were almost as high as in 1800, a sheffel of rye was worth 44 measures (Mass.) of milk, and recently 82-⅔ measures. (Schmoller, Tübinger Ztschr., 1871. 336 ff.)

803 The principal cheese-producing countries and cities are Holland, Limburg, Switzerland, Gloucester, Chester, Ayrshire etc. Compare Roscher, loc. cit., 195 ff.

804 In England, in the year 1000, a cow was worth only as much as two sheep. (Anderson, Origin of Commerce, a., 979.) The best butter was worth only 1d. per pound in 1550, while pork was worth 1-1/8, veal and mutton, 1-½, and beef, 2-¼d. The price of butter was exceedingly variable in the sixteenth century. (Eden.)

805 During the middle ages, pork constituted the most usual animal food even of the best classes. (Büsching, Ritterzeit und Ritterwesen, I, 164.) Immense importance attached to pork by the Lex Salica. (Tit., II, XIV; Emendatt. Caroli Magni, II, 1 ff.) The archbishop of Cologne used every day 24 large and 8 medium-sized hogs, and four more on the three great festivals. The abbot of Corvey used daily five fat and one lean hog, besides two young ones. (Kindlingen, Münsterische Beitr., Urkunden, 147, 126.) In 1345, at the court of Dauphiny, there were used annually for 30 persons, 30 salt and 52 fresh hogs; whereas, in modern Paris, with 800,000 inhabitants, only 32,000 hogs are consumed yearly. (Roquefort, De la Vie privée des Fr., I, 310 f.) Compare herewith the place occupied by the swine-herds in the Odyssey in Greece’s age of chivalry. In England, in the time of William I., woods were taxed according to the number of hogs they might feed. At present, there is an enormous production of hogs in Servia, which, in many places, constitutes the only source of ready money to the agricultural population.

And about the end of the eighteenth century, it is said that Servia received from Austria alone 1,300,000 florins yearly for hogs. (Ranke, Serb. Revolution, 95.) In 1864, Servia’s total exports amounted to 62,500,000 piasters, of which 28,162,260 were for hogs, 7,043,000 for wool, 7,662,000 for the skins of sheep and deer, 5,732,000 for cattle, 1,222,400 for tallow. (Kanitz, Serbien, 598 ff.) Great production of hogs also in the Moldau and in Wallachia, in the United States and Mexico, where, instead of butter, only lard and suet are used; also in Lombardy, the Prussian Rhine province, Belgium, the English milk-producing districts, Gloucester, Wilt, Dumfries, Galloway and the districts where agricultural proletarians abound—Ireland and Yorkshire. It is a consequence of the same law that, among the South Sea Islanders, the hog was the principal domestic animal, as it still is among the Chinese. Similarly in the whole of Asia, beyond the Ganges (Ritter, Erdkunde, IV, 938, 1101); in semi-barbarous upper Italy in the time of Polybios (II, 15); in Gall itself, in the time of Augustus. (Strabo, IV, 192, 197.) The America of the ancient Greeks, Sicily, exported hogs, mainly, in the time of Hermippos. (Athen., I, 27.) And even among the Romans, the consumption of pork was much greater than the consumption of beef. (Marquard-Becker, Handbuch, V, 2, 39.)

806 In the cities of Prussia subject to a tax for the privilege of maintaining slaughter houses, a pound of beef cost on an average, in 1846, from 2 silver groschens, 5 pfennigs, to 3 s. gr. 4 pf.; pork, from 3 s. gr. 2 pf. to 4 s. gr. 4 pf. (Dieterici.) In Moscow, also, the latter is dearer at present. Before the time of Peter the Great, it was cheaper. (Storch, Handbuch I, 364.) It was a sign of high civilization, too, that in Florence, in the fifteenth century, veal cost, on an average, 2-½ soldi; mutton, 2-⅓ soldi; but pork, 4 soldi. (Pagnini, Saggio sopra il giusto Pregio delle Cose, 325 f., Cust.) It is especially the lower middle class who ask for fat meats. The very fat English sheep are taken not to London, but into the manufacturing districts. (Lauderdale, Inquiry, 322 f.) As to whether the relatively high price of pork, and the fact that in the later times of Rome, the wild boar was the most fashionable dish, compare Becker, Gallus, II, 186.

807 The production of fowl is similar in this, that they are frequently fed from remains of consumption; only their production is not adapted to uncivilized countries, because it is difficult to protect them there. In Texas, it is said, it costs more to raise ten chickens than to bring up ten children. (Kennedy, Czarnkowski’s translation, 1846, 115.) The independent breeding of fowl is advisable only where there are a great many rich consumers; for the reason that they are naturally a delicacy. Enormous production of pigeons in Cambridge, Huntington etc. (McCulloch, Statistical Account, I, 189.) In Paris the consumption of pork and fowl has gained somewhat since the Revolution. (M’Chevalier, Cours. I, 113.)

808 According to Schuckburg, Philosophical Transactions of 1798, and Kraus, Vermischte Schriften, I, tab. I, the prices of the following species of animals rose in England between 1550 and 1795: horses, 904 per cent.; oxen, 896 per cent.; sheep, 876 per cent.; cows, 2050 per cent.; hogs, 1964 per cent.; geese, 300 per cent.; butter rose from 5d. per pound to 11-½d.; beer from 1d. per gallon to 2-¾d.; agricultural day wages from ½s. to 1s. 5-¼d.; wheat 326 per cent. Compare, however, Edinburg Review, III, 246 ff. In Germany also, cows and hogs have increased much more in price than horses and sheep. (Tübinger Ztschr., 1871, 342.) Dutot, Réflexions, 946 ff., éd. Daire, says that the value of the precious metals in France decreased in value between the times of Louis XII. and Louis XV. in the ratio of 3-79/91:1. On the other hand, the prices of different commodities rise in very different degrees:

Fat sheep, from 7 sous to 10 livres. Lean sheep, from 5 sous to 5 livres 10 sous. Hogs, from 10 sous to 25-35 livres. Capons, from 1 sou to 12 sous. Hens, from 1-½ sous to 6 sous. Pigeons, from 1-½ sous to 3 sous. Deer, from 1-½ sous to 15 sous.

809 Thus, in Thuringia, the average price in silver of corn from the sixteenth century until the period 1848-61 increased in the ratio of from 1 to 3-4; the price of the different kinds of animals, on the other hand, from 1 to 5-10. (Knies, in Hildebrand’s Jahrbb., 1863, 78.) The price of the different kinds of corn as compared with one another may, however, be modified by many different circumstances. Thus the Capitulare Saxoniæ of 797, c., II, estimated the prices of rye, barley and oats to be to one another as 30:30:15; while the Magdeburg Chamber of 1804 estimated them to be as 17:14:8. In the kingdom of Saxony, in 1841-9, the average prices of wheat, rye, barley and oats stood to one another in the ratio of 144:100:75:47 (Engel); while, in the middle ages, wheat, rye and oats were as 9:6:3 (Gersdorf, Cod. Depl. Sax., II, p. XXXIV); under Prince August, corn, barley and oats were as 24:22:12. Assuming the price of rye to be equal to 100, the cost was:

At Brussels, in the 16th century, wheat 126.7, barley 80, oats 50 At Brussels, in the 17th century, wheat 138.8, barley 82.9, oats 51.9 At Brussels, in the 18th century, wheat 147, barley 86.7, oats 55.2 At Brussels, 1815-1844, wheat 156 At Brussels, 1841-1850, wheat 153, barley 82.7, oats 51 At Berlin, 1789-1818, wheat 135, barley 74.8, oats 54 At Berlin, 1819-1832, wheat 143.5, barley 74.9, oats 52

(Rau, Lehrbuch, I, § 183.) To understand this, it is necessary to bear in mind the relatively great increase of wheat bread, beer made of barley, and horses, as objects of luxury. The unusually low price of oats in North America, as compared with the price of wheat, is dependent on the facility of exporting the latter. In Florence, in the fifteenth century, the price of wheat was 22-⅔, of rye, 12, of barley, 8 soldi. (Pagnini, Sopra il giusto Pregio delle Cose, 325.)

810 The English so called custom-house prices (Zollhauspreise) correspond to the market prices of 1696. If these are assumed = 100, the price

Of steel and iron was, in 1826, 83, in 1831, 56 Of coal was, in 1826, 47, in 1831, 45

Between 1835 and 1850, Scotch iron had already become cheaper by one-half (Meidinger, 387), and coal in London by one-third (Porter).

811 Rogers, History of Agriculture, I, 67.

812 In England, in 1172, an ox cost 2 shillings; in 1175, green cloth cost per ell, 2-10/12 shillings; red cloth, 5-½ shillings. (Eden.) In the western states of North America, the farmer gives two pounds of coarse wool for one pound of woolen yarn; he sends 4 bushels of wheat to the miller for the flour of three bushels (Ausland, 1843, No. 68), while in Ravenna, in the thirteenth century, the miller’s fee was 1/10 (von Raumer, Hohenstaufen II, 437); according to the fixed prices in Fantazzi, (Monumen. Ravennet.); in Germany, during the last centuries of the middle ages, 1/8 (J. Grimm, Weisthümer, III, 8); at the end of the sixteenth century from 1/8 to 1/5 (Coler, Oeconomia, II, 3); in modern Germany, generally 1/16 of the raw material, and in the steppes of southern Russia, when the wind is still, in summer, even the half. (Mitth. der freien ökonom. Gesellsch. zu Petersburg, 1853, 85.) In Guiana, in 1806, a very ordinary saddle and bridle could not be had under 10-½ guineas. (Pinckard, Notes on the West Indies, III, 1806.) Count Görtz was obliged to pay 2 dollars, in Demarara, for the cleansing of a rifle, and another person for the oiling of a carriage, 5 dollars. (Reise um die Welt, 1864, 327.) A lady’s dress in Mobile costs four times as much as in London or Paris. (Ch. Lyell, Second Visit to the United States, II, 70.) In Athens, articles of clothing, even for the poorer classes, were never as cheap as they are in civilized countries to-day. (Compare Plutarch, De Tranquill. Anim., 10.)

813 In Upper Italy, between 1261 and 1400, a lady’s chemise and the making of it cost 14.77 lire; Rheims linen, 7.04; ordinary mourning cloth, O.45; black cloth from Moriana, 2.83; cloth from Mecheln, 43.83; from Ypres, 47.04; scarlet cloth, 80.44 per ell. (Cibrario, 1. 1.) On the other hand, to-day, in the Leipzig market, the difference in price of the dearest and of the cheapest cloth will scarcely surpass the ratio 18:1. Even Scaruffi, Sulle Moneta, 1679, 163, Cust, remarks that hemp-linen and similar coarse articles had increased much more in price than brocades; but he ascribes this circumstance to the disordered state of the coinage. It is much better accounted for by Adam Smith, Wealth of Nations, I, 386, ed. Basil.

814 Before the plague in the fourteenth century, the cwt. of lead was worth 10-½d.; of iron, 4s. 1d. (Rogers, I. 599.) On the other hand, between 1848 and 1856, the average January price of bar-iron was £7, 11s.; of lead, over £20. (Newmarch.)

815 Thus, in England, the price:

Of glass was, in 1826, 387; in 1831, 369 per cent. Of leather was, in 1826, 285; in 1831, 123 per cent. Of silk goods was, in 1826, 158; in 1831, 249 per cent.

of the price of the same articles in 1796. (Rau.) Of 29 chemical products of the Parisian manufacture, the wages of labor is on an average only 7.4 per cent. of the selling price; and, in some cases, only from 1 to 2 per cent. (Chabrol, Richerches Statistiques sur la Ville de Paris, 1821; Hermann, Staatsw. Untersuch., 137.) In Buschtiehrad, between 1670 and 1870, barley rose from 1 to 4.8; hops to 6.52; fire wood to 6.14; the excise to 6.54; but beer only to 2.81; although wages increased ten fold. (Inama Sternegg, Gesch. der Preise im österreich. Ausstellungsbericht von 1873, 43.)

816 A silk cloak lined with fur cost in the time of Charlemagne, 400 scheffels of rye, one not so lined 200. (Hullmann, Finanzgeschichte, 212 ff.) In Florence in the fifteenth century, one pound of sugar was equal in value to 15 pounds of mutton. (Pagnini, 326.) In Turin, in the fourteenth century, 1 pound of pepper was equal in value to 28 pounds of salt. (Cibrario, III, 359, 362.) As late as the middle of the fifteenth century, the court of Duke William of Saxony paid for one pound of sugar 1 thaler and 8 groschens, while ducal fees paid to servants and workmen seldom exceeded 2 gr. Hence, even at a princely meal, often scarcely ½ a pound was consumed. (Büsching, Ritterzeit, I, 137 f.)

817 Charlemagne’s capitularies suppose a merchant’s profits to be from 100 to 200 per cent. (a. 809, c. 34.) And even in our own day, merchants in the markets of Cabul are frequently not satisfied with a profit of from 300 to 400 per cent. (K. Ritter, Erdkunde, VII, 244), and the caravans which leave Maroc for the Soudan are wont, in exchange for commodities amounting in price to 1,000,000 piasters, to return with a supply of other commodities worth 10,000,000. (Stein-Wappäus, Handbuch, Africa, 33.) According to Büsch, Geldumlauf, II, 10, the price of East Indian products in Hamburg was some 70 per cent. higher than at home, while Pliny, H. N. IV, 26, speaks of a price one hundred times (?) as high; and its spices, at the time of Portuguese dominion, were sold at a profit of at least 600 per cent., in Europe. (Crawfurd, History, VII, 360; Ritter, Erdkunde, V, 872.)

818 When Humboldt found a missionary near Cumana who paid 7 piasters for a cow, and was obliged to pay 17 piasters for blood-letting, rather unskilfully performed, he found an illustration of one of the peculiarities of colonial life—to have all the wants of higher stages of civilization but not the means of satisfying them. (Relation historique, I, 374.)

819 Enormous payments made to distinguished virtuosi, actors, sophists and hetares at the time in question, also to Appelles, Aristides etc., for works of art. (Plin., XXXIV, 19, 2, XXXV, 36, 19.) The actor Aesopus (see § 233, note 6) had a fortune worth 20,000,000 sesterces, while Pompey, for instance, had 70,000,000. Roscius received from the state for every day he played, 286 thalers, and earned 43,000 a year. (Mommsen, Römische Geschichte, III, 483, 547.) Compare Cicero, pro Roscio Comœdo, 10, and Plin., H. N. IX, 59, X, 72. The zither-player, Amoebaeos, received one talent for each appearance. (Athen. XIV, 623.) According to Pliny, H. N. XXIX, 5, the Roman principes gave the most distinguished doctors yearly 250,000 sesterces, and even more as an honorarium. At the end of the eighteenth century, the greatest Parisian actors received from 4,000 to 5,000 francs per annum. Now 100,000 is considered a moderate income for one. (Journ. des Economistes, May, 1854, 279.) It is said that Frederick Hase earned $30,000 in America in ten weeks. (Leipz. Tagebb., 15 Jan., 1871.) Steuart, Principles, II, ch. 30. Adam Smith frequently represents it as a rule, that superfluous goods like gold and silver, are dearest among the richest nations, necessary goods among the poorer, and vice versa. But the supply has much more to do with the permanent price of a commodity than the demand for it has. And the principle above mentioned applies only in so far as the supply is here an unlimited and there a limited one. Hence, the comparison of silver with painters’ and sculptors’ works is not an apposite one—in the case of these there is a natural monopoly, while the former, on account of its durability and capacity for transportation, may, on the contrary, be increased almost at pleasure.

820 Besides Böckh., Staatshaushalt der Athener, 1817, Book I, compare Arbuthnot, Tables of ancient Coins, Weights and Measures, 2d ed., 1754, Reitmeyer, Ueber den Bergbau der Alten, 1785, and Michaelis, De Pretiis Rerum apud veteros Hebræos, in the Comment. Societ. Gottingensis, vol. III. The principal sources of information among the ancients are Diodor., V; Strabo, III, V; Plin., H. N., XXXIII.

821 The money revenue of the Persian king, to the amount of 14,560 talents yearly, was transformed into bars and thus deposited in the treasury. Herodot., III, 95 f. Even the little vassal prince Pythios of Celænæ had a treasure of 2,000 talents of silver and 4,000,000 pieces of gold. (Ibid, VII, 26 f.) On the money stores of private persons, see Plin., H. N., XXXIII, 47.

822 An ox was worth, in Solon’s time, 5 drachmas; in 410 B.C., 51 dr.; 374 B.C., 77¼ dr.; a medimnos of wheat in Solon’s time, 1 dr., about 390, 3 dr., under Alexander the Great, on an average, 5 dr. (Böckh., I, 102, f.) The usual amount of ransom paid for a prisoner of war, in Kleomenes’ time, was 2 minæ (Herodot., V, 77, VI, 79); under Dionys., I, 300 m. (Aristot., Oeconom, II, 21); under Philip of Macedon, from 300 to 400 m. (Demosth., De fals. Legat., 394); under Demetrios Poliorketes, 1,000 for a free man, 5 for a slave. (Diod., XX, 84.)

823 This booty for Susa alone amounted to from 40,000 to 50,000 talents; for Persepolis, to 120,000; for Pasargadæ, to 600. Curtius, V, 2, 6; Strabo, XV, 731; Justin, XI, 14; Arrian, III, 16; Diod., XVII, 66, 71; Plutarch, Alex., 36.

824 Oros., VI, 19; Dio, C., LI, 21; Suet., Aug., 41. Decline of the value of money under Constantine the Great, when the precious objects of the heathen temples were coined. (Monitio ad Theod., Aug. de inbidenda Largitate, Thes., Antt. Renn., XI, 1415; Taylor, ad Warm. Sandvic, 38.)

825 Compare I Kings, 10, 14, 27 ff.; I Chron., 22, 2 ff.; II Chron., 9, 15 f., 12, 10 ff. On Ophir: K. Ritter, Erdkunde, XIV, 407 f.; on the wonders of the discovery of Spain: Herodot., IV, 152. Aristot., De Mirab., 146; Diodor, V, 35 ff. On the other hand, of Greece, Athen. VI, 19 ff.

826 Compare Plin., H. N., XIV, 1. Yet the value of money in the time of the Cæsars seems to have stood much higher than it is now, as is proved, for instance, by the endowments by Trajan (16 sesterces per month for boys, and 12 sesterces per month for girls), as the alimenta furnished them according to Digest XXXIV, 1, embraced their entire support. Compare the excellent essay on this subject by Rodbertus, in Hildebrand’s Jahrbb., 1870, I.

827 The conquest of the Avares seems to have temporarily produced a considerable cheapness of the precious metals. (Guérard, Polyptiques, I, 141.) Increase of the value of money in Scandinavia, during the later part of the middle ages. (Wilda, Gesch. des deutschen Strafrechts, I, 323 ff.)

828 In England, from 1279 to 1509, there were coined on an average only 6,868½ pounds sterling; from 1603 to 1830, on the other hand, 819,415 pounds sterling. The average in the time of George IV., per annum, was 4,262,652 (Jacob, ch. IV.) An evidence of the uncertainty of the history of prices in the middle ages is, that Jacob, ch. 12, infers, from the price of corn, that the price of silver remained rather stationary from 1120 to 1550, while Adam Smith, I, ch. 11, 3, infers from the same fact, a remarkable rise in the price of silver from 1350 to 1570. Concerning the latter, see Leber, Fortune privée au moyen Age, 16 f. Tooke-Newmarch, History of Prices, VI, 391; whereas Rogers, Statist. Journ., 1861, 544 ff., finds that in England, between 1300 and 1532, there was no change whatever in the price of silver. According to Soetbeer, Forschungen zur deutschen Geschichte, VI, 94, wheat and rye were, as compared with silver, worth during the Carolingian period, about one-fourth of its value, between 1750 and 1850. Hegel, Shassburger Chroniken, II, 1012, ascribes to gold over 2½ times as great a purchasing power in the 13th and 14th centuries as in the 19th century; and to silver, a purchasing power about three times as great.

829 The silver ores of Peru and Mexico yield, on an average, only from 2 to 3 per 1,000 of metal; those of Potosi, at present, scarcely 1 per 1,000; those of Mexico, according to Humboldt, on an average, from 3 to 4 ounces per cwt.; so that many of the European ores are decidedly richer. While the veins of the Saxon mine, Himmelsfürst, have a breadth of only from 0.2 to 0.3 meters; the Veta-Madre of Guanaxuato, is in few parts less than 8, and it is sometimes even 50 meters broad; and the Veta-Grade of Zacatecas is from 5 to 10 meters in breadth. In Pasco there are veins of silver ore which have 114 and even 123 meters. Tschudi, Reise in Peru, K., 12; Chevalier, Cours, III, 184 ff., 241 ff. According to Humboldt, Essai sur la Nouvelle Espagne, III, p. 413, eleven times as many miners are needed at Himmelsfürst as at Valenciana to obtain the same quantity of silver.

830 Thus, for instance, the celebrated ransom-money of Athahualpa (even according to Garcilaso de la Vega) amounted to only 5,000,000 thalers, while the French King John, after the battle of Poitiers, in 1356, had to pay 41,000,000 francs for his ransom. (Leber, Fortune privée au moyen Age, 121 ff.)

831 Compare M. Chevalier, III, 190 ff. Discovery of the quicksilver mines of Guancavelica, 1567.

832 The yield of Potosi amounted from 1545 to 1638, to 395,619,000 pesos. (Ulloa, Viage, II, I, 13.) Up to the present time, the aggregate yield there has been estimated at from 6,000 to 7,000 million francs.

833 On the worse grounded assumptions of former writers, see Humboldt, N. Espagne, IV, 237.

834 There was really introduced into Spain, about 1525, not much over 2,000,000 francs annually; and after 1550, six times as much. (L. Ranke, Fürsten und Völker, I, 347 ff.) Compare Humboldt, Ueber die Schwankungen der Goldproduction, in the Vierteljahrsschrift, 1838, IV, 18.

835 On the Brazilian exports of gold in the 18th century, see Schäfer, Gesch. von portugal, V, 192 ff.

836 According to Humboldt, N.E., IV, 218, the amount up to the beginning of this century was 17,000 kilogrammes of gold and 800,000 kilogrammes of silver.

837 Thus, for instance, Mexico, during this period yielded, on an average, 65,000,000 francs, instead of the former amount of from 130,000,000 to 140,000,000. In Carro de Potosi, there were, in 1826, of the former 132 pool-works only 12 in operation. Compare Adams, The Actual State of the Mexican Mines, 1822. Jacob assumes that about 1830, the quantity of money in Europe and America was 1/6th less than in 1809. (Ch. 28.)

838 Of this, 1,800 kilogrammes of gold from the United States.

839 Fischer, Geschichte des deutschen Handels, 2d ed., II, 616 ff., 673 ff. But the Schwaz mines, in the Tyrol, are said to have produced, until 1523, 55,000 marks annually; the Freiberg silver mine, from 1542 to 1616, 16,000 marks annually. Compare von Langen, Kurfürst Moritz, II, 56.

840 The Russian gold ores, quite insignificant before the year 1814, have made very great progress since 1840. Their aggregate yield, between 1814 and 1861, not taking into account the amount embezzled, amounted to 37,000 puds, the pud being equal to 16.3 kilogrammes. The best year, 1847, gave a yield of 1,757 puds; 1852-1861, an average of 1,556 puds; 1861 alone, 1,442 puds, of which 1,041 came from the private Siberian gold-sand washings. (Walcker, in Faucher’s Vierleljahrsschrift, 1869, II, 115.)

841 Spanish silver production yielded, in 1845, over 184,000 marks; in 1850, over 291,000. (Willkomm, Halbinsel der Pyranäen, 1855, 537.)

842 Annales des Mines, X, 831 ff.

843 Of this amount, there came to Europe, not including Russia, 150,000 kilogrammes of silver, 2,650 kilogrammes of gold; to Russia, 24,000 kilogrammes of silver and 30,000 kilogrammes of gold (embracing the quantities probably withdrawn without the knowledge of the custom’s authorities); to the rest of Asia, 100,000 kil. of gold; to Africa, 4,000. (M. Chevalier.)

844 According to Humboldt’s assumption before the time of Columbus, Europe had a circulation of 170,000,000 piasters; about 1600, of 600,000,000; about 1700, of 1,400,000,000; in 1809, of about 1,824,000,000. Up to 1803, there was produced in America, 9,915,000 marks (Spanish) of gold, and 512,700,000 of silver. (N.E., 245.) Gallatin estimates that, before Columbus, there were 1,600,000,000 francs; in 1830, in Europe and America, from 22,000,000,000 to 27,000,000,000 francs. (Considerations on the Currency and Banking System of the United States, 1831.) According to M. Chevalier, 1850, all the silver which America produced had a volume of only 11,657 cubic meters; and all the gold of only 151 cubic meters. The latter, therefore, would not even fill the half of a French gentleman’s salon.

845 All the more in favor with governments because they affect principally foreign consumers. Thus, the Spanish government at first imposed a tax of 50 per cent. of the gross yield of the raw material, on the purchaser of silver; since 1503, under Orando, of 33-⅓ per cent.; and later yet, of 20 per cent. This last tax was therefore in full force under Cortes. This tax was reduced in Mexico, in 1725, and in Peru in 1736, to 10 per cent., and later, in the case of gold, to 3 per cent. Heavy taxation of Russian gold ore (35 per cent. of the raw material), by virtue of the ukase of April 14, 1849. Compare M. Chevalier, III, 274.

846 Cantillon, Nature du Commerce, 215, 236, shows very clearly how the increase of the price of commodities was produced, in the first instance, by the increased consumption of the possessors of gold, and how it, therefore, first affected those commodities which they especially desired.

847 This is the opinion of Adam Smith. Similarly of David Hume, On Money. According to Letronne, Considérations sur l’Evaluation des Monnaies Grecques et romaines, 119, and Böckh, Staatshaushalt, I, 88, the average value of wheat in relation to silver was, in Athens, 400 B.C., as 1:3146; in Rome, 50 B.C., as 1:2681; in France, shortly before 1520 after Christ, as 1:4320; in the nineteenth century it is as 1:1050. Th. Smith, De Republ. Anglorum, I, assumes that the price of silver, from the age of chivalry to 1625, decreased in the ratio of 120:40. The Spaniard, Moncado (1619), says as 6:1. (Jacob, ch. 19.) Jacob, himself, in comparison with his own time, as 7:1 (ch. 15.) Much more moderate is Newmarch in Tooke’s History of Prices, VI, 345 ff., who assumes an increase in the prices of commodities of about 200 per cent. The estimated value of tithe-wine (Zehntwein) about doubled in lower Austria, during the sixteenth century. (Oberleitner, Finanzlage N. Oesterreichs im 16 Jahrhundert, 36.) According to the important researches of Mantellier, Mémoires de la Société Archéologique de l’Orleanais, vol. 1, 103 ff.; extract of Lespeyres in Hildebrand’s Jahrb., 1865, I, 1, the purchasing power of silver as compared with the average value of twenty-seven commodities, assuming it to have been 1 from 1750 to 1850, was, from 1350 to 1450, 2.9; from 1450 to 1550, 2.8; from 1550 to 1650, 1.5; from 1650 to 1750, 2.1. According to Rogers, the prices of corn in relation to silver were from 1596 to 1636, at most 2.3 times as high as from 1260 to 1400; from 1637 to 1700, 2.6 times; from 1701 to 1764, 2.1 times; from 1726 to 1820, 3.2 times. (Rogers, I, 180.)

848 In Germany, the rise in prices was first observed in the price of foreign groceries, which partly rose 400 per cent. Popular opinion looked for the cause in the evil disposition of the large commercial houses. In order to facilitate the competition of the smaller houses with the larger, the Reichstag, in 1522, prohibited all companies with a capital of more than 50,000 florins; and, in 1524, the royal treasury wished to bring suit against the violators of this law. But the cities contrived to avert the blow. (L. Ranke, Geschichte der Reformation, II, 42 ff., 134 ff.) In Spain, the government, especially between 1550 and 1560, endeavored to oppose the growing dearness of goods of all kinds, by prohibiting the exportation of the most important commodities, and by putting obstacles in the way of retail trade. The lower classes in England ascribed the rise to the suppression of the monasteries (Percy, Reliques of ancient Poetry, II, 296), while Henry VIII. endeavored to improve the condition of things by laws against luxury, the governmental establishment of fixed prices, the expulsion of foreign merchants etc. (21 Henry VIII.) The first writer who seems to have clearly seen the true cause of the changes in price was Bodinus, Response aux Paradoxes de Mr. de Malestroit touchant l’Enchérissement de toutes Choses et des Monnaies (1568). This work was translated into Latin by H. Conring, 1671; and done over in the work: Discours sur les Causes de l’extrême Cherté, qui est aujourd’hui en France (1574). Next, we have the English author W. S., A Compendious or briefe Examination of certayne ordinary Complaints of divers of our Countrymen of these our Days, London, 1581. In Befold’s Vitæ et Mortis Consideratio politica, 1623, 13 f., we have a right explanation of the caritas sine inopia which is to be considered as the common property of his time.

849 Similarly Quesnay, 77, Daire. Sir J. Stewart, Principes, ch. 3. Kraus, Vermischte Schriften, II, 131 ff. Hermann, Staatsw. Unters., 127. Helferich, Von den periodischen Schwankungen im Werth der edlen Metalle, 1843, 70 f.

850 According to Cibrario, a hectolitre of wheat was worth, in Turin, from 1289 to 1379, on an average, 905 gr. of fine silver; that is, about three times as much as in Paris before the discovery of America, and as much as in Paris from 1546 to 1556. In Turin, from 1825 to 1835, it was worth about 1702 gr. In the fifteenth century even, the foreign embassadors complain of the enormous cost of living there. So, for instance, Raumer’s histor. Taschenbuch, 1833, 162. Compare also, Carli, Del Valore della Proporzione dei Metalli monetati con i Generi in Italia prima delle Scoperte dell’ Indie, 1760, in which he, indeed, exaggerates the matter, and seeks to prove his views by the coarsest sophistry.

851 The chief result of Helferich’s excellent researches. (Helferich, loc. cit.) The general opinion, indeed, is that this statu quo of the value of the precious metals was interrupted about the middle of the eighteenth century by another decline, and that the latter yielded to a subsequent rise in 1815 and afterwards. Thus David Hume, History of England, ch. 44, App. 31, ch. 49, App. A. Young, Political Arithmetics, ch. 6. More recently, Rau, Lehrbuch, I, § 176. M. Chevalier, Cours, III, 320 ff. One of the principal advocates of the opinion that every increase made in the medium of circulation produces a corresponding depreciation is Nebenius, Deutsche Vierteljahrsschrift (1841). In England a quarter of wheat was worth, on an average, 38s. 8/9d., from 1595 to 1685. On a similar stability of corn prices in Belgium, see Schwerz, Belgische Landwirthschaft, III, 37. According to Suckburg (l.c.), the value in exchange of money from 1640 to 1700 declined 32-2/9 per cent.; from 1700 to 1760, 43 per cent.; from 1760 to 1806, 84 per cent.

852 From 1637 to 1700 the price of corn in England averaged 51 shillings; from 1701 to 1764 only 40½ shillings.

853 Thus, the dearness of wheat in Germany, during the first thirty years after the Thirty Years’ War was caused, in large part, by the depopulation produced by the War.

854 In Germany, also, the cause of the enhanced dearness of so many goods during the Thirty Years’ War is to be sought for in the goods themselves.

855 Since 1815, most Birmingham and Sheffield wares have fallen from 50 to 70 or 80 per cent. in price—at least from 20 to 30. (McCulloch, Statist. Account, I, 705.) The Quarterly Review, May, 1830, speaks even of an average decline of prices of English commodities in general, of 50 per cent.

856 Excellently carried out in Tooke, History of Prices, III, 1838. That the world’s market is not so very readily affected by an increase of the medium of circulation, is established by this fact, among others, that the immense exportation of French metallic money in consequence of the issue of paper money between 1716 and 1720, and again in 1790 and the following years, is coincident with very low prices of wheat in the neighboring countries. (Helferich, loc. cit., 139, 190 ff.) And yet, in the former case, the amount was 400,000,000 francs, and in the latter, at least 1,000,000.

857 Jacob estimates this part at only 2-½ per cent., McCulloch, at 20, Lowe at 25, Necker and Helferich at 50, Humboldt at 66-⅔ of the whole quantity worked. It certainly is, in our day, on account of the ever growing aggregate supply, greater than hitherto; but it is very different in different countries. Nebenius, Deutsche Vierteljahrsschrift, 1851, 56 seq., estimates the aggregate consumption of new gold and silver for industrial purposes at 14-½ piasters yearly, and in addition to this seven millions of old gold and silver (Bruchgold und Bruchsilber). The annual wear and tear of previously existing articles of gold and silver, it is estimated, amounts to 4,420,000 piasters (1/420); the annual increase of their aggregate amounts in Europe to 6,000,000 piasters (1-½ per cent., corresponding to the increase of population), and 4,200,000 (one-fifth of the entire consumption), is employed, as he claims, in gilding, plating etc. The last item is probably much increased by galvanic silver-plating, the invention of photography etc.

858 Jacob embraces in the amount of metal employed in industrial purposes, in the sixteenth and seventeenth centuries, 1/5 of the amount which, after deducting the loss in Asiastic trade, was added to the gold and silver stores of Europe; i.e., in the seventeenth century, about 2,500,000 piasters yearly; in the eighteenth century, ⅔ (!); that is, annually, 15,000,000 piasters; in 1830, in England, £2,457,221; in France, 120,000; Switzerland, 350,000; in the rest of Europe, 1,605,490; in North America, about 300,000; altogether, £5,900,000. Humboldt’s estimate is 21,000,000 piasters; McCulloch’s, £6,050,000. According to the records of the Paris Monnaie, the amount of silver ware in France increased seven fold between 1709 and 1759. (Humboldt.) In England, between 1807 and 1814, 8,290,000 ounces of silver were stamped for manufacturing purposes, from 1830 to 1837, only 7,387,000; in 1851, 924,000. McCulloch estimates the annual consumption of silver, in Birmingham alone, for plating purposes, at 150,000 ounces; in Sheffield, at 500,000; and the gold consumption in the pottery districts at £650 per week. Birmingham consumed (1831) for gilding purposes, £1,000 gold yearly. (Whately.) It now employs weekly 3,000 ounces of gold and 6,000 ounces of silver in the manufacture of gold and silver ware, besides the quantity intended for gilding and silver-washing purposes. (Quart. Rev., April, 1866, 381.) The jewelers of New York manufacture yearly 3,000,000 of dollars worth of gold and silver ware, mostly new material. (Economist, April 16, 1853.) There were in Vienna, in 1781, only 167 workers in gold and silver; in 1840, 229; in 1847, 539. (Baumgartner, in the Wiener Akademie, May 3, 1857.) Jacob estimates the aggregate mass of gold and silver ware, in plate, instruments etc., in Europe and America, to be 1-¼ as great as that of the ready money; and in England alone to be twice as great (ch. 28); while Tengoborski thinks that at the beginning of the nineteenth century, the coin constituted ⅔ of the entire amount of the precious metals. Sometimes a movement in the opposite direction takes place, as, for instance, in those revolutions in which the silver of the church was confiscated; in the unfortunate wars of Louis XIV., etc. Nebenius, loc. cit., 17, mentions a South German silversmith who melted down in the years succeeding 1802, monastery silver to the amount of 11,000,000 guldens.

859 On the wear and tear of coin, see § 120, and Hermann, in the Archiv. der politischen Oek., I, 1841. Compare also, Faust, Concilia pro Aerario, 1641, 263 ff. This wear and tear is so great that M. Chevalier supposes that it alone would suffice to reduce an amount of money under Constantine the Great of 5,000 millions to 300 millions, in the time of Philip IV. (ob. 1314.) Cours, II, 322. How great a number of coins, especially of the smaller denominations, are entirely lost is evident from the fact, that at the time of the demonetization of the 15-sous and 30-sous pieces of 1791-92, amounting to 25,000,000, only 16,000,000 were presented for redemption. Of the 10-centime pieces stamped with an N, amounting to 3,286,932 francs, there were only 2,000,000 left when they were withdrawn from circulation, and this although individuals had added to the coinage. (M. Chevalier, III, 321.) The total loss caused on this score, McCulloch estimates at 1 per cent. per annum, and Helferich, at ¾ per cent. The greater the aggregate stock of gold and silver, the greater the absolute amount of wear and tear. If, therefore, there were annually an equal influx of mineral products to the markets, the pressure of this increase of supply from that cause alone would take the shape of a converging series of prices. (Tooke, History of Prices, II, 151 ff.)

860 The British East India Company exported gold and silver on an average per annum from:

1711-1720, £434,000 1721-1730, 532,000 1731-1740, 487,000 1741-1750, 631,000 1751-1760, 571,000 1761-1770, 152,000 1771-1780, 43,000 1781-1790, 393,000 1791-1800, 352,000 1801-1807, 852,000

Milburn, Oriental Commerce, 1813, 419. According to M. Chevalier, Introduction aux Rapports de l’Exposition de 1867, the trade of Europe and North America, with India, China, Japan and the Australian islands, amounted in 1800, to only 410 million francs, in 1866, to 4,024 million. Yet, for a time, the largely increased exportation of English manufactures to East India and of East Indian opium to China, had changed the relation so that the exportation of the precious metals from South Asia, by a great deal, more than counterbalanced the imports. On the other hand, between 1853 and 1856 240,000,000 thalers were shipped to India and China from England and the Mediterranean harbors; in 1863 and 1864, even as much as 300 millions, to be, for the most part, buried there. Moreover, the immense quantity of cash money—often as much as from 12 to 15 million in pounds sterling—in the state treasury, and silver ornaments (§§ 44, 123) customary in India, demand a considerable yearly supply to make up for wear. Newmarch speaks of 400 million pounds sterling which can be maintained in its condition hitherto by a yearly increase of 1 per cent. (History of Prices, VI, 723.) From 1865 to 1869, English steamships carried gold and silver to the East in the following quantities, yearly: 93.9, 66.3, 24.6, 70.2 and 60.4 million thalers, in addition to which almost as much came directly from California. Statist. Journ., 1871, 122 seq.

861 Tooke-Newmarch, History of Prices, VI, 147 ff., estimates the aggregate stock of gold at the end of 1848 at £5,600,000; in 1856, at £172,000,000 more. According to Lavasseur, the amount of silver in the East increased, between 1848 and 1857, from 22 to 24 milliards of francs; and the amount of gold from 9-½ to 15-½ milliards. (Annuarie d’Economie politique, 1858, 632.) The total amount of gold and silver in the civilized world, Wolowski estimated at from 55 to 60 milliards of francs, in 1870. (L’Or et l’Argent, Enquête, 19.) Compare Mason, The Gold Regions of California from the Official Reports, 1848. Tengoborski, Sur les Gîtes aurifères de la Californie et de l’Australie, 1853. Goldfield’s Statistics issued from the Mining Department in Victoria, 1862. W. R. Blake, The Production of the precious Metals, or statist. Notice of the principal Gold and Silver producing Regions of the World (New York, 1869).

862 Soetbeer’s Denkschrift betr. die deutsche Münzeinigung Mai, 1869, and earlier yet, in Faucher’s Vierteljahrsschrift, 1865, II. According to M. Chevalier, all the mines of the world, a short time previous to 1865, produced 284,000 kilogrammes of gold, and 190,000 kilogrammes of silver in a year: a total of 373,000 thalers (Journal des Economistes, June, 1866), while, in 1848, the total amount of gold coinage in the world was estimated at 560,000,000; Great Britain, France, North America and Sidney had, since that time and up to 1871, added to this £597,780,000. The additions have been made in decreasing quantities: thus, 1857-59, 37.2 millions annually; 1869-71, 16.99 millions annually. (Statist. Journ., 1872, 376 ff.) The estimates as to how much a gold-digger might make in a day have been variously estimated. Thus, Larkin estimates it from $25 to $50; Mason, at $10; Folson, at $25 to $40; Butler King, at $16, reckoning one ounce at $16. All these estimates seem to give an altogether too high average. In Australia, according to Khull, Colonial Review, June, 1853, a digger can produce only one ounce daily, or less than 4 thalers. According to W. Stamer, Recollections of a Life of Adventure, II, 1866, a gold-washer in Victoria earned in 1858, on an average, £250 per year; in 1865, only £70; while day labor was worth 15 shillings. Hence, great hopes have to be built on the lottery-nature of gold-washing. On the Rhine, a gold-washer is satisfied with ⅔ of a gramme of gold, that is worth from 13 to 18 silver groschens. (Daubrée, Comptes rendus de l’ Académie des Sciences, XXII, 639.) It should be borne in mind, however, that the Rhine-lander devotes to gold-washing only the leisure time which his avocation as a fisherman leaves him, while the gold-washer in the new world, as a rule, devotes his whole time to it; and that his labors are interrupted by the long rainy season, attacks of fever etc. To this must be added the great difference of the average prices of the means of subsistence and the difference of all social conditions.

863 Compare, for instance, on the early productiveness of the Brazilian gold districts which soon ceased: Spix und Martius, Reise nach Brasilien, I, 262 f., 350. Gardner, Travels in the Interior of Brazil, 1846. On Hispaniola, see Benzoni, N. Mundo, I, 61, and Peschel, Gesch. der Entdeckungen, 304, 556. Hitherto, gold had been obtained by the usual mining process, only in very few places. As a rule, it has been found in alluvial land not far from the surface. Compare Ansted, The Gold-Seekers’ Manual, 1849. These circumstances have made the production of gold important from the first; and they still make it comparatively easy, while it causes little demand for capital but for great skill. As soon, therefore, as the greater part of the country washed for gold has been worked, which does not require a long time, the whole is abandoned, while in the production of silver the great amount of capital fixed in pits, shafts, kilns etc. ties the parties engaged in the enterprise to the spot, and necessitates the continuation of the enterprise. In recent times, however, Australia and California have developed the mining and machine production of gold to a surprising extent. According to Laur, La Production des Métaux précieux en Californie, 1862, 33, and the Journal des Economistes, Nov. 1862, Californian gold-quartz produced, in 1851, on an average, 635 francs per ton; in 1860, only from 80 to 85 francs; but the gold-washing methods have become cheaper in the ratio of 2,500:1. However, the production of the precious metals seems even now to be decreasing. According to the Statist. Journal, 1866, 99, it amounted on an average to:

in 1849-51, gold £23.9 million, silver £15.5 million. in 1852-56, gold 38.7 million, silver 16.1 million. in 1857-59, gold 36.5 million, silver 17.1 million. in 1860-63, gold 33.5 million, silver 18.2 million. in 1864-68, gold 30.0 million, silver 19.5 million.

The number of gold-diggers in Victoria steadily decreased from 125,764 in 1857, to 63,053 in 1867.

864 One of the chief difficulties in the way of the production of gold is the loss by embezzlement, which is estimated at an average of 20 per cent. Small companies of men working on their own account would be less exposed to temptation, and the Anglo-Saxon races and the North Americans are very well adapted thereto. (M. Chevalier, III, 261.)

865 Gold is in a certain sense one of the most widespread of metals, although it is found anywhere only in small quantities; so that on the Rhine, for instance, it takes from 17 to 22 millions of gold grains to make a kilogramme. An extraordinary large number of places owe their civilization to gold-seekers. Compare Tacitus, Agr., 12. I select the following “finds” from Ritter’s Erdkunde. The Shangallas (I, 249); still more the terrace of Fazoglu itself (I, 253, compare Bruce, Travels, V, 316, VI, 255, 342), in Monomotapa (I, 140); in Manica, west from Sofala (I, 145), especially since the suppression of the slave trade (I, 305, 471); in Mandigo land (I, 360, 372); on the road from Gambia to Timbuctoo (I, 457); on Lake Mangara (I, 493); between Timbuctoo and Finnin (I, 445); in Nubia (I, 667, seq.); unused silver and quicksilver mines on the lower Bagradas (I, 493); gold wealth at Malacca, aurea chersonesus (V, 6 f., 27); Tonkin, Lao and Ava (III, 926, 1, 216, IV, I, 213); Assam (IV, 294); smaller Thibet (III, 657); Kashmere (III, 1,155); on upper Setledsch (III, 654 ff., 668); in the mountainous sources of the Indus (III, 508, 529, 593, 608); on the Cabool (VII, 23); in Peshaver (VII, 223); Badakschan (VII, 795); rich silver mines abandoned for want of wood near Herat (VIII, 243); in Armenia (X, 273). It is said that in southern China there are great treasures of the precious metals, the removal of which has been opposed thus far. (IV, 756.) Arabia’s richness in gold mines, spoken of by Diodor., II, 50, III, 45, and Agatharch, De Mare rubro, 60, is of doubtful existence, as no traces of them are to be found in the country to-day. On the other hand, on both shores of the Pacific Ocean, the portions of the earth richest in volcanoes seem to possess almost everywhere quantities of gold equal to those of California and Victoria. (Edinburgh Review, Jan., 1863, 82 ff.) What an amount of treasure can be obtained at times from old and long since forgotten “finds” is proved by the Altai (that is gold mountain), which even the old Tschudi had rummaged (K. Ritter, II); and where Herodotus’ (III, 16) love of truth, so frequently called in question, has recently been so brilliantly vindicated. Compare v. Ungern-Sternberg, Gesch. des Goldes, 1835. A. Erman, Ueber die geographische Verbreitung des Goldes, 1835. According to Murchison, Siberia, ch. 17, gold is to be found only “in crystalline and paleozoic rocks, or in the drift from these rocks, which is a tertiary accumulation of the pliocene age;” and that it is found most abundantly “in quartz-ore, vein-stones and traverse altered Silurian slates, chiefly lower Silurian, frequently near their junction with eruptive rocks.”

866 Compare Humboldt, N. Espagne, IV, 147 ff.; St. Clair Duport, Essai sur la Production des Metaux précieux en Mexique, 1843; M. Chevalier, Cours., III, 483 ff.

867 The cost of a kilogramme of silver, expressed in terms of silver itself, up to the moment that it is shipped, is estimated by Duport as follows: salt and magistral, 61 grammes; quicksilver, 112 grammes; stamping it, 171 grammes; transformation of the ore, 72 grammes; rent and superintendence, 38; duties etc., 145; smelting, transportation and shipping, 35. There remains as profit for mining it, 336 grammes. As to how the production of American silver increases and runs parallel with the cheapness of quicksilver, see Humboldt, N. Espagne, IV, 91 ff.

868 Wolowski calculates that the absolutely much smaller yearly increment to the amount of the precious metals in the sixteenth century, frequently 1/12, now constitutes only 1/50 of the greater existing amount. (L’Or et l’Argent Enquête, 50.)

869 In the United States the stock of cash money in 1820 was estimated at 5.1 thalers per capita; in 1849, at 8.6 thalers; in 1854, on the other hand, at 13 thalers.

870 The weight of the mass of gold introduced into Europe annually stood to that of silver in the ratio of 1:60-65 in the seventeenth century; in the first half of the eighteenth century, in that of 1:30; in the second half, in that of 1:40; and yet the variations in price were not in the least parallel. According to Sœtbeer (Beiträge und Materialien zur Beurtheilung von Geld und Bankfragen, 1855, 102 seq.), the average silver-course (silbercurs) of gold had, 1852-54, sunk only 2.05 per cent., as compared with that of 1800-40. And yet the value of the annual production of gold stood to the annual production of silver, in the beginning of the nineteenth century, as 29 to 71; in 1846, as 47 to 53; in 1848-56, as 3 to 1.

871 While the public, even since 1850, think they have noticed a depreciation in the value of money, there are a great many learned political economists who are by no means prepared to grant it. The principal advocates of this opinion are Tooke, and Newmarch, in vol. VI. of the History of Prices (1857). Also Lavergne, in the Journal des Economistes. And really the enhanced dearness of many kinds of goods up to 1857, might have been accounted for by causes affecting the goods themselves: diminished supply by reason of bad harvests, commercial gluts etc.; increased demand by capitalization on a gigantic scale, speculation, but especially by the elevation of the lower classes etc.

The London wholesale prices were on the 1st day of January, 1869, nearly all lower by 10 per cent. than on the 1st day of July, 1857. Only indigo, cotton and meat had risen. (Hildebrand’s Jahrb., 1870, I, 328.) In many instances the enhanced dearness is entirely local, by reason of the greater facilities for transportation in places where prices were already higher. But as new truths are very easily exaggerated by their discoverers, much of Tooke’s view concerning these events depends upon a polemic carried too far against the theory of the balance of trade which was customary in the so-called currency school. Compare, in opposition to Tooke, Lavasseur, in the Journal des Economistes, March, 1838, and M. Chevalier, La Baisse probable de l’Or, 1858. Lavasseur, from the difference between the official and real custom-house prices in France, calculates that raw materials in 1856 were on the average 63 per cent., and in 1858, 20 per cent. higher than in 1826; and that manufactured articles were in 1856, just as high, and in 1858, 6 per cent. lower than in 1856. An average made of all commodities showed, in 1856, an enhancement of 30 per cent, and in 1858 of 9 per cent. (Hildebrand’s Jahrb., 1864, II, 118.)

In the Hamburg market in 1847-65, 87 articles declined in price, 183 rose in price, and 24 remained about stationary. (Amtl. Statistik von 1887, 18 ff.) Jevons assumes a general rise in the price of commodities between 1849 and 1869 of about 18 per cent. (Economist, May 8, 1869.) He makes this estimate from the average March prices of 50 of the principal articles. Assuming the average March price of 1849=100, we have, according to him, for the following years, respectively: 101, 103, 101, 116, 130, 125, 129, 132, 118, 120, 124, 123, 124, 123, 122, 121, 128, 118, 120, 119. Previous years showed: 1789=133; 1799=202; 1809=245; 1819=175; 1829=124; 1839=144. (Compare supra, § 129, note 1.) The budget of a Swiss teacher’s family consisting of five persons has become dearer since 1840 ff., their consumption remaining the same and of only the simplest articles, by 72.5 per cent. (Böhmert, Arbeiterervhältnisse etc., I, 302 ff., 355.) That, however, the depreciation is under-estimated most precisely in England and over-estimated in Germany, Knies very well accounts for by the price-leveling effects of the more modern means of communication. (Tübinger Zeitschr., 1858, 280 ff.)

872 Compare Leibnitz, on the consequences which would follow the realization of the dreams of the alchemists. It would be a great misfortune, since then a pocket would no longer suffice for the transportation of money, and people would have to use wheel-barrows as they do now in Sweden. (Opera ed. Dutens, V, 199, 401.)

873 Beccaria considers it equitable that the debtor should always pay the original value of the metal. (E.P., IV, 2, 17.) Galiani, on the other hand, would not permit individuals, even when the state arbitrarily causes a diminution in the real value of money, to maintain the real value of the coinage in their contracts. (Della Moneta, V. 3.)

874 It is precisely this class which first comes to an understanding of the essential nature of the change effected.

875 Thus the English lessees, who in the sixteenth century had leases for a long term of years, saw themselves rise in the social scale in consequence of the revolutions in price—a fact of importance in the political struggles of the seventeenth century. Compare Sir F. M. Eden, State of the Poor, I, 119 ff.

876 Too much stress is laid upon this by Tooke-Newmarch, who, on that account, considers almost every increase of the precious metals as a blessing. As a matter of fact, the population of Australia, of the United Kingdom, and of the United States, increased, between 1848 and 1871, 44.5 per cent.; the production of coal and of railroads in England, between 1856 and 1869, by about 60.6 per cent.; the English production of woolen goods, linen and cotton and yarn, between 1848 and 1870, by from 110 to 335 per cent. (Statist. Journal, 1872, 376 ff.)

877 Luther’s complaint concerning the poor condition of the clergy. See Schmoller, in the Tübinger Ztschr., 1860. This very clearly shows how much surer for the crown domains are than a civil list, and donations of land to a church than payments in money. Law of Elizabeth, 18 Eliz., that, in the case of university property, ⅔ of the lease rent should be paid in metal and ⅓ in corn. In Adam Smith’s time, this latter third was worth as much again as the other two. (I, ch. 5.)

878 In the sixteenth century, this class was of small importance in most countries; in our times, their ruin would cause general disturbance. The wiser class of capitalists would, indeed, find means to exchange their credits for more certain values, or make it a condition that they should receive in the end a large sum.

879 Thus, for instance, the son of a deceased land owner who retains the lands as his own acquits himself towards his brothers who have entered the military or civil service of their country by paying them a certain sum periodically. If a revolution were really impending, the owners of land would soon emulate one another to improve their estates by borrowing capital, if for no other reason, to turn the depreciation of the medium of circulation to their own advantage. In the sixteenth century, the indebtedness of land owners was relatively unimportant.

880 It appears from Roger’s Tables, Statist. Journal, 1861, 551 ff., that, between 1583 and 1620, a time during which the population of England increased neither in wealth nor in numbers, there was a considerable increase in the price of nearly all English commodities. Thus, for instance, wheat was, from 1591 to 1600, 468 per cent., and from 1611 to 1620, even 495 per cent. higher than from 1530 to 1533. The Saxon laborer earned, in 1599, in corn, only half as much as in 1455. (Tübinger Ztschr., 1871, 354.)

881 When labor is indispensable to employers, it may happen that a small decline in the supply may largely raise the price. Wages, in almost all branches of labor, rose between 1851 and 1856, by about from 15 to 20 per cent.

882 This, also, was of little significance in the sixteenth century, but how important now!

883 Income taxes, ad valorem duties and tithes rise and fall in their nominal amount as the price of the medium of circulation falls and rises.

884 Thus, for instance, the victory of the English Parliament over the unlimited power of the crown, in the first half of the seventeenth century, was very much promoted by the fact that the crown, in spite of all its economy, was always in financial straits in consequence of the depreciation of money. (Power of the purse, power of the sword!) However, any force kept steadily in action is a two-edged sword. While under favorable circumstances, it may be thereby developed, under unfavorable circumstances it may be thereby exhausted. How great a number of representative assemblies, during the revolutions in prices in the sixteenth and seventeenth centuries, allowed their energies to grow dormant!

885 Most of the above points are very well discussed in the work W. S., cited above, § 137.

886 As no one then doubted: Compare W. Raleigh, The Discovery of Guiana, Pref. I refer to Philip of Macedon.

887 Compare Roscher, Kolonien, Kolonialpolitik und Auswanderung, 1856, 145 ff.

888 Something similar might have been observed in England in 1819 etc., at the restoration of a depreciated paper currency. Among nations in a comparatively low stage of civilization, a variation in the medium of circulation is of less importance than among more highly civilized nations, because trade in money, and still more, credit, are relatively speaking undeveloped.

889 Fawcett greatly exaggerates when he says that with an increase of population and wealth, an increase of money is as much a want as hunger. (Manual, 370.)

890 Galiani, Dellab Moneta, III, 1. At the time of the Lex Salica, 10:1. After the Edictum Pistense of Charles II., ch. 24 (Pertz, Mon. Germ., III, 488), 12:1. At the time of the Sachsenspiegel (III, 45), again, 10:1. Under Saint Louis, King of France, 12.5:1. (Leblanc, Traité historique des Monnaies de la France, ch. 1, 2.) In Poland, 1356, 12:1. (Muratori, Dissertt. Medii Aevi, II, 28.) In England, 1262, 9.6; 1272 = 12.5; 1345 = 13.7:1. (Rogers, 1, 593 ff.) Under Henry VI., and in 1494 = 12:1. (Anderson, Origin of Commerce, a. 1422, 1494.) In Denmark, under the former Kings of the Union = 8:1. (Dahlmann, Dänische Geschichte, III, 52.) And so throughout almost the whole of Scandinavia’s medieval period, as for instance in the Graugans. (Wilda, Gesch. des deutschen Strafrechts, I, 329.) In Italy, 1579 = 12:1. (Scaruffi, Sopra le Moneta, 1582.) In Holland, 1589 = 11.6:1. Bodinus, De Republ., 1584, II, 3, maintains 12:1 as the general ratio; but the Apostolic Chamber adopted the ratio of 12.8:1. In Germany, according to the instances cited by A. Riese, 1522 = 10:1. The monetary laws of Germany give it in 1524 = 11-⅓:1, in 1551 = 11:1, 1559 = 11-3/7:1; Budelius, De Monetis, 1591 = 11-¼:1. At the beginning of the seventeenth century the relation in Spain was = 13.3; in Germany = 12.16; in Flanders = 13.22; in England = 13.5:1. (Forbonnais, Finances de la France, I, 52.) About 1641, in Flanders, it was 12.5; in France, 13.5; in Spain, 14.1. Immediately after Colbert’s death it was, in Genoa, 15.03; in Milan = 14.75:1. (Montanari, Della Moneta, 80.) While in the seventeenth century gold rose, it sank in the eighteenth, on account of the Brazilian gold washings and the many bank notes in circulation, which were for the most part of a large denomination. (Steuart, Principles, III, ch. 13.) Still it was in Amsterdam in 1751 = 14.5:1.

891 In Hamburg, the relation of the price of gold to that of silver bars, varied, between 1816 and 1852, from between 15.11-16.2 to 1 (Soetbeer); in London, from 1816 to 1837, between 15.80 and 14.97 to 1.

892 In Asia, it is generally lower than in Europe—for centuries mostly = 10:1. But in Birmah it is = 17:1, mostly on account of the extent to which indulgence in luxury is carried there. (Crawfurd, Embassy, 433. Ritter, Erdkunde, V, 244, 266.) Concerning China, see M. Chevalier, Cours, III, 359. In Africa, gold is low as compared with silver, in proportion to the distance from the civilized world. Thus, an ounce of gold in Shenaar cost 12 piastres; in Suakim, 20; in Djidda, 22. (Ritter, Erdkunde, I, 538.) In Timbuctoo, Mungo Park found the relation of gold to silver to be as 1-½:1. Compare Marco Polo, II, 39 seq.

893 In antiquity, a similar course is to be observed. According to Manu’s Indian laws, VIII, 134 seq., = 2-½:1; in the East, for a long time, = 10:1; under Darius Hystaspis, = 13:1. (Herodot., 111, 95.) In Greece, in the time of Lysias, = 10:1 (Lysias, pro bonis Arist., Conon); according to Plato, = 12:1 (Hipparch., 231); according to Demosthenes, adv. Phorm., 214, = 14:1 (Böckh, Staatst., I, 43); Menander’s estimate, = 10:1, probably because Alexander’s victory had made gold cheaper. (Pollux, IX, 76.) Among the Romans, about 189 B.C., = 10:1 (Livy, XXXVIII, 11); somewhat later, = 11.9:1 (Mommsen, in the histor. phil. Berichten der K. Sächs. Gesellschaft, 1851, 184 ff.); in the fourth century after Christ, = 14:1. (Theod., Cod. VIII, 4, 27.) We sometimes find sudden variations. Thus, according to Polyb., XXXIV, 10, gold, in Italy, sank about ⅓ in consequence of the opening of the mines at Aquilea. It sank to the proportion of 9:1 when Cæsar spent the contents of the Roman treasure, which consisted of gold. (Surton., Cæs., 54.) The ratio of 17:1, during Hannibal’s wars, was a species of National bankruptcy. See Plin., H. N., XXXIII, B.

894 After the February revolution, the gold-agio, as compared with silver, rose from 10-17 to 70 per 1,000. (M. Chevalier Cours, III, 346.) On the other hand, since the discovery of America, gold, as compared with commodities, has declined much less than silver. Compare Hermann, Ueber den gegenwärtigen Zustand des Münzwesens, in Rau’s Archiv., I, 151 ff. According to Lord Liverpool, Treatise on the Coins of the Realm, the value of gold coin in the London market, as compared with bank notes, varied in 40 years, almost 5½ per cent.

895 In recent times, it has become possible to extract from ancient silver coins a small quantity of gold, and with some advantage. European industry produced in this way about 1,600 kilogrammes of gold per annum. One half of this amount is obtained in France and the rest in Hamburg, Amsterdam, Brussels and St. Petersburg. (Michel Chevalier, Cours, III, 302.)

896 Senior, On the Value of Money, 77 ff. It is certain that a simple variation in prices would not induce people to have gold table services, or architectural ornaments of silver.

897 Rau, Lehrbuch, 6th ed., I, § 277 c. In Rau’s opinion (loc. cit.) we may, in the course of the next decades, expect a decline of the price of gold of about 76 per cent., and of only 10 percent. of the price of silver (because of the low prices of quicksilver.) But here he seems to overlook entirely what influence a change of standard in important commercial districts would have.

898 Compare the works already mentioned. Fleetwood, Chronicon preciosum, or an Account of English Gold and Silver Money, the Price of Corn and other Commodities etc., for Six Hundred Years last past, 1707; Dupré de Saint Maur, Essai sur les Monnaies ou Réflexions sur les Rapports entre les Denrées et l’Argent, 1746; Unger, Ordnung der Fruchtpreise, 1752; Paucton, Métrologie ou Traité des Mesures etc., des anciens Peuples et les modernes, 1780; the appendix to Macpherson’s Annals of Commerce, 1805; the tables in Garnier’s translation of Adam Smith, vol. II, 1822; A. Young, Inquiry into the progressive Value of Money in England, as marked by the Price of Agricultural Products, 1812; W. F. Lloyd, Prices of Corn in Oxford, in the Beginning of the fourteenth Century, and also from 1583 to the present Time, 1830; Helferich, in the Tüb. Zeitschrift, 1858, 471 ff. There are some very interesting notes on the history of prices during the Merovingian and Carolingian periods in Guérard, Polyptiques, I, 141 ff.

899 Thus, for instance, the bonds (and their coupons) of states, cities, great corporations, certificates of stock, mortgages, bills of exchange, checks.

900 A Prussian regulation of 1765 (Goldschmidt, Handbuch des Handelsrechts, I, 550), calls money-paper (Effecten), instruments of trade in which a value or a valuta is designated.

901 Garnier, French translation of Adam Smith, II, 143 ff., distinguishes between coin-paper and promise-paper: the latter is never found in circulation at the same time with the capital which it represents. Say says that, for instance, evidences of state indebtedness, state bonds, call for money if they would circulate, but they seldom act as money in circulation. (Traité, III, ch. 2.) Sismondi very well determines the difference in his Richesse Commerciale, I, 160. Rau, Lehrbuch, I, § 293, requires of all good paper money: a., that its mere transfer, even without any proof of its rightful acquisition, should suffice to vest the property in it in the receiver; b., that the power emitting it should enjoy universal confidence or be able to compel universal recognition; c., that its redemption should not be fixed for any definite point of time.

902 That it is not possible to keep paper money from declining in value, by the payment of interest, the people of North America learned from more than one experiment during the eighteenth century. (Benjamin Franklin, Remarks and Facts relative to the Paper Money of America, 1765.) The same phenomenon was observed in the case of the Spanish vales, which were created during the North American war in consequence of the absence of the silver fleet. (Bour-going, Tableau de l’ Espagne, II, 38 ff. Humboldt, N. Espagne, II, 808.) When the Portuguese apolices (since 1797) still bore six per cent. they depreciated in value; and when the payment of the interest was suddenly stopped, the rate of exchange did not become any lower. (Balbi, Esai statist. sur le Portugal, I, 323.) In Austria, in September, 1820, the bank notes which bore no interest were at a premium as compared with the imperial treasury notes, which did bear interest of 1 per cent., although the credit of both kinds of paper had ultimately the same foundation, namely, Austrian state-credit.

903 The attempt to make paper money pay interest suggests (as the Saint Simonists recommend it should, with much ado; Enfantin, Ser les Banques, d’ Escompte in the Producteur, 1826), that awkward sword, invented by Count Wilhelm von Bückeburg, to the blade of which a pistol is affixed! Shortly before each term for the payment of interest, the circulation of such paper money would be arrested. If the rate of discount should sink below the rate of interest such notes bore, they would be sought after eagerly and disappear in quantities, and, not be ever seen again until the rate of discount had risen to a high figure, when they would be suddenly presented for redemption. Such interest-bearing paper money, therefore, would be a serious element to aggravate the fluctuations of the money-market between good and bad times. When interest-bearing paper money pays interest at the rate usual in the country, it is hoarded by misers, (v. Struensee. Abhandlungen, III, 387.) Compare Forbonnais, Principes économiques, p. 234, ed. Guill., whereas v. Prittwitz, Kunst reich zu werden (1840, 359), takes delight in elaborating the idea of an interest-bearing paper money.

904 Of jurists, see Thöl, Handelsrecht, I, § 51, and the authorities for and against in Goldschmidt, Handelsrecht, II, Kap. 4, 1, 2. The compulsory circulation of paper money is an essential element only in reference to the person that issues it. Of political economists, especially A. Wagner in Bluntschli’s Staatswörterbuch, Art. Papiergeld, Band, VII, who, however, is very soon compelled to oppose to paper money “proper,” another kind not “proper.” Adam Smith unhesitatingly accounts bank notes also paper-money. (W. of N., II, ch. 2, p. 28, Bas.) Huskisson understands by “paper-money” only the irredeemable paper-money of the state, while bank notes should be considered as “paper currency.” (The Question concerning the Depreciation of our Currency, 1810.)

905 Seyd, Münz, Währungs- und Bankfragen in Deutschland, 50 ff., distinguishes four classes of paper-money: 1st class, paper-money covered by cash; 2d class, bank notes covered after the manner of banks; 3d class, state paper-money; 4th class, such paper money as the notes of the Southern Confederacy after its defeat.

906 Even Plato, De Legg., V, 742, was acquainted with money after the Spartan type, intended only for internal trade: νόμισμα ἐπιχώριον, αὐτοῖς μὲν ἔντιμον τοῖς δὲ ἄλλοις ἀνθρώποις ἀδόκιμον. Besides the state kept for foreign trade a supply of the universal Hellenic money, of which in case of need, private individuals could acquire what portion they needed by exchange. When Dionysius I. issued tin instead of silver money, all the Syracusans, although they noticed the forgery, acted in their intercourse with one another as if they considered the coins genuine. (Aristot., Œcon., II, 21, Pollux, IX, 79.) Timotheos behaved more honorably when, pressed by the dearth of money, he gave his troops copper coin tokens, which passed for the time being for their full value in the camp; but which were later to be redeemed at their full value in silver. (Aristot., Œc. II, 22.) Compare Polyæn, Strateg., IV, 10, 2. The iron money which the Klazomenians exchanged with the rich for silver, which bore interest, but which the rich were forced to take, had a longer duration; the silver was used to pay foreign state creditors, the iron money circulated for the time being in the city, and was gradually redeemed. (Aristot., loc. cit, II, 17.)

We are still more forcibly reminded of paper money by the Carthaginian leather money, where any object whatever of the size of a coin was shut up in a leather envelope with the state seal, and then circulated as if it were the coin it purported to be. Mieris, Beschryving der Munstn, 1726, explains the saga of Dido’s ox-skin by means of this leather money. Certain it is, however, that the surprise with which the sophistical dialogue, Eryxias, mentions the matter, is a proof how foreign it was to the Greeks. Concerning the Roman plated denarii which were stamped with the silver coins, but which were also accepted by the state treasury, see Mommsen, R. G., I, 405.

907 In the middle ages, leather money was issued as a promise of future payment: by the doge of Venice in the wars of 1122 and 1126 (Montanari, Della Moneta, 34); by King John, of England, during the struggle of the barons (Camden); Emp. Frederick II. at the siege of Faventia (Malespini, Hist. Fior., 130, Villani, Hist. Fior., VI, 21); by Louis IX. during his captivity (v. Raumer Hohenstaufen, V, 461), John of France, 1360 (Anderson, Origin of Commerce). On the Frankfurt lead marks which were afterwards redeemed by the Rechnerei: Kirchner, I, 541. Lavallette’s copper tokens during the siege of Malta had the inscription: non æs sed fides. The paper money which was issued during the siege of Leyden, the inhabitants afterwards would rather preserve than have redeemed, ad perpetuam liberationis divinæ memoriam. (Bornitii, De Nummis, 1605, I, 15. Distress coins, melacs, during the siege of Landau and of the Hungarian Ragoczy, Marpurger, Beschreibung der Banquen, 213. Krones, Zur Geschichte Ungarns im Zeitalter R’s, 1870.)

908 The Chinese have had various kinds of paper-money in their country since the 7th century after Christ. Sometimes they called them “flying coins, convenient coins,” and sometimes coupons, bons, conventions (Klaproth, Mémoires relatives à l’Asie, I, 375 ff.), against which the caravans, as soon as they had passed the limits were obliged to exchange their silver (Pegolotti, Pratica della Mercatura in Della decima etc., III, 3). These had compulsory circulation in China. The great Mongolian khans here became acquainted with paper-money. (M. Polo, II, 21.) Thus, especially in Persia, where refusal to accept such money and the imitation of it was punished with death (1340). Compare Ferishta, ed. Briggs, I, 414 ff. d’Ohsson, Hist. des Mongols, IV, 101 ff.; II, 487. Even here there occurred cases of state bankruptcy and finally withdrawals of the depreciated paper. (Klaproth, loc. cit.) In Japan, according to Oliphant, Narrative of L. Elgin’s Mission to China and Sapan (1859), all foreign coins were required to be exchanged against paper-money at the offices of the state bankers.

909 Adam Smith mentions North American paper money of the amount of 1 shilling, and Yorkshire bank notes of the amount of 1-½ shillings. Sweden had, until 1828, notes of 28 pfennigs.

910 Hence in Sweden, with its copper standard of long duration, the system of banks of issue was developed very early. The transport-notes (Transportzettel) (to be found in that country as far back as 1661) of the Stockholm bank are considered the oldest bank notes. Compare, however, Palgrave, in the Statist. Journal, 1873. When, in 1768, Catherine II. introduced paper money into Russia, the people gladly paid ¼ per cent. exchange to the state treasury for it. (Brückner, in Hildebrand’s Jahrbücher, 1863, 49.) According to Cancrin, Oconomie der menschl. Gesellschaft, 116, private individuals in from four to five months exchanged 40 millions of silver roubles for paper. And thus, in 1780, Berlin bank notes stood a few per cent. above par, and the notes of the S. Carlos-Bank, in 1788, from 1 to 1-½ per cent. (Rau, Archiv., II, 161.)

911 When at times in which paper money is looked upon with diffidence, peasants and others bury their metallic money, this advantage of course is lost. On the other hand, the exportation of precious metal money, caused by the emission of paper money, must not be considered a necessary evil, but rather as the condition precedent which in most cases makes the above advantages of the paper money possible for the first time. Compare Ad. Wagner, Die russische Papierwährung (1868), 22, 24, 33. Ricardo, Proposals for an economical and sure Currency, 1816, estimated that England, after the abolition of the bank restriction, needed twenty million pounds sterling. The interest on this amount of capital inclusive of wear and tear etc., should be estimated at at least ten percent.; that is for the whole kingdom at at least from two and one-half to three millions a year. On this Ricardo founded his proposal to base the bank notes on gold bars. In its time, the essay: Guineas an unnecessary and expensive Incumbrance on Commerce, or the Impolity of repealing the Bank-Restriction Bill considered (London, 1802), met with great approval.

912 Adam Smith calls attention to the analogous case in which a manufacturer replaces a costly machine by a cheap one, sells the former and employs the difference between the old one and the new in enlarging his business. (W. of N., II, ch. 2.) When, indeed, all nations have introduced the use of paper money, the greater portion of the advantages which the one nation was able to obtain by its means cease, and the only ultimate result is a depreciation of the value of money and of the precious metals. Formerly the advantage reaped by the single nation that emitted paper money was greater than its share in the depreciation. (Wolowski, Enquête de 1865, 108.)

913 When E. Seyd calls bank notes more costly than metallic money, because the former in England require an outlay for administration of 1-½ per cent. per annum, while the wear and tear of metallic money amounts to 1 per cent. only in 20 years (Statist. Journal, 1872, 511), he overlooks the loss in interest and the costs of coinage in the latter case.

914 Related to this is the fact that in France, during the assignat-crisis, the large bills of 10,000 francs were harder to get rid of than the small ones. (A. Schmidt’s Pariser Zustände, III, 22.)

915 The numbering of paper money. A state which should neglect this would not only reserve to itself the possibility of an unlimited increase, but would surrender all control of its officials charged with the emission of the paper money. Law, Trade and Money, 162, advises that a large money reward should be paid to any one who should show the existence of a higher number than allowed by law, or of a duplicate number. And indeed, as comptroller-in-chief, he caused the prévôt des marchands to be removed, because charged with the duty of burning the paper withdrawn from circulation, he (the prévôt) noticed that the same number reappeared several times.

916 If a traveler wished to pay his inn-keeper in the note of a bank entirely unknown in the place, the latter would certainly refuse it. If, on the other hand, the traveler were to offer him a silver coin, the stamp and inscription of which were not familiar, still it would be taken at the value of the metal it contained, after deduction made of the costs of testing it, re-coining it, and compensation for the trouble caused. Ignored by Berkeley, who, indeed, considered metallic money nothing but “counters” or tickets (Querist, No. 23, 26, 441, 475), and who ascribes important advantages to paper money,—which by “stamp” and “signature” is made as costly as gold (440)—over metallic money (226).

917 Any person who has witnessed a tax-execution, or sale of property for the non-payment of taxes (Stuerexecution) will admit that a tax receipt is at least as real goods as an umbrella or a glass window that protects one from the storm. Michælis considers the amount of running payments to the state for duties, taxes etc., as the only right basis for full-value paper money. (Berliner Vierteljahrsschrift, 1863, III.) Better yet when Höfken advises that only as much paper money should be issued as amounted to the average balance (Bestand) in the national treasury. The tax-basis is defended with great warmth by L. Stein. Louis XIV., in 1704 issued paper money bearing 7 per cent. interest, the acceptance of which by all the royal officers of the treasury was prohibited! (Dutot, Réflexions, 863, Daire.) Law, Trade and Money (1705) ascribes to parcels of land the greatest constancy of value, because they cannot be replaced, because they can be neither increased nor decreased, and because they help to produce all other goods (p. 170). While silver cannot but depreciate, they have a prospect but to rise (188). Hence Law recommended notes based on parcels of land as the best money. (163, 191, 195.) Similarly, Benjamin Franklin, Modest Inquiry into the Nature and Necessity of a Paper Currency: and the Paper Money of Pennsylvania, New York and New Jersey was actually based on parcels of land, and was to be extinguished by the enfeoffed owners, and the interest paid by them. (Ebeling, Gesch. und Erdbeschreib, von N. Amerika, III, 621, IV, 649.)

918 F. Renonard de Ste Croix, Voyage aux Indes orientales (1810), I, 32, describes a species of paper money based on parcels of land which had lost 40 per cent. of its nominal value, although the holders of them were invested with the fief at only one-half their value. The French mandats territoriaux of 1796, declined in five months to 5 per cent. of their nominal value, although they contained the provision that the holders might, without public sale (Auction), have a certain amount of the national estates allotted to them in exchange for the mandats. The assignats were still more defective after their redemption (at the Caisse de l’extraordinaire), which was at first intended, and their drawing of interest were not fulfilled. Leaving the tax-basis out of consideration, the notes might, at the sale of the national estates, be brought in as means of payment: a thing which would not have been inoperative, provided the amount of the paper money had been strictly limited to the price of the pieces of land estimated in money. On the 1st of April, 1790, 400,000,000 francs in assignats were issued, and in September, 800,000,000 more, both together about equal to the secularized property of the church. (Ad. Schmidt, Pariser Zustände, II, 97.) But as afterwards all proportion between these two magnitudes ceased, or rather as up to January 1, 1793, 3,626,000,000 assignats were issued; up to September, 1794, over 8,800,000,000; up to September, 1795, 19,700,000,000; and finally up to September, 1796, 45,578,000,000 francs, of which perhaps 6,500,000 were either burned or demonetized, the price of the national estates on lands must naturally have risen as vastly as the assignats declined.

919 The paper money issued by Colbert’s successor, Chamillard, soon lost on account of its too great amount, 25 per cent. of its value, spite of the fact that it bore interest, and that ¼ of all payments to private persons had to be made in it. (Forbonnais, Recherches et Considérations, II, 182.) When the people of the United States, in 1775, issued paper money, it did not decline in value up to the end of 1776, so long as the amount did not exceed $20,000,000, as it was considered a matter of honor to take it at par. Afterwards, when the amount issued continued to increase, not even the law that a refusal to accept it, or insisting on taking it below par, should be punished with the loss of the commodity, and that the guilty party should be declared a national enemy, could keep it from declining in value; so that in May, 1871, a dollar in specie was worth $200.5 in paper. Compare Franklin, Works, ed. Sparks, II, 421, VIII, 328, 505.

France, during the Reign of Terror, on the 2d day of April 1793, threatened the claiming of a discount in the taking of assignats with six years’ confinement in chains, and on the 1st day of August, on Couthon’s motion, with twenty years’ confinement. In addition to this, maximum prices for the principal necessities of life were fixed and the exceeding of them was punished by severe penalties; and in France, and still more in the neighboring conquered countries, there were many persons who preferred to take assignats instead of payment rather than permit themselves to be robbed by requisitions. And yet on the 4th of June, 1796, one franc in specie exchanged for 800 francs assignats. Compare Büsch, Geldumlauf, III (§ 58 ff., d’Ivernois, Etat. des Finances Française, 1796).

920 The Prussian treasury notes of 1806, by virtue of a decree published in 1807, were to be taken by all at a rate of exchange to be officially published from time to time. Between December 1, 1807, and February 28, 1809, the highest “normal course of exchange” was 71, and the lowest 27 per cent. In January, 1815, a refusal to take them at par, except in certain cases, was threatened with from 500 to 1,000 thalers of a money-fine or from 6 to 12 months’ imprisonment. But indeed, in December, 1812, of 8,000,000 thalers, there were only 731,625 still circulating. Compare § 7 of the decree of the 19th of January, 1813. In April, 1815, it was ordered that the half of all taxes should be paid in such notes, or that if not, 8-½ per cent, should be added as a penalty. This penalty, reduced in 1827 to 1 silver groschen, was not formally abolished even in 1870, although it had long fallen into disuetude. There was a run of the owners of the notes in 1830, for redemption, and again in 1841 and 1848; in 1848 to the extent of at most 40,000 thalers in one day, and altogether not over 100,000 thalers. (Bergius, in the Tübinger Zeitschr., 1870, 226 ff.) About 1846, it was estimated that scarcely 1/250 a year of Prussian paper money was presented for redemption, while ⅓ of the state receipts came in in the shape of paper money. (Rau, Archiv., V, 125, 207.) The Saxon treasury notes never lost over 2 per cent., although the state treasury redeemed them up to 1804 only at an agio of 9 pfennigs per thaler, and afterwards of 1 pfennig.

921 Those entitled to make money claims are either compelled to accept the paper money at its nominal value or only at its current value for the time being. In the latter instance, the unjust compulsion is much smaller, but at the same time the whole expedient is much less productive to the state; and hence the former is the more usual. It was provided in Austria on the 22d of May and the 2d of June, 1848, that the former should be the rule, and that the latter should govern in cases in which gold or foreign silver had been stipulated for. (Höfken, Oesterreichs Finanzprobleme, p. 53.) On the 7th of February, 1856, it was permitted to contract by express promise for loans in the metallic currency of the country, both for the interest and the repayment of the principal. Hence a species of parallel-currency. If it be made entirely impossible for private individuals to protect themselves against the compulsory circulation of paper money, the more prudent are forced to send their capital into foreign countries, which operates very disadvantageously to poor countries especially. (Wagner, Tübing. Zeitschr., 1863, 441.)

922 Thus, for instance, the Frederick coins, and for a time the French assignats were helped by the popular enthusiasm, while Gustavus III., of Sweden, could give little value to his paper. (v. Struensee, Abh., III, 577.) In France, in 1796, 2,400,000,000 mandats were issued instead of all the outstanding assignats; that is, as many as there were assignats at the close of the year 1792. And yet the latter were then only 25 per cent. below par; the former, before one month had elapsed, 80, and in nine months, almost 98 per cent. below par. (St Chamans, Nouvelle Essai sur la Richesse des Nations, p. 150. A. Schmidt, Parisier Zustände, III, 121 ff.) In Austria, in 1811, the volume of paper money was contracted, but in a manner so violent and destructive of credit that its rate of exchange did not rise in consequence. (Tub. Zeitschr., 1763, 1874.) After 1848, also, the rate of exchange of Austrian paper money was much more perceptibly influenced by the variations in the political state of affairs than by the changes in its volume. (Tub. Zeitschr., 1856, 129.) In the summer and winter of 1866, about 650,000,000 paper rubles circulated, with scarcely any increase or decrease; and yet the ratio of exchange was, during a part of the summer, 66, and in winter, 84 per cent. of the silver value of the ruble. (Wagner, Russ. Papierwährung, 74.) Instances in which the increase in the price of commodities began to be more general only after the volume of paper money had decreased; in Austria, in 1851 and 1866; in Russia, in 1857 (loc. cit).

923 Then precious metal money becomes a commodity of which great stores may be collected in the country itself, at the banks, but chiefly for foreign trade. It is said that Austrian business men in 1860 and the following years invested “hoards” to the amount of several hundred million florins in exchange on metallic-currency countries. (Tüb. Zeitschr., 422.) Good paper money will never drive out the whole supply of cash money out of a country, because a good portion must always be kept for purposes of redemption; depreciated paper money operates much farther in this direction. Even the exportation of small change may become a profitable speculation as soon as the amount of depreciation of paper money exceeds the seigniorage. Then usually small change of a worse kind is stamped, as, for instance, in Austria, copper instead of silver; and in 1860, 12 millions florins of paper small change. Here the exportation of the better money is not a consequence, but the motive to the manufacturing of the worse.

924 During the assignat-period it could happen that a land owner, after the term for which he had farmed out his land, might be compelled to surrender it to the farmers, for the reason that the taxes, requisitions, etc., paid by the farmers, amounted to more than the farm rent. In the case of the former, the calculation was based on the recent depreciated value of the assignats; in the case of the latter, on the higher value the assignats had at the moment that the contract was concluded. (Büsch, Geldumlauf, III, 62.) A writer in the Revue des deux Mondes, April 15, 1865, thinks that one reason why the American civil war was so popular in the northwest was because the paper money issued during the rebellion made it easy for that part of the country to pay off the mortgage-debts which had burthened it since 1848. Even of the two law catastrophes, Duclos, in his memoirs, remarks that they produced a great admixture of those who had been formerly separated by differences of class and wiped out the previous ideas of decorum, fitness, etc.

925 During the time that the clipping of the coin was practiced, it is scarcely possible to show that money was debased below 11 per cent. of what its value should have been. See, on the other hand, § 3. In Austria, in 1810, a person had to give 1,200 florins in paper money for 100 florins in silver. (Tüb. Zeitschr., 1861, 593.) In North America, in 1781, it took $280 in paper to purchase $1 in silver. (Ebeling, Gesch. und Erdbeschreib., von N.A., 1856, III, 580; IV, 440; V, 437.) During the American civil war, the paper money of the Southern States declined to ½ (December, 1863) and even to 1/35 (October, 1864) of its nominal value. Compare Hock, Finanzen der V. Staaten, 514 ff. Observed even by Storch, Handbuch, Rau’s translation, III, 141 ff. (See, on the other hand, C. King, Thoughts, p. 113.) In Paris in July, 1795, the greater number of commodities estimated in assignats were worth as much as if the rate of exchange of the latter was 6-14 per cent. of their nominal value, while it actually amounted to only 3-½ per cent.

926 Where an agio of exchange of metallic money as compared with paper is prohibited, the decline of the latter will manifest itself not only in foreign rates of exchange, but also in the price of bars of the precious metals.

927 The changes of the agio or premium depend mainly on the supply and demand of the precious metals, that is, on the extent and intensity of the business transactions which have to be made in these metals themselves. (Wagner, Russ. Papierw., 87.) Hence, for short periods of time, it may be said in a paper currency country, that business transactions based on cash money have a great element of variation in them. (Wagner in Bluntschli’s Staats-wörterbuch, III, 971.) The purchase and lease-hold prices of fixed capital, of houses, for instance, rise much less because most people look upon the distress as transitory, and of short duration. (A. Walker, Sc. of W., 133.) In Austria in 1859, the rise of the agio of exchange of silver from par to 40 per cent., and its subsequent fall within 7 months to 20 per cent., left the price of coin almost entirely unaffected. (A. Wagner, Gött. Anz., 1860, 114.) That country people in general suffer more from a bad paper currency than the towns people and inhabitants of cities, see Bonamy Price, Currency and Banking, 175, seq. In the northern states of the American union, in 1864, 12 home kinds of commodities had risen 148 per cent., 7 foreign kinds of commodities, 164 per cent., and 7 which could be obtained only from the southern states, 353 per cent. (v. Hock, 186 seq.) As too great issues of paper money are so frequently made on account of war, it is comparatively easy to understand why it is that articles for which war creates a demand should rise in price very soon and very high; while the very opposite happens in times of taxation-distress, in the case of a great many articles of luxury, which can readily be dispensed with. Büsch remarks (Werke, VII, 91), that retail dealers frequently raise their prices in order not to be obliged to pay out so many small coins as change for the paper dollar.

928 Compare Hufeland, N. Grundlegung, II, 241. Self-seeking undertakers (Unternehmer = men of enterprise) have, on this account, both in Austria and Russia (Wagner, Russ. P.W., 105), but more so in North America (v. Hock, 556 ff.), opposed measures intended to restore values (Valuta), on the ground that they were anti-national. Even Sperausky experienced this in 1809, when he published very correct ideas on paper money, while in the “fairy” times of Catherine II., no one even thought that state paper money is a state debt. (Bernhardi, Russ. Geschichte, II, 2, 636.) One of the principal representatives of this course is H. C. Carey, Our Resources (1866), and in the New York Herald, 1865. On the other hand, Faucher rightly calls the more active exportation of countries, with a bad paper currency, an exportation of barbarous nations, the commerce of misery, to which any price paid in metal or in any higher-standing product of civilization is acceptable. (Vierteljahrsschrift, 1868, IV, 167.) The nation in the aggregate loses in international trade for the simple reason that its foreign creditors will accept its paper money at most at its current rate of exchange against specie, while foreign debtors force it upon the nation at its nominal value.

929 The different provinces also of a large empire may have very different degrees of depreciation of the same paper money. Thus, in the interior of Russia its rate of exchange against specie had for a long time not declined beyond 50 per cent. of its nominal value; while the foreign rate of exchange supposed a decline to 33-⅓ per cent. (Cancrin, Weltreichthum, 68.)

930 An enhancement of duties, taxes (Abgaben) etc., will seldom be able to progress in the same measure as the paper money sinks; in any case, a law would be necessary to effect this, which, however, comes always later than the decline. (Sismondi, Du Papier Monnaie, 27.)

931 Wagner, Russische Papierwährung, 142, estimates that the Crimean war depreciated the average current rate of exchange of Russian paper money by 11.1 per cent., the Italian war of 1859 by 14.5 per cent., the German war of 1866 by 19.4 per cent., spite of the fact that Russia did not participate directly in the last two wars.

932 The more than forty-five milliards French assignats, estimated at their rates current, really produced to the state only about six milliards. (Gentz, Histor. Journ., 1800, II, 317, after Lecoulteux.)

933 Very well explained by H. Thornton, Paper Credit of Great Britain, ch. 10. As to how, in Austria, the paper-money crisis contributed to bring the rigid national resources into a molten state, and to shake off the national inertia by the feeling of insecurity, see Buquoy, Theorie d. Wirthschaft, 1816, 347 ff. Schäffle, System, 3 aufl., 254 seq., thinks that if Austria should first adjust its values, and then, in case of another war, have recourse to a second depreciation, the disastrous disturbances of its national economy consequent herein would be produced twice instead of once, and not without reason.

934 The Prussian treasury-bills stood, in June, 1809, at 36 per cent. of their nominal value; June, 1810, 84-½ per cent.; January, 1812, 13-½; December, 1812, 44-½; June, 1813, 26-½; July, 1813, 24-½; December 31, 1813, 49-½; January, 1815, 88; January 5, 1816, 99 per cent. Austrian paper money expressed in terms of metallic money, amounted, on an average, between 1849 and 1855, to 292,000,000 florins: but at certain moments, it fluctuated from 231,000,000 to 337,000,000. (Tübing. Zeitschr., 1856, 124.) The agio of silver fluctuated during the Bancozettel (bank-billets, a species of Austrian paper money) period from one day to another on Change 40 and even 100 per cent.: thus, on the news of Napoleon’s entry into Paris, between the 25th of March and the 4th of April, from 330 to 440; on the receipt of the news of the result of the battle of Waterloo, in three days, from 458 to 412; after Napoleon’s abdication, from 412 to 320. (Gentz, Werke, V, 62.) Huskisson rightly calls a depreciated paper currency a much worse thing than clipped coin: the clipping of the coin is, so to speak, one great blow after which people can again calculate with certainty; but bad paper money is one continual fluctuation.

935 “The only difference here is that it is not left to individuals to say whether they will join in the game or not.” (Helferich.)

936 During the later assignat-period every house was full of commodities, every pocket of samples; every “exquisite” and every lady was a merchant, because no one had any further confidence in the money. People had retrograded to the barbarous condition of trade by barter. (Goncourt, Histoire de la Société française pendant le Directoire, 1854.) The French constitution of 1795 fixed the salaries of members of the Directory at the value of 50,000 myriogrammes of wheat (art. 173, 68). In Delaware, while the depreciation of paper money lasted, farm rent was usually required to be paid in produce. (Ebeling, V, 37.)

937 “Of all contrivances for cheating mankind, none has been more effectual than that which deludes them with paper money.” (D. Webster.) The American Secretary of the Treasury, McCulloch, says, in the report of December 7, 1868, of the legal tender notes: “there can be no doubt that these acts have tended to blunt and deaden the public conscience, and they are chargeable in no small degree with the demoralization which so generally prevails.” Niebuhr attributes the decline of old Spanish honesty which was formerly so much relied on in all great money centers, principally to the vales. (Nichtphilol. Nachlass, 489.)

938 This calls to our mind the impersonal mass-crimes to which our own times so frightfully incline, when many a man who would recoil in horror from an ordinary act of pocket-picking or from manslaughter with intent to commit larceny, robs thousands in cold blood by means of a swindling enterprise, or, for the sake of a fraudulent insurance, destroys the lives of a whole ship’s crew.

939 Saxon loans of two million thalers treasury notes (Kassenbillets), August, 1813, which were then to bear interest in silver and to be paid in silver. The purchase of the precious metals, or loans made by the state in foreign countries, with the intention of redeeming paper money, effect the same end at a much greater cost. (Peschel, D. Vierteljahrsschrift, 1858, III, 254.) If the currency consists of bank notes endowed by the state with compulsory circulation and an irredeemable character, such a metallic loan made in order to reimburse the bank for a loan to the state in depreciated notes is a gift made to the bank without reason; and the metallic money brought into the country flows back into foreign parts when the bank restriction is removed, because it, together with the appreciated notes, creates a too abundant circulation.

940 Although in England the suspension of the redemption of notes had lasted from 1797 to 1819, depreciation of notes during the greater part of this time either did not occur at all (Summer of 1797 to 1799, 1802 ff.) or was very small; and even during the last five war years, it did not amount to much over 30 per cent. About 1817, the notes of themselves again rose to par, and had lost but little during the following years, in consequence of the great loans of the continental powers in the English market. Under such circumstances, the repeated promise of the state to make the notes redeemable at their full nominal value was certainly a cogent reason for the Peel’s Act of 1819. In favor hereof are especially Tooke, Hist. of Prices, II, p. 60 ff., and J. S. Mill, Principles, III, ch. 13. Opposed to it, the so-called Birmingham-Atwood school and also Lord Ashburton, in his statement before the Agricultural Committee, 1836. But according to Rob. Muschet, Tables, exhibiting the Gain and Loss to the Bondholders arising from the Fluctuations in the Value of the Currency (1826), the state creditors, on the whole, lost more by the depreciation of the notes than they gained by their subsequent rise. Ad. Wagner also is decidedly in favor of the course A.

941 This has occurred not unfrequently in the case of the paper money of subdued revolt: thus, for instance, the Hungarian of 1849; in the case of the Southern Confederacy. But the assignats, too, came to this end, although, according to Büsch (Werke IX, 526), the intentions of the country at first were good; and in Austria, in 1810, many prophecies looking in this direction were made. (Per contra Rehberg, Sämmtl. Schriften. IV, 334.) Not very differently did it fare with the Swedish coin-tokens (Münzzeichen) of Charles XII, which were altered 7 times between 1715 and 1718; and where besides, the tokens called in in a much too short space of time were transformed into small change coins 1/32 their value hitherto. (Brückner in Hildebrand’s Jahrb. 1864, I, 161, ff.)

942 Thus it was, for instance, in Austria, in 1811 and 1820, at 1/5 and 2/5 of the nominal value, in 1799 in the United States, in 1813 in Denmark with the currency notes (Courantzettel), in 1816 in Norway with the royal bank dollar notes, in Sweden in 1814 with the bank notes (Bancozetteln) at 37-½ per cent., in 1839 in Russia with the bankassignationen, at 2/7 of their nominal value. Of theoretical writers this course is recommended among others by Jacob, Staatsfinanzwissenschaft, § 980 ff.; Nebenius, Œff. Credit, 2 Aufl., ff.; Deutsche Vierteljahrsschrift, 1841, I, 65; Rau, Lehrbuch, III, § 528; Helferich, Tüb. Ztschr., 1856, 435 ff. According to v. Rotteck, Lehrbuch, IV 402, it may be assumed that paper money is spread among the people of a country in proportion to their resources: which is also the hypothesis on which all direct taxation is based. Hence the gradual depreciation of paper money operates like the imposition of a tax and the reduction of value (Deralvirung) is, so to speak, only the release of the same. Besides Gentz (Werke by Schlezier, IV, 58) shows from the example of Austria in 1811, that in the case of the taking up of a depreciated paper currency it makes a better impression to give 100 florins in specie for 1,000 florins in paper, than 200 florins in a new kind of paper. The holders of the old paper money have now lost confidence in all paper currency. Of similar import is the immediate abolition of the compulsory circulation of paper money at its nominal value (Prince Smith in Faucher’s Vierteljahrsschrift, VII, 126 ff.), and the introduction of compulsory circulation in accordance with the day’s quotations of the actual value of the paper as compared with specie. (Strache, Die Valuta in Œsterreich, 1861; per contra, Ad. Wagner, Tüb. Zeitschr., 1861, 606 ff.)

943 Such measures as were adopted in Austria, in 1811, where a “redemption and extinction deputation,” independent of the government was established and sworn to prevent a further increase of paper money, are not sufficient of themselves alone.

944 The Code Civil (art. 1895) makes the nominal value entirely conclusive; so, also, the Prussian Landrecht (I, § 790): which is to proclaim the omnipotence and infallibility of the state power in the most ingenuous or else in the most brutal manner. The power given by Puchta to metallic value (Pandecten, VII, aufl., § 38) is applicable neither to paper money nor to small coin; and it ignores entirely that stamped coins and currency money are something different from mere metallic commodities and even from metallic bars. The Austrian civil law (bürgerliche Gesetzbuch) decides in favor of the current value (986 seq.): a view which most modern jurists since Savigny (Obligationenrecht, I, 404; earlier yet, Hufeland, Ueber die rechtliche Natur des Geldschulden, 180) entertain. But they even fail to recognize that the depreciation, for instance, of paper money as compared with specie and general decrease of purchasing power are identical only in the case of such paper money or reduced coins which have no compulsory circulation. (A. Wagner, Tüb. Ztschr., 1863, 478 ff.)

945 Let us suppose that at the moment the state could perform its duty to its servants only to the extent of one half. If it should frankly admit this, pay one-half in good money and remain in debt for the other half, it might subsequently, in better times, make good to them or to their heirs what it had now refused; and thus private credit, from the disturbance of which the state can only suffer, suffer no diminution. Both are quite different when the state disguises its insolvency under the mask of apparent full payment in paper money which has lost 50 per cent. of its nominal value. In opposition to the myth that the assignats saved France, see Levasseur, in the Acad. des Sc. m. et. p.

946 It not unfrequently happens that a nation’s paper money has been directly or indirectly affected by an unfriendly state. Thus for instance, England, in 1794, tolerated an assignat manufactory at Lambeth, while Frenchmen imitated English bank notes. (Archenholz, Aenalen XI, 429.) Napoleon in 1812 issued forged Russian bank notes. (Cancrin, Œconomie der menschl. Gesellschaft, 136. Niebuhr, Gesch. der Revolution, II, 314.) When Maria Theresa first wished to introduce paper money, Bolza, her minister of finance, in his urgent appeal to her to desist from adopting such a measure, foretold the subsequent bankruptcy etc. (Mailath, Oesterr. Gesch., V., 83.) Adam Smith compares gold and silver circulation to a highway which, indeed, produces nothing directly. Paper money is an advance similar to that which would be produced by the construction of a machine adapted to the carriage of persons and goods through the air, and which permit the highways hitherto used to be turned into meadows, arable land etc. Ad. Smith very strongly emphasizes the insecurity of these “Dædalian wings” as compared with the “solid ground of gold and silver,” especially in the transitory misfortune produced by war. (W. of N., II, p. 78, Bas.) David Hume says of all paper media of exchange, that they share all the harmfulness of an increase of specie money, enhancement of the price of commodities, aggravation of the obstacles to exportation; but that they do not share in the useful properties of specie money. (Discourses, On Money and on the Balance of Trade.) The younger Mirabeau kept Necker from pursuing his plan to issue paper money with the words: du papier monnaie c’est la peste circulante! Inconsistent as Napoleon was in his bank policy (compare Horn, Bankfreiheit, 304), he always rejected paper money. As in 1805 he wrote to the minister of justice: je ne veut pas de papier monnaie: so, in opposition to the minister of the interior, he in 1810 compared it to the plague: le plus grandfléau des nations. (Acad. des Sciences m. et p., 1864, II, 212.) Sismondi, too, compares paper money to the paper cannons of the Chinese, which render a cheap service until the hour of danger comes. (N. Principles, II, 107.) Of the banks he says: les avantages aussi-legers les dangers aussi graves. (Eludes, II. 421). Cancrin, Œkonomie der menschl. Gesellschaft, 1845, 152 ff., says he thinks that possibly it might have been well never to have established banks, but that yet the craving for the new is preponderately good, it brings inventions and improvements with it. Even Tooke considers the insecurity of paper money a disadvantage which more than counterbalances its cheapness. (Considerations on the State of the Currency, 1829, 85.) On the doubts of Jefferson and Gallatin, see Wolowski, Enquête, 170, seq. Webster called paper money “the most effectual of inventions to fertilize the rich man’s field by the sweat of the poor man’s brow.” Tout papier monnaie par lui même est un mensonage. (M. Chevalier, Cours, III, 428.) M. Niebuhr calls banks a poison which should be used with moderation. (Bankrevolution und Bankreform, 1846, 37.) Compare the writers named in § 2.

947 Avec la liberté un peuple n’a jamais de mauvaises monnaies (F. Lenormant): entirely so, provided liberté be translated “true and insured freedom.”

948 Law’s giddy projects under the regents of Orleans and the assignats of the first republic; Austria, Russia and the United States; the Danish absolute monarchy, and Sweden, both under Charles XII., and its oligarchical times. The history of Rhode Island paper money is peculiarly scandalous. All debts had to be paid within two years, or to be held invalid, and juries were dispensed with in such cases. (Ebeling, Gesch. und Erdbeschreib. von N. America, II, 173 ff.)

949 Ad. Müller compares “cosmopolitan” metallic money to a universal language: paper money ties one to the country, as people do not like to travel in foreign parts when they understand only their native language. As paper money compels subjects to take an interest in the state, a state like Austria would act very foolishly if it should begin its reorganization by enhancing its depreciated values (Valuta). (Elemente der Staatskunst, 180, III, 171; II, 339 ff.) Even in 1830, he found fault with the Austrian loan for the payment of the paper money. (Briefwechsel mit Gentz, 321 seq.) He lauded paper money because he claimed it led a country back to the barter And service-economy of the middle ages. (Verm. Schriften, I, 59 ff.) Similarly, Gentz, in his later writings. Compare Roscher, Gesch., der N. Œk., in Deutschland, II, 762.

950 Who, for instance, would lay by a paper dollar in the savings bank for his godchild? In this respect, too, oriental countries have preserved much of the medieval. Concerning the aversion of the Egyptians of our day for all paper money, see Stephan, Ægypten, 250 seq. This is all the more surprising since during several months after the harvest, there are from 4,000,000 to 8,000,000 piasters in specie sent every day from Alexandria by post to private individuals in the provinces. In addition to this there is the immense difference in the French, English and Austrian coins circulating in the country, and which have very different rates in the different provinces. It is still worse in Arabia. (v. Maltzan, Reise, I, 27.)

951 Compare v. Schlozer, Anfangsgründe, I, 140 ff. M. Niebuhr (Rau’s Archiv. N.F. II, 125) finds paper money best adapted to countries without any exchange-trade, but which at the same time require a species of money easily computed and easy of transportation (Russia); countries whose national economy has an extraordinarily rapid growth (the United States); and in unusually solid countries (Scotland).

952 List, Nat. System der politischen Œk., I, 394. A private individual of small means who should go on his travels without money would be subject to all sorts of annoyances; a king or a Rothschild, just as soon as he was recognized as such, would find credit everywhere. Thus, English businessmen have outstanding claims in all parts of the world, which might without any great difficulty be called in in the precious metals. The more the division of labor is developed, the better may the condition of a nation’s whole economy be seen reflected in the course of its banking system and its exportation and importation.