But the convenience of coin for a cer tain class of payments is a question quite distinct from that of its fitness for a standard of value. It is not necessary to exclude gold from the coinage because it is not adopted as the standard ; it may be circulated as freely as the people desire to use it, while, instead of being the legal standard, its value may be calculated in silver. If silver be the standard, a large gold coinage may circulate at the same time for the convenience of larger pay ments, just as silver circulates for small payments where gold is the standard. In either case, however, that metal which is chosen by the state as the lawful standard governs all calculations and bargains, while the other metal merely contbrms to its standard, and is subsidiary to it. But even if the relative convenience of gold or silver as a standard were the sole question, it could not be determined by the modes of effecting large payments only. All payments are calculated as easily in the coins of one metal as of another, in whatever form they may be actually effected. But by far the greater number of bargains are made for articles of small value. It is in silver and copper that the consumption of all commodities is mainly paid for. The wages of the country are paid and ex pended in that form ; and in that form the prices of nearly all the ordinary arti cles of daily use are calculated. How aver the wholesale bargains of mer chants may be conducted, the goods nought and sold by them are ultimately distributed to the consumers in very small quantities, the prices of which are estimated in silver and copper. The ag gregate value of the small bargains must be equal to that of the large mercantile bargains which relate to the internal trade of the country, and in frequency and number they are, beyond all com parison, more important. It is certain, also, that in the vast operations of com merce the bargains, in whatever medium they may be calculated, are very rarely paid for in any coin whatever, but are settled by various forms of credit; while all minor transactions—the bargains of daily life—can he adjusted by money payments only. It is for such purposes, therefore, that the metallic currency of a country is mainly needed ; and it may be contended with mach force, that silver represents the value of commodities more universally than gold, and is consequently a titter standard.
The fitness of a standard, however, cannot be determined solely by consi derations of convenience; for we must chiefly regard its intrinsic qualities as a permanent measure of value. How shall uniformity of value be maintained as far as practicable in the money of a country ? is the main question to be determined ; and not, Which is the most convenient form in which to make bargains? la what medium shall the whole property of the country be valued, from one year to another? By what standard shall the relative value of all things be compared ? How shall fluctuations be restrained in the value of this standard itself? These are the questions to be answered.
In favour of gold as a standard it is argued that being less extensively used for plate and other manufactures, it is less an article of commerce than silver, and is confined more specifically to the purposes of money. On the other hand, it is con tended that gold is used in large quan tities for jewellery, watches, and decora tive purposes, and that being a compara tively scarce material, its consumption, in this manner, affects its quantity and value to a greater extent than the use of plate affects the price of silver.* And in this
argument there is much weight, for it is estimated that the quantity of gold com pared with the quantity of silver is as I to 50; and their relative value is as 1 to 15. (See Bullion Report, 1810, Allen's Evidence.) Now it is evident that any variation in the commercial de mand for gold must be more sensibly felt than a similar variation in the demand for silver.
But it is not sufficient to consider the demand for the precious metals as articles of consumption only ; they are suddenly sought for in large quantities for other purposes. If the exchanges be unfavour able to a country, its precious metals are in greater demand for exportation than its commodities ; or if there be a foreign war, its metals are in demand for the payment of the troops and for the pur chase of food and munitions of war. Here again gold must feel the demand to a greater extent than silver. If metals be required for exportation in payment of goods, gold is sure to be preferred by merchants ; it is compact and portable; a large value can be exported at a small cost and without difficulty ; while fifteen times as much silver must be taken to effect the same purpose. In war gold is even more in request than for the purposes of com merce : its facility of transport is so im portant that it must be obtained at any cost, and it is consequently drained from all countries in which it can be found. Thus not only is gold, from its limited quantity, more sensibly affected by any increased demand than silver; but it is more pecwfilirly liable to great and sud den drains from any country in which it forms the standard of value.
If it should happen that one country has a large gold co* in circulation in addition to all the bullion which is required for the purposes of commerce, while all the adjacent countries use a silver currency, and possess very little more gold than is necessary for its con sumption, it is clear that whenever a large demand for gold arises, it must be directed to the country in which there is a gold currency. That country will be immediately used by all others as a rich gold mine, whence abundance of metal without alloy, and assayed ready to their hands, may at once be, without digging in the earth, and no vigilance can restrain its export: as soon as it is wanted abroad, it disappears like water through a sieve. And this has been the case with England. Every other country in Europe has a silver stan dard; and whenever gold is wanted, her coinage supplies it. The extent to which gold is exported when the foreign ex changes are unfavourable may be esti mated from the returns of bullion re tained by the Bank at different periods. On the 28th February, 1824, the Bank had in its coffers 13,810,060/. in bullion, at the same period, in 1825, it had 8,779,1001.; on the 31st August in that year its treasure was reduced to 3,634,3241.; and on the 28th February, 1826, to 2,459,510/. Again in March, 1836, the bullion amounted to 8,003,4001., but was reduced by the following Feb ruary to 3,938,750i. A similar exhaus tion of treasure was exhibited in 1838-9. In December, 1838, the Bank possessed 9,686,000/. of bullion ; and in August, 1839, no more than 2,444,000/.