But when gold and saver had attained this position in commerce, they were not the lens objects of barter ; nor were they distinguishable in character from any other articles of exchange They were weighed, and being of the required fineness, a given weight was known as a denomination of value, but in the same manner only as the value of a bushel of wheat may be known. In the earliest ages gold and silver seem to have been universally exchanged in bars, and valued by weight and fineness only. The /Limo custom exists at the present day in China. There Is no silver coinage.'' but the smallest payments, if not made in the copper ultra, are effected by exchanging bits of silver, whose weight is ascertained by a little ivory balance on the prinuiplo of the steelyard." (Davis's ' c. 22.) Notwithstanding the ease with which gold and silver are divided into the smallest portions, each of which is of the same intrinsic) purity and value as the others, the trouble of weighing each piece, and the difficulty of assaying it in order to detect alloys of baser metals, render these metals in bars, or other unfashioned forms, ex tremely imperfect instruments of exchange, especially when they are used in email quantities. However accurately they may be weighed. it requires considerable skill and labour to assay them. which in small pieces would scarcely be repaid. Even in large quantities the difficulty of assaying their fineness, in countries which have made considerable advances in the arts, is greater than might be expected. To obviate this difficulty coinage was introduced, by which portions of gold, silver, copper, and other metals have been impressed with distinctive marks, denoting their character, and have become current under certain denominations, according to their respective weight, fineness, and value. These coins have always been issued by the government of each country as a guarantee of their genuineness; and the counterfeiting of them has been punished as a serious offence against the state.
In rich countries these three metals of gold, silver, and copper, or of a mixed metal, such as bronze, are very convenient substances for the manufacture of coins, on account of the differences in their relative value. Gold coins, containing a high value in small compass, are con venient for large payments, silver coins for smaller payments, and copper or bronze coins for those of the lowest value ; while all the larger coins are multiples of the smaller. These several descriptions of coin serve the ordinary purposes of trade sufficiently well : they are universally received as money within the country in which they circu late, and the principal part of all payments of moderate amount is made in them. But payments of large amounts cannot conveniently be made in coins of any metal ; and in this and other countries paper money and various forms of credit have bceu used as substitutes. Of these we shall speak presently ; but it will first be necessary to con sider the suitableness of gold and silver coins as standards of value.
Coins made of those metals are not exempt from the laws which govern the prices of other: commodities. They have accordingly varied in their own value in successive periods, and are at no time secure from variation. In the 16th century new mines of extraordinary richness were opened in America, from which a large amount of the precious metals was poured into Europe ; this gave a great stimulus to commerce and industry. and a material change took place in the relative prices of these metals, and other commodities.
The discovery of the gold deposits in California has brought such considerations into the class of debateable questions iu our own day. The distingiehed political economist, M. Michel Chevalier, in his lectures before the College of France, published in 1850, predicted that if Russia and California continued to produce gold at the rate they were then doing, the value of gold would be ultimately reduced by five sixths, or even nine-tenths. He admits, however, that the fall, though rapid at first, would be greatly retarded by the adaptability and greater beauty of gold for purposes of ornament or use, for which silver is now used. This opinion, slightly modified, is
repeated in his work On the probable Fall in the Value of Gold,' translated in 1859 by Mr. Cobden ; and he attributes the little effect hitherto produced, even with the addition of the immense quantity imported from Australia, to the absorption of a large proportion of it by France iu exchange for her silver. In these predictions, however, he is thought by some to overlook many material facts, the influence of which the experience of twenty years has in a great degree substantiated. The addition of gold or silver forms an addition to the world's capital. and this capital forms a fresh labour fund ; such additions therefore give a great stimulus to increased industry, and the wages for this industry require and absorb a large though an indefinite quantity of the precious metals. M. Chevalier saw this to some extent, for he says (' La Monnaie,' p. 473), "that such an increase as was then taking place would compel England, for the purposes of her commerce, to increase ninefold the amount of her coined gold." The anticipated fall has not followed ; the general increase of manufacturing industry, the exports from England in a few years mounting from 50,000,000L to 130,000,000l, has neces sitated a corresponding increase in the RUM distributed as wages, which has been accompanied by a great increase of imported articles for home consumption by the classes so benefited ; the import of tea, for instance, increasing from 40,000,000 lbs in 1833, to 75,000.0011114. in 1853. This again has occasioned a reaction not contemplated by M. Chevalier. China takes little except silver in exchange for her tea ; the East Indies also require silver for their commodities, and in this way from 15,000,0004 to 20,000,0001. in silver are ab stracted from Europe, which deficiency must be filled either with gold or silver from the various mines in work. Thus in the year 1859, the total quantity of gold and silver bullion imported into the United Kingdom was valued at 37,070,1501.; of which 20,370,9014 from the United States, Australia, and Russia, was probably gold ; and 7,3e2,3031. from France, and 5,123,932/. from Mexico and South America, will probably represent the silver. The exportations amounted in value to of which 10,334,371/. went to France, no donbt in gold to replace her abstracted silver ; and 10,616,581/. to Egypt, for transmis sion to India and China, nearly all of which must have been in silver. The influx of the precious metals (for the produce of silver continues to be large) has had, as yet, little visible effect on the prices of com modities in general, and none whatever in the relative values of the two metals; at least none beyond the slight variations occasioned by the wants of commerce for the one or the other. Articles of con sumption for food or clothing are not higher in price than before the gold discoveries. But it is impossible distinctly to assign the rise or the fall in prices to the influx of the precious metals, during a period when the operation of our new commercial system has unquestionably placed, not only agricultural produce, but articles of luxury, more within the reach of the majority of consumers. There may have been a continuous fall in the price of the necessaries of life under a large additional supply of Australian gold ; and there may also have been a continuous rise. such as that of meat, from the greater stimulus to industry demanding more labourers, and therefore raising the rate of wages. Many variations in the price of products manifestly depend on their own scarcity or abundance, and not merely on the increase of gold. It is satisfactory to know that since the time of the Australian gold discoveries, the rise in the wages for labour has been more marked than the average rise in the price of commodities, enabling the labouring population not only to increase, but to consume more, and of a better quality, than they could previously, thus maintaining and extending the demand for, and the capability of employing, almost any fresh amount of the precious metals, whether silver or gold.