Chapter CLX: Section VI: Paper Money—A Curse Or A Blessing? (11)

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.)