A treatise on political economy; by unknow

Author:unknow
Language: eng
Format: epub
Tags: Economics
Publisher: Philadelphia, J. Grigg
Published: 1830-03-25T05:00:00+00:00

SECTION yiii.

Of the Absence of any fixed ratio of Value hetiveen one Metal and

another.

The same error, which led public functionaries to believe, that they could fix the relative value of any metal to commodities, has also induced them to determine by act of law the relative value of the metals employed as money, one to the other. Thus, it has been arbitrarily enacted, that a given quantity of silver shall be worth 24 liv., and that a given quantity of gold shall likewise be worth 24 liv. In this manner, the ratio of the nominal value of gold to that of silver came to be legally established.

The pretension of authority was in both cases equally vain and impotent; and what has been the consequence? The relative value of the two metals to other commodities has, in fact, been constantly fluctuating, as well as the relative value of the metals themselves, when exchanged one for the other. Before the re-coinage of gold, in pursuance of the arret of 13th October, 1785, the louis cl'or was commonly sold for 25 liv. and some sons of the silver coin. Consequently, people took good care not to pay in gold coin the sums bargained for in silver; otherwise they would really have paid 25 liv. and 8 or 10 sous for every 24 liv. of the sums stipulated.

Since the recoinage in 1785, when the quantity of gold in the louis (Por was reduced by one-sixth, its value has nearly kept pace with that of 24 liv. in silver; so that gold and silver have been paid indifferently. However, it has still continued most customary to pay in silver, partly from long habit, and partly because the gold coin, being more liable to be clipped or counterfeited, was received with more caution and liable to more frequent cavils about the weight and quality.

In England a different arrangement has produced an effect directly contrary. In the year 1728, the natural course of exchange fixed the relative value of gold to silver at 15 9-124 to 1; say 15 1-14 to 1, for the sake of simplicity; 1 oz. of gold v/as sold for 15 1-14 oz. of silver, and vice versa. Accordingly, that ratio was established by law, 1 oz. of gold being coined into the nominal sum of 3/. 17s. lO^d. and 15 1-14 oz. of silver into the same sum. Thus, the government attempted permanently to fix a ratio, that is, in the nature of things, perpetually varying. The demand for silver gradually increased; its use for plate and other domestic purposes became more general; the India trade received an additional stimulus, and took off silver in preference to gold, for this reason, that the relative value of silver to gold is higher in the East than in Europe; so that, by the end of the last

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