Bullion and Oreign Exchanges - Forgotten Books

BULLION

AND

OREIGN EXCHANGES

THEORETICALLY AND PRACTICALLY

CON S IDERED ;

FOLLOWED BY A DEFENCE

THE DOUBLE VALUATION ,

WITH SPECIAL REFERENCE TO THE PROPOSED SYSTEM

UN IVERSAL COINAGE .

ERNE ST SEYD .

LO N D O N

EFFINGHAM WILSON , ROYAL EXCHANGE.

1868 .

HG

LONDONa'

rnn mv W. W. MORGAN, 232, CunnouuuROAD, N .

TABLE OF CONTENTS .

PART I.

INTRODUCT ION

RAP PER L—Mnmmt or ExaNOt

II.-MxDmuor EXCHANOL (continued)

III.—Cua cr

IV.—BtLLs

V.

VL StLv nn

VIL—BULLION

VIII.—MnLn NO or GOLD AND StLv n

IX—Puu GOLD AND 8 v “, AND ALLOYS or Tmm v rta0m“ Ht mLs

X.—Tr.m NO AND Asun NO BULLION

XI.-Mm ons or En ussmo AND Rt rom NO TB: FINE

use or BULLION

XII.—0N m :aars v sxD ron m : Pn cxous Mn us

XIII—Tn:acns or GOLD AND StLv n

XIV—Pn c ncAL Dtn c'n ONs ron CALCULA‘

H NG m VALUE }or BOLLtON IN ENOLAND

XV. PAlm NO” BULLION

XVI.—GLN1mAL DnscntPe N or m : l NxNO or

EVIL—M in now or AssAn NO

XVIII.—Inwwx , AND BurrrLLas IN BULLxON

XIX—Tm:BULLION oum AT m g BANK or ENGLAND

XX.—BULLION Bnou ns, AND SHIPPING or BULLlON

XXL—Comma

CONTENTS .

PART II.

n I. -PAns or ExcuANos

Monetary Systems, Great BritianFranceBe lgiumSwitze rlandItalyGe rmany

South Ge rmanyHanse Town s

HollandSwedenand NorwayDenmarkRussia

BurmahSiamCochin ChinaDutch Posse ssion s (Java, 369

Philippine Islands 370

SpainPortugalTurkish EmpireEgyptUnited State s ofAm ericaBritish North AmericaMexico

West Indies

Central AmericaSouth Am er ican Re publicsBrazilLaPlataState sAfrica, Barbary State sWest Coast of AfricaEast Coast OfAfr icaAbyssiniaPe rsia

CONTENTS .

C s Ar rn I.-PAas or En su e s—continued .

Monetary System s, ChinaJapanSandwich Islands

Table Of the Value Of the Pr incipal Coins

C s Ar rta IL— SB IPMENTS AND As snrauxONs IN BULLION

Go ld Shipmen ts

From London to ParisFrom Paris to LondonFrom New York to LondonFrom London to New YorkGold from Californ iaHalf Imper ials from St. Petersburg

Si lv er Shipments

Silv er Bars to HamburgSilv er Bars from Hamburg to LondonSilv er Bars to AmsterdamSilv er Bars to IndiaSilv er Bars from Marse illes to CalcuttaFiv e Francs pieces from Marse illes to IndiaSilv er Dollars to ShanghaiSilv er Bars from Californiato Hong Kong

Clum n III.— 'I‘naSs oar EXCHANGE

IV.—Ts n LONO ExcsANe r.

V.—Ts z LONDON Gouasaor ExaNOL

VI.- FoaxxON Couasas or ExaNos

Brussels

Frankfort-ou-the-MaineHamburgBremen

Vienna

v i CONTENTS .

CHAPTER VL—FOIIs ION Counsr s or ExcaANOII—continuad.

Constantinople

NewYork

VII.—CALcIILArION or ExaNens

VIII—ABBITRATION or EXCHANGES

Operations in Direct ExchangeOperations in Indirect ExchangeBaukers’ Arbitrations

IX.—INrLIn ArrncrINe run ExcuANens

Cum “ I.—Cam cxsn ON THE Ban-IsaMINr

IL—BULLION AND Buns or DIscoe

III.—Ts r PAaIs CONrranc ON Im nNA

'r IONAL COINAOL

IVA—Drum : or run DOUDLL VALUATIONV.

-PaOI>OSAL TO EsrAaLIss run DOUDLII VALUATION IN

ENOLAND

VL—UNIv sasAL COINAOL

INTRODUCTION .

BULLION and Foreign Exchanges are subjectsgenerally comprised among the contents of

higher class books on Practical Ar ithmetic ; though ,of course, the consideration given in works of thekind to these in teresting topics is necessarily onlylimited and superficial,at the best . There are severalpublications on Bankin g and Commercial Businesswhich go somewhat more deeply into the matteramong others , Gilbart

’s admirable work, and Laing’s

Theory Of Business and there are, finally, at leastthree well known works specially devoted to the study

of these most important subjects, —Goschen’s Theory

of the Foreign Exchanges ,’ Nicholson ’s Science of

Exchanges ,’ and Tate ’s Cambist, or Manual of Ex

changes . ’

Why then, it might beasked, should the author ofthe present volume ventur e upon a field apparently

already so well cultivated, which would seem to affordno legitimate opening for him P A brief glance at

the nature and scope of the thr ee last-named works

will, he believes, show that, notwithstanding their

2 INTRODUCTION.

confessed excellence, neither of the three can be saidto fully answer and satisfy all requirements, to makeit a completeand perfect guide in all matters relatingto Bullion and the Foreign Exchanges ;and that thereis room left, for another work on the subject, constructed on more comprehensive principles, and more

universally adapted to all classes of readers . Tosupply such a work is the writer’s object . The

financialand commercial public will judge whether hehas brought the necessary qualifications to the taskundertaken by him .

We have then, first, Goschen’

s Theory Of theForeign Exchanges,

’ which may be defin ed as a general

treatise on international commerce, and the effectsproduced by the ordinary and extraordinary v icissi

tudes Of the same on the Exchange transactions

of Foreign coun tries with England. The book iswr itten in plain, clear language . It bears throughout

a stonrg impress of the writer’s personal experience .The views expressed, and the conclusions drawnby him , are lucid and logical, and there are notmany of them open to contestation . It is altogetheran admirable work, and does the fullest justice toits title, The Theory of the Foreign Exchanges . ’

But, for that very reason, it falls necessarily shortOf the requirements Of the ordinary reader. The

author starts upon the supposition that the readerwhom he addresses knows all about the elementarygroun d-work of the subject, and he confin es his teach

ing, accordingly, to the higher and highest branches .There is, for instance, no information given on the

INTRODUCTION . 3

value of Foreign Coinsand Monies ;and thereare onlya few practical examples and illustrations to be foundin the book . These omissions and deficiencies cannotbut detract, in some measur e, from the practical usefulness of the work to that large class Of readers who ,in their study of Exchange operations , have to begin

with the beginning of the subject .Nicholson’s Science of Exchanges’ is conceived

and constructed upon a different principle, -the authorusing the Catechetical form . The book consists

prin cipally Of a series of 289 questions and answers ,r anging over a wide field, from the first question ,What is value P to the last, What shouldwe desire most for the general welfare ofall classes inEngland P” Explanations are given on the subject of

Gold, Silver, and Currency ; also some practical illustrations and calculations . The book forms a mostexcellent Manual, which should be in the hands of

every student of Exchanges . Still, it may be que stion ed whether the Catechetical form , with its inherent

dogmatism, is the best calculated to give the student aclear insight into, and a competent knowledge of, a

subject of such magnitudeand importance, and one soOpen to difference of Opinion on many of the leadingpoints, as the Science of Exchanges . The more so , asthe work is slightly tinged with the author’s somewhat

absolute free-trade views , and bears the impress alsoof his strong bias to look upon all things from anexclusively British point of view .

We now come to the last of the three SpecialWorks

on the Science of Exchanges , v iz .

— Tate ’s Cambist,

4 INTRODUCTION.

or Manual of Exchanges the Banker and Merchant’s

old and trusty friend, ‘ as it is deser v edly called . This

work is, in conception, construction, and treatment,the very opposite to Goschen’s book . Whilst thelatter is nearlyall “Theory,” Tate’s ‘Cambist’ is almostexclusively Practice abounding in figur es and calculation s, practical examples and illustrations of allpossible Exchange transactions , single and compoun d

Arbitrations, conversion of Bullion, &c. A considerableportion of the work is taken up with the Weights,Measures

,Coins , and Monies of every coun try in the

world, with their British equivalents . In short, everything in Tate is dry matter-of-fact ; and the beginnerwho would take him for his guide in the study of the

Science of Exchanges cannot but sadly feel the absence

ofall theoretical explanations, which yet are soabsolutely indispensable to a proper comprehension of the

subject .The purpose of the author of the present volume

then is, to endeavour to give the fullest information

on every branch and detail of Exchanges . The titlewhich he gives to his Work The Foreign ExchangesTheoretically and Practically Considered’ -is in tended

to express the end which he has in v iew .

Before entering upon his task, he deems it neces

sary to explain to the reader how he in tends to dealwith the matter . The term, Science of Exchanges,which has been repeatedly used in the foregoing

Mr . Tate has wr itten other Works on Business Matters. See ,

among others, his Counting-house Guide .

’

INTRODUCTION. 5

observations , might perhaps seem to imply a carefullystudied systematic arrangement and scientific treatmen t of the subject, dressed in suitable elegantlanguage to match . The author begs at once to statehere , that such is not his inten tion . He is simply amerchant, with but few hours of leisure at his com

mand, who does notaspire to a reputation for eleganceof language and gracefulness of style . He means totreat the matter in the plainest and most practicalmanner, and to use the simplest and most fam iliarlanguage, which he deems, in fact, the best suited tothe purpose .

Bankers and Merchants well versed in Exchangeoperations , may, perhaps , feel inclined to object tothe frequent repetitions occurri ng in the book , of

principles, facts , and figures, which may be familiar tothem. They should bear in mind, however, that thework is intended also for the use of those lessadvanced in the knowledge of the business , to whomthe same repetitions may prove beneficial,as remindersand as guides to amore easy comprehension of its

several branches .

A few words will suffice to show and explain theplan followed by the author in the distribution andarrangement of the subject matter of the Book .

The first Chapters are devoted to the consideration

of the so-called Mediums of Exchange .

” Here thereader will find a full exposition of the author’s views

upon this important branch of the subject,and of theprinciples upon which he intends to proceed in his

treatment of the same . These are followed by Chapters

6 INTRODUCTION.

ouGoldand Silver Bullion, giv ing minute and elaborateaccounts and description s of the various processesandmanipulations through which the precious metals have

to pass ,— from their native state down to their ultim ateconversion into Coin .

The author has bestowed particular care and atten

tion upon thi s part of the work,— which he deems of

special importance to the large class of people who ,though quite aware of the practical use and application of Gold and Silver,as Mediums of Exchange andStandards of value , are yet more or less ignorant ofthe why and the wherefore of such uses and applications , and of the manner in , and the means by,which the precious metals are fitted to subserve the

intended purpose . Proper consideration is also givento the technicalities involved in the Bullion business ,which,as a rule, are known only to a few finan ciers

and m en on ’Change, whom the special nature of theirbusin ess obliges to make themselves masters of thisparticular branch of their lin e . Practical experiencehas taught the writer that an intimate acquaintan cewith these technicalities , and with Bullion operationsin general, in all the branches and details of the

busin ess , is indi spensable to a competentunderstandingof the working of Exchanges .

After these Chapters , which form , as it were, theground-work of the book, comes the necessary instruction in the Monetary Systems of Foreign

Countries ,”illustrated by practical example s of

Exchange Operations and Transactions ; succeeded bythe Course of Exchange , and the operations eon

INTRODUCTION. 7

useted generally with Foreign Exchanges,”

trations of Exchange ,” &c . , &c .

In conclusion of these introductory remarks, the

author would observe that he takes the reader, inte re sted in the subject, and willin g to follow him in his

exposition and treatmen t of the same, to be a goodordinary arithm etician .

CHAPTER I .

MEDIUM or EXCHANGE.

HE Employment of a Medium of Exchange is aSocial Necessity . There are only two state s of

Human Society in which no Medium of Exchange isneeded ; and even of these two States the one hasno ac tual existence, and can only be considered as amere matter of theoretic assumption ; whilst the otheris restricted to the lowest and most absolutely nu

civ ilised of the Savage tribes . The untutored Savage

readily supplies his few and simple wants from thegreat store of Natur e ; his limited requirements leavehim independent even of the aid and co-Operation of

his fellow Savages . So long as he finds food andshelter, and the coarsest covering to shield him from

the weather, he is satisfied ; and his benefactressMother Earth— does not call upon him to return heran equivalent for her gifts . The other imaginary Stateof Society which might dispense with the need of a

Medium of Exchange, is represented by the prettytheory of Commun ism . The amiable Philanthropist

may, in his search after a satisfactory solution of the

great Social Problem, propound the question , Why

cannot men live together on a footing of perfect

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10 MEDIUM or EXCHANGE.

America, and the Tartars, in Asia, reckon, in their

commercial dealings, by horses and some other articles

highly valued by them . Cowries (the shells of theCyprwaMoneta) are still extensively used as smallchange in Bengal, the Philippines , and on the Coast of

Africa . In Abyssinia, pieces of coarse salt, in size andshape like the sole of a boot, are used as Currency ;thirty to forty of them going to the dollar. Amongst

semi-barbarous nations, Gold and Silver ornamentsare made to subserve the purpose of a purchasingmedium ; whilst the more civ ilised people already know

the use of Coin made of the Precious Metals ; and,finally, the nations most advanced in civ ilisation haveestablishedacomplete system ofMeant/ms of Exchange,which may be considered the highest and most perfect

so far attainable in this scale of progression .

It is in reference to the most civ ilised state of

Society that we call the employment ofaMedium of

ExchangeaSocial Necessity.

Civilisation , so far from beingan artificial state, inthe invidious sense so Often applied to the term ,

mayreally and truly be considered the natural state ofman,on whom it confers so many material and intellectualblessings . This accounts also for the tendency moreor less manifestly shown by savage tribes, whencoming into contact with more advanced nations, toshare in these blessings,and secure the advantages ofsocial improvement . It is not saying too much; then,that the highest state of civ ilisation is also the most

natural state ofman, and thatall the results springingtherefrom

,good or ev il, are simply legitimate, natural,

MEDIUM or EXCHANGE. 1 1

and inev itable consequences thereof. Among these

results figures ,also, the existence of anacknowledgedMedium of Exchange, which may therefore, withoutn eed of further argument, safely be looked upon as

one of the constituent elemen ts of Society.

The existence of an ackn owledged Medium of

Exchange strongly influences the general intercourse

between individuals, communities, and nations ; whilst

the commercial intercour se between them is entirelyregulated by it.

The Value ofaCommodity is dependent upon thereal, or fancied, benefit which its possession confersupon the holder . Upon the means at our command to

secure such possession depends then , n ecessarily, our

enjoyment of the benefit thereby conferred . The lack

of a proper Medium of Exchange lessen s our ability to

procure the necessaries, comforts,and luxuries of life ;whereas the command of it in our hands enables us tosatisfy our wants,and obtain the co-operation of our

n eighbours . A proper Medium of Exchange, therefore, exercisesamost powerful influence on all classesofHuman Society . It is the life-blood of commerce,that great agency by which the blessings of civilisationare carried and disseminatedall over the World ; andthe due actionand scope of this great agen cy may wellbe said to be dependent, not only upon the properquantity, but also upon the healthy movement, or circulation, of such Medium of Exchange .

The fu ction s which a Medium of Exchange iscalled upon to perform in social and comm ercial intercourse are twofold ; it acts as an agent, and as a


principal. In the former capacity, it serv es to effect

the valuation of commodities , and to put a price uponthem ; its div ision in to certain fixed fractional partssupplying us with un its by which to calculate and

express in figur es the value of things . The other

function , that of a principal, is still more important ;for , in that capacity, it has to serve as an actual

guarantee for the correct performance of the valuation

of other commodities based upon its own value , as ithas itself to pass in exchange for such commodities

in accordance with such valuation ; which involves the

necessity of a fixed intrinsic value of its own .

We will now proceed to discuss and establishthe proper nature and form required to constitute

a Medium of Exchange . This can be done bestby following out, by way of illustration, a series of

assumed transactions, such as are constantly occurring

in ordinary life .

A stands possessed of certain goods in excess of

his own wants, but which are required by B , who, on

his part, is again in the same position with another

article required by A . Prov ided the value of bothcommodities be equal, A and B can easily effect an

exchange of them . B , however , may not want A’s

goods ; but may require certain other articles held by

C , who may want the goods of A . If the articles are

of equal value, the exchange can again be as easily

effected,— A taking the goods of B , C those ofA, and Bthose of C . Let us carry the illustration still further,and introduce D , E , F, and all the other letters of thealphabet ; and provided always , of course, the value of

MEDIUM or EXCHANGE. 13

the articles be equal, there will be no practical difficultyin the way of effecting the whole series of Exchanges,without the intervention of a general Medi

But, leav ing out of consideration the patent factthat Society, wi th its thousandfold divisions and rami

fication s, cannot well be represented by the letters of

the alphabet ; and the equally patent fact, that the

assumption here made, of an equal value of all thearticles held by the different parties , is altogetherimprobable, it is quite clear that even in so limited acommunityas the letters of the alphabet might sufficeto embrace and designate, production and consumption ,supply and demand are naturally subject to theordinary variation s ; which, of course , must tend to

upset the mathematical balance of the system,and tolead to lesser or greater difference s in the respectivevalues of the several commodities ; and these differenceswould nece ssarily require some independent method ofequalisation .

The foregoing illustration represents Barter , thesimplest and most primitive form of Commerce

,which

,

it may as well be men tioned here, remains still a

n ecessity among semi-barbarous nations , and in certaincolonies in remote corners of the world .

Let us now carry our alphabetical illustration a step

further . A has supplied B with goods, for which B

cannot give him anything in return at the tim e . B

stands accordingly indebted toA, to whom he promises

to give an equivalent at some future period . C, D , E ,

and the rest of the party, find themselves placed in thesame position with reference to A, who happens to


have no imm ediate need of effecting a further series of

Exchanges to supply his own personal wants . TheAccounts between him and the other parties represent

the benefit derived by him in exchange for the goodshe has supplied to his debtors . Here we have the

positions designated in commercial intercourse asAccountsand Indebtedness.

Let us proceed another step in advance, and con

vert these Accounts in to Certificates of Indebtedness,promising to supply and deliver to A a particular commodity. Give A the right of passing these Certificatesfrom hand to hand, entitling the holder to claim at hispleasure delivery of the goods thereon designated .

Now,although these Certificates are of a specific cha

racter , yet they will afford A a Medium of Exchangepassing current within the limited circle in which heholds the advantageous position of creditor .

Go still one step further, and, instead of specifying

on the Certificates the particular description of goodswhich the debtors severally promise to supply,let all the Certificates express the value of such

goods calculated in fixed corresponding quantities ofone general article in which theyall deal, and whichthey are at any time ready and willing to exchange forother commodities . By this means the sphere of usefulness of the Medium of Exchange afforded by such

Certificates of Indebtedness is considerably enlarged .

Still greater usefuln ess may be imparted to these in

strum ents by expressing the value represented by them

measured by some generally accepted Standard .

In the foregoing illustration, which shows the


difference between Barter Trade and Accounts andIndebtedness, we have assumed the Certificates of In

debtedness to be safe and certain to meet with duesettlement and conversion into positive value for

otherwise there is at once an end again to the mathematical precision of the system .

Now, the fallacy of such an assumption is too palpable to require comment . It cannot stand for amoment . A much firmer and safer basis is requir ed to

secure the proper balancing of the Exchange ofCommodities .

The claim to an equivalent return which one partyderives from the sale and transfer of an article effectedby him to another party, must be properly secured by

the actual possession of something of intr in sic value,which is held in the same high esteem byall parties ,and offers thus all requi site guarantees , independentofall conditions of verbal or written promises ; whichremains unaffected by external influences, and is of aconvenient form and shape to pass readily fi'

om hand

to hand .

As a matter of fact, we know that the Precious

Metalsare the substances used for this purpose . Thequestion whether they hold this high position simply

by general agreement, or by an inherent right of theirown , will be discussed hereafter .Still, Barter and Indebtedness continue, to the pre

sent day, to play an important part in commercial intercourse, both between indiv iduals and nations ; and wemust not, therefore , lose sight of them in connectionwith the subject of this work .

1 6 MEDIUM or EXCHANGE.

Nations , mutually exchanging their produce, may besaid to Barter, in the first instance ; if the balance of

such Barter turns in favour of the one, the other is

placed thereby in a state of Indebtedness, which Indebt

edness may, thr ough the creation of Bills of Exchange,be made to serve for a time as a Medium ofEachange;such Bills serv ing as Economisers of actual money .

But the final balance of the Account must be settled

by a more solid Medium , of the class of which Gold isthe highest representative .

18 MEDIUM or EXCHANGE .

value, and of a convenient form to pass from hand to

hand, is necessary for the purpose of facilitating inter

course in civilised society .

2ndly. That there are certain substances of highintrinsic value wi thin our reach, amongst which Goldholds an elevated rank .

3rdly. That Gold, from a mechan ical point of v iew,

is the material best suited for the purpose .

’

The first proposition we have already endeav oured to demonstrate in the preceding chapter ;but we repeat it here once more, as it cannot be

pointed out too strongly that our estimate of Gold,and all our remarks about its employment in thecapacity of a Medium of Exchange , are meant throughout solely in connection with , and in reference to

ci v ilised society. This consideration will also enable usto dismiss at on ce the popular anecdote of Robinson

Crusoe , who found a lump of Gold on his island, andmade such sorrowful reflections upon the uselessness tohim of this discovery .

In tr insic value , and a convenient form to passreadily from hand to hand, rank among the principal

conditions to constitute the suitableness of a materialto serve as a Medium of Exchange . It is clear that

the substances which possess these qualifications in the

highest degree must be considered first . The term

W eare en titled to claim this high position for Gold, in so farat leastas England is concern ed, where the Gold valuation pre vails,and Silv erand Copper coinsare lookeduponas occupyingasecondaryposition

—asubject to which we shall return hereafte r .


intrinsic value means that the worth of the material towhich it is applied should be actually inherent in it,independent of any addition to itmade by art or labour .

Bearing this in mind, we may accordingly at oncedismiss from consideration many costly portable objects

ofart, which owe their value only partly to the material ofwhich they are made, and in a greater or lesser

measure to the art and labour bestowed upon their

fashion . The same remark applies equally, for obvious

reasons , to all the more perishable productions of

nature , howe v er rare and costly they may otherwise

happen to be .

Am ong the most valuable substances within thereach of man , Pearls , Diamonds , Precious Stones , and

the so-called Noble Metals , may be said to occupy thehighest position . We know as a matter of fact that,with due reference to both weight and size , these substances rank among the m ost costly , and that their

intrinsic value is mainly naturally inherent in them,

art having but a secondary influence in regard to it.

Which of these substances is the most noble and themost durable ? Pearls are deservedly considered of

ver y high value,on account of their rarity and beauty,

and also the peculiar circum stances under which their

formation takes place . They are , however, easily

destroyed, and therefore lack one of the most indi s

pensable qualifications to serve for the purpose whichwe have here in view .

The Diamond" (to which , as the very highest

W e are quite aware , Of course , that the Diam ond is simfiy


representative of Precious Stones, we limit our

attention here), is, next to the Noble Metals , prao

tically the most indestructible of all the substanceson earth .

It is the hardest body in natur e ; it scratches allother bodies, and is itself scratched by none . Though,from its lamellar structur e it is brittle, and will give

way in the line of its cleavage, itwill stand, un scathed,the test of the strongest force that can be brought tobear upon it through the agency of other bodies of asize not considerably exceeding its own ; and, even

where it has to yield to the crushing force of

some other hard body, of relatively much greater bulk,the fragments in to which it is shattered still remain

Diamonds . A Diamond can only be cut or abradedby means of another Diamond, and the powder or dustcom ing ofl

'

in this process alone will serve to effect the

polishing Of its faces . It absolutely resists the dissolving or corroding action of the very strongestchemical agents ; even a mixtur e of the concentratedacids fail to produce the slighest efl

'

ect upon it. As it

consists simply of crystallised carbon, it will, of course,burn in fire with free access ofair , and more readilystill when heated even to ordinary redn ess in a vessel

of oxygen, passing Ofl'

as carbonic acid gas , without

leaving a residue ; yet, so long as access ofair is ex

pure carbon in acondensedand crystallized form ,and cannot, therefore , prope rly be ranked am ong ston es . Still,as it is held in com

m erce the most precious of the gem s, we think we are justified intaking it hereas the highe st repre sentativ e of the class .


eluded, it will bear a very intense heat without fusingor suffering alteration . One of the most marked and

characteristic features of the Diamond is its peculiar

Splendid lustre, which surpasses the highest brilliancyofall other gems , and contributes much to make it athing of such marvellous beauty . Add to all this itsgreat rarity, and there is certainly ample to accoun t,in a great measure at least, for the high esteem in

which mankind holds the Diamond.

Now let us take Gold as the representative of theNoble Metals . Bulk for bulk, and weight for weight,Gold is certam much less costly than the Diamond ;but, in so far as the virtue of indestructibility isconcerned, it may be said to be even superior to thelatter, for although it fuses at about 201 6 degreesFahrenheit, the intensest heat attainable fails to other

wise afl'

ect it in its nature and properties as Gold

whereas the Diamond, as we have just seen, isabsolutely desm'

oged by fire , being converted into a

comparatively alm ost valueless compound, which noart within the sphere of hum an ken can change back

again into a Diamond. All chemical agents, even the

str ongest mineral acids, employed singly,are powerlessagainst Gold,and it requires the combined action of

two of the most powerful acids— nitric and hydr o

chloric— to force it into a chemicalunion with another

body ; but, even in the inferior compound thus formed,the Gold still continues to exist, and may be re-obtainedin its virgin purity. The same remark applies tothe mechanical mixtures or alloys of Gold with other

metals from the amalgam which Mercury form s with


Gold, the former metal is readily separated again by

distillation . In ductibility and malleability Gold sur

passesall other metals . Its beautiful colour, and thehigh polish which it takes, are other qualities addingto its value .

But, although the foregoing considerations might

certainly seem to afford ample grounds for the high

value we set by these precious materials , and although

the fact of the ir be ing held in such high esteem bymankind is a matter of daily practical experience , yet,somehow, to many people all this is not sufficientlyconvincing to preclude constant recurrence to the sameplain question , Why should comparatively small

quantitie s of mere dead matter be este emed of such

high value ? To reply that this estimation is a matter

of common consent , based upon general convenience,is really no satisfactory answer to the que stion ,as italtogether fails to convey to the que stioner’s mind

any positive or direct e v idence of in trin sic value .

There is nothing left, then , but to rest satisfied

with the distinct recognition of the fact that theseprecious substances owe the exalted rank which theyhold among the bodies of nature, independently ofallother considerations , to the peculiar material propertie sinheren t in them . They have , in fact

,always been

held in high esteem from the earliest ages , even longbefore mankind had begun to enter upon the path of a

more advanced civilisation, and when man’s knowledge

of their nature and propertie s remained stillvery imperfeet and defective . W C , with the teachings of science toaid us in the consideration of the subject, are therefore


all the more bound to assign to these bodies the sameexalted position among created matters which they

have always held from time imm emorial. We ‘may

even go so far , at the risk of taking too high ground,to adv ance our belief that Providence has purposelyendowed t hese bodies with exceptional properties tofit them for the uses to which they are turned bycivilised man .

We do not mean by this to assert that Providence

has explicitly pointed out Gold, for instance, asthe only proper materi al for coin ed mon ey but thi s

much is perfectly clear, that a careful comparison of

all known bodies in nature leads in evitably to therecognition of the fact that the Precious Metals ,andmore especially Gold, are the best suited to serve asthe comm on measure of value forall other commodities ,and as the medium through which one kind of goods

may most readily be exchanged for another . An d thisfact is indeed practically adm itted by man, inasmuchas he uses Gold chiefly in the capacity of Coin . But

are we quite sure that this is really and truly the

most useful application of Gold Is it impossiblebut that other applications may be found for it of

still higher importance ?Let us assume, for the sake of argument, that Gold

is no longer used for Coin , but that some other

material performs its present fun ctions in that capacity .

“That would then be the value of Gold as comparedto that of such other material ? Would it be higher orlower ? That must, of course, depend upon the usefulness of Gold for other purposes ; and, with reference


to this , it would be difficult indeed to overlook the

patent fact that the fin e physical and chemicalproperties of Gold must necessarily fit it for a vari ety

of uses and applications . Were it no longer used for

Coin, then there woifld naturally be much fuller scopegiven to turn it perchance to better account in a greatmany different ways .We will endeavour to bring this to a plain , prac

tical illustration . Steam boilers are now made of Iron ,or Copper, which, as weall kn ow, will only last a fewyears . Suppose we were to make a steam boiler of

Gold, suitably alloyed for the purpose . Beingproof against the corroding action of the elements,such a boiler might, within certain limits, andleaving the chance of explosion out of consideration,be practically held fit to last for ev er . True, there would

be the great objection to the loss of interest upon thecapital sunk in the manufacture of the article but,

on the mere question of comparative usefuln ess anddurability, there could hardly be a doubt that the deci

sion would be in favour of the Gold . An d can it besaid that we have actually arrived at the fin al limit Ofallinvention The progress of science may at some futur e

period lead to discoveries necessitating the use of even

so noble a material as Gold for many important ends ,of which we at present have as little notion as our

forefathers had of the use of steam as a motive power .It is, indeed, in this very direction that there may

before long arise a necessity for a new application of

Gold on a large scale . Our age is in active search of

a new motive power of much greater force than


direction in which the peculiar properties of Gold maybefore long necessitate the employm ent of this metalfor a new, most important end . But may we not hopethat, with the continued progress ofmankind, there will,in centuries to come , be di scovered many other, perhapsstill more important uses and applications ofGold ?

In the foregoing remarks we have in some measure

considered the Diamond and Gold jointly, each as thetype of a class .We will now proceed to show that the Diamond,

however,is not a suitable body to serve as a proper

Medium of Exchange , even were it only for certain

mechanical objections . Leaving altogether out of consideration the question of price , which fluctuate s with

the supply of the article and the demand for it (thesupply and demand of Gold, and the supposed effectson the value of this metal, will form a subject for laterinquiry), it is quite clear that the Diamond is disqualified for the purpose of serving as a Medium of

Exchange , for the following reasons : it is found in

most irregular proportions ; it cannot readily be divided

into parts ; it is liable to fairly successful im itation ;and it cannot be stamped or marked with a visiblepatent sign of its exact value ; whereas Gold, onthe other hand, can be manipulated with the greatest

facility it can be melted, alloyed, and tempered ; it canbe hamm ered and drawn out ad libitum

,and it is sus

ceptible of infin ite subdivision , without detraction fromits value . Pieces can be made of it of precisely thesame size and weight ; its real character is very easily

detected by the test of weight, as well as by other


tests , and it can be so impressed with figur es that the

most ignorant may know at a glance its numericalv alue as Coin .

Silver, of which we shall say more in anotherchapter, has certain characteristics which fit it for

the same purpose , as we all kn ow . It serves , therefore, also to a great extent for coinage . But Gold andSilver are not the only Noble Metals . Platinum,

Palladium, Iridium , and several others , belong equallyto the same class . Platinum is even heavier than Gold,and almost as noble a metal, although it is greatlyinferior in lustre, and is in point of colour only a littlewhiter than iron . One of the great drawbacks to theemployment of Platinum for monetary purposes is theextreme difficulty of melting it, as it will fuse onlybefore the oxy-hydrogen blowpipe . Still this difficulty

m ight be considered disposed of in a measure by theproperty of the metal of welding, like iron , at a veryhigh temperature . But there is yet another,and a moreimportant drawback— v iz . , paradoxicalas itmay appear,its co mparativ e scarcity. Whilst we can count Gold byhundreds of millions of ounces , we can count Platinumonly by hundreds of thousands . Gold is, therefore,say a thousand times more plentiful. IfPlatinum werefound in quantities sufficientlyabundant for this pur

pose, itmight be used as money . The Russian Govern

ment tried in fact to introduce a Platinum coinage ;but the experiment failed . Platinum fetches aboutone-sixth ofthe price ofGold in the market . Palladiumis even more rare than Platinum ; and Iridium, which


is scarcely inferi or to the Diamond in hardness, is stillmore refractory than Platinum, and much less weldable

,and there are, moreover, probably no more than

a few hundred ounces of it in existence .Now, it must appear quite clear that the material

intended to beused for monetary purposes should possess the requi site conditionsas perfectlyas is attainable in natur e ; and when, therefore, a material is defi

cient in one or other of these conditions , it is therebynecessarily disqualified for employment as Coin .

These remarks , if they do not exactly demonstrate

with mathematical precision that Gold and Silver arethe right and proper materials for Coinage, must atallevents be held toafl'

ord powerful argum ents in support

of this conclusion, which the undoubted fact of theirholding this position can , of cour se, only tend to confirm and strengthen . Gold appears to possess thesenecessary qualifications in the highest degree ; Silverfollows next in order.

CHAPTER II I .

OLD is then the most perfect of the Mediums of

Exchange in actual use in the civilised world,and its superiority in thi s respect is so absolute that

all other practical substitutes are governed by it, nomatter whether they be of intr insic or of conditionalvalue .The general Mediums of Exchange in use among

civilised nation s may now be givenas consisting of

Gold coin sSilver coinsCopper coins The Currency .

Bank note s, orState notesBills of Exchange .

Gold, Silver, and Copper coins , and Bank notes,pass cur rent from hand to hand without restrictions ;they are therefore called Curre ncy.

Bills of Exchange are not Currerwg their transmission does not take place in the same free andsimple mann er ; but they also serve, under certainrestrictions, as a Medium of Exchange .

The Mediums of Exchange comprised here under

30 CURRENCY .

the general term Currency may be subdivided again

into

Gold coinsSilver coins Metallic CurrencyCopper coinsBank notes andState notes Paper Currency .

and, upon the ground that in England Gold forms the

basis of valuation , into

Gold coin s Free Currency .

Silver coins"

Copper coinsBank notes , andState notes

Conditional Currency.

M ETALLIC CURREN CY .

-There is reason to believe that Gold, Silver, and Copper have generally stood

in pretty much the same relation to each other withregard to their proportionate value as they do now .

In so far as Gold and Silv er are concerned, at least,the fluctuations of the proportionate value of these twometals may be assumed to lie within the narrow lim its

ofa few per cent . But the case is somewhat differentwith Copper . This metal, though not belonging to theclass called noble , holds yet a certain rank among the

inferior metals , on account of its many valuable qualities , and its general usefulness . In some countries ,and in some ages , it has been more extensively usedthan it is now in Europe . In the East and in China

In certain coun tr ies Silv er is fre e currency,and Gold condi

tional cur rency,as will be shown hereafter .

CURRENCY. 31

Copper, Brass , and even Iron coins , still form animportant part of the Currency . In Eur ope , however,we now look upon Copper Coin s simply as tokens , as isclearly proved by the fact, for instance, that a fewyears ago the whole of the old French, and soonafterall the old English Copper Currency, were calledin ,and new coinages of the same denominations, but

of little more than half the weight or size of the formerpieces , were issued . The intrinsic v alue of thesetokens falls accordingly very short of their deno

minational value . In England Silver coins are alsotokens , but their intrinsic metallic value is comparativ ely much higher than that of Copper tokens ,although it falls still below the actual market price of

Silver .But it may be asked, if these Silver or Copper

tokens do not possess their full denominational

metallic value, yet pass as money, would not thisrather seem to militate against the assumed absolutesupremacy of Gold ? Here we have the justification of

our div ision of the Currency into Free Curr ency and

Conditional Curr ency. In England a law exists , calledthe law of legal tender, in accordance with which Gold

coin is legal tender for any amount whilst Silv er coinis legal tender up to for ty shillings, and Copper up to

one shilling on ly. So a creditor, whils t bound to take

all the Gold tendered him in discharge of his claim, canrefuse to receive payment in Silver if the sum tendered

in that coinage exceeds two poun ds , and in Copper if itis more than twelve pence ; and he can accordingly

Compel payment in Gold of any sum exceeding two

32 CURRENCY .

pounds sterling . He may also be paid in Bank of

England note s, which he is equally boun d to take . But

as the Bank itself has the right of refusin g to receivepayment in its own notes , this description of Currencytoo belongs to the conditional. It will at once be

seen that this law of legal tender is an efl'

eetual bar toany attempt to displace the supremacy of Gold in

England, and to use instead the conditional currenciesof Silver and Copper .The values represented in Paper Currency and

Bills of Exchange, are expressed in the denominationsof the metallic Currency andall other securities andvalues— State bonds , shares , lands , houses, and everyother description of property and service— are alsomeasured and expressed among civ ilised nations in the

denominations of the metallic coins of the country .

It is one of the special objects of this book to giveas much information as possible upon everything con

nected with metallic Coinage, as will be seen hereafter

in the chapters on Bullion, Gold, Silver, Mining, Melting, Assaying, Coining, 850. But in this presentchapter we will, in the first place, discuss the description of Curr ency known as Paper Money, as a proper

understanding on this subject is a matter of some

importance in dealing with the Es changes with certainforeign countries .

PAPER CURREN CY .—Thi s description of current

money, in contradistinction to which metallic money

is appropriately called HARD CASH , plays a highlyimportant part in most of the systems of Currency .

34 CURRENCY.

A brief investigation of the prin ciple upon which

Paper Money may properly be issued will therefore be

useful.There are two descriptions of Paper Issue— v iz . ,

RANK NOTES, or Notes issued by banks, under theauthority and with some participation or guarantee of

the Government ; and STATE NOTES, issued by the

Treasuries of the State (these also are fi equentlyissued through the agency of banks) . Both Bank

Notes and State Notes may be regarded on the

same footing in their offices and functions as

part of the Curr ency. Now each such Note carri eson its face the promise to pay to the holder,or bearer, on demand, or upon presentation, a certain amount of Metallic Money. Upon the faith

of this promise the Note becomes current, and is

assumed to stand in the place of Hard Cash . The

simple plain promi se to the bearer that, in exchangefor the piece of paper he holds, he may at any th e ,

at the place designated, receive Gold or Silver (asthe case may he),admits of no qualification. Introduce a qualification on the face of the Note

,pro

mising payment otherwise than on demand, or in anyother value than in Metallic Money, and the worth ofthe Note falls at once . We have, therefore, to dealwiththe plain and dry fact of this promise and the holdersofNotes must have the absolute right, individually andcollectively, of demanding Hard Cash for their Noteswhenever they choose . Now here the question arises

,

— Is this promise to pay in Coin safe to be fulfilledunder all and any cir cum stances ? The respective

CURRENCY . 35

degrees of the certainty that this promise will be keptmay be illustrated by the following classification of

Paper Currency into four descri ption s

l st. Bank Notes made absolutely safe, by beingissued only against an equivalent amount of Bullionheld by the issuer .

2nd. Bank Notes made good for all practical purposes , by being issued partly against Bullion held

by the issuer, and partly against Government and otherv aluable securities .

3rd. Bank or State Notes depreciated in value ,issued again st a small reserve of Bullion, but restingon the Credit of the country generally, and on theStrength and good Faith of the Governm ent .

4th. State Notes issued almost entirely or alto

gether without a Bullion reser v e, and under the bare

Guarantee of a weak or totte ring Government, which

arealr eady valueless, or threaten to become so .

The FIRST CLASS of Notes assum ed here is only

imaginary ; for thereare no Bank Notes issued uponthat system . If there were, the securi ty ofl

'

ered by them

would seem absolute in theory as well as in practice .

A Bank, for instance, might hold ten millions in Gold,and issue ten millions of Notes against them . The

Gold being specially assigned to serve as security forthese Note s , and resting dormant in the vaults of the

Bank,to be paid away only against the production of

the pieces of paper by which it is represented, there

would be a complete balance between the two . Ifall

36 CURRENCY .

the Note s were pre sente d at once , payment could be

made at once,and no question of liability would remain

on either side . So perfect and safe a system of con

vertibility has frequently been suggested in England,and there is much to be said in its fav our .

’li In the

first plac e, on the Bullion deposit there would be thesaving of the expenses of Coinage, and on the Coin

lying inactive in the coffers of the Bank there would

be the sav ing of the usual loss by abrasion or fri ctionand

, in the second place , Bank Note s constitute a farmore convenient and portable kind of Currency, espe

cially for heav y sums, than Coin ; and for all otherpractical purposes such Notes would seem to be asgood as Gold .

But even to thi s apparently so safe basis of con

vertibility at least a few theoretical objections worth

mentioning may be started . Although Bank Note s

are certainly more portable and more convenient, moreespecially for large paym ents , yet they are, on the

other hand, also more liable to destruction than Me

tallic Money . They may also be more or less success

fully imitated by forgery,—arisk which, much as it islessened now-a-days by superior manufacture andengraving, has still to be taken into account . We

must not lose sight either altogether of the expenses

W e may here remark that in Hamburgthe Bank holdsastockof Silv er Bullion on som ething like the pr in ciple here suggested ;

howev er , it issues no Notesagain st the sam e , but in lieuthereof it

keepsaccounts with Merchants , and tran sfers the respectiv e own er

ship in this stock of Bullion from one to the other . (See Hamburgand Mark Banco . )

CURRENCY . 37

entailed by the manufactur e and issue of Bank Notes,which would hardly be balanced altogether by thesaving of the expenses of Coinage on the other hand ;for a certain amount of Coined Money would still be

required under any cir cumstances . Then there arecertain other contingencies which must be taken intoaccount in comparing the respective worth of a Gold

currency and a Note Currency . A war or a revolutionmight break out an enemy might invade the country,and might possess himself of the treasure in the Bank,and carry it away. What would then become of thecertainty of the con v ertibility of the Note In Englandwe may now laugh at the very suggestion of such acontingency but however remote the risk, there is no

blinking the fact that it still really does exist, by

however small a fiaction it may be theoretically expressed. In other countri es, less secure than England,the risk will be more appreciable . It is partly for thisreason that thr eatened war s and revolutions exercise

so great an influence on Paper Currency . As the

danger dr aws near the Note holder becomes alarmed,and presents his Notes for payment, preferring to

have his Gold in his own posse ssion rather than entrust

it to any other custody ; and in Spite ofall principlesof politicaland social economy propoun ded and expounded to him , he prefers to hoard it. The desire

for the actual substance , for the materi al of intr insicvalue itself, as affording the on lyabsolute guarantee inthe end, is too strong ; which again shows the supe

ri ority of Gold over all other Mediums of Exchange .

We refer to thi s natural tendency of the Note holder

8 CURRENCY .

here , in conn ection with our assum ed first-class Bank

Note system,as a mere theoretical objection ofperhapsno great weight under ordinary circumstances but it

becomes intensely practical under actually existingconditions of lesser certainty .

The SECOND cu ss or BANK News in our scale of

gradation, which we have designated as good, is repre

sented by the Paper Currencies of the more prosperous

states , such as England, France, Germany, Holland,and Belgium . It rests upon the basis of a combination

of Precious Metals and other Securities,upon the joint

value ofwhich the issue is made .

The Bank of England, for instance, under the Actcalled Sir Robert Peel’s Act, has the privilege of

issuing Bank Notes against the amount of Bullion in

its vaults , and also against an additional amount offifteen millions sterling, which the British Government

owes to the Bank . Thus if the Bank of England has

(say) twenty millions 1n Bullion in its cellars , it may

issue against thi s Bullion, and against the fifteen millions Government liability, thirty fiv e millions m Notes .The Bank Note promises payment in Gold the Bankhas thus issued thir ty-fiv e millions in Notes for whichonly twenty millions in Gold are in its hands , or about

fifty-seven per cent . If the stock of Bullion should

increase to thirty millions , and forty-fiv e m illions inNotes be thereupon issued, the proportion of the

In this sum of fifte en millions certain other securities held by

the Bankare included.

CURRENCY . 39

Note s actually covered by Gold would be about sixtysix per cent . butwith a decline of the stock of Bullion

to ten millions , the proportion would be only forty per

cent . in an issue of twenty-fiv e millions in Note s andit would fall to twenty-fiv e per cent . if the stock of

Bullion were reduced to fiv e millions , and an issue oftwenty millions were made in Notes . In the face ofthis , the promise to payall Note s in Gold would seemsomewhat paradoxical, and slightly illusory ; and, indeed, the uncompromising Opponents of Sir Robert

Peel’s Act do not scruple to assert that the Bank of

England is generally in a state of insolvency . If the

term insolvency as used by them be meant to expressthe Bank’s inability to pay all its Notes in Gold atonce, they may, strictly speaking, not be altogetherwrong in this extreme assertion of their views ; butthere are other considerations in the case whicheffectually counterbalance this allegation . In the firstplace, the Government has guaranteed the fifteen m illions over-issue which is notactually covered by Gold .

What is the value of that guarantee ? So long as theEnglish Government remains as firm as it is now, it

could easily, by loan or otherwise, raise that amountin Gold, and pay the Bank therewith, thus actually

covering this over-issue of Notes by Gold ; or it couldissue Stock bearing interest, and sell the same, taking

in payment Bank of England Notes , and so withdraw

them fi'

om circulation . Even in times of internalcommotion and foreign complications , the British

Governm ent could raise money on its credit ; and incase of urgent need, as the supreme authority of the

40 CURRENCY .

nation itself, it might even raise money by extrataxation payable in Gold. The question then would be ,Is there— leaving the stock of Bullion at the Bank

out of consideration— sufficient Gold in the country,or can the industry of the people draw enough fromabroad, to produce fifteen millions at the bidding of

the authorities ?” The people must under the cir

cum stances of course be willing to support the

Government ; should they, by revolution or otherwi se,Oppose or resist the call made upon them, or shouldthe country turn out to be too poor in Gold to pay the

demand, the forced taxation fails of necessity. In

England we fortunately have an acknowledged goodGovernm ent, in splendid credit, and the wealth andindustrial power of the nation are undoubted. This

shows how important a bearing the stability of a

Government, and the prosperity of apeople, haveupon the question .

There are other safeguards besides the guarantee

of the British Government . The Bank of England

has a capital of fourteen millions sterling, the securi tiesfor which may be realised and converted into Gold ; sothat, with the aid afforded to the institution by thelaw of legal tender (which compels every body, except

the Bank itself, to receive Bank Notes in paym ent), it

may be looked upon as pretty well secured . And thesupposition that the Note s should be presented all atonce, without giving the Bank timc to realise, is an

extr eme one, which may fair ly be dismissed fi'

om con

sideration here .

We in England have good reason to attach perfect

42 CURRENCY.

be substituted ; for , if we may be permitted to borrow

the term used by its enthusiastic advocates andadmir ers, it is eminently sound.

On looking again, fi'

om another point of view,at

the position of the Bank of England, which, with a

stock of only twenty millions of Bullion in reser v e, andfifteen millions ofGovernment Securities, is empoweredto issue thirty-fiv e millions of Money in Notes, thequestion naturally presents itself Ifwe can createfifteen millions of extra money on such easy terms ,why not make the sum twenty millions, or thirty, orfifty ? Government surely is good enough for the

larger as it is for the smaller issue l” We do not pretend here to appraise and fix the amount for whichthe Government of Great Bri tain may be held to beactually good— in the commercial sense of the word ;but we very much question whether the EnglishGovernment itself could, in times of great pressur e,attended with scarcity of Gold, force from its own

constituents— the people—an amount of fifty millionssterling in Gold, which yet would be absolutelyrequired to enable it to perform its own part of theengagement

,to take up and pay in hard cash the fifty

millions issued in Notes . We cannot say whether itwould, under such circumstances, succeed in squeezing

even thirty millions out of the people ;all we know forcertain is, that at present it undertakes to pay the

fifteen millions over-issue if called upon to do so .

In limiting its liability to this amount, the Govern

ment may certainly be considered to act upon a proper

and prudent principle ; for it may pretty safely be

CURRENCY . 43

taken for granted that, besides the Bullion reser v e inthe Bank, there is always sufficient Gold Currency incirculation to produce, at an extreme pinch, by thepower and the credit of the Governm ent, the fifteen

millions wanted to pay off in Coin all the Notesof the fifte en millions over issue .

This limi t of the over-issue to fifteen millions maysimply be accidental, or it may be the result of acareful consideration and calculation ; but there canbe no doubt that upon the whole it works well. ‘

Whenever a cri sis occur s,and both Gold and Notesare scarce, we hear the cry for mor e Mon ey raised,and Government is urged to sanction a larger issueofNotes to supply the eager demand . Every argument is pressed into the service to prove that ther equirements of theage and the mansion of trade impe

The most conser vativ e of our Financiers regard e v en these

fifteen m illions of Gov ernment Notes in the light ofamischie v oussurplus of currency, and impute to this ov er-issue of Notes the

pe r iodical panics which v isit us in tim es of m ercantile distress,They contend that if we hadaCurren cy founded on Bullion alone .

the exportation of Gold or Silv er would not in v olv e the risk,atallev ents , of disturbing the proper balance of our Curren cy System

whilst, under the present arrangemen t, the exportation of Bullion

in hard tim es cannot but tend to raiseappr ehensions in the public

mind lest the Bank should not be able to pay its own Notes, andthus to create apan ic, in greataggravation of the gen eral distress ;which pan ic, with its disastrous results, cannot justly be imputed,under such circumstances, to ov ertrading and impruden t speen

lation . These Financiers see som ethingarbitraryand unmean ingin the present priv ilege of the Bank of England, and adv ocate thefalling back upon our first class” plan— v iz . issue of Note s basedsolely upon Gold.

44 CURRENCY .

rativ ely call for an increase of Currency . It was so in1866 . Last year, in 1867, not a word was heardabout thi s necessity of an increase of Cur rency, for the

Bank was not only overstocked with Bullion then , butits Notes in reserve were nearly equal in amount to thefifte en millions guaranteed by Government , which certainly shows that the r equir ements of the age and theexpansion of trade should not be judged by the contingen cies of a single year .

Proposals have also been made for a double PaperCurrency to be issued by the Bank— v ia, Bank Note s

based exclusively upon the stock of Bullion (our own

first class plan here), and Bank Note s based expressly

upon the guarantee of Government . It is argued that,supposing this latter description of Paper Money to

sufi'

er depreciation fi'

om distrust, it might still continue

to serve as a Currency, even though it should be at a

discount of fifty per cent . The proposers of this scheme

clearly overlook the disturbing action which the intro

duction of such a system would be sure to exercise

upon the healthy operations of trade, as well as the im

portant fact that no provision is made in their project

for theultimate conversion of their guarante e Notes into

actual value . We, for our part, believe in the wisdom

of the present system of the Bank of England, which

rests the basis of its issue upon the combination of the

Bullion of the country, the substantial mark and token

of its prosperity, with the credit of the Government ;restricting the latter factor, however, within prudent

limitations . We are of Opinion also , that though there

might be room for rational improvement in the present

CURRENCY . 45

system,experiments in matters of this nature are too

hazardous to be lightly attempted unless called for byabsolute necessity. We hope, then, that the English

Government will listen to no plan tending to extendthe Paper Currency of the country at the expense of

lessening the proportion of Bullion which now serves

asafair basis .’The system ofthe Bank of France may be said to be

even more secure than that of the Bank of England, as

the issue of Bank of France Notes has a comparativelymuch larger foundation of Bullion, the French Government owing only four millions to the Bank, instead of

fifteen millions as is the case in England. The other good

Continental Bank Notes which pass upon a par wi th

the Metallic Currency, are also based on systems con

nected with Banks and State Treasuries , and sufficiently

solid to invest the Note s with that character of safetywhich alone can enable them to performall the officesand functions of full-valued money.

The only reallyuseful improv em entwhich may be suggested

in reference to the Bank of England Notes is the issue ofa£1Paper Cur rency. Form erly the Bank issued £1 Note s, but now

the smallestamount is £5 . It may fairly be taken for granted thatthe issue of £1 Notes would hav e the beneficial result of bringingagood deal of the presen t Gold coin back into the cofi

'

ers of the

Bank , prev enting thus the wear of the coin . It m ightalso be more

con v en ient to the public . In other coun tr ies, quite or nearlyassound

” as England, Note sare issued for amounts much less than£1 . Our Bankauthor ities, no doubt,act upon what they consider

apruden t policy ; but it is n ot clear whether analteration of the

system in this respect m ight not serv e to bring out con v incingly

theadvan tages of £1 Notes .

6 CURRENCY .

The following Bank of England statements showthe condition of the Bank at two different peri ods

BANK or ENGLAND, 18th Nov ember 1857.

LIABILITIES. 43 ASSETS.

Note s Issued Gov ernment Debt

Other Secur ities

Propri etors’

CapitalRest

Public Deposits

Other ditto

Se v en Day’

s Bills, &c .

Thus , against 22} millions in Notes, issued by the

Issue Department, there were at that time (the great

panic of 1857) only 6 millions of Bullion in hand topay the Notes with, or about 27 per cent . There

was the sum of in Note s in the Banking

Department in Reser v e, lessening to that extent the

amoun t in cir culation ; but these were held as againstliabilities .

The position of the Bank of England Notes’ Issuewas then very weak , and the Government had to come

Gov ernm entSecur ities

Other ditto

Bills Discounted

Notes

Goldand Silv er Coin

CURRENCY . 47

to the rescue by suspending the Bank Act, andauthorising an extra issue of in Note s .

BANK or ENGLAND, 2oth Nov ember 1867.

Issue Depart/ment.LIABILITIES. 16 ASSETS.

Notes Issued Gov ernm ent Debt

Other Secur ities

(Total £15 m illions . )

Banking Departme nt.

Proprietors’

Capital Gov ernm ent Se

Re st

Public Deposits

Other ditto

Se v en Days’ Bills, dtc .

Against 36 millions in Note s issued by the IssueDepartment, the Bank held at the time 21 millions in

Bullion, or about 59 per cent . But, in the Banking

Department, there were in Reserve (lying there idle),in Note s , and in Coin , to

gether not in cir culation, which , deductedfrom the Notes , leaves onlyin actual circulation against 21 millions Bullion, or

about 94 per cent . The position of the Bank wasconsequently very strong at the time .

Other ditto

Bills Discounted

Note s

Goldand Silv er Coin

48 CURRENCY.

The position of the Bank of England is thusalwaysplaced Openly before the Public in the Weekly Statement of the two Departments , the Issue and the Banking. In estimating the position of the Bank fi'

om

these Statements , the Items of Notes and Coin in

Reserve must be taken into account .The following statements of the Bank of France

at the same peri ods , will furni sh a comparison . TheBank of France has no separate Issue Department likethe Bank of England .

BANK or FRANCE, for Week ending 12th Nov ember 1857.

LIABILITIES ASSETS.

Notes Issued Bullion

Post Bills, dtc. Bills Discounted

Deposits Advanceson BullionTreasury BalanceReser v e Advances on PublicProfitand Loss Funds, SharesandCapital Deben ture s

Gov ernm en t Debt

Gov ernm ent Stock

New Bank Stock,

notyet settled

Prem ises

The amoun t of Bullion in the vaults of the Bank

at this time was thus about 33 per cent . of the Issue

of Note s . This was dur ing the commercial panic in

England, which necessarily affected the French Bank .

It is, however, worth rememberi ng that beyond this

adverse influence there was no crisis in France atthat time .

50 CURRENCY .

(towards the close of last year it stood at about thirty

per cent .) in Russia it varies from ten to twenty per

cent . ; in Italy about the same . The fluctuations in

the value of Gold in these countri es are closely con

n ected with the varying phases of their commercial

prosperity, and with the internal and external changesin the political horizon, upon which commerce andwealth, as well as the stability of Governments , ultimately depend . The over-issue of Paper Currency

is either caused by the inferi or industri ous andmercantile condition of the country (frequentlyaggravated by unwise acts of the Government in referenceto the trade of the world), or mainly, and generally in

the first instance, by the actual necessities of the

Government . Requiri ng very large sums ofMoney forWar or other purposes , and finding that the country

cannot, even by forced taxation, be made to yield sufhcient Coin , for the very simple reason that there happensto be in circulation only a fraction of the large amountso suddenly wanted, —and having besides exhausted

its borrowing powers in the Money Market of other

countries , the Government is forced to have recourse to

the issue of Paper Money, either direct from the StateTreasuri es , or through the Medium and Agency of

Banks . State Notes of this kind carry upon their facethe usual dry promise to pay the amount stated in cashto the bearer or holder on presentation or demand .

So long as the credit of the Government remains

pretty good, and prudent arrangements have been

made respecting Bullion reser v es , to secure the conver

sion ofthe Notes into Coin under certain circumstances .

CURRENCY . 51

the system is elastic enough to permit of a compa

rativ ely wider range than is required for good Notes ofour second class . So soon , however, as the issue

breaks these elastic bonds , and the public becomeaware that it is impossible for the issuer to pay at the

time, and that the fulfilment of the promi se to pay has

to be waited for till some future period, the contingency

even of the deferred payment being dependent uponthe future prosperity of the nation , and the stabilityof the political organisation, confidence in the safetyof the Notes is at once destroyed . With an increasingissue ofNotes the Treasuri es and Banks furnish actual

proof of their inability to cash them ; the Governmentforbids the export of Gold,and declares its Notes legaltender; creating thus a so-calledfor ced Paper Cur rency.

The Bullion basis is set aside, and Gold is turned into

simple merchandise , in Spite of the well-recognised

fact that it is the true standard of value .

The degree of faith still reposed in the Government

by the people, and inspired by the hopes of a future

revival or improvement of Industry and Commerce,

is expressed in the marketable sense , by the per cent

age rate of depreciation of the Paper Currency ,andthe prem ium which Hard Cash, or Bullion in all shape s,brings in the market .

Operations of ov er-issue of this kind by State

Governments , or Communities generally, closely re

semble the borrowing of money by individuals upon

promise to repay the loan at some future time . The

charges of Interest —sometimes in both cases of ausur ious character— are in the case of State operations

52 CURRENCY .

of this kind represented by the greater or lesser depr e

ciation of the Paper Money, and the effect which such

depreciation has upon the home and foreign trade of

the country . An over-issue of Paper Money in a

country may apparently create a momentaryflnshn ess

indeed , in the United States , for instance, during the

late civil war, the flood ofGreenbacks pouring into the

Market stimulated the home trade , and afl’

orded an

easy means of amassing wealth to those who knew

how to profit by the circumstances of the times . In the

end, however, a people will find the obligation of re

paying Capital and Interest just as onerous and difficult of fulfilment as an individual may find it ; and ifthe hopes of the future , resting on an improved state

of Trade and Politics , are disappointed, National

Bankruptcy becomes imminent .

An over-issue of Paper Currency, no matter

whether brought about by politicaland financial m is

management, or forced upon the Gov ernment of a Stat eby absolute necessity, is therefore not only detrim entalto the pre sent interests of a country, in so far as itsExchanges with other State s are concern ed , but it

involve s , like a continual discoun tand r enewal, a heavycharge on the future prospe ri ty and resource s of the

State . In Italy the forced Currency is onlyafewyearsOld, but it is continually on the increase . In Spain thestate of things is so uncertain that the relative valuebetween Paper Money and Metallic Money can no longerbe fixed wi thany degree of accuracy . AS regards theRouble Notes in circulation in the Russian Empire , it isstated that the ImperialGovernment itself is not aware

CURRENCY .53

of the actual totals issued , and has thus lost controlover its liabilities in reference to the same ; morever, alarge quantity of successfully forged Notes is in ciren

lation , which the authori ties he sitate to suppress , fearing a further disturbance of credit . If this be true, we

may soon hear of something more serious than a merefurther depreciation of Russian Paper Money .

Austriaoffers one of the most remarkable instancesof the position of an ov er-issuing State . For many

years Bankruptcy has hung over her like the sword

of Damocles yet she still stands erect . Gold and

Silv er Coins have almost entirely disappeared from theland, and Paper Money reigns paramount , in Notes fromthousands of florin s , down to the value of a few pence .

Indeed,the Austrians seem almost to have solved

the problem of di spensing altogether with a Metallic

Currency . Their intercourse with other nations is

limited,and their Industry is Shut out from the markets

of the world . Yet they do not seem to be poor ; they

have a full measure ofall the luxuries and refinementswhich other nations enjoy . The Austrian system of

Paper Money seems to drag on its existence on the

faint hope that , at some future time or other, a suc

cessful movement may be accomplished to regain a

sufficient stock of Bullion . A day of reckoningéhowever, must come , sooner or later, for Austr ia as well

as for other States that are equally in a condition of

almost hopeless financial confusionand embarrassment .It needs only— and with the ever-increasing liabilities

which certain States load upon them selv es in our times

such an event is not unlikely— that one of the se

54 CURRENCY .

States should become Bankrupt, when the whirlwind

of the panic created thereby would be sure to blow

downall the rest . Then we may expect to see revolution , civ il war , and anarchy taking the place of thepeaceful interchange of benefits upon which civilised

society is founded .

The means of averting such a catastrophe are, first

and foremost , the strictest economy on the part of theGovernment . Every effort should be made to reduce

the Expenditure of the State within the narrowest pos

sible limits , and to secure an excess of the Revenue

over it,applying the balance to the gradualwithdrawal

of the fictitious Currency from circulation . In the

second place , Government and People should heartilyun ite in fostering those Industries , more especially, of

which the products can be beneficially exported, thus

attracting Bullion into the State . In this manner,Government , Industry, and Commerce wouldall regainstrength and credit, sufficiently to enable the Stateultimately to command the necessary confidence , eitherfor the Consolidation of its Liabilities into a properly

regulated State Debt, or for the re-establishment of a

proper par between Paper and Metallic Money . Let

us hope that the Austrians will be able to accomplish

this much desirable end . At least they have an

example before them in— England .

During the wars of Napoleon, this country wascalled upon suddenly to raise enormous Sums of

Money ; and so severe was the strain at the tim e, thatfor twenty years Specie paym ents were suspended,andGold stood at a premium of forty per cent . In the

CURRENCY . 55

years of peace which followed,Retrenchment ofExpen

diture— but, aboveall, the indomitable Industry of the

Nation, which commanded the markets of the world ;the insatiable thirst for enterprise which, aided by thisIndustry,and strengthened by the influence gained inthe victorious struggles, dr ew Bullion to the coun try— enabled the Statesmen of England to convert theFloating Liabilities into a National Debt

,and a Bullion

basis was regarned sooner than ev en sanguine peoplehad Cxpected . It is true, that this National Debt— On

which we of the present generation,who have inherited

this bur then from our forefathers , still continue to the

present day to pay the Discount or Interest , and evenare not altogether without some hope of being yet

able some time to pay back the Pri ncipal— is a heav ycharge ; but the fearfirl evils of National Bankruptcy,with its attendant demoralisation, were avoided . If

this proved a hard and diflicult task for England, with

all her extensive means , her great industry, and hervas t power, leaving her still to the present day bearingthe heav y burden thereby entailed upon her, how much

more difficult may such a recovery be expected toprov e to other States of so much less powerand wealthand ability to COpe with the overwhelming difficulties

of their position !

The United States, whose present Floating Debt is

enormous , are likely to follow in the footsteps of

England . Their Paper Currency has alr eady recov eredto av ery considerable extent , the premium on Gold,whichat one time ranged from 100 to 200per cent . ,be ing down now toabout 40per cent. The Am e rican

56 CURRENCY .

Government acts wisely in forcing Gold, by tim elyarrangements , to pass through its Treasury . Meanwhile

the American National Debt undergoes , m oreover, a

continued reduction , and we have no doubt but thatslowly and gradually, but surely— the Notes will rise in

value until they stand on a par with Gold . This may

take fiv e , ten , or twenty years but the ultimate

accomplishment of the end is almost certain , as the

Country is possessed of immense natural wealth andnum erous other adv antages , and the People have allthe requisite characteri stics ofIndustry and Intelligenceconducive to such a result .

The American Greenback Currency forms a partof the United State s Debt incurred during the late

CivilWar . On the l stNovember , 1867, this stood as

followsDollars .

Bonds— Interest payable inin Paper

to beu

paid 011"

Gold CertificatesGreenbacks and Small Notes

Against this issue ofDols .387,971 ,277 in Govern

ment Notes , the United States Treasury held at thatdate

DollarsIn GoldIn Notes

58 CURRENCY.

State Banks at that time also were , in a comparativ ely

stronger position than usual. The Bills discounted

are not in the same proportion as in other sim ilar

Institutions, whilst theadv ance s to the Stateare larger,and Loans on Mortgages are made, the Bonds for

which are circulated . Although the Austrian National

Bank is thus much less strong than other similar Insti

tution s, yet so far as Austria is concerned, it is lookedupon as the most solid institution in the coun try, and

its Note s command confidence, though they are at a

discount .

But it is in the other parts and branches of

Austri a’s Financial System that the trouble andthe difficulties of her position principally lie . The

Austri an Government, with an enormous Debt (near

millions florin s) , and all manner of liabilities

and embarrassments, generally finds that the State

Expenditure exceeds the Re v enue , and, unable toborrow Money, it has recourse to the expedient of

issuing State Notes . These are Forced Currency, butthey have n o security in Bullion, and no guaranteewhatever except the good faith of the Government .These State Notes amount to some three hundredm illionsflor insand mor e (the exact total is not knownto the public), and this issue is at pre sent still on theincrease . There is no prospect of the conversion of

these Note s into Bullion ; it is possible , howev er, that

should Austria’s credit enable her to raise another

Loan in addition to the present overwhelming burden ,

that the Notes may be withdrawn at some futureperiod . Thus , whilst the Notes of the National Bank

CURRENCY . 59

are secured by some reserve in Bullion , approaching our

system of the Second Class (it is said that the publichoard” them on this account), the State Notes , not

being secured by any reserve whatever, belong to thelowest category of issues . The uncertainty of this posi

tion ne cessarilyafl'

ectsall the Austrian Paper Currency .

The FOURTH CLASS ofNotes , in our scale ofgradation

,represents the most extreme position . The first

remarkable failure of Paper Money occur red through

the celebrated John Law’s introduction of Mississippi

and other Bonds in France in the first half of last century .

‘ Other countries hav e also had to pass through

their bitter experiences with Paper Money . The com

m ercial history of England, before the present better

s ystem gained the ascendancy, tells of the suspension ,at various times of private Note-issuing Banks . (The

Notc issue by private Banks and Bankers all overthe country is now under the control of the Govern

nent) . In Am eri ca, long before the p resent State

Paper Currency was thought of, there had been many

attempts made to introduce a Private Bank Note

system, which had, however, mostly resulted in dis

astrous failure . The most noteworthy modern instance

of a complete collapse of a State Curren cy founded on

Paper has been furnished quite recently by the lateConfederate States of North Am er ica. The Government

The disastrous re sults of the bursting of that gigan tic bubblemay,as hasalready been stated, be numbe redam ong the promin ent

cause s ultimately leading to the National Bankruptcy of France andto the French Re v olution .

60 CURRENCY .

of these State s found itself compelled, at the very outset of the Secession, to give up paym ent in Bullion ,and to issue Notes to such en ormous amounts , that thedecline in the value of the latter kept in advance e v enof the rate of issue . And in the same measure ,as thechances le ssened of the Government holding its own

ground,and acquiring stability, so didGold rise in value ,first from one hundr ed to fiv e hundred, then to on e

thousandand more per cent . , until at last one dollar inGold would command one hundred dollars in Notes . A

state of inextricable confusion ensued, and all comm oditie s rose in price out ofall proportion ; flour, forinstance , worth in England at the time thirty-twoshillings , or about eight dollars a barrel, rose in Rich

mond to one hundred and fiftyand even two hundreddollars ; and laughable andabsurd as the statementmay appear, we have it upon the authori ty of the correspondents of the English Press that people going to

market required a basket to carry the lawful Money of

the land, which basket was quite large enough to carry

back to their homes the produce which the purchas ingpower of this desirable Medium of Exchange enabled

them to obtain . When the end came at last, and the

would-be new nation fell to piece s , the Confederate Curroucy became of course absolutely valueless, and allthe prom ises to pay made by Government authority ,and confirmed by Government stamp , van ished into

nothingness .

Misery unspeakable followed in this instance in the

train of the experiment ; the rights of property and

labour were de stroyed alike . Yet, fortunately , the evil

CURRENCY . 61

wrought had not leisure afforded it to strike deeperroots , and the restoration of a strong and healthyGovernment came just in time to check the downward

course, and to save the unhappy land from immediate

ruin .

We have so far confined our discussion here tothe issue of Paper Money based on either Bullion or

Go v ernment Guarantees . We have now to add afew brief remarks on the subject of the many pro

jects started fi'

om time to time to create a PaperCurrency based uponall kinds of property and value .

Banks may be permitted, to a certain extent, to issue

a Circulating Medium in Notes , based upon convertible

Securities, Government Stock, Bills of Exchange , &c .

but this can only be done in a very limited way, andat the Bank of England, at least, it is not done atall . Our projectors of schemes for issuing Notes

on property are not content, however, with this

limited range , nor does it appear that they have taken

a lesson from the past history of exploded Bubble s , for

we find them again and again raising the question of a

Paper Currency, based onall sorts ofValues . We willnot discuss this topic here a Single practical illustra

tion will suffice to demonstrate the utter fallacy of such

schemes .Let us, then , for the sake of argument,agree to

lookuponall kinds of property as an effective basis forthe issue ofNotes , and to regard the value represented

by such Notes as on a par with Coin . To make

the illustration the more striking, let us select the

62 CURRENCY .

most real and substantial kind of property— Land and

Houses . A, being possessed of in money, in

vests this Capital in the purchase of a plot of land, orto make the matter still clearer, of a house of that

value . He then issues a Note for secured on

the house, which Note, upon the above assumption , will

pass current and circulate as Money . He now buys

another house with this Note, also worth

and again issues a Note upon this second

acquisition of his . Thi s second Note he again inve sts

in the purchase of a third house, and so On ;and if therewere a hundred, or a thousand, or a million of housesin the Market, he m ight go on purchasing in the same

way, and might thus ultimately secure the entire lot,and enjoy the rents thereof. Twenty houses , at £50

rent each, would yield a n ice little income of a

year, and so on in proportion ; and , in addition to this,A ,would always still retain the power of raising another

upon the security of his last pur chase . Now,

as this entire superstructure ofwealth rests solelyandentirely upon the foundation of the first house purchased by A, with his original capital of it is

self-ev ident that this first house must really be worth

infinitely more than its nominal value to A, or to any

body else in the same position .

Why, the whole thing is a simple absurdity, which

cannot stand the test of a moment’s serious exa

mination . However, let us again , for the sake of

argument, modify the assumption, . to adapt it moreclosely to our notions of Collateral Security . Let usgive A the power only to raise £750, or even only

CURRENCY. 63

£500, uponahouse v alued at He accordinglyissues a Note for £500, with which he buys another

house, but thi s time of course one worth £500only .

Upon the security of thi s latter again he issues another

Note to half the amount of the nominal value , say£250, with which he buys a third house , and raisesupon this last purchase of his again £125 . This

makes a total of £875— raised so far upon his originalcapital of he has thus , with his pur

chased houses worth £1 ,875 , and he has only raisedupon

each house half the value , and not a penny yet uponhis last purchase . The rentals rece ived will, by the

end of a year or so , increase the £1875 to £2000, and

thenceforth the value will go on increasing at a more

rapid rate , like compound interest . The difference

between the two forms of our proposition here is

accordingly, after all, only on e of degree : upon our

first assumption , A’s property would go on increasing,

in arithm etical progressionad infin itum ,and so wouldof course also the number of Notes thrown by him on

the money market ; whilst, in the second case assum ed,the increase would progress at a much slower rate

indeed, yet in the end the result would be pretty much

the same . And mind, we have not yet touched , in our

examin ation of this question, upon another most im

portan t element in it— Competition . There are many

other people who would like to do the same thing asA ; and every additional competitor would, of course,accelerate the rate of progression in the increase of

the Paper Currency thus easily created . We have

selected the most substantial kind of property— Land

64 CURRENCY .

and Houses ; how much more impracticable would theproposition appear if all other kinds of property

were equally made a basis for the issue ofNotesThe foregoing illustration clearly demonstrates the

utter impracticability ofall attempts to create a permanent artificial Curren cy . Simple and natural as theProposition to found a Paper Currency based on Pro

perty may appear upon a mere superficial view of the

matter, yet, if such a system were ever practicallyintroduced , the prices ofall comm odities would rise inthe most abnormal fashion ; and this must inevitablylead in the end to produce that state which is the

greatest dread ofall Political Economists— Inflationin its extremest form . The projectors of such

schemes as a private Paper Currency never takeinto account the necessity of providing ultimately for

the redemption of the Notes , and their conversion

into Cash , and of giving up the Guarantee Property on

the original terms , without the least regard to its

artificially inflated v alue ; nor is any provision made in

their schemes for deteri oration and reduction of value

from natural causes .

Now,ifall this seems sufficiently nonsensical, how

much more extravagantly absurd must not the cool

proposition appear, which we find so fr equently made,of permitting the issue of Private Notes not resting

on the security ofany property whatever ? “Te occasionally have heard some of our theorists say, Whyshould I not issue my own Promissory Note payable

to bearer, and circulate it as Money, pledging my

credit for its value ?” There are many ardent fr ee

66 CURRENCY .

the sound principles of supply and demand. If these

axioms are neglected—and they are neglected or forgotten occasionally, when a portion of the mercantilecommunitywill follow the lead of speculation— inflationtakes place

,which inevitably leads to a crash : the law

of supply and demand strongly asserts its ascendancy,and, with a rude and unsparin g hand, destroys the

fictitious prosperi ty of the preceding period of over

trading .

Thus far then we have stated, as succinctly andclearly as possible, our views on the comparative

worth of a Hard Cash and a Paper Currency , and

endeavoured to demonstrate that Bullion is truly

and legitimately the measure of Value . We trust

that we have succeeded also in establishing a proper

understanding on the subject of Currency generally,and on the causes which lead to a depr eciation of

Paper Money, Since this has an important bearing

upon the question of the Foreign Exchanges, as willbe shown hereafter .

CHAPTER IV.

BILLS.

ILLS , in their vari ous forms, are Mediums ofExchange, but they are not Currency, which ,

whether thefree or the conditional, has a direct action ofits own , not limited by restri ctions . The simpleact oftenderingand handing over the amount ofa debt in legalCurrency terminates the liability of payment involved .

Currency (in Metal or in Paper) is established and

authori sed by Government, and Government is responsible for its value . This invests Currency with a public

charac ter,and makes its universal acceptance a matterofgeneral contractby the consent ofallparties . WhereasBills of Exchange are simply matters of private agree

ment, for which Government is not responsible . The

re sponsibility here attaches solely to individuals, and

theacceptance of the instrument as a representative ofvalue is merely a matter ofprivate or personal contract .The responsibility of the parties to a Bill remains

engaged un til the instrument is converted into actual

Currency, in conformity with the terms of this contract .Currency circulates fi eely by general consent,

whilst Bills of Exchange only circulate amongst theparties more immediately concerned, upon pri vate

68 BILLS.

terms of understanding,and under certain formalitiesand restrictions , which impart a special and distinct

character to these instruments .Bills are Mediums of Exchange, inasmuch as they

serve to convey certain definite amounts of value, fix edand expressed in terms of Currency, from one hand to

another, and from place to place . Value may, indeed,be procured and conveyed fr om place to place in the

shape ofall kinds of moveable propertyand merchandise sold and forwarded in Exchange for Curren cy .

But this involves the questions of bargain and sale,the fluctuations of price, the cost of transport, andthe uncertainty attendant upon the conveyance of the

articles . State Bonds, Stocks , Shares, and valu

able Securities generally, which are equally move

able representatives of value , are, in their realisation ,

liable to fluctuations of price, and cannot therefore

properly be termed Mediums of Exchange .

Now, Bills bear on the face of them,like Currency,

a definite declaration of their nominal value , and it is

expected that their realisation will be efl'

ected in due

time in actual Currency to the exact amoun t for whichthey are drawn . They may accordingly serve as realMediums of Exchange, and in that character as

Economisers of Currency .

We have no positive evidence as to the time whenBills were first invented : the first mention we find

made of them does not go further back than the Middle

Ages . However, it is very likely that they were in uselong before, in some form or other, and their origin

BILLS. 69

may be easily accounted for , say in the following wayFor in stance, suppose A, living in one town , to have

supplied B , living in another town, wi th goods , for

which B would accordingly be indebted to A, andwould have to forward payment to him . Now suppose

C, liv ing in the same town as B ,to have furnished

goods to A, who would accordingly have to forwardpayment for them to him . A would of course find' it

more convenient to instruct his debtor B to pay the

money over to C, to whom he would r emit a lette r, orreceipt, or Bill, empowering him to claim payment from

B . This simplearrangement would save the expenseand the risk of sending coin backwards and forwards

between the several parties to the affair. The same

operation would answer equally well for a variety of

other mercantile transactions of a more complicated

natur e . At the time when the German Hanse Townscommanded the trade of the world the use of Letters

of Credit and Bills increased considerably ; but it waschiefly in the time of the commercial greatness of

the North Italian trading cities that the system

attain ed a more perfect development . The intelligent

Lombards were the fir st to bring method and orderinto the management ofmercantile matters , which they

thereby rai sed, in a measure, to the dignity of a science .

There can be no doubt but that they invented many

of the present forms of Bills , and devised the whole

some rules and customs which the proper and con

v en ient working of commercial intercour se by these

In struments demands .

The influence which Bills of Exchange have ex

0 BILLS.

ercised upon the trade of the world has been mostbeneficial and it is very questionable whether but forthem the material prosperity of civilised nations would

have attained the present high development . Theyser v e to facilitate the largest and most important transactions in Home and International Commerce ; and thegreater part of the Import and Export Trade betweenthe various countri es is conducted by their agency .

Resting as they do on a Currency basis , they serve to

balan ce the Debit and Credit between two countries ,and the actual transmission of Bullion is only required

when the final Balance is positively declared.

From the high social importance of the Bill system

the abuses to which it is naturally liable, and the

proper means of guarding against them have alwaysoccupied the attention of the difl

'

erent Governments ,and special laws have been passed to regulate the

proper action of the system . Compliance with certain

strict forms , rules , and customs , according to law, is

absolutely indispensable to establish clear rights of

claims in connection with Bills of Exchange .

In England we have no special consolidated law onBills of Exchange ; but the matter is governed by anumber of Statute laws , and by certain commercialrules and customs which have acquired a species oflegal force .

“ In France the Code Napoleon contains

Thewell-known series ofWilson ’

s LegalHandyBooks containsan exceedingly useful publication on the law of Bills , Cheques,Notes, &c . , by J. W Sm ith, Esq. , LL.D . Eflingham Wilson , RoyalExchange . Pri ce Is .

BILLS. 71

the legal enactments and provisions in reference toBills of Exchange . But it is in Germ any that them ost complete and satisfactory legislation on the sub

ject is to be found , in the so-called General GermanLaw on Bills of Exchange (Allgemeine DeutscheWechsel Ordnung), which has been adopted byall theGerman State s within the last fifteen years .

Most Governments derive a considerable incomefi om taxing Bills of Exchange by means of a compul

sory Stamp , the evasion ofwhich not only divests Bills

of Exchange ofall legal value , but renders the partiesconcerned liable to certain penalties . In foreign

countri es theusual Stamp duty is one-half per mille on

the amount . W e give the Schedule of Br itish Bill

Stamps at foot .“

BILLS AND PROMISSORY NOTES.

S (1

Not exceeding £5 0 1 Exceeding £400and0 5 0

Exe . £5 not exc . 10 0 2 not exceeding £500

10 25 0 3 500 750 O 7 6

25 50 O 6 750 1000 O 10 O

50 75 O 9 1000 1500 O 1 5 O

75 100 1 O 1500 2000 1 0 O

100 200 2 O 2000 3000 1 10 0

200 300 3 0 3000 4000 2 0 0

300 400 4 0 4000 5000 2 10 0

And 10s for e v eryadditional £1000, or part thereof.

FOREIGN BILLS or EXCHANGE drawn or negotiated in but payableout of the Un ited Kingdom ,

in sets of three or more , for e v ery B ill

of each set one-third of Inland duties . If drawn singlyand not in

se ts, or if drawn out of but payable within the Un ited Kingdom ,

sam e as Inland duties .

72 BILLS.

The general term Bills comprises all PaperMediums of Exchange, excepting those previously

designated and described here as Paper Currency.

Thereare four principal Classes of them, v iz

Letters of Credit .Bankers ’ Cheques .Promissory Notes .Bills of Exchange .

LETTERS OF CREDIT may be considered the mostprimitive form of the Bill system . They are generally

wr itten on a plain letter sheet,and contain a requestfi om one firm to another to pay overacertain amountof money to a thir d party they are frequently used

also as letters of introduction and recommendation at

the same time . The following is a common form of

a letter of CreditLondon , lstMay 1866 .

Messrs. B . B . Co. , Par is .

Gentlemen ,-W e hav e great pleasure in herewith introducing to

youM r . N . N .,who v isits your city for purposes of bus in ess,and we

beg to recommend him to your kind attentions . At the same time we

herewith Open acredit in his fav our for ONE HUNDRED POUNDS,andrequestyoutopay ov er thisamount to him at his desire. His signaturewe ltd/08 forwarded to youinan other letter .

A. & A.

Now,such a document (the wording and style of

which may of course be varied as may suit the taste

of the writer) undoubtedly bears on the face of it a

certain value . But suppose that it is not honoured

74 BILLS.

invalid character in point of lawas the first form ; and,in case of non-payment, they can only serve as collate ralevidence of the original basis of the transaction .

Something more is therefore wanted to make this

species of Medium of Exchange fully available, not

only as a direct means of paym ent in the fir st in

stance, but also as effectively constituting in itself anundoubte d claim on the writer in case of non-payment .

The so-called Letters of Cr edit and Circular Notes

issued by Bankers belong to this category ; but the

question as to their validity is not often raised, and as

they are not important for purely commercial pur

poses , we may content ourselves here with this bareallusion to them .

BANKERS’ CHEQ U E8 .— A Cheque is an order

drawn upon a Banker to pay a certain sum to the

Holder on demand . In thi s respect it resembles aLetter of Credit .Cheques are payable on demand, and formerly the

words on demand were incorporated in the form ;they now usually run as follows

London , lst Dec. 1867.

To the LONDON AND COUNTY BANK, Lombard Street.Pay to James Sm ith, or Bearer , THREE HUNDRED POUNDS .

£300. WILLIAM BROWN rlt Co.

With this Cheque James Smith , or any one elsewhom he may make the Bearer , can go to the Bank

indicated, and provided that William Brown 85 Co .

have money there sufficient for the purpose, he will

receive the £300against the surrender of the Cheque .

BILLS. 75

If the Cheque is crossed, i s. if two lines, with the

nam e of a Bank or Banker between , or the word 00.

in lieu thereof, are drawn across the Cheque , custom

requires that the document should be presented for

payment by the Banker specially named on the face ofit, or through some other Banker or Bank . This is a

precaution which works well, and protects the owner

in case of irregular or illegal possession of the docu

men t by other par ties not entitled to it.

If the Banker refuses to pay the money, the Holder

can go back to the Drawer and demand paymentfrom him , or institute legal proceedings against him .

Form erly a Cheque was merely held evidence of debt ;but since the introduction of another form, having the

wor d Order substituted for that of Bearer , an actionmay be brought at law upon a Cheque , which , so

drawn ,is very nearly subject to the same regulations ,

and has very nearly the same effect as a Bill of

Exchange . Nevertheless it is not so complete aninstrument . Unless it be made payable to Order,and bear Indorsements consequent thereon, the onlypar ty liable on a Cheque is the one who has issued it.

Its circulation is efl'

ectually limited by the necessityon the part of the Holder to present it for payment

with all practicable speed . If he waits longer than

aday, and if the Bank meanwhile stops payment, hehas no claim on the Issuer, or even against the

In dorsers (provided the Issuer had at the time funds

sufficient at the Bank) ; but he has , in that case , to

bear the loss himself.

In England a Cheque is a most important in stru

76 BILLS .

ment in commercial intercourse . In foreign countries

(excepting the United States) Cheques are in but very

restricted use . But they form an essential feature in

our English Banking system,and replace, to a great

extent, the employm ent of actual Money .

Many millions worth of accoun ts are settled daily

by Cheques drawn on Bankers . By means of theClear ingHouse the Bankers in London again exchangeaccounts between themselves with the Cheques col

looted daily in each hand. This magnificent system

serves to greatly facilitate what would otherwi se be

sure to proveamost laborious settlement of accoun tsby Money payments . The saving of labour, timeand expense effected by it is obviously an advantage

which must have an appreciable beneficial influence

upon the commercial prosperity of the country .

Wide-spread and important as is theuse ofCheques

as Econom isers of Curr ency, in the settlement of allsorts ofaccounts, the individual career of these in struments is necessarily very brief ; and in their capacityas Mediums of Exchange they do not bear on the faceof them a clear definition of the rights and claims,and the liabilities of the several parties concerned, asis the case with Bills of Exchange .

PROM ISSORY NOTES .

— A Promissory Note is a

wri tten promise by one party to pay a certain sum to

another party . Promissory Notes are usually drawn

in the following form£20. London , l stDee . 1867.

On Demand, I promise to pay to Mr . SAMUEL ROBINSON the

sum ofTWENTY POUNDS. JORN W ILLIAMS.

BILLS. 77

This constitute s a mere obligation to hand £20to

S . Robinson , whenever demanded .

“

We have already mentioned that the law forbidsthe issuing of Promissory Note s payable to Bearer,except under Special sanction , as in the case of BankNote s .

The following is another form of a PromissoryNote£800. London , l stDec. 1867.

On the lstFebruary 1868, I promise topay to S . ROBINSON, or

Orde r, the sum of EIGHT HUNDRED POUNDS, for Value Receiv ed.

JOHN WILLIAMS.

In this case the payment is not promised on

demand, but on a certain future day distinctly specified-in the instance here before us two months after

date ; which accordingly implies a cr edit to JohnW illiams . The Note is made payable to Samuel

Robinson, or Order , which means that Robinson can

order payment to be made to somebody else . It is

also expressly stated that the payment to be made isfor Value Receiv ed, indicating that a transaction of

some kind has taken place between the parties , whichhas led to the making of the Note . A document of

this kind will serve in the same way as a complete Bill

of Exchange, and is subject to the same general lawas the latter .

BILLS OF EX CHANGE— A complete Bill of Ex

change, drawn on a proper model, ought to provide

The so called I O U ’

s (I Owe You) in England are m ere

acknowledgm ents of indebtedn ess to particular persons .

78 BILLS.

for all interests involved, and should clearly definethe positions , rights and liabilities of all the partieswhose names are attached to it.

A complete Bill of Exchange is usually drawn in

the following form

£250 Birmingham ,132Dec . 1867.

Three Months afler date please pay this B ill of Exchange to

Messrs. RICHARD IRVING dz Co.,or Orde r, the sum of Two HUNDRED

POUNDS Sterling, for Value receiv ed,and charge the same toaccoun t,as

adv ised by HARFORD Go.

To Messrs. TANNER BROTHERS, London .

The Acceptance of the party on whom it is drawn

is written across , in this fashion

Accepted, Payable 4th March at the UNION BANK OF

LONDON. TANNER BROTHERS .

The Bill may bear Indorsements written on theback , as the following, for instance

Pay to the Orde r of JAMES BARBER, Eso., for Value recei v ed .

L iv erpool, 3rdDec. , 1867. RICHARD IRv INe 85 CO.

Pay Messrs. MACGREGOR Co.,or Order , Value in Account.

London , loth Dec. 1867. JAMES BARBER.

The parties to this Bill are Harford and Co . ,the

Drawers, addressing Tanner Brothers as the Draweesand subsequent Accepwrs Richard Ir v ing Co . ,

the

Remittees or first Payees, who by their Order , in thefirst Indorsement on the back of the Bill, constituteJames Barber Payee in their stead the second Indorsement transfers Barber’s claim to Macgregor Co . ,

the

This due date in cludes the three days’ grace allowed by theEnglish law onall Bills of Exchange .

BILLS . 79

actual Holde rs ofthe Bill, who may again Indorse it toother parties .In the wording of the document the term Bill of

Exchange is introduced ; the Bill has been handed byHarford 85 Co . to Irving 85 Co . , for Value Receiv ed,showing thereby that a consideration has passed betweenthem, which may sometimes arise, also, from Value inAccount. The relations between the Drawers and

Tanner Brothers are expressed by the words , andcharge the same toaccount.

” The first Indorsement to

James Barber states for Value receiv ed the second

one for Value in Account, which makes the differencebetween the two .

Bills so executed are full or complete documents ,and the terms here used in the wording are designed toser v e as pr imalfacie evidence of the bondfide nature ofthe business between allparties ; theuse and effect ofthese te rms may be found, more especially, in the event

of law suits arising, from some cause or other, inreference to Bills of Exchange .

In England this practice is not invariably followed,andaBill drawn in the following form is often con

sidered sufficient :£250. Birmingham , lstDec. 1867.

Three months afte r datepay RICHARD IRVING Co., or Order, TWO

HUNDRED AND Fxm POUNDS. HARFORD Go.

To Messrs . TANNER BROTHERS.

Tanner Brothers may Accept this Bill by writing

the word Accepted across the same,and above theirsignature ; or they may Simplyafiix their Signature toany part of the Bill, in order to constitute a validacceptance .

80 BILLS.

Instead of a full Indorsement the parties maysimply write on the back

PayMr JAMES BARBER, or Orde r.

RICHARD IRv INoa00.

without stating date or consideration ; this is called anIncomplete Indorsement ; or the name

RICHARD IRv INe AND Co.

may Simply be written across the back, without anydirections, when it is called a Blank Indorsement .These departures from the strict form of an original

Bill of Exchange are permitted in England, and theBlank Indorsement has become a custom extensivelyadopted, being especially convenient to large Discount houses , who can thereby, under a separate

guarantee, transfer such Bills as securities . In ordinary

practice, where Blank Indorsements are not necessary,a complete, or, at least, an incomplete Indorsement isalways desirable . The fin der of a Bill, Indorsed inBlank, m ight improperly fill out the Indorsement tohis own name and order, and obtain value for it ;in which case, unless the loser can give timely notice

to the Payer—and unless he can at the same tim c

prevent third parties from negotiating the Bill in a

bondfide manner (a thing scarcely possible), he wouldfin ally lose the money .

On the Continent generally the regulations aremore strict, especially in regard to Indorsements ,which must be complete in order to answer all legalrequirements . We mark these distinctions here as

essential in theory, even if not of such absolute importance in practice .

82 BILLS .

The question of Cr edit involved in this does not here

concern us . This is a subject with which the Banker,Merchant , or Trader must deal on separateand specialgrounds . The various degrees of Solvability, in thecommercial meaning of the term , are determined by

experience ; and that cannot be taught in this volume .

‘

If the engagement undertaken by the Acceptor beduly fulfilled, the Billwill have run its proper course to

the end, and there will be no retrospective disturbance

of the several payments , which it may have facilitatedand represented in passing from hand to hand . But

if, from any cause , the Bill should not be paid atmaturity, itbecomes the duty of the Holder to P rotest it.

The term Protest was probably invented by theLombards , who , in their amazement at so serious abreach of mercantile faith as the non-paym en t of a

Bill of Exchange , felt bound to p rotest again st it.

When a Bill is represented for Acceptance or for Paym ent, and either is refused, the Holder, in order toprotect his rightagainst the Drawer or Indorsers preceding him , is bouud to make Protest. He must send

the Bill to a Notary, who then presents it once more

to the Drawee,and ifagain dishonored, records thefact, and lev ies Protest in due form . The Protestthen becomes the title by which the Holder can claimupon all the other parties on the Bill, to whom hegives notice in the first instance of the dishonor

,as

Mr . Gilbart’s Work on Banking, &c ., contains the best treatise

known on the subject of Cr edit.

BILLS. 83

an intimation of his intended reclamation . It is clear

that thi s Protest is necessary, not as a mere formalityfor the recording of the several interests concern ed

, but

as a protection toalland each of them . Suppose that

the Bill would have been duly honored if it had beenduly presented, but that the Holder, from neglect or

malice , chooses to return it to the preceding Indorser,falsely alleging that it has been dishonored he mightthereby seri ously affect both the Acceptor and theIndorser’s interests , and wrongfully cause embarrass

ment . It is only right therefore that his own evidence

should not be relied upon in proof of the alleged dishonor ; and that a Public Officer—aNotary— as an independent party not concerned in the Bill, shouldverify the fact .In England , Noting is generally looked upon as a

sufficient Protest. NotingaB illmeans that the Notaryrecords the non-acceptance or non-paym ent thereof

,

and affixes a small notice to it, briefly stating the

cause of refusal ; and this has all the necessary legaleffect . For business abroad, however , he may afterwards , or at Once , be required to extend Protest, and

thereupon issue the usual formal document . On the

Continent full Protests are generally made at once .

BILLS or EX CHANGE are eitherInland Bills , OrForeign Bills .

Theyare also , ac cording to the time they have to run ,

e itherShort Bills , orLong Bills .

84 BILLS .

Cheques , Bankers’ Drafts at sight

,Bank Post Bills,

&c . , are Short Bills of Exchange .

The following examples need no further explanation

INLAND B ILLS OF EX CHAN GE .

Bank of Bristol, lstDec. 1867.

Three days afte r date pay to the Order of Messrs . FAIRMAN

CO. the sum of FIFTY POUNDS, as adv ised.

To Messrs. WILLIAMSaCo., WM . RATHBONE,

London .

This is a usual Bankers ’ Draft, payable (including the

three days grace) on the 7th December, and is a ShortBill.

Manchester,l stDecember 1867.

Two months after date please pay this B ill of Exchange to JOHNBARBER, Eso.

, or Order , ONE HUNDRED POUNDS Ste rling, Value inAccount,as adv ised by LESSINO BROTHERS .

To JOHNSON (it SMITH , Liv erpool.

Suppose to-day is the 2md of Feb . 1868 , the above

Bill, drawn on the l st Dec . 1867, at two months ,would be due (with three days grace added) on the

4th Bob , the day after to-morrow; it is, therefore ,although it was a two months’ Bill on the l st Dec .

1 867, a ShortBill now .

Bills of less than ten days to run are considered

short Bills ; those having more than that number of

days to run , say twenty days , or one month or twomonths

,belong already to the class called long Bills ;

but the term long is specially applied to three months

BIlls .

BILLS . 85

£500. London , lstDec. 1867.

Three months after date please pay to our Orde r the Sum of FIVE

HUN DRED POUNDS, for Value Receiv ed,asad v ised byMessrs . FORS'

rER BROTHERS, JEFFREY BROWN .

London .

This is probably a Trade Bill, drawn by a warehouseman upon a merchant or retail house . It isdrawn to our Order , so that Jeffrey Brown them

selves become the first Indorsers .

The following Bill may be by a manufacturer upon

a London shipping house

£1000. Shqfi’ie ld

, lstDec . 1867.

S ic months after date please pay this SelaBill of Exchange tothe Orde r of Human , SONS E Co. , ONE THOUSAND POUNDS Ster ling,for Value Rece iv ed,and charge to account ofMessrs. SAMSONaCo.

, London . FINLAYSON HART.

Bills drawn at four, fiv e , or Six months , like the

above,are subject to special rates of discount .

FOREIGN BILLS or EX CHAN GE are either

1 . Bills drawn abroad, but payable in theUnited Kingdom .

2. Bills dr awn in the United Kingdom , but

payable abroad .

3 . Bills drawn and payable abroad, but negotiated in the United Kingdom .

Examples of Class 1Par is

, 30th Nov . 1867.

At s ightpay this SelaB ill of Exchange toMr . JAMES RYAN, THREEHUNDRED AND TWENTY POUNDS Sterling,asad v ised by

LECOMTE PEREZ.

Mess rs . DOLBr , WADE db Co. , London .

86 BILLS.

£35. Cologne , 15thNov . 1867.

Fourteen daysafter date pay this B ill of Exchange to the Order ofour Own , THIRTY-FIVE POUNDS Ste rling, Value m Ourselv es, and placethe same to accountas per adv ice of Your obedient Ser vants ,To the Joint Stock Bank, London . SCHNEIDER C0.

These are both short Bills, and so-called Salas, orsingle Bills . Their loss, by post or otherwise , maycause inconvenience .

£187 108 . Berlin , 12th Oct. 1867.

Twomon thsafter date pay this first of Exchange (second and thirdof the same tenorand date unpaid) to the Order ofMessrs . WALTER

Co. ,the sum of ONE HUNDRED AND EIGHTY-SEVEN POUNDS TEN

SHILLINGS Sterling, Value receiv ed, and charge the same toaccount.F . VOSS.

Messrs. MERRY BROTHERS, L iv erpool.In cas e of need

, with hIessrs . FORD RILEY .

This is a first of Exchange the second or third

of the same tenor and date are intended to be used inthe event of the first being lost . There is also a caseof n eed provided for , perhaps by one of the Indorsers of

the Bill, who corresponds with Ford 85 Riley in London ;should the Bill be dishonored , Messrs . Ford Riley,seeing the signature of their fr iend , will inte rfere on

his behalf,and take up the Bill.£1500. NewYork, lstNov . 1867.

S ixty daysafter sightplease pay this second of Exchange (firstandthird unpaid) to FORSTER STEv ENS, Esq.

, FIFTEEN HUNDRED POUNDS

Ste rling, Value of the same,asad v ised by

GRANT, DUNCAN Co.

Messrs. THOROGOOD BROTHERS

F irstAccepted with FARBRIDGE db Co.

This is a second of Exchange, first Accepted with

BILLS. 87

Farbr idge and Co. , another house in London , who,having procured the Acceptance to thefirst, keep this

firstaccepted in their custody, to surrender it to theHolder of the second. Instead of a second or third

Bill, a so-called copy may also be used.

£2300. Shanghai lst Sept , 1867.

S ix months afte r sight pleas e pay this first of Exchange (secondand third unpaid) to the Order of the CHINA BANKING CO Two

THOUSAND THREE HUNDRED POUNDS Sterling, for Value rece iv ,ed asper slupments of Tea. W. R. per F lying Cloud .

B . DURRANT Co.

Messrs. FRY DAWSON, Londo n.

This Bill, drawn as per shipments of Tea, Shows

on the face of it why it was made ; the China Bankmay hold other documents, i .s . , Bills of Ladingand Insurance Policy, as security, which they will surrender

to Fry and Dawsonagainst Acceptance or Paym ent .Fore ign B ills payable in the United Kingdom vary,

of course, greatly in the degree of credit they seve

rally command in the market ; those drawn upon

Banks , Bankers , and commercial houses of the

highest standing, form the so-calledfirst class fore ignBills , or first class r em itted B ills . Then there are

good second class foreign Bills, &c . &c . , down to

inferior paper ofall sorts .

Class 2.

Bills drawn in the United Kingdom, but payable

abroad.

‘

W e giv eall these forms in English, for the sake of gen eralconv en ience .

88 BILLS .

ExamplesF8 . 3000. London , 30th Nov . 1867.

At sightplease pay to Monsieur VICTOR MENNOIER, or Order , the

sum of THREE THOUSAND FRANCS, Value Receiv ed,asadv ised.

J. BARRONaGo.

To the SOCIETE DU COMMERCE, Paris .

This is an ordinary Short Bill, drawn at the sight

Exchange .

M' ° 1500. L iv erpool, 14th Nov . 1867.

At ten days date , pay this Selaof Exchange to the Order of LYALL,SONS doCo.

,FIr rELN HUNDRED MARCS BANCO, Value in Account,and

charge the same as peradv ice . B . C . TORRENS.

Messrs . SCHRAMM 65 Co., Hamburg.

This is a short Bill on Hamburg .

£400. Shefi eld, lstDec., 1867.

Thirty days after sight please pay this first Bill of Exchange(second and third unpaid) to the Order of Ourselv es, FOUR HUNDRED

POUNDS Sterling, Value in Ourselv es , as per adv ice of to-day.

IRONMONCER BROTHERS .

To M r . A. NICHOLSON, Halifax (NovaScotia) .

Although Nova Scotia is an English Colony, the

Bill is Foreign .

Dols . 1576 . Cts . 55 . Manchester, lstDec. 1867.

S ixty days after sightplease pay this first of Exchange (secondand third notpaid) to the Order of the BANK or BRITISH AMERICA, thesum of FIFTEEN HUNDRED AND SEv ENTr-e DOLLARS FIm -FIv E

CENTS. in Un ited States Gold Currency, for Value Rece iv ed, as perin v oice of 1 5th ultimo,asad v ised by MAGINN SONS.

Messrs. VALENTINE s, ROBINSON, Boston .

In this Bill prov ision is made for payment inUnited State s Gold Currency ; if this were not done ,

90 BILLS.

Class 3 .

Bills drawn abroadand payable abroad, but negotiated in the United Kingdom, are also made Bills .

Examples

Fs .14,000. B ilboa, lstNov . 1867.

S ixty daysafter date p lease pay thisfirst of Exchange (secondandthird not paid) to the Orde r of SALVADOR PEREZ, the sum ofFOURTEEN THOUSAND FRANCE, Value Receiv ed, and charge the same toaccountD . E . dc CO. LORENZO (it CO.

Messrs . PASSAVANT FRERES , Par is .

This Bill, on passing through London , would be

negotiated there at a rate of Exchange .

£100. Zurich,18th Nov . 1867.

Three daysafter sightplease pay this first of Exchange (second andthird notpaid) to the AUSTRALIAN BANKING Co.

,or Order , the sum of

ONE HUNDRED POUNDS S TERLING, Value Receiv ed, asad v ised.

SCHONBERG (it 00.

Messrs . BOULTON, SONS Co.,Melbourne .

This also is a For eign B ill, although drawn on

Melbourne . (Even Inland Bills , when sent abroad fornegotiation , are, on their return here , looked upon the

same as Foreign Bills) .

FLGOOO. Ham burg, loth Nov . 1867.

Three monthsafter date pay this B ill of Exchan ge to the Order ofMessrs . HOMSEN CO. the sum of S ix THOUSAND FLORINS, AustrianCurrency, Value of the same

,and place toaccount,as ad v ised by

To the CREDIT BANE, Vienna. T . C. JUNG.

Original Accepted with Messrs. SCHMIDT Co.,where in need.

This is not drawn in a set,by first, second or

BILLS. 91

third, but is a single Bill. Homsen Co . send it toVienn a, to Schmidt who procure Acceptance .

Hom sen and Co . then make a Copy as far as theirIndorsement , and send thi s to London . The Holder

of the copy can Obtain the OriginalAccepted at Schmidtand Co .

’s which firm may also , in case of n eed, pay

the Bill foraccount ofHomsen and Co .

A Bill payable in England on demand or at sight

realises the full amount ofmoney which it profe sses toconvey ; but a Bill falling due only at a future time is

subject to Discount if the Holder wants the money at

Once . Supposing a Bill drawn for £100— to fall due

in three months from this , it will, at a discount of

5 per cent . per annum for interest, equal to £1 5s, beworth tod ay only £98 15s .

The same applies to Bills payable abroad ; onlywith these it is usual, instead of deducting Interest inthis way, to vary the rate of Er change in accordancewi th the Interest ruling at the place upon which the

Bill is directed .

There are two principal rates of Exchange, v iz

The short Exchange, or sight Exchange rigo

rously speaking, for Billsat sight, but, inpractice ,applied also to Bills which haveonly a few days to run and

The longExchange, or three months Exchange,for Bills having to run fully three months .

The latte r rate is the one usually quoted with the ex

92 BILLS.

ception of the short rates on Paris and Amsterdam, or

sixty days sight usances on New York , Rio , &c .,the

London Course of Exchange quotes the three monthsrates .

With regard to Bills on France , for instance, whenthe rate of Exchange in London is fs .25

°50per £1 forthree months Bills , and Interest in France is 4 percent . per annum , the short or sight Exchange is onlyfs .25

'25 per £1 . If we purchase here thr ee monthsBills on France we obtain fs .25 °50 per £1 but if we

buy sight Bills we get only fs .25' 25 per £1 . We get

more in the first case, but then we have to wait threemonths ; and if we discount the three months Billin Paris at 4 per cent . , to have the money at once ,the result is the same as with the short Bill, sincefs .25 ' 50 at three months less Interest at 4 per

cent . per annum for the three months , equal to 25centimes , give fs .25 °25 per £1 , which is the same as

for s ight B ills .

We shall have occasion hereafter to return to thesubject of the short and long Exchanges .

In the foregoing description and discussion of Bills

of Exchange we did not intend to give a complete

treatise onall the legal and commercial question s conn ected with the subject ; but our principal Object has

been to Show how the se mediums of Exchange differ

from Paper Cur rency, in reference to the laws , usages ,and formalities severally governing the two classes , or

applying to them . At the same time we have availed

ourselves of the opportunity of giving practical models

94 BILLS .

place to another in the country of their origin , andser v e us thus as LocalMediums of Exchange .

Foreign B ills of Exchange regulate the transmission

of the universal public value from one country to

another ; this imparts to them the character of Inter

nationalMediums of Exchange .

CHAPTER V.

GOLD .

OLD is the Noblest ofallMetals— the of theMetals, as the Alchemists of old used to call it.

It holds this exalted rank by v irtue of its precious

physical and chemical properties , among which maybe mentioned, more especially, its indestructibility

(already previously alluded to) ; its signal power of

resisting oxidising influences ; its fusibility ; its preeminent ductility and malleability ; its beautiful colourand Splendid lustre . Youmay expose a polished surface of pure Gold to the action of the air or of waterfor any length of time, and at any temperature ; you

may place the article in an oven, and heat it short of

the fusing point it will not lose one atom of its sub

stance, and the surface, after removing the depositof smoke , &c . , that may have formed on it, will

shin e just as brightly as before . It is to allpractical intents and purposes proof against the action

of the strongest chemicals ; youmay boil it in hot

concentrated Nitric, or Sulphuric , or Muriatic Acid,and it will come out of the ordeal unscathed. It

requires the combination of Nitric Acid and Hydrochloric Acid to di ssolve Gold ; it is the most energetic

96 GOLD .

of the chemical elements— the Chlor ine liberated in the

process— which acts as the solv ent, and the compound

resulting is Terchlor ide of Gold. From this salt spring

all other compounds which Gold forms with Chlorine,Oxygen , Sulphur, Cyanogen , 810. One of the most

remarkable among these compounds is the so-called

Fulm inatingGold, a formidable explosive agent, whichacts with such suddenness and force that the explosion

of a small pinch of it on a glass plate will blow a hole

through the plate, or shiver it to atoms .

Mercury will di ssolve Gold ; but, as we hav e

already had occasion to observe, the amalgam formed

is simply the re sult of a mechanical combination . If

the quantity of the Gold in the amalgam be graduallyincreased , a soft yellow mass is formed, which may berolled into a ball, and the Quicksilver pressed out

of it.

The malleability of Gold is almost without limit .

Though one of the heaviest metals , its specific gravitybeing 19 3, Gold can be reduced, by beating with a

hammer,to such extreme tenuity that the slightest

breath ofair will suffice to blow away a sheet of Goldleaf like a feather . Gold leaf can be beaten to the

thickness of45

—

036 of an inch . It has been calculated

that the film of Gold covering some kinds of Silver

gilt wire is so thin that 14 millions of such films could

be compre ssed to the thickness of one in ch , whilst 14millions Sheets of common printing paper would reach

a height of inches, or nearly three quarters of

a mile S

A cubic inch of Gold, which weighs about 10 oz .

98 GOLD .

Gold has been found, from time immemorial, in

many parts of the world . It isalways found in themetallic state, partly as native Gold, partly associatedwith the Ores of other metals . In Europe it is found

to the present day in Wales and Cornwall, on the

Rhine,in Switzerland, Italy, Hungary, Transylvania ,

and in the Oural Mountains in Russia ; the latter dis

tricts, more especially, furnish con siderable quantitiesof this most precious metal. In Asia, there are numerous regions where Gold has been found in abundancein ages gone by . It is undoubtedly still found thereonly our information of the exact localities is limited .

It is very likely that large deposits of it are hidden in

the remote districts now inhabited by roving tribe s

the Spread of civ ilisation may bring these stores of

mineral wealth to light many years hence .

Africa has always furnished Gold, and still contin nes to do so and if the climate and other circum

stances should ever permitapopulation ofthe Europeanspirit of enterprise to penetrate into the wilds of that

Continent, the sources from which the natives at

present obtain their comparatively scanty supply mightbe forced into yielding richer streams of the PreciousMetal.America and Australia now produce the far larger

portion of our fresh supplies of Gold . The older countries of the Western World that have furnished, andstill continue to yield Gold , are Virginia, North Carolina, and other States of the Union Mexico ; Central

America ; Brazil, Peru, &c . Nova Scotia and BritishColumbia also now contribute to our store ; but the

GOLD . 9

collective yield of all these countries together fallsfar short of that of California, which , from 1849 to the

present date , has given from eight to thirteen millions

pounds sterling per annum . Australia , whose richtreasures of the Precious Metal were discove red firstin 1852, is almost equally productive in Gold as the\Ve stern Coast ofNorth America.The probable exhaustion of these rich Gold fields

of the New World, within a more or less remote

period , is a matter of serious consideration . To say

that these fields are inexhaustible, would be evidently

wrong ; indeed, the so-called surface diggings have beenpartially exhausted already . Still the yield, with Slight

variations , continues at about the same rate, owing

chiefly to deeper digging, and Quartz mining opera

tions with improved Machinery ; and we believe we arenot far out in assuming that for the n ext fifty or sixty

years there will be a pretty constant supply of Gold

from these quarters . By the end of that time the

Gold deposits existin g in the South-Western portion of

North Am erica, in Patagonia, and in the yet un ex

plored regions ofAustralia, may become available ; notto speak of Asia and Africa, whose hidden m ineral

wealth may be reserved for future ages .

It is a question whether the now m ore or less

exhausted Gold fields of the Old World ever have

produced,or whether those likely to be discovered in

future in different parts of the earth , ever will produce

Gold at so rapid a rate as California and Australiahave done severally since 1849 and 1852. It is true

that the Sacred Writings speak of large quantities of

100 GOLD .

Gold in the days of King David and King Solomon ;also that the Spaniards for more than three centuries

drewconsiderable quantities of the Precious Metal from

Mexico, Peru,and other sources ; but there is no

"

e v i

dence to Show that the Gold-bearing districts ofAsia or

New Spain were ever so extensive, or were ever worked

in so energetic and systematic a manner as the n ew

Gold regions discovered within the last twenty years .

Certain Political Economists , more particularlyMichel Chevalier— whose work upon the subject has

been translated by Richard Cobden— have endeavouredto pro v e that Gold has of late been in excessive supply,&c . , and that it has accordingly fallen in value . This is a

moot point to which we shall have occasion to returnhereafter, in a special chapter on the supply, the usesand employment,and the consumption of Gold .

AS we have already observed, Gold is always foundin the Metallic State . Strictly speaking, then , thereare no Gold Ores , though the Gold is often foundassociated with the Ores of other metals

,as Silver

,

Copper, Tin , Iron , &c . The association here,however

,

is simply a mechan ical one , and the Gold is separated

readily enough, according to circumstances , either by

the metallurgic processes of roasting, fusion, re-roast

ing, fusion with Lead,and cupellation ; or, in the caseof rich Ores , by direct fusion with Lead, succeeded byCupellation ; or by the process of amalgamation . To

Obtain the Gold in a state of purity, the chemicalprocess ofRefining must ultimately be had recourse to .

The quantities of Gold Obtained from this source are

102 GOLD .

placers would be of comparatively but little value .

There are dry Placer Diggings— outhe sides of hills ,in ravines, in valleys , and in plains ; with pits many feetdeep , and tunnels many yards long, where Water hasto be conveyed by canalsand ditches . Some of thesewaterworks are stupendous enterprises of engineeringSkill . But there are also many others situated close to

rivers , where the miners have free access to water ;and others still that are actually in the bed of the

river, where there is too much water,and where it hasto be dammed out to permit profitable working of theauriferous deposit .WATER then is the great agent employed to wash

away from the aur iferous soil the earth , stones , and

rubbish the Gold, by reason of its great specific

gravity, subsiding to the bottom of the apparatus used

in the washing process .

A shallow TIN PAN, called at the diggings a pros

perlingpan, is the most primitive instrument in use

there ; a few shovelfuls of earth are thrown into this

pan , which is then immersed in water, and gentlymoved about . The contents of the pan are thereby

gradually converted into a kind of thick muddy

slush, from which the stones are then picked out,

and removed by hand, the Gold subsiding meanwhile

to the bottom of the pan . AS the process ofwashing

goes on,the dirt and sand are gradually washed away

,

until, at last, there remains only about a pint of thinmud in the pan . The washing is now continued withgreater caution , until there remains ultimately only asmall quantity of black sand, with glimmering bits of

GOLD . 103

Gold disseminated through it. Many a panful of

supposed auriferous dirt turn s out to contain nothing,or on ly the colour of Gold, which is the techn ical term

made use of among the diggers to express that only afew paltry grains of Gold have been found in a largemass of dirt . Where , as will also happen , the washer

gets hold of some rich auriferous soil, the momentwhen the Gold makes its appearance, may be with a

nugget or two shinin g out from amidst, is truly a mostexciting one .

Another Gold-washing instrument in use at thediggings is the CRADLE, a double-bottomed box, into

which the dirt and water are thrown to be rockedabout . The stones are picked out and ejected, thedirt gradually dissolves , the Gold subsiding to the

bottom . The pan and the cradle are used where noflowing water can be had .

With a constant supply of flowing water at command,our Californ ian and Australian Gold seekers use moree ffectiv e machinery . One of these superior washingapparatus is known as LONG TOM .

” Thi s consists of

abox, about twenty feet long by two feet wide at thetop

, and three at the bottom , held in an inclined posi

tion . The lower end of the box is made of perforated

sheet Iron , and below thi s is a ritfle box , which some

times contains Quicksilver (the r iflle bars which thisbox contains are made of wood, in the grain of which

the fine Gold catche s) . The water enters at the top ;one man thr ows in the dirt , which is washed by thestream ; another picks out the stones and the rubbish ,and atte nds to the prOpe r working of the machine

104 GOLD .

generally . The Gold is afterwards found at the bottom

of the apparatus and in the rifl e box .

“Long Tom ” has lately been superseded by

SLUICES. A sluice is a succession of wooden boxes ,each ten to fifteen feet long, to from one to fiv e feet

wide, through which a continuous stream of water

flows . A number ofmen work together, according to

the number of boxes and the length of the Sluice , which

varies from 50 to 1000 feet . The Gold remains at

the bottom of the sluice boxes , where it is caught by

false bottoms or r ifile bars and other contrivances .Quicksilver is used very exten sively in all Goldg Operation s . The larger pieces would be caught

without itsaid, but the fin e particles of Gold— sometime s se fin e as to swim on water— would escape , if theQuicksilver did not catch or retain them, through the

Amalgamation between the two metals . There areseveral ways of using Quicksilver in this process . It

is sometimes thr own in with the dirt, when it willdissolve the Gold on its way through the sluices ; or thelast washings are made to flow slowly over long Copperplate s , coated thickly with Quicksilver ; when the fineGold will adhere to the Quicksilver, the Copper platebecoming encrusted with the amalgam, which is then

removed from time to time , and the Copper plate prepared afresh. Every four or fiv e days , the whole

sluice is cleaned up , i . e . , the Gold is taken out which

has collected dur ing the time in the crevices and rifl eboxes . The wooden Sluice boxes can be moved about

as occasion requires .

The supply of wate r is derived either from a

106 GOLD .

to tear asunder the earth and rock, and charges of

from 10 to 200barrels of powder are fir ed at a tim&For the eager greed of man for wealth shrinks not

from employing the fiercest agencies that fire and

water can place at his command to force Mother

Earth to yield him her treasures . This gigantic

hydraulic process is generally employed on moun tainous

districts , where water is abundant . A large number

of men band together to carry on the operations , as

the expenses are great, and the work is a work of

tim e, requiring con siderable attention, and a mostsystematic division of labour .

The Gold which is thus found in the loose ground

at the surface , and down to a depth of several hundred

feet, was not there originally . We find that the larger

or smaller particles of the Dust, and even the largeheavy Nuggets, are more or less rounded off; their

original and sometimes fantastic shape has lost itssharpness of outline . This is n o doubt due to theaction of water, which, aided perhaps by convulsivedisturbances of the surface crust of the earth , has, inflowing over the ground washed by it, torn the Gold

from its hidden beds, and, in carrying it away to distant parts , has rolled itabout for a considerable time ;until the metal has ultimately subsided, together with

the disintegrated rockand rubble of the floating mass,which constitutes the general deposit through which

we find the precious metal disseminated more or lessCopiously or sparingly .

This Gold came originally from Quartz , found to

exist in veins of varying thickness and extent, in the

GOLD . 107

mountainous and other districts of the aur iferous

regions . It is evident, from looking at a piece of Gold

bearing Quartz , that the whole mass , at sOme time or

other, must have been in a state of fusion . The Goldlies in streaks and veins , in smaller

'

or larger portions,with jagged ends, between the layers of the stone ;filling, in fact, some of the crevices which the accidents

of the fusion and subsequent solidification have caused .

In some kinds of auriferous Quartz we find the stoneintersected by soft veins of earth , and in a porous

state ; whilst other kinds show a very solid and hardstructure . The action of the elements , however,ultimately disintegrates and decomposes the Quartz,gradually reducing the mass to sand ; and the Goldoriginally imbedded in the rock in streaks and veins ,and flakes

,spangles, and lumps, is washed out and

carried away by the water flowing over the ground,whi ch, by rolling it about over considerable distances ,and for a long tim e , wears and rounds it, as just now

mentioned, into the Shape in which we find it as Gold

dustand nuggets .

Q UARTZ M ININ G is now the most general, as it is

also the most profitable, way of obtaining Gold.

Very soon after the first explorations of Placer

mines, the Gold-bearing veins of Quartz rock were

discovered . Some of these crop up at the surface, and

show the Gold others lie hundreds of feet below the

surface ; andall the ordinary contrivances ofminingby pits , Shafts , and tunnels

— have to be resorted to , to

raise the Quartz to the surface . Some of the rock is

108 GOLD .

very rich in Gold, a hammer cleverlyand vigorouslyhandled being sufl cient to separate the lumps or veins

of Gold ; the far greater portion, however, is poor incomparison,and in some parts the sharpest eye wouldbe unable to detect the presence of Gold . Yet eventhese still contain minute quantities of the Precious

Metal ; and if a ton of 2000 lbs . will yield even one

ounce ofGold, it pays well to work it out.

When the Quartz has thus been brought to the

surface , the Gold seeker has , in the first place, to performan indispensable preliminary work, which in thePlac er mines he finds already done for him by Nature .

The stone has to be crushed and pulverized . From

the sand thus obtained the Gold is then extracted, by

washing with water, on pretty much the same prin

ciple as in Placer min ing, and by the cepious use of

Quicksilver .The CRUSHING MILLS, or QUARTZMILLS, as they are

called, vary greatly in construction . The Arrastraof

the Mexican settler is the most primitive form . The

Quartz is fir st broken with the hammer into small

pieces , which are then thrown into the mill—aroundtrough , measur ing ten to twelve feet in diameter— in

which four heavy granite blocks are dragged round by

means of an axle driven by a mule .

The modern Californian or Australian mill is a v ery

superior affair . Steam or water power sets in motion

m ill stones, or heavy iron balls , or sets of stampers .The washing apparatus , the amalgamating contri

vances, and all the rest of the elaborate machinery,

are of the most appro v ed construction ; everything

1 10 GOLD .

dust, in fin e flakes and spangles, and grains like sand,and in small pieces of the size of a pea, and nuggets

of larger dimensions , up to lumps weighing several

ounces , and even several pounds each . It is heavy ,soft native Gold, of a somewhat dull golden lustre .

Where the article has been obtained by the amalgamation process , employed both in Placer Mining and

Quartz Mining, it appears in the form of lumps , from

one to six inches diameter, having a greenish lemon

colour ; they are hard and brittle, and spongy-looking,which is simply the consequence of the preceding amal

gamation of the Gold with Mercury. In both forms thi s

article is marketable,and the owner can get his pricefor it from the Dealer and Banker at the diggings ,within one-half to one per cent . of the actual value , adeduction to which the Miner or Quartz miller may

well cheerfully submit . But this Gold is not yet

Bullion in our sense of the word its exact value to a

penny in a thousand pounds’ worth cannot be properlyascertained until it is melted and assayed . These pro

cesses , by which we may ascertain to a fraction how

much Coin the article will produce, wi ll be described

hereafter.The parcels of Gold dust, &c . , or of Amalgam

Gold, thus sold to the Dealers and Bankers at the

diggings , vary considerably in quality and price,

according to the different localities that have furnished

them . Some descriptions are worth 80s per ounce ,whilst others will only fetch 503 per ounce . We shallhereafter take occasion to show the causes of these

differences .

CHAPTER VI.

SILVER.

ILVER ranks next to Gold in the class of Noble

Metals , though Platinum and its kindred metals

are less liable to alteration, and less subject to the

influence of chemical agents . But Silver, on the other

hand, possesses many most valuable properties whichthe metals of the Platinum group lack altogether ;moreover, their great scarcity must always prevent

their employm ent for the principal uses and purposes

to which Silver is turned .

With the exception of polished Steel, perhaps ,Silver is positively the brightest of all metals , itsdazzling white brilliancy exceeding even the splendid

lustre of Gold, though it must yield to the latter in

warmth of colour . A highly-polished surface of Silver

will reflect lights and shades with greater effect than

the brightest glass mirror .Although Silver is unalterable in pur e air , and not

afl'

ected by moisture, and refuses to oxidise at any

temperature , it is subject more or less to the action ofa number of chemical agents that make not the least

1 12 SILVER.

impression upon Gold . Silver hasamost powerfulattraction for Sulphur it will, therefore, speedily

tarnish in an atmosphere containing even the slightest

traces only of sulphuretted hydrogen gas , a brown or

brownish black film of sulphide forming on its surface,which film , however, protects the Metal from further

action of the gas upon it.

Vegetable acids leave Silver entirely unafl'

ected,

but Nitric, Sulphuric, and Muriatic acids— e specially

the two former— d issolve it. Nitric acidwill do so even

when diluted and in the cold ; Sulphuric acid requires

theaid of heat to promote its dissolvent action upon

the metal. Hydrochloric acid attacks Silver but little .

Silver forms numerous compounds with Oxygen,Chlorine , Iodine, Cyanogen, Sulphur, Mineral Acids ,Organic Acids, &c . The well-kn own lunar Caustic ,which is extensively used in Medicine and in Photo

graphy, is simply crystallised Nitrate of Silver.It is its great afl nity for other bodies which

accounts for Silver being so rarely found in the native

state . It is obtained chiefly from Ores .The specific gravity of Silver is 105 . It fuses at a

temperature of about 1860-1870degrees Fahrenheit .Its malleability is very great . It cannot be beaten

out so fine as Gold indeed ; still, one grain of it can be

flattened to cover a Space of fifty square inches , or

drawn into a wire 130 yards long . Its tenacity isonly inferior to that of Iron , Copper, and Platinum a

Silver wire inch in diameter will bear a weight

of Avoirdupois without breaking .

Pure Silver is a little harder than Gold , but still

1 14 SILVER.

of Peru, Chili, and other parts of South America arestill in working, but they furnish at present only

moderate quantities of the Metal.Mexico now holds the first rank for the supply of

Silver to the World . The Mexican Mines are exceedingly rich their yield was very large

,more especially

during the last century, when it exceeded occasionallyper annum . The supply declined in the

period from 1828 to 1840 but it has sin ce thenagainreached, and even exceeded, the high figures of formertimes .

Within the last fiv e years Mexico has found a

rival in Californ ia, and in the n ew North AmericanState called Nevada . Num erous Silver mines , yielding

Ores of great richness have been discovered in these

quarters , and from three to four millions sterling worth

Of Silver have been brought to light annually . The

supply from these fresh sources is likely to become

very considerable .

Thr oughout the range of the Rocky Mountains

from British Columbia down to Cape Horn— Silver is

known to exist .

Australia also furn ishes Silver, and is probablyasrich in deposits of it as California has lately turned

out to be . This will be made manifest in the next

few years .

The processes of Mining for Silver are pretty

nearly the same asall other Mining operations . The

Ore lies at various depths , and has to be brought tothe surface of the ground in much the same way asother minerals . Native Silver Ore occurs occasionally ;

SILVER. 1 15

some of the Peruv ian Silver, for instance , has beenfound in that state ; and in the differen t mining localities specimens of the metal are found, in greater orsmaller lumps , or in veins and flakes mechanicallycombin ed with the Ore . Silver is also often containedin native Gold ; also in Copper, Antimony, Lead, andother metals , extracted from Ores by smelting .

The Ores of Silver, from which , as already stated ,the greater quantity of the metal is derived, are verynumerous . The Sulphide of Silver Ores are therichest . The ruby Silver, which is frequently fOIm din the crystallized state , is the most valuable of these ,containing from thirty to sixty per cent of the metal.

There are also certain Sulphide Ores found in which

the Silver is associated with Gold , Copper, Ir on , Zinc,Ar senic, An timony, Lead, Bismuth . Some Ores arevery poor indeed, containing perhaps only one-tenthor one-twentieth per cent . of Silver; yet their r eduction

pays .A description of the roasting, smelting, and other

processes and operations practised to procure the pureBright Metal cannot well be given here . The subjectis too exten sive ; but ample information may be ob

tain ed from the many valuable works specially devotedto it. In Germany, more particularly, the reduction

of poor Silver Ores has become a scientific industry of

very high standing .

Here the foregoing brief indications will sufl ce for

our purpose,and the reader must imagine himself nowin presence of a cake of Silver,— say a jagged piece ,measur ing about one foot round,and three inches deep

1 16 SILVER.

in the centre ,—or of rough bars of Silver, about ten

inches long,by four wide and four deep, turned out of

an iron mould ; or of lumps of Chinese Sycee Silver,resembling in form and Size the Shoe of a Chin ese lady .

These vari ous pieces mayall of them be valued in therough ; but remelting, weighing, assaying, and other

manipulations are necessary, to convert them into

Bullion proper.

1 18 BULLION .

and their known quality, yet to determine their exact

Metallic Value correct to a fraction it is indispensableto melt the material, intermix the mass by stirring,then cast it into Ingots , and assay and weigh these .

We accordingly restrict the application of the termBullion here to Ingots of Gold or Silver ofall sizes,and to masses of Gold or Silver Coins , from the

quality and weight of which we calculate their valuein Pounds , Shillings , and Pence, Francs and Centimes,Dollars and Cents , as the case may be .

Bullion in Bar s weighed, assayed, and wi th an

exact statement of its value affixed, is held by the

State Banks or Mints , to be manufactured into Coin ,whenever necessary .

Bullion is the solid international Medium of Ex

change ; and the large Exchange transaction s ar isingfrom the balances of trade between Nations , are settled

chiefly by the transm ission of uncoined Bullion from

the one to the other . It is obvious that Bullion in

Bars is the most suitable form for this purpose, and

that it is , on the whole , cheaper than Coin, whichinvolves the expenditure of Coinage,— at all events tothe Nation issuing it ; and whi ch is liable moreover toabrasion , and consequent loss of weight, &c . TheNation receiving the Bullion cares little for the formin which it is sent , so long as it contains a certain

quantity of Gold or Silver charged at the value of

these materials in the country where the Bullion isreceived . Therefore , whether we , in England, receive

Gold Coins from a Foreign country— which , as theyare not current here , we have to melt down into Bars ,

BULLION. 1 19

to coin Sovereigns of them— or whether we receive

Bars of Gold, which realise precisely the same valueas the melte d Coin , the result is the same to us . TheForeigner, who has to furnish us with a specificamount in Pounds Ste rling here, may find it cheaperto send us Bars instead of Coin .

The great bulk of this international Bullion busin ess is consequently carried on by Bullion Bars .The difference of value between Bar s and Coin is,

however, very small ; and, frequently, when the Coins

are quite new, they answer just as well as Bullionin Bars . In some coun tries , also , Bars are occasionallyscarce, and Coins must be sent .The manipulations of melting, weighing, valuing,

assaying, refining, and coining Bullion, will be explained hereafter.

From the Weekly Returns published, it appears

that the Bank of England generally holds , at present,say in Bullion . This is all in Gold,chiefly in bright yellow Bars — (The Bank but rarely

holds Silver Bullion) .Twenty Millions Sterling in Gold, if we take the

av erage weight of at 21 lbs . Troy, or about1 7% lbs . Avoirdupois , would represent a mass of

lbs . weight, or 1 75 tons of lbs . each .

Taking a four-horse waggon to carry fiv e tons, itwould

require thirty-fiv e waggons of the kind to cart awaythe 175 tons of Gold . Supposing each man of them to

be able to run away with 100 lbs . weight, orit would take robbers to carry off the treasure .

120 BULLION.

A cubic inch of Gold weighs about 10oz . Troy,and,atan average price of£4, is worth £40. Thetherefore , would fill a space of cubic inches,or about 290cubic feet, which is equivalent to a room

six feet square by eight feet wide.A recent estimate values the total amount of Gold

now in the hands of man— in Coin, Ornaments ,Utensils, and otherwise—at about millionsSterling, or 300 millions ounces, or thirty millions

cubic inches . This would give a block containingsome cubic feet, measur ing about 26 feet each

way, and weighing tons of lbs . each .

A Bar one inch thick by one inch wide could bemade of it two and-a-half millions feet, or 500m ileslong . This Bar might be drawn into a wire, morethan one-twentieth of an inch thi ck , mileslong, which is the calculated distance from the Earth

to the Moon ; and inch diameter is a pretty stout

thickness for a wire . One grain of Gold can be drawnout into an almost invisible wire some 600 feet long ;one ounce would thus give about 55 m iles of wir e ;and the whole mass , consequently, millionsm iles of wire — and the distance from Neptune to the

Sun is only millions m iles 1Supposing the to be cast in a

single plate one-twentieth of an inch thick, thi s platewould measur e about square feet ; sayfeet long by feet wide . Estimating very thin

gilding at two millions films per inch thi ck of Gold,the quantity in the plate would suffice to cover about

millions square feet, about square

CHAPTER VI I I .

MELTING or GOLD AND SILVER.

LTHOUGH the melting, or fusion, of the

Precious Metals presents no special features

requiring a minute description of the process in all itsparts, yet a few practical details cannot but proveuseful to those who have to deal with Bullion .

The quality of Gold dust and Amalgam Gold isgenerally known to a comparatively small fraction ; still

the article has to be melted to be assayed in the mass .It is the same with Silver ; moreover, although this

metal is generally sent from the furnace at the Minesin a solid state , in some form or other, it .has to be castinto a properly-Shaped Bar, to suit the machinery used

at the Mint .

Broken-up Gold Jewelry and broken and batteredSilver Plate are collected by dealers , who melt thearticles when they have a sufficient quantity, and determine the exact value of the Gold or Silver in the Bar

or Ingot cast with the Metal. Foreign Coins of

variable and doubtful quality, when imported as

Bullion, have also to go into the melting-pot . SomeForeign Gold Coins (French , American , Russian, &c .)are known to be always of the same quality,and are

MELTING or GOLD AND SILVER. 123

bought by weight , without melting . But where the

piecesare intended to be recoined here, they must, ofcourse , also be melted down .

Jewellers and others in the Gold and Silver

business , who have to deal only with comparatively

inconsiderable quantities of metal, do their melting in

small ovens or gas furnaces . But where Bullion has to

be melted in masses , for Banking and Minting purposes ,the furnaces are built in rows , or ranges , generallyagainst a wall of the building, which carri es the fines .The lower portion , reaching to a height of about

two-and-a-half feet, projects from the wall, and is

formed of an iron casing, enclosing the hearth or pit

of the furnace—asquare pri smatic cavity, lined withfire bricks , from twelve to twenty-four inches wide , by

about thirty inches deep . Some six to twelve inches

from the bottom of the pit are placed strong , moveable

fire bars undern eath them is the ashpit, with a large

Opening in front of the casing . The top of the casing

carries an horizontal iron ledge, from eight to twelveinches wide , on which the moulds are placed, andwhence the melting pot is lifted in and out. Fr om the

back of this ledge the casing runs upwards at an angle

of forty-fiv e degrees , some fifteen to twenty-fiv e incheshigh, until it touches the wall carrying the flue . A

square opening is made in this piece of the casing, ofthe same width as the furnace pit, and placed right

over it thr ough this Opening the fire is kept up,and

the melting pot inserted . It is closed by a moveable

iron shutte r, provided with a handle , and running inhorizontal grooves .

124 MELTING OF GOLD AND SILVER.

The crucibles, or melting pots, now in generaluseare made of Plumbago (Black Lead) the best and mostdurableare manufactured in London . Theyare ofaconical Shape, wide at the rim , and narrowing toaflatbottom .

The material to be melted— Gold dust, Coin,Lumps, Bars, or Ingots of Gold or Silver— (of whichan account has previously been taken at the Office, and

which is sent in to the furnace room accompanied bya ticket giv ing the marks and the number of the Barsto be produced)— is put into the crucible . Bars or

Cakes of Silver requiri ng remelting, are broken intopieces fir st with heavy hamm ers , or with steamhammers and cutters .

The melter then proceeds to throw a shovelful oflive coke on the bars of the fur nace, and places the

charged crucible upon them, covering it with a Plum

bago top . He then fills the Space around with coke ,up to the top, and closes the iron shutter . The strong

dr aft and the roar soon give evidence of the rising fire .

Meantime the melter cleans the iron mould inwhich the metal is to be cast . For Gold, the mouldsare Six to ten inches long, by two to thr ee inches wide,and about two inches deep inside ; they are narrowerat the bottom, to let the Bar come out easily . Themoulds for Silver are larger, measuring from twelveto eighte en inches in length, by four to Six inches inwidth, and Six to eight inches in depth . They are also

narrower at the bottom, for the same reason as the

moulds for Gold .

The moulds must be perfectly clean and dry they

126 MELTING OF GOLD AND SILVER.

with his protected hand,close to the glowing mass ,

and Slowly and deliberately lifts out the white-hot

crucible with the other hand . With only some 200

ounces or so of Gold this is no difficult task ; but it isa very different affair when a weight of some or

ounces of Silver has to be lifted in this fashion ,in which case the assistance of another man is

generally needed ; a crane is also often used .

Placing the pot on the°

ledge , a little away from theside of the mould, the melter holds it until another

man grasps it Sideways with another pair of tongs

with concave jaws . With his gloved handagain closeto the pot, and the other hand holding the longer end

of the instrument, the melter slowly inclines thecrucible, and pours the molten mass into the mould,until the last drop is tilted into it.

When the cast is set— though still red-hot— the

mould is turn ed over, the bar tumbles out, and is lifte d

or dragged away over the iron floor .

The floors of the melting house are made of iron ,as an efl

'

ectual safeguard against the loss of any of

the precious metal from Spilling, in the event of an

accidental cracking or upsetting of a crucibleaccidents which will occur occasionally, though rarely .

Nothing can equal the beautiful appearance of a

molten mass of Gold or Silver . Looking down in tothe crucible , the liquid Gold appears floating about at

a heat near dazzling whiteness . The prevailing light

is that of the heat but the eye , after looking at it forsome moments , can clearly distinguish the surface of

the metal. Now and then its yellow golden nature

MELTING OF GOLD AND SILVER. 127

will reveal itselfby sudden flashes ; streaks of prismatic

colours seem to travel over it ; then bright green willShow, even through the intense whiteness of the light .

Light blue will be seen , streaked with red ; but golden

yellow and green are the principal colours that are

seen flashing through the white burn ing rays . Whenthe golden mass is poured into the mould in a stream ,

the surface at first seems to heave and dance . AS the

white heat goes down , the coloured lights become

more di stinct . When the mass has set hard, andis tumbled out still red-hot— the surface shows

changing patches of green and red, which are nowand then outshone by the lightning flashes of the

metal; a little after this, the Gold coating becomes more

distinctly visible ; letting the red rays pass through asthrough a curtain . The red heat gradually loses itsintensity,and Shortly after, as the red deepens more

and more,and fades away, the bri lliant golden sides ofthe Bar or Ingot shin e in all their quiet glory . Thiseffect is particularly observable in fine Gold, which

always sets bright and pure . With Gold rather largelyalloyed with inferior metals , the Bar is apt to get

tarn ished on the surface , by films of oxide forming

on it ; steeping in an acid solution will remove this

coating, and bring out the Gold .

Molten Silver in fusion looks equally beautiful; blue

and violet colours Show during the melting, pouring

out, and cooling, intersected with Silvery flashes ; and

the contrast, towards the end of the process , between

the dark redand the bright curtain of Silver through

which it Shines is stillmore marked than it is with Gold .

128 MELTING or GOLD AND SILVER.

When the Bars are cold, they are taken to thestamping room , where a mark and number is impressedupon them .

We shall hereafter have occasion to see what isdone with the Bars after they leave the stampingroom . As regards our present purpose, we have nowbrought Gold and Silver to the stage where thesePrecious Metals, in the Shape of saleable Bar s, areBullion— in our sense of the word .

Bars occur ofall sizes and Shapes . The Californianand Australian Bars re semble square bricks and halfbricks of various Sizes . The ordinary English Bartapers towards the bottom . AS a rule, our English

Golden Bars do not exceed 200 ounces in weight ;our Silver Bars oun ce s .

The fusion of Bullion is always attended with asmall loss of weight, especially where the Alloy is of

inferior quality. The lower Metals are apt to sufferpartial oxidation in a state of fusion ; and overheatingthe mass will occasionally lead to slight evaporation .

The decrease of weight arising from these causes may

be from one-twentieth per cent . to one per cent . but

as the loss suffered is chiefly confined to the Alloy, itis not actually so great as it appears , the quality or

fineness of the Metal being correspondingly improved

thereby .

Particles of Gold and Silver will also occasionallyadhere to the melting pot . When the pot has cooled,the inside of it is scraped down , and the Plumbagopowder washed away from the Metallic particles

,which

are then either handed to the owner of the Bar,or

130 MELTING or OOLD AND SILVER.

Tower Hill ; Messrs . Johnson and Mathey, Hatton

Garden , 850.

The following are the melting points of some of

the principal metals , according to the best authorities

on the subjectDegrees of Heat.

Tin 442 Fahrenheit .Bismuth 497

Lead 612

Zinc 773

Silver 1873

Copper 1996

Gold 2016

Cast Iron 2786

Platinum will only fuse before the oxy-hydrogen

blow pipe .The London charges for melting Bullion are : For

Gold bars cast of Coin , 1d per ounce ; cast of Golddust, -}3d per ounce ; for Silver, 12s 6d for oun ces ,or figd per ounce .

CHAPTER IX.

PURE GOLD AND SILVER, AND ALLOYS OF THEM WITH

OTHER METALS.

HE Gold and Silver which we meet with in ordi

nary life— in the Shape of Ingots , Coins , Utensils ,Ornaments, &c .

— differ considerably in quality andintri nsic value . Many people apply the term Gold orSilv er indiscriminately, and without regard to differencein quality, to all articles made of what is called goodGold or good Silver. Others , who , better informedupon the subject, kn ow that there are different sorts of

Gold and Silver, have recour se to certain trials or tests,toascertain the true quality of the metal. This is thebusiness, more especially, of Jewellers and Goldsmiths .

Bankers and Bullion dealers , and the Maste rs and

Managers of State Mints , have to examin e the Precious

Metals submitted to them still more closely and

accurately, and to determine their true value to the

minute st fraction .

Absolutely pure Gold and Silver are elementarybodies , belonging to the domain of Chemistry , which

cannot possibly present the least difference in quality,from whatever source they may have been derived, and

by whatever process they may have been brought to a

132 PURE GOLD AND SILVER, AND

state of absolute puri ty . Take Gold dust or nuggetsfrom California, Australia, or the Oural mountains , orfrom any other part of the Globe where the article isto be found ; take Golden Coins of any sort, orbroken Jewelry, and extract from these different

articles severally the pure metal, by the chemical pro

cess of Refining (which will be described hereafter),and youwill be unable to detect the slighte st difference

between the produce obtained from the different

sources . Youwill find that all the samples presentidentically the same properties . It is the same withSilver.

When the scientific chemist speaks of the ele

m entary bodies— Gold and Silver— he refers invariablyto the absolutely pure Metal. A Sov ereign , for

instance , which is Gold to us, is not pure Gold in the

chemical sense of the word . Pure Gold is not suitablefor Coin ; it is too soft, and too much liable to lossfrom wear by fri ction . It is, therefore , customary toimpart to it greater hardnessand more power to resistfri ction (to which money is continually subject), by

fusing it together with certain proportions of other

and harder metals ; or, as it is technically called, by

Alloying it. When thus m ixed or Alleged, it is, as a

m atter of course, no longer pur e Gold. In analysing a

Gold Pound Sterling,we find, for instance, that divided

into twenty-four equal parts by weight, twenty-two ofthese fractions consist ofpuf

re Gold, and the remain ing

two of Copper or Alloy . Accordingly, one-twelfthpart of the Coin is notGold .

French 20-franc Gold Pieces contain e ighteen


Pure Silv er isalso too soft for ordinary uses , andrequires alloying with other metals in pretty much thesame mann er as Gold .

Now, where does the pure Gold come from ? IS the

metal ever Obtained in astate of purity in California,or in Australia, or in any other of the Gold-producing

regions P To thi s question, a reply must be given in

the negative . True, we hear Californian and Australian

Gold dust and nuggets sometimes qualified as v irgin

Gold ; but if the word Virgin is meant here to standfor pur e , it is decidedly a misnomer .

We have already described how the Gold is

worked out from the Mines and Diggin gs . We may,therefore, at once proceed to inquire here into the

respective quality and value of the different descriptions of the metal as found in the Gold-bearing dis

tricts. There we find that the various sorts of the

native Metal coming from the Mines or Diggings

differ just about as much in quality as Gold CoinandJewelry do . The Gold is, in fact, generally found

alloyed or associated with other metals, more especially with Silver ; but also with Platinum, Iridium ,

Iron , Antimony, &c .

The Australian Gold dust is the purest. In somelocalities it is found to contain as much as ninety-nineper cent . of Gold to one of Silver ; in others eighty

per cent . of Gold to twenty of Silver .Californian native Gold contains from ninety-six

per cent . down to seventy per cent . of pure metal.South American fi’

om eighty-fiv e per cent . down tosixty per cent .

ALLOYS OF THEM WITH OTHER METALS. 135

We believe a few Specimens of pure native Goldhave been found in Wales ; but the quantities of these

are infin itesimally small compared to the vast bulk of

the Metal obtained in other parts of the World. As

a matter of course , the value by weight of the severaldescriptions differs in proportion to the per centage

of pure Gold respectively contained in them .

Silver, in the metallic state, supplied from the

Mine, or the smelting furnace, is also more or lesslargely associated with other metals, such as Lead,Tin , Copper, Iron, &c . ; also occasionally with small

proportions ofGold .

We have then to look upon pur e Gold and Silversimplyas elementary bodi es that can be obtained onlyby chemical agencies from the native Metals

,or their

Alloys and Compounds . And some people will evenmaintain that there is no such thing in actual existence

as chemically pure Gold or Silver, the Precious Metalalways retaining some minute trace of impurity, however repeatedly and carefully it may have been refined.

Be this as it may, the purity or fineness of the Gold

we have to deal with is sufficiently absolute for allpractical intents and purposes, even where the impurity in the article exceeds one in ten thousandparts .In commerce we sayfine in lieuof pur e ; when we

Speak comm ercially offin e Gold or Silver, we mean

metal of the highest degree of purity attainable by the

best processes of refining, and sufficiently pure, atleast, for all practical purposes .The reader will please to bear this definition in


mind, asall our valuation s of the Precious Metalsandtheir Alloys have reference to the term fineness, asused in the acceptation here defined .

We will now give the per centage composition of afew vari eties of native Gold

SPE C IMENS

FROM CENTRAL AMERICA.

FROM PERU , CHILI, &c.

FROM THE BRAZILS . FROM AFRICA.

Gold GoldSilver . SilverOther impuri ties Iron

FROM THE OURAL AND SIBERIA.

Gold .

SilverCopperOther impurities

FROM CALIFORNIA.

Gold .

SilverIron

138 GOLD AND SILVER, AND THEIR ALLOYS.

which contains about fifteen or Sixteen per cent . of

Silver, to thirty-fiv e of Arsenic, forty-four of Iron , andfour of Antimony ; Tellur ial Silver, with about sixtyper cent . Silver ; Silver Am algam, which containsabout thirty-fiv e per cent . Silver, and Sixty-fiv e of

Quicksilver .The Silver obtained by smelting Silver Ores often

contains , as has already been stated,— Gold, Copper,Lead, Antimony, Bismuth, and a variety of otherimpuri ties .

CHAPTER X.

TESTING AND ASSAYING RULLION.

HE Metals with which Bullion and Coinage Goldis generally found Alloyed are Silver and Copper .

Silver is the natural Alloy ; Copper is melted with the

Gold by the Mints , as it is a harder metal, and rendersthe Gold more suitable for the purpose of Coinage .

Pur e Gold is of a peculiar bright yellow colour ;its alloyage with Silver gives it a paler greenish tint .Copper deepensand reddens the natural colour of theGold with which it is Alloyed . Gold intended for

Jewelry and Plate is Alloyed with Tin , Aluminium,

&c . ; but for Bullion proper and Coinage Gold theonly two Alloys coming under our notice here are

Silver and Copper.

Silv er may be Alloyed also with other white Metals ;but the only Alloy used for Coinage Silver is Copper.The usual proportion of this latter metal contained in

Mint Silver does not affect the white colour of the

Silver in any perceptible degree .Now let us suppose that we have before us a Bar

of Gold, say of about 200 ounces weight— in shapesomewhat like a large cake of chocolate— and we wantto know its exact value . The fir st thing to be done,

140 TESTING AND ASSAYING RULLION .

is to weigh the Bar accurately toagrain , after this itsfineness has to be ascertained, and from the data thusobtained, we have to determin e the exact intrin sic

value of the Bar to a fraction . The specific we ightand the colour of the article Show that it is Gold ;for confirmation we resort to the application of a

Simple chem ical test : we scrape the surface of the Bar,and apply strong Nitric Acid to it. The fact that nodiscoloration takes place is a proof that the Metal isGold . The colour may be nearly like that of pureGold, or it may look a little pale , showing the presence

of Silver ; or it may look a little reddish , indicating

the presence of Copper ; or both Shades may beapparent to the practised eye .

Ifwe are certain that the only Alloy in the piece isSilver or Copper, we may make a kind of rough Assayby specific gravity simply . The Bar is weighed forthat purpose , first in the ordinary way, then in di stilled

water . From the specific weight thus ascertained, we

calculate the respective quantities of Gold and Silver

(or Copper) in it.

From the great difference between the specific gra

v ity of Gold and that of Silver and Copper,a rough

estimate of this kind is practicable for Gold alloyedwith Silver or with Copper, although even the result

may be inaccurate to the extent perhaps of several percent . But where we have to deal with the presence

of both Silver and Copper, a rough estimate by this

Simple means is impracticable , as there is no verygreat difference between the specific gravity of the one

Metal and the other (Silver Copper Where

142 TESTING AND ASSAYING RULLION .

n eedles) of kn own composition, varying in finenessfrom pur e Gold, 23 carat Gold, &c . , down to the lowestsort . The tester selects those which , in his judgment,are of about the same quality as the piece of Metal tobe tested, and he makes strokes with them on the

Stone, alongside the stroke made by the article under

examin ation . The action of the Acid upon thedifferent strokes enables him to judge of the com

parativ e degree of fineness of the latter .It is said that the Bullion merchants in the Indian

Bazaars are the greatest adepts in thi s method of

testing Gold, seldom failing to ascertain to within one

half per cent . the exact value of the article tested . In

Europe Jewellers and others use the Touchstone onlyfor the very widest tests— generally , merely to ascertain whether a certain Coin or Ornament is Gold ; butfor Bullion Operations , in which an exact valuation tom1-

6-

oth part is required, it is of no use .

Silver cannot be tested by the Touch Stone . Thesurface of a supposed piece of Silver may be tested by

applying a drop of Nitri c Acid to it ; if the Acid turns

black on exposur e to light the surface is Silver ; if it

turns green, or grey, or white, with evolutions ofminute

bubbles ofair , it is not Silver . Where articles are merelyplated with Silver, the part to be exam ined must firstbe scratched or filed before the Acid is applied .

These primitive modes of trying the fineness of

the Precious Metal in Gold or Silver articles, do

not give results sufficiently accurate for business pur

poses . In Bullion and Coinage operations we have

to determin e the quality of the Gold or Silver Bars

TESTING AND ASSAYING RULLION . 143

to the minutest fraction ; this we effect by Assayingthe Bar . The business ofmaking Assays is now con

ducted by Special Assay Qfiioes, where the operatorshaveall the necessary apparatus at their command, toascertain the precise quality of a Bar from a samplepiece sent to them for Assay . TheseAssayOfiices forma special branch of industry in conn ection with the

Bullion business . All that the Bullion dealer has to

do is to cut off a piece from the Bar he wishes to have

Assayed, and to forward it, to the Assayer , who, afterOperating upon it, will return the same, wi th an exact

statement of the fineness of the Metal. The chargefor making these Assays varies from one to fiv e

Shillings, according to the nature of the Assaywhether it is for Silver or for Gold, or whether it isasingle, a double, or a tr eble Assay .

A small piece the Size (though not the Shape) of a

peais, with a chisel and hammer, chipped off the Bar

of Gold to be Assayed, which has a letter and number

stampedupon it. Gold is a softmetal, which easily yields

to sharp steel. The chip is sent to the Assayer, folded

up in apiece of paper, about eight inches long by thr eewide , which has marked upon it at the top, in wri ting,the letter and number of the Bar. The Assayerreturns the paper in due tim e, with the report of the

Assay written upon it, Showing the exact quality ofthe Bar. The Assay piece is return ed folded up inthe paper, not in the same state, of course , in whichit was sent, but cut up, and some of it rolled into

strips , showing thereby that thearticle has been sub

jected to the Nitric Acid process .

144 TESTING AND ASSAYING RULLION.

Although the pieces Assayed are comparatively so

small, so minute and certain are the manipulations,and the scales employed by the Assayer SO delicate ,that mistakes very rarely occur . Still, double ortreble Assays are frequently made for greater safety,or a second Assayer is employed, to ensure an efiicientcheck upon the operation .

It is, of course , absolutely indispensable that theBar to be assayed Should be properly and uniform ly

melted, so as to ensure the,

same composition thr ough

out. Otherwise it might chance to differ in fin eness

in different parts of its mass . Frauds might also be

committed by dishonest parties ; the interior ofthe Bar

might be Iron, or some other inferior metal, with the

Gold or Silver cast around it. Bullion dealers know

well how to guard against such contingencies . The

Bank of England, for instance, will not buy Gold Barsunless melted, or re-melted, by melting houses Specially

employed by that establishment . The seller accord

ingly takes his Gold there to have it melted and castinto a certain Shape (Bank of England shape,as it iscalled), and stamped with the Bank melter

’s mark,

which serves as a guarantee that the Bar is really what

it purports to be .

There are certain English , French , Australian ,Californian , and other foreign melters , whose stamp isknown ,

by experience, to be equally safe ; and between

dealers who know each other, purchases and sales aresometimes made on the faith of the same .

Persons not acquainted with this business are apt

to imagine that many ingenious frauds might be com

CHAPTER X I.

METHODS OF EXPRESSING AND REPORTING THE FINENESS OF

BULLION .

HE manner in which the ascertained fineness ofBullion is reported is not universally the sam e .

There are two principal system s in vogue— one ,the English and German Carat system ; the other,the modern French and Ameri can Decimal system .

The latter is the better and easier of the two , asarithmeticians well know .

The Carat is an old-fashioned weight derived, in

olden times , from the average weight of a certain

description of beans , but entirely out ofuse at present ,except for Diamonds . (Six carats are equal to nineteen grains Troy weight .)We do not weigh Gold by the Carat, but the

Assayer reports the fineness of the Gold examined byhim in Carats . The Carat serves as the Integer or

Un it ; it is divided into four grains , subdivided againinto fractions of one-eighth each . In fact , the Gold

Carat is simply a nominal we ight.

“E

In Hamburg the Assay weight for Gold is the Mark div ided

into 24 carats of 12 grain s each, with fractions of grain . For

Silv er , it is the mark div ided in to 16 loths of 18 grains each, with

THE FINENESS OF RULLION . 147

A piece of Gold reported by the Assayer as twenty

four Carats fin e is pure orfin e Gold . There can be noGold twenty-fiv e carats fin e , then , as twenty-four isthe utmost possible degree of fineness . Supposing the

Assayed piece to weigh 120grains , the report that it istwenty-four Carats fin e means that it contain s exactly120grains of pure Gold . If a piece is found to contain 1 15 grains of Gold and 5 of Alloy (Copper orSilver) , it is 23 carats fin e ; if it contains only 60grains

ofGold and 60ofAlloy, it is 12 carats fin e .

If it contains 1025 grains of Gold in the 1 20grains of weight, it is 20 carats and 2 grain s fine

(the carat being divided into four grains) . If 104-H;grains , it is 20carats 3a} grains fin e .

Now thi s seems simple enough ; but the Bri tish

Bullion authorities have complicated the business byhaving the value reported as beww orabov e Standard.

The Bri tish Standard metal (of which Sovereigns arecoined), is 22 carats fin e ; that is to say, a piece of

24 ounces must contain exactly 22 ounces of Gold

(equal to 1 1 in 12, or 22 in to be reported as

British Standard, of 22 carats pure Gold, with 2carats of Alloy .

A piece 23 carats fin e is , accordingly1 carat better than Standard, and the Assay isreported

(Better) — B 1 carat 0gr .

fractions of grain . The Span ish Assay Mark is 24 quin lates of 4

grains and fractions for Gold, and 12 din eros of 24 grain s andfractions for Silv er .

148 METHODS OF ExPRESSING AND REPORTING

A piece 21 carats fine is reported(Worse) —W 1 carat 0gr.

One 22 carats 2§ grains fine is reportedB 0carat 2S” grains .

One 18 carats 29; grains fin e , is reportedW 3 carats l§~ gr .

To reduce this to the Simpler form of the report in

carats , 22 carats are added to the report in the case of

Better ; as e .g

B 0carat 2§ grains

Add 22 carats

Fin e 22 carats 2% grains

In the case ofWorse the report is subtracted from

22 carats ; as e . g22 carats standard

Subtract Worse 3 L? gr .

Fine 18 29; grains

This is the so-called Standar d system of Br itish

Repor ts for Assays of Gold.

In the Br itish Assays for Silv er , the Unit orIn teger (instead of the carat and its grains as forGold) is the dwt . (pennyweight), with its fractions of

one-fourth .

Fine or pure Silver is 240 dwts . (12 ounces of

20dwts . each ; the

Standard Metal for Sterling Silv er is 222 pureSilver

, 18 Alloy .

150 METHODS OF ExPRESSING AND REPORTING

We call this Decimal method the M illi emes (thousandth-parts) system .

British reports are easily converted into Milliemes

reportsIf 24 Carats fin e is equal to Milliemes fin e ,

what is British Standard of 22 Carats in Milliemes P

24 : 22

216

40

24

1 60

144

1 60

144

1 6 , &c .

or 91 6% Milliemes . It is generally reported 917,is near enough for the purpose of ordinary estimate s .

Again , what is 900 fine in Milliemes in British

Reports P

900 24

900

carats .Or 21 carats

Or W 0carat

(As we reckon in Bri tish Reports by fractions of

one-eighth, gis substituted for which is sufficiently

near enough for the purpose .)

THE FINENESS OF RULLION. 151

The British Standard for Silver of 222 fine is, in

Milliemes240 1000 222

2160

600480

1200

1200

900fin e in Mi lliemes is equal to

1000 900 240

900

216 dwts . or

6 dwts. worse than Standard .

The reader Should make himself familiar with theseRepor ts,

— both with the Bri tish , as expressed by

Betterness or Worseness than British Standard (22

carats for Gold, 222 pennyweights for Silver) andwith the more convenient m ethod of Reports in

Milliemes .

The subjoined comparative Tables of Bri tish andFrench Reports show the British equivalents , upon

the Better or Worse Report system , for French

Milliemes , from 1000 fine French : 24 carats fine , orBetter 2 carats 0gr . Bri tish , to 800fin e French : 19

carats 05} gr . fine , or Worse 2 carats 3}grs . Bri tish, for

Gold ; and from fin e French=240dwts . , or Bette r18 dwts . British , to 800 fin e French=192 dwts . , or

Worse 30dwts . British, for Silver .

COMPARATIVE TABLE OF BRITISH AND FRENCH REPORTS .

GOLD .

N.B.—B stands for Better than Standard, W for Worse than Standard.

8m m .

CHAPTER XI I .

ON THE WEIGHTS USED FOR THE PRECIOUS METALS .

THE English standard weight for Gold and Silv er

is the SO-called Troy pound of 5760 grains .

1 75 lbs . Troy are equal to 144 lbs . Avoirdupois (the

ordinary weight for common goods) .

The Troy Pound is divided into 12 ouncesThe Ounce 20dwts . (penny

weights)The Pennyweight 24 grains

A Bar of Gold weighing, for instance,

17 lbs . 5 ounces 13 dwts . 20grains ,

the weight would, up to a recent period, have been

returned in this fashion, as was then the invariable

custom in the Bullion Trade and at the Bank of

England . We have now, however, so far improved,at least, as to drop the lbs . and giv e the weight inounces instead ; the above bar would thus be returnednow

209 oun ces 13 dwts . and 20grain s .

Some Bullion brokers , in their account sales of

Silver Bars , drop even the dwts . and grains, and give

WEIGHTS USED FOR PRECIOUS METALS . 155

the decimals of ounces instead . Thus a Silver Bar

returned in the old fashion

72 lbs . 3 ounces 10 dwts . (grains are not marked)would, after the new method, be returned 8675 ounces .

The ounce is the weight most in use , with itssubdivisions into pennyweights and grains , or into

decimals .The weighing of Bullion demands properly con

structed and accurately poised scales .0

Small quan

tities, up to a few ounces , are generally weighed in

small scales of great delicacy that will turn with a

fraction of a grain . Large quan tities , say some 600

or 800ounces of Gold (50 to 70lbs . weight), require

large and strong scales , yet sufficiently delicate toturn with one-quarter of a grain , even though this isnot needed in actual practice , as Gold Bars are notweighed closer than to one-half pennyweight

,or twelve

grain s . The scales for Silver have to bear Bars up to

300lbs . weight, and are considered sufficiently exact

if they turn with a pennyweight . The Bullion brokers

in London weigh up to half-oun ces— that is to say, ifa Bar weighs , say 9512} or 9518 oun ces , it is returnedas 951 if 951; or 951 -g, as

Foreign Bullion dealers Object to thi s somewhatloose system ; they would have us weigh our Bullion

to closer fractions . But the difi'

er ence is afterall verytrifling ; and as it frequently works both ways (excepting in the case of Silver going to India), it is of nogreat importance practically . The Bullion importers

are prepared for and know how to take it into accountin their operations with large quantities .

56 WEIGHTS USED FOR PRECIOUS METALS.

In France the Kilogramme is used, divided into

parts or Grammes . The French weigh to much

greater exactness and smaller fractions than we dohere .The French Kilogramm e is equal to 2 679227

English Troy Pounds, or 32 1507225 English Troy

ounces .One Troy ounce consequently weighs 0 031 1035

kilogrm . or 31 1035 gramm es .

In Germany the Zollpfund (Zoll-Verein pound),or Miinzpflrnd (Mint pound), is used. This is exactlyone-half of akilogramm e, and is divided into 500

grammes .In Hamburg the Cologne mark is employed, of

8 Unzen, or 16 Loth, or 64 Quentchen, subdivided into

fractions of on e-quarter. The Hamburg Cologne mark

weighs 233 85489 grammes , or 3609 English Troy

grains .In the United States the English Troy Ounce and

Decimals are used .

The Decimalsystem , on the basis ofthe Kilogramme,will, it is to be hoped, shortly be adoptedall over theWorld .

158 PRICES OF GOLD AND SILVER.

called the importer ; but he has to pay for the Assays ,and he must bring a certain quantity (not less than

in value at the time) of Gold to that establishment . The importer may also have to wait fourteendays or longer before he obtain s the Coin .

Thi s makes it somewhat inconvenient to deal

direct with the Mint, and it is preferable to takeGold Bars to the Bank of England, which will at once

pay for the same at the rate of £3 1 7s 9d per ounceStandard . This is three-halfpence less than the Mint

price ; but the Bank takes any quantity at this rate , andpays in fullas soon as the Assays are completed,—aday or two after delivery . The Bank clears a profit

of thr ee-halfpence per ounce for the trouble whichit takes in the business , but to the Bullion Dealer this

method of obtaining value for Gold is a convenience of

much greater importance than the payment of thesmall charge for theaccommodation .

The Bank thus buys Gold of the Public at therate of £3 1 7s 9d per Ounce Standard, and sells itagain to the Public at the rate of £3 1 7s l0%d peroun ce and Gold is thus taken into the Bank

,or

taken away from the Bank, according to the state of

the Exchanges .

The Bank is now the principal importer of GoldBullion into the Bri tish Mint, and an arrangement

exists between the two establishments by whichregular periodical Coinages take place .

The price of £3 1 7s 9d per ounce Standard,

called the Bank pri ce , must be taken as the ordinarycurrent rate by which the Market is guided . The

PRICES OF GOLD AND SILVER. 1 59

Mint price of£3 [78 104d per ounce otherwise forms thebasis for the valuation of foreign Coins , as comparedwith the British Gold Coins .

Sometim es, when Gold is in much demand for

Export , Bullion dealers pay £3 1 7s 94d, or £3 1 7s 10dper ounce ; and the shipments of Gold coming in fromAustralia or other parts , instead of going into theBank of England, are sent Abroad . If the demand

still increases , the Exporters buy Gold Bars from theBank at £3 1 7s -d per ounce ; but so long as the

Bank has Gold, which is always the case , the pri cecannot go beyond this .

There is a certain description of Gold calledRefinable Gold, which is in great demand by Refiner s,who will pay for it at the rate of from £3 17s 1 1dto £3 18s 1d per ounce . Of this we Shall have to say

more hereafte r ; but the Bank of England purchasing

rate always remains

£3 1 7s 9d per ounce Standard ;and the Bank is bound to buy all the Gold ofi

'

ered

to it at this pri ce, and equally bound to sell at the

Mint price of £3 17s 10a§d per ounce Standard .

The Gold Coinage of the country, therefore , restson a fixed basis , and a Bar cast of one thousand

n ew full we ight Sovereigns ought , at the price of

£3 1 7s 101§ d per ounce, to be worth exactlyun less an accidental loss of weight Should have takenplace in the casting .

’

In the Chapte r on the British M in t itwill be shown that thisis notalways the case .


The British Silver Coinage rests on adifferentbasis . Neither the Bank nor the Min t is boun d tobuy Silver Bars ; but the Min t issues Silver Coin satthe price of 5s 6d per ounce Standard. (Bri tishStandard for Silver is 222 fine Silver in 240 dwts.

metal) . In the Open Market the price of StandardSilver vari es from 58 05d to 58 2d per ounce . Bylaw one pound Troy of Standard Silver is coinedinto sixty-six Shillings in Silver ; twenty shillings of

such Silver consequently weigh 33; ounces . 3 111

oun ces , at 58 6d per ounce, are exactly 208 ; but

at the average market price of, say 58 1d per ounce,the value would be only 1 88 6d.

The British Mint , in fact, which coins Gold free of

expense,charges heavily for the Silver Coinage, and

makes a large profit thereby . The Mint buys Silver

(through the Bank) at the market pr ice of 60%d to

624}d per ounce Standard, and sells it to the public,in the Shape of Coin , at 66d per ounce Standard,the profit thus realised is the seignorage accruing tothe Governm ent . This seignorage, or duty, is notonly sufi cient to pay the expenses of the Mint,but it also enables that establishment to undertakethe obligation of giving new Silver Coin in exchange for worn and light pieces ; and thi s isby no means an inconsiderable item

, as it amountsto more than one-half per cent . on the Coinage of

a year.The reader must bear in mind accordingly, that

in Gold, Whether in the shape of Coins or ofBars , are, as a rule, intrinsically worth


(For the so-called Market prices see chapter onFrance .)

In other countries, in Germany, Holland, &c . , the

position is the reverse of that in England . S ilv er is

the only fixed Standard,and Gold has a variable price .

In Prussia, for instance, the Mint Pound (half-kilo

gramme) of pure Silver is taken by the Mint at

30Thalers, deducting 1 12, Silbergroschen for Coinage ;but Gold is bought at an average price of 466 Thalersper Mint Poun d, with a discount or premium , varyingfrom to 51

’ per cent .In the Standard of the British Coinage 1 part of

Gold is worth 14}

of Silver ; in the French double

Standard, 1 part of Gold is equal to 15% of Silver ; inthe coun tri es where the Silver Standard prevails

,the

proportions vary from 1 to 1 57} to 1 52In due course, when we come to the monetary

systems of these countri es , we Shall enter into furtherparticulars respecting Foreign Mint Operations . Wemay also take occasion then to make some passingallusion to the late Monetary Convention , held in Pari sin 1867, which seems to have adopte d the Bri tish plan

of the Gold valuation as the most suitable one .

The reader will now please to bear in m ind the

Standard Rates of 77s 9d per ounce as the buyingpriceof the Bank of England,and 77s 10%d per ounce as theMint price for Gold and the var iable market pr ice of

from to 62éd per ounce for Standard Silv er .

PRICES OF GOLD AND SILVER. 163

VARIATIONS IN THE PRICES OF BAR SILVER

PER OUNCE STANDARD IN LONDON ,

FROM JANUARY 1860.

1860 1861

Jan . Mar . 7 . . 61

. 60§ 29 “ 613

Feb. Mar .

Mar . 22 62

April 61?

61§ 21

May 613Jun e

July22

Aug. Aug. 6 . 61%Oct.

10 ” 60? 613Nov . Oct. -

,l;

Oct. Dec .

61 -3

Dec . 20 61§ 1862 12 61 1;l

1861 Dec . 10 61

Jan . 61-1Feb . 28 61% 31 6 15

1862

Feb. 7

14

21

Mar . 6

20

Apri l 3

May 8

15

22

29

June 12

26

July 24

31

Aug. 7

14

Sep. 25

Oct. 9

16

23

Nov . 6

20

Dec . 4

24

1 1

31

61;61361;61;61}61

61-161561}61;61361;61

61;mg61

61;6 1;61§61361;

62

61§61;612


VARIATIONS IN THE PRICES OF BAR SILVER—continued !

1864

Jan .

Feb .

18

April

14

May

June

July

Aug. 4

11 .

62;

61-3

1864

Aug.

Sep.

Oct.

Nov .

Dec .

1865

Jan . 5

Feb . 2 .

Mar . 1

30

May 4

11

June 15 . .

Aug.

Sep.

14

21

612

613

61;“ 61261

60360§66;

60360;

1865

Oct.

NOV.

61 1

613

61

613

6136 1 1

1866

Sep.

Oct.

Nov .

Dec .

1866

Jan . 1 1

25

Feb . 1

15

22

Mar . 1

22

April 5

19

May 1017

June 14

28

July 19

26

Aug. 9

6 13

60;sogi

60;605}603

err60§60360

60360;603603

,

60;60;60;60;

1 66 PRACTICAL DIRECTIONS FOR CALCULATING

it is much too cumbersome . In such cases it isbetter to Standard the whole, i .e . , to reduce each Bar,upon the Assay Report , from its actual weight to the

Standard weight, add together the several Standardweights found, and multiply the total by the Standard

pri ce to find the value of the parcel.

A Bar of 100 ounces reported B 20 carats , is

worth 84s 9—lgi d per ounce fin e ,100x 848 91

91-d £424 1S -

1-9—fd .

The same Bar,reduced first to the Standard

100oun ces twenty-four carats fine

109 ounces 1 dwt. 19111 grains

’ twenty-two

carats fine , or Standard weight,at 778 9d per ounce £424 l s 99rd.

The following is a convenient rule for StandardingMultiply theactualweight of the Bar by the Better

n ess or lVorseness repor ted, and div ide the product by 22.

Add the Betterness, or substract the Worseness found, to

or from theactualweight; the resultwill be the Standardweight, which , at 778 9d per ounce Standard, will givethe value of the Bar .

The shortest way to do this, is to put down foreach carat of the Betterness or Worseness, the actualweight ; for each grain , one-fourth the actual weight ;and for fiaction s of grains , the corresponding fractions

It is not customary to giv e fractions of grains, which is donehere only to Show that the result is exactly the same in both

THE VA LUE OF BULLION IN ENGLAND . 167

of the one-four th ,— add up the total, and divide it by22 to find the difference between the actual and the

Standard weight .

ExampleOz. Dt . Grns.

Gold Bar weighing 201 15 12

Assay B 1 carat 339}grains

For 1 carat 201 15 12

2 grains (4) 100 1 7 181 grain (i ) 50 8 21

grain (g) 25 4 10

Divide by 6 13

Betterness 1 7 3 22

Add origin al weight 201 15 12

Standard weight 218 19 10

At 77S 9d per oz . , Standard £851 5 0

An other Example

Gold Bar weighing 127 9

Assay W 1 carat 2% grainsFor 1 carat 127

n 2 grains 63

grain (ft) 23

Div ide by

Worseness 9

Actual weight oz . 127

DeductWorseness 9

Standard weight oz . 1 1 7

At 77s 9d per oz . £457


Third Example

Gold Bar weighing 10 0

Assay B 0carat 14 grainsFor 1 grain (4) 13

12grain 6

4 grain 3

grain 1

Divide by

Bettern ess 1

Add actual weight 52

Standard weight oz . 53

At 778 9d per oz . £208

Fourth Example 011. pm , Gm ,

Gold Bar weighing 137 6 0

Assay W 1 1 carats 2§ grainsFor 10carats 1373 0 0

1 carat 137 6 0

2 grains (if) 68 13 0A} grain (fi) 1 7 3 6

Divide by 2 6

Worseness oz . 72 1 1 0

0

0

Actual weight oz. 137 6

DeductWorseness 72 1 1

Standard weight oz . 64 15 0

At 778 9d per oz . £251 14 4

With a little practice , these calculations becomeeasy enough . It is also proper to state that there are

sets of tables published, giving the v alue for every


In a transaction Of this kind the Bankwould at once,upon the receipt of the Gold, make a large advanceupon it to the seller, say in the case beforeus ; paying him the balance , less charge for Assays,two days after, when the Assay r eport had come in .

INVOICE OF GOLD BARS TO MESSRS . M . N CO.

WEIGHT. ASSAY . STANDARD.

Carats

1 753 2578 225

205 725

44 050

2072 50142 70059 80065 750

26 000

Standard

ozs . at 778 9ij d per oz . 1 6 6

CHARGES

Packing cases , &c . £0 1 1 6

Cartage 0 8 0

Brokerage, 113th 4 2 0

5 1 6

18 0

THE VALUE OF BULLION IN ENGLAND . 171

In this invoice the weights are given in ouncesanddecimal fractions of Ounces ; the Assays in grainsSimply, inste ad of in carats and grains . The Gold issold at 77S 94d per ounce Standard (probably becausethere was at the time ademand for Gold for ex

portation) ; and one-sixteenth per cent . Brokerage ischarged .

The Bars are generally weighed before the Assaypieces are cut off, which , with the Assay papers , belongto the purchaser .

The calculation for Silver Bullion is less complicatedthan that for Gold . The weights are given in ouncesand half oun ces only ; the Assays in pennyweightsand quarter-pennyweights .Taking the pri ce of Standard Silver (222 fine in

240 dwts .) at 61d, What is the value of one ouncepure Silver, or B 18 dwts. P

By the rule of three

222 61 240

240X 61d 222

The value of one ounce fin e Silver at 6l%d per ounce

Standard is 66751514 .

The same as for Gold, so for Silver, it is moreconvenient to reduce the actual weight of the Barsto the Standard weight . Multiply the actual weightby the Report, and div ide the product by 222; add theBetterness to, or Substract the Worseness from , theactualweight.


ExammeSilver Bar weighingAssay B 10dwts .

10dwts .:

Divide by 222

Betterness

Add actual weight

Standard weight

At 61d per oz . £265 1 2 4

Another Example

Silver Bar weighingAssay W 28% dwts .

X

Divided by 222 gives Worseness

Actual weight

Deduct Worseness

At 61d per oz . £185 2 0

We subjoin two Invoices of Silver Bars , v iz . , anAccount Sales Of Bars sold to a Bullion dealer ; and

an Invoice Of a batch of Bars bought through a Brokerfor India . The fr actions of ounces are in decimals .

The decimal is here used.


ACCOUNT SALES OF SILVER BARS SOLD TO

MESSRS . M . N . 85 CO.

ASSAYS. STANDARD.

At 61d per oz . 8 1 1

Melting £3 2 6

Less grains 0 1 7 6

£2 5 0

Six Assays, at IS 6d 0 9 0

Cartage , &c . 0 7 6

Brokerage, 4th per cent . 1 12 3

4 13 9

Net proceeds 15 2

The market price here is 61d per oz .

We have so far described the English method ofcalculating Bullion it is cumbersome and old

fashioned . The French method, entirely based on

the decimal system, is much more convenient, as we

Shall in due course have occasion to see .

THE VALUE OF BULLION IN ENGLAND . 1 75

Foreign Gold and Silver Coins , which a num ber of

Assays have Shown to be always of the same fin eness,are Often bought at so much per oun ce , without beingfirst remelted into Bars .French 20 franc piece s , for instance, Of 900 fine ,

British Report W 01 43, are worth about 76s Si d

per ounce . The Bank of England purchases them at

76s 2§d per ounce weight .

Account Sales of FS .200,000, in

20 Franc pieces , weighing

At 76s 2,lid per oz . , £7904 6 7

Sold to the Bank of England .

Mexican Silver Dollars are also bought by theounce (Assay about

Account Sales of MexicanDollars , weighing

At 59d per oz . 15 5

Brokerage, fith per cent . 26 13 1 1

1 6

The pri ce of Mexican Dollars varies in the marketaccording to the greater or lesser demand for the

Continent or for India .

CHAPT ER XV.

PARTING RULLION .

THE Assays and calculations in the last chapter

have reference to Gold and Silver alone , thevalue of the Alloy in the Bullion being left altogether

out of account .

Copper is the Metal most in use for Alloying Goldand Silver . Other base Metals are rarely employedfor the purpose , and need not be considered here .

The Copper Alloy contained in Gold or Silver Bullionis Of such insign ificant value that it is not paid for . ABar of Gold, for instance, Of 1 20 ounces of Standardfineness is worth

.

£466 103 the Copper contained init

, 10oun ces in weight , at the price of IS per pound,would be worth 10d, or less than —th part of thevalue . In a Bar Of Silver Of the same we ight and fin eness , which is worth £28 53 3d— the Copper is worth

9d, or fi gth part . Moreover, the Alloy is not even

available as Copper .

It is not customary, therefore , nor is it practicable ,to allow for the value of the Copper in Gold or SilverBullion . In case s where the amount of Copper in aBar very largely exceeds that of the Gold or the Silver,the Bar likely containing only a fewper cent. of e ither,

1 78 PARTING RULLION.

countries furnish Silver wi th from 1 to 5 per cent . in

value of Gold in it. Old Silver Coins , certain descriptions ofDollars , and Plate melted down , are occasionally assayed for traces of Gold.

The parting of Gold and Silver is effected by theprocess ofRefin ing, which will be described in the next

chapter . A Refinery is generally a large establishment ; and it may well be imagin ed that the businessof Refin ing cannot be done free Of charge . Theprocess of Refining, like all other operations of thiskind, involves a certain expenditure of time , labour,and materials

,and a charge is consequently made for

Refining .

In London the charges for Refining Bullion are asfollows

For Gold containing Silver they amount to 5s 6d

per 12 ounces ofMetal (or 5%d per ounce) .

For Silver, to 1044-d per 12 ounces of metal (orless than 1d per ounce .)

The question now resolves itself into this : Is theresufficient Silver in a Bar of Gold, or enough Gold in

a Bar of Silver, to make it worth While to part thetwo Metals P

For , where thi s is not the case , the Bullion had

better be sent on to the Mint at once , to be alloyedthere with Copper to the Standard of Coinage . Let

us see , then , what proportionate amount of Gold in aBar Of Silver, or Of Silver in a Bar of Gold , constitutes

a sufficiency” to offer a fair margin for the process

of parting .

PARTING BULLION . 179

Take the case of a Bar of Gold , weighing1 20 ounces

Assayed W (834 fine),The balance (166 parts)

being Silver .

We thus have100 ounces fin e Gold , equal to 109 091

ounces Standard at 77s 9d £424 1 10

20ounces fine Silver, worth at 53 6d

per ounce fin e 5 10 0

The charge for Refining is 5%d per ounce , which

comes to £2 1 5s for the 120ounces

The Silver is worth £5 10 0

We have to deduct 2 15 0 for Refining,

which leaves a margin of £2 15 0

or rather more than gper cent . over and above thevalue of the Gold . A Bar of this description con se

quently pays for Refining .

Now take another Bar, weighing also

120oun ces , but assayed as Standard (917 fine) ,Silver 83 parts ; thus containing

1 10oz . fin e Gold, equal to 120oz . Stan

dard Gold, at 77s 9d £466 10 0

and10oz . Silver, at 58 6d per oz . fin e 2 I5 0

The charge for Refining 120ounces ofMetal is, asbefore , at 5&d per ounce, £2 15s ; which is the exactsum we get for the Silver . There is thus no profit

180 PARTING RULLION .

made here , and the Refining may accordingly just as

well be left alone .

From these results we may deduce the followingrules respecting the Refining of Gold in England,

If the Gold in the mixed Bar is of the finenessOf British Standard— or fin er— it does not pay for

Refining ; if it is below Standard , it will bear thecharge

,and leav e a margin— in which case it is called

Refinable Gold . Thus we know at a glance that Goldreported Wor se is Refinable , and that the excess of

Silver in the mixed Bar will pay the expenses of the

process and leave a clear profit .By saying that Standard Gold will not pay for

Refiningwe mean that it will not pay for the public .The Refin er s charge the public at the rates stated, andthey make their profit out of these rates of course ; sothat where they refine for their own account they can

work with a much closer margin . They will, there

fore, frequently buy Gold above Standard , and yet theRefining will pay them . Refinable Gold is accordinglysought by them ; and whilst the Bank of England

pays but 77s 9d per Ounce Standard, Refin e rs willpay 778 9%d to 78s per ounce, according to the greater

or lesser proportion of Silver in the mixed Bar . ’

The cost of Refin ing Silv er is 10%;d for 12 ounces .What per centage OfGold in the Bar will pay the cost

of Refining, and leave a fair margin ? Suppose we

have a Bar of 1000ounces , which contains 950ounces

The Refin ing charge in France is much less than in Englan d.

ACCOUNT SALES OF 18 BARS OF CALIFORNIAN

GOLD SOLD FOR MESSRS . M . N . dz CO. :

WEIGHT.

21 251-000

22 252-300

23 60-025

24 71-775

25 37-300

26 37-275

27 40-075

28 40-350

29 102-475

30 106 975

31 34-050

32 54-275 12 ;33 55-700

34 56-575 02-135 20-775 195 65

36 263 75 0-1§ 25-963

37 31-725 30; 27 084

38 88-1 50 73-134

1367-1 75 1 1839 66

1 183 966 Standard ozs . at 778 10§d31 15 pennyweights fin e Silver at

58 6d per oz . 42 16 7

1 7 1 1

Brokerage , {3th per cent . £5 16 4

Eighteen Assays at 48 3 12 09 8 4

9 7

The Refin er in thi s case has paid 778 10-gld per oz .

Standard for Gold .

The Assayer reports the Assay for Gold, stating ,at the sam e time, the Pennyweights of Silver presentin each 12 ounces of the Bar ; the last column givesthe total number of pennyweights

,less 20pennywe ights

per lb. for Refining.

INVOICE OF TWENTY BAR S DORE SILVER,

BOUGHT FOR MESSRS. M . N . 85 CO.

Grains of Gold inthe Bar , les s 5WEIGHT . ASSAY . STANDARD.

12 oun ces grai ns of Go ld fore v e ry 12 ounces .

Bwts . Ozs .

W 14 8573 049 8695 7 842 1050 7

51 868 0 7 8406 552 8670 63

1,

53 8700 771,

8406054 865 0 6 841 6 055 7 839 65

56 866 5 7 839 2057 869 5 7 842 1058 74 83530

59 760 761 706 5 17-362 7335 20

63 7735 1 7; 712 55

24

65 798 0 B 5466 814 0 12} 859 85

67 972 0 1 1 102015

At 61d per oz .46 ,672 grains Gold at 848 71d per

fin e 41 1 6 4

9 7

Boxesand PackingBrokerage, 35 per cent 6 I3 9

3 4

The Assayer state s the grains of Gold for every

12 ounces of metal, and gives in the last column the

total number of grains of Gold contained in each Bar ,- less 5 grains per 12 ounces f or Refin ing.

797

36 1

796

506

725

793

795

866

797

792

796

724

1236

1406

1805

58

266

729

3

184 PARTING RULLION .

Incidentally, we call attention to the exceptional

richness in Gold of the first of the Bars in this invoice .

When Gold is supposed to contain Silver, theAssay Paper in which the Assay piece is wrapped upis marked

Gold double

Par ting.

Which is meant as an instruction to the Assayer tomake a double Assay , and assay also for Silver

present .

For Silver, the As say Paper states

Silv er double

Parting.

Instructing the Assayer to make a double Assay ,andassay also for Gold . Acting upon these instructions,the Assayer reports the quantities found of both the

Gold and the Silver .

Refiners generally seek to buy both Refinable Goldand Doré S ilv er at the same time , that they may meltthem together, which , as we Shall see in the nextchapter, proves of considerable advantage in the sub

sequent process of Refining .

186 REFINING OF RULLION .

producing districts , or from the large Bullion centres ,where the article is dealt in for Banking purpose s .

The object of Refining is to obtain Gold and Silverin a state of puri ty . So , besides the parting of Goldfrom Silver, pro v ision has to be made also for the

removal of the baser Alloys , especially Copper, whichis so often found in Bullion . The Refin er may be ableto utilise , to a certain extent, the product furnished by

the baser Alloys ; but this is a matter which doe s not

enter into our calculations here, where we have to deal

simply with the parting of Gold from Silv er .

Thi s parting is effected either by Nitric Acid or by

Sulphuric Acid . Gold, as we have already had occa

sion to state , resists the action of all Acids , exceptthe Nitro-Muriatic ; neither Nitric nor Sulphuri c Acid,cold or boiling, has the slightest effect upon it.

But Silver is easily attacked by these two Acids .

Nitric Acid will dissolve it even in the cold . Hot

Nitric or hot Sulphuric Acid will very quickly convert

it into Nitrate or Sulphate of Silver, which both aresoluble Salts .A piece of pure Gold may be put into Nitric Acid,

and boiled in it for hours , without tarnishing, or losing

one atom of its weight ; whereas a piece of Silver putin to cold Nitric Acid becomes instantly discoloured,and turns black ; the Acid around it becoming turbid

and agitated ; and, when heat is applied, the Silver

piece is Speedily dissolv ed ; the liquid acquiring a darkmuddy colour , and turning quite black upon exposure

to the light of the Sun

It is upon this well-known different deportment of

REFINING OF RULLION . 187

the two Metals with Acids that the process of parting

is founded .

The Refin er purchases the Refinable Gold andthe Doré Silver upon invoices , as shown in the lastchapter . On entering the Refinery, a due account is

taken of the several quantities of Gold and Silver inthe Bars before the latter are allowed to pass into the

hands of the workm en .

It is indispensable for the success of the operationthat the weight of the Silver in the Bars should be at

least double that of the Gold ; and it is even expedientthat it should be still much larger . Where the proportion of Gold in a Bar is greater than one to two as

compared to the Silver, the Bar cannot be refin ed by

this process , as the particles of the former Metal willso envelop and protect those of the latter that theAcid cannot get at them to act upon them . Whereas

,

with a large excess of Silver, the Gold particles are

more disseminated through the mass so that the

Acid can act fr eely upon the Silver . The larger theproportion of Silver in a mixed Bar, the more rapid isthe action of the Acid upon it ; however , the most

suitable proportions for the purpose are about four

parts of Silver to one part of Gold .

It is for this reason that the Refiner always seeks

to buy Refinable Gold (Gold containing Silver) , andDoré Silver (Silver containing Gold) , in such quantities

as will make up these proportions as nearly as possible .He thus manages to effect two partings at one andthe same time . At present the supply in the Bullionm arket is pretty regular ; occasionally , however, there


is a scarcity of either Refinable Gold or RefinableSilver, and slightly higher prices than usual are offeredfor the scarcer article of the two . In Australia and inother parts , where there is much Gold, with no continuous supply of Silver, the Refiners are obliged to

keep on hand a large stock of Silver, to melt and

refine with the Gold over and over again .

The subjoined illustrations will Show the advantageof Operating jointly on Refinable Goldand Dor e’ SilverBars ,

A Bar ofCalifornian Gold ,weighing 200oz . 850fine ,contain ing accordingly 1 70oz . of Goldto 30oz . of Silver

And

A Bar of Doré Silver,weighing 800oz . 900fine ,

with 10 oz . of Gold, and

70 ounces baser Alloy,containing accordingly 720oz . of Silver

10oz . of Gold

melted and refin ed to

gether,will yield for

product 180oz . of pure Gold

750oz . of pure Silver

The complete parting of the Gold from the Silver

in the Californian Gold Bar is entirely due here to

the presence of the large proportion of Silver in theDoré Silver Bar. Were it not for this great excess

of the latter Metal in the mixed Bar cast of the two ,


The metal grains , dri ed and weighed, are nowready for the chemical Refining process . The Parting

may be efl'

ected either by Nitric Acid, or by SulphuricAcid .

NITRIC ACID METHOD — The granulated GoldandSilver Alloy, or garble , as it is technically termed, isput into large stone-ware vessels , and the proper

quantity ofNitric Acid is pour ed over it. A dozen or

more of these vessels are ranged closely together,upon a sand-bath furnace . A wooden dome, or hood

surrounds them, with an opening at the top , leadinginto the flue of a tall chimney, so as to carry off thepungent nitrous red fumes, which are copiously discharged from the hot Acid .

After a few hours’ boiling some of the fluid, whichis then heavily charged with Silver, is drawn off into avessel, and put aside ; a fresh supply of Acid being

added to the residuary mass in the vessels . The sameprocess is repeated until all the Silver is dissolved ;when the vessels are cold enough to be handled the

remaining liquid is poured off into the same vessel

which has received the first portions of the solution .

At the bottom of each stone vessel a dark brown ,

muddy deposit is found . Thi s is pure Gold, in apulverulent state, wet with the remains of the Nitrate

of Silver solution . Water is then poured into thevessel, and the mass stirred about when the Depositsettles again, the fluid is poured ofi

'

, and added to the

other portion of the solution . A number ofwashings ,with careful draining each time , are required to

REFINING OF RULLION. 191

remove to the last traces of Silver remaining . The

washings are of course also added to the Nitrate of

Silver Solution .

The brown powder is then taken out of the vessel,dried by heat, and carefully weighed . People whohave never seen Gold in the pulverulent condition

would hardly take this brown stuff to be the King of

the Metals ; strong compression , however, will forceits particles into cohesion, when the surface will Shine

here and there in patches with a yellow glimmer.A pin ch of the powder, rubbed between the finger

ends, will give a Slight coating of a dull Goldcolour . Rub a few grains of it against a Sheet ofglass or some other polished surface, and the siderubbed with it will glisten with Virgin Gold .

The dry powder is then melted in a crucible ;shortly afte r it is turn ed out in the shape of a Bar,which is unmistakeably Gold heav y, smooth, soft,brillian t,andfine .

There remains now the Silver to be reducedfrom the Nitrate to the Metallic state .

The solution ofNitrate of Silver collected fi°

om the

stone vessels requires dilution before it can be properly acted upon . Water 18 , therefore , added to itcopiously,and the diluted fluid is then pour ed into alarge vat , called the precip itating vat. A solution of

common Salt is added to it there, when a thick white

mass , like clotted cream, instantly forms , which increases in bulk as more of the Solution of Salt isadded, and settles finally at the bottom of the vat .The deposit formed is Chloride of Silv er .


The combination of the Nitric Acid with theSilv er had in this process , in the fir st instance , formedNitrate of Silver in Solution . Nitrate of Silver, or

Lunar Caustic, as it is often called, is one of the

Salts of Silver . It is well known to Chemists andPhotographers . Common Salt is Chlori de of Sodium .

The aflinity of Silver for Chlorin e is so strong thatit will leave any other substance with which it is alliedin a Solution to combine with Chlorine . Sodium hasan equally strong affinity for Nitric Acid . Therefore,so soon as a Nitrate of Silver solution comes intocontact with a Chloride of Sodium solution , the two

metals— so to speak— e xchange partners ; the onecombining with the Chlorine to Chloride of Silver,the other, after previous oxidisation to Soda , with theNitric Acid to Nitrate of Soda . The white preci

pitate forming in the m ixed solution is'

so charac

teristic of this reaction, that very Slight traces of

Silver may be easily detected in a solution by the

simple addi tion of common Salt . After the addition of

the solution of Salt, the fluid in the vat is well stirred,and the white Chloride of Silver precipitate is allowedto subside to the bottom . The supernatant liquid

above it is then tested, by further additions of Saltwater, to see whether it still contains Silver. Solong as white flakes continue to form , Salt is added,until further addition ceases to produce a precipitate .

An excess of Salt is finally thrown in , to make allsure . After stirring, the mass is left at rest, to letthe precipitate fairly settle . The clear supernatant

liquid is then drawn off, and the Chloride of Silver


large buildings cannot be erected ,and where there isan inadequate supply of Silver , compelling the Refin erto keep a stock of that Metal specially on hand andwhere the Refin er has to deal with Gold and Silveralone in the Refinable Bars . Butwhere other AlloysCopper, &c .

—are present in the Bullion , which , as a

matter of course , will dissolve together with the Silver,the method is less suitable . The Copper, for instance,is entirely lost ; which , though the value of thatmetal may be but small, is yet a matter of some

moment at least .The Min ts of Philadelphia, San Francisco , South

America, and some other countries, still use theNitri c Acid process . One of the more important

London Refineries, being cramped for Space , also partsBullion still by thi s method ; but all large establishments in London , France , and Germany have nowadopted the n ew French or Sulphuric Acid method .

SU LPHURIC ACID METHOD . The granulated

Gold and Silver Alloy or garble is boiled in SulphuricAcid in iron vessels lined with Lead (this latter metal

not being much affected by Sulphuric Acid) . A

somewhat greater degree of heat is required, and a

longer time . The Sulphurous Acid fumes,which are

copiously disengaged during the ebullition , must becarried off, thr ough proper openings in well closedhoods , into the flues .

When the whole of the Silver is dissolved toSulphate , the Gold is found at the bottom of the

vessel in the same state as in the Nitric Acid


process . The supernatant Silv er solution is carefully decanted ofl", and the pulverulent Gold depositis washed , dried, and fin ally melted into Bars of

Fine Gold.

The decanted Solution , to which the washings of

the Gold powder are added, contains the Silver in theform of Sulphate . It must be kept hot to preventthe crystallisation of this Salt . It is diluted withwater , and drawn off into large elongated holderslined with Lead , and a number of pieces or plates of

Copper are suspended in it. In obedience to the

general chemical law— that a baser Metal, by reasonof its greater affin ity for Oxygen , will reduce a nobler

Metal from its solution in an Acid— the Copper combines gradually into the Acid , forming Sulphate of

Copper, or blue Vitriol, whilst the reduced Silver inthe pulverulent form subsides to the bottom . Whenall the Silver has thus been eliminated— which is

ascertained by te sting from time to time a sample

of the blue liquid , in a suitable glass , with Copper, tosee whether further precipitation takes place or not— the blue solution is drained off. The WaterSilv er , or Silv er lime (as the precipitate is called bythe English ; Chane: d

’argen t by the French), iswashed, pressed , dried,and melted into Bars .The blue solution afterwards passes through a

process of evaporation, effected by heating and

atmospheric action combined , which requires veryextensive arrangements of holders and vats ; it is

ultimately refined, and crystallised into that wellknown substance, blue Vitriol, or Sulphate of


Copper . Where the mixed Bullion operated upon

contains Copper as an Alloy, the latter Metal is dis

solved along with the Silver in the process of ebul

lition ,and passes with the Silver solution into the

precipitating apparatus , where it is left behind in the

fluid as Sulphate , after the precipitation and removalof the Silver, in creasing thus to the quantity of Blue

Vitriol ultim ately obtained .

A great portion of the Sulphuric Acid is also

regained, which , after puri fication, is fit for furtheruse whereas in the Nitric Acid process the solutions

ofNitrate of Sodaand Sulphate of Zinc are lost, aswell as all the Nitric Acid . In the Sulphuric Acidprocess nearly all the materi al can be utilised ; thelast produce— the crystallised Sulphate of Copper

has a market value , varying according to supplyanddemand .

Although it would appear almost a matte r of certainty that Bullion— parted on such Strictly definedlaws of chemistry— Should turn out entirely pure , itis , nevertheless , almost impossible to attain thatresult . Slight traces of Iron , Lead ,and other metalswill persistently remain, but in such infinitesimalquantities that we need not care about them . Repeated

Refining, at the hands of a scientific chemist, willreduce these impurities to the lowest minimum ; butat an expense incompatible with the economicalrequirements of business .

The Assayer will never consent to find Gold 1000fine . He will insist upon some allowance for Alloy


thr ough the mass in solid particles , or more closelycombined with the noble Metal, decidedly are so .

The Quicksilver can be dri ven off by moderate heat ;Lead and the other base Metals are removed byCupellation, as, at the high temperature of the fusingpoint of Gold, the base metals are , in presence of

Lead, or with the aid of fluxes , converted in to highlyfusible oxides , which are readily absorbed by theCupel. Platinum and Iridium are separated fromGold by mechanical means .A great deal of the Silver extracted from Lead

Ores contains traces of Lead , which make the metalbrittle and un suitable for coining.

The Refining of masses of metal consisting chieflyof the baser metals, and of inferior ores , belongs to

the province of the Miner and the Metallurgist : we

have already had occasion to remark that metallicmixtures of this kind are not Bullion .

The presence of Iridium in Gold, and the B rittlen ess in Silver Bullion , are subjects reserved for

treatment in a subsequent chapter .

The uninitiated might be led to think that theworkmen in a Refinery, where such large masses of

Bullion are under their hands,could pilfer without

detection . The exact quantities of Gold and Silv er

present are , however, kn own withalmost mathematicalaccuracy, and the Precious Metals pass from hand tohand, or in the charge of foremen , in such a way that

robbery becomes almost im possible , or is, at least, atonce detected . The managers of Refining establish


ments fully understand how to guard against suchmishaps .The Profits made by large Refining establishments

are variously estimated . The two largest Refin ers of

Bullion in London (who refine on the cheaper French

plan, and yet charge as much as the Refin er s by theold process) are working in the interest of two Bankingfirms . That there is a dir ect profitupon the Operationitself scarcely admits of a doubt . As a rule, morePure Metal is obtained than the Assay states , becauseEnglish Assayers underrate actual fineness by one-halfto one M illiem e ; and there may be other little advantages , which , on large sums , make up a fair directprofit per annum .

Where large Refineries are carri ed on in connectionwith Banking and Bullion operations , they have aninfluence on the supply and demand of the Precious

Metals in the market, and thereby yield indirectprofits .

To those of our readers who have some knowledge ofchemistry, or who , by chance , possess a few apparatusandutensils for chem ical experiments , we can suggest asimple and amusing process, completely demonstratingthe theory of PartingGoldand Silv er .

The thin gs required for this pur pose are, a smallpiece of Silver, weighing about 2 pennyweights (say a

Sixpence) ; and asmall piece of Gold, weighing about1 pennyweight (say a bit of old Jewelry, Gold of about

14 to 18 carats fine) . Upon the supposed degree of

fineness of the two Metals here the proportion which

200 REFINING OF RULLION.

the Silver bears to the Gold isas about 2% parts of theformer to 1 part of the latter .

A piece of Charcoal, for blow pipe experiments

(sold, in square pieces , by ChemicalApparatus makers);a blow pipe and a spiri t lamp .

A small globular glass bottle, of about 4 ounces

capacity,such as are sold as suitable for boiling Acid

over a spirit lamp ; or a large te st tube .

A couple of ounces ofNitric Acid; a little Sulphuric

Acid,and a few pieces of Zin c ; a glas s vessel or

tumbler, and a small flat dish, or common saucer .

Our first object is to produce a piece of partingmetal, which is done by means of the blow pipe .

Hollow out a small portion of the charcoal, and placethe Sixpence with the bit of Gold on it in the little

cavity made . Then, with the blowpipe, direct the flame'

ou to the charcoal support under it. When , after afew seconds , the coal begin s to burn brightly, blowmore strongly, so as to get it to a white heat . If you

are no great adept at the blow pipe, endeavour to getsomebody else to assist you, with a second spiri t lampand another blow pipe . As soon as the right heat isreached, say in one or two minutes , the Coin, &c . willfuse and drop into the hollow burnt into the charcoal ;keep up the heat a little longer, until the molten dropbegins to be slightly agitated ; then let it cool.Now it is very likely that with so small a quantity

of metal an equal distribution of the Gold with theSilv er has not taken place . Therefore, when the pieceis cool, beat it out with a hammer, boldly flattening itdown to as thin a piece as youcan . Break or fold up

202 REFINING OF RULLION.

may gently dry them over the Spiri t flame . They are

pure Gold .

The Acid containing the Silver you may thendilute with four times its volume of water, in a largetumbler. Make about half a tumbler full of solution

of salt in water, and gradually introduce this into theAcid . The thick cream-like deposit of the Chloride

of Silver will instantly form, and will only cease to

form when you have pour ed in the right quantity of

salt water. Then stir the fluid with a glass rod, andleave it to settle . When the upper part of the fluidhas become clear, introduce a few more drops of thesalt water, and watch whether they will still producetraces of Slowly subsiding white flakes ; if not, then

all the Silver is already precipitated . Decan t thesupernatant fluid, and wash the Chloride of Silverrepeatedly, by filling up the glass several times withwater

,always taking care to let the Chloride settle

down well before you pour off the water . Thenturn the Chloride out into the flat dish or saucer,cover it with a m ixture of Sulphuri c Acid andWater (say fifteen parts Water and one part Acid),and distribute some chips of Zinc (cut off from Zinc

Sheeting) over it. The action commences at once, andthe Chloride turns dirty and grey . Wh enall the whitehas disappeared, which youcan accelerate by stirring

the pieces of Zinc about with a glass rod, youmaypour Off the solution , and wash the residue in several

waters,taking finally the Zinc away . The residuary

greyish powder is pur e Silver, which may be drained

on blottingpaper , and dried upon the blade of a large

REFINING OF BULLION. 203

knife, or on a piece of Zinc plate held over the spiri t

flam e .

The grains of Gold, mixed with a stiff paste of

Gum Arabic to keep them together, may be fused bythe blow pipe in a cavity Of the Charcoal . The Silverpowder

,also mixed with a little wet Starch or stiff

Gum for better adhesion , and rolled into a small lump ,may

,in the same manner, be melted down in to a

small button . Afterwards the bit of Gold, and thebutton of Silver, may be Slightly flattened with a

hammer , and rubbed bright to show their Virgincolours .We have often, in the space of half an hour, per

formed this experiment for the amusement of our

fii ends .

When larger quantities , say four oun ces (208) worthof Silver, and three or four pounds worth of Gold are

thus to be Operated upon, the melting can be done insmall crucibles, either in a jeweller

’s furnace , or,at a pinch, in a well-built coke fir e in a common grate,with the diligent use of a pair of bellows to get theheat white . The metal may then be stirred with ahot iron wire or red, and granulated in water. All

the other apparatus for the Refining process mustthen be larger in proportion .

A small experiment with Sulphuri c Acid may alsobe made upon a Similar plan, following the generaldirections given in our description of Refining on alarge scale .

CHAPTER XVII .

METHODS OF ASSAYING .

Ithe regular order this chapter should have

preceded the last . But, as Refin ing is Simply

Assaying on the largest scale, itwas thought the bettercourse to give, in the first place, a description Of the

outlines of the Process of Refining, as the most suit

able introduction to the general description of the

Methods ofAssaying . In fact , if the reader has per

formed the little experiment just now describedat theend of the last chapter, he has been truly making a

kind of Assay ; although, from want of experience,and in the absence of proper appliances, he has probably not been quite accur ate enough in his manipula

tions .Modern Science has brought the art of Assaying

to a degree of perfection more than sufiicient for allpurposes of Bullion operations . It can readily beimagined that a subject involving so many nice anddelicate operations has warmly engaged the attentionofmen of science, by whom it has been brought to itspresent high state of theoretical development ; andthat it has received also the best practical treatment atthe hands of scien tifically educated working Assayers .

206 METHODS OF ASSAYING .

minutest fraction . This is accomplished by thattriumph of the mechanical art,— the Assay Scales,which enable the Assayer to weigh to the twenty

thousandth part of the Assay piece .A true Assay scale will carry a maximum Of about

100grains, and will turn distinctly with the L—gg th part

of a grain . This beautiful instrument, looking like the

ghost of a scale , so Slender and delicately constructed

is its framework, upon which a particle of dust would

make an impression, is kept in aglass-case, on e sideof which lifts up, to enable the Assayer to introduce

the objects to be weighed . For fear of getting troublesome specks of dust inside the case, the Opening Sideis lifted but rarely, and even then only just sufficientlyhigh to permit the introduction of the fine pincers ,with which the weights and the objects to be weighedare passed into the pans of the scale . The Assay

Balance is a beam scale, supported by a brass pillar ;the pans are suspended fi°

0m the ends by almost in

visible pieces ofwire . The beam is apointed bar ofMetal, very light, yet strong enough not to bendunderthe maximum lead which the balance is constructed tocarry . The tiny hard tempered steel points turn on

Agate plate s . A lever, affixed outside, enables the

As sayer to raise and to lower the beam withthe pans suspended fi°

om it ; the pans, when in astate of rest, are supported on nicely arrangedcushions .

The weights used in Assay weighing are little bits

of round or square metal ; or Short pieces of fin e Platinum wire, bent into various Shapes ; these piece s are

METHODS OF ASSAYING . 207

SO small that it requires a magnifying glass to seethem with any degree of distinctness .Two small wire hooks , weighing the TL—O oth part of

a grain each, are suspended on graduated slides , affixed

to the beam ; by means of rods so arranged that theycan be worked from outside the case . These r iders,asthey are called, can be Shifted backwards and forwardson the beam , and, acting on the principle of the leverscale, they may thus between them Show to the - th

,

or even m th part of a grain . The arrangement000

for

working the rods from the outside enables the weigher

to obtain this high degree of accur acy without liftingthe glass shade ; so that neither dust, nor even themovement of the air caused by his breathing, canaffect the balance . Other balances are without this

arrangement ; yet they are, practically perhaps, just as

serviceable .

To give a notion of the wonderful accur acy of anAssay Balance prov ided with riders as just nowdescri bed, we may mention that a Balance Of this

kind will enable us to detect a difference in weightbetween two sovereigns to a fi

°action of 3—5—5th part

of the value of a penny ; so that, in calculating byweight one 1000 sovereigns worth of Gold against

another 1000, thi s balance will give a return exactto -§d, which is far beyond what is necessary inthe Bullion trade .

In ordinary Assaying operations an indication of

the 1000th part of a grain giv es an accuracy of

weighing to the minute fraction of the —th par t ;12000

which is amply sufficient forall practical purposes .


The Assay pieces sent in for analysis weigh from24 to 48 grains for Gold, and from 48 to 120 grainsfor Silver . For a single Assay the Assayer uses only12 gram s of the metal ; but the excess is required toenable him to make double or treble Assays when

needed ; also to give him an extra supply of substancein case Of error . As the whole of the small piecesare afterwards returned to the owner, with the Assaypaper, there is not, or there ought not to be, any lossof the more valuable part of the material.The Assayer accordingly takes 12 grains Troy

weight of the metal sent him to Operate upon . His

first business is to find out how much of these 12grains is pure Gold, and how much Alloy . Supposing

he finds , for instance, that out of 12 grains 1 1 are

Gold, and one Alloy, he reports the fineness Of theexamined Assay piece as 22 carats out of 24, which,as we know,

is the fineness of British Standard Gold .

If the 12 grains hold 1 1% grains of Gold to grain Of

Alloy, the proportions are 23 in 24 ; or, as the Assay

would report , Better 1 carat 0 gr . than Standard .

If there are 10grains of Gold, and 2 of Alloy, which

makes 20 in 24, the Assay would report Worse 2carats 0gr . than Standard .

The 12 grains Troy are called the British AssayPound ; and each of the 12 grains represent 2 carats

in the 24 carats . The grains of the Assay pound, forGold, are divided into fractions , up to 3

15 th of a

grain . This gives the following corresponding proportions


English Assay for Silver ; but theoretically we may

weigh to 316 th dwt . , or 0001 fin e .

’

When we come to Assays of Silver con tainingtraces OfGold, reported, say 5 or 10or more grains of

Gold per lb . Troy, we can weigh to half a grain .

Thus , 1 lb . Troy is 12 oz ., or 5760 grains or parts .

The 12 grains of the Assay pound may be div idedaccordingly into parts . This would giv e a less

accurate result than the former ; however, for such

parting Assays of Silv er the Assayers generally use a

larger quantity than 12 grains of metal, so as to

increase the chances of a more accurate result .Thereare some English Assayers who do not bind

themselves to the Assay pound and its sub-divisions .

They use weights of their own ; and they will maketheir Assay also upon pieces of more or less weightthan twelve grain s . In fact, it is much more con

v en ient entirely to follow the decimal system, ratherthan deal with fractions of grains ; and we believe that

a great many English Assayers do so now . The

weights and sub-divisions of weights which they use

The French Assayers report to Eidooth fine , and state the

Assay in M illiem esand ten th of M illiizm es . British Standard, forin stan ce , is 9166 in France . English Assayers only allow the fith

grain for Gold, or the dwt. for Silv er , where the As say we ighsit full, or ov er ; if it we ighs on ly or €2th8 , or gths of it, they

ignore it. For these reasons , the av erage of English Assays isbelow that of Fr ench Assays . The English method may appearsafe ; but it is n e ither mathematically nor logically corre ct ; and inthe pre sen t advanced state of the science we ought not to lagbehind othe r nation s .

METHODS OF ASSAYING . 21 1

are of secondary importance , in so far as we areconcern ed ; and in the Assayer’s hands such weights ,no matter what they happen to be , will answer every

purpose, so long as they represent units and theirminutest practicable sub-div i sions .

From thi s description of the weighing systempursued in Assaying the reader may gather an idea ofthe minuteaccuracy of the method, which enables the

Assayer to estimate fi°

om a small sample the exact

value , or, at least, very nearly so , of a heavy Bar ofGold or Silver . The Assayer also uses a largerbalance , in which he can weigh heavier pieces to —

5th

of a grain exact . With these larger scales he weighs

off, in the first place, the several parts of twelvegrain s each which he requires for his Assays .

It now remains for us to describe the Chemical

processes . In ordinary Bullion Assays (for we here

leave out of consideration all Assays of Ores , asproperly belonging to the province of Metallurgy) the

pieces of Metal to be analysed may consist of

Gold containing only Silver .

Silver containing only Gold .

Gold containing only Copper or other inferiorAlloys .

Silver containing only COpper or other inferior

Alloys .

Gold containing both Silver and Copper orother inferi or Alloys instead of or in

conjunction with the latter.


Silver containing both Gold and Copper orother inferior Alloys instead of or in conjun ction with the latter.

There are two methods of Assaying, which ,according to circumstances, are employed singly orjointly, v iz .

The Assay BY ACID, and

The As say BY CUPELLATION .

Assays by Acid,are madeFor Gold contain ing on ly S ilv er .

For S ilv er contain ing only Gold.

Assays by Cupellation are madeFor S ilv er contain ingon ly Copper or other infer ior

Alloys .

Assays , by Cupellation first, and Acid after, are

made :

For Gold contain ing on ly Copper or other infer ior

Alloys .

For Gold containing S ilv er and Copper or other

inferior Alloys instead of or in conjunction

with the latter .

For S ilv er containing Gold and Copper or othe r

infer ior Alloys instead of or in co njunction

with the latter .

And in this order we Shall describe them .

’

Silv er As says can also be made in an other way, quite distin ctfrom the abov e , v iz . , by the so-called French or Wet Method ofAssaying Silv er ; acomparati v ely new process, of which we Shallspeakat the end of this chapte r .

214 METHODS or ASSAYING .

judge pretty closely by the mere look of anAssay piece .

Upon theAssayer’

s estimate of this, whichmay be taken

to be pretty correct to twenty or thirty milliemes , hecalculates the quantity of Silver required to be added .

The process is conducted as followsTwelve grains (the Assay pound) are taken off the

Assay piece, and weighed in the balance as accurately

as it can possibly be done . A preliminary Assay showsthe 12 grains to consist of

Say about 10ofGold, and2 of Silver .

Consequently, 28 grains of pure Silver must be added

to the Assay piece , to bring the weight of the whole

up to 40, being 30of Silver,and

10ofGold .

Thi s addition of Silver to the Assay piece of Gold is

called Quartation .

The forty grains of mixed metal are meltedtogether ; the inquartated Button obtained is flattenedon an anvil, and annealed once or twice to soften it ;it is then passed between rollers , so as to reduce it toa thin plate or ribbon , about 1% to 1 72inches long, and

about 33 inch Wide . In the rougher wholesale Refiningprocess , as it may be termed, the Metal is granulated.

In the Assay this rolling out into a fine ribbon hasexactly the sam e effect, in so far as the exposing of a

larger surface to the action of the Acid is concerned .

The r ibbon is rolled up upon a quill, which givesit the shape of a short watch Spring ; the small

Spiral piece of Metal— the Cornet, as it is te rmed ,is placed in a glass nzatrass, or retort , standing

METHODS or ASSAYING . 215

on a hot sand bath, where pur e Nitric Acid is then

poured over it. It is now boiled for a quarter of anhour ; after which the Acid is cautiously decanted,and fresh Acid poured over the Cornet in the

Matrass , until all the Silver is dissolved . Three

oun ces ofAcid are necessary for the first boiling ; lessafterwards , as the quantity of the Silver dimin ishes .The Acid is not used in its full strength ; the firstboiling is done with a mixture of 30 per cent . of pureAcid and 70ofWater (about specific gravity, concentrated Nitri c Acid being The second boilingis effected in strongerAcid,about halfconcentrated Acidand halfwater this really dissolv es out the remain ingSilver . Different Assayers have different ways , bothas to the strength of the Acid and the time of boiling .

A trace of Silver, from 1 to 1 4} M illiem es, is said always

to remain with the Gold . As this is known to bethe rule, allowance is made for the Silver remaining,which is called Sur charge . It is said, however, that athird boiling, conducted upon the plan of the French

Assayers , clears offall the Silver .“Then the whole of the S ilv er present has been

removed as far as practicable , the Cornet, or spiralwhich now appears of a red brown colour, and is verybrittle from its honeycombed structure, resulting from

the removal of the intersecting atoms of Silv er, so thatit requires the most delicate handling to guard againstits breaking— is washed successively in hot and in colddistilled‘ water, and then heated in a small oven , to

Distilled wate r must be used,as comm on ri v e r or pump waterwould precipitate small trace s of Chloride of Silv e r in the ce llulars tructure of the Co rne t,and would thus rende r the Assay inaccurate .


anneal it, This Operation causes it to contract

slightly,and imparts to it a dead golden colour but it

still remains bri ttle, and an attempt to unwind it will

break it to pieces .However

,the Corn et is now pure Gold.

Now, to make our calculation of the result of the

Assay . We must remember that 12 grains were

taken from the Assay piece, to which 28 grains of

Silver were added, making in all 40grains . Supposethe pure cornet, carefully weighed in the Assay

balance, is found to weigh, say 9%%th grains . In thiscase 303

14-th grains of Silver have been di ssolved by

the Acid ; substracting from thi s the 28 grains Silveradded, we find that there were 23

14—th grains of Silver

in the 12 grains of the original metal .

In the Assay pound 9%—%th grains are equal to 19

carats 3g grains in fineness : or Worse thanStandard of 22, or 833 fin e in M ilhemes . The proportions assumed at starting were 10Gold and 2 Silver ;or W 2 0, or 834 ; the actual Assay has , therefore ,turned out {;th grain , or 1 Millieme worse than theestimate . The Silv er of 23

147th grain s in the 12 is equi

valen t to 962 gr . per pound Troy , or 40pennyweights ;and the Assay , asapartingAssay, would be reported,

Gold W gr .

Silver 40pennyweights per 12 oz . ofmetal.

On comparing the process of Refining with thi smethod of Assaying , it wi ll be seen that, essentially ,the chemical action is the same ; but that in the

Assaying the process is modified to suit the delicatenature of the Operation .


weight for the rest ; which , being placed in on e of the

pans of the Assay scale , the other Corn ets may be

weighed again st it, by simply adding or subtrac tingthe grains and fractions of grains required to establisha perfect equilibrium between the two pans . The

grain sand fractions of grains so added or subtractedgive at once the Worseness below or the Betterness

above Standard .

Say the Standard piece Assayed is found to weigh1 1 Assay grains (exactly 22 fineness) ; one of the

Assays is found to weigh 1 1-1 grains B 02 grains ;another grains W 52 5. In thi s case the Stan

dard piece has lost nothing . But let us suppose it is

found to weigh only l0g—iths , showing a loss of 314t h

Assay grain , or gth carat grain ; the other two pieces

(ifweighing the same as before) would be —th carat

grain better, or B —18-th or W —g-th grains .

For S ilv er contain ingGold — In Assays of this kind

the Silver is generally much in excess of the Gold, and

there is , consequently , no necessity for further addition

of Silv er . For the re st the process is the same as inthe Assay just now de scribed . The Silver will dissolve

very readily,and leave traces of Gold behind in the

glass matrass . Instead of taking only 12 grains tobe Operated upon , the Assayer may use 4 tim es that

quantity . W ith forty-eight grain s of Metal, and abalance weighing to

fit—nth of a grain , he ought to be

able to weigh to48fil th exact ; and to discover accord

ingly to %th part of a Troy grain of Gold in the Troy

pound . It is by no m ean s n ece ssary, however, to


carry the Assay to such minute fractions ; such Assaysare sufficiently accurate if showing full grains of Gold

per Troy pound ofmetal.

Fine Gold may also be Assayed without Quartation ;and this may sometimes even be nece ssary . The

Assay piece , having first been accurately we ighed , is

dissolved in Nitro-Muriatic Acid (the only Acid which

dissolves Gold) . The Chloride of Gold is then pre

cipitated by Sulphate of Protoxide of Iron ; the precipitated Pure Gold dri ed, annealed,and weighed again .

It is , however, a tedious process , and , if Silver be present , the Chloride Of the latter metalwill be found very

much in the way . The process is rarely made use of.

ASSAY BY CUPELLATION .

— In cases where Goldor Silver, either separately or jointly, are Alloyed with

Copper, Lead and other impurities , they are first

separated from these base Alloys by Cupellation .

The process of Assaying Gold and Silver by the

Cupel has been kn own for centuri es , and still remain sto this day one of the most wonderful and interestingchemical operation s . It is totally differen t in its

nature from the Assay by Acids . It is based upon

the feeble affinity which the Precious Metals have forOxygen , and on the strong tenden cy of Copper, Tin ,

&c . to oxidise rapidly in contact with Lead at a hightemperature , forming a readily fusible Oxide , whichdrains off through the Cupel (a porous earthy vessel)as through a sieve , whilst the Precious Metals are leftbehind, the Cupel being impermeable to Metallic particle s , e v en in astate of complete fusion .


The strongafi n ity whichall the baser metals havefor Oxygen distinguishes them from the Precious

Metals . Lead, notably, is soon converted into anOxide . Melt a small quantity ofLead in an iron ladleuntil the metal runs , and continue the heating until it

is red hot. You will find that a dark yellow scum

soon begins to form, especially at the sides of theladle ; if youremove this , the bright surface exposedfor an instant at once becomes covered again with

another coating,which floats to the sides ; and at last

the whole of the metal will be converted into the

yellow Oxide , or Protoxide of Lead, or Litharge .

Upon continued application of heat, raised to a higher

degree,more Oxygen is taken up by the Protoxide,

which is thus converted into the Red Oxide (a m ixture

of Protoxide and Binoxide of Lead) .Zinc , Tin ,

and other metals which fuse at a com

parativ ely low temperature , are readily oxidi sed by

intense heat with free access ofair (which gives upits Oxygen to the Metals) ; even Copper, whichrequires a higher temperature to fuse , is soon oxidi sed

by intense heat with free access ofair . Whereas Goldrefuses to oxidise at any temperature ; and Silv er

oxidises only to a very limited extent in the mostintense heat , such as is never reached in Assaying .

A slight consideration of these characteristic pro

pe rtie s of the different metals will naturally lead to thesupposition that where a mixture of the se several

metals is exposed to the action of a proper degree of

heat, with free access of atmospheric air to themolten m ass , the baser m etals will be converted into


portion of the other base metals ; and this action goeson until complete oxidisation of the Alloys is effected,and pure Silver and Gold alone are left.

Now comes the question, How are the Oxidised

Alloys removed, so as to leave the noble metals in a

state of purity P Here the so-called Cupel performsits oflice . The Cupel is a small vessel, about twoinches in diameter and one and a half in ch high, con

cave inside , and in shape not unlike certain kinds Of

salt cellars . It looks as if it were made of earthen

ware . It is, however, made of bone ash (previouslypurified) . Though of porous structur e, it is a strong,fire-proof vessel, which has the remarkable propertyof allowing fused Litharge (and other Oxides in a state

of fusion) to soak into its substance as water will into

blotting paper, whilst it is impermeable to metallicparticles .

Suppose we have the following mixture heating ina Cupel

Lead 22 parts

Copper 2 partsTin 1 part

Not alone will the Lead , converted into Litharge m a

state of fusion, sink into the Cupel, but it will assistalso in forming the fusible Oxides of Copper and Tin ,

which will equally soak into the substan ce Of the

Cupel. If, in addition to the Lead , Copper, and Tin ,

Silver and Gold are present, say in the proportion of

three of the former to one of the latter, these two

Precious Metals , resisting the Oxidising influences to

which the baser Alloys have to yield, will not sink into


the Cupel, but remain behind, in a state of fusion , at

the bottom of the Cupel.

For S ilv er contain ing on ly Copper or other baseAlloys

— In these Assays it is taken for gran ted that no

Gold is present . The Silver may contain Copper, or

Lead , or other metals , in larger or smaller proportions .

The process remains pretty much the same , whether

the Silv er is 600, 700, 800, or nearly fin e .

A sample of 12 Troy grains (equal to the Assay

pound) of the Metallic Alloy is accurately weighed .

Let us suppose thi s sample to be about 950fine , and

the 50 parts remaining to be partly Copper, partly

Lead . To make the Cupellation succeed properly, a

quantity of pure Lead, at least fiv e times the weightof the Assay piece , must be added to it.

The quantity of Lead to be added varies according

to the presumed fineness of the Silver,and the proportion of Copper present in the Alloy . Copper has agreat affinity for Silver, which protects it, in a measure,again st the action of Oxygen ; and , as a rule, it

requires 15 parts of Lead to carry off one part of

Copper . An expert Assayer knows by experience

what is required, according to the supposed fineness ‘

of the Silver Alloy ; a moderate excess of Lead is not

prejudicial to the success of the Assay.

The process is conducted as followsThe twelv e grains of the Silver Alloy , carefully

weighed in the Assay scale s , are charged in to the

Cupel,and sixty grain s of pure Lead added . Fr equentlythe Lead is put in first, and allowed to melt in the

224 METHODS os ASSAYING .

Cupel, and the Silver Alloy, wrapped up in a slip of

Lead foil, is dropped into the molten Lead bath after .The Cupel is placed inside aMnfiie . Thi s is

made of fire clay, in the form of an arch , with a flat

bottom ; it is about six inches long , by four wide, andfour inches high ; it is open at both ends , and the

arch over the Cupel is perforated so as to let theatmosphericair circulate freely inside .

The Mayle stands in the Furnace . Assay Furnaces

are made ofall sizes, capable of holding from one to

twenty Muflles or more . They are heated with cokeor charcoal, and a strong draught is required, bothfor the bright burn ing of the fuel and the currentof air , which, when the formation of the Lithargebegin s, is required to play upon the molten metal bathin the Cupel.The Muffle , with the Cupel in it, is gradually heated

to redness in the closed furnace, which is then opened,and the Assay is charged into the Cupel. As soon asthe Metal is in full fusion , presenting a smooth convexsurface to the eye,air is freely admitted, which , gettingheated on its passage to the Cupel, at once begins tooxidise the Lead. The metallic bath shines very

brightly, a scum forms on the surface, where it flits

about, apparently moving towards the sides of theCupel. This is the fused Litharge . As the temperature

increases to white heat , fum es of Lead rise ; and themovements on the surface increase in rapidity, themolten metal presenting a continual succession andalternation of films of Oxide forming on the surface,clearing away and forming afresh . These film s con


made, on the same system as explained under the headof Assays of Gold by Acid . A piece of StandardSilver, of twelve grains weight, is Cupelled, in theordinary way, in the same Muflle , and simultaneously

with the Assay piece or pieces ; it is thus exposed toexactly the same degree of heat as the latter, andOperated upon under the same condition s . If theStandard piece, after Cupellation , weighs exactly 1 1 1

grain s (or 222 dwts . fine) , then no loss has taken placein the Assay ; but if it weighs 1 1075 , or 1 1025, thenit is fair to assume that the sam e fractions have been

lost in all the other pieces , and the fineness of thelatter can be computed accordingly .

For Gold con tainingon ly Copper or other base Alloys .

Gold which contain s Copper can be Cupelled inthe same manneras Silver ; it can bear a much higherdegree of heat than the latter Metal. Very large quantities of Lead are required in the process , to overcome

the resistance of the Copper to oxidation,as that Metalhas a very strong aflin ity for Gold . But even wi thlarge quantities of Lead the process is uncertain .

It has been found that Silv er lessens the affinity

between Copper and Gold, and that the addition of

Silver to the Assay piece, in the proportion of threeparts to one part of Gold, will bring about the ready

removal of the Copper by Cupellation . This proportion of three of Silver to one of Gold is the sameas used in Refining and in Quartation in Assays byAcid .

Besides , Gold , unless specially composed of only


fine Gold and fin e Copper, gen erally contains Silver,which cannot be parted from it by Cupellation .

It is therefore expedient in cases where Goldalloyed with baser Metals is to be Assayed

,to Quartate

the twelve grains of the Assay piece at once withthirty-six grains of pur e Silver (or thereabout, according to the supposed quality of the Gold) .This gives a total of forty-eight grains , with three

fourths of Silver in it. The mixture is Cupelled inthe same way as just now described ; the button

fin ally resulting consists of Silver and Gold alone .

Let us suppose the Gold in the Assay piece tobe about 750 fin e , the balance consisting of 84

parts of Silver and 1 66 of baser Alloy ; to the 12grains of thi s Assay piece 36 grains of Silver are

added, making in all 48 grains . After Cupellation thebutton ought to weigh 46 grains . Namely

For the Gold in the Assay pieceFor the 84 parts of SilverFor the Silver added

The two grains wanting to make up the original

weight of the Quartated Assay piece are accountedfor by the 166 parts of baser Alloy, oxidi sed in the

Cupellation .

The bead or button of the 46 grains of Gold and

Silver is then Assayed by Acid . The piece is flattened

,and laminated into a thin plate or ribbon ,

which is rolled into a com et, and boiled in Nitric


Acid, in the same way as previously described. Whenall the Silver has been dissolved out, there should beleft nine grains of pure Gold ; which corresponds to afin eness of 750 in Milliemes in the original Assay

piece . Thus we have here Assays by Cupellation andby Acid combined .

For Gold con tain ing S ilv er and Copper or other

base Alloys . Alloys of thi s kind are Assayed in

precisely the same way as just described, by Cupellation first and by Acid after . We know in such casesthat Silv er is present, and our object is not only to

ascertain the fineness of the Gold, but also the quantityof Silver in the As say piece .

The Assay piece of twelve grains is accordinglyat once Quartated with Silver, the Mixture Cupelled,and the Silver and Gold Corn et treated with NitricAcid .

Let us suppose the Gold in the Assay piece to be

800 fine , with 140 parts of Silver and 60 of Copperor other Alloy . To twelve grain s of it, accuratelyweighed, 36 grains of Silv er are added

,making 48

grains in all. After Cupellation, the piece shouldweigh grains , namely

For the Gold in the As say piece

For the Silver addedFor the Silver originally present

grain sThe grain wanted to make up the original weight

of the Quartated Assay piece being the baser Alloyoxidised and absorbed into the Cupel.


Assays made solely to ascertain the fin e weightof Gold, or the fine weight of Silver, are called ordi

nary Assays .Assays made for the purpose of determining the

relative proportions ofGold and Silver, or of Silver and

Gold, are called partingAssays .

The liability to error in Assays ofall kinds may bevery much lessened bymaking double or treble Assays .

The Assayer is generally instructed to make double

Assays ; for the Bank of England treble Assays are

made .One Assayer may be effectively checked by

another, to whom a second piece of the same Bar issent . If the two Assays difl

'

er , which is, however,very seldom the ease, another set of Assays can bemade . Should these difl

'

er again , the fault may be in

the bad melting, and in the irregular distribution of

the metals in the Bar ; in which case the Bar should

be remeltedand Assayed again . Finally, if this doesnot answer, the whole Bar should be Refined, toobtain the correct quantities . Such difficulties occur

very seldom indeed ; we simply allude to them herein order to Show that the principle of correctness canbe carried out in any case .

THE W ET METHOD OF ASSAYING SILVER

(Process of Assaying Silv er by the Humid Way) — InFrance a method of assaying Silver has been perfected of late years , altogether distinct from the

process of Cupellation . French Assayers use it

extensively . English Assayers do not as yet seemto favour it much .


Silv er alone (including as a matter of course Dore’

Silver) is Assayed by this method.

The prin ciple upon which the Assay is based is

this — The As say piece is dissolved in Nitric Acid,which converts the Silver in it into Nitrate of Silverin solution . The solution is precipitated by comm onSalt (Chloride of Sodium) , which throws down theSilver as Chloride

,thus enabling the Assayer to

dete rmine, from the quantity of the precipitate ob

tained, the fineness of the Silver in the Assay piece .

We have before this had occasion to state thatNitrate of Silver in contact with Chloride of Sodium

(Common Salt) is converted into Chloride of Silver,and the Salt into Nitrate of Soda .

It might be suggested here that the Chloride of

Silver precipitate produced fr om, say twelve grains ofAssay, m ight be separated, reduced to pure Silver byZinc and diluted Sulphuric Acid, and weighed . Thismight indeed be done, although not with all desirableaccuracy ; but, as will be seen a little further on,there is no necessity for thi s somewhat complicated

course of proceeding .

The Salts of the Metals in a state of purity always

consist of certain fixed proportions of an Oxide of the

Metal and an Acid ; there is never the slightest variation in the per cental proportion of each element

present . A certain fix ed quantity of pure Nitric Acidwill take up a corresponding weight of pure Silver ; ifthere is less Acid than requir ed, some of the Silverwill remain undissolved . If there is too much Acid,the surplus will remain un charged with Silver . In


the same way Chlorine combines with Silver in proportions always rigorously the same . A certain fix edquantity ofNitrate of Silver will thus be decomposed

by its equivalent proportion of Common Salt . Wherethe proportions of the Nitrate and Chlorideare strictlyequivalent, there is neither Nitrate of Silver nor Chlo

r ide of Sodium left in the mixed solution of the two ;but where thi s is not the case, the excess of the preponderating salt remains in the solution , and its quan

tity may be accurately determined by a simple chemical

process .The reader may make an experiment . Dissolve a

piece of Silver in Nitric Acid ; or, better still, purchase

from a chem ist a quarter of an ounce of crystallisedNitrate of Silver . Place thi s in atumbler, and pourdistilled water over it; when dissolved, put about onethird or one-fourth of the contents into a second tumbler, to be kept in reserve . Dissolve half an ounce of

Common Salt in a third tumbler, reserving a portionof this Salt solution also in a fourth tumbler . Placetumblers numbers one and three alongside each other

,

and gradually add some of the Salt solution to theSilver solution . A thick white precipitate of Chloride

of Silver will form at once . Agitate the contents of

the first tumbler, then allow them to settle down . As

soon as the supernatant liquid is clear again, add a

fr esh portion of the Salt solution ; the same white

Deposit will probably form again , though not so Oopi

ously as before . Further additions of Salt solutionmay produce but a slight result, until finally no morewhite flakes are formed .


weighed ofl'

; which is the only weighing Operationrequired in the process .

This is dissolved in pure Nitric Acid, and the

Solution— diluted with distilled water, so as to giveexactly one litre , or cubic centimetres of liquid— is

put into a suitable white glass bottle , which it fillsabout half.

The neck of the bottle is placed under the Pipette ,suspended above it, supported by a stand . The P ipetteis a hollow glass cylinder, terminating at both ends inelongated necks wi th fine orifices or openings . Bothends are furn ished with stop cocks ; but the flow

of the solution with which the Pipette is charged can

also be stopped or regulated, drop by drop , by closingthe upper orifice with the fore finger . The Pipettecontains the Decime Standard Solution of pur e Salt.The Salt Solution is carefully made beforehand, and

kept in well-stoppered flasks , to guard it from loss byevaporation . The solution is made accurately of such

trength that cubic centimetres of it will pre

cipitate exactly one gramme of pure Silver, neither

more nor less . The Salt Solution, like the Silver

Solution, thus measures exactly one litre (equal tocubic centimetres) . The original volume of the

two so-called Standard or Normal Solutions is only100cubic centimetres each ; but when they are wanted

for use , they are fir st turned into so-called DecimeSolutions , by the addition of nine parts of water.

When required for an Assay, the Decime Salt

Solution is put into the Pipette, which has engraved

upon it a graduated scale , div ided into centi


metres (with decimals in dicating to Edi th part) ; so

that when full, the surface of the liquid touches 0 on

the scale ; when half full, 500, &c . The Operator canthus read off to a small fraction how much of the Salt

Solution he has discharged from the Pipette .

Now, if the one gramme of Silver contained in the

centimetres of the Decime Silver Solution is

pure Metal,it will exactly take the centimares

of the Decime Salt Solution to precipitate the Silver ;if the Metal is only 950 fin e , it will take 950parts ofSalt Solution ; if 600 fin e , only 600parts of the SaltSolution will be necessary ; and, provided the neutralisation point can be fixed with unerring certainty,nothing can be more simple than this operation .

Supposing it is known , from a preliminary Assay,or from experience, that the piece of Silver is from800 to 850 fin e . The operator may then at oncedischarge into the flask which holds the Assay piecein Nitric Acid Solution 800 parts of Salt Solutionfrom the Pipette . The Chloride of Silver forms

copiously, the flask is well shaken, and when theDeposit has settled, and the supernatant liquid isclear and at rest. again, a fur ther addition of SaltSolution is made, but this time cautiously, and dropby drop , so long as a precipitate continues to form ;the bottle is occasionally shaken dur ing the progressof thi s operation . Suppose the Assayer has thusdischarged from the P ipette twenty-four centimetres

more , the precipitate form ing upon the addition of

every fresh drop getting fainter and fainter, and failing

altogether to make its appearance upon the addition of


the twenty-fifth centimetre : in that case the Pipette

will Show that 825 parts of the Solution originallycontained in it are gone ; the Silver is, consequently,825 fin e .

The Assayer may, however, in order to make sure

that there is really no more Silver left to precipitate ,have discharged 826 or 828 centimetres of the SaltSolution , and he may thus have created an error, in

which case there will be a slight excess of Salt in theSilver bottle which has to be removed . This is effected

by placing the bottle under another Pipette , which ,instead of a Decime Standard Solution of Salt , containsa Decime Standard Solution of Nitrate of S ilv er . This

Silver Solution, being added very cautiously, drop bydrop , will now in its turn form a precipitate with theExcess of the Salt ; two or three centimetres will, of

course , under the circumstances here assumed, sufli ce to

throw down the Excess of the Salt , and thus to correct

the error created by the over-addition of Salt Solution .

If the Assayer has found, accordingly, in the first

instance, that 825 Cubic Centimetres of his SaltSolution were gone from the Pipette when the for

mation of a precipitate ceased , and had continued,nevertheless , to discharge two or three Cubic Cen

tim etr es more , he Should now again at 825 find neither

Nitrate of Silver nor Chloride of Sodium in the AssaySolution .

A higher degree of accuracy may be attained, and

a more eflicient check applied, by double or treble

Assays , as in Cupellation . A second Assay, for

instance, may be made by di scharging the

CHAPT ER XVI I I .

IRIDIUM, AND BRITTLENESS IN BULLION .

AGOLD Assay may at times come back from the

Assay Oflice , marked Iridium or a Silver Assay,

with the word Brittle wri tten across it. Thi s is avery annoying result to the Bullion dealer, for he loses

1d per ounce on the Gold, and %d per ounce on theSilver ; these being the Refin er

’

s charges for purifyingthe Gold, and rendering the Silver malleable . Besides

thi s , the Bars so marked are thrown out of thebatch , and have to be sold separately by the Bullion

broker .Iridium is found mostly in crude Platinum, either

in alligation with the latter Metal, or as a native Alloyof Iridium and Osm ium, another Metal of the samegroup ; it is occasionally found also in native Gold .

Iridium is the most refiactory Metal known, fusingonly with great difliculty before the oxy-hydrogenblowpipe ; it resists the action ofall Acids, even ofAquaRegia, except in Alloys with a large excess of

Platinum . It is oxidised , however, by fusion withNitre , and by ignition to redness in the air . It is awhite or Steel grey, bri ttle Metal ; in hardn ess it

almost equals the Diamond . Where native Gold

IHIDIUM, AND BRI'

I‘TLENESS m BULLION. 239

happens to be Alloyedwith Iridium , the latter will not

fuse with the Gold ; but its hard, sharp , occasionallycrystalline grains will be found mechanically dissem i

nated through the Bar . Its presence in Gold is agreat inconvenience to the Mint, as its hard sharp

points injure the Steel dies (though made of the

hardest Steel) to such an extent as to render them

useless in a short time . The Min t and the Bank of

England are therefore compelled to reject all Barsreported as containing Ir idium .

Gold is freed fi°

om Iridium generally in the following

wayThe Gold and Iridium Alloy is melted together

with the proper quantity of Silver (the usual Refining

proportion), to reduce the specific gravity of the Goldsufficiently to cause the unfused particles of Iridiumto subside to the bottom of the molten mass . Iridiumhas a specific gravity of 18 6 , nearly approaching that

of Gold, which is 19 3 ; so that it requires the addition

of three parts of Silver (Sp. gr. 105) to one of the

Gold and Iridium Alloy, to reduce the specific gravity

of the mass to about 13, which will permit the Iridiumparticles to subside to the bottom . When the m ass isin fusion , the melter stirs the liquid Metal ; after whichhe lets it rest awhile, then pours the greater part ofthe contents of the crucible Ofl

'

into Bars,and puts

aside the residue left at the bottom of the crucible .

This residue contains the grains of Iridium . Theresidues of severalmeltings may afterwards be remeltedtogether, to remove an additional quantity of Goldfrom the Iridium . The last residue is dissolved in

240 IBIDIUM , AND BRI'I'I‘LENESS m BULLION .

Nitro-Muriatic Acid, which forms with the Gold theChloride of that Metal, leaving the insoluble Iridium

behind . The Gold is then finally precipitated fromthis solution by Sulphate of Protoxide of Iron .

The charge for remov ing Iridium from Gold is i-dper ounce in London ; that is to say, the Refin er buys

Gold Bars containing Iridium with an allowance of id

on the price per ounce .

We believe that, owing to the irregular dissemination of the Iridium , Assayers are not in a position to

pronounce an authoritative opin ion respecting the

proportion in which that impurity may be present in a

Gold Assay ; they stop short at its detection in the

Assay Cornet ; and small traces of it in a Gold Bar

will Often altogether escape detection .

Br ittleness in Silver renders that Metal, as theterm clearly expresses, too hard and bri ttle for coining

purposes . A blow with a hammer will shiver abrittle bit of Silver into pieces , whilst the soft Metalcan be beaten out easily into a thin plate . This brittlen ess 1s caused by the presen ce of Lead, Antimony,Arsenic and Mercury . The Mercury, however, willgenerally evaporate during the re-melting ° but Leadand the other base Metals can only be got rid of by

a process Similar to Cupellation, which has beendescribed in the Chapter on Assaying . The Bar ismelted together with an additional quantity of Lead ,in a reverberatory furnace, in a large Cupel madeof bone ash ; upon the free admission of air the

Litharge forms , oxidisingand carrying off at the same

CHAPTER XIX .

THE BULLION OFFICE AT THE BANK OF ENGLAND .

THE Bullion Office at the Bank of England is

situated in the glass-covered cour t, entered fromthe Lothbury side . Several strong gates guard theentrance ; and a couple of Bank Porters, in theirofficial gowns and hats, keep watch over it.

The words Bullion Ofli ce are written over anunpretending looking doorway . Enterin g through

this , there is a compartment to the left, speciallyappointed for Gold, another to the right, speciallyappointed for S ilv er . The interior of the Bullion

Ofli ce , with its vaulte d roof, is very plain , and looksrather bare ; scales , weights , and a few desks , beingthe only articles of furniture in it. At the rearthere are frowning arches, into which Porters may,now and then , be seen to enter wi th hand-trucks ,laden with shining Gold Bars , or bags of coin , or heavyboxes containing Silver ; or they may emerge fromthence carrying bars , for which a recipient is waitingat the counter . These arches lead to the v aults of theBank, where the great store of Bullion is kept .The gentlemen employed in the Bullion Office

attend to all this in -coming and out-going treasure,

BULLION OFFICE AT THE BANK OF ENGLAND . 243

without the least signs of exaltation or excitement ;on the contrary, they look perfectly cool, collected,and unconcern ed, and are most promptand businesslike in their acts and proceedings . They take goodcare of King Mammon, wi th whom they are evidently

on quite a familiar footing ; whilst , at the same time ,in their own quiet manner, they are polite , attentive ,and obliging to their customers .The number of Houses dealing with the Bank

regularly is not large ; and the names of the principalRefiner s , Bullion Merchants , and Bullion Brokers , areas Household Words in the Bullion Court . It doesnot often happen that strangers do busin ess directwith the Office .Suppose a stranger un acquainted with the modus

operandi comes to the Bank , and offers Gold Bars forsale ; he will be told , at the Bullion Office , that theseBars must first be re-melted, by the authorised Bankmelters . The addresses of these being given him , hemust proceed to one of them, to have the Bars re

melted . The Bars are there cast into what is called theBank of England shape— as near to 200ounces we ightas practicable, but not above that weight ; they arethen marked with the melter’s stamp , and such lettersor numbers as the seller may desire . They may nowbe taken back to the Bullion Ofli ce .

Here they are weighed in the Gold scales , the markand weight of each Bar being called out for mutualnoting . The Porters then cut off the Assay pieces , after

which the Bars are trucked into the vaults . If anad v ance ofmoney be there and then required, the chief

244 THE BULLION OFFICE AT

of the office , roughly estimating the fineness and v alueof the Gold from the appearance of the Bars , will

authori se a payment on account, to within 5 to 10

per cent . of such estimated value, and issue his order,which is paid in Notes in the Issue Department .A day or a couple of days after the Assays come

in , and the account is got ready . The calculations areverified, the balance due is settled and paid , and the

transaction is closed . The seller pays for the Assays

(always treble Assays) , but the Bank takes theBars at their full weight before the Assays are cut off,which the Bank keeps , of course .

When the Bank is asked to sell Gold, the amountwanted by the purchaser is stated, and Bars , to asnear the amount required as is practicable, are selected .

As these are all Assayed, the account is made outatonce, and the Bars , together with the Assay pieces andpapers , are handed over against payment in Notes ,which must first be taken to the Issue Department tobe verified and marked as good . The actual weight ofthe Bars is then less than stated, the Assay piecesbeing cut Off; but as these are given up with the

Bars , there is no loss upon the purchases . The Bank,at all events , does not make any profit on the Assaypieces ,as has been erroneously stated by Mr . Nicholsonin his remarks on the Bank of England.

The Bank of England buys the following descriptions of Foreign Coin without re-melting :

Russian Imperials,

United States Eagles , andFrench Napoleons d’

Or .

246 THE BULLION OFFICE AT

Now these shipments , some of them of manyhundreds of heavy packages, are taken at once forsafety to the Bullion Oflice , where they are assorted ;a day or two after, they are delivered to the holders ofthe Bills of Lading .

Thus , when a West India Mail Steam Ship arrives ,with a cargo worth some two or three millions Dollars

on board, consisting of a few small packages of

Precious Stones , a number of Gold boxes , ofall sizesand shapes , and a large quantity of Mexican Bultos,containing Silver Dollars , Lothbury may at times beseen lined, on the Bank side, with a number of vanswaiting to enter the Court. These vans do not lookas if they were heavily laden— at least, their loads arenot likely to attract attention by their bulkiness but

those who kn ow what is under the tarpaulin areaware that there lies heavy treasure at the bottom of

the van, though scarcely rising a foot high above it ;and the efforts of the horses when the vehicle is to be

moved show that there must be some four or fiv e tons

weight in each van .

The arrival of the West India Packet makes it a

busy time at the Bullion Cflice , twice a month . Thegentlem en of the Department have to bestir themselves

to brisk action at these periods ; as the Bank undertake s , for a small consideration , the verification andthe weighing of the Silver ; and many houses avail

themselves of this facility . The weighing of many

hundred thousands of Dollars is not a pleasant task .

The continual rattle of the Coins , as the porters Shoot

them from the ir original packing into the Copper

THE BANK OF ENGLAND . 247

pans of the scales and put them back again ; thesteadiness required in the operation, combined withthe rapidity with which it has to be conducted— formoney cann ot afford to wait long—are trying . The Dust

raised— partly consisting of atoms of Silver— coversthe coats and irri tates the throat ; and altogether,although Silver Dollars must certainly be a most

respectable and pleasing article to handle, the duty issevere .

To the right of the entrance to the Bullion Office,the Packing Rooms are situated . A store of strongiron-bound boxes is kept on hand here ; and theporters at the Bank undertake, for a small charge, thepacking of the Bullion and the marking of the boxesfor the Public . The marks and numbers are cut intothe lid or the side of the boxes by a chisel, so thatthey cannot be altered on the way without dete ction .

Over the join ts of the boxes roun d holes are countersunk, into which sealing wax is poured, to receive theimpression of the sender’s seal. The arrangementsaltogether are thoroughly practical, and deserve the

highest comm endation ; and , on the whole , there arefew things more satisfactory in business than dealingwith the Bullion Office of the Bank of England .

On the other side we give a copy of the AnnualReturn published by the Bank of England of themovements of Bullion . The year in question, 1865 ,was not a very brilliant one for commerce but 1866

was worse ; whilst 1867 was rather above the averageof imports of Gold Bullion to the Bank .

REPORT ON THE BULLION MARKET.

For week ending 23rd January 1868 .

GOLD .—The demand for export continues unabate d, andall the arr ivals of

the past week, m en tioned be low, hav e been taken for the Con tinent.

The supplies from Am ericahav e som ewhat fallen ofl'

, and wil l stillfurthe r decrease , owing to the lower exchanges reported from NewYork ;theamount stated, by the Ov e r land Mail,as hav ing been shipped dur ingDecember , is also v ery small, on ly but this may be in some

m easureaccoun ted for by the fact that the only remain ing duty, of 6d perounce on the export of Gold, was to be remov ed on the l st January thisyear ,and the Banks would therefore hold back all this Gold un tilafterthat date .

The Massilia has brought from Me lbourne .

Kent”

Scotia from New York.

DeutschlandSIdon

”

TotalThe exports hav e been to the West Indies, and to

Alexandria;and the on ly transac tions at the Bank hav e been awithdrawal of and asending in of both the se amounts

be ing Sov ere ign s.

SILVER .— Our Silv er Market has been quiet ; we hav e noarrivals of Fine

Bars to report— the price consequen tly remain s as last quoted—GOid perounce standard . The Deutschland” broughtabout from New

York this con s isted of Doré S ilv er , which was placedat the last rate of

605d. per oz . standard . The demand is almost en tire ly for the Con

tinent.

M EX ICAN DOLLARS —The Scotia brought about from

New York,and the se , together with those brought by the W. I. steamer ,

hav e be en taken at 58 §d per ounce with the exception ofav ery smallamount sen t to China, the whole has been taken for refining purpose s.

EXCHAN GE on Indiafor Banks’ Drafts at 60 days’ sight is lower ,andmay be quoted l s loid per Rupee for all three Pre sidencie s. Transactionsare v e ry lim ited .

INDIA GOVERNM EN T LOAN N OTES show noalteration fromour last quotations ; the price s are , 108 to 108} for the 55 pe r Cen ts ;103 to 103} for the 5 pe r Cents ; and 87 to 87i for the 4 pe r Ce n ts .

Q UOTATIONS FOR BULLION.

GOLD .

s d

Bar Gold 77 9 per oz . Std .

Bar Gold, Fine 77 9 pe r oz . Std .

Bar Go ld, Refinable 78 0 per oz. Std .

Spanish Doubloon s 76 O to pe r oz . last priceSouth Am er ican Doubloon s 73 9 pe r oz . last priceUn ited State s Gold Coin 76 3} per oz . last price

SILVER.

Bar Silv er 5 03 per oz . Std . flatBar S il v er , contain ing 5 grain s Gold 5 05 pe r oz . Std. last pr iceFine Cake Silv e r 5 5} per oz . last priceMe xican Dollars 4 105 pe r oz .

Span ish Dollars (Caro lus) pe r oz . none here

Fiv e Franc Pieces pe r oz. none hereQuicksilv er £6 17s per Bottle ; Discount 3 per cen t.

EXPORT of SILVER from SOUTHAM PTON to

INDIA , CHINA and the STRAITS .

Y ear . India.13

14 5

For Week ending 23rd Jan . 1868 . A. B . Co . , Sworn Brokers .

(0) In cluding Go v t Rem ittanceabout (6) In cluding Go v t Rem ittance of(0) Includ ing Go v t Re rm ttance of (d) Including Go v t. Remittance

of (1 ) Includ i ng Go v t Renuttauce of (f ) Inc ludmg Go v cram en t

Rem i ttance of

BELGIUMFRANCEHANSE TOWNSHOLLANDCOPENHAGENRUS SIASPAIN AND PORTUGALGIBRALTARMALTACONSTANTINOPLE

ALEXANDRIAADENCEYLONBOMBAYMADRASCALCUTTA

S INGAPOREPENANG

MANILLAHONG KONG

SHANGHAE

FOO-CHOW—FOO

CAPE OF GOOD HOPECAPE VERD AND SIERRALEONE

UNITED STATES

MEXICO , CENTRAL AM E

RI(‘

A , WEST INDIES , Ac.

BRAZILS

BRITISH NORTH AMERICA

AU STRALIA

fNEW ZEALAND

Torn .

Amount Im ported duringthe SIXMon ths endi ng 3oth June 1867

GOLD

ANNUAL REPORT 0

For the Year en di

BY MESSRS . A. B . dz C

SILVER. TOTAL . S ILVER

2 2 896 ,

2 5 19

9

TOTAL IMPORTS , 1867, 8

The produce of the NewZealand Gold Fi elds is v ery much larger than the amount stated abobut the greater part 18 at presen t sen t to Australiafor Shipm ent elsewhe re . The sum statedus Is the total rece i v ed In England di rect from NewZealand

254 BULLION BROKERS AND

The Custom-House Statistics are not reliable .

We quote here passages from the Annual Circular

of another brokering firm , alluding to this subject,2ud January 1868 .

Taking the Imports and Exports 50111 the Custom House wee rde for the pasttwelv e months , and comparing them with former years, we find the fe llewmg results

Total Imports , 23 m illions ; total Exports , 14 m illions ; balance in fav our of this country,9 mi llions , ofwhich 2} is in the Bank of England,and 01 millions unaccoun ted for . From

Am erica, large as our Imports hav e been , N . , 01 m illions , the total 18 less bythan last year . Australiahas also sent less by nearlyam illion . Outhe other hand , our

Exports showadeficiency chiefly to Indiaand China, the Expe rts to Egypt showing th eyear ,as compm d with former ones , against in 1866 , m 1865 ,

in 1864,and in 1863. W ith respect to the Cont1n ent, there isagreatfalling of? apparently , but,aswe said before,we hav e no confidence in theaccuracy of thereturns mrn ished to the Custom House .

”

Afte r a general discussion on mercantile disasters,

over-trading, borrowed capital, unfair competition ,plethora of money, and want of commercial morality,the writer proceeds as follows

Capitaland labour , which ought to hav e been harmonious ,are utterlyantagom stic ;class isagainst class ; whilst corruption , imm orahty, and downright theft,are openly laid,by our leading newspapers , to the charge of the whole commun ity. If this be true ,itmay ,

in some measure ,account for what may hav e appear ed to others an anomaly in

the Bullion trade , v iz the large quantities ofGoldannuallyunaccoun ted for ,—for example ,from the let January 1859, to the 30th Nov ember 1867, the records of the Board of Tradeinform us that our Im ports of Gold exceed our Exports by Of these 371}millions ,

probably twoare in the Bank of England 1n excess ofwhat it held at that date , and the

other 35} are unaccounted for . We do not find the same discrepancy m the retur ns of

S ilv er , the expe rts for the same pon od beingabout three milhons in excess , wh mhmet 18not W i thout its significance .

”

What the writer hints at here is the well-kn ownpractice of some shippers of Bullion to omit declaringthe value of the Gold shipped by them ; the Goldis frequently packed with and declared as Silver, inorder to save freight , a practice, which though nodoubt well paying to those who undertake the r isk ,is not in accordance with the sound principles of com

SHIPPING or BULLION. 255

mercial honestyand prudence . The deficit of the 35-5millions of Gold is thus accounted for by the excessof the three m illions of Silver.

Bankers and Mercantile Houses having to receiveor to ship Bullion generally entrust the management

of these matters to the Bullion Brokers, who will alsomake advances ofmoney if requir ed .

Without proper appliances and suitable arrangements for the purpose, a Merchant cann ot well himselfreceive or ship Bullion ; the packages are heavy, andshake the floors of the offices ; they are apt alsoto damage the fingers and toes of persons not accustomed to handle them. Spacious strong rooms arerequired for the safe keeping of Bullion . Assay piecesmust be cut off by a practised hand; proper scales and

weights have to be kept . Moreover, the many te chn i

calities involv ed in the melting, the Assay returns , thecalculations and other matters , require a Special train

ingwhich is not likely to be found or got in an ordinary

counting-house .

Now a Bullion broker has all the necessary appointm ents and appliances for his business ; so he canreadily undertake , for a moderate charge, in additionto the receiv ing of Bullion and the management of theaccounts , the prOper packing of the parcels , and their

delivery at the Railway or Shipping stations de

signated .

‘

Bullion shouldalways be packed in stout iron-clamped boxes ,well securedagain stattempts to open them on the way. Robbe r ies

256 BULLION BROKERS AND

The Banker or Merchant has simply to receive orto pay the money, and to verify the accounts madeout by the Broker. There are many Houses in Londonwho in the course of their career

,have dealt in many

millions ’ worth of Bullion through the agency of

brokers , without ever having seen any of their property .

The confidence reposed by them in the partiesentrusted with the management of this business forthem is, therefore , surely not of a light character .

We subjoin here a list of the current rates of

fr eight and insurance on Bullion to or from the prin

cipal Ports . Large shippers may be in a position tomake arrangements for cheaper rates ; some of themore important Houses have established an InsuranceFund of their own, the rates at Lloyds being too highin comparison to the risk .

hav e occasionally occur red through indifl'

erent packing. Bullion

boxes should not carry more than ounces, which is alreadyapretty heav y weight in asmall compass .

The Silv er Bars shipped to the Eas t Indiesar e gen erally packedon e in abox ; and the Pen insular and Oriental Steam Ship Com

pany in struct Shippersas followsBoxes should be strongly made , with elm ends , lin ed with tin ,

and they must be sealed ov er tape in counte rsunk holes . Hoe’

s

Safety Bullion Box is recomm ended, which may be procured atNo . 44, Leadenhall Street.

”

The deli v ery of Bullionat the Railway Stationalways takes plac eunde r the care and superv is ion of on e or se v e ral Clerks speciallyen trusted with the busin ess . Where Bullion is broughtalongsideaship in the riv er , in lighte rs receiv ingitfromawharf, great respons ibilityattachesto thepartie s in charge ofthe treasure . Thereare specialCarm enand Lighte rm en employed for the con v eyance of Bullion .

CHAPTER XXI.

COINING.

THE earliest records of history inform us that thePr ecious Metals were usedas standards of value ,

be ing given in exchange or payment for other com

m odities . With regard to Gold, its employm en t in thecapacity ofmon ey or iginated fir st, in all probability , inits use in the form of portable ornamen ts . The smalleror larger nuggets found often presen t cur ious andfantastic shape s , suggestive of the ir suitablen ess forpersonaladornm en t . After awhile the aid ofArt wascalled in to fashion the native article in to m ore graceful form s ; and from the remotest known ages jewelry

,

the join t production of Nature and Art, has con stituted,as it continues to con stitute to

.

the pr esen t day,an importan t elem en t in the social ‘

economy of man .

The prim itive rude Gold ornamen ts of earlyages wereno doubt soon made to serve , in some way,as m edium sof exchange . The discoverers of Am ericam et with

Gold ornam en ts subserving the purpose of mon ey inthe hands of the natives . Some of the Indian tr ibes inCentraland South Am er icastill pay in Goldand Silverornam ents ;and cur iously-twisted solid ear-r ings,armle ts , and other trinkets pass in to the possession of

260 comma.

traders , and find the ir way finally to the m elting

establishm en ts in London .

The an cien t Jews dealt in Gold and -Silver by

we ight , and there are num erous r ecords speaking of

shekels of Silver and talen ts of Goldand Silver .

Even to our own day the Precious Metals are , in cer

tain parts of the world , more e specially in the far East,stillusedas mon ey by weight . In China, for in stance ,Syree S ilv er circulate s as m oney, in lumps of severalpounds weight, cast roughly in to bowl-shaped m oulds ,and marked with afew Chin e se characters, statingweight, fineness , and value . The Chin ese are so

much accustom ed to these pieces that they actuallyrem elt the Mexican Dollars imported from abroad in to

The first in troduction of Coins, or pieces of the

Precious Metals impr e ssed withastamp declaring thecharacter and value of each piece , marked, most likely ,an importan t erain civilisation . W e have no positiveevidence , however ,as to the period when Coin s we refirst in troduced, or the nation which first made useof them . Herodotus gives the credit of the introduction of Coin ed Mon ey to the Lydians ; other ancientauthors place the inven tion of the Art of Coin ing inthe re ign of Saturn and Janus , in Italy, before the

beginning of authen tic history . Many learn ed andinter esting books have been written on the Coin s of

the Egyptian s , Hebrews , Roman s , Greeks , and othernation s . The study ofancien t Coin sand ofthe historyconn ected with them is am ost in teresting pur suit .

The patien t re searche s ofanumber of devoted studen ts

262 com ma.

present time should differ so vastly,and so greatly forthe better , from those of former ages . Compare anEnglish Guineaor aShilling of the last cen tury withaSovere ign or Shilling of the Coinage of the last thirtyor forty year s,and the differen ce in the regular ity ofshapeand in the sharpn essand n eatness of impressionwill beat on ce apparent .Before the use of machinery was introduced in to

it, the proce ss of Coin ing wasavery simple , but alson ecessar ilyavery laborious on e . The Touchston e , or

som e other imperfect m ode of Assaying, had to beresorted to , to getan ideaof the fin en ess of the m etal.A certain quantity ofAlloy or fin e Metal,as the caseght be , had to be added in order to attain , as n earas practicable , to som ething like un iform quality inthe Coinage . The Bar s or pieces had to be m elted next

and cast into flat blocks , which had then to be furtherflatten ed into slabs or plates of the required thickn ess .

Disks of certain sizes had then to be cut, to suit theCoin intended to be struck . These disks were alsomade in another way : circular bars or rods, of the

diam eter of the intended Coin , were cast, and disksof the r equired thickne ss successively chopped or sawnoff the ends . The se piece s had then to be adjusted tothe exact weights required, by filing the excess off theheavier on es , and throwingaside the lighter pieces forrem elting . Theadjusted piece swere thenat last readyfor the final process of stamping . The dies were madeof harden ed iron or steel,and the impression in tendedto be stamped on the Coin was graved into the ir in side .

They con sisted of two loose m oveable halves fitted

comma. 263

together . One of these was laid on asuitable strong

support , and the Coin disk placed on top of it ; theother half was then reve rsed on the disk, and sharpblows were dealt on it withahamm er , un til the softerm etal of the disk was thus dr iven in to fill the gravedparts of both die s, and thus to recei v e the in tended

impression . The edge of the Coin was then r ibbed or

m illed in som e equally clum sy way, and the piece of

m on ey was ready at last for circulation . lv e aretold that som e of the Austrian ducats and Spanishdoubloon s were made in this pr im itive fashion as lateas last cen tury . In the East , in Japan , Coinsare still

struck byasim ilar process , as the following accoun t ,taken from aLondon n ewspaper afewweeksago , willshow. (Japan e se Silver m on ey is made in oblong

square-shaped pieces, called Itziboos,— an Itziboo is

worthabout 1 s 4d of our mon ey) .

Tn s SILVERMm '

r or Jn an — Ifwe could gain adm ission to theSilv er M in t at Yeddo, we should see the following proce ss con

tinually going on . A lum p of Silv e r of the n ece ssary finen ess ,

obtained e ither from the Gov ernm en t M ines or by m elting down

Me xican dollar s, is plac ed in an iron ladle and reduced to am olten

state by m ean s ofacharcoal fireandapair of blacksm ith ’

s bellows .

It is then pour ed in toam ould, from which it is taken out in the

shape of thin rectangular bar s ,which are imm ediate ly thrown in to

atub of cold water . On be ing taken out, aman ,seated on the

ground, shears offwithapair of large fixed scissors all jaggedpiece sadher ing to theangles . Theyare n ow handed to anothe r man , who

we ighs them one by on e , and apiece is cut off, if n ece ssary, to

reduce the bar to its prope r we ight. T he n ext process is that ofdiv iding the bar byafixed pair of shears in to e ight equal por tion sof the size of itziboos ; this is don e byaworkman cutting itas accurate lyas his practised eye will enable him ,and his wo rk is te ste d

264 comma.

by we ighing, light pieces be ing rejected,and the heav y on es reduced

to the ir proper we ight by the scissors . The pieces are now heatedwhite-hot in acharcoal fine , plunged in to water , boiled,and washedin akin d of brine , from which they com e out witham oderate lybr ight surface . Theyare n ext v ery slightly m illed on the two sides,

and m ore deeply on the edges, by m eans ofam illed hamm er . Theyare now ready for stamping. A man places on e of the pieces on astationary die , and lays on the top the other die ;asecond man ,

arm ed withahuge hamm er , giv es . one blow on the upper die , andthe coin is struck . The blowsare dealt in rapid succession ,

and thewhole scen e rem inds on e ofablacksm ith ’

s shop. Boys now pun chsmall stars on the edges by m eans of chisels and hamm e rs . The

coin sare weighed on e by on e for the last tim e,and the light on es

rejected. The Im perial stamp isadded by m eans ofan other stampedchisel and mallet,and the coin s are complete . Theyare rolled up

in pape r packets of 100 each packet is we ighed and marked withaseal, which serv esasaguaran te e of its conten ts,and giv es it cur

rencyas 100 itziboos . While ev ery operation is per form ed in this

prim itiv e man ne r , pe rfect order prevails in the establishm ent ; e v eryman goes through his portion of the work in silence

,and with the

regularity of clock-work,and many e v in ce con siderable skill. There

are about 300hands employed in the building. When the m en en te r

in the morn ing they are made to div est them selv es of the ir own

clothes,and put on other s belonging to the Min t. At the end of

the day ’

s workagong sounds, when the som ewhat curious spectac leis pre sen ted of 300m en spr inging from the groun d, on which theyhad been seated, throwing off their clothes, and rushing, anakedthrong, to on e end ofayard. He re they pass through the followingordeal in order to prov e that they hav e n o silv er on them —The ir

back hair is pulled down and exam ined, they wash the ir hands andhold them up to v iew,

they drink wate r ,and then holloa,and, las tly,they run to the other end of the yard clear ing two or three hurdle s

on their way ;afte r which performance they are allowed to put onthe ir own clothes and depart. Mr . Sidn ey Locock

,Her Majesty

’

s

Secretary of Legation ,from whose report of this year the se state

m en tsare taken ,be lie v es that the Min t has been on ly twice en tered

by fore igners,and states that the appare n tabsence ofall re strictions ,

266 comma.

ally perform s its fun ctions with greater regularityandexpedition than could possibly be achieved with the

hamm er . Screw Presses are still in use in som e of

the South American Min ts . Som e of the se are of

con siderable size ; avery large specimen was shown

at the Exhibition of,1862 and there is now on e at

work, we believe , in the Crystal Palace at Sydenham .

For striking large m edals , whe re speed is of le ss im

portance than careful man ipulation and deepand clearimpression , the Screw Pre ss an swers the purpose

exceedingly well.

Before the inven tion of Steam , the machin e ry of

the Mints was driven by Water or by Hor se-Power .

The Fr en ch Min t had alarge Horse-Mill, in whichshafts were turned by horses harnessed to them .

Since that greatest revolution ist of the age , Steam ,

has com e to the aid of our Min ts, the production of

Coin is no longer the slow and laborious process itwas in form er tim es .

A Modern Min t is an e stablishment worth see ing .

To give afull and lucid de scr iption of the Coin ing

proce sses as now conducted , would require the aid of

illustration sand elaborate techn ical explanation s . W e

will, howeve r , endeavour to give acursoryaccoun t ofthe ways and mean s by which the BRITISH M INT

turn s outas current Coin of the realm the Gold andSilver Bars sent in to it.

It has been stated already, in Chapter XIII , thatany on e sending acertain quantity of Gold in to theMin t hasaright to have it re turn ed to him in British

com ma. 267

Gold Cur rency, fr ee of charge for Mintage . We haveexplain ed also in the same place how it com es that,n otwithstanding this gen eral facilityafforded, the Bankof England is practically the only importer of GoldBullion in to the Mint . When ever the Bank of Englandfinds that large exports of Gold Coin , or an undueaccumulation of light pieces fi'

om abrasion , make afre sh issue of Sovere ign s , &c . de sirable , the authoritiesof that In stitution give notice to the Master of the

Min t that Gold Bars will be sen t in . The Min t Officialsmake the ir preparations accordingly ; and at the tim e

appointed several hundred Gold Bars, of about 200oun ce s each,are received from the Bank, to be con

verted in to Coin .

These Bar s have been duly Assayedat the tim e of

their purchase by the Bank ; the Assay Report issen t in with them . The Min t authorities con trol theBank Assay by afresh Assay of the ir own , whichgen erally gives corresponding results, or pre tty n earlyso . On these Assays the exact value of the Bar isfixed .

These preliminaries settled, the Bars are takenin to the Operative Departm en t of the Min t, wherethey pass through the following processes

STANDARDIN G .

— The Gold furn ished to the Min tis of differen t degrees of fin eness . The Bank

,n o

doubt, may select, from its large stock , Bars as n earlyas possible of equal quality . Whether this is don e or

notwe cannot say; however ,as the exten sive Refiner iesin London supply the Bullion Market with an abundance of fine Gold , the greater number of the Bars

268 comma.

sen t by the Bank to the Min t con sist of the finer titlesof Gold . Form erly the Min t did the ir own Refin ingbut that branch of the Establishm en t was sold in1851 to Sir An thony Rothschild, and is now on e of

the large private Refin eri esalluded to in Chapter XVI.

All the fin e Gold r equired by the Min t can be gotr eadily from the Bank .

The British Standard for Gold be ing 22 carats inthe 24 , it follows that Bars reported Worse thanStandard have to be brought to Standard by the

addition of pure Gold ; and Bars reported Better thanStandard have to be reduced to Standard by the

addition of Alloy . The Alloy used for this purpose isCopper . Pur e Gold and pure Copper , in about theBritish and Fren ch Min t proportion s , give the best

m etal for Coin ,and the best colour . Many of the fin erBars, however , con tain Silver in proportions of muchle ss than 83 parts inathousand , so that it will not payto Refin e them . If such Bar sare reduced to Standardby the addition of Copper , the Alloy in them con sistspartly of Silver and partly of Copper , which impartsalighter colour to the Coin . The Sove reign s struckin Australia, where Refin ing is an expen sive process

frequen tly con tain Silve r for their sole Alloy, which

gives them apale straw-coloured appearan ce . A

practised eye will at on ce detect the se difference s inthe colour of Gold Coin .

The greater bulk of the Gold Bars sen t to theBritish Min t for Coinage is fin er than Standard,andhas accordingly to be reduced by the addition of

Copper .

270 comma.

we ight, reported W 22, will take ounces of

pure Silver , raising the total we ight to 1 1 1 1 1 1 ouncesStandard .

The MELTIN G of the Gold or Silver with the

Copper requires care , the latter Me tal be ing apt tosuffer oxidation at ahigh temperature , which, if not

duly guarded again st, will cause the m ixed Metal toturn out above Standard . In ordinary Melting theloss of the baser Metal from Oxidation or Evaporationisamatter of no con sequence ; but the case is differen twith Mintage Meltings . The proce ss is therefore

conducted he re in asom ewhat differen t mann er fromwhat we have previously de scribed ; the heating proce eds m ore gradually . The m elting pot is heate d toredn ess , and alump of Charcoal is placed at the

bottom ; the Gold is then in troduced first, and the

Copper added after through am etal funn el. Whenthe mass is in fusion , the lump of Charcoal r ises tothe top , where it absorbs the Oxygen which m ightotherwise combin e with par t of the Coppe r . The

m olten mass is properly stirred from tim e to tim e , to

in sure the m ost comple te in te rm ix ture of the Metals ,till it has reached acer tain temperature which the

Melter knows by experience to be the most suitablefor casting soft bars ; the pot is lifted out of the

furnace by acran e . Each pot holds aboutounces of Me tal.

A numbe r of upr ight m oulds, warm ed previouslyin astove ,and anointed in side with acloth dipped inoil,are fixed in asuitable iron fram ework placed on

wheels . These m oulds rece iv e the m olten m e tal,

comma. 27 l

which ,after cooling , is turn ed out in Bars or Ingots,about 24 inches long by 13 inch broad , and one in ch

thick for Sovereign s . (For half-sovereign s the Ingotsare only inch broad,and for the Silver Coinage theydiffe r in breadth according to the pieces in tended tobe struck .) Each Sovereign Bar we ighs about 320oun ces .

Assaysare taken of each series of Bars , to provethe Standard . If the Assay pieces turn outabove or

below Standard , the Bars have to be re-m elted . But

if the Assays turn out correct, the Ingots pass on tothe n ext stage , in the

ROLLl-N G ROOM ,where they are flatten ed out

between sets of highly polished Cast Iron Rollers . The

Rolling Mill is so con structed that the Uppe r Rollercan be raisedand depre ssedat will. The Bars , which ,as just stated, are one in ch thick, by 13 inch wide ,have to be reduced toabout g

lo inch thick , and widened

to about 1ginch broad . The first set of Roller s inthe Mill is set pretty wide apart , reducing the thick

n ess of the Ingot from on e inch toabout $3inch . The

space be tween the Rollers is then successively andgradually narrowed, until after passing six or seventim e s through them , the Bars are flatten ed out in toribbon s ofabout inch thick by 1 72 in ch broad . Thisgradual Rolling is n ece ssary in order to secure the

greatest practicable un iform ity in the thickn ess of

the Bar throughout ,and to guard again st its gain ingovermuch in breadth , as the principal object is tolengthen it out. Originally two fe e t long, the Bar sarenow ribbon s seven or e ight fee t long . Theyare then

272 comma.

cut up in to pieces 18 inches long . The repeatedRolling having made the Metal by this tim e hard andbrittle , these pieces have to be softened again by“Annealing

” before they can be further reduced in

thickn ess .

THE ANNEALIN G ROOM is fittedup with furnaces .

The pieces or clips ofMetalare placed in copper tubesherm e tically closed ; and after be ing heated to the

prope r temperature , the copper tubes with their con

ten tsare rapidly cooled in water . Slow cooling would

r ender the metal too soft for working; whilst thequick cooling imparts to both Gold and Silver the

de sirable degree ofmalleability . The Annealed piecesare now called fillets .

” They are return ed to the

Rolling Mill, where they are passed again severaltim e s through the Rollers, to r educe them in thickn ess .

Several so-called Spr ing Finches are given them ,

which simply m eans that they are passed r epeatedlythrough the Rollers r emain ing set at the sam e dis

tan ce . This is done with aview to insure un iformthickn e ss . The flatten ed fillets are now successively

passed through four othe r sets ofRollers , with gradually decreasing space between them ; after which theyare passed through the “Gafuge Mill,

”when they are

found to haveathickn ess of0050in . by 1 8 29 in . broad .

It is extremely difficult to get the fillets of un iform

thickn ess throughout , and frequen t gauging is useessary toascertain the re sult of the rolling . Un iformthickn ess is of the greate st importance ; sin ce , whenthe round disks come to be cut out of the filletsafterwards, varying thickn ess ,although scarcely pe rceptible

274 comma.

to the Coin ing Presses , however , they are carefullyexamin edandaccurately we ighed in the

W EIGH IN G B oom— The we ighin g is don e by the

wonde rful scales, called Cotton’

s Automaton We igh

ingMachines .

”As we cannot give here an elaborate

description of these highly ingen ious in strum en ts (of

whi chalarge number are in use , costing about £250each), we will simply state that each one of these

self-acting scales we ighs Sovere ign s at the rate of 60

per minute . The Blanks are supplied by hand ; theyare piled on the ir edges in the lan e ofaslantinggutter tube , projecting over the Machin e ; as theydescend they drop on e by one in to the scale , whichnot only in stan tly determ ines the ir we ight, butactuallyassor ts them , separating the full weight Blanks fromthe light and over -we ight , by sending them severally,with un e rring certain ty, through three diffe ren t slitsundern eath , into separate compartm en ts . The light

pieces are r e-m elted, the over -we ight blanks aregen e rally reduced to the proper we ight by filing byhand, or by afiling machin e , an ingen ious invention ,

for which the Min t is indebted to on e of its own

Officers . The full we ight Blanks ar e then passed on

to the

MARKIN G on M ILL IN G MACH IN E — The objectof the Marking or Milling proce ss, is to raise aslight rim round the edge of the disk ; which se rvesto facilitate the subsequen t r ibbing of the edge . The

Milling Machine is also self-acting ; the Blanks arethrown by the handful intoacopper pan , whence they

drop upon the machin e , which turn s them in avertical

com ma. 275

position between rollers, pre ssing the edge , slightlyrough from the cutting out, in to asm ooth andraised rim . The Machin e can m ill 600 Blanks in aminute .

By this tim e the Rolling, Cutting-out, and Millinghave again imparted acertain degree of hardness tothe m etal, which therefore now require s anotherAnn ealing before it goes to the Coin ing Pre ss . A

few thousands of the Blanks ar e placed in Ironreceptacles, whi ch are then heated to redness , andafte r this cooledagain by imm ersion in cold water .

The Annealed Blanks are now boiled for afewm inute s in aweak solution of Sulphur ic Acid (Pickle) .

This se rves to remove the slight film of Oxide of

Copper , which has form ed on the surface in the

Annealing . The pickled Blanks are then washed inastream of cold water , to clear away the acid ; afte rwhich theyare taken to the

DRY IN G B OOM — Here they are put into akindof Iron Roasting Cylinder , which con tain s sawdust .The Cylinder be ing pushed into the chamber ofanoven ,

con structed for the purpose , is turn ed by m ean sofalong handle . The sawdust , dried by the heat,serve s as akind of polishing powder , the requir ed

fr iction be ing supplied by the r e v olutions of tl e

Cylinder . The brightly-polished Blanksare nowreadyfor the Coin ing Pre ss .

The com maB OOM of the British Mint contain sanumbe r of Boulton

’

s Screw Gain ing P resses,”

which ,as has already be en stated , re semble , in the irmain feature s, large-sized Copying Presse s without

276 com ma.

Press plates . Boulton ’

s Presses have longarms, withvery heavy square we ights at the ends ; the shaft ofthe screw stretches through the floor in to the apartm en t above , where the requisite m otion is supplied

by asuitable m echanism . This m otion con sists inlifting the screw by turning, then sending it back forthe descendin g blow with con siderable velocity andforce . A comprehensive and lucid description of the

con struction and working of the apparatus cannotwell be given without the aid of illustration s ; butwe may m en tion that the shaft is conn ected, in theapartm en t above , through asystem of arms , beam s,

and rods , with cylinders, whose piston sare worked onthe pn eumatic pr in ciple , the requisite vacuum be ingcreated in akind of boile r , through air-pumps drivenby asteam engin e in anothe r part of the prem ises .

Boulton ’

s Pre sses are therefore known also by the

nam e of “Pneumatic ScrewThe attendan t on the Pr ess , gen erally abov, has

with himasupply of Blanks, which he places pile uponpile into avertical tube . By an ingen ious feedingm echan ism the Blanksare taken on e by one from the

bottom of this column in the tube , placed true on the

die ,and,after the stroke , thrown out into the propercase in tended to rece ive them . All that the boyattending to the Press has to do , is to feed the tubewith Blanks ,and to watch the proper descent of the

The so-called “Le v er Press, now in gen eral use in the

French, Am er ican ,and other Fore ign Min ts, is greatly super ior toBoulton ’

s Press .

278 comma.

being con cave on the Matrice , is reproduced con

v ex ou the Pun ches . When anumber of Punches

have thus been taken from the Matrice , they areproperly hardened, and then serve in their turn for

the production of the Dies, on which the design

appears again con cave , as it is on the Matrice . As

avery great number of Pun ches have to be producedfrom the Matrice , and avery great number of Dies

from each Punch , it naturally follows that the Matrice ,or the original Die , and the paren t of all the others,must be the most perfect attainable model to en sureperfection equally in the Pun ches taken from it, andin the Dies struck from the latter . This accountsfor the extrem e care , attention , and labour whichhave to be bestowed upon the production ofaproperMatrice .

A well-made Matrice will remain in use for aboutfifteen years before shewing signs of wear ; the

Pun ches made from it will last for many m on ths ; butthe Dies, which have to perform the actual work ofCoin ing, will rarely last longer than aday. However ,during this one day of the ir working existen ce , they

will str ike off many thousand impression s on Coins

as many, in fact ,as per hour . Asamatter of

course , there must be two Matri ces for each Coin , one

for the Obverse , and another for the Reverse ; andPun chesand Dies have to be taken from each .

Besides the Dies, of which the lower on e is fixed

onasuitable bed beneath the screw, whilst the upper

one risesand descends with the latter , there isanotheressential part of the Coining apparatus, v iz . , the

com ma. 279

so-called Collar ,—aflat steel ring about three in chesin diam eter , with ahole in the cen tre , exactly fittingthe n eck of the lower Die ,abo v e the face of which itr ises at the m om en t of the stroke . This ri ng or

collar is grain ed in side , or cr enated, i .e . , ribbedvertically . The Blank, under the pressur e of the two

Dies, expands slightly, which drive s the m illed edgeinto the ribs of the collar , thereby producing the

usual crenated or ribbed edge of the Coin .

The process of thus ribbing the edge of the Coin

(which is don e to preven t the dishon est from clippingthe piece) was form erly called M illing, and wasdone by aseparate machin e , not unlike the Milling

Machin e descr ibed . Each Min t had form erly its ownway of Milling Coin s , which it looked upon asasecretto be jealously guarded . But sin ce the in troductionof the Collar , the Stamping and the Crenatingaredoneat on e stroke .

The Coin s are now ready,and theyare deliveredto the Bank of England at the rate of 1869 brightn ew sove reign s , or double that number of half-so v ere igns , for every forty pounds of Standard Gold sentinto the Min t . ’

In 1849, aRoyal Comm ission was appointed to inquire into

the con stitution and managem ent of the Mint. This Comm ission

issued an excellent and elaborate Report. At that tim e the M int

managem ent wasastrange m ix ture of Gov ernm ent Ofi cialism withprivate r ights of the M intMelte r and the Corporation ofMoneyers,

who made extraprofits out of it. Sin ce 1851 all this has be enreformed,and the M in t is now en tirely unde r the con trol of officers

appoin tedand paid by the Crown ,

280 comma.

The Min t makes no charge for Coin ing Gold ; but,as we have already explained, it charges aheavyse ignorage on the Silver Coinage .

Here the question ari ses, whether the Mint doesnot,after all, make aprofit on the Coining of Gold .

The Assay Reports in England are always slightly

below the true fineness of the Metal ; and it is justpossible that, with very careful man ipulation , the Mintmay realise asmall fraction of profit on the GoldCoinage , although we believe the reverse to be the

case . However , the suggestion of the possibility ofaprofit leads on to an other question , v iz . this : Is it

possible always to attain amathematically correctStandardandabsolutelyaccurate weights? The reply

to this can be n o other but that it is not possible ,asslight var iation s willalways occur , even with the verybest machin ery, and the most careful man ipulation .

The Law, acknowledging the difliculty ari sing fromthis circum stan ce , gran ts the Mintan allowan ce withincertain lim its . Thi sallowance is called

The Remedium or Remedy. If the Coinage on

trial is foun d correct within the limits of the Rem edy,it is declared lawful mon ey . The Rem edy allowedfor the fineness of Gold Coin is 1

13 th carat, equal to

fl y or about 3 per m ille , or gpenny per £1 . The

Rem edy for weight allows avariation of 12 grainsin the lb . Troy, or “1“ grain , equal to -%d per Sove

reign .

For Silver , the Remedy for finen ess is 1 penny

we ight to 4% per m ille , or 116 penny per Shilling ;

for weight it is 24 grain s per lb . Troy, or 4 per m ille ,

282 comma.

When the Trial of the Pyx is ordered , these boxesare taken to the Treasury Office , where , unde r the

presidency of the Lord Chan cellor , agreat cerem onytakes place . A jury of experts is impannelled, whoafterwards proceed to Goldsm iths’ Hall, where samples of the coin s are weighed, m elted and assayed .

The jury reports the results, and if they are satisfactory, as they are expected to be , the Master is

discharged from all further liability in the matter .

The last Trial of the Pyx took place in 1861 .

To this subject,as well as to the British Min t generally, the author will have occasion to rever tagain inthe Appendix of this Book .

An order for the in spection ofthe Bri tish Min t canbe obtained by forwarding arequest to that effect in

wr iting to the Master of the Mint, who appoin ts aday and hour for the visit, and in structs aspecialcflicer to be in attendan ce to conduct the partiesover the Operative Departm en t of the Establishm ent .

An agreeable and in structive half-hour may thusbe spent, under the guidan ce of am ost cour teousgen tleman

286 PARS or EXCHANGE.

tain ing the we ight and fin eness of foreign Coin by

actual tr ial here , we may readily determ ine its valuein British sterling, which value must naturally be thePar of Exchange .

This principle is correct enough , with the exceptionof the clause , by actual trial here ; for if fore ign

Coin be brought over here , to be tri ed, it may turn out,1, That the Coin has suffered from abrasion2, That although carefully coin ed, it may not be

quite so fin e in quality,and quite so full-weighted (eventhough it should have undergone no loss from abrasion ) as it is presum ed to be ; also , that our m ethod

of te sting Bullion ,and paying for it, differsalittle fromthat of other coun tr ies .

These sam e chan ce s to which foreign Coin is

liable are equally inherent also in the Bri tish Coinage .

W e havealready had occasion to m ention the Remedies

allowed to the Bri tish Min t for slight deviationsfrom the strict letter of the law in the matter of the

weight and fin en ess of the Coin . The foreign er whoimports Br itish sovereigns into his coun try,and triesthem there , will con sequently most likely find the

sam e differences .

Supposing, for in stance , thatan ew 20fran c piece ,tested here , even officially , turn s out to be worth

1 5s 92d in Gold at the Bank pr ice of 77s 9d pe r

ounce Standard, giving accordingly francs asthe Par made in England ; whilst the sovereign mayturn out, by Fren ch valuation , worth only francs251 5 as the Par made in Fran ce— n either of these

two rates can be called the Par , for the true Par must

PARS or EXCHANGE. 287

be fixedandunalterable . The n ecessity of this rule maybe shown m ore clearly inamatter ofaccount . Byway of

illustration , sayan English m erchan t owes fran cs 2522 50toaFren ch merchant ; in order to rem it this amoun tin sovere igns at fran cs 251 5 he must send (independen tly of the charges of forwarding) £100 33 l0d ; theFrench m erchan t may in his turn also owe £100 tothe English m erchan t ; to transmit this he must forward fran cs 2530. But if they settle the accountbetween them at the Exchange of fran cs (thein term ediate poin t between the two supposed pars) ,the Englishman gives and recei v es exactly £100, andthe Frenchman exactly fran cs just as the

accounts stand between them . This m edium poin t ,freed on both side s from the chan ces affecting Coin ,

in con sequence of the wan t ofabsolute accuracy in theCoinage , re sults, as the only true and fixed Par , fromthe Min tage values ,as fixed by law. The Min t law of

England says that 1869 sovere ign s shall be coin ed from40Troy lbs . Standard Gold (22 carats , or 91 66 7 fin e) ;the law in France orders francs 3100, equal to 1 55Napoleon s, to be coin ed out of the kilogramm e weight

of Gold 900fin e . From these proportion s, independen tof all accidental differen ce s in the Coin , and of the

charge s of forwarding, which act in both direction s,the true Par has to be calculated .

Now let us suppose atran saction of this kind to

be effected between thr e e diffe ren t place s say London ,

Par is, and NewYork . If each of the se were to followits own on e-sided way of deducting the Par from the

actual Coin , as tr ied by them,six diffe ren t rate s of


Exchange would be the result ; whilst taking the

Min tage values fixed by law for the basis of the calculation , any two of the true Pars will give the true Parbe tween them and the third . The true Par s of Ex

change must be fixed in such mann er as to agreecor rectly for all Coinage Systems, whether they becalculated direct from the legal Standards, or arbitrated from the Cross Pars between fore ign coun tri es .

W e are induced to poin t out this principle , becausein other works on Exchanges we fin d con siderableloosen e ss in this respect . Mr .Tate , for in stance ,adoptsour system in regard to the French Exchange ; butfor other Exchanges he takes the value as foundin England” of certain Coin as his basis for the Par .

In following out this prin ciple in the comparativevaluation of English and Fore ign Gold Coin anothercon sideration arises . In England we have the Goldvaluation , and our Mintage rate of 77s 10—lf d per oz .

Standard givesusafixed rate for Gold; Silver , however ,hasavariable pri ce , ranging from 6051 to 62§¢d per oz .

In certain other coun tries— Prussiafor in stance ,India, &c .

—the Silve r valuation pr evails,and Gold hasavariable pri ce . Between Englandand [these coun tr iesit would therefore seem impossible to establishafixedrate of Exchange . However , it so happen s that inFrance and som e other countri es the so-called DoubleValuation exists, both Gold and Silver having afixed pri ce by law. In France this pri ce standsat on epart of Gold to 1 5—5 parts of Silver ,and it is this ratewhich must serv e us as aguide in valuing betweenGold and Silve r gen erally . And this pr inciple will


GREAT BRITAIN .

The Monetary Un it of Great Bri tain isThe Gold Pound Sterling,divided into 20Shillings, of

12 Pen ce each .

The Coinage is represented by5 Pounds pieces2

n

l Sov ere igni, Half Sov ere ign

5 Shillings piece s Crown2 Half Crown2 Flor in

l Shilling Shilling Silv er .

Sixpen ce

Threepence

1 Penny pieces Penny

i Halfpenny Bronze .

4 FarthingThe Fiv e poundsand the Two pounds Gold piecesare rarely seen

in circulation,as the Min t on ly str ikesafew specim en piece s, whichare not intended to be usedas part of the Currency.

The Crown , Half Crown , and the Fourpenny piece in Silv er

are no longer coined now, and those still in circulation will gr ip

The followingare the Coins actually struck and issued by theMintat pre sent, with their supposed full weightand fineness

GOLD.

Sov ere ign oz . Standard 22 carats, or 9166 66 fino

Half Sov ereign

GREAT BRITAIN.

SILVER.

oz . Standard 222 dwts ., or 925 fine

01 81 800909

00454

BRONZE.

oz 0303801 822 Bronze of 95 Copper , 4 Tin , 1 Zinc .

0091 1

The Gold valuation pre vails in England, and Gold Coin is

accordingly legal tender to anyamount.

The full weight ofan ew Sov ereign ought to be 1232 74grains.

If by abrasion or otherwise it is found to we igh le ss than 122-3

grains, it becom es light,” and ceases to hav e legal currency.

Silv er Coin is legal tender only to the am oun t of 40Shillings

ster ling. Copper or Bronze Coin is legal tender on ly in Pennypieces to the amoun t of on e Shilling, in Halfpenny pieces andFarthings to the amoun t of Sixpence .

The Gold Coinage is issued at the Min tage rate of 77s 10§d

per oz ., which corresponds to the un iv er sal market price of Gold.

The Silv er Coinage is issuedatarate much higher than the

univ ersal market price of Silv er , v iz . 66d per oz . Standard, whichmakes Silv er stand to Gold in the proportion of 14% to 1 . The

un iv ersal price , upon the bas is of 1 ofGold to 15; of Silv er , is 605d

per oz. Standard .

The se v eral Coinsare worthaccordinglyGOLD.

Sov ereign 20 Shillings .

Half Sov ere ign 10

SILVER.

Shillings


At the presentav erage pri ce of Copper , Tin ,and Zin c, Bronzeis war th 10d per lb. Tr oy ; consequen tly the actual m etallic valueof the Bronze Coinage is

Pe nny about 3; penny .

Halfpenn y iFarthi ng T5,

The Old Guineain circulation before 1816 was worth exactly2la

,at the rate of 77s lOéd per oz . Standard. The Silv er Coin s

struck before that pe riod we re co in ed at the rate of 62d per oz .

Standard. The re lativ e value of the Gold and Silv er Coinageaccordingly stood at that pe riod as l of Gold to 15} of Silv e r .

The prices of Goldat the Bank ofEngland (the only importerof Bullion into the Min t) are

Buying price 778 9d pe r oz Standard .

Selling pr ice 78 10 (1

At these rate s the Bank is bound to deal. The Bank makes no

allowance for Silv er con tain ed in Refinable Gold.

In the open Market the Bank Rates ser v e for guidance , subjec tto the fluctuations of supplyand demand. Refinable Gold sellsat778 10d to 78s per oz . Ne ither the Bank n or the M in t is obligedto buy or sell Silv e r . Silv er , beyond the lim ited quantity boughtby the M in t for coinage , is altogether am ere article of m e r

chandize ; the pri ce of Silv er Bullion fluctuate s between —d to

62-l-d pe r oz . Standard, according to the supply com ing in , andthe demand for the Con tinent or for India.

Paper Cur rency .

— The Paper Currency is on aPar with theGo ld Coinage . The Bank of England issues

Note s of

The Prov in c ial,Scotch

,and Irish Notes of

upwards .

294 PARs or EXCHANGE.

promised to send his Credito r in England £100by the l et July,he must ship to him £100 in Gold, say on the l st Januarypreceding,and the charge s of forwarding, &c . will cost him £1 1 .

For the £100he hasaccordingly to pay Instead of shippingGold, he may go to aBank for adrafi ,and pay his £101§ there .

The Exchange on England is therefore lol i in Australia.

The English Merchan t, howe v er , or the Australian BankAge ncy in London , may be applied to foraBill on Australia. A

draftmay then be made on the parties in Australiafor £101;— the

sam e amount which they would hav e to pay if they were to send

Gold oraBill for £100to England.

Or , if the draft on Australiabe made exactly for £100, theCreditor or Seller here mighttake £98 1 for it ; thus the Exchange on

AustraliaIn London would standat or per cen t. discount.

And, if the question turn ed on paym en t by the Australian on

the lst January 1869, such payment be ing due here on the l st July1869, the Creditor he re m ight draw his draft on the l st July 1868,arr iv ing for paym ent in Australiaon the l st January 1869. He

would thus gainafull year ’

s in te re st in the bargain , dis coun t be ing,say 3 per cent. pe r annum . He could then actually afford to sell

his billat 95; per cen t.,or per cent. discoun t. In the curren t

trade transaction s this is not don e, as the intere st on the whole

is balanced otherwise . The variations in fre ight and charges,supply and demand, dte .

, may occasionally alte r the rate of Ex

change ; butupon the bas is of l }, per cen t.,so longas AustraliaIs

indebted to us , the Exchange in Australiaon London stands atExchange in London on Australiaat 98

the Actual Par of Exchange b e ing n e v er theless 100.

FRANCE . 295

FRAN CE.

The Monetary Un it of France isThe Franc ,

divided in to 100 Centim es .

The Coinage is represented100Francs pieces50

40

00

10

Francs pieces5

5

2

1 l» Silv er .

3

t

t

10Cen times pieces Dec ime

5 SouCopper .

The 100francsand 50francs Gold pieces hav e been coined in con

siderable numbers late ly,andare v ery ofte n met with in circulation ;acoin of 25 fran cs hasalso been made by way of trial.

The coining of the 40francs piecesand the one-fifth franc pieceshas been discontinued.

The double valuation pre vails in France both Go ldand Silv erare legal te nder in that Coun try . In Silv er , howe v er , the fiv e francspiecealone con tinues stillas legal te nder toanyamoun t; the fractionalSilv e r Coin be low the value of fi v e francs are , since 1867, legaltender only to the amount of fcs . 50. Hitherto, all the Coins of

France , bothGoldand Silv er , were struck 900fine ; but with regardto two francs piecesand the fractions below, the Gov ernment, under


aCon v ention with Be lgium , Switze rland, and Italy, has reduced

the finen ess to 835, without increasing the we ight of the Coin .

These smaller Silv er Coins therefore are no longer of full intr insic

value ,andare simply forced Cur rency, standing on the same footing

as the English Silv er Coinage . The only difference between the

French and the English system, is that, whereas the latter has noSilv er Coin of full intri n sic value , France maintains the fi v e fran cspiece at its full standard fin en essand we ight. The fi v e fran cs piecethus form s the conn ecting link be tween the two Coinages , by whichthe relativ e value of Gold and Silv er is maintain ed at on e of the

form e r to 1 5% of the latter ,and the double valuation by both Goldand Silv er is upheld.

The Monetary Con v ention which lately m et in Paris decided infav our of the single Gold Standard. It is therefore possible thatat som e future tim e the fi v e francs Silv e r piece mayalso becom edebased,and cease to be legal te nder . (Upon this subject generallywe refer the reader to the Chapte r on the Defen ce of the DoubleStandard, in the Appendix . )

According to the French M int Law,

On e Kilogramm e ’ of Gold of 900fine (French Standard)is to be coin ed into fcs . 3100.

On e Kilogramm e of Silv er of 900 fin e is to be coin ed into

fcs . 200.

This giv es exactly one part of Gold for parts of Silv er . Up to

1807all the Coin s were made in conform ity with this Law but,asalready stated, the smaller Silv er Coinage from two francs downwards, is now made 835 fine so that theabov e regulation , in so faras Silv er is concerned, now only applie s to fi v e fran cs pieces. The

two fran cs, one fran c , half franc , quarte r franc , and on e-fifth francpieces, struck before 1867,are be ing called in ;and, in spite of their

abraded state , they yieldagood profit to the State , which issues thenew debased pieces in stead.

One Ki logramm e equal 321 50725 oz . Troy ; 1 oz . Troy equalgramm es.


The Paris Min t, whose operativ e department is worked byMoneyers under contract, charges at the rate of fee . 670 per

kilogramm e of Gold 900fin e , coined into fcs . which makesthe ac tual Mint price for Gold 900 fin e , fcs . 3093 30. The Mint

price of pure Gold, or 1000 fine, consequently is fcs . 3437 per

kilogramm e .

For Silv er coin ed in to 200francs the kilogramm e 900 fine the

Mint charges fcs . 1 °50 for coinage ; the ac tual Min t price for 900fin e Silv er is accordingly fcs . 198 50,and the price for pure Siv erfcs . 2205 6 per kilogram s . The Mint coins fi v e francs pieces onlywhen specially demanded.

There are Branch Mints at Bordeaux and Strasbourg. The

Coins struck in Pari s bear the in itial letter A ;at Bordeaux the

letter K ;andat Strasbourg the letters BB .

The Bank of France is the largest importer of Bullion into theFr ench Min ts ; but the public are also at liberty to import. The

Min t giv es, in return for the Bullion sent in , Min t certificates ,payable usually in ten days, orat longer dates if the supply exceedsthe capacity of the working departm ent.

The Rented/gallowed to the Mon eyers is , for Gold Coin , two

pe r m ills in fineness, and two per m ills in we ight ; for Silv er coin ,

three per m ills in finen essand we ight. It is proposed, howe v er , toreduce the Remedy for Gold in future to one pe r m ille .

The Mon eyers do not profit by the Re m edy . The ir Coinageis regularlyassayed by the Gov e rnm ent to I

'

D—dim exact, and they

are debited with any deficiency un der 900fine,or credited with the

surplus ov er 900fin e , prov ided n e ithe r diffe rence do exce ed two pe r

m ille . As arule , they work unde r 900fine . For Coin 899 6 fin e,

or 898 0fine , theyaccordingly are debited 04 pe r m ille ,and 2 perm ille respectiv ely. The State thus Obtainsall the profit that mayresult from the Remedy, but the State does n ot seek to make thisprofit ; on the contrary, e v e rything is done to ensure the greatestattainable correctness of the Coin .

In the Open Bullion marke t Bullion is still quotedaccording toanow obsolete M i nt Tariff (abolished in which made fine

Gold worth fcs . 34344 4 per kilogramm e ,fin e Silv er worth 218 89

FRANCE. 299

pe r kilogramm e . These pr icesare subject to Premium or Discoun t,

according to supplyand demand.

In dealing in Gold it is always firstagreed whether the pr iceshall be fixed by the Tarif de laMonnaie, m ean ing the presentrate s of the M int, or by the Tarif daComme rce ,as the Old Tarifl'

is

now te rm ed. For Silv er the latte r is generally taken .

The Decimal System appears to greatadvantage in the Frenchm e thod of valuing Bullion , simple multiplication beingall that isrequired to get the re sult.

The pr ice of the different degre e s of fineness from 1000down

wards (if such atable is at hand) need only be multiplied by thekilogramm e to find theamount in fran cs ; or the price of fin e gold

may first be multiplied by the fin en ess,and the re sult by the we ightThus kilos . 101 55, of 921 fine ,at fs . 3437 per kilogramme fin e ,

by the Tar if de laMounaic ,are worth343? X 921 31654 ? X

101 55 fs . 32145 35

or for Silv e r (by the Tar if du Commerce price ) kilos . 317 35

803 fine ,at fcs . 2188 9 pe r kilogramm e fine ,

2188 9 X 863 X

517 35 fs .

Additional examples of calculations on this system ,and in v oices,by way Of illustration

,will be giv en hereafte r in the chapte r on

Arbitrations in Bullion .

French Assays are made and reported to 17 3—63 exact ; thuswe find Gold and Silv e r reporte d, for in stance, as 8505 ,

9957 , &c .

,British Assays reporting only to one-eighth grain

or fi g part exact. The Fren ch Assays are thus much more

accurate ly reported than English Assays .

The charge for r efin ing Gold amoun ts to fi v e francs per kilogramm e

,equal to m illiém es Of fin e Silv e r (the charge in

England is 83 milliémes) ; and the Fre nch Mint buys RefinableGoldat this rate . For Silv er the charge is one m illiem e of Gold,

or about 15 pe r m ille on the value ; but, on the other hand,a

Prem ium , ranging from 14 to 18 pe r m ille , is paid for Doré Silv e r ,according to the market price of Silv erand the quality Of the Bar .


Paper Cur ren cy .— The Bank of France issues

Note s of 50francs .

1002005001000

It is the only In stitution in France allowed to issue PaperMon ey. The Bank of France Note s are on afull par with the

Gold Coinage .

W e now come to our first transaction in Exchanges. What isthe true Par of Exchange be tween Englandand Fran ce W e hav etold the reader before that this Par has to be established upon thefull we ightand fin en ess of the Coin fixed by the M intage Law,andindependently of charge for coinage and ofallowance for rem edy,abrasion , freight, &c.

W e giv e our calculations he re in decimals, carrying the decimalas faras practicable , in order to prov e the true Par with the utmost

attainable correctn essA Napoleon of 20francs weighs

gramm es,

equal to oz . 7424 Troy,of 900 or carats decimal fine ;which,at 22 carats , giv es ozs . Standard ;this,at 778 10§d, or 5638 9375 decimal per oz . ,

makes the value of the 20 francs piece or

158 10i% d,

and giv esan Exchange of fs . per 38 .

A Sov ereign , of which 1869 go to 40lbs. Troy, or 480 ozs.

Standard Gold, by the chain rule,as follows

How many fran cs 1 Sov ere ign ?

If Sov e re ign s 1869 480oz . StandardIf ozs . Standard 24 22 fine Gold

If ozs. l 31 1 035 gramm es

And fine 900 3100francs per kilogramm e

403704 1018204176

= fs .


750Copper )are no longer issued. The old Coinages of Souv erains .

Crowns, Ducats, Guilders, Shillings, &c ., hav e en tirely disappeare d

from circulation .)

The Paper Curren cy is on afull par of value with the GoldCoinage . The issue is made by the Banque Nationale .

The M int Par of Exchange b etween Londonand Brusse ls

£1 fcs . 25-2215 ,

or fs . 25 22—29

SW ITZERLAND .

The Monetary Un it of Switzerland isThe Franc ,

divided into 100Centimes .

The pre sent Coinage is in e v ery way identicalwith that of theother m embers of the French Monetary Un ion . Switze rland doesnot coin Gold pieces,and the principal supply of them com es from

France .

(Before the finaladoption of the Franc throughout Switzerlandgen erally the differen t Can tons coin ed Thalers , Neuthalers,Guilders, Francs, and smaller Coins, which are now withdrawnfrom circulation . )

The Paper Cur r ency is on apar of value with the Coinage .

The issue is made by se v eralBanks,and is quite local.

The M int Par of Ex change with England is

£1 fcs. 25-2215 ,

or fs . 252 25

ITALY . 303

ITALY .

The Monetary Un it of the Kingdom of Italy isThe Franc or LiraItaliana,div ided in to 100 Cen tesimi.

The Coinage is identically the sam e as in France , Belgium ,andSwitzerland.

(Before the un ification of the pre sent Kingdom was ae complished,all the pe tty States of Italy issued their own Coinages. Thus

in Venice , for i nstance , the LiraAustriaca( valueabout 85 French

Centim es) was in use in Tuscany, the LiraToscana(valueabout2 French Centimes) in Naples, the Ducat (value fcs . asmoney ofaccoun t, the Gold ounce (fcs . the Scudo, in Silv er

(fcs . in Palermo, the Sicilian ounce (fcs. with smallerdi v isionary Coin s for each.)

The confusion in the Coinages of Italy before the unification of

that Country was only exceeded by that reign ing form erly in the

other still much larger disun ited political body, Germany. The old

Italian Coinages are now obsolete ,and the LiraItalians , which isthe f

{tact equivalent of the franc, is the practical Unit for all {pur

poses bfExchange .

In Rom ealone , under the Papal Gov ernment, the Unit is stillthe old Roman Scudo, div ided into 100Bajochi.

The other Roman CoinsareGOLD. SILVER.

10Scudi pieces5 n 01

2t n

l Scudo

with Copper Coins of smaller value .

The value of the Scudo ofaccount is 512 pence ,and the Par of

Exchange isaccordingly Paoli (Paolo 715th Scudo) per ste r


ling ;and the sam e result is arriv edat ifwe compute the Par by theMint value of the Papal Gold Coinage . The Roman Gov ernm ent

is taking steps now for the issue ofaCoinage in accordance withthe rest of Italy.

Paper Cur rency . The Paper Currency of Italy is muchdepreciated, Gold is at aprem ium varying (1868) from 12 to

18 per cent. This makes the Exchange for the Paper Currencyper £1 from fcs . 28 to fcs. 29 75 ; for , unless bills drawn on Italybear upon them the express direction that they are to be paid inGold or Silv er , they will be paid in Paper Currency. The ItalianGov ernm ent has not only been compelled, by pressing political cir

tances,and by wars, to in cur an enorm ous debt ; but,as there v enue of the State falls much short of the expenditur e , and asthere is great want of mon ey, the Italian Gov ernm ent has beendr iv en to the expedien t of cr eatingaforced Pape r Currency. This

isan illustration in point of what we hav e characte r ised, in one of

the earlier chapte rs of this work,asathird class Bank Note issue .

The exact amount in circulation of this forced note issue is not

kn own ; butthe Finan ce Ministe r ofthe Kingdom ofItaly lately statedthat 528 million s francs in Gold would be n ecessary to withdrawthe note s. This leads us to infer that from 600to 650m illions

of fran cs hav e been issued. It is to be heped that the in creasingprosperity of the Coun try, and the good management of the

Gov ernment will soon succeed in relie v ing this depreciated Paper

The M int Par of Exchange between Italyand England is£1 fcs .

but owing to the forced Paper Currency, which isat presen t legaltender in the coun try, the actual Par varies with the prem ium on

Metallic Money. All the valuations of Italian Mon ey computed inPaper Currencyare as much higher as this premium per cent. ,andwith it rises the Paper Par of Exchange with London , which in theearly part of 1868, stood

c . 28 50to 28 75 per £1 .


Before 1866 the Austr ian Florin con stitute d the basis ofafifthsystem of valuation in Ge rmany ; butas Aus triaforms nowno longer

apart of the political organ isation of Germany, we shall de v ote aseparate chapte r to the Austrian Exchange .

Pre v iously to the recen t en ergeticand practical m ov em ent for

un ity, Germany, div ided in to anumbe r of small State s, under the

alm ostabsolute sway ofavariety of Go v ernm ents,was par excellence

the land of the m ost bewilder ing confusion of Coinages. Each Statestruck its own Coin ; e v ery petty pr in ce figur ed upon the MetalCurrency of his dom in ion . Som e of these small pote ntates struckThalers , and e v en these not always upon the sam e standard of

Coinage ; others struck Gulden , of different descriptions , with odd

subdiv iduary piece s, to make confusion worse confounded. There

were also avarie ty of Gold Coins of differen t denom inations .

Side by side with this array of indigenous Coins there cir culatedalso Fore ign Coin s from n ear ly e v ery part of the W orld. Indeed,

the circulation of Fore ign Coins con tinues in Germany to the

presen t day. Napoleon s, Imperials, Sov ere igns , Eagles, Ducats,Fiv e Fran cs Pieces, and smaller French Silv er Coin , Dollars ,andRoubles ; in short, anything in the shape of Gold or Silv er Coin

may be passed in Germany without trouble , at the hotels, shops,or banks

,at ce r tain understood rate s of Exchange . The English

shop keepe r or the Fr ench r estaurateur gen erally looks uponfore ign Coin sas som ething not much better than counte rfeit m on ey

,

only fit to be ranked with counters ;and nothing but the Coin of

his own coun try will suit him . The German ’

s greater appreciation of the character of fore ign Coinages is no doubt highlycreditable to his in telligen ce but

, from anational point of v iew,it

must beadm itted it looks likeasign ofgr eat political weakn ess .

The English trav eller in Germany must be sorely puzzled e v en

now with the diffe r en t Coinages still hav ing cour se there,and

changingatn early e v ery frontier between the se v eral States,andwiththe singularand worn appearance of the small change which he gets ,and the num erous dirty notes, represen ting insignifican tamoun ts of

m on ey . This is not to be wondered at, sin ce e v en the nativ eGe rman, to the mann er horn , is hardly able to thoroughly maste rand command the Coinage Babe l of his coun try.

GERMANY . 307

Asamatte r of record, it may be stated here that the CologneMark, equal 3609 Troy grains , was formerly the pr incipal weightfor Goldand Silv er . (Ev en this we ight was not the sam e through

out Germany, the Hamburg Cologne Mark, for instance , weighingonly 3608 Troy grains .)

Upon this weightanumbe r of se-calledMunzfusse, or Standardsof Coinage , were based ; to wit

The LeipzigMiinzfuss, of 12 Thaler , or 18 Gulden or Guilders,

to the Mark of fin e Silv er (the Saxon Species Thaler . )

The Berlin Miinzfuss of 14 Thaler , or 21 Guilders per Mark offine Silv er .

The Con v entionsfnss of 13% Thale r , or 20Florins per Mark of

fine Silv e r .

The 24 Guldenfuss of 24 Flor ins per Mark (abolished in

The 24; Guldenfuss of South-W est Germany.

The Schleswig Holstein Courantfuss of 11193 Thaler per Mark

of fin e Silv er .

The Liibeck Munzfuss of 1 1% Thale r, or 34 Marks Courant.

The HamburgMark Banco valuation ,at the rate of 27% MarksBanco pe r Mark for Silv er (still in use ) .

The Brem en Louis d’

Or valuation (still in use ) .

From this form idable lis t of Coinage Standards som e notion

may be gathered of the confusion which pre vailed in the m onetaryarrangem en ts of the coun try. Under the Zollv ere in se v eralattemptswere made to bring the ThalerandGulden Coinagemore into unison .

Theseattempts m et with som e,thoug h but indifferen t success , un til,

in 1857,aCon v ention of the German State s m etatVienna,at whichit was agreed

Toadoptas the Standardweight for Bullion the newMziuzpfuml

(Mint Pound) . This Miinzpfund is exactly on e-half of aFre nchkilogramm e ,and is div ided in to 500grammes (oz . TroyThis wasagreatad van ce .


The next difficulty was to establishabetterand more manageable proportion be tween the three principal Coinages, v iz

The Thaler( 14 Thale rfus s)

The Austr ian Gulden(20Guldenfuss)

The South GermanGulden

(24%Guldenfuss)

This prov ed atask of con siderable difficulty ; howe v er , itwasfinallyagre ed to coin , from the Min t Pound Fin e Silv e r ,

30 Thaler (Norddeutsche W iihrung, or North Ge rmanvaluation ) .

45 Austrian Gulden (OstreichischeW iihrung, or Austrianvaluation .

52 South German (Suddeutsche W iihrung, or SouthGerman valuation .

Thus making 2 Thaler equal to 3 Austrian and South GermanGulden . P ieces of this value wer e struck as Vere z'nmm '

inze (Un ion

Coinage ) ,with 1 Thaler pieces, Guilder pieces ,&c .

,allof them 900fin e .

Hamburgand Brem en,howev er , continued the ir m on ey ofaccount.

The Silv er valuation is the ruling Standard in Germany ; butthe Con v ention agre edalso to coin 50Gold Crown s, or 100Gold

Half Crowns (Deutsche Kron en and Halbe Kron en ) , from the M t

Pound fine Gold ; the value of these in Silv er Thaler being about9 Thaler 10Groschen , varyingwi th the greater or lesser demandfor Gold. These Gold pieces hav e been coin ed in fair quantities ,but theyare not much used as yet, the old Gold Coins still keepingtheir place . Upon the whole , Silv er remainsas yet the great stapleof the Ge rman Coinage .

r.

Austr ia, sin ce the separation from Ge rmany, is now no longer

bound by the Con v en tion ; still there seem s to be no reason why she

should depart from the actual system . She has, howe v er , declaredthat she considers herself no longer bound by the Con v ention of 1852.

Afte r this briefabstract of the recent Histo ry of the GermanCoinage , giv en he re by way of in troduction ,

we will now proceedto the consideration of the four descriptions of Coinage to which theform er chaos is n ow reduced.

ofwhich 14 madeaMark fin e .


d’

or , W ilhelm d’

Or , Louis d’

Or , &c .

,der iv ed from the nam e of the

re igning Sov ere ign .

The Frederick d’

Or now no longer issued, was originallycoin edas worth Thaler 5 in Gold, equal to Thaler 5 20Groschen inSilv er ;andat this latter rate the Prussian Gov ernm ent now receiv es

it ; the other German Louis d’

Or , or Pistoles , are v ery n earlythe sam e value , varying simply to the exte nt ofafew Groschen

Coinage .

The only Gold pieces that are coined at presen tare the Gold

Krone , ofwhich 50,and the Gold Halbe Krone , of which 100makeaM in t Pound fin e . These Coins are Handelsmunze , or Comm ercialm on ey

,and they vary in value with the gr eate r or lesser demand

for Gold ; Silv er alone is the fixed Standard, or legal Currency(CourantMunze) . Taking the proportion of 1 Gold to 1 5% Silv er ,the Kron e is worth 9§ Thaler ; but it is frequently quotedatr iflebe low this rate . The num erous old Silv e r Coins ofall sorts of

we ightsand fin ene ss we n eed not m en tion here .

The subjoin ed Table giv es the weight and fineness

actual Coinage of the pre sen t day

GOLD .

We ight m Grammesl l ' l l l

SILVER.

2 Thaler pieces 370370 900 fine .

1 18 5185 900

5 5 3419 520

11; 3 2206 375

315 1 2 882 220

sic 06 441 220

And Copper Coins of 1 Pfenn ing,and 2, 3,and 4 Pfenn inge .

The lower description of the Silv e r Coin , the small changepie ce s (Sche idem iinze ) , from one-twelfth Thaler downward, ar e , itwill be seen , of v ery low m etallic quality . The Groschenac tuallycon tain s more than thr ee-four ths Copper .

NORTH GERMANY . 31 1

The value of these se v eral Coins in Thaler isGOLD . As computedupon the rate

Gold Crown.

Thl . 9 10Groschen of 1 Gold to 15-5 Silv e r ,but varyi ng 111 the Market

GOId Half Crown 4’ 20 with the greater or lesse r

SILYER. demand for Gold.

Nominal Value . Real Value .

2 Thaler pieces 2 Thale r 2 Thaler1 1 1 n

t'

5 Groschen 5 Groschen

T1; 1 : 2 Groschen 6 Pfenn inge 2 Gr . Pf.

333 1 Groschen or 12 Pfenninge 6-1 Pfenninge

310 6 Pfenn inge

Gold Coin 18 not legal tender In the North of Ge rmany . The

Silv er Thaler 18 legal te nder toanyamoun t. The small change belowthe on e-six th Thaler is lim ited to thatam ountas legal tender .

North Germany, with her Silv er Valuation ,affords us then anillustration ofaState the re v erse of that of England, where the

Gold Standard rules. There is this difference , howe v er , that thePrussian Gold Coinage is struck in str ict conform ity with the

un iv ersal price of Gold, without profit to the State ; which ce rtainlyis not the case with the Silv er Coinage in England.

The Prussian Mint buys Silv er at pr ices varying from 291} to

30 Thaler per M in t Pound fine . The Min t is not bound to buy

Silv er , but makes its purchasesat its own discre tion ,andaccordingto the quan tityand quality of the Silv er ofi

'

e red. In buying Silv e rthe Min talways seeks to include in the pr ice its own charge forCoinage , and, accordingly, be ing bound to str ike 30 Thaler fromthe Min t Pound weight of fine Silv e r , it endeav ours to purchase itsSilv eras muchas possible unde r this rate .

The Prussian Mint does not buy Gold, but it coins Bar s , or re

coin s old Goldpieces in to 50Crowns per Min t Pound fin e , chargingtwo-fifths pe r cen t. for Coinage . Paym ent in Gold Crowns is madeat on ce , without pre v ious issue ofMin t Ce rtificates .

Computing the value of the Gold Crown at Thale r on theav erage , the price of the Mint Pound fine Gold is Thl. Sgr .

Le SS i per cent. for Coinage Sgr .

Thl. 4642 4 Sgr .

It isabout thi s figure that the Market price turns . Thus on 12th


August 1867, the Market price of fine Gold was quoted atThl. and the Gold Crown at Thl. Sgr . On the 4th

January 1868, the price was Thl. 46935 , the Gold Crown be ingquotedat Thl. 9°10i Sgr . (Gold seems to hav e risen in value inBerlin since the Mon etary Con v ention in Paris) .

The Rem edyallowed for Gold Coins is 231; per mille for weight,and 2 per m ille for fin eness ; for the larger Silv er Coin s 3 per m illefor we ight,and 3 per m ille for fineness ; for the Div isionary Coinagetheallowance must be larger .

Paper Curren cy .The Paper Money of the North

Ge rman Confederation is on aPar with Metallic Coin . The issue

is made by the State Banks and Treasuries, in Notes from 1 Thalerup to 500Thaler .

The Mint Par of Exchange between Berlin and London cannotbe made direct from Gold Coin ,

because Gold, which has afixedvalue in England, has avariable pr ice in Berlin ; nor from Silv er

Coin , because Silv er hasafixed price in Berlin ,butavariable price

in London . The rate must ther efore be arbitrated through the

Coinage of another coun try, say France , where both Gold andSilv e r hav e fixed prices . This arbitration is made on the bas is of1 part of Gold to 15% parts of Silv er ,and will be found toanswercorrectly in practice ; for , excepting the slight variations in Berlinin the Kurs (price ) of Gold Crowns , the prac tical proportion of

value between Goldand Silv er in Prussiaisas 1 to l5§, consequen tlyby chain rule

How many Thaler £1

If 1 oz. Standard GoldStandard Gold oz . 24 22 oz . fin e

Fine Gold oz. 1 gramm es fin e

Fin e Gold gramm e 1 155 gramm es fin e Silv er

Fin e Silv e r grammes 500 30ThalerThaler

making the Thaler equal to 35243 pence , or 25 1 1%d.

Th e true M int Par of Ex change b etween London andBerlin is therefore

£1 Thl . Silb ergroschen .


Of the Gold Coin s, the 10and 5 Gulden piecesand the Ducatsare now no longer struck ; the Gold Crowns alone are issued.

Howe v er , onlyafew of theseare in actual circulation ,and they hav eavariable Kurs (price ) . Fore ign Gold Coin s, such as So v ere ign s,Napoleon s, &c . ,are much used. Of the Silv er Coins , the and IfGulden pieces correspond to the North Ge rman 2 Thaler and1 Thaler pieces, in accordance with the Monetary Con v ention of

1857,andare called Vereim mwnze (Un ion Coin ) .

The old Kron en Thaler and other Coin s form erly in useare nowalmost en tirely withdrawn from circulation .

The wretched small change of the South Ge rman State s, repreanted by worn and coppery looking Kreuzer pieces, must hav estruck e v ery English trav eller .

The subjoin ed Table shows the legal we ightand finen ess of theactual Coinage of the presen t day

GOLD.

We ight In Grammes .

900fine

SILVER.

3% Gulden piece 370370 900fine

2

1§ 18 5185

1

5 2910

(6 Kr euzer ) 2 598 333 fin e

(3 12 99

(I 156 fine

value of these Coins,expressed in Gulden

,is

GOLD.

Nom inal Value . Actual Value .

Gold Kron e 16§ Gulden Varying in Kurs orGold Halbe Kron e price from 16 to Gulden .

SOUTH GERMANY . 315

SILVER.

Gulden pieces Kreuzer .

Paper Currency . The Bank Notes of Frankfort andthe South German Statesare on aPar of value with the Coinage .

The Mints of South Germany (for e v ery State hasaM int of itsown ) , buy Silv er per Min t Pound fin e at the best rates they can ,varying from 52 to 523

} Gulden . They are not compelled to pur

chase . Gold they coin and re-coin , giv ing 50Gold Crowns per MintPound fin e , the sameas in Be rlin the price of Gold in the Marketvar ies from 805 to 812 Gulden per Min t Pound fine . Frankfort isnotalarge Market for Bullion .

The Silv er valuation ruling in South Germany, the Par of

Exchange mustagain be arbitrate d upon the basis of 1 part Goldto 15% parts Silv er , calculated for the M in t Pound fine of 5235

Gulden .

Howmuch in 56 is 1 Mint pound 500gramm es.

If 1 oz.

If fine Silv er 15% 1 fine Gold.

If fine Gold 22 24 Standard .

If Standard oz .

£4 4054.

According to the Union Coin valuation (30Thaler equal to523Florin s) the Flor in is worth 20°139d ( ls 8

3d) ; but there arein reality only Florins to the Mint Pound fine

,so that the

full weight Rai n is worth pence (Is 8%d) . The Par of

Ex change must, howe v e r , be taken upon the bas is of 52% Guldenper M intPound, and is b etween London and Frankfort

£10 Fl. 119 1 71 or PI. Kreuzer .

316 PARS OF EXCHANGE.

HAN SE TOW N S .

HAMBURG.

The Monetary Unit of the Town of Hamburg isThe Mark Banco ,

divided in to 16 Schillinge ,of 12 Pfenninge each .

But this Un it does not exist in the Shape of Coin ;it con stitutes Simply the mon ey of account betweenMerchan ts, in which is recorded the r espective own er

ship of each in alarge Stock of Silver Bullion lying

in the Vaults of the Bank ofHamburg .

The circulating metallic m on ey is called Mark Courant, incontradistinction to the Mark Banco .

The Bank of Hamburg is the great Cen tral depository for thebankersand traders of that town . This Bank is bound (sin ce 1846)to purchase and sell Silv er in Bars, from or to those firms who keepan accoun t there , at the rate of 27% Marks per Cologne Mark of

fin e Silv er (3608 English Troy grain s) . A banker or m erchan t maybring Bar Silv er to the Bank, where he gets credited for the sam eatthe rate of 27§ Marks per Cologne Mark. He may transfer part orthe whole of the sum thus placed to his credit to another m erchan twho keepsanac count there ,and he mayalso receiv e paym ents bytransfer in the sam e mann er . Or , if he requires Silv er for exportation , he may withdraw from the Bank part or the whole of the

Bullion standing to his credit,at the rate of on e Cologne Mark fine

for e v ery 27§ Marks Ban co .

The Bank charges 1 per mille commission on paying in .

It does not follow that e v ery trader in Hamburg must be adealer in Bar Silv er ; there are on ly certain bankers or Bullionm erchants who supply or take the actual Silv er Bars again stthe Exchanges in Bills or othe r values ; but the entir e stockis the prope rty of the custom ers of the Bank

, which pas ses from


There is no doubt that the old Coins, called Liibeck Courant, willsoon be withdrawn altogether ,and that the North German systemwill be substituted for the presen t system , which is som ewhat vagueand confusedas to weightand fin en ess . Almost all othe r GermanGold and Silv er Coins, and many Foreign Coins , are cur rent in

Paper Cur ren cy .The Paper Cur ren cy (issued by the

North German Bank is onaPar of value with the Coinage . PrussianNotesare also Current.

The price of Gold in Hamburg varies from 427 to 430% MarksBanco per Cologn e Mark fine Gold, according to the state of the

Market. Taking the proportion of value be tween Gold and Silv erat 1 Gold to 15% Silv er , the price should be 430A. On 6th Septembe r ,1867, the pr ice was quotedat 427 ; 9th Nov ember 1867, 430; 25thJanuary 1868, 428.

The Silv er Valuation rules in Hamburg. The price of fin e

Silv er be ing 27% Marks Banco per Cologne Mark fin e Silv er , thearbitrated rate of Exchange is

Howmuch in Marks Banco £1

If 480grains Standard.

If Standard 24 22 grains fin e .

If Gold 1 15% Silv er .

Grains 3608 Marks Banco.

Marks 13 4714

This makes the value of the Mark Banco Shilling

English, or 1s 5g-d, the Mark Couran t is therefore ls -d,and the

Par of Exchange b etween London and Hamburg,£1 Marks Banco 13

°

7 i Schillinge .

BREMEN . 319

HAN SE TOW N S .

BREMEN .

The Mon etary Un it of the Free Town of Brem en is

The Louis d’

Or Thaler ,divided in to 72 Groten .

of 5 Schwaren each .

The Brem en Louis d’

Or Thaler is, like the Hamburg MarkBanco

,simplyamon ey ofaccoun t ; but, unlike the Mark Banco , it

has no conn ection withastock ofBullion in the vaults of the Bank,to which it serv esas an infginary integer ; but it is entirely idealMoney.

The Louis d’

Or Thaler , or Re ichsthaler , is the fifth part of the

se-called Louis d’

Or (comprising Hanov erian , Brunswick, Hessen ,

Dan ish Gold Coin s , called George d’

Or , W ilhelm d’

Or , &c .,afte r the

Sov ere igns of these States . They differ in qualityand we ight,andare on theav erageabout g, per cen t. less in value than the PrussianFrede r ick d’

Or ; so that the fifth part ofaLouis d’

Or , the SO-calledLouis d

’

Or Thaler , is worth So much more in proportion than the

Prussian Thale r . Calculatedupon theav erage value ofthe Louis d’

Or,

the Brem en Gold Thaler is worth Prussian Thaler , or 33 Silbe rgroschen .

These Louis d’

Or are worth, in Prussian Thalers, Thl. to

Thl. 84 Louis d’

Or of 5 Gold Thaler eachare valued to make1 Min t Pound fin e Gold ; this giv es 420Gold Thaler pe r Mint Pound,or 8} Thaler per German Crown (50to the Mint Pound) . At the

pr ice of Thl. 466-gPrussian mon ey, the Crown is worth Thaler ,and theBrem en GoldThaler isaccordingly worth 33} Silbe rgroschen .

W e hav e no doubt the North German Confederation will induceBrem en be fore long toabandon this ideal Money system for amore

practical on e .

It has thisadvan tage for Brem en,that the town n eed not strike

Gold or large Silv e r Coin ,as the Coin s of othe r nations are free ly

used, especially Louis d’

Or , Crowns ,and British So v e re ign s .


The only Coin s which the Brem en Mint strikesare

1, Gold Thaler 37 Groten 986% fine .

l

fi7393

16

Silv er

,1, 1 28l§

and Groten , or Schwaren pieces in Copper .

These Coins are simply used for small change , their nominalvalue is slightly higher than theiractual m etallic value .

Paper Currency . The Bremen Bank issues alim itedamount ofNotes, onaPar of value with Metallic Coin .

The Par of Exchange between Bremen and London is difi cult

to dete rm in e , although the Ge ld valuation rules at both places.

The reason is that the Gold valuation of Brem en re sts onaloosebasis (the varying value of old and Odd Gold Coins ) . The

value of the Hanov erian double W ilhelm d’

Or of 1835, whichweighs

gramm es, fine, is 168 4 ,

1

,d sterling, which makes the

Louis d’

or Thaler worth 38 3fiyd. But we cannot take this forthe basis of our calculation of the value of the Louis d

’

Or Thaler ,as the various Louis d’

Or , &c ., pieces vary greatly in weightand

fineness .

Since 1857 Bremen has determin ed to adopt the GermanCrown at the value of Gold Thaler ,and taking theav erage priceof Gold Crowns in Berlin at 9} Thaler , we arriv e at the rate of100Louis d

’

Or Thaler Prussian Thaler . The Louis d’

Or

Thaler isaccordingly worth 39°I59 pence , or 38 315d.

The Par of Exchange between London and Bremen , consequently is

8 100 Louis d ’or Thaler .


3 Florins pieces(equal to 2Thaler )

15Florin 1

9,2

1 Silv er .

t

and Copper coins ofg, 1 ,and 3 Kreutzer .

Austr iahav ing left the Ge rmanic Confederation , has alreadydeclamd that she ceases to be bound by the Ge rman Min t Conv ention of 1857. It remains to be seen whether she will continue

toadhere to the present system .

The subjoin ed Table shows the weight and fineness of the

piecesand their respectiv e valueWEIGHT AND FINENESS.

GOLD.

SILYER.

3 Gulden piece1% n n

2

1

ia115

VALUE.

GOLD Nominal Value. RealValue.GOld Crown ,about Fl. Varying in the Marketaccording to

supplyand demand . In Paper Currencythe ir value is of course much higher,

Ducat 4°60 risingwith the Premium on Gold.

SILYEB. Nominal Value .

3 Gulden or Double Thaler piece Fl. 32

1§ Thaler1125 Kreutzer

115

10

316

5

AUSTRIA. 323

These figures Show the Metallic value of the Coin ; computedin Paper Currency the value is of course so much higher , risingwith the Premium on Silv erasagainst Paper .

The Silv er Valuation rules in Austr ia,and the Gold Coin mustbe con sidered simplyas Cmnmercial Coin , the same as in Germanyand Holland.

The Remedy for the Coinage is 2 per mille for fineness, and 2}per m ille for we ight. The Mint Pound beingworth 45 Flor ins , theMint buys at from F1. and coins and re-coins Gold at therate of 50Crowns per Mint Pound fine , charging fths per cent. for

Paper Currency .—The Min t in Austriais not av ery busy

\Institution . The Metallic Coin has almost disappeared from cir

culation , and the State is deluged with Paper Money,as we hav ealready had occasion to remark in the Chapte r on Currency,at thebeginning of the Book . The Premium on Metallic Money variesfrom 12-3to 30per cent.

,and Coin is an article in Austriain whichpeople will speculate . As the Austr ian Paper Cur rency is legaltende r in the Empire

,the respectiv e value of the se v eral descr ip

tions ofMetallic Coinage must be compute d at aso much higherrate , according to this Premium on it. The National Bank of

Austriaissues Note s of ten , hundr ed,and thousand Florins ; but theState issues amuch larger number of unsecured Note s, from 100

Florins downward, e v en to the most insignifican tamounts .

At the rate of 45 Gulden per Mint Pound, the Austr ian MetacPar ofExchange is 50per cent. abov e the Prussian Par , so thatthe new Austr ian Silv er Florin is worth 3 Prussian Thale r, or

23 495 Pence (ls l l%d) ;and the Metallic or Min t Par of Ex

change between Londonand Viennaisan Fl. 10215 , or PI. Cents .

But the Par upon the Paper Cur rency varies according to the

Premium on Gold or Silv er ; in February 1868 it stoodat£1 Florins


HOLLAND .

The Monetary Unit ofHolland isThe Silver Flor in ,

divided in to 100Cents .

The Flor in isalso divided into 20Stiver , which latterdivision is used in the quotation of the Exchange withLondon .

The Coinage of the present day is represented by20 Florins pieces Double W illiam10

5

1 1;

5;

2%Florin1

Silv er .

4

116

116

and 1 Cent.and Cent. pieces in Copper .

The older Coinage of the Netherlands included Austrian-DutchSov ereigns , Brabant Ducats, Ryders, Crown Dollars, Thaler , and

The subjoined Tables Show the weight an d fineness of the

piecesaccording to law,and their valueWEIGHT AND FINENESS.

GOLD.Double GoldW illiam

HalfDouble DucatDucat

3, W illiamDouble DucatDucatRyksdaalderFlorin


Mint buys Silv erat its own discretion . The Remediesallowed forthe Coinageare 2% per mille for weightand fin eness .

Paper Cur rency .—The Dutch Paper Cur rency— in Notes

of 5, 10, 20, 50, 100, 500,and 1000Flor in s— is on aPar of valuewith the Coinage .

The Dutch Florin or Guilder containing grammes fine

Silv er ,

Howmany Pence gramm es

If 31 °1035 1 oz. TroyFine Silv er 15} 1 fine Gold

Fine Gold 22 24 Standard oz. BritishOz . Br itish Standard 1 9345 Pence (77s 10%d)

Pence

or 1s 8d

The Par of Exchange between Londonand Holland therefore is£1 12

'

OlO Flor ins .

or , with the fraction expressed in Stiv er ,

£1 Florins 120} Stiv er .

SW EDEN AN D NORW AY .

STOCKHOLM .

The Monetary Unit of Sweden is

The Riksdaler Riksmynt,divided in to 100Ore ,

coinedat the rate of 50pieces from the Swedish

pund Grains Troy) 750fine .

This Unit was introduced in 1856,and becam e compulsory in1863. Up to that tim e the Riksdaler Banco was in useas Money

SWEDEN AND NORWAY . 327

of Account, based on Paper Cur ren cy, and the Speciesdaler wasthe Chief Silv er Coin ; the relativ e proportions of value betweenthe three descriptions of Money being 1 Speciesdaler 2} Riksdaler Banco 4 Riksdaler Riksmynt, the newUnit or Integer .

The Speciesand the Bancodaler were each di v ided into 48 Skilling, of 4 Stii v er each, or 12 Run styken .

The new Riksdaler Riksmynt is div ided into 100 Ore , andthe decimal system has also been adopted with regard to the

weights of the precious metals .

The Coinage is now represented byRiksdaler pieces (Ducats) in Gold.

(Therearealso doubleand quadruple Ducats .)4 Riksdaler pieces, called Speciesdaler2 or half Speciesdaler1 Riksdaler Riksmynt

Silv er .

t

t t

116 i t

and Copper pieces of 5, 2, l ,and Ore , whichare legal tender upto theamount of 1 Riksdaler .

The old Skilling pieces are still largely in circulation , and25 Oreare reckoned equal to 12 Skilling,and so on in proportion .

The subjoined Table shows the weight and fineness of the

in Grammes. in Mllllemes.

Gold, DucatS itv er, Speciesdaler 34007 750

3 17003 750

Riksdaler 8 502 750

3 50Ore 42 51 750

25 750

116 10 750

The nom inal value of the Silv er Coinage is str ictly inaccordancewith the Metac Value , ev en down to the 1 15 Riksdaler .

The Rem edyallowed is thr ee per m ille for both Goldand Silv er ;for the smaller denomination the Remedy for weight is larger .

The Paper Currency issued by the Bank of Stockholm ,


in Notes of 1 , 3, 10, 15, 25, 50,and 750Riksdaler , is on aPar of

value with the Coinage .

The Silv er Valuation rules in Sweden , the price of Gold Coin

varyingwith the supplyand demand. The Min t buys Silv er at itsown discretion at 50Riksdaler Riksmynt per Skiilpund, chargingf pe r cent. for Mintage .

Takingthe weight of the presentRiksmyn tRiksdaleras legallyestablished at 8 502 gramm es, 750 fine , its value is (calculated bythe usual rule ) Pence (1s 13 d ) ,and the M etallic Par of

Exchange b etween London and Stockholm is accordingly ,£1 Riksdaler Riksmynt.

CHRISTIANIA.

The Monetary Unit of Norway isThe Riksdaler Species,

div ided in to 5 Orts or 120Skilling .

Un it is held equivalent to the Swedish Speciesdaler ,though it is Coin ed of Silv er 9 per m ille less fin e than the SwedishCoin ; howe v er , as agen eral rule 4 Riksdaler Riksmyn t Swedishmay be reckon ed 1 Riksdaler Species Norwegian .

The Coinage is represented by(No Gold Coinsare struck .)

1 SpeciesdalerA2

Silv er .

and Copper Coins of 2, 1 ,and g'; Skillinger .

PARS OF EXCHANGE.

The Coinage is represented by14§ Rigsdaler pieces, Double Fr ederick7§ Frederick d’

Or

2 Speciesdaler1 Daler1

i su3

v e r.

11;

tk

and Copper Coins of 2, 1 , 4,and 4 Skilling.

Gold Ducats werealso form er ly coin ed.

The subjoined Table shows the legal weightand fin en ess of the

pieces

com) . 5mDouble Frederick 13 284

Frederick d’

Or

SILVER.

Speciesdaler 28 893 875

Rigsdaler 144 47 875

72 23 8756 129 6875

4 214 5002809 375

18 56 2503

so that, with the exception of the 4and 3 Skilling pieces, whicharebelow the mark, the Metallic value of the Silv er Coinage is the

sam eas the Nominal value .

The Silv er Valuation rules,and the Gold Coinsare CmnmwrcialCoin, varying in price with the supplyand demand.

The Min t Rem ediesare the sameas in Sweden .

Paper Curren cy .—The Note s of the National Bank, of

5, 50,and 100Rigsdalers,are on aPar of value with the Coinage .

The Rigsdaler in Silv er weighing 144 47 gramm es of 875

fin e , its value in British Mon ey is Pence (2s 24}d) ,and thePar of Exchange between London and Copenhagen is

£1 Rigsdaler , or Rigsdaler Sk illing.

RU SSIA .

The Monetary Unit of the Empire of RussiaisThe Silver Rouble ,

divided into 100Copeks .

The form er Banco Rouble ,an ideal money, resting on aCopper

basis,and worthabout 4} Silv er Rouble is now no longer in use .

The Russian Coinage is represented by1011’s Rouble pieces Imperials53

’s

1 Rouble piece1S

1

Silv er .

t

115

An d Copper pieces of 5, 3, 2, g,and COpeks.

Silv er Coins for Poland of

I}; Rouble , or 10Polish Florins .

or 5

15 Cepek pieces , or 1 Polish Florin (Zloty) ,with gZlotyand Zloty pieces.

The Russian Gov ernment used to coin Ducats (of the same

weight and quality as the Dutch) ; PlatinaCoins of 12, 6, and3 Roubles were also coined ; but since 1845 they hav e been With

The Russian Half Imperials are 22 carats fine, the sam e asBritish Standard. The Mint has aRemedy of 2 per mille for

weight, but none for fineness . It is of course almost impossible tomake the Alley exactly Standard, n ev ertheless the Russian Gold

Coins are the most regular of all Coins with regard to quality,

which shows what proper care can accomplish. Theyareafav or iteCoin in the British Mint for Re-coining into Sov ere igns . The


weight of the Half Imperial is legally 65 44 ;at 778 10-}d per oz .

it is worth Shillings . The Half Imperial was originallyissuedas 5 Roubles, but it isactually worth 595 Silv er Roubles .

The subjoin ed Table shows the we ight and fin eness of the

Silv er Coinagesin in Milhem es .

Rouble 207 315 868056

i 103660 868056

4 1460 868056

715 20730 868056

$6 10370 868056

Theactual Metallic value of these pieces, down to the smallestof them is exactly the sam eas their Nominal value . In this respectRussiapresents av ery fav ourable exception from almost all other

countries . Som e of the older small Silv er Coins are , howe v er , only750fine .

Paper Cur ren cy .—Russiahas an excessiv e Paper Currency,

the Empire be ing deluged with Bank Notes. Gold and Silv er areataPremium varying from 127

1

, to 25 per cent. The exportationof Silv er has for along timc been prohibited ; that of Gold is

periodicallyallowed, but just now it isalso prohibite d.

The Metallic Money, expressed in this forced legal PaperCur rency, is of proportionately higher value , rising with this

Premium . According to the Russian Mint Law, 100 RussianSilv er Roubles weigh Russian Pounds . (The Russian Pound

is 6319 733 Troy Grains . ) On e hundr ed Silv er Roubles, lessMin tage Charges, Will accordingly be about the price paid by theRussian Mint for

.

that we ight of Silv er .

The value of the Silv er Rouble (computed by Chain Rule ) is

Pence , but the Half Imperial, which is worth in GoldShillings, taken at Roubles, giv es an Exchange b etwe en

St. Pete rsburgand Lon don of

1 Roub le 38 4 75 P ence oras mandat 778 75d per oun ce , the Bank pr ice here , it is 38055 .

But, as aPaper Currency now reigns in Russia, and the

Premium on Coin in Exchange on London is large , the Paper Parmust be regulate d accordingly. The Exchange lately stood at32 Pence per Rouble .

334 mas or EXCHANGE.

Paper Cur rency .—The National Bank issues Notes of 25,

100, and 500Drachm es, which form the principal circulating

The value of the Drachm e in Ste rlingMon ey is 8 520Pen ce .

The Par of Exchange b etween London and Athens is

£1 28 1 70Drachm es.

SPAIN .

The Mon etary Unit of Spain isThe Real de Vellon ,

divided in to 10Decimes, or 100Cen tim es .

20Reales 1 Dollar or Duro .

In former tim es n early e v ery Spanish Prov ince hadadifferentsystem of Coinage ,all m ore or less connected with the Dollar ; therewas the Castilian , the Aragonian , the Valentian , the Catalonianvaluation ; that of Navarra, Mallorca, the Canary Islands , &c . ,andunder these difl

'

erent systems the Real had different values anddenominations . Sin ce 1848 the new system has been substitutedall ov er the country,and the present Real is called Real de Vellon .

The Spanish Coinage is represented by320 Reals, or 16 Dollars pieces, Onza

de Or , or Quadruple , or Doubloon160Re els, or 8 Dollars pieces , § Onza

de Or ,or 31

; Quadruple ,or Doubloon100Reals IsabellaDoubloon80 4} Onza40

20

SPAIN. 335

20Reals Piastre or Duro10

4 Peseta2 ‘2 n

1 Real de VellonAndCopper pieces of 25, 10,and 5 Centimes, or 1 ,and Decimes.

(The Escudo, div ided into 10 Reals or 100 Decimes, ispractically the m ostuseful Un it.)

The Quadruple , or Onzade Oro, with its div isions into i , i ,and 1

13th pieces is now no longer coined. The days of the old

Spanish Doubloons are gon e by ; but these Coin s are dealt in inLondon , Paris, and elsewhere , for tradingwith Spanishand other

settlem ents . In London they fetch 75s to 768 per oz . The old

Doubloons ranged in fineness from 850to 917 fin e ; those struckun til 1848 weighed 27064: gramm es, and were 875 fine . Their

real quality generally turns outalittle below the legal finen ess .

The modern Doubloon of Isabella, equal to 100 Reals or

5 Dollars, now replaces the former Doubloon of 16 Dollars .

The old Silv er Coins , difi'

er ing more or less in value ,

The subjcinod Table shows the weight and fineness of the

Spanish Coins in actual circulationGOLD.

Ffimmawin

IsabellaDoubloon 8 3865 900

SILVER.

25060

12080 900

51 92 900

2 596 900

1298 900

The intrinsic Metallic value of the pieces is on atheir Nom inal value . The proportion of value betweenSilv er isas 1 to so that practically the Doublepre vails.


The M int Remediesare 2 per mille for Gold and 3 per m ille

for large Silv er pieces, both for weightand fineness .

Paper Cur rency — Spain.

is an ove r-issuing State ,and Paperre igns paramoun tall ov er the land, subject toavariable discoun t.A large number of Banks , under super v ision by Gov ernm ent

In spectors, issue Notes based upon State and other securities .

It is impossible to dete rm in e the actual value of Coin as againstPaper . Each Bank hasadistr ict, in which its Note s are cur rent ;when out of this distr ict, they cease to be cur rent

, orare taken onlyatadiscount. Thus, Note s of the Southwill not pass in the Centre ,W est, East, or North of the country,and v ice v ersa.

A rev olution breaking out, or thr eatening to break out, inapart of Spain , the Notes cur rent in that part fallat once in value ,the depreciation keeping pace with the prospects of the success of

the mov em ent. Adding to this the discredit which the tr eatm ent

of the Span ish Bondholders abroad has brought upon the coun try,the in te rnational value which this Paper Currency is likely to com

mand may readily be imagin ed. Howe v er , this does notmuchaffectFore ign Exchanges ; for in Bills drawn in England on Spain , good

care is always taken to stipulate expr essly on the Bill that theamoun t stated is to be paid in Gold or S ilv er Coin—Beale de Vellon,or Duros forte s— Hard Cash .

The Par calculated from Silv er will giv eabout the sameas thatfrom Gold.

The fiVe Dollar Doubloon of Isabellaweighing gramm es

900fine , its value in English Gold Coin is2473 89 Pence , or £1 Os 7§d,

which makes the Real worth about 2 4741 Pence ;and the MetallicPar of Ex change b etween London and Madrid is accordingly

Pen ce 1 Spanish Dollar ,Or about Pence .


SILVER.

500Mi lreis 12 500

200 5000

100 2 500

50 12 50

which giv es the following Table of values,Nominal Value. Real Value .

Gold 10Milreis 10Milreis 10Milreis

5 5 5

2 2 2

1 1 1

Silv er 500Re is 500Re'

is 454 Re'

is

200 200 181

100 100 90

50 50 45

The Mint has not Coin ed much Gold Money as yet. Br itishSov ere igns , being of the same fin enessas the Portuge se Gold Coin ,

are largely us ed ; their current value is 4500Re '

is .

The Paper Cur ren cy was form erly much depreciated, butis nowgen erally on aPar ofValue with the Metallic Coinage .

The Crown of 10Milreis weighing gramm es ofBritishStandard fin eness, its value in British Money is 532 84 Pence or£2 4s (Ed ;and the M int Par of Exchange b etween London

Pence 1 M ilre is Gold ,

whilst calculatedupon the Br itish Sov ereign at 4500Milreis it IS53 333, or exactly Pence per Milreis .

TURKISH EMPIRE. 339

TURKISH EMPIRE .

The Monetary Un it of Turkey isThe Piastre ,

divided into 100Aspres for Money ofAccoun t,and in to 40 Paras, of 3 Aspres each , for Currencypurposes .

The history of the Turkish Piastre isacur ious on e . Originallythe Turkish Coin of this denomination was ofabout the sam e valueas the Span ish Piastre ; in 1 750 it stoodatabout 36 Pence , whilstat present it is worth only 21 1; Pence . This declin e in the Valueof the piece arose Simply from the progressiv e debas em ent of its

fineness and we ight by successiv e Gov ernm ents, untilat last theintrinsic value of the Coin in fine Silv er was reduced to —th part ofthe or iginal value . The despotic Gov ernm ents of the State had not

much trouble in forcing the continued circulation of the debasedCoin upon their subjects,and they were blind to the disastrous effectsof sucharbitrary m easur es upon the Hom eand Fore ign Trade of the

Empire . But this was not all : an enormous am oun t of PaperCurrency, under the denom ination of Ce z

'

me, was forced into circu

lation besides ;and what with the depreciated value of this PaperCurrency, the fearfully debased, and e v en counterfeit Coinage ,circulating in an immense var iety of largerand smaller pieces, to thetotal am oun t of some 900 millions Piastres, and what with the

in cessantand Violent fluctuations in the pr ice of Foreign Coin ,there

surely n e v er was agreater state of confusion in aMonetarySystem . The stoic subm ission of the Moslem to Kism et, and hisbelief in the infallibility of the Prophet’s Successor ,alon e preser v edthe State from the dreadful re v olution which, withamuch smallershare of grie vances, would in e v itably hav e burst out in aciv ilised

Chr istian community .

The influence of international inte rcourse , howe v er , compelledthe Gov ernm ent of Turkey to de v ise som e reform

,and in 1844, underthe Sultan Abdul Medjid,an attempt was made to rc-e stablish the


Monetary System of the Empire upon amore solid basis , by theissue of an ew Coinage , taking for its Unit or Integer the latestedition of the debased Piastre . Atasubsequentper iod the ImperialOttoman Bank was established, whose functions comprisedalso thegradual reorganisation of the Turkish Mediums of Exchange . This

In stitution has succeeded so far in regulating and funding the

wretched Paper Currency known hithertoas Caime (nowaTurkish5 per cent. Stock) . The Coinage is also being regulated, and acontract for an ew Copper Coinage is now being executed for the

Turkish Gov ernment at Birmingham . But the task of entir elywithdrawing from circulation the m iserable old Coinage ,and substi

tuting for itahealthier and more stable system of Currency, is amost diflicult on e , which itwill take years toaccomplish . The new

Coinage of 1844, for instance , was no sooner in circulation than itbegan to be exportedabroad, and, in spite ofanabsurd law, passedsome yearsago, forbidding its rise in value (Since repealed) , it hasso far ser v ed scarcelyany other purpose than that of satisfying thedemands of fore ign creditors. The coun try is therefore still sufferingfrom the plague ofadebased Coinage ,and from the variable rates ofmany sorts of good foreign Coin (English Sov ereigns among the

number ) , to which the m erchantsare compelled to hav e recourse .

The Metallic Monies of Turkeyare accordingly represented bythe general m edley of these old and debased Coins (the so-calledBeshlz

’

k, with its di v isions) , adescription of which would take toomuch spac e , besides being of but little use here ;and by the Medj ldié

Coinage (issued by Abdul Medjid in which, although it hasso far been of less importance in the Turkish hom e trade , will yet,under the influence of the mon etary reforms, gradually work itsway, and which ser v es, at all ev ents, as apractical basis for the

The Medj idie Coinage of Turkey is represented by100Piastres pieces Medjidie, or Tur kish Pound or Lira50 n

20 Silv er Medj idie

10 Silv er Coin , bear ing each5 If as of them se v eral Turkish2 2 P13 8t names .

1 1 Piastr eand Copper Pieces of 5 Parasand 1 Para.


by law,at 72 16 gramm es 916 fin e , it is worth,at the British Min tprice of 77s 10%d pe r oz . Standard, -5 Pence , or 18s 03d ;andthe Par of Ex change b etween London and Constantinople is

£1 Piastr es Turkish .

Theactual Exchange , howe v er , variesaccordingto thePremiumon Goldasagain st Paper Currency .

EGYPT .

The Turkish Piastre is also the Unit for the Viceroyalty of

Egypt ; but upon the Tar ifl‘

fixed by the Egyptian Go v ernm ent for

Fore ign Gold Coin , 1 1 Turkish Piastresare held equal to 10Piastresin Egypt. The British Sov ere ign ,

which is the fav or ite Coin in

Egypt, is reckonedat about 100Piastres (Tar ifl'

The Par of Exchange b etwe en London and Alexandr iais£1 10071 Piastres .

UN ITED STATES OF AMERICA .

The Monetary Un it of the Un ited States isthe Dollar ,

divided into 100Cents .

The Coinage is represente d by20Dollars pieces Double Eagle10 Eagle5 Half Eagle3

2} Quarte r Eagle1 Dollar piece

AMERICA. 43

316 Dim c

Silv er

Half Dim e

3 Cents piecesand in Copper 1and Cent pieces, in Nickel 1 Cent pieces .

The Silv er Dollar was the original full legal tender in the

United States up to 1853, the Gold Coinage be ing also full legalte nder ; so that in fact the Double Standard pre vailed the Silv er

Dollar we ighing 267 295 gramm es,and the Ten Dollars Gold pieceweighing gramm es both 900 fine , the proportion of valuebetween Goldand Silv er was as 1 to 16 . As the proportion Stood

in other countri es at say 1 to Silv er in the Un ited States wascheape r ,and the consequence was that it was largely exported.

In 1853, therefore , aLaw was pas sed, reducing the we ight ofthe Half Dollarand its sub-di v isions to the extent required toalterthe proportionate value of Goldand Silv er from 1 to 16 to about1 to l4§, debas ing thus the Half Dollar below the gen eral rate of

1 to 155, the sam e as is don e in Englandand Portugal. But this

law does not in clude the Silv er wholeDollar piece , of which the

we ight remain s unalte red. The Mint, howe v er , has gradually ceasedcoin ing Dollar pieces, and n ew issues v ery few of them . Theo

retically, the refore , the Double Standard still pre vails, untilCongress shall pas s an Act reducing the Dollar to the sam e le v el

as the Half Dollar ; but practically the Gold valuation rules .

The subjoin ed Table shows the weightand fin eness of these

pieces

GOLD .

Double EagleEagleEagle

3 Dollars piecesi Eagle1 Dollar piece


SILVL'B in m emes .

1 Dollar piecei

t

i‘a

3 Cents

their respectiv e value beingGOLD .

N33?

AWM "

Double Eagle 20Dollars 20DollarsEagle 10 10

31

, Eagle 5 5

3 Dollar piece 3 3

Eagle 2 50

116 Eagle 100 l

The 3 Dollars piece is no longer coined.

SILVER.

Dollar 1 Dollar 1 Dollar 2§ Cents .

50Cen ts 48 Cents

25 24

115 10 9}

t 5 n

3 Cents pieces 3 38

(It isunn ecessary here to gi v eanaccountof the early CalifornianCoinage , especially the Octagon 50Dollar pieces, which were issuedby private par ties. Since the establishm ent ofaregular UnitedStates Mint in San Francisco they hav e been withdrawn from

The Remedy for the Gold Coinage is 2 per m ille , for the Silv erCoinage 3 per mille for fineness ; for weight 1 to 3 per m ille is

allowed in the Gold Coinage , according to‘

the size of the piece ;and 5 per m ille in the Silv er Coinage , with astill larger allowancefor the smaller Silv er Coin .

The we ightused for Bullion in the United States is the EnglishTroy ounce , div ided into 100parts but the fineness is reported inMilliem es, to M illieme exact.


maximum ;and how it has declin edagain since then to its pre sentvalue , which, howev er , still standsat 33-3per Cent. Premium .

Go ld. Value in Paper .

January Dols . 1 Dols . 100

1 1-00

1 1-00

1 18 3;1 1-52

1 2-37

1 1-44;1 1-33

1 18 3;

The following Statem ent of the expenses of the manufactureof Paper Money mayalso prov e inte resting

The Expense of Furnishing Cur ren cy to National Bank s .

It appears from official datathat the expense of Prin ting and Furn ishingCurrency for circulation to National Banks, the amount paid for engrav ingplates and Spec ial dies,and for prin ting c ir culating notes for National Banks ,from the organisation of the Bureauto 18th Jan .,amoun t to Dollars,and paid for paper during the same pe riod Dollars, making atotal of

Dollars . These items do not cov er the entire expense , such as

29th Jamm y 1868.

The Eagle or 10Dollars piece , we ighing by law 258 grains 900fine , is worth,at 778 10-35d per oz . British Standard,

Howmany pence are 258 grains 900fin eIf 900fin e 1000 900fine m etalIf 22 carats fin e 24 Standard

Standard grains 480 9345 Pence

493 1613636

or £2 ls 14d.

The Sterling is worth Dols . 4 8665, but it is taken atDols . 4 84,according to Tarifl

'

.

The M int Par of Exchange is therefore in London

1 Dollar 4 9016 Pence .

AMERICA. 347

But, except in San Francisco, it is not upon this basis that theExchange on London is reckoned in the United States .

According to an old Un ited States Coinage the Dollar wasform erly valuedat 54 Pence , so that 40Dollars were worth £9,and

100Dollars £22 500

but in the present Coinage 100Dollarsare worth only

which makes adifference of 9 4981 or 931; per cent. ; so, instead

of adopting the new form of Exchange , the old valuation of

Dols . 100 £22 108 has been retained, and the difl'

erence is

quoted by way of P remium on the 100. The Exchange betweenNew York and London is thus quoted at New York either ataPrem ium varying from 8 } to per cent.

, or it is quoted

simply— London at 108% or The actual M int Par being,according to this system ,

Ex change on London 109} Dollars Gold (for £22 10s)Where the Exchange is expressed in Paper Cur rency, the Prem iumon Gold isadded.

BRITISH N ORTH AMERICA.

Monetary Unit for Canadaand the other BritishProvinces in North Americais

The Dollar ,divided in to 100Cents

besides which

The Halifax Currencyand

The Sterling British Currency

are in use .


Neither of these valuations is represented by aCanadianCoinage ; for , with the exception of

4 D01. , or 20cents pieces, weighing gr . 900fine .

In n 1

g n

}in propOrtion .

coin ed in England toalim ited amount, Canadahas no Coinage of

her own ; in fact she has no Mint establishm ent. The Metallic CirculatingMedium s of the Colony consist ofall sorts of Fore ign Coins ,prin cipally of the Dollar clas s.

The Dollar Un it of Canadais only repre sented by the PaperCurrency issued by the Banks ; it is worth 50Pence Br itish.

The HalifawCurrencyPound,div ided into 20Shillings of 12 Penceeach, is simply m oney ofaccount. It is founded upon the valuation of

theabov e Dollar ,at the rate of four to the Halifax Pound, makingthe Dollar worth 5 Shillings, or 60Pence , as Halifac Currency ;whereas , calculated in British Ste rling, at 50Pence per Dollar , ittakes Dollars to make £1 English ; which makes adifl'

erence

of 20per cent.

Theactual B ritish Sterling Mon ey is used only by the Gov ernm entand the Custom House .

For the Exchange Valuation an other sort of ideal mon ey isin troduced, v iz . : the Halifax Sterling, at 48 6d per Dollar . The

Halifax Cur ren cy being 58 per Dollar , or 60Pen ce , whilstthe SterlingDollar is de 6d only, or 54 Pence , it follows that £100 in HalifaxCurrency are equal to £90 in Halifax Ste rling ; which makes adifferen ce of 10per cent. This Halifax Sterling is used in the

sam e way for computing the Exchange with Great Britain ,as theold NewYork Sterling valuation, which takes £9 to equal 40Dols .,

or 4s 6d per Dollar , and quotes the difference between this andBr itish Sterling by way ofaPrem ium . The value of the CanadianDollar being 4s 2d Br itish, as fixed by law, this Prem ium (4d

upon 50d) amoun ts to 8 per cent. ,and in the fluctuations of this

Prem ium the state of the Exchange is expressed. If, therefore , the

value of the Dollar is to be cons idered in actual Ste rling, we hav eto arriv e at the result thr ough four differen t elem ents , in the

following roundabout wayHowmany CanadaDollars are equal to £1 Halifax Currency

Answer 4 Dols .


The Par of Exchange from London on Canadais se

D01. 1 = 48 2d ,

and from Queb ec to LondonDol. 108 £22 108

or 8 per cent. Prem ium .

MEXICO .

The Monetary Un it of Mexico isThe Pe so or Dollar ,

divided in to 8 Reales of 4 Cuartillos each ,or 100Cents, in accoun ts .

The Coinage is represented by16 Dollars pieces Doubloon8

4

2 t1 Dollar piece 15

1 Peso or Dollar3.

8

Silv er .

fir

,x, J

and Copper pieces, Cuartillos (31, Dollar ) ,and Tlacos (fi th Dollar ) .

The subjoined Table Shows the legal weight and fin en ess of

the pieces

AMERICA. 351

WeightSILVER. in Grammes.

Dollar 27067

136 33

t 6 767

t 33 83

,x

, 16 91

,x, 0845

The Gold Coinage , though the Doubloon is nominally worth16 Dollars, varies in price . It is found to be in fer ior in quality by4 to 10Milliem es, like the Spanish Doubloons . The price in the

London Market ranges between 738and 74s 8d per oz. ,according to

The Metallic value of the Silv er Currency is on aPar withthe nom inal value .

The Copper Coins are simply tokens ; theyare much belowtheir nominal value .

The Coinage of Mexico has always been rather un certain in

quality and weight. Many of the older Mexican Dollars containtraces of Gold,and were worth 1 to 2 per cent. more than others .

The Coinage is now som ewhat more accurate in quality andwe ight, though it is still v ery rough.

Mexico is one of the great sources of the World’

s supply ofSilv er . It is estimated that, since the discov ery of the land, n early

m illions Dollars, or 800 millions Ste rling in Silv er hav ebeen drawn from its M in es, of which about one-half has beencoined in Mexican Dollars .

The Mexican Dollar exercises avast influence in the Bullionand Monetary transactions ofav ery considerable part of the World.

Itarriv es here in England in large masses, to be re-shippedabroad,where it is either employedas Coin in itsunalte red Shape , or re-m elted

and re-coin ed. The Mexican Dollar is known in China, India,Centraland South America,and in the remotest corners of the East,

The weight of the Mexican Dollar is 27067 gramm es oz.

Troy) 900 fine ; its value in Br itish Ste rling is accordingly 51 -iPence .

The M int Par between London and M ex ico is


W'

EST INDIES .

The Monetary Un it in the West Indies isThe Dollar ,

divided into 100 Cents for accoun ts.

In the Br itish W est Indies, in Jamaica, Barbadoes, the

Bahamas , doc . both the Dollarand British SterlingMon eyare used,the Dollar being valued at 443 2d Sterling; Am erican , Mexican,Spanish,and other good Silv er Coinsare also cur rent. For JamaicaHalf Dollars were formerly Coin ed ; for Dem eraraandBritishGuianathree , two,and one Guilder pieces and fractions ; but the Dollar isn ow e v erywhere the recognised Standard ; in Exchange withEngland the Dollar may be taken at 445 2d. The British SterlingMoney isalso used, subject to the usual charges for rem ittance .

In the Spanish W est Indi es , i . e . , Havannah, Porto Rico, &c .,

the sam e Monetary System pre vailsas in Spain ; but the quotationof the Exchange on London is often made upon the same basisas inNewYork, v iz .

, byaPrem ium on the old valuation of Dols . 100

£22 10s ;and this Premium is subject toabout the same fluctuations .

In Martinique the French system prevails .

In Hayti the Monetary Un it may be said to be the Gourde, orHaytian Piastre, div ided into 100 Centim es or Sous, but onlydiv isionary Coins in Silv er hav e been struck. The country sufl

'

ers

from an ov er issue of Paper Mon ey, and the Gourde varies in valuefrom 2} Pence upwards . An attempt to introduce the French

Coinage system has been made , but without success, for want of

Bullion .

In the Re public of St. Domingo Monetary mattersare in aboutthe same unsatisfactory state ; the value of the Dom in ican Piastre

In other parts of the West Indies the Moneys of the respectiv eMother Coun tries are used side by side with the Dollar . In the

Islan d of St. Thomas , which now belongs to the United State s, theAmerican system will probably be in troduced.


SOUTH AMERICAN REPUBLICS

0?

NEW GRANADA, ECUADOR, PERU, BOLIVIA, CHILI, VENEZUELA,AND URUGUAY.

The Monetary Un it of the South Am erican Republicsisalso

The Dollar ,divided in to 100Cents,

or 8 Reale S .

The Spanish, Mexican ,and other Dollar s, and 5 Francs piecesform the larger part of the Cur rency throughout the States.

NEW GRANADA .

The Coin ing of the Doubloon and its subdiv isions has beenabandon ed

,there be ing issued in stead

10Pe sos pieces Condor

5 i n

2 t

1 Peso, or Dollar .

-3 g (Peso Macuquina)2 Reals .

(The Peso 10Reals . )The Condor weighs gramm es 900fine , and the Silv er

Peso 25 gramm es 900fine (the sam e as the French 5 Francs piece ) .

The proportion of value be tween Goldand Silv er is thus 1 toand the Peso be ing of the sam e valueas the 5 Francs piece, its Par inBritish Ste rling is

Pence , or 38 l lfi d.

In Peso Macuquina, or 8 Real pieces (worth 20 per cent. less

than the Peso of 5 Fran cs) , the Ex change is quoted at 6 PesosMacuquinaper £1 Sterling, with the usual Prem ium .

SOUTH AMERICAN REPURLICS . 355

In ECUADOR Doubloons of the sam e value as the Mexicanpieces were form erly issued ; but in 1866 the sam e system as inNewGranadawas introduced. W e hav e not yet rece iv edanaccountof this new Coinage ; but there has been coined in Ecuador , sin ce1858

,aSilv er Peso of precisely the same valueas the 5 Francs piece ,div ided into 5 Reales, or 10Decim os . The Macq Piastre of

4 Reales, or 10Decim e s, isalso coin ed in Ecuador .

In PERU the old Doubloon Coinage has also been abandon ed(although the Coin is still currentat 17 Dollars) . A n ew CoinageLaw of 1857 ordered the coin ingofGold 8018 (28 406 grammes 900fin e ) to be worth 20 Dollars or Pesos of gramm es 900fine ,

both with subdiv isions . Very few of these Coins were made ,for in 1864an ew system was in troduced ; the nam e of Sol for the

Gold piece was giv en up,andapplied in stead to the Dollar , the following Coin s be ing issued

Grammes .

20$018 piece 322 58 900fine10 16 129

5 8 640 in Gold

2 3 226

l Sol 16 13

1 Silv er Sol piece 25000i 12 500

f 5000 in Silv er

{ U 2 500

$5thus establishing the exact proportion of 1 to 15% between GoldandSilv er . Copper Coin s of 1 and 2 Centim es are also issued. The

old Boliv ian Dollars, which circulated largely,are nowworth only

aths ofaSol,and the new Coinage promises to beahealthy one .

The Silv er Sol is thus precisely of the same we ight and fin en essas the 5 Fran cs piece ,and upon both the Gold and Silv er valuationthe Par of Ex change between Londonand Limais

47 11, Pence per Sol.

In BOLIVIA Doubloons of the same finenessas the MexicanDoubloon hav e been coin ed ; before 1856 the Silv er Dollars werealso of the sam e we ight and finen ess as the Mex ican . Since thatpe r iodanewDollar has been issued, weighing only l9°830gramm es ,

3 56 PARS or EXCHANGE .

and of course is so much infer ior in value . This debased Coinagewill probably be supplemented by anew system similar to thatadopted by the n eighbour ing South Am erican States .

In CH ILI the old system of Doubloon sand Pias tres has alsobeen setaside,and since 1851 the n ew Coinage consists of

GOLD .

10Pesos pieces5

2

SILVER.

$16

116

and Copper pieces of l and Centav o .

The Condor weighs grammes 900 fine , and the Peso

25 grammes 900fine (the sam eas the 5 Francs piece ) . Until 1860

the Silv er Peso was the Standard valuation , but since then the

Gov ernm ent, in order to stop the export of Silv er (which in the old

Coinage stood in the proportion of 164 to 1 of Gold) has issuedthe n ew Silv er Coinage as abov e of lesser weight by 8 pe r cent.

(thus reducing the proportion to about 15 to and has adoptedthe Gold valuation .

The Condor weighing gramm es 900 fine,its value in

4498 5 Pence , or £1 17s 55d.

and the Peso is worth 45 Pence .

Upon this basis the Par of Ex change between Valparaisoand London is therefore

I Peso Gold 4 5 P ence .

In VENEZUELA the Gold Doubloon and the Silv er Dollarar e curren t, Side by side with the Am erican Eagle and the BritishSo v e re ign . The MecaquiuaPiastre , worth 20per cent. less thanthe Mexican Dollar , which was form erly di v ided into 8 Reales is

now div ided into 10Rcalcs of 10Cen tav os each and in 1858 pidccs

358 PARS OE EXCHANGE .

BRAZIL .

The Mon etary Un it of the Brazils isThe Milr eis,

divided in to 1000R8 18 .

This Milreis was form erly of the sam e valueas the PortuguMilreis, tlie Coinage consisting, up to 1833, of

GOLD .

Dobras of 12800 Re'

iS .

MoedasSILVER.

Double Crusado of 960

PataconPatacon

&c ., dpc .

These Coins were gradually raised in value , un til it was settled, in

1846 , that the Dobrashould be held worth 32000Milreis (150percent. m ore than its or iginal value ) ,and the Double Crusado 1920M ilreis (double its or iginal value ) . This woeful depreciation hadits origin in the Ov er-issue of Paper Currency, foisted upon the

people by the Gov ernm ent. In 1849 Brazil definitely adopted theGold Standard, and the Coinage now consists of

GOLD. SILVER.

20Milre is pieces 2 Milreis pieces10 1

1

2

And Copper pieces of 40and 20Re '

iS .

The we ightand finen ess of these piecesareGOLD Grammars M llhémes .

20Mih'

c'

is 9166 6?

10 8063

BRAZIL . 359

Grammes .

25 500 916 6?

12 750

6 375

The proportionate value of Silv er to Gold is accordingly as14°06 to 1 ; and as the price of Silv er is thus raised beyond itsun iv ersal Market value ,aspecial law has been passed, lim iting itsuseas alegal te nder to theam ount of 20Milreis .

Coin is rare in the Brazils ; British Sov ere igns and Dollarsaremuch us ed ; but Paper Currency is m ostabun dan t,at excessiv elydepreciated rates .

The legal we ight of the 20Milreis piece being gramm es

of Br itish Standard fin eness, the value of the Coin is 538 614 Pence ,

or £2 4s l0g-d,

making the £1 Sterling 8 911 Re'

is .

Th e M int Par of Exchange betwe en B io Jan eiro andLondon is accordingly

1 Gold M ilre is P ence ;

but computed upon the basis of Paper Cur rency value , in February1868 the

1 Paper Milr eis was worth only 15 Pence .

LA PLATA STATES .

The Mon etary Un it isThe Dollar or Peso,

div ided , for accoun ts , in to 100 Cen tesim os, or in to

8 Reales or 80 Decimos ;

but in actual Cur rency this Un it is represented chieflyMon ey, with which the country is deluged. Or iginally the PesoDuro or Hard Dollar was worth about 52 Pence ; but the Paper


Currency founded upon it is excessiv ely depreciated ; at presen tthe Paper Piastre has actually dwindled down to 2 Pence , the

Gov ernm ent paying 1 Dollar Metallic Currency for 25 Paper Dollars .

Of course ,aPaper Currency of this nature isaltogether out ofthe questionasabasis for InternationalValuation .

The Metallic Money current in the country consists chiefly ofthe old Doubloons , which legally should be of the sam e weightandfineness as the Mexican Doubloons, and of Silv er Dollars of the

same value as the Mexican . (W e n eed not note here the actualdiscrepancies existing between these Coinand their Mexican prototypes )

Side by side with the Doubloon and the Dollar all sorts of

Foreign Coins circulate ,andaTarifl'

has been laid down regulatingtheir value in Paper Currency. This Tar ifl '

,howev er , is altogether

ineffectiv e ,as the fluctuations in the value of the Paper Cur rencyare too v iolent.

The British Sov ereign is takenat Dols. in Silv er Piastr es,and the Exchange on London is regulated by the Gold Doubloon or

Onza, we ighing 2? gramm es 875 fin e .

‘ The Onzais worth inBr itish Gold Shi llings, giv ing the Par of Exchangebetween London and Buenos Ayr es as

4 8 } Pence per Peso .

AFRICA .

BARBARY STATES .

In TRIPOL I, the same as in Egypt, the Unit of

Accoun t isThe Turkish Piastre ,divided into 40Paras .

20Piastres make 1 Mahbub .

Tho Onza, howev e r , is not really up to this Standard fin ene ss.


The Un it of Accoun t of the Empirethe Mitskal,

divided into 10Uckias, or Ounzes,of 4 4 Mazunas,of 6 Quartols ,of 4 Flus each .

The Coinage cbnsists of quaint, rough, gold pieces, calledMadridiaofabout 10Dollars in value .

Benky 2

Half do. 1 DollarMitskal pieces

The quality of these pieces is v ery low, ev en down to 255 fine .

In Silv er , rough, round or square M itskalsare in circulation , alsoOunzes (fi th Mitskal) ,with pieces of 6and 4Mazunas ,and 1 Mazuna(called Barbary Penny) . There is an extensiv eam ount of CopperCoin in circulation, of various kindsand denom inations , down tothe most ins ign ificant pieces, as worthless as Chin ese cash. The

Gold Benky is taken at 32 oun ces .

Foreign Coins, especially Spanish Dollars, are current in the

Empire , the Dollar being taken at 16 oun ces. From this the valueof the Mitskal may be computedatabout 32 Pence Sterling.

The Ex changes are made in Spanish Dollars, at 50d per

Dollar , more or less .

W EST COAST OF AFRICA .

The Dollar constitute s again the gen eral recogn ized Mone

tary Un it and Standard of value all along the W este rn Coastof Africa. In SIERRA LEONE the Dollar and its div isions

AFRICA. 363

(Coin struck for the Colony in England) , and Danish Coin arecurrent. Dan ish, French,and Dutch Coin circulate in the Danish,Fren ch, and Dutch Settlem ents on the Coast. The pr incipalbusin ess all along the Coast is done by barte r , the nativ es payingin Oli v e Oiland other produce .

The Com i c shells , so much valued for ornam ent by the

blacks, ser v e still as am edium of Exchange in tradingwith them .

At the trading ports the Span ish Dollar remains the basis forExchange s with Europe .

THE EAST COAST OF AFRICA .

In the Portugese Settlem ents on the East Coast of Africa, thetrade is chiefly carried on by barter . The Portugese Milreis , with

its subdiv isions, ser v esas Money of Accoun t.

In Madagascar the Spanish Dollar cut into halv es and quartersis used.

ABYSSINIA .

The Mar iaTheresaDollar is the fav our ite Coin in Abyssinia.The Gold Wakih' is estimated of the value of 54 Sequins , equal toabout 56s Sterling. Cotton Clothand Saltalso passas m edium s of

Exchange . 1 1 yards of Cotton Cloth being held equal to 30piecesof Salt, worth about 3e British Money. The English in vasion of

the coun try is likely to work important changes in the Abyssin ianCurrency.

The Wahib is the 12th part of the Abyssin ian Pound, or Rotolo, equal toabout 635 Gramm es . The Wakih is equal to about 529 16 Grammes ; it issubdiv ided into 10Drac hm e s .


PERSIA .

The Monetary Un it of PersiaisThe Gold Toman ,

divided into 10Sahibkiran or Zabkran ,

of 2 Penebats each,subdi v ided in to 10Shahis ,of 10Kasbeggeach, or

1 Toman 200Shahis or 2000Kasbegg.

Accountsare carried to the Dinar ,which is them th

part of the Toman .

The Coinage is represented byThe Gold Toman and Half Toman .

The Toman is arough Coin , made of nearly fine Gold ; olderissues differ in weight and quality, but the Toman of 1839 weighs

35 grammesabout 970fine .

It is intended to issue anew Gold Coinage , of the fineness ofBritish Standard.

The Silv er Coinagealso is made of n early fin e Metal.The Sahibkiran or Zabkran (113 Toman ) weighs gramm es

fine . (The new Coinsare to be 880fin e . )The Penebat (116 Toman ) we ighs grammes fine .

Thereare also Persian Rupees of difl'

erent weightsand quality .

The Rupee of the late st Coinage weighs 9°l56 gramm es 945 fine .

(The n ew Silv er Coinage is to be 880fin e . )The Copper Coinage con sists of the Shahi and its subdiv isions,

down to the Kasbegg, or r‘

c Shahi .The Persian Coinage ,as arule , cons ists of roughand irregular

pieces ; the statem ent of the weight and fin en ess giv en here of the

difl'

erent pieces is taken from Assays made ,and not deriv ed from the

supposed prescriptions ofaMin t Law.


present Coinage of India, is represented by

GOLD .

30Rupees pieces Double Gold Mohur .

15 Gold Mohur

10 35

SILVER.

1 Rupee Piece

iand Copper pieces of 3 Pice , 1 Picsand Pice .

Pice being equal to 20Cash (the minute fractional change of

the Asiatics in the East) .The subjoined table shows the weight and fin eness of these

pieces.

GOLD .

We ight in Finen ess inGrammar; Minnem es .

Mohur 116 64 (180Grain s Troy) 916 667

The Double Mohurand the div isions in proportion .

SILVER.

Rupee 11-664 ( 180Grains Troy) 9166 67

n90

The Silv er Coins areaccordingly of equal proportionate value .

The Gold Mohur is precisely the same weight and fineness as theSilv er Rupee ,and the proportionate value of Gold to Silv er is 1 to

15, but,although attempts hav e been made to fix this value legallyupon the Gold Mohur , they hav e been abandoned, and the Gold

Coinage is at present Comm ercial Money” in India. Still, the

Gold Mohur is making its way into public fav our ,and is now ofte n

valued abov e 15 Rupees ; som etim es e v en as high as 15§ Rupees .

W e hear , howev er , that but fewMohursare coin edat the Min t.The Silv er valuation is emphatically the Standard in Br itish

India, and Silv er is so far the only legal tender .

Indeed Indiais the great store-house for Silv er . Many M illionsSterlingayear hav e gon e from Europe and elsewhere to Indiaand

INDIA. 36?

the East, to pay for cotton , tea, seeds,and the manifold productionsofEastern As ia, the balance of trade be ing so largelyagainst Europe .

From 1855,

to 1865 alone 200Millions Ste rling Silv er hav e beenshipped fr om England, from Marseilles,and elsewhere .

In fac t, it is the demand for Silv er in Indiawhich has so

greatly disturbed the Silv er Coinage of France , and other partsof Europe , and giv en rise to the wish to demonetise Silv er to acertain extent.

In consequence of the Crisis of 1866 there has been no Silv er

sent to Indiafor the last three years ; indeed it is said that Silv er isabout to be returned to England ; but, with the recov ery of trade , wemust expect that, so soon as Shipments of goods on alarger scaleshallagain be effected from India, Silv er remittances to that quarterwill hav e to be resum ed.

The greater bulk of the Silv er sent to Indiais said to behoarded by the Nativ es .

The Min t of CalcuttaCoins Gold pieces for private personsatacharge of l pe r cent.

On Rupees in Silv er there isaseignorage ofabout 2 per cent.and fi th for m elting. The Rem edy of the CalcuttaMint is,— forGold 2; per mille , for Silv er 3 per m ille , both for weight andfineness .

The U nit ofBritish Indiaweights is the Tola 180grains Troy .

The legalweight ofthe Rupee is 1 Tola, the legal fineness 916g.

The Tola, if fin e m etal (B Should accordingly be worth10886 Rupee . The Min t actually pays 106-1 Rupees for 100Tolasfine Metal, which shows aMintage charge , in cluding probably theloss by m elting, ofabout 24per cent. The greater portion of the BarSilv er arr iv ing in India, is sold to the Merchants in the Bazaars,where from 10657 to 107Rupeesare paid for 100Tolas of fin e Silv er .

The Rupee weighing 180grains, 91606? or 220dwts . fin e , the

value of the piece is2200886 Pence ,

and the M int Par b etween Calcuttaand London isaccordingly1 Rupee 1s lOgd .


SIN GAPORE .

The Monetary Un it isThe Dollar ,

divided in to 100 Cents .

Span ish, Mexican and other Dollars and Rupees are the

div isional fractions of the sev eral Coins circulated in Singapore .

The Exchange on London is computed on the Dollar basis .

BURMAH .

In the Barman Empire and in the Bazaars of Rangoon the

nativ es still makeand receiv e paym ents in Metal by weight,— Leadfor small payments, Goldand Silv er for larger paym ents .

The usual weight for Silv er is the Tical 258 English Troy

grains . There are three different descriptions of Silv er , of varyingfin eness, sold by the Ticalweight.

In the Port of Rangoon , which is now Br itish, the Company’

s

Rupee is the U nit for dealings between Merchants, and for

Exchange .

SIAM .

The Monetary Un it isThe Bat or Tical,

divided into 4 Selungs, of 2 Fuangs each .

(The Fuang is reckoned equal to 800Cowrie Shells ) . 80Batsare equal to 1 Cattie ,and 100Catties are equal to 1 Pical Silv er .

W ith the exception of the small change in Cowri es , the Siam ese

currency consists entir ely of Silv er , the coin being irregular pieces ,or little bent bars , stamped with figures . From assays made , itappears that the Bat is worth about 30d Sterling, 5 Bats be ingequal to 3 M ex ican Dollars , which form s the on ly basis to bedepended upon for computing the Exchange .

370 PARS or EXCHANGE .

PH ILI PPINE ISLANDS .

The Monetary Un it is the Span ish Dollar ,div ided into 8 Reales,of 20Cuartos eachor in to 100Cen ts .

The Par of Exchange is the sam eas in Spain .

CH INA .

The Mon etary Un it of ChinaisThe Tael,

divided in to 10Mace ,of 10Candareen s each .

A Money of Account founded on weight, the Tae l be ing simplythis we ight of Sycee Silv er . Gold and Silv er are dealt in by thisweight in Barsand Lumpsand other shapes .

The Coinage proper of Chinacon sists of the se-called Cash(L6 in Chinese ) , of which 1000were form er ly held equal to the

Tael ; but it takes nowabout 1400to make upaTael. This Coinageis made of 6 par ts of Copper and 4 of Zinc ; it is stamped withChin ese charac ters . The Cash pieces hav e eachasquare hole in thecen tre , so that they may be strung together in rows of 50or 100.

Originally these pieces were worthaboutaFarthing each ; but theirvalue has since considerably decreased,and such large quantities of

them are manufactur ed by private par ties , that they are wor thatpresent (at the rate of 1400 per Tael) only {;th Farthing. This

cur ious m on ey is used between the Chin ese chiefly for retail busin ess ;but from its fluctuating pr ice and want of m etallic value it cannotaffordabasis for Exchange tran saction s .

CHINA. 371

The Chin ese Tae l weight, or Canton weight, as it is called, isequal to 580Grains Troy but there is anothe r Tae lwe ight in use besides the Canton weight, v iz .

,the Gov ernm ent, or

Haikwan we ight, of which 98 Tae ls are equal to 100Taels Can tonweight. Both we ightsare used for Bullion .

Small oblong Bars or Ingots of Gold are dealt in , weighingfrom 9 Tae ls upwards ; theyare gen erally 98 touch (about980fine )they differ much in finen ess, but the quotation is made at 98 touch .

Silv er is gen erally cast into small shoe-shaped Bars, called Sycee .

There are thre e difl'

erent kinds of Sycee , v izHaikwan Sycee , assayed and marked by the Gov ernm en t

,

varying in fin en ess, but on theav erageabout 980fine .

Canton Sycee , not marked by the Gov ernm ent, but ofaboutthe sam e finen e ssas the Haikwan Sycee .

The Shanghai Sycee or Currency, which is eithe r cast ofm elted

down Mex ican Dollars , or con sists simply of Mexican Dollars , whichare sold bywe ight. The Shanghai Sycee Bar sare from 896 to 902fin e .

The Assays, on the whole ,are not much to be depended upon ,

exceptas regards the latter Currency, made from For e ign Co in .

If the Haikwan we ight Tael of Haikwan Sycee be taken as980fin e ,and the Canton we ightTae l of Shanghai Syceeas 898 fin e ,it will be found that Tae ls Shanghai Currency are equal to100 Canton weight Taels of Haikwan Sycee ; andas the Cantonwe ight Tael of 580 grains of Shanghai Curren cy con stitute s the

type which represents the Tael for Exchanges,and the full Mex icanDollar weighs grains ,

1 Tael of Shallghai Currency is Dollarsor 1 Dollar 07 202 Tae l

Asarule 720Taels are reckoned equal to Dollars . The

value of the Tael Shanghai currency is therefore exac tly Pence ,

or 53 1 1%d.

The Can ton Sycee be ing 980fin e , there is the sam e weight of

fin e Silv er in 100Taels Can ton ,as in about 109 2 Tae ls ShanghaiCurrency ; and fin e English Bar Silv er be ing 996 Touch (Bthere is the sam e amount of fin e Silv e r in 100Tae ls of itas in 1 1 1Tae ls of Shanghai Currency .


Som e of the Chin ese Sycee Silv er (that obtain ed from

Chinese ; Mines) contains Gold, in the proportion of from 10 to 15

grains per 12 oz ., which the Chin ese do not know how to extract ;

this makesadiffe ren ce of 131

; to 2 per cent. in the value of this Doré

Sycee .

Gold Bars we find quoted, at the end of 1867, 98 Touch 168 5

Tae ls Shanghai Cur ren cy per Bar of Tae ls Haikwan weightThis is equal to 9 91 Canton weight,and equal to Tae ls Cantonweight of 898 fin e ; which giv es ,at 168 5 Tae ls Silv er Cur rency of

Shanghai,aproportionate value of 1 part of Gold to of Silv er .

A M in t was established at Hong Kong som e years ago ,which has coin ed som e v ery pretty Dollars, stam ped with Englishas wellas Chin ese characters . From som e cause or other—perhapsthat the supply of Silv er by m erchants is not constan t enoughthis Mint has notas yet don e much good.

Paper Curren cy .—The Chin ese Gov ernm ent issues no Bank

Notes ; but certain nativ e Bankers and Merchants of gr eat credit,carrying on busin ess in the interior of the coun try

, issue Pro

misse ry Notes from small am oun ts up to 100Tae ls, which cir culatein the localities in which the issuingEstablishm entsare situated.

The Par of Ex change b etween London and Shanghai is1 Tael 5 9 M id.

JAPAN .

The Mon etary Un it of Japan isthe Japan Tael,

divided in to 10Mas100Candareens=1000Leui, or Cash .

Upon the sam e system as in China. But this is onlyaMon ey ofAccount, represented sole ly by the smallan dalmost valueless Cash,

374 PAEs OF EXCHANGE .

thus been effectiv ely remov ed,and Goldand Silv er bear nowthe same

proportionate value in Japan as in the rest of the W orld,—1 to 1557.

The Japanese Coinage is now represented byGOLD, 650 FINE.

100BOO piece s, the Obang (rarely seen );

oblong, withthe Cobang rounded ends .

GOLD AND SILVER ALLOY, ABOUT 300FINE, GILT OVER.

2 BOO pieces, the Niboo

t the Nishi

oblong, withSILVER, 900FINE.

square corners .

l the Itziboo

the Ishi

and Coppe r Coins .

The quotation Of the Itziboo var ies at from 312 to 313 pe r

100Dollars . In Exchange transactions the Mex ican Dollar is used,giv ing the Par of

an Pence per Dollar .

SAN DW ICH ISLAN DS .

The Mon etary Un it isThe Dollar ,

divided in to 100 Cen ts,pr in cipally represented by Am erican Gold and Silv er Coin , butalsoby Mex ican , Spanish,and other Dollars,and 5 Francs pieces .

Ex change Par 5 1} Pen ce per Dollar .

TABLE OF THE VALUE OF THE PRIN CIPAL

COIN S .

W e subjoin aTable of the value Of the pr incipal Coins .

The first colum n shows the full n ominal value of the Coin as perMint valuation made at the place of issue , withoutany deductionswhatsoe v e r for M in t Re medies orabrasion . Som e of the Gold Coins

hav e a. var iable price at the plac e where they are issued, whichmust be borne in mind.

The second column giv es the full equivalen t, to Penny exact,in English Mon ey

,at the Par ofExchange . Som e of the Gold Coins

hav ingavar iable priceat the place whe re theyare issued, cann ot bevalued by the Par ; in such cases theactual Gold value is giv en .

The third column giv es the Metallic value of the Coin , with due

allowance made for M in t Rem edi esand loss of we ight byabrasion .

As regards abrasion in Gold Coin , we follow the English rule as tolight Sov ere igns, which is ratherabov e the av erage for older Coin .

For Silv er we take afair ly worn Shillingas aguide . Excessiv e

abras ion ,te nding to flatten or oblite rate the im pression , must be

taken in to separate account.

When the Exchangesare high, that is to sayagainst England,the Coin is worth m ore than Par . The 20 Fran cs piece , forin stance ,at the Exchange of 252 2—3 (the Par ) , is worth 158 l0,‘6 d ;but

,at the deare r Exchange of it is worth 158 1 11—d ;andat

the Exchange of 25, it is worth l6s, always less the charges oftran sm ission .

When the Exchange sare low and fav ourable to England, theCoin is worth le ss than Par . Thus the 20Fran cs piece at is

worth 15s Qi‘d ;andat 15s 8{-3d , less charges of tran smission .

In this case the re is no demand for Gold for France ; on the

con trary, Gold is due to England, so that if 20Fran cs pieces bem e lted down here , or sold as Gold, they will, if quite n ew andsupplied in large quantities, fetch about 158 -d, and making dueallowance for M in t Rem edie sand fair abrasion

,single pie ce s will be

worth 158 9d. The sam e rules apply to all othe r Gold piecesthe charges for transm ission are aseparate item to be deducted.

376 TABLE OF THE VALUE OF

In small Silv er Coins Mint Rem ediesand loss by abrasion formaconsiderable item ;when such pieces com e to be m elted down, there

isaloss of from 5 to 15 per cent. upon them .

Gold and Silv er Coin , much worn , should be m elted andassayed whenev er there is asuflicient quantity at hand for the

purpose

W e take GOLD at 778 10§d per oz . Standard.

and SILVERat 60§d

run Nominal Fun Value in “m“d“Value . Exchange . $g

°

£gehgfg

fh lrabras ion .

ENGLISH

GOLD Sov ere ign

Half Sov ere ignSILVEE Florin

Shilling

SixpenceThreepence

Crowns, Half Crown s, and Four

penny bitsare no longe r coined .

FRENCH,

BELGIAN, ITALIAN SWISS

GOLD 100Francs piece50

20

10

5

S ILVEE 5 France piece2

l Frauct

l

Up to 1866 these pieces were all900fin e of the same we ight.

GERMAN dzAUSTRIAN

GOLD Crowns VaryingHalf Crowns in price

378 TABLE OF THE VALUE or

Full Nom lnal Full Value inValue . Exchange .

SWEDISHGOLD Ducat— (varyingS ILVER Specie sdaler

Spec ie sdalerl Riksdaleri

t

1‘s

NORWEGIAN

S ILVER Specie sdalerl

t

1‘s

1I F

DANISHGOLD Double Freder ick

(POr

Frederick d’

Or

SILVER Specie sdalerRigsdaler

l

3 !

RUSSIAN

GOLD Half-ImperialS ILVER Rouble

2

i

i

THE PRINCIPAL COINS .

Value .

GREEK Drmai . Lepta.GOLD 40Drachmai piece

20

SILVER 5 Drachmai piece1

i

t

SPANISH Dolls . Cts.

GOLD IsabellaS lLVEB Dollar

EscudoPe se taHalf PesetaReal de Ve llon

PORTUGUESE MilreisRois .

TURKISH Piss . Paras .

79

380 TABLE OF THE VALUE OF

AMERICAN

GOLD Double EagleEagleI

i

1‘s

S ILVER Dollart

t

1‘s

355

MEXICAN

GOLD Doubloont

t

t

1's

SILVER Dollar

NEW GRANADA

GOLD CondorI

t

SILVER Pe soPe so Macuquiuaf Pe so

PERUVIAN

GOLD 208018 Pieces

10

5

2

1 Sol

Dolls . Cts .

Dolls . Cts.

Sole. Cts .

Full Value inExchange .

79 3}

39 7i

19 92

7 4}

3 1 1 }

78

39

1 5

1 1}

5}

9}

10}

10}

39

19

00

1 1

l l

10

CHAPTER II .

SHIPMENTS AND ARBITRATIONS IN BULLION .

W E now propose to give aser ies of Invoice s andAccoun t Sales in conn ection with Shipm en ts

of Bullion between Englandand other Coun trie s . They

will serve to show, in the first place , how in strum ents

of this kind are made out; and, in the second place ,how the Practical Par of Exchange deviates in on e

direction or the other from the True Min t Par of Ex

change . IVhen e v er the Balan ce of Trade be tweentwo coun tries turn s decidedly in favour of on e of themagain st the other , shipmen ts of Bullion from the latterto the form er becom e necessary . So longas the Exchange of Commodities and other values r emain s on apretty equal footing between two Coun tries , the supplyofaccoun ts ofindebtedness, tran sferable from on e to theother , by way of Bills of Exchange , furn ishes the

m ean s of balancing the ir mutual liabilitie s . But if one

country, by trade or otherwise , obtain s more value fromanother coun try than it r eturn s, it be com e s the Debtor

in wan t ofExchange , whilst the other coun try , the Creditor , hasasurplus ofExchange . The balance betweenthe two must then be settled by Bullion . Thus ,according to Demandand Supply,ar ise or fall in the Rate s

SHIPMENTS AND ARBITRATIONS IN BULLION . 383

of Exchange takes place , un til the so-called Bullionpoints are r eached, at which , under ordinary cir

cum stan ces ,afur ther rise or fall is checked, upon thesettled limits of the reSpectiv e value of Gold or Silverin the two coun tr ies .

Under extraordinary circum stances, in times ofwaror revolution ,

the Bullion poin ts may be passed ; butthese are exceptional con tingen cies out of the regularcourse of Comm erce .

In referen ce to the case of indebtedn ess of one

Country toanother , we have used the term by tradeor otherwise .

” This otherwise mean s that theindebtedne ss of one coun try toanother may notalwaysarise from the direct balance of trade between the two ;but that it may be owing to the influence of the tradeof one or several other coun tr ies, with e ither of the

two .

Australia, for in stan ce , is generally indebted toEngland by the direct trade between the two coun tr ies,and so are other Colon ie s, and many Fore ign Cotries, importing commodities from England ; and the

Exchanges with these are accordingly in favour of

England . Indiaand China, on the other hand,aregen erally England’s creditors, for the same reasonthat they supply her withan excess of goods and theExchanges with theseareaccordingly unfavourable toEngland .

But,as regards France , the case happens frequentlythat ,although the direct balan ce of trade is notagain stEngland, yet the Exchange is so,and that we have toship Bullion to Paris . This arises, in the first plac e ,

384 SHIPMENTS AND ARBITRATIONS IN BULLION .

from the simple fact that England, through her imm en se comm ercial fleet, is the largest carrier of

Bullion , which comes to her shores partly for her own

account, and partly for accoun t of other EuropeanNation s ; and this makes the Exchange , as arule ,

appear unfavorable to her .

It may, in the second place ,ar ise from Bankingand Exchange operation s, in which Fr en ch Capitalistsare in terested . At the present time , for in stan ce ,the Fren ch Bankersare large holders of English Bills ,whilst English Bankers rarely hold French Bills .

Operation s on the Stock Exchange may also con

tr ibute to create an inequality in this respect . Thus ,ifaForeign Loan is to be brought out in London ,

the

parties in terested will take care to buy up suitableExchanges for rem ittance , which will thus influence therate s otherwise than by the direct balance of trade .

In these remarks we have touched upon afewonlyof the manifoldand incessan tly varying circum stan ce sand influences bearing upon the question of Rates ofExchange ,and the Theory of the Exchanges .

In the subjoined Invoices and Account Sales of

Bullion shipped between England and other countriesthe full rates of freight and in suran ce are charged .

For the mann er of shipping and in sur ing Bullion werefer to Chapter on Bullion Brokersand Shipping ofBullion . The results of such shipm en ts are not

alwaysalike but the example s chosen for illustrationhere have been selected with aview of giv ing the

n earest possible average re sults .

386 GOLD SHIPMENTS .

ACCOUNT SALES IN PARIS.

KILos. TARIFFRATES. VALUE PERBAR.

Essais , frais de fonte ct div ers .

Fs.

(The first nine Bars we igh less in the French Account Salesthan the In v oice weight giv en in the English Inv oice this is owing

simply to the fact that the English Assay pieces of all the Barshav e been m elted with Bar No. 10, which is accordingly heav ier inproportion ,

barring the slight loss in curred in the m elting.

The Exchange resulting from this shipm ent is £3 . 251 09 per £1

Sterling; but, deducting ten days ’ in te re stat 3 per cent. for Mint

Certificate , it is fs. 25°O89.

Shipm ents of fine Gold from the Bank to Franceare made whenthe supply of Bars in the Market runs short,andwhen the Exchangeis at 25-07-3to 251 2-15 ;although som e shippers always commen ce

exporting Bank of England Gold when the Exchange is 251 0 toGoldat 773 9d, or l -g-d per oz. cheaper than the sellingprice

of the Bank is frequently obtainable in the Market (withaBrokerage

GOLD SHIPMENTS. 87

ofgth per cent. , which brings the price up to 77s 10,-1

5d per oz . ;. the

Brokerage , howe v er , is ofie n reduced to fifth per 77s 9 -d

to 77s 10d is paid occasionally for suitable parcels in the Market.Each -}d sav ed in the prim e cost in London improv es the rate of

Exchange by { rds ofaCentime per

Am erican Gold Coin , being 900 fine , sells at the Tarifl'

ratein Fan s .

INVOICE or UNITED STATES GOLD COIN SENT FROM LONDON

To PARIS.

2 Kegs containing each 11 Bags with 250

Double Eagles, together Dols . we igh

ing ozs .at 768 4d 9 9

Brokerage §th per cent.Packing, &c .

Freightand Insurance96 13 3

3 0

ACCOUNT SALES IN PARIS.

Double Eagles—Kilos atFs.

for 900fin e

Charges

Giv ingan Exchange of FS . 251 0.

The Refining ofGold Bullion in France be ing so much cheaperthan in England (5 francs per Kilo. 223

, Milliemes, the cost in

England being 83Milliem es) , exporters seek to purchase RefinableGold,and payacorrespondingly higher price for it, ranging from778 10§d to 78s per oz .

388 GOLD SHIPMENTS.

INVOICE or 18 BARS REPINAELE GOLD SENT TO PARIS.

WEIGHT. ASSAY. the Bar , less

ozs . Standardat 788 9 4

dwts. Silv er fineat 58 6d per oz . 42 16 7

5 11

Caseand PackingPorterageFre ightand In surance 3 per milleBrokerage éth per cent.

20 5 6

Cost in London 11 5

390 GOLD SHIPMENTS.

fs . per kilo. fine Gold without Premium,and fs . 218 89 per

kilo. fine Silv er , with 10 per m ille Premium . The Shipm en t is

presum ed to be made between two regular correspondents , free of

Melting Chargesand Brokerage in Paris . The Exchange re sultingis fs . These examples of Shipm ents of Gold from London

to Paris show fairav erage r esults . Var iations in price , conditionsof Brokerage , &c . , will necessarily affect these rate s ,and so will,

of course ,also discrepancies in the weightand Assays of the Bars ,and difl'

erences in the Shippingand in the In surance . At certaintim es, when Paris happens to be full of Gold,adiscoun t on theTariff duComm erce is demanded,at other th eeaprem ium may bemade .

INVOICE or BRITISH SOVEREICNS (NEW) .

0 0

Caseand Packing 0 7 6

Cab 0 2 6

Fre ightand Insurance 30 O O

30 10 0

10 0

Sold in Paris weighing Kilos at theMint Tar iff rate for 916 fin e Fs. Fs .

Charges 102 5

FE.

Giv ingan Exchange of Fs . 2506 per

It is therefore ,not profitable to send British Gold to Par is,

e v en when the Coin turns out,as here found by French weight, towithin per m ille of the full legal British Mintweight.

GOLD SHIPMENTS. 391

FROM PARIS TO LONDON .

SHIPMENT or GOLD BARS BOUGHT IN FRANCE, AT THE MARKET

PRICE OP Fs. 3434 44 WITH 1 PER MILLE PREMIUM .

12 BARS GOLD.

KILOS. KILOS. FIN.

63 157 70

9012 395

57 79 520

1 11 576 90

40906 65

4087035

130066 20

8 8534 45

102 273 75

6 478 880

5 931430

3070015

89 8117 40 890636 84

it Fs . Fs .

1 per cent. prim e

Fs .

CaissePorte rageTransportand AssuranceCourtage , 1 16 th per cent.

Fs .

These Bars, in order to be sold to the Bank of England,require re-m elting, and each Bar must not exceed 200 oz . in

we ight. There are se v eral am ong these weighing more than6 kilos . In order to sav e Assays, the Melte r is directed to

m elt No . 1 and Nos . 5, both 998 fine , together , and to cast themass into two fresh Bars to castNos . 2, 4, 8and 9, into two Barseach ; No . 7 into three Bar s ; Nos . 6 and 10 together into two ;

392 GOLD SHIPMENTS.

Nos . 3, 11and 12, into on e Bar each. Thus 18 Barsare obtained,weighing oz .

, equal to kilos (which showsaloss by melting of 66% gramm es, or rather more than 2 ozs. , 9 dwts .

being recov ered in the scrapings) .The English Assays, in two instances, yield §th grain less.

ACCOUNT SALES IN ENGLAND.

W EIGHT. ASSATS.

395295

313 952

5907 16

398 282

449 793

Melting ozs. at i—dLess Scrapings 9 dwts .at 4s

18 Assaysat 4S 6dPorterage

5 10 1

12 7

Giv ingan Exchange of FS . 253 68 per Sterling.

394 GOLD SHIPMENTS.

Compar ing the two sets of Shipments of fine Gold, we find

that the one from London to Parisgiv esan Exchange of fcs . 25 109,

the other from Paris to Londonan Exchange of fcs .

whilst the true Min t Par of Exchange between the two places (seepage 301) is 252 215 ; so that when the Exchange on France r ises

1 1 11centim es below Par (the difference between 252 215and 25 109)

Gold is sent from London to Paris,and when it gets cheaper , say14§centim esabov e Par (the difference between 252 215andLondon receiv es Gold from Paris .

The fac t that Gold is rather sent from London to Paris thanv ice v erse , is attributable , in am easure , to the circumstance thatBullion is bette r valued in Fran ce than here ,andalso that the Bankof England

’

s fixed pur chas ing price is 778 9d per oz . Standard.

This accounts for the 3} Cen tim es difference against England .

Bear ing in m ind, howe v er , that different shipmen ts may turn out

to yield diffe rent rates, we may set this consideration aside , andassum e ,asageneral rule ,

That when the Fren ch Exchange is at 25 1 0, it pays tosend Gold fi-cm England to Fran ce ;

And , when the Ex change is at it pays to send Gold

from France to England .

The M int Par b e ing taken at we hav e thus amargin of 12} Centim 98 , or l per cent. e ither way , and 25

Centim es, or 1 per cent. , b etween the two extr em e points .

The per cent. either way be ing absorbed by charges of

Brokerage , tran sporting, realisation and in cidental costs , constitutesanatural bar to the m ore frequent in terchange of shipments of

Bullion betwen the two coun tries . Although, so soonas the ActualPar of Exchange with France changes from the Mint Par of

to or 25 ‘ 17'1

2f, or there is atendency to takeGold from us, the Exchange then be ingwhat is called unfav ourableto England ; yet to induce actual withdrawals of Gold from our

shore s to France requires that the Exchange with that countryshould fall to or And

, on the other hand,long as the Exchange from Par is on London does not rise

GOLD SHIPMENTS. 395

higher abov e the Mint Par than or it will not

pay to send us Gold ov er here ; but so soon as the Exchange rises

to we rece iv e shipm ents ofGold Bullion from Paris . Meanwhile , before these so-called Bullion points are reached, the ratesfloating between them and the Mint Par are sustain ed by acor

responding influence on other Exchanges. England, for instance ,whilst aDebto r to Fran ce , and unable to obtain acheap directExchange in Paris , may be aCreditor of Holland, Italy, Spain , or

other coun tries, with which France may beable to exchange advantageously. English Drafts on these places then go to Fran ce forrem ittance ,and uphold the rate of Exchange e ither temporar ily orun til the balance of trade turns the other way. But if the supplyof both Frenchand other Fore ign Bills falls short, the Bullion pointis rCached n e v ertheless.

The margin between the two Bullion poin ts of 1 per cent. is

sufi ciently large to allow considerable play to the num erous con

tingencies conn ected with In ternational Comm erce and Credit,asdependen ton Industry,Har v ests ,and Politicaland SocialEv ents ;andthe balance oscillates pre tty steadily between the two extrem e points .

Re v olutions, Wars, or other startling Political Ev ents alone willwidely disturb the workingofthis balance beyond the natural limits .

People who are not v ersed in comm ercialand financialaffairs,when they hear of theabsolute sway of the rule of the Exchanges,cannot understand that the matte r is gov erned byanatural law, to

which the Banker has to submit just the sam eas e v erybody else .

GOLD FROM NEW YORK TO LONDON .

The following isashipm ent of fine Gold Bars, m elted,assayed,and stamped by the Un ited State s Assay Office . These Bars formacon v en ient remittance . In the Accoun t Sales in England it maybe noticed that the Assays show slight differences ; thus the fir st

Bar , in v oiced at is returned of the sam e Bette rness as theBars of 997, nam ely B 7; grains, which in Milliemes is only 99609,whilst two Bars of 997are re turnedas B 7} or

The Bar s are soldat 778 9d (not to the Bank) with {3 per ce nt.

Brokerage ; but then the cost of rc-melting has been sav ed.

396 GOLD SHIPMENTS .

INVOICE OP ONE KEG FINE GOLD BARS PROM NEW You

To LONDON.

Kegand Packing for ShipmentDrayage to Steamer

254.

Dols.

98 GOLD SHIPMENTS .

At 778 9d per oz . £8923 5 0

CHARGES.

Fre ight fith per cent. £11 3 1

Insuran ce 58 3d per cent. (New Yorkto London ) 23 8 6

Charges in Liv erpool and Freight toLondon

Bagsand Deliv eryBrokerage fith per cent.

PROCEEDS.

Giv ingan Exchange of 48 939 Pence per Dollar , or in

Re v ersing this Shipm entas made from London to

NewYork, under the same conditionsas to price(corresponding to 778 M id in London ) ,

The cost here would be

Add charges

Shipped to New York the Bars (unless UnitedStates Bars) require re-m elting, which would

cost 6 cents . per 100Dollars ; allowingalso forasmall loss of weight.

The Bars would realise Dols .

Less meltingand loss ofweight 4000

Dols .

Which would giv e an Exchange of 49 509 Pence per Dollar, orin NewYork, 109.

The next is an In v oice of United States Eagles, new from the

Mint in Philadelphia, sent from NewYork to London , sold in London

at 76s 4d (free ofBrokerage) . The Bank Price is 768 2%d.

GOLD SHIPMENTS. 399

INVOICE or TWO KEGs CONTAINING DOLS. UNITED STATESGOLD COIN.

No. 38. 1 Keg containing U . S . Double Eagles Dols .

39. l Keg containing U . S . Double Eagles

Dols .

KegsDra &c.Yage i

Dols. 75

ACCOUNT SALES or SAME IN LONDON.

ozs.at 768 4d (Bank pr ice is 763 2§d)Fre ight New York to Liv erpoolfith per cent. £28 3 9

Insurance New York to London58 3d per cent.

Charges In ,and from Liv erpoolBagsand deliv eryBrokerage (None)

90 81 5

11 4

Gi v ingan Exchange of 49 Pence per Dollar ,and in NewYork 1105.

400 GOLD SHIPMENTS.

The Bank of England will som etimes hav eastock of Eagle son hand, for sale at 768 6 —d per oz. ; or Eagles may be in theMarket at 768 3d or 76s 5d, which latter rate , with Brokerage ,com es to about the same price . It is adv isable , if possible ,to av oid buying Coins quite n ew from the Mint. Selecting

av erage parcel, we ship to NewYorkas pe r In v oice subjcinod.

INVOICE or EAGLES FROM LONDON To NEw YORR.

1 Case , containing 10Bags United States Gold

Coin , weighing, Dols . 5000 each, oz.

at 768 6§d 15 3

Caseand packingCharges to Liv erpoolInsuran ce 53 6d per cent.

30 14 6

9 9

Realising in NewYork Gold Coin Dls .

Less fre ight fith per cent.

Charges

Dls .

Giv ingan Exchange of 495 31 per Dollar , or 109 in NewYork.

The Par of Exchange between NewYorkand London is 10915 3

Shipmen ts of Gold from New York to London

therefore can be made when the Exchange for Billson London at sight is 1 10; and when it stands at109 Gold can be sen t from London to New York,whichagain proves the ruleas stated before st

See Page 347.

1 It must be borne in m ind that the London Exchange here taken is thesight Exchange , whilst that quoted in New York is meant for the eo-called60 days’ Exchange on London , to which London interest must beadded forshort.

402 GOLD AND SILVER SHIPMENTS.

The Account Sales in London of this In v oice will be found

at page 182.

The sam e realised 9 7

W hich,deducting Fre ight from Panama per cent. 40 14 1

Gav e n ett proceeds 15 6

Oran Exchange of 48 534 Pence per Dollar .

W e have thus given examples of Gold Shipm en ts

be tween England, on the one hand ,and Fran ce andthe Un ited State s, on the other . With the exception

ofAustralia, these are the principal parts dealing inGold with England . Shipm en ts of Imperials from or

to Russiahave almost ceased, andwith other coun tr iesEngland deals principally in her own Gold Coin s .

RU SSIAN HALF IMPERIALS FROM ST. PETERSBURG.

Half Imperials Rbls .

Shipping Charge sand InsuranceRbls .

W eighing in London

ozs.at Bank pr ice 778 7—3-d 1 7 8

Landing Charges, Fre ight, die . 15 2 0

15 8

Giv ingan Exchange of 375 Pence per Rouble .

SILVER SHIPMENTS .

Silv e r is shipped for the Continentwhen e v er there is no demandhe re for India. At 60} to 60; Pen ce per ounce it pays to be sent to

Hamburg, Am ste rdam , France , &c . , according to the state of the

Exchanges . But when the demand for Indiaarise s,and the stockin the market here is exhausted

,the stores of Silv er on the Con ti

n ent supply what is requir ed, and Silv e r return s to England atpr ices varying from 61 to 62% Pen ce .

BV

SILVER SHIPMENTS .

SILVER BARS TO HAMBURG.

GENERAL STEAM NAVIGATION BOATS.

WEIGHT. ASSAY.

-867

403

404 SILVER SHIPMENTS.

Ounces Standard at 60id pe r oz . 1 7 8

Brokerage , {gper cent. £12 10 6

Packingand Cases 1 1 7 6

Cartage ,Lighterage ,CustomHouse Charges 2 3 4

In surance 10 0 026 1 1 4

9 0

ACCOUNT SALES IN HAMBURG .

Cologne Marks Loth Fineness Cologne Marks fine Loth

5 Bars weighing 709 3% 994 704 15}6 851 1 1 995 847 7522 10 996 4

4 521 5% 997 519 1231

,

Total Marks fin e 7%At Bee . Mk. 2714

l Boo . Mk.

As saysand ChargesFre ight per cent. on

2T‘s on Balance

136024 10

Giv ingan Exchange of £1 135 36 Boo . Mks .

or

This is exclusiv e ofBank Comm ission .

The Assays in Hamburg, itwill be noticed,are rather belowtheEnglish Assays .

BAR SILVER FROM

4 Bars 992 fine making19 993

1 994

7 997

4 999

35 BarsAt Boo. Mks . 27%Shipping Charges

HAMBURG TO LONDON .

Loth Grs .

Mks . fin e 515 O 10

12 5

133 3 2

925 7 1 7

513 15 5

Mks . fin e 4536 7 3

Bee . Mks . 6

37 6

Bee . Mks . 12

406 SILVER SHIPMENTS .

which di v ided by the Hamburg short Exchange will giv e the pr iceof Silv er ,as by the following Table

3 605

503 i 603

60;5 .S3 603a

6043 5

"601;

f‘ ,a5

,

594Viz.

Ham

3"

So that, the Exchange be ingat 13 7-é, Silv er will cost 61{5d whenshipped here from Hamburg,and when shipped from London then ce

it must be bought he re at 60%d, in order to balance theaccount.

Am ste rdam isanother important market for Silv er , the price ofwhich var iesatfrom 104 to 106 Florin s per kilogramm e fine

,accordingto the supply com ing in from or the demand for Englan d.

BAR SILVER TO AMSTERDAM .

We ight. Assay . Standard .

167050 B 1 7; 130213 11 7532 5 1 7 13923-35

3165-5 16; 34007 6

374530 Standard oz . 403514 2

At 601-6 per oz . 17 9

Packing, dtc . £1 16 0Shipping Charges 0 18 0Brokerage 12 15 6

Insurance 10 0 0

25 9 6

7 3

To HamburgIn Em otions to td

ac

hewe

d

Lou

a

2550

0

53one

835

6

SILVER SHIPMENTS . 407

ACCOUNT SALES IN AMSTERDAM.

Kilos .

B 998

34 569 997

26 895 996

9 846 995

1 164 92 1 16 141

At PI. 12l,541 °55

Le ss Freight, LandingCharges Fl. 1 18 50

Assays, &c .

15700

Fl.

Giv ingan Exchange of F1.

The sam e shipm en t, returned from Amsterdam at 106 Florinsper kilo fine ,and sold hereat 62d pe r oz . Standard, would cost

Kilos fin e at 106 Fl.

Charges, Insuran ce , 850. 14000

F1.

In London , oz . Standard at 62d 2 4

h e ightand Landing Charges £10 5 6

Assays 2 14 012 19 6

2 10

Giv ingan Exchange of PI. pe r

The variations in the Exchangeare not so decisiv e in this case ,because the price of Silv er in Am ste rdam is not fixed

, as it is inHamburg, but fluctuatesaccording to supplyand demand.


SILVER TO INDIA mu. SOUTHAMPTON .

INVOICE OF 52 Boxes CONTAINING 52 BARS or SILVER BULLION,Shipped pe r P . 0. Company’s Steam e r from Southampton to Calcutta.

023 . 023

-72

936 l ,063°72

992-5

929

933-5

933

936-5

966 5963-5

934-5

935

949 5

956

9705

l: °015 5

709°5


OUT-TURN of 52 Boxes Bar Silv er ex Peninsular and OrientalSteam Nav igation Company’

s Steamer from Southampton ,receiv ed from London .

SW 52 Boxes Bar Silv er , containing oz .

or Tolas 1366642 , sent to CalcuttaMint,proceeds of Out-turn as pe ran nexed statem ent, equal to about Rs . per 100

Tolas Rs . 5 9

CHARGES.

Landingand Con v eying to Mint, dtc . 22 14 0

Re . 7 9

Thus giv ingan Exchange of Is l lgd per Rupee .

INVOICE OF SILVER BARS

Sent to Calcuttaby Pen insular and Oriental Steam Nav igation Co .

190boxes con tain ing 190Bars fin e Silv er ,Ofwhich 133 B 173

1

,

44 1 7

6 1645 16

2 15;W e ighing together

oz . Standard oz .

At 6l id per oz .

CHARGES

Fre ight, 2 per cent. on

190Boxes, Packing, &c .

Brokerage , 5 per cent.

19 9

Insurance 123 6d,and duty 370 10 0

1 1 0

This shipm ent is sold in the Bazaar in Calcuttawithout re-m e lt

ing the Bars . The Merchan ts buy the sameaccording to the fin eness .

found.

SILVER SHIPMENTS . 41 1

OUT-TURN or 190BoxEs BAR SILVER,

Sen t per Pen insular and Or iental Steamer of 20th January 1861 ,from Southampton to Calcutta, sold in the Bazaar .

PARTICULARS. AMOUNT.

W e ighing per In v oice , For 100Tolas .

Tolas . Re . Re . A. P .

62 133 15 1 7; B . or at 7 4

75 17; 106/ 5 10

20 1 7 3 5

22 1 7 -05-4 14 10

1 161, 14 3

3 -10-3 2 0

1 16 5 6

4 16 5 7

1 154 10555 2314 103 3 9

1 155 944 5 2513-103 1o5/s 3 1

190133 14 51 311, 1333345 oz .

-05-4 Tls . Rs . 1 7

CHARGES TO DEDUCT.

Break hire (carriage ) RS . 60 0 0

Landing, &c . 51 14 9

1 1 1 14 9

Rs . 2 10

Gi v ingan Exchange of 2S 0055d pe r Rupee .

A conv enient rule can be established to calculate theav erageout-turn of Bar Silv er in Indiaupon the price per oz . Standard here .

h eightand Insuranceand Petty Charges per cent.

Seignorageat CalcuttaMelting ChargeAv erage Loss on Melting

’

per cen t.

The Insurance is occasionallyalittle higher , the loss on melting less or

more up to l pe r m ille , but on the whole the figure s giv en repre sent theav e rage expe rience .


Indian Standard is 220

British Standard is 222

So the form er is Th th part, or 9 per mille cheaperthan British Standard

Deduct this

Leav es per cen t.

to be added to the price per oz . Standard here ,as the price per oz .

Indian Standard laid down in the CalcuttaMint,andas the Tolaor Rupee we ighs 180grains or 8 ofan oun ce ; this fraction giv esthe Exchange ofRupees .

Thus Standard oz . in England 612 50Pence

Add 4 per cent. 2 450

63 700

Multiply by g ls l lfid.

Exchangeat CalcuttaSIlv erat Pence pe r Rupees .

60 Pence per oz . here giv es 23 400

603; 234 48

60}603 23 546

605 235 95

60g60f60561

6 1}6 11}6 1g61g6 1 5

81

6131

61562


Taking the Exchangeat the cost of the Shipm ent in Englandis £3019 12s 3d ; whilst

Kilos 2108 18 998 fin e ,an d128 645 997

are equal to Kilos 3661 14 of 925 British Standard fin e , or at thecustomary rate of gramm es per oz . oz .

, so thatthe pr ice per ounce Standard is equal to Pen ce .

or 338 656 Kilos fine

The factors to be considered in this caseare , the Prem ium on

the Silv er to be paid in Fran ce upon the Tar if du Comm erc e

pr ice of fs . 218 89 per Kilo . fin e , which am oun ts here to

24 per m ille , or 24} per cent.

, and the rate of Exchange betwee nEngland an d France .

How many Pence 1 ounce Standard.

If Standard oz . 240 222 fine .

1 gramm es .

Gramm es 218 89 fs .,with Prem ium to be added afte r .

Exchange per 240pence .

Giv ingafactor of 151126

to be div ided by the Exchange , and the premium m ille to

added to the div idend thusat

add 20per m ille Prem ium

or 61 1-5

3Pence .

Upon this plan acon v en ien t table of equivalen ts for reference maybe constructed, as shown on next page .

SILVER SHIPMENTS . 415

SHORT ExcHANGE WITH FRANCE.

25 25

The Table shows the n et pr ice of S ilv er at Marse illes,as com

pared with the Market.

price in London . The shipping r id

Marse illes sav es tim e it is true , butan allowan ce must be made forBanking Comm ission of fi-th per cen t.

, probablyalso for Bill Brokerage of 1 per cent. ; furthe r it turn s out, by exper ien ce , that theFren ch Assays are often from 1 to 2 per m ille higher than Englishor Indian Assays—at all e v ents English shippers allege this to bethe case ,an d charge the Fren ch wi th the fact. The French m ethod

ofAssaying is n e v ertheless bette r than our own ,and we know it isacknowledged that English Assays,ac cording to the presen t fashionof reporting them , are always under the mark

, so that the realcause of the difl

'

erence ar ises on this

‘ Tables of equivalen ts , suchas we hav e giv en them here , by way of illustration , can be made equally withall other Exchanges, e rthe r in asingle set,W ithoutallowan ce for charge s, which may be added to the quotients or deductedthe re from ,ac cording to the way the shrpment goe s ; or in adouble se t, addrngcharge s in the case of exportation ,and deductrng them in the case of importatIon , from the rate s of Exchange re sulting. Practical expe r ie nce W lll nowand then Show re sults diffe ring from the stn ct rule ; the av e rage , howe v e r ,may se rv easaguide to shrppe rs .


SHIPMENT OF FIVE FRANCS PIECES FROM

MARSEILLES TO INDIA.

125 Cases con tain ing Fran ce in 5 Fran ce piecesFs . we ighingKilos. 3728075,atFe . 20230per Kilo Fe .

Casesand PackingShipping Charges, (to.

4932 5

Fs .

Drawn forat Fe . nett (without Brokerage ) 143 6d.

The 5 France pieces ,whose Terifl'

value is200FS .perKilogramm e ,

are here in v oicedat Fs . 20230or 1 13, per m ille Pr em ium . Some

twee the Fran c value is taken ,andaccording to the weight found,aprem ium isadded .

Shipped to Calcutta, as 900 fine (they are occas ionally not

quite up to this quality) , they realise , less 2 pe r cen t. Seignorage ,1 per cent. m elting charge ,and 1 pe r cent. loss on m elting, pe r Tolaof 180 grains, Rupees or 2 5605 Rupees per oz . Troywe ight.

Theabov e 3728075 Kilos, at the customary rate of con v ersion

of grammes per oz .,are equal to oz .

, costing

14 6

Fre ight to Indiaat 1 per cen t.

Insurance per cent.

Petty Charges601 15 0

9 6

Total cost at Calcutta, Pence per oz . 900fin e , or 62}Pence per oz . British Standard, giv ingan Exchange of Pen ce

per Rupee , or 13 1 191.

The results of the Shipm en ts are dependent again upon the

Prem ium on the Coin paid in Fran ce ,and upon the rate of Exchangebetween Marseilles or Parisand London .


on the Opposite side of the Pac ific Ocean ,is within 50to 70 days

sail by clipper ship, or 30 to 35 days by steam er to Hong Kong,

Californiais nowacon v enient market for the supply of Silv e r

to Chinafor European accoun t. Shippers in San Fran cisco areaccordingly fur nished with Credits from Anglo

-Indian Banks, todraw 60days’ sight or shortBills on London ,and in v est the proceedsin the purchase of Silv er for China. But m ost of the CalifornianSilv er is Doré Silv er , or not fine enough for China, where B 17 to1 7-3is required. Thearrangem en ts for Re fin ing Silv er in Californiaare notample enoughas yet to refin e the whole production ; and,asthe charge for Refin ing is higher ov er there than it is in Europe ,the Silv er which is actually refined on the spot has to be boughtataprem ium varyingfrom 2 to 6 per cent. ,according to the demandfor China.W e subjoin an actual operation of this kind.

INVOICE OF EIGHT BONES REFINED SILVER BARS, SHIPPED FROM

SAN FRANCISCO To HONG KONG.

SILVER BAR. W EIGHT. VALUE.

Prem ium about 23per cent.

Dols .

CHARGES.

Custom House Clearance8 NewBoxesat 2 Dols .

CartageInsuran ce per cent.

13111 of Lading Stamp 101-50

Dols .

Drawn for upon London at the Exchange of Pence per Dollar(including Californ ian Bill samP). 16,363-32 1 4

OU’IVI

‘

UBN OF SAME, 8 Bon e REFINED SILVER BARS, IN HONG KONG.

8 Boxes refined Silv er Bars,weighing oz . or Taels

Soldat 11 per cent. premiumfor the Betterness

-301

At 717 Tae ls per Dols . 1000 Dols .

CHARGES TO DEDUCT.

Fre ight per cent. on Dols .

Primageat 5 per cent.

Brokerageat per cent. on Dols .

Dols .

thus giv ingan Exchange of 513Pence per Dollar .


The Silv er arriv es in Hong Kong, say in 60days, whilst theDrafts on London , taking 30 days

’

transit, and due in 60days ,mature one month later . If the shipm ent had been made fromLondon , it would hav e taken , say thr ee m onths to arriv e at Hong

Kong so the London firm sav es in all four months’

inte restat5 per cent. per annum , equivalent to r id on the price , makingthe Exchange 50T-3d per Dollar .

The same shipm ent made from England represents

oz . Standard,at 61%d 17 0

Fre ightand Insurance 357 per cen t.PackingCharges , 650.andBrokerage

125 19 0

16 0

giv ingan Exchange ofabout 54d.

The Shipm ent from Californiais therefore cheaper than that

The factors upon which the result depends are , the Pre miumon fine Silv er to be paid in San Francisco, the Exchange there forsixty days’ sight Bills on London , the price of Silv erat HongKong,and finally the rate of Exchangeat HongKong on London .

In the case here before,us , the Dols . which the

parcel realised, were in v ested in Bills on London at six months’

sight,at 53} Pence , giv ing 13 8

3 months to London

6 months in London9 months .

Deduct 4 months gained 4

Interest 5 months ,

at 5 per cent. £72 7 0

Bill Stamp 3 10 0

75 1 7 0

16 3

CHAPTER III .

THE SHORT EXCHANGE.

HE Short Exchanges, or Cash Exchanges, as wehave established them , on the basis of the Min t

Pars of Exchange , in the chapters preceding, aretheoretically the neutral points or rates, indicatingthat the commercial relation s between England andthe other parts concerned are properly balanced, andthat there is no call for Bullion shipments in e ither

direction . A departure from these neutral rates, inone direction or the other , turns the Exchange fav orable to one and unfav orable to the other country ; andif the difference is sufficiently large to cover the

expenditure of forwarding Bullion , shipm en ts of thatcommodityare made , provided always, of cour se , the

article can be procured ; which is notalways the casein coun tr ies where aforced Paper Currency prevails ,Theann exed table gives, in the first column , the Mint

Pars of Exchange ; in the second column , the Ratesof Exchange when they have becom e so fav orable toEngland as to bring Bullion over here ; and in the

third column the Rates of Exchange when theyare SO

unfavorable to usas to compel us in our turn to partwith Bullion .

But this rule of Bullion shipments holds good onlywith r espect to certain countri es in easy commun i

THE SHORT EXCHANGE. 423

cation with us— such as Fran ce , Holland, Hamburg,Spain , Am erica, India, China, and some others ; butAustr ia, South Germany, Italy, Switzerland,and otherStates,are not so conven ien tly placed . The chargesof forwarding Bullion between them and England areheavier . Instead ofdealing direct with these countries,other Bullion cen tres— Hamburg, Amsterdam ,

Paris,Marseilles— Ship or receive Bullion for Englishaccoun t,whereby time and charge s ar e saved . Thus, if Goldis wan ted for Genoa, in stead of sending Bars or

Sovereigns from London across the Chann el, thenthrough Fran ce by land, and from Marseilles againby sea, it com es much cheaper to order ashipm ent of

Napoleon s at on ce direct from Marse illes to Genoa,and to r e imburse Marseilles either by Draft fromthere or by rem itted Bills . The debit or credit thusaccruing between England and these interm ediateplaces is settled in the usualway.

The fav orable or unfav orable state of the Ex

change mayalso be balanced by Drafts or Rem ittancesthrough other interm ediate places, where the Englishor Foreign Exchange holds areversed position ; afav orable Exchange upon Italy may thus be used tocover an unfav orable Exchange with France , and so

forth .

Costs of conveyance , and charges for risk , andother con tingencies, compel us to be Spar ing of the

actual tran sm ission of hard mon ey ; but the tendencyof the favorable or unfavorable Exchange has the sam e

efl‘

ect upon the international account as actual ship

ments of Bullion .

TABLE OF PARS or ExcHANGE COMPARED To SHORT EXCHANGES,

FAVORABLE OR UNFAVORABLE To ENGLAND.

FRANCE 65 BEL

GIUM 1=Fs. Fe .

SWITZERLANDITALY" i l 252 2}

NORTH GERMANY l Thr . 62 41

SOUTH GERMANY 10 Fl. 1 19 10Kr .

HAMBURG 1 B . M . 18 7} Sch.

BREMEN 100 L .Th .612°

i

AUSTRIA' 1 F1 102 1}

HOLLAND 1 12

SWEDEN l R.Dlr .

NORWAY 1 S .Dlr . Skg.

DENMARK 1 R Dr . 8 94

RUSSIA" i Bhle . 1 385 Pence

GREECE 1 Drach .

SPAIN Dolr . 1 49) Pence

PORTUGAL Milrs . 1

TURKEY 1 Petre .l lo§

EGYPTUNITED STATES

BRITISH NORTH

AMERICA

MEXICO

Dolr . 1 50Pence

CNTRL . AMERICA,

NEW GRANADA,

and PERUCHILIURUGUAYBRAZILS'

LAPLATA STATESINDIACHINA

JAPAN

unfav orable to usto Bullion poms.

F3 .

In the Coun tries marked theactual quotation s of the dayare in PaperMoney,and varyaccordingly from the Cash basis hereadopted.

25074

Th . Th.

F] . 12000 Fl. 1 18 20

B .M .13°9 RM . 18 5

L .T. 6 19° L .T. 607°

Fl. Fl.

1205

R.D R.D

S .D. Bkg'

S .D. Skg.

R.D. R.D.

37} P 38}Pen

Dr . Dr .

49 Pence 50 Pen

52} 531L

Petr . 1 12 Petr . 109}

102 99}

Dols . 1 10 109

DATE. PRICE.

October

Nov ember

December

1862.

January

February

March

August

September 25 °17}

October

Nov ember

December

1863.

January

February

March

25 17}

DATE. PRICE.

August 25 °27}

September

Nov ember

Decembe r

1864.

January

February

August

n

September

Nov ember

Decembe r25 ° 15

October

March

October

DATE. PRICE . DATE. PRICE .

January

February

25 20

September 25 °21

October

Nov ember

December

March

August

1868 .

January

February

March

1865 .

January

February

September 25 °22}

October

Nov ember

December

1866 .

January

25 30

March

August

February

March

August

September 25 °25

Nov ember

December

October

CHAPTER IV .

THE LONG EXCHANGE

IN the preceding pages our business has been withHard Cash, e ither in Coin or in Bullion . The

Rates of Exchange resulting from the transactionsdiscussed the re are called the snoa'r RATES or EXCHANGE,in con tradistinction to the LONG RATES or EXCHANGE.

Bills drawn and paid on demand or at sight, sen t

from on e place toanother , have , asarule , practicallythe sam e effect as shipmen ts of Coin or Bullion : the

holder rece iving money on presentation .

As amatter of theory, shipments of Metal, ifproperly in sured and otherwise guarded again st accidents, must be regarded as still better than sight

Bills,as theyat on ce secureabsolute possession .

Bills at sight are , after all, but pieces of paper ,liable to be dishonoured ; and, however small thisr isk may be with Bills issued by the residen t Bank or

or Banker , the theoretical inferior ity to hard Cashremain s nevertheless . Theyare , however , more con

v enient to the m erchan t than Bullion ; they aregenerally cheaper , according to the state of the

Exchange s, especially for smallamounts . Resting,asthey do, on the basis of hard cash , asarule , they donot involve the con sideration of credit in the samemanner as Bills drawn at the so-called Long Exchange .

428 THE LONG EXCHANGE.

THE LONG EXCHANGE — A Bill drawn by on e firm

on another departs from the Cash basis at once ifnot made payable at sight or on demand, no matterwhether the stipulation be that it should be paid one

day or two days, or e ight days, or ten daysafterwards.

Still, in ordinary Comm erce aBill is con sidered short

when it is payable afew daysafter arr ival in the placeon which it is drawn . The Banker , however , whomust have interest for his m oney, takes these daysinto account in fixing aRate of Exchange . When

Bills are longer , say when they are due in twenty,thirty, or forty-fiv e days, they are no longer shortBills, but they fall within the in term ediate classbetween the short and the long Exchange , by whichlatter term Billsat three months are generally designated. The thr ee m onths’ Exchange is the full longExchange as generally understood .

When aBill is thus drawn , the credit of the

Drawers, Acceptors, and Endorsers upholds its valueun til it falls dueand is cancelled by paym ent .

The custom of drawing Bills at dates longer thanshort, up to thr ee m on ths or more , has its or igin inmercan tile transaction s, where it becom e s necessary tocombine the gran ting ofaCredit to the Debtor or

Acceptor with the Exchange operation . In formertimes, before we enjoyed the present rapid means of

in ternational commun ication , goods sen t from one partto another took amuch longer time to arrive , andeven conveyance by post required as many days as itnow does hours ; the laws on mercantile proceedingsgenerally were also more stringent than theyare now,


An order for the payment of the amount of £100to-day is worth £100. An order for the paymen tof the same amoun t three m onths afterwards, if therate of interest is four per cen t per annum , or £1 for

three m on ths, is worth today only £99 ; so that tomake italso worth £100to-day it ought to be drawnfor the amount of£101 .

The same prin cipleapplies to the rates of Exchange .

A Draft on Paris, payable at sight, for Fs . 2522 50,

would at the Exchange Of Fs . give exactly£100 here ; but if the Bill isat thr ee mon ths,andexactly £100 here are required, with the Rate of

In terest in Paris rulingat 4 per cen t . per annum (or1 per cent . , or about 25 Centim es per for thr eem on ths),

theamount drawn must beto realise , less interest

or F8 . per

It must, therefore , be drawn at the Exchange of

Fs . called the Long Exchange in this case .

If the In terest is only 2 per cen t. per annum , 12}Centimes will con stitute the difference ,and so forth ;if the Short Exchange , here taken at var iesabove or below that figure , the Long Exchange willvary with it.

Now, if aDraft on London be required in Paris,the Short Exchange being the same there , the £100would cost also Fs . but if the draft bemadeat thr ee months, interest in London being also4 per cent . , the Banker in Paris might afford togive £101 for the sam eamount of Francs, whichwould

THE LONG EXCHANGE. 431

make the rate of Exchange Fs . Centimes ; so

that at the thr ee m onths’ rate he would give £100for Fs .

This illustrates the proportionate Exchanges (Interest in both places be ing 4 per cent .)

Three Months’ Bills in London upon

Paris Exchange Fs .

Sight Bills in London on Paris, or in

Paris on London Short Exchange Fs .

Three Months’ Bills in Par is upon

London Exchange Fs .

the 1 per cent . in terest for thr ee m onths, equal to25 Centimes, be ing in the first case added to ,and inthe third case subtracted from , the short rate of

Exchange .

The Rate of In terest ruling at the place uponwhich the Exchange is made thus enables the

inquirer to make out the Short Exchange from the

Long,and v ice v ersa‘.The French Exchange being, say,

SHORT. LONG.

— Interest in France at 2 per Cent. -1

5

3 per Cent.

4 per Cent.

5 per Cent.

6 per Cent.

8 per Cent.

M .

If the Short Exchange is at 7} Centimes

must be added to the rate s for three m onths ; ifat20Centim es must beadded .

Supposing the case to be reversed, the sam e short


rate s being takenas the Exchange in Paris on London ,

the Long Exchange will be found, by deducting the

number of Centimes represen ting the Interest.The Long Exchange in e ither place is dependent

therefore

l st— Upon the r ise and fall of the ShortExchange ,and

2nd.— Upon the var iation s of the In terest rulingin the place upon which Draft is made , tobeadded or subtracted from the rate .

This ruleapplies to all the Exchanges quoted inthe same manneras the Fren ch Exchange in Englandwhere the £1 is taken as the Un it to start from ,

viz

The Exchanges so quotedareThe Dutch £1 Florins qBelgian -f, FrancsFrench

M’mBanco (as short m etallic pars)

Italian Lire

ThalerFlorins

S.Cerman £10= 1 19010

&c .

The Sterling in these cases is the fixed rate, thefor eign mon ies given con stitute the variable rate .

In certain other Exchanges custom has reversed

the position ; the Foreign mon ey is made the Unit to

start from as the fixed rate, and the British equivalentis made variable . The Exchanges so quotedare

The Spanish 1 Dollar Pence British.

Portugese 1 Milreis : 53}Russian 1 Rouble 38}

CHAPTER V.

THE LONDON COURSE or EXCHANGE.

THE Foreign Bankers and Merchan ts of London

m eet in the open Court of the Royal Exchangeevery Tuesdayand Fr iday, between the hours of two

and thr ee in theafternoon , to transact business in thepurchase and sale of Foreign Bills . The majority ofthe firms represented are sellers of Bills that hav ecome to them as remittances fromabroad or from the

coun try, which are technically called Made Bills or

of so-called Drawn Bills, which are simply their own

Drafts upon houses abroad against shipments madeor orders given . A large number of the firms present

on Changeare foreign Bankers,and Exchange dealers,who purchase such made or drawn paper , or who

sell to Merchan ts or others drafts on places abroadfor such specificamoun tsas may be required.

The interchange of this bus iness is effected chiefly

thr ough third parties, the Exchange Brokers, whohave either certain Bills to sell for houses not other

wise represented on’Change , or who negotiate the

buying and selling between the houses dealing on

THE LONDON COURSE or EXCHANGE. 435

The rates being agreed upon , the Broker handsanote to the Buyer , which is called the Contract, andwhich generally runsas follows

Fs. 3Months BrusselsatofMessrs. N . N . Co.

A. (b B .,

April l0th, 1868. Sworn Brokers.

The figur esare filled in on the spot in pencil.

And to the Sellerasimilar note or con tract

Fs . 3 Months BrusselsatOrder ofW . S . C. value of the same .

A. B .,

April l0th,1868. Sworn Brokers.

These n otes serve as am emorandum to Sellerand Buyer ; theyare bindingat the sam e time on both

partiesas contracts made andaccepted . After’Change

the Seller prepares and indorses his Bills,and sendsthem to the Buyer , with theaccoun t,and this accountis paid for by the passing ofaReceipt Draft on the’Change-day following. Thus Bills bought on Tuesdayare paid for on Fr iday, and those bought on Fridayon the Tuesday following .

The Brokerage amounts to 1 15th per cen t. , whichis invar iably paid by the Seller ; but in agreatmany cases the Broker also receives acommissionfrom the Buyer , unless it be agreed beforehand

436 THE LONDON COURSE or EXCHANGE.

with the Broker that the Buyer should go free , or

unlessfree is endorsed on the contract .The Brokerage accounts are paid at the end of

each year .

After the business is over the Brokers note the

rates of Exchange made , and issue the ir Cour ses of

Exchange , whichare generally found or made toagree .

LONDON COURSE OF EXCHANGE.—FEBRUARY 28th, 1868 .

AMSTERDAM

ROTTERDAII

BRUSSELS AND ANTWERP

MARSEILLES

FRANXEORT-ON-THE-MAINE

VIENNA

TRIESTE

BERLINST. PETERSEURG

COPENHAGENGENOA

LEGHORNNAPLES

PALERMO AND MESSINA

BARCELONACADIz

LISBON

OPORTO

NEW YORK 60days ’ SightRIO DE JANEIRO

438 THE LONDON COURSE OF EXCHANGE.

RIO DE JANEIRO,at 60days’ sightPence to Pence

(For the two last no pr ices were made on the 28th Feb. )

The places in this list ar e those usually given inthe London Course of Exchange . Calcutta, Bombay,&c .are quoted in some of the Cour ses of Exchange .

The first thing likely to strike the reader is thein congruity in the system of taking the £1 in som e

cases, the 1 Rouble , the 1 Dollar , the 1 Milreis inother s, and in one case the £10, as the fixed Un it .Why notadopt the £1 as the Un it for all Exchanges PThere can be no doubt but this would be the moreconsistentand more con v enien t plan ; however , customhas established the presen t system , and although allare agreed upon the n ecessity for doing away withtheanomaly, yet custom is too strong in favour of itsmaintenance . It might further be suggested that allthe Exchanges should be quotedas Short,and that therates of In terest should be given upon which the LongExchanges m ight be computed. Custom again standsin the way of this simpleand reasonable reform .

The three mon ths’ Exchange is still considered

the ruling rate ,and only the Am sterdam and the ParisExchange are also quoted Short. Howev er , short inthese cases does not mean sight, but three , four , or ten

days’ paper .

We will now reduce this Course of Exchange as itstood on the 28th February 1868 to the short rates,the In terestat the respective places be ing given in theleading column .

THE LONDON COURSE or EXCHANGE. 439

The two other columns giv e , the first the Short

Rates, the second the Mint Parsas found in Part II . ,Chapter I . A comparison between these and the

present Short Exchange will then enable us to judgeof the actual position of each Exchange . We takethe dearest Exchangeas the one from which to makethe Short thus , if Paris is quoted to we

take as the fairest quotation , con sidering thatBillStamps, Brokerages, &c. , hav e to be taken intoaccount.

COURSE OF EXCHANGE, ON 28TH FEBRUARY 1868,

Reduced to Short Exchanges.

per Cent. AHSTERDAH

RO’I'I

'EBDAM

BRUSSELSHAMBURGPARIS

MARSEILLES

FRANXEORT

VIENNA

TRIESTE

BEBLm

ST. PETERSBURGCOPENHAGENGENOA AND LEGHORNNAPLES AND MESSINA

440 THE LONDON COURSE OF EXCHANGE.

This comparison shows

That the Exchanges between LondonandHamburg l lFrankfort

Were ced

B Iona small fiactions.

That the Exchanges between LondonandAmsterdam

Bo

russelsWere unfav orable

Pto England toan s

M'

llesthe extent shown .

Cadiz

That the Exchanges between LondonandCopenhagenMadr id Were fav orable to

England.

And finally that the Exchanges betweenViennaTrieste Were m eptzbnallySt. Petersburg in fav or of thisGenoaand h ghorn Country.

Naplesand Messina

This exceptionally favourable proportion does not

arise from the Min t Par ; it is simply due again to

the great finan cial evil, the forced Paper Currency, inwhich Bills drawn upon these places are supposed to

be paid . The extent of the Prem ium on Hard Coincan be estimated by these departures from the Mint

CHAPTER VI.

FOREIGN COURSES OF EXCHANGE.

IN England we have two classes of Bankers,— the

so-called local Bankers, to which our powerful

Join t Stock Banks and the great private Bankingfirms belong ; and the so-called foreign Bankers. The

local Banker , or English Banker proper , prin cipallydeals in Br itish Money, and is supposed, both askeeper of cash accounts and deposits, and as discoun te r of Bills or dealer in Money, to confine his

operations chiefly to Bills payable in England, and tolocal matters generally . Such Foreign Exchanges ascome into his hands are disposed ofat once throughBrokers.

The Foreign Banker in London , in his turn , buyssuch Bills of Exchange ; his business lies chiefly with

abroad ; he main tains alarge correspondence withBankers and Merchants all over the world, and froquently combines Fore ign Banking with certain other

m ercantile Operations. The distinction between the

English Banker and the Foreign Banker in London ,

and between their respective lines of business, is well

recognised . On the Continen t this is different. The

Bankers in France , Germany, and other parts, combine the functions of both classes of Bankers in

FOREIGN COURSES OF EXCHANGE. 443

England . They not only keepaccounts with the localm erchants, manufacturers, or private indiv iduals , butthey deal largelyalso inall sorts of securities, whetherhome .or foreign , amongst which Bills on other

countries playan important part.

The Portfolio ofan English Banker contains only

English local Bills, but the Portfolio ofBankersabroadcontains, besides local Bills, also Bills on England,France , Germany, Russia, Spain , Italy, 850.

The fact is that the requirements of business in

England, where so vastan amount of enterpr ise con

tinually extends the boundaries of commerce , fullyengage the English Banker , and that he is thus underno necessity of seeking investm ent for his funds in

Foreign securities of this kind. Whereas the Bankersabroad, proceeding altogether upon aplan different

from the English Banking system , do not so readilyfind convenient investment for large sums of money,and are therefore driven to deal in avariety of Bills .

This comparative greater scarcity of home business,however , fin ds its coun terpoise in the very large fieldopened to the Bankerabroad; the peculiar nature of hisbusiness compels him toadapt his knowledge to the

more universal character of his operations . A Foreign

Banker , therefore , is generally agood linguist; he isacquaintedwith the comm erce of other countr ies ; heis bound, in fact, to educate himself for his business .

Thusarmedand prepared, he finds himself enabled todeal profitably with all sorts of Foreign Exchanges ;to en ter into arbitrations, and other business, whichthe English Banker has no in clination to embark upon .


In most of the large Continental cities there isconsequen tlyalm ostalwaysastock (ifwe mayuse thisterm) of Foreign Bills, in which the Bankers deal withtheir customers, oramong themselves.

The English Bill Exchange , which takes placeTuesdaysand Fridays, is essen tially held for the bondfide consumption of Paper offer ing, and is comparativ elyasmall one : the Foreign Bourses generally takeplace every day,and speculativ e dealings in Exchanges,as well asabsorption of Bills, give them the characte rof largerand closer markets of Exchange .

The condition s of Brokerage , &c. ,abroadare generally the sameas in England.

W e now give the Courses of Exchangeas issuedatthe principal towns , showing the systems pursued .

PARIS.

Paris, Vendr edi, 28 Estate: 1868.

v ALEURs SE NEGOCIANT A m ore more.

3} pr Ct 209} 209}a2098 et 4 per Cent.

185} 1858 184} 184} et 4

364} 365} 364 365 et 4.

509 510 510 511 et 4.

PETERSBOURG

446 FOREIGN COURSES or EXCHANGE.

taken is theabsolute short,and for London the £1 Sterling is takenas the Unit. For Belgium and Italy, where the same monetary

The first column in the table giv es the rate s of discount

cur rent in the towns in the second column ; the third column

states the prices made for three months’

paper , and the fourth

column the rates for short paper , computed upon the thr ee months’

are supposed toallow or to charge for short. But these are only

nominal rate s of Inte rest ; in actual bargains the rates of discountare more closely followed. Thus three months ’ Amste rdam,at thethree months

’

Exchange , is Fs. 209}a210per 100Florins, butsight Amsterdam at the thr ee months ’ quotation of 209}a.sayW ith 4 per cent. Interest for three months

Fs.

per 100Florins.

The Interest is subtracted from the rates giv en under the

Valeurs se NegociantaVue .

’Thus London three months,at the

quoted sight Exchange of 3 say Fs.

Less Interestat 2 per cent. for thm e months

Fs.

The rate quoted in the fourth column,

“A courte échéancefor London , is the guiding rate for cash payments between the twoplaces.

The quotations for Coinsand Bullion, Cours des Monnaies,Matieres d’

Orat d’

Argent,”show that

Or en barre(Gold bar s) }1 000 Is Fs. per KIIO

“Essizsmlitt p .m

at 9 1°

The rates beingthose of the Tariff duComm erce .

at per Mills

FOREIGN COURSES or EXCHANGE. 447

Comparing nowthe rates ofExchange in London with thoseatParis, selecting, for instance, Amsterdam , quoted at the cheaper

In London , £1 Fl. 12

In Paris, F1. 100 Fs. 2092

An Exchange of Fs . results

between London and Paris . The Exchange quoted for London isto 16 } or , takingthe m ean , Fs. thus showingamargin

or profitof 3Centim es per which, howev er , is not enough to cov er

Bill, Brokerage , Stamps, dtc .

Italyat three months is quoted in London a sayFs . In Paris it is 13 per cent. perte or loss

,or 100Lire

for 87 France . Interest beingat 5 per cent. , 100 Lire at sight

are=Lire at three months ; consequentlyP £1

If £1 Francs.

Fs. Lire Italiane .

These exammes lead the way toarbitrations ofExchanges .

BRUSSELS.

Brucelles, Mercredi, 26 Fémier 1868.

CHANGES.

AMSTERDAM 25 15a25 1 7}BERLINFRANCPORT SIM 21 1 25

HAMBOUBG

W ith the exception of London, which is here quoted per £1 ,allthe other ratesare quoted on the basis of 100Foreign Units for therates in Francs stated,andall of themare for short. The BrusselsCourse of Exchange is thus one of the simplest and easiestunderstood ; for the thr ee months

’

Exchanges the respectiv e Interest hasto be deducted.

448 FOREIGN COURSES OF EXCHANGE.

TURIN27 Febbraw 1868.

CAMBI.

FRANCOFORTE 238 90 239 25

LIONE (LYONS) 113 90

LONDRA (LONDON) . 28 70 28 75

PARIGI (PARIS) 113 90

PanDA 20FRANCHI (20FRANCE GOLD PIECES) 22 87 22 89

DA 5 FRANCHIARGENTO (5 FRANCEPIECES) 5 712SPEzzATI IN ARGENTO (SPECIE) 114 30

London , which is quote d per £1 . The Rate sare for three months.

The expression denaro signifies the buyer’

s rate , lettera the

seller’

s rate . The pricesareall for Paper money, Parisand Lyons

Rome , for which no quotationsare giv en here , isat presentatabout625 Lire per 100 Scudi. In Genoaand other Italian Towns

Am sterdam , Hamburg, and Spanish places are sometim es quoted ;but the principal business in nowdone in Exchange on Paris , Lyons ,London ,and Frankfort.

450 FOREIGN COURSES OE EXCHANGE.

The tim e is expressed by M (months) , W (weeks) , T (days) ,Zf. in the second column m eans Zinsfuss ” (Rate of In te rest) .

The lette rs “bz .

” after aquotation m ean “bezahlt ” or paid,indicating that these prices are curr ently paid ; whilst the capitalletter G stands for “Geld (Mon ey) , m eaning that at the

quotation in question Money can eas ily be had for the Exchange .

This Course of Exchange date s from the 19th February, therate s in the third colum n being those of the 18th, the day before .

FRANKFORT ON THE MAINE .

Frankfurtam Main , 28 Februar 1868.

WECHSEL IN SUDDEUTSCHER WAHRUNG.

Am ste rdam F1. 100 100} G.

Ditto F1. 100

Antwerpen Frs . 200

Ditto Frs . 200

Augsburg Fl. 100 99-2G.

Ditto F1. 100

Thlr . 60 105 B .

Ditto Thlr . 60

Brem en Thlr . 50Lsd. 97% B .

Ditto Thlr . 50Lsd.

Briissel Frs . 200 95 G.

Ditto Frs . 200

Ciiln Thlr . 60 105 B .

Ditto Thlr . 60

Genua Frs. 200

Hamburg MB . 100 88 13G.

Ditto MB . 100

Le ipzig Thlr 60 105 B .

Ditto Thlr 60

London Lst. 10 1193, bez.

Ditto 2 5 3 Monat .

Lyon Fr s . 200

Mafland Frs 900


FRANKFORT (continued) .

Mailan d Frs . 200

Miinchen F1. 100

Ditto F1. 100

Frs . 200 958B . AG.

Ditto Frs . 200

Petersburg 60S .-Bbl.

F1. in Ost. tV.

F1. in ost. W .

Frs . 200

Fl. in iistr . W . k.S . bez .

Ditto Fl. in ostr . W . m .S . 35bez . m it 4 pro cent.

Ditto F1. in ostr . W . bez . m it 4 pro cent.

Disconto 3 pro cen t. G.

GELD SORTEN.

Preussische Cassen-Sch. (Prussian Note s)Preussische Friedr ichs d

’

Or

Pistolen

DoppelteHolliindische 10Flor in StuckeDucaten

al marco20Franken StiickeEnglische Sov ere igns

Russische h perialeGold per lb. fe in

5 Franken ThalerHochhaltig Silber per lb. fein

Dollars in Gold 2757The Exchanges are quoted in Florins, the fixed rates being

placedagainst them .

K S m eans Kurze Sicht (Short.)L S m eans Lange Sicht (Long )

The lette r B m eans Briefe ,” that is to say, the Seller ’s rate ;G designates the Buyer

’

s rate ; Bez (Paid) theactual prices made .


Ham burg, 24 Februar 1868.

WECHSEL. (Notiz v om 21 Februar .)

per 100Bco. M . 187} 187}

187} 187; 187}187} 187} 187}186} 186; 1863

£ Ste rling 13075 15 7 13 a}13 °8

40Bco.M .

akfurtaM.

n

fl


BREMEN .

Bremen, 28 Februar 1868 .

Wechsel Course .

Hamburg an 300Mk. Bco

Amsterdam 250Fl.

London

Paris

100L. d’

OrBerk!“

Thl. Gold

Leipzig 100

New York 100

Disconto 3}a3} per cent.

GELD SORTEN.

Geld in Sorten und Barren per Mpfd. fe in 418 L. d’

Or Thaler .

Pistolen , per 100Thaler 100320Fran cs StiiekeSov ere ign s 6 7

Eagles, per DollarThaler , Silber , per 100L. d

’

Or Thaler . 1 1 15The quotations for Hamburg, Am ste rdam , London , Augsburg.

and Frankfor t,ar e in L . d

’

Or Thaler Gold ; for ViennaThaler (uponthe basis of 2 Thaler Prussian 3 Guilders Austr ian ) , for Berlinand Le ipzig Prussian Thaler , for New York Dollarsare quotedasagainst 100 L . d

’

Or Thaler ; for Paris 1 Franc is the fixed rate ,quoted in Groten , with fraction s to Groten .

The reader will probably agree with us in opinion that theBremen Course of Exchange is v ery confusedly constructed.


VIENNA,

Wien , 24 Februar 1868.

WECHSEL COURSE.

3 Monate .

Amste rdam 100h. Fl. 100

Augsburg 100F1. 99

Berlin 100ThalerBreslau100ThalerFrankfurt 100FlorinGe nus. 100Lire

Hamburg 100Mark 88

Le ipzig 100ThalerLiv orno 100Line

London £10 119 75

Lyon 100FrancsMailand 100LireMarseille 100FrancsPar is 100FrancsVenedig 100Lire

VALUTEN.

K. KronenK. Milnz-DukatenK . Rand-DukatenGoldal marcoNapoleon s d’

Or

Souv erains d’

Or

Friedr ichs d’

Or 10

Louis d’

Or (deutsche )Englische Sov ere igns 12

Russische ImperialsS ilber in fl. l l6 °75

Ditto 1 fl.

D itto CouponsPreuss. KasswAnweisungRuss. Papier Rubel

The quotation s are in Florins but, as must be born e in m ind,in Pape r Mon ey for the present. The prem ium on Silber (1 Florin

456

LONDEN

PARIJS


AM STERDAM .

Amsterdam, 18 Fév rier 1868.

COURS DE CHANGES.

Acour t.

S court

acourt

ROTTERDAM .

Rotterdam ,22 Feb. 1868.

/M .

GENUA

kort. NAPELS

190° LISSABON

LIv OURNE

NAPELS

VIENNE

AUGUSTEFRANCFORT-s-M .

PETERSBOURG

Ror rERDAM

LONDRESB rro

HAMBOURGDITo

W ISSEL KOERSEN.

F BERLIJNST. PETERSB.

FRANXF. A/MID.

AUGSBURGW EENEN

TRIEST

VENETIE

458 FOREIGN COURSES OE EXCHANGE.

In CHRISTIANIA the quotations on the 28th February wereLondon 3 m onths, Speciesdaler pe r

Hamburg 3 days ’ sight, 101} for 300Marks Ban co.

Amsterdam 3 9531 per 250Florin s .

COPENHAGEN .

Kgobenhav n , den 31 Januar 1868.

Hamborg k. S . 200} for 300Mar k Banco.

London 3 M . 8 Rdlr . 93 Sk. per £1 .

K . S . 9 4

Amsterdam 3 M . 189} for 250Florin .

Paris 3 M . 34} Skillingfor 1 Fran c .

Discontoaf Hamb. Banco 325 4 pro cent.

afRigsmont-Vexler 4 4} pro cent.

af do. i Privatbanken 4 4}pro cent.

Hamburgand London are the prin cipal Exchanges for Copenhagen .

ST. PETERSEURG .

St. Pétersbourg, 22 Fév r ier 1868.

CHANGES.

LONDRES

AMSTERDAMHAMBOURGPARIS

OR : DEMI-IMPERIALE

ESCOMPI‘E is laBan que de l’Etat pour cent.

5 laBour se 7 R7} pour cent.

For London , the quotation m ean s somany Pence per Rouble .

Amste rdam Florin s per 100Roubles .

Schillinge Banco per Bbls .

Francs per 100Roubles .

The Roubles are at present Paper,

”and the depr eciation of

this forced Cur rency is shown by the quotation of the Half Impe r ialat (its

'

Metallic Value is equal toabout 14 per cent. prem ium ,as the buyer

’

s price .

Londres

AlicanteBarcelonaBilbaoBadajozCiudad-RealCéeeres

Cad izCOrdovaCorufiaGranadaLogrono

MalagaMur ciaOv iedo

PalenciaPonte v edraSalaman eaSantanderSantiagoSe v illaSan SebastianValenciaValladolidVigo

Zaragoza


Madrid, 17 do Marzo de 1868.

A 8 dias Vista.

France sBeneficio . Doi'lo.

459

49, 60y 70

The differen ces in the Exchanges on the var ious Span ish Townsshow how imperfect the inte r ior inte rcourse must be .


LISBON .

Lisbonne, te 15 Jawier 1868.

CHANGES.

LONDRES 90j{d 1 000re

60j/d

30j/d

n court

PARIS 100 j/d .

8 j/v ue 54950

HAMBOURG 3 m/d 1 dol. 000

AMSTERDAM id. 16 dls. 000reis

GENES id. en or .

MADRID 8 j [v ue peso fuerte 945 94042

London is quoted in Pence ; Paris , Genoa,and Madrid in Re'

is ;

Hamburg in Schillinge Banco ; Amste rdam in FlOIins .

CONSTANTINOPLE.

Cm tamtinq i le , Is 3 Fe’

v r ier 1868.

COURS DES CHANGES .

LONDRES 3/m d par £1 .

PARIS

MARSEILLE

NAPLES

GENES

VIENNE

Napoléonescompte pour

Piastres for the £1 ; Francs for Parisand Marseilles ; Lire forNaplesand Genes ;and Florins for Viennaper Turkish Pound.

108; A 109;23-15 A

25 20a, 23-25A 27-50

27-10A

1 1-05 A 1 1-20

MONNAIES.

109} A 109387


In SAN FRANCISCO the quotations were on the 30th

January 1868,

London 60days’ Sight, Comm ercial Bills 49a49}Pence per Dol.Bankers 48}

Short sight 47}Par is 60days’ Sight Francs

NewYork Short, payable in Currency, 136 to 137 for 100Dls . Gold.

Payable in Gold 1 1} Prem ium .

By Telegraph in Gold 1} 135 Premium .

Fine Gold Barsat Par ; 900 fin e and under , i per Cent. Premium .

Silv er Bars, par to Premium .

MEXICO.

25ih January 1868.

Havana30days’ Sight 8 to 9 Prem ium for 100Dollars,New York 30days’ sight 10 12

Paris 60days’ sight Fran cs. to per Dollar .

London Pence 44} 45 pe r Dollar .

Madr id 16 Prem ium for 100Dollars .

In LIMA quotations were on the 13th February 1868,

London 90days’ sight 36} Pence per Dollar .

Paris Fs .

In VALPARAISO on the letFebruary 1868,

London 90days ’ sight 46% Pence per Dollar .

Par is Fs .


In BUENOSAYRES the quotations were on the 25th January 1868 .

London 60days ’

sight 48} a48} PencePar is Francs. Pe r HardAn twerp Dollar .

Hamburg 43} Schillinge

In MONTEVIDEO on the 22nd January 1868 .

London 60days ’

sight 46}Pen ce per Patacon .

Par is 5 Francs

In RIO JANEIRO F ebr uary 1868 .

London 60days ’

sight 15}a15 Pence per Milrels .

Re'

is 600a620per 1 Franc .

Hamburg Rs 1040a1050pe r 1 Mark Banco .

Gold 87 pe r Cent Prem ium . The quotationsare in Paper Money.

CALCUTTA.

LONDON— 6 months’

sight, Bank Bills 221—5,T Pen ce per Rupee .

lst Class Credits 22} PencewithDocum ents 22} Pence

PARIS—6 months’

sight, Bank Bills Francs per Rupee .

with Docum ents Francs per Rup.

HONG KONG— 30days’ Sight, 220Rupees per 100Dollars .

SHANGHAI— 60days ’ sight, 315 Rupees pe r 100Taels .

In BOMBAY the quotations wer eLONDON, 6 months

’

sight, 22} Pen ce pe r Rupee .

In MADRAS

LONDON, 6 months’

sight, 22} Pence pe r Rupee .


SHANGHAI .

24thDecember 1868.

CLOSING RATES OF EXCHANGE.

ON LONDON Bank Bills . sight

6months’sight 6s od a6s0}d

Billswith Documen ts

ON PARIS

Billswith DocumentsBank Bills . 3 days’ sight Rs. 302 psr Tls. 100

ON BOMBAY Rs. 300}

ONHONGKONG On demand 27} per cent. diaconu15 days’ sight 28

INTEREsr .— 12 per cent. perannum on best securi ties .

PRICES OF BULLION.

MEXICAN DOLLARS Taels per 100DollarsCAROLUS DOLLARSPEXIN GOLD BARS 98 Touch, Tae ls Shanghai Currency per Bar of

Tls. Haikwan we ightHAIXWAN Srcn Taels Shanghai Currency per 100Taels Haikwan

we ight

CANTON SYCEB Taels Shanghai Currency per 100Taels Canton

BAR SILVER 996 Touch or 17 Betterness, Tls. 1 11 °4°0 Shanghai Curreney, pe r 100Taels Canton we ight

COPPER CASH per Tael

In HONG KONG the quotations were at the same tims.

EXCHANGES.

On London , Bank paper , 6 m onths’

, 48 4d. First-class Credits,6 mon ths, 49 4}da4G 4}d.

On BombayRs . and on CalcuttaRs . for 3days’ Bank bills .

On Shanghai, Taels 72 for Bank bills , and Taels 72} for Privatepaper ,at 30days’ .

BULLION.

Bar Silv er , 11} per cent. prem ium ; S cee , 9} per cen t.

prem ium ; Gold Bars, Dols . Gold Leaf, ols . DoubleEales, Dols . to Sov ere igns, Dols . to CleanDo rs, 1} per cent. premium .

CHAPTER VII .

CALCULATION OF EXCHANGES.

HERE the sterling is the fixed rate ,and theforeign mon ey the variable rate , to find the

value of agiven sterling sum in the foreign money,the simple r ule is to multiply the sterling sum by the

variable rate , or rate of Exchange ; e .g. the value infrancs of£100, at the Exchange of is

£ 100 x 25 32-1

, fs .2532°

50

To change agiv en sum of fore ign m on ey into

sterling, the rule is to divide the foreign sum by the

rate of Exchange ; e .g. , the value in sterling of fs . 1275 ,

at the Exchange of is

255 ) 1275

Where the foreign m on ey form s the fixed Un it,andthe sterling in Pence the var iable rate , the rule is

simply reversed . The British ste rling, reduced first to

Pence , is divided by the rate of Exchange ; the quotient gives the equivalen t in the fore ign mon ey ; e . g.

£200, exchangedat 48d per Dollar Span ish,are 1000Span ish Dollars . To change the fore ign money into

sterling, the fore ign sum is multiplied by the rate of

Exchange in Pence ; e . g. , Roubles 5000, at 30d perRouble ,are £625 .

The se are simple and easy calculation s ; but with

CALCULATION OF EXCHANGES. 467

odd sums and fractional Exchanges theyare som e

what m ore complicated, and may occasionally seem

tedious to people not quite familiar with them . Thereare sets of Tables published which greatly facilitatethe work .

There are , however , many little artifices which agood calculator may find ituseful toadopt . When , for

in stance , the French Exchange stands exactlyat fs . 25 ,

and £1632 12s 7d are to be converted in to Francs,in stead of multiplying the sum by 25 , Simple division

of it by 4— having reduced it first to decimals, wi ththe separating point removed two places towards ther ight hand— willwork quicker ; e . g

£1632

40800128 x 25

Div ided by 20 15 °

7d x 25

Div ided by 240

By reducingthe £1632 12s 7d to decimals—1632 629, with the sepaprating poin t shifted two places towards the righthand 163262 9,

and div iding this by 4, the same result is obtained much quicker .

If the Exchange is add i th per cent. of theamount.

Fs . 40815 72}

Making Fs . 40897 35}

For ev ery 2} Centim es add f6 th per cen t. , which makes

per cen t. for 12} Centim es, 1 per cent. for 25 Centim es, 2 per

cent. for 50Centim es , dbc .

468 CALCULATION OF EXCHANGES.

Con v ert £335 149 3d into Francs ,at the Exchange of

in the usual wayand by the m ethod here suggeste d, youcertain lywill find the latte r much more expeditious .

£335 146 3d 335712 5

Div ide by 4Add 1 per cent. for 25 Centimes

5 12;1}

Fs . 8522 90

To con v ert Francs in to Sterling, div ide theam ount by the rateof Exchange ; e .g.

F,S .

or £732 3s 3d.

This is in the ordinary way. A som ewhat more con v enient

way is to multiply the Exchange rate by 4, div ide the sum by theproduct, and multiply the quotientagain by 4 ; e . g.

25 12} x 4 1005

1005 1830408 x 4 732 1632

or £732 38 3d.

The Fren ch Rates of Exchangeall giv e more con v enient figures

for di v isors when multiplied by 4— thus becom es 1001 ;

1007 ; 25 23} 10095 ; 101 ; 102.

There is this Slightdrawback, of course , thatan additional processof calculation is r equired, v iz .

, the multiplication of the quotient

by 4.

In calculating the Hamburg Exchange the con v ersion of the

ste rling Money in to Mark Banco may be effected by multiplyingthe sterling sum , reduced to decimals in the first place , by 13Mark8 Schillinge , or then by what the rate of Exchange falls Shortof or exceeds 13 Mark 8 Schillinge , substracting the last productfrom the first in the form e r case ,and adding it in the latter . To

con v ert Banco Mark into ste rling, reduce the rate of Exchangeto Schillinge , or Half or Quarte r Schillinge , as the case may be ,div ide the Hamburg Mon ey by the resulting figur e ,and multiplythe quotient by 16, 32, or 64,as the case may be .

470 CALCULATION or nxaNOEs.

Lit. Naples. Due 8th June .

7078 ' 75 Leghorn .

Lit. £514 2 1

8th March 1867.

Fl. 12975 . Vienna. Due 10th Jun e ,£1000 0 0

8th March 1867.

F1. Amsterdam . Due 10th

March, Stiv er £108 6 6

10th December 1867.

c . 1000. Paris . 10 days’

date ,25 22; 39 12 10

Lit. Leghorn, 3 months,

19th March 1867.

F1. Frankfort. Due 11th Jun e,£294 12 6

11th March 1867.

Thls. 3000. Berlin . Due 13th December ,6 Thl. 27 Sg. £434 15 8

13th September 1868.

Rhles . 5743-50. St. Pete rsburg. Due 15th

June , 311 £747 17 0

15th March 1867.

Reals 13350. Madrid. Due 15th June,482 £134, 3 11

15011 March 1867.

CALCULATION OF EXCHANGES. 471

ACCOUNTS OF BILLS

Boughtat 3 Months’

Exchange ,allowing Inte rest.

Bought on 17th December 1867, Fr . 6000Paris , due 30th March1868, 253 25 less Interestat 3 per Cent. The Account is madeoutas follows

Fs . 6000 Paris for 30th March 1868,253 2, £236 18

‘

5

Less thM en days’ Interestat 3 per Cent. 0 5 1

£236 13 4

This Bill hav ing to run 13 days longer than 3 months, the

Interest is deducted from the product calculated at the three

months’

Exchange .

Bought 10th December 1867, Fs . 25 31}and 2 perCent. Inte rest.

Fs . 660800for 28th December , Paris .

26 43 Interest 2 per Cent. , 28th

December to l0th March.

Fs . 253 1} £262 2 0

The Intere st for tim e below 3 m onths is hereadded to theamount.

Bought Reals 34484 Barcelona. Due 1 1th April.8730 l 6th

43214

101 Inte restat 5 per Cent.

Reals 43315 at 48g £438 15 9

29th January 1867.

Bought Fl. Amsterdam . Due 20th May,at 1 1 PI. 19 Stiv er £836 16 5

Interestat 2-5pe r Cent. , 20th May to 15thJun e

15th March 1867.

The Interest may be added to or subtracted from either the

foreign money or the ste rling.

472 CALCULATION or EXCHANGES.

ACCOUNTS OF REMITTANCES

OfBiIls Purchased on’

Change, showing the Net proceeds .

Purchased in London on 5thMarch,and remitted to Paris same day.

Fs . 12635 on Par is for 16th Marchat 252 31 £500 12 9

2500 99 1 2

599 13 1 1

1 per m ille Brokerage 0 12 0

£600 5 1 1

Credit Note rece iv ed from Paris for theabov e .

Days. Nos .

Fs. 12635 Par is , l6th March11 1665

2500

1665

15135 Interestat per Cent.

Fs . Value 5th March.

Interest in this Account is calculate d on the Contin entalprin ciple , with num bers. The amount is multiplied by the numberof days the Bill has to run , so as to giv e the equi valent sum for 1

day’

s Inte rest. Thus anumber of Bills may be reduced to 1 day’

s

In te re st,and the total, multiplied by the rate per Cent. ,anddiv idedby 360days (it is customary to take 360days) giv es the Interestfor the whole .

PURCHASE ACCOUNTS .

Purchased in London on 28th October 1867,and remitted to Paris .

Fs. Par is . For 28th Dec . 25 '27i £91 3 0

3101-49 Boulogne 2nd 25 25 122 16 8

Marse illes 28th 25 30 325 6 0

10000 Paris 15th Nov .

385-00 }25 20 39 1 9

Fs . 1462046

1 pe r m ille Brokerage

474 CALCULATION OF EXCHANGES.

Purchased in London 28th January 1868.

F1. 4208 28 on Am ste rdam for 28th April,12F1. 0} Stiv er £350

1 per mille Brokerage 0

£350

Credit note returned from Am sterdam for theabov e .

AMSTEEnAH, 3oth January 1868 .

F1. 42082 8 28th April, 91 days, 3829.

3829 3% per cent. Fl.

StampFl. value 30th January. Fl.

As with Par is, the Dutch Banker may remitasight draft on

London , for

£350 19s 8d Fl. 4167°94,

or he may cov er by rem itting se v eral long Bills to credit

under discount, say£123 4 2 due 3rd March 31 days 2 pr cnt. £0

80 0 0 20th 48 O

141 15 0 10th Apr il 69 0

67 5 4 15th 74 0

412 4 6 1 4 7

Stamp 0 5 9

gper cent. Commission 0 10 4

2 0 8 £2 0 8

£410 3 10at F1. value lst February 1868 .

As the amounts are usually placed to credit in accoun t, it isnot of course n ecessary or e v en customary to remit the exactamount ; in the case here before us, for in stance , more is remittedthan will cov er what has been receiv ed from London .

CALCULATION or EXCHANGES. 475

W ed in London 11th December 1867,

Of B .

“ Hamburg, 11th March at £120.

Credit note rece iv ed from Hamburg,

Bfl 1 1th March, 86 days, 1410Discoun tat 2% per cent.Stampand PostagesComm ission

value 17th December 1867.

Account of remittance from Hamburg for discountand credit.No.

£120 0 0 for 20th February, 25 days, 30000 2 6 Discountat L; per cent.

£120 2 6 at B .“

Comm ission

Value 17th December 1867. B .

“

Purchased in London , 2lst January 1868.

Rbls . 980°4O St. Petersburg, 2lst April,at 321 : £131 48 7d.

Account of realisation of the abov e in St. Pete rsburg on 3lst

Rbls . 980-40 3lst January, 81 days, NO. 794

Discountat 6 per cent.Stamp

Rbls . Value 3lst January .

476 CALCULATION OF EXCHANGES .

Re turn remittance from St. Petersburg.

0 0 on London , 12th April.1 4 9 days at 2 per cent1 4 Stamp

1 per mille BrokeragePostages

0 7 7

£129 13 9 at 32 Rbls .

Value 12th February 1868 .

Account showing proceeds in ViennaOfaBank Post Bill of£100, remitted from London .

Purchased of Bank of England, 18th January, Bank Post Bill.£100 due 25th January.

Note of proceeds of sam e in Vienna£100 for 25th Januaryat 119 55

Interestat 2 per cent.

Comm ission

Value 22nd January 1868

PURCHASE ACCOUN T OF REMITTANCES,

LONDON, 25th Feb-wary 1868.

F1. Frankfort due 4th May 21 days 54

186 00 l0th 15 28

19200 11th 14 27

12th 13 13

198 46 Augsburg due 9th 16 32

13214 8 15th 10 132

286

5105 6 31

255

255at 2 per cent.

Fl. 27674 5 a1207} £230 28 10d.

CHAPTER VII I .

ARBITRATION OF EXCHANGES.

THE Operation s known as Arbitration s Of Ex

changesare , like all other legitimate comm ercialtransactions, based upon the simple maxim— to buy in

the cheapestand to sellin the dearestmarket.Toarbitrate m ean s to decide , to judge of, &c . in

the comm ercial sense the best definition Ofthe m ean ingwould be to choose, to select, to make achoice or

option from among a. number Of different things or

chan ces .

The most primitive proceeding in business is per

haps that Of the ordinary hawker or retail dealer , whopurchases certain description s of goods, in greater or

lesser quan tities,and, putting his profit per cent . uponthe pr ice , sells them in retail, in exchange for theun iversal m edium Money . The wholesale dealer ,who merely buys goods from the merchant or importer ,and sells them to the retailer , can scarcely be held toact inahigher capacity, or to perform asuperior Office ,except in so far that his tran saction sare larger .

The dealer compelled to doaBarter trade , whetherr etail or wholesale ,— to exchangeacer tain comm odityofan estimated settled value ,againstanother , Ofwhich

ARBITRATION OF EXCHANGES . 479

the value has to be determ in ed— departsalready fromthis prim itive mode of doing business , and is calledupon to make greate ruse of his judgment in compar ingand sele cting .

The operation s of the m erchant, or internationaltrader , who imports and exports goods from and toother coun tries,are toacertain exten takin to Barter ;and the elemen ts of calculation that have to be takenin to account in such operations are more numerous

and varied . One of these elem ents is the state of the

Exchanges, the fluctuations of which exercise a. favorable Or prejudicial influen ce as the case may be , uponthe success Of the operation , and the gain expected to

be der ived therefrom . The ever-varying chan ces andcon tingencies of comm erce cause these fluctuation s ;and these chancesand contingencies again are dependen t oumany causes ordinary and extraordinary,foreseen and unforeseen , naturalandartificial . Abun

dan t har v ests or failures of crops,accidents of var iouskinds, wars and revolutions, will materially influencethe Markets and the Exchanges. Speculation andover-trading are Often the m ost effective agen ts incausing disproportion between the supply and the

demand of commodities ; and the supply of and demand for Exchange again obeys the impulse of the

latter . Over-supply of goods causes ascarcity of

Exchange in the place supplied, andan abundan ce Of

it in the place supplying ; astrong demand for goodshas the opposite effect . Thus , when Indiaor Chinahave Shipped goods to Europe in great excess ofwhatwe have Shipped to them , Exchange upon London

480 ARBITRATION OF EXCHANGES .

becomesabundant there . The Indian Bankersat firstmay take Bills upon England, giv ing 1 Rupee for 23%Pence ; when the ir stock of cash gets short, and theyare compelled to import Bullion from Europe at anenhanced cost, they have to ask perhaps 24 or 25

Pence to be paid in London for '

each Rupee givenby them in Calcutta. The goods shipped to Englandagainst these Bills, may have cost exactly the sam e

pri ce in Calcutta, and there may not be the leastdifference in the ir sellin g price in England ; but it isObv ious that at 25 Pence per Rupee alarger paym en t

must be made in Ste rling mon ey here to the holder of

the Bill than at 235Pence per Rupee . The difference

in this case is more than 6 per cen t . ; which may besufficien t not only to cancel the supposed profit, but

to leave an actual loss on the tran saction .

The m erchant therefore must take the Exchangeinto accoun t. His chief factors for calculating the

chances of his operationsareThe pr ice of goods at the Shipping port;The price of the sam e goods at the rece iving

port ;The state of the Exchange ;

and if between these he sees his profit, he operates ;if he sees the con trary, and wishes to conduct hisbusiness on legitimate prin ciples, he ceases Operationsuntil the Markets or the Exchange , or both, turn morein his favor .

He decides or arbitrates according to these indications . The Exchanges with Indiaand distan t portsgenerallyare naturally more subject to important fluc

482 ARBITRATION or EXCHANGES.

France in its turn may be indebted to Holland,andmay thus be in wan t of rem ittan ces on Am sterdam .

Now, ifactual m on ey were to be employed in settlingthe accoun ts, Holland ought to send Bullion to

England , England Bullion to Fran ce , and FranceBullion to Holland . But if the relative indebtedn essbetween the three coun tries , for argum en t’s sake , bealike inamoun t , no such shipm ents, wi th the ir attendan t ri sksand Charges, will be required .

For England may draw Bills on Holland, and sendthese Bills to Paris as paym e nt for her own indebt

edness to Fran ce , and Paris again may rem it them

to Am sterdam as asettlemen t Of the Dutch claim .

These operations will serve to adjust the Exchangesbetween the three coun tr ies ,and to restore the balanceof trade . That convenient in strum ent, the legallyexecuted Bill of Exchange , alr eady acknowledged asthe great econom iser Of m etallic curren cy in the hom e

and in the dir ect in ternational trade , has its sphere

ofusefulness thus further enlarged here in an indirectmanner . It is upon this prin ciple , somewhat forciblyillustrated by the example here given , that Arbitrations Of Exchanges are based ; these Arbitration shave been organ ised into acomplete system of oper

ations, extending over the general field of comm erce .

Although every commercial operation , from the

humblest Hawker ’

s to the highest Banker ’s , which involves option , decision , and judgmen t, may be lookedupon as aspecies of Arbitration , still we lim it the

application Of the term here to the operation s of

Merchan ts and Bankers , as indicative of som ething

ARBITRATION OF EXCHANGES . 483

above the ordinary tran sactions of trade . The foreign

Merchan t makes Arbitration s of Comm odities,‘ in

which he must have regard to the Rates Of Exchange .

The Foreign Banker makes it par t of his busin ess to

profit generally by the differen ces and fluctuations ofthe Exchanges .

The Operations relating toArbitrations ofExchangesmay be classed under three difl

'

erent heads, v iz

l st. Operation s in direct Exchange .

2nd. Operations in indirect Exchange .

3rd. Bankers’ Arbitration s, or Operations in

direct or indirect Exchange , connected moreor less with other Banking Operation s .

The Merchant has an occasional in terest in the

operations of the first and second class, as will beshown in the cour se of this chapter ; the Operation s ofthe third class belong more exclusively to the provin ce

of the Foreign Banker .

The direct Exchanges are those which result im

m ediately from the balance of trade between two

countries,and whichare quoted in the several Courses

Arbitrations of goods can be reduced toas completeasystemas Arbitration of Exchanges . W e recomm end to the reader asplendid work, full Of Practical Illustrations , in the shape of In v oice sand Accoun t Sales for all sorts of Exportand Im port transactions,with Tables of Equivalents computed from compar ison with the

Exchanges,and full of other useful information , compiled by Mr .

Louis W eller ,and published by H . Greenwood, Liv erpool.


of Exchange . The direct (Short) Exchange betweenLondonandParis (see the London Course ofExchange ,page 439) was on the 28th February 1868 , fs .

that between London and Am sterdam was on the 28thFebruary 1868, 1 1 F1. 1 72; Stiver per £3. The dir ectExchange between Paris and Amsterdam (see page444) on the 28th February 1868, was 2oogto 209-g;between Parisand Madrid, 510to 51 1 .

The rates between Paris and Amsterdam , or

between any other two foreign places are the directExchanges in so far as the places themselvesare con

cern ed, but in regard to England theyare also calledthe Cross Exchanges .

The indirect rate of Exchange between Londonandafore ign place is the result Of the cross Exchangeas compared with our direct Exchange . Thus, ifaBill on Paris is bought in London , and rem itted toParis, this is an operation in dir ect Exchange ; but if,as we haveassum ed in the illustration given on page481 , bills on Am sterdam are remitted from London to

Paris , and sen t then ce to Am sterdam , in discharge of

the debt owing by Fran ce to Holland, this is anOperation in indir ectExchange . An in term ediate Exchange has been made use of here , and the rate of

Exchange resulting from the sale of the bills for acertainamount of Fran cs,as comparedwith the amountof Ste rling which they have cost in London , is calledthe indirect rate .

48 6 ARBITRATION OF EXCHANGES.

In making this comparison we hav e lefi out of accountBrokerages and Bill Stamps, which hav e , howev er , to be pd d forBills of Exchange .

W e will nowassume that the house in Paris can discount paperat Three Monthsat 4 pe r cent.

,and that the debtor here , inadditionto Billsat Sight, has also the choice of good Three Months

’ Bills atper W e accoun t for Brokerages and Bill Stamps

byadding these items to the Fran cs or the Sterling, soas to makethe net paym ent in Paris Fs . inall three cases.

SIGHT REMI’I‘I‘ANCE rROH LONDON TO PARIS.

Fs. 9. 1 11

(Noallowance is made for the Stamp in Paris here , becausesuch sight rem ittances are frequently made by Delegations, whichrequire no Stamp ; but if the remittance is aregular Bill of

Exchange ,aStamp of per mille , or Fs . 25 is required. Brokerageis not paid in this case, but this charge isalso often made .)

Drafl;made from Paris on LondonFs.

25 ° for Stampfor per cent. Brokerage

Fs . 3

11 11

Remittance of Thre e Months’ Bill from London to Paris

Fs . 50,530°55 8

Fs. 25°30 10 8

Bro kerage 316 1 19 8

Nett in Paris Fs. 10 4

The Three Months’

rem ittance would thus prov e the cheapest ;

ARBITRATION or EXCHANGES. 48 7

the Exchange , in fact, at which it is bought in this case is v ery

The practised calculator need not make out this full statementin order toarriv eat the results ; he simply calculateson the rates of Exchange .

Thus the Sight Bill on Paris isat net

The Sight Bill on London ,atLess Stamp l per mille

The Three Months’ Bill on Paris,at

Less StampDiscount 1 per cent.

Brokerage here 1 15 per cent.

The last of the three (the Three Months’

rate) is consequentlythe most fav ourable .

This latter m ethod of calculating the value is not so exactasthe form er , because the Centimes on the Exchangeare not takenintoaccount, but itanswers the purpose ofapretty near estimate .

BENITTANCE TRON PARIS To LONDON.

Suppose the Paris correspondent owes Fs. to the house in

London , what should be done in order to giv e the largest sum in

Ste rlinghere if demand Drafts on ParisareatIn London

Demand Remittance on London at

Three Months’ Bills in Parisat 252 54and 3 per cent.

(Discount in London 3 per cent.)The Draft from London on Paris soldatBrokerage 1 per mille 24

Fs . 252 72lnet.

The Demand Draft may be drawn on Stamp of 1d.


DemandRem ittance on London bought in Par is ,free of Brokerage,at net

(Stamp in London 1d.)Three Months

’Remittance bought in Paris ,

th Brokerageand 3 per cent. intere st 25°23fiBro kerage 4 per cent.Stamp on London

Fs .25 °28%

(The 3 per cen t. interest is deducted from the rate in Par is, butmust beaddedagain when the Bill is discoun ted in London .)

The Demand Remittance bought in Paris is therefore the

cheapest, giv ing the most 56 Sterling here .

RENITTANCE TO HOLLAND.

Suppose the Exchange for shortLondon in Holland is Fl.Cents .

Thr ee Months’Am sterdam in London F1. Stiv er (5 Cents

1 Stiv er ) , the Dutch Interestat 5 per cent.Shall Holland draw Short on London , or shall London rem ita

Three Months’ Bill.

Draft from Holland £1000Shortat 1 1 °87i Cents.

F1. 1 187

Brokerage 1 per m ille

PI. 1 1863 12;

Remittance from London £1000, Three Months’

Am sterdam ,

at F1. Stiv er (free of Brokerage)Stamp 6 024}Discount, 5 per cent. 1506 2;

The remittance is therefore the best in this case . In Hollan dthe quotation is made in Florin s and Cents, in London in Florin s

490 ARBITRATION OF EXCHANGES.

REHITTANCE To LISBON.

The sum Of £200is due from London to Lisbon .

Shall Lisbon drawon Londonat 3 Months at the Exchange of

52} (Discoun t here being 2 per cent. per annum ) , or shallaBillat3 Months be sent to Lisbon , boughthereatthe rate of 51—gd (In te restat Lisbon being 5 per cent) .

DRAr r TRON LISBON.

£200

Add Interestfor 3monthsat2per cent. 1

£201at 5243 Milreis 923-253

Bill StampBroke l th cent.rage 8 per

Milreis

REHITTANCE TRON LONDON.

£200to be paid hereat 51§d per Milreis Milr e is

Bill Stamp 0500

Discount 5 per cent. perannum

Milreis 922 127

The latter transaction thus giv ingaslightadvantage .

descriptions of Exchanges, the factors being the Rates of Ex

change , Rates Of Interest, Charges for Bill Stamps and Brokeragein either Of the two places. The calculations may be made either

in full, or simply upon the Rates of Exchange the comparison of

the results will show the course most fav orable to pursue .

ARBITRATION OF EXCHANGES. 491

OPERATIONS IN INDIRECT EXCHANGE.

The indirect rate of Exchange , as explained before , is the ratewhich results from the rem ittance from on e place to another of aBill of Exchange payable in athird place . Thus , if London has toreceiv earemittance from Paris,and Paris, instead of being drawnupon , or instead of rem itting to London , closing the transaction byadirect operation , rem its to London aBill on Am ste rdam ,

the ratere sulting from between the Francs in Paris at which such Billis bought, and the Ste rling in London atwhich it is sold, representsthe indirectExchange .

Suppose Par is quotes Amsterdam at 3 Monthsat Fs. 210for

100Florins ,and the rate in London is 12 Florins per Sterling.

The question is, if Fs. 210are thus laid out in Par is for 100Florins,and 100Florins sell here 12 per what is the Exchange resultingtherefrom between Parisand London By the chain rule

Howmany Francs is £1 Sterling.

If Ste rling 1 12 Florins .

If Florins 100 210Francs .

Answer £1 Fs.

Now, if Paris owes to London acertain amount of money, andif adirect Bill on London costs Fs . per Sterling, it is

obv iously cheape r to send one on Amsterdam instead ; or if London

is the debtor of Paris ,and direct rem ittances to Paris giv e onlyFs. per the Bill on Am sterdam at the indirect Exchangeof is clearly the more profitable .

Charges of Bro kerageare presum ed to be the same in the placewhere either direct or indirect Bills are bought, and also the

Stamps ; but on indirect Bills there is gen erally theadditional Brokerage for the saleabroad.

Supposeam erchanthav ing to make rem ittance to Paris receiv esthe following instruction s : Rem it us dir ect Bills on Paris if you

get them at an Exchange resultingat Fs. here , or you

may send indir ect Bills, our quotations here be ing


Am sterdam, 3 Months

Hamburg

Dollars.

BelgiumItaly

Finding that the quotations in London for the same Ex

changes areAm sterdam , 3 Months F1. 12 per £1 .

Hamburg B .“ Sch . per £1 .

Thi . Sg.

Vienna F1.

Fl. 12032per £10.

Madr id 484, Pence perDollar .

5135 Milreis .

Petersburg 32g Rble .

Belgium Fs. per £1 .

Italy Lire

He calculates sev erally the results, and compares them , to see

which of these Exchanges will giv eamore profitable rate than thedirect one , v iz :

The Formulas of calculationareas followsFOB AMSTERDAM.

Howmany Francs is £1 .

If £1 12 Florins .

Florins 100 2092An swer Fs.

FOB HAMBURG.£1 .

£1 Schillinge .

Mk . B . 100 1855Fran cs .

Answer Fs.

209} per 100Florins .

1852“ as Mark.

366 Thaler .

21 1t Florin s .

209

509

541

341 Roubles .

per cent. perte ,and 3 per cent.

5n

494 ARBITRATION or EXCHANGES .

FOR ITALY.

LireInte re st 5 per cent. per} 36annum for 3 months.

12 r cent. rtepe pe

The Exchanges on Am ste rdam , Hamburg, Madr id,and Belgiumare therefore worse than the direct Exchange ; those on Berlin ,Vienna, Frankfort, Lisbon , Italy, and Pe te rsburg,are better , thelast ofall giv ing the most fav orable return .

Supposeam erchant in London is in expectation of aremit

tance from Berlin . The Exchange for 3Months , London, is quoted

at the tim e in Berlin at Thl. Sg.

which, with Interestat, say 3 per cent. perann . lfi

Makes the Short Thl.

The Quotations in Berlin of Bills on other Townsareat thetime

Am sterdam , 2 Months, Thlr . 1433; per 250Florins .

151 per 300Mark.

81% per 300Fran cs .

per 100Florins .

Petersburg, 3 Weeks 93§ per 100Roubles.

Contemporary quotations in LondonareAm sterdam 3Months

Petersburg

A direct comparison of the Exchanges cann otbe made here , forthe rates in London areat 3 Months,and those giv enatBerlinare at2Months for the first four places,andat 3 Weeks for St. Petersburg.

The differen ce of Inte rest thus arising must first be balanced, inorder to giv e the r ight factors for calculation . This can be done

ARBITRATION OF EXCHANGES. 495

either by reducingall the rates to short, or by bringing them to

lev el tim e . In the cas e here before us, it is better to reduce

the Berlin Course of Exchange to 3 Months’ prices, by deducting

the proportion due upon the respectiv e rates of Interest in eachplace , thus

2 Months’

rate less Interest 3 Months’

rate .

Amsterdam 143% less 3 per cent. 143 14 dec imalsHamburg 151i~ 357 1508 1

2-3Frankfort 56—

33

3Weeks’rate .

St. Petersburg 93§ 6

When the following compar isons can be made

FOR AHSTERDAII.

Howmany Thaler is £1 .

If £1 12 Florin s .

Florin s 250 143 14

Answer Thl. 6/26%Sg.

FOR HAMBURG.

£1 .

£1 Sch.

300Sg.

FOR PARIS.

£1 .

£1 25 32;300

Answer Thlr . Sg.

FOR FRANKFORT.

£10 120

100 56-69

Answer Thlr . Sg.


FOB ST. PETERSBURG.

P 240Pence .

If Pen ce 32} 1 Rouble .

Roubles 100Answer Thlr . Sg.

He had therefore bette r order the rem itting of Bills on Hamburg Or Frankfort, which are cheaper than the others , and whichsell better in London .

Suppose acorrespondent in Hamburg authorises aLondonhouse to draw 3 Months

’ Bills either uponParis, quoted in Hamburg 187 Francs per 100Mark.

Amsterdam Florins 40

FrankfortOr upon Hamburg, direct quotations in London being

Paris , 3 Months

Amsterdam Sti v er .

FrankfortHamburg Sch.

Upon which place ought the Draft to be made to come Cheapest tothe Hamburgfriend.

FOB PARIS.

£1

£1

187 100

Answer—Banco Mark Sch.

FOR AHSTEBDAH .

£1

£1 12025

40An swer Mark Sch.

FOB FRANKFORT.

£1

£10 120

40Answer Mark Sch.


The risk of the merchant is, as arule , limited to single credit

transactions, and to the amount in v olv ed in these , whereas the

Banker , compelled to indorseagreat number of Bills in the course

of his Operations , undertakes risks seem ingly quite disprOportionateto theamount in v olv edand to the profit made . But this is onlyatheoretical drawback ; for in actual practice the characte r of thwer isks is quite differen t from that Of ordinary single credits . In the

first place , av ery large pro portion of Bankers’ Arbitrations arecar ried on in Bullion or Bills at sight, or in other marketableBanking secur ities ; in the second place , the long Paper in whichoperationsare made is considered first-class Paper , and the credit

r isks in v olv ed there in are almost nominal. The local EnglishBanker , who discounts many m illions Ste rlingpe r annum , under

takes the sam e class of liability, and in both cases the question of

r isk in curred and security held rests upon clear , well-understoodpr inciples .

On the whole , the character Of fore ign Bills , often bearing,as they do,anumber of fir st-class indorsements, is superior to thatof local Bills ; at any rate , such foreign Paper , when payable inLondon , is the fav ourite securi ty of discounters here .

Operations in Exchangesare in reality ordinary discount transactions , foreign Bills beingused instead of local Bills,and Ar bitrationsare combined with these operations .

As in the local Discount bus iness , so in the foreign Discount orExchange business, r isks in credits willarise ,which,asaquestion of

Insuran ce , hav e to be prov ided for in theav erage of profits expected.

W ith these remarkswe will hereagain dismiss the considerationof credit value , as amatter quite distinct from the subject of

Arbitrations of Exchanges then constitutearather importantpart of the foreign Banker ’

s busin ess, both here and abroad . He

watches the rates of Exchange , the prices of Bullion ,and of MarketableBankingSecur ities in the different large comm ercialand finm cialcentres . If on comparing the rates he finds thatacertain descriptionof Exchange is dearer in one plac e than in another , he buys inthe cheaper and sells in the dearer of the two . The busine ss is

ARBITRATION or EXCHANGES. 499

promptly done ,andasmall profit realised on it. The operation hasthis important effect, moreov er , that it te nds to adjust the differences in the Rate s Of Exchange resulting from the balance of

trade , and to e v en the var iation s in the prices of all sorts of

m on etary values and secur ities arising from ordinary or extra

The Banker ’s indispensable requisities for conducting Operations of this kind successfullyare

A fair Capital,and first-class credit ; the latte r being ev en

of still higher importance to him than the former .Properarrangements with correspondents of equally good

financial standing in the great commercialand financial centres .

A well-digested general plan ofaction de v ised to efl'

ec

tuallymaintainand con tro l, with the least expenditureof tim e and trouble , the intricate techn icalities inv olv ed In the endless considerationsand e v er-varyingfiguresattendantupon such complicated operationsasCompound Arbitrationsare .

The command ofasuflicient Capital is n ecessary, to enable theBanker to make purchases for Cash at the shortest notice ; butafirst-class credit is still more im portant, as Short or Long Draftsby one correspondent on another play the most prom in ent part inthe Banker ’

s Exchange and Arbitration business , and it is indispensable that the financial position of the operatorh both for the

purchase and sale of Bills—fi should be such as to enable him to

command the m ost fav orable Exchanges .

The arrangem ents with correspondents in the leading com

m ercial and finan cial centres must be bm ed upon most

econom ical principles . The usual banking commission of 5 to

per Cent. is too heav y to adm it of more than occasional andexceptional transaction s . It is therefore customary, between largehouses which hav e agreed upon Arbitrations, to charge no com

m ission to each other , but to work on joint account for profit.

All the charges attendant on busin ess of this kind are cut down

as lowas possible ,as the watchfuland energetic competition fro mall sides tends to reduce the margin to av ery narrow compass,and


the utm ost economy has to be practised, to leav e asmall profit onthe transaction .

This same competition compels also the utmost v igilance inlooking out for business, and the greatest promptness ofaction in

conducting it. The telegraph now-a-days flashes n ews and quo

promise to leav eaprofit margin those whose ordersarrir e first reapthe benefit of that margin . So we clearly see that high personalintelligence and prompt action are elements as necessary to thesuccess of financial operationsas capitaland creditare .

In awork of this kind we can do little more than giv e som e

practical hin ts in reference to the technical part of the business . In

aform er part of this chapte r it has been shown how compar isonsof direct Exchanges are made . To the Banker these are familiarmatters. He deals with them byasystem of rapid m ental calculation of per centages, by which heat on ce reduces the se v eral ratesto “

Short,”to see which of the Exchanges will best suit his purpose .

For indirect rate s, or so called simple arbitrations , tables arecompute d, rangingbetween practicable limits, from which the indirectExchange maybe picked outataglance . The method of computingand using such tables variesaccording to con v enienceand fancy.

BETWEEN LONDON AND PARIS.

The best course to pursue is to drawupageneral list headed bythe short rates of Exchange between London and Paris , exceptthe leading column , which gi v es the Paris rates of Exchange on the

third place . The Arbitration between these rates giv es the n et priceof the Exchange in Paris, expressed in the way in which they

are quoted in London .

The whole of the Par is Course of Exchange may be reduced in

this manner . W e select the Amsterdam and the Madrid Exchangesas M ples of the system .

Am sterdam is quotedIn Paris Francs per 100Florins .

In London £1 Florins .

In Paris 100Dollars Francs .

In London 1 Dollar Pence .

502 ARBITRATION 01°

EXCHANGES.

Now if the price of three m onths’

Amsterdam in London is

Fl. Stiv er— in Decimals — the price of the sam eExchange in Paris 21 14, the short rate between Londonand Paris

aglan ce at the table willat once show that the arbitratednet rate in Paris is Amste rdam is consequently cheaper inLondon than in Paris by 063 Cents , equal to 5 per mille . Again , ifthe short rate between Londonand Paris is Amsterdam beingquoted in London at in Paris at 2093, the table will giv ethearbitrated n et rate in Parisas which is 3per cent. cheaperthan in London ,

But we hav e to take into account the fluctuations of the

Exchangesand the charges upon the transaction .

The quotationsare notmadeatfixed rates,asassumed in the tablethe rate for Amste rdam , for instance , may be giv enas St.

to and the quotation in Paris may be 21 1a The selec

tion of the rate s that may be fairly depended upon for profitablebusin ess transactions is amatter in which the Operator must beguided by experience , and by his kn owledge of the customs andpractice se v erally obtain ingat the respectiv e places,assisted by suchspecial facilitiesas the position of his house mayafi

‘

ord him . Asamatter oftheory, theao-calledMedium rate—that which lies betweenthe two extrem es of quotation—ma.y frequently be takenas the oneatwhich business can safely be done, withafair prospect of profit.

The charges generallyare q

315 per cent. Brokerage in London ;

A} per ce nt. Brokerage in Paris , for sale of Bills ;4 per cent. Brokerage in Paris , for return Remittance315 per cent. Bill Stamp in London—making in all 4 per mille on

the transaction ; if the margin shown in the table does notafi‘

ord

m ore than ampleallowance for thisaggregate of charges , the Opera,tion is not practicable . W e hav eassumed here that the business iscarried on by firms operating on joint account, without charge of

Banking Commission . Such firm sare ofte n in aposition to remit to

each other withoutBrokerages,and to reduce the charges to be takenintoaccount to 3 or 25 per milleand less ; howev er, 4 per mille maybe taken as the fullaggregate of charges on Arbitrations .

If the price of Thr ee Months’ Bills on Madr id is 48§ Pence in


London , 514 France in Paris ,and Short between Londonand Paristhe table giv es the rates for Madr id in Paris

At

Deducting charges , 4 per m ille '196

The London rate being 48°750

A Profit of 0154 Penny,

orabout 68 4d per cent. , would be the result of rem ittingMadr idto Paris .

Madr id quoted in Parisat 511 , in Londonat48}Pence ,and ShortParisat the rate resultingwould be 484 30Add charges, 4 per m ille

48 624

Which, compared to the price ofMadr id inLondon , 48 750

Leav esamargin of 0126 Penny,

orabout 23, (215 ) per mille .

TABLE or PRICES or AMSTERDAM BETWEEN LONDON AND BERLIN.


Florin s £1 Ste rling.

If£1 Sterling is Sg.

Thaler 143 250Florin s.

Answer Florins .

In this Table the 2 months’

Exchange on Amste rdam is quotedin Berlin, whilst London quotes the 3 months

’

rate . To adjustthe London to the Berlin price , 1 month

’

s interest has to be takeninto account ; and as this additional month makes Amste rdamcheaper , this interest must be added to the London Exchange ;which makes,

At 2 per cent. perannum ,anaddition of0020

2; 0-025

3 0-030

3; 0-035

4 0-040

5 0-050

Charges for Brokerage , 6°C ,are the sam eas before .

A complete set of Tables, embracingall the different Courses of

Exchange , may thus be constructed for comparison with the LondonCourse . The operations contemplated in these Tablesare usuallycalled Simple Arbitrations . In Compound Arbitrations the operation embrac es m ore than three places of Exchange .

Thus, finding that Amsterdam is cheaper in Paris than in

London , the London house may order from Par is asupply of

Amsterdam for its own market, and, instead of rem ittingBills onParis in return , or authorising drafts , it may, finding that Bills on

Parisare Cheaper in Hamburg than in London , cause Hamburg tocov er Paris by aremittance from there ; Hamburg may be cov ered

in its turn by adirect rem ittance . These Operations constitute aCompound Arbitration . Or , should the price of Bills on St.

Petersburg be m ore fav orable (higher ) in Hamburg than in London ,the London firm may cov er Hamburgbyaremittance on St. Petersburg, which would change this operation from Compoun d Arbitration to what is technically called Cir cuitous Arbitration .


lower the price at once ; ev en in London purchases or sales to theamount of or hav e asensible effect upon certainExchanges . Occasionally, howev er , when there is acurrent of

Arbitrations of Exchange s may be combin ed with Stock Exchange Operations, i .6 . purchas e and sale of Stock, Securities, M .

The variations in the prices of Foreign Funds, Railways, 4°C ,between

two placesare takenadvantage of for either selling or buying, uponthe same general principle upon which Arbitrations of Exchanges

As an illustration of the system we select, for instance , theLombard Railway Shares (called in Englan d the South Austr ianand Lombardo-Venetian ) . These Shares are nominally worthFs . 500or £20; butat the present time (March 1868) the price inLondon ranges from £14} to in Par is from F8 . 373 to F8 . 376 .

Transactions in selling and buying in both Citiesare effected for

the settlingdays in the middleandat the end of each month.

At the Exchange of F8 . per F8 . 373are equal to£14 168 4d, so that £14 108 or £14 12s 6dwould leav eamargin

To facilitate calculation,aTable may be constructed upon the

P534? 367 368 369 370 371 372 373 374 375 376 877

This Table can of course be extended to suitall possible fluctuation s in the price of the shares .

The Charges for Brokerage here and in Paris,and the Brokerage on the Exchange must be taken into account ;also the Cost

of forwarding the Stock, unless the latter item be av oided through


acounter operation . These charges may in the aggregate makeadifferen ce of fi ths per cent. orabout 10Centim es on the Exchange .

(Operators always endeav our to economise charges by specialarrangem ents .)

Difi'

erences in the manner of valuingand quoting Stock in two

Stock.

The Unite d States 196 Bonds , for instance ,are valued in Londonatthe oldAm erican Exchange—4s 6d per Dollar . The div idends of

6 per cent. per annum , which are paid half-yearly, fall due on the

l etMayand 1st Nov ember ,and the price in London rises or fallswith the accruing of these div idends , standinghighest just before ,and lowest justafte r the lst Mayand lst Nov ember .

In Frankfort-ou-the-Main e , on the other hand, the Dollar 18

takenat 2} Florins, whichat £10 120Florins, giv es 4s 2d per

Dollar ; when sales ar e effected, the actual interest due on the

Coupon up to the date of deliv ery isadded to theamount.To compare , therefore , the London price with the Frankfort

price , this interesthas first to beadded to the latte r . Thus, supposingthe price in Frankfort to be , on the 15th June 75

There has accrued one-and-a-half months’

interest at 6 per cent. per annum , which

makes on 100Dollars Dollar to be paidextra, or 1 Dollar upon the price of 75 1

Theactual value being thus 76 per 100Dollar sThe price in Londonat the same time may be 704,at 46 6d pe r

Dollar .

The calculation on the Exchange would therefore standFlorins 200Shillings

IfShillings 1 Dollar .

London Dollars 100nominal.Nom inal 100 76 in Frankfort.Frankfort Dollar 1 2 5 Florins .

Answer 1 19§ Florins .

Two sets of Tables are accordingly required here—v iz ., on e

Table giv ing the priceat Frankfort, with the interestadded thereto,as here subjoined

VALUE Ar DIn ERENT rERIons, INCLUDING M M .

77;

:F ‘

76 764 76 }

764 771

764 761 76} Wt 771

76}

764

76}

76}

761

76}

77

771

77t

771

771

77;771

77;

76}

764

76}

77

771

771

771

771

771

771

774

777

78 78;78}

77

77}

771

771

774

77}

78

78}

784

781

781

78}787

77!

77}

774

77}

78

78

78}

784

78!

78}

781

784

78}

79

78} 79;

77! 78

77} 78}

77} 784

78}

78}

78!

78}

78}

79

79}

794

797

79}

78}

78!

784

78!

787

78}

79

79}

794

791

794

79479!

79!

Andanother Table Showing the Arbitrated Rate s of Exchangeresulting from the prices in Frankfortand the prices in London .

119 1 18} 1 18} 1 18:1 184 1 18 1 174

1194 1 19 1 183 1 181 1 181 1184 118

119} 119} 1 19 1 18} 1 18; 118} 1 18} 1 18

1 19; 1 191 1 191 1 19 1 18} 1 18; 1184 1 18; 1 18

119} 1 19; 119} 1 194 1 19 1 184 1 18} 1 18} 118} 118

120 1 191 1 194 1 191 1 194 1 19 1 18} 1 18} 1 18} 1 18}

120} 120 119} 1 104 1 194 1 19 1 18} 1 18} 118; 1 18; 1 17;

120} 1204 120 1 19} 1 19; 1 19i 1 194 1 19 1 18} 1 18} 1 18; 1 18; 1 17}

120; 120; 120; 120 1 191 1 19; 1 19; 1 19; 1 18} 1 18} 1 18} 1 184 1 18 1 17}

12o;r 120; 1201, 1 20} 120 1 19} 1 19; 1 19; 1 19} 1 18; 1 184 1 18} 118} 1 18} 1 17;121 1202 120} 1203 120} 120 1 191 1 194 1 19!1 19; 1 1s;r 1 184 1 184 118} 1 18

121 1205 120; 120; 120; 120 1 19i 1 19} 1 191 1 194 1 18; 1 18} 1 184 1 184

121 1204 120; 1201 120; 1 19; 1 197 1 191 1 194 1 19 1 18; 1 18:1 18}121 120; 120; 120; 120; 1 19; 1 191 1 191 1 191 1 19 1 18:1 18:

1 21 120} 120; 120:120; 1 19; 1 194 1 19; 1 194 1 19 1 18;121 1204 120; 120} 120 1 19; 119:1 194 119} 1 19

121 1201 1204 1204 1 20 1 19; 1 19:1 19} 1 193

CHAPTER IX .

INFLUENCES AFFECTING THE EXCHANGES.

HE influences which affect the Exchanges aremanyand varied . It is impossible to combineand

work them in toageneral system that m ight ser v easthe ground work for establishing som e intelligible com

prehen sive principle to guide us to aproper un derstanding of the Exchanges and their m echanism andfluctuation s, soas to enable us thus to foreseeand forestallthe latter . Statistics have , indeed, been most indusatriouslyand diligently collected,and Tables have beencarefully compiled, showing the fluctuation s of the Exchanges in their several phases, and tracing them to

the causes that have chiefly produced them . But,

however valuable these tables unque stionably are ascon tr ibution s to the statistics of the subject, theywouldnot ser v e us much in our attempts to foresee andforetell futur e fluctuations ofasim ilar nature ; for themaxim that the sam e causes will produce the sam e

efl'

ects does notapply here ,as the tim esat which,andthe condition s and circum stan ces under which thesecausesare operatingare n ever whollyalike in any twoperiods ; and as there arealwaysanumber of modifying

’and disturbing influen ces at work in the matter

INFLUENCES AFFECTING THE EXCHANGES. 51 1

tending to produce new combinations totally differen tfrom those to which the tables of the fluctuations of

Exchanges refer .

In certain special cases, indeed, where we havebefore us some extraordinary con tingen cy, suchas anexceptionallyabundant harvest, oragri evous failure of

the crops, or som e great political movement or even t,the effectwhich suchacon tingency is likely to have uponcertain Exchanges may be foreseen and predicted, toagreat exten t, at least ; but hereagain the m isfortun eis that the effect produced is so closely coin ciden t withthe even t that very little time is afforded for prediction .

The term Exchanges, or Foreign Exchanges, is lookedupon by manyas m eaning simply exchanges betweenthe respective Coins or Currencies ofdifl

'

erent coun tries.

This is agrievous error ,as it leaves en tir ely out of

accoun t the m ost materialand essen tial featur e of thequestion— viz . , the elem en t of in ternational indebtedn ess . For the sake of simplifying matters, we willaton ce dism iss here from con sideration the so-calledRates of Escha/nge, resulting from the diversities of theexisting Monetary System s . In so far as the realquestion of the Exchanges is con cerned, it matters verylittle indeedwhether we have to dealwith Ste rling, orFran cs, or Dollars, orany other Curren cy,as the relation s of value which these Coin s bear to each otherarealtogether amatter of ate chn ical nature , which hasbeen already thoroughly exhausted in the precedingparts of this volume . So we will, for greater clearn essand simplicity ’

s sake , proceed here as if there existed

512 INFLUENCES AFFECTING THE EXCHANGES .

no different Currencies ; in fact, as if the Un iversalCoinage hadalr eady been fully in troducedandadoptede v erywhere . Let us assum e the £3Sterling to be the

Un iversal Un it,as being the most fam iliar Coin to thereader . Upon thisassumption there will bean endaton ce , of course , in so faras the prin cipal subject of ourcon sideration here is concerned, to the presen t so-calledRates of Exchange ,as resulting from the diversities of

the existing Monetary System . This, however , willonly enable us to simplify the mode of expressing theRates of Exchange ; it cannot act in any way uponthe circumstan ces which influence the rise and fall ofthe Exchanges . Australiashowsacase in point ; theMon etary System is the same thereas in England, yetthe Exchange wi th the m other coun try is e ither ataPremium or at aDiscount . These very terms ,Premiumand Discount, which figure nowas item s inthe calculation of the Rates of Exchange , will alsoserve to express the variation s in the Exchanges withother coun tries, so soon as the projected Un iversalCoinage System shall be generally adopted . The

per centage of this Prem ium or Discoun t will rangewi thin the lim its of the costand charges for forwarding Hard Cash from the one country to the other , butit will not exceed these lim its.

An absolute un iversal Parity of the Exchangesbetween the different coun tries cannotwell be expectedto come to pass in this World, suchas it is con stitutedn ow. It iswith nation s the sam eas with corporation s,with corporation s as with firm s, and with firm s aswith individuals ; they may all alike be looked upon


naturaladvan tages . They have bothaproud historybehind them ,and they have had the ir period of powerand wealth ; yet, how wretchedly inferior is the ir

pr e sent position ! How wofully they are laggingbehind most other European Nation s in industryandcommerce ! The people seem to be indolent andslothful,as there appears to be no sufficien t en ergy in

them to organise asystem of productive industry,suchas con stitutes the foundation of the wealth andwell-being of other Nation s . Theyare clearly extravagan talso in their spendings ; and the sound prin

ciples of Politicaland Social Economy seem to be butlittle understoodand practised by them ,

for we find

the Balance of Trade going con stan tlyagainst them .

The Credit of the two countries isatavery low ebb,

and the Exchanges are perpetually again st them .

There are other coun tries m ore or less in aSim ilarplight— Russia, to wit, and Turkey, and the SouthAmer ican Republics .

France , Germany,and Belgium rank n ext to GreatBritain in trade , industry, and national wealth . The

progress made by these countr ies in these re spectsdur ing the last twen ty year s is truly aston ishing .

Som e twen ty year sago the Exchanges wer e constan tlyagain st them , Whilst n owwe find them usually in the irfavor , even the Exchange wi th England . In fact, inthe great race for wealth, though these coun trieshave not yetattained to England’s high position ,

they

have been of late fast gain ing upon he r .

In the Un ited States of North Am erica, on the

con trary, we have an instance of retrogression, not

INFLUENCES AFFECTING THE EXCHANGES. 515

altogether imputable to the late Civil War ; for it wasanotorious fact before that time that the people of

the States had exceeded the bounds of prudence , by

importing alarger share of luxur ies for the ir con

sumption and enjoym en t than the ir exports could

possibly warran t ,and that they had in thus far beendeparting from the sound principles of PoliticalandSocial Economy . With the proved energy of the

Amer ican character , the vast intelligen ceand industryof the American people ,and the ir unbounded spirit ofenterprise , it may, however , safely be affirmed thatthey are sur e to recover the groun d lost by them

sooner than other Nation s could expect to accomplish it, and they will speedily appear againamong the forem ost in the race .

It may be laid down asageneral rule that, in proportion as aNation advances in in telligence andindustry, and cultivates abetter and clearer understanding of the true pr inciples of Politicaland SocialEconomy,and gives them awider andam ore rigorousapplication , so will its wealthand well-be ing improve ,and so, consequently, will the Exchanges turn in its

Let it be distinctlyunderstood, however , that whenwe Speak here of the Exchanges turningin fav our or

againstacountry, or beingfav ourable or unfav ourable toit, we always mean the averages of the Exchangesgenerally, and not simply some special Exchanges,which cann ot be guiding in this respect . Thus, for

instance , the Exchange between England and Francemay foralong period keep unfavourable to England,

516 INFLUENCES AFFECTING THE EXGHANGES.

owing e ither to the condition of the direct tradebetween the two coun tries tellingagainst England inthis much that she imports more largely from Francethan the latter coun try imports from her , or to som e

indirect cause ; whilst the Exchanges generally, taken intheaggregate , maybealtogether favourable to England .

Again , when we talk of the Balance of Trade ,andsay that it is in favour of one coun try, or that it isagain st som e other coun try, there is an error very

commonly comm itted, which con sists in looking uponthe matter as am ere question of import and export ,andassum ing that the country which has supplied toanother coun try commodities to alarger value than ithas received from that same country, has the balanceof trade in its favor . It must be adm itted that,at thefirst blush

,this looks like aperfectly natural and

rational conclusion . A has supplied B with goods tothe value of £1000,— B in return has supplied A with

goods to the value of £800 only, and B accordinglyowe s £200to A . However ,as we Shall have occasionto Show, the Balan ce of Trade is not m erely the result

ofan interchange of commodities between Nation s ; itis not simply the exce ss of imports over exports , or

v ice v ersa, on on e side or the other ; but there aremany other elemen ts to be taken in toaccoun t in thematter , which give amuch wider m eaning and application to the term .

The subjoin ed Table ,taken from Martin ’

sYear Book ,1868 (5th Edition— MacMillan Co .) give s the returns

of the Importsand Exports of the various countr ies

518 INFLUENCES AFFECTING THE EXCHANGES.

Great Britain , we see , figures in this Table“forValue of Imports in 1866

Exports

Showingan excess of Imports ov er Exports of

which certainly looks arather awkward Balanceagainstus.

The Bullion busin ess of this coun try for the same

period was return edImports for 1866 £34,287,l39

Exports

ShowingaBalance of

Bullion retained in the country ?

This retur n , issued by the Custom House , only refers to Goodsd Produce passing in and out of the coun try.

1' The Bullion Statisticsare kept separate . As regards these latte r ,

anannual error of som e has to be taken intoaccoun there(see page We take this Opportunityalso to remark thattheabov eimportand export statistics do not seem quite accurate in the estimated valueassigned to the goods ,as may eas ily be shown byaddingtogether the imports and the exports of all coun tr ies, when the

form er will Showagross aggregate of the latte r ofandaccordinglyatotal excess of imports ov er exports

of £87, If this excess be equitably div ided among the

different countries concerned, the apparent balance again st som e of

them , Belgium for in stance , will disappear , whilst in the case ofsom e other countr ies, England for instan ce , itwill be considerablyreduced. Another item for consideration in this matter is that theCustom House valuation of the imports in to Englan d does not giv ethe actual am ount to be paid for the goods imported, the sam easthe m erchant’s valuation of the exports from England does not show

theamount actually realised by the goods exported, for which paym ent is receiv ed here . These returns, therefore , cannotbe consideredconclusiv e e v idence of theabov e large balanceagains t England.

INFLUENCES AFFECTING THE EXCHANGES . 519

At first Sight it may not appear easy to reconcilethese two return swith each other . We find, on the one

side , that we have imported worth m oreGoods than we have exported, which , upon the gen eralvulgar notion Of the Balan ce of Trade , would require to

be covered byan equivalen t amount of Bullion ,to be

suppliedand exported by us . It is self-eviden t that,if this were truly the case ,an annual drain of Bullionto suchaformidable extent as this would in averyfew years impover ish and ruin us . Whereas, on the

other side , we find that, so far from our having to sustain this drain , we actually retain , out of the Bullionpassing through the coun try,aBalance of

in our hands . How is thisapparent con tradiction to beexplained ? The explanation is very simple . It is , asstate d before , that the excess of Imports over Exports,or v ice v ersd, does not con stitute the tr ue Balan ce of

Trade . England has agreat many other resourcesbesides her export trade . She possesses alargeCapital, the frui t of many years intelligen t Industryand prosperous Comm erce , which , besides affordingample funds forall en terprises at hom e , is invested to

avery considerable amoun t in num erous undertakingsand Speculationsabroad , which yieldagrossaggregateOf profits , com ing to this coun try in avariety of ways,more than suflicient to cover the great excess of

foreign produce consum ed by us over andabove whatour exports would seem to warran t .

The most importan t investm en ts Of this kind , which

England has madeabroad, may be classed under thefollowing fiv e heads, to wit

520 INFLUENCES AF

FECTING THE EXCHANGES .

1 . Foreign State Loans held by English Capitalists,on which large sum s have to be periodically rem itted

to the holders for inte rest, in Coupons payable e ither

here or abroad .

2. Investm en ts in Foreign Railways and Mines, ‘and num erous other en terprises, yielding in terest anddividends in the same way to the English Capitalists .

3 . Use of English Capitaland English Comm ercialCredit in all sorts of busin ess transaction s, dir ectly orindirectly conn ected with this country, or carried onbetween other countries through English mediation ,

from which profit is derived in the shape of Comm ission , Prem ium s of Insuran ce ,and otherwise .

4 . The large Mercantile Navy of England, whichmakes this country the prin cipal Car rier , not only forthe British Trade , but also for the Trade betweenmany other Nation s . This yields con siderable annualretur n s for freight to the English ship own ers.

It may be almost needless to remark here that the largein v estm ents of Capital in the English National Debtand in BritishRailways and other Hom e ente rprises are matters which hav e no

conn ection with the Coun try’

s fore ign in tercourse . Still we maypoin t out,as ,

amost important feature in the matter , in so far asin ternational in debtedn ess is concern ed, that England holds n earlythe whole of her own State Debtand Railway Stock,av ery smallproportion in deed of these secur ities being held abroad ; whereasEnglish Capitalists are holders of almost e v ery kind of Fore ign

Stock, ev en ofacertain am oun t of Fren ch Rente s andagreat dealof French Railway Stock . German Stockalon e formsan exceptionfrom the rule , being held exclusiv ely in Germany .


England the great Creditor of many Coun tri es, andconstitute s in itselfan overwhelming balance in favorOf Great Britain in the gen eral account of relativeinternational indebtedn ess . Although that portion of

the Capital of the Coun try which is placed in investm ents abroad, is not imm ediately available , like the

annual in terestand dividends upon it, but falls due inlonger or Shor ter per iods of tim e , it will ultimaelycom e back to the coun try ; it may even , in partat least, in case of need, be realisable in otherMarkets.

The Country possessed of this wealth might foryears con tinue to live actually on its Capital, andyet not be brought down to the low financial condition in which many other nations find them selvesplaced .

For Fran ce the Table shows

Exports in 1866

Imports in 1866

Which leav esabalan ce ofin favour of that country .

We see thus that France , unlike England, clearsav ery largeactual profit on her industry, which wouldplace her in afavourable position even if she had no

other resour ces . But She has other resources, though

not quite so exten sive as those of England . She hasinvested con siderably in Foreign Loan s,and is largelyin terested in many Railways and industrious en ter

prisesabroad . Her Banker sandMerchan ts extend thesphere of the influence of their Capitaland Credit year

INFLUENCES AFFECTING THE EXCHANGES. 523

by year more and more . Her Mercan tile Navy mayalmost be said to rank n ext to the English now,

although there is likely to beachange in this respect,so soonas the Un ited States of North Americashallhave fully recovered the ir former position . Paris, withher powerful attractions for visitors, who flock to the

place fromall parts of the World, spending the ir m oneythere , may be looked upon in the light of am ostlucrative investment made by France . The Bullion

brought annually to that City by foreign visitors,andspent there , may be reckoned by Millions Sterling.

Whilst the French on their part are notatravellingpeople , like the English, and do not carry away muchBullion from their Country to Spend itabroad . With

all theseadvan tages in her favour it is no wonder thatFran ce Should have made rapid str ides of late in theaccumulation of wealth, and that she should havegathered m ore Gold than even England.

Germany we find returned asImporting in 1866Exporting in 1866

Leav ing thusabalance of

against that country. But Germany also hasaverylarge Capital invested in Foreign Secur ities ofall kinds .

In Un ited States Bonds alone more than 400MillionsDollars have been taken by her in the last few years .

Her own Hom e Secur itiesarealmost exclusively held inthe country . The North German Mercantile Navy islarge ,and takes acon siderable share in the World’sTrade . Numbers of visitors flock to Germany from


other coun tries, whilst the German s them selves, whenthey go abroad, do so m ostly for business and profit,and not in search of pleasure . Many of them , whenthey have made the ir fortunes abroad, return to

Germany, bringing their acquired wealth with them ,

which thus goes to swell the general stock of the

country .

Holland figures in the Table withImports for 1866Exports

Showingabalance of

against the Dutch .

ButHolland may be regardedasakind of Englandon asmaller scale , with this difl

'

erence , however , thatthe latter country is proportionally much stronger in

industrial enterprises than the former . Hollandderives large profits from her trade with other

Continen tal nations. She is possessedalso of con siderable wealth, acquired in the times of her commercialglory, when She ranked almost first among mar itime

nations ; which wealth is invested in fore ign stocks

and secur ities, more particularly Austrian and Russian .

Holland’s Eastern or Indian Empire , unlike EnglishColoniesand Dependencie s, yields the Mother Coun tryahandsome annual revenue . The mercantile nav y of

Hollandalso falls into the scaleasasource of in com e .

Asageneral rule , Dutchm en , being of aphlegmatictemperam ent,are not much given to travellingabroad,so they do not spend much money out of their own

country .


States of North Americaare burdened with largeState Debts, held m ostlyabroad,and en tailing thusaheavy charge upon the coun try for the paym ent of the

annual interest to the foreign creditor , for which

Bullion has to be exported .

For Austr iathe Table Showsan excess of exports

over imports to the am oun t of but she

has to pay annually for the In terest on

her debt ,and acon siderable portion of these thirte enmillion s has to be sent out of the coun try ; whilst shepossesses little or no investm en ts in the secur ities of

other coun tries. She has, indeed,arespectable Mer

cantile Navy, and great natural resour ces ; but theheavy State expenditure and the finan cial Shifts towhich her Governm en t is forced to have recourse actas m ost serious drawbacks on her efforts to gain afairsurplus of Bullion from the Ordinary Chann els . The

only resource left under the circum stan ces is an occasional loan con tractedabroad, which leads toakind ofspasm odic importation of that m ost desirable comm odity— Hard Cash .

To judge by the figures which are returned forRussia, that Empire would seem to balance her TradeAccoun t . Unfortunately for her the figur es returned

are lookedupon as slightlyapocryphal. Russia’s largeState Debt is held abroad, whilst she holds no stock

or securities of any other nation . Besides the heavydrain upon her resources,which the paym en t of in terest

on her National Debt to the fore ign creditor involves,she loses con siderable sum s ofm on eyannually throughthe propensity of her wealthyaristocracy to indulge in


travelsabroad , with that expen sive display and pompof which sem i-barbarous nation s are so fond . Thismayaccoun t for the fact that even with the rich yield

Of Gold derived from the Ural Moun tains , the balan ceoftrade can barely be turn ed in her favour mom entarily,by the common expedien t ofan occasional additionalState Loan raisedabroad .

The Un ited State s figure in the Table foran excessof imports over exports in 1866 to the tun e of some

in addition to which they have to payanenorm ous yearly interest to the fore ign holders of theirState Bonds . The shipping Of the coun try has beenall but de str oyed in the late Civ ilWar , and even now

the States have not yet got out of political troublesand in te rnal strife . The enormous balan ce Of tradeagainst the great Republic is coun terpoisedat presen ttoagreat exten t by the con tinual rem ittan ce of Debt

Bonds to Europe , where capitalistsare still inclin ed to

invest in them , despite occasional falls in the pr ice of

these Securities . The characteristic en ergyand intelligen ce ,and the in dom itable spir it of enterpr ise of the

Am erican people , combined with the imm en se naturalresources of the country, will no doubt in time to

com e do battle successfully with the State of the

Exchanges which is likely to result from the presen tm ost un satisfactory position ofaffairs .

Indiashows, in 1866 ,abalance of in

her favour . Con sidering that except during the few

years of occasional stagnation of trade , Indiaisalwaysan importer of Bullion toavery considerable amoun t,sufliciently so indeed to alarm Europe , the Anglo

528 INFLUENCES AFFECT ING THE EXCHANGES .

Indian Empire ought to grow rich fast . The investm en ts made by English Capitalists in IndiaStock,andthe wealth which English settlers in Indiawithdrawfrom the country upon the ir return to England ,together wi th the large expenditure of the Anglo

Indian Government, unquestionably tend to check tosome extent the in crease of m etallic wealth in the

Indian Empire ; yet, notwithstanding these drawbacks,Indiapossesses an imm ense store of the solid circu

lating m edium , almost all in Silver . Unfortunatelythere is good reason to believe that the greater partof the Silver imported in to the coun try is hoarded bythe Natives, and hidden from sight ,

‘and thus keptfrom perform ing its legitimate function of circulatingm edium . Indiamay be said to afford an exceptionalinstan ce of the Balan ce of Trade dependen t simplyupon the import and export of comm odities , andcon sisting m erely in the excess of the one over the

other . But, as we have shown by the example of

Great Br itain and other countries, this is simply the

exception . As arule , the Balan ce Of Trade and themutual indebtedn ess Of nation s are not m erely the

result ofan in terchange of comm odities between them ,

but Of avariety of other elem ents combined withthis .

We will now offer afew remarks on the actionwhich is exercised upon the Exchanges by cer taineven ts or contingen cies that are more particularlycalculated toaffect them , to wit, warsand revolution s ,or political even ts likely to lead to them .


war includedamong its horrors also the confiscationor destruction of pr ivate property, the financial andcomm ercial ruin of the Member s of the defeated State swas looked upon almost as acertain and inevitablecon tingency . No wonder then that threats of warshould be calculated to causeapan ic in the Exchange sas in all other tran saction s .

In revolution s, where the shock ism ore likely to beconfined to the nation con cerned , the panic create damong the commercial and finan cial part of the com

mun ity tendsalso at first to the Speediest realisationof claim s on foreign debtors ; whilst foreign creditors,in the ir turn , strive Of cour se with equal eagerness toforce on asettlem en t of their claims . But when thefir st rush Of the pan ic is over , astrong desire takespossession Of the m inds of the wealthy to place the irtreasures out Of reach of the danger which seems to

threaten them at home , and to confide them to the

safer custody of fr iendly nations ; which makes theExchanges turn in favor of the places Of safety chosen .

The demand for Bills payable abroad increases , andthe rates riseaccordingly, in proportion as the dangerseem s to increase ,and they subside subsequentlyagainin proportion as tranquillity is restored and secur ity

regain ed . The movemen ts and fluctuations expe

r ien ced in the Exchanges at the tim e of the Fren ch

Revolution may beadducedasacase in poin t .During the late CivilWar in the Un ited State s of

North Am ericathe Exchange on Englandand Fran cein New York fell much below the Bullion Par of

Exchange ; it is not too much to say that Gold was


actuallyforced away from England for acon siderablelength of time , un til the Balan ce of Trade due to theUn ited States from previous year s had been fullyexhausted and absorbed. Some tim e after , althoughthere had beenafalling off of imports from England,andalthough Am erican Bonds had been largely placedin Europe , the curren t ofGold turn ed back to England .

This wasatatim e when the CivilWar stoodatamostcritical juncture ,— shortly after , when afl

'airs took abetterand brighter turn , the Exchange recovered .

If, in consequence of in creasing finan cial embarrassm ents, abelligeren t Nation is compelled to haverecourse to the creation ofaforced Paper Currency,which is sure Speedily to suffer considerable depr eciation , this new elemen t in troduced into the matteradds its disturbing influence on the Exchanges ; and,unless the foreign Creditor stipulates expressly for thesettlem en t of his claim s in Metallic Currency, he iscompelled, in order toavoid the loss which paym en t inthe depreciated Medium must otherwise inev itablyentail upon him , to seek compensation in aproportionate rise of the Exchange .

Thereare numerous special causes Operating uponthe condition of the Exchange s, some Of which areknown beforehand,and can accordingly be taken dulyintoaccoun t in estimating the chan ces ofarise or fallin certain Exchanges ; whilst others come down uponthe marke t suddenly and un expectedly . Thus, for

instance , when the travelling season commences,Exchange on Fran ce is sure to be in demand in London .


Chequesand Bills drawn by British travellers on the

Continen tare rem itted to London ,and Bullion has tobe sen t out in return . The effect of these withdrawalsof Cash tells again st us in the rate to the extent Of

1 to 2 per mille .

On the so-called settling days at the Stock

Exchange the purchase or sale of secur ities between

London and Paris is sure to create am ovem en t in

e ither direction ,according to the Balance due to the

selling place .

The Stafl'

of Iafe— Corn— exercises con siderableinfluen ce upon the rates of Exchange . A good

harvestat hom e makes us m ore independen t of fore ignsupplies, and proportionably lessens the drain uponour m on etary re sources for Corn to be imported fromabroad . A well-founded apprehen sion Of abad or

indifferent harv est in any of the Com -supplying landsmakes the Exchanges r ise there ,and turn s them inanadverse direction . The sam e rule applies to Cottonand other staple Commodities in which large dealingstake place . Irregular trading, e specially in the direction Of over-trading, may also be numbered amongthe acciden tal and temporary influen ces operatingupon the Exchange s . Before the comm ercial crisis of1866 , the Exportation of Goods from Indiato Englandhadattained enormous proportion s,and large amoun tsof Silver were sen t out to Calcutta, &c .

, to buy upExchange on London on r easonable te rm s . When ,

owing par tly to the weight of over supply here , theMarkets in Europe broke down , the Exchange on

Indiafell fast to Par , and even below Par , and


well be raised to the rank ofan exact scien ce , yet thecareful and atten tive study of the subject in all itsbran ches is em in ently useful, even were it only that itwill teach us this great lesson , that the strictest

adherence to sound socialand economical principles isthe safest guide through the haze and maze of ever

varying chancesand con tingencies,and over the shoalsand quicksands ofunlim itedand indeterm inable changesand fluctuations ; and that, with nations the sam e

as with individuals, in telligence , energy, industry,andeconomy will ultimately safely en sure success, the sam e

as the lack of these great qualities will be sure to leadto failure . AS people sow, SO they will reap ; and theharvest to be reaped here is indeed worth str iv ing for ,let shallow theor ists and would-be philosophers pretend to deride and despise it as they may : it is the

br ight glitter ing Gold, the shining Silver— it is wealth ,which, when honestly gained and properly used, is asgoodathingas this World has to Show; and the suc

cessful honest trader of the present day— whetherindividual or nation— may proudly inscribe on his

money-box the motto , Honi soit qui mal ypense .

538 CRITICISM ON THE BRITISH MINT .

been theacknowledged leader in allMonetary matter s,and con tinues still firstand foremost in the Mechan icalArts,whilst it certainly is not behin dany other Nationin the everadvancing Progress of Scien ce .

But does the British Min t come up to this Standard ?

The author of this volum e has personally visited,and in spected with great care and atte n tion , the

Establishm en t on Tower Hill, the Hbtel de laMonnaiein Paris , and several other Fore ign Min ts, especiallyin Am er ica. He has thus had afair Opportun ity of

drawing practical compar ison s between the Br itishMin t and certain Fore ign Min ts, and truth compelshim to confess, however reluctantly, that the greatCoinage Institution on Tower Hill, in its pre sentState , falls far short of the theoretical Standard ofanEflicient Mint, and that upon the whole it is by no

m ean s an Establishm ent ofwhich the Br itish Nationhas reason to be proud . Most likely the Managersand Authorities of the Min t may Object to our str ietures on the In stitution under their direction andcare ; but as that Establishm ent is aNational on e ,

we think it is fairly open to honest cr iticism ; and ,although the subject m ight seem to com e only distantlyand indirectly within the scope of the presentWork , we trust that, even were it only for the in terestwhichattaches to it in aPublic Point ofView, it maynot be deem ed out of place here .

To proceed systematically, we will begin with thePr e misesand Buildings .

The Passer-by on Tower Hill cannot fail to notice

CRITICISM ON THE BRITISH MINT. 539

the tall double Iron Railingsand the imposing Gates,Open ing upon aspacious quadrangle , with exten siveBrick buildings on the right and left, and astate lygrey Pile in the rear , over which Policemen and astrong body of British Grenadier s keep watch andward .

Judging from the outside appearance there wouldseem to be no legitimate ground for objecting tothese Prem ises and Buildings ; but the m isfortun e

is that, with the exception of afewapartm en ts in

the magn ificen t Central Building facing the Tower ,which are used for Ofl‘ices, and with the exception

also of the Assay Oflice , which, we believe , is in the

same part of the prem ises , the actual work Of the

Min t is not carried on in them , but in arangeof low-roofed, shed-like , and ill-arranged buildingsbehin d . These workshopsare not properly conn ected,and they occupy , together with acouple Of useless

yards enclosed by them , but asmall section of the

exten sive areaof the Min t Prem ises . It may beaflirmed that the Operative Depar tm ent, which surelyis the most importan t part of the In stitution , is stin ted

in space , and this cannot but greatly in te rfere withthat eflicient supervision and control over the workwhich is so indispensable in an e stablishmen t Of

the kind . As for the imposing sem i-palatial structure sin front, which str ike the public eye ,andalm ost lookas if they were designed for Show, theyare turn ed toaccount chiefly to supply spacious and snug pr ivateresidences, besides affording accommodation , as already stated, to the Accountant’s, Assay and other

540 CRITICISM ON THE BRITISH MINT.

Oflices, which we have no doubtare all properly conductedand well lookedafter .

W e next come to the PLANT and the MACHINERY.

The MELTING HOUSE is asmall, dirty-looking, in conv en iently arranged, and indifl

'

erently-appointed Shop ,

which makes no favourable impression upon the

visitor . Of course one cannot expect aplace in

which Coke is largely used to be kept as neat andtidy as agentleman ’

s kitchen ; but one would think

that the very natur e of the precious mate r ials man ipulated there m ight suggest the propr iety ofalittlem ore order and atrifle less dir t . In the state in

which the wr ite r of this volume found the MeltingHouse Of the British Min t, on the occasion of his

visit to the Establishm en t, the place seem ed to him

but little suited for the important Operations carriedon in it ; and he had astrong impression on his mind

that the supervising Oflicer must find it n ext to impossible to enforce due order and n eatness , and to

exercise proper con trol over the proceedings in aplaceso inconven ien t and ill-arranged . NO doubt the old

fashioned furnaces in use in the Melting House maybe found to m elt very well, but theyare certainly notthe best and most efficien t article of the class thatm ight be procured .

The ROLLING MACHINERY of the British Min t

is the best appointed part of the Working Plan t of

the Establishm en t . The machin e s are large andpowerful, and have afair allowance of space to workin . The work done by them is really well perform ed .

The DRAW BENCH also is am ost useful and efficien t


were no doubt justly con sidered to be marvels of

m echan ical ingenuity and skill, but great improvemen ts have since then been made in the Coin ing

Machin ery, and the SCREW PRESSES ought certainlyto give way n ow to the LEVER PRESSES as used inBirm ingham , Paris, Philadelphia, and other places .

Even more complicated in con struction than the

Cutting-out Machines, the British Coining Presses

take up agreat deal of room , and the work is

not SO well don e by them as it is by the Lever

Presses , besides which they, like the Cutting-out

Presses, work with atruly terrific noise . The force

of the stroke delivered upon the blank is en tirely

broken by the latter ; if by chan ce the supply Of blankssuddenly fails, or the blank slips away from underthe Scr ew, the two dies will in evitably be v iolen tly

clashed together , to the ir mutual damage . Whereasthe Lever Pre sse s work with agen tle m ovem en t ; themom en t the de scending upper die touches the sur

face of the blank on the lower , the eccentric force in

creases in in ten sity , squeezing, SO to say, the m etalin to the hollows and inden tation s Of the die s . If

the supply suddenly fails, or the blank Slips, the dies

are notbrought in to that violentand destructive con

tactas in the Screw Pre ss .

‘

The Pneumatic Screw Presse s workwithastr iking

It has been alleged that the screwpress giv esaclearer impression and hardeus the Metal. Weadm it that for large m edals it maybe am ore suitable in strum ent

,because repeated blows can be giv en ;

but for smaller Coins , suchas Sov ere igns, lev er presses are muchthe best, and the im pressions on the French and Am erican Coins


power of from 30to 50 ton s, whilst the Lever Presses

can be made to exerciseamuch greater pressure . The

American presses which are employed in Coining the

Gold 20Dollars pieces are said to attain amaximumpower of 400tons.

The Lever Presses make scarcely any noise , savethe low thumping soundattendant on the pressing

of the Coin , and the slight jingle Of the apparatuswhich transfers the blanks from the supply tube to

the top Of the lower die . They take up comparativ elylittle room ; the lever is worked in side apowerfulIron fram e , by asmall fly-wheel at the Side , whichlifts it with every rev olution .

Toany oneacquain ted with the process of Coin ing,and having seen at work the superior Machin ery em

ployed in the leading Foreign Mints, it cannot but seemexceedingly strange , that aNation like the Englishshould consen t to lag SO far behind other countries inthis respect. It is indeed amatter Of surpr ise to ushow the Conductors of the Br itish Min t manage to

compete so successfullyas they do with other Min ts inthe execution of the Coinage turned out by them .

Taking into due consideration the old fashioned,clum sy Machinery in use at the British Mint, thegenerally satisfactory state , in amanufacturing andartistic poin t of view, in which that In stitution turns

are certainly not surpassed in Clearn ess by that on the Sov ere ign .

The heav y blows of the screw hav e the efl'

ect of disturbing the

m etallic structure of the piece , which the squeeze of the le v er does

notaffect. Coins struck with the lev er are , in our opinion , lessliable to injury by abrasion than those struck with the screwpress.


out its Coins , reflects credit on the Officers in the

Operative Departm ent.

W e are convinced that the British Mint m ightprocur e the very best Machin eryatam oderate outlay ;and we are equally convinced that the introductionofall the modern improvem ents would Speedily enablethe authoritie s to effectacon siderable annual saving .

W e thinkaway m ight readily be found of efl'

ecting

athoroughly efficien t Reform in the British Min tEstablishm en t— Prem ises , Buildings, Plant , Machinery,andall. If we m ight ven ture upon asuggestion in

the matter , we would say : Let the pr esent Establishm ent be sold ; the vast areaof most valuableground which it occupies will be sure to fetch aprice in the Market mor e than amply sufficient to

purchase asom ewhat more lim ited space in amoresuitable locality, to erect thereon apile of buildings ,le ss exten sive upon the whole than those on Towe r

Hill, but m ore exclusively devoted to the actual workof the In stitution , and m ore suitably planned andbetter appointed than is the case now, and to defraythe n ece ssary outlay for an ewand improved Plan tand the best m odern Machin ery . Such an Establishm en t would indeed be worthy of the Coun try .

The supreme management of the Mint in Par is isvested in aComm issi on , appoin ted by the ImperialGovernm en t, to super v ise and con trol the operation sof the Monnayeurs or Mon eyers . The Moneyers ar ethe parties con tracting to manufactur e the Coin for


apartm en ts in this Palatial Buildingare in the ocen

pation”of the Conmn issionnaires , in whom ,as alr eady

stated , the supreme managemen t of the Institution isvested, but who seem to have to do very little realwork in the matte r . Indeed, it m ight be said thatthe stilln ess which re ign s over this solemn part of

the building, where the magnates of the ImperialComm ission have the ir Official re siden ce , affords thefitte st emblem of the share ofaction taken by thosegen tlem en in the production of the Coin .

The fact is, both the Britishand the French Min tsare institution s under Governm en t con trol, wi th amonopoly vested in them for the manufacture of the

specialarticle which they produce ; and the in evitableresult, which con stitutes at the sam e tim e theirgreatestand gravest defect, is , that they lack thewholesomeand inv igorating stimulus of Competition . Never

theless, on the whole , the French Mint is abetterappoin ted Establishm ent than that of England .

The Am erican Min ts are much superior to theBritishand French for compactness of building, cleanliness, and efficien t machinery . The workshops arein suitable parts of the main building, wellarrangedfor supervision , and the machin ery and material inuseare in admirable order— kept clean , even elegan tlyclean .

According to the law 40 lbs . Troy of StandardGold are to be held equal to 1869 Sovere ign s ,andthat weight ofMetal Shallaccordingly be coin ed in to1 869 Sovere ign s free of charge , the Min t,as aState


In stitution , supported out of the Public Purse , doing

the work of Coinage gratis .

The regulation to that effect was in troduced, partlyasaset-Ofl'again st the large profitmade by the Min t onthe Coinage of Silver ,and partly in order to uphold theposition of the Single Gold Standard, by making thein trin sic value of Gold Coin exactly equal to that of GoldBullion . It isassum ed then that 1869 Sovereign sareequal, in we ight as well as in fineness, to 480oz . of

Standard Gold in aBar ,and v ice v er sa. Now to thisassumption we must holdas essen tial to the characte rof the British Gold Coinage , upon the strict correct

ness ofwhich we all pride our selves . Makin g all dueallowance for loss in Alloying and Coin ing, amplycovered by the reasonable application of the so-calledRem edy allowed to the Min t, we have ar ight toassum e ,

1 . That, on an average at least, our British GoldCoin is turn ed out full weighted and exactly Standardfine

2. That the Coin supplied to the Public by the

Min t is invariably subjected to official trials as to itsfineness,and

3. That the Min t does actually coin 1869 full

weighted Sovereign s Standard out of 40 lbs . TroyStandard Gold .

It would only seem reasonable to expect that thesecondition s should be fulfilled with the utmost possiblestrictn ess . Yet we find that theyare not absolutelyso in practice .


It is quite true that the we ight of the Sovere ignwhen turn ed out n ew by the Min t is e ither quite full,orat least onlyasmall fraction under . This triflin g

underwe ight, however , is usually much within the

Rem edy allowed for we ight . The Coin s issued arecon sequen tly quite legal. Some few of the pieces ar eoccasionallyalittle over-we ight, but the average of anumber of n ew pieces, to the Credit of the Min tAuthorities be it said, is main tain ed at full we ight .The occasional shortness of we ight of Single pieces

within these lim its is of no great importance .

As regards the question of fin en ess , however , thematter is of m ore serious con sequen ce . The str ict

average Standard is notmain tained in the way it Shouldbe . The Rem edy,asallowed by law, is simply m ean tto provide for acciden ts ,as the law clearly states . W e

do not think the allowance was granted withaviewthat it Should be habitually claim ed, e ither wholly or

in part. Indeed, we believe that its full applicationis only rarely put in force , and that , as arule , the

Min t works much within the range of the Rem edy

allowed . Still it cann ot be den ied that there is

habituallyaSlight deviation from the str ict Standardin the direction ofWor sen ess ; and the authoritie s of

the Min t practicallyadm it this to be the case , by the irrefusing to take back Old Sovere igns at the Standardrate at which theyare issued .

The case may be briefly statedas follows : Whenlight Sovereign sare cut by the Bank of England , theown er s of the cut Coin s sufferacon siderable loss . It is

que stionable e v e n whethe r the law which compels the


Bullion were offered . This supposition would appearall the more reasonable ,as the Min t, receiving in the

cut Coin an article alr eady Standard for Coin ing,would save the trouble and expen se of Alloyage ,n ecessarily in curr ed with other Bullion .

But the Min t r efuses to efl'

ect this Exchange ,andthe Bank of England will only pay 778 (iéd per oun ceof old Sovereign s, which isaclear loss of 4d per oun ceupon the Coinage rate of 77s 10%d, equal to 1 in 234 ,or about 3per cen t .This afl'

ords pretty strong presumptive eviden ce

from the Min t, which prac tice would be sure to entail, it is argued,aconsiderable loss on that Establishm ent. To the sweater it reallycan make no difl

‘

erence whether the Mint takes his lightened Sov e

re igns, or whether the Banker does, so we cannot exactly see how

the presen t system can possibly be cons idered to pre v ent sweating.

This n efarious prac tice is n ot known in other countr ies, where the

State exchanges n ew Coin againstworn Coin ,and we truly belie v e

that there is no m ore dange r of it here in England than elsewhere .

But supposing ev en that the objection holds good ; prov isionm ight eas ily be madeagainst the dangers of sweating, to acertainlim ited exten t. At least,aCoin that has been sweated can eas ily bedetected,and it m ight be exempted from the rule . The Coin m ight

m oreov er be struck in such awayas to facilitate detection . The

old Guin eas were rather liable to sweating, on account of the rough

workman ship ; the present Sov ereign is v ery superior in th is

respect. The Gold Coin m ight be made with aSlightly stoute r

r im , and smaller but sharper design s, Showingalarger extent of

plain surfac e , which, struck with highly polished dies , would atonce betray the action of the sharp friction powder that is usedby sweaters.

The Fren ch Min t is bound to buy light French Gold Coin atthe Tar iff rate for 900fine .


that the Min t Authorities do not look upon the Coinissued by themas Standard.

The wholesale Jewellers of London complain thatwhen they manufacture Standardarticles from BritishGold Coin , they run the danger , at Goldsmiths’ Hall,of having them broken for wan t of fineness ; in orderto guardagain st this, theyadd Six grains of fin e Gold

to every oun ce of Standard Gold Coin .

On e of the causes to which the lessen ed finen ess

ofworn Sovereign s,as compared with the Coin newly

issued from the Mint may be attr ibuted, is that ourBritish Gold Coin is too much pickled or

blanched .

” We hav e de scribed this process, page275 . The blanks, before they pass between the Dies,are pickled in asolution of sulphuri cacid, to removethe oxide of Copper formed on them in the process of

Ann ealing . If this pickling is continued too long, theacid will dissolveaminute portion of the Alloy,and acoating of fine Gold will then form on the surface of theCoin , which, being softer than the Standard Gold, willwearawayafterawhile . Thus, when new Sovere ignsare m elted, this coating of fine Gold renders the

m etal fin er than that run down from worn Sovereign s,which have lost the coating of fin e Gold . That the

pickling thus has adistin ct effect on the fineness of

the m etal is amatter of fact, capable of practicaldemon stration the effect is not sufliciently marked toaccoun t for the whole of the deficien cy of fin eness

obser v ed in worn Sovereign s ; the loss of alloy bypickling does not exceed { 6th per mille on the whole

we ight ofthe blanks . W e mayas well remark here that


this practice of excessive blanching of the Coin s is anunnecessary on e it certainly gives avery bright lookto the pieces, but thi sappearan ce is deceptive ,an d n otin accordance with the actual quality of the m e tal.The surface is rendered soft moreover , and afte r awhile it begin s to look Shabby . The deposit of fine

Gold, after the removal of the Alloy by blan ching,amoun ts to rather more than a}; per m ille on the

we ight of the piece , or about Tl—e—th of agrain . The

removal of this fine Gold, so easily efl'

ected by

abrasion ,is the first cause tending to make Sove

reigns light. Fore ign Mints pickle the Coin only

to the exten t n ecessary to rem ove the oxide of

Copper , which, unquestionably, is the right cour se topursue .

From Assayswhich we ourselves have wi tnessed wefind British Gold Coin always reported 4th worse ,andsom e parcels 4th worse . True the 4th worse repor tis due , in am easure , to the unfavourable mann er of

stating the Assay in England, as Coin s foun d 916 ,9162 ,and even 9165 (close to Standard),are reported-th worse . The actualaverage deficien cy cannot wellbe stated, except it be done officially ; butwhether thi sbe 14 or 1 or 3

1; per mille , the fact that the Coinage

is habitually under Standard cannot be den ied . The

deficiency seem s, however , to remain generally withinthe Rem edy allowed, and this is so far creditable tothe managers of the Mint -Still the real in ten tion of

the law, and certamly that ofthe theory of the BritishGold Coinage , is that, on theaverage , the Coin Shouldbe quite full Standard .


is an absolutely right one . Practical Melters andAssayers must be aware that when asmall quantity of

Gold, say 50or 100Sove reign s ,are m elted, the dange rof over-heating is v e ry great, and the liability to err or

in fav our of fineness con siderable . Yet here we find

the whole Coinage of fiv e years subjected to one

single trial ! The witn esses to the Assay may kn owwhether this trial was as satisfactory in every other

way ; we think , however , that the public m ight reasonably claim afullaccoun t of the actual re sults found bythe jury, m inute as to weights , finen ess, accidents of

and loss bym elting,and every other particular includedin the verdict “satisfactory .

”

Indeed , it is not too much to say that the Tr ial ofthe Pyx, as now conducted, is worse even than am ere idle cerem ony : it is afarce , of little practicalvalue , tending to create false impression s about thesupposed absolute purity of our Coinage . If it is theduty of the State , and ther e can be very little doubtindeed that it is, to have the Coinage of the coun try

peri odically tri ed, the tr ials ought surely to be con

ducted in the best and most effective manner , andthe re sults ought to have the fullest publicity giventhem . If it be deem ed n ecessary to have the Gold

Coinage of the country properly exam ined and testedby parties in dependen t of the Min t and its Managemen t, let it be don e in aproper business-like mann er ,andat intervals of not m ore than on e year .

“l

In France the tr ials of the Coinage are conducted in av erydifl

'

e rent mann er . The Authorities of the French M int, under whose

control the Coinage is plac ed, stand be tween the Mon eye rsan d the


W e are of opin ion that the Bri tish Mint oughtto be able to turn outas goodaGold Coin as Russia.The Russian Half Imperial is , without exception , the

m ost regular Coin as regards fin en ess and surely we

ought to be able to be as carefulas the fore igner . Itis not sufficien t for us to do an ordinary thing in -afairly satisfactory way butwe ought to be at the headofall Nation s in the accuracy of our Gold Coinage .

The Br itish Min t still enjoys the Rem edy ofabout

Public . The batches of Coin are we ighed and arranged by them .

Ins tead of castinganumbe r of Co in s into an Ingot, they Assay theindiv idual pieces, thus av oiding the ri sk of unduly improv ing the

finen ess by rc-m elting. The Fre nch m g/ers deriv e no ben efit fromthe Rem edies for we ight or fineness . The French Money law fixes

acertain we ight for the Napoleon ifabatch of Coin is found under

or ov er this weight, the Mon eye rs are debited or credited for it.

The law giv es fin en ess at 900; if the Moneyers turn out Coin of

on ly 899, or 8985 0, or 898 fine , theyare debited with 1 or l , or 2

milliém es if ther e isan exce ss of fin eness theyare cr edited with it.

If the Coin turns out below 898, or abov e 902, it is retur ned

upon the ir hands for r e-coinage . The allowan ce of arem edy isnecessary,as it is impossible always to coin exactly 900 fine ;and,indeed, in this respect the Fren ch Coins difl’

e r justas muchas other

Coins— but it is the Public Treasury which gets the benefit of such

Rem edy, not the Moneyers . It is proposed nowto reduce the Rem edyin France to l per m ille , instead of 2 per m ille as hithe rto ;and,considering that the Fren ch Assay to n twnth par t fine , this is quitefair . W orkingunder these restrictions , the Fren chMon eyers naturallytake good care not to lose Metal in e ither the Melting, or the Coin ing

Process ; the loss incurred falls upon them , notupon the Publicas itdoe s here in England. The Fren ch Moneyers rece iv e fS . for eachkilogramm e ofGold Coin ed,and fs . 15 0for each kilogramm e of S ilv er .

In the Arn e rican M in ts the annual assays are taken both fromthe Coin s them se lv es . and fr om Ingots cast of them .


24per m ille for weight,and of about 3 per mille forfineness . This may have been all very well andequitable in Olden tim es, when Science had not ye t

attain ed its presen t high state of developmen t ; butthe progress which has been made sin ce then oughtsurely to en title the Public to demand that the Rem edyshould be restricted nowwithin closer lim its .

The so-called WASTEAGE to which Min ts are liable ,form salsoan inte resting subject for inquiry . We havealready stated thataslight loss of we ight takes placein the melting ; but this loss is caused by the oxi

dation of small portion s of the inferior Alloy, not byactualabsorption of Gold . In the subsequen t processe sOf Rolling

,Drawing,and Coin ing, m inute particles of

m etal maygetdetached ; but such loose particles oughtalways to be found in the machin ery or on the floor .

With Silver there may, indeed, be aSlight actualloss in curred, unless the m elting be most carefully conducted . But with Gold the re Can be noabsolute lossof Metal, either in the m elting or in any of the sub

sequent processes atall even ts, notaparticle of the

Gold is destroyed . If then we find that afractionalloss of the PreciousMetal is sustained notwithstanding,the question naturallyar ises,What becom es of the lostfraction PWhere does it go toW e beg leave her e to quote an extract from an

Article , published some years ago by Mr . Ansell,

one of the Officer s of the British Min t .

It wouldappear that the Royal M int sustains less loss thanany othe r M in t by the Coin ing of Goldand Silv er . Ifallowance be


question arises, in the first place , whether there areanyauthen tic or official databy which the loss fromWasteage sustained in the Bri tish Mint may be estimated . Does the Establishm en t on Tower Hill freely

and frankly publish to the IVorld its AnnualWasteageReport, as cer tain other Mints are in the habit of

doing .

Mr . An sell, i n his article , adm its rather vaguelyaloss of £373 pe r Million Gold ; we happen to

know thatat certain periods the loss has been much

larger . The Authorities of the Bank of England (ifthey felt so disposed) no doubt could tell from the ir

books howmuch Coin they have rece ived in exchangefor Bullion sent in by them to the Min t dur ing the

last 20years ,and how much the Mint has had to payto make up the deficiency in the Coin delivered .

The Min t is aPublic Institution ,and it is therefore bound, we think, to publish itsWasteage Accounts,both for the benefit ofabstract scien ce ,andalso for am ore eflicient Public con trol over its own managem en t . The Master of the Mint, who has many dutie sdevolv ing upon him , cannot be expected of cour se to

join personally in the processes in the Operative Departm ent ; but, with an efficient managem en t , the

Officers under the Master ought surely to take apridein publishing the Wasteage Accoun ts, to Show the ir

Scien tificattainmen ts or the carefulness of the ir man ipulation s .

W e kn ow,asamatter of fact, that in the Prussianand Fren ch Min ts , the hVasteage is smaller than it isin the Establishmen t 011 Towe r Hill. The moneyers,

CRITICISM ON THE BRITISH MINT . 559

who work the French Min t by Con tract with the

Governm en t, take good care not to lose more of the

Precious Metal than they can help . The Ameri canMints, we adm it, lose as much by Wasteage as the

British Min t, if not more even ; but surely that is noreason why we should not endeavour to cure our

Min t of the disorder called Wasteage .

Bullion dealers will understand uswhen we con tendthat the British Min t not only should suffer no lossfrom wasteage , but that it shouldactually makeaclearprofit on the Gold Coinage . The British Assay isalways under the real fin ene ss say, on an average , byabout 4per m ille , ’ or som e £500per million . Accordingly, in each sent into the Mint in

Standard Bullion , the Establishment rece ive s actuallyso that it ought surely to be in a

position to strike 1869 Sovereign s out of 40lbs . Troy

Standard Gold, with asmall surplus to show, insteadofaloss,as is the case now.

For , as we find from Mr . An sell’

s article ,alossof £373 per million Gold is actually adm itted ; the

Min t and the Bank alone may possess the exactdata, but if we average the loss really sustainedat g per m ille , there would—adding the aboveper m ille for wider Assay— be atotal loss of

1 per m ille , or £1000 on every m illion coin ed .

How then are we toaccoun t for this absolute dis

An Assay reported fine is called fith worse , which isequal to 9153 on ly—adiffe re nce of 12 pe r mille , the half of whichis so ifwe take 05 per m ille , we are quite within the estimate .


appearance ofacertain am ount of Precious Me talfrom the Min t? To coverall possible fallacy of theory,let us even gran t that éth of the loss is due to actualdestruction of Gold, this will still leave the remainingéths of the loss unaccoun ted for .

We should like to see aReturn m oved for in

Parliam ent of the Wasteage of Goldat the British Min tfrom 1850to the presen t year : it might Showwhe the rthe re has not been ,at certain periods of the Managem en t of the Operative Department , much less loss

than at others ,and whether there has not been occasionallyasmall gain even , as there certainly ought tobe with proper managemen t .A r eturn of the Wasteage of Silver m ight also

prove interesting,aswellasanaccoun t of the imperfe ctwork, returned to the Melting pot, during each year .

The author of this Criticism on the weak points ofthe British Min t has taken great trouble to getat thefacts here stated he is quite open to correction ,

shouldany of his statem en ts turn out to be unfounded .

He trusts it will not be overlooked that he is mostwilling to gran t all proper credit due to the Mint

Managem ent for working much within the legal Remedyallowed ,and for turn ing out the British Coinagein so creditable amann er as it is done ; for , bar ringthe comparatively tr ifling defects poin ted out here , thecharacter of the British Sovereign for due weightandfinen ess , and for artistic execution , standsas high , atleast,as the majority of Fore ign Coinage s . This , how

ever , is n ot sufficien t . Great Br itain ,be ing the first

CHAPTER II .

BULLION AND RATES or DISCOUNT.

THE Bank of England raises or lowers the rate of

in terestaccording to the demand for Gold Bullionand the supply of the article stored in its vaults . The

Rate ofDiscoun twhich the Bank fixes from tim e to tim e

rules the Money Market,although the Bank itself isen tirely guided in its decision by the alternation sandfluctuation s in its own resources, without reference

to the supply of m oney at the command of othe r

large Banks in the Market. These other Banks ar eat perfect liberty to follow the example of the Bankof England, or to take an independen t course of the ir

own but,asarule , they do follow the example of the

Bank of England . The raising or the lowering of therate of Discoun t cannot be called, then ,an arbitraryproceeding on the part of the Bank of England . Thatgreat in stitution be ing, in acertain sen se , the Gen eralBanker ofall other Bankers,and of the nation at large ,its own position , wi th its fluctuation s, fairly indicate sthe finan cial state and condition of the coun try .

Whenever over-trading is going on toacon siderablee xten t, obliging the Bank to make heavyadvan ce s, orto discoun t Paper on alarge scale , the tim e is sure to

arrive , soon er or later , when the exhaustion of existing

BULLION AND RATES OF DISCOUNT. 563

and the failure of further resources will put acom

pulsory stop to speculative busin ess ,and the drain of

Bullion from this coun try will make m oney scarceand dear . On the other hand, wi th the reactionwhich is sure to set inafter atim e , Bullion will flow

back in to the country ,and Money will get abundan tand cheap .

In such times of over-speculation , when the Com

m ercialWorld is fast hurrying on to the inevitable cr isis,the ri se in the rate of In terest will take placeabruptly,and advance with fast str ides . A sudden and rapidcommotion of this kind in the Money Market cannot buttend to endanger the in terests of Commerce , by entailingheav y lossesupon merchants ,and leading to num e

rous failures ,and to the partial ruin of trade , with itsconcom itan t train of destitution and m isery to thelower classes .

There is afamiliar expression used to designatethe action of the Bank on such occasion s . The Bankis said to put the screw on ,and the expression is indeed

fairlyapplicable to the case . When the screw is thus

put on abruptly,and with the utm ost force , the result

is that Comm erce finds itself compressed beyond thepower of rebounding ; its elasticity seems de stroyedfor atim e , and, when the pressure of the screw is

relaxed at last, there is no vigorous respon se ofacorresponding re-expan sion . Then com e the times of

gen e ral stagnation ,no bus iness, and un i v ersal slackn ess .

Mon ey is over-abundan t then and unnaturally Cheap,imm en se sum s lying idle , seeking in vain for safeinvestmen t .

564 BULLION AND RATES or DISCOUNT.

It is excusable , perhaps , under the circum stan ce s ,that the Me rcan tile Commun ity should bitte rly com

plain of the action of the Bank of England,andassailthe privileges of that great institution .

However , we believe that the Bank does not

deserve all the blam e lavished upon it on this score .

A tenden cy to over-trading is quite anatural characteristic ofan en terpr ising nation like the English .

And, no matte r whe ther it ought to be looked upon asavirtue orafault, this tendency isagood deal en couraged by the Banking system gen erallyas practised inEngland,and m ore e specially in London . Theanxie tyof the trader to stand well with his join t-stock bank,by keepingalarge balanceasavoucher for his solidity,on which depends the goodn ess of his bills for discoun t

,

combin ed with the eager competition of Banks tosecure the largest share of busine ss,and declare the

largest dividends for the ir shareholders, will n ece s

sarily lead both the trader and the banker to departfrom the se sound pr in ciples of cautious prudence uponwhich all healthy comm ercial speculation should bebased . The artificial activity thus imparted to tradewill temporar ily create astate of fictitious prosper ity

,

sure to term inate , sooner or later , in greater or lesser

embarrassmen t to the rash speculators, indiv iduallyaswellas collectively . When the smash com es,as com e

it naturally will and must, it is quite idle to im pute

the mi sfortune to the Bank of Englandand its ex travagan t priv ileges .

Still the Bank cannot be held entir ely blam eless in

the matter . It must be adm itted that that great In

566 BULLION AND RATES OF DISCOUNT.

to which the violen t fluctuation s in the Rate of Dis

coun t may be partlyattr ibutable ?If Gold is scarce , it may be asked, Why does not

the Bank buy the article wherever it can be procured ,andat Whatev er Cost .

2

This question leads the way to the considerationof the policy now pursued by the Bank of England,and thus by the commun ity represented by that Institution , in the purchaseand sale ofGold Bullion .

The Bank of England buys Gold at 773 9d,andsells itat 778 10§d per oz . Standard . From these rate sno departure whatever is made . However abundan tmay be the Shipm en ts ofGoldarriv ing in this coun try,the Bank rigidly pays 77s 9d per oz . Standard , n everafarthing less per oz . ; however large may be the

drain of Gold from the country, even though reducing

the Stock of Bullion in the Bank toan extentalarm ingto the Mercantile Commun ity, the Bank is bound tocontinue selling Gold at 778 105-d per oz . Standard .

Now, it is for the expre ss purpose of coun teractingthis rigid rule of price that the Bank of Englandlowers or raises the rate of In terest, the theory which

lies at the bottom of the system being that Capitalwill accummulate most wherever its value , as ex

pressed by the rate of Inte re st, is highest .

Mr . Nicholson , in his work on Exchanges, inan swer to que stion No . 199, What is the naturaltenden cy of Bullion ? says , It is to flow towardsthose markets where the best price can be obtain ed forit

, so that the raising of the rate of In ter est toav ery highpoin t in any country has the double (f eet of pr ev enting


the caportation of the Bullion or Coin which is in thatcountry, and of attracting Bullion or Coin to it from

other countr ies .

If this were an unden iably true axiom , the assum ed

invariable tenden cy of Bullion to seek the place whe rein terest ranges highest would certainly seem to provide , in its own extreme plian cy , am ost e fficien t

coun terpoise again st the adverse efl'

ects of the extrem e

rigour with which the Bank of Englandadheres to thefixed buying and selling price of Gold Bullion andCoin . A combination so simple and logicalas this , itclearly would not be pruden t to attempt to disturb .

Un til the event ofthe Crisis of 1866 our finan ciers hadthe fulle st relian ce upon the effective working of

this rule , and apparently with justice ; for up tothat tim e experi ence had seem ed to bear out the cor

rectne ss of the proposition . Money was retain ed inthe coun try, or flowed in to it from abroad, wheneverthe rate of interest here was raised . In the first place ,the ri se of in te rest tended to check speculation for

en terpr ises abroad, by affording more profitableemploym en t for mon ey here ; in the second place , theExchanges declined, which naturally tended to bringGold over here ; and, in the third place , Bankersand Capitalists abroad, being able to realise largerinterest in the English Market than in the ir own

Home Markets , sen t their mon ey over here for

inve stment . Ahnost every cri sis in the London .

Market was thus followed by arapid reaction , andan abundan t influx of mon ey . No wonder then thatour financialauthor ities should look upon the working


of the system embodied in the aboveaxiomas perfectlysatisfactory ,and that any suggestion in favour ofadifl

'

erent policy should be regarded as afinancialheresy .

But those who held this view of the matter had ,

unfortunately, om itted to take in to properaccoun t themany sudden and unforeseen changes to which the

business of finance is liable , from political, social,andother cause s ; and they were doom ed to find, in 1866

1867, that the ir much vaun ted system of high in te re st

proved nearly acomplete failure , n either attractingBullion to the country, nor even che ckin g the drain of

Bullion from it . ’ During the whole of the ever m emo

rable year 1866 , the interest on Mon ey in Englan druled at rates much higher than on the Con tin en t,un til at last the discount on fir st-class bills reachedten per cent. per annum . Yet the Bullion in the Bankdecreased continually , despite the high rate of in terest .

Whereas, in France , discoun t remained at fi'

om 3 to 5

Mr . Goschen says, on pages 133and 134 of his book The

efficacy of that correctiv e of so-called unfav ourable Exchanges hasbeen most thoroughly tested sin ce the Bank of England has adoptedthe system of varying its m in imum rate of discoun t more rapidlyand m ore extensiv e ly than was its practice in form er years .

The fact has been that alm ost e v ery advance in the Bank rateof discoun t is followed by aturn of the Exchanges in fav or of

England ; and, v ice v ersd, as soon as the rate of interest is lowered ,the Exchanges becom e less fav orable .

In 1866 when Inte rest rose to 10per cen t,and in 1867 whe n it

fell to 2§ per cent., the Exchange s, especially that with Fran ce,

remained without much mov em ent, and kept decidedly unfav orableto England— (See Table on pp. 425and

570 RULLION AND RATES OE DISCOUNT.

surelyat perfect liberty to do so. But the free tradeproposition , as understood by the said financiers ,amoun ts in reality to this When Gold isabundan t ,let the Bank buy the article at as much less than778 9d that they can get i t,and sell itagain at acorre sponding reduction on the present pri ce of 77s l0%d .

When Gold is scarce , on the other hand, let the Bankpurchase , if n ecessary,atahigher rate than 778 9d,

and sell at ahigher rate than 778 104

,15d per oz .

”

Which , expressed in other term s, simply m eans , Let

the Bank deal in Goldatadiscoun t or prem ium from

the presen t Mintage Rates .

It willat on ce be apparen t that the fluctuation sin the price of the article that m ight result fr om the

adoption of this prin ciple must necessarily lie wi thinnarrow lim its . The market price of Gold can n ever

fall much below the Coinage rate , for were it to fallcon siderably below that rate , the value of the Coins of

the realm would be disturbedand debased ; on the otherhand, it cannot rise muchabove the Coinage rate ; for ,supposing it were to do so, the holder of Coin mightfind it profitable to m elt it into Bars . To adept avariable Coinage , contain ing more Gold or less Gold inCoin of the sam e nom inal value , would , of cour se , bealtogether out of the question .

The possible fluctuations would simply rangebetween the cost of Coin ing, the Min t Remedyallowe d ,and the abrasion , lessen ing the value of the Coin , on

the on e hand ; and the simple value of uncoined Bar s ,on the other hand .

The Bank buys Gold at 778 9d per oz . , and con

BULLION AND RATES or DISCOUNT. 571

tinues to do so even in the face ofalargeaccumulationof idle money, though m oney lying idle is ackn owledged to be almost as greatan evilas scarcity of thearticle . Supposing the Bank were to regulate the

pri ce according to the requirements of supply anddemand , and were thus, for in stan ce , to reduce itsbuying pri ce at atim e of superabundance to , say,778 6d per oz . what would be the con sequen ce The

surplus stock of Gold in the Market would then go tothe Con tin en t or elsewhere —that is to say, in steadof further enlarging our idle stock, it would make uscreditorsabroad, turn ing the Exchanges in our favour ,or bringingan equivalen t in commodities to our shore s .

The value of our Gold— for , when in the country, it is

ours— would thus n evertheless be made available forour ben efit , though throughadifferen t kind of invest

men t . Let us suppose , on the other hand , that the reis no demand for Goldabroad ,and that the re is thus nooutlet for the article , the re sult would simply be to turn

the Exchanges in away to make 778 6d per oz . the

equivalen t price of thearticle ,which would thus remainin the coun try de spite the lower rate offered for it bythe Bank . By skilful man ipulation of this sliding scalethe Bank Authorities m ight always secur e the Stock

of Bullion demanded by the requirements of Tradeand Industry .

Now let us take the reverse . When Gold is scarcethe Bank m ight oflhr 77s 1051 or 77s l lgd per oz . for

the article ,and thus attract Bullion ove r here . It is

eviden t that the rise must be confined within acertainnarrow limit ‘

for , were it carried beyond, the result


would simply be the m elting down of Sovereigns for

the purpose of re-selling them in Bars to the Bankataprofit . This lim it can be dete rmin ed by the pricewhich n ew Sovere ign s would realise , deducting the

Min tage Remedy, and the charges for Melting andAssaying .

Taking theaverage loss byabrasionat grain only(the provision being made again st it exceeding grain) ,this would afl'

ord an additional protective margin of

about 1 per Cen t . for Sovere igns in actual circulation .

The pri ce for Gold m ight, therefore , if needed, safelybe raised to 77s l l lgd,and the Bank, being practicallythe only pr imary receiver of new Sovereigns from the

Mint, m ight easily keep the new Coin back from Cir

culation foratim e .

In stead of selling Gold at 778 10§sd per oz . , the

Bank m ight raise the rate to 77s 1 151 or 78s per oz .

The exporter of Bullion would in that case fall backfirst upon the light cut Sovereign s, ofwhich we shouldbe rather glad to be rid ; after the exhaustion of thi ssource , he would com e to the circulating Coin, whichwould cost him , however , m ore than 77s lo%d per oz .

As regards n ewSovere ign s , the Bankm ight keep themback fr om circulation foratim e ,as we have just nowremarked . It is only when this expedien t can n o

longer be pursued that the price of Bullion n eed belowered .

From these prem ises it follows that the Bankm ight safely, and without the least danger to the

Coinage , depart from its rigidadherence to the narrowmargin of l i d between its buying pr ice of 77s 9dand

574 BULLION AND RATES OF DISCOUNT .

some mean s or other , the nation has very quicklygrown wealthier . It may be argued that the im

provemen t in the political, social, and industrialcondition of the coun try has hadashare in producingthis Change , and that dueallowan ce Should be madealso for the Gold r equired to re-place the Silver

Coinage exported to India. Still these causes com

bined are in suflicient to accoun t for the marvellouschange which has taken place , and which .has madeFrance at this tim e the principal storehouse of GoldBullion in Europe .

At this presen t time (March 1868) the Bank of

France holds an amount of Bullion nearly doublethat held by the Bank of England . Is this to be

attributed solely to the improved condition of Fran ceIf so , then all that can be said upon the poin t isthat there is no known in stan ce of anational progress equalling this in rapidity ; and England mustacknowledge that France has overtaken and out

stripped her in the succe ssful practical application of

the prin ciple s of socialand political economy .

There can be no doubt but that the wise ofl'

er of

aprem ium on Gold had the covert efl'

ect of turn in gthe Exchanges in favour of Fran ce . Smallas the inducement ofl

'

ered may seem to the ordinary reader , itwas large enough to determ ine English and otherBankers to export Bullion to Fran ce . It was certainlyby the ofl

'

er of this prem ium that Paris secured theinflux ofalarge quan tity of Gold,although—and thisis apoin t which must not be ove rlooked in cousider ing the matte r in all its bear ings— this extrainflux


of the Precious Metal in to Fran ce might, in acertainsen se , be regarded rather in the light of borrowedCapital than as National Property actually acquired ;for Fran ce could not immediately make an equivalentreturn for the Gold in other commodities of her own

production . The Bank of France paid this prem iumon Gold;and for anumber of years the weekly statements of that Institution showed considerable debitsto the accoun t of the premium so paid . The directloss thus sustain ed by the Operation was amply counterbalanced, however , by the influx of Bullion to alarge amoun t, which enabled the Bank to encourageComm erce and Industry, at remun erative but not

Oppre ssive rates of Inte rest,and the in creased busin essthus done by the Bank supplied the m ean s to liquidatethe debit or iginally resulting from the operation . The

ben efit be stowed upon the nation by the in crease in thesolid Medium of Exchange can scarcely be e stimatedin figur es, but it is made str ikingly apparen t in the

improved condition of the peopleat large . The Bankof France be ing, in agreat m easure , aGovernm en tIn stitution (not, like the Bank of England, the m ere

Banker of the State), the policy pursued by its authorities has naturally something of national importancein it .However absolute the belief may be in the infalli

bility of the well-known rule of trade of giving valuefor value , we think it will be admitted, at least, thatthe alm ost continuous absorption of Gold Bullion byFran ce , ever sin ce the tim e when the premium on Goldwas first ofl

'

ered, which , let it be rem embered, was in

576 BULLION AND RATES OF DISCOUNT .

the first,un settled years of the presen t political system ,

isavery singular fact .There is no longer any n eed now for the Bank of

Fran ce to ofl'

er apremium for Gold, for the de sir edresult has been fullyattain ed,and France rejoices atpresen t in the possession ofasufficient stock of Gold.

The Governmen t of the Bank of Fran ce hasalso sin cethen endeavoured to assim ilate the position of thatIn stitution to that of the Bank of England ; but theimportan t fact remains that its pre v ious policy withregard to the purchase of Gold at aprem ium hasturn ed outagreat success .

And this fact would seem toargue in favour of the

assumption that the sam e system which has proved so

successful in France would an swer equally well inEngland, . when ever it m ight be deem ed desirable or

n ecessary toattract Bullion to the coun try, by ofl'

ering

aprem ium on the article . The objection , which weare prepared to hear urged, that the adoption of the

sam e policy on our part would be nu-English, ought

surely not to be perm itted to weigh against the

man ifestadvan tages of the plan .

Let us now compare the more imm ediate effects ofthe two system s as pursued respectively in Fran ceand in England . The charge for the prem ium on Goldin France , both principal and interest, had, of cour se ,

to be borne ultimately by the trade of the coun try .

The equivalent which had to be furn ished in return fo rthe Gold must have sufl

'

ered som e slight depreciation .

Although the prices of commodities were not violen tly

578 BULLION AND RATES OF DISCOUNT.

harm would be done ; unfortunately, the effect of

the screw put on by the Bank does not stop

there , but it strikes down equally all legitimatebusiness, and forces it to submit to a ruin ousdiscount, or to keep altogether out of the marke t .Independen t of this stoppage and ruin , what is

the direct pecun iary cost to the trade of the coun trySupposing the average amoun t of Bills under

discount in London to reach the sum of 120

million s sterling for three mon ths, and the in tere st

thereon to be raised from 4 to 8 per cen t . , thiswould give aloss of 1 per cent . for thi s period of

three mon ths, equivalen t toagross loss ofupon the totalamount of Bills under discount—alossto be borne en tirely by comm erce !and if Bullion , asce rtainly was the case in 1866and 1867, still declin escom ing over here , notwithstanding the exceptionallyhigh rate of in terest exacted by the Bank , this loss islikely to be doubledand quadrupled .

Whereas, if the Bank were to ofl'

erapremium on

Gold, within pruden t limits, say k to l per cen t . ,andfiv e m illion s sterling— suflicientatall even ts to greatlyrelieve the market—were obtain ed thereby, the cost

would only be som e to which the

Bank m ight easily make up again by amoderateincrease of the rate of discoun t, and which wouldultimately fallupon the general public .

Provided always then that we be r ight in our

con clusions regarding the effect which the substitutionby the Bank of England ofavar iable for afixed pr iceof Gold is likely to exercise upon the importation an d


exportation of the Precious Metal, the prem ium to be

paid upon the article by commerce would be quiteinsignifican t in comparison wi th the heavy extrarate of

interest usually exacted under the presen t system in

tim e s of pre ssure .

The author , in placing these consideration s beforethe reader , does not wish to be understood toadvan cethem as his own , but he is simply desirous to bri ng

them forward withaview to Open aquestion whichhas an importan t bear ing upon the whole subject of

Finan ce .

Impor tant question s of this kind should not be

disposed of dogmatically, or eat cathedra-(and we conceiv e that thiswould be don e if the sweeping doctrin esof the balance of trade alone were permitted to supplythe groun ds for the decision) but they demandand deserve the patien t atten tion and the ser iousstudy ofall parties concerned in their proper solution .

The author is quite aware that the adoption of the

suggestion here made would involve changes in the

system of the Bank of England that may run coun ter

to the doctrine sand disposition of our leading financialauthorities . It mayalso be that the generaladoptionof the proposed Un iversal Coinage (supposing it shouldtake place) will tend to m odify, in som e m easure , thean tagon istic position in which nation s now find them

selve s placed to each other with respect to m oney

matters,and that there may be no n eed then to haver e cour se to the preven tive m easures here sugge sted ,to guard again st the recurrence of such Cr isesas theone in 1866 .


But so long as matte rs are allowed to remain in

statu quo, we cannot shut our eyes to the ugly factthat our commercial Cri ses here are too severe ,andthat the rem edy hi therto applied to m eet them hastoo much of the character ofhill or cwreabout it, to bedeemed satisfactory by pruden t people ;and,above all,that other coun tries are much less subject to violen tfinancial commotion s than England, and that them eans they resort to to combat and m itigate the evil

efl'

ects of over-speculation are of agen tlerand subtler

nature than our favour ite remedy can claim to be .

The Policy of the Fren ch Bank to pur chase Goldataprem ium was, of course , attacked at the time byEnglish finan ciers, upon the broad grounds of adepartur e from the sound pr in ciple s of free trade ,and inthe fullest reliance upon the infallibility of the systempursued by the Bank of England .

Thereare som e minor matters connected with the

treatm ent of Bullion in England, which are , in our

opin ion , susceptible of improvem en t . Con sidering thehigh importan ce of everything conn ected with the

question of Bullion in acoun try dealing so large ly inthe article as England doe s, we trust we may n ot be

accused ofan over-strong tenden cy to hypercriticism , if

in stead of chaun ting the praises of our financial in stitution sas theyactually exist,and of matter s as th eyare managed now (which would be amuch easier tas k ,no doubt, but certainlyalsoamostunprofitable on e ) , weven ture to poin t out what we con sider the defec ts of

the present system , and to suggest how the se defe cts


regulate them selves upon the Coinage basis,and thataccordingly, when Bullion is due to us from abroad ,we keep it out of the coun try byadhering to our old

fashioned way of valuing it below its actual worth ;and, on the other hand, when Bullion is leaving us ,we ,acting upon the same system of valuation , give

more value than we charge for , thus actually promoting the exportation of it . This defect in our

system works therefore against us both ways .

It may be perfectly proper toargue that it is not

the province of the English Governm ent to in te rfere

in what may be regarded in the light ofaprivate en

terprise ; but inamatter so importan t as Bullion the

Governm en t surely may claim the right of layin g downcertain rules for the public benefit ; the more so asthe State has to provide the Coinage , and has theexclusive privilege of doing so .

We are of opinion also that the State would dowise to supply the public with every possible facilityfor dealing in Bullion , so as to impart the highestattainable degree of perfection to this m ost importan tbusiness . Gold may e ither be sold in open Marketto pr ivate parties, or it may be sold to the Bank of

England . In the latter case , before thearticle is takento the Bank , the Bar s have to be re-meltedatapr ivatemelting house ; theyare then Assayed for the Bank bypr ivate Assayers,at the charge of the seller . All thismay work fairly enough, but certainly no one willven ture to maintain that it is the best and m ostsatisfactory way of doing the business . In the UnitedStates Min t or Assay Offices Gold Bullion is melted

BULLION AND RATES OF DISCOUNT . 583

andassayed,and has its exact value officially stampedupon it,ataround charge of 6 Cen ts per 100 Dols . ,

or about 42 per m ille on the value . This isagreatpublic convenience and advan tage , besides saving theexpen se of Coinage ,as the Bullion Bars so stampedar e pr efer red for exportation .

A sim ilar in stitution over here , in direct con

n ection with the Br itish Mint or with the Bank of

England, would certainly be apublic ben efit, andwould, besides, more than amply repay expen ses .

The m elting of Gold now costs 1d per oz . for

nuggets, lumps, coin s, &c . ,and {id per oz . for Golddust . Thisam oun ts on £1000toabout 5s 6d, makingthus, with 4s 6d for Assays , l0s or {5 per m ille—aremun eration for whichan establishm en t suchas heresuggested might surely well afl'

ord to undertake theduty officially.

The refin ing of Bullion at the lowest praeticable rate , by an establishm en t under the imm e

diate con trol of the Authorities of the Min t, is alsoamatte r worth con sider ing, as it hasadir ect bearingupon the reten tion of Bullion in the coun try .

The defects pointed out here in our presen t system

of valuing Bullion Simply afl'

ord Bullion Dealers amargin ”

for realising extraprofits ; whilst, smallasthe differences resulting from these defects mayappearto be when lookedat singlyand separately, they nevertheless form an aggregate sufliciently importan t toplace this coun tryatadisadvantageas compared withother nations .

CHAPTER III .

THE PARIS CONFERENCE ON INTERNATIONAL COINAGE.

HEadoption byall Nations ofaun iform system of

Coinage would materially promote the progre ssof civ ilisation ,and the gen eral welfare of mankind . It

would not only exercise adir ect ben eficial influenceupon the comm ercial transaction s between the m orecivili sed nation s, but even sem i-barbarous populationswOuld soon learn to appre ciate the signal advan tage sofaset of Coin un iversally recognised as the generalStandard of value ,and this would necessarily tend todraw them in to closer conn ection and in te rcour se withtheir moreadvan ced brethren . But, even independentlyof these higher considerations,and regarded simply inthe light ofadirect question of Profitand Loss, the introduction of aUn iversal Coinage could not but prov ehighly ben eficial to the interests of the Mercan tileand Trading Commun ity .

At present the balances of trade between the

nation sare se ttled by shipmen ts of Bullion or of Coin .

Frequen tly the Bullion shipped is the result of theRe-m elting of Fore ign Coin ; and the Coin sen tabroadm ostly requires m elting down to be converted in to theCurr ency of the Coun try into which it is impor te d .

586 PARIS CONFERENCE.

in the matter , and of devising som e feasible plan of

carrying the project of aUn iversal Coinage in topractical efl'

ect.

To this end many of the leading men then in Par isfromall coun tri es of the world, in cluding Delegate sandComm issioners ofall the Fore ign States, and of the

Scien tific Societies then represen tedat the Exhibition ,

— were invited,at the in stance of the Fren ch Governm en t, to m eet for the purpose of organ isingaMon etaryConferen ce . Professor Leone Leviattended this Conferen ce as on e of the English Delegates . There wasanother Conferen ce held about the sam e tim e at theForeign Office in Par is, which wasattended by OflicialDelegates nom inated by the differen t Governm en ts ,and had for its special object the gen eral discussion of

the great International Coinage question . We think

we cannot do better than give extracts from ProfessorLevi’s report of the Meetings of both Conferen ce s ,made by the learned Professor in aLecture deliveredby him before the Society of Arts, on the 27th of

November 1867. After giving an accoun t of certainMeetings and Conferences held on the question of

un iformity of weights, measures, &c . , on which he

states the Conferen ce agreed very well, the Profe ssorproceeds to the discussion of the In te rnational Coinagequestion , on which he reportsas follows

Upon the subject of Coinage much greater difliculty was ex

perien ced,andafter considerable discussion , in which the AustrianDelegate , Baron de Hock, the Am eri can Commission ers, Mr . Ruggles

and Mr . Kenn edy, took aleading part, the Comm ittee submitte d tothe Conference the following distinct propositions

l . The first condition to be fulfilled is the adoption ,by the dif.

PARIS CONFERENCE. 587

ferent Gov ernments inte reste d in this question , of the sam e units

in the issue of their Gold Coins .

2. It is desirable that such Coins be e v erywhere Coin ed n in e

tenths fine .

3. It is desirable that each State should in troduce am ong its

Gold Coins on e piece at least ofavalue equal to that of on e of the

pieces in use among other States inte rested,so that there may be

amongall the systemsapoint of comm on con tac t. From that eachnation willafte rwards endeav our to assim ilate gradually its systemof Coinage to that which may be chosen asaun iform bas is .

41. The ser ies ofGold Coins now in use in France , beingadoptedbyagreat part of the population of Europe , is recomm ended as abasis of the un iform system .

5 . Whereas , in consequence of accidental and happy circum

stan ces, the m ost important monetary units may be adapted to theFrench Gold piece of fiv e fran cs, by m eans of v ery small changes,this piece seems the most con v en ient to ser v e as abasis ofam on etary system ,

and the Coins issued upon such abas is may becom e ,as soon as the con v enience of the nations will perm it, multiples of this unit.6 . It is desirable that the different Gov ernments should decide

that the Coins issued by each nation , in conformitywith the uniformsystem proposedand agreed, should bear legal currency in all theircoun tr ies .

7. It is extremely desirable that the system of double Standardsbeabandon ed where v er it yet exists .

8 . It is extremely desirable that the system of decimal num eration be uni v ersallyadopte d,and that the m oney ofall nations should

be of the sam e finen essand of the sam e form .

9. It is desirable that the Gov ernm ents should com e to an un .

derstanding for adopting comm on m easur es of control, so as to

guarante e the integrity of the Coinage both when issued and whilstin circulation .

It will be observ ed that these propositions laid down no specificschem e ofun iv ersal coinage . They took Gold Coin s for their basisbecause m ost nations had alreadyadopted it as the sole Standard.

Mr . Ruggles stated that between 1851 and 1865 the United States ,


France , and Great Britain issued collectiv ely, in round numbe rs,

in Gold Coin s to in Silv er Coin s . The

Congress adopted the fin en ess of one to ten as already exte nsiv elyin use . It simply aimed at on e point ofaccord in the differen t

systems of Coinage , in hav ing on e pieceat leastalike e v erywhere ;and fixed upon the fi v e franc piece in Goldas on the whole the m ost

con v enient for the bm is of the un iform system .

It is quite possible thatwere we to startanew system , ir respec

tiv e altogether of the existing condition s, abetter and am ore

scien tific plan m ight yet be suggested, but the Conference had apractical object in v iew,and we had to consider not what might betheoretically the most perfect, butwhatunde r present cir cumstan cescould best be attempted. When , therefore , M . Michel Che valierproposedatotally new system— to takeapiece of fiv e gramm es of

Gold, nin e-tenths fine , as the un iv ersal monetary un it— it was feltthat, whate v er might be its m erits, it would be impossible to dis

regard the imm ense amount of Coinage of Silv er and Gold now in

existence , which would require to be altogether withdrawn . The

new Coin suggested would agree with no existing Coinage , an dtherefore its introduction would be quite impracticable . For my

part I objected to taking the piece of fi v e fran cs in Goldas aun it,it being too small and too easily lost. I proposed to substitute forit the ten franc piece , but it was agreed that the word un it”

attached to the fi v e francs,as at first in serted in the 8th proposition ,should be om itted ;and the proposition asadopted simply laid downthat valueasabasis of calculation , the different nations be ing quiteat liberty to choose for their un itany multiple of the same , say 10,20, or 25 francs . M . Wolowski , so able and SO eloquent, fought

hard in fav our of the double Standard. He argued in fav our of

leav ing it optional with debtors to pay in Gold or Silv er , an dthought it inexpedient to fix on the Gold Standard for all nation s

,

hav ing regard to the changes which hav e occurred and may still

occur in the production of Gold and Silv er . M . Wolowski was, ofcourse ,answered that the system ofadouble Standard was unjustin itself, sin ce it left the creditor at the m ercy of the debtor

, in

allowing him to pay in the leas t valuable m etal ; that if it wasdesirable that the Standard of exchange should be as little as pos


fav our of the second alte rnativ e ,adding that the system agreedupon by the Monetary Con v en tion of 1865 should be the on e principally to be taken under consideration .

The next question refe rred to the Standard,and hav ing regardto the decidedadvance made e v erywhere towards the adoption ofaGold Standard, itwas unan imously resolv ed, with the exception of

the representativ es of the Netherlands, That it is not poss ible toattain the desired un iformity, or e v en apartial coin cidence , on the

basis and on condition of the exclusiv e adoption ofaSilv e r Standard

, but that it is possible to attain it on the basis ofaGoldStandard

,allowing each State to preserv e the Silv er Standard in

atran sitory manner . The latte r condition be ing n ecessary for

States such as Prussia, Sweden ,and the Nethe rlands , where the

Silv er Standard alon e is still main tain ed.

”Then aresolution was

added, supported byall the representativ es except those of Prussiaand the Netherlan ds , That theadvantage of in te rnationality whichthe Coinage taken for common Standard would possess, is not itse lf

asufficient guarantee for its being main tain ed in circulation in allthe States, but it is n ecessary to stipulate that, in the coun tri e s

which con tinue to use the Silv er Standard only,and in those which

hav e adouble Standard, the relation between Gold and Silv e r

should not be established on too lowafooting, in order to giv e due

facility for the practical in troduction of the Gold Coinage .

”It

appears that at presen t the r elation ofGold to Silv er in Prussiais1 to 154 5, in Spain as 1 to in France as 1 to 155 0,and inthe Un ited State sas I to 16,about.

The Congress then entered on the difficult question of the com

mon denom inator,and, hav ing first unanim ously agreed that

,fo r

the success of the m on etary un ification it is n ecessary to fix type s

hav ing acomm on denom inator for the weight of the Gold Coin ,

withan identical finen ess of 393 fine , itwas decided byamajor ity of

13 against 2, the repre sen tativ es of Englandand Sweden hav ingv oted against, and those of Russia, Bavaria, Baden , Wurtemburg,

and Belgium hav ing abstained from v oting, That the comm on

denomination should be the piece of 5 fran cs . Though man ym embers spoke in fav our of the reduction of the dollar to 5 fran cs

,

and of the pound ste rling to 25 fran cs, M . Wallenbe rg, the delegate


from Sweden , preferred the 10francs in Gold ;and M . de Par ieuhimself said that that piece would be specially con v en ient to France ,s in ce she would only require to change the plac e of the commatoexpress the n ewun it, whilst, moreo v er , the piece of 10francs,underthe nam e of ducat,apiece ofabout the sam e value , had once auniv ersal circulation .

As regards the reduction of the pound to 25 francs, ProfessorGraham , the Maste r of the Mint, stated that e v en if itwas true thatthe difference of20centim % was in cluded wi thin the limits of tolerance , it is, ne v ertheless, afact that the English Gov ernm ent con

siders itself bound in honour not to take advantage of it. There

would, therefore , be much incon v en ience in hav ing in circulation

Sov ere igns of 2520should the issue of n ew Sov ere igns reduced to

25 francs be resolv ed upon ,andare-coinage would be necessary.

In his opin ion , if the piece of 10fran cs were adopted, it would hav ean ad vantage ov er the piece of fiv e francs . It was then agreed byall

, except the representativ es of Prussia, Baden ,and Wur temburg,whoabstain ed from v oting, That it would be useful that the typesof Coinage de te rm in ed by the Mon etary Con v ention of the 23rd

December 1865, should be , in the in te re st ofun ification , and, consequently, of reciprocity, complete d by new type s,as per exampleof 25 fran cs .

”But when the proposal was made thatapiece of

fifte en francs be also added, the representativ es of only sev en

coun tri es v oted in fav our of it, those of se v en countr ies v oted

again st it,and those of six ,in cludingGreat Britain ,abstained from

v oting. It was then unan imouslyagreed that the m easures whichmay beadopted by the Gov ernm ents of the different States in order

to m odify the ir re spectiv e mon etary systems, in accordance withthe basis indicated by the Conference , should be made as much aspossible the subject ofDiplomatic Con v en tions . That soon afte r thereception of theanswe rs which may be giv en by the diffe rent State sto the official commun ication which will be made to them of the

labours of the Confe ren ce by the Fren ch Gov ernm ent, that Gov ernm en t may, if n ecessary, call another Confe rence . But as to the

tim e by which such answer should be giv en , the representativ es ofte n coun tries v oted that it be giv en before the first of Februaryn ext

,those of fiv e v oted that it be giv en before the first of Octobe r


1867 ; those of the Un ited State s v oted for the 1 5th ofMay 1868 ;and those of Great Britain for the first of June 1868 ; the repre

sentativ es of France and Spain hav ingabstained from v oting. In

substance , the re solutions of both Conferences perfectly agree , thepr in cipal recomm endation consisting in taking advantage of the

particular position in which the fi v e franc piece stands towards thedollar on the one hand,and the pound ste rling.

It now remain s for m e to consider the position in which this

coun try is placed in relation to these two Confe rence s . Oflicially, Imay say the United Kingdom is in no way pledged by their reso

lution , the Gov ernm ent hav ing main tain ed itselfalmostaltoge therpassiv e as regards the one and the other . The Confe rence of the

Palais de l’Industr ie owed its origination to the Metr ic Commi tte e

of the British Association and the British Branch of the In te r

national As sociation ;and in the Inte rnational Comm ittee no ofi cialm embe r was deputed by he r Majesty’

s Gov ernm en t, though the

British Commission was nominally,at least, represented in it. At

the Diplomatic Conference , the Maste r of the Mint and Mr . Riv ers

W ilson , though oflicially deputed, were expressly pre cluded fromin any way bin ding this country to any course . Ne v erthele ss, it is

vain to imagin e that this country can remain indifferent to what ispassing in all the rest of the world ;and itwould be far better fo rher to place herself, byaspontan eousand gen erous policy,at thehead of those m easur es which tend to improv em ents in humansociety, than to lag behind till necessity and self-inte rest compel

her to accept what is already irre v ocably settled. The m easuresadv ocated by these Con ferencesaffect on the one hand our en tir e

system ofwe ights and m easures,and on the othe r the bas is of our

Coinage and our entire syste m ofaccoun tancy. As regards we ightsand m easure s, the only course left is the early in troduction of the

m etr ic system , pure and simple ,as it exists in the greater part ofEurope , and in differen t States of Am erica. The Act of 1864,

which renders the use of it permissiv e in this coun try, is man ife stlyimperfect. It is simply ofan egativ e character , remov ing the pre .

v ions illegality. It does not prov ide for Standards, and it is aquestion whe ther any on e could actually use the m e tr ic we ights

and m easures , since they cannot be stamped. What is wan ted is


less than apound by m ils seems to me exceedinglyawkward andcomplicated. The main advantage e v er adduced in fav our of re

tain ing the poundas aun it is that it is uni v ersally kn own in the

tradingand banking circles of the world, that it is as sociate d inthis coun try with e v ery calculation of value ,and that it is awelldefin ed and in variable value . But ifall European and Am er icancountries enter the Con v ention on the terms of the Conference , the

pound will be the Coin least known in Europe . There would doubtless be much incon v enience in changing the unit of value , but thedifliculty is greatly exaggerated. And as for the in variability inthe value of the sov ereign , the same willapply toany Coin whichmay be legally declared by this country as the unit ofaccoun ts .

These are som e of the many obstacles to our adopting the plan of

reducing the pound to 25 francs,and making that the un it of adecimal system for this country. But there isanother plan, whichappears to be far preferable , v iz .

, the taking of the Gold piece of 10

fran cs, equivalent to 100pence of present m oney,as aunit. The

presen t penny is practically the same in value as the ten cen tim es .

LetaGold piece representing on e hundred pen ce , which m ight be

calledaducat, be issuedand coin ed of the exact value of ten fran cs .

Let this Coin foratimc be put in circulationasatoken only, or asaCoin of con v en ience , in which man n er itwould make no differe n ce

if its r eal value be slightly inferi or to its nominal value ,and let e v e ryencouragement be giv en to use this hundred-pen ce pieceasaun it.

Should it prov e popular and con v enient, aten-pen ce piece m ight

also be issued, to take ev entually the place of the present shilling ;

and when the tim e com es for the ultimate declaration of the ducatas the un it of value , the exact relation of the sam e to the so v ere ign

would be fixed,and the difl'

erence between the sov ereign and the

ducat would be dulyallowed in exchange .

The con v en ien ce of this m ethod is v ery decided. Itwould be

str ictly decimal. It would be plain and simple for computation .

In aten ducat piece , equivalent to one hundred francs, we should

hav ean excellent Coin ofaccounts for large transactions,as in the

ten th ofapenny we m ight, if required, hav e aCoin adapted to

the m ost m inute bus iness of life ;and,abov e all, it would place uson an exac t le v elwith the system likely to be un iv ersal, it beinga


fact that already 100 m illions of people hav e accepted it, andprobably 100m illions more willadhere to italm ost imm ediately .

I do n ot wish to be dogmatic in propounding such aplan .

only suggest it for ser ious consideration , and I am certainly en

couraged in thinking that it does in agreat m easure accord withmany of the m ost valuable suggestions made to this Society som e

ten years ago . In the preference thus giv en to the ten francsrather than to the 25 francs, I speak my own m ind only, the Metri c

Comm ittee of the British As sociation and the Coun cil of the In ternational Association hav ing com e to no resolution on the subject.

I am strongly con v in ced, howe v er , that the schem e is not on lysound and practical, but the only one likely to prov e in the end

successfuland perman en t. The tim e has com e when som e decisiv e

m easur e must be taken , her Majesty’

s Gov e rnm ent hav ing to giv eanswer on the subjectat least not late r than June n ext. Theactionof the Gov ernm entwill probably be either to mov e foraComm itteeof the House of Comm on s or to nom inate aRoyal Comm ission to

consider the question . Whate v er m ethod may be preferred, let ushope that the inquiry will be in stituted in alibe ral spirit,and withan inten tion to com e to practicaland final conclusions .

From thisaccoun t it will be seen that two pri n cipalr e solutions were arrivedat, viz .

(l .) A resolution in favour of the un iversaladeptionof the Gold valuation .

A re solution in favour of the adoption of the

Gold Five Francs piece as the representative type of

the un iversal un it or integer of the proposed n ew

In ternational Coinage ; accordingly in favour of the

adoption of the French Fran c system generally .

With regard to the first of these resolutions, wepurpose to show in the next chapter that the absoluter ejection of Silver asaStandard of Value would be am ost unwise and dangerous proce eding, and that it


would beafar better and safer course to establish theDouble Goldand Silver Valuation .

And as regards the second resolution , we shallendeavour to prove , in asubsequen t chapte r , that,although the Five Francs piece is, n o doubt,asuitabletype for Silver Coin , it is not so for Gold Coin , andthat it would be far more practical to take for typein stead aFiv e Shillings Gold piece , and to substitutethe Shilling for the Franc generally .

598 DEFENCE OF THE DOUBLE VALUATION .

matters . An attempt toadvocate the Double Valuation in England, the very stronghold of the Single

Gold Valuation , which has nowVictoriously main tain edits position there for m or e than halfacentury , se ems

all the m ore diflicultand per ilous for the strong bias infavour of it naturally en tertain ed by many EnglishFinanciers . Still the Author takes heart to developehis views, from the fact that the Delegate s whoattended the Paris Monetary Convention of 1867

were by no m ean s unan imous in their re solution to

adopt the Single Gold Valuation ; but thatarespectablem inority of them , men of acknowledged experience

in Mon etary matters, warmly advocated the Double

Valuation . Som e of the Delegates, notably thoserepresen ting the principal coun tries where Silver isthe valuation , abstained from v oting on several vitalquestion s conn ected with the proposal. The Easternnation s had no represen tatives at the Conference ,and, as India, which form s aportion of the British

Empire , is one of the m ost important Silver-holdingcoun tri es, the question of the Single Gold, or the

Double Goldand Silver , or the Single Silver Valuation ,

still claims con sideration , if not from an exclusive ly

English, at all even ts from aBritish Imperial poin tof view.

The in troduction , un iversally, of the Single Gold

Valuation ,as proposed by the Paris Conference , m ean s :

That Goldalon e shall in future be used for paym en ts,and that Silver shall only be used inasubsidiary or divisionary characte r . Pay

DEFENCE OF THE DOUBLE VALUATION . 599

ments in Gold Coin , from the smallest possible sum up toanyamoun t, shallalon e belawful, whereas paym en ts in Silver Coinshall be lawful only toalim ited extent, notexceeding the value of one or two piecesof Gold .

It is not in these precise terms that the prepositionis stated, but in reality its efl

'

ect will be of this nature .

In England the payment in Silver is lim ited to £2,and, whether the other Statesadept the same lim it, orone below orabove it, matters little ; the supremacy ofGold,as the only legal tender , can only be enforced

by the suppression of Silver in the contrary direction ,

stepping short only of final demon etisation at the

lim ited legal tender .

The example and model which England afl'

ords in

this respect may for the present be taken hereas thatwhich the worldat large is supposed to be invited to

Copy .

The ordinary reader of this book may not have hadoccasion to con sider the vast importan ce of this propo

sitiou, especially if,asan Englishman ,he sees therein

nothing more thanan approval of the Currency systemof his own coun try . Certain other nations, however ,haveamuch deeper interest in the matter , for thepreposition involvesan almost total revolution in the irm onetary system s; it threatens the legal destruction of

the valuation in Silver upon which they have hithertorelied .


Dism issing from our m inds the partiality for our ownEnglish system , and looking upon the matte r from awiderand moreuniversal poin t of v iew, itmay indeed beaflirmed that mankindat large , all nation s,all classesof society,and every individual, have amost mate rialinterest in the right decision of this question . This

in terest, and the exten t and importance of it, maynot seem quite patent now to every reader of thisvolum e ; but the tim e is sure to come when the

effects which the ultimate decision and final settlem ent of the question will have upon the trade of the

world may forcibly open the eyes of every one tothe true extentand importan ce of that interest .

In order to place the whole subject before the

reader in aconven ien t form , we propose successivelyto con sider :

1 . The present relativ e position of Goldand S ilv er in the

M onetary Systems of the W orld.

2 . Th e probable consequen ces of the uni v ersaladoption of

the Single Gold Valuation , in so far as the futur eposition of Silv er , and its value , are lik ely to b e

affected thereby , and the serious injury to gen eral

3 . The general state and aspect of the question ,and th egroun ds upon whi ch th e ad v ocates of the Single

Gold Valuation recomm end the introduction of th e

sam e , and the fallacy of whi ch we , defending th e

Double Valuation , propose to demonstrate .


In the countrie s where the Single Gold Valuationprevails Gold Coin alone is fully legal tender , andform s thus the far largest portion of the metallic circulatingm edium , the use of Silver be ing restr icted bythe operation of the law of legal te nder , and SilverCoin form ing butasmall portion of the Curr ency .

In the coun tries where the Double Goldand Silve rValuation prevails Coins of both Metals are legaltender ; andalthough , in so far as regards the re spe c

tive quan tities of Gold Coin and of Silver Coin in

circulation , the Gold vastly preponderates over theSilver in France and in the United States , yet theSilver Coin form s still an importan t elem ent ; and insom e coun tries Spain , Greece , Ecuador , Peruthe Silver Coin is much m ore abundan t than the

Gold .

In the countries where the Single Silver Valuationprevails, Silver Coin is the only legal tender ,and GoldCoin is an ar ticle of m erchandize , varying in pr ice .

In Germany , Holland, &c . ,it is true , agreat deal of

Gold Coin is in circulation , but . Silver Coin is n ever

theless the ruling value ; the Banks hold their stockof Bullion chiefly in the form of Silver Coin or Bars .

In Norway, for instan ce , Gold is n ever coined . In

India, notably, Silver reign s paramoun t ; and, up to

this tim e , Gold Coin has not yet made its way withthe Natives .

The following Table shows the proportionate valueat which Gold and Silver are held in the differ en t

Coinage s .


S INGLE

DOUBLEFranceBelgiumItalySwitzerlandSpam Payments are legal

in e ither Gold or

GreeceSilv er .

Un ited StatesNewGranadaEcuadorPeru

North GermanySouth GermanyHamburg These proportions are

only approximate , asHolland Gold Coin varies in

Sweden price .

NorwayDenmarkRussia

Mexico

Cen tral Am ericaIndiaChina

This refers only to the whole Dollar piece ; the Silv er Coinsbelow the whole Dollarare at 1 to 145.

GOLD VALUATION.

1 to 14;l 1436

l 157 ;I 15

1

The lim it of tende r to

which Silv er is re

stri cted may gene

143fl; rally be takenas £2.

GOLD AND SILVER VALUATION.

l to 15}1

l

1

1

1

1

l

l

l

15;15;15;

15;16'

15;15;15;

SILVER VALUATION.

l to 15;

H

l—ii—i

i—ii—i

H

H

l—‘t—li—i

i—ih-ii—i 15;

15;15;15;15;

15;15;

15h}I5;;15

15; l

The Half Imper ial fixedat 5135 Rouble

Gold Coin of uncertainfineness .

TheMohur 15 RupeesGold Coin notused.

By the recent reductionof the Gold Cobang.


It is of importance now that we should arrive atsome conclusion in referen ce to the total quantity ofGoldand Silver Coin and Bullion ,and its proportionatedistribution in the various Monetary system s . The

question m ight be widened so as to include not onlyCoin and Bullion

, but also articles made of the

precious m etals imm ediately available for value ; wewill, however , lim it it for the presen t to Coin andBullion .

It is impossible to arrive at aresult in this

re spect by statistical re search . The Mintage re turn s

of England , France , the Un ited State s, and othercoun tries ,aswellas the m ovem en ts in Bullion between

the vari ous coun tries for anumber of years,"are in

them selves complete enough , indeed ; but they do n ot

embrace the whole field of the subject ; and, even if

they did, the re-m elting and re-coin ing con tinuallygoing on would in te rfere with the correctness of the

data. As regards the old stock of Gold and Silver ,and Coinage operation s before the ages of statisticalscience , we have no dataatall to go upon , beyond thevarying surm isesand estimate s made by severalwri terson the que stion .

Want of space preven ts us from enter ing in to adetailedand m inute exam ination of this subject, but ,basing our figures upon the most trustworthy e sti

mate s, we mayassume thatBefore the discovery of the Californ ianand Aus

tralian Gold fields the amoun t of Silver Mon ey in theWorld exceeded that of Gold Mon ey, it be ing estimatedthat there were about 300m illion s ofGold in circula


the calculation , we find, upon the authority of Mr .

Ruggles , the American Comm issioner and Delegate atthe Paris Monetary Conferen ce , that these coun tri eshave ; between 1851 and 1865, issued collectively,in round numbers, in Gold Coin to

in Silver Coin . As it may fairly be assumed that the greater portion of this latter Coinagewas issued by Fran ce , where the 5 Fran cs piece inSilver still remarn s legal tender to anyamoun t , wethink we are within the mark if we put the SilverCoinage of Great Br itain and the Un ited State s as1 to 20, compared with the Gold Coinage .

From Germany and Holland,and other EuropeanSilver-valuing State s, we have been unable to obtainaccoun ts, but it may fairly be surm ised, when the

stocks of Silver Bullion in Amsterdam , Hamburg,Berlin , Frankfort , Vienna,and the num erous Bankingcen tresare taken in toaccoun t, together with the massof Coin in circulation , that m ore than on e-half of theHard Mon ey of these States is in Silver , and thatthis half probablyamoun ts to 150m illion s Sterling or

m ore . In Mexico vast quantities of Silv er are held ,

but Indiaand the East are the large st holders of

Silver , to’

thealmost total exclusion of. Gold .

2. The probable consequences of the univ ersal adoption of the Single Gold Valuation , in so faras the futur e position of Silv er , and its value

,

are likely to be afiected thereby, and the ser iousinjury to gen eralprosper ity in v olv ed ther ein .

The Par is Confe rence , whilst r ecomm ending theadop

DEFENCE OF THE DOUBLE VALUATION. 607

tion of the Gold Valuation , took care at the sametim e to recommend that the Silv e r-valuing Statesshould, whilstadopting Gold for the ir future Standard,continue to maintain the Silver Valuation during thenecessary period Of tran sition . Ultimately, however ,all nations would have to adopt the Single Gold

Valuation , to which end Laws must be introduced ,investing Gold with the exclusive fun ction of soleStandard of Value . With the un iversal adoption of

the Single Gold Valuation it is n ecessary, in fact, turnwhich way we may, that som e such law of legal tenderas now exists in England, with reference to Gold andSilver , should be introduced in all other States . The

Engl ish law forces the creditor to accept Gold inpaymen t for all sums up to the largest amoun t ; buthe is not bound to take Silver Coin in paymen t beyondthe sum of Two Pounds . Now, whether other nation sadept the sam e limit or not, in principle the result

remain s the same ; but it is likely that, with the

proposed universal system of Coinage , auniform lim it

will beadopted. In the countr ies where steps towardsthe adeption of the Gold Valuation have already beentaken ,

the same lim it of Two Pounds for paym ents inSilve r has been adoptedas in England .

What will be the effect of this restriction upon the

use of Silver ? If this precious Metal is no longe r tobe employed as an independen t Standard of value , ifits m onetary office for the future is to be confined toservingasadi v isionary Coin m erely, howmuch Silver

Coin will in future be required for this latter , subsidiary purpose ?

608 DEFENCE OF THE DOUBLE'

v ALUAT10N .

This question touchesavital point .The Coinage return s Of England show that there

has been coined, onanaverage , dur ing late years ,abouttwen ty tim es as much Gold Coin than Silver Coin .

From 1861 to 1866 , 35 m illion s in Goldand millionin Silver were issued by the Mint . The return s fromFran ce , England ,and Am erica,as shown before , giveabout the sam e proportion . It would seem ,

therefore ,that in aState Where the Gold Valuation prevails , it isnot n ecessary to coin more than 5 per cent . ofMon eyin Silver , in order to supply the public wan t . Let us ,

however , for safety ’

s sake , double this proportion ,andlet usassum e that 10per cen t . may be required for theun iv er sal mon etary system .

‘

Taking this 10per cen t . asafairand safe estimatefor the future requirem en ts of the World in SilverCoin ,and, bearing in m ind that we have valued GoldCoin and Bullion at 700 million s Sterling, 10 per

cen t . thereof, or 70m illion s Sterling in Silver would besufficien t to perform the subsidiary office of supplyingsmall change . W e have e stimated the quan tity of

Silver used for m on etary purposes at 550 million s .

With the partial dem on etisation of the Metal weshouldaccordingly have asurplus of 480m illions n o

longer required for money . What is to becom e of

this enormous quan tity of Silver ? Is it likely thatthis imm en se stock, swelled con stan tly by the regular

It must be borne in m ind that the Gold Coins in Englandar ewithdrawn from circulation , by becom ing light or by exportation ,

much quicker than Silv er Coins . The latter hav ealonger life the

Mint return sare therefore n ot strictly guiding in the matter .


pletely upset the Silver Coinage then still remain ingin circulation .

The proposed partial dem onetisation Of Silver ,coupled with the fall in the Market price of the Metalresulting therefrom ,would haveamost disastrous effect,m ore particularly, upon the large Silver Coin of the

Dollar and Rupee class— the Dollar more especially ,which is now represented in Europe by the 5 Francspiece , the Span ish Dollar , the Thaler , the Rouble , the24} Guilders piece ,and in the Western Hemisphere bythe South Ameri can and Mexican Dollar , would soonhave to disappearaltogether ,as they would be en tirely

un suitable even for the restricted use to which thisnew lawwould limit them . The smaller Coin Of the

Threepen ce , Sixpence , Shilling, and Florin class ,m ight con tinue to pass at their presen t over-valuedrate ,as they do in England, although the disturbancewould no doubt soon affect the ir cur ren t value also .

A vast amoun t of Silver is held in deposit in the

shape of Bullion , and the Paper Currency of manyStates (in Germany m ore especially) is founded on

this Bullion deposited in the State Banks . The

Silver Bullion lies dorman t in the Bank vaults, butthe Paper Curren cy which is based upon it,and repr e

sen ts it, effectually perform s in its stead the functionof Circulating Medium naturallyassigned to it . Eventhe great objection of Bullcin ess cannot be broughtagain st Silv er Money so represented . Butafall in the

price of Silver would weaken or destroy the foundationof value upon which the Paper Currency rests .

Can any one doubt but that if480m illion s in Silv e r

DEFENCE OF THE DOUBLE VALUATION . 6 1 1

out of 550m illion sare thrown on the Markets of theWorldas m etal, the value of the material will declinecon siderably ? Can it be

"

doubted but that the con

tinual steady influx of fresh supplies of Silver willaggravate this unfavourable contingen cy P

The probable extent of the decline in pr ice cannotnowbe fix ed but, upon the usual rules of supply

‘anddemand, it is notunlikely that, taking the proportionsas we have assumed them here , Silver will fall to,

35rd

or i th of its present value .

Regarded inam ere superficial poin t of View, thiscontingency may seem to presen t no very form idableaspect ; but there is involved in the question aconsideration of much higher importance , directly con

nected with the welfare of mankind .

W e have estimated the whole mass of the Circu

lating Mediumat present existing in the Worldat onethousand two hundred and fifty millions Sterling in

Coinand Bullion . Seven hundred million s of this sum

are in Gold, fiv e hundredand fifty m illion s in Silver .

The universal in troduction of the single Gold Standardwould demonetise the far greater portion of the Silver

Money ; it would , as we have seen already, reduce

the 550 m illions"' in the course of time to 70

To guardagainst misconception ,as we use the te rm Silv er

Money, we repeat that the greater portion of this amoun t is repre

se nte d by S ilv er Bullion , either held by Banks , or hoarded in Indiaand elsewhe re but this Bullion can be con v e rte d in to curre nt Coin ,

and it is upon this con v e rtibility in to Cur rency that its accepted or

con v en tional value depends . W ith the demonetisation of Silv er ,

ther e fo re , the bas is is taken away upon which this value re sts .


m illion s , which latter sum would be amply sufficien t

to provide for all paym en ts in small amoun ts , forwhich alon e Silver would remain legal tender . We

are justified, then ,in assuming that the solid Circu

latingMedium nowexisting in theWorld would sufferasom ewhat sudden reduction of some THIRTY-EIGHT AND

A-HALF PER CENT . for which we could not possibly expect

to find an imm ediate compen sation in the in creasedsupply of Gold Money, or in acon siderable r ise in the

value of Gold. Willany one pretend to deny but thatthe withdrawal of so large aportion of the World’

s

solid Circulating Medium must seriously injure the

bestand truest intere sts of Tradeand Comm erce , anddisastrouslyaffect the social welfare ofmankind PSuppose even , for the sake ofargum en t, that e ithe r

byacontinuedi

large increase in the supply ofGold , orbyacon siderable rise in the value of that Metal, or byboth causes combined , the enorm ous deficiency create din the actual stock of the Hard Circulating Medium of

the lVorld were to be absolutely filled up in tim e to

avoid the injurious effects here fore seen by us , whatdiffe rence would this make to the holders of Silve r so

seriously depreciated in value , not by the natural ope

ration of supplyand demand , but simply by the forceofam ostarbitrary law? What compen sation would itafford them P And letus not forget that we , throughour Indian Empire , are our selves the largest holde rsof Silver , and that this loss would accordingly fallheaviest upon our own shoulders .

Whatever difference of opin ion may otherwise ex istam ong Political Econom ists about the effects of the

6 14 DEFENCE OF THE DOUBLE VALUATION .

cannot be den ied. How much greate r then must thebenefit be that may be expected to result from anin crease in the solid Circulating MediumThe converse surely must hold equally good, there

fore , Viz . that the de struction ofaconsiderable portionof the existing Circulating Medium , the ann ihilationof part of the World’s capital, cannot but prove injurious to the bestand truest in te rests ofmankind ; andweare clearly justified in maintain ing that theadv ocates of the Single Gold Standard, by the projectedun iversal prohibition s of payments in Silver , except toan insignifican t amount, would str ike am ost ser iousblowagain st theadvance of civilisation and the blessings of social progress .

Theargumen t has been used that Gold will replaceSilver , because so much more Gold is yet expected tobe found . Well, let us welcom e these fresh supplies

of Gold, but their arrival is surely no reason why weshould doaway with Silver .

It is alsoargued that Gold will rise in value ,andthat this willafford compensation for the demonetisation Of Silver . We deny this ; Gold may, indeed, r isein value , but certainly not to the extent required tocompensate the World for the withdrawal of nighupon 500million s Sterling in Silver .

If Money is beneficial to the World, and if bothGold and Silver are fit materials to represent it, let

us keep to both Goldand Silver .

The forcible debasem en t of Silver byan arbitrarylaw cannot find compen sation in agreater increase of

Gold ; but admitting even it m ight, why should we

DEFENCE OF THE DOUBLE VALUATION . 6 15

not profit by this increase of Gold without being com

pelled to subm it to the proposed debasem en t of Silver ?W e do not now touch upon the poin t of the relative

value between Gold and Silver . It does not matterso far whether , from the variations in supply, it maybefound expedien t to fix the proportionate value of on e

part of Gold to 10, or or or 20 par ts of

Silver . This isasubject for future con sideration but

we have here placed before the reader the effect

which the in troduction of the Gold Valuation , with itsrestrictions on Silver , is likely to have upon the

future value of that mater ial. These Views are the

outposts from which the subject, in the first instan ce ,may be watchedand exam in ed.

3 . The general state and aspect of the Question , andthe grounds upon which the adv ocates of the

S ingle Gold Valuation r ecommend its in tro

ductio n, and the fallacy ofwhich we , defe ndingthe Double Valuation , propose to demonstrate .

NVe have stated that, taking into due accoun t thevarious Coinages of the World , it is found that, as analmost un iversal rule , one part of Gold is held to be of

the sam e value as about 15% parts of Silver . With

respect to the relative value of Gold and Silver inancient times, we have no positive datato go upon . It

is, however , generallyassum ed, thataTalen t of Goldwas held worth— in Asia, Afr ica, and Europe— ten

Talents of Silver ; and we know that this remainedthe proportionate value in Europe up to some three

hundred years ago, when the discovery of the Ame

6 16 DEFENCE OF THE DOUBLE VALUATION .

r ican Mines , and the large importation s of Silver fromthe New tended to alter this proportion gradually , until it finally cam e to stand, asagen eral rule ,at between fifteen and sixteen parts of Silv e r to on e

part of Gold ; ranging between these two points

according to the differ en t countriesand localities . The

exact per iod at which the relati v e ratio of on e to

fifteen or sixteen was reached cannot be de term inednow ; but we know for afact that it stood at thesefigur esat the comm encem en t of the pre sen t cen turythat is to say, in Europe ; for in m ost parts of Asiaitkept, up to acomparatively recen t pe riod, rangingbetween te n to twelve of Silv er to one of Gold . In

Japan the relative value of Goldas compared to Silv erstood even as lowas on e to four , un til the Open ing of

the Japane se ports to European comm erce open ed the

eyes of the Japan e se to the much higher e stimation inwhich the re st of theWorld held Gold ,and led them to

the adoption of the same relative Standard— aresulten tir ely owing, in this instan ce ,as is thus clearly seen ,

to the widen edand improved international in te rcoursebetween the Japan ese and other nation s .

At the beginn ing of this cen tury the m ean s of

international intercour se we re rather lim ited, even inEurope which perm itted slight variation s in the value

It was but natural that the enorm ous masses of Silv er broughtov er from the NewW orld by the Span iards, shouldaffect the pr iceof the article . It is affirm ed that the purchas ingpower of Silv e r ,

which simply m eans its re lation of value to other comm oditie s, fell

som e 83 per cent. ; howe v er , Goldalso fellat the sam e tim e about75 per cent. in value .


ordinary citizen is but little given , as arule , to go

deeply into the political and social con siderations con

n ected with the subject : he is gen erally con ten t toplace faith in the Coin of the Realm .

It was in England that the que stion of asinglepositive Standard of Value was fir st practically in troduced in 1816 . Practically, we say, because at thatpe r iod the theoretical grounds upon which the adv ocate s of the system of the Single Standard now taketheir stand had not yet been excogitated .

Up to 1816 Silver had been the true Standard of

Value in England ; at that tim e the relation which theBr itish Silver Coin bore to the GoldCoin wasas 15} to 1 .

In France , on the other hand, Silver was slightlyover-valued as compared with Gold . This circum

stan ce , coupled with the rapid exten sion of the Br itish

Empire , and with the great War in which GreatBritain was then engaged , led toan extensive exportation Of Silve r Coin , whi ch naturally created con siderable inconven ience ,and en tailed aheavy expenditureon the Mint . The Coun try wasat that period delugedwith Paper Mon ey . It was then in con templation toreorgan ise the System of the British Cur ren cy . The

first step which the Governm en t resolved upon wasto de v ise efficien t m easures to put astop to the ex

portation of Silver ; this Object was m ost effectively

achieved, by raising the value of the Silver Coin ascompar ed with Gold, the proportion be ing fixed at14; to 1 , whilst the rest of the World kept it, asthey do to the presen t day,at 1531; or 16 to 1 .

With the adoption of this m easure , it was quite


natural that Gold should from that tim e forward takethe place of Silveras the only practicable Standard of

value in England . The adv ocates of the Single GoldValuation poin t with pride to Great Britain , the prin

cipal coun try where the Single Gold Standard prevails,asam ost favourable in stance of success in illustrationof the soundn ess of the ir VleW S . W e shall he reaftertake occasion to express our Opinion on this poin t .This was the fir st m ovem en t in favour of the Single

Gold Valuation . It was, as we have just shown ,

entirely practical, be ing based on no theory, for the

very simple reason that no theory On the subject

existedat the tim e .

But som e eight or n ine yearsafter the Open ing Ofthe Gold Fields in Californ iaand Australia, in 1858 ,

Michel Chevalier gave the World his theoretical viewson the question . He took his stand upon the assumed

fact that the sudden , enorm ous increase in the quantityOf Gold had lowered the value Of that Precious Metal,and had depreciated it in the World’s market, anddisturbed its accepted relation to all othe r comm odities, &c .

The great Political Econom ist Of France hasdrawn around him acertain school of Theorists, who

succe eded in carrying the day in favour of the ir Views

at the Mon etary Conference held in Paris in the year1867, which constituted the third movem en t in support

of the Single GoldValuation . At this Conferen ce it wasdecided,as has been stated in apreceding Chapte r ,that it was expedient to adopt the Single Gold

Standard for all the Monetary System s of the World.

620 DEFENCE OF THE DOUBLE VALUATION.

Our Object here will be to endeavour to dem onstrate the in sufficien cy and in conclusiven ess of the

results Of these three m ov em en ts, to establish the

Single Gold Valuation all ov er the World ; and wepropose to show

A. That, adm itting even that England affords afairly successful in stan ce of the wisdom of e stablishingthe Single Gold Standard , the position of that coun tryis quite exceptional,and the success of the exper im en t

there is to be attributed solely to the exceptionalcharacter of that position .

B . That Michel Chevalier and his School are not

right in many of the ir asserted facts , n or in the ir

deduction s and inferen ces , and in the proposition s

advan ced by them .

C . That the Paris Mon etary Conferen ce of 1867

should not be regarded in the light of asupr em e

authority whose decision in the matter ought to be

considered con clusive and final.

A. The erample of England. In England the proportionate value of Gold and Silver Coin , as fixed bythe Min t law, is as l to l flé, whereas in most othe r

coun tr ies it isas 1 to 15 195 the value of Silver Coinin England is thus artificially raised by about 6%per cen t . The Min t issues Silv er Coin at 66d pe roz . Standard, whilst Bar Silver sells in the openMarket at 601}d to 62—5d per oz . Standard . The

ar tificial excess of value thus given to Silver Coin inEngland isupheld simply by the Operation of the law of


matter is very differen t,and though the Br itish Publicis con tent to take 93% per cent . of Silver for on e

hundred full, it would certainly not quietly put upwith afurther stre tch of the operation of the lawof legal tender in the direction of an additionaldebasem en t of the Silver Coinage . The excess of 6}

per cent . now supplied by the law of legal tende r isthe differen ce between the Mintage pr ice of 66d pe r

oun ce Of Silver Coin issuedand the univer salave ragepr ice of 60,

7

;d per oz . of Silv er boughtand sold in theMarke t . It is this un iversal Market price of Silver

which supplies the foundation for the Min tage Rateof Silver . Suppose this foundation were suddenly to

alte r to avery con siderable exten t ; suppose Silver

were to fall in the Market to 50d or 40d per oz .

Standard— is it likely , we ask, that the public wouldcontinue to take the Silver Coinat its presen t nom inalvalue P We should rather think, it is not likely.

The present average market pr ice of 60§d per oz . is

kept up simply by the value which Con tinen talNation s ,and China,and India,and the East gen erallyplace on Silver . England having, so to say, demon etised Silver to am ost considerable extent atleast, has no use or employm ent for the very largesurplus of the Me tal which is n ot consum ed in

manufactures or in the arts ; the price of the articlein the Market is keptup, then , solely by the demandfrom abroad . If this demand from abroad were sud

denly to decrease con siderably , or to failaltogether , theprice ofBar Silver in the EnglishMarketwould go downat on ce to an exten t which would reduce the actual


value of the Silver Coinage out ofall proportion belowthe nominal value assign ed to it by the law of legaltender .

It is simply upon the basis Of the actual universalmarket price of Silver that the margin of 6? per

cen t . is allowable , which the law of legal tendercreates in excess over the in tr in sic value of our

Silver Coin . Take this basis away, and the en tiresystem erected upon it must collapse . If all othernation s were to follow the example of England , theresult m ight be that this basis would indeed be takenaway . Let the price Of Silver experience ase riousfall—as it is by no m eans unlikely may be the con

sequence of the re stricted use Of the Metal in futureand the nom inal value ofall the Silver Coinages now

existing would at once grow out ofall sound proportion to the intrinsic Metallic value of the piece s, andagap would be produced which the force of lawwouldprove unavailing to fill up.

On the other hand, let Silver experience acousiderable rise— which , however , is notathing very likelyto happen— the incon v en ience would be equally great inan Opposite direction . But if the actual averagemarket price of Silve r , say 60§d pe r oz . Standard,keeps unaltered , the maintenance of the pre sen t settledr elation Of the value of Silve ras compared with that ofGold will in itselfafford the best argumen t and the

strongest pleain favor of the maintenance of the

Double Standard of Valuation .

Letus see what Michel Chevalier has to say uponthe alteration of the Standard in England in 1816


England, he says, may be regardedas hav ing effected in

1816 the delicate ope ration of the alteration of the Standard. She

then substitute d the Standard of Gold, frankly av owed, for the

Standard of Silv e r which had been expressly chosen in an cien ttim es, but of which the titles had becom e som ewhat obscured inpeople ’

s m inds, without, howe v e r , being quite forgotten . At thattim e , the m en who exerc ised the greatest influence on the Go v ern

m entand on public opin ion allowed them selv es to be unduly in fluenced by the advantage which Gold possesse s of be ing m ore portablethan Silv e r . They thought, also, that Gold fulfilled be tte r , or atleast le ss im pe rfectly than Silv er , the im portant condition of fixed

n ess of value . In that they probably dece iv ed them se lv es ;and ifatthe pre sen t tim e the m ost competen t judges in such matte rs in

England were con sulted,agreat num be r would pronoun ce them

selv es in an opposite sense . But it is essential toadd that in 1816there was n othingwhichwarranted the expectation that the relationof Gold and Silv er would be modified. It was still less probablethat, ifachange did occur , it would con sist in afall in the value of

Gold. The fact is , that the relation between the two m etals unde rwen t in the succeeding years av ery slight m odification , which wasmain tain ed until 1848 or 1849, but it was in the direction ofar iseofGold relativ ely to Silv er ,and not of its depreciation .

”

This is an acknowledgm en t that England was not

influen ced in her action then by the m odern theor ie supon the subject on which the que stion has been latelyagitated . The author m ight have added, that thechief m otive which prompted the British Governm en t

at the tim e toalter the Standard from Silver to Gold ,

was pur ely aselfish and sordid one : it was , as wehavealready had occasion to remark , simply the de sir eto save the heavy cost of the Silver Coinage . It maybe taken for granted that the m en who proposed an dcarried out the alteration of the Standard had n o

thoughtat the tim e of the wide bearing of the ir act.

In our Opin ion , so far from the boasted success of the


Before we dism iss this bran ch ofthe subject , we havetoallude briefly to the effectwhich the exceptional position ofEngland’s Silv er Coinage has hadupon the SilverCoinage of other coun tries,and m ore particularly uponthat of Fran ce . For the last twen ty years the Fren ch5 Fran cs pieces have been fast disappearing, in con se

quence of large expor tation s of the article to Indiaand Chinafor English accoun t . Whenever the priceof Bar Silver in England risesabove acertain lim it , itbecom es profitable to ship fiv e Fran cs pieces from Marseille s to India. This exportation of her Silv er Coin

has been agrievous evil for Fran ce ; the great inconv en ience resulting from it has furnished certain Fren chFinanciers with argum en ts against the use of Silve rfor Coin . It must be clear , however , toany unbiassedm ind, that the fault here is not imputable to anydefect inher en t in the Fr en ch system of Double Valuation , but ought to be put down en tir ely to the accoun tof one of the indirect effects of England’s exceptionalposition in the matter of her Silver Coinage .

B . M ichel Che valier ’

s work (an English version of

which, by Cobden , was published in 1859) was wr itte natatim e when we had be en receiving for about te nyear s m ost con siderableaddition s to our stock of Gold ,

and when there was every prospect that these addition s would still go on increasing in futur e . In thisbook M ichel Chevalier does n ot pronoun ce adecidedopin ion in favor of the Single Gold Standard nay, atthe conclusion ,

he almost seem s to speak in defen ce of

the Double Standard, and is , atall events, conten t to


leave the decision of the question to the future . Still

there is clearly perceptible throughout the bookastronglean ing towards the British Gold Valuation . He seem s

to take England foran example , and e v idently showsthat he is greatly influen ced by his admiration of

her . But, with the exception that he seems to

espouse afew dogmas established by English Financiers, which he quotes, the position which he takes upis, upon the whole , pretty impartial and, as we havejust now state d, he is content after all to leave thesettlem en t of the question to time .

His statemen ts and v iews, which have certainlylargely influenced the decision of the majority at thelate Paris Mone tary Conference , have been fully

adoptedand endorsed by som e , and equally strongly

combatedand con troverted by others . It isadmittedthat som e of the refutations of his Views, published inpamphlets and books, have been fairly succe ssful.

We cannot he re follow Michel Che valier , from pointto poin t, through the page s of his book, but must rest

satisfied with extractingand combating two chief conelusion sat which hearrives in his work .

The first of these conclusions is, that in con se

quence of the large and in creasing supply of the Metalfrom Californ ia, Australia, the Ural, &c . , Gold must

fall in value . Now,in the first place , this fall in the

value of Gold thus proclaimed, cannot properly becalledafall in the price of Gold, as it is not to be

expressed by areduction of so many Shillings andPence in the value of the Gold Pound Sterling, but

simply by the rise in the price of other commodities .

628 DEFENCE OF TEE DOUBLE v ALUATION.

At the first glan ce this may look very much like adistinction without adifference ; but, properly con si

dered, it is really not so . The fact is, the measur e ofvalue cann ot possibly alter , though the comm odity

e stimated by it may varyand fluctuate in pr ice . Ifacertain article were to r ise in pr ice , asecond articleremain ing stationary m eanwhile ,and Gold, as athirdarticle , were to fall in pr ice , then , by the Standardsupplied by the second stationary article , it m ight belogical toaffirm that the firstarticle had r isen in price ,whilst Gold had fallen in value . But as Gold is itselfthe Standard Of Value , the re can only be ar ise or fallin the price of the other articles that are m easured bythis Standard, and it would be quite illogical toassertthat Gold had fallen in value . Still, in its practicalr e sults, the matter com es pretty much to the sam e

thing ; for whenever commodities grow deare r , thepurchasing powe r ofGold is lessened in the sam e ratio .

Chevalier ’sasse rtion that Gold mus tfall in value naturally createdagreat deal of sensation . M . Chevalierhim selfwas so much impre ssed with the gravity of thee v en t which he believed he fore saw, that we find him

actually speculating upon the possible dmnonetisationof Gold . The anticipation of this extrem e result isbased upon the theoreticalassumption that, in proportion as Gold in creases in quan tity, so “ill the pr iceof other commodities rise .

If, on the one hand, the production of Gold

should really go on indefin itelyat the sam e highannualrate as since 1848and 1849,and if, on the other hand ,it could be clearly established that the naturaloperation


is the great purchasing Medium , having doubled , theprice of the goods to be purchased with this Medium

must also have doubled, or must at least have eon

siderably r isen , making due allowance for the fact thatthe in crease has n ot extended to the Silver bran ch ofthecirculating Medium . At the first glance this m ight seemalogical conclusion , if the question were simply on e of

afixed arithmetical proportion between the quan tityof the purchasing Medium on the one ,and the pr ice of

the purchasable comm odities on the other side , asMichel Chevalier and his school would seem to take itto be . But is it so P Are there not agreat manyfactorsat work in the matter , which require to be

taken in to due con sideration P SO far from be ing ruledby the greate r or lesseram oun t of the solid Medium of

Exchange in actual circulation , the r ise or fall in the

price of commodities depends uponavariety of circumstancesand con tingencies,and, if we want to find the

rule which govern s the matter , it will not do to star tupon the basis of som e assum ed favour ite mathematicalaxiom , or to be guided by isolated facts , or pas salim ited review over ashort period of tim e , or confin eour observation to this or that coun try .

If there were in realityafixedarithmetical proportion between the quan tity of purchasing Medium andthe price of the purchaseable comm oditie s why, in thatcase , the pr ice Of comm odities ought to be , now in 1868 ,som e 40 per cen t . higher than it was in 1847 and1848 ; for the quan tity of Gold Coin has in creased 100per cen t . sin ce then ,and the quan tity ofGoldand Silve rCoin taken jointly has increasedat least 40per cen t .


Let us see how the matte r stands actually . Mr .

Nicholson says, upon this poin t in 1865The bestauthorities stilldispute whethe r this gen eral rise ofprices

has yet taken place . W e find Professor Cairnes stating, in the Times ,that aman withafixed m on ey incom e obtain s now 20pe r cen t. less

of comm odities in gen eral than he would hav e obtain ed had the Golddiscov e r ies n e v er taken place .

’

On the other hand, Mr . T . Crawford states in the sam e paper that there certainly has been no r ise

in pr ice in the commodities of which the supply has been equal tothe demand.

’ T here has been no r ise in the pr ice of Iron , Copper ,Tin , Lead, Zin c or in Rice , Sugar , Tea, Coffee , Wool, Spices,or Dye Stuffs . In many commodities there has beenafall of price ,the result of more econom ic processes of production .

’

Thisappears in Mr . Nicholson ’

s work, which waspublished in 1865 . Now, what has our experiencebeen since then ? Why, we have passed through amost severe finan cialand comm ercial Crisis ,and goodshave sufl

’

ered agreat fall . Many Commodities areactually much cheaper than they were in 1847 and1 848, before the discovery of the Gold Fields .

Som e years back Cotton rose disproportionately inpri ce ; but it was the Civil War in the Un ited Stateswhich caused the rise , not the in creased quan tity ofGold Coin in the World ; and Cotton is cheapernow than it was ever before . Everybody is awarethat the price of Corn , Flour , and Bread dependsmuch m ore upon the state of the crops and the yieldof the harvestsall over the Con tin en t of Europe ,andin the North American States, than upon an increase

The fact that the supply of such commodities has kept up tothe demand seems to us toaffordample proof that the Worldat largehas grown wealthier in those comm oditiesas well as in Gold.


or reduction of the Circulating Medium . In creasedfacilitie s of inte rcourse with othe r Nations, speedie randcheaper modes of conveyance , more perfect and m oreeconom ical processes of produce ,and the growing tendeney to widen the sphere over which the ble ssings of

Free Trade extend , may safely be expected to ke ep

down the pri ces of commodi ties , the large influx of

Gold from Californ ia, Australia, and the Ural not

withstanding .

Had Chevalier waited till now, he certamly wouldnot have arr ived at the con clusion that alargein crease in the circulating solid Medium of Exchangemust nece ssar ily lead to acorresponding rise in the

price of other comm odities ; the stubborn fact thatpricesare actually lower now than they were beforethe discovery of the Gold Fields has thoroughly ove rthrown his theorie s established upon the in complete ,un satisfactory, and in con clusive basis of the re sults

ofalimited review overacomparatively brief pe ri odof tim e ,and confined chiefly to Fran ce . Adm itting acertain in crease in the prices of comm odities did takeplace after the discovery of the Gold Fields, are wenot, in Viewof the subsequen t collapse of pricesand theun iversal depression of trade after 1866 , justified inattributing this r ise in agreat m easure ,at least , to theinflation of Comm erceand Trade produced byasudde nlarge addition of Money ? It was this inflation thatled to the late Crisis, which has forced back thingsintoam ore naturaland more healthy state .

The second importan t conclusion arri ved at by


dearer by about 3 or 4 per cen t . This is foundedupon the fact that before 1848 its pri ce in London felloccasionallyas lowas 59d per oz . It must not be for

gotten , however , that even at that tim e the m ean s of

international communication by steam and telegraphwere not so perfect as theyar e n ow, that comm er cedid not m ove with the sam e rapidity,and that chargesand profits were larger than theyare now. On the

Con tinen t Silve r has varied but little in pr ice , and thepre sen t gen erally highe r value of Silve r Bar s in

England is due to the abo v e cause s, and to the

developm ent of the Indian , Chin e se and Japan trade ,and not to the supposed disproportionately largesupply ofGold .

M . Chevalier devote san en tire chapte r of his book

to the subject of the probable rise in the pr ice of

Silver . When he published his work , in 1859, Indiawas absorbing large sum s of Silv er from Europe ,which , it must be adm itted, created som e alarm at thetim e ,and there can be n o doubt but that this made astrong impression upon him . For acouple of yearsIndiahas ceased to take Silver from us . She now

(April 1868) recomm ences taking Bullion from us ;

but, as Gold is gradually gaining ground in Asia, it isby no m ean s unlikely that in future alarge portionof this Bullion may be Gold in stead of Silver .

Ther e is another circum stan ce for which M .

Chevalier was not prepared when he wrote his book ;viz . , the discov ery of fre sh r ich Silv er Min es . Californ iaand the partsadjacen t have since 1860, in addition to

the irabundan t Gold crops , produced nearly fiv e m illion s


sterling Silver per annum . Why should not otherSilver Min es be discovered, whose yield m ight con

tribute , in the cour se of year s , to restore the balancebetweer’ the supply of Gold and Silver ? It ought tobe well born e in m indalso that the exceptionably largeEupply ofGold in the last twenty year s has certainlysom ething ofaspasmodic character about it, whereasthe yield of the Silver Min es has kept on steadilyatthe same rate for along series of years ; so that it isnotatall improbable but that, whilst the n ew SilverMin esand the old will go on steadily producing the irpresen t yield of m etallic treasure , the produce of the

Gold Mines will subside toamuch lower level, whichagain must n ecessarily tend to restore the balan cebetween the two Metals .

There isavery plausible argum en t made use of byMichel Chevalier and his adherents , which seem s to

bear strongly again st the Double Valuation . It isthis The value of each of the Precious Metalsis liable to perpetual change s . The Min t authoritiesmay do their best to fix the relative value of the two

Metals in the closest possible correspondence with theproportion which they actually bear to each other inthe Market , the chan ces are that the fluctuation s inthe Market pr ice will spe edily alte r the proportionfixed by the Mint regulations,and that the one of the

two Metals will become over-valued accordingly, asCoin in compar ison with the other . And in this casethe debtor is always sure to pay his creditor in the

over-valued Metal, which he naturally finds the

636 DEFENCE OF TEE DOUBLE VALUATION .

cheapest for him . Sure ly it cannot be just to force thecreditor to subm it to this Option on the debtor ’

s part .”

This m eans if Gold falls in pri ce in the Marke t ,whilst Silver remains stationary or r ises in pr

'

t e , Gold

Coin is over-valued,and debtors will accordingly payin Gold ,and v ice v ersd with Silver . We m ight argueagain st this plea, that if the Option lies with the debtor

in which Coin he chooses to pay, the sam e Option lie s

also with the credi tor in his capacityas debtor to other s ;so, as he is at liberty to make his own paym en tsin the sam e Coin in which he him self has been paid,there is no injustice done him . However , setting thisaside , the question here again tur ns upon the pointwhether the disproportion in the supplyand deman dof the two Metals is likely to be so con siderable as towarran t theassumption that the debtor will der ive aclear and positive advan tage by paying in the overvalued Metal.W e propose to exam in e and discuss this poin t

when ,at the end of this Chapter , we develope our ownplan for the maintenan ce of the Double Standard .

Michel Che valier con cludes his work by proposin gto leave the settlem en t of the que stion of the Single or

Double Standard ofValuation to tim e . It seem s to us

that the tim e to pronounce adecision on the poin thad com e in 1867, when the Monetary Conference or

Convention m etat Paris .

4 3 . T he Par is Confer ence .—We have in the Chapte r

preceding this given an accoun t of the proceedings of

the two Conferen ces— (the on e held chiefly by Dele


Standard was aforegone con clusion with the majorityof the Delegates .

Then there was the Diplomatic Conference , whichwas attended by oflicial Delegate s , nom inated by thediffer en t Governm en ts . The subject of the Single or

Double Standard was equally discussed by these gen tlem en , and the re was con siderable diversity of Opin ion

about it among them . W e do not in tend here tofollow the discussion , but we cann ot abstain from

m en tion ing , by way of givingasample of the spiri t in

which certain of the Delegatesapproached the subje ct,and the sort of kn owledge they brought to bear uponit , that on e of these gentlem en coollyasserted thatall civilised nation s had already practically adoptedthe Single Gold Standard .

” W e always thoughtthat Prussiaand Holland,among others , might fairlyadvance som e claim to be ranked among ci v ilisedcoun tries ; yet they have not adopted the Single

Gold Valuation , and it is even unquestionably the

fact that Gold is actually in little request there , andthat the far gr eater part of the Coinage con sists of

Silver . The Silv er Valuation prevails in these countr ie s , and the State Banks of Prussia, Hollan d ,and Hamburg hold almost all the ir Bullion in SilverBars .

Again , another of the speakers gave it as his

Opin ion that in the countries where the Gold Valuation prevailed the r ise and fall of prices was le ssmarked than elsewhere If England , the prin cipalseat of the Gold Standard , be taken as an exam plehe re , the proposition is decidedly founded in e rr or

,

DEFENCE OF TEE DOUBLE VALUATION. 639

for nowhere has the fluctuation in pri ces been so con

siderable as in England .

The discussion altogether did not bring out asingle clear , conclusiveand unassailable argum en t in

suppor t of the un ive rsal adoption of the Single Gold

Standard ; this will be adm itted even by the warm estadvocate s of the proposed m easure . Con sidering them om entous magn itude of the proposition , which m ean snothing short ofaswe eping revolution in the Mon etarysystem of the world, it might certain ly have beenexpected that the matter would have been approachedon all sides in aspirit of diflidence , and with asince reand earn e st de sire to con sider and di scuss the subjectin all its bearings ,and to clear up the last vestige of

doubtabout it , before pron ouncing adecisive Opin ione ither way. t en , in stead of this , we find the subjectof the discussion treated by most of the speakers asaforegon e conclusion ,and finally decidedupon the groundof bare boldassertion s , un supported by facts or argum ents , we may sur ely claim the right to refuse ser v ilely

subscribing to the decision . We cannot help thinkingthat the gen ius loci, the atmosphere of the plac e wherethe Confe ren ce was held, must have exe rcisedacertaininfluence upon the m inds and views of many of the

Delegate s ; we are not quite certain whether the

English scientific Delegates were not among the

number thus led to make undue obe isance to the

Fren ch system ,and e v erything French connected withit . lVe are quite willing to adm it that the Fr enchMonetary system is excellen t in its way, and thatthe m etr ical system of weights and m easures seem s

640 DEFENCE OF TEE DOUBLE VALUATION.

certainly the best that could be hit upon . But sur elythis is not sufficien t reason why all the World should

subm issively follow in the sam e path , without furtherexamination into the matte r ,andwi thout con siderationof the crowd of circum stances of place and conditionwhich everywhere surround the subject . Atall even tsit was no reason that the views of French finan ciers ,based m ostly on exper ien ce confin ed to Fran ce , andthe opin ion s of the Am erican Delegate , and afewother disciple s of the sam e school, should have beenso emphaticallyadopted as they were by the major ityof the Delegate sat the Conference .

As we have shown , the oscillations in the propor

tionate value of Gold and Silver have now for manyyears past kept within very manageable limits ,and itwould, in our Opin ion , be much better and wise r ,instead of proposing to use the force of law,as theadv ocates of the Single Gold Standard do, to destroythe existing r elative propor tion of value between thetwo Metals , to employ that same force for the maintenance of the ir proportionate value , so long,at least,as no n otable natural r ise or decline in the price of

e ither of the two Metals shall com e toaffordapractical demon stration of the n ecessity ofachange . Thiscertainly has not occurredas yet,as even the warm e stad v ocates of the Single Gold Standard are forced toadm it , and the uncertain and flickering indication swhich have occasionally seem ed to poin t in thisdirection have in variably soon diedawayagain .

W e would like to place the decision and issue of


England , which , as we have repeatedly explained,

occupie s an altogether exceptional position in r elationto this question ) has the law ever been had r e course

to to suppress the use of one of the two CoinageMetals ,and e stablish the sole supremacy of the other .

This coercive and prohibitory feature in the proposed m easure is the m ore calculated to strike us withamazem en t, as the proposer and the supporters of it

star t in theirargum en t from the broadest basis of fre e

trade ,and the m ost unrestricted operation of the lawsof supply and demand . In the se enlighten ed dayspeople are apt to be captivated by argum ents thatprofe ss to be based upon aliberal application of the

prin ciple s of free trade , and upon the natural laws ;and when they find m en of em inen ce arri v ing atconclusion s that, from acommon sen se poin t of View,

may se em to be the very n egation of the prin ciple supon which they profe ss to be based , they are aptalso to believe that these em in en t m en are guided intheir r eason ing, and in the conclusion s and re sultsat which they arr ive , by asen se supe rior to the

common ; and they will occasionally take the soundn ess ofasystem on trust, upon the m ere nam e andauthority of som e man Of high standingand reputationwho has started it .

But this is an example which we do not fe el

inclined to follow he re . It is clear to us that theadvocate sand supporters of the Single Gold Standardofl

’

end again st the laws of sound reason ing when ,

having taken the ir stand profe ssedly upon the broade stbasis of the principle s of fre e trade , they, at the end


of the ir case , suddenly turn round deliberately— todemand the adoption ofam ost illiberaland prohibitorylaw to put down the use of Silver in future as aStandard of Value ! W e cannot help looking uponsuch aproposition as on e of the m ost flagran t andmischievous Violation s of the ve ry principle s uponwhich , up to that point , all the ir argum ents in supportof the Single Gold Standard proposed by them havebeen based .

It is upon this ground chiefly that we claim the

right of saying : the Paris Conference of 1867 shouldnot be regarded in the light ofasupreme authoritywhose decision in the matter ought to be con sideredcon clusive and final.”

The Conference m ight have dealt with thi s questionin quiteadifferent spirit . Now that rapid internationalcommun ication brings all nations into closer contact,and tends to modify thean tagon istic position in whichthey we re form erly placed to each other— so much so ,

indeed, that we see before us unan im ity ofaction inmany importan t social que stion s— the subject m ighthave been considered in aspir it of highe r intelligence .

It would surely have been possible for the delegate sto e stimate the pre sen t and the future supply of the

precious m etals , and to base on such e stimate som eplan upon which , in som e shape or othe r , the existingrelations between Gold and Silve r m ight have beenupheld ; and, even if the plan devised had turned out

wrongafterwards , they would atall even ts , have beenjustly entitled to claim the credit of having doneeve rything in the matter which human in telligence


could do toarrive atan equitable comprom ise . But,

in stead of this, they must, forsooth ,adopt the clum sy

and rough expedien t of practically demonetising Silv er !Before proceeding fur ther , we will br iefly explain

here the circum stan ces in which the Law of LegalTender originated , and the grounds upon which it isbased .

The thr ee Metals— Gold , Silver , and Coppe r— havefrom tim es imm emorial been always associated in

the capacity of Circulating Medium s . Iron also has ,indeed , occasionally been turn ed to the sam e use ; it

form ed, for in stance , in ancien t tim es, the prim itivem oney of the Lacedaemon ians ; and, in the begin n ing

of the e ighteen th cen tury, Sweden found herse lf

reduced to an Iron Coinage , through the wars of

Charles the Twelfth . But then the use of Iron forthis purpose has only been rare and exceptional ;whilst the other thr ee Cur rency Metals have noto

r iously kept the ir position from the earliest histor icages to the pre sen t tim e . Gold is by far the m ost

valuable of the thr ee Silver follows n ext , thoughatacomparatively long distance ,and Copperagain is muchless valuable than Silver .

It is upon this theory of apropor tionate valuebetween the three Curren cy Metals that the gen e ralnotion is based which people not cogn isan t of the

var ious causesand circum stance s affecting the subje cten tertain of the m onetary system s of the World . It

seem s only quite natural that the earlie st personalexper ience made in life of the functions of m on e yshould lead to the belief in acertain in tr in sic Metallic


In the paym en t of large sum s, the refore , bothPayer and Payee would be sure to find the CopperCoinage extrem ely inconven ien t . The tim e andlabour which such paym en ts would n ecessitate be ingamatter of appreciable value , it is self-eviden t that,both theor etically and practically, Copper Coin s areby that much less suited for Curren cy in alarge waythan Silver and Gold. Now, there m ight ar ise caseswhere an ill-natured debtor , wishing to give troubleand ann oyance to his creditor , no matter at whatamoun t of trouble to him self, m ight elect to make paym ent in Copper Coin . Would it be rightand equitabletoallow him to do so ? The law of legaltende r , whichhas been devised to m e et the case , says no andlim its the faculty of making paym en t in Copper Cointo small amoun ts, ranging in different coun tr iesbetween Sixpence and two Shillings . Above thistr iflingam oun t no creditor is bound toaccept paym ent

in COpper : but he has an absolute right to demandSilver or Gold,as the case may be .

There can be no doubt but that the law of legaltender was suggested first through the necessity tomake provisionagain st this purely m echan icaldifficulty,

and that in this sen se its application is thoroughlyjustified, in so far as regards the Copper Curr en cy .

But it isaquestion whether the objection of in con

v enientbulkiness can be said toapply equally, though inamuch lesser degree , to Silver . In the Silver-valuingStates, at least , no inconven ience on the score of

bulkiness has hitherto been felt toattend the use of afull-value legal tender Silver Currency . Mor eove r ,

DEFENCE OF TEE DOUBLE VALUATION . 647

the issue ofaPaper Cur ren cy based upon an equi

valen t deposit of Silv er Bars in the National Bankswould completely se ttle the objection .

lVe now com e to another con sideration affectingour preconceived theory of the proportionate valueof the three Curren cy Metals , v iz . , the influen cewhich supply and demand must exercise upon the ir

value .

Up to this poin t we have taken our stand uponthe abstract m ean ing of the term value as derivedpur elyand simply from the inherent qualities of the

three Metals . We n eed not repeat here the reason sadduced in other parts of this volum e , why Gold isin tr in sically m ore valuable than Silver , and whyCoppe r is the least valuable of the three Cur ren cyMetals . Suffice it to say that, if we take into dueaccoun t the various Coinages of the World , we find

that ,asan almost un ive rsal rule , on e part of Gold isheld of the same value as about 1 5 parts of Silve r , "i

and that one par t of the latter is con sidered equal toabout twenty parts of COppe r .1

' lVe may take it forgranted then that these fixed proportionate values of

Gold, Silver , and Copper Coin are pretty gen erally

England holds asom ewhat exceptional position with regardto her Silv er Coinage , which is issued at anom inal higher valuethan its intrin sic m etallic worth . In England the proportion be tweenGoldand Silv er in the value of the Coinage standsas l 14 15909.

t It must be hom e in m ind,howe v er , that the Br itish Penny

piece,for instan ce , is in reality worth only on e Farthing m etallic

value . The true proportion , in the relativ e value of Silv er andCoppe r or Bronze , isabout 1 to 80.


assumed to be naturally resulting from the in tr insic

worth severally inheren t in the three Metals .

Still it cannot for amoment be doubted but thatthe supply of, and the demand for , any on e of the

three Me tals must exerciseacertain di sturbing influ

en ce upon the ir abstract proportionate values . It

remains to be shown hereafter whether this theory ofthe influen ce of Eupplyand demandupon the r espe ctive

value of the three Curren cy Me tals is absolute enough

to enfor ce an equallyabsolute practice ; or whether

the Mon etary System hasace rtain degree of elasticityin it tending to coun teract, or to m odify,at least, tosome exten t, in so far as these thr ee Metals in

the ir capacity of Coin are concern ed, the naturalactionof the lawof supplyand demand .

Paying due regard to all other purposes to whichGold and Silver are generally turn ed, the ir chiefandmost importan t use is to serveas Coined Mon ey . Now,

whatare the requirem en ts of Society in this respect

It is generally conceded that the prosper ity of Mankind is the greater in proportion to the quan tity of athoroughly sound Circulating Medium . There is n o

n eed then to endeavour to fix alim it to the amoun t ofCoin in circulation generally ; on the contrary, weshould rather str ive to promote its in crease as muchas practicable . But there is another question whichforces itselfupon our atten tion here— viz . , the relativeamoun t of Gold, Silver ,and Copper Coin demanded bythe requi rem ents of Society . Is the natural action of

the law of, supplyand demand sufficien t to solve andsettle this question , or is legislativ e inte rference n ece s

Out) DEFENCE OF THE DOUBLE VALUATION.

this law has acertain power ofaction upon the valueof the Currency Metals ,and that it can invest m e r e

token s with the attributes of full-value Coin . Could

not this power , which we find exercised in the dirce

tion of adebasem ent of the Coinage , be exercised

equally in an opposite directionW e propose that ad van tage should be taken of

this power ofaction of the lawwhenever an occasionaldisproportion between the supply ofand the deman dfor e ither Gold or Silver ,— which furn ishes the adv ocates of the Single Gold Standard with their greatargumen t in support of the ir theory, -may call for theexercise of it .

The advocates of the Single Gold Valuation chieflyr ely upon the se two great staple argum ents of

the irs :

That it is desirable that the Standard of Ex

change should beas littleas possible subje ctto oscillation of value , and that it is cer

tainly inexpedien t to subject it to the

oscillation saffecting both Goldand Silver .

That the system of Double Standard is unjustin itself, since it leave s the creditor at them ercy of the debtor , in allowi ng him to

pay in the least valuable m etal, 830.

Professor Levi reports these as the an swers madeby the Conferen ce in Par is toadefende r of the DoubleStandard (see page and it will be seen thattheyare , in the main , the old maxim s laid down byChe valier (see ‘ pageIt would be idle for us to deny the correctness


of the axiom that the Standard of Value ought to besubject to as little fluctuation as possible , and thatthe restri ction of that Standard to one material only,Gold, as proposed, seems likely to lessen the oscillation s caused by supplyand demand.

On the other hand it is just possible that , werethe Gold Valuation un iversally introduced,and Silveruniversally demone tised, as suggested, it m ight bediscovered that the employm en t of Silver as aStandard ofValue is indispen sable for the proper upholdingof Gold as aStandard of Value ,and thatadistin ctvalue should beassigned to each of the two mater ials ,in order to maintain the balance ,whenever fluctuationsin the supplyand demand tend to lead to oscillation inthe value of either . Take this mutual checkaway,andthe chancesare that the fluctuations in the value of thesole material left in exclusive possession of the field,relatively to the price of comm odities, will be much

more serious than they are now. The example of

Englandaffords no conclusive criterion in this respect,for it remains to be seen whether the Un iversaladoptionof the English system will not move away the

foundation of that system .

Granted, however , as amatter of theory, that itis desirable to have aun iform Standard of Valueallover the World,and that this desirable result may beachieved by the universal introduction of the Single

Gold Valuation , the whole matter may be placed uponthis issue :

Are the advantages which it is supposed the

Worldat large will derive from the Single


Gold Valuation great enough tocounterbalance

the evil results which are sure to follow

thi s revolution in the existing mon etarysystem s, and the debasementand destruction ,

whether rapid or slow, ofagreat par t of

the Cash Capital of the VVorldPIs the theoretical crotchet of the paramoun t

necessity of keeping the Standard ofValuefree from oscillation s of pr ice ’ sound andconclusive enough to

subv ert altogetherour pre con ce ived notion that in trin sicm etallic value is the indispensable basis of

alegitimate cur rency, supported as thisnotion is by the history of the past andbyall the tradition s connected with Silverasamater ial for money .

The pertinacity with which the advocates of the

Single Gold Valuation cling to their theory is onlyanother illustration of the blindand stubbornadheren cequand meme to asupposed absolute principle , whichwe so often m eet with in life . Here is aprinciple ,proclaim these advocates,and this pr in ciple must becarried out in spite ofall that may seem to m ilitateagainst it . W eare willing toadmit that the pr in cipleof the Single Gold Valuation theory is strong, and

Notabsolutely fr ee , mark, which would be rather too U topian,but only comparativ ely fre er , in so far as this result is supposed toheattainable by confin ing the oscillations to one single material.


But it is hardly in this sense that the objection ismean t to apply ; what the defenders of the SingleGold Standard really m ean is this When the supply

of one mate rial gen erally is disproportionate to the

supply of the other , the mater ial in over-supply willget cheaper , whilst the other will becom e comparativ ely dearer , and the debtor will make his choice

between the two,and, of course , will elect to pay inthe cheaper material. This, in fact, is the or iginalpoin t again upon which Chevalier and his discipleshave started the whole subje ct. Gold has been in veryabundant supply, consequen tly Silver has becom e

dearer . We have refuted this assertion before , andbelieve that the presen t spasm odic supply of Goldwill, in course of tim e , be fully balanced by the mor egradual but steadier supply of Silver .

’

The caseas between creditor and debtor ,althoughwe are not aware that in the ordinary tran saction sof trade the creditor has ever practically experiencedthe supposed injury to which it isasserted the DoubleStandard exposes him , is nevertheless worthy of

attention and con sideration ; for it must be concededthat differen ces in the value of Goldand Silver have

Let us notice the singular position assum ed here . The

adv ocates of the Gold Standard assert : Gold has becom e more

abundantand cheaper ,and accordingly ov er-valued, Silv er is there

fore dearer , and accordingly under-valued . If this were true we

ought to introduce m easure s of raising the value of Silv er . But

will the introduction of the Gold Valuation efl’

ect this P We hav eshown that it willact in the contrary direction ,and that, in v iola~tion ofall principle , it will lower the pri ce of Silv er .

DEFENCE OF TEE DOUBLE VALUATION . 655

from time to tim e ar isen . These diffe rences , howe v er ,have always been more or less ofalocal character .

In Germany, for in stance , before the Californ ian Mineswere discovered, Gold was frequently at an agio or

prem ium over Silver . In France ,whenever the demandfor Silver for Englishaccoun t for Indiabecam e urgen t,the 5 Francs piece s were eage rly sought, and whenrequired for shipment in large quan tities ,apremiumup to 1 per cen t . was paid for them . We asser t thatit was in both cases the Single Valuation which causedthe evil ; in Ge rmany , the Silv er Valuation in France ,the English Gold Valuation and the Indian SilverValuation combin ed .

’ Had there been in force asystem of Un iversal Coinage , England, France , andIndiabe ing all three of them willin g to take Goldand Silver upon the sam e understanding, no disturb

ance in the French Silver Coinage would have takenplace without an imm ediate re-supply of the articlefrom England . Bullion— Gold or Silver— would havebeen shipped, and the differen ces in value causedby the brisk demand would simply have appeared asordinary feature in Exchange transactions, am ere

‘

natural deviation from the Par of Exchange . Nobody

will ven ture to assert that it was an over-supply of

Gold which caused the withdrawal of the 5 Fran cspieces .

As ad v ocates of the system of the Double

The paym ent ofaprem ium on Gold in Germany was not due

to an ov e r-supply of Silv er ; it was simply the result of ashort

supply of Gold.


Standard, we dispute altogether that differen ces inthe relative value of Gold and Silver Coin s occurupon any other than exceptional grounds, and maintain that in such case s an in sufficien t supply or asudden withdrawal of the on e or the other mate rialis the cause , and not an over-abundant supply of

e ither . In the usual local in tercourse the se oscillaption s have otherwise no influence ,and from this pointof view the small practical evil assum ed in the posi

tion between creditorand debtor is after all reduced

toam ere matter of theory .

To sum up our objections to the projected universal in troduction of the Single Gold Valuation ,

and our views in favor of the main tenan ce of the

Double Gold and Silver Valuation ,and of its further

extension and more un iversaladeption even , we repeaton ce m ore our firm conviction that there is no reasonable prospect ofasudden notable change in theactualproportionate value of Gold and Silver , un less it bebroughtabout forcibly by the operation ofan arbitraryprohibitory law;and, if the proposerand the supportersof the Single Gold Standard of Valuation profess tothink theyare entitled to demand the interven tion of

the law in favor of their crotchet, we surely have thegreate rand better claim to plead rather for the support of the law in favour of the maintenan ce of the

actual proportionate value of Gold and Silver , for so

long, at least, as no notable natural r ise or decline inthe market pri ce of e ither of the two Metals shallcom e to demonstrate the fallacy of our Views on this

question .


the creditor has the simple remedy of claim ing fullpaym ent in the other Standard ofValue — so no injus

tice will be done in e ither case . Let the creditor , or

rece iver of Money, on his part, be en titled to exact aprem ium on all payments tendered in the temporaryov er-valued Metal.

Theadoption of the Double Standard, modified bythis Premium proviso , would satisfy all reasonabledemands, and it would in reality respond to the

theory of the single pivot of the Balan ce , as thatone of the two mater ials which is over-valued forthe tim e , or which, if we may expre ss it this way,keeps on arelative Par with the price of all othe rcommodities, assumes practically for the tim e be ing

the fun ction of principal Standard ofValue whilst theother , which rises toaPremium , becom es techn icallyahigher-priced article ofmerchandise . If no Pre

m ium isasked in e ither case ,and both mater ials keepat their proportionate value ,as fix ed by the Mon etaryLaw,

it is clear that in that case they really con

stitute conjoin tlyand together asingle pivot on whichthe beam of the balance of value may safely be left to

The system of the Double Standard of Valuationmight thus justly be pron oun ced to be self-adjusting .

No other in tervention of the law would be required ,

except to fix the proportionate value of the two Metalsfor Mone tary purposes . The Min t Authorities mayregulate the respective issue of the Gold and Silve rCoinaccording to the requirem ents of the public the

demand ofaprem ium or adiscount on either will

DEFENCE OF TEE DOUBLE VALUATION. 659

afford valuable indications in this respect . The sur

plus of Gold or Silver ,as the case maybe , may be heldin the shape ofun coined Bullion ,asasolid guaran teeforan issue of Paper Money—and the Banks m ight,so to Speak, perform the function s of reser v oirs in towhich the surplus m ight beabsorbed . Such surpluswould then be represen ted as Money by Bank Notesof the first-class, no matter whether founded on aGoldor on aSilver basis . The objection that there m ightbe too much Gold Coin or too much Silver Coin

would con sequen tly fall to the ground .

It can easily be shown that theassumed con sequencesofan over-supply of either Gold or Silverare not m et

by theadoption of the Gold Standard . It matters notwhether the proportion between Gold and Silver befixedat 1 to 15% or 1 to 144, but som e fixity of valuemust be adopted for the Coinage . A cer tain fixedquantity of Gold must be held equivalen t to acertainfix ed quantity ofSilver ,and the proportion onceadoptedcannot be altered . This, afterall, amounts in realityto aDouble Standard,andall the supposed influen ces

of supply and demand would operate on the new

proportion the sam eas upon the Old. What would begained therebyasamatter of practicalvalue P Nothingat all! The alteration of the law would in r ealityhave no othe r effect than that of lim iting the use of

Silver , and thisagain would simply lead to the re v olu

tion in the Monetary system ,and to the destruction of

the value of one of our two great Currency Metals,which we have before de scribed .


In the face of so mom en tous acontingency itseem s to us that m ore tim e should be given before adecision is finally made . Men ofacknowledged ex

per ience should m eet again in order to discuss the

subject in am ore systematic manner than it has be e ndone before . With all due deference to the force of

abstract theories, we think that every other elem en t,

theoretical and practical, should be taken into dueaccoun tand con sideration .

W e think that England may well take the leadin this matter . She herself has the large st stake init, for she represen ts, by her own Gold Valuationat hom e , and by the exclusive Silver Valuation in

India, the two extreme s of the position . The forcible

in troduction of the GoldValuation will ruin , rapidly orslowly, the wealth of India.W e have no doubt that, upon afair and common

sen se ground of discussion ,asatisfactory re sult can beattain ed, and that an equitable comprom ise in the

matter , or the full and Open adeption of the DoubleValuation will be the happy result .

662 PROPOSAL TO ESTABLISH TEE

tion , or both combined . That the wr iter is awarmadvocate of the last of the three courses must, by

this tim e , be clear ’

to every reader . He is quite awarethat his views upon this subject run absolutely coun te rto the gen eral tendency of the public m ind in GreatBritain ; but he thinks, nevertheless, that the Vitalimportance of the question to be decided, perhapsfinally,— at least for ages to com e ,

— will justify hisclaim ing leave to add his m ite to the general stockof factsand reason ings upon which the decision oughtto be based. The exigencies of clearnessand logicalconnection of the argum en t must plead his apologyfor an occasional repetition of facts, &c . , that mayhave appeared before in the preceding Chapters .

The English Mint Law, as we know, makes 1 partof Gold equal to 145 parts of Silver , whilst the

average proportion in all other parts of the World is

as 1 to 15-3 The English Silver Coin is issued by

the Min t at 66d per oz . Standard Silver , and the

people are compelled to take it at that value , whilstthe actual average price of the same quality of the

m etal in the Market, which is regulated chiefly by theun iver sal price of the article , is only 6 1d per oz .

Twenty Shillings worth of Bri tish Silver Coin , fresh

from the Mint, when re-m elted and exported asBullion , will only on the average fetch l 8s 6d. As

we have repeatedly obser v ed already, this discrepancybetween the nominal and the actual value of the

British Silver Coin is calculated to upset our pre

con ceived notion thatabsolute intrinsic m etallic valueis the indispensable basis of alegitimate curren cy .

DOUBLE VALUATION IN ENGLAND . 663

The law of legal tende r , which compels us to takeBritish Silve r Coin at ahigher than the actual intrin sic value of the article , simply converts this Coin ,in so far as the excess of the nom inal over the realvalue is con cern ed , in to aforced Cur rency in the veryworst form , as the State is not respon sible for thediffe ren ce ; but the sam e law, on the other hand,lim its the use of this over-valued forced currency

to the comparatively small sum of £2 in any one

paym en t . It pro v ides thatThe creditor is bound to take Gold in paym en t

to any amoun t , and the debtor is bound to pay in

Gold , at the ' Creditor ’

s demand, to anyam oun t ex

ceeding£2

The n ecessity of this lim itation of the legality of

atender in Silver to the small sum of £2 is patent .It is not likely that people would con sen t to receivelarge paym ents in an over-valued Currency, whichthey would find it extremely difficult to pass on to

othersat the nom inal value . Export m erchan ts m oree specially , who have to send Silver abroad, wouldincur aloss of more than 6 per cen t . if they wereto receiv e Silv er Coin here at its nom inal value , tosend itabroad .

There appears to be asingular con tradiction of

principle in alawwhich , whilst, by one of its clausesraising acertain article for use for certain purposesabove its actual intrin sic value , by another clauseprohibits the use of thatarticle for the said purposesbeyond certain most restricted limits .

Our greatest and gravest objection to the law

664 PROPOSAL TO ESTABLISH THE

of legal tender ,as faras the relative position s of Gold

and Silve r Coin are concern ed , we base upon the

principle of free trade . Why should there be thisexceptional direct inte rference of the law between Goldand Silve r in the capacity of Coin P Why should Goldbe thus investedalmost exclus ively with the attribute sof legal currency, to the prejudi ce of its com pee r ,Silver ? Asaque stion of theory, it cann ot be den iedthat this in terference of the law is con trary to thespirit of comm erce and to

,

the pr inciple s of free trade .

Before the year 1816 Silver Coin was the StandardCurrency of the Realm , although Gold also playedam ost importan t part . The Silver Coinage then stood

in the proportion of value of 15} to 1 of Gold .

The result was that, before and during the warswith the French Republic and Napoleon Bonaparte ,the Silver Coin kept rapidly disappear ing from England,being exported to the Colon iesandabroadas fastasit was issued from the Min t . A period of PaperCurren cy then followed in England , when all de scription s of Coin di sappeared from circulation , by boardingor otherwise ; so that , when after many years, in 1816 ,the Country began to recover from the trouble andturm oil,and the m isery of the long and m ost costly

war ,and it becam e necessary to re-organ ise the Coinage , the Statesm en and Financiers of the day, on

whom the task devolved , hadafresh , clear field beforethem .

Rem embering the loss inflicted upon the Min t inform er tim es by the exportation of the Silver Coin ,

and finding, pe rhaps, that there was at the tim e a

666 PBOFOSAL To ESTABLISH THE

adoption of the Gold Standard, the partial prohibitionof the use of Silver in the capacity of Coin ,and thedebasem ent of the subsidiary Silver Currency whichwas still perm itted to exist . The measure adoptedserved not only as 'an effectual baragain staren ewedexportation of Silver Coin from the Country, but itgave the State aclear profit, by way of seignorage , of

6 pe r cent . (more or le ss,according to the fluctuationsin the Market price of the Metal) upon all SilverCoins issued by the Min t . W e may fairlyassum e thateconomical considerations had their full share in thedecision ; after the costly wars ne ither the Min istrynor Parliam en t could resist the temptation of se izing

upon this prom ising source of revenue . Asaset-off,the State undertook to Coin the Gold Currency free of

charge .

Such was the true or igin of the adoption of the

Gold Valuation in England, and the arbitrary suppre ssion ofafull-valued Silver Curren cy . It may bequestioned whether an efficient check Upon the ex

portation of Silver Coin from the Realm m ight not

have been devised at much less cost to the true interests of the Coun try— for that these interests havebeen mostadv erselyaffected by the m easures adoptedin 181 6 weare prepared to Show.

W e are fullyaware that we Shall be m et here ,at thevery outset,with the usual declamatory phrases, aboutEngland be ing the r ichest and the most prosperouscountry ; the GoldValriation having worked very well ;there being no need ofaSilver Currency,as we have asufficien cy of Gold Coin forall our requirements ; the re


being plen ty of Silver Coin provided to serve in the

subsidiary capacity of change , &c . , &c .

Granted that England may justly claim ahighposition for industry and wealth, surely no one will

ven ture to assert that she has attained the highestpractical pinnacle of prosperity, leaving no room for

further improvem en t .It is easy to assert that the Gold Valuation has

worked very well in England ; but thisassertion doesnot prove that the Double Valuation would not havedon e better . Atall even ts, it must have worked prettywell in olden tim es, since itwas perm itted to remain inforce in England for more than four centuries (from 1257to From the latte r date down to 1 717, Silverwas the only legal tender , the value of Gold Coin

fluctuating with the fluctuation s in the relative worthof Goldand Silver in the Market . In 1 71 7, however , itwas deem edadvisable to revertagain to the old practice ,and the Double Standard was restored, it be ing fixed

then by law that the Gold Guineashould be taken asthe equivalen t of 2] Shillings in Silver ,and conve rsely .

But in this restoration of the Double Standard therewasagri evous error comm itted , which could not but

Vitiate the result of the m easur e . The Gold Guineawas ov er-valued to the extent of 1;per Ce nt. The result

of this error becam e , of course , the m ore and m oreapparent,as the real value of Silver , relatively to Gold ,con tinued to in crease dur ing the greater part of lastcen tury . It is to this error , and its natural con

sequences , that we have to ascribe the un satisfactoryworking of the Double Standard at that time , and


the tendency then prevalent to fuse or export the fullwe ight Silver Coin , which principally led, in 181 6 , tothe adoption of the Single Gold Valuation .

It mayappear also that we have plen ty of Gold

Coin for all our requirem en ts , although in times of

comm ercial distress and panic , the very reverse is

loudly proclaim ed ; but be there enough Gold Co in ,

or be there too little , we can see no reason e ither

way why we should notalso have asound and fullvalued Silve r Coinage .

That there is plenty of our debased Silver Coinissued toanswer the subsidiary purpose of small changefor Gold Coin , we willingly admit ; but we think thisought not to be the only, nor the chief purpose forwhich the second of the Precious Metals should enter

into our Mon etary System . We would have Silve rhold in our Currency an independen t position of its

own , equal to that of Gold, in proportion to its relativevalue .

The pleathat the system introduced in 1816 hasanswered very well, belongs to the same category withthe averment that England is aprosperous country ;and may, accordingly, be m et by the sam e rejoinder

as the latter , viz . , that, granting the GoldValuation tohave worked pretty well, there can barely be adoubtbut that the retention ofafull-valued Silver Currency ,in conjunction with the Gold Valuation , would haveworked still much better . We think it can be shownthat the Gold Valuation has been injur ious to England’sinterests in her foreign trade as wellas in her inte rnalfinancial economy .

670 PROPOSAL TO ESTABLISH TEE

encies closer to her P This con sideration isaltogetherindependent of an other importan t item in the matter ,viz . , the much higher rates of Coinage which the Min tsat Calcuttaand Hong Kongare compelled to chargem erchan ts .

Our present English Silver Coin , v iolatingas itdoes , by its artificially raised nom inal value , every

sound pri nciple of Inte rnational Exchanges, is totallyunfit to se rve asaMedium of Exchange in our tradewith Foreign Countrie s . England n ever holdsastockof Silver Bars . As soon as she is compelled to exportBullion , she has only Gold to give ,andwhen the stock

of that m etal becom es.

low,alarm is created . Other

countries, however , besides Gold, have Silver to fallback upon .

The injury inflicted upon our home trade by thesubstitution ofalim ited debased Silver Curren cy forafree full-valued Silver Coinage may not be so verypaten t,and there m ight bea. difficulty to calculate itand express it in figures . Still there can be no doubt

but that there isakind of in stinctive objection on the

part of Bankers and Merchants to hold much of thisover-valued curr en cy ; they always endeavour to getrid of it as soon as they can , and it generally fallsultimately into the hands of the labouring and the

poorer classes . It does not seem quite r ight andconformable to the str ict dictates of honesty thatthis Medium of Exchange of the poorer classes shouldnot Ofl

'

er the sam e full guarante e of in trin sic valuewhich the Gold Coinage offer s to the wealthie r classe s ,

7

DOUBLE VALUATION IN ENGLAND . 6 1 1

andwhich the popular ideaof Money justly demands .

W e are prepared to hear itargued, in defence of this

state of things, that the poor are at liberty toexchange the ir Silver for Gold, or to lodge their

savings in the Post Office Bank . But such pleas donot effect the paten t fact that the Silver Curren cy,which is nece ssarily restr icted, inam easure , to circulationamong the poorer classes , is intrin sicallyun sound ;its actual value falling short of what it professes tobe . The poor save only in small sums,and deal only insmall sum s— Half Sovereigns and Sovere ign sare not

always handy to them . Let it be born e in mindalsothat aPenny or aShilling may be ofas much importance to them as aPound or a£100Note to thewealthy ; and, furthermore , that aShilling in activecirculation will produce more Exchange of Ben efitsthan aSovereign lying dormant .

The glari ng contrast existing in this coun try

between enorm ous wealth and abject poverty may beattri butable , in some m easure , to the British CoinageLaws , and the undue favour shown to Gold . The

financial weakness of our humbler classes,rwhich becomes painfully apparen t , despite the Saving Banks,in which the industrious and econom ical workmandepositsaportion of his earnings, is certainlyaverystri king fact . It is possible that the lack ofaproperfull-valued Silver Currency ought to be reckonedamong the causes of this sad state of things .

‘ Viewing

That Silv er 13 the material In which the poor prefer to holdtheir sav ings is gene rally admitted. India18 astriking example of

this . In France also this has been made manifest. Enormous

672 PROPOSAL To ESTABLISH THE

the question on the most general grounds, we find

that Great Britain certainly loses theadvantage of the

greate r part of the capitalising power of Silver , by thearbitrary and most unfair prohibition of the un

restricted employm en t of that material in the capacityofan in trin sically soundand full-valued Cur ren cy .

In ven turing to suggest the desirableness of sucharadicalalte ration in our presen t Monetary System asthe introduction of the Double Standard— the Gold

and S ilv er Valuation— would n ecessarily require , it isby no m ean s our intention to call for the withdrawalof our presen t small change Silver Coinage from cir

culation . Let the Florin (which is now our largestSilver Coin , since Crown s and Half Crown s are no

longer struck) continue at the presen t valuation of

1 part Gold to parts Silver . Indeed, Fran ce hasfollowed our example in this respect, by coin ing her

2 Fran cs and Fran c pieces,and the smaller subdiv i

sionary pieces,about 7i‘ per cen t . below the ir nom inalvalue . So our present Silver Coins m ight continue to

amounts of French Silv er Coin hav e been exported to the East, un tilitwas supposed thatalmostall the large Silv er pieces had disappearedfrom the country. Yet there is still Silv er to be had,and whene v ershipm ents ar e ordered v id Marseilles, they can be effected at am oderate premium . There is no doubt that the Coin com es chieflyfrom the hoardings of the poorer classes. It is quite true thathoarding isaproceeding not inaccord with the modern prin ciples of

Banking, but no matte r whether , from this point of View, it be

considered av irtue orav ice , it isafeature which must not be lostsight of in the consideration of this question for wealth is wealth

,

whether hoarded or thrown freely into circulation .


to receive paym en ts in large sums . Accustom ed asthey are to Gold Coins, easily handled and we ighed,according to the pre sen t fashion , they m ight saySilver is too bulky,and we should suffer great inconv enience if we had to rece ive and make paymen ts init . In the first place , Banke rs are even now com

pelled to use Silve r ,and the additional trouble whichthe use ofaDollar piece would give would not be so

great as imagined , for Gold will always much pre

ponderate . The Min t m ight easily regulate the use

of Dollars in accordan ce with public conven ience ,andneed not exceed certain lim its . Such limits, in fac t,can be narrowed to apoin t just suflicient for the duemaintenance of the Double Valuation . But it must

beadm itted that , in order to main tain the characte rof the Double Valuation , it is necessary to investthe Dollar with the r ight of paym en t, as it mayfrequen tly occur that Banker s are compelled to takein large quan tities of the Coin . A modification m ightbe made in the law of legal tender which would m ee tthis case fairly . The legal tender in Dollars mightbe lim ited to the amoun t of £100 or £200 (upon

the prin ciple that £100or £200is awe ight which one

per son can carry) . It m ight fur ther be enacted, thatin making such paym ents , the payer be compelled, atthe payee ’

s demand, to furn ish the Coin in rolls of

25 or 50, or in bags of 50 or 100 pieces each .

Bankers would have little difficulty in dealing withSilver in this form , and the restri ction so provided

would lessen the objection against Silver mon ey,asalegal tender , that might otherwise be urged by


them on the score of un reasonable trouble given themin the rece ipt of paym ents in Silver Coin .

The introduction of this full-value Dollar ,as thelink between our present Gold and Silver Coin , wouldafford afair compromise of the whole question of

Single or Double Valuation . Goldwould still con tinueto remain the principal Standard,and Silver , kept stillto some exten t under the re striction of the law, wouldat all even ts r egain its original importance ,and maintain its value by the proposed extension of the lim it oftender for the Dollar piece .

If this suggestion were carri ed out, England wouldthereby be enabled to hold astock of Silver Bars,upon which ahealthy Paper Curren cy m ight befounded . Our surplus of Silver now goes abroad ;it is true that in return for it we ar e supposed toreceive Gold and other Commodities on favourableterms . Nevertheless, the conversion of such surplusof Silver in to actual Money, immediately availablefor the purposes of our home “as well as our foreign

trade , is clearly preferable to return s in Gold or other

commodities . A large stock of Silver held at hom e

would enable us, whenever Indiademands remittancesin Silver , to supply her from our own stores, so thatthe profit which Continental Banks now make on the

Exchanges with England for supplies of Silver would

remain in our own hands . A stock of Silver of thiskind would con sequen tly m eet apressing wan t ; itm ight easily be keptupas the basis ofaPape r Curreney system of the fir st class , which would in itselfform an importantaddition to our national wealth .


W e think we mayalso ven ture to state our beliefthat the adoption of the Double Valuation will befound the only sureand safe m ean s ofattain ing thatm ost desirable object— the introduction of aun iversal system of Coinage . Lim iting our considerationof this bran ch of the subject, by way of illustration ,

to the introduction ofaun iform system of Coinagebetween Great Britain and her Indian Empire , wefind that in the one coun try the Gold Valuation prevails, whilst in the other the Silver Valuation holdsalmostabsolute and exclusive sway . Every attemptto introduce Gold in to Indiahas hitherto failed ; theGold Mohur has been Coin ed for agreat many years ,but it has made but little progre ss as yet among the

people of India. It is now proposed to in troducethe Sovere ign ; is it at all likely that this piece , farm ore un suitable for di v ision into Rupees than the

Mohur , will make greate r progre ss P W e very much

que stion it. The Opin ion sandassertions of those whoare anxious to place Indiaunder the Gold Valuation ,

r est upon very weak grounds indeed, and ar e clearlybased upon wishes rather than facts .

True , the introduction of the Gold Valuation intoIndiam ight be accomplished by the force of law ;

Silve r m ight be declared to be no longer legal tender .

A m easur e of this kind, supposing it were actuallycarr ied into effect, would simply re sult in the de

monetisation of Silver , and the total destruction of

the value of the che rished circulating m edium of the

Indian people . No State sman would ever dare tor ecomm end suchacourse , and it is not likely that our

678 PROPOSAL To ESTABLISH THE

The English Florin is of the Silver value of

l s but,it passes for 23 why should not the

Rupee , which is also worth 1 s 9-§d , pass for 2s or

HalfDollarThis is, in fact, the sam e plan which we have

suggested for England , wi th regard to the Dollar andthe smaller Silver Coins. The Rupee Coinage wouldbe invested withasubsidiary character ,and would belegal tender to the extent of £2 only, whilst the new

Silver Dollar , or piece of 2 Rupees, as well as the

Gold Coin of the system , would be full legal tender toanyamoun t .This plan of alter ing the Monetary system of

Indiaseems to be very simple , and it tallies wellwith other Monetary system s . (See next Chapter ,—on Universal Coinage) . But we must not losesight of the fact that the bulk of the Coinage of

Indiaconsists of single Rupee pieces, and that itwould therefore be difficult at once to assignasubsidiary character to the Rupee . We think

, how

ever , that it can be don e with alittle managem en t .The Min t in Calcuttam ight, simultaneously with thein troduction of the law of legal tender , ceas e tocoin Rupees for the public , issuing them and the

smaller Silver Coins in future only at its own dis

cretion , with ase ignorage or duty upon the Coinage ,in the same way as the British Min t . The Dollarmight at the same time be struck and circulatedaslegal tender , together with the Gold Coins . It

is clear that the prices of commodities must

follow this alteration , which involves, of course ,

DOUBLE v ALUATION IN ENGLAND . 679

acorrespondingalteration in accounts .

‘ The refusalof the Min t to coin Rupees, exceptat its own pleasureand discretion , would protect the Dollar again st allattempts at melting down for the purpose of re

coinage in the shape of Rupees . If the Nativesshould take to hoarding the Dollar , on accoun t of thepropor tionately larger amoun t of Silver in it, thiswould only tend‘

to bring it very speedily in to favourasaStandard of Value .

The large mass of the Rupee Coinage now in cir

culation , so far from suffer ing aserious depr eciation ,

wouldactually have conferred on itanominal in creaseof value , to which the Natives certainlyare not likelyto object ; whilst the law of legal tender , restrictingthe use of the old Rupee to small paym en ts, would

confine the effect of this nominal increase within verynarrow lim its . Amongst the Indians themselves theRupee m ight continue to circulateas anational Coin ,

and we think that in so exten sive acommunity,where small change plays so importantapart,averylarge amount of subsidiary Coinage will always berequired . Should it turn out, on experience , that thequan tity of old Rupees in circulation is really toolarge , it may possibly happen that the holders thereofmay have to bear the loss of about 9 per cent . , thedifferen ce between the actual value of 21 -n and the

There is unquestionably som e incon v enience in v olv ed in this

change ; but this is unav oidable , and would equally attend anyother mann er of change . The Dollar might be called apiece of

two Rupees, oraDouble Rupee , or an Imperial Rupee , in contrw

distinction to the Company’s Rupee .

”

680 PROPOSED DOUBLE VALUATION IN ENGLAND .

nom inal value of 24d; this loss, however , is infin ite lyle ss than would be that caused by the forcible in troduction of the Gold Valuation . In any case it would onlybe partial, as alarge proportion of the old Coinagewould still nece ssarily remain in use . The danger of

this loss itself would tend most effectively to destroyin the Native m ind the prestige of the presen t Rupee ,and to facilitate the success of the n ewBritish Sterling

system . But we really do not think that, if the Mintceases to Coin Rupees, and the in troduction of the

4 Shillings or Double Rupee piece is pushed wi th

proper energy, there will be too much subsidiary Coinfor small change . The large portion of Silver in Indiais held in the shape of Bars and Pieces, upon whichthe proposedalteration in the Coinage system would

exercise no disturbing influence whatever , except in

so far that it m ight tend to bring to light the hoardedwealth of the coun try, to see it graduallyabsorbed inthe Un iversal Coinage , and thus distr ibuted all overthe World .

In the n ext Chapter , when discussing the planproposed last year at the Par is Conference , to adoptthe Fran c system as the basis of the InternationalCoinage , we shall Show how well this Silver Dollarwould work in wi th either of the system s of Un iver salCoinage suggested .

682 UNIVERSAL COINAGE.

Monetary Un ion has taken the lead in the matte r ,certainly entitles the system adopted by it, andproposed to the other Nation s, to great con sideration .

It is only reasonable to demand that other Nation s ,each of them singly much less numerous,and eachwithadifferent Mon etary System , should rather makean endeavour to follow in the wake of the Union , thanselfishly in sist upon forcing upon all others their own

particular system as the basis of the desired International or Un iversal Coinage .

Even we in England, however strongly we may beattached to our Pound Sterling System , ifwe desire toShare in the benefits sure to result from the gen eralin troduction ofauniform Currency, must make upour m inds toassimilate ou

‘

r Coinage to that of Fran ce ,as the best means of facilitating theattainm ent of thegreat object in view.

The pre sent actual Money value of the British

Sovere ign or Poun d Sterling is Fs . 252 215, the Coin

be ing fine . All we have to do is to str ike

aCoin 900 fine ,‘

of the exact value of Fs . 25 , or

about g-ths per cent . less than the presen t Sovere ign ,

which reduction of gths per cent . represents the odd

Cen times in the Pound . This new Sovere ignof ours would be exactly 28 per cen t. heav ier thanthe present 20 Francs piece , and we should thus

This reduction in the Standard must not be mistaken for adebasem ent of the Coin . The change fi'

om 9166 6 to 900fin e is not

brought about by the abstraction of Gold, but simply by the

addition ofalittle more alloy. A Coin 900fine will, therefore , be

heav ier than aCoin of equal value fine .

UNIVERSAL COINAGE. 683

possess apiece of the exact value of 25 Francs ,which would pass curren t in France , whilst the 20

Francs piece m ight be taken here at the rate of 16

n ew Shillings (for the Shillingalso would n ece ssarilybe affected by the change) . The Fren ch Governm ent

has already taken the lead in this matter , havinglately issued an ew Gold Coin of the value of 25

Fran cs, in deference to usand the Am ericans .

To people unacquain ted with commercial operations the excess of 22 15 Centim e s over Francs 25 ,in the value of the Sove reign as now coined by our

Min t,may seem so fractional and unimportan t that

they will be in clin ed to ask, perhaps, whywe shouldrequir e to have an ew Coin struck, in stead of simplykeeping to our old Sovere ign , generously dropping

the few paltry Cen times over-value . But in the eyes

of Bankersand Merchants the matterassumes averydifferen t aspect . True , upon £1 the differen ce isonly alittle mor e than 2d ; but upon it

amounts to something like £880.

Still the change can be broughtabout withoutanyv ery considerable disturbance of our presen t system . If

the Government will butagree to effect the alteration ,

it is only necessary to stop the Coinage of Sovereign sand Half Sovereigns for atime , un til the Gold Coinin cir culation shall have become light by wear . W e

know that light Sovereigns are cut, and that theholders of them have to bear the loss . When the

proper time has arrived, let the n ew Coinage be

issued,and let the old Sovereigns be withdrawn fromcirculation , by declaring that they hav e ceased to be

684 UNIVERSAL COINAOE.

legal tender , or let them be declared simply of the

value of 20n ew Shillings .

The lack of n ew Sover eign s m ight unquestionablycause som e in conven ien ce , and speculator s would beinduced to buy upall the full-we ight old pieces . But,

as it is to be presum ed that , in the even t of theadoption ofaUn iversal Coinage , the British Min t will notcon tinue the presen t system of coining Gold gratis ,but will charge for the expenses of Coinage , as allother Min ts do , such aspeculation would not prove

very profitable in futur e .

Upon the whole , the plan wouldwork with the leastpossible effect upon the prices of Commodities, andupon the state of Inte rnational Exchanges . Changesof this kind cann ot possibly be effected without som e

in conven ien ce ,and people must make up their min dsto bear their fair share of it .With the Pound Ste rling reduced to -the exact

value of Fran cs 25 , Great Bri tainapproaches the M e

Valuation closer than m ost other countries . It is tobe hoped that she will be willing to carry in to effect this

par t, at least, of the International Coinage proposed .

In aspeech delivered 7th February 1868 ,at Live rpool, Mr . G6schen made the following remarks

Gentlem en, in your reportwhich has been read, youallude tothe subject of Inte rnational Coinage . In this matte r you must

allow m e to say that Iam not yet quite of your m ind. Adm itting

all thead vantages ofaun iform system of Coinage , I cannot but fee lthat it is adoubtful matter , seeing how the question affects the

National creditor , and, indeed,all contracts, whether the imm ense

disadvantage of depreciating the value of the Sov ereign , as is proposed

,be it by e v er so little , doe s not outweigh the benefit of a


and paym en ts stipulated in the old Sovere ign . With

re spect to paym en ts for goods,abalance of value maybe easilyarrivedatat once , but as regards other con

tracts, such as Mortgages, the State Debt, &c . , the

question seem s certainly m ore difficult to solve to the

en tire satisfaction ofall parties concern ed ; for it isself-evident that , ifat the time when the con tracts , 850.

we re effected , the value of the Sovere ign stood atFs . 25 2215 , paym ents under such con tracts, &c . , madesubsequen tly in an ew Coinage of the value of onlyFs . 25 , would be an injustice to the creditor ,and inflictan injury upon him . Let it be born e in m ind, however , that the rate of Fs . 252 215 is the supposed full

legal value of the Sovere ign , but not theactual value .

Sovere ignsare full legal tender , with the Mint Rem edyfor fin eness of 1

—16-th carat,andat the weight of 122 5

grain s, in stead of 1232 47 grains, which two item s

together am oun tactually to per cen t . , making theSovereign practically worth only Fs . or about-ths per m ille less than the proposed value of Fs . 25 .

So far the re would be no injustice in the case asregards future paym ents upon old con tracts in the n ew

Coin . A Min t Remedy, both for finen ess and weight,must, however , be allowed for the new Coin as well asfor the old ; but, as we have demon strated in our

Cr iticism on the British Mint, page s 555and 556 , thereis no n eed to con tinue the presen t excessiveallowance .

One per m ille for finenessand on e per mille for weight

is quite sufficien t,and, with this allowan ce , the Mintmay easily manage to turn out an almost perfectCoin .

UNIVERSAL OOINAOE. 687

Theactual reduction of the Gold value of the new

Sovereign ,as compared to the old, would thus be less

than 2 per mille . Creditors paidupon old contracts, &c .

in the n ew Coin would consequently sustain aloss of 4supon £100, makingaloss of £20upon The

State , with the sanction of Parliam en t, has the r ight

to le v y taxes in whatever manner or shape it may bedeemed conven ient ; and this loss sustained upon paym ents rece ived in the n ew Coin may be looked uponin the light ofatax of less than kth per cen t . for oneyear . The paym en t of this slight tax , which , m ore

over , falls only on con tracts of old date , would settle

the question on ce for all. Beside s, the tax is not

actually levied, beingafterall simplyanominal matter ,and compen sation is provided in other direction s .

Acts of Parliam ent , whether relating to question s of

Policy or Taxation , will often afl'

ect private intere sts inasim ilar way. Taxing Bills of Exchange , for in stan ce ,to the exten t of pe r m ille may be con sidered anarbitrary m easure of this kind , which falls upon aclass ; yet nobody will dispute the principle of Policy

and Taxation involved in the Stamp Duty . And Bills

of Exchange are short-lived in strum ents ; yet they

bear this charge of 51, per m ille easily ; why then should

con tracts of long existence , such as are likely to beaffected by the proposed change in our Coinage , beunable to bear with the sam e ease atrifling charge of2 per m ille , to be paid for once on ly, for the purpose of

facilitatingachange so beneficial to the public interest PLet us hope that Mr . Geschen ,

upon whom the City

of London looksas an authority in financial matters,

688 UNIVERSAL OOINAOE.

will takealess narrow View of the question of Inter

national Coinage ,and that he will be induced to lendhis powerful assistan ce to the accomplishmen t of

this change , which cannot but prove of un iversalbenefit .

W e have said that the Paris Conference resolved

to adopt the 5 Fran cs Gold piece , with its decimalsub-division s,as the basis of the projected new Uni

versal Mon etary System .

The prin cipal objection to this Coin is its smallness .

This objection was strongly urged at the Pari s Conferen ce again st itsadoption as the basis of the system ;and asuggestion was made to make the 10FrancsPiece the n ormal basis, under the nam e of Ducat,dividing it in to 100par ts, each of them equal toaboutOne Penny or Two Sous . Under both system s it

was proposed to coin Gold piece s of 5 Francs, 10Fran cs, 20 Fran cs, up to 100Francs, or Imperials ;with Silver Coin s from 2 Fran cs pieces down

to the smallest practicable sub-divisionary pieces, re

tain ing the presen t Copper Coin , and r estricting the

use of the Silver and Copper Coinage within certainnarrow lim its byalaw of legal tender .

The Un iversal Coinage wouldaccordingly be baseden tirely upon the Fran c system , with its decimaldiv ision s .

Upon this point we have to offerafew observation shere

l st. It is gen erally adm itted that the 5 Fran csGold piece is too small.


GOLD.

Sov ere ign 20Shillings, or 25 Francs.

Half Sov ereign 10

Quarter Sov ereign . 5

SILVER.

i

The Flor in to be divided in to 100parts, each partabout equal to the presen t Farthing .

It is adm itted on all sides that the 5 Fran cs Goldpiece is too small ; it is easily ben t, and require scareful handling. A 900 fine Gold piece of the valueof 5 Shillings would be 25 per cen t . heavier andlarger , and would accordingly be by so much less

objectionable on the score of smalln ess .

Most nation s have acurrent Coin about equivalen tto the English Shilling. In Austria, for instance ,there is the Half Guilder ; in Prussiathe Third Thaler ,in the Un ited States of North America,and the othe rDollar-issuing State s , the Quarter Dollar whereas forthe Franc, we find only the Quarter Rouble in Russia.

In those coinages in which the Shilling finds no equi

valen t there is no corresponding Coin either for theFranc . Taking it altogether , the Shilling is muchmore frequen tly and numerously represented in otherCoinages than the Fran c, which may fairly be con

sideredan indication that the size of the Shillingandof its sub-divisions is generally thought more suitable .

UNIVERSAL COINAGE. 691

The Dollar m ight, indeed , be divided into fiv e

par ts, in stead of four ; but the latter sub-division is

the one prac tically in use now. The half fran c is still

afair Coin , but the quarter fran c in Silver , which is ofsmaller size than our threepen ce bit, is decidedly toodim inutive for practical purposes .

The division of the Franc into 100 Cen tim es is

simply nominal, in so far as the actual Centim e piece iscon cern ed, which has indeed been coined, but is hardlyever seen in actual cir culation . And in accoun ts wefind 237 Centimes practically set down as the lowestfigure ; balances under thisamount being ignored,andover the amount counted for the full Sou.

Now 215 Cen tim es are about equal toaFarthing,and m ost nation s have aCopper Coin ofabout thisvalue we believe that thi s Coin is the bestadapted tosupply the lowest practicable Un it . True , Farthingsare not much seen in the higher walks of life ; but

they con stitute , nevertheless ,an importan t Medium of

Exchange among the humbler and lower classes of

Socie ty .

W e may observe here , in cidentally, that the termUn itapplied to the Pound Sterlin g or the 5 Francspiece is logically wrong, as the Un it, in the propersen se of the term , is the lowest sub-division of the

Coinage . It matters not whether this Un it be calledFarthing , or half Sou, or Pfennig , but the word Centcann ot correctly be applied to it .Prem ising, as an additional argum en t of som e

we ight in support of our views, that the in troductionof the present Franc , and the system based the reon ,


would necessitate greate r change s in most of the

existing Coinages , and would lead to greate r dis

turbance , and m ore in tricate complication s in the

accoun ts, than would be the case with our proposed

Shilling system ; we will now proceed to en ter intoam ore detailed elaborationand elucidation of our plan .

Taking the Farthing, then , for the ultimate Un it of

our proposed new System of Coinage , we get the

following scale of Coins, as set forth in the subjoin ed

TableCOPPER.

1 Un it

1 Son or Halfpenny1 Penny or Double Sou(or Decime)

Units .

GOLD .

Sov ereign

10

1 10Florins

2 Sov ere igns pieces 10Dollars4 20

BANK NOTES.

5 Pound Notes 5 Sov ereigns or 25 Dolls . 5000

10 10 or 50

&c ., &c .

The 100Pound Note would therefore be Units .

The 1000Pound Note

SILVER.

5 Sous

12l n

25

25 Pence or 50

50Pen ce or 100


stead of the fourth part of the Dollar) ; Florin andDucat, German ; whilst the words Baron and Royalare generallyapplicable .

Re specting our suggested combination of the

duodecimal with the decimal system , we may remarkthat the latter , pure and simple , does not afford so

inuch scope for all kinds of divisionsand fractionsasthe combin ed system . If the Coinage were based, forinstan ce , upon the piece of 10Fran cs, the hundredthpart of this would be equal to one Penny ; if upon

the piece of 5 Francs, thi s latter would have to be

divided into 100Sous ; and n either the Penny nor the

Sou is the admitted smallest Un it of its respective

scale , whereas the division of the Florin into 100

parts gives us this ultimate Un it .With the Five Francs Gold piece for the basis of

the system , as settled by the late Mon etary Conference ,and the division of this Coin into Five Parts,—with the Fren ch Fran c system in short,— we obtainthe following scale of Coinage .

COPPER.

1 Son piece2 Sous or 1 Decim e

SILVER.

Franc piece

1

2 France piece5

UNIVERSAL COINAoE. 695

GOLD.

5 Francs piece10

20

50

100

W e will now compare the two system s, the Francand the Shilling, upon the point of the respectivefacility severallyafforded by either for paying fractional8 111118 .

PROPOSED SHILLINO OR NEw PRESENT FRANO

FBANO Srsrmr.’ Sr STEu.

COPPER.

SILVER

GOLD .

BANE NOTEBANE NOTE.

It will be seen that our proposed new systemaffords am ore extensive range of fi°actions in the

lower Coins, and that it contains also the figure 4,

It matte rs notwhether we use the term Shilling, or New

Shilling, or Franc, or NewFranc, or any other term that may bedeem ed suitable .

696 UNIVERSAL OOINAOE.

imported from the duodecimal system , giv ing us thus

am ounts of 1 , 2, 3, 4, 5, 10, 20, 40, 80and 100NewFrancs, whilst the present Franc system gives us onlyamounts of 1 , 2, 5, 10, 50and 100Francs . The piece

of 25 Un its, or Shilling or New Fran c , and the

smallest Gold Coin of 250Unitsarealso usefiIl introduction s . The presen t Fran c system has the 5 Francepiece both in Gold and in Silver ,and the 100Fran csNote by the side of the Gold piece of 100Fran cs . In

our proposed n ew system the Silver Coins stopat 4, theGold Coinsat 80, the Bank Note s beginn ing at 100,which clearly affords amuch larger scope for com

bination of paym en ts .

Theadoption of our proposed plan would givetheleast trouble to England (and to the United State s,&c .) The presen t Sovereign s and Half Sovereign swould soon get worn to the condition of light Coin ,

when it will be tim e to issue the 900 fine n ew

Sovereign s and Half Sovereigns of the value of 20

and 10new Shillings (25 and 1231; Francs) , and to

str ike the Baron or Five Shillings piece in addition ,

also 900fin e of course .

In the Silver Coinage the only new piece would

be the legal tender Dollar , 900 fin e , and of the

full metallic value of Four Shillings . Our presentFlor in s, Shillingsand Sixpen ces might be leftunaltered,as they are only slightly affected by the proposed

change ,and the fractional differen ce resulting is morethan amply covered by the fictitious over-value of

these small Silver Coins .

Considering the small intrinsic value of the Copper


Francs Gold piece alongsidea100Francs Bank Note ,

is not so conven ien t as would be the possession ofaSilver piece of 4, aGold piece of 5, an Imperial inGold of 80,andaBank Note of 100parts .

England be ingamost importan t party required tojoin in the proposed Internationaland Un iversal Coinage arrangemen t, having, together with her Colonie s,the largest in terest in the matter , has surely aclearright to assert the weight of her influence , and tobri ng it to bear to the fullest extent upon the ultimatedecision of the question .

To resume briefly, then , we hope that GreatBritain , whilst willing to make all reasonable concession s to facilitate the universaladoption ofaun iformsystem of Coinage ,and to yield,accordingly, in deferen ce to Franceand other coun tries,as well as on the

score of the greater soundness of pr inciple in the

practice , upon the three following points, viz .

1 . The decimal division of the Coinage , withthe m odification here suggested ;

2. The adoption of 900as the Standard of

fin en ess ;and3 . The reduction of the value of the presen t

Sovere ign to Frs . 25 ,

will on her part strenuously in sist upon the retention

ofaShilling basis for the division of the Coinage . She

may do this with the more rightand the greaterweight,Since ,as has been Shown here , the pieces represen ting

the smaller sub-divisionary fraction s of the Shillingare of amore suitable size , and that the Shilling

Bullion and Oreign Exchanges - Forgotten Books

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