The circulating medium of the New England colonies was quite as fantastic as that of Virginia. Merchantable beaver was legally receivable for debts at 10s. per pound. In 1631 the General Court of Massachusetts ordered that corn should pass for the payment of all debts at the price it was usually sold for, unless money or beaver skins were expressly stipulated. In other words, a debt payable in pounds, shillings, and pence might be paid at the debtor's option in any one of three ways: in corn at the market price, in beaver at IOS. per pound, or in the metallic money of England. For more than half a century this order continued in force and operation, other things being added to the list from time to time. In 1675, during King Philip's war, the need of metallic money for public use was so great that a deduction of 50 per cent was offered on all taxes so paid. The first local currency of New Netherlands was wampum, but | it was subordinate to the silver coinage of the mother-country; that is, it was reckoned in terms of that coinage as fixed by the Dutch West India Company from time to time. It was first fixed at six white beads for a stiver. Wampum was not made in the province, but was imported from the east end of Long Island, the principal seat of production. It is mentioned in a letter from the Patrons of New Netherlands to the States General in June, 1634, as "being in a manner the currency of the country with which the produce of the country is paid for," the produce of the country being furs. Beaver soon became current here, as in New England, and for the same reason, its currency value being fixed by the company at 8 florins per skin. As 6 wampum beads were equal to 1 stiver and 20 stivers to florin, and 8 florins to 1 skin, the ratio of wampum to beaver was 960 to I. The market ratio did not coincide with the legal ratio very long. Nor was the legal ratio of either wampum or beaver to silver maintained. In 1719 the Assembly of South Carolina made rice receivable for taxes, "to be delivered in good barrels upon the bay in Charlestown." In the following year a tax of 1,200,000 lb. of rice was levied, and commissioners were appointed to issue rice orders to public creditors, in anticipation of collection, at the rate of 30s. per 100 lb. in the following form: "This order entitles the bearer to one hundred weight of well-cleaned merchantable rice to be paid to the commissioners that receive the tax on the second Tuesday in March, 1723." Rice orders were receivable for all purposes, and counterfeiting was made felony without benefit of clergy. In eastern Tennessee and Kentucky, early in the nineteenth century, deerskins and raccoon skins were receivable for taxes and served the purpose of currency. When California was first invaded by gold-seekers there were a few Mexican coins in circulation there, not nearly sufficient to answer the needs of the growing community. The immigrants brought more or less metallic money with them. The smaller coins were those of many different countries, chiefly Spanish. For want of sufficient coins, the first trading was done largely with gold dust, sometimes by weighing it in scales, and sometimes by guesswork. A "pinch" of gold dust about as large as a pinch of snuff had a current value and was common measure in places where there was no means of weighing. At a public meeting in San Francisco, September 9, 1848, it was resolved by unanimous vote that $16 per ounce was a fair price for placer gold. This rate was at once adopted in all business transactions. By and by private coiners of gold came into the field. C. The Use of Metals as Money 40. EVOLUTION OF THE PRECIOUS METALS' The reason why the precious metals had become the generally current medium of exchange among here and there a nation prior to its appearance in history, and in the sequel among all peoples of advanced economic civilization, is because their salableness is far and away superior to that of all other commodities, and at the same time because they are found to be specifically qualified for the concomitant and subsidiary functions of money. There is no center of population which has not in the very beginnings of civilization come keenly to desire and eagerly to covet the precious metals—in primitive times for their utility and peculiar beauty as in themselves ornamental, subsequently as the choicest materials for plastic and architectural decoration, and especially for ornaments and vessels of every kind. In spite of their natural scarcity, they are well distributed geographically, and, in proportion to most other metals, are easy to extract and elaborate. Further, the ratio of the available quantity of the precious metals to the total requirement is so small that the number of those whose need of them 'Adapted from "The Origin of Money," Economic Journal, II (1892), 252-55. is unsupplied, or at least insufficiently supplied, together with extent of this unsupplied need, is always relatively large-larger more or less than in the case of other more important though more abundantly available commodities. In no national economy which has advanced beyond the first stages of development are there any commodities the salableness of which is so little restricted in such a number of respects-personally, quantitatively, spatially, and temporally— as the precious metals. It cannot be doubted that, long before they had become the generally acknowledged media of exchange, they were, amongst very many peoples, meeting a positive and effective demand at all times and places, and practically in any quantity that found its way to market. Under such circumstances it became the leading idea in the minds of the more intelligent bargainers, and then, as the situation came to be more generally understood, in the minds of everyone, that the stock of goods destined to be exchanged for other goods must in the first instance be laid out in precious metals, or must be converted into them, even if the agent in question did not directly need them, or had already supplied his wants in that direction. But in and by this function, the precious metals are already constituted generally current media of exchange. In other words, they hereby function as commodities for which everyone seeks to exchange his market goods. 41. SUPERIORITY OF GOLD AND SILVER1 a) Silver.-I need hardly say that silver is distinguished by its exquisite white lustre, which is not rivalled by that of any other pure metal. Certain alloys, indeed, such as speculum metal, or Britannia metal, have been made of almost equal lustre, but they are either brittle, or so soft as not to give the metallic ring of silver. When much exposed to the air silver tarnishes by the formation of a black film of silver sulphide; but this forms no obstacle to its use as currency, since the film is always very thin, and its peculiar black colour even assists in distinguishing the pure metal from counterfeit. When suitably alloyed, silver is sufficiently hard to stand much wear, and next after gold it is the most malleable and impressible of all the metals. * Adapted from Money and the Mechanism of Exchange (1875), PP. 45-47. (D. Appleton & Co.) A coin or other object made of silver may be known by the following marks: (1) a fine pure white lustre, where newly rubbed or scraped; (2) a blackish tint where the surface has long been exposed to the air; (3) a moderate specific gravity; (4) a good metallic ring when thrown down; (5) considerable hardness; (6) strong nitric acid dissolves silver, and the solution turns black if exposed to light. Silver has been coined, it need hardly be said, in all ages since the first invention of the art, and its value relatively to gold and copper suits it for taking the middle place in a monetary system. Its value too remains very stable for periods of fifty or a hundred years, because a vast stock of the metal is kept in the form of plate, watches, jewellery, and ornaments of various kinds, in addition to money, so that a variation in the supply for a few years cannot make any appreciable change in the total stock. Productive silver mines exist in almost all parts of the world, and wherever lead is produced a small but steady yield of silver is obtained from it by the Pattinson method of extraction. b) Gold. Silver is beautiful, yet gold is even more beautiful, and presents indeed a combination of useful and striking properties quite without parallel among known substances. To a rich and brilliant yellow colour, which can only be adequately described as golden, it joins astonishing malleability and a very high specific gravity, exceeded only by that of platinum and a few of the rarest or almost unknown metals. We can usually ascertain whether a coin consists of gold or not by looking for three characteristic marks: (1) the brilliant yellow colour; (2) the high specific gravity; (3) the metallic ring of the coin when thrown down, which will prove the absence of lead or platinum in the interior of the coin. If there remain any doubt about a metal being gold, we have only to appeal to its solubility. Gold is remarkable for its freedom from corrosion or solution, being quite unaffected and untarnished after exposure for any length of time to dry, or moist, or impure air, and being also insoluble in all the simple acids. Strong nitric acid will rapidly attack any coloured counterfeit metal, but will not touch standard gold, or will, at the most, feebly dissolve the copper and silver alloyed with it. In almost all respects gold is perfectly suited for coining. When quite pure, indeed, it is almost as soft as tin, but when alloyed with one-tenth or one-twelfth part of copper, becomes sufficiently hard to resist wear and tear, and to give a good metallic ring; yet it remains perfectly malleable and takes a fine impression. Its melting-point is moderately high, and yet there is no perceptible oxidation or volatilization of the metal at the highest temperature which can be produced in a furnace. Thus, old coin and fragments of the metal can be melted into bullion at a very slight loss, and at a cost of not more than one halfpenny per ounce troy, or little more than one-twentieth of 1 per cent. 42. A MONETARY CHRONOLOGY The main events in the history of money may be summarized as follows. The legislative acts in various countries leading to the adoption of a single gold standard are omitted. B.C. 1860 Abraham's purchase of land for 400 shekels of silver, weighed out as "current money with the merchant," is an early illustration of the use of silver by weight as money long before the introduction of coinage. 1594 Cadmus mined gold in Thrace. 1400 Gold and silver used as money in Egypt, India, and Arabia. 1100 Money of China consisted of cubes of gold, round plates of copper, and rolls of silk cloth. 800 Homeric poems show no trace of coined money. There were, however, two units of value: (1) the cow; (2) the talent-supposed to be a certain weight of gold. 500 Silver coins were current in Thrace and Macedon about this time. 480-206 Silver mines in Spain were worked by the Carthaginians. 450 Herodotus stated the ratio of silver to gold to be 13 to 1 in Greece. 400 Dionysius called tin equivalent to silver; his was probably the earliest instance of debasement of coinage and of a legal-tender act to force base coin into circulation. 60 Ratio of silver to gold in Rome, 9 to 1. A.D. 14 Amount of precious metals in the civilized world estimated by Jacob to have been $1,800,000,000. The drain to the East began at this period. 800 Total supply of precious metals estimated by Jacob to have been reduced by abrasion to about $165,000,000. At this time the Moors reopened the mines in Spain. Mines discovered in Saxony, Harz Mountains, and in Austria. Supply of precious metals remained about stationary until the discovery of America. 'Adapted from Sound Currency, VI (1899), 33–47. |