MONEY, SILVER, AND FINANCE.

CHAPTER I.

THE EVOLUTION OF MONEY, TRADE, AND FINANCE.

IN the dawn of trade and civilizationand I mention trade first because civilization has been supported by trade, although sometimes affecting to despise it-there arose a necessity for money, and different communities groped about until each found its most available substance. Adam Smith tells us that in the rude ages of society cattle were the common instrument of commerce, the armor of Diomede, according to Homer, costing nine oxen, while that of Glaucus cost a hundred. Salt has been used as money in Abyssinia; a species of shells (cowries) in some parts of the coast of

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India; dried cod in Newfoundland; tobacco in Virginia; sugar in the West Indies; hides, leather, furs, etc., elsewhere. Circumstances too have forced the use of inferior money upon people who had grown accustomed to better; for instance, our colonists along the coasts of Long Island Sound adopted the money of the Indians and made wampum (polished beads made of parts of the periwinkle and the clam-shell) a legal tender for sums up to twelvepence, and, by custom, made it the prevailing currency. The superiority of the white man was shown, however, by his ability to counterfeit this wampum, as Professor Sumner dryly mentions in his History of American Currency.

It is a long way from the many articles named, and from the irregular pieces of metal which almost everywhere superseded them, to a five-dollar gold piece, a twentyfive-cent silver piece, a nickel five-cent piece, and a bronze or copper cent, or to a Bank-of-England five-pound note, and the car of progress has frequently tumbled into a paper-concealed ditch; but com

paratively perfect forms of money and its substitutes have at length been evolved, and the whole process by which copper, bronze, nickel, silver, gold, and paper have taken relative positions has been strictly evolutionary, the actions of governments having been forced upon them by irresist ible natural law. Copper, bronze, and nickel have proved their suitability for small change and their unsuitability for large coinage. Silver has proved its suitability for dimes, quarters, and half-dollars and its unsuitability for dollars or certainly for any larger coin. Gold has proved its unsuitability for smaller coins than quarter- or half-eagles; and, for the ordinary use of money, from hand to hand, gold has been proved inferior to paper. But gold has taken the position of a base for paper money and for national and international exchange of commodities.

The displacement of silver by gold, as a standard measure of value among the great commercial nations, has been as truly evolutionary as has been the displacement, as money, of unsuitable articles: the im

portant cause was the cheapening of sil ver through over-production and through a natural decline in the cost of production. Supply exceeded demand, at or near current prices. About the year 1873, silver became so plentiful in the United States that it began to circulate side by side with paper money, although gold was then at a premium of say ten per cent. In Europe, the cheapening of silver was helped on by the belief of individual governments that silver would displace gold in that country which should continue to largely coin silver, Gresham's Law,' the economic law under which an inferior kind of money tends to drive from a country a superior kind of money, being well understood over there. It was seen that if a large quantity of silver were coined, after its bullion value had declined, gold coins might be melted down and then sold by weight. It is said that Germany thought it a good time to put its money upon a safe gold basis and to force France to drift upon the silver basis. Then too, a government which should be the quickest to reduce

1 Discovered by Sir Thomas Gresham (1519-1579).

the quantity of its silver coin in circulation, therefore the quickest to make room for gold to circulate, might succeed in attracting gold from other countries. England, of course, could not afford to be behindhand, for bills of exchange are drawn upon London in all quarters of the globe, and every one of these bills is payable in gold, the commercial supremacy of England, indeed, depending upon the world's belief that she has sufficient gold to meet all possible demands, and upon the world's knowledge that the note of the Bank of England has commanded gold for three quarters of a century. The pathetic view of the actions of European governments in stopping the coining of silver, prompted by fear that a continuance of silver-coining might lead to the actual demonetization of gold may be found in the minority report of the Committee on Coinage, Weights, and Measures, on the Senate Silver Bill, second session, Fiftyfirst Congress. Silver might have maintained its parity with gold if nobody had given silver a kick, thinking it would go