The republic. [volume] (Washington [D.C.]) 1849-1853, 1851-01-20
Gold and silver
From Mx London Hcoaomisf.

the production IS, l42, 274; in l84S, prior TO
the discovery OF California, Ell OF 2s1 CHE whole
increase having arisen in Russia;) and in 1850,
Ell 800 00O Of which less than ElO ,0OO, OOO
contributed from an entire new source-California.
But that inquiry also showed that the relative guam
titles Of gold and silver produced at those different
periods had greatly changed. At each of the dates
mentioned they were as follows
Production of gold and silver.
ls40. fS, ,274.... FL .290. 900. f6,s52.274
Is4s. IL ,O27, 237 4,l6o.060. -. .6,s67 ,2y
1867. al,oOo, Ooo..... l4,I9O.OOO ...76o6Oo
Proportion of gold. Proportion of silver.
per cent per cent.
1910. ;. 10 $40. ...........s "a 100
1885, 1880. g ss. $685. III 49,. IS 900
Here, then, we have two very important facts
established /. An enormous increase in the guam
tity Of the precious metals produced. g. Avery
great increase in the proportion Of gold to silver
Compared with 1910. the annual produce of the
mines in 1850 had increased more than $50 per
cent, and even within the last two years the in
crease has been nearly 100 per cent And whereas
gold represented barely l6 per cent Of the whole
quantity in 1910, in lS4S it represented nearly 3S
per cent, and in 1850 ess than 65 per cent. This
change in tho relative proportions of the two
metals has been caused entirely by the combined
effects of Russia and California. The supplies of
gold from Russia had already become large in
1910, and increased rapidly in every year up to
lS4S while the supplies of silver remained nearly
stationary, bat without producing any perceph-
BILE difference in the relative values of the two
metals. 1t must, however, be borne in mind
that, so long as opinion remained unaitered
with regard to their relative values, very great
change might take place in the actual quanti
ties held in stock without affecting their relative
values, owing to the peculiar purposes for which
gold and silver are used One OF the chief OF those
is the large reserves held throughout Europe,
in particular by the great banks Of each country.
With the exception Of the bank Of Hamburg,
where, We believe, the entire deposit has always
been kept in silver, the two metals have been ust d
almost indscriminately for that purpose. For cx-
ample, even the Bank of England, though bound
to pay all her liabilities in gold, ia yet authorized
by the act of 1914 to hold silver in the issue depart
ment in the proportion OF one fourth Of the amount
of gold bullion and coin held at any particular
time; and in practice, until lately, the Bank OF
England has always held large quantity OF sill
In the year lS46 the silver In the bank was
as high at one time E2,727 900. Again, the
Bank Of France had even better reasons for hold
ing either of the metals in huctuating quanti-
ties, and receiving them unfortunately; for
though, practically, silver Is the currency OF
France, yet gold is also a legal tender at a
fixed proportion. In May, lS46, the amount Of bull
lion held by the Bank Of France and its branches
ElS000,00O and in that great increase there is no
doubt gold and silver have been received indis-
criminately. Again. in the Bank OF Holland, where,
till lately, gold and silver were legal tender, gold
had accumulated TO the amount of E425O, 900, and
at this moment Notwithstanding the recent change
of the law, ia held to the amount Of E2,5OO 900.
Again, in the great Bank of ST. Petersburg though
ton of the eco, O0O, 900 to E22 100000 of bullion
held by that establishment has been in gold II
will be remembered that at one time, in lS47, the
Russian government sold in Paris and London no
less than E5,OOO,000 of gold, and purchased pub
lie stocks. The same may be said Of other public
and private banks throughout Europe; So long,
therefore, as gold and silver continued TO be re-
ceived Unfortunately by these various banks at
fixed relative rates. so long the large reserves OF
bullion held from time to time allowed to con-
sist ofvarying proportions OF gold and sllvert ID
clear that the actual aggregate quantities Of each
i0ht ito al w
any perceptiblc change in their relative values
Take the Bank Of England as an example. On the
18th Of September, 1886, that establishment held IN
the issue department bullion to the amount of El5,
SD, $50, which consisted of E 1888 ingold and
27lO,O77 in silver. At the beginning OF 1850 the
bank held bullion in the issue department amount
ing to El6,23S ,3i0 but which was comprised OF
EI5,96l 1913 in gold, aud only f277,O77 in silver,
thus showing that while e. 433 900 bad been with
drawn from the bank reserve in silver, t2,707 OO0
had been added to it in gold; and is obvious that
similar changes in the proportions OF gold silver
may have taken place throughout Europe. Yetdur-
ing the whole period, and for many months after
wards, no perceptbe alteration was experienced In
the relative value Of gold and silver although there
can be doubt tho relative quantities held OF the
two metals underwent considerable change
And, indeed, it not until the Bank Of Holland,
in the attempt to change her OF ~, 900
OF gold into silver, caused considerable q de-
mand for the latter in exchange for the former,
both in London and Paris that silver began to rise
in England and gold began to fall on the continent
with demand for silver in Austria and Germany,
coming both did when the public mind was much
excited with reference to California, has no doubt
created a greater disturbance in the exchange be-
tween those countries using gold standard and
those using silver standard, and between the
relative prices of the metals, than the increased
supply Of gold actually received in Europe
would warrant. Reports " the effect that
France and Belgium intended to follow the exam
pie Of Holland, and to exclude gold from their cur
rencies, tended to aggravate the alarm already ex-
-. I.~ -. Lr~v ~l,,-,- ~staa
that in that city, con Friday last, there actual
ly gold panic. On that day (the Goth of Deem
ber) the price of gold fell to 492 marks, which on
the 18th had been 423 marks, and which TIL re-
Gently had ruled about 433 to 434 marks; and the
exchange on London fell from l3 marks %. on the
l7h, to II marks 1873. on the goth. the rate till
lately having usually been about 10 marks 90. to
IL marks l2s." A very able letter from the same
place, which we publish in another part of our
journal, corroborates the description which gave
in recent number of the effect of those apprehen-
sons upon the bills OF exchange on England, held
by continental bankers.
Blu. however much apprehension and speculation
may have contributed to the present state of the cx
changes and the relative price Of the metals we
think no one can doubt, if their production is TO
continue at the same ratio and in the proper
ton to each other as in 1850, that considerable
permanent change must take place., in the per-
manent relative value of the two metals; and 2, in
the value of the precious metals together in their
relation to other commodities. The probability
and the consequences Of such results We will con-
slider separately.
l.--THH RELATIVE VALUE OF GOLD AND SILVER
Whatever doubt may exist as TO whether the re-
rise in the price of silver in England expressed
in gold fall in the price Of gold on the continent,
expressed in silver, and the consequent fall in
the exchanges between England and the continent,
have been caused by the altered proportion of silver
and gold already produced and brought to market,
think there can be no doub. entertained that II
their production is to continue for any number OF
years the came as it has been in 1850, when not
only the entire production of the metals was nearly
doubled, but when gold represented IS per cent of
the whole, very considerable permanent change
must take place in the relative price of the two
metals. But then, before we come to this concu-
sion, we have two questions to determine. 1. Will
the production of gold continue at its present rate
2. Will the production of silver not also greatly
increase?
In the first place, how long Russia and Califor-
MIA will continue to supply such quantities of gold
as they have done in 1850 would not venture
to predict, after all that has happened in the his
tory of mining. But this we are bound to say
After carefully considering all the evidence
which has been furnished % the bilitics