Page:Encyclopædia Britannica, Ninth Edition, v. 16.djvu/757

Rh  the loss by wear and exportation, and accordingly regard the metallic supply as fixed in amount until the next change in the conditions of production, which was the result of the discovery of America. Though 1492 is the date of the first landing, yet for some time no important additions were made to the supply of money. The conquest of Mexico (1519) gave opportunities of working the silver mines of that country, while the first mines of Chili and Peru were almost simultaneously discovered, and in 1545 those of Potosi were laid open.

I.—Estimated production of gold and silver from 1493.

From this latter date we may regard the American supply as an influential factor in the matter, and look upon the stock of money as increasing. The annual addition to the store of money has been estimated as 2,100,000 for the period from 1545 to 1600. At this date the Brazilian supply began. The course of distribution of these fresh masses of the precious metals is an interesting point, which has been studied by Mr Cliffe Leslie. The flow of the new supplies was first towards Spain and Portugal, and from thence they passed to the larger commercial centres of the other European countries, the effect being that prices were raised in and about the chief towns, while the value of money in the country districts remained unaltered. The additions to the supply of both gold and silver during the two centuries 1600–1800 continued to be very considerable; but, if Adam Smith's view be correct, the full effect on prices was produced by 1640, and the increased amount of money was from that time counterbalanced by the wider extension of trade. At the commencement of this century, the annual production of gold has been estimated as being from 2,500,000 to 3,000,000. The year 1809 seems to mark an epoch in the production of these metals, since the outbreak of the revolts of the various Spanish dependencies in South America tended to check the usual supply from those countries, and a marked increase in the value of money was the consequence. During the period 1809–1849 the value of gold and silver rose to about two and a half times their former level, notwithstanding fresh discoveries in Asiatic Russia. The annual yield in 1849 was estimated at 8,000,000. The next important date for our present purpose is the year 1848, when the Californian mines were opened, while in 1851 the Australian discoveries took place. By these events an enormous mass of gold was added to the world's supply. The most careful estimates fix the addition during the years 1851–1871 at 500,000,000, or an amount nearly equal to the former stock in existence. The problems raised by this phenomenon have received the most careful study by several distinguished economists, to whose writings those desiring more extensive information may refer. The main features of interest may be briefly summed up. (1)The additional supply was almost entirely of gold, thus tending to produce a distinction between the two principal monetary metals and an alteration in the currency of bimetallic countries. Under this influence France, from being a silver-using, became a gold-using, country. (2)The contemporaneous development of the Continental railway systems, and the partial adoption of free trade, with the consequent facilities for freer circulation of commodities, led to the course of distribution being different from that of the 16th century. The more backward districts were the principal gainers, and a more general equalization of prices combined with a slight elevation in value was the outcome. (3)The increased supply of gold rendered a general currency reform possible, and made the use of a gold monometallic standard appear feasible. The movements for currency reform, as will be seen, all arose after these discoveries. (4)The change in the value of money, which may for the period 1849–1869 be fixed at 20per cent., enabled a general increase of wages to be carried out, thus improving the condition of the classes living on manual labour. It may be added that the difficulty of tracing the effects of this great addition to the money stock is a most striking proof of the complexity of modern economic development. (5)The last point to be noticed is the very small influence exercised on the value of silver by the new gold. Hardly had the gold discoveries of 1848–1851 ceased to produce a decided effect when new silver mines of unusual fertility came into working. During the period immediately succeeding the gold discoveries the production of silver remained at an annual amount of from 8,000,000 to 9,000,000. This amount suddenly, about 1870, increased to 15,000,000, and remained at that amount for the next five years. More than half of the supply came from new mines opened in Nevada. This increased supply was accompanied by a marked depreciation in the gold price of silver, though the prices of commodities in countries having a silver standard did not rise. The result of the close investigations to which all aspects of the question were subjected was to show that the increased production of silver was only a minor element in causing its depreciation. The policy pursued by various states—viz., (1)Germany and the Scandinavian 