GOLD AND SILVER.

Thames Guardian and Mining Record, Volume I, Issue 28, 8 November 1871, Page 3

GOLD AND SILVER.

A late number of the News of (he World contains the following article which may he of some interest to tho Mining community at the Thames:—Twenty years since when California gold discoveries had become fully demonstrated, a sort of panic set in among the Governments of Western Europe, to a lesser extent in England, and more modified in the United States. The question which presented itself was the probable change in the value of gold consequent upon its increased abundance. It was supposed that, both in relation to silver and to other commodities, gold would have a lower value ; that is, that a perpetual fixed income, like an annuity, or a revenue from Government stocks, or aground rent, would gradually diminish in real value so that the recipcntof, say 1,000 dols. per annum, would gradually get less aud less for the money as its purchasing power diminished. Most governments appointed commissions to investigate the matter. The United States passed the Mint bill of 1852, which made gold alone a legal tender. The French did the same but Holland, under the supjiosition that if gold alone was produced in greater quantities it would lose its relative value, but that silver would maintain its position, adhered to silver alone as the standard by which permanent incomes would retain their purchasing power. It happened, however, that for the first ten years of gold production here, aided by Australia, gold did not much deteriorate in value, and its relative value to silver, 15£ to 1, was not changed. In the last ten years, however a change has taken place, not in respect to silver, but in relation to commodities, and the fact shows itself in greatly increased expenses of living all over tho world. It is estimated that in England 4dol. now is not more than equal to 3dol. ten years since. On the Coutineut of Europe the change is still greater, and still more in Australia and the United States. But throughout India the purchasing power of money has undergone still greater reduction. An important element of this change in the last ten years has been the United States war. Whan the war broke out there was in circulation 200,000,000d01. bank notes, and 300,000,000d01. coin. There is now in circulation 700,000,000d01. of paper money and little or no coin. The latter lias passed off into the markets of tho world, greatly increasing tho general suiiply. At the same time, thero was a great reduction in the quantity of commodities produced—cotton, tobacco, rice, manufactures, shipping, &c. Of the first article, India became the source of supply, and silver poured out of Europe profusely into the Indian market for raw commodities and for railroad construction, so glutting it that English official reports show that the natives used the silver for wagontires and other unusual purposes. Tho gold of the United States and Australia more than supplied the vacuum caused by sending the silver to India, and a rapid decline in tho purchasing power of money has taken place. Such a moment is a favourable one for a return to specie payments in the United States ; to call in the superfluous paper money and substitute the coin. But there are no signs as yet of such a consummation. The prospect now is of a reflux from the India market and from China, while the production of silver on this coast promises to move than rival that of gold. A London financial authority states in relation to the Indian flow of silver; “ The reader can draw from this his own conclusion ; for, it is undeniable that the yield of silver is rapidly increasing on the Pacific Slope, and soon will attain to such dimensions that there will be a material fall in the value of the metal. The broad rule ought therefore to be kept in view that a fixed income is less desirable than an income derived from real estate or industrial undertakings, for it undergoes a diminution in its purchasing power through a constant, if slow, process, which must, however, he felt severely at the end of ten or twelve years.” Without assenting to the full scope of this proposition, since there will no doubt be a restored activity in tho production of commodities, which will tend to compensate for the increase of the precious metals and maintain au equilibrium, there is no doubt but the part California is to play in the world’s operations will bo more important in tho future than in the past.