Various - Blackwood's Edinburgh Magazine, Volume 69, No. 423, January 1851

Whoever has examined with attention the past annals of mankind, must have become aware that the greatest and most important revolutions that have occurred in human affairs have originated in the variations which from time to time have taken place in the supply of the precious metals which could be obtained for the use of man. As they constitute, by the universal consent of the world, the common medium of exchange and measure of value among nations, their plenty or scarcity has an immediate and powerful influence upon the remuneration of industry and the activity of the working-classes in all countries. According as they are increasing or diminishing, abundant or awanting, is the condition of the people prosperous or calamitous – the national prospects bright or gloomy. No amount of human exertion, no efforts of human patriotism, can sustain the national fortunes for any length of time, or diffuse general and enduring prosperity among the people, if the existing medium of exchange is below what their numbers and transactions require; because, in such a case, prices are constantly declining, credit is liable to periodical and ruinous contractions, and industry, on an average of years, ceases to meet with its due reward. No calamities are insuperable, no dangers insurmountable, when a currency is provided adequate to the wants of men, and capable of extension in proportion to their necessities; because, in such a case, prices are rising or remunerative, and individual effort, stimulated by the prospect of an adequate return, becomes universal, and acts powerfully and decisively upon the general welfare of society and the issue of the national fortunes.

The two greatest revolutions which have taken place in the annals of the species, and which have for ever left their traces on the fortunes of mankind, have arisen from the successive diminution and increase in the supply of the precious metals for the use of the world. There can be no doubt that the decline and fall of the Roman empire – so long and falsely ascribed to its latter extension, plebeian slavery, and patrician corruption – was in reality mainly owing to the failure in the mines of Spain and Greece, from which the precious metals in ancient times were chiefly obtained, joined to the unrestricted importation of grain from Egypt and Libya, which ruined the profit of the harvests and destroyed the agriculture of Italy and Greece, at once paralysing industry, and rendering taxes overwhelming. 1 1 See "Fall of Rome," Alison's Essays , vol. iii. p. 440. We know now to what the failure of these mines, attended with such portentous results, was owing. It was to the exhaustion of the auriferous veins in Spain and Greece near the surface, from long-continued working, and the extreme hardness of the rock in which they were imbedded farther down, which seems to be a general law of nature all over the world, 2 2 See a very able article on California, Quarterly Review , Oct. 1850. and which rendered working them, to any considerable depth, no longer a source of profit. On the other hand, the prodigious start which Europe took during the sixteenth and seventeenth centuries, and which has implanted the European race for ever in the new hemisphere, is well known to have been mainly owing to the discovery of the mines of Mexico and Peru, and the continual rise of prices during nearly two centuries, which took place all over the world, from the constant and increasing influx of the precious metals drawn out of their rich strata.

The greatest and most momentous contests which have taken place among nations, have been in a great degree determined by the discovery or use, by one of the belligerents, of an expansive currency, to which the other was for a time a stranger. The most memorable strife in antiquity, that between Rome and Carthage, on which depended whether Europe or Africa was to become the mistress of the civilised world, was in reality determined by a great extension of the Italian circulating medium during the second Punic war; and that dreadful contest was less brought to a successful issue by the firmness of the senate or the arms of Scipio, than by the wisdom of a decree which virtually, at the crisis of its fate, doubled the currency of the Roman republic. 3 3 "Quum Censores ob inopiam ærarii, se jam locationibus abstinerent ædium sacrarum tuendarum, curuliumque equorum præbendorum, ac similium his rerum: convenere ad eos frequentes, qui hastæ hujus generis assueverant; hortatique censores, ut omnia perinde agerent, locarent, ac si pecunia in ærario esset . Neminem, nisi bello confecto, pecuniam ab ærario petiturum esse." – Livy, lib. xxiv. c. 19. "The censors," says Arnold, "found the treasury unable to supply the public services. Upon this, trust monies belonging to widows and minors, or to widows and unmarried women, were deposited in the treasury; and whatever sums the trustees had to draw for, were paid by the quarter in bills on the banking commissioners , or triumvirs mensarii . It is probable that these bills were actually a paper currency , and that they circulated as money on the security of the public faith. In the same way the government contracts were also paid in paper ; for the contractors came forward in a body to the censors, and begged them to make their contracts as usual, promising not to demand payment till the end of the war . This must mean, I conceive, that they were to be paid in orders upon the treasury, which orders were to be converted into cash when the present difficulties of the government should be at an end." – Arnold's History of Rome , ii. 207, 208. This was just an inconvertible paper currency; and its issue immediately after the battle of Cannæ saved the Roman empire. We have heard, from a gentleman who was present, that, in a political Whig party many years ago, when the conversation turned on the service of a paper currency in bringing a state through a pecuniary crisis, and some one said it was that which enabled the Romans to surmount the Second Punic war, Lord Melbourne, who was present, immediately repeated, from memory, the words above quoted from Livy in capitals. The Transatlantic revolution was brought to a successful issue in the same way; and the independence of the United States is less to be ascribed to the imbecility of British counsels, or the wisdom of American generalship, than to the establishment of a paper currency, which sustained the efforts of the insurgent states when they had no other resources wherewith to maintain the contest. It was the assignats, as all the world knows, that set on foot those prodigious armies which, amidst the destruction of all private fortunes, enabled France, during the Reign of Terror, to repel the assault of all the European powers; and the coalition which at last overturned the empire of Napoleon was sustained by a vast system of paper currency, issued in 1813 in Germany, which, guaranteed by the four Allied powers, passed as gold from the Atlantic Ocean to the wall of China, and arrayed all the armies of Europe in dense and disciplined battalions on the banks of the Rhine. Of what incalculable importance it was may be judged of by the dreadful straits to which Wellington, for five previous years, had been reduced by its want. Great Britain emerged victorious from the strife, chiefly from the powerful influence of the same omnipotent agent. Vain would have been the constancy of Pitt, the genius of Nelson, or the wisdom of Wellington, if the paper currency, established in 1797, had not given her people the sinews of war, and the means of illimitable industry, when the Continent was shut to her commerce, and the whole precious metals were drained away by the necessities of Continental warfare. Nor have the effects of the opposite system, pursued since the peace, been less striking and momentous; for the contraction of British currency to one half of its former dimensions, by the bills of 1819 and 1844, has brought about the dreadful panics of 1825, 1837, and 1847, induced by the decline of prices and the sufferings it occasioned. The English revolution of 1832 transferred power in the British islands exclusively to the inhabitants of towns, and spread such misery through the rural population, that three hundred thousand emigrants now annually leave the British islands for Transatlantic or Australian shores.