Leon Faucher - Remarks on the production of the precious metals

My Dear Sir,

I have fulfilled the promise I made you a few weeks since, by translating, I hope intelligibly, your remarks on the subject of the Production, &c., of the Precious Metals, which I read first in the August number of the “ Revue des Deux Mondes ,” and which have been subsequently published, somewhat amplified, in the reports of the “ Académie des Sciences Morales et Politiques .” Since the date of your remarks, the production of gold in Australia has been greater than you anticipated; recent reports estimate the amount shipped, or ready for shipment, from thence, at not less than £8,000,000 sterling; at which figure, I think, we may safely place the produce of 1852.

A gentleman who was with me a few days since, just arrived from Victoria, told me that the gold diggings at Bathurst were nearly at an end, and that he did not believe that any more gold would be shipped from Sydney. Although Sydney is only one of the ports of Australia from which gold has been shipped, this would appear to confirm your views, that the first gatherings cannot fairly be assumed as data on which to found estimates of future production: at the same time when we hear of so great an increase of production in other parts of Australia, I can hardly agree with you, that there is so little ground for alarm as to a depreciation in the value of gold, in consequence of these late discoveries. The effects of the production in Australia can hardly be felt at present, considering that the export of English gold coin has been, up to this date, I think, equal to the amount of gold we have received thence; but when the sovereigns lately shipped are found to be in excess of the wants of the community in Australia, and are re-shipped to this country, together with the produce of the gold workings between this and next summer, I cannot but believe that the supply in the market of the world will be found in excess of the demand, and that ultimately a considerable and general alteration in prices will ensue.

I shall be very glad if I find that by this translation I have in any way contributed to increase the circulation of your remarks in this country. The subject is one of considerable interest, and I hope that you will, at no very distant period, give us some further observations, and let us know how far your first impressions have been then influenced by events which may have occurred subsequently to the present time.

London, 30th November, 1852.

The Foreign Weights and Monies have been converted into English, at the following rates.

A kilogramme weighs nearly 2 lbs. 8 oz. 3 dwt. 2 grs. or nearly 15,434 grs. Troy.

Do. of gold at the standard value, viz. 77s. 9d. per oz. is worth about £125.

Do. of silver at 5s. per oz. is worth about £8 0s. 9¼d.

Do. of quicksilver weighs 2·2055 lbs. avoirdupois.

Do. Do. is worth about 5s. 1¾d. or 2s. 4d. per lb.

A Spanish marc weighs 7 oz. 7 dwts. 22½ grs.

Do. of gold at 77s. 9d. per oz. is worth £28 15s.

1 lb. of gold is equivalent to 46²⁹⁄₄₀ sovereigns.

A poud is equivalent to 36 lbs. English, and worth about £1679.

The weights and measures not enumerated here are explained at the foot of the page in which they occur.

From the commencement of the 19th century, gold appears to have been always esteemed in Europe above the price at which it has been legally fixed in relation to silver; the commercial value of the metal has remained on an average about 1 per cent. above its legal value. In England alone gold circulates as money: in those countries which have maintained a double standard, gold, rarely coined, became immediately an article of merchandize, and disappeared from circulation. Gold regions were discovered without restoring the equilibrium of value between the two metals. Civilization, in its development from historical times, has but realized the legends of ancient fables. Gold, from its importance and constancy of value, appeared likely to remain for ever the symbol and the essential agent of wealth.

In this regular course of the progress of the precious metals, a pause, or rather a deviation, appears to have occurred. Gold seems to be tottering in its monetary supremacy; the fortress appears to have succumbed in a paroxysm of alarm. Ten years ago, every one was frightened at the prospect of the depreciation of silver; during the last eighteen months, it is the diminution in the price of gold that has been alarming the public. Some countries, which, but a short time since, were but too anxious to attract and retain gold in circulation, even at great sacrifices, have already shown a feverish anxiety to banish it altogether.

Holland took the lead in this movement, and in July, 1850, demonetized the gold 10-florin piece and the Guillaume. Portugal has partially followed this example, by prohibiting any gold to have a current value, except English sovereigns. Belgium, which in order to increase its gold circulation, had given a legal value to our 20 and 40-franc pieces, and had struck, in 1847, a mixed coinage of gold and base alloy, has demonetized its gold circulation, both home and foreign. Russia, by a ukase of 29th December, 1850, wishing to maintain the former equilibrium, has prohibited the export of silver. The French Government itself, struck with the novelty, and the sudden change, issued a commission for the purpose, as the Minister of Finance stated in his minute of the 14th December, 1850, of examining the questions connected with the simultaneous use of the precious metals, gold and silver, as a circulating medium of value.

From public authorities, alarm has spread to private interests, and the price of the precious metals has experienced in European markets a very sensible disturbance in value. In the space of only a few months, the premium of gold has given way to a reaction, only checked by the tariff. From 1st July to the 25th December, 1850, the price of English sovereigns in Paris has fallen about 2 per cent. On the Amsterdam Exchange, the fall in the price of gold, in the same year, amounted to 4 per cent.; at the same time silver rose in London almost as much (from 4s. 11½d. the ounce, to 5s. 1⅝d.); the relative value of gold to silver, which our laws had fixed at 15½ ounces of fine silver to one of pure gold, and which the constant premium on gold in Europe had raised in the Spanish tariff to 15¾, fell to 15¼ in Holland, Belgium, and Hamburg; in all places where gold, from having been demonetized, had become a mere article of merchandize; almost realizing, in fact, the tariff of Russia, a country where the abundance of gold and the scarcity of silver had induced a legal relative value of 15 to 1.

However great the present depreciation of gold, the depression appeared likely to increase still further, and the gloomy forebodings of the press have added to public alarm. Newspapers of all parties, and of all countries, prophesied that, under the combined influence of California and Siberia, the value of gold would soon fall to nine times that of silver. Whilst crowds of emigrants were forcing their perilous way across the Rocky Mountains, or doubling, for economy, Cape Horn, or, in their impatience, taking the shorter but dearer passage by Panama, hurrying on to the capture of the golden fleece, this very treasure which they were unduly