The eagle., May 27, 1896, Image 1

About The eagle. (Silver City, N.M.) 1894-1???

Image provided by: University of New Mexico

                
VOL. 2, NO. 40.
SII.YF.U CITY, X. M., WKDNKSDAY, MAW7,- JitiMi.
PRICK ó (FATS
DEMAND AND SWTLY.
How it Has Affected the Price of
Gold and Silver,
Nnliin InUrcHthii: Farts About the Kultf'M
llt-twrttn (iiilil Mini Silver from
the Kuril, Ht Tlnief.
1785 Frunce lixt d tin- viilui' of silver at
M.UÜJ.. per ounce, and ii 1 SO.'i opened,
her minis lo (in unrestricted coinage at
Hint ratio. Fur sevcnty'ycars thereafter
France thus maintained un unlimited
demand for silver lit that vuliu, ntxl
lixi'd itH priri- throughout t lit' ctnit uicr
cial world.
At n very early date we find that the
unlimited demand, crealed solely hy
' 'the edict of nations, was w holly respons
iable for the price uf both gold und silver
bullion. At no time was the ratio of
value betweeit gold and silver fixed to
conform to the cost of production or the
supply of either in'etal. In fact, up to
the time of the risu of the "Sherman"
school of linancial economists, the op
posite had lieeu the policy of govern
ments, l'.efore the Christian era, w hen
nations had hut liitle commerce, one
with another, the relative value of gold
and silver varied widely in different
parts of the world. Tho Hebrews seem
to have accounted silver about one-half
the value of gold ; while other nations
' placed the two metals upon an equal
basis. Greece, in the time of Herodo
tus valued gold at thirteen times as
silver. In later years, when the produc
tion of gold decreased, the Unman
raised the value of silver to one-tenth
that of gold.
From the time of the discovery of
America, we have a more accurate re
cord of the relative production and value
of the precious metals. In 1497, the ra
tio of value of gold to silver was fixed at
10 to 1, and remained so until the in
flux oí gold from her ;iew ly conquered
territory, induced Spain, fifty years
later, to raise the coinage value of gold
to 13'jj times thai of silver. As she
controlled the supply of the precious
metals, she compelled I he other na
tions to accept both silver and gold at
her valuation. During the seventeenth
century, inimiiise quantities of gold,
which were received from the Kast In
dies, Japan, and lirazil, enabled Port
ugal to llx the ratio ; 'whereupon she
raised the value of gold 20 per cent.
Owing to the decrease of the supply from
these sources, Portugal finally lost her
prestige. The Spanish colonies in
America were then producing chiefly
silver! and Spain accordingly raised its
vrd'io, in 1 770. tnfl.HO per ounce. In
Invariably any change in the ratio
was made with the object of enhancing
the value ol that metal, whether gold or
silver, which was produced by the coun
try controlling ihe ratio. Such hud
been the pol.cy of the world uniil 1878,
when this nation, which was then pro
ducing l!8 per cent, of the silver of the
world and 111 per cent of the gold, by
some "occult influence," was deluded
into legislation which struck a fatal
blow at one of its greatest interests. At
a time when it was in a position to com
pel all Kiiropctu acquiesce in ifs valua
tion of precious metals, and to control
the finances of the world, this govern
ment stupidly surrendered to Kngland.
An examination of statistics of the
comparative (plantilles of gold and sil
ver which have been produced at differ
ent periods well sustains ihe position
that the supply does not affect the ratio
of value, so long as there is an unlimited j
demand (or both metals established and I
ipainlametl bv coinage legislation.
From i4!t:i to 1H20, theworld's average
annual production of silver was eight
times that of gold in weight, while the
ratio of value was Unit fixed by legisla
tion, J034 ounces of silver being equiva
lent to one ounce of gold. From 1545'to
lótiO, the average ratio of weight pro
duced was lili 0-10 of silver to' 1 of gold,
while the ratio of value was II 11-10 to 1.
The average annual production of silver
from l.")80 to 1000 was 5tl 8-10 limes that
of gold, yet the ratio of vulueniily raised
to II 8-10 lo 1. From 154.') to 1840, the
average annual production of silver was
19 1-10 times that of gold, and the aver
age ratio of value was 14 3-10 lo 1. Dur
ing the following ten years, the average
annual production of silver was only 14
.'i-10 limes that of gold, yet the average
value of gold was increased by legisla
tion to 15 8:5-100 limes that of silver.
Owing lo Ihe unprecedented production
of gold in California and Australia from
1850 to 1870, the average annual produc
tion of si'ver decreased comparatively lo
only 5 4-10 times that of gold, yet gold
retained its value of 15 42-100 tin Ho'
ol silver. Since the closing of mints to
silver by the Cni . d Suites the average
annual ratio ol ; pun. uction has been 18
8-10 of silver u 1 of gold, and the aver
age ratio of value of gold lo siiver has
been 20 ti-10 to 1. From 1491! lo 18-50
Ihe average value of gold was 1 1 It-100
times il.ni ol silvci , while Ihe nerge
annual prodiii', inn i. Í silver was Ul 4 10
limes, i Inn of go!d.
Of Ihe world's total prodiUM ion of
gold fronrHli:! to 1M)4, :7 per cent was
pioilllccd thil ing ihe lirsl .58 ears or
up lo IK-'iO, in il !" per cent, durii g the
44 years si ce lN5(j; while ti'.' percent, of
I lie I oi :il pi'uiluclioii of silver was pro
duced ilurn g l he same period of .'58
years ami Ufi per c in during t lit period
of 44 years. Thus during the .-ecuinl
period as compared with Ihe I i i-.-1 eriil,
the prod iii'tioii nl gold increased rela
tively in alliiosl l he exact ratio that the
production of 'silver decreased; vet
with Ihe except ion of l very few slum
periods, legisla. ion during the 400 vcars
has steadily ami inteulionlly increased
the value of gold.
From an examination of these figures,
it seems that when there was 50 time as
much sil ver as gold being produced the
value of silver as compared with that of
gold was :!0 percent greater than when
the production of silver had become less
than six limes thai of gold. So long as
there was an unrestricted coinage of
both metals at a fixed ratio, the price of
both gold iind'silver bullion was praeli
callv determined by the ratio so fixed,
uncontrolled by the amount of product
ion or by ihe cost oí production ol either
metal. If the v alue is to be governed
by (he comparative quantities of gold
and silver produced, and the ratio 14 I
100 lo 1 was'lhe corred basis during the
58 years, then I he rat o during the 44
years should have been 5 5-110 to I, in
stead of 15'ü lo 1, and tit . the'preseut
time the ratio should be 7:l, fo 1.
i This law the law of unlimited de
I niand was lietter understood us far hack
, as l be time of Charles II than it appesrs
i lo be today in our legislative hall,s.
While Kngland held her mints open to
ihe unrestricted coinage of both gold
I and silver, the crow n, from time lo
I time, fixed the ratio oi their valiie.
, This was accomplished by proclamation"
j as to the value at which gold and silver
coins should be reckom d. It wasosten-
' fiblv wi'li the view of nlwv"'f, '(