Principles of Political Economy with Applications to Social Philosophy

present to speculate on its limits. But on the whole, no commodities are so little exposed to causes of variation. They are more constant than almost any other things in their cost of production. Furthermore, because of their durability, the total quantity in existence is at all times so large in proportion to the annual supply that the effect on value, even from a change in the cost of production, is not sudden; it takes a very long time to significantly diminish the existing quantity, and even increasing it greatly is no rapid process. Gold and silver, therefore, are more suitable than any other commodity for agreements to pay or receive a specific amount at some future date. If the agreement were made in corn, a crop failure could increase the burden of the payment in one year to four times what was intended, or an abundant harvest could drop its value to one-fourth. If stipulated in cloth, some manufacturing invention might permanently reduce the payment to a tenth of its original value. Such things have been known to occur even with payments stipulated in gold and silver, but the great fall in their value after the discovery of America is the only authenticated instance; and in that case, the change was extremely gradual, spread over many years.

When gold and silver became the virtual medium of exchange—the items for which people generally sold their goods and with which they bought whatever they needed—the idea of coining naturally suggested itself. Through this process, the metal was divided into convenient, standardized portions with a recognized value relative to one another. This saved the trouble of weighing and testing the metal at every transaction, an inconvenience that would have become unbearable for small purchases. Governments found it in their interest to take this operation into their own hands and to forbid all coin-