( a) Gold and Silver in Comparison with the Other Metals Ill ( b) Fluctuations in the Value Ratio of the Different Metals
"Gold employed long before silver, because it is found pure or only combined with a little silver; obtained by simple washing. Silver generally exists in lodes embedded in the hardest rocks of primitive formation; for its extraction machinery and complicated work are required. In South America the gold lodes are not exploited, only gold in the form of powder and grains in alluvial soils. Also at the time of Herodotus. The oldest monuments of Greece, Asia, Northern Europe and the New World show that the use of gold for utensils and jewels is possible in semi-barbaric conditions; and the use of silver for the same purpose denotes in itself fairly advanced social conditions" (cf. Dureau de la Malle, Notebook (1) [Economie politique des Romains, Vol. I, Paris, 1840, pp. 48-49]).c47 their relative value (see Letronne, Böckh, Jacob(1)). (In so far as this question is connected with the overall volume of the circulating metals and its relation to prices, to be considered later, as historical appendix to the chapter on the relation between money and prices.)
( a) Gold and Silver in Comparison with the Other Metals Ill ( b) Fluctuations in the Value Ratio of the Different Metals
The changement successif between gold, silver and copper in different epochs inevitably depended in the first place on the nature of the deposits of these three metals and the greater or lesser purity in which they are found. Then on political changes like the invasion of Asia and part of Africa by the Persians and Macedonians, and later the Roman conquest of parts of the three continents (orbis Romanus, etc.) [Dureau de la Malle, op. cit., pp. 63-64].
Therefore dependent on the relative condition of purity in which they are found and the nature of the deposits.
The value ratio between the different metals can be determined without having regard to price, by means of the simple quantitative ratio in which they exchange for each other. We can generally adopt this procedure when we are comparing only a few commodities [1-32] that are measured in terms of the same unit, e.g. so many quarters of rye, barley, oats for so many quarters of wheat. In barter, where usually little is as yet exchanged and only a few commodities enter into commerce, this method is employed and hence money still unnecessary.
Among the Arabs neighbouring on the Sabaeans, according to Strabo, gold was locally so abundant that 10 lbs of gold was given for 1 lb. of iron and 2 lbs of gold for 1 lb. of silver [ibid., p. 52].
The land of the Bactrians (Bokhara, etc., in short Turkestan) and the parts of Asia SITUATED between the Paropamisus (Hundu Kush) and the Imaus (MUSTAGH MOUNTAINS), i.e. the Desertum arenosum auro abundans(1) (Gobi Desert), were so rich in gold that Dureau de la Malle thinks it
possible that from the 15th to the 6th century B.C. the ratio of gold to silver equalled 1:6 or 1:8, a ratio which existed in China and Japan up to the beginning of the 19th century. Herodotus puts the ratio at 1:13 for Persia under Darius Hystaspes [ibid., p. 54].
According to the code of Manu, 4 8 written between 1300 and 600 B.C., the gold-silver ratio= 1:2 Vo- Silver mines in fact scarcely exist except in primary-strata, especially in stratified rocks, and in a few lodes in secondary rocks. Silver lodes are usually embedded in the densest and hardest rocks such as quartz, etc., and not in alluvial sands. This metal is more common [than gold] in regions which are cold either due to their latitude or to their height above sea level, while gold usually prefers hot countries. Unlike gold, silver is only very rarely encountered in the p u r e state, etc. (most frequently combined with arsenic or sulphur) (hydrochloric acid, nitric acid). With respect to the quantity of the two metals in circulation (before the discovery of Australia and California), Humboldt (1811) estimates the ratio of gold to silver in America = 1:46, in Europe (including Asiatic Russia)=l:40. The minéralogistes of the Académie des Sciences make the ratio nowadays (1842 a)= 1:52; yet the pound of gold is only worth 15 p o u n d s of silver, hence the value ratio = l : 1 5 [ibid., pp. 54-56].
Copper. Specific gravity=8.9. Beautiful colour, like the red of dawn. Fairly hard; requires a very high temperature to melt it. Not infrequently found pure; often combined with oxygen or sulphur.
Its lodes are embedded in ancient primary rocks. But is also frequently found, more than other minerals are, on the surface of the earth or at shallow depths, conglomerated in pure lumps, sometimes of considerable weight. Used before iron both in war and peace [ibid., p. 56].
(As the substance of money, gold bears the same relationship to silver as copper does to iron as an instrument of labour in historical development.)
It circulated in great quantities from the 1st to the 5th century in the part of Italy subjected by the Romans. The degree of civilisation of a people can be determined a priori simply by knowing the kind of metal — gold, copper, silver or iron — which it uses for weapons, tools and ornaments. Hesiod in his poem on agriculture:
"XaXxQ 8' e'p-yci£ovTo (xeXas 8'ovx eaxe ai8T|po<;." b
Lucretius: "Et prior aeris erat quam ferri cognitus usus " c [ibid., p. 57]. Jacob refers to ancient copper mines in Nubia and Siberia (see Dureau, I, 58).
Herodotus says that the Massagetae possessed only bronze, not iron. According to the Oxford marbles, iron was not known before 1431 B.C. In Homer, iron is rare; by contrast, very common use of bronze (ore, bronze), this alloy of copper, zinc and tin, which for so long served both Greek and Roman society even for the manufacture of axes and razors" [ibid., p. 58].
Italy is fairly rich in native copper; to 247 B.C. copper money formed, if not the sole currency, then the usual money, the monetary unit of middle Italy. The Greek colonies in southern Italy received silver from Greece and Asia either direcdy or via Tyre and Carthage, which they coined from the 5th and 6th century onwards [ibid., p. 64].
The Romans apparently possessed silver money before the expulsion of the kings, but according to Pliny, "interdictum id vetere consulto patrum, Italiae parci" (i.e. of her silver mines) "jubentium"(2) [Plinius, Naturalis historia, Book III, Chapter 20]. They feared the consequences of a convenient means of circulation — luxury, increase of slavery, accumulation, concentration of landed property [ibid., pp. 65-66].
Also among the Etruscans, copper was used as money earlier than gold.
Gamier is wrong in saying (see Notebook III, p. 22) that
"the material destined for accumulation was naturally sought and chosen in the realm of minerals".(3)
On the contrary, it was after the coming into use of metallic money (whether as money in the proper sense or still merely as a privileged means of exchange by weight) that accumulation began. This point to be discussed particularly in relation to gold.
Reitemeier [is] right [when he says] (see Notebook III, p. 33):
"Gold, silver and copper first used among the peoples of antiquity to make breaking and crushing tools, despite their relative weakness, earlier than iron and earlier than their use as money." (Tools improved when men learnt to harden copper by tempering it, so that it could stand up to solid rock. A very much hardened copper was used to make chisels and hammers, which served to master stone. Finally, iron discovered.)(4)
Jacob writes:
"In the patriarchal state (see Notebook IV, p. 3) when the metals from which arms were made, such as (1) BRASS and (2) IRON, were scarce and enormously expensive compared with the COMMON FOOD AND CLOTHING THEN USED, although no COINED MONEY OF THE PRECIOUS METALS w a s k n o w n , YET GOLD AND SILVER HAD ACQUIRED THE FACULTY to be more easily and CONVENIENTLY exchanged for the other metals than CORN and CATTLE".d [1-33] Moreover, only simple washing was required to obtain the pure, or nearly pure, gold of the immense areas of alluvial land situated between the Hindu Kush and Himalayan ranges. At that time the population was abundant in these Asian countries and labour was therefore very cheap. Silver, because of the (technical) difficulty of its exploitation, relatively dearer. The opposite obtained in Asia and in Greece after Alexander's death. The gold-bearing sands became exhausted; the price of slaves and labour rose; since mechanics and geometry had made immense progress between Euclid and Archimedes, it became possible to exploit profitably the rich seams of the silver mines of Asia, Thrace and Spain, and silver being 52 times more plentiful than gold, the ratio between the values of these two metals naturally changed, and a pound of gold, which in Xenophon's time, 350 B.C., had exchanged for 10 pounds of silver, was worth 18 pounds of the latter metal in A.D. 422 [Dureau de la Malle, op. cit., Vol. I, pp. 62-63].
Hence gold had risen from 1:10 to 1:18.
At the end of the 5th century A.D., there was an unusual decline in the quantity of coins and stagnation in mining. In the Middle Ages until the end of the 15th century, gold coins made up a relatively significant portion of the money supply. (The decline affected particularly the silver [coins], which had earlier provided the bulk of the circulating currency.) The [gold-silver] ratio in the 15th century=l:10, in the 18th century=l:14 on the Continent, 1:15 in England.
In Asia more recently, silver more as a commodity in trade; particularly in China, where copper money (tehen, an alloy of copper, zinc and lead) constituted the country's coinage; in China gold (and silver) reckoned by weight served as commodities for balancing external trade.[49]
Great fluctuations in the relative values of copper and silver (used as coins) in Rome.
Until the time of Servius, metal in ingots was used in exchange: the aes rude. The monetary unit was the as of copper,=1 lb. of the metal. At the time of Servius, the silver-copper value ratio=279:l, till the beginning of the Punic Wars [5 0]=400:l, at the time of the First Punic War =140:1, at the time of the Second Punic War= 112:1 [ibid., pp. 66-68, 73, 76 and 82].
Gold initially very dear in Rome while silver came from Carthage (and Spain); gold used only in ingots until 547 [from the founding of Rome]. Gold to silver in trade= 13.71:1, in coin 17.14:1; under Caesar=12:l (at the outbreak of the civil war,[51] after Caesar's plundering of the aerarium(5) only = 8.9:l); under Honorius and Arcadius ([A.D.] 397), fixed at 14.4:1 ; under Honorius and Theodosius Junior ([A.D.] 422) = 18:1. Silver to copper =100:1; gold to silver= 18:1 [ibid., pp. 85-91 and 95-96].
The first silver coin struck in Rome in 485 from the founding of Rome, the first gold coin in 547. As soon as the weight of the as was reduced to 1 ounce after the Second Punic War it was used only as small change; the sestertius (silver) became the monetary unit and all large payments were made in silver. (In everyday dealings, copper (and later iron) continued to be the main metallic currency.) Under the Emperors of the East and West, the solidus (aureus), i.e. gold, the controlling money [ibid., pp. 65, 86, 81, 84 and 96].
Thus in antiquity, taking the average:
Firstly: Relatively high value of silver compared with gold. Apart from individual cases (the Arabs) where gold was cheaper than silver and even cheaper than iron, the value ratio of gold to silver in Asia from the 15th to the 6th century B.C. = 6:1 or 8:1 (the latter rapport* in China and Japan till the beginning of the 19th century). In the code of Manu [the ratio was] even = 2V2:l. This low ratio arises from the same causes owing to which gold was the first metal to be discovered. At that time gold came chiefly from Asia and Egypt. The use of copper as money marks the corresponding period in the development of Italy. In general, copper as the main instrument of peace and war corresponds to gold as the dominant precious metal. Even in Xenophon's time gold to silver =10:1.
Secondly: Since the death of Alexander, relative rise in the value of gold compared to silver, following the exhaustion of the auriferous sands and the progress in technology and civilisation. Consequently, opening of silver mines; now you have the influence of the quantitatively greater occurrence of silver than gold in the earth. But especially the Carthaginians, whose exploitation of [silver mines in] Spain was bound to revolutionise the relationship of gold to silver like the discovery of American silver at the end of the 15th century. Ratio before Caesar's time=l7:l; later 14:1; and finally, since A.D. 422, it was 18:1. (The fall in the relative value of gold under Caesar due to accidental causes.) To the fall in the value of silver in relation to gold corresponds the use of iron as the main instrument of production in war and peace.
While in the first period gold came mainly from the East, in the second period silver came from the more temperate West.
Thirdly: In the Middle Ages, the ratio was once again as in Xenophon's time, 10:1. (In some places 12:1?)
Fourthly: After the discovery of America, the ratio was once again ABOUT the same as at the time of Honorius and Arcadius ([A.D.] 397), 14 or 15:1. Although gold production increased from ABOUT 1815 to 1844, gold was at a premium (e.g. in France). It is probable that the Californian and Australian discoveries,
fifthly, will bring the ratio back to that of the Roman Imperium, i.e. 18:1, if not to a still higher one.[52] Both in antiquity and in modern times, silver became relatively cheaper with the progress of the production of the precious metals from East to West, until the Californian and Australian discoveries reversed this process. In the short run great fluctuations, but there is a striking recurrence, if the main differences are considered.
[1-34] In ancient times, copper was three or four times more expensive than it is today (Gamier(6)).
c) The sources of supply of gold and silver, and their connection with historical development, must now be considered.
d) Money as coinage. A brief historical survey of coinage. Debasement and enhancement, etc.
Endnotes
[49] The data on Chinese money are from Gustav von Gülich's book Geschichtliche Darstellung des Handels, der Gewerbe und des Ackerbaus der bedeutendsten handeltreibenden Staaten unsrer Zeit, Vol. V, Jena, 1845, pp. 110-11, 131.—119
[50] The Punic Wars (264-241, 218-201 and 149-146 B.C.) were fought by Rome and Carthage, the two biggest slave-owning states of antiquity, for domination in the Western Mediterranean and for the capture of new territory and slaves. They ended in the destruction of Carthage.—119
[51] This refers to the armed struggle for dictatorship between Caesar and Pompey (49-45 B.C.). It was part of the civil war in Rome at the end of the 2nd and during the 1st century B.C., which took the form of clashes between different groups of the slave-owning class, accompanied by slave uprisings and sharp conflicts between the poor sections and the landed and financial aristocracy. The civil war led to the fall of the republic and the establishment of the Empire.—119
[52] Presumably a slip of the pen, for in the next sentence Marx speaks of the relative depreciation of silver that was caused by the progress in the methods of mining and continued "until the Californian and Australian discoveries reversed this process", i.e. caused a relative depreciation of gold. In A Contribution to the Critique of Political Economy (Chapter Two, Section 4, "The Precious Metals"), he also points out that "the discovery of gold in Australia, California and Colombia will probably lead to another fall in the value of gold" (see present edition, Vol. 29).—121