The principle that the value of the precious
metals, like other products of industry, is determined primarily by the
cost of production, and then by scarcity, ideas of utility, and
convenience, seems to be neutralized by this new discovery; and it
becomes a curious question, how far it may affect the value of gold and
silver in Europe. If the abundance of gold flowing from America be such
as to exceed the demand, the value of gold will fall, and the price of
all other commodities relatively rise, and the relative proportion
between gold and silver be disturbed so as to affect the standards of
value in each country and the par of exchange between one and another.
The productiveness of the silver mines, there is no doubt, is greater
and more regular than those of gold; but the enormous increase of the
silver currency on the Continent, in the United States, and even in
India, and our own colonies, has kept the price of silver a little
below five shillings an ounce. On the other hand the English standard
of value being gold only, the drain of gold is generally towards
England, while that of silver is towards the Continent.
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