Relative positions of gold and silver: historical.# It is not
possible within the limits of our space to enter here into the details
of the world's monetary history. It must suffice for our purpose to
sketch briefly the period preceding the nineteenth century. Both
gold and silver were used as moneys in Europe in the Middle Ages, tho
silver was much the more common. The two metals continued to be used
side by side in Europe and in the new settlements in America, silver
for the smaller and gold for many of the larger transactions.
Both were made legalized forms of money (and standards of deferred
payments) in units of specified weights and fineness, the weights
bearing a certain ratio to each other. Thus it was possible for a
debtor to discharge his obligations with that one of the two metals
that at the moment was the cheaper at the legal ratio. Fluctuations in
the prices of gold in terms of silver were at times such as to cause a
large part of the full-weight coins of one or the other metal to leave
circulation (in accordance with Gresham's law). So from time to time
the ratio was slightly changed by law in the various countries to
permit the circulation or to bring back the kind of money that had
been undervalued in terms of the other. But it is a very remarkable
fact that from the time of Xenophon until the discovery of America
(a period of nearly 2000 years), the market ratio of silver to
gold bullion in Europe remained pretty close to 10 to 1, being only
temporarily altered by sudden and unusual occurrences. From 1492 to
1660 the ratio changed to 15 to 1, where it remained with remarkable
stability until about the year 1800. At the establishment of the mint
of the United States in 1792 that ratio was found to exist. Men
had come to look upon the ratio of 15 to 1 as the natural order,
determined (it was sometimes said) providentially by the deposit of
the two metals in due proportion in the earth's surface. But as we
now see it, this in part was mere chance and in part was due to the
equalizing effect of the wide use of both metals so that the one could
be easily substituted for the other in case of a divergence of the
market ratio from the legal ratio as money. From the year 1500 until
1800 the Western hemisphere was the main source of the precious
metals, the alluvial deposits were widely scattered, were gradually
discovered, were usually found in small quantities, and were
extracted in primitive ways. The existing