Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy — John Stuart Mill — John Shaqi
Principles of Political Economy: Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy
John Stuart Mill · en
This is the operation by which is carried into effect the law of
Sir Thomas Gresham (a merchant of the time of Elizabeth) to the
purport that “money of less value drives out money of more value,”
where both are legal payments among individuals. A celebrated
instance is that where the clipped coins of England were received
by the state on equal terms with new and perfect coin before 1695.
They hanged men and women, but they did not prevent the operation
of Gresham’s law and the disappearance of the perfect coins. When
the state refused the clipped coins at legal value, by no longer
receiving them in payment of taxes, the trouble ceased.(234)
Jevons gives a striking illustration of the same law: “At the time
of the treaty of 1858 between Great Britain, the United States,
and Japan, which partially opened up the last country to European
traders, a very curious system of currency existed in Japan. The
most valuable Japanese coin was the kobang, consisting of a thin
oval disk of gold about two inches long, and one and a quarter
inch wide, weighing two hundred grains, and ornamented in a very
primitive manner. It was passing current in the towns of Japan for
four silver itzebus, but was worth in English money about 18_s._
5_d._, whereas the silver itzebu was equal only to about 1_s._
4_d._ [four itzebus being worth in English money 5_s._ 4_d._]. The
earliest European traders enjoyed a rare opportunity for making
profit. By buying up the kobangs at the native rating they trebled
their money, until the natives, perceiving what was being done,
withdrew from circulation the remainder of the gold.”(235)
It appears, therefore, that the value of money is liable to more frequent
fluctuations when both metals are a legal tender at a fixed valuation than
when the exclusive standard of the currency is either gold or silver.
Instead of being only affected by variations in the cost of production of
one metal, it is subject to derangement from those of two. The particular
kind of variation to which a currency is rendered more liable by having
two legal standards is a fall of value, or what is commonly called a
depreciation, since practically that one of the two metals will always be
the standard of which the real has fallen below the rated value. If the
tendency of the metals be to rise in value, all payments will be made in
the one which has risen least; and, if to fall, then in that which has
fallen most.