The Pamphlet Collection of Sir Robert Stout: Volume 84
Gold & Silver as an Amalgam Coin
Gold & Silver as an Amalgam Coin.
The theory appears to be, that the production of gold as the more precious metal, and silver as the less valuable metal, being unequal, causes a fluctuation in the relative value of the circulating media or tokens, especially between those countries which have a different, or preponderating one metal standard, creating a waste in exchange, trouble in making calculations, and a general stringency in representative coinage. The question then seems to arise, could these evils be avoided or mitigated, if there were an authorized amalgam of the two precious metals which constitute the tokens of commercial intercourse throughout the civilized world ? For example, the coinage in England being mainly gold, while that in India is almost entirely in silver, there is a loss in Government transactions alone, between the two countries of some four millions sterling a year, and the loss to pensioners is appalling, and there is danger of the difference widening. This loss seems to fluctuate with the relative production of the two metals from the various mines in the world, which are the only source of supply. Similar effects are at work in the monetary relations between other countries where the legal coin or representative tokens are in different metals. The scarcity of coin also, it is alleged, adds to the depression of trade so generally felt; what would happen then if silver were rejected and the supply of gold much decreased, while as commerce developes, more coin will be required ? Is it irrational then to assume that if the relation of the precious metals—silver with gold—were fixed, for the purpose of coinage, the fluctuation complained of would be greatly steadied, and risks avoided, and further by increasing the consumption of silver, by mixing it with a ratio of the more valuable metal and so creating a new coin, the latter metal would be economized, while there should result an increase in the coined tokens, silver being raised in value by being mixed with gold, so that the stringency for coin would be relaxed, even supposing legal payments in coinage of mixed metals were limited to say £100, as is now done in England in silver to the extent of 40 shillings. This beginning of an introduction of a semi-gold coin into countries with chiefly a silver coinage—India especially, where it would be interchangeable with England—would undoubtedly be very greatly appreciated for utility and portability.
The quantity of gold in coined tokens in combination with silver and alloys, might be so fixed as to render it unprofitable to melt coin for the purpose of extracting the gold. There are two views to be taken of this amalgam scheme, as regards the method of valuation, i.e., the proportions, and the size and weight of the coins. The object would be to establish a token of a convenient size, the greater mass of which would be silver. At present it is almost impossible for a person to carry about £100 of money in the shape of Rupees or Dollars, and as regards paper tokens there is the risk of loss and deterioration of the actual substance by wear and tear—while half a sovereign is unnecessarily small. Assuming for the convenience of Example the market value of an ounce of bullion gold at £3 15s. 8d., and of an ounce of silver at 4s. 4d., we have two ounces of metal by weight which in combination as coin would represent £4, but a coin weighing 2 oz. troy of metal, representing 4 pounds sterling, would not for our purpose utilize sufficient silver, so we must reduce the quantity of gold or increase relatively that of silver. Now we already have a page break Florin and a Rupee of almost equal value, but not of equal currency, which we will assume to represent two shillings, let us make them equal in value and currency, by mixing six-pennyworth of gold with one shilling and sixpence worth of silver (not now noting alloy), then allowing ten of such coins as representing one sovereign, we shall have a coin intrinsically worth something more than ten rupees or florins, but much less bulky. Roughly we might calculate for a shilling 18 farthings of gold, 26 of silver, and 4 of alloy, = 48 Farthings. Perhaps abetter example would be to take Half-a-crown, 1/8 of a sovereign, as a good token for calculation, and make a composition coin consisting of say 1/-gold, ¼½ silver, and 1½d. of alloy, and establish its value at 2/6, it could be made smaller than a rupee or florin, while rather more valuable comparitively than silver tokens, and yet not worth any persons while to melt down for the sake of separating the gold, which is said to be the great fear in introducing gold into the Indian currency. Then 5/-, 10/-, and one sovereign pieces would naturally follow, even a £5 of this fashion, viz., £2 gold, £2 15s. silver, and 5s. alloy, would be a considerable improvement on 50 Rupees or 25 Dollars—to be in England used chiefly for deposits, as notes would hold their own for convenience of carriage; it might be worth while in making the change to establish a decimal coinage. Of course the ingredients of the bi-metal coin could be worked out into any relative value, weight, or proportion, and no doubt an amalgam of silver with gold and an alloy of copper or platinum would make a handsome coin, and it would be a great matter if such an amalgam could be made current in other countries, each state to have its own device engraved, as the commencement of an international coinage, and it need not be added that the Jubilee year of our gracious Queen's reign would be an auspicious era to commence with.
The idea is on somewhat similar lines as the recent proposal for re-coining half sovereigns by reducing the quantity of gold, with this difference, that the proposal herein made utilizes silver and steadies its value, while maintaining the full bullion value in the coin—rather it would be a closer assimilation if the loss in re-coining the half sovereigns were made up by adding silver. Such an amalgamated coin of the current value of 20/- as above proposed, might be called a sovereign or a "Victoria," it would intrinsically be worth something less than the current £1 gold coin, which latter could be called a guinea, which would be about its relative value, or 1/- more than the amalgamated sovereign. In almost every trading country there is a certain amount of gold and silver coinage. Now what would be the effect of the metals being mixed up together, as herein proposed, or used separately as at present? Mr. Samuel Smith, M. P., in his interesting lecture at Blackburn, 24th October, last year, asked that the policy of the past should be reverted to, viz., to coin both metals and use them equally as money, he calculated the money in the world was nearly equally divided, about 800,000,000 sterling of gold, to 700,000,000 of silver, and for the first time in history there was, he said, an attempt being made to get rid of the 700,000,000 of silver ! He went on to say that the relative value now, had increased to 20 of silver to 1 of gold, that justice required 15½ of silver to 1 of gold, "but those who held the same views as himself were willing to agree to a compromise of 17½ of silver to 1 of gold." But as gold comes to be consumed in the arts, and by loss, its present relative excess value over silver, failing large discoveries of gold, will probably be more equalized :—That is, the waste of 1 sovereign of gold would be relatively greater than the waste of 20 shillings in silver, so that 16 to 1 would seem more near the mark in the not distant future, especially if the value of silver can be steadied by the page break above proposal, and now seems the time for change by government making a monopoly of coinage while silver is cheap.
England holds a peculiar position, her own legal coin being gold, on her left hand, in the west, she has America with almost an exclusive silver coinage, over which she has no control, near her is France with a mixed coinage, of which Mr. Smith computes 100,000,000 sterling consists of silver, Germany also with both gold and silver, while on her right hand is India, which has an immense silver currency, over which England has entire command, yet she allows herself to suffer enormously in the matter of exchange. That is to say an interchangable coinage would injure no one. Then there is China, she could not change her silver bullion system for a pure gold coinage, in short it seems impossible to eliminate silver as a token of value,—then to allow it to be depressed, is to the injury of all concerned.
Taking the relative value at 16 of silver to 1 of gold, we might roughly have a coin, 1 part gold, 16 parts silver, and 3 parts alloy, made equal to 20 shillings, or one sovereign, or whatever ratio science and utility might dictate, leaving the present gold sovereign as a guinea.
Here is a scale for consideration—
|1/- Gold.||2/- Gold.||4/- Gold.||8/- Gold.|
|¼½ Silver.||2/9 Silver.||5/6 Silver.||11/- Silver.|
|1½d. Alloy.||3d. Alloy.||6d. Alloy.||1/- Alloy.|
It may be said that no one wants a new coin. Similarly it may be said no one wants physic ! It is not supposed that a nation would be any richer by simply uttering mixed coin—but it is thought the value of silver may be steadied and silver utilized to advantage while it is abnormally cheap, and that country which first takes advantage of this cheapness will derive an immense advantage, because the value of silver will then assuredly rise.
Since the above was written, Mr. Childers among other remarks on the battle of the standards, in his speech at Kdinburgh, published in the Times of the 30th of November, said, regarding international coinage, "It deserves and is certain to receive attention if any change in the standard be made. It will be asked whether some endeavour should not be made to bring our monetary system into harmony with that of the other great commercial nations. France, Italy, Belgium, Switzerland, and Greece have one currency. An Italian 20 franc or 5 franc coin is current in France or Belgium; if bi-metallism should be adopted by England as well as by France and her allies, by the United States, and Germany, why should we not form a still wider union than the Latin Union; The disturbance would not be very great, a sovereign is only worth about 2d. more than 25 francs, about 4d. more than a 20 piastre piece, about 6d. less than a 5 dollar piece," To this I will add that it is almost of more importance to bring the silver than gold coins of nations into greater relationship, and that the difference it would seem could be better adjusted by a scheme of amalgam than by any other means; a glance at the numbers in gold, ii, viii, x, xi, xiv, xvi, xxv, in the subjoined table, and in silver Nos. 12, 18, 21, 22, 25, 32, 33, and their minor proportions. Nos. 3, 17, 20, 29, and minor equivalents, Nos. 6, 11, 14, 15, 24, 28, 30, will show how near we are already to allied coins.
H. Nelson Davies, Maj.-Gen. B.S.C.
Bronte Villa, Lee,
30th November, 1886.