But when gold is a mere medium of exchange,--its chief use,--then it has only a conventional value; I mean, it does not make a nation rich or poor, since the rarer it is the more it will purchase of the necessaries of life. A pound's weight of gold, in ancient Greece, or in Mediaeval Europe, would purchase as much wheat as twenty pounds' weight will purchase to-day. If the mines of Mexico or Peru or California had never been worked, the gold in the civilized world three hundred years ago would have been as valuable for banking purposes, or as an exchange for agricultural products, as twenty times its present quantity, since it would have bought as much as twenty times the quantity will buy to-day. Make diamonds as plenty as crystals, they would be worth no more than crystals, if they were not harder and more beautiful. Make gold as plenty as silver, it would be worth no more than silver, except for manufacturing purposes; it would be worth no more to bankers and merchants. The vast increase in the production of the precious metals simply increased the value of the commodities for which they were exchanged. A laborer can purchase no more bread with a dollar to-day than he could with five cents three hundred years ago. Five cents were really as much wealth three hundred years ago as a dollar is to-day. Wherein, then, has the increase in the precious metals added to the wealth of the world, if a twentieth part of the gold and silver now in circulation would buy as much land, or furniture, or wheat, or oil three hundred years ago as the whole amount now used as money will buy to-day? Had no gold or silver mines been discovered in America, the gold and silver would have appreciated in value in proportion to the wear of them. In other words, the scarcer the gold and silver the more the same will purchase of the fruits of human industry. So industry is the wealth, not the gold. It is the cultivated farms and the manufactures and the buildings and the internal improvements of a country which constitute its real wealth, since these represent its industry,--the labor of men. Mines, indeed, employ the labor of men, but they do not furnish food for the body, or raiment to wear, or houses to live in, or fuel for cooking, or any purpose whatever of human comfort or necessity,--only a material for ornament; which I grant is wealth, so far as ornament is for the welfare of man.
The marbles of ancient Greece were very valuable for the labor expended on them, either for architecture or for ornament.
Gold and silver were early selected as useful and convenient articles for exchange, like bank-notes, and so far have inherent value as they supply that necessity; but if a fourth part of the gold and silver in existence would supply that necessity, the remaining three-fourths are as inherently valueless as the paper of which bank-notes are printed. Their value consists in what they represent of the labors and industries of men.
Now Spain ultimately became poor, in spite of the influx of gold and silver from the American mines, because industries of all kinds declined. People were diverted from useful callings by the mighty delusion which gold discoveries created. These discoveries had the same effect on industry, which is the wealth of nations, as the support of standing armies has in our day. They diverted men from legitimate callings. The miners had to be supported like soldiers;and, worse, the sudden influx of gold and silver intoxicated men and stimulated speculation. An army of speculators do not enrich a nation, since they rob each other. They cause money to change hands; they do not stimulate industry. They do not create wealth;they simply make it flow from one person to another.
But speculations sometimes create activity in enterprise; they inflame desires for wealth, and cause people to make greater exertions. In that sense the discovery of American mines gave a stimulus to commerce and travel and energy. People rushed to America for gold: these people had to be fed and clothed. Then farmers and manufacturers followed the gold-hunters; they tilled the soil to feed the miners. The new farms which dotted the region of the gold-diggers added to the wealth of the country in which the mines were located. Colonization followed gold-digging. But it was America that became enriched, not the old countries from which the miners came, except so far as the old countries furnished tools and ships and fabrics, for doubtless commerce and manufacturing were stimulated. So far, the wealth of the world increased; but the men who returned to riot in luxury and idleness did not stimulate enterprise. They made others idle also. The necessity of labor was lost sight of.
And yet if one country became idle, another country may have become industrious. There can be but little question that the discovery of the American mines gave commerce and manufactures and agriculture, on the whole, a stimulus. This was particularly seen in England. England grew rich from industry and enterprise, as Spain became poor from idleness and luxury. The silver and gold, diffused throughout Europe, ultimately found their way into the pockets of Englishmen, who made a market for their manufactures.
It was not alone the precious metals which enriched England, but the will and power to produce those articles of industry for which the rest of the world parted with their gold and silver. What has made France rich since the Revolution? Those innumerable articles of taste and elegance--fabrics and wines--for which all Europe parted with their specie; not war, not conquest, not mines. Why till recently was Germany so poor? Because it had so little to sell to other nations; because industry was cramped by standing armies and despotic governments.
