The progress of mankind would have been seriously limited if trade had been confined to barter; as I have shown above, even in the very early stages of civilization, a medium of exchange was found to be necessary. At several periods in the history of the world a number of articles like silk, and metals like iron have served such a purpose - at some periods and in some countries almost simultaneously. Gradually, however, there has been a certain feeling, unanimously in different parts of the world without any consultation whatsoever, that the metals suited for this special purpose are gold and silver. Thus these two metals being used as medium of exchange became by the natural process the standards of value for transactions into which the element of time entered. Although gold and silver have been used as mediums from time immemorial - in spite of the fact that other articles and metals have for a short while, and occasionally, successfully competed with them - they were not always used together in one and the same country. It has been the common occurrence that while gold served as a standard in one country silver was such in another whose boundary was scarcely fifty miles from the capital of the gold-using country. There are however records that the Babylonians, the Assyrians, the Lydians, the Ancient Hindus, the Persians, the Egyptians, the Greeks, and the Romans have had both these metals simultaneously as standards of value. But where these two metals were used as mediums in the same country or in adjoining countries the question of the rate of exchange between the metals became one of great importance. Being mediums or articles which by convention have a certain amount of fixity of value, their usefulness would have been considerably curtailed it their relative value was changing from day to day or from hour to hour - as it is happening at present. It is needless to explain that the variation in relative value between gold and silver is so great to-day, because of the fact that in practically every country in the world which has a big trade gold remains the sole standard of value - silver as a consequence being dethroned and relegated to the level of any other commodity like wheat, wool, or iron. Before gold became the standard, for centuries the two metals enjoyed unrestricted and joint supremacy. It was found, however, essential that there should be an agreement as to the ratio at which they were to exchange for each other. Even as early as the era of Menes in Egypt there was a fixed ratio of exchange between gold and silver. Such fixity, however, was only permanent in comparison with the fluctuation in the values of the commodities usually sold in the market. The relative values of gold and silver were changing constantly. There are records of periods in ancient history when silver was more valuable than gold. In the first decades of the nineteenth century gold was thirteen times as valuable as silver, weight for weight; and year after year owing to various causes the value of silver has been depreciating until now gold is worth 45 times as much as silver, weight for weight.

The discoveries in science and the increased output of precious metals also contributed towards bringing about a state in which a proper standard of value became absolutely necessary. To establish a standard there are two essentials; first there must be sufficient supply of what is intended to be the medium of exchange, and, secondly, there must be sufficient commerce to make it imperative that the people should have a standard. So far as commerce is concerned there has been the gradual increase ever since the dawn of history. Although the subject of the history of the growth of commerce in the world is interesting, my purpose at present is only to deal with the growth of currency. In the very early stages gold and silver were both scarce, and although they remained as standards were used as sparingly as possible. We know of silver mines having been worked in Yunnan in about the tenth century and in many parts of India as early as the eighth century; the total production was however extremely small and counted very little, as a force determining the course of currency. Only in the latter half of the nineteenth century has there been mining of the precious metals on a large scale; and the result has been a great change in the determination of the standard of value. In the sixteenth century silver was obtained by the Spaniards through plundering and slaughtering the unfortunate natives whose lands they had occupied, with the ostensible aim of spreading the truth of Christianity." * The silver thus obtained was distributed all over Europe first of all in payment of further ambitious projects, and it was not till it reached the Dutch in the usual course of trade that the full effects of the circulation of silver on commerce began to be noticed. " In the nineteenth century, on the other hand, from the outset, commercial influences alone determined the acquisition and distribution of the precious metals."* At the close of this period the value of the gold production was 40 per cent. more than that of silver, while even as late as 1869 the values of the production of the two metals were about the same. In the still earlier periods, the production of gold was immensely less than that of silver.

* See "The Effects of Great Discoveries of the Precious Metals" by J. Shield Nicholson.