The engagements in the New World brought in the 16th-century large amounts of gold to Europe. The new gold supply first reversed deflation and later caused inflation first in Spain, later in the rest of Europe, and even in Asia.
The second half of the 16th century, gold coins further lost their value:
This happened as gold coins were combined with other metals, such as copper, and became less pure. Further low-grade coins were brought into circulation due to the Seven Years War (1756–1763).
Fixed gold-silver conversion rate and gold standard:
In the United Kingdom, Sir Isaac Newton, warden of the Royal Mint, determined the conversion rate of gold and silver. This helped to ease the big fluctuations of gold coins. In 1774, the British Parliament introduced the gold standard. Here the of the currency is determined by the gold reserves.
Bimetallism of the 18th and early 19th century:
Other European countries and the United States minted at the same time gold and silver coins. The basis was a fixed conversion rate between these two metals. In France, starting in 1795, the rate was 15:1, meaning that gold has a 15 times higher value than silver.
=> As we have seen, gold was used as a means of payment already 5,000 years ago. During the history of mankind this precious metal competed with silver for the domination as coin material. In the Early Modern Times, a fixed silver-gold exchange rate was set and the gold standard was introduced to back and define the value of national currencies.
As we are talking about gold in the 18th and early 19th century, we need to discuss about the California Gold Rush !!!!
The second half of the 16th century, gold coins further lost their value:
This happened as gold coins were combined with other metals, such as copper, and became less pure. Further low-grade coins were brought into circulation due to the Seven Years War (1756–1763).
Fixed gold-silver conversion rate and gold standard:
In the United Kingdom, Sir Isaac Newton, warden of the Royal Mint, determined the conversion rate of gold and silver. This helped to ease the big fluctuations of gold coins. In 1774, the British Parliament introduced the gold standard. Here the of the currency is determined by the gold reserves.
Bimetallism of the 18th and early 19th century:
Other European countries and the United States minted at the same time gold and silver coins. The basis was a fixed conversion rate between these two metals. In France, starting in 1795, the rate was 15:1, meaning that gold has a 15 times higher value than silver.
=> As we have seen, gold was used as a means of payment already 5,000 years ago. During the history of mankind this precious metal competed with silver for the domination as coin material. In the Early Modern Times, a fixed silver-gold exchange rate was set and the gold standard was introduced to back and define the value of national currencies.
As we are talking about gold in the 18th and early 19th century, we need to discuss about the California Gold Rush !!!!
Gold rush timeline
1848: James Marshall discovered gold at Sutter’s sawmill in California
1849: Gold Rush starts to attract people from around the world
1850: California becomes a state
1852: Gold becomes more scarce and better mining techniques developed
1853: Population of California exceeds 300,000
1855: Sacramento becomes the California State Capitol
1859: Discovery of silver in Nevada ends the California Gold Rush
9 Things You May Not Know About the California Gold Rush
1. California did not have the first gold rush in American history. Fifty years before gold was discovered at Sutter’s mill, a 17-pound gold nugget was found in Cabarrus County, North Carolina. Mint were produced using North Carolina gold. 2. The Gold Rush was the largest mass migration in U.S. history. In March 1848, there were roughly 157,000 people in the California territory. Just 20 months later, following the massive influx of settlers, the non-native population had soared to more than 100,000. And the people just kept coming. By the mid 1850s there were more than 300,000 new arrivals. 3. The Gold Rush attracted immigrants from around the world. 4. Before the Gold Rush, its native population numbered roughly 300,000. Within 20 years, more than 100,000 would be dead. Most died from disease or mining-related accidents, but more than 4,000 were murdered by enraged miners. 5. The Gold Rush was a male-dominated event. In 1852, 92 percent of the people prospecting for gold were men. |
6. Early sections of San Francisco were built out of ships abandoned by prospectors.
After the passengers headed inland to hunt for gold, they accidentally abandoned ships in San Francisco. As the formerly tiny town began to boom, demand for lumber increased dramatically, and the ships were dismantled and sold as construction material. Hundreds of houses, banks, saloons, hotels, jails and other structures were built out of the abandoned ships. 7. Prospecting for gold was a very costly enterprise. Once the people who traveled to California, certainly beside the clothes they had with them, they still needed to buy food, goods and supplies, which San Francisco’s merchants were all too willing to provide—for a cost. At the height of the boom in 1849, prospectors could expect prices sure to cause sticker shock: A single egg could cost the equivalent of $25 in today’s money, coffee went for more than $100 per pound and replacing a pair of worn out boots could set you back more than $2,500. 8. More fortunes were made by merchants than by miners. 9. Thousands of Gold Rush prospectors got rich—but John Sutter wasn’t one of them. Within months, during the Gold Rush, most of Sutter's workers abandoned him to search for gold while thousands of other prospectors overran and destroyed much of his land and equipment. Faced with mounting debts, nearly bankrupt, he began a decades-long campaign to have the U.S. government reimburse him for his financial losses, to no avail. While thousands became rich off his former land, a bitter Sutter retired to Pennsylvania and died. |
Gold standard from 1810 - 1834
Between 1810 and 1833: the United States had de facto the silver standard. The gold price was at US$ 19,39 for one ounce of fine gold.
In 1834 (Coinage Act of 1834): ,the government set the exchange gold-silver exchange rate to 16:1 which implemented a de facto gold standard.
In 1834 (Coinage Act of 1834): ,the government set the exchange gold-silver exchange rate to 16:1 which implemented a de facto gold standard.