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CO M ME ECIAL.
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Untitled Article
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WHAT DETERMINES THE VALUE OF GOLD ? The probable foil in the value of gold continues to engage the attention of some of our contemporaries . One of them ossiires us that it is bringing on a more portentous revolution than the disputes of the despots . Admitting the fascination of the preciotis metals , we must not forget that their utility , on which the estimate of their value is founded , consists in being instruments to exchange other commodities . They are useful in a variety of arts , but chiefly as money . For this purpose they are as indispensable to social life as the distribution , in
small portions for individual use , of the commodities they serve to exchange , or as the mutual services they serve to reward . Unlike a pint-pot or a foot rule , each of which is a definite portion of space , and is , therefore , a perpetual and in-Variable measure of other things , the precious metals do not derive their measuring power from being a representative of something more fixed and unchangeable than themselves . They possess , indeed , according to the size of the pieces , a very precise and certain amount of gravity . Their weight is invariable in proportion to their dimensions . But their value , an estimate of the mind formed from a knowledge of their qualities
and uses , is in exchange , and is only another name for the quantities of other commodities given for them . The measure of their value is other commodities * and a fall in their value is only a rise in the value of other things . Where there is . great scarcity of commodities , as in a besieged town , or in Melbourne , after the first nugget was found , the value of gold sinks , or their price rises very much ; where commodities of all kinds are very abundant its value rises or their price falls . To
estimate the value of the precious metals without considering the abundance or scarcity of the commodities to be exchanged all over the world , is to reckon without your host , or measure an angle without knowing the direction of one of the two lines which determine it . This , however , is done by M . Chevalier , Mr . Cobden , and writers like those in ike Saturday Review , who put their faith in these gentlemen , and endorse arid circulate opinions formed exclusively from the anticipated effects of the new gold .
Leaving them , let us remark that the supply of the precious metals—however much public writers and gold seekers may be dazzled by unexpected discovei'ies of new mines- —depends , in the Icing run , on the quantity and skill of tlie labour directed to procure them . Like coal and iron , they are created m limited , though yet unknown quantities ; but the actual supply is determined by the number of miners . If nobody collected gold there would be none in use , and the greater the number of persons employed in collecting it , the greater is the supply . Itfew deposits having been unexpectedly found in California and Australia , a great number of persons
rushed immediately to collect it . A very great quantity having been suddenly obtained in those countries , its value there in relation to the food , clothing , &c , miners , as well as other men , must have fallen very considerably ? or the price of food , clothing , &c , rose three , four , or five fold . Many persons , consequently , who flooked to those counfa-ies from all quarters , found it more advantageous to provide food , clothing , &c , than to dig for gold . A check was at once put to the rush , and n , powerful stimulus given to the production of other commodities . Two great communities , embracing various cjassos of producers , and most of the arts
of civilised life soon come into existence there , requiring considerable quantities of coined money * o ' carry on their business . For a time it whs extremely advantageous to send sovereigns to Melbourne and engloa to California ; it was extremely advantageous , also , to send commodities of various kinds from other parts of tho world to those countries ; and in a short time tho value of gold thqro , and tho prices of other things , approximated to thfc value oligold and , the prices of similar things throughout the commercial world , Thus , the number of persons who can advantageously be employed in collecting gold is determined by the a
terms on which other commodities can be produced and obtained for them . We see , at the same time , that the quantity of gold collected is determined by the number of persons engaged in collecting it , and consequently the quantity continually provided for the use of society is in the long run determined by the same laws as regulate and determine the production of all commodities . In proportion as- it falls in value and they rise in price , labour-will withdraw from producing it , and engage in the more advantageous and more necessary work of producing food and clothing . What occurred in California
and Australia emphatically teaches us * that any increase to the supply of the precious metals stimulates to a great extent the production of other things . It hastened the cultivation of thousands of acres of land in California and Australia . It hastened , too , the production of all the looms ^ of Europe , and by increasing the demand for wine and beer it has increased and improved the cultivation of land in Europe . In order therefore , to form any fair estimate of the future value of _ the precious . metals , or the influence of the increased must
quantities lately obtained Over prices , we ascertain , as far as we can , what is likely to be the increase of commodities to be exchanged hereafter throughout the commercial ¦ / world . Obviously , this is a very difficult , not to say impossible task , and therefore those like M . Chevalier , Mr , Cobden * and the Saturday Review , who predict a great fall in the value of gold , and a great rise in the price of all commodities , including the wages of labour—though no such rise has yet taken place—are at least not to be implicitly trusted .
As the fact that no general rise in prices hitherto has resulted from the very considerable additions made within the last ten . years to the stock of gold is of prime importance in this argument , let us add to the testimony already borne by Mr . Tboke , Mr . ISTewmarch , Mr . M'Culloch , the Editor of the Economist , and other writers , as well as the testimony of facts already laid before our readers , the assertion of the New York Herald . In one of the most recent issues of this journal which has arrived in Europe , it is said , " Our imports during
the present season exceed in quantity those of many previous years ; and it is a favourable symptom that they come in at a valuation , which is generally from 13 to 20 per cent , below the average of the five years preceding 1858 . " There is now in the United States , therefore , as in Europe , a great increase in trade and lower prices- The prophets of a fall in the value of gold have neither facts nor theory in their favour ; and a slight reflection will show that they have not read history with muoh discrimination .
The principal fact on which they rely is the fall in the value of the precious metals and the rise in the price of commodities which ensued in Europe after tho discovery of America . In comparing what occurred then with what is likely to occur now , it is an important fact that not only were commerce and production then very much restricted in Europe by political regulations , but that discovery , and the planting , of colonies in that country , gave birth to a new complicated , excluaivoi and tolerably complete body of restrictions , known as the colonial system , and as the balance of trade , which notoriously very much impeded the increase of wealth and population in Europe and in tho world . Thoro is no probability that
any such event should occur now . On the contrary , tho gold discoveries , in California and Australia , have opened up to a great ox ' tcnt tho trade with Asia , and that densely pcojriod portion of the earth is pouring out its inhabitants into the cold regions and into the western world . In conjunction with this remarkable extension of commerce every kind of restriction on trade is condemned theoretically ? and , practically , great advances have been everywhere made towards free trade , aa indispensable to tho Volfaro of sooioty , We are surprised that Mr . Cobden , , tv 1 io contributed so muoh to promote it here , and who has seen as its consequence amongst ourselves a vast
increase of wealth and of people , should not have inferred from these circumstances such a rapid increase of wealth and people hereafter as to make the supply of gold none too large , and guarantee society against the presumed disastrous effects of a great fall in its value , England has got rid of the colonial system ; other nations are repudiating ancient restrictions ; society has fairl y entered into the path of free trade , and will probabl y increase more rapidly than ever it increased at any former period . .
Within a century , the United States have grown from a few insignificant colonies into a great nation There is no similar growth in all history . A great southern continent has been discovered 5 and there too , a great nation is as rapidly cominr * - into existence as in Americsu In the meantime the increase of population in Europe , in spite of political wars , has been , unexampledly rapid . Taking the progress of England as an indication of the general ^ progress , though it have not , perhaps , equalled her progress , we learn from the enumeration of her inhabitants in different centuries , that they have increased in an accelerating ratio . This is a -certain , . fact . jSTever before did they increase so fast as within the first half of this century . From the
progress of . knowledge-we learn both how to procure subsistence more abundantly , and how to avoid diseases and all the causesi ¦ which shorten life ; and we . may ¦ securel y-calculate , therefore , that our ' population-, and the population of the whole of Europe and of the world , will increase . more rapidly than ever . An increase in numbers , which can only take place . with an increase of" wealth , implies a vast increase in the mass of commodities , to be produced , and in the number of-exchanges to be made .
Division of labour , both individual and territorial , Is continually extending and making exchanges more necessary and more numerous : To elleet thorn , in spite of all our inventions to economise . . the-use of money—Which prove the continual want of a large and increasing quantity—a great increase of the precious metals will be required . In fact , the commodities to be exchanged seem to the imagination infinity in-quantity , while the quantity of the precious metals is exceedingly limited , giving U 3 quite as ' much reason to suppose that the quantities now obtained will be insuflicient for the purposes of society , and rise In value , as that they will be redundant , and will fall . Both conclusions are mere conjectures ; but the factn adverted to entitle us to doubt the correctness of tho prophets n «^ 1 u AT ? J . _ „ . ? . V-. ... 1 . . n vtva ^ iv ) IjT * 4- # ¦» > w | t / lo f fill I lit i I If * Vll 111 f *
of gold , and would at once plague society with some new restrictions to meet the ovil foreshadowed by , their fertile but incorrect fancies . , They insist very much on a presumed rise in the value of silver in relation to gold . Xo ( acts warrant the presumption . A great demand for silver indeed has arisen in Asia , and u rise in its value , inconsequence , maybe no indication ol-a mil-in the value of gold in Europe Ah the rule , the excess in value of the tea , silk , cotton , &C , . imported from China into Australia , 1 bo UmtcU States , and England , over and above tho viiluo <> tho exports from these countrit ? s to .. Inditi txnu China , is paid for by silver sent from 'huronc . Between 1840 rind 1851 , the vahi « of ( lie silvei exported from England to Asia , in no ono yew , mnoimt
inexceeded SOOiOOCtf . Tho greatest , cluding the Mauritius , put down in tho uMicinl ivturns , was 44 G . 970 , in 1843 . In 1851 , however , whP « the gold discoveries had begun-to toll on tho tinat of Asia and tho world , England alone oxporM through Egypt to tho Mast silver <> t thv value 1 , 834 ^ 78 ^ . From that time tho miantity oxpoiU wont on continually increasing till it iim oiinlod , " » 1857 , to 17 , 601 , 428 / . .. JJotwceu 1831 and 18 ' * . inclusive , tho value of the silver' exported noi » England through Egypt to tl . o'En ^ wnrt tf l , 447 , w » or 6 , 430 , 980 / . per annun Ah ad ditional ? m »» \ n tho same period sent from the Continoiit Ji Kuropo , w « 4 Marseilles , to tho sniuo I ' ' ' , ^ ,, '" tho quantity of silver . actually sent . - i ^^ . ^ W to Asia , since tho discovery ol gold m u » fiwnia , has not been in value many i » >» ' tan thuiii the value of all the gold bro « # * tj Europe from Oaliibrnia and Australia . lo »« w
Co M Me Ecial.
CO M ME ECIAL .
Untitled Article
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Citation
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Leader (1850-1860), April 23, 1859, page 538, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/vm2-ncseproduct2291/page/26/
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