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Appreciation of Gold. 
 
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 BY 
 
 WILLIAM FOWLER, LL.B. 
 
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 {Fellow of University College , London.) 
 
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 CASSE 4 LL & COMPANY, Limited 
 
 LONDON, PARLS, NEW YORK & MELBOURNE. 
 
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PREFACE 
 
 I regret that this paper is so long ; I should have 
 cut it down, had I not been much interrupted during 
 its progress. 
 
 I wish to make one explanation. I have no prejudice 
 against the use of silver as money. It appears to me to suit 
 some nations and not others — why, it is not useful to 
 discuss here. The larger part of the population of the world 
 appear to prefer it ; but that fact is hardly an argument for 
 the resumption of its use by us. Formerly we used it as 
 our standard and our legal tender money. To John Locke 
 it seemed the one natural money. We gave it up for 
 reasons which appeared to very competent men to be 
 sufficient. 
 
 I cannot see anything in the events which have happened 
 to induce us to take it up again. It has not become more 
 stable in value in recent years, and it seems likely to be 
 less stable than ever. 
 
 If silver be alive and strong, we may leave it to the care 
 of those who are naturally concerned in its future. If it be 
 dying, let us take heed lest we should find ourselves tied to 
 
 a corpse. 
 
 I William Fowler. 
 
 P.S. — Since writing this Essay, I have seen an argument 
 
IV PREFACE. 
 
 Debt. It is said that, as part of the Debt was created 
 when debtors could pay in silver or gold, it was not just in 
 1816 to take away this option, and compel payment in gold 
 in any event. 
 
 Far the larger part of the existing Debt was created 
 between 1797 and 18 16, on a paper basis, when cash pay- 
 ments were suspended; or since 18 16, under the single gold 
 standard. The argument therefore does not apply to the 
 whole Debt. 
 
 Moreover, apart from this, it seems to be forgotten that 
 thirty-five years ago it was fully expected that the sovereign 
 would be depreciated ; but compensation to the Fund- 
 holder was not proposed by any responsible person. Now, 
 by another turn in events, an advantage is alleged to have 
 arisen to the holder, and it seems hard to take it from him. 
 He must take his chance. It is quite possible that the 
 phenomena of 1850 may be repeated. Discoveries of gold 
 are much talked of. It seems to me that the settlement of 
 1 8 16 ought not to be disturbed in the interest of any set, 
 whether creditors or debtors. The turn of the debtors may 
 come again, and, if it comes, they ought to have it. 
 
 Certainty and stability, so far as legislation can give 
 them, are what we need, not fluctuating laws about money. 
 Variations of supply and demand must come, and will 
 cause many gains and losses j but hasty legislation, ' as 
 in Germany and America, has wrought far more mis- 
 chief than natural changes have effected. From these 
 cases we ought to take warning, and exercise the greatest 
 caution in dealing with our laws about money. 
 
OTVERSITT, 
 
 APPRECIAfTOTSTOF GOLD. 
 
 The first point in this discussion seems to be the definition 
 of our meaning when we speak of "appreciation of 
 gold." These words may mean that a given weight of 
 gold will purchase more of most articles of consumption 
 than it would have purchased in years gone by ; or, in other 
 words, that prices generally, as measured in gold, have 
 fallen ; or it may include the hint of an opinion that gold 
 has become scarce, and therefore dear. That many prices 
 have fallen is a fact which no one disputes ; but much dis- 
 pute arises when we inquire into the cause of such fall. Of 
 course prices may have fallen (i) because, with a tolerably 
 even supply of gold, the supply of other articles has developed 
 with astonishing rapidity in consequence of modern inven- 
 tions affecting production or distribution; or (2) because the 
 supply of gold has fallen away, so that a scarcity of money 
 available for exchange has arisen ; or (3) possibly these 
 two causes may coincide — that is to say, the supply of 
 gold from the mines may be contracting at the very time 
 when other articles are brought forward in greatly increased 
 proportion. 
 
 The importance of the question involved in this discus- 
 sion arises from the fact that the existing depression in many 
 trades is by some attributed, mainly, if not entirely, to the 
 fall in prices arising from a change in the supply of gold, so 
 that a remedy is sought in some change of currency 
 and especially in an endeavour to increase the use of 
 silver as money, in order to counteract the alleged scarcity 
 of gold. 
 
O APPRECIATION OF GOLD. 
 
 The causes of depression have been much discussed in 
 various publications of the Club with especial reference to 
 the Free Trade controversy. There does not seem to be 
 much prospect of any responsible English Minister adopting 
 Protection as a means of reviving our trade. The interests 
 involved are too numerous and too antagonistic to give rise 
 to any general demand for Protective duties. A manufac- 
 turer who demands Protection for himself, clings to cheap 
 food and cheap raw materials ; and the farmer who longs for 
 a duty on cereals desires to have clothes, machinery, etc., at 
 the lowest possible prices. 
 
 But it is quite possible for those who differ as to Protec- 
 tion to agree in the proposition that " something must be 
 done " for the good of all. Producers feel keenly the loss 
 arising from a fall in prices, and they snatch at any proposals 
 which may possibly check so disagreeable a process, without 
 reflecting much on the ultimate consequences of hasty 
 changes. 
 
 The general principles involved do not seem to be dis- 
 puted on either side ; but differences arise as to their appli- 
 cation where facts are so complicated and numerous. Money 
 being used both as a measure of value and as a means of 
 making exchanges, it is obvious that, if the demand for pur- 
 poses of exchange should greatly increase without an increase 
 of supply, we might have a real scarcity of money, so that 
 its " value," by reason of this demand, might rise, or " appre- 
 ciate," when compared with other articles. So money might 
 lose in part its fitness as a " standard " Of value. On the 
 other hand, supplies of bullion being pretty constant, the 
 value of money might "depreciate" in exchange, if through 
 changes in the machinery of credit there should arise a 
 decrease in the demand for actual money for exchange. 
 Perfect stability cannot be secured by any arrangements, 
 so long as commercial changes are so continuous and 
 important. We cannot have a perfect standard ; but the 
 question now arises whether we are not safer with " a 
 pound " or unit of value consisting of a given weight of one 
 metal, than with a pound payable in either of two metals at 
 the option of the payer. 
 
 The first point seems to be that we should clearly 
 understand the facts as to the supply and demand of the 
 
APPRECIATION OF GOLD. 7 
 
 precious metals since 1849, and endeavour to decide 
 whether gold is or not really " scarce." 
 
 Comparing the two metals — gold and silver — it is curious 
 that, whereas in 1850 the stock of silver was estimated at 
 thirty-two times in weight that of gold, it is now supposed to be 
 about nineteen times; and were their prices regulated merely 
 by the stocks of the two metals at different periods, the price 
 of silver should now be 102 pence per ounce, instead of 
 43 pence (Mulhall, " History of Prices," p. 17). Silver has 
 fallen, although the stock of gold has increased far more 
 than that of silver ; but the demand for gold has increased 
 more rapidly than that for silver, although India and 
 China have absorbed great amounts of silver during the 
 past twenty-five years.* There seems indeed to be no 
 obvious and permanent connection between the price of 
 silver in Europe and the stocks of gold and silver. Silver 
 did not rise materially from 1852 to 1857, when the 
 annual production of gold increased, while that of silver 
 remained stationary (see Appendix A), and in the period 
 since 1872 silver has fallen in Europe far more than can be 
 accounted for by changes in the production of the precious 
 metals, considerable as these have been. The explanation 
 would seem to be that in the former period there was no 
 special change in the position of silver in Europe, no new 
 supply and no altered demand, and France was able to 
 absorb a very large amount of gold ; whereas in the latter 
 period there was an enormous new supply of silver from 
 Germany and the United States, ard a sudden destruction ot 
 
 * The American figures are as follows : — 
 Total production of gold in 36 years from 1849 to 1884 — £776,595,000 
 ,, „ ,, silver „ ,, ,, „ ,, „ — £450,000,000 
 
 Dividing 1850 to 1884 in periods of five years, the supply of gold is 
 as under : — 
 
 850—54 
 
 .. £105,000,000 
 
 Or per year 
 
 £21,000,000 
 
 855—59 
 
 138,000,000 
 
 >» 
 
 27,600,000 
 
 860—64 
 
 112,000,000 
 
 j> 
 
 22,400,000 
 
 865—69 
 
 112,000,000 
 
 >> 
 
 22,000,000 
 
 870—74 
 
 100,000,000 
 
 > j 
 
 20,000,000 
 
 S75-79 
 
 109,000,000 
 
 >> 
 
 22,000,000 
 
 880-84 
 
 100,000,000 
 
 »> 
 
 20,000,000 
 
8 APPRECIATION OF GOLD. 
 
 demand by the cessation of free coinage by the Latin Union, 
 to say nothing of increased drafts on India by her Govern- 
 ment in London. It is not wonderful that silver has fallen 
 heavily in recent years. The wonder is that it did not rise 
 when there came that sudden and enormous increase in the 
 production of gold. (See Appendix B.) 
 
 To us in England, silver, as money, is of no more con- 
 sequence than copper, it being only token money, and not 
 legal tender for more than forty shillings. So far, the 
 changes in the value of silver in Europe would appear 
 to have assisted the people of India by giving them more 
 favourable markets for their produce, while silver prices in 
 India have not risen.* 
 
 * The recent letter of Secretary Manning to the House of Representa- 
 tives in Washington offers some important points for our consideration. 
 (March 2, 1886.) 
 
 The unit of value in the United States of America is the gold 
 dollar, and both gold and silver are legal tender ; but there is not free 
 coinage of silver, but a forced coinage of at least 2,000,000 dollars per 
 month, which coins are legal tender for 100 cents each, though only 
 worth about 75 cents at this moment. 
 
 The Americans dare not have free coinage of silver, as they fear 
 that they should lose their gold and have it all replaced by silver, so 
 long as silver can be bought at a low price in Europe. The result 
 would be a silver and paper circulation, with a gold unit of value — a 
 nominal gold dollar, with only silver and paper obtainable. Therefore, 
 they desire an arrangement with Europe, so as to create a price for 
 silver by agreement, which would prevent import of silver from Europe 
 and export of gold from America. 
 
 It is clear that the Americans shrink from a silver standard of 
 value, and they at the same time desire to use silver as largely as pos- 
 sible as legal tender, not token money. They not only have great 
 stocks of gold and silver but they produce both, and therefore for 
 various reasons they desire to make use of both metals as money and 
 not to cast discredit on either. 
 
 Their present situation affords a good illustration of the difficulties 
 which may arise from using two metals as legal tender money, even 
 though the unit of value be by law most clearly defined to be in one 
 metal only. Just the same difficulty arises in France, where the stock 
 of silver held* is very large, and of course the Government desires to 
 avoid, if possible, any loss on that holding. 
 
 The United States Secretary denounces forced coinage, and longs 
 for free coinage of silver, with complete legal tender, as the only reason- 
 able way of getting a proper supply of coin, because thus people supply 
 themselves, and will not use or keep more or less coin than they require ; 
 whereas the State cannot know what is required, and a fixed and forced 
 
APPRECIATION OF GOLD. 9 
 
 The present situation seems to be as follows. Since 1850 
 there has been in Europe, America, and Australia (which 
 include the great civilised communities, and those where 
 gold is chiefly used as money) a great increase of popula- 
 tion, estimated at about 117 millions, or nearly 45 per cent 
 During the same period there has been a great increase of 
 productive power over the whole world (probably 50 per 
 cent.), especially in the same countries ; and, along with this 
 extension of population and production, a great develop- 
 ment of trade. 
 
 The trade of the world is at least four times as great as 
 it was in 1850, and the mere weight of goods moved is six 
 times as great as it then was. Such changes cannot occur 
 without causing a need for more money available for 
 exchange of commodities, and this increased quantity has 
 been supplied, partly by the discovery of great supplies of 
 gold and silver, and partly by a great extension of credit ; 
 so that, as a final result, we have large stores of coin and 
 bullion in circulation or reserve, and the interest paid on 
 money lent for short periods has been lower than in any 
 recent period of our commercial history; but we have, at the 
 same time, a scale of prices lower than that of 1850. All 
 this trade has been done — and that with fewer panics and 
 alarms than in former times — great masses of produce have 
 been moved and exchanged, and the enormous increase in 
 the total produce has only caused a slight fall of prices in 
 thirty-five years. The fall may be great in some cases, when 
 measured from 1873; but it is slight when measured from 
 1850. It would seem probable that, all other things being 
 the same as they are now, we must have seen a far greater 
 fall in prices if there had been no increase of gold and 
 
 circulation takes no account of real needs. But he is hampered by the 
 state of the silver market. He dares not ask America to act alone. 
 The following figures are interesting : — 
 
 Total gold in United States Treasury on January 30, 
 
 £"50,000,000 
 
 [886 
 
 Total standard silver dollars coined same date 
 
 Gold certificates outstanding (including } 
 
 < those in > 
 
 Silver „ ,, ( Treasury.) 
 
 Total gold in United States, January, 1886 
 
 ,£44,000,000 
 ^"27,800,000 
 
 £25,000,000 
 £"106,000,000 
 
IO APPRECIATION OF GOLD. 
 
 silver. The mere extension of credit, however important, 
 might not alone have sufficed to maintain even the prices of 
 1850. In 1850 every one expected that gold would soon 
 buy less goods than formerly. The result has been that a 
 given weight of gold will now buy more than at any time in 
 the present century. How far the change depends on 
 supplies of money, and how far on other causes, is the 
 question of interest about which so much is being said 
 and written. Gold did depreciate. It is now slightly 
 appreciated, but greatly depreciated as compared with what 
 its value would have been had no new supplies come forward. 
 
 It is often forgotten in discussions on the effect of the 
 increase of production that, however great that increase, the 
 articles produced are quickly used up and done with. They 
 are exchanged and dealt with, and they cease to be. But 
 the case is not so with the precious metals. They accumu- 
 late by reason of their durability, and an increase of stock is 
 comparatively a permanent addition to the fund available for 
 exchanges.* In any given year the increase of articles to 
 be moved may be great, but the movement of this increased 
 product does not involve the consumption of the precious 
 metals, except by wear and tear. They do the work, and 
 are ready to do it over again. It follows that we cannot 
 regard the accumulation of goods as a cumulative increase, 
 as is that of the precious metals ; and therefore the increase 
 of the metals tends far more towards maintaining prices 
 than does the increase of production towards the reduction 
 of prices. 
 
 It is, however, said that gold must be scarce, because the 
 annual supply is much less than it was thirty years ago, and 
 because so much gold was absorbed by America, Germany, 
 and Italy in a single decade. It is alleged that 200 millions 
 was thus absorbed; but there seems to be an insufficient grasp 
 of the facts and a theoretical defect in the argument as to 
 the so-called "absorption." 
 
 * Compare Secretary Manning's letter to Secretary of Treasury 
 (U.S.A.), cited above, p. 17 : "Standing over against the vast aggregate 
 of human commodities, mostly perishable, which' sinks and swells with 
 seed-time and harvest, as the seasons change, and of which the uncon- 
 sumed and more or less imperishable part is so small, the monetary metals 
 of the world are the most trustworthy attainable measure of value." 
 
APPRECIATION OF GOLD. II 
 
 In the first place, it is not sufficiently noted that the 
 circulation of notes by the Bank of France, over the amount 
 of bullion held, increased by ^9 1,000,000 from January, 
 1870 to November, 1873. This great movement arose no 
 doubt from the. war and the war-indemnity, but it must 
 have had an effect on prices in Europe, and should be set 
 against the supposed absorption of gold. Much of the gold 
 coined by Germany came, no doubt, from France, and its 
 production was assisted by means of this great issue of notes. 
 It is surely clear that gold coined by Germany was quite as 
 much money, and quite as useful, as gold hoarded by 
 French peasants and traders. It is also clear that coined 
 gold, whether coined in the usual course or in an unusual way, 
 as in Germany, America, and Italy, is gold in its most useful 
 form for purposes of money. It does not seem, therefore, 
 to be sound reasoning to assume that gold so coined is 
 somehow "absorbed," so that demands for coinage, as such, 
 must tend to lower prices. The gold is there, although 
 the localities in which it is stored or used may be 
 changed. It would be absurd to treat it as a new supply of 
 money; but, on the other hand, it seems absurd to treat it as 
 a disappeared factor in the general supply of money, and as 
 if it had ceased to influence prices. 
 
 A similar remark may be made as to the annual absorp- 
 tion of gold for coinage. The coinage turns the gold into 
 money proper, and such a use of the gold does not take it 
 away and hide it out of sight and make it impotent. 
 
 There is of course a loss of metal by wear and tear of 
 coins every year, and a certain amount is really absorbed in 
 manufactures and decoration. This is variously estimated 
 at from ^5,000,000 to ;£ 12,000,000 a year, and, whatever 
 it may be, it is clear that this gold is removed from all 
 influence on the money market and on prices. 
 
 The idea, however, seems to be that if Germany, Italy, 
 and America had stuck to silver and shaky notes, we might 
 have had more available gold here and in France ; and in 
 consequence a higher range of prices. This is certainly not 
 clear as to the gold obtained by Germany, for much of that 
 came, as has been said, from French hoards. It is not easy 
 to say exactly what would have happened, had Germany 
 taken no gold from France and had America resumed specie 
 
12 APPRECIATION OF GOLD. 
 
 payments on a silver basis. The important fact is that the 
 supply of gold has sufficed to give to Germany, Italy, and 
 America all the gold they have required for the modification 
 of their currencies, and yet to leave to other countries 
 ample working balances. It is also worth noting as to the 
 American resumption that cautious people in London 
 expected great pressure here in 1879, m consequence of 
 American demands; whereas, in fact, 1879 was a year of 
 extreme ease, following as it did on high rates of discount 
 and considerable alarms during the autumn of 1878, when 
 large amounts of bullion were attracted to this side. 
 
 It is quite clear that capital, in the form of money loan- 
 able for short periods, has been very abundant during recent 
 years, even in countries like England, where a real scarcity 
 of bullion at once acts upon the short loan market, and 
 increases the rate charged for the use of " money." The 
 average Bank rate of the past ten years has been slightly 
 over 3 per cent., whereas it was more than 4 per 
 cent, during the twenty preceding years, and the " mar- 
 ket rate " for discount has been in recent years lower 
 than the Bank rate in a larger proportion than was formerly 
 the case. 
 
 If we want gold we have to raise the rate of discount to 
 get it ; and although, during the period in question, other 
 countries have bought and used large amounts of gold, 
 we have secured all that we have required at comparatively 
 low rates. We have not perhaps wanted so much as on some 
 other occasions, by reason of low values of produce, although 
 this period has included times of great activity; but, at any 
 rate, it is perfectly clear that the recent history of our money 
 market affords no confirmation to the assertion that gold 
 has become scarce. On the contrary, so far as it goes, the 
 evidence points the other way, and tends to show that the 
 supplies available have been more than sufficient, even for 
 demands which have sometimes been of an extraordinary 
 nature. 
 
 It is worth observing that our foreign trade has been 
 transacted in recent years with a smaller proportion of actual 
 shipment of bullion and specie than formerly. The total of 
 our imports and exports from 1866 to 1875 was in round 
 figures ^"6,000,000,000, and the total of bullion and specie 
 

 APPRECIATION OF GOLD. 1 3 
 
 imported and exported was in the same period ^"530,000,000; 
 but the total of our imports and exports from 1876 to 1885 
 was ;£6, 700,000,000, and this vast amount was moved with 
 the aid of ^£493,000,000 of bullion and specie. If we take 
 the gold alone, we used about ^327,000,000 in the former 
 decade, against ^2 7 8,000,000 in the latter. The figures of 
 the total trade in the later period are somewhat misleading, 
 as of course the trade was even larger than it seemed, if the 
 amounts had been corrected for the fall of prices. So the 
 diminished use of bullion is really more important than it 
 seems.* (See Appendix C.) 
 
 * It is interesting to note that those countries which do the most 
 trade are not those which require the most coin. For instance, Great 
 Britain uses about ^4 per head of her population, and France about ^£8, 
 and, according to Mr. Mulhall's tables, the ratio of metallic money 
 used in different countries to the total commerce of each country is as 
 follows : — 
 
 Per cent. 
 Spain and Portugal... ... ... ... 100 
 
 France ... ... ... ... .. 85 
 
 United States ... ... ... .. 58 
 
 Italy ... ... ... ... ... 40 
 
 Germany ... ... ... ... ... 34 
 
 Great Britain ... ... ... ... 20 
 
 We require the least coin, because we have developed our banking 
 system so that instruments of credit do the work of money. 
 
 It is also well to notice that in our own home trade there is a 
 marked falling off in the use of bills of exchange since 1874. There 
 may be some reduction in the business done, but not sufficient to account 
 for the change in the stamps used. It is more likely that loans from 
 banks and book debts have taken the place of bills, and it is probably 
 also the fact that many firms, having accumulated much capital, use 
 much more cash than in past years, so that many payments are made at 
 once which used to be deferred and drawn for. It is at any rate 
 notorious that banks have long complained of the scarcity of bills, and 
 the figures which follow quite explain that complaint : — 
 
 1874. 1885. 
 
 Inland and foreign bill stamps... ^985,000 ... Inland... ^342,132 
 
 Foreign • ^562,981 
 
 l^705,H3 
 So that Inland have fallen since 1874^^^0.000, or almost exactly one-half 
 
 Foreign estimated for 1874. . • £3°3,°oo 
 Inland ^682,000 
 
14 APPRECIATION OF GOLD. 
 
 Those who are familiar with the course of the money 
 market will remember that the semi-panic of the summer of 
 1875, when enormous failures took place, was surmounted 
 without a high Bank rate, and that the feature of 1876 was 
 an excessively low market rate — so low that vast sums of 
 money were lent "at call" during long periods at half to one 
 per cent, per annum, and this before the general fall in prices 
 had taken place, and at the very time when the effect of 
 German operations on silver was first fully felt, and the 
 Indian exchange fell to is. 6d. the rupee. 
 
 Trade was no doubt depressed in 1876, and of course 
 this was one cause of the want of demand for money, and the 
 heavy fall in rates ; but if gold were ever scarce, it should 
 have become so when German demands had been so long 
 " absorbing " bullion on all sides. The general opinion was 
 that during 1873 and 1874 German demands had diminished 
 supplies of gold here; but by 1876 this special demand 
 seems to have ceased, and as soon as it ceased the market 
 assumed an aspect of excessive abundance of loanable 
 capital.* 
 
 # Mr. Giffen, in his second series of Essays on Finance (p. 80 et seq.), 
 argues that the money market has been more disturbed since 1874 than 
 was common previously — ' ' feverish. " as he puts it. The basis of the 
 argument is that there were high and low rates in the same year on 
 several occasions, as, for instance, in 1875 and 1876. 
 
 Great difficulties were surmounted in 1875 hy reason of an excessive 
 supply of money throughout the year. 
 
 No one who really was engaged in the money market would ever 
 speak of the money market as " feverish " in 1876. As a matter of fact, 
 1876 was, as above mentioned, a year of extreme ease in the money 
 market. The same remark will apply to most of 1877 ; and as to 1878, 
 there was no serious pressure until the failure of the City of Glasgow 
 Bank and its consequences caused an alarm which would have ended 
 in panic had there been any real scarcity of money. 
 
 Eighteen hundred and seventy-nine was another year of extraor- 
 dinary ease in money, though the rate did rise in the autumn to 4^ 
 per cent. 
 
 Mr. Giffen (p. 81) admits that the five years from 1880 to 1884 
 inclusive have been " less disturbed," though it would seem that, if the 
 supply of money from gold were then continually decreasing, the con- 
 trary result should have been experienced. 
 
 However explained, the fact remains that the years since 1873 have 
 not been years of " feverish " money, if compared with former periods, 
 say from 1856 to 1873, when gold supplies were very large, and, till 
 
APPRECIATION OF GOLD. 1 5 
 
 It is interesting, as showing the real condition of the 
 money market, that in the decade from 1866 to 1875 
 inclusive there were 109 changes in the Bank rate of 
 discount, whereas in the decade from 1876 to 1885 there were 
 only 61 changes. The condition of affairs must have been 
 far more " feverish " in the former than in the latter period. 
 
 The history of the great banks of Europe, during recent 
 years, certainly lends no aid to those who dwell on the 
 scarcity of gold, and even M. Cernuschi, the eminent 
 advocate of bimetallism, in a letter to the Economist dated 
 in April, 1886, says that the scarcity of gold is "purely 
 imaginary," and he refers, in confirmation of this view, to 
 the great store of gold now existing in the world. 
 
 The stock of the Bank of England (April, 1886) was 
 ^21,400,000, ^4,000,000 less than in 1885 ; but the stock 
 of the Bank of France was ^5 1,800,000, showing an increase 
 of ^£10,000,000 since April, 1885. The Imperial Bank of 
 Germany had ^34,000,000* (in gold and silver), and the 
 Treasury and banks of the United States held about 
 ^65,000,000 (gold). 
 
 It is remarkable that while the stock of gold in the 
 Bank of France has doubled since 31st December, 1881 
 (^25,800,000 in 188 1, now — April, 1886 — jQ$ 1,800,000), her 
 stock of silver has fallen ^2, 000,000 — from ^46,000,000 to 
 ^44,000,000. 
 
 The only material falling off in recent years has been in 
 America, and that is far more than compensated by the 
 great increase in Europe. Recent legislation, as well as the 
 course of trade, has tended to cause an export of gold from 
 the States to Europe. 
 
 The general result confirms the opinion of M, Cernuschi, 
 
 1 87 1, excessive. Any one really engaged in the business of lending 
 money can have no doubt on this head. There has been no " panic " 
 since 1866, and this fact alone should be very instructive. 
 
 * According to Soetbeer (as quoted in the Financial Nezvs), the 
 stock of money in circulation in Germany in January, 1886, was 
 £133,000,000, against £87,000,000 in 1871. Of this, £87,000,000 
 was gold, against £4, 500,000 in 1871, and £44,000,000 was silver, 
 against £75,000,000 in 1871. 
 
 Therefore the increase of gold (£82,500,000) was £30,000,000 more 
 than the decrease in silver. This does not seem to point to a great 
 " scarcity " of the more precious metal. 
 
1 6 APPRECIATION OF GOLD. 
 
 and possibly it may be true, as he suggests, that, if we could 
 turn every silver coin into gold it would make no difference 
 in the total of available money, and ought not, therefore, to 
 affect the condition of prices. 
 
 In much of the recent controversy, many writers do not 
 seem to have dwelt sufficiently on the influence of the 
 extended use of instruments of credit on prices. Formerly, 
 much turned on the issue of Bank notes. It is not so now 
 in our system. The amount of their issue is here strictly 
 limited, and they do less and less of the work of the nation. 
 Their total is as nothing when compared to the total of money 
 needed for daily exchanges. Men confide in one another, 
 and, when they confide, do not need the aid of cash. It is 
 not, perhaps, true to say that England is fully " banked," but 
 she is sufficiently "banked" to enable her to carry on a vast 
 trade with very little money. 
 
 When credit is rampant, a great inflation may arise, and 
 money may seem plentiful, and no doubt such a situation 
 tends to enhance prices ; but if prices are thus raised, their 
 fall is certain when crisis and panic supervene on a collapse 
 of credit. This is admitted, but it is argued that, as the 
 structure of credit depends on the maintenance of a 
 sufficient reserve of gold, any condition of things which 
 makes it more difficult to maintain that reserve, will tend to 
 cause a fall in prices. As a matter of fact, the rate of money 
 has never been more steady in England than it has been 
 since the supply of gold has been diminishing — say from 
 1870 to the present time. Credit has fluctuated, but has 
 never been excessively developed since 1866, and the supply 
 of money in the discount market, as already stated, has 
 been for the most part ample at low rates of interest. Every 
 day there is an increasing tendency to use less cash in 
 business, and the function of gold, however important, seems 
 to be more and more confined to transactions entirely retail 
 in their character, and to the maintenance of such reserves 
 as may be necessary for the stability of credit.* 
 
 * Even in small transactions, men desire to dispense with metal, as 
 we see in the wide use of £1 notes in Scotland and Ireland, where 
 gold is seldom seen (except in the form of half-sovereigns), and. in the 
 great expansion in the use of Postal Notes since 1880. Englishmen 
 
APPRECIATION OF GOLD. 1 7 
 
 At least 99 per cent, of the real business of the country 
 is effected by instruments of credit, if we include in that 
 expression Bank notes of all sorts ; and, apart from Bank 
 notes, the vast mass of important exchanges takes effect 
 without the use of any "money" whatever. No one, in 
 deciding what price he will give for any article, ever thinks 
 of the question whether it may be easy or difficult to 
 procure*the money required, except during a panic or so far 
 as his own credit may be affected by his own condition. 
 The means of exchange are always at hand for. the solvent 
 man. Scarcity of gold is never referred to, for gold is not 
 used in transactions of any consequence. The cheque or 
 bill does the work as effectually as sovereigns could do it. 
 If a man's credit is weak, because credit is restricted, he 
 may refuse to enter on a transaction which he would 
 otherwise accept gladly; and, on the other hand, if credit be 
 easily obtained, he will do what he would otherwise refuse ; 
 and so prices are affected by credit, because the condition of 
 credit affects the condition of men's minds. But it may well 
 be doubted whether the state of the mines is much 
 considered by traders in ordinary times. 
 
 It is curious that prices should vary so little as be- 
 tween France and England, though customs as to the use 
 of instruments of credit and money vary so much. For 
 instance, in the Bank of France it is found that about 44 per 
 cent, of transactions are effected by means of notes and cash, 
 whereas, in London banks, only 3 per cent, are thus effected, 
 the cheque system being little used in France as compared 
 with England. It would seem to follow from this, that the 
 general movements of prices depend less on customs as to 
 the use of money than on other causes. And this tends to 
 confirm the observation before made, that men, in consider- 
 ing values, think rather of supplies and demands of goods, 
 than of facts as to money. The Frenchman keeps money 
 and depends on it. The Englishman uses credit instead of 
 money and depends on it, just as much as if it were money. 
 
 Taking our own country alone, we often turn over as 
 
 are forbidden the use of £1 notes for some inscrutable reason, but 
 they show plainly, by their disposition towards Postal Orders, how 
 convenient is representative money, even in small affairs. 
 B 
 
1 8 APPRECIATION OF GOLD. 
 
 much nominal money in the London Clearing House in a 
 single week as the whole amount of gold coin and bullion 
 supposed to exist in the kingdom, and to this must be 
 added the great sums moved in the country without coming 
 in any form to London. This fact ought to bring home to 
 the mind the slight importance of cash as a factor in the 
 transactions of a great commercial people.* 
 
 No one would assert that the amount of money in a 
 country at any given time has no influence on prices ; but, 
 granted the fact that for years no scarcity of money for pur- 
 poses of exchange has been felt, it may well be asked 
 whether, at such a time and in such a situation, price depends 
 much on facts as to supplies from the mines. If the time 
 should come when lessened supplies from the mines take the 
 form of lessened reserves, lessened credit, and lessened 
 facilities in the money market, as evidenced by high rates 
 of discount, then indeed prices may come to be affected, 
 for demands for goods will probably lessen, even if supplies 
 continue. You may, however, have high rates of discount 
 with rising prices, as in 1864-66, or you may have low rates 
 and falling prices, as in recent years. In both cases there 
 were special causes affecting prices, apart from money 
 markets. All that one can say is, that the tendency of scarce 
 money and high rates of discount should be towards falling 
 prices, and the tendency of plentiful money and low rates 
 should be towards higher prices ; but it has often happened 
 that other tendencies have been stronger than those arising 
 from facts affecting money, and so the course of prices has 
 seemed to baffle calculation. 
 
 Mr. Giffen, in the Essay already mentioned, argues as to 
 the importance of bank reserves as a factor in prices. But 
 he seems to ignore the fact that while our Bank reserve in 
 England has been barely maintained, the gold reserve of 
 
 * Compare the observation of Mr. E. Atkinson as to the United 
 States of America ("Distribution of Products," p. 211). 
 
 11 Three hundred million dollars of gold coin suffices as the standard 
 by which to measure 300,000,000,000 dollars' worth of purchases and 
 sales every year. 
 
 " By the use of notes issued by, or cheques drawn upon, banks and 
 bankers, more than 100,000,000 tons of food are moved in each year 
 from the producer to the consumer, and thus the subsistence of 
 50,000,000 people is assured." 
 
APPRECIATION OF GOLD. 1 9 
 
 the Banks of France and Germany has largely increased — 
 a fact of much importance when money markets are so 
 closely associated, and when transmission is so easy and 
 rapid. It is perfectly true that, as we work with little cash in 
 hand, our market is more sensitive and more affected by 
 slight movements of bullion than are the great markets 
 abroad, where cash is so largely used and retained. Slight 
 changes in the reserve act quickly here, because they soon 
 affect the expectations or fears of borrowers and lenders. 
 But it is difficult to believe that these changes have just the 
 same effect now as they would have in times when the 
 Banks of France and Berlin were scantily supplied with 
 gold. 
 
 Mr. Giffen argues that if the reserve is not kept up here 
 values must decline, and, if necessary, rates of discount must 
 be raised in order to secure the decline. Again, he says 
 that, as increase of population and wealth demands more 
 cash for the transaction of business, if fresh supplies of 
 cash do not come to us in ordinary course, rates of discount 
 must rise and values fall. But, recently, values have fallen 
 without any serious advance in the rate of discount, with, in 
 fact, a low average rate of discount. The old machinery 
 does not work, for on several occasions the Bank has failed 
 to raise the rate of discount, even when 'disposed to do so 
 It may be said that rates have not risen, because other 
 causes have produced a fall of values which has brought 
 about an " adjustment." If that be so, it seems to follow 
 that other causes have been more powerful in causing 
 changes of price than any changes affecting supplies of 
 money. But it would be more correct to say that the supply 
 of cash outside the central Bank has been so great, that per- 
 manent advance of rates of discount was impossible. The 
 peculiarity of the money market in recent years has been that, 
 with a very moderate reserve, we have often had very low 
 rates of discount — a condition of things which would not of 
 itself tend to lower values ; but values have fallen. It is 
 hard to see how it can be said that want of cash for any 
 purpose has led to the fall in such cases.* 
 
 * Generally speaking, the rate of discount depends, not on abund- 
 ance of gold or silver, but on the organisation of credit, so that we see 
 B g 
 
20 APPRECIATION OF GOLD. 
 
 If it be true that gold has not become scarce, and that 
 we cannot safely argue that prices have fallen in con- 
 sequence of such- scarcity, the question will be asked — 
 What then are the causes which have led to the serious 
 fall which has occurred in the price of many articles of 
 great importance ? 
 
 The following table gives the changes from 1873 to 1886, 
 in the cases most frequently referred to : — 
 
 the lowest rates in those countries where there has been a comparatively 
 small amount of bullion or coin. Compare, for instance, England and 
 France. France has probably two or three times as much cash as we 
 have ; but if we compare the rates charged from 1844 to 1877 by the 
 Banks of England and France, we find that the Bank of England was 
 at 3 per cent, for 2,682 days, and the Bank of France for only 1,518 
 days ; and the Bank of England was at 2 per cent, for 1,391 days, and 
 the Bank of France for only 270 days. (See Mr. Inglis Palgrave's 
 tables, published in 1878 ; and see also M. Y. Guyot's very interesting 
 chapter in the third book of his " Principles of Social Economy.") 
 
 Mr. Giffen admits [ib., p. 55) that a fall of price may arise from 
 "over-production," or lessened cost of production, which will "ease" 
 the money market, and prevent a rise, or produce a fall, of rates. Or a 
 rise of prices in articles may occur when gold is flowing in, but not 
 caused by the influx of gold, and the consequence will be greater 
 demands for cash, and possibly higher rates of discount. Through 
 "wages and profits " prices are affected, for "prices are only wages 
 in another form," and so by changes in wages and profits, differences 
 arising from scarcity and abundance of gold may be adjusted without 
 changes in the short loan market. 
 
 Mr. Giffen, in fact, admits the importance of "other changes of 
 prices" apart from "changes in credit prices;" but then these other 
 changes in prices depend on "wages and profits," and these depend on 
 " the quantity of gold in use," so that it comes to this — that all changes 
 of prices depend on the " quantity of gold in use." 
 
 This argument seems to beg the whole question, for it seems to be 
 assumed that prices depend on wages and profits, and that wages and 
 profits must vary with the cash in the reserves of the country. The 
 contention here made is intended to show that other elements, besides 
 those enumerated by Mr. Giffen, have in fact affected, and do still affect, 
 prices. 
 
APPRECIATION OF GOLD. 21 
 
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2 2 APPRECIATION OF GOLD. 
 
 The first observation is that it seems impossible here to 
 find any law as to the fall. The fall appears to be spasmodic 
 and uncertain, which it should not be if it be caused by a 
 continuous and increasing scarcity of the means of effecting 
 exchanges. 
 
 We are, however, referred to Index numbers as proving 
 a fall which is general and persistent. These numbers are 
 very misleading, as articles small and great are treated as of 
 equal importance — indigo and wheat, for example. Recently 
 we have received a table where the numbers are, as far as 
 possible, corrected so as to embrace the consideration of 
 "relative importance," as well as mere price. These 
 figures are given in tables 26 and 27 of Appendix B to the 
 third report of the Commission on Depression. They are pre- 
 pared by Mr. Nash under the direction of Mr. Inglis Palgrave. 
 He takes the average prices from 1865-69 of the twenty-two 
 articles chosen to form the Econo?nist Index number, as his 
 " datum line." Treating each article as of equal importance, 
 we get a number in 1869 of 2,200 = 100, and in 1885 a fall 
 to 1,550, or 70, but the corrected figure is 1,669 or 76. 
 The corrected figure of 1877 was 2,205 or IO °; being 7 per 
 cent, higher than that of 187 1, and the figure of 188 1 was the 
 same as that of 187 1, and the very heavy fall only begins 
 after 1883, the figure for which was 88, whereas the figure 
 of 1884 was 80, and that of 1885 was 76.* 
 
 This gives a fall of 12 per cent, in two years, and it 
 is very hard to attribute such a change to any possible 
 alterations in gold supply in such a period, f These 
 peculiarities become more interesting when we look a little 
 further into details. 
 
 The change in the price of wheat is very curious. The 
 price of January, 1879, was 39s. 7d. a quarter; of January, 
 1884, 39s.; January, 1885, 32s. 6d. ; and of April, 1886, 
 30s. No change of importance occurred from 1879 to 1884, 
 and no one would suggest that the fall of 1884 was caused 
 by scarcity of gold. 
 
 * It may, perhaps, be doubted whether the prices from 1865- 1869 
 form a very satisfactory datum line, as they are a good deal affected by 
 the price of cotton. 
 
 t Compare, as to fall of Indian prices in 1884 and 1885, Barbour 
 on Bimetallism, p. 93. 
 
APPRECIATION OF GOLD. 23 
 
 Take sugar again. It did not fall much between 1879 
 and 1884, but West India sugar fell from 16s. to 19s. per 
 cwt, to 9s. 6d. to 12s. before January, 1885, and it remains 
 much the same in 1886. But in 1884 we received 7f 
 million cwts. of unrefined sugar from Germany, as against 
 4J million cwts. in 1882; and the production of beetroot 
 sugar increased from 1,393,000 tons in 1879 to 2,500,000 
 tons in 1885. In the same period, the production of cane 
 sugar increased slightly, but the total sugar production of 
 the world increased more than 30 per cent. These figures 
 account readily for the fall. The trade has, in fact, been 
 upset by bounties offered by over-anxious Governments, as 
 well as by an enormous natural increase of supply* 
 
 * I take the following figures as to the import of sugar into the Clyde 
 from the Financial Neivs of the 17th of April, 1886 :— In 1858 the first 
 200 tons of beetroot sugar were imported — the total import of sugar for 
 the year being 70,000 tons. Last year 241,000 tons came into the 
 Clyde, 158,000 being beet, and 83,000 cane. 
 
 In 1879 only 40,000 tons of beet sugar were delivered in the Clyde. 
 In 1869 the total beet sugar crop of Europe was estimated at 659,000 
 tons, and last year at 2,546,000 tons. The deliveries of West India 
 sugar fell from 37,000 tons in 1879 to 11,000 in 1885. 
 
 Prices of sugar, 1830 ... ^50 a ton. 
 
 1840 ^40 „ 
 
 1881 £25 „ 
 
 1886 £16 „ 
 
 Consumption, 1884- 1885. 
 
 Beet 2,500,000") 
 
 Cane 2,170,000 j lonb * 
 
 The following facts, extracted from a single impression of the Times 
 (19th April, 1886), illustrate strongly the extraordinary supplies of the 
 present time : — I. As to wheat in India, the estimated area under 
 wheat on 22nd March, in the Punjab alone, was 6,700,000 acres, about 
 2% times the whole area under wheat in the United Kingdom. 2. As 
 to wool, Messrs. Windeler, in their circular, say : "Colonial wool is 
 cheaper now than at any time within the memory of the present 
 
 generation Production during the interval (since 1848) 
 
 has increased nearly tenfold in the case of Colonial wool, while, as 
 regards River Plate wool, this industry now represents a total probably 
 equal to the entire Australian clip, and has more than doubled during 
 
 the last twenty years There are special circumstances 
 
 affecting Colonial wool at the moment. First, the rivalry with River 
 Plate wool has reached an acute stage. Secondly, the fact that the 
 
24 APPRECIATION OF GOLD. 
 
 Copper was about ^90 a ton in 1873, ^57 m J 879, 
 £65 in 1883, and ^41 in 1886, in face of a great demand, 
 but supplies have been, and are, so large (say 47,000 tons in 
 1850 and 210,000 in 1884) that the fall surprises no one. 
 
 So of iron and coal. Scotch pig iron fell from £6 7s. 
 per ton in 1873^0 £2 9s. in 1883, and £1 18s. in 1886 ; 
 but the production of iron was 9,392,000 tons in 1868, and 
 20,410,000 tons in 1883, so that a fall was inevitable sooner 
 or later. 
 
 Coal was £1 10s. per ton in 1873, 18s. in 1883, and 
 15s. 6d. in 1886, with enormous stocks. The production 
 is said to have quadrupled from 1850 to 1883. The prices 
 of iron and coal from 187 1 to 1874 afford a remarkable 
 illustration of fluctuation arising from special demands. No 
 doubt the Franco-German war was one great cause of this 
 change, as it produced a great stagnation- in two great 
 countries of the Continent, and so led to an extraordinary 
 demand for our manufactures and an unusual consumption 
 of coal and iron. There may have been other causes for 
 the rise, but, at any rate, gold had nothing to do with it, as 
 the serious falling oif in supply had then already com- 
 menced. 
 
 No survey of recent prices would be complete without 
 some allusion to those articles which have not fallen during 
 the period here considered. During a quarter of a century, 
 until within the past two years, meat has remained dear. The 
 consumption has greatly increased since the repeal of the 
 Corn Laws, but supplies have also increased from foreign 
 countries. We import ten times as much as we did thirty years 
 ago (447,000 tons against 44,000) ; but our population has 
 increased, and our people consume 105 lbs. per head per 
 annum, against 81 in 1855, and, as our chief supply is still 
 
 production of Merino wool is now for the first time in excess of the 
 powers of consumption." Since July wool has advanced rapidly. 
 
 Our markets have begun to feel an influence of supplies of wheat, 
 even from countries so distant as Australia and New Zealand. It may 
 be worth noting that in the present year New Zealand papers mention 
 most extraordinary results of the harvest just completed. One paper, 
 dated 19th February, mentions 60, 50, and 72 bushels of wheat to the 
 acre. Another, dated 24th February, mentions 90 and 70 bushels. In 
 a third paper, 100, 86, and even 116 bushels of oats to the acre are 
 recorded near Tanaka and St. Andrews. 
 
APPRECIATION OF GOLD. 
 
 25 
 
 produced at home, prices have advanced while other food 
 has fallen. The advance is most natural, if one considers 
 the ordinary factors of supply and demand; but if gold were 
 really appreciated from scarcity, it is hard to account for 
 such an advance, when other articles of food have fallen 
 spite of a greatly increased demand. 
 
 The prices are as follows in London : — 
 
 Beef per ton. 
 
 1841-50 £$& 
 
 £61 
 
 1851-60 .. 
 1861-70 .. 
 1871-80 .. 
 1881-84 •■ 
 
 ^65 
 £19 
 
 £H 
 
 Meat is not the only article the price of which has risen 
 since 1854, during which time so many have fallen. 
 
 Taking all the agricultural products of Ireland, Mr. 
 H. V. Stuart gives the following figures : — 
 
 United 
 
 totals of minimum prices 1850 to 1855 . 
 
 ••^145 
 
 2 
 
 i860 „ 1865 . 
 
 .. 212 6 
 
 11 
 
 1870 „ 1875 . 
 
 .. 264 13 
 
 9 
 
 1880 „ 1885 . 
 
 .. 224 13 
 
 5 
 
 , maximum prices i860 ,, 1865 . 
 
 • • 305 6 
 
 11 
 
 1880 „ 1885 . 
 
 •• 398 13 
 
 8 
 
 (See " Prices of Farm Products in Ireland," p. 19.) 
 
The following Diagrams, which are taken from M. Guyot's " Principles of Social 
 Economy," pp. 95 and 98, afford an interesting illustration: — 
 
 
 
 
 
 
 
 
 
 
 Aoo 
 
 
 
 
 
 
 
 
 
 
 275« 
 
 
 
 
 
 
 
 
 9 
 
 
 - 
 
 
 
 
 
 
 
 1/ 
 
 
 '211 
 
 
 
 
 
 
 
 
 / 
 
 
 
 
 
 
 
 
 
 '158 
 
 
 
 
 
 
 
 
 4 
 
 
 
 
 
 
 
 
 
 
 
 X 
 
 
 
 100 
 
 
 
 
 
 
 
 9} 
 
 8s ) 
 
 
 82.25 
 
 
 
 f 
 
 
 
 <& 
 
 t 
 
 s J^r 
 
 
 
 
 
 40, 
 
 
 c CS5>T^4-37 
 
 
 4 2 
 
 
 
 
 
 
 <^ 
 
 Corn 
 
 
 2 
 
 8^- 
 
 
 15.8 
 
 79° 1800 1810 1820 1830 1840 1850 i860 1870.. 1880 
 Price of Land and Agricultural Produce, 1 787-1 880 (France). 
 
Increase per Cent. 
 
 1771 
 
 8=;o 
 
 1878 
 
 Price of Land, of Agricultural Products, and rate of Agricultural Wages, 
 1771-1878 (England— Caird). 
 
28 
 
 APPRECIATION OF GOLD. 
 
 Taking 50 British imports as given by Mr. Mulhall 
 (" History of Prices," p. 180) and taking the Index number 
 of the prices of these from 1854-60 as 100, we find in the fol- 
 lowing cases an advance in 1884 as compared with 1854 — 
 
 
 1854 
 
 1884 
 
 
 1854 
 
 1884 
 
 Bacon 
 
 78 . 
 
 .. 96 
 
 Eggs 
 
 80 . 
 
 .. 123 
 
 Beef 
 
 95 • 
 
 .. 127 
 
 Hides .. 
 
 • 7i 
 
 97 
 
 Brandy . . 
 
 89 • 
 
 .. 96 
 
 Oats 
 
 ■ 103 • 
 
 in 
 
 Butter 
 
 81 . 
 
 .. 119 
 
 Oxen 
 
 75 
 
 • • 138 
 
 Cheese 
 
 90 . 
 
 .. 102 
 
 Pepper .. 
 
 . 102 
 
 •• 145 
 
 Cocoa 
 
 60 . 
 
 .. 165 
 
 Potatoes .. 
 
 . 85 . 
 
 192 
 
 Coffee .. 
 
 94 • 
 
 •• 135 
 
 Raisins . . 
 
 . 86 . 
 
 .. 91 
 
 Cotton 
 
 88 . 
 
 •• 93 
 
 Sheep 
 
 . 72 
 
 no 
 
 Currants .. 
 
 61 . 
 
 •• 75 
 
 
 
 
 In the same way, if we take 50 British exports, and 
 compare the prices of 1854 and 1884, we get the following 
 exceptions to the fall — 
 
 
 1854 
 
 1884 
 
 1854 
 
 1884 
 
 Beer 
 
 95 
 
 .. no 
 
 Salt ... 109 
 
 .. 118 
 
 Cloth .. 
 
 89 
 
 .. 152 
 
 Silks ... 100 
 
 .. 103 
 
 Firearms .. 
 
 72 
 
 104 
 
 Spirits ... 133 
 
 .. 165 
 
 Fish 
 
 84 
 
 .. 100 
 
 Yarn (cotton) 92 
 
 .. 100* 
 
 Horses 
 
 88 
 
 .. 100 
 
 „ (linen) 100 
 
 .. 108 
 
 Leather . . 
 
 95 
 
 .. 107 
 
 
 
 There is here a list of exceptions so long as to lead to 
 caution in speaking of any prevalence of depression amount- 
 ing to a law. No doubt there are special causes for the rise 
 in each case. That is not disputed, but so are there special 
 causes accounting for a fall in other cases. Some articles 
 rise and some fall according to supply and demand, and 
 many new and most important influences which affect 
 supplies and demands have arisen in our own time, as will 
 be seen hereafter, f 
 
 * Cotton yarn has fallen much since 1884. 
 
 + Compare the remark of Professor Marshall (Appendix C. to third 
 Report of Commission on Trade, p. 423). " It is beyond question that 
 changes in the supply of gold are not accountable for more than a 
 very small part of the total fluctuations in the general purchasing 
 power of money." 
 
 No allusion is made in the text to the great rise in the value of 
 real estate (land and houses) which continued up to 1876 or 1877. 
 
APPRECIATION OF GOLD. 29 
 
 Before, however, dealing with these, it may be instructive 
 to refer to some cases of great fluctuation in price in former 
 periods, before the discovery of the great gold-fields of 
 California and Australia. 
 
 There was an enormous rise of prices from 1789 to 1809, 
 by some attributed to war and by others to a great abundance 
 of gold and silver in Europe (although there were no new 
 supplies of much importance during that period) ; and there 
 was an equally remarkable fall in the next twenty years, from 
 1809 to 1829. This is usually attributed to increase of 
 population and trade, without any increase of importance in 
 gold or silver. Again, by 1839 there was another sharp rise, 
 attributed by Mr. Jevons to "general expansion of trade *and 
 credit;" but by 1849 there was a fall, even more extraordinary, 
 attributed to a " collapse" of trade and credit. 
 
 The potato-famine, the panic of 1847, an d the revolution 
 of 1848, were all included in this decade, and would seem 
 to account for much decrease of business and a lessened 
 demand for most articles of commerce. 
 
 The year 1849 marks about the lowest point of the low 
 prices before the gold discoveries, and the history of these 
 previous changes ought to make it very clear how great may 
 be these fluctuations, even when supplies of gold and silver 
 remain comparatively stationary. 
 
 The figures of this period are thus summed up by Mr. 
 Jevons in his " Investigations," published after his death : — 
 
 
 Average ratio 
 
 
 Average ratio 
 
 Year. 
 
 of prices to 
 
 Year. 
 
 of prices to 
 
 
 prices of 1849. 
 
 
 prices of 1849 
 
 1789 
 
 133 
 
 1829 
 
 124 
 
 1799 
 
 202 
 
 1839 .- 
 
 I44 
 
 1809 
 
 245 
 
 1849 
 
 IOO 
 
 1819 
 
 175 
 
 
 
 Recently that advance has been more than lost, but real estate 
 continued to rise after circulating capital in the form of goods of 
 various kinds had begun to fall. And yet, if gold were really scarce, 
 such property as land should have felt it quickly. Bad seasons and 
 low prices of many products and dearer labour have caused so many 
 failures amongst farmers that rents have fallen and land in many 
 localities is now almost unsaleable ; but the history of this fall is not 
 like that of the fall in goods. The one has followed on the other, 
 whereas they should have begun together had they been the results 
 of a common cause. ^^^5^ S ~-o 
 
 ffTJHIVEBSITY 
 
30 APPRECIATION OF GOLD. 
 
 This very interesting period is in part discussed by Mr. 
 Tooke in his "Essay on High and Low Prices," published in 
 1824. He shows how the great war had tended to raise prices 
 by checking production at home and lessening importations 
 from other countries, through prohibitions and heavy 
 freights and charges. But a most careful analysis of many 
 changes results in the conclusion that the ups and downs 
 depended, not on greater or smaller issues of notes or 
 exportations of gold during the suspension of cash payments 
 by our Bank, but on supplies and demands, consequent 
 partly on seasons and partly on mercantile speculations, of 
 which there was a plentiful supply when fluctuations of price 
 were so rapid and so serious. 
 
 For instance, there was a prodigious advance in 181 7, 
 simply in consequence of a very bad harvest in 18 16, and 
 prices remained high throughout 181 7 and 1818 ; and they 
 afterwards fell rapidly, but not, as he shows, by reason of 
 any deficiency in available money, but from natural causes 
 and a collapse of a great speculation. Not only was the 
 supply of corn great, but the imports of other productions 
 had been enormous after the peace. 
 
 The net imports of " Colonial and Foreign Productions " 
 were in — 
 
 1816 ... ^11,306,000 
 
 1817 17,704,000 
 
 1818 23,019,000 
 
 A similar collapse had already taken place in 1810 
 and 181 1, but without teaching prudence to speculators, 
 encouraged by Napoleon's famous system, which added so 
 many elements of uncertainty to all transactions. 
 
 Mr. Tooke's remarks on this last period are very 
 important and instructive. He says ("High and Low 
 Prices," part I., page 182) : — " It is sufficient to remark 
 that the more the instances of a rise in prices are examined 
 into, the more clearly will they be found to be explained 
 upon scarcity from seasons and political obstructions, or 
 extra demand from peculiar and temporary causes. But it 
 is material to observe that while such great stress has been 
 laid on the circumstance of many articles having risen in 
 
APPRECIATION OF GOLD. 3 1 
 
 price between 1808 and 1814, no attention seems to have 
 been paid to the great and long-continued depression of 
 other articles. 
 
 " Colonial produce was in several instances lower than 
 it had ever been before. Moreover, various kinds of raw 
 materials, imported at most extravagant rates, were sold in 
 1810, 181 1, 1813, and 1814 at prices that would not pay 
 more than the mere charges. 
 
 " Now, if from these reduced prices be deducted 20 per 
 cent., as about the difference between paper and gold, it 
 will leave so low a range, that, applying the same rate of 
 reduction to the highest prices at which any considerable 
 quantities were sold in 1808, 1809, 181 2, and 18 13, the 
 average will afford a result of very moderate metallic prices, 
 by no means justifying the inference of any diminished value 
 of gold and silver, but rather the reverse." 
 
 In the Edinburgh Review for January, 1886, and in the 
 article of M. de Laveleye in the Contemporary for May, 
 1886, much stress is laid on the condition of prices and of 
 commerce in the decade from 1820 to 1830, as throwing 
 light on present depression. 
 
 But it would seem difficult to draw any sound conclusion 
 from a period so different in its characteristics from our 
 own. The period in question began with low prices, which 
 were caused by very abundant supplies, as explained by 
 Mr. Tooke, and, notwithstanding the supposed depressing 
 effect of such prices, they were followed by one of the most 
 extraordinary spasms of speculation ever known in this 
 country — a speculation which ended in the crisis of 1825, 
 and a multitude of serious failures, especially of banks. 
 This fact does not appear to be referred to in either of these 
 articles, and the omission seems to throw great doubt on 
 reasoning which seems intended to convince us that low 
 prices are simply destructive of all enterprise, and, therefore, 
 amount to a calamity. (See Appendix F.) 
 
 It is quite true that this view of the case would not apply 
 to Italy and other countries which were not affected by our 
 disasters ; but it is equally clear that the mere existence of 
 low prices will not of itself discourage active exertions 
 by traders, and it is notorious that great speculations 
 sometimes originate from the fact that prices are low. and 
 
32 APPRECIATION OF GOLD. 
 
 that, therefore, stocks can be procured at a comparatively 
 small outlay, and held at a comparatively small risk. The 
 existence of depression now maybe admitted ; but it is con- 
 tended that it is most unsafe to compare this period with 
 1820, as if the depression of 1820 was permanent, and had 
 not been followed by a sudden revival here, and as if it were 
 possible to compare the state of commerce just after the 
 great war and before the discovery of the locomotive with 
 the condition of things with which we are now familiar. 
 
 If any comparison were to be made, it would be more 
 fair to suggest that if such a depression as that of 1820 were 
 soon surmounted under conditions so unfavourable as then 
 existed, we might naturally look for an even more rapid 
 recovery in the present condition of trade. But the fact is 
 that even that comparison would be unsafe ; for, if many 
 things now tend towards recovery, on the other hand exist- 
 ing conditions, as we shall see, tend to encourage competi- 
 tion, which was unknown in former days. 
 
 The following extract from Tooke's " History of Prices," 
 vol. ii., page 139, seems strongly to confirm the argument 
 here used : — " Credit had been restored, and the. general 
 circulation had been consequently enlarged, more especially 
 as compared with the autumn of 1825, when the prices of 
 wheat and of corn generally were from 20 to 30 per cent, 
 higher than in the last six months of 1827. If the facts here 
 adduced should not be deemed sufficient they might be 
 multiplied without end, in proof of the utter want of con- 
 nection in the relation of cause and effect between the state 
 of the corn markets and the state of the circulation, from 
 the commencement of 1823 to the close of 1827." And yet 
 this is the very period chosen by these high authorities to 
 encourage us to attribute the recent fall in prices to changes 
 in the supplies of money throughout Europe. Their mistake 
 seems to arise from an imperfect consideration of the facts 
 which have been so carefully analysed by Mr. Tooke, from 
 whom one more extract may be fairly given. He says 
 (vol. ii. page 188) : — 
 
 " It is perfectly within general recollection that this great 
 enlargement of the Bank issues" (in February, 1826) "had 
 not the effect of arresting the fall of prices. . . But it 
 
 has not been so well recollected nor understood that a 
 
APPRECIATION OF GOLD. 
 
 33 
 
 similar enlargement in 1810, which was represented as an 
 inundation of paper, causing an advance of prices, was issued 
 under circumstances singularly analogous, having been in 
 fact coincident with a great fall of prices and a great failure 
 of private credit."* 
 
 * It can hardly be disputed that fluctuations of price were more 
 severe in former than in recent times, the influence of modern discovery 
 tending towards far greater uniformity of supply in different parts of the 
 world. At any rate, fluctuations were formerly excessively rapid and 
 violent, as may be seen throughout Tooke's great work. 
 
 If supplies fell off, they could not easily be filled up before the days 
 of steam and telegraph, nor could a superabundance be easily removed. 
 
 So, in the early days of the century, a good harvest would cause a 
 terrible fall in corn, and a bad year would be followed by famine prices. 
 The history of British India is full of illustrations of an excessive 
 diversity of price under one Government, and there can be no doubt that 
 the railway, the steamer, and the telegraph have done more to prevent 
 local famines than any action of Governments. 
 
 The following is a good illustration of the general remark made 
 above (see Tooke's " History of Prices," vol. i., p. 235) : — 
 
 
 1798-9. 1800-1. 
 
 Coffee, per cwt. 
 
 185s. to 196s. ... 1 1 6s. to 1 30s. 
 
 E. India sugar 
 
 96s. to 115s. ... 50s. to 70s. 
 
 Cotton, per lb. 
 
 ... 3s. 6d. to 4s. 6d. ... is. 6d. to 2s. 8d. 
 
 Tobacco, per oz. 
 
 u£d. to i6d. ... 4<1. to 5d. 
 
 A few prices from ] 
 
 782 to 1822 may be interesting : — 
 
 
 1782. 1800. 1810. 1822. 
 
 Cotton (W. India) (lb.) 
 
 ...2s.t03s.6d.... 2s. 3d. ... 2S. ... lid. 
 
 Copper (cwt.) ... 
 
 84s. ... 140s. ... 160s. ... IOOS. 
 
 Iron (ton) 
 
 £6 ... £5 10s. ... £8 ... £6, rose 
 
 
 to ^12 
 
 
 in 1825. 
 
 Rice (cwt.) 
 
 25s. ... 40s. ... 30s. ... 20s. 
 
 
 (Duty 7s. 4d.) (Free) 
 
 Sugar (Jamaica) (cwt.) 
 
 50s. ... 35s. ... 40s. ... 30s. 
 
 
 (Duty 1 2S. 3d.) (Duty 20s.) (Duty 29s.) (Duty 27s.) 
 
 Tea (Congou) (lb.) 
 
 5s. ... 5s. ... 3s. 6d. ... 3s. 
 
 
 (96 p.c. (100 p.c. 
 Duty.) Duty.) 
 
 Wheat 
 
 50s. ... ioos. ... 90s. ... 40s. 
 
 Wool (Spanish) (lb.) 
 
 3s. ... 4s. ... ios. ... 3s. 6d. 
 
 (See Tooke's ' 
 C 
 
 ; High and Low Prices "—Appendix F.) 
 
34 APPRECIATION OF GOLD. 
 
 It is natural now to- state some of the peculiar 
 events of our own times which have tended to reduce 
 prices. 
 
 (i) The first great cause seems to be the increase of 
 competition both in Europe and America, and even in the 
 East. Recent consular reports lay great stress on the 
 activity of German manufacturers and their skill in extend- 
 ing their business. They seem more industrious and better 
 informed than our own people, and to aim at adapting them- 
 selves to their customers, both in offering low prices and 
 goods suited to varied demands. France is often quoted as 
 a serious competitor, both in silk and woollen goods, and 
 even India is regarded with anxiety by many. It is need- 
 less to refer to America, whose people are distinguished for 
 their ingenuity and activity. The important point consists 
 in the fact that we have now had a long period of peace, so 
 that our competitors have been able to operate without 
 hindrance. 
 
 During her great war, America was unable to be a 
 serious rival, and there can be no doubt that the great 
 European war of 1870-71 destroyed for the time many com- 
 petitors, and thus lessened the force of a competition which 
 is now fully felt. 
 
 Thus peace has tended to lower prices by increasing 
 competition. 
 
 (2) But far more potent even than competition from 
 without has been that competition at home which has 
 arisen from inventions which have increased production 
 or lessened its cost, or have greatly reduced the cost of 
 distribution by low rates of carriage and saving in the use 
 of capital. 
 
 The great cause of causes has been the development of 
 steam power. No accurate estimate can be made on such 
 a matter, but it is said that the available power now in use 
 by man is six times what it was in 1850. 
 
 Wages have greatly increased, but the cost of doing a 
 given amount of work has greatly decreased, so that five 
 men can now do work which would have demanded the 
 labour of eight men in 1850. If this be correct, the saving 
 of labour is 40 per cent, in producing any given article. 
 The amount of saving will, of course, vary according to the 
 
APPRECIATION OF GOLD. 35 
 
 subject matter; but it must be great throughout, and must 
 involve a great lessening of cost, and therefore, other things 
 being equal, of price. 
 
 The history of the manufacture of iron and steel affords 
 a striking illustration. It is supposed that five times as 
 much iron is now consumed as was consumed in 1850, but 
 the price is lower than ever, thanks to an enormous produc- 
 tion everywhere. Germany, France, and America have in- 
 creased their production more rapidly even than England, 
 as in 1850 they produced but little. The general result is a 
 production so great as to leave little profit to the producer, 
 and no industry at this moment is more depressed than 
 that which is most vital to the progress of all other 
 industries. 
 
 According to the high authority of Sir Lowthian Bell, 
 the consumption of fuel in smelting pig iron is only 
 one half what it was formerly — i.e. a ton of iron can be 
 smelted by the use of two tons of coal instead of four 
 tons, the coke used being reduced to its equivalent in 
 raw coal. 
 
 There is another economy arising from the fact that 
 the new enlarged furnaces will turn out 500 tons of 
 pig iron per week, instead of 80 to 100 tons turned out 
 by the old small furnaces; and the labour employed at 
 each furnace is not more than one-third of what was 
 necessary when the small furnaces were used with the 
 cold air blast. 
 
 It is needless to do more than refer to the great import- 
 ance of the Bessemer process, and other inventions relating 
 to steel. At this moment the price of steel rails is about 
 £$ 12s., as against ^"17 10s. in 1864, and it is said that 
 English makers have offered to deliver steel rails in Canada 
 at £4 4s. per ton, a lower price than can be offered even by 
 makers in America. The price is less than half the price of 
 iron rails a dozen years ago. At the same time it is noto- 
 rious that there is a decided economy in the use of steel 
 instead of iron in rail-making. No one knows exactly how 
 much longer a steel rail will last than an iron one, but it is 
 clear that the difference is great, so that the make of iron 
 rails has almost ceased. 
 
 The like change is to be noticed in other industries. 
 C 2 
 
36 
 
 APPRECIATION OF GOLD. 
 
 Steel is now much used for shipping,* for boilers, and in 
 many other directions, so that a great economy in the use of 
 iron is secured, and at the same time the improved material 
 is supplied at prices which, a few years ago, would have been 
 thought absurdly low even for ordinary pig iron. 
 
 Perhaps, however, nothing has so strongly tended to 
 cause a fall in iron as the discovery of new and cheaply- 
 worked supplies of iron ore, both here and abroad. Many 
 old supplies have fallen off, but the general increase has 
 been very great : — 
 
 i860. 
 
 1870. 
 
 1884. 
 
 North-Eastern 
 
 
 
 
 District (Tons of ore) 1,483,000 
 
 4,297,000 
 
 6,103,000 
 
 Scotland ,, , 
 
 , 2,150,000 
 
 3,500,000 
 
 1,885,000 
 
 Wales 
 
 715,000 
 
 619,000 
 
 95,000 
 
 Staffordshire ,, , 
 
 , 1,523,000 
 
 1,360,000 
 
 1,873,000 
 
 Cumberland , , , 
 
 , 989,000 
 
 2,092,000 
 
 2,595,000 
 
 Lincolnshire , , , 
 
 , 112,000 
 
 1,009,000 
 
 2,628,000 
 
 Derbyshire , , , 
 
 , 875,000 
 
 384,000 
 
 19,000 
 
 Shropshire ,, , 
 
 , 165,000 
 
 337,000 
 
 198,000 
 
 West Riding ,, , 
 
 , 255,000 
 
 307,000 
 
 167,000 
 
 Sundries ,, , 
 
 , 252,000 
 
 464,000 
 
 570,000 
 
 Imported ,, , 
 
 , 23,000 
 
 208,000 
 
 3,153,000 
 
 The importation of foreign ore consists chiefly of 
 hematite ; but there has been an enormous extension of the 
 iron industry in other countries, which must tend to keep 
 down prices. 
 
 The following figures show how important is this con- 
 sideration : — 
 
 1870. 1875. 1880. 1884. 
 
 Nett iron received 
 
 from U. K. by Tons, 
 
 foreign nations. 3,472,000 
 
 Tons. Tons. Tons. 
 
 3,o88,000 4,428,000 4,308,000 
 
 Make of foreign 
 nations. 
 
 Total consump- 
 tion by foreign 
 nations. 
 
 5,602,000 7,268,000 10,328,000 12,469,000 
 
 9,074,000 10,356,000 14,756,000 16,777,000 
 
 * Gross tonnage of ships built of steel : — 
 
 1877. 1880. 1884. 
 
 1,118 38,164 i$*,339 
 
 (Sir L. Bell, " The Iron Trade of the United Kingdom, 
 
 P-23-) 
 
APPRECIATION OF GOLD. 
 
 37 
 
 So there has been a falling off in our export since 1880, 
 but a marked increase in the total consumption outside the 
 United Kingdom. 
 
 Sir L. Bell estimates (p. 58) the progress of the trade 
 here and abroad as under : — 
 
 Per cent, of 
 total make — 
 Great Britain 
 
 1870. 
 51-6 
 
 1875- 
 467 
 
 1880. 
 42-9 
 
 1884. 
 38-5 
 
 All other 
 countries 
 
 48-4 
 
 53'3 
 
 57-i 
 
 61 '5 
 
 The increase since 
 
 1870 is as 
 
 follows : — 
 
 
 
 Great Britain 
 
 100 
 
 1067 
 
 129-9 
 
 131 
 
 All other 
 countries 
 
 100 
 
 138-6 
 
 197 
 
 237-9 
 
 It must not be forgotten that the home competition has 
 been greatly increased by the existence of limited liability, 
 and the consequent use of great sums of capital in the trade, 
 which, but for the altered state of the law, would certainly 
 not have been so applied. The money once so invested 
 cannot be withdrawn, and companies work on, without 
 profit, or at a loss, to the great injury of their shareholders 
 and of the trade. 
 
 The production of coal has quadrupled since 1850, and 
 the price, since the sudden advance of 1870-72, has fallen 
 to a lower level than ever. 
 
 Invention has not in this case materially assisted pro- 
 duction,* but the introduction of capital, in consequence, 
 partly of the high prices of 1872-73, and partly of limited 
 liability, has tended to maintain the output even at a loss ; 
 
 * The following figures show the tons wrought per hewer per shift : — 
 
 Year. 
 
 Tons wrought 
 Per Man. 
 
 Year. 
 
 Tons wrought 
 Per Man. 
 
 1871 - 
 
 1872 ... 
 
 1879 -. 
 
 - 4-57 
 ... 4-46 
 ... 4-21 
 
 1882 ... 
 1885 .. 
 
 ... 4II 
 
 ••• 395 
 
 The cause of the reduction is the working of thinner seams, which 
 involve more labour per ton raised. 
 
38 
 
 APPRECIATION OF GOLD. 
 
 and thus, though the consumption has increased enormously, 
 it has been far more than overtaken by production. 
 
 The cotton industry affords a good illustration of like 
 changes. The price of raw cotton is about the same as in 
 1850, but the cost of cotton cloth has fallen at least 10 per 
 cent, by reason of improved processes and decreased cost of 
 production. The crop has increased prodigiously, especially 
 in the United States, where it has doubled since i860 ; but 
 the demand has increased as rapidly, so that, but for many 
 labour-saving inventions, the price of cotton clothing must 
 have increased. The result is well shown in the figures 
 given by Mr. Atkinson (" Distribution of Products," p. 119) 
 as to factories in New England (see Appendix D) : — 
 
 Yards per operative per year : 
 
 1830 
 1850 
 1870 
 
 4,321 
 12,164 
 
 19,293 
 
 Cost of labour per yard 
 
 [830 
 [850 
 
 Dollars. 
 1,900 
 1,556 
 
 1880 
 1884 
 
 1870 
 1884 
 
 28,000 
 28,032 
 
 Dollars. 
 
 1,425 
 1,070 
 
 Comparison of 1830 with 1884 : — 
 
 Operatives per 1,000 spindles, 1830 
 1884 
 
 Pounds per operative per day, 1830 
 1884 
 
 Wages per operative per year, 1830 
 
 Profit per yard at 10 per cent. ) 1830 
 on capital ... ... ( 1884 
 
 49 \ Decrease, 
 17*2/64 per cent. 
 
 • • • 9 '94 ) Increase, 
 ... 31*26 J 2i4percent. 
 
 ... $164 ) Increase, 
 ... $290 ) 77 per cent. 
 
 2*40 cents. ) Decrease, 
 •41 cents. ) 83 per cent. 
 
 Another case is that of paper, in which, spite of pro- 
 digious demands, there has been a steady fall of price by 
 reason of the discovery of new materials and machinery, 
 and the competition of makers on the Continent. 
 
 Paper is now produced from woody fibre, straw, and 
 grasses, as well as from rags, so that the cost of books has 
 
APPRECIATION OF GOLD. 39 
 
 fallen almost beyond belief, to say nothing of newspapers 
 and periodicals. When a well-printed standard book can be 
 sold for threepence, the reduction of price may seem almost 
 to have reached its limit. The following table gives an idea 
 of the changes in the cost of paper : — * 
 
 Year. 
 
 1849 
 
 1854 to '61 .. 
 
 1862 
 
 Fine Paper. 
 9ijd. to iod. per lb. 
 8£d. to 9d. 
 
 . m 
 
 Second Quality. 
 
 8d. 
 ... 74d. 
 6d. 
 
 (Duty i£d. per lb. taken 
 off in 1861.) 
 
 1885 
 
 . 5 d. 
 
 (Common, 3d.) 
 
 4d. to 4|d. 
 
 Another curious illustration has recently come into 
 notice in consequence of the riots in Belgium. Great 
 distress exists among the glass-blowers of Charleroi — a state 
 of things which is due, according to a recent correspondent 
 of the Times, to the fact that " The improvements in the 
 methods of manufacture have entirely upset the equilibrium 
 between the supply and the demand." It appears from his 
 statement that one Siemens " tank furnace," as used by M. 
 Baudoux, does the work of eight "coal furnaces," and 
 requires but four men to feed it instead of twenty-eight. 
 Another is equal to six coal furnaces. A coal furnace 
 
 * It is stated on the best authority that a paper mill making £15,000 
 a year fifteen years ago, will hardly pay its expenses at this moment ; 
 and that a mill worth .£50,000 to sell at that time, would barely fetch 
 £8,000 now. 
 
 No one would venture to attribute such a change to any alteration in 
 the supply of gold. But competition has affected makers of paper as 
 well as producers of corn. 
 
 Compare the following, from an American paper, Bradstreefs, of 
 22nd May last: — " Holyoke, 19th May: The manufacturers of this 
 'paper city' have found no relief for two evils of which they complained 
 bitterly at the time of the Saratoga Convention last summer. One is 
 
 the continued prevalence of extremely low prices With regard. 
 
 to prices, it is to be said that a year ago experienced manufacturers called 
 the ruling quotations the lowest ever known. Nevertheless, there has 
 been a steady "decline since that time." 
 
 Some of our paper makers complain much of foreign competition. 
 But their brethren in Protectionist America seem to be in much the 
 same condition as to prices. The same paper says that prices have 
 fallen 10 per cent, in a year. 
 
4-0 APPRECIATION OF GOLD. 
 
 produces 1 15,000 feet of glass per month, and a tank furnace 
 1,000,000 feet per month. The coal furnace only works 
 eighteen days in a month, and the other sort " can be used 
 without interruption," and can be worked with fuel of a 
 "very inferior quality." We have here an instance of a 
 truly wonderful economy, and it is hardly surprising that 
 such results should have alarmed both small producers and 
 their workmen. The effect on prices has also been extra- 
 ordinary. 
 
 There is no fall in the highest kind of glass, where much 
 skilled labour is necessary for the manufacture, but common 
 window glass has fallen at least 50 per cent, inconsequence, 
 as it would seem, of these discoveries. 
 
 (3) Perhaps no consideration is so important, in discuss- 
 ing recent prices, as the reduction in the cost of distribution, 
 both by land and water, since 1850. 
 
 We have in Europe eight times as many miles of railway 
 as we had in 1850, and in the world quite eleven times as 
 many. It is not easy to say how far the cost of carriage is 
 reduced by the existence of railways, but it has been esti- 
 mated as amounting to a saving of five-sixths. The exten- 
 sion of the area of production is more important even than 
 the mere saving of cost of carriage : that is to say, by the 
 reduction of the cost of carriage great sources of supply are 
 opened up which in other days could not have exported any 
 surplus. For instance, not many years since, Indian corn 
 was burnt for fuel in the far Western States of America, and 
 it is certain that the wheat of the "great North-West" and 
 of India could not have reached our English markets but 
 for low rates of carriage by land and sea. Of course the 
 extension of the home trade in every country by railway 
 carriage has been enormous. Opportunity of travelling 
 makes men desire to travel, and facility of transport must 
 cause a great development of business. 
 
 But, as regards price, it is probable that competition 
 amongst foreign producers has an even greater influence than 
 the mere reduction of the cost of carriage within our own limits. 
 Articles which we do not produce at home, like, sugar, have 
 fallen as heavily as our own staple productions, the railroad 
 and the steamer operating all the world over to create com- 
 petition and reduce charges. As Professor Cairnes said : — 
 
APPRECIATION OF GOLD. 41 
 
 "Foreign trade not merely supplies us with commodi- 
 ties more cheaply than we could produce them from our 
 own resources, but supplies us with many commodities 
 which, without it, we could not obtain at all." (See 
 Appendix N.) 
 
 No better illustration of this point can be given than the 
 change in the cost of carriage from Chicago to New York. 
 What cost 42*6 cents to carry from Chicago to New York in 
 1868 was carried in 1884 for 13 cents, or just a third of the 
 old charge. 
 
 One is not, therefore, surprised to find that three 
 American railroads which carried 10,000,000 tons in 1868, 
 carried 46,000,000 tons in 1883. Charging so little, they 
 must carry more, or work without a profit (Nimmo, "Railway 
 Federation," &c, January, 1885). The following figures as to 
 the Pennsylvania Railway Company add another good illustra- 
 tion. The tonnage moved one mile in 1865 was 420,060,260 
 tons, but in 1885 it was 3,318,466,263 tons. The increase 
 of 1885 even over 1884 was 235,966,277 tons. The average 
 charge per ton per mile was about fths of a cent, or say 
 Y^ths of a penny, and only Jth of the charge made in 1865. 
 An additional charge of y^th of a cent per ton per mile 
 would have added about ^600,000 to the revenue of the 
 company. The competition must be pretty keen which 
 compels a company to forego such an addition. 
 
 Speaking of the whole United States, Mr. E. Atkinson 
 says ("Distribution of Products," p. 274) that in 1865 they 
 had one mile of railway to 1,000 people, and in 1885 they 
 had one mile to 450 people. It appears from the same high 
 authority that in 1870 there were moved on all the railways 
 in New York State 20,000,000 tons; but in 1883, 74,000,000 
 tons. Had the rate of carriage of 1870 been charged in 
 1883, the total paid would have been about ^£3 1,600,000, 
 whereas the actual charge was ^16,700,000, showing a saving 
 of ;£ 14,900,000. 
 
 Taking the railways of Ohio in a similar way, there were 
 moved in 1869 about 14,000,000 tons, and in 1863 
 63,700,000 tons, and the saving to the public from the 
 reduction of rates was about ^18,000,000 — even greater 
 than in the case of New York. 
 
 In the case of the New York Central Railway, it has 
 
42 APPRECIATION OF GOLD. 
 
 been recently worked for a profit of less than J of a cent 
 (say Jth of a penny) per ton per mile, and the average 
 freight in Ohio has come down to one cent (say ~d.) per 
 ton per mile. 
 
 Again (ibid., p. 85): "The saving in the cost of moving 
 merchandise over existing railroads, comparing one year 
 with the next preceding, that is, over the railroads exist- 
 ing in each year, has far more than equalled the cost of 
 building all the new railroads constructed in the subsequent 
 year for 15 years — from 1865 to 1880. In other words, 
 the reduction in the charge on existing railroads each year, 
 computed on the quantity of merchandise moved in that 
 year, has amounted to a sum equal to the sum expended 
 in the extension of railroads in the next year, for each and 
 every year since 1865." 
 
 Mr. Atkinson {ibid., p. 235) makes one general remark 
 of great interest. He says, " Had the actual quantity of 
 merchandise moved by the railroad in 1880 been subjected 
 to the average rate per ton per mile which was charged 
 from 1866 to 1869, the difference would have amounted 
 to, at least, ;£i 00,000,000, and perhaps ^"160,000,000 
 more than the actual charge of 1880, and yet, up to this 
 period (July, 1884), the prices of leading farm products had 
 not been substantially affected by this enormous change."* 
 
 Prices of grain, &c. have fallen much in America since 
 Mr. Atkinson wrote, nearly two years ago, and far more 
 than he seemed then to expect; but no one can wonder at 
 such effects from the facts he mentions, and from the 
 competition of India, which has recently become so im- 
 portant, and the importance of which as a competitor 
 depends largely on the fall of sea freights and the develop- 
 ment of railways in India. 
 
 So, all over the world, the effects of lessened cost of 
 distribution become more and more conspicuous.! 
 
 * In a recent letter to Bradstreet 's ■, of 15th May last, Mr. Atkinson 
 gives another comparison. He compares 1865 and 1885, and shows 
 that, taking a given weight of goods to be moved from Chicago to New 
 York by the New York Central Railway, 58 per cent, of the value was 
 absorbed in transportation and depreciation of currency in 1865. But 
 in 1881;, only 20 per cent, was absorbed, the charge per ton per mile 
 having fallen from 3*45 cents to /"^ths of a cent. 
 
 f Mr. Atkinson {ibid., p. 183) makes an observation which tends 
 
APPRECIATION OF GOLD. 43 
 
 The triumph of invention has been arrived at in the 
 wheat trade of America, for we are assured by Mr. Atkin- 
 son (ibid., 76) that " seven men suffice to give 1,000 persons 
 all the bread they customarily consume in a year. 
 
 " If to these we add three for the work of providing 
 fuel and other materials to the railroad and to the baker, 
 our final result is that ten men working one year serve bread 
 to one thousand (1,000)." 
 
 It may, perhaps, be fairly questioned whether the fall 
 in the cost of carriage by sea may not have had even more 
 influence on prices than the fall in land-carriage. Certainly 
 in nothing has the influence of invention been more rapid 
 and more important. 
 
 Partly in consequence of cheapness of materials, and 
 partly in consequence of the limitation of liability, the build- 
 ing of steamers has made an almost absurd progress in 
 recent years. In 1883 alone more than ^3,500,000 was 
 paid up by shareholders in " limited " shipping companies ; 
 and this fact prepares one for the extraordinary figures given 
 by Mr. S. Williamson, M.P., in the Fortnightly Review for 
 January, 1885. (Cf. Appendix G.) 
 
 He says that the combined capacity of our sailing and 
 steam ships was in 1875, 9,975,000 tons, and in 1883, 
 14.646,000 tons— an increase altogether "wild and unjustifi- 
 able," adds tnis excellent authority. And, of course, the 
 carrying capacity of each steamer has been enormously 
 increased in recent years by inventions which reduce the 
 quantity of coal to each ton of cargo, and thus leave more 
 
 strongly to confirm the general argument of this "paper. " May it not 
 be that the complete revolution in the methods of commerce, which 
 has been brought about during the last twenty years by the railway, the 
 steamship, and the telegraph, as well as by the application of science 
 and machinery to agriculture, has now come to what might be called a 
 culminating point, after which the benefits heretofore enjoyed mainly 
 by the producers and distributors of the staple products necessary to life 
 are now in process of wide distribution amongst all consumers ? In 
 other words, may it not be that, under the beneficent law of diminishing 
 profits and increasing wages, a lower plane of prices on a gold basis has 
 been reached, which is of a permanent character ? " Taking all grain 
 together, Mr. Atkinson reckons that the product per head of the popu- 
 lation of the States has increased from 32^ bushels in 1865, to 52^ 
 bushels in 1885, the population having increased during the same 
 period about 25,000,000. 
 
44 
 
 APPRECIATION OF GOLD. 
 
 room for cargo. A few years ago it required eighteen tons 
 of coal per day to move a steamer of 1,200 tons burden. 
 Now ten tons per day will move a steamer of 2,600 tons. 
 The current expenses of the larger ship are not increased at 
 all in proportion to her size, and thus arises economy, not 
 merely in the amount conveyed by a given amount of fuel, 
 but.also in other expenses. 
 
 It follows that shipowners can afford, with a reasonable 
 profit, to carry goods at rates of freight which would have 
 been ruinous in years gone by, and they are forced to 
 reduce freights even lower than they can afford by most 
 unusual competition.* 
 
 The rapid increase in the use of steamers is well shown 
 by the following figures as to one part of the world : — 
 
 Registered net tonnage sailed from the United Kingdom to India, 
 China, and other Eastern ports, and the Australian Colonies. 
 
 During the 
 
 year 1874 
 
 »» 
 
 1875 
 
 »> 
 
 1876 
 
 ,, 
 
 1877 
 
 ,» 
 
 1878 
 
 »» 
 
 1879 
 
 > j 
 
 1880 
 
 »» 
 
 1881 
 
 ,» 
 
 1882 
 
 »» 
 
 1883 
 
 ,» 
 
 1884 
 
 ?> 
 
 1885 
 
 >ailing Ships. 
 
 Steamers. 
 
 Net Tons. 
 
 Net Tons. 
 
 1,626,792 
 
 654,498 
 
 1,640,858 
 
 710,560 
 
 1,640,704 
 
 723,039 
 
 1,772,298 
 
 862,919 
 
 1,484,368 .. 
 
 751,595 
 
 1,462,073 
 
 808,208 
 
 1,646,559 
 
 1,125,991 
 
 1,577,774 
 
 1,606,841 
 
 1,493,955 
 
 1,587,400 
 
 1,333,046 
 
 2,072,427 
 
 1,325,151 
 
 2,145,635 
 
 1,448,961 
 
 2,274,767 
 
 * The history of inventions relating to steam traffic may be summed 
 up as follows : — 
 
 1855. — Introduction of screw instead of paddle, and general use of 
 steamers. 
 
 1866. — Introduction of condenser and "compound engine," and 
 consumption of coal reduced from about 7 lb. per indicated horse- 
 power to 3 lb. per horse-power. 
 
 1870. — Horizontal action superseded by "inverted direct action." 
 This, together with " the triple expansion," will probably reduce con- 
 sumption to 1 '50 lb. per horse-power. 
 
 Boilers and furnaces have been greatly improved, and finally the 
 "forced blast," effected by a fan fixed below the furnace, will, it is 
 expected, enable steamers to burn cheaper coal and will keep up a 
 regular heat. 
 
 Further economy is expected in high quarters from the use of 
 petroleum as a source of heat for steam -ships. 
 
APPRECIATION OF GOLD. 
 
 45 
 
 The result is seen in the following table of recent 
 freights (see further Appendix O) : — 
 
 COMPARISON OF FREIGHTS IN OCTOBER (INDIA). 
 
 Calcutta to 
 U. K. 
 
 Article. 
 
 1881. 
 
 1882. 1883. 
 
 1884. 
 
 1885. 
 
 
 s. d. 
 
 s. d. s. 
 
 d. 
 
 s. 
 
 d. 
 
 s. d. 
 
 Vid Cape 
 
 Jute 
 
 65 O 
 
 45 37 
 
 6 
 
 30 
 
 O 
 
 33 
 
 ,, Canal 
 
 >» 
 
 • 85 O 
 
 37 6 35 
 
 
 
 31 
 
 3 
 
 33 
 
 ,, Cape 
 
 Wheat 
 
 . 62 6 
 
 30 25 
 
 
 
 20 
 
 
 
 23 
 
 ,, Canal 
 
 >> 
 
 7i 3 
 
 35 26 
 
 3 
 
 17 
 
 6 
 
 27 
 
 ,, Cape 
 
 Linseed 
 
 . 67 6 
 
 45 37 
 
 6 
 
 30 
 
 
 
 33 
 
 ,, Canal 
 
 11 
 
 — 
 
 37 6 35 
 
 
 
 30 
 
 
 
 34 
 
 „ Cape 
 
 Rapeseed .. 
 
 70 
 
 47 6 37 
 
 6 
 
 30 
 
 
 
 35 
 
 ,, Canal 
 
 »» 
 
 • 35 
 
 40 37 
 
 6 
 
 32 
 
 6 
 
 35 
 
 
 OUTWARD FREIGHTS FROM WALES 
 
 
 
 
 Year. 
 
 Alexandria. 
 
 Bombay. Genoa. 
 
 
 New York. 
 
 
 s. d. 
 
 s. 
 
 d. s 
 
 d. 
 
 
 
 s. d. 
 
 1875 .. 
 
 l6 O 
 
 29 
 
 ... I 
 
 3 
 
 
 
 35 
 
 1880 
 
 15 O 
 
 24 
 
 ... I 
 
 4- 
 
 
 
 10 
 
 1883 .. 
 
 12 6 
 
 18 
 
 ... II 
 
 
 
 11 
 
 1885 
 
 IO O 
 
 19 
 
 O ... IO O 
 
 
 
 9 
 
 
 HOMEWARD 
 
 FREIGHTS. 
 
 
 
 
 
 
 Bombay 
 
 Brazils. 
 
 Quebec 
 (Timber). 
 
 Odessa. 
 
 
 N.York 
 (Iron). 
 
 
 j. d. 
 
 j. d. 
 
 s. d. 
 
 s. 
 
 d. 
 
 
 s. d. 
 
 1875 ... 
 
 41 O ... 
 
 43 .. 
 
 . 80 O ... 
 
 30 
 
 O 
 
 
 7 
 
 1880 .. 
 
 32 O ... 
 
 40 O .. 
 
 . 65 O ... 
 
 23 
 
 O 
 
 
 5 6 
 
 1883 ... 
 
 28 O ... 
 
 48 O .. 
 
 — 
 
 23 
 
 O 
 
 
 5 
 
 1885 ... 
 
 23 O ... 
 
 37 .. 
 
 . 50 O ... 
 
 20 
 
 O 
 
 
 4 
 
 Freights for wheat from San Francisco to England fell 
 50 per cent, between October, 1883 and October, 1884. 
 
 Another indirect economy arises from the reduction of 
 the time occupied in voyages ; so that in the Eastern trade, 
 for instance, the stock of goods now on the water in course 
 of transit is only about one-half of what used to be thus 
 'locked up. In other trades the economy of time will not be so 
 great, but it will still be very large. It is an economy which 
 is felt both as to imports and exports. It amounts to an 
 enormous saving of capital, which is thus quickly realised, 
 whereas formerly it would have remained for a long time 
 absolutely unproductive, and, in fact, requiring much outlay 
 for carriage and custody during transit. It would be 
 
46 APPRECIATION OF GOLD. 
 
 extremely difficult to make any calculation of the amount of 
 interest of money thus saved every year, but on such a 
 national turn -over as ours the amount must be very 
 important ; and though the advantage thus obtained would 
 accrue equally to shippers of all nations on a given amount 
 of goods, England must of course get the greatest share of 
 the saving, as she so far exceeds any other nation in the 
 amounts dealt with. 
 
 Perhaps few modern inventions have had more peculiar 
 or important effects than the telegraph. In its ruder forms 
 it did not seem likely to produce such remarkable results ; 
 but, as now developed, it is admitted that the course of 
 commerce has been greatly modified by its influence. 
 
 Generally speaking, it may be asserted that it is no longer 
 needful to retain large stocks of goods at any of the great 
 centres. The price of articles in London is known every 
 day all over the world, and transactions can be arranged 
 with as much certainty and facility between London and 
 Bombay or Hong-Kong as between London and Liverpool. 
 The merchant can order purchases or make his sales by 
 wire just as readily as by letter, and he need not wait 
 months for a reply. Everything is fixed in a few hours, and 
 payment can be arranged by the same medium. Where 
 formerly bills were drawn and transmitted in settlement of 
 accounts, and much time was lost in the transmission of cash, 
 the remittance can now be made by telegram, and the rate 
 of exchange is settled in the same way. 
 
 Thus a great saving in the use of capital is effected. 
 The goods purchased must, of course, be shipped, but they 
 are only now a fraction of the old time on the way, and, 
 on arrival, payment can be effected, if desired, in a few 
 hours instead of weeks. The period occupied by the voyage 
 being thus curtailed, and the supplies ordered as if by word 
 of mouth, and paid for as if buyer and seller lived next door 
 to one another, it is obvious that the use of capital in the 
 movement of goods from one country to another is reduced 
 to the smallest possible amount* 
 
 * It is, however, to be observed that very large payments are still 
 made by drafts both on foreign countries and on England, and in some 
 trades transmission of money by wire is less common than it was a few 
 years ago, and the system of drawing at short dates has become more 
 
APPRECIATION OF GOLD. 47 
 
 Formerly such a trade needed the co-operation of rich 
 men on both sides of the world, and of a series of middle- 
 men. Now small men can do the work for small profits 
 on each transaction, and the multiplication of transactions 
 will give a good result, though the commission be greatly- 
 reduced. Moreover, the need for middlemen and their 
 charges has almost ceased to exist. As a matter of senti- 
 ment, such changes may not be agreeable, but in matters of 
 business sentiment must yield to common sense ; and it is 
 obvious that such great economies are certain to hold their 
 ground, and that those who decline to accept facts must 
 submit to be crushed by them. 
 
 It is not easy to estimate the full effect of such changes 
 as to the capital employed in trade, but some years ago it 
 was stated by one eminent firm in the East that their 
 business could be conducted with one-fifth of the capital 
 formerly required. If this statement be not exaggerated, 
 it is evident that vast sums of money formerly invested in 
 foreign trade must have been brought home, or turned into 
 other modes of investment abroad. In other words, there 
 has been a great saving of capital embarked in trade, the 
 result being that a greater business can be done with far 
 less absorption of money, i.e. of capital in the form in 
 which it is available for use in trading adventures. The 
 exchanges of the world are effected more economically, not 
 merely by saving in the cost of carriage by sea or land, but 
 also by saving in the interest of the money necessary for the 
 conduct of such transactions.* 
 
 prevalent. However this may be, it does not materially affect the 
 argument used in the text. The influence of the telegraph on trade 
 becomes every year more and more important. 
 
 * In considering the causes which have encouraged an extraordinary 
 production and importation of many articles, we ought not to omit all 
 reference to our new law as to limitation of the liability of partners. 
 A great amount of money has been diverted from ordinary and safes 
 investments to trading enterprise by this change of the law. It operates 
 on production both directly and indirectly. The development of iron 
 and coal companies affords an illustration of the direct results of the 
 law, and the extension of shipping companies of its indirect influence. 
 By the former, great masses of iron and coal have been brought into 
 the market, which must otherwise have waited long before their 
 extraction from the earth ; and by the latter, the cost of the carriage 
 of every conceivable material which we can import has been reduced to 
 
48 APPRECIATION OF GOLD. 
 
 The causes thus set forth seem quite sufficient to 
 account for a fall in prices even greater and more general 
 than that which we have seen. But it has been objected 
 that the activity and ingenuity of man were in full 
 swing before 1873, and that production had then rapidly 
 increased, with an increase in many prices. This is true, 
 but it is forgotten in this argument that, though peace was 
 restored, its effects had not then been fully developed, and 
 competition was, therefore, still much hindered; and it is 
 also forgotten that the great reduction of railway rates in 
 America, and in shipping charges all the world over, to say 
 nothing of the complete development of telegraphic inter- 
 course, has arisen since 1873. Much had then been done, 
 and we were then on the eve of far greater changes, the full 
 influence of which we now feel. As remarked above, the 
 extraordinary fall in several important cases did not occur 
 till 1884, and, curiously enough, the same peculiarity is 
 observed in Indian prices, although they have been more 
 stable than ours.* Changes in price may linger, but they 
 are sure to come sooner or later, when the efficient causes 
 are at work. 
 
 But there are many who are impatient. They admit 
 that goods have overtaken money, and they demand an 
 increase of money in order to maintain money values. 
 Their desire for bimetallic money is really based on the con- 
 viction that such a change would restore prices to a higher 
 level than that to which^we have been recently accustomed. 
 If, however, we look back to 1850, we rind that the 
 
 an almost incredible extent. Materials once put on the market cannot 
 wait long for sale. If one price will not sell them, a lower price must 
 be taken ; and ships, rather than remain idle, must work at rates which 
 would, a few years ago, have been thought ruinous. It would not be 
 fitting here to discuss the question whether limitation of liability works 
 well or ill ; but it is important to remember that it increases competition 
 prodigiously, and is, therefore, one important cause of the recent fall in 
 prices in our own country. Another cause of great importance is the 
 extension of emigration, which must have greatly increased production, 
 especially in America and Australasia. Some figures on this head will 
 be found in the Appendix (H). 
 
 * See Mr. Barbour, "Theory of Bimetallism," p. 93. After stating 
 that the demonetisation of silver had checked the fall of prices in India, 
 he says : — " Even in silver prices the fall has, been very great in 1884 
 and 1885." 
 
APPRECIATION OF GOLD. 49 
 
 world's stock of gold and silver has just about doubled, and 
 the total coin in use is said to have increased from 460 millions 
 to 1,250 millions; but prices have returned to the level of 
 1845-51, and even to a lower level, spite of this enor- 
 mous increase of coined money and the great development 
 of credit. This being so, it seems dangerous to reckon on 
 any powerful influence on prices as likely to result from an 
 extended use of silver as legal tender money. Gold money 
 has increased twice as much as silver money since 1850, 
 according to some, and three times according to others. 
 But prices have gone back, even where gold is the unit of 
 value j and even where silver is the unit, as in India, prices 
 in silver have not advanced, though the supplies of silver 
 have been great. 
 
 It is sometimes suggested that the proposed change 
 is needed, not so much to restore prices as to prevent a 
 further fall. If, however, it be true that prices are affected 
 far more by other facts than by the amount of metallic 
 money in use for the time being, it is evident that we 
 cannot depend on an increase of that money even for a 
 check to a pending fall of price. Who can believe, for 
 instance, that any change in our money would have pre- 
 vented a heavy fall in the value of grain since 1868, or the 
 fall in metals in the same period ? Without asserting that 
 the use of silver as well as gold as money would have no 
 effect under any circumstances, it is certain that, if the 
 argument here used be correct, we cannot depend on such 
 a change in order to check a further fall in prices, and, 
 therefore, that we should derive in this way no certain 
 compensation which could be set against any confusion or 
 other evil consequences which might result from a change 
 in our monetary system. 
 
 In answer to any argument from history, it is alleged 
 that we have suffered from want of co operation amongst 
 nations, and that recent confusions would have been avoided 
 if we had agreed with other countries as to the relative 
 value of gold and silver for purposes of money. 
 
 It is very easy to say that we could define by law what 
 weight of silver should be equivalent to the weight of gold 
 in the standard pound, and that we could depend on this 
 weight of silver having the same purchasing power as the 
 
 D 
 
5© APPRECIATION OF GOLD. 
 
 defined equivalent in gold, provided the silver were, by 
 agreement of all the great nations, coined for all comers on 
 the same basis as that adopted by us. No one, it is said, 
 would take less than the coin- value for his silver, because 
 he could at any moment get it coined on the agreed basis 
 at several great mints. Such an agreement would, of 
 course, work easily enough under ordinary circumstances 
 and during peace, but there seem to be serious diffi- 
 culties. 
 
 (1) Supposing the supply of silver should increase 
 rapidly, and that of gold should fall off, the result would 
 clearly be that silver would remain here, and gold 
 would be exported, being more valuable as merchandise 
 than as coin. Thus we should probably end in mono- 
 metallism on a silver basis — a result not apparently 
 approved by any one. # 
 
 * It will be interesting to refer to two recent authorities, who agree 
 in thinking that even if gold and silver had been used as now proposed 
 during recent years, the result would have been, before this, that silver 
 would have been practically our sole money, and that prices would 
 have fallen just as much as they have already done, to say nothing 
 of possible dangers from the abandonment of the use of gold as money. 
 Mr. Giffen is a writer who attributes much of the fall of prices to 
 scarcity of gold, but he does not advise us to use silver as a 
 supplement. He says ("Journal of Bankers' Institute," vol. vii. 
 p. 464) : — " It is clear that if the production of silver had been increased, 
 the production of gold might have been diminished, and prices, even 
 if they had come to be reckoned in silver — as I believe would have 
 been the case — would, perhaps, have fallen about as much as they have 
 done." So also Professor Marshall {ibid., p. 449), after referring to the 
 possible greater richness of the mines of silver — " We think that gold 
 will practically go out. Gold is now mined, in spite of difficulties, 
 because it is so valuable; but if gold were fixed at 15! or even 18 
 times the value of silver, and if the gold mines were scanty, and the 
 silver mines were rich, gold would almost cease to be mined, and the 
 result would be practically a silver monometallic currency." Mr. 
 Giffen again said {ibid., p. 459) : — " I believe the effect of the intro- 
 duction of what is called universal bimetallism at the present moment 
 would be that every great country practically would, in a very few years, 
 have silver for its standard money. Gold everywhere would become 
 merchandise at a varying premium in relation to silver." This seems a 
 most natural conclusion, having regard to recent evidence as to the 
 production of silver. American authorities expect a further great fall 
 in silver, because they hold that even the present value, in relation to 
 gold, is not in any way justified by the cost of mining. Mr. J. H. 
 Norman, who has paid much attention to this question of the relative 
 
APPRECIATION OF GOLD. 5 I 
 
 The same result would ensue supposing some large 
 holders of silver — say in the East — should prefer to hold 
 gold as a more stable commodity, and should effect the 
 exchange even at a slight loss in order to avoid another 
 silver panic. Should this happen, and our law as to issue 
 of notes remain unchanged, with free coinage of both 
 metals, a great part of our gold might be exchanged for 
 silver without any conceivable advantage to any one. 
 That mere exchange would not add to our total of 
 " money," as we should part with the same value in bullion 
 as we received, and it would not, therefore, affect prices 
 directly ; but it is hard to see what good could arise to the 
 country from a financial alteration which might make it 
 very difficult to pay any debts except in silver, and might in 
 substance make us once more monometallic, only in the 
 wrong sense of the word. 
 
 (2) Supposing the supply of silver to fall off, such a 
 plan would have no effect in preventing a scarcity. Free 
 coinage does not meet the case of an insufficient supply. 
 In that case, silver would buy more than gold and would be 
 exported, while gold, as overvalued, would remain at home. 
 So we should return to a monometallism on a gold basis, 
 after more or less confusion. In our own days we have 
 seen remarkable changes, even before 1873 and the fall in 
 silver. Thus, we have had gold scarce in France, and we 
 have seen silver scarce there, just because France had free 
 coinage of both metals ; and at one time gold was dear and 
 scarce, and it paid to coin silver, which was cheap, and at 
 another time gold became cheap and it paid to coin gold. 
 All this time the franc was the unit of value. So now in 
 America you have a gold unit of value, and both metals 
 used, with much consequent confusion and hesitation — a 
 forced coinage preferred to a free coinage, and money 
 
 cost of producing gold and silver, makes the following alarming state- 
 ment : — "Mr. Pixley evidenced in 1876 that silver was being pro- 
 duced in Mexico at i8d. per 480 grains, or at the relation of 53 parts 
 of silver to I part of gold. My investigations, made in this year and in 
 1885, into American figures showed a much greater proportion of silver ; 
 but, accepting American statements, I make the average relation of 
 63 parts of silver to I part of gold for the year 1883." — Appendix to 
 Third Report of Commission on Depression. 
 D 2 
 
52 APPRECIATION OF GOLD. 
 
 created for which there is no demand, in order to support 
 one of the smallest commercial interests in the country.* 
 
 (3) Even supposing both metals remained in use, it is 
 well pointed out by Mr. Giffen (" Essays," second series, 
 p. 32) that the same difficulty would still exist which is 
 alleged to exist at present in reference to maintaining a due 
 supply of money for an increased population and for increased 
 trade in an increased production. He puts it as follows : — 
 
 " The permanent causes of the scarcity of money in 
 relation to commodities remain, and the momentary 
 abundance must be succeeded quickly by the same relative 
 scarcity as before. The case against bimetallists on this 
 score is very strong. Gold and silver being equalised, 
 assuming the bimetallic scheme to be successful, the future 
 course of prices will be regulated by the aggregate annual 
 production, not of the one metal but of the two. The pro- 
 Dortion of that annual production to the stocks of the two 
 in use is, however, much the same as the proportion of the 
 production of the one metal to the stock of that metal only. 
 The future course of prices will accordingly be much the 
 same as if one metal only were used in a particular country." 
 
 (4) Another difficulty seems to arise as to the propor- 
 tion which should be agreed upon. At present the actual 
 value of silver (July, 1886) is less than 20 to 1, whereas the 
 old ratio, and one so much recommended, is 15^ to 1. If 
 England, Germany, France, and America should determine 
 to give at the rate of 15 J to 1, there would be much danger 
 of a great influx of silver from the East, and an enormous 
 
 * The value of the silver interest is not equal to that of the " hen in- 
 dustry " in the States, but Congress favours the silver owners. ( Appendix 
 E. ) The curious and instructive fact is that nothing probably at this 
 moment so tends to depress the silver market in Europe as the existence 
 of the American Bland Bill. People ask, what will America do with 
 the unused dollars should she repeal the Bill, and, if she should force 
 them on the market, what would the effect be ? Nothing could better 
 illustrate the danger of the interference of legislation with the natural 
 course of business and values. The very law which was passed to 
 maintain the price of silver is now depressing it. See Secretary 
 Manning in loc. cit., p. 6: "Forced silver circulation, forced silver 
 accumulation, these are the alternatives to which silver coinage has 
 brought us now- But the term when a choice will remain possible 
 between these bad alternatives, silver storage or a silver basis, is 
 narrowing." 
 
APPRECIATION OF GOLD. 53 
 
 rise would at once take place in many securities now 
 depressed, to the loss of some and gain of others, but for no 
 good reason. If, on the other hand, 20 to 1 were chosen, 
 the loss incurred by the Indian Government would be made 
 permanent, and the rupee fixed, at present, at is. 5d. or 
 is. 6d. There is much to be said for and against either figure, 
 and it seems very difficult for any Government to make a 
 choice. There is no virtue in a value which has fluctuated 
 so much within a short space of time, and much loss must 
 arise to individuals whichever course is taken. It is, how- 
 ever, argued that such losses are only temporary, and would 
 be of little or no consequence, if the ultimate result should 
 be a stable equilibrium as between the two metals. 
 
 To ourselves, as traders, there exists really no motive for 
 keeping up the price of silver more than of copper or iron. 
 In fact, commercially, silver is of infinitely less consequence 
 than iron to the English nation, except so far as our com- 
 merce is affected by exchanges with countries like India, 
 where silver is the legal tender. India, it will be seen, as a 
 producer, needs no care on our part, and we may safely 
 leave other countries to manage their own affairs, it being 
 to be observed that, as in the cases of Russia and the 
 Argentine Republic, we constantly do a great business with 
 countries where the exchanges are fluctuating.* 
 
 If, then, we can look for neither the permanent restora- 
 tion nor maintenance of prices from the use of silver as 
 money in addition to gold, it is not easy to see what we 
 should gain from the change. 
 
 One disadvantage, however, which might arise is easily 
 seen. If debtors could pay in gold or silver at their option, 
 it is plain that there must be an ambiguity as to the real 
 
 * See Mr. Goschen, in House of Commons, 12th of June, 1879 : — 
 "We have passed through a period which has been viewed by all 
 merchants trading with India with regret and alarm. And I do not 
 wish to minimise these causes for regret, if, on the other hand, I call 
 attention to the fact that this country has continually done a prosperous 
 business with countries subjected to no less violent fluctuations in their 
 exchanges. Look at the trade with the United States when gold was 
 at an immense, but ever-varying, premium. Look at the Russian 
 exchanges, utterly without stability ; at the Austrian exchanges. Yet 
 England has not failed to do good business with such countries, never- 
 theless." 
 
54 APPRECIATION OF GOLD. 
 
 value of a pound which does not now exist. Now, every- 
 one, all the world over, knows that " a pound " sterling 
 means so much weight of gold. A man who draws on 
 London knows just what he will receive when his draft is 
 paid. But he will not know that with certainty should a 
 new law declare both metals to be legal tender. How far 
 such an uncertainty would injure our position as the great 
 banking centre of the world it may not be easy to estimate. 
 It seems obvious that such a change in the nature of the 
 pound could not do us any good from a mercantile point of 
 view, but it is equally clear that it might be very injurious. 
 
 Another serious consideration arises when we contem- 
 plate the possible effect in the East, and especially in India, 
 of any attempt to fix a price for silver in Europe by agree- 
 ment. It appears quite clear that large stores of gold are held 
 in India, although gold is not legal tender, and no gold coins 
 are current as money. Gold coins are, however, not only 
 received but preferred in payments, and it is said that they 
 are so popular that as much as 20 to i has been allowed for 
 gold when received instead of silver (Clarmont Daniell, 
 " Discarded Silver," p. 13). 
 
 A well-known Sultan is said to have ^£2, 000,000 in gold 
 ingots in his Treasury, and it is known that very large sums 
 in gold coin and bullion are held in India. Why the Indian 
 people should prefer to hold in reserve a metal which cannot 
 be coined in India is a question not easy to answer ; but if 
 it be true that " there is nothing which from its nature is 
 purchasable with gold in India, from personal services or 
 railway tickets to bales of cotton, for which the seller would 
 not prefer to be paid in gold uncurrent coins . . . than in 
 silver money" (C. Daniell, ib., p. 12) the mystery becomes 
 less inexplicable. 
 
 In our own country in the days of Newton silver 
 coins were legal tender, but gold was the favourite metal 
 in use and gradually superseded silver in all the larger 
 transactions of life. We cannot, therefore, be surprised that 
 gold should be preferred amongst the richer classes of our 
 great dependency. But if this be so, and if the tendency to 
 the use of gold in the East is an increasing tendency, it may 
 well be that if we chose to give silver an artificial value by 
 agreement with other great nations, only the result might be 
 
APPRECIATION OF GOLD. 55 
 
 that Eastern holders of silver would remit it to Europe to be 
 coined and then exchanged for gold on the new scale of 
 values, an operation which would bring a large profit, 
 supposing silver to be depreciated as against gold in the 
 East. 
 
 How far such an operation would go it would not be 
 easy to say. A large export of gold might soon correct the 
 values, but the operation might cause great tension and 
 alarm here. Mr. Daniell asserts, writing in India, that " in 
 Asia gold is less variable in value than silver, is more sought 
 after, and always more acceptable in payment of a debt than 
 silver ; and as silver is much more easily procured than gold, 
 it is the owner of gold that will refuse to sell it at any other 
 than its natural price, and if that price is 1*19, he will not 
 part with his gold at 1*15 J." No, but he may send his 
 silver to Europe at that rate in order to procure gold 
 for which he could procure 19 to 1 of silver in India. 
 Should this be so the nations who had made the agree- 
 ment might, in fear of the East, do that which the Latin 
 Union did in fear of Germany, and suddenly stop the 
 free coinage of silver, with what consequences to silver and 
 gold it is not easy fully to predict. We ought certainly to 
 be cautious how we enter on any attempt to re-arrange the 
 values of the precious metals without taking into account 
 those vast stores in the East, which are no longer distant and 
 unattainable, but are almost as much at our doors as the 
 silver of France or Germany. 
 
 The present situation in India is very peculiar and very 
 interesting. Although we hear so much of depreciated 
 silver in Europe, it is the fact that silver prices have fallen 
 generally in India, though not so much as gold prices have 
 fallen here. The great increase of Government drafts on 
 India has, of course, lessened the export of silver to the 
 East, so that the full effect of the returns in silver for 
 exports, which might otherwise have been made, has not 
 been felt. The shipments of silver to India were in fact 
 much larger in the '5o's and '6o's than in the '7o's. (See 
 Appendix I.) There has not been any great surplus of silver 
 in India, and prices have, from many causes, tended down- 
 wards, and this fall in Indian prices has encouraged imports, 
 while the low exchange in Europe has, of course, stimulated 
 
56 APPRECIATION OF GOLD. 
 
 Indian exports, so that we see an increased trade in both 
 directions. 
 
 The figures are very remarkable : — 
 
 v~.„.<. Exports from Imports into «, . ^ 
 
 Years - India. India. Net Exports. 
 
 1870-75 ... 285,000.000 ... 161,000,000 ... 124,000,000 
 1875-80 ... 312,000,000 ... 188,000,000 ... 124,000,000 
 1880-85 ... 411,000,000 ... 253,000,000 ... 158,000,000 
 
 Thus the five years 1880-85 show, as compared with the 
 years 1870-75, an increase in exports from India of nearly 
 45 per cent, and of imports into India of more than 50 per 
 cent. It comes to this, that trade is extremely active in both 
 directions, and the natives of India, who are producers and 
 sellers, profit by the low price of silver in Europe, which 
 assists them in securing a good market, and at the same 
 time as consumers and buyers in India they are getting 
 what they require at low silver prices.* 
 
 For instance, cotton goods are selling in India at more 
 than 30 per cent, less than the prices of 1870, and it appears 
 that all staple articles produced in India are lower than they 
 were in 1870. (See Appendices L. and M.) 
 
 Whether this state of things would continue, supposing 
 
 * Mr. Barbour, in his recent work on "Bimetallism" (p. 134) attempts 
 to show that the great increase in Indian exports is not due to the fall 
 in silver, because silver prices of the exports have not increased. But 
 this is a very incomplete view of the case. The profit to the trader 
 arises from the fact that he gets a price in England, in gold, which will 
 now purchase a much larger amount of silver than in former times, and 
 this silver when remitted to India will purchase per rupee as much as 
 ever of other commodities, prices in silver having fallen pretty generally 
 in India. The extra rupees received in this way, therefore, afford a 
 prospect of an extra profit which must encourage exports, as these, but for 
 this advantage, might be unprofitable. 
 
 Mr. Barbour is a stern bimetallist, but he is compelled to admit that 
 the fall in silver has not injured India, because he thinks the demone- 
 tisation of silver has prevented a fall of prices there. The Government 
 has lost, but the people have gained. One may not agree with Mr. Bar- 
 bour's explanations, but one is glad to agree in his conclusions as to the 
 condition of India. 
 
 See p. 150, where he says that the fall in exchange cannot have 
 ruined Indian finance, as the Government had in 1882 a surplus of 450 
 lakhs and has imposed no taxes since that date, though the further 
 fall has thrown an additional burden of nearly 200 lakhs a year. 
 
APPRECIATION OF GOLD. 57 
 
 some great change in the silver market were suddenly made 
 by the English Government, may well be doubted, and 
 certainly needs consideration. 
 
 A great advance in the exchange here would discourage 
 exports from India, and should prices rise here for goods 
 which we export, as is hoped by bimetallists, exports to India 
 must be discouraged. In what way this state of things would 
 suit our manufacturers and those whom they employ it is not 
 easy to see. 
 
 The general result of this long argument seems to be 
 that it is by no means clear that, even if we assume low 
 prices to be injurious to us as a trading nation (a very strong 
 assumption), we could correct the modern tendency to low 
 prices by any change of our currency in the direction of 
 bimetallism or a double standard. Such a change must 
 make the value of the pound less certain than it now is, 
 and might, therefore, be injurious to us as traders, and this 
 the more as recent events throw more doubt than ever on 
 the real value of silver. At the same time the experience 
 of 1848 to i860 ought to make us very cautious of depend- 
 ing on any existing facts as to supplies of gold, as these 
 may again suddenly rise as they did in former years. 
 
 Even an agreement cannot be depended on in the pre- 
 sent condition of affairs, especially when we take into 
 account the difficulty of fixing on a ratio of value as between 
 gold and silver, and the great uncertainty which exists as to 
 the course of events in the East where so large stores of 
 silver are known to exist. 
 
 The events of recent years seem to point out the great 
 danger of sudden changes effected by ignorant Govern- 
 ments, and to indicate the necessity of the utmost caution 
 in dealing with a subject-matter which affects all classes of 
 the people, and especially those least able to protect them- 
 selves, and to whom, so far, these changes of value have 
 brought far more good than harm. 
 
 Wages have not fallen as yet at all in proportion to the 
 fall in the prices of necessaries ; nor should they do so, for 
 when necessaries were very dear, wages were very low ; and 
 it seems strange that we should desire to raise the prices of 
 the articles which are most used by the humblest of our people. 
 Probably it will be said that the object of bimetallists is 
 
58 APPRECIATION OF GOLD. 
 
 not so much an advance in prices as stability of price; but 
 it is pretty clear that, but for the hope of securing some 
 advance, so much zeal would not be expended in this cause. 
 
 Our trade is still enormous, and it is far from clear that 
 we can enlarge it or improve its stability by any changes 
 which would imply a want of confidence in our monetary 
 system, and would create an impression that we have failed 
 where, in fact, we have had great success, largely because 
 we have maintained a high credit, and have adhered to a 
 money which is as stable in its value as any money has ever 
 been in the history of the world. 
 
 Let those use silver whom it suits, and who prefer it. 
 It is certain to be used by great nations who have long 
 adhered to it. Our forefathers chose gold for general use, 
 even while silver was the legal tender, and the unit of value 
 was a given weight of silver. It seems strange that we 
 should be asked to adopt silver, as if gold had proved 
 a failure as a standard, and far more uncertain in value 
 than silver, at the very moment when silver in Europe 
 has fallen i7d. an ounce from the old par, or about 28 
 per cent., and when we are threatened by an extended 
 production on a scale never yet approached. No one pro- 
 poses to demonetise silver. No one suggests that recent 
 proceedings in that direction were wise, but many object to 
 an attempt to give an artificial value to a metal which would 
 not suit us as money, and which may yet have to bear 
 in the future even greater fluctuations than in the past. 
 
 If that attempt is to be made, it ought to be made by 
 those who produce silver, or who have great stores of silver 
 coin or bullion, the value of which they desire to maintain. 
 France, Germany, and America are powerful nations, and 
 each of them is much interested in silver. It seems strange 
 that if a wide-reaching agreement would suffice to maintain 
 the value of silver, they should fear to make a beginning in 
 this direction. This want of courage is discouraging to 
 those who have no direct interest in silver, and the fact that 
 those most interested show so much fear, arouses suspicions 
 and doubts which will not be readily removed.* 
 
 * It has been suggested that India might join in any such agreement 
 without affecting our own system of currency, and her adhesion would be 
 
APPRECIATION OF GOLD. 59 
 
 of the greatest importance. But this could not be effected unless gold 
 were freely coined and made legal tender on a certain ratio of value 
 with silver. In other words, we must give India a currency partly gold 
 and partly silver, and a new unit of value consisting of a certain weight 
 of either metal. 
 
 We might coin gold in India without making gold a legal tender 
 there. We might have Indian sovereigns and half-sovereigns, exactly 
 like our own in weight and appearance, with the exception of some 
 mark to indicate their origin. Such coins, even though not legal 
 tender, would probably come into use largely, and it is believed that 
 great amounts of gold bullion would be brought out to be coined, and, 
 once coined, much of this gold would get into circulation. India has 
 received about ^ioo, 000,000 gold from Europe since 1856, and how 
 much more she may have no one knows. As mentioned before, it is 
 said that Indians like gold, and Indian sovereigns would become a 
 favourite medium of exchange, even though not legal tender. They 
 would be freely taken, and would be preferred to silver coins, just as 
 gold was preferred in England a century ago. 
 
 Supposing gold to be coined and made legal tender in India, you 
 may make it the only legal tender, as we do here, or you may combine 
 it with silver. Some high authorities propose to take from silver its 
 power as money, except for token coins, so as to resort to a gold 
 circulation only in India. This would be a most dangerous innovation 
 — a revolution in fact, and one not justified by anything in the present 
 situation. It would enormously detract from the value of existing 
 stocks of silver, by destroying one great market, and forcing great 
 masses of useless coins on the market, and it would at the same time 
 create a new demand for gold, which is, we are told, already scarce and 
 dear. Probably such a change would cause such serious loss and 
 inconvenience to the masses of India as to arouse political disturbance 
 of the gravest character. 
 
 Perhaps such a proposal need hardly be seriously considered, but to 
 give currency to both metals, and to make both money on a ratio of 
 comparative value, fixed by law, is a very different plan. However 
 plausible it may seem, it appears to have difficulties. In the first place 
 we must fix a ratio — not an easy matter, as already explained. What- 
 ever is decided, the ratio chosen must be the ratio to be adopted in any 
 agreement with other countries, and could hardly, therefore, be arrived 
 at without consultation, if India is to unite with other silver-using 
 nations as to an agreed valuation between gold and silver. 
 
 Another serious question arises when we consider the probable 
 effect of the restoration of the value of the rupee on the trade of India. 
 As explained before, it would seem that raising the value of the rupee 
 would discourage Indian exports and imports, and thus, for the present 
 at any rate, injure both India and England. 
 
 Again, should the adoption of gold coins as legal tender cause a 
 great and sudden increase in the money circulating in India, the conse- 
 quence might be an advance of prices all along the line. Exports 
 would be discouraged, and probably an advance in the prices of articles 
 imported from Europe for the use of the people would check consump- 
 tion, and thus our trade would be lessened by the reduction of the 
 
60 APPRECIATION OF GOLD. 
 
 purchasing power of the people through diminution of exports, and also 
 by the discouragement offered to the purchase of English goods. To 
 such people as the Indian masses, cheapness Is vital. An advance in 
 the value of the produce they have to sell would assist them, but it 
 docs not follow that they would pay prices higher than those to which 
 they are accustomed for goods imported for their use. Even ah 
 advance in goods exported would not help them permanently, if the 
 result should be that an article such as wheat, for instance, lost its 
 European market, until an excess of supply should again reduce its 
 price. 
 
 Prices have been fairly steady in India during our recent dis- 
 turbances, and if fluctuations of price are as injurious as they are said to 
 be, it seems strange that we should desire to impose these evils on the 
 people of India. It would be a fine thing, no doubt, to eliminate " loss 
 by exchange " from the Indian Budget, but it would seem hard if this 
 were done at the expense of those who are not represented and do not 
 possess influence. Officials can approach chancellors and secretaries, 
 but the ryot can only suffer without knowing the cause. Had the 
 reverse of the existing depression occurred, we should have heard no 
 complaint from Government. The loss of the people would have been 
 treated as "inevitable," and governing people would have accepted 
 the situation. Now they cry out very naturally, and do not seem 
 disposed to consider what may be the effect of the changes proposed on 
 the great producing classes to whom any alleviation of their poverty 
 seldom comes. 
 
 For those whose object is to bring out stores of unused gold and so 
 to increase the world's supply of the metal, it will suffice to freely coin 
 Indian gold without causing the confusion and trouble which seem to be 
 involved in giving another legal tender to the people of India. 
 
6i 
 
 APPENDIX A. 
 
 Statement of the Annual Production of Gold and Silver 
 in the World each Year since the Discovery of Gold 
 in California. 
 
 From Reports of the Director of the U.S.A. Mint. 
 
 Year. 
 
 Gold. 
 
 Silver. 
 
 Total. 
 
 1849 
 
 $27,100,000 
 
 $39,000,000 
 
 $66, 100,000 
 
 1850 
 
 44,450,000 
 
 39,000,000 
 
 83,450,000 
 
 1851 
 
 67,600,000 
 
 40,000,000 
 
 107,600,000 
 
 1852 
 
 132,750,000 
 
 40,600,000 
 
 173,350,000 
 
 1853 
 
 155,450,000 
 
 40,600,000 
 
 196,050,000 
 
 1854 
 
 127,450,000 
 
 40,600,000 
 
 168,050,000 
 
 1855 
 
 135,075,000 
 
 40,600,000 
 
 175,675,000 
 
 1856 
 
 147,600,000 
 
 40,650,000 
 
 188,250,000 
 
 1857 
 
 133,275,000 
 
 40,650,000 
 
 173,925,000 
 
 1858 
 
 124,650,000 
 
 40,650,000 
 
 165,300,000 
 
 1859 
 
 124,850,000 
 
 40,750,000 
 
 165,600,000 
 
 i860 
 
 119,250,000 
 
 40,800,000 
 
 160,050,000 
 
 1861 
 
 113,800,000 
 
 44,700,000 
 
 158,500,000 
 
 1862 
 
 107,750,000 
 
 45,200,000 
 
 152,950,000 
 
 1863 
 
 106,950,000 
 
 49,200,000 
 
 156,150,000 
 
 1864 
 
 113,000,000 
 
 51,700,000 
 
 164,700,000 
 
 1865 
 
 120,200,000 
 
 51,950,000 
 
 172,150,000 
 
 1866. 
 
 121,100,000 
 
 50,750,000 
 
 171,850,000 
 
 1867 
 
 104,025,000 
 
 54,225,000 
 
 158,250,000 
 
 1868 
 
 109,725,000 
 
 50,225,000 
 
 159,950,000 
 
 1869 
 
 106,225,000 
 
 47,500,000 
 
 153,725,000 
 
 1870 
 
 106,850,000 
 
 51,575,000 
 
 158,425,000 
 
 1871 
 
 107,000,000 
 
 61,050,000 
 
 168,050,000 
 
 1872 
 
 99,600,000 
 
 65,250,000 
 
 164,850,000 
 
 1873 
 
 96,200,000 
 
 89,250,000 
 
 185,450,000 
 
 1874 
 
 90,750,000 
 
 71,500,000 
 
 162,250,000 
 
 1875 
 
 97,500,000 
 
 80,500,000 
 
 178,000,000 
 
 1876 
 
 103,700,000 
 
 87,600,000 
 
 191,300,000 
 
 1877 
 
 114,000,000 
 
 81,000,000 
 
 195,000,000 
 
 1878 
 
 119,000,000 
 
 94,800,000 
 
 213,800,000 
 
 1879 
 
 108,700,000 
 
 96,000,000 
 
 204,700,000 
 
 1880 
 
 106,400,000 
 
 96,700,000 
 
 203,100,000 
 
 1881 
 
 103,000,000 
 
 102,000,000 
 
 205,000,000 
 
 1882 
 
 99,000,000 
 
 111,800,000 
 
 210,800,000 
 
 1883 
 
 94,000,000 
 
 117,000,000 . 
 
 211,000,000 
 
 1884 
 
 95,000,000 
 
 115,000,000 
 
 210,000,000 
 
 Total... 
 
 $3,882,975,000 
 
 $2,250,375,000 
 
 $6,133,350,000 
 
62 
 
 APPENDIX. 
 
 APPENDIX B. 
 
 Estimated Stock of Gold and Silver at the end of 
 periods named, in money and hoarded : — 
 
 
 Gold. 
 
 Silver. 
 
 1850 .. 
 
 ... £167,000,000 
 
 ^481,000,000 
 
 i860 .. 
 
 395,000,000 
 
 441,000,000 
 
 1870 .. 
 
 535>ooo,ooo 
 
 409,000,000 
 
 1880 .. 
 
 638,000,000 
 
 420,000,000 
 
 1884 .. 
 
 654,000,000 
 
 437,000,000 
 
 oportioi 
 
 1 of Coinage according to Periods (per cen 
 
 
 Gold. 
 
 Silver. 
 
 1851-55 
 
 87-9 ... 
 
 121 
 
 1856-60 
 
 79'5 ••• 
 
 20-5 
 
 1861-65 
 
 81 -6 ... 
 
 18-4 
 
 1866-70 
 
 687 ... 
 
 3i*3 
 
 1871-75 
 
 73'2 ... 
 
 26-8 
 
 1876-80 
 
 69-1 .... 
 
 30'9 
 
 1881-84 
 
 717 -. 
 
 28-3 
 
 1851-84 75-6 
 
 (Sotbeer, as quoted by Mr. Palgrave.' 
 
 24*4 
 
 Mr. Palgrave concludes that the coinage of gold has 
 exceeded the estimated production by nearly one-third, and 
 that of silver has exceeded the production by close to half 
 during the 34 years. 
 
 The total coinage of the period is estimated at a 
 value of — 
 
 Gold ... £1,136,102,700 J Silver ... £367,018,150 
 
 APPENDIX C. 
 
 Value of Total Imports and Exports of Merchandise 
 into and from United Kingdom in various years (not 
 corrected for changes in price) : — 
 
 Years. 
 
 Imports. 
 
 Exports. 
 
 i860 
 
 .. £210,530,873 . 
 
 .. £164,521,351 
 
 1870 
 
 .. 303,259,493 . 
 
 .. 244,080,577 
 
 1880 
 
 .. 411,229,565 
 
 .. 286,414,466 
 
 1883 
 
 .. 426,891,579 
 
 .. 305»437,070 
 
 1885 
 
 •• 373,834,314 
 
 •• 270,934,935 
 
 Total of Imports 
 
 and Exports. 
 £375,052,224 , 
 
 547,338,070 . 
 
 697,644,031 . 
 
 732,328,649 . 
 
 644,769,249 
 
 Year. 
 i860 
 1870 
 1880 
 1883 
 1885 
 
APPENDIX. 63 
 
 The following are corrections made by the Secretary to 
 the Board of Trade (C. 4456, 1885) :— 
 
 Values of Enumerated Articles of Import in the under- 
 mentioned years as actually computed and as computed at 
 prices of 1883 : — 
 
 Declared Values Values computed at 
 
 in Millions. Prices of 1883. 
 
 i860 186 159 
 
 1870 250^ 213 
 
 1880 324 3i3i 
 
 1883 336 336 
 
 Increase since 1870 by first column, about 30 per cent. 
 „ ,, second ,, „ 50 „ 
 
 Similar correction as to Enumerated Articles of Export : — 
 
 Declared Values Values computed at 
 
 in Millions. Prices of 1883. 
 
 1860 97 87 
 
 1870 143 ii3i 
 
 1880 143^ 138 
 
 1883 i 4 6£ 146* 
 
 Increase since 1870 by first column, nil. 
 
 „ ,, second ,, 26 per cent. 
 
 APPENDIX D. 
 
 Diagram. — Comparison of Cotton Manufacture in the 
 United States of America, 1830 and 1884. (E. Atkinson, 
 in /. at., p. 120) : — 
 
 Spindles j l8 3°- ^ 6o ° Increase. 
 
 ( I884. 6,IOO 1^pprr>nt 
 
 Operatives ~) 
 
 per 1,000 > 1830. 49 Decrease. 
 
 Spindles. J 1884. l 7' 2 — — — — • 64 per cent. 
 Pounds per") 
 
 operative > 1830. 9*94 Increase. 
 
 per day... ) 1884. 31*22 ?T/jpgr™»nt 
 
 Wages per") 
 
 operative [ 1830. £33 Increase. 
 
 per year..) 1884. ^58 77 per cent. 
 
 Profit per ") _ 
 
 yd.atio%>i83a i|d. — Decrease. 
 
 onCapital ) 1884. £d. 8 3 per cent. 
 
 Mr. Atkinson estimates the increased product of twenty- 
 one crops from 1865 to 1885 (inclusive), over twenty-one 
 crops from 1841 to 1861, at 35,000,000, worth about 
 ^400,000,000. 
 
6 4 
 
 APPENDIX. 
 
 I 
 
 OO 
 
 Q 
 
 o 
 
 v. o 
 
 o 
 
 bao 
 
 OO 
 
 
 N 
 
 >s? 
 
 -S? 
 
 c 
 
 8 
 
 w 
 
 £ 
 
 N 
 
 t/5 
 
 S8R 
 
 a 
 p 
 ex 
 
APPENDIX. 65 
 
 APPENDIX F. 
 
 Specimen of fluctuations of prices from 1824 to 1826: — 
 
 Prices— July, 1824 to June, 1826. 
 
 # 
 
 
 July to Nov. 
 
 Dec. 1824 to 
 
 Jan. to June 
 
 
 
 1824. 
 
 June 1825. 
 
 1826. 
 
 Cotton (Georgia) 
 
 per lb. 
 
 8K 
 
 lid. 
 
 ey. 
 
 Indigo 
 
 »> 
 
 1 1 s. 
 
 14s. 
 
 9S. 
 
 Silk (China) 
 
 ,» 
 
 16s. to 25 J. 
 
 18s. to 29 s. 
 
 14s. 
 
 Sugar (B. P.) 
 
 per cwt. 
 
 30s. 
 
 41s. 
 
 2SS. 
 
 Coffee 
 
 >> 
 
 S9s- 
 
 77s. 
 
 48s. 
 
 Iron 
 
 per ton. 
 
 /6to^7 
 
 £u 
 
 £8ios. 
 
 Lead 
 
 »> 
 
 £23 
 
 £30 
 
 £22 
 
 APPENDIX G. 
 
 Total tonnage of vessels entered and cleared at ports 
 in the United Kingdom in various years : — 
 
 Years. 
 
 British Tons. 
 
 Foreign Tons. 
 
 Total. 
 
 i860 
 
 13,914,923 
 
 10,774,369 
 
 24,689,292 
 
 1870 
 
 25,072,180 
 
 11,568,002 
 
 36,640,182 
 
 1880 
 
 41,348,984 
 
 17,387,079 
 
 58,736,063 
 
 1884 
 
 46,671,701 
 
 17,600,821 
 
 64,272,522 
 
66 
 
 
 
 APPENDIX. 
 
 
 
 
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APPENDIX. 
 
 67 
 
 APPENDIX I. 
 
 Shipments of Gold and Silver to India from United 
 Kingdom : — 
 
 
 England. 
 
 Mediterranean. 
 
 Year. 
 
 Gold. 
 
 — ^ 
 Silver. 
 
 Gold. 
 
 Silver. 
 
 1854 
 
 j£l,774*299 
 
 £3,132,003 
 
 £48,456 
 
 £l,45I,OH 
 
 1855 
 
 948,272 
 
 6,409,889 
 
 243,239 
 
 1,524,240 
 
 1856 
 
 404,749 
 
 12,118,985 
 
 74,039 
 
 1,987,916 
 
 1857 
 
 269,275 
 
 16,795,232 
 
 259,986 
 
 3,350,689 
 
 1858 
 
 168,305 
 
 4,781,923 
 
 165,231 
 
 911,043 
 
 1859 
 
 788,269 
 
 14,828,521 
 
 142,144 
 
 1,521,970 
 
 i860 
 
 1,669,746 
 
 8,038,276 
 
 765,138 
 
 2,764,054 
 
 l86l 
 
 783,543 
 
 6,838,292 
 
 644,934 
 
 2,021,060 
 
 1862 
 
 1,715,963 
 
 10,138,506 
 
 1,676,689 
 
 4,461,273 
 
 1863 
 
 3,173,442 
 
 8,213,264 
 
 4,849,521 
 
 6,923,269 
 
 1864 
 
 2,041,854 
 
 6,175,270 
 
 4,928,891 
 
 10,681,428 
 
 1865 
 
 555,725 
 
 3,621,330 
 
 3,794,425 
 
 6,123,968 
 
 1866 
 
 478,217 
 
 2,374,939 
 
 2,393,062 
 
 4,704,549 
 
 1867 
 
 258,904 
 
 643,927 
 
 1,240,129 
 
 1,408,297 
 
 1868 
 
 1,564,635 
 
 1,650,132 
 
 4,963,551 
 
 1,908,421 
 
 1869 
 
 1,519,125 
 
 2,341,035 
 
 1,107,281 
 
 4,223,113 
 
 1870 
 
 I,277,2IO 
 
 1,918,508 
 
 816,509 
 
 297,292 
 
 1871 
 
 1,728,368 
 
 3,649,667 
 
 I,552,Ol8 
 
 242,456 
 
 1872 
 
 1,399,352 
 
 6,278,935 
 
 1,992,225 
 
 253,680 
 
 1873 
 
 1,573,163 
 
 3,363,822 
 
 1,382,949 
 
 H5,I70 
 
 1874 
 
 1,039,402 
 
 6,841,487 
 
 1,677,259 
 
 929,150 
 
 1875 
 
 232,589 
 
 4,009,942 
 
 900,549 
 
 537,176 
 
 1876 
 
 1,474,908 
 
 9,522,751 
 
 1,737,733 
 
 I,573,3H 
 
 1877 
 
 2,057,394 
 
 15,971,206 
 
 1,074,252 
 
 890,002 
 
 1878 
 
 1,061,529 
 
 5»703*514 
 
 539,668 
 
 200,976 
 
 1879 
 
 2,276,807 
 
 6,534,o8i 
 
 2,703,409 
 
 1,135,675 
 
 1880 
 
 2,142,611 
 
 5,001,430 
 
 1,726,795 
 
 1,624,624 
 
 I88l 
 
 1,502,437 
 
 4,H7,293 
 
 1,030,308 
 
 418,780 
 
 1882 
 
 2,020,374 
 
 5,97i,oo7 
 
 i,49i,938 
 
 2,5i9,5 IQ 
 
 1883 
 
 1,288,620 
 
 6,828,905 
 
 648,568 
 
 396,689 
 
 1884 
 
 3,252,340 
 
 7,969,258 
 
 928,873 
 
 699,097 
 
 1885 
 
 1,471,487 
 
 7,732,038 
 
 667,322 
 
 1,130,964 
 
 Total.. 
 
 £43,312,914 
 
 £209,515,368 
 
 £48,167,090 
 
 £68,932,856 
 
 Total Gold in 32 years, £91,480,004. Average nearly £3,000,000. 
 Total Silver „ 278,448,224. „ 9,000,000. 
 
 £ 2 
 
68 
 
 APPENDIX. 
 
 APPENDIX K. 
 
 Drafts by Home Government on India, and amounts 
 received : — 
 
 
 Bills and 
 
 Amount received 
 
 Year 
 
 Telegraph Transfers. 
 
 in Sterling. 
 
 
 Rs. 
 
 £ 
 
 l86l-62 
 
 1,20,03,592 
 
 1,193,729 
 
 1862-63 
 
 6,66,37,287 
 
 6,641,576 
 
 1863-64 
 
 9,01,41,740 
 
 8,979,521 
 
 1864-65 
 
 6,82,45,100 
 
 6,789,473 
 
 1865-66 
 
 7,04,71,747 
 
 6,998,899 
 
 1866-67 
 
 5,84,14,133 
 
 5,613,746 
 
 1867-68 
 
 4,28,18,177 
 
 4,137,285 
 
 1868-69 
 
 3,83,40,000 
 
 3,705,741 
 
 1869-70 
 
 7,20,00,000 
 
 6,980,122 
 
 1870-71 
 
 9,00,85,000 
 
 8,443,509 
 
 1871-72 
 
 10,70,00,000 
 
 10,310,339 
 
 1872-73 
 
 14,70,25,000 
 
 13,939,095 
 
 1873-74 
 
 14,26,57,000 
 
 13,285,678 
 
 1874-75 
 
 11,74,37,000 
 
 10,841,615 
 
 1875-76 . 
 
 13,75,00,000 
 
 12,389,613 
 
 1876-77 
 
 14,85,75,122 
 
 12,695,799 
 
 1877-78 . 
 
 11,69,85,000 
 
 10,134,455 
 
 1878-79 . 
 
 16,91,23,612 
 
 13,948,565 
 
 1879-80 
 
 18,35,00,000 
 
 15,261,810 
 
 1880-81 
 
 18,32,77,000 
 
 15,239,677 
 
 1881-82 
 
 22,21,09,350 
 
 18,412,429 
 
 1882-83 
 
 18,58,56,593 
 
 15,120,521 
 
 1883-84 .. 
 
 21,62,15,462 
 
 17,599,805 
 
 1884-85 
 
 17,10,22,118 
 
 13,758,909 
 
 Total drawn from January, 1861, to 31st March, 1885 : — 
 Rupees, 2,85,74,40,033. ... Received, ^"252,421,91 
 
 Average received about ^10,000,000. 
 
APPENDIX. 
 
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 CO .<y 
 
 <D O o 
 
 B-gg 
 
 •S h* 3 d 
 
 « <u o 
 
 co -Q bx) 
 
?o 
 
 APPENDIX. 
 
 Further Statements as to prices in India taken from Mr. 
 Prinsep's Tables : — 
 
 
 Wheat. 
 
 Rice. 
 
 Cotton. 
 
 Jute. 
 
 1865-69 . 
 
 IOO 
 
 IOO 
 
 IOO 
 
 IOO 
 
 1870-74 . 
 
 . 82-54 . 
 
 .. 84-24 . 
 
 . 8o-6i . 
 
 •• "9*57 
 
 'olH 9 - 
 
 . 87-16 . 
 
 •• 115*97 • 
 
 . 72-62 . 
 
 .. 127-31 
 
 1880-84 . 
 
 • 83-32 . 
 
 .. 90-07 . 
 
 . 74'9Q . 
 
 .. 122 *o6 
 
 APPENDIX M. 
 
 Prices of cotton manu- 
 factures, excluding lace, 
 hosiery, thread, &c, for 
 Indian shipments, 1870 — 
 1885 :- 
 
 Prices of cotton yarn and 
 twist : — 
 
 Year. 
 
 Price per iooo 
 
 Ratio 
 
 Year. 
 
 Price per iooo 
 lbs. 
 
 Ratio 
 
 
 yards. 
 
 1870=100. 
 
 1870=100 
 
 1870 
 
 .. £16 6 
 
 ... IOO 
 
 1870 
 
 .. ^78 17 O 
 
 ... IOO 
 
 1875 
 
 15 2 
 
 - 93 
 
 1875 
 
 .. 61 6 
 
 ... 78 
 
 1880 
 
 12 16 
 
 ... 79 
 
 1880 
 
 .. 55 2 
 
 ... 70 
 
 1885 
 
 11 1 
 
 ... 68 
 
 1885 
 
 .. 48 6 
 
 ... 6l 
 
 APPENDIX N. 
 
 Table of general Increase of Production of various 
 Articles between 1872-4 and 1883-5 as given by Mr. 
 Sauerbeck in Paper on Prices in September Number of 
 the Journal of the Statistical Society (1886): — 
 
 Nominal value in 
 millions at prices of 
 1867-77 (average). 
 
 Increase in 
 Production. 
 
 Nomin 
 millions 
 1867-77 
 
 al value in 
 at prices of 
 (average). 
 
 Increase in 
 Production. 
 
 £ 
 
 Per cent. 
 
 
 £ 
 
 Per cent. 
 
 Wheat and flour 64-3 
 
 .. 22 
 
 Tea... . 
 
 12-2 
 
 ... 44 
 
 Barley 24-3 
 
 ... IO 
 
 Iron 
 
 22*2 
 
 - 39 
 
 Oats 30-2 
 
 ... 23 
 
 Copper . 
 
 5*1 
 
 ... 97 
 
 Meat 78*2 
 
 ... 14 
 
 Cotton . 
 
 53*2 
 
 ... 32 
 
 Sugar 20 
 
 ... 68 
 
 Wool . 
 
 32-i 
 
 ... 20 
 
 He estimates the " total aggregate increase in production 
 from 1873 to 1885" at 28 per cent., or 2\ per cent, per 
 annum. 
 
APPENDIX. 
 
 
 7i 
 
 APPENDIX 0. 
 
 
 
 Average freights (Calcutta) by steam and sail : — 
 
 Year. Steam. Sail. Year, 
 s. d. s. d. 
 
 1875 61 3 52 6 1884 
 r88o 65 48 9 1885 
 
 Steam. Sail, 
 s. d. s. d. 
 23 9 26 3 
 
 32 6 33 9 
 
 Average freights (Bombay) : — 
 
 
 
 Year. Steam. 1 Year, 
 s. d. 
 
 1875 4i 3 1884 
 
 l88o 35 O 1885 
 
 
 Steam, 
 s. d. 
 
 23 I 
 
 23 9 
 
 Average freights from Baltic to London 
 deals and battens : — 
 
 (steam). All 
 
 Year. Steam, 
 s. d. 
 
 1875 5° ° 
 
 1880 42 3 
 
 1884 25 6 
 
 Year. 
 
 1885 
 1886 
 
 
 Steam, 
 s. d. 
 
 29 6 
 25 3 
 
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