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former in the means of locomotion, and the more backward con-
dition of the places farthest from the capital.* In France, as in
England, there has been some controversy respecting the influ-
ence of the gold mines on prices ; but there too writers on both
sides have overlooked the effect of railways upon the distribution
of the national currency and the prices of country productions.
The writer on the Precious Metals, for example, in the ' Diction-
naire Universel du Commerce,' simply pronounces that provisions
and raw materials are rapidly rising in price, but manufactures
tending rather to fall. But in the article on Railways, in the
same work, it is remarked that prices have risen enormously in
the districts they traverse, and that ' one hears every day, in some
place where people lived lately almost for nothing, that the
passage of a railway has made everything dear.' The rise of
prices in the provincial towns and rural districts forms the most
prominent subject in most of the reports of the Britsh Consuls

* See on this subject, Les Chemins de Fer en 1862 et 1863, par Eug^ue Flachat.



In the Sixteenth and Nineteenth Centuries. 285

in France for several years past.* In each locality, special
causes are commonly assigned by persons on the spot, for ' the
dearness of living ; ' but how is it that the same phenomenon
presents itself in so many different localities — in the capital, the
provincial town, and the agricultural district ? How is it, if
railways have raised wages, prices, and rents, that the rise has
taken place at both ends of and along their lines ? How is it, if
labour and produce are rising in the country, because they are
carried off to the town, that they are rising also in the town? And
how could the prices of things, for the most part increased greatly
in quantity, have risen prodigiously throughout France, if there
were no more money than formerly circulating through it ?
Many persons seem to imagine they have accounted for a rise of
prices, without reference to the influx of money from the mines,
when they have pointed out how the additional money has been
actually laid out, and through whose hands it has most recently
passed. Unless they see the miner himself, they will not
believe that he is the prime agent in the matter, although it is
commonly only being brought by other hands than his own,
that his gold can raise prices at a distance. An interesting
German -oaiter has reproduced one of the popular theories of

* Thus the Consul at Nantes, in his Report for 1862, observes : ' The market
prices of goods have been greatly increased by the railway communication
between Nantes and Paris, while bouse rent has risen to a price almost equal to
Paris.' The Consul at Bordeaux, in his Eeport for 1859, says: 'For a while
the hope was entertained that the establishment of railways would realize the
problem of cheap living ; but this has proved a fallacy, for the facility of trans-
port and increased demands of the capital have created a drain in that direction.
House-rent has within the last few years doubled, if not trebled.' In his Eeport
fur 1862, the same Consul says : 'With the exception of bread, the price of every
commodity remains excessively high; and, though wages have risen in propor-
tion, there does not appear to be any marked improvement in the state of the
lower classes. It cannot be denied, however, that the progress of civilization has
gradually created among them a tendency towards more expensive habits, and that
what formerly were esteemed luxuries have now become indispensable wants.'
There are similar reports from the Consuls at Havre and Marseilles. Nor is it
only in the provincial towns that this monetary revolution has taken place. The
cultivators of the soil, although they sell their produce at much elevated rates,
complain bitterly of the increased cost of rural labour. The rise of house-rent in
the towns is, no doubt, due in part to the concentration of the population ; but this
would not, if there were not more money in general circulation, raise wages and
commodities both in town and country.



286 The Distribution and Value of the Precious Metals.

Elizabeth's reign — that luxury, ostentation, and expensive
habits among all classes are the causes of the modern dearness
of living, and not the abundance of money.* There cannot,
however, be more money spent, if people have no more to spend
than before. A mere change in the ideas and desires of society
would add nothing to the number of pieces of money, and
€Ould not affect the sum-total of prices. If more money were
spent upon houses, furniture, and show, less would remain, if
pecuniary means were not increased, to be spent upon labour
and food, and the substantial necessaries of life ; and, if the
former became dearer, the latter would at the same time become
cheaper. But, when people have really more money than for-
merly to spend, they naturally spend more than they formerly
did, and their unaccustomed expenditure is considered excessive
and extravagant. And, when an increase in the pecuniary incomes
of large classes arises from, or accompanies, greater commercial
activity and general progress, there commonly is a general taste
for a better or more costly style of living than there was at a
lower stage of society. There is always, it is true, much folly
and vanity in human expenditure ; and masses of men do not
become philosophers of a sudden because they are making more
money, and their state is improving upon the whole. But their
state is improving on the whole when their trade is increasing,
and the value of their produce rising to a level with that of
the most forward communities, and when the lowest classes are
breaking the chains of barbarous custom, and furnishing life
with better accommodation than servile and ignorant boors
could appreciate. It is better to see German peasants building
chimneys and embellishing their houses than burying their
money, even if we find them copying their superiors in non-
essentials and in finery, as well as in the plain requisites of
civilization. The greater expense of ordinary life in North than
South Germany has been cited as positive proof that the growing
dearness of living on the Continent comes not from the plenty
of money, but from the costlier habits of the people ; and there

* Seethe chapter headed ' Der Geld-preis und die Sitte,' in Eiehl's Culturstudien.



In the Sixteenth and Nineteenth Centuries. 287

may be much that is wasteful and silly in modern German
fashion, as well as much tliat is uncleanly and unwholesome in
what is called ancient German simpHcity. But the chief reason
why South Germany is comparatively cheap is, that there is
really less money in circulation ; partly because it has more
recently been opened up by railways, and still remains farther
from the best markets of Europe ; and partly because a greater
proportion of the money actually gotten is hoarded* — which
is a sign of comparative backwardness, and illustrates the con-
nexion between progress and ascending prices noticed already.
Wherever backwardness is changing into progress, and stag-
nation into commercial activity, it will be found that cheapness
is changing into dearness, and that something like English
prices follow hard upon something like English prosperity.
Thus the British consul at Bilbao reported lately : ' The increased
trade and prosperous condition of the country have di-awn
numbers of families to Bilbao. As a result of this the cost of
living has risen enormously, and Bilbao, long one of the cheapest
towns in Europe, has become a comparatively dear place. 't To
Spain, which in the sixteenth century robbed the treasures of
the New World directly from their source, gold now comes by
honest trade, and the miner is hidden behind the merchant.



* The following passage is taken from the Bevue Germanique ior October, 1863,
in which it forms part of a translation from an article which appeared in 1857 in
a German Quarterly : — ' La population de scampagnes a ete dans les huit dernieres
annees comme une eponge qui s'est gorgee d' argent. Des statisticiens ont calcule
que dans un seul canton a blede I'AlIemagne du sud, lequel ne compte que quelque
milles carres, on a thesaurise dans le cours des dix dernieres annees au moins un
million de florins d' argent comptant, qui n'est pas rentre dans lo commerce.'

t The Consul gives the following comparative Table of Prices in 1854 and
1860 :—







1854


,






1860.






£ £


s.


d.


£


£ s.


d.


Houses and apartments,


15 to 30








50 to 80





Beef (per pound),








91







4


Mutton, ,,










H







4|


Veal, „ ...










H







8


Bread, ,,










1







2


Potatoes (per stone), .







2







3


n


Eggs (per dozen),










H







'h


Wine (two quarts),










H




1


3i



288 The Distribution and Value of the Precious 3Ietals

Unaccustomed streams of money are flowing, not only into the-
towns of Northern Spain, "but through all the more fertile
districts of the Peninsula near the new lines of railway. And
the sums by which prices have been raised in Portugal and
Spain could evidently not have been drawn from England and
France without a corresponding fall of prices in those countries,
had their coffers not been replenished from a new source. It is,
too, in regions like the great corn-district of Medina del Campo,
poor lately in money, but rich in the wealth of nature, that
prices must rise fastest when they are brought into easy com-
munication with the markets where money abounds, since the
money is both attracted by tlieir cheapness, and produces the
more sensible change on account of it. It is in sucb places also
that the unwonted abundance of such treasure, and the rise in
the pecuniary value of the labour and produce of the people, are
to be regarded as signs of rise in the international and economical
scale, and of the obstacles being at length overcome which
for centuries prevented them from contributing their natural
resources and energies to advance the general prosperity and
happiness of mankind. Thus the trade of the Swiss, shut out
by their own mountains from the principal markets of Europe
in the last century, now reaches to the farthest regions of gold ;
tbe merchant and the traveller pour the precious metals into
their lap ; and a country, not long ago scantily furnished with
a base native currency, is now flowing with money from the
mints of the wealthiest States. In the north and east of Europe
we likewise find the range of prices indicating the course of
local fortunes, and the share of remote places in the increased
currency of the world depending on the improvement of their
means of intercourse and trade with the more forward regions
and their general progress. In Norway — which, with a
population about half of that of London, is, in respect of
its commercial marine, the fourth among maritime powers —
the wages of seamen rose at a bound to the British level
on the repeal of the navigation laws ; and no sooner did
Australian gold appear in Europe than the Norwegian currency
swelled to an unprecedented balance, and prices rose to a



In the Sixteenth and Nineteenth Centuries. 289

pitcTi unknowu before.* In Russia, a commodity which, a
few years ago, was worth to the producer in the interior only
a fourth of the sum it would sell for in the capital, may now
be carried thither at comparatively trifling cost in fewer days
than it might formerly have taken months to perform the
journey ; and the producer gains the difference. Such a burst
of traffic ensued upon the new means of locomotion that the
receipts of the St. Petersburg and Moscow Railway for the
carriage of goods in 1859 are said to have equalled those of the
best railways in England ; and in the summer of the previous
year 300 steamers plied the waters of the Volga, where only ten
could be counted in 1853. This rapid growth of trade was
accompanied, as the British Secretary of Legation reported, by
a great improvement in the condition of the people, increased
demand for labour, and higher wages, better food, and the ex-
change of the sheepskin for cloth. The exports of Riga, again,
are of the very class which benefited most by the alterations in
the English tariff, and which rose the most in the English
market immediately after the influx of new gold began ; and at
Riga the same monetary revolution has ensued which Bilbao and
other Western towns have experienced. In his report for 1859
the British Consul says : — * A fact which seems rather to weigh
against Riga is the rapid increase of late years in the cost of
living in this port. The necessaries of life have doubled in ten
years ; labour has risen in proportion.'! It would, however, be
an inference wide of the truth, that the whole Russian Empire
exhibits similar indications of a rise towards the Western level.
Grreat part of it is hardly better furnished with the paths of
traffic than before the discovery of America ; the carrier in



* British Consul's Report for 1852-3. The Consul at Gottenberg, in Sweden,
reports for 1855 : — 'The year 1855 has been most prosperous. Notwithstanding
tliat most articles are now admitted free of duty, provisions of every kind are
excessively dear, many articles having, within the last few years, advanced to
treble, and in no instance to less than double in price. This may be attributed to
the general prosperity, and consequent increased consumption of better food, among
the working classes.'

t A part of this rise is attributable to the depreciation of the paper rouble, but
this was not considerable at the period referred to.

U



290 The Distribution and Value of the Precious Metals

many places leaves the cultivator little or no surplus ; and
the resources of a teeming soil and the industry of an ingenious
people are imprisoned and valueless. There is, in fact, still
great inequality of prices, as of opportunities of progress, in
different parts of Europe ; but there is evidence, nevertheless,
of the presence of a new money power in parts of every
European country since the new gold first glittered in the
market, and the Englishman has had, in his own quarter of the
globe, many successful competitors for a share in the treasure,
some of whom have been realizing prices much more above the
ancient level than those which have ruled in the wealthiest
towns of this island. Different countries — different localities —
by reason not only of the inequality of comparative pro-
gress, but also of the vicissitudes of the seasons and political
affairs — have participated unequally from time to time in
the general enlargement of the circulating medium of Europe.
One prevailing tendency is, however, discernible in the com-
mercial movement of this age — to reverse the monetary order
of the 16th century, and to raise most, in relation to money,
the produce of places where money was scarcest before. Is it
so in Europe only ? On the contrary, the most remarkable
contrast between the former and the present epoch in the history
of the precious metals lies in the share allotted to Eastern
countries, and the rise of Eastern industry and productions in
international value, as measured by the universal standard of
money. From 1500 to 1595 the Portuguese monopolized the
maritime trade with the East Indies ; and the cargoes of
Asiatic merchandize which arrived in Europe, few and small
in the first half of the century, declined in the latter half ; nor
does Mr. Jacob estimate at more than fourteen millions the
entire amount of treasure which moved to Asia from the "West
in the first 108 years after America was discovered. In the
last fourteen years, India has netted a balance of about a
hundred and fifty millions. For upwards of two years the
scale has been loaded in favour of India with money lost to
the American States by the war — a fact which illustrates the
connexion with the fortunes of nations of the movement of the



In the Sixteenth and Nineteenth Centuries. 291

precious metals. This influx into India began, however, with
the increase of their quantity in the world,* following the
general law of the period of the attraction of money to cheap
and fertile places with which communication has been improved,
and in favour of which international trade must be redressed.
The money has flowed into India, it is true, not only in the
immediate purchase of its commodities, but also in loans, public
•works, and investments of English capital — a fact, however,
springing from the same general cause, and tending in the same
direction. It is a fact of the same order with the gradual rise
of the country to an economic level with the earlier elevated
towns which struck the sagacious mind of Adam Smith. * Every-
where,' he said, ' the greatest improvements of the country have
been owing to the overflowing of the stock originally accu-
mulated in the towns.' The ruder and remoter regions are at
length, if commerce be allowed its natural course, brought into
neighbourhood and fellowship with the regions more advanced
and endowed with the same advantages, especially with that
advantage to which the latter mainly owed their earlier progress,
the advantage of a good commercial situation, which steam
navigation, railways, and roads, are giving to many districts iu
India, rich in the food of mankind and the materials of industry,
but until lately unable to dispose of their wealth, unless upon
beggarly terms. There are some who view the accession of
metallic treasure to such countries as a burden and a loss to
them — who maintain that the money exported to India, for
example, abstracts a proportionate sum of commodities from
the consumption of the natives, and then disappears in useless
hoards or frivolous ornaments, adding little or nothing to its
industrial spirit and power, or to the pecuniary value and com-
mand over foreign markets of its produce. As to the actual
use of the new treasure in India, the truth is, that there, as in
Egypt, and every continental country in Europe, it has been
both hoarded and circulated. Even in England there is always



*The bullion imports of India in 1852-3 exceeded five millions sterling; in
1855-6 they rose nearly to eleven millions and a-half ; in the year 1856-7, tb



Online LibraryT. E. Cliffe (Thomas Edward Cliffe) LeslieEssays in political economy → online text (page 27 of 41)