T. E. Cliffe (Thomas Edward Cliffe) Leslie.

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R. 1-8; yet no flow could take place from the full to the ex-

* See a table of prices of fifty-five commodities in the New York Market. —
Economist, March 28, 1863.

t The effect of the increase of money in India cannot he measured by the rates
at which Indian products sell in the English market. Prices are very unequal in
different parts of the East, and our imports may come from the cheapest places.
Moreover, prices may he actually rising at the place of exportation, while falling at
the place of importation, and the very cause of a fall at the latter may produce a
rise at the former. Thus, the price of rice has been low of late years in the English
market, because of large importations from the cheap Burmese provinces, where,
however, the price has risen in consequence. For the same reason, together with
the abundance of the crops on the spot, the price of rice has latterly been low in
some districts of Bengal in which prices generally have been high. Thus, at
Dacca, the price of rice was not higher in 1862 than in 1854 ; it was, however,
30 per cent, higher at Berhampore, and 100 per cent, higher at Cuttack. The
exports of India — coffee, cotton, grains, hemp, hides, indigo, jute, oils, opium,
saltpetre, seeds, shawls, silk, sugar, tea, wood, wool — have almost all risen greatly
even in foreign markets. Nevertheless, the prices in Mr. Jevons tables of ' tea,
sugar, rice, foreign spirits, spices, seeds,' have been referred to by an able writer
as confirming his conclusion that prices have risen less abroad, and especially in
India, and Eastern and tropical countries generally, than in England. But English
prices are not foreign prices. Of the commodities just named, rice bas greatly
risen in most parts of India ; tea has risen considerably even in the English market,
but much more in India ; and sugar has risen in India (more than 100 per cent, in
some places), but it has fallen in Europe for several years, owing to tlie enormous
increase of the produce of Cuba and Porto Eico, and of beetroot sugar on the
Continent. Foreign spirits (except brandy, which has much risen) have fallen in
England, in common with British spirits, by reason partly of the immense produc-
tion of rum in the West Indies, and partly of diminished consumption in England
and Ireland. Spices have been falling in the British market ever since the cessa-
tion of the Dutch monopoly, owing partly to the immense increase in the sources
and amount of supply, partly to the extent of adulteration, and partly to the

In the Sixteenth and Nineteenth Centuries 295

liausted market, because roads were not in existence.'* Before
the Mutiny the prosperity of these provinces had steadily in-
creased, and labour bore a price in them from 1854 to 1857 that
it had never borne before. Then came destruction and famine ;
and while the price of labour fell, that of food increased — just
as, in the winter of 1586, food bore an enormous price at Ant-
werp and Brussels, not because the new mines were prolific — for
the plenty of money had disappeared — but because the Spaniards
had stopped cultivation. f In the adjoining provinces of Hol-
land, on the contrary, prices at the same period were high,
though every commodity abounded in the market, because
American silver abounded there too; so likewise in India, while
famine prices reigned in the North West, there were other
provinces in which things were at once abundant and dear,
because the harvest of money as well as of food had been rich ;
and the same may be said of the North West itself for two
years past. During the famine years in the North West, the
enormous rise in prices, generally in the Lower provinces of
Bengal, was not attributable exclusively to the operations of the
Indian Mints ; but in 1862 and 1863 plenty reigned all around,
and yet prices ranged far above their level in 1854, with striking
inequalities in the rise in different districts in different commodi-
ties, varying from above 300 per cent, to less than 20. Sugar,
for example, was only 25 per cent, higher at Dacca in 1863, but at
Patna and Dinapore it was 130 per cent, higher than in 1854.
Rice is almost the only native product in any part of the Lower
provinces of Bengal which did not sell much higher in 1863
than before the drain of silver to the East, which the gold mines
made possible ; and the rare exception is accounted for not only

alteration in oiir tastes and customs of cookery, through which the demand has not
increased with the supply. Oil seeds have risen enormously in ludia. Opium (to
which the writer quoted has not referred) is the only Indian export of importance
which has fallen in India itself ; the causes of the fall being, first, a great increase
of production since the Government raised the price to the cultivator, in order
to drive rivals from the Chinese market ; and, secondly, the late monetary crisis at

* Colonel Baird Smith's Beport.

t Motley's United Netherlands.

296 The Distribution and Value of the Precious Metals

by splendid crops upon the spot, but by the diversion of a part
of the demand to the Burmese rice-grounds. Corn, in like
manner, is as cheap in the London market now as it was a
hundred years ago, because the supply of last year has outgrown
the money demand. But rice sold in 1863 for double its ancient
price in many parts of Madras, although cultivation had extended,
and the two last harvests had been good, while the importations
of food had increased, and its exportation diminished. In the
interior of Bombay such unprecedented prices have been latterly
witnessed that the natives (who seem to be equally blamed
whether they save or spend) have been accused, in an official
Report of ' playing with their money like the Californian gold-
finders in the first days of the diggings.' In this novel
profusion of expenditure, in the new comforts and luxuries
with which the natives of India are filling their houses, in the
new and more numerous exchanges which money performs in the
interior of the country, and the larger sums necessary to perform
them at rates enormously higher than formerly, we have the real
account of much of the money supposed to have been hoarded
because it has not found its way back to the bankers in the
chief towns. The peasantry of the poorest districts in Ireland,
in the late famine of 1847, were, in like manner, supposed to be
hoarding the silver introduced by the Board of "Works, because
it did not return to the banks : the true explanation being that
barter had ceased, and the coins which had disappeared were
busy performing common exchanges, which had never been per-
formed by money before. It is no slight advantage to the
Indian natives to have their industry excited, and their traffic
facilitated by the unwonted abundance of the currency, and it
liberates the ryot from the cruel exactions of the money-lender.
It raises the value of Indian commodities in the market of the
world, and the Hindoo is no longer forced to sell cheap and buy
dear, in international trade.* It is in the rate of wages, perhaps,
that the most remarkable proof is afforded of the elevated rank

* The disadvantage to which a country is exposed in international trade from a
lower range of prices than obtains in the countries with which it trades, is wei

In the Sixteenth and Nineteenth Centuries. 297

of the Indian people in the scale of nations ; for the comparative
powers of production and purchase of different nations are
measured by the average pecuniary earnings of labour in each.
The rise of money- wages in England is seldom computed at so
much as 20 per cent. ; but the localities are now few in India
where the labourer cannot earn more than twice the sum he
•could have done twelve years ago, and there are many in which
he can earn more than three times as much. The railways,
and new public works, and the emigration of Coolies to Ceylon,
Mauritius, and the "West Indies, have, along with the European
purchases of cotton, contributed largely to this result ; but a
fact is not explained away by showing how it has come to pass.
The better market for the industry of the Hindoo, the expendi-
ture of unprecedented sums upon it, and its extraordinary rise
in price, are the very things spoken of. All the silver sent to
the East could not add a rupee to the price of its produce and
industry unless it were expended ; the railways, public works,
and the payments for cotton, are among the channels of expen-
diture ; but the true sources of the money, though it be nearly
all silver, are the new gold mines, for the silver could not have
been spared from the West, had its place not been supplied by
new gold.

There is, then, upon the whole, incontrovertible evidence of
^ great change in the value of the precious metals in the world,
far more extensive than occurred in the 16th century, and upon
a different ground-plan ; but, like that earlier monetary revo-
lution, it has been neither universal nor equal where it has
occurred. It has not been universal, for the Egyptian is almost

explained in the following answer of the Doctor to the Knight in the old Dialogues
referred to in the early part of this article : —

' Knight. — Yea, but, sir, if the increase of treasure be partly the occasion of this
continued dearth, then by likelihood in other our neighbours' nations, unto whom
yearly is consigned great store of gold and silver, the prices of victuals and other
wares in like sort be raised, according to the increase of their treasure.'

' Doctor. — It is even so ; and, therefore, as I account it a matter hard to revoke
all our English wares unto their old prices, so do I not take it to be either profitable
convenient to the realm, except one should wish that our commodities sliould be
uttered cheap to strangers, and on the other side be dear unto us, which could noc
he without great impoverishment of the commonwealth.'

298 The Distribution and Value of the Precious Metals

the only African enriched ; China has netted nothing on the
balance of its trade for many years, and the cattle wandering
in the pampas of La Plata soon leave the golden circle. Nor
has it been equal, for the change has been greater in cheap
markets than in dear. But the immense rise of prices in many
of the former has been balanced by no corresponding fall in any
of the latter markets, and a great diminution in the value of
money, on the whole, is therefore clear, though to attempt to
measure it with precision is vain, and to talk of it in terms of
arithmetic is an abuse of figures. The only reasonable conclu-
sion on the subject is, that money has for the present lost much
of its purchasing power in the general world of trade — a con-
clusion by itself little to be desired. To load the exchanges
of men — to alter the terms of agreement, and disappoint just
expectations — to make landlords unwilling to grant leases, and
all classes doubtful about contracts for time and thrifty invest-
ments — were a calamitous result of the enterprise and toils of
the miners. And some evil of this kind has undoubtedly been
done. The first consequence, too, of the discovery of the new
mines was a diminution in the production of commodities. In
1851, half the male population of Victoria deserted their
occupations for the diggings. In 1850, when the population of
the colony was only 76,000, more than 52,000 acres were under
cultivation. In 1854, when the population amounted to nearly
237,000, only 34,657 acres were cultivated. In 1860, this very
colony imported from the rest of the world consumable commo-
dities to the value of more than fifteen millions, and gave
commodities in exchange to the value of only four millions and
a quarter. British Columbia to this day has produced little but
gold, aud has levied a continual tribute upon the food, clothing,
and implements of the rest of the world. Nevertheless, the good
and the gain which have accompanied the evil and the loss are
infinitely greater. The new gold has not only founded com-
mercial nations of great promise round its sources, and enabled
our own nation to work out (not only without a paralysing
monetary drain, but with triumphant success) the problem of
free trade, and to purchase in most critical times the material

Tn the Sixteenth and Nineteenth Centuries. 299

of our manufactures ; but it has assisted many backward
communities to rise rapidly in the scale of civilization, and
' "wandered heaven-directed to the poor.' The rapid rise in the
pecuniary value of the labour and produce of several such
communities, of which evidence has been given, is not merely a
sign and effect of their growing prosperity and elevated com-
mercial position ; it has also helped to conduce to their progress.
The new money has obtained the immediate execution of great
works such as a long line of ancient Egyptian tyrants could
not have compelled ;* it has been a stimulus to the cultivator's
industry and to the merchant's activity ; and it has substituted
to a considerable extent a civilized medium of exchange for the
barbarous and obstructive contrivance of barter.

So much the increase of the precious metals may be said to
have accomplished. What more in their future increase they
may accomplish it is not in the province of political economy to
forecast. They may become a curse instead of a blessing ; they
may turn the reaping-hook into a sword, and become the sinews
of war in Europe, when the sinews of war are exhausted in
America. In Asia they may be buried out of the reach of the
merchant by rebellion and anarchy, and prices may rise although

* * An extraordinary revolution is rapidly proceeding in this country
(Egypt). Europe has finally understood the immense future of Egypt, and is
eager to develop her yet budding resources. Every steamer is pouring a new
population and a golden stream on our shores ; energy and capital are taking
possession of the land, and m-ging it forward in the path of civilization and
wealth. Not only are the cities of Alexandiia and Cairo receiving so great an
influx of inhabitants that, although whole quarters are rising on every side,
house-room is stiU insufficient, and rents are always increasing ; but the inland
towns and villages are overrun, and factories M'ith high chimneys and long lines
of black smoke cut the sky of our flat landscape through the length and breadth
of Lower Egypt. Gradually, but surely, the tide is creeping upwards, and will
soon people the shores of the Thebaid. Englishmen, I am glad to say, are not
behind in the race, and then- numbers must always increase in a corresponding
ratio to the amount of machinery employed. The effect of all this is telling on
the natives. I lately heard that Halim Pacha, in conversing with his farm
labourers, had found the intellect of the lads who have grown up since the intro-
duction of ,the new mechanical appliances was greatly in advance of that of the
men who had reached manhood under the former primitive system of cultivation,
when the ox was the all-in-all to the fellah, and when his mind had no stimulus
aud no cause for thought or inquiry.' — Times, March 28, 186-1.

300 Distribution and Value of the Precious Metals, ^c.

money is scarce, because food is scarcer still. But, should both,
hemispheres be blessed with peace, their hoards as well as their
mines may pour their contents into the lap of trade, and a new
use may be found for all. The emancipation of the Russian
serfs affords, in the payment of wages it involves, an example of
the useful employment which the progress of civilization may
provide for an increase of silver and gold in the world. The
history of the last fifteen years bids us believe that, if the sword
can be kept in its sheath, the precious metals will become less
precious, chiefly in places where they are too precious at present ;
that prices will rise fastest where they are now lower than they
should be, or could be, if commerce had convenient pathways; and
that commodities will finally be multiplied as much as pieces of
money on the market. Given the fertility of the mines and the
total quantity of money in circulation, prices in the aggregate
must be lower through the world as a whole, in proportion to
the general industry and skill of mankind, and the extent and
facility of their trade ; but in the same proportion they must
also be nearer equality in different markets; and the rise of
prices in cheap places to the level of the dearest is a sign of
advancing civilization and prosperity. If prices were at a per-
fect equality in all places, it would prove that even distance as
well as war had ceased to separate mankind. Although the
literal attainment of a perfect monetary level is, therefore,
manifestly impossible, the history of prices proves that, while
many obstacles to human fellowship remain, more has been done
since the new gold mines were discovered to make the world one
neighbourhood than was done in 300 years before.





IN 1865.*

On the discovery of the new gold mines, under the name of the
Grold Question, an economic inquiry, unconnected with party
politics, for the first time gained the ear of the public at large.
Yet public interest has been languid, in comparison with the
real importance of the monetary problems involved. The chief
reason for this is perhaps the diffusion of an opinion, that the
effect of the increase of money upon prices practically concerns
persons alone whose pecuniary incomes are fixed : an opinion
which would be sufficiently true if prices were everywhere uni-
formly affected, and with respect to all things alike. But the
fact is, that the scale of relative incomes, and of relative prices,
in different places, and with respect to different commodities,
has been so altered, that the old level of profits in different
employments, and the old rates of expenditure in different situa-
tions, have been permanently disturbed, and new elements must
be imported into all calculations respecting the best markets to
buy and sell in, the cost of living in different localities, the out-
goings and returns in different trades, and the rates of interest
which different investments will yield. Those who omit to take
these new elements into account may find that their expenses,
both as producers and consumers, are largely increased, while
the prices of their own productions are not higher than formerly ;
or they may find themselves buyers in markets in which prices
have unexpectedly and enormously risen, and sellers where they

* North British Heview, June, 1865.

302 The New Gold Mines, and Prices in Europe in 1865.

have risen in no such proportion ; or again, they may miss
investments which would yield extraordinary gain. The
British farmer complains that while labour and many of the
requisites of production are dearer, he gets no more money than
formerly for his wheat, and the migration of population from
the country to the towns, and the production of animal food
instead of corn, are among the results of changes in relative
prices at home. Most writers on the effects of the Mines have
confined their observations to changes in prices at home. The
truth, however, is, that changes in prices abroad are of equal
importance even to Englishmen, not for the purpose of theoretical
instruction alone, but even with a view to pecuniary saving and
gain. Every day people are making speculations and entering
into transactions — in emigration, in foreign trade, and in foreign
loans and undertakings — the prudence of which depends upon
the movements of prices abroad. Great undertakings by Eng-
lishmen abroad, in fact, have been based upon estimates which
have proved fallacious, because they made no sufficient allowance
for the effects of an extraordinary increase of money in remote
places. Chairmen of Indian Railway and Irrigation Companies,
for example, have reported in London that the rise of prices
in India had falsified all their calculations, and entailed the
heaviest losses on contractors. Nor is it in production alone
that the unequal alteration of prices has made itself felt, for
consumers have been very differently affected according to the
place of their residence and the things they are accustomed to
use. The class of British holders of fixed incomes, who have
really been the chief sufferers from the increase of money in
other hands than their own, are not fundholders and Govern-
ment servants in Great Britain, who are generally placed first
in dissertations on the subject, but military and civil servants of
the Crown in India, who are confronted by a rise of prices to
which there has been nothing similar in England since the reign
of Elizabeth. Even in England itself, consumers are differently
affected, according to their class of life and habits, and the
localities^ they live in. To the agricultural labourer the price
of grain is the chief matter, and grain is cheap ; he suffers

The New Gold MineSj and Prices in Europe in 1865. 303

comparatively little from the clearness of butter and meat, and
nothing from the dearness of service, now pressing so hard on
the poorer gentry and tradesmen, especially in the parts of the
country where such things used to be cheapest. It depends
entirely on the localities men buy and sell in, and the things
they buy and sell in them, how they are aiiected by the greater
amount of money in the world; and statistical averages of
prices in general are not only fallacious in principle, but mis-
leading in practice. The additional money has been unequally
distributed by the balance of trade to different countries, and
very unequally shared by different classes in the countries re-
ceiving it ; again it has been spent by the classes receiving it,
not upon all commodities alike, but unequally, and the supply
of some things upon which there has been an additional ex-
penditure has increased very much more than that of others.
Moreover, a low range of prices is raised more by a given
addition to money than a high one, which is one reason why
the change has been greatest in places once remarkable for their
cheapness.* And from what has been said, it is plain that a
change in comparative incomes and prices would have been
caused by the new gold alone, since it would increase the
incomes and expenditure only of the classes, beginning with
the miners, to whose hands it successively came. But the new
gold has by no means been the only new agency at work ; an
altered distribution of money through the world has been
brought about by more general and permanent causes. And
at a time like the present — a time of doubtful markets and
hesitating trade — it is peculiarly desirable to lay hold of the

* The greater effect on low prices of an additional sum of money is a matter of
considerable practical importance, which may be illustrated in this way. Let us
suppose that the price of common labour was formerly \s. 6d. a-day in England,
and la^. a-day in India, and that the increased demand for labour has added a six-
pence to the rate of daily wages in both countries, raising the rate fi-om 1«. Gd. to
2s. in England, and from Id. to Id. in parts of India. Wages would then have
risen 33 per cent, in England, and 600 per cent, in India ; and whereas a con-
tractor could only hire three men in England for the sum with which ho could
formerly have hired four, in India he could only hire one man for the sum with
which he could formerly have hired six.

304 The New Gold Mines, and Prices in Europe in 1865.

fundamental causes at work, because, although the fortunes of
individuals here and there may depend on the momentary
condition of things, to the bulk of society the permanent
agencies which prevail in the end, and the permanent rates,
they tend to establish, are the objects of greatest importance.
Commerce and enterprise may pause and falter for a few weeks
or months ; a transitory disturbance originating in America
may possibly agitate all markets ; but such possibilities only
make it of greater importance to know what to look forward to
afterwards, and to distinguish between permanent and temporary
changes of prices and of the profits of production in each place
and with respect to each sort of thing.

The general principle determining the distribution of the
precious metals is, that money is spent by those who receive it
on the things they want most for production or consumption,
and in the places where those things can be procured at the
smallest expense. To buy in the cheapest and sell in the dearest

Online LibraryT. E. Cliffe (Thomas Edward Cliffe) LeslieEssays in political economy → online text (page 28 of 41)