2»>d S. NO 94., Oct. 17. '57,] 



NOTES AND QUERIES. 



315 



no doubt the "large annual balance of trade 

 against Great Britain ; " but this is only expressing 

 the phenomenon itself in another way. ScoTus 

 wants, I dare say, to know why the balance con- 

 tinues to be so large, or why we continue to send 

 so much silver, and so little calico and hardware. 

 If he is sufficiently curious on the subject to study 

 Foste?' on Exchanges, he may soon be convinced 

 that, without some extraordinary disturbance in 

 the value of the precious metals, they cannot con- 

 tinue for long periods, or in large quantities, to 

 pass between countries neither of which produces 

 them. But the value of silver in Europe has 

 been greatly disturbed of late. The large influx 

 of gold since 1848 has steadily depressed the value 

 of gold relatively to silver, which is the same 

 thing as saying that it has raised the value of 

 silver relatively to gold. It has in fact raised the 

 value of silver (in gold) higher than it is rated in 

 the French coinage. Such being the case, nobody, 

 while he can coin gold in France for a nominal 

 charge, is foolish enough to pay debts in silver, as 

 Frenchmen used to do. Everybody prefers to 

 sell his silver coin to the bullion merchant for 

 gold. The consequence has been that silver coin, 

 in France alone, has within the last nine years 

 been taken out of circulation to the amount of 

 fifty millions sterling. What can the merchants 

 do with this silver ? They cannot, as we have 

 seen, circulate it in France, as the government 

 have rated it below its value. Neither can they 

 circulate it in other European countries where a 

 double standard still prevails ; for the double 

 standard having been settled before gold got 

 cheap, the silver is there also rated too low. In 

 those countries which, like England, have but one 

 (gold) standard, they cannot of course find a 

 market for such quantities. They, therefore, of 

 necessity send it to the East, where a single silver 

 standard is universal. Our merchants can, of 

 course, force any amount of silver upon those 

 countries while it is less valuable here than there. 

 This explanation is simple enough to* those ac- 

 quainted with the law of value as it affects money ; 

 although newspaper writers appear to be much 

 puzzled by the facts. The subject is very ably 

 explained in an article in The Athenceum of Jan. 

 19, 1857, and in an article in the same journal re- 

 viewing Mr. Tooke's History of Prices (June 27, 

 1857). I would advise Scotus, or any one de- 

 siring to understand the reasons of the great silver 

 efilux, to refer to these. J. S. M. 



[We cannot agree with our correspondent "with respect 

 to the ultimate cause of the efflux of bullion, especially 

 silver, to the East. Without the local knowledge of the 

 practical working of exchanges abroad, writers sit down 

 and study up their phenomena in the libraries; hence 

 such fine-spun theories as those of Foster, Tooke, &c. 

 That the discoveries of gold since 1847, and its immense 

 importation into Europe, have reacted upon the value of 

 commodities (the aecessariea of life) and upon labour, may 



be true; but that these circumstancea have materially 

 heightened the relative value of silver in Europe is not 

 practically correct — still less is it correct as regards the 

 East. European merchants are far from " forcing silver " 

 upon the produce markets of the East. Indeed they ob- 

 viously pay in silver at a disadvantage (not so great 

 indeed as J. S. M. seems to think), and are therefore in- 

 terested in avoiding rather than " forcing " the paj^ment 

 in silver. Indeed, if they did so " force " it, it must be 

 clear that such an effort would depreciate, not heighten, 

 its relative value. Again — a fact — about one-eighth or 

 one-ninth of the bullion shipments to India and China, 

 whether from home or from the colonies (which is the 

 same thing, because a mere transference of liability), is 

 in gold. Still the Indian and Chinese populations, ac- 

 customed from time immemorial to a silver standard and 

 silver currency, prefer silver. Wherefore the merchants, 

 who frequent their produce markets on European account, 

 are themselves forced to be prepared with a preponderating 

 quantity of that metal in case of demand. Again, another 

 fact, the Spanish Carolus dollar is the favourite in China. ' 

 It is true that, intrinsicallj', it merits a premium of about 

 10 per cent. ; but John Chinaman esteems it at above 

 80 per cent, premium. This is clearly a whimsical valu- 

 ation, and not at all dependent upon a fixed law of ex- 

 change. Now for the staple of J. S. M.'s Foster- Tooke 

 reasoning. He says the statement, "that the annual 

 balance of trade is against Great Britain," is a mere sub- 

 stitution of words for " efflux of bullion." We beg his 

 pardon. The balance is against Great Britain in com- 

 modities: because Great Britain uses largely of eastern 

 produce, and the East requires comparatively little of 

 British fabrics. Why is this? but because, Istly, the 

 Indian and Chinese populations are themselves manufac- 

 turers of what they want ; 2ndly, because they are not 

 yet imbued with much taste for European fabrics ; 3rdly, 

 because the chronic state of insecurity in which they live 

 has made them characteristically fond of treasure, (that 

 is, of property easily concealed, easily removed, and readily 

 convertible, which from all time they know precious metal 

 to be). India used to make all its own calicoes, and sup- 

 ply us too. Manchester learnt how to turn the tables to 

 a great extent in that particular department. And the 

 tendency of Orientals is slowly to become more and more 

 consumers of our fabrics: until, by and bye, no doubt, 

 the 150,000,000 Indians, and 350,000,000 (?) Chinese, 

 will probably find comfort and pleasure in our goods. 

 But we have meanwhile to invade the domain of preju- 

 dices of ages' duration. Lastly, J. S. M.'s Fo^ter-Tooke 

 theory is based on the assumption that the metals rule 

 values and exchanges ; whereas a minute's reflection upon 

 the habitual impulses of mankind, and fluctuations of 

 trade, will prove that commodities (the necessaries of 

 life) rule the metals, and not the metals the commodities. 

 If J. S. M. will spend a month at Bendigo, he will soon 

 be convinced of that.] 



THE RULE OF THUMB. 

 (2°'> S. iv. 147.) 



At Bordeaux, under the Duke in 1814, we 

 often had to make cash issues to French con- 

 tractors, whom we paid in Spanish dollars. This 

 required, on the part of the recipients, a reduc- 

 tion of the dollars to French currency, which they 

 generally worked with a pencil on the nail of the 

 thumb. Such a modus operandi greatly amused 

 the gentlemen of our military chest, who main- 



