164 PAPER MONi:\- ANT) COLD P:xcn an(;e. 



depreciation Had not been nearly so great as the external, if 

 one confines attention solely to prices in South Africa. A point 

 which seems to have escaped attention is that in a system of 

 countries connected by commerce, one must deal not only with 

 the forces operating in one country, but also with the more 

 general forces which affect all countries. Now. this period of 

 rising prices in South Africa was a period of falling prices in 

 the countries with which the Cape traded. In 1800 the index 

 number of prices in England stood at 235 ; in 1824 it was 147; in 

 1825 there was a temporary rise to 172, but thereafter there was 

 a steady fall. Where trade is established, jjrices tend to move 

 in the same direction, so, in the absence of an inconvertible and 

 excessive currency, prices, instead of rising, would have fallen 

 in South Africa. The internal depreciation was therefore much 

 greater than appeared. 



It was generally said in the petitions that the calling down 

 of the dollar to 1/6 had reduced the wealth of the colonists to 

 three-eighths of its original amount. Obviously this is simply the 

 old confusion between money and wealth. So far as internal 

 trade was concerned, if a man sold his goods for 1/6 instead 

 of 4/-, he also bought at the same rate. The actual commo- 

 dities remained the same as before. In external trade the dollar 

 had in any case to be given to obtain 1/6 abroad. The evil lav 

 in the depreciation of the money, not in the official recognition 

 of that depreciation. The only just ground of complaint was 

 the additional charge of 3 ])er cent, on bills. This, however, 

 was soon reduced to li ])er cent., as the charge was merely 

 meant to cover costs. .Some of the merchants recognised that 

 the depreciation, and not the recognition of it, had been the 

 evil, and, when the proposal was made to compromise by fixing 

 the value at 2/-. they pointed out the dangers to trade of any 

 further fluctuations in value. 



Dr. Theal has suggested that the calling down of the dollar 

 was disadvantageous to creditors, but advantageous to debtors. 

 In view of the long period chu-ing which the dollar had been 

 worth only 1/6, most contracts which were still current in 1825 

 must have been made at about this rate. To have fixed on any 

 other rate would have involved far more injustice. In any case 

 the general argument applies, that the evil consisted in the 

 dei)reciation. 



In May, 1826. the 'i'reasur_v issued its ilecision on the ])eti- 

 tions. It was pointed out that the debt had been contracted for 

 purely colonial ])ur])oses. and could not be a charge upon the 

 public funds of Britain. Any claim the holders had could only 

 be against the Colonial (Government. The burden of meeting 

 it would fall on the landed proprietors and ca])italists. who were 

 the chief complainants. The Treasury therefore concluded to 

 make no alteration in its decision. 



Some of the rixdollar notes were exchanged for silver and 

 for sterlin''^ notes, i.e., paper money, of which the value was 



