

nak, SY a ae 
6 
TRANSACTIONS OF THE SECTIONS. 95 
centuries produced the most remarkable changes in prices at that period, so that 
the prices of all commodities were quadrupled in the short space of seventy years. 
Although this change did not begin to take place till twenty years after the disco- 
very of Potosi, yet a similar change at the present day, if the causes were in ex- 
istence to produce it, must be expected to happen with much greater rapidity, as the 
facility of transit and the promptness with which labour and capital were applied 
to industrial undertakings would bring the produce of the American mines into the 
European market with much greater rapidity than in past centuries. It must also 
be recollected that there was not the slightest provision in the present or past ar- 
rangements of the British currency to prevent changes in prices being produced to 
any extent by the gold mines of California if their fertility were sufficient to effect 
such changes. In investigating the cause of changes in prices, there were two classes 
of changes to be considered which were perfectly distinct from one another. 
Sometimes the prices of particular commodities varied without any corresponding 
variation in the prices of other commodities. At other times the prices of all com- 
modities partook of simultaneous changes of the same proportion and inthe same 
direction. Changes of the first class arose from causes affecting the value of the par- 
ticular commodities in the prices of which they occurred. Changes of the second 
class were quite independent of the value of the commodities, and arose solely from 
changes in the value of the metal or other commodity that was used as money. 
The price of a commodity in any place meant its value estimated in the money of 
that place, or, in other words, the quantity of money that could ordinarily be there 
received in exchange for it; and this quantity might increase either from the com- 
modity becoming more valuable or from the money becoming less valuable. As gold 
was the standard of value in England, it followed at once that whatever cause af- 
fected the value of gold as a commodity would affect prices in Great Britain; so 
that it was only necessary to consider whether the discovery of gold in California 
would affect the value of gold asa commodity. But this depended entirely on the 
cost of production of gold there. The answer to the first question might be stated 
in a few words. The extent to which British prices could be affected by the disco- 
very of gold in California depended on the difference between the cost of obtaining 
gold there and the cost at the least fertile mine now worked, or which continued to 
be worked after the discovery. 
- As to the second question, it was manifest that it could not be solved directly. 
No statistical investigation, however carefully pursued, could enable us to ascertain 
the cost of production in California; for there the prices of labour, of the use of 
‘ capital and of raw materials of every kind, were ina state of most rapid fluctuation. 
It would also be extremely difficult to discover with that certainty which the import- 
ance of the question would require, the least fertile mine. But there was fortunately 
an indirect method of discovering the effect of the Californian gold without sending 
statisticians to that perilous region; and this indirect method gave results far more 
certain than any that they could discover for us. Let the price of silver be observed 
in England where gold was the standard of value, and the price of gold on the Con- 
tinent where silver was the standard. If it were found that the price of silver was 
rising in England and the price of gold falling on the Continent by the same amount, 
it might reasonably be inferred that the Californian discovery was affecting the value 
of gold. But this conclusion could be corrected and verified by a very simple me- 
thod. Let there be a systematic set of observations of the prices of all the chief 
commodities in some place in England—say in London. Select from this list of 
observations the twelve commodities that were ordinarily most constant in value. 
Observe whether there was now any simultaneous change going on in the prices of 
these commodities. If they were found to be all increasing in value by the same 
G amount at the same time, it might be inferred that gold was changing in value; for 
it was highly improbable that twelve commodities ordinarily constant in value should 
all change in value to the same extent from causes peculiar to themselves. 
- Should the result of these observations prove that prices had begun to be affected 
by the discovery, then it would be necessary to consider the third question—How 
can we guard against any extreme change in prices being produced? From the 
manner in which the subject was alluded to in conversation and noticed in the 
. public prints, it would seem that the community in general was ignorant of the 
at 
