218 REPORT— 1872. 



who not only do not at once participate in its advantages, but wlio actually suffer 

 in couseqiicnce of it. But it may he asked, is the rise in prices, which is now so 

 marked a feature in the economic condition of England, caused by the general 

 activity of trade, or is it simply an accidental coincidence ? If nothing- occurs 

 either to increase the supply of the precious metals, or if no change in the method 

 of conducting business enables their use in many transactions to be dispensed with, 

 it is a well-known principle of economic science that an increased production of 

 wealth would cause, not a general rise, but a general decline in prices. It has, 

 however, happened that, contemporaneously with the great development of trade 

 vrhich has occurred during the last twenty years, there lias been an enormous 

 increase in the production of the precious metals. It has been calculated that the 

 total yield of gold since the gold discoveries in Aush-alia and California, a little 

 more than twenty years since, is about £500,000,000. This is supposed to be 

 nearly equivalent to the entire quantity of gold existing in the world preA iously. 

 There has also been a considerable augmentation in the production of silver. The 

 effect which has thus been produced in cheapening the precious metals, or, in other 

 words, in effecting a general rise in prices, has been greatly assisted by an extended 

 use of credit, partly owing to greater facilities in banking. When the gold dis- 

 covei'ies in Australia and California first became known, many predicted that there 

 would be a great and almost immediate depreciation in the value of this metal. 

 This prediction was not fulfilled. The gold discoveries occurred just at the time 

 when tliere was a great development of trade, partlj- prqduced by the introduction 

 of free trade, by the extended application of steam to indu.stry, and by the develop- 

 ment of the railway system. The additional supplies of gold were consequently for 

 some time absorbed without any decline in its value. It can now, however, be 

 scarcely doubted by any attentive observer that a considerable depreciation has 

 taken place, and that this is indicated by a marked rise in prices, which is erro- 

 neously supposed to be due, not to this cause, but to a general activity in trade. 

 The rise in prices which has taken place since 1850 is estinitated by eminent 

 authorities as not less than 40 or 50 per cent. This circumstance partly accounts 

 for the fact that the augmentation which has taken place in the production of 

 wealth has not produced a greater and more perceptible influence upon the general 

 well-being of the country'. If, for instance, we discover that during the past year 

 10 per cent, more wealth, estimated in money, was produced than in the previous 

 year, and if during the same period there has been, owing to a depreciation in the 

 value of the precious metals, a rise in prices of 5 per cent., it is at once obvious 

 that one lialf of this supposed increase of wealth is not real, but simply nominal, 

 because all connnodities have advanced 5 per cent. It is not, of course, intended 

 to be implied that there has not been a large and real increase in the production of 

 wealth. It is, however, important not to omit the deduction to which allusion 

 has just been made. lint the reason which induced liini to refer to the present 

 general rise in prices was threefold. In the first place, he wished to point out the 

 hardship and suil'ering which it will, at any rate for a time, cause to certain sections 

 of tlie community ; secondly, to show what precautions should be taken in order, 

 as far as possible, to mitigate the influence of a similar cause in future ; and, 

 thirdly, to draw the practical conclusion that at the present time certain classes 

 who are most unfavourably affected by the peculiar economic circumstances of the 

 country are the very people upon whom the burden, both of imperial and local 

 taxation, falls with peculiar severity and inequality. But it may probablj' be said, 

 is not the present advance in prices temporary ? Is there any possibility that it 

 can continue and increase ? In answer to such inquiries, it would be presumptuous 

 to give a positive, dogmatic answer. There is probably no subject on which it is 

 more hazardous to prophecj' than on the future yield of the precious metals. Some 

 people may argue that the yield of gold from Austraha and California cannot be 

 maintained. On the other hand, it may be urged with equal plausibility that the 

 j'ield of gold may be greatly increased as labour in tliese countries becomes more 

 plentiful, and as improved methods of mining are introduced. Without, however, 

 attempting to decide between these two opposite opinions, we will adopt a middle 

 course, and assume that about the present yield will be maintained. If this should 

 be the case, it cannot be do.ubted that there will be a steady depreciation in the 



