206 report — 1859. 



1st. The quantity of the substance which has generally been adopted as the 

 medium of exchange has been augmented. 



2ndly. The new gold has influenced the wealth and the social condition of the 

 countries in which it has been discovered. 



3rdly. Great Britain has been affected by this change in the condition of one 

 of her colonies. 



When it was found in 1851 that Australia and California would annually supply 

 nearly £30,000,000 of gold, or, in other words, at least four times as much as all the 

 gold mines in the world had yielded before, it was supposed that gold would rapidly 

 decline in value to the extent of at least 25 per cent. The best authorities now agree 

 that this decline has not as yet occurred. I will in the first place state the reasons 

 which justify this supposition, and then explain in what manner the increased gold 

 has been absorbed and its value been maintained. An inductive proof of a change 

 in the value of gold requires data which cannot be obtained ; for a comparison of 

 general prices during the last ten years will afford no proof. Thus wheat is cheaper 

 now than then. The value of gold, compared with wheat, has risen ; but how 

 erroneous would it be thence to conclude that its general value had risen ! Wheat 

 has declined in price because it can be imported cheaply from other countries. On 

 the other hand, the price of meat and dairy produce has of late much increased. 

 This rise in price we know is partly due to the increasing wants of an advancing 

 population, and especially to the increased consumption of a more numerous and 

 better paid labouring class ; but still we cannot say that the rise in the price of such 

 produce has not been augmented by a fall in the general value of gold. Manifestly 

 such comparisons avail nothing. The price of silver will afford the most important 

 evidence. Silver and gold have been adopted as the general media of exchange, 

 because they are liable to little change in their value. The value of these metals, 

 like agricultural produce, is determined by the cost of obtaining them under the 

 most unfavourable circumstances. Therefore their value is not altered, unless the 

 current rate of profit in a country falls, and renders it profitable to work worse mines 

 than those already worked ; or, on the other hand, rises, and renders it no longer 



Srofitable to work these worse mines. Where commodities are employed in rn- 

 ustrial occupations, the demand is variable; their value depends upon the demand; 

 and this value constantly tends to obtain that position of stable equilibrium, when 

 the supply equals the demand. But the quantity of gold and silver which is used 

 for industrial purposes is very insignificant ; and when a substance is used merely 

 as a medium of exchange, the demand is always exactly equal to the supply, and the 

 aggregate supply determining the value, and the value in a crossway regulating the 

 supply, because the supply must give such a value as will cause the current rate 

 of profit to be obtained in the worst mines. If, therefore, within the last ten years no 

 new silver mines have been discovered, and the worse mines which were then worked 

 are worked now, it affords strong evidence that nothing has occurred to affect the 

 value of silver. As therefore the value of silver has remained stationary, if gold 

 has declined in value 25 per cent., silver estimated in gold woidd have increased 

 25 per cent, in price. But it has not increased more than 2 per cent. This, I 

 believe, affords the strongest evidence which can be obtained that the general value 

 of gold has not yet declined. For some years up to 1840, our exports and imports 

 had steadily increased. About that time the progress seemed to have ceased ; for 

 from 1840 to 1846, our exports remained at the stationary point of about £50,000,000 

 per annum. The fettered energy of the country seemed to have achieved its utmost. 

 Free trade, and the repeal of the navigation laws, unloosed these fetters, and then 

 the country started on a career of the most extraordinary progress. Our exports in 

 nine years advanced from £50,000,000 to £115,000,000. In 1847, 475,000,000 pounds 

 of cotton were imported ; in i856, more than 1000,000,000 pounds. This increased 

 commerce stimulates the accumulation of capital, the wage-fund of the country is 

 augmented, and wages, especially in the manufacturing districts, obtain a very de- 

 cided rise. Free trade also cheapens many of the prime necessaries of life, and much 

 more can therefore be spared for luxuries. No luxury is more prized by the poor than 

 tea, and hence we find that while only 50,000,000 pounds of tea were imported in 

 1850, 86,000,000 pounds were imported in 1856. In Europe, during the last few 

 years, there has been a great failure of the silk crop. China has been resorted to; and 

 thus while only 1,700,000 pounds of silk were imported in 1850, more than 4,000,000 



