INFLUENCE OF BECENT GOLD DISCOVERIES ON PRICES. 437 



for some time, higher than those of skilled labourers. This pro- 

 bably arose from the fact that at the diggings all labourers, skilled and 

 unskilled, were put nearly upon an equal footing. The mechanic or 

 tradesman could not use the pick, the cradle, or rinsing box, better, 

 probably not as well, as the hardy labourer accustomed to toil in the 

 fields. The natural consequence would be that the gold digging 

 would prove especially attractive to the unskilled labourer, and con- 

 sequently that very little labour of that kind would be left disposable 

 in the Colony for other necessary purposes. Hence the extraordinary 

 rise in the money wages of common labourers as distinguished from 

 artisans or mechanics. 



We have thus shewn that the immediate effect of the gold dis- 

 coveries in Australia, (and the same is true of California,^ was a 

 fall in the value of gold in the Colony, as compared with labour and 

 provisions, a fall in value proportioned to and measured by the re- 

 duction of its cost of production. 



When we pass from the gold raising to the gold importing countries 

 and attempt to trace the operation of those discoveries in the latter, 

 the results are not, perhaps, quite so obvious. 



The reduction in the cost of production of gold in Australia and 

 California does not immediately and necessarily affect the value of 

 labour and its products in other countries, because the labour of 

 those countries cannot be at once applied to the production of gold 

 on the same terms as the labour in the neighbourhood of the mines. 

 Ultimately, indeed, the value of gold everywhere must be regulated 

 by its cost of production in Australia and California, assuming 

 always, that the latter countries can continue to supply an unlimited 

 quantity of the metal at a lower rate than the mines previously in 

 use. 



Those foreign countries, whose commercial relations with the 

 new gold raising countries are the most intimate and extensive, will 

 be the first to feel the effects of the increase of the precious metals. 



The immediate and direct effects of the discoveries in those 

 countries, will, it seems to me, be — 



To diminish the supply, and consequently raise the value of 

 labour (and therefore of all its products), by withdrawing from those 

 countries to the gold fields a large portion of its available stock of 

 productive labour. 



To increase the demand for and consequently "protanto" raise 

 the prices of all commodities exported thence to the gold regions. 



To lower the value of the precious metals by suddenly increas- 



