INFLUENCE OE EECEST GOLD EISCOTEEIES OX PEICES. 443 



pressure of business was such as to render an increase in the engi- 

 neering staff of the establishment necessary. 



A late ingenious writer* on this subject has, it appears to me, 

 needlessly complicated the question as to the effect of the recent in- 

 crease of gold on prices, by a minute consideration of the processes by 

 which the new gold gets into the currency of a country. That it 

 does so is tolerably plain, nor indeed does there seem to me to be 

 any great mystery as to the processes by which the result is brought 

 about. A recent American writer on this matter truly says that 

 " currency, like water, seeks a level, and the gold of California thus 

 becomes mingled with the metallic currency of the world. If prices 

 rise here, because our gold is falling below its value in Europe, some 

 of it will be taken away to Europe till prices will cease to rise with 

 us." It may, however, be argued that although the gold portion 

 of the currency of a nation or of the world may be shewn to have 

 been considerably increased, yet it by no means follows that the 

 general mass of the currency (bank notes and every other kind of 

 paper money being included in the term) of that nation or of the 

 world at large has been augmented in the same ratio. It is 

 found, however, in practice that the proportion that the metallic 

 part of the currency bears to the paper is in a given country nearly 

 constant ; so that, in truth, any increase of the precious metals brings 

 with it a corresponding increase in the whole mass of the currency 

 of the country. f 



It is asserted, however, by some, that the influx of the precious 

 metals from the recently opened gold fields, whatever effects on prices 

 they may be destined ultimately to produce, could not possibly in 

 so short a time have made any sensible alteration in the general 

 level of prices. This impression, one very commonly received, seems 

 to be the result of an erroneous view of the consequences which 

 flowed from the discovery of the silver mines of Mexico towards the 

 close of the fifteenth century. It is taken for granted that there is 

 a strict analogy between that case and the present, and that the 

 effects then produced may therefore be expected to be repeated now 

 in precisely the same way and at the same time. A brief review, 

 however, of the facts connected with the influx into Europe of the 



* John Lalor. 



t In Ireland wo And that the circulation of Bank notes in 1849 was only C:.sn,i 16, while 

 in 1854 it ha (0. From the August number of '■ Hunt's Merchants' Maga- 



zine," which <-v.nc into my hands white fchi ■ I find that in 1840 th* 



entire currency of the Union was .^ j2i.'..«2^ J ui^, and in 1856 1605,122,393, an increase of more 

 than 100 per cent. .See page 107. 



