INFLUENCE OE RECENT GOLD DISCOVEEIES ON PEICES. 445 



skill, and the employment of complicated mechanical and chemical 

 processes. Gold, on the contrary, requires neither capital nor skill, 

 but is, as it were, the immediate and direct result of manual labour. 

 In the case of silver, its cost of production will be reduced by any 

 improvement in the mechanical or chemical processes employed, or 

 by any cheapening of the materials made use of in its manufacture. 

 In the case of gold, there is no room for the operation of these 

 causes. The cost of production, if lowered at all, must be lowered 

 simply because the unskilled labour employed in the gold diggings 

 (the very term implies the rudeness of the operation) is compara- 

 tively more productive than the labour previously applied to the 

 same object. The reduction must, therefore, be, at least in the 

 country where it is produced, instantaneous, and so it has been in both 

 California and Australia. " We must not, therefore," says Mr. Ster- 

 ling, " rashly conclude that because the increase of silver from the 

 Mexican mines did not materially affect general prices in Europe for 

 more than half a century, the same or anything like the same time 

 must elapse before (the present increase of) gold will create a great 

 permanent and universal elevation of prices in all the markets of the 

 world." 



As this paper has already extended considerably beyond the 

 limits within which I had hoped to compress it, I shall now briefly 

 recapitulate some of the conclusions which appear to me to be 

 plainly deducible from the foregoing facts and arguments. 



That the immediate effect of the gold discoveries in California 

 and Australia was a very great reduction of the cost of production 

 of gold in those countries respectively. 



That the value of gold, as compared with labour and the products of 

 labour in those countries, immediitely fell, and that the fall in its value 

 was due to and measured by the reduction in its cost of production. 



That the surplus gold of California and Australia, being carried by 

 the thousand channels of commerce to other countries, has already 

 produced in the latter a decline in its value proportioned pretty 

 nearly to the extent of their commercial dealings with the new 

 gold producing countries. 



That in the gold importing countries the fall in the value of gold 

 is still going on, and that it is not likely to reach its ultimate limit 

 for some years to come. 



That assuming, as I believe we may safely do,* that the new gold 



• The most recent accounts from Australia and California agree in stating that the supplies 

 of gold in those countries are perfectly inexhaustible. There appears to be, moreover, a 

 great probability that new auriferous regions will ere long be added to the list. 



