What will be the effects produced by this expansion of gold on those
countries where the discoveries and working have occurred, and on the
great centres of wealth and industry, where competition is in active
operation, and where the gold may, when in the shape of coin, fix a new
value on commodities? First, as regards the gold-producing countries
themselves. It is clear that the attraction to the “diggings” must
retard, if not put a temporary stop, to really productive labour, that
of the cultivation of the land: but this demoralizing influence may
not be of long duration. The “placers” will become exhausted, the gold
of alluvial deposit, that which the rains and other causes have spread
over the surface of the soil, has hitherto been the chief feeder of
the supply. The thousands of miners working at the various sources,
and turning over and over again every part of the surface, will soon
have picked out every particle of the metal. The remainder of the gold
must then be sought for in the quartz; whence it can be obtained only
by the aid of scientific processes, and effectually extracted only
by the application of capital: which is hardly likely to be supplied
to an adequate extent, excepting by companies, in the same way as
has been the case in the working of silver mines. Then individual
enterprize will be again directed to the cultivation of the soil. Out
of the crowds of emigrants in Australia and California, now attracted
to the “diggings,” the number required for agricultural purposes will
no longer be deficient. Amongst the adventurers who are expatriating
themselves to seek fortunes in new countries, there will be numbers
of poor families who will consider themselves adequately repaid by
being able to obtain in a distant land, a fair remuneration for their
services, and the ownership of land, with the means of a comfortable
livelihood.
The Spaniards, in the early days of conquest in South America, began
by abandoning all other pursuits than the search of gold and silver;
they ended however, by building cities, forming harbours, constructing
churches, planting the land, and rearing flocks. After the soldiers
came the miners, after the miners came the colonists: swords were
turned into plough-shares. That which occurred in the 17th century
will recur in the 19th. Australia, California, and the colder regions
of the Altai, will be covered with people. It may readily be believed
that Providence, in the accumulation of treasures like loadstones in
the hearts of the mountains and in the depths of the valleys, has
contemplated the attraction of a superabundant population, and of the
genius of colonization throughout the civilized world.
Thus much for the producing country itself. Let us now consider the
effect of this superabundance of gold on the importing countries. The
first and most important question is, whether the relative proportions
in value between gold and silver is likely to be materially disturbed.
We have been considering the present production of gold, let us now see
how the case stands as regards silver.
Mons. de Humboldt estimates the amount of silver annually produced
at the commencement of this century at 870,000 kilogrammes (about
[139]193,000,000 francs). In 1847, M. Michel Chevalier, considered the
annual production to be 775,000 kilogrammes, (about [140]172,000,000
francs), but there is reason to suppose that this writer
under-estimated the returns of the Mexican mines, which he placed at
[141]18,500,000 piastres, and in a later work, the same authority
states the production at [142]900,000 kilogrammes. The English paper,
_The Economist_, estimated the return of 1850 at [143]191,772,000
francs; the actual production, however, appears to have been much
larger. It cannot be placed at a lower figure than 1,000,000 of
kilogrammes for 1851, or at about [144]230,000,000 francs. The
following is the table of details:
Mexico 133,000,000 francs = £5,320,000
Chili 22,000,000 ” 880,000
Peru 25,000,000 ” 1,000,000
Bolivia and New Granada 12,000,000 ” 480,000
Russia and Norway 5,000,000 ” 200,000
Saxony, Bohemia,
Hungary, &c., 12,000,000 ” 480,000
Spain 16,000,000 ” 640,000
The rest of Europe 5,000,000 ” 200,000
----------- ----------
Total 230,000,000 ” £9,200,000
=========== ==========
We do not think we shall be exaggerating in supposing that the
production will have reached [145]250,000,000 francs in 1852, and that
it will consequently have exceeded [146]1,100,000 kilogrammes. At this
rate the accumulated value of the precious metals produced in 1852 will
have reached the figure of [147]850,000,000 fr., of which silver will
represent the proportion of about 30 per cent; the weight of gold will
then be in the proportion of 1 to 6³⁄₁₀ to silver.
In estimating a gradual increase in the production of silver, we
have some data for our supposition. In 1843, there was scarcely
[148]16,000,000 piastres from Mexico; in 1849, the silver coined
at the Mexican Mint amounted to [149]20,000,000 dollars, without
reckoning that portion which escaped duty, and which probably amounted
to [150]3,000,000 or 4,000,000 more; [151]we are certainly quite
within the mark, it is even more probable that the production this
year may again reach the sum of [152]27,000,000 dollars, to which
it had attained in 1805, under the Spanish Government. In Chili the
progress has been still more rapid, the mines which in 1841 produced
[153]821,000 piastres, and in 1845, [154]1,534,000, having in 1849
given [155]3,343,000, and in 1850 [156]4,070,000 piastres.
One cause of a purely local nature has contributed to this result.
It is known that the process of amalgamation is almost the only one
employed by the miners in extracting the ores of Chili, Peru, and
Mexico. To obtain 1 cwt. of silver it is necessary to employ 1½
cwt. of quicksilver; it is evident, therefore, that the price of
quicksilver must have a great influence on the cost of extraction.
When it has become too dear, the working has been confined to the
richest mines; when it has fallen the increase in the working of the
poorer ores has soon followed. Before the war of independence, the
Crown of Spain, preserving the monopoly of the sale of quicksilver,
gave it out at all their depots in Mexico at [157]35 to 40 piastres the
cwt.; thence arose the immense increase in the workings of the silver
mines, notwithstanding the coarseness of the ores. Since the Spanish
Government, however, has, pressed by the miserable position of its
finances, farmed out the produce of the Almaden mines, the lessees who
had agreed to pay a very heavy rent, and who had no competition to fear
for a long period of time, raised the price of the quicksilver beyond
all bounds. A few years since the price at Guanaxuato rose to [158]150
piastres the cwt. In 1850 the agent of Messrs. Rothschild fixed the
price at [159]103 piastres in Vera Cruz, and at [160]105 at the depot
in Mexico. At the same date the price was [161]120 at Mazatlan. The
cost price of the quicksilver at Almaden is [162]18 dollars the cwt.,
and it is sold at the rate of [163]45 dollars for extraction of the
ores in Spain.
The high price will cease with the monopoly. Spain has no longer the
exclusive privilege of furnishing quicksilver for the mines in the New
World. California possesses mines of cinnabar in abundance, and they
are now in full work. Those of New-Almaden, situated at some leagues
from San Francisco, are now producing [164]400 kilogrammes a day. At
300 day’s work this could give a provision of [165]120,000 kilogrammes,
sufficient to work at least [166]80,000 kilogrammes of silver. At
the mine itself this quicksilver is worth [167]25 piastres the cwt.;
brought to Fresnillo, near the rich veins of Sombrerete, and on the
backs of mules from the port of Mazatlan, it has been sold at [168]93
piastres in 1850. The proprietors of New-Almaden undertake to reduce
the price whenever the price of Spanish quicksilver shall be lowered.
They have sent some of it to Chili, where silver-mine working has
taken a fresh start. They can sell it advantageously in Peru, for the
quicksilver of Huancavelica cost at Pasco in August, 1850, [169]104
piastres the cwt. The mine of New Almaden is not the only one being
worked in California; cinnabar is met with in several directions, and
hereafter it is probable that California may be looked to as a country
producing quicksilver as well as gold.
The news of the discovery of quicksilver mines in Mexico, in the
neighbourhood of San Luis de Potosi, was confirmed by accounts received
in London in March last. Are they old mines formerly abandoned on
account of their poverty, or have they really discovered an ore which,
as at New Almaden, yields a produce of 50 per cent. of quicksilver?
This is a point yet to be cleared up. In the meantime the price of
silver has fallen in the district of Guanaxuato to [170]40 piastres
the hundred weight, and it is now varying between a price of [171]55
and 56 piastres. In short, one of the conditions connected with silver
mining has materially changed. An economy of [172]60 or 70 piastres per
hundred weight in the cost of amalgamation can hardly fail to kindle a
fresh spirit of enterprize.
Another cause will necessarily act on the production of silver, and
that is the very abundance of gold. When silver is found to be more in
demand, fresh activity will ensue, both in reopening old galleries,
which have been closed as not sufficiently remunerative, and in pushing
on the work in those actually in operation. If the mines, feeding the
present supply, are becoming exhausted, and other sources are not
forthcoming, in a few years silver will reach the price of gold, or
the value of gold will descend to that of silver; but as the limits of
silver working are but the price of labour, the power of machinery, and
the application of science, so, every increase in the quantity of gold
which is not caused by accidental circumstances, or by an extraordinary
demand, must produce a corresponding increase in the production of
silver. Is not this a fact which we have been witnessing since 1850?
Who can venture to affirm that Californian gold has had no influence in
stimulating the workings of silver in Mexico and Chili? Besides this,
the extraction of gold is generally accompanied with a production of
silver. Silver mines are not always auriferous, and the richest in gold
contain but a small quantity of it, but gold mines are almost always
argentiferous. The proportion of silver in a “nugget” of gold is about
⅛th in California, ¹⁄₁₀th in Siberia, and ⅕th in New South Wales. So
that for every [173]four kilogrammes of gold in Australia, there is
about one of silver. This is an important fact resulting from chemical
analysis.
The production of silver is in the course of increase. Will that of
gold be kept up? It is reasonable to entertain considerable doubt
on this point. In Siberia we have seen it retrograde since 1847.
The extraction appears stationary--perhaps rather on the decrease in
California. Australia alone, with gold fields yet unexplored, appears
likely to produce much more than heretofore. Auriferous strata may be
discovered elsewhere, and add to the general stock. Combining these
various circumstances, we incline to the opinion that the quantities
now forming the annual production of gold will not be diminished for
a certain number of years; but when the miners have exhausted the
gatherings from the alluvial deposits, and it becomes necessary to seek
the golden ore in the rocks and mountains, in which nature appears
during the various revolutions and convulsions of the world, to have
deposited it; then the working of the mines will depend upon the amount
of capital and the degree of science, which may hereafter be brought to
bear on that description of enterprize.
In a paper read in 1848, before the Royal Institution of London, Sir
Roderick Murchison remarks that the principal deposits of gold are
found in auriferous “detritus,” and that the same degree of success
must not be expected to ensue from exploring the veins, which are
ramified through the quartz rock. The result hitherto shown in
California fully confirms this theory, as is shown in the following
letter from an engineer at St. Francisco, dated 4th April last, after
an expedition amongst the localities occupied by the gold diggers:--
“I send you the result of experiments made upon fragments of rock. In
each we have operated upon three tons of quartz, reduced to powder, and
carefully worked by amalgamation. We have made five experiments upon
as many veins in the county of Bath, which is situated between l’Yuba
and the River de la Plume. No. 1 has produced [174]3 dollars 53 cents
per ton; No. 2, [175]9 dollars 50 cents; Nos. 3 and 4, [176]11 dollars
each; and No. 5, [177]17 dollars.
“In the county of Nevada, experiments have been made on four different
points. The first has given [178]15 dollars per ton; the second,
scarcely any gold; the third, [179]14 dollars per ton--this mine, upon
which a company had established works, has been abandoned;--and the
fourth has given [180]59 dollars, the vein being of an extraordinary
richness, and having yielded large returns to the proprietors.
“In the county of Eldorado, three different veins did not give a larger
return than [181]17 dollars per ton; a fourth equalled the richness of
No. 4, in the adjoining county.
“In the county of Mariposa, out of eight experiments, three veins
gave hardly [182]3 to 7 dollars per ton; three more gave [183]7 to 20
dollars; one gave [184]24 dollars; and one more, [185]38. The two last
veins have attracted miners, who are going to work them. No enterprize
requires a more careful and a more expensive examination than an
auriferous quartz mine. A good vein, yielding [186]36 dollars per ton,
may be considered, by moderate people, as worth working; sometimes they
are found much richer; but out of all the quartz-crushing mills which
have been set up in California, I do not think that one-third are used
for mines which are yielding, for any continued period, [187]30 dollars
the ton; so that one-half of the works of this nature are suspended.”
From the above account, it would appear that a vein of quartz, to be
considered productive, should give 36 dollars, or [188]192 francs
per ton. This return represents a weight of 55 grammes upon 1000
kilogrammes, or 5½ parts of gold out of 100,000 parts of quartz.
Mineral of iron stone will give 10 to 15 of metal per 100; and the
production by melting is infinitely less troublesome or expensive than
the extraction of gold. In Australia, it was at first supposed, after
an analysis of some ounces of quartz, taken from Mount Ophir, that
the ton would yield more than £1100 sterling; but these experiments,
made on so small a scale, are of little value. It is not likely that
Australia, when the miners find themselves reduced to the necessity of
working the quartz rocks, will show any considerable increase of yield
over California.
The extraordinary abundance of gold, then, does not appear to be of
permanent duration. It is a sudden outbreak which we, accordingly,
have to meet. It does not appear to be, as far as we can now form
any opinion, a reign of one metal, which is likely to take the place
of some other; nevertheless, there will most infallibly be a very
marked fall of gold in comparison with silver, unless met by a most
extraordinary activity in working the silver mines; other causes,
however, although secondary in themselves, appear, concurrently, likely
to neutralize part of the effect of this superabundance.
It is of little importance to ascertain the amount of the annual
production of the precious metals, unless we investigate the
proportions in which they are distributed between the two hemispheres.
Silver gives rise to a regular trade, and, coming from sources
long open, it is sent almost exclusively to Europe, as an article
of exchange, against the produce of her soil, or of her industry.
Gold in California, on the contrary, a source of unexpected wealth,
starting up in a new country, is first absorbed by the wants of a local
circulation. A new society, formed in the midst of a desert country,
necessarily requires some medium of exchange: some money. Next to
the immediate necessities of California come the wants of the United
States. These States have, for some years past, been endeavouring to
introduce a greater amount of the precious metals into their monetary
circulation. The gold of California has powerfully contributed to
effect this object. Silver coin now circulates, but in small amounts,
throughout the Union. They have coined gold pieces of 20, 10, 5, and
even of one dollar. Out of [189]400,000,000 to 500,000,000 francs,
brought in during the three first years, not more than [190]70,000,000
or 75,000,000 have found their way to Europe. The import of 1851 has
been more sensibly felt. According to the returns of the American
newspapers, the quantity of gold shipped to Europe from New York and
New Orleans, was, during last year, [191]200,000,000 francs.
The like result is obtained from other channels of information. The
Mint of London, which ordinarily coins gold at the rate of about
£2,000,000 sterling per annum; and which, in 1850, had not coined
more than £1,492,000 sterling; in 1851, increased their operations
to the extent of a coinage of £4,200,000 sterling (above 105,000,000
of francs). The moiety of this gold must have come from California.
In the same year, the mint of Paris coined in gold [192]269,709,570
francs, of which about half was supplied by the conversion of
100,000,000 of Dutch Guillaumes into French money. In the accounts of
the German Mints, we find about [193]200,000,000 of Californian gold.
If we are to judge from the operations of our own mint, the import
of 1852 will be smaller than that of 1851; for we have coined but
14,000,000 pieces in gold during the first three months of this year.
Australia sends regularly large amounts of her gold to England; but
a part of the export of gold dust, or “nuggets,” is returned in gold
coin. Many vessels have lately cleared from London with £200,000
sterling; and this at a time when England had barely received £800,000
sterling, from Sydney and Melbourne. Considerable amounts will likewise
be imported in plate and jewellery. The more wealth increases in
the colony, the more gold will be employed both for circulation and
for luxuries. The producing country will be most certainly, _par
excellence_, the country of consumption. Europe contains 200,000,000
inhabitants, of whom not one-half are adequately supplied with metallic
money. It would require, certainly, an addition of many milliards of
francs to the quantity of the present metallic circulation, to put many
of these countries in an equally favourable position in this respect
with France, Belgium, Switzerland, Holland, and Great Britain. We
know, that only nations of industrious habits are in want of a larger
supply of gold and silver because they alone carry on trade to any
extent. Abundance of production precedes and gives rise to a demand
for money. Wealth must exist in a country before the sign of that
wealth is required; but, at the same time, it cannot be denied that
the circulation of the precious metals stimulates, to a great degree,
the creation of richness; it acts like roads, canals, or other modes
of transport, which, by opening the means of reaching markets, extend
the radius of operations, and give additional value to commodities. One
half of Europe has a trade of inconsiderable importance, and derives
but a small part of the benefit of the produce of its own soil. It has
neither industry nor credit. In many countries now, gold and silver are
replaced by the use of paper-money, often discredited in its own, and
in all cases valueless out of its own country.
Austria has just made, partly in London, and partly in Frankfort, a
loan of £3,500,000, intended principally to restore the credit of her
paper money. This will be the first step towards the restoration
of metallic money, which had disappeared to such an extent, that
the smaller notes were often divided into four, to use for change.
Prussia, Poland, Russia, and Turkey, have experienced, in different
degrees, the like embarrassment. Before these various markets are
all superabundantly supplied with gold and silver, the treasures of
Siberia, Australia, and the two Americas, may be diffused for many
years over the continent of Europe.
The scarcity of gold had restricted its use; in France, for example,
the smallest gold coin was [194]20 francs. Since it has become more
common, the Mint have coined pieces of [195]10 francs, which are much
liked, and are convenient for use. These smaller coins appear likely
to take the place of a portion of our silver, which is needlessly
cumbersome. It is supposed that the use of Bank-notes of [196]200 and
100 francs has economised the use of several hundreds of millions of
the precious metals. The 10-franc pieces, when more generally used in
circulation, will take the place of, and drive out a portion of silver
coin. The demand for silver then will diminish, whilst that for gold
is increasing. Silver will be used as change for gold--as gold is for
bank-notes. This is the case to such an extent in England, where the
silver circulation is small, that the Mint in London, which coined
£1,492,000 sterling in gold, in 1850, only coined £130,000 sterling
in silver in the same year, whilst, in the same year, [197]86,000,000
francs in silver were coined at the Mint in Paris. It must not be
forgotten that the use of the precious metals is not confined to the
limits of Christian civilization. The Chinese import Peruvian and
Mexican dollars in exchange for their silks and teas; they attract
by their trade the gold produced in the neighbouring Islands, and in
the Straits of Sunda. This industrious nation has sent its contingent
of labourers and traders both to California and Australia. A portion
of Californian gold has already gone to China, but Australia appears
better situated for the purpose of supplying the eastern regions and
the southern portions of Asia with the precious metals. The Australian
gold, however, sent there will be as so much lost treasure; for whilst
the precious metals which are thrown into circulation in Europe
continue in use as coin for a long time, that which is sent to China,
or India, or Africa, altogether disappears; it is not required for
circulation, but seems to be consumed.
Nothing appears more likely to restore the confidence of those who
have taken alarm at the abundance of gold than the consideration of
the almost unlimited extent of its market. What people, civilized
or uncivilized, agricultural or manufacturing, do not enter into
competition for a supply! What are the millions of francs extracted
from the Cordilleras when compared with the capital created by the
labour of the inhabitants of the whole globe?
The combined washings of the Altai, California, and Australia, during
a quarter of a century, would be required to produce a sum equal
to the annual revenue of England alone. This unexpected harvest of
the precious metals is but an addition to a common fund of wealth;
it cannot produce a deep or a durable impression on the almost
incalculable mass of wealth already existing in the world.
After all, Europe herself does not preserve gold and silver as
relics. Money is used by wear and tear to such an extent that it must
from time to time be recoined, and the consequent loss falls on the
community at large. The use of silver and gold plate, of gold work and
jewellery, is increasing every day, as a distinguishing mark of the
rise of the middle classes; the manufacturers of France, England, and
Switzerland are at work for all the world. English statisticians have
estimated the loss, from use, disasters at sea, and export without
return of the precious metals, in the United States and Europe, at
more than [198]125,000,000 francs a-year. A more moderate estimate
reduces this sum to [199]75,000,000 francs. As to articles of luxury,
the sums of gold and silver employed therein annually, have been
estimated by Mr. Jacob, at [200]148,000,000 francs, without including
the consumption of the United States of America. Mr. M’Culloch, who
embraces the United States in his calculations, puts the amount at
[201]150,000,000. France, herself employing upwards of [202]30,000,000
francs, it may be admitted, without fear of exaggeration, that the
sum of [203]125,000,000 of gold is used for domestic purposes. Here,
then, we have an annual consumption of [204]200,000,000 francs; the
proportion borne by gold in this absorption of the precious metals
is every day becoming more important. What remains, at the present
time, of the enormous masses of the precious metals which Mexico and
Peru have poured forth during the last three centuries? The amount
of gold and silver now in the form of circulation would scarcely
equal the produce of the mines during the last fifty years. The 30
milliards which America sent to Europe, from the Spanish Conquest to
the beginning of the 19th century, has almost entirely disappeared. It
would appear as if industry, in its contact with gold and silver, must
have volatilized it. France converted into coin a large amount of the
precious metals; but when coined, it did not remain there. Exportation
appears constantly to produce the effect of banishing it from the
country. Thus, in twelve years, from 1840 to 1852, we have imported
[205]123,012 kilogrammes of gold, and we have exported [206]71,217
kilogrammes; the difference in favour of the import being [207]51,795
kilogrammes, equal to [208]181,138,000 francs, showing an average of
[209]15,000,000 francs per annum. Jewellery, goldsmith’s work and
gilding, employ, annually, in France, quantities of gold exceeding
that sum in amount. The excess, then, is taken from the coinage, which
accounts for the ordinary premium on gold in our market. The average
would be considerably reduced if we except the year 1851, during
which the import has exceeded the export by [210]34,503 kilogrammes;
but the results of 1851 may be considered as exceptional. Already,
the greater part has disappeared; gold finds its way from France to
London. The Bank of France, whose metallic reserve in 1851 included
an amount of [211]100,000,000 francs of gold, now does not hold above
[212]15,000,000 to 20,000,000. French gold coin, common enough in
Paris, is scarcely seen in the provinces.
From 1840 to 1852, French commerce imported [213]10,175,312 kilogrammes
of silver, and exported [214]3,688,279 kilogrammes. The excess of
import, [215]6,487,033 kilogrammes, represents a sum of 1,303,893,633
francs, or 108,657,802 francs a year. Admitting that [216]15,000,000
are annually absorbed in the demands for articles of luxury, and
[217]10,000,000 or 12,000,000 for wear, our monetary reserve of silver
would have increased at least [218]1,100,000,000 since 1840. This
leaves a large margin in the circulation of France for the displacement
of silver by gold coin. When the import of gold shall have exceeded
the export by an amount equal annually to [219]200,000,000 francs,
with this accumulated reserve of [220]1,100,000,000 and with an annual
excess of [221]80,000,000 to 90,000,000 francs over the import and
consumption of silver, it will require at least ten years to restore
the equilibrium between the two metals, to the state in which it was in
1840.
No subject has given rise to more rash and speculative opinions
than that connected with the trade in gold and silver. Amidst the
great variety of conflicting phenomena, statistics appear almost
valueless; but so long as gold continues to bear a premium, in spite
of the apparent superabundance, and notwithstanding its partial
demonetization, it may well be considered doubtful whether the relative
proportions, established by law between gold and silver in so many
countries, will be materially affected for at least some years to come.
Various remedies have been proposed by alarmists, to prevent the evils
of the influx of Californian and other gold. Some have desired that
government should limit the quantity of gold to be annually coined.
This expedient, in the event of a depreciation in value, would be of
little avail, for the quantity imported and kept in the shape of bars,
would equally augment the general stock, and weigh down the price.
Others have thought of altering the legal value, but this plan would
be useless as long as gold remained at a premium. If gold became
depreciated it would be injurious only until the fall was ascertained,
and considered durable; this once determined, things would go on as
before.
Then comes the question as to the demonetization of gold; doubtless no
point is of greater importance for a standard of circulation than a
fixed value. It is a fact that in all those countries where a double
standard of gold and silver is established, one or other has always
obtained the ascendancy, and maintained a premium, and has ceased to
appear in the shape of money; logically, it would appear quite enough
to regulate all prices by the value of one metal, without exposing
trade to the uncertainty of an alteration in value of two. In the
adoption of one only, however, it is desirable to examine which of
the two has, over any given period of time, been subject to the least
variation. Before the discovery of California, silver would certainly
have had little chance of being selected. Even now it appears to me
that the question has not so materially changed as might at first sight
be supposed.
It should be remembered also, that it is not so easy for all countries
who may have adopted the double standard to exclude one from their
monetary code. The example of Holland has proved that gold, having
lost its character as legal money, will no longer be used as a token.
To demonetize gold is to exclude it from the market. For a great
commercial country like Holland, living in the greatest freedom, and
carrying on its trade by exchanging and carrying the products of all
the countries in the world, to exclude one of its habitual means
of exchange, may not be attended with great risks. England, though
little disposed to imitate Holland at present, might perhaps do so
with less danger, from having the commerce of the whole world in its
hands. France, unless under pressing necessity, could not demonetize
her gold without exposing herself to a complete disturbance in all
her relations, both at home and abroad. Our trade is tied up by
a completely protective system, without alluding to those direct
prohibitions which disgrace our customs’ tariffs; almost all the duties
which affect articles of primary consumption are, in short, disguised
prohibitions. In exchange for the products of our own country, which
we have to sell to the foreigner, we can hardly purchase in return
anything but raw materials. Thus, bar and pig-iron, those articles of
primary importance, have been subjected to duties at the rate of 100
per cent. on their value. In those countries enjoying a legislation
attentive to the wants of trade, and where the custom-houses are only
for the objects of revenue, the imports and the exports will show an
even balance. In our country, where we have been desirous of opposing
a barrier to the free course of exchange, goods exported have always a
preponderance in value over those imported. In 1850, for example, the
imports represented a value of [222]790,000,000 francs, and the exports
[223]1,068,000,000 francs, showing a difference of [224]278,000,000.
England and the United States, together, receive of our products an
excess of [225]236,000,000 above the exports we receive from them;
and as those countries with which we trade cannot pay us in goods,
they must make their return in gold and silver. This was the reason
of the import of [226]220,000,000 francs in coin in 1850, as shown
in our official returns. So long as the system of protection is the
ruling policy of France, so long will it be impossible to deprive gold
of its value as money; to attempt it would be to withdraw from trade
one of its most useful means of exchange. It would check, if not stop,
all intercourse with those countries who can only pay in gold, or who
can only sell us those commodities which we endeavour to exclude by
our tariffs. Gold flows naturally only to those countries where it is
marketable; and it is only so where it is in use as coin as well as in
commerce. A profit of half per thousand is sufficient in the present
day to turn the current of the precious metals. This circumstance ought
not to be lost sight of in the consideration of monetary legislation.
In fact, the change in the relative value of gold and silver, which
was so strongly anticipated, appears anything but imminent; if any
great change is now taking place, it appears rather to be that of a
simultaneous depreciation in the value of both metals. Deep thinking
persons are not content with expressing their fears; they are already
providing themselves with the means of averting the evils which they
anticipate. This is one of the causes which have raised the value
of railroad stocks, and of landed property; and this explains the
comparative abandonment, not of speculation, but of capital ordinarily
seeking investment in government stocks. Alarm is felt at placing money
on security, of which both the capital and the interest may remain
at a fixed value; these may be the more sensibly affected, if the
value of the precious metals is altered; whereas the shareholder of a
railroad would have a chance of having his income increased; and the
landed proprietors that of having their capital augmented in the same
proportion in which the value of money would be depreciated.
In dwelling on these facts, I have no idea of setting myself up as a
prophet. I would confine myself to the wish to indicate some of the
symptoms of the present position of these matters; the danger, if any
exists, is certainly not very near at hand. We have already seen the
use of bank notes in France increased to an extent which, owing to the
stability of their value, has largely taken the place of specie. It
is but reasonable to suppose, that the present abundance of gold and
silver will make no greater disturbance within a short time, than has
the great increase of paper money.
The influx of the precious metals has been, in a certain sense, a
providential occurrence during the revolutionary state of Europe.
Credit had either disappeared, or had at least become stagnant.
Everywhere, amidst the tempest of the times, both past and
prospective, business had been suspended, or carried on only for
ready money. Affairs had assumed an aspect of a primitive state of
exchange. An increase of metallic circulation might again restore
confidence, and calm agitation. The average excess of money imported
over that exported, which, before 1848, was not above [227]80,000,000
to 100,000,000 francs, amounted in 1848 and 1849 to nearly
[228]300,000,000 francs for each year. Specie in these times supplied
the wants of trade, and maintained prices; but, in more easy times,
when used not alone, but concurrently with paper money and bills of
exchange, for the purposes of circulation, gold and silver would
naturally be in use in proportion to the movements of trade. The reason
why [229]600,000,000 of francs in coin now encumbers the vaults of
the Bank of France, is, because capital is only employed in the stock
markets, and that the restoration of trade on a large scale is still
confined to a sort of anticipation; but let the industry of the country
experience a complete restoration of confidence in the future, and we
shall soon see the metallic reserve of the bank diminish; and, as a
natural consequence, our market will attract an import of the precious
metals from abroad. In short, gold and silver will then be wanted; the
state of trade will improve, and we shall have to seek for an increased
supply.
Let us not then either despair or be too confident; the world is not
entering on an Eldorado, nor is it on the eve of a state of ruin.
Those who consider gold and silver as positive wealth, who confound an
abundant supply of the precious metals with an abundance of capital,
and who affirm that the gold imported from California must lower
the rate of interest, should remember that the rate of interest is
determined by the state of confidence, as well as by the general rule
of the supply and demand for loanable capital, and that confidence
depends upon the good order existing throughout the civilized world.
California itself shows the delusion of such an idea--for there, where
gold is strewing the land, interest has risen as high as from eight to
ten per cent. per month. Those on the contrary, who, at the idea of the
galleons seeking freights in the western continent, dream only of ruin
and catastrophes--who anticipate that the day will arrive that the Bank
of France will pay persons to take away her gold--should not forget
that she sells it now without difficulty even at a small premium, and
that this increased trade in gold has not hitherto ruined anybody.
PARIS, _August, 1852_.