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538 THE LE AD E B [Ho. 474, April.23, 18...
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C OMME ROIiV L.
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WHAT DETERMINES THE VALUE OF GOLD? The p...
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Note: This text has been automatically extracted via Optical Character Recognition (OCR) software. The text has not been manually corrected and should not be relied on to be an accurate representation of the item.
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538 The Le Ad E B [Ho. 474, April.23, 18...
538 THE LE AD E B [ Ho . 474 , April . 23 , 185 Q ,
C Omme Roiiv L.
C OMME ROIiV L .
What Determines The Value Of Gold? The P...
WHAT DETERMINES THE VALUE OF GOLD ? The probable fall in the value of gold continues to engage the attention of some of our contemporaries . One of theni assures us that it is bringing on a more portentous revolution than the disputes of the despots . Admitting the fascination of the precious metals , we must not forget that their utility , on which the estimate of their value is founded , consists in being instruments to exchange other commodities . They are useful in a variety of artSjbut chiefly as money . For this purpose they are as indispensable to social life as the distribution , in
small portions for individual use , of the commodities they serve to exchange , or as the mutual services they serve to reward . Unlike a pint-pot or a foot rule , each of which is a definite portion of space , and is , therefore , a perpetual and invariable measure of other things , the precious metals do not derive their measuring power from being a representative of something more fixed and unchangeable than themselves . They possess , indeed , according to the size of the pieces , a very precise and certain amount of gravity . Their weight is invariable in proportion to their dimensions : But their value , an estimate of the
mind formed from a knowledge of their qualities and uses , is in exchange , and is only another name for the quantities of other commodities gj iven for them . The measure of their value is other commodities , and a fall in their value is only a rise in the value of other things . Where there is great scarcity of commodities , as in a besieged town , or in Melbourne , af ter the first nugget was found , the value of gold sinks , or their price rises very much ; where commodities of allkinds are very abundant its value rises or their price falls . To
estimate the value of the precious metals without considering the abundance or scarcity of the commodities to be exchanged all over the world , is to reckon without your " host , or measure an angle without knowing the direction of one of the two lines which determine it . This , however , is done by M . Chevalier , Mr . Gobden , and writers like those in tlie Saturday Review , who put their faith in . these gentlemen , and endorse and circulate opinions formed exclusively from the anticipated effects of the new gold .
Leaving them , let us . remark that the suppl y of the precious metals—however much public writers and gold seekers may be dazzled by unexpected discoveries of new mines—depends , in the long run , on the quantity and skill of the labour directed to procure them . Like coal and iron , they are created xa . limited , though yet unknown quantities ; but the actual supply is determined by the number of miners . If nobody collected gold there would be none in use , and the greater ine number of persons employed in collecting it , the greater is the supply , New deposits having been . unexpectedly found in California and Australia , a great number of persons
terms on which other commodities can be produced and obtained for them . Wo see , at the same time , that the quantity of gold collected is determined by the number of persons engaged in collecting it , and consequently the quantity continually provided for the use of society is in the long run determined by the same laws as regulate and determine the production of all commodities . In proportion as it falls in value and they rise in price , labour will withdraw from producing it , and engage in the more advantageous and more necessary work of producing food and clothing . What occurred in California
and Australia emphatically teaches . , that any increase to the supply of the precious metals stimulates to a great extent the production of other things . It hastened the cultivation of thousands ' Of acres of land in California and Australia . It hastened , too , the production of all the looms ^ of Europe , and by increasing the demand for wine and beer it has increased and improved the cultivation of land in Europe . In order therefore , to form ; any fair estimate of the future value of the precious metals , or the influence of the increased must
quantities lately obtained over prices , we ascertain , as far as we can , what is likely to be the increase of commodities to be exchanged hereaf ter throughout the commercial world . Obviously , this is a very ' difficult ,. not to say impossible task , and therefore those like M . Chevalier , Mr . Cobden , and the Saturday Review , who predict a great fall in the value of gold , and a great rise in the price of . all commodities , including the -wages of labour— . though no such rise has yet taken place—are at least not to be implicitly
trusted . As the fact that no general rise in prices hitherto has resulted from the very-considerable , additions made within the last ten years to the stock of gold is of prime importance in this argument , let us add to the testimony already borne by Mr . T . ooke , Mr . Newmarch , Mr . M'Culloch , the Editor of the Economist ., and other writers , as well as the testimony of facts already laid before our readers , the assertion of the New York Herald . In one of
the most recent issues of this journal which has arrived in Europe , it is said , " Our-imports-during the present season exceed in quantity those ol many previous years ; and it is a favourable symptom that they come in at a valuation , which is generally from 15 to 20 per cent , below the average of the five years preceding 1858 . " There is now in the United States , therefore , as in Europe , a great increase in trade and lower prices . The prophets of a fall in the value of gold have neither facts nor theory in their favour ! 5 and a slight reflection will show that they have not read history
of the . precious metals , i . s exeei'tlingly limited , giving us quite as much reason to . suppose thiit the quantities mow obtained will be insullieient for the purposes of society , and rise in value , as that they will be redundant , and will full , lioth eonclusions arc mere conjectures ; but the iiicts advertotl to entitle us to doubt the correctiu \ -i . s of the prophets and politicians who predict n great fall in the value of gold , and would at once plague society with some new restrictions to meet the evil foreshadowed
increase of wealth and of people , should not have ¦ i nferred-from these circumstances such a ' rapid increase of wealth and people hereaf ter as to make the supply of gold none too large , and guarantee society against the presumed disastrous effects' of a great fall in its value , England lias got rid of the colonial system ; other nations are repudiating ancient restrictions ; society has fairly entered into the path of free trade , and will probably increase more rapidly than ever it increased at any former period . . Within a century , the United States have ° rown from a few insignificant colonies into a great nation
There is no similar growth in all history . A treat southern continent has been discovered ; and there too , a great nation is as rapidly coming into existence as in America . In the meanthne ' the increase of population in Europe , in spite of political . wars ' has been unexampledly rapid . Taking , the process of England as an indication of the-general " progress , though it have not , perhaps , equalled her progress , we learn from the enumeration of her inhabitants in . different centuries , that they have increased in an accelerating ratio . This is a
certain fact . Is ever before did they increase-so .-fast as within the first half of this century ; Jfrom the progress , of . knowledge we . learn both " how to j ) rocurc subsistence more abundantly , and how to avoid diseases and all the causes which shorten life ; and we may securely calculate , therefore , that our . population , and the jippulation of the whole , of Europe and of the world , will increase more rapidly than ever . Ah increase in numbers , which--canonly take place with an increase of wealth , -implies a vast increase in the mass of commodities to be produced , and in the number of exehanires to be made .
Division of labour ., both individual and territorial , is continually extending and making uxelianjres more necessary and more numerous . To ollect them , in spite of all our inventions to economise the use of ' money—which prove the continual want of a , large and increasing quantity—a great increase of the precious metals . will be required .-. Intact , the commodities to be ¦ exchanged seem to the imagination infinity in quantity , while the quantity
by their fertile but incorrect iancios . > _ They insist very much oh a presumed rise m the value of silver in relation to gold . No facts warrant the presumption . A great demand for Silver indeed has arisen in Asia , ami a rise m its yiuue , inconsequence , may'bo 110 indication of a lull m the value of gold in Europe . Ah ( he rule , tlio excess in value of the tea , silk , cotton , & c , imported from China into Australia , the Unite " Statos , and England , over and above the . value 0 the exports from these count rioa 1 . 0 huM ami China , is paid for by silver Kent . from Liu'ope . Between 1843 awl 1851 , the value ol the Kw ej exported from Eimland to Ani » , h » . " <> " K' 3 ' ' . ' J * - - _ . iS * mmm -9 I i . .. ¦¦¦ illilr III * amount
11-with much discrimination . The principal fact on which they rely is the fall in the value of the precious metals and the rise in the price of commodities which ensued in Europe after the discovery of America . In comparing what occurred then with what is , likely to occurnow , it is an important fact that not only were commerce and producti on then very much restricted in Europe by political regulations , but that discovery , and the planting of colonies in that coyntry , gave birth to a new complicated , exclusive , and tolerably complete body of restrictions , known as the colonial system , and as the balance of trade , which notoriously very much hnpoded tho increase of wealth and population in Europe
exceeded 500 , 000 / . Tho grenicHt , cl tiding the Mauritius , putdown in tlioollii-iul ivtuni * , was 46 , 075 ^ in 1843 . In 1 , 8 . 1 1 , however , wliiu the gold diseovcrics had begun to tell on tlw " »»« of Asia mid tho world , England alone ox \» nw through Egypt to tho East ; silver of thy va lue 01 1 , 834 , 78 ' 2 / . From that time ( lie mmutJly l ' ! M ) 1 a . wont on continually inoruiwiug till n iiniiiimi ^ U' » 1857 , to 17 , 601 , 428 / . BeUvuun 1851 and 1 WJ inehiHivo , tho value of tlio H . ilvcr uxpo ri ^ J om England through Jflprypt to the Kiwi wi * 61 . J l 7 < 1 ''" ov 8 , 480 , 080 * . per anAu . n . An ud . lH . o . u . l m 1 « JJ in tlio same period sont from thu ( 01 . 11 m •» J Europe , vid Marseilles , to the same 1 t !«* .-o , ho i < tho quantity of silver actually Hunt i » ' ;» J ljll / , % to Asia , smoq tho discovery of gold U tj ' fornia , has not boon in value iwmy » J ^ loss than tho valuo of all tho gol « j '" WA-jj Europe from California and Auatruhu . * ouu «»
and in tho world . There is no probability that any such oyent should occur now . On tho contrary , the , gold discoveries , in California and Australia , have opened up to a groat extent the trade with Asia , and that densely peopled portion of tho earth'is pouring out its inhabitant !) into tho gold regions and into tho western world . In conjunction with this remarkable extension of commerce every kind of restriction on trade is condemned theoretically ; and , practically , great advances have been everywhere made towards free trade , as indispensable to the welfare of , society . Wo aro surprised that Mr . Cobdon , who conr tvibuted so much to promote it here , and who has seen as its consequence amongst ourselves a vast
rushed immediately to collect it . A very great quantity having been suddenly obtained in those countries , its value there in relation to the food , clothing , & c . minerS j as well as other men , must have fallen very considerably 5 or the price of food , clothing , & c ., rose three , four , or five fold . Many persons , consequently , who flocked to those countries-from'all quarters , found it more advantageous to provide food , clothing , & a , than to dig for gold . A check was at once put to the rush , and a < powerful stimulus given to . the production of other commodities . Two great communities , embracing
various classes of producers , and most of the arts of civilised life soon oamo into existence there , requiring considerable quantities of coined money to carry on their business . For a time it was extremely advantageous to sond sovereigns to Melbourne and eagles to California ; it was extremely advantageous , also , to send commodities of various kinds from other parts of the world to those countries ; and in a short time tho value of gold there , and the prices of other things , approximated to % > value of gold and tho prioes of similar things throughout the commercial world . Thus , the number of persons who can advantageously bo employed in collecting gold is determined by the
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Citation
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Leader (1850-1860), April 23, 1859, page 26, in the Nineteenth-Century Serials Edition (2008; 2018) ncse2.kdl.kcl.ac.uk/periodicals/l/issues/cld_23041859/page/26/
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