The truth of the last remark is forcibly illustrated by Australian statistics; from official statements of the imports to Sydney, we find that the average amount of the imports for the ten years preceding the gold discoveries was little more than £1,000,000 sterling, while in 1853 and 1854 the annual imports to that port averaged fully £6,000,000.

The prices of labour and of commodities in Great Britain and the States must therefore have been raised in virtue of both the causes which I have pointed out; for whilst the supply of labour and commodities in those countries was reduced, the demand for labour and commodities was actually increased.

We now come to consider the third, and, doubtless, the most influential as well as the most obvious of the assigned causes of the fall of the value of gold in the gold importing countries. I mean the sudden and extraordinary augmentation in the mass of the precious metal as compared with the mass of commodities in those countries. No one can doubt that if the mass of the precious metal in the world became suddenly doubled or trebled, the prices of all commodities would at once be doubled or trebled as the case might be. Such sudden changes in the mass of the precious metals are of course impossible; changes in the amount of the metallic currency when they do occur, are generally, as has already been observed, the gradual result of years, and when this is the case the ultimate effect of the increase of the precious metals on prices may be materially modified by the change which has taken place simultaneously in the value of the aggregate of commodities.

Prices (so far as they are affected by the cause under consideration) would rise or fall according to the relative increase in the mass of metal and commodities. If the mass of the precious metals had outstripped in its growth the mass of commodities, prices would be raised. If, on the other hand, commodities had increased more rapidly than the metals the prices of commodities would be lowered.

There can be little doubt, I imagine, that since the gold discoveries in California and Australia, gold has been increasing much more rapidly than commodities, and consequently (in obedience to the law just stated), the prices of commodities must, as a matter of course, have been raised during that period.

At the beginning of the present century the annual value of the precious metals raised from all the mines of the world, was, according to the calculation of Humboldt, somewhat under £10,000,000 sterling. From 1800 to 1810 (owing to the increasing yield during that period of the American mines), the total annual produce steadily

increased until in the latter year it was rather over than under £11,000,000. From 1810 to 1830 the total produce of the precious metals would seem to have fallen off somewhat, but from the latter date up to the time of the discovery of the gold in California (owing mainly to the increased yield of the Russian mines and washings) it again advanced, and at the epoch of the gold discoveries on the Sacramento was about £12,000,000 sterling per annum. In 1850, the second year after the discovery of gold in California, the total produce of the precious metals was, as computed by McCulloch, £27,000,000; in 1851, Australia began to add her treasures to the mass, and in 1853 the combined yield from the new and the old mines was estimated at the enormous sum of £47,000,000. I believe we would be safe in assuming the total produce of the year which has just closed at upwards of £50,000,000 sterling.*

In order to estimate even in a rude way the probable effects of this unprecedented and sudden influx of the precious metals, we should know the whole amount of bullion previously used as currency, and the portion of the annual yield required to supply the wear and tear of coin and bullion, due allowance being made under this latter head for the additional amount of bullion which the reduction of its value would cause to be used in various branches of manufactures and the arts. The surplus portion of the annual yield, which would be forced, as it were, upon the currency of the world, over and above its legitimate wants, would afford an exponent or measure of the depreciation of the whole mass, so far, at least, as that depreciation may not have been counterbalanced by the operation of other causes.

The value of the metallic currency of the world at the epoch of the gold discoveries has been very variously estimated. McCulloch (after a careful comparison of the calculations of Jacob, Humboldt and others,) puts it down at £380,000,000.

The same author estimates the wear and tear and loss of the precious metal at 1 per cent. of the whole mass, or about £5,700,000 per annum.

The probable annual addition to the currency, required by the rapidly increasing population in the gold countries and elsewhere, he

*The produce of California has been estimated officially at $60,000,000 or upwards of £12,000,000 sterling. The quantity exported from Melbourne alone during the year must have been at least £12,000,000 sterling. From Sydney up to the 10th December it was close on £10,000,000. Taking into consideration the quantity retained in the country and the quantity sent home by private persons and of which no account was taken, we think the total yield of Australia during the past year cannot have fallen short of £20,000.000. The Australian newspapers received since the above note was penned confirm my conjecture as to the last year's yield of gold in that Colony.

calculates at 3 per cent. of the whole, or upwards of £11,400,000 per

annum.

Again, the annual consumption of the precious metals in the arts he estimates at £11,200,000.

In reference to the last item, McCulloch remarks, "this quantity, however great it may appear will be increased with the increase of population and the spread of refinement and the arts; and it will, also, be certainly increased by any thing like a considerable fall in the value of bullion." Indeed I believe there can be little doubt that already the decline in the value of gold bullion has caused it to be employed in various new branches of manufactures and the arts, and the tendency of this increased demand for gold will be of course, pro tanto" to check the decline in its value.

From a careful examination of all the authorities to which I have had access on the matter, I have arrived at the conclusion that the whole amount of gold raised since 1818 to the beginning of the present year is not much under 300 millions, and that the whole amount coined during the same period may be estimated at upwards of 180 millions.

Had the whole of this enormous amount of coin been suddenly thrown upon the currency of the world, the effect would have been (assuming as before the whole mass of the currency of the world to be £380,000,000,) an average decline in the value of gold throughout the world, of nearly 50 per cent.

But as in reality the rate of influx of the new gold is very different in different countries, and as the effect of this cause in any particular country is directly proportioned to its rate of influx into that country, as compared of course with the amount already in existence there, the decline in the value of gold in some countries would have been above and in others below this average.

The addition to the coin has, however, not been instantaneous, it has been spread over a period of 8 years, and during that time, (owing to the extraordinary impulse given to commerce from the gold discoveries themselves, from free trade and other causes) the production of commodities has been going forward with a constantly increasing energy, so that the whole mass of commodities in the world in 1856 far exceeds in value the mass of commodities in 1848, and therefore the

depreciation of the metals or the rise in the prices of the commodities is not so great as, looking merely to the unparalleled augmentation of the metallic medium of exchange, one might have been led to anticipate. It is hardly necessary to state that it is not in my power to verify from authentic returns the calculation I have made as to the probable amount of bullion coined since 1848. The following table, however, giving the gold coinage of Great Britain, France, and the States, from the period in question, has been compiled carefully from reliable sources, and will serve, I think, to shew that I have not over estimated the whole amount of the coinage of the world since 1848:

The preceding table shews that the gold discoveries did not produce any very marked effect on the gold coinage of the countries enumerated until 1851, when a sudden and unprecedented augmentation took place in the coinage of each of those countries. The average annual coinage of the three countries taken together for the last four years, exceeds, as appears from the foregoing table, thirty-two millions sterling, an amount which appears almost incredible when compared with their average annual coinage before 1848.*

It seems, indeed, not unlikely that the mint recently opened at Sydney will coin this year as much as the total annual coinage of England, France, and the States together, before 1848; for we find from recent Australia papers that the weekly coinage at the Sydney Mint in November last was 45,000 sovereigns, or at the rate of £2,340,000 per annum; and we learn further that the increasing

According to Mr. Birkmyre, (during at least the first 30 years of the present century,) the average annual united coinage of the three countries was only £3,055,000, or about one-eleventh of their present annual coinage.

pressure of business was such as to render an increase in the engineering 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 increase 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.†

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.

+ In Ireland we find that the circulation of Bank notes in 1849 was only £3,811,445, while in 1854 it had reached £6,846,000. From the August number of " Hunt's Merchants' Magazine," which came into my hands while these sheets were in press, I find that in 1849 the entire currency of the Union was $325,922,038, and in 1856 $665,122,393, an increase of more than 100 per cent. See page 167.