The Press.
London, England, 1855-10-27 00:00:00

ARE HIGH PRICES CAUSED BY THE

WAR ?

A QUESTION has been raised at agricultural
meetings whether the present high price of
produce is mainly to be referred to the war or
other causes. General opinion at these
gatherings seems to connect rising markets
with a continuance of hostilities. The farmers
are contented ; rates are realised which no one
ever expected to see under free trade ; and
there is an universal admission of agricultural
prosperity.

The question is one to be cautiously ap-
proached. Supposing that the excessive
prices which now prevail were really caused
by the war, we must set them down to the ac-
count of those inevitable evils which in one
way or other war is sure to bring in its train.
All war involves wasteful expenditure, for
which sooner or later the nation must be pre-
pared to pay. The account may accumulate,
but it is not to be got rid of by postponement.
We all know what frightful distress was
caused among every class of our community
by the reaction from high prices at the close
of the last war, and what an artificial system it
was found absolutely necessary to adopt to
save the landed interest from absolute ruin.
Supposing the same causes were now at work,
the same results would in degree attend the
termination of the war, whenever that might
be; and when the balance was struck agricul-
turists would have little cause to congratulate
themselves on the excessive rates which for a
time had benefitted them. The effect of high
profits is immediate—the producer finds his
means at once enhanced. It is not so with
the expenses which are attendant on high
prices. They creep on at a slower pace, they
gradually follow rising rates, but also they re-
main for a time behind them.
Take the case of rent for example. It is not
raised on account of the high prices of one
year or two, but it is surely raised if those
prices assume any character of permanency.
The proprietor of the soil has a struggle to get
more from the cultivator while the upward ac-
tion goes on ; but, on the other hand, the cul-
tivator has a struggle to induce the owner to take
less when the downward movement has set in.
Both parties wait to see whether the move-
ment is merely accidental, or arises from
causes likely to endure. It is the same with
other items of expense. If, therefore, the
farmer is the first to profit by rising prices, ho
is the first to lose from falling ones. The
farming interest which throve on the exces-
sive rates of the last war was beggared when
it came to a close.
But there is solid ground for believing that
the present high rates are at least only partly
attributable to the war. The interruption of
the supplies from the Black Sea, joined to the
, demand for the stores_ necessary to feed the

OCTOBER 27, 1855.

immense armies collected, must have had
some effect. But, on the other hand, the har-
vest in the United States has been the most
abundant ever known, and the increased sup-
plies from the Weat must go far to counteract
the stoppage of those which under ordinary
circumstances would be drawn flout the East.
To account, independent of the war, for the
present high rates we have the facts of a har-
vest somewhat below au average at home and
considerably below an average in France. But
this comparative deficiency would, in the face
of the very largo quantities America is
prepared to send us, not justify present
rates, and we must look for the cause else-
a here.

During the last war the excessive prices
wire caused less by the natural action of the
war, destructive and protracted as it was, than
by the artificial system of currency which it
was found necessary to adopt. Supposing
that the gold currency had never been sus-
pended, it is almost certain that the action of
the war would have been, not to raise prices,
but to depress them, by making money
scarce. The tendency of war, as we all know,
is to interfere with the ordinary circulation of
coin, and drain it from the country engaged in
vast expense for the support of its armaments.
With the scarcity of coin, commodities would
fall in price were there no influence to sus-
pend the action of this natural law. In the
last war this influence, as is well known, was
the suspension of cash payments, and the es-
tablishment of paper money. It was not the
war which caused high prices, but the paper
currency which the war necessitated. This is
an important distinction.
That action which the large issue of paper
money exercised in raising prices during the
last war, the great and continuous supplies of
gold from California and Australia are exercis-
ing now. Shrewd economists foresaw when
the gold discoveries were announced that if
the supplies continued they must in time have
a perceptible effect on prices. In the first in-
stance the great banks of the world received
the gold, then it was gradually sent to the
mints, then the coin came into circulation,
and it is this general diffusion and greater
abundance of the precious metal which is now
universally raising prices. On the most
moderate computation, the addition made to
the gold circulation of the world since 1848
cannot have been less than from 100 to 150
millions, independent of those sources of sup-
ply which previously existed.

We hear from California this week that
" more gold-dust has come to San Francisco in
" August than ever before in one month. The
" shipments in the month exceeded 5,000,000
" dollars." This is at the rate of more than
twelve millions of pounds per annum. From
Australia the last accounts state that the
quantity of gold already supplied this year
(1855) amounted to fifty-seven tons ten
hundredweight, of the estimated value of
5,524,3681., and the yield is likely to increase
as quartz-crushing comes into play.
The theory by which all other commodities
increase in price as gold becomes more abundant
is very simple. The price of all commodities
is principally regulated by their cost of pro-
duction. If it requires as much labour to
raise one ounce of gold—value, say 808.—as to
raise two quarters of wheat, then the wheat
will find its level and stand at 405. per quar-
ter. But if, through new discoveries of gold,
one ounce of the metal can be produced as
easily as one quarter of wheat, then the grain
will be 80s. per quarter. This is the principle,
subject to various modifications ; but in these
days when the gold-lands are thrown open to
all comers, and when the means of transit
are so easy, the level is sure to be quickly
attained.

The war has not, we think, much influence
on prices one way or the other. Prices had
risen considerably before the war commenced,
and would have continued to rise had it not
occurred. Those who support it from a notion
that it inflates prices, and those who deprecate
it for the same reason, are equally deceived.
The notion is mischievous, as it tends to array
classes against each other. While the existing
currency system is maintained, whatever