The Sun.
London, England, 1863-10-20 00:00:00

RECENT GOLD DISCOVERIES.

The following is the interesting paper on the above sub-
ject, read last Thursday by Mr. Thomas M'Combie, before
the Trade and International Law Department of the Social
Science Association :

A wide-spread uneasiness hasbeenrecehnatvilynvgisifixblee,dpar-
ticularly amongst annuitants, persons
in-
comes, and even other persons whose interest is at stake,
e abgsleraale aimne
great
remaine
discoveriesti whs aoautsfn
te heax le theyl
es
di
abmewfi tofeeer
gold
a r
e.
eop,
to about
wereouotnad
,gla2rmne
althoughye
daetd:r
extent,
x. years
eas
tnteh,tc
enhe ,
no doubt
nte dat theoenxud
fallacious.
pbartr
expressed
belief timethatsbeydl
as to the danger of gold becoming deteriorated in value.
The same was exhibited about 12 years since, at the time
the
mtshtiyell
Bnwehuacnseikctshsoafevery
depend in
r a
dd other commodity is valued or measured every-
where, iyEsg,notoolgfdplcato aonkurse, an article of commerce, and its value
m
takes :moregreattze i., . d
xe t f: rt
produce ehle7insuh.p6olane.
—etthn than
n2l
proveabi tou
is
carats labour
wafienotnrd,
tehn. expensepaetGn toathe
average,
has certainly been increased, and is daily being increased as
an article of commerce ; and it has thus added to the cir-
culation of the world without depreciating its value ; nor
can its value be very well lessened while it requires its full
equivalent in labour and capital to create it. It forms, in
fact, an accumulated national capital, which is a kind of
property to be laid by in good times for emergencies
which may occur in bad times, Being a universal cur-
rency over the world it is fit for this purpose ; and will
continue so as long as it requires the full value of labour
and capital to obtain the gold. I know from personal obser-
vation that gold digging is not remunerative. To commence
with alluvial digging, even in the richest spots at the best
times, the great majority were unsuccessful. I have been
upon the richest of the fields, and know that the vast majo-
rity did not succeed, and that the aggregate of the gold ob-
tained, if equally divided amongst those working for it,
would scarcely amount to anything like the ordinary wages
of labour. The gold procured by alluvial washing is soon
exhausted on any field ; and it is to the source from which
those deposits have originally come that we look for a per-
manent supply. The oldest stratified rocks are seldom auri-
ferous, even in the gold countries, but those next in succes-
sion, such as the silurian, devonian, and carboniferous pe •
Hods, contain large quantities of the precious motel. By
capital and machinery the gold is extracted by the process
of amalgamation. But in no country has this, upon an ave-
rage of years, been very remunerative. It is proved by the
statistics of gold digging that it is a profession unremune-
native, and that, while its ranks are recruited by young vo-
taries led away by the romance of the thing, they soon tire
quit it. This is why more gold is not being produced, as
the auriferous rocks are almost inexhaustible in the gold
countries. It is produced in limited quantities, because
it does not remunerate those who get it for their labour.
I think this is indirectly shown by the manner
in which it impoverishes those countries in which it is
largely produced. I take Victoria, which, if not the largest
field of gold production, is certainly as large as any, being
about equal to California, some years exporting more and
some years less. Before gold was discovered, the exports of
that colony were at least equal to the imports upon an ave-
rage of years, but after the discovery of gold they usually
fell very far short, one year as much as six millions. The
last year, 1860, of which I have the figures, shows the im-
ports at £15,622,891, and the exports (including the gold
produced) at £13,867,860, or nearly a deficiency of two mil-
lions against the colony. I admit that many of our colonies
exhibit a disposition to import more than they export, but
not in anything like this degree. Canada may be cited es a
similar case, but it could be proved to be situated very dif-
ferently, its population being almost entirely agricultural.
We have the returns for 1860 given in the Exchange Naga"
zinc, vol. i., page 21, which we assume to be correct (but we
do not vouch for it officially), value of imports, £6,888,324;
of exports, £6,926,360. So that even Canada is now export-
ing as much or more than she is importing. Gold neither
remunerates the country who produces it, nor the country
where it is produced. Most other branches of industry en-
rich the land where they are carried on—the timber trade of
Canada may be said even to do this, it is clearing the land
preparatory to cultivation, but the digging for gold tear up
the bowels of the earth ; they take not an annual return,
bat the capital itself, and impoverishes rather than enriches.
The persons engaged in gold digging in any of the gold
countries do not obtain fair remuneration for their actual
labour. In Victoria, in 1861, there were 233,501 persons
engaged in gold digging ; and at this date the number is
226,987. The amount of gold produced in 1861 was
2,072,359 ounces of gold, which is not more than about £35
a-head, not to give interest for the capital £1,511,012 in-
vested. The numbers who embark in the production of
gold are decreasing. It does not remunerate them. They
obtain more in other pursuits. So long
as gold is only
procured by paying full value for it, its production must
be but limited. There was a panic at the period
when gold was discovered in California and Australia; and
it was contended that gold would become cheaper, and those
who had fixed incomes, and money to receive at distant
dates, would be serious sufferers. Of course, the value of an
article is in proportion to its abundance, and even the cur-
rency of a country, which is the standard by which the
value of every other article is measured, is no exception ;
but there are circumstances which must be taken into con-
sideration, and in the case of gold it seems never to be ob-
tained in too groat profusion, as the demand is apparently
always in advance of the supply. Before the increased
supply was obtained commerce languished, and social
progress was obstructed, in consequence of the
diminished quantity of the precious metals. The dis-
coveries in America and Australia came at a very
opportune period, when the railroad and telegraph
systems, colonisation and the penny postage, called for an
enormous influx of the auriferous metal to aid this expan-
sion. To use a very vulgar expression, gold was the manure
which brought the great yield of prosperity. The supply was
increased, but the demand still kept in advance of the sup-
ply. It has aided the capitalist and the labourer's wages
alike—the profit to both is very great, not in England or
Europe, but over the world. In India, wages have risen (of
ordinary labourers) from 2,1 to is a day. There is a natural
affinity between the wages of labour and gold which has
not been pointed out. Wages have been advanced by the
increased supply of gold; and yet that very advance tends
to check the over-production of the precious metal ; for,
while wages rule the value of all other articles, it does that
of gold in an especial degree, because the main element in
its production is labour only, with the exception of a very
small amount as the interest upon capital in those cases
where skilled machinery is used, and the land-tax or rent,
usually trifling, charged in the shape of a royalty. I think
that it does not follow that, because the gold has increased
in quantity, it must necessarily have decreased in value.
Gold is a non-perishable article, produced in ext remely small
quantities, and is very different from any other article of a
perishable or ordinary character. It becomes, therefore, as I
have already said, a great accumulation of capital to be
stored up by men and nations for future emergencies. There
are economists who argue that because we have within the
last ten years added 100 millions to our stock of gold, that
it must have depreciated in value. But I contend in this
paper that it has not done so, and that it is not likely to do
so while the checks we have pointed out remain. Trade
and population both increase with the increased comforts
and facilities the gold has offered, and thus provide an out-
let for all the extra quantity which has been produced,
There are many who contend that an alteration in the value
of gold has already taken place, but I cannot see that such
is the case. I cannot see that between 1852 to 1862 they
have much increased in amount. Wheat is the leading article
or staff of life, and quote the highest and the lowest prices,
as given in the tables in the Estate Sales Gazette. I find in
the years between 1850 and 1854 the price ranged between
39s to 535; in 1856 it rose, and from that year to 1858 it
averaged from 44s to 755, and from that date to 1862 it re-
mained almost stationary at 53s to 555. I may also state
auction, such as tea, sugar, coffee,
the same principle applies to the other great articles of pro-
rice, wool, metals, &c.;
of course cotton being an exception. The prices, therefore,
of most articles do not indicate any alteration in the value
of articles of consumption. The highest amount of bul-
lion held by the bank in the last ton years, ending with
1862, was on the 10th July 1852, when it was £22,232,138,
and the lowest was on the 18th November, 1857, when it
was £6,484,096. The gold does not appear to accumulate
there. It is not got for nothing. It has to be paid for. It
has gone to expand and foster commerce in every part of the
globe. It is true it has had to replace the silver currency
of France, which again has gone to India ; but this is, atter
all, only a limited portion of it. In all parts of the world.
in England as well as in America, in India and China, and
indeed everywhere, more currency wao necessary. A vile
and vitiated paper had in many parts usurped the place of
gold, and commerce was liable to sudden fluctuations in
consequence. All this has been checked ; there is now a
currency something like commensurate with the require-
ments of commerce, and we now hear of fewer violent
crises, which were formerly so common. Thus I find that
notwithstanding the increase of trade and the greater num-
ber of joint-stock banks, their issue was larger in 1854 than
in 1862 ; while that of the Bank of England was nearly
the same. If the increase in gold had not opportunely ar-
rived, I should have had to record many severe crises
caused by the use of debased currency. I have been led by
a careful consideration of the subject to arrive at the
pass
in l
transactionseverYopinion that credit has a very great influence upon
e
prices.
This is not to be much wondered at, when we take
into consideration how seldom in the actual business
ofu tli
gold payments are actually made, if specie
had to l:
ciatra be
transaction, howe
vaat limitedamount
of would
our cowthe
real transa • ettons of life are carried which on
upon bills,
cheques, draughts, open accounts, can hardly be appreciated.
In a good commercial country like England, credit is every-
where visible—its influent© l 7 I
greater than even gold itself.
The great benefit which thei
na ereaBe of gold has effected is,
that it has taken the place of
vitiated currency, and ren-
dered prices more equal, Before theincrease
metals in 1848 and 1849, prices had
9. tendency to fluctuate ;
but since then they have had a more stationary aspect
they have ever had previously. The prices
of wheat thanhave
been more stationary since 1858 than they have been for

r many years previously, not having fluctuated more than two
shillings a quarter for four or five years. If my view be
taken that gold never can be increased, so far as we can
now ascertain by experience of the facts with which we are ac-
quainted, beyond the rate at which we have to give value for
it, then so long as gold is only produced with the labour, or
equivalent value, it will only be,as I have said, accumulated
capital, and have little direct bearing upon prices. It goes
into every part of the globe as a representative of wealth—
it may be in the shape of coin, bullion, plate, jewellery,
gilding, or whatever other form the requirements of luxury
may cause it to assume—and that vast quantities are used
in these purposes is unquestionable. Thirty years ago the
quantity estimated as used in manufactures was £3,000,000
and the increase of population and wealth and luxury must
have greatly added to this amount. I believe that the in-
crease of the preeious metals does not so materially affect
prices as is usually supposed. For 30 years I have been a
merchant and close observer of these matters,l have noticed
that for a series of years prices generally advance, they
reach a certain maximum, and again recede, and gradually
descend. This is quite irrespective of any circumstance,
such as the American war of the present day, which would
give us a solution of the matter. The real cause of these
regular rises and falls I have not been able to ascertain ;
but of this I have satisfied myself, that it is not connected
with the supply of the precious metals. I have ventured
to bring forward this subject, for if my paper has no other
effect, it may probably excite discussion. lam quite aware
that objections may be raised; one which probably will be
set forth in the rise in the rents and value of land in this
country, and, but in a less degree, of labour and cattle.
Yet the rise in the annual income from land, and of the
real value in the market, rather bears out my arguments.
The rate at which land sells has certainly increased in this
everywhere, as in many places it has been
are to be sought for the rise
population, the skill and
here
nn t
gr
in
,n bt
phuret
eneg
ro. t e
at
The
increasecauses
science of our agriculturists, and the consequent superior
appliances which have been brought to bear on the cultiva-
tion of the land, so that it has been made to yield a much
more remunerative crop, in some cases threefold; and also
to the confidence which persons entertain of the stability of
this country, inciting many with capital to withdraw it from
other countries to invest it here; and in consequence of our
higher civilisation, greater stability, speedy railway commu-
nication, by means of which the most distant parts of the
kingdom have markets brought to their doors; and by the
blessings of Free-trade, which admits of unrestricted com-
munication with all parts of the world. Credit has, after
all, caused the rise in land here ; for the belief in the stabi-
lity of our institutions is in fact credit. A man could buy
land for a mere fraction of British prices in countries whose
institutions are attenuated or have decayed, such as Italy;
or where no confidence is placed in the stability of Govern-
ment. Land was bought in France during the Revolution
at a mere song. In Africa, and some parts of America and
Asia, thousands of acres may be had for a few toys or knives
—yet no one desires it, because, destitute of the appliances
which we possess, it is useless. Briefly, then, the rise in
labour is from the facilities for emigration of recent years,
which has equalised the rates between England and her
colonies. The advance in the value of cattle is more from
their increased weight than from the value of the beasts per
head ; and is from the superior knowledge of breeding and
feeding, while the demand for meat has gone on increasing
in consequence of the advance of wealth and civilisation and
the superior quality of food used by the middle and lower
classes; and that the rise in prices has not been caused by
an increase in the precious metals so much as from other
causes, for this country never had prices so high as when it
had to suspend payment in specie. The paper was as good
as gold, although itself of no intrinsic value. The great
panics in this country and elsewhere have sometimes been
attended with an abundance of the precious metals. Were
the standard of value a Government paper currency prices
would not alter so long as the credit of the Government
remained secure. Many of the Governments of Europe
have a very large portion of their currency in paper
not convertible. Russia alone has 100,000,000, and
Austria and other countries on the continent very
large amounts. They would prefer to have gold,
and will replace either by gold, or paper convertible at
pleasure into gold, which must therefore maintain its
value while this is being accomplished. So long as the na-
tions of the world can obtain it, they will secure it for future
emergencies, and, unless obtained at less cost,it is not likely
to become of less value. The great test of value in Scotland
is the price of corn, as the stipends of clergymen and many
other public payments are founded upon it; and I think to
Scotsmen, at any rate, the fact that it is stationary is petty
strong evidence that gold is not falling. Free trade, steam,
and the advance of intelligence, national emigration and
colonisation, will tend to prevent the very undue rise of
prices.