The Sun.
London, England, 1869-05-10 00:00:00

THE DEPRECIATION OF GOLD.

That high authority, Professor Stanley Jevons, pub-
lishes a letter in the Economist shewing that since 1849
there has been a real depreciation in the valuo.of gold, or,
in other words, that the purchasing power of the
precious metal is less than it was twenty years
ago. Professor Jevons takes fifty of the chief
common commodities, and he finds that in the
case of each there has been an average rise of price
since 1849 to the extent of 18 per cent. This rise in price
and consequent decline in the purchasing power of gold,
he attributes to the great gold discoveries in Australia
and California—discoveries which were first made in
1849. The facts he adduces in support of his argument
are very interesting. Down to 1849 prices had uniformly
and regularly declined; gold would buy more and more each
year, and, therefore, the value of gold was greater. But
since 1849 prices have increased, gold will buy less than
it formerly would, and hence the precious metal is less
valuable. If we take the average price of commodities
in 1849 as 100, we find that in 1850 the average was 101—
an increase of 1 per cent. In 1851 it was 103 ;
in 1852, 101 ; and in 1853, when the effects of
the gold discoveries began to be fairly felt, the average had
risen to 116. In 1854 it had gone up further to 130, from
which year it declined, until in 1858 the average was only
118. Then it rose again to 124 in 1862, since which
date it has declined to 119 in 1869. From these
figures it appears that the range of prices has
since 1853 been always considerably above the point they
attained in 1849. The three great collapses of credit and
enterprise occurred in the years 1847, 1857, and 1866, and
the depressions of prices thereby occasioned were respec-
tively 22, 14, and 10 per cent. ; it is perfectly fair, there-
fore, to compare together the three lowest points thus
attained in the years 1849, 1858, and 1867, and we thus
learn that there has been a net or permanent rise of 18
per cent. accomplished in the prices of about fifty of the
chief materials and commodities. By some it is asserted
that this rise of prices is due to the progress of trade, the
growth of population, &c., but Professor Jevons refutes
this theory. Prices have gone up since 1849 ; but previous
to that date there was a vast decline. Keeping the
average at 100 in 1849, we find that in 1799 prices
were at 203; in 1809, at 245 ; in 1819, at 175 ; in
1829, 'at 124 ; in 1839, at 144 ; and in 1849 they sunk to 100.
"Between 1809 and 1849 we notice a vast decline of prices
to the extent of 145 per cent., the previous rise having been
rearly as great. With this great revolution in the value of
gold we are only concerned so far as regards the fact that
previous to 1849 a great decline in prices was in progress.
This decline was interrupted during the years 1835-9 by a
temporary rise, due perhaps to excessive speculation,
but the decline was renewed as rapidly as before until we
reached the critical year 1E49. Since then the course of
prices seems to have been entirely altered, and a perma-
nent rise has been established." Now, tradeaud population
increased rapidly up to 1849, and yet prices went rapidly
down. How, then, remarks the Professor, can the increase of
trade and population have caused a rise Eince the critical
year? How can one cause have lessened prices before
1849 and lengthened them afterwards? The Professor
says : " I have only to ask those who think that
the growth of population, the increase of demand,
or the progress of trade is the cause of the rise of prices.
whether population, demand, trade, &c., were not expand.
ing before 1849, not so rapidly perhaps as since, but still
expanding ; and how it is that causes of the same kind have
produced falling prices before 1849 and rising prices since?"
Hence Mr. Jevons concludes that the gold discoveries caused
this great difference. Indeed, as Professor Cairnes has so
distinctly pointed out, the effect of those discoveries is
probably much greater than any we can prove, because
the course of prices was in previous years decidedly down-
wards, so that the new gold has both :prevented a further
fall and occasioned a rise in its stead.