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 HG 1234.P77 
 
 Gold and silver weighed in the balance:a 
 
 3 1924 013 775 642 
 
Cornell University 
 Jbrary 
 
 The original of tliis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013775642 
 
GOLD AND SILVER 
 
 WEIGHED IN THE BALANCE. 
 
GOLD AND SILVER 
 
 WEIGHED IN THE BALANCE 
 
 A MEASURE OF THEIR VALUE : 
 AN ESSA Y 
 
 ON 
 
 WEALTH AND ITS DISTRIBUTION DURING FLUCTUA- 
 TIONS IN THE VALUE OF GOLD AND SILVER ; 
 
 Sow the tmjust and unintended Gains and Losses that have hitherto 
 
 accompanied depreciation and appreciation of the Precious 
 
 Metals may be FOR EVER PREVENTED. 
 
 BY 
 
 THOMAS INWOOD POLLARD, 
 
 Author iJ^"THE INDIAN TRIBUTE AND THE LOSS BY EXCHANGE.' 
 
 THACKER, SPINK AND CO. 
 
 1886. 
 
 All rights reserved. 
 
" It was not by Gold or Silver but by labour, that all the wealth of 
 the world was originally purchased ; and its value to those who possess it 
 and who wish to exchange it for some new productions, is precisely equal 
 to the quantity of labour which it can enable them to purchase or com- 
 mand." — Adam Smith. 
 
PREFACE. 
 
 It is said that there are some African tribes which 
 are not afflicted with the possession of coins of the 
 realm, which have no money ; commercial transactions 
 being carried on by means of purely imaginary — coins (I 
 suppose), called niacutes. A thing is said to be worth so 
 many macutes, and, of course, exchanges on even terms 
 for another thing worth the same number of macutes. 
 
 I used often to wonder what a macute might possibly 
 mean : of what it might be the symbol. By closely 
 observing the essential features of the production, distri- 
 bution and exchange of wealth among ourselves, one 
 can readily form an idea, after a little reflection, of what 
 sooner or later a macute must represent. Even among 
 those untutored savages there must be a vague notion 
 that a thing which cannot be acquired without the 
 expenditure of considerable time and effort is, or ought 
 to be, worth a lot of macutes ; and that a thing which 
 can be had with little labour is worth only a few ma- 
 cutes. The macute, therefore, would inevitably (I 
 think) come to stand for a certain quantity of labour. 
 How much I have not the least idea ; but supposing 
 one macute were, by general consent, the equivalent 
 of th6 results of one day's ordinary, typical work the 
 proper macute-price of goods would admit of easy cal- 
 culation, and the exchange of wealth might be carried 
 
vi Preface. 
 
 on to any extent and with little or no inconvenience 
 even without the ' use of metallic money. " Higgling 
 of the market " unquestionably there would be under 
 a macute " currency " ; for one man would insist that 
 his work was more laborious and involved more risk or 
 required more skill than that of another man ; and 
 hence would expect more than one macute's worth of 
 things in general for one day's labour. These matters, 
 however, soon right themselves. A day's average work 
 in any representative industry of the country might be 
 selected as thestandard ; otherkinds of labour being remu- 
 nerated according to desert — or the reverse ; as with us. 
 
 Macutes, indeed, would possess one very decided ad- 
 vantage over rupees and sovereigns. They could not 
 well get scarce ; or inconveniently plentiful. There 
 could be no " influx " of macutes ; and I do not mind 
 hazarding the opinion that, if macutes do represent 
 a certain quantity of labour, no words corresponding 
 to our dismal " depreciation " and " appreciation " are 
 to be found in the languages of the tribes using them. I 
 am not at all sure that the invention of gold and silver 
 coins was an improvement on macutes. Re. i is, after 
 all, only a tangible symbol of a certain quantity of Indian 
 labour — condensed, as it were : the nuisance is, it is of 
 a variable — generally a diminishing — quantity. 
 
 Macutes are not the only imaginary coins we hear of. 
 In Bengal, there was not long ago an imaginary rupee, 
 which compared very favourably indeed with its more 
 substantial competitors. 
 
 At the end of the last centurj', in Bengal, we are told 
 by Dr. Hunter, " the coinage, the refuse of twenty dif- 
 ferent dynasties and petty potentates, had been clipped. 
 
Preface. vii 
 
 drilled, filed, scooped out, sweated, counterfeited, and 
 changed from its original value by every process of 
 debasement devised by Hindu ingenuity during a space 
 of four hundred years .... The actual coin at any 
 single mint could not be selected as the stand- 
 ard, and whatever could be handled was sure to be 
 falsified. An ideal coin was accordingly invented, by which 
 all rupees might be valued, and one of the Company's 
 earliest and soundest financial advisers has left on record 
 the process. ' When a sum of rupees is brought to a 
 shroff (banker or money - changer), he examines them 
 piece by piece, ranges them according to their fineness, 
 then by their weight. Then he allows for the different 
 legal battas (deductions) upon siccas and sunats ; and, 
 this done, he values in gross by the current rupee what 
 the whole quantity is worth. The rupee current, therefore, 
 is the only coin fixed by which coin is at present 
 valued ; and the reason is, because it is not a coin 
 itself, and therefore can never be falsified or worn. ' " 
 
 It is a thousand pities that that happy idea of an ideal 
 rupee was ever allowed to die out. I have never seen a 
 counterfeit coin since I have been in India, nor (so far as 
 I remember) one that has been drilled or clipped or 
 tampered with in any way ; but it is a well-known fact 
 that the excellence of our coins is apparent only. Even 
 Hindu ingenuity could not have scooped out of our ru- 
 pees so much of their value as they have lost since the 
 beginning of the century through the insidious process of 
 sweating known as depreciation. I am not alluding prin- 
 cipally or at all to the recent fall of silver in relation to 
 gold — the currency of other nations — (which is quite 
 another matter) but to that steady diminution in the 
 
viii Preface. 
 
 purchasing power of the rupee in relation to all things 
 Indian which has accompanied " the drain of silver to the 
 East" ever since it began in the sixteenth century. 
 
 If the debased " refuse of twenty different dynasties " 
 could be weighed in the balance by the " rupee current," 
 could not our even more unfortunate rupees be similarly 
 dealt with ? Here is a suggestion : a rupee current in 
 those days represented a certain (I assume ascertainable^ 
 average wage of a certain number of days' agricultural 
 labour in Bengal. What if Adam Smith's grand idea of 
 labour as the measure of value had been seized upon, and 
 the rupee current, our ideal coin, been made by law and 
 custom the symbol of that quantity of labour? Had 
 that been done, the rupee current could never have de- 
 preciated any more than it could have been clipped or 
 otherwise falsified. Only silver rupees could be thus 
 influenced by their increasing in number more rapidly 
 than the people among whom they are distributed. The 
 Bengal Land Revenue might then have been fixed as 
 so many rupees current, and as the silver rupees increas- 
 ed in number and fell in value, more and more of them 
 would have been — perhaps uncomplainingly — paid by 
 the tax-payer ; for the more they have depreciated, the 
 more easy of attainment they have become. The rupee 
 current, always the symbol of so many days' work, would 
 at all times have indicated with unerring justice the 
 exact number of depreciated silver rupees due ; just as 
 it did indicate the number of clipped coins necessary to 
 compose a given sum. 
 
 The principle of the thing has been insisted on with 
 energy and eloquence by Adam Smith and by Dr. Hunter. 
 Their substitute for the precious metals as a measure or 
 
Preface. ix 
 
 standard of value for perpetual land settlements is corn, 
 the subsistence of the labourer, which they select because 
 the staple food of the people will always, as nearly as 
 possible, purchase or command the same quantity of 
 labour (this was Adam Smith's idea, but it needs any 
 amount of qualification for modern England ): whereas 
 the purchasing power of silver in relation to Indian 
 labour and its products is always on the wane — seven- 
 eighths of its value having been annihilated in the course 
 of a few centuries. Re. i in modern times resembles 
 nothing so much as a tourist's return ticket on his re- 
 turn — clipped to a mere skeleton. And the process is 
 destined still to go on ; the present delusive temporary 
 downward movement of prices, and stationary wages, 
 notwithstanding. It may not be ; the process may even 
 be reversed. All the more need, I say, for putting a 
 resolute stop to this helpless drifting hither and thither. 
 I have used the rupee current as an illustration merely ; 
 but I have for years been impressed with the profound 
 conviction that something very analogous to what I 
 have hinted at ought to be attempted and might be done 
 in order to obviate the depreciation and appreciation of 
 the precious metals, if statisticians would onlywork hand 
 tn Jtand with political economists. At present they do 
 nothing of the kind. The unnatural divorce between 
 theory and observation seems complete. True, those 
 who collect figures about prices, &c., have usurped, 
 apparently, the title of " economist" ; but this is all the 
 connection that exists between two sciences that cannot 
 well flourish separately.* The kind of so-called " facts" 
 
 * I speak of course of economical statistics only. 
 
X Preface. 
 
 so assiduously collected (in England especially) shew 
 how little statisticians know or care about the principles 
 of political economy. 
 
 If the value of gold and silver varies (as it does not) 
 inversely as general prices of commodities (of which the 
 labour of human beings is not one), the statisticians' 
 index-numbers shewing fluctuations in the price-level at 
 successive periods are the measure of the value of the 
 precious metals. 
 
 If their real value varies inversely as the wages of 
 labour, as it does according to the founder of political 
 economy, then the statisticans' wages-level (when we get 
 it) will be the measure of value we want ; and what just 
 now the world appears to me to be unconsciously craving 
 for. 
 
 Let statistics only furnish for England and India a 
 thoroughly accurate wages-level (for different districts, 
 if necessary) at intervals of a few years and Adam 
 Smith's idea of measuring the real value of gold and 
 silver by labour — " the only universal and accurate 
 measure of the value of all commodities at all times 
 and in all places " — might be carried out. 
 
 The wages-level, if I mistake not, would do for our 
 depreciating rupees or appreciating sovereigns precisely 
 what I have suggested might have been done by rupees 
 current. 
 
 If half the energy spent in reckoning up and bemoan- 
 ing our losses through depreciation and appreciation 
 were devoted to their prevention, there would soon be 
 no losses to lament over. 
 
 It would be strange indeed if the very means by which 
 I conclude that I have paid lo per cent, more than I in- 
 
Preface. xi 
 
 tended through the appreciation of gold (say), did not 
 enable me to pay exactly what I intend in future 1 
 
 When I know my watch is wrong, I do not " get up 
 in the morning" by it, but by that other time-piece which 
 has convinced me that my watch cannot be depended on. 
 
 Whether I have succeeded in conveying to the reader 
 a general idea of my meaning, in these few words, I 
 know not. Nor am I sanguine that I have done so 
 in the accompanying essay. If Adam Smith, with all 
 his crystalline, forcible exposition failed to make his great 
 interpreter, John Stuart Mill, catch even a glimpse of 
 his real meaning when he insisted so repeatedly, so 
 tediously, that labour is the measure of value, how can / 
 hope to succeed in addressing an audience of Anglo- 
 Indians, most of whom appear to deny, or, at any rate, 
 ignore, the very existence of the science which Adam 
 Smith did so much to create, and John Stuart Mill and 
 very many others so much to perfect ? That my favourite 
 science is as yet by no means perfect ; that its first 
 principles sadly need overhauling ; are very good rea- 
 sons for criticising its teachings when they are erroneous, 
 but very poor ones for refusing " to have any thing to 
 do with " it, for fear of " getting a fit of the blues." 
 
 At first sight, the conclusions arrived at in this essay 
 seem somewhat disappointing and devoid of immediate 
 utility ; for the fact turns out to be, much to my surprise, 
 that, measured by labour, the ultimate price man pays for 
 all things, silver in India, in the last i S years — the very 
 period during which we have heard so much of its de- 
 preciation — has scarcely altered in value at all ; and 
 that gold in England from 1870-4 to 1 880-4, about the 
 appreciation of which it is now the fashion to raise such an 
 
xii Preface. 
 
 outcry, did not really appreciate in the tiniest degree ! — 
 wages and incomes in England, if there is any truth 
 in figures, having remained nearly, if not quite, station- 
 ary. True, wages at home just now are falling and the 
 fall may be due to something more than a mere tempo- 
 rary depression. Time will shew. 
 
 Let not the reader imagine, however, that, therefore, 
 "Gold and Silver weighed in the balance" is not worth 
 reading, or that nothing is radically wrong with 
 our rupees and sovereigns or the things they buy. 
 Amongst other important consequences of the con- 
 clusions I have arrived at is this : the real meaning 
 of the depreciation of silver in relation to gold stands 
 revealed — it may be for the first time so far as 
 Anglo - Indians are concerned. Silver not having 
 perceptibly fallen in value in India, but only in 
 England ; and gold not having become scarce (prior, 
 at all events, to 1884) in England, it is evident (to me 
 it is certain) that the supply of gold or silver has, as 
 yet, had nothing to do with the fall in the rate of 
 exchange or in the gold price of silver. What has 
 taken place is a redistribution of silver between the two 
 countries — an increase in the depth or volume of the 
 English stream or reservoir of silver — a permanent 
 diminution in the English cost of obtaining the metal. 
 
 I am aware of the difficulty of compressing into a few 
 sentences the solution of a terribly difficult problem, 
 and must refer the reader for fuller information to my 
 work on " The Indian Tribute and the Loss by Exchange" ; 
 but I will try to render my meaning clear here : — 
 
 Our Home-charges are economically of the nature of 
 a tribute. They are paid (some ;^22,ooo,ooo annually, 
 
Preface. xiii 
 
 all things included) not in money but with merchandise. 
 Imports from a tribute - paying country (both as a 
 matter of theory and as a matter of fact) are always 
 of lower value in the \xSbi\x\&-receiving country than (but 
 for the tribute) they would be — English importers of 
 Indian merchandise having to compete with the virtu- 
 ally gratuitous imports of the Secretary of State for 
 India ; who is the largest English importer of Indian 
 wheat, cotton, indigo, jute, hides, &c., the world has ever 
 seen. The so-called depreciation of silver is, or has 
 been caused by, the depreciation of our exports in 
 England. In order to induce our English customers 
 to buy more and more from us to pay for our imports 
 and for our growing tribute, we must and do offer our 
 merchandise on cheaper and cheaper terms. The value 
 and cost of our exports thus inevitably fall in England 
 with every increase of our tribute, and their equivalent 
 in silver, now peculiarly Indian money, must fall too. 
 When one rupees worth of Indian m.erchandise is worth 
 only I J. 5 i^a?'., ow^ r«/^« is only worth that paltry sum; 
 things which are equal to the same thing being equal 
 to one another. 
 
 This peculiar result, the depreciation of the currency 
 of the tribute-paying country in the receiving country, 
 could not have happened if silver were freely coined 
 by other countries — France and America, for instance. 
 Still, Indian merchandise would, even in that case, be as 
 cheap as now in England. If they were not, our custom- 
 ers would not buy enough of them to cover our English 
 liabilities, and part of our Home-charges would then 
 be paid in cash. An efflux of money from this country 
 (or diminished influx, which is the same thing) could 
 
xiv Preface. 
 
 not then be avoided ; our prices, profits and wages would 
 fall ; the fall in prices here would continue till the neces- 
 sary demand for our exports was created by growing 
 cheapness ; and although we should not under these cir- 
 cumstances " lose by exchange " in quite the same way, 
 we should still lose to quite the same extent by having 
 to pay exactly the same quantity of our merchandise as 
 we pay now. 
 
 Were it not for the depreciation of our exports in 
 England there would be no loss by exchange — through 
 cheap silver at all events. We are not likely to lose by 
 the cheapness of what we buy, but of what we sell. 
 Had our exports maintained their value in relation to 
 gold (of which, remember, there has been no scarcity), 
 we could each and all (and we certainly should) escape 
 from the loss by exchange by paying our English 
 debts with our merchandise, as we all do ; although 
 some of us do not appear to know it. 
 
 Looked at from an English point of view, the fall of 
 silver is virtually and really a lowering of the prices 
 of all things Indian. 'Y\ie. result \s the same as if, silver 
 maintaining its English value, Indian prices had fallen 
 through an efflux of the metal from India. By offering 
 less for Re. i, our English customers prevent the neces- 
 sity for the otherwise inevitable efflux of silver from 
 India and enable us to " get off" (as the Economist 
 once put it) and pay our tribute with a less alteration of 
 our prices and incomes than (but for the fall of silver) 
 must have taken place. 
 
 The only difference bimetallism would make to India 
 is, that by creating a scarcity of silver in the English 
 entrepdt, it would let loose the forces tending to drag 
 
Preface. xv 
 
 down our prices, profits and wages, which the fall in the 
 rate of exchange has confessedly* held in abeyance. 
 Not that it would make the smallest difference to any 
 one. We should have to pay less ; and have less to pay 
 with. That is all. 
 
 Looked at from an Indian point of view, a fall in the 
 rate of exchange is equivalent to a rise in the price of 
 all things English. The result is the same as if, English 
 prices remaining the same, our incomes had fallen. 
 Now this is just what will happen when silver rises to 
 6\d. an ounce owing to the renewed demand of France, 
 Germany and the United States. We merchants then 
 could not resist the temptation to export Indian 
 rupees and sell them at their enhanced London price. 
 The law which associates a rise in the rate of exchange 
 to 2s. and the loss to India of about a quarter of her 
 present currency is, I assure the reader, quite " Medo- 
 Persian " in character. 
 
 I make no apology for stating here these conclusions, 
 which I think I have proved in " The Indian Tribute " 
 (without the facts which support them) ; for, in the 
 event of the re-establishment of the old ratio of i to 
 i^j4, the arguments used in the following pages would 
 at once come to the front. 
 
 What I have said about the justice and expediency 
 of increasing the salaries of government officials with 
 every fall in the real value of the rupee in India, that 
 is to say (roughly), with every rise of everybody else's 
 income, admits of being inverted, and applied to the case 
 of a rise in the Indian value of Re. i. It would be simply 
 
 * This is admitted by some bimetallists. 
 
xvi Preface. 
 
 monstrous that by means of an artificial propaganda, 
 about which all the energy of its advocates cannot elicit 
 a "languid curse" from other people (who have not 
 signed away their services for the rest of their natural 
 lives and accepted in return such an abomination as a 
 fixed salary and pension), Indian officials should be 
 allowed to deliberately cut down our money incomes 
 and retain their own undiminished. The problem — 
 how to ensure the equitable redistribution of the rupees 
 that remain in India after the nations have declared 
 their willingness to accept Indian rupees for 33^ per 
 cent, more than they are at present worth — is one of the 
 questions of the day for us outsiders. 
 
 There are two other reasons for cordially commending 
 this essay to the serious consideration of Indian officials : 
 First, unless they can refute " The Indian Tribute " 
 and English political economy as well, their astonish- 
 ingly insane anxiety to continue borrowing from 
 England and to increase the Indian tribute, will come 
 to an end shortly ; and, as sure as fate, the deprecia- 
 tion of silver in India th.a\.vfa.s arrested vfYien the Home- 
 charges became due, about 1 8 or 20 years since, will then 
 resume its course; when these Home-charges are reduced, 
 and even when they cease growing. Then, I am sure, 
 Indian officials will welcome a suggestion as to the best 
 means of allowing their money incomes to expand with 
 those of other people ; for expand they then must, either 
 according to some standard, or according to none. 
 
 Secondly, it was only a few months ago that the 
 fate of the Bland Act and the Latin Union trembled in 
 the balance ; and although the advocates of the double 
 standard seem to be making headway just now, it is not 
 
Preface. xvii 
 
 yet certain that the demonetization of silver may not 
 ere long be not only talked about (as it has been 
 hitherto) but accomplished on a large scale. The few- 
 millions sterling's worth of silver sold by Germany 
 appears to have made but little impression on the 
 value of the rupee in India ; but the supplies that could 
 and may be put in the market by America and France, 
 would in all probability make a serious difference in 
 the purchasing power of silver here ; while the scramble 
 for gold may bring about a real scarcity of that metal. 
 
 So that in addition to our present loss by exchange, 
 which seems almost entirely owing to the depreciation 
 of the things we sell {not only silver), we may soon have 
 to suffer another loss that may be owing to a positive 
 scarcity of the metal in which we have, foblishly enough, 
 promised to pay our English debts : of which double 
 loss the fixed salaried official will pay his full share. 
 Nor is this all the official classes may lose. 
 
 A depreciation of silver through sheer superabundance 
 (which has not yet occurred) would raise prices, wages 
 and cost of living in India. Unfixed incomes would 
 no tbe affected by it ; but fixed incomes would really 
 dwindle ; and so would fixed taxes. We know the 
 rest — a chronic deficit — successive additions to the 
 income-tax — and the workhouse. 
 
 Although bitterly opposed to what I cannot help 
 thinking the injustice of Indian bimetallism — because 
 I am convinced that it would lead to a rapid contrac- 
 tion of the currency to the great benefit of those who 
 have fixed salaries and to other people's injury — the 
 reader will not fail to notice that " Gold and Silver 
 weighed in the balance " is written chiefly in the interest 
 p., G. & s. b 
 
xviii Preface. 
 
 of the Indian oflicial. The text of the book is, that it 
 is shamefully unjust to allow one man " to grow rich in 
 his sleep " at the expense of another man — a principle 
 which cannot be too vividlj' borne in mind when silver is 
 growing in abundance and when gold is becoming scarce. 
 Unfortunately, so far as events have gone as yet, the 
 mischief of exchange is not what I and others had 
 suspected, but something more difficult to deal with. 
 Our merchandise having fallen in English value in 
 consequence of the Indian tribute, the only true 
 remedy is obviously to reduce that tribute. Had gold 
 become scarce, our creditors would surely not be so 
 unreasonable as to expect so much of it. Had rupees 
 fallen in value, because there are so many of them, there 
 would be no loss by exchange to remedy, and no serious 
 problem before us except that of ensuring the equitable 
 distribution of the extra rupees among the people. 
 
 Yet a few words more : In writing " The Indian 
 Tribute " I found the depreciation of Indian commodi- 
 ties in England a subject about which it is sufficiently 
 difficult to express oneself intelligibly and briefly ; but 
 fortunately for the simplicity of the argument there 
 seemed no reason to believe that gold or silver supply 
 had as yet appreciably influenced the rate of exchange. 
 Had part of the result been due to the superabundance 
 of silver, part to the superabundance of Council bills 
 (paper money representing the Indian Tribute), and 
 part to the scarcity of gold, the subject would have 
 been almost inexpressible in the Empress's English. 
 Adding up pounds, shillings and pence columns at once 
 would be child's play compared with writing on three 
 such subjects in the same sentence. 
 
Preface. xix 
 
 Yet this is what we may have to do ; and it cannot but 
 be of immense advantage to those who are fascinated 
 by these dreary and intricate subjects, to arrive at a 
 clear, satisfactory method of ascertaining the real value 
 of gold, silver and the things they buy. How much has 
 gold risen in value ? How much has silver fallen ? Has 
 Indian wheat risen or fallen ? This is what we want to 
 know ; and this is the problem I have tried to solve. 
 But does it admit of a solution ? Opinions differ. I 
 think, and Adam Smith thought, that so long as we, 
 who have to work in order to get possession of gold, 
 silver and commodities, exist, their value to us, and in 
 exchange, does admit of measurement, at any time and 
 place and at different times and places. 
 
 To those who say that my views are " too theoretical" 
 (and this has been said), I reply with the home-thrust. 
 Your facts, your statistics, are all wrong and worth no 
 more than the ink wherewith they are written, because 
 they are based on a false theory. Ten years and a 
 terrific amount of energy have been wasted over this 
 silver question for this very reason. Adam Smith's 
 penetrating genius would have seen through it in a 
 week- ; for he had a measure of value. He taught that 
 labour and not any particular commodity or set of com- 
 modities is the measure of the value of gold, silver and 
 all other commodities. You have just celebrated his 
 centenary, but have missed his " theory," the self-evident 
 axiom, the keystone of the arch upon which the " Wealth 
 of Nations " was built. So much for yo\ir price-lewels — 
 your facts. Measuring the less variable by the more 
 variable may be amusing ; but see the result: Mr. 
 Giffen confidently asserts that there is a dearth of gold ; 
 
XX Preface. 
 
 Mr. Mulhall just as confidently tells us the world has 
 more gold than it knows what to do with. I incline to 
 the belief that Mr. Mulhall is right ; but I doubt if he 
 knows it. And here is the joke of the thing : Mr. 
 Giffen supplies the facts which prove Mr. Mulhall to be 
 right. I allude to the doubling of English wages in 50 
 years. And what use do Anglo-Indians make of this 
 surely very relevant fact ? Why, some eminently 
 practical official writes to the papers about it and quotes 
 it as a remarkable and hitherto unnoticed reason why 
 gold had become scarce. People in the gold - using 
 country get twice as much gold as formerly ; therefore, 
 / should say it had fallen in value 50 per cent, seeing 
 that it will purchase or command only half as much 
 English labour as before : but Mr. Chapman thinks 
 therefore gold has risen in value through scarcity ! I 
 suspect Mr. Chapman of a practical joke. But the 
 Editors did not see it. Remember Mr. Giffen said that 
 the people habitually 'get the extra money : not that 
 it is owing to them. May heaven preserve us from 
 mere facts without theory — from statistics minus 
 political economy. 
 
 Mad statistics on currency matters been collected on 
 the supposition that the teachings of the science they 
 profess to illustrate might be true, 999 thousandths 
 of what I have had to read on the silver question would 
 never have been written. As George Henry Lewes 
 said, "'Facts,' as they are called, are notoriously valu- 
 able in proportion only to the value of the theory upon 
 which they have been collected. People talk of ' facts' 
 as if facts were to produce irresistible convictions. The 
 truth is they are susceptible of almost any explanation." 
 
Preface. xxi 
 
 These words, though written 40 years ago, might have 
 been written to-day and with especial reference to the 
 silver question. 
 
 After all, gentle reader, the distasteful "theory" 
 relates to " putting money in thy purse" ; the problem 
 is how to prevent money from going into other people's 
 pockets which was intended to go into yours. If the 
 theory also explains how to prevent other people's 
 money from iinding its way into your purse, I cannot 
 help it : the two things are so inseparably mixed up. 
 
 J^, J, (P(Ma^ 
 
CONTENTS. 
 
 Page. 
 I. Introduction : What do I Mean by a Measure of 
 
 Value ? i 
 
 II. The Pre-eminent Utility of a Measure of the 
 Value of Gold and Silver at different periods, 
 
 IF attainable . . 3 
 
 III. A Measure of Value not necessarily a thing or 
 
 commodity S 
 
 IV. Might not the means by which we ascertain 
 the extent of our Losses and Gains through 
 Appreciation or Depreciation be used in order 
 to prevent those Losses and Gains in future ? 7 
 V. The Folly of allowing our so-called standards 
 of value to drift : Nothing to prevent Inde- 
 finite Appreciation or Depreciation ... 12 
 VI. Measuring a thing by itself : Gold by the Gold- 
 price OF Gold and the Double-standard by 
 the " Ratio " 19 
 
 VII. The Price-level of Statisticians not the Mea- 
 
 sure OF the Value of Gold and Silver . . 25 
 
 VIII. The Relativity of Value no argument against 
 
 the Possibility of Measuring it : Real Value, 
 Commodities and Labour: The Wages-level the 
 Measure of Value 33 
 
 IX. The Possibility of a General Rise or Fall of 
 Values and its Bearing on the Possibility of 
 
 A Measure of Value 39 
 
 X. Adam Smith on Labour as the Measure of 
 
 Value 46 
 
 XI. Labour occasionally used as the Measure of 
 Value : The Determining Cause and Regulator 
 of Value S3 
 
XXIV 
 
 Contents. 
 
 XII, John Stuart Mill on a Measure of Value . 
 
 XIII. Objections considered 
 
 XIV. Does the Theory admit of Practical Application? 
 XV. Corn as a Measure of Value for India 
 
 XVI, The Wages-level as the Measure of Value eter- 
 nally JUST both to Debtors and Creditors 
 XVII. The Wages-level as the Measure of Value in- 
 
 - • evitable 
 
 XVIII. The Equitable Distribution op the Precious 
 Metals, in accordance with their Real Value 
 as declared by the Wages-level, all that is 
 needed in order to obviate the evil effects 
 OF their Scarcity or Superabundance 
 
 Notes 
 
 Appendices 
 
 Page, 
 
 57 
 66 
 71 
 So 
 
 87 
 93 
 
 97 
 
 lOI 
 
 IS7 
 
GOLD AND SILVER 
 
 Weighed in the Balance. 
 
 CHAPTER I, 
 
 INTRODUCTION. 
 
 WHAT DO I MEAN BY A MEASURE OF VALUE ? 
 
 In the Tower of London there is a metal rod, the dis- 
 tance between two marks on which, when the temper- 
 ature of the whole rod is 60° F., is the British Imperial 
 yard — our standard unit or measure of length. 
 
 The universally received unit of time is the gj^th part 
 of a mean solar day — the mean solar second. 
 
 In the Exchequer Office there is a lump of platinum 
 weighing one pound avoirdupois. This is our standard 
 unit or measure of mass or weight. 
 
 Our unit of velocity is a body uniformly moving at 
 the rate of one foot per second. 
 
 Our unit of force is that force which, acting on a 
 pound of matter, produces in one second a velocity of 
 one foot per second. 
 
 Have we, or can we have, anything analogous to 
 these standard measures which may be called a measure 
 'of value ? 
 
 P., G. & S. A 
 
2 What do I mean by a Measure of Value? 
 
 By a measure of. value I mean an unvarying standard 
 by comparison with which we might ascertain from time 
 to time the fluctuations (if any) in the value of the 
 precious metals ; which, singly or combined, answer the 
 purpose of measuring the value of other things for the 
 time being sufficiently well. Many other commodities 
 would probably answer the same purpose as well ; or 
 better, in some respects ; but gold and silver have been 
 selected chiefly on account of their not being subject 
 to any very sudden alterations in their own value, and 
 for ordinary commercial transactions it would be ridi- 
 culous to suggest a substitute. The quantity of these 
 metals in existence and in circulation is so vast that 
 excessively sudden fluctuations in their value (through 
 expansion or contraction of the volume of the currency 
 which must accompany them) are impossible ; so, from 
 day to day, from week to week, and from month to 
 month, no better standard could be found : but, from 
 century to century, from generation to generation, from 
 decade to decade, and even from year to year, the case 
 is different. Some means of knowing exactly how much 
 gold'has risen or silver has fallen in value ; or of satis- 
 fying ourselves that no alteration in the value of these 
 metals has occurred, seem to me in the very highest 
 degree necessary and, if attainable, desirable. 
 
CHAPTER II. 
 
 THE PRE-EMINENT UTILITY OF A MEASURE OF THE 
 VALUE OF GOLD AND SILVER AT DIFFERENT PE- 
 RIODS, IF ATTAINABLE. 
 
 NOR have I the least doubt that people in India will 
 patiently consider an earnest, independent, disinterested 
 attempt to think out a subject so closely concerning 
 their own and India's welfare. 
 
 There can be no question whatever that if I or any- 
 one else could succeed in discovering some tangible 
 substance, metallic or other, which demonstrably never 
 varied in value at all, the whole world with one consent 
 would make use of it for the purpose of ascertaining 
 the fluctuations in the value of gold and silver at differ- 
 ent periods ; and no national or other debts of long 
 duration would be contracted on any other terms than 
 that their nominal interest should fluctuate in accord- 
 ance with the real ascertainable value of the precious 
 metals as declared by comparing them with our un- 
 varying standard. Or the thing might conceivably be 
 done by a sort of balance or machine. We do much 
 by machinery now-a-days (calculate life -policies for 
 instance). Suppose a kind of balance were constructed 
 that would render manifest exactly how much £i ster- 
 ling had appreciated or Re. i had depreciated from 
 year to year. Who would in future be content to pay 
 a fixed interest for money borrowed, or receive a fixed 
 
4 The Utility of a Measure of Value. 
 
 salary, in falsified coins when a measure of their falsity 
 was at hand ? A sovereign that cannot be " tapped " 
 through the balance we use is handed back to the 
 tenderer. 
 
 When (as may happen) the English gold (and paper) 
 currency contracts and prices, profits and wages fall, 
 rents fall too : only the holders of consols et hoc genus 
 omne will gain by the increased purchasing power of 
 their incomes. 
 
 When prices, profits, and wages rise in India through 
 the influx of depreciated silver and other causes (as 
 they may do — what is to prevent it ?) ; while agricul- 
 tural and commercial incomes rise, official incomes will 
 remain stationary ; so will the permanently settled land- 
 revenue. The virtual diminution of agricultural taxa- 
 tion will inevitably result in a deficit, which will be 
 partly made up by paying the official only the same 
 quantity of a metal that has fallen in value instead of a 
 nominally increased salary as he is justly entitled to ; 
 and the balance will be made good by an income-tax, 
 from which the very men whose incomes have been 
 inc^ased by lightened taxation will be exempt. 
 
 In Orissa, the revenue in the time of the Gangetic 
 dynasty, (*) though nominally about the same quantity of 
 silver as now, was in reality of about eight times its 
 present value. Government service was a sure road to 
 affluence. Now the province is bankrupt, and the official 
 miserably poor. 
 
CHAPTER III. 
 
 A MEASURE OF VALUE NOT NECESSARILY A THING 
 OR COMMODITY. 
 
 Now there is no absolute necessity that a measure of 
 value should be a thing, a commodity or machine, which 
 might be locked up in a cupboard. What we want to' 
 know is to what percentage gold or silver has increased 
 or decreased in value through causes affecting itself 
 only, at one period as compared with a former period. 
 One stupid objection is thus disposed of. Because no 
 individual thing is less subject to variation in value than 
 the precious metals, it does not follow that we cannot 
 measure their value. The very means by which we 
 know they vary in value less than other things, might 
 surely with a little ingenuity tell us how much they 
 vary. 
 
 I quite admit that if a commodity couldhe discovered 
 which is always produced or acquired with the same 
 quantity of labour, the problem of a measure of value 
 would be immensely simplified. For it would then be 
 evident to the meanest capacity that whenever an alter- 
 ation occurred in the ratio of exchange between our 
 invariable commodity and some other thing, the cause 
 of the variation would not be in it, but in that other 
 thing; seeing that cost of production or acquisition, 
 estimated in labour, determines the ratio in which all 
 things exchange for each other ; i. e., their value in rela- 
 
6 A Measure of Value not necessarily a Commodity. 
 
 tion to each other. If a certain quantity of rice, for 
 instance, in Bengal required for its production an in- 
 variable quantity of labour, and the rupee-price of rice 
 were to rise 50 per cent, under these circumstances, we 
 could with certainty infer from the price of rice that 
 silver had depreciated 33^ per cent, for a given number 
 of rupees would then purchase not only a third less rice 
 but a third less labour ; 50 per cent, more rupees than 
 before could be acquired by a given number of hours' 
 work. Rice, ex kypothesi, would be no dearer, no more 
 difficult to get possession of; silver would be cheaper, 
 more easily acquired. Unfortunately, there is no com- 
 modity so stable in its own labour-cost as rice, on our 
 hypothesis, is supposed to be ; and what I cannot help 
 deeming the most practical problem economists have 
 ever tried to solve, is not so simple as it conceivably 
 might have been. The moot point is whether, accept- 
 ing the incontestable fact that we have no commodity 
 sufficiently stable in its own labour-cost to measure the 
 value of other things, we cannot measure the actual 
 labour-cost, at different periods, of anything we choose 
 to direct our attention to, almost as easily as if we had 
 some tangible commodity invariable in its own cost 
 wherewith we might compare other commodities the 
 cost of which is subject to fluctuations. 
 
 Measuring the speed of ships would be a more simple 
 matter than it is now, if a model steamer were always 
 at hand which invariably travelled at one uniform num- 
 ber of knots per hour. We have no such model ship ; 
 and we do, very well indeed, without it. 
 
CHAPTER IV. 
 
 MIGHT NOT THE MEANS BY WHICH WE ASCERTAIN THE 
 EXTENT OF OUR LOSSES AND GAINS THROUGH AP- 
 PRECIATION AND DEPRECIATION BE USED IN ORDER 
 TO PREVENT THOSE LOSSES AND GAINS IN FUTURE? 
 
 One oft he most curious psychological problems I know 
 of is how men can speak and write (as they do) of gold 
 and silver as the standards of value for all time, and 
 then immediately afterwards proceed to measure them 
 by another standard, without seeing that this other 
 standard (if indeed it is of any utility for measuring 
 purposes) is the real measure of value. 
 
 If a draper were to come to me complaining that his 
 wooden yard measure, from some cause or other, would 
 persist in growing longer, and that he had to bear a 
 steady continuous loss, because every yard of cloth he 
 sold is in reality more than a yard, I should think (no 
 matter what politeness might prompt me to say) : " You 
 idiot : How do you know that your measure gets longer 
 and longer year by year? By comparing it with an 
 accurate yard measure. Then, simpleton, why not correct 
 your measure from time to time by that ? " So when 
 India tells me piteously that her annual tribute of 
 Home-charges is growiijg at an alarming rate because 
 a "sovereign's worth " is getting to mean more and more, 
 and may shortly mean double or treble what she un- 
 derstood by a " sovereign's worth '' when she undertook 
 to pay those Home-charges, and asks me for advice, I 
 
8 The Possibility of Measuring our Gains and Losses 
 
 for one, never could see anything at all perplexing about 
 the matter. Who told India that sovereigns are growing 
 scarce — that therefore more and more of other things 
 have to be given for them, or their possessors will not 
 sell ? The answer is, the science of statistics. The 
 gold currency of India's creditors is contracting, as is 
 evidenced by — what ? Whatever the means are by which 
 the Statistical Society arrive at this fact (if it be one), 
 those very means are or ought to be the standard in 
 accordance with which the nominal money amount of 
 India's perpetual interest for gold borrowed ought to be 
 compelled to fluctuate. 
 
 The fact that there are many English statisticians who 
 positively deny that there is, or has been, any scarcity 
 of gold, while others assert the dire reality of the gold 
 famine, shews that men have not yet made up their 
 minds as to how gold is to be measured. Could any 
 more convincing proof be required of the need of a 
 solution of this mighty problem (yet it is amusingly 
 simple), or of a demonstration of its insolubility ? For 
 we have been told that a measure of value is an impossi- 
 bility. But we do not believe it, evidently. 
 
 The very fact that we grumble about appreciation and 
 depreciation proves that we think we have some means 
 of making a shrewd guess at the value of money at any 
 rate, and what, after all, is science but accurate orga- 
 nised commonsense ? Whatever the means are by which 
 we come to the certain conclusion that gold and silver 
 fell in value by more than two-thirds in the- 90 years 
 or so following the discovery of the Potosi mines and 
 the rest ; whatever the means are by which Dr. Hunter 
 can convince us that silver in India has lost seven* 
 
Implies the Possibility of their Prevention. g 
 
 eighths of the value it once possessed, why not make 
 use of those means as a substitute for gold and silver 
 for our perpetual land settlements, fixed salaries, and 
 so forth ? 
 
 Why not regulate the interest of our national and 
 other debts, and all fixed payments, according to that? 
 It must, in our opinion, be of a more stable nature than 
 the precious metals, or we should not measure their 
 value by it as we do. The possibility of the existence 
 of an effectual substitute for gold and silver for con- 
 tracts extending over long or indefinite periods cannot 
 be consistently denied by those who make use of it 
 in order to calculate their losses and gains — for some 
 one must gain what some one else loses ; the wealth 
 " lost " is not annihilated but simply transferred or not, 
 as the case may be. May not those same losses be 
 prevented for ever by insisting upon that same measure 
 of value being made the basis of all fixed contracts 
 in future ? What has happened is a small matter. The 
 past is irrevocable ; but the future is in our hands. 
 We cannot restore that which was lost to those who 
 have lost it, for the gainers by the falsification of the 
 standard (save the mark !) will not part with it ; but it 
 seems to me that we cz.-n prevent one section of the com- 
 munity from being enriched at the expense of another 
 section. 
 
 Neither political economy nor statistics is of much 
 use to mankind if it can only amuse creditors by 
 telling them how much richer they are than they ought 
 to be, or if it can only annoy debtors by maliciously 
 exhibiting the exact total of their losses through the 
 falsification of the so-called " standard " of value. 
 
lo The Possibility of Measuring our Gains and Losses 
 
 England's national creditors are said to have gained 
 about ;£'i 1 5,000,000 in ten years, because £1 sterling 
 has expanded in meaning some 20 per cent. India 
 is said to have had a capital of ;^ 100,000,000 added to 
 her Home-charges for the same reason. Either we can 
 ascertain the exact value of gold at different periods or we 
 cannot. If we cannot, let us cease fooling ourselves with 
 imaginary figures : if we can, the losses are clearly pre^ 
 veniible. We can and do measure how much we ought to 
 have paid ; how can we deny the possibility of measuring 
 what we ought to pay in future ? 
 
 When a man comes to the positive conclusion that 
 his watch is not a correct time-keeper, he would be 
 very foolish indeed to continue to regulate his daily 
 actions by it. The very fact that he knows that he 
 has not the correct time of day implies that he has 
 some means of ascertaining what the right time is. 
 Those means whatever they are — the gun, a sundial 
 or an accurate chronometer — must in his opinion be a 
 more perfect measure of time than is the watch he 
 carries ; otherwise he would contentedly believe that 
 the gun or the sundial or the chronometer, and not his 
 watch, had gone wrong. Instead of grumbling that his 
 time was too fast or too slow, and taking his breakfast 
 when other people are at tiffin or chota hazri, he would, 
 if he were wise, regulate his confessedly imperfect time- 
 piece by that other apparatus whose movements more 
 closely correspond with the diurnal movement of the 
 world he lives in. 
 
 As to what the means are by which men arrive at 
 the indisputable fact that gold appreciates or that silver 
 depreciates, or that both metals rise or fall in value 
 
Implies the Possibility of their Prevention. 1 1 
 
 together (as they generally do), opinions may differ ; 
 but there can be no difference of opinion on this point : 
 the means of ascertaining the extent of the rise or fall 
 in the value of gold or silver having been discovered 
 and generally accepted as practically invariable, men 
 commit an act of egregious stupidity who, after that 
 discovery, undertake to pay annually a fixed weight of 
 a thing that may become year after year more difficult 
 to obtain ; and who are content to bargain away their 
 services during the rest of their lives in return for an 
 unalterable weight of a metal that may become so 
 plentiful that ere long it may have scarcely any value 
 left ; except as spoons, tankards, and so forth. 
 
CHAPTER V. 
 THE FOLLY OF ALLOWING OUR SO-CALLED STANDARDS 
 OV VALUE TO DRIFT : NOTHING TO PREVENT INDE- 
 FINITE APPRECIATION OR DEPRECIATION. 
 
 There are those who hold — and I think rightly ; a 
 love of truth so predominates over a desire to make 
 out a strong case as to compel me to say this — that 
 nine-tenths of what has been said and written about 
 the depreciation of silver and the appreciation of gold 
 during the last 12 or 15 years has been grossly exagger- 
 ated ; that during this period silver in India has an- 
 swered the purpose of a measure of value tolerably 
 well : the same of gold in England. (^) 
 
 But what of this ? 
 
 It cannot be maintained without manifest absurdity 
 that gold and silver, however stable they may have been 
 during the last decade or two, cannot or may not fluc- 
 tuate in value to any extent. What is to prevent their 
 doing so ? No one knows what a day may bring forth. 
 The value of money depends on, or has a great deal to 
 do with, its quantity. Gold or silver may be discovered 
 in any quantity at any time ; or the mines of one metal 
 or of both metals may "dry up." But the yearly 
 output from the mines is a very small matter compared 
 with the possible increase or decrease in the volume of 
 the currency. from other causes. A European war may 
 at any moment deluge us with money ; and the peace, 
 that it is to be hoped would soon follow, would as 
 
The Drifting of the Standards of Value. 1 3 
 
 rapidly perhaps take the extra money away again. 
 Within the memory of most of us America and Italy 
 expelled some ;^8o or ;^90,000,000 by means of paper ; 
 the coins expelled went, as we all know, to other coun- 
 tries and depreciated their currency very considerably. 
 Much of the subsequent contraction of the world's 
 currency — the contraction (or reduced rate of expansion) 
 which took place from 1 864 — was simply due to America 
 and Italy claiming their " own again." Instead of use- 
 lessly grumbling at these little matters, it would be 
 surely wiser to be prepared for them. They ought not 
 to make the smallest difference to anyone ; and they do 
 make a difference only to those who are foolish enough 
 to act as if .^ I sterling or Re. i really bears the remotest 
 resemblance to a yard measure. Measures of value for 
 different periods they never are or were ; but standards 
 of weight and fineness. 
 
 And leaving war out of consideration, during peace 
 these alternate expansions and contractions of the 
 world's currency are of repeated occurrence. They 
 appear to have something to do with spots on the sun ; 
 at least they occur with similar regularity. Every ten 
 years or so people in England get into a fever of en- 
 thusiasm and buy ; and for the purpose of buying they 
 use not only all the money they have got, which is 
 limited, but all they expect to get and what they pre- 
 tend to expect, which together form an unlimited fund. 
 In short, they buy on credit. 
 
 Now credit during a trade-revival brings about a fall 
 in the value of the " standard " of value, whatever it 
 may be, generally with more rapidity than the discovery 
 of half a dozen gold and silver mines could do. Of 
 
14 The Drifting of the Standards of Value. 
 
 course, people buy in order to sell ; and when they think 
 the proper time for selling has arrived, they do sell, all 
 at once ; and then the so-called standard itself rises in 
 value as rapidly as it fell, much to the relief of those 
 unfortunate individuals with fixed incomes. But why 
 should any incomes be fixed as a stated weight of a 
 thing so liable to fluctuations in its own value ? 
 
 It is perhaps unnecessary to take into account the 
 sudden and temporary fluctuations in the value of 
 money during trade-revivals and commercial crises — 
 perhaps impossible (yet they last a year or two) — but 
 what shall we say of those great and permanent depre- 
 ciations and appreciations that may occur in conse- 
 quence, on the one hand, of a determination to do with- 
 out metal coins ; or, on the other, of a well- or ill- founded 
 apprehension of an impending dearth of the precious 
 metals ? 
 
 If bimctallists continue preaching at England much 
 longer, they may produce the very effect they so much 
 dread. The English people may soon begin to think 
 there must be something in these repeated warnings 
 about the coming scarcity of gold, and take to invest- 
 ing it where it is absolutely safe instead of freely lend- 
 ing it for the purposes of trade. The paper wings of 
 credit may shrivel up — with what effect on the value of 
 £\ sterling the reader who knows how many imaginary 
 coins there are in circulation at home may judge for 
 himself 
 
 But there is more to be feared in opposite directions. 
 The cheque system in England and America which, as 
 Mr. Mulhall says, is to trade what steam-power is to 
 machinery, is superseding the use of gold coins much 
 
T}ie Drifting of the Standards of Value. 1 5 
 
 as railways superseded stage coaches, and is increasing 
 12 times as fast as trade itself. The English currency 
 is indeed based. on gold, but the metal has been already 
 " economized well-nigh to vanishing point ; " and what 
 may happen to the value of £\ sterling in the imme- 
 diate future who knows ? There seems to me some- 
 thing appalling in our binding our descendants ten 
 generations hence to pay or to receive a fixed weight 
 of a thing which may by that time for all we know 
 have almost ceased to exist ; and the value of which 
 may meanwhile drift anywhere and mean simply any- 
 thing. Its value hereafter will depend, as now, on the 
 number of contrivances men can invent for the purpose 
 of doing without it. Instead of being more stable in 
 value than most other things at periods at all remote 
 from each other, ;^i sterling appears to be without any 
 stability whatever. Its future value will depend solely 
 on human caprice, Perpetual interest for national 
 debts might be made to fluctuate with the rainfall or 
 with the number of christenings per 1,000 of the popu- 
 lation ; and no one would have serious cause to com- 
 plain. What ;^i,ooo,ooo may happen to mean a couple 
 of generations hence would puzzle the wisest to say 
 within ;£'soo,ooo. 
 
 At present in India we manage things differently ; 
 whether better or not is an open and a serious question. 
 Our currency is and has been for some years almost purely 
 metallic. People say this is because we cannot trust one 
 another out of sight ; some maliciously disposed indi- 
 viduals insinuate that the Government knows that every 
 issue of paper money it sanctions depreciates the rupee 
 and the salaries of its servants just as much as so many 
 
1 6 The Drifting of the Standards of Value. 
 
 silver coins would do, and that therefore it restricts our 
 substitutes for rupees to some paltry ;^i 2,000,000, or 
 so. Mr. Wilson would have given us ;£■/ 5, 000,000 by 
 this time had he lived and been in power ; and we 
 should have thus been spared the necessity of purchas- 
 ing with the chemical wealth of our soil every batch 
 of silver European nations choose to throw into the 
 market. But how long will this state of things last ? 
 Not long ; and what may happen to the value of our 
 " standard " of value. Re. i, when the Government once 
 sees the necessity or the wisdom of lightening this 
 ponderous circulating medium of ours? Depreciation 
 and losses, to those who have stupidly accepted fixed 
 incomes and pensions for the rest of their lives, are 
 inevitable. 
 
 Besides, the Bland Act may be repealed ; bimetallists 
 may fail in their attempt to persuade other nations to 
 come to our rescue. Silver may be demonetized and 
 sold ; and we should have to buy it. On the other hand, 
 bimetallists may succeed after the lapse of — time ; and 
 what then ? Worse than all — we should lose, as I have 
 proved in " The Indian Tribute" at once about a quarter 
 of our present currency ; and our " standard " of value 
 would rise in its own value. 
 
 Time would fail me to notice anything like all the 
 causes at work in bringing about fluctuations in the 
 value of gold and silver. It would take a long argument 
 to convince Anglo-Indians that by the abrogation of 
 the import-duty on cotton goods they are causing silver 
 to appreciate here (or checking its depreciation) ; and 
 that by continuing the export duty on rice they are 
 doing the same ; and that by borrowing money from 
 
The Drifting of the Standards of Valiie. 17 
 
 England and adding to our tribute, Sir Auckland Colvin 
 depreciates silver in England and raises its value in India. 
 With the details of the last named process, readers of 
 " The Indian Tribute " will be familiar. 
 
 I have said enough to convince anyone who admits 
 that the value of our coins depends on the volume of our 
 currency that falsifications of our standards of value are 
 both possible and probable ; not to say certain. 
 
 The very reverse of all I have suggested as likely to 
 happen may occur without affecting my argument in the 
 least. All I assert is, there is no knowing what may 
 happen to the standards which we, with amusing per- 
 sistency, pretend to believe are as immutably fixed in 
 their own value as the polar star itself is in position. 
 
 If it could be demonstrated that there is nothing in 
 the nature of things to prevent the British Imperial yard 
 from dwindling in length from 36 inches to 4^ during 
 the next century or two, and that the mean solar day a 
 few centuries hence might mean an interval of time three 
 or four times as long as our " twice round th^ clock," 
 our standards of distance and time, most people would 
 admit, would not be altogether satisfactory. If that 
 lump of platinum, our standard of weight, might prove 
 no more stable than a lump of ice, something more sub- 
 stantial would be put in its place. " Iser rolling rapid- 
 ly " — sometimes, and sometimes slowly, would never be 
 regarded as a perfect measure of velocity. Neither would 
 the physical strength of an individual human being, vary- 
 ing as it does from childhood to old age, be of much ser- 
 vice as a measure of power. 
 
 We grumble terribly when shop-keepers make use of 
 false weights and measures, and appoint inspectors to 
 P., G. & S. B 
 
1 8 The Drifting of the Standards of Value. 
 
 set things right ; but we allow our medium of exchange, 
 money — composed of a heterogeneous mass of silver, 
 gold, copper, cowries. Government notes, cheques and 
 other forms of " coined credit " — our measure of value 
 for current transactions, to drift — anywhere ; men fancy 
 its value is stable, or will be in future : at any rate, 
 they act as if they did : Epur si muove — and generally 
 towards vanishing point. 
 
 True, we grumble about this too : and having grum- 
 bled ; having perhaps delivered an eloquent lecture, and 
 expatiated on the imaginary horrors of the impending 
 gold famine ; having clearly shewn that the fall of the 
 Roman Empire was owing to a " tightness of the money 
 market," we congratulate ourselves on the success of 
 our new Indian loan! — on having bound our descendants 
 for ever to pay a fixed weight of a metal which, accord- 
 ing to our own argument, is year after year getting 
 more and more difficult to get possession of. Or perhaps 
 we purchase an annuity in India, i.e., we pay a heavy sum 
 in silver, every ounce of which cost us any amount of hard 
 work ; for which we are to receive yearly a certain weight 
 of the same metal, which there is reason to believe may 
 after a time cost those who pay it next to nothing, and 
 may be of next to no real value to us. 
 
CHAPTER VI. 
 
 MEASURING A THING BY ITSELF : GOLD BY THE GOLD- 
 PRICE OF GOLD AND THE DOUBLE - STANDARD BY 
 THE "RATIO." 
 
 Value is, of course, a relative term : which seems, by 
 the way, a conclusive argument, in some people's esti- 
 mation, against the possibility of measuring it. As we 
 shall see, it is nothing of the kind. Length, breadth, 
 thickness, duration, weight, velocity, and power are re- 
 lative too. Yet we measure them. 
 
 A thing cannot be said to be absolutely, without re- 
 ference to anything else, long or short, big or little, light 
 or heavy ; nor a person to be weak or strong ; nor a 
 horse to move swiftly or slowly ; nor an event to be 
 of long or short duration. A race is run in more or less 
 than — 50 seconds. One horse runs faster than — the 
 rest. A buniah's weight is not so heavy as — it ought 
 to be. A yard of Manchester cotton is invariably short- 
 er than — the steel yard in the Tower. Similarly 
 with value. Nothing is either dear or cheap but think- 
 ing — comparison — makes it so. A quarter of Indian 
 wheat is worth (unfortunately only) as much as thirty 
 shillings. 
 
 The whole question is, is ;^i sterling worth more than, 
 or only as much as, usual? If it is dearer, if it has 
 become of higher value, if it has appreciated, how do we, 
 how do we profess to, know it ? What is this standard 
 
20 The Gold-price of Gold. 
 
 by comparison with which we arrive at our ever so con- 
 fident conclusion that sovereigns have increased in value 
 of late years ? 
 
 Do we not assume that Indian wheat never does and 
 never can by any possibility alter in value at all ? and 
 do we not proceed to measure the value of gold by it ? 
 We do, some of us do, and are laughed at for our 
 idiotcy. We do indeed add some other things ; about a 
 score, even more liable and (considering the circum- 
 stances) more certain to fall in value than wheat itself; 
 and by these very unstable commodities we measure the 
 comparatively stable gold. Whatever the measure of 
 value may be, it certainly is not the statistician's price' 
 level, as we shall see more fully in the next chapter. 
 
 What I propose dealing with here is another fallacy 
 altogether. Granting, nay insisting upon, the relativity 
 of value : what do those mean who insist that gold is the 
 standard of value for all time and cannot itself fall or 
 rise in value ? In relation to what has gold been, or is 
 going to be, stable in value ? I wish so particularly 
 to know because that presumably immutable something 
 wherewith gold is compared might answer the purpose of 
 ascertaining in future whether the asserted stability of 
 the noble metal is a fact or (as I suspect) a pure fiction. 
 
 You tell me your watch is right, assertions to the con- 
 trary notwithstanding. You loudly insist upon it, there- 
 fore I want badly to know why you feel so positive. Your 
 watch and mine may both go wrong hereafter, and I may 
 not be able to correct mine by yours. 
 
 You tell me you have just consulted Benson's chronQ<- 
 meter. That is just what I wanted to know. Benson /fej 
 a chronometer; then I need not ask /ok the time in future; 
 
The Gold-price of Gold. 2 1 
 
 This is what I see in the papers as I write : " The 
 news that a large gold - field has been discovered in 
 Western Australia is indeed most welcome. The world 
 wants more gold, and just at the moment when the 
 intensity of the want was beginning to be most keenly, 
 felt, Australia, which has already produced millions of 
 the precious metal, again promises to open out bound- 
 less wealth. A large increase in the supply of gold can- 
 not reduce the standard of value ; on the contrary, it will 
 tend to increase the value of other metals, as well as the 
 value of all colonial products. If this discovery of gold 
 in Australia, added to the rich deposits now being 
 brought to light in India, is as important as it is repre- 
 sented to be, we may at last fairly look with hope for a 
 revival in the trade of the world which has been so long 
 languishing in consequence of the over-supply of every 
 commodity except gold." 
 
 Now, I have not taken this extract from an unpub- 
 lished news-letter written at the beginning of the last 
 century, before men began seriously to think on these 
 subjects. It was written in this very year of Grace, 1 886, 
 and published — that is the wonderful part of it — in a letter 
 on Commerce and Companies, dated 26th of June, 
 from Calcutta, by the Pioneer's own correspondent. Its 
 author is Mr. William Abbott ; a bullionist, I presume. 
 It is the old, old story. There is nothing like leather. 
 The world wants more leather ; the trade of the world 
 is languishing for want of leather. Leather alone is 
 wealth. A large increase in the supply of leather can- 
 not reduce its value ; on the contrary, every other arti^ 
 cle of commerce estimated in leather would rise in 
 value; leather estimated in leather could not rise at all. 
 
22 The Gold-price of Gold. 
 
 The leather price of leather is immutably fixed. Of 
 course, this looks silly enough when stated about leather, 
 but when stated about gold, it is different. The standard 
 of value cannot fall in value, however cheap it may 
 become ! 
 
 Is It possible that those who "refuse to listen to any 
 arguments based on the supposed scarcity of gold " (an 
 English Chancellor of the Exchequer once used words 
 to this effect) are thinking of the grave announcement 
 in Chambers' Cyclopaedia that the present price of pure 
 gold is £2, 17 s. 6d. per ounce ? 
 
 " All things alter in value except gold ; yes, except 
 gold." This was my first lesson in political economy — : 
 30 years ago. I afterwards discovered that my old 
 schoolmistress had "seen in a book" that gold was al- 
 ways as nearly as possible ;^3 17J. 6d. per ounce, '" not- 
 withstanding the immense influx of gold from California 
 and Australia." This was probably about its price in the 
 days of Solomon too. One shekel of pure gold must 
 always have been worth about two half shekels. One 
 tolah of silver is not likely to be worth any more or less 
 than two eight-anna pieces so long as Re. i weighs one 
 tolah. Value being relative, the value of a thing in rela- 
 tion to itself does not admit of much alteration. I think I 
 have heard that it was predicted that the inevitable effect 
 of the gold discoveries would be to lower the gold-price 
 of gold, and it may yet be predicted that the continued 
 influx of silver into India may reduce the silver-price of 
 silver to less than Re. i per tolah. Whether the notion 
 that gold, is the standard of value for all time rests on 
 the invariability of its gold-price I know not ; but I do 
 know that it has nothing else to rest upon.(^^) 
 
The Gold-price of Gold. 23 
 
 Let not the reader hastily condemn the fallacy of mea- 
 suring the value of gold by its own price as childish. 
 Those who live in glass-houses should not throw stones, 
 and it is about 100 chances to one that he is guilty of 
 an exactly similar or even a more childish blunder him- 
 self Probably the reader is a bimetallist, and firmly 
 believes with M. Cemuschi that if London, Paris, Berlin, 
 and Washington were only to declare the double -stand- 
 ard, silver would go up to 15^ and remain there ^/^z- 
 ever. And what then ? We should hear no more from 
 the reader on depreciation or appreciation. The cur- 
 rency question would be settled for all time. For has 
 not (he might argue) Mr. Molesworth told us ? — 
 
 " When accuracy is required in a standard of length 
 or time, it is usual to employ ' compensation.' The 
 most simple form of ' compensation ' is the employment 
 of two different metals, so combined that the expansion 
 or contraction of one neutralizes that of the other. 
 Bimetallism is the method of compensating the standard 
 of currency." 
 
 The analogy is ingenious ; but the moment you begin 
 to argue from the stability of the relative value of the 
 two metals, the " accuracy " and invariability of the 
 value of the combined metals in other respects, you 
 commit the folly of measuring a thing by itself. For 
 gold and silver would then, in the words of Professor 
 Jevons, form " one commodity of two different strengths'.' 
 To measure gold by silver under a bimetallic rigim,e, 
 or silver by gold, would be just as egregiously absurd 
 as it would be to measure the value of gold of 22 
 carats by the value of gold of 18 carats, or one ounce 
 of pure gold by its "present price" £1 ijs. 6d. per ounce. 
 
24 The Gold-price of Gold. 
 
 Both qualities of gold rise and fall together, and under 
 the double-standard gold and silver woulddo thesame. 
 There would be just as much need to ascertain the 
 fluctuations in the value of the currency after the 
 establishment of bimetallism as before. Strange that we 
 heard so little (except from Dr. Hunter) of the deprecia- 
 tion of silver from 1850 to 1870.0 Then there was 
 something to grumble at ; the rupee was sweated down 
 to Zas., yet Indian officials took it very coolly, and 
 because the precious '" ratio " was tolerably well main- 
 tained. But since, while the rupee has remained very 
 steady in value, the complaint has been loud and con- 
 tinuous. 
 
 Besides, measuring gold by its gold-price and measur- 
 ing gold by silver under the double - standard are no 
 more absurd than measuring commodities in general 
 by one another, and into this pitfall how many have 
 fallen ? You ask, but is there anything else to measure 
 them by ? There is something else by which their value 
 is always consciously or unconsciously measured, de- 
 clared, and determined, as we shall see. There is a 
 standard measure of value, but it is not what it is usually 
 supposed to be. 
 
CHAPTER VII. 
 
 THE PRICE -LEVEL OF STATISTICIANS IS NOT THE 
 MEASURE OF THE VALUE OF GOLD AND SILVER. 
 
 A WILL have it that B's watch is " fast " — absyrdly so. 
 How does A know it ? From his own watch which, B 
 asserts, never yet went right by any accident, and A 
 knows it is true. Nevertheless, A persists in trying to 
 prove B's watch " goes on wheels, " and how does he 
 set about it ? He consults half a dozen other watches, 
 none of which indicate any one time of day and strikes 
 an average of the lot. B's watch may not be right, but 
 it is infinity to one that A's " average " is wrong. 
 
 Most believers in the alleged appreciation of gold in 
 England, if questioned as to the reason for the faith 
 that is in them, would reply by producing the statis- 
 tician's price-\eYG\. But the truth is, that measuring the 
 value of gold by the prices of commodities in general 
 is as useless as trying to ascertain the correct time of 
 day by striking an average of a lot of times of day 
 which we know are all hopelessly incorrect. Mr. Mul- 
 hall's conclusion (and that of others too) is, that not- 
 withstanding the fall of prices in England, the world has 
 got more gold coins than it knows what to do with ; 
 that all periods of high prices during the century have 
 been caused by the obstruction to the supply of commo- 
 dities {i. e., a rise in their value) occasioned by war ; 
 and that low prices are always brought about by peace,. 
 
26 The Price-level not the Measure of Value. 
 
 prosperity, and improvements in production. Since 
 1858-60, for instance, he shews that the increased effi- 
 ciency of human labour through machinery is alone 
 sufficient to account for a 30 per cent, fall of prices : 
 two men in 1884 being able to do as much as three at 
 the former period. The reason why prices have not fallen 
 30 per cent, but only 17 being — war. In short, com- 
 modities have depreciated. There is certainly sufficient 
 truth iq this view of the matter to make Mr. Goschen, 
 who loosely asserts that "commodities for the most 
 part remain stationary in value," and others who assume 
 that " it is conceded on all hands " that Indian com- 
 modities have remained stationary, feel uncomfort' 
 able. Man is such an extreme creature. The moment 
 he abandons the eternal stability of £\ sterling doctrine, 
 he rushes into the opposite absurdity, and imagines that 
 a rise in the price of timber indicates a superabundance 
 of gold — a fall in its value ; and a fall in the price of 
 Indian cotton is held as proof positive of a scarcity of 
 rupees. Wages, meanwhile, for ajl this school of writers 
 know, having been multiplied perhaps by 3 ! 
 
 The assumption that commodities in general remain 
 stable in value, and gold and silver alone are subject to 
 fluctuations, will not bear a moment's serious reflection. 
 Were this notion true, the prevalent belief that the de- 
 preciation, the cheapening, of silver in India is neces- 
 sarily accompanied by a universal rise of prices would 
 be correct. The rise of prices would mean, be, con- 
 stitute the very essence of, the depreciation of silver. We 
 often, I may say always, hear that it is so. Thus the late 
 Mr. W. T. Thornton remarked in a memorable article, 
 the last he ever wrote in the Westminster Review : " The 
 
The Price-level not the Measure of Value. 27 
 
 co-existence of a depreciated currency and of stationary 
 prices is a flat contradiction in terms. Depreciation of 
 silver currency in a country in which silver is the sole 
 legal tender, signifies a rise of prices and signifies 
 nothing else. It is a rise of prices alone which indicates 
 it, nay rather which constitutes its essence. The quan- 
 tity of silver contained in a given number of rupees 
 has ceased to be worth the same quantity of miscellaT 
 neous commodities as before ; so, more rupees than 
 before are needed to purchase the same quantities of 
 commodities ; in other words, general prices have risen. 
 In whatever measure, great or small, depreciation of 
 silver has contributed, or may hereafter contribute, to 
 lower the exchange value* of the rupee, in precisely 
 that measure must Indian prices in general have simul- 
 taneously risen already, or hereafter rise simultaneously, 
 The necessity of the case forbids one moment's inter- 
 val between the two events. It does not suffice to say 
 that prices must sooner or later rise in virtue of the 
 depreciation ; if they have not risen already, the de- 
 preciation has not yet commenced." 
 
 If all this were true, the /nV^-level of commodities 
 in general in India would be the only conceivable mea- 
 sure of the value of silver. No better standard by 
 which to calculate the interest of our (silver) national 
 debt could be found. Oflficial salaries ought to be re- 
 adjusted annually or at short intervals according to 
 prevailing prices, and the land-tax ought to be similarly 
 re-adjusted by continual reference to the same standard. 
 But the fact is, the price of commodities in general is 
 absolutely of no use whatever for the purpose. Silver 
 * Or the rate of exchange. This sentence is quite true. 
 
28 The Price-level not the Measure of Value. 
 
 has been selected as a measure of value for ordinary 
 use, because it is the least variable of all commodities, 
 gold perhaps excepted and perhaps not. (We must 
 certainly except corn — in India.) 
 
 In other words : If we start from the assumption, 
 which would be extremely difficult to verify, that the 
 precious metals are the only things that can by any 
 possibility fall in value through cheapened production 
 and increased supply, then everything must rise in 
 price when silver becomes more plentiful ; an increased 
 number of rupees in everybody's pocket would inevi- 
 tably mean a general rise of prices. But is it not quite 
 possible that at least one thing, (say) saltpetre, might 
 depreciate, fall in value, pari passu with or even more 
 rapidly than silver ? It would be rash to deny it, and if 
 one thing, why not two ? — cotton (say) and Indian wheat 
 and jute, and in fact most or many articles of export 
 — India's superfluous agricultural produce ? Remember, 
 we have been expending some ;£' 2 5 0,000,000 during the 
 last 30 years on purpose to reduce the quantity of labour 
 required to land Indian goods at the shipping, ports. 
 What are Indian railways for except this very purpose 
 which, being effected, it is the absurd fashion to marvel 
 at and even lament ? 
 
 Does not the reader admit the difficulty ? The West- 
 ren world may demonetize their silver and sell it. An 
 influx of cheap silver into India must then take place, 
 and at the same time we are every year opening new 
 railways ; the indubitable tendency of which is to 
 bring about an influx of cheap commodities into Cal- 
 cutta, Bombay, and Karachi. It is more than probable 
 that the influx of commodities into the shipping ports 
 
The Price-level not the Measure of Value. 29 
 
 overtakes the influx of silver, and their prices fall. Both 
 commodities and silver are cheapened, but apparently 
 silver has become scarce and dear ; and, of course, 
 we should cry out about the contraction of our cur- 
 rency, which, by the way, is just what some of us are 
 doing now. It is a stupid blunder ; the measure of 
 value is ignored. It is like measuring the position of 
 two falling bodies by the position of the one which 
 falls more rapidly than the other ; we, the spectators, 
 remaining stationary, might measure their position by 
 ours. On the other hand, there is a different and an 
 opposite set of causes at work. We may ere long (noth- 
 ing is more probable) witness an efflux of silver from 
 India, or the influx may be altogether arrested, and 
 our currency may really contract. At the same time 
 the gradual exhaustion of the productive powers of the 
 soil of India (a terrible rock-ahead, as most of us know) 
 may be perceptibly felt. The prices of the food-grains 
 forming the people's subsistence consequently tend to 
 rise, while the contraction of our currency tends to bring 
 about a fall : the two tendencies neutralize each other ; 
 prices remain unchanged, and we fancy things are all 
 right, whereas they may be fearfully wrong. Both food 
 and silver may be growing dearer. But mere prices 
 would not reveal the fact. 
 
 Even more important in its bearing on price-levels 
 and the silver question (though more difficult to grasp) 
 is the following consideration : A country like England 
 which through various causes (referred to in " The 
 Indian Tribute") gets its imports more cheaply than 
 usual, gets its bullion also more cheaply for the same 
 reasons. This has been rigorously demonstrated by 
 
30 The Price-level not the Measure of Value. 
 
 John Stuart Mill, and is, besides, an observed fact. In 
 consequence of this simultaneous cheapening of bullion 
 and of imports, the relation between them is not altered 
 when such occurs ; the prices of imports do not rise : 
 the rise of prices occasioned by the influx of additional 
 bullion affects home-made produce only. It would take 
 too long to enter into details and explain the process 
 I allude to ; it is sufficient, for the purpose of argument, 
 to ask the reader to suppose that Mill's theory of inter- 
 national values might in this particular be true. If it 
 is true, the Economists price-level, so often quoted in 
 proof of the alleged scarcity of gold in England, is 
 laughably irrelevant ; for the index-numbers of the 
 Economist are calculated from the prices of imports 
 chiefly. 
 
 Every genuine political economist knows that the 
 English price of an imported article does not depend 
 at all upon how much English people could pay for it 
 if they liked (upon the volume of the English currency), 
 but upon its price in the country whence it comes, which 
 now - a - days is infinitely more dependent upon how 
 much English capital has been invested in the export- 
 ing country than upon the out - put from the mines of 
 Ballarat. 
 
 Almost all the articles, from the prices of which the 
 Economists index-numbers are calculated, are imports. 
 If they were imports only, one might make good use 
 of these index-numbers. By comparing the extent to 
 which they grow " small by degrees and beautifully less," 
 with the "languidly increasing" English income-tax 
 returns,^^) one might measure with some accuracy the 
 advantage reaped by the English people from the invest- 
 
The Price-level not the Measure of Value. 3 1 
 
 ment of their :£'2,ooo,ooo,ooo in other lands. The total 
 tribute now received annually by our countrymen at 
 home amounts to (at any rate) more than ;^ioo,ooo,ooo's 
 worth of foreign merchandise ; every "sovereign's worth" 
 of which is expanding in meaning at the rate of- — well, 
 our goods have fallen in English value 36 per cent.* in 
 little more than a dozen years. With the necessary 
 data one might calculate what S per cent, in foreign 
 bonds really means : not much less than 25 per cent, I 
 fancy. 
 
 It seems to me that if we wish to ascertain the fluc- 
 tuations in the real value of gold in England, the only 
 /rzcg-level useful for this purpose must be based on the 
 prices of things peculiarly English. Even this would 
 be deceptive ; for improvements in production are made 
 at home so repeatedly that a fall of prices almost al- 
 ways means something very different from a scarcity 
 of gold. The production of cotton goods, for instance, 
 was increased 50 per cent, from i860 to 1883, at the 
 expense of only a 7 per cent, increase in the number of 
 hands employed, and raw cotton meanwhile was chea- 
 pened considerably ; so that from the price of cotton 
 goods the appreciation of gold cannot possibly be 
 inferred. In fact, there is nothing peculiarly English 
 in England but labour (and there is some danger of 
 that becoming half Irish and half GermanJ. Every- 
 thing else is being cheapened from time to time by the 
 cheapening of raw materials of foreign origin or by 
 improved machinery. The wages-\&v&\, not the price- 
 level,' is what we want. 
 
 * See the diagram forming the frontispiece of " The Indian Tribute.^' 
 
32 The Price-level not the Measure of Value. 
 
 Professor Cairnes wisely and truly pointed out that 
 high prices do not necessarily accompany cheap gold in 
 England: other things may be equally cheap. High prices 
 are the concomitant of cheap gold only when the 
 efficiency of English labour applied to those industries 
 devoted to the manufacture of articles exported in ex- 
 change for gold does not extend to other branches of 
 industry. A general increase in the efficiency of labour, 
 while it cheapens all things, has no tendency to raise 
 prices, not of commodities : but it does raise the "price " 
 of labour. The high rate of industrial remuneration 
 in England is the proof of the low value of gold in that 
 country. 
 
 And obviously what is true of gold in England is true 
 of silver in India. Here silver might have become 
 doubled in abundance, and the cheapening of commo- 
 dities might have kept pace with that of silver. Prices 
 in that case would have remained stationary, but money 
 profits and wages would have risen. The high rate of 
 wages, high profits of the cultivator, high incomes, in 
 short, will be the proof of the cheapening of silver in 
 India, when such takes place. 
 
CHAPTER VIII. 
 
 THE RELATIVITY OF VALUE NO ARGUMENT AGAINST 
 THE POSSIBILITY OF MEASURING IT : REAL VALUE, 
 COMMODITIES, AND LABOUR: THE WAGES -LEVEL: 
 THE MEASURE OF VALUE. 
 
 It is sometimes argued that the relativity of value, 
 closely looked into, is and always will be fatal to all 
 attempts to discover a measure of value. To ask, what 
 is the value of £\ sterling ? is as meaningless as it is to 
 ask, what is the ratio of the number 17? Value means 
 simply the ratio in which things exchange for each 
 other. A thing cannot have an innate, inherent, sub- 
 stantive quality of its own called value, without refer- 
 ence to other things, any more than it can have 3. position 
 of its own. Half a dozen bodies in otherwise empty 
 space might all move in any direction and at any 
 velocity, but their absolute movement could never be 
 known. We could never know more than their relative 
 positions. The whole universe might shift a few millions 
 of miles up or down, or to the right or left, anywhere 
 in fact, if it had anywhere to go to, and no one would 
 be any the wiser. Similarly there can be no general 
 rise or fall of values ; if there can be, the event would 
 be simply unascertainable. Gold may rise in value, 
 silver may do the same, so may every other commodity. 
 The general rise, even if it could occur, could not be 
 measured : all that can be known is the difference of 
 extent (if there were any) between the rise of some things 
 p., G, «Ss s. c 
 
34 The Relativity of Value. 
 
 and the rise of others. That is, there can be no abso- 
 lute measure of value. In other words, the value of a 
 thing is its purchasing power over other things ; the 
 quantity of other things it will buy. Its own inherent 
 worth, value or utility, does not enter into the economi- 
 cal and commercial idea of value. 
 
 Now all this is pure nonsense ; and although really 
 clever men talk in this way, it is not even clever non- 
 sense. The value of a commodity never was, and never 
 was intended to mean, by the founder of the science of 
 values — and he had as good a right as anyone else to 
 define the word as he thought proper — merely the quan- 
 tity of other commodities it will sell for. A few years 
 ago African diamonds were selling for 30.5-. per carat ; 
 now their price is 20s. : gold will now purchase 50 per 
 cent, more diamonds; therefore, it is said, gold has risen 
 in value ! The diggers know better, and know why 
 the stones have fallen in their own value. As it costs 
 less labour to find them and carry them to the place 
 where they are wanted, " so when they are brought thi- 
 ther, they will purchase or command less labour," or the 
 products of less labour or the latter's equivalent in gold. 
 
 The real worth of diamonds, the estimation in which 
 people hold them, the quantity of toil and trouble neces- 
 sary to obtain possession of them, the quantity of labour 
 they will purchase or command ; these have fallen : that 
 is, diamonds have depreciated, and this is not the same 
 thing as the appreciation of gold ; on the contrary, it 
 is something radically and essentially different. "At 
 all times and places that is dear which it costs much 
 labour to acquire, and that cheap which can be had 
 easily and with very little labour." The cheapening of 
 
The Relativity of Value. 35 
 
 diamonds has not even tended to enhance the value of 
 gold one iota, nor would it do so if they were to become 
 .as common as glass beads. Push the argument to its 
 bitter end : if a fall in the price of diamonds really 
 mearis a scarcity of gold, wrere they to become so plen- 
 tiful as -to be given away, there would be no gold left. 
 Nor would gold depreciate by the smallest fraction if no 
 more diamonds were discovered, and all but the Koh-i- 
 noor were lost or destroyed. The mountain of light 
 might then be worth a mountain of gold " as huge as 
 high Olympus," but gold would not for that reason be 
 of less value than before. The value of ;^i sterling, 
 so far from being simply the quantity of other things 
 it will buy, has nothing to do with that quantity. The 
 definition of value is incorrect. Mere words I care 
 nothing for : I mean the idea is a wrong one. 
 
 Granting that value is relative, and granting that it 
 means purchasing power : I ask over what ? Over com- 
 modities, I shall be informed. But what do we include 
 under the term commodities ? Do we mean only all 
 kinds of useful and transferable things, all more or less 
 difficult of attainment ? or do we mean also the mus- 
 cular and intellectual labour of human beings ? 
 
 Men do sometimes loosely speak of labour as a com- 
 modity having a " price " and governed like all others 
 by the law of " supply and demand," and even by that 
 of " cost of production " ! But the idea is too outrage- 
 ously absurd to need refutation. The motives influencing 
 the supply of human beings are widely different from 
 those influencing the supply of transferable wealth, and 
 labour is not now-a-days transferable. What is not 
 transferable is not wealth, is not a commodity. I indig- 
 
36 The Relativity of Value. 
 
 nantly repudiate being classed with my employers' 
 goods and chattels; and I protest against a verbal leger- 
 demain which has been so prolific of mischief. 
 
 The purchasing power of the precious metals may 
 mean the quantity of commodities in general a given 
 weight of them will purchase, or the quantity of labour 
 it will purchase or command. The latter alone is, and 
 is the measure of, their real value. 
 
 Nor is this a distinction without a difference. What 
 I have said about African diamonds and English gold 
 applies word for word to everything else. Gold in Eng- 
 land is of no more value at the present day because 
 it will purchase more silver than it would 15 years 
 ago. The silver when bought is not worth so much as 
 formerly. It and its equivalent in Indian merchandise 
 have depreciated in England ; they will purchase or 
 command less labour there. This is the measure of their 
 value and of the value of gold too. 
 
 So with India. The illustration of the diamonds is 
 (I think it will be admitted) an impressive one ; so is 
 the case of Indian sapphires. Everyone knows that 
 sapphires fell in rupee-price a few years ago, because 
 it cost next to nothing to cut them out of a mountain 
 in Jummoo, and bring them to the market. But no 
 one imagined for one moment that therefore silver had 
 risen in value, appreciated or become scarce. Nor are 
 precious stones an exception. Almost everything in 
 Bombay and Calcutta (exports especially) has fallen 
 in price of late years, evidently because the railways 
 have reduced the quantity of labour necessary to bring 
 goods to where they are sold. As their cost, estimated, 
 in labour, has been reduced, they or their equivalent 
 
The Relativity of Value. 37 
 
 in silver will purchase or command less labour than of 
 old. This is no mere theoretical assumption or deduc- 
 tion, but a positive niatter of fact. The goods I am 
 alluding to have considerably fallen in rupee-price Q-^) ; 
 wages in and about Calcutta and Bombay have risen (i*) ; 
 the goods have then fallen in value in relation to " the 
 original purchase money, " labour ; their cost of acquisi- 
 tion has been reduced ; they have been cheapened. 
 Had wages. fallen as much as the prices of commodities ; 
 wheat, cotton, indigo, &c., would be worth just as much 
 as before, in spite of their lower prices. Labour is the 
 measure of their value and of silver too. 
 
 Silver, we imagine, has depreciated w« India, because 
 it will purchase less gold than formerly. Not at all. 
 The real value of gold in this country has risen (^) ; the 
 products of a greater quantity of Indian labour have 
 to be exported in payment for it; therefore, when 
 bought, it purchases or commands more labour. The 
 smaller quantity will purchase as much labour as the 
 larger quantity used to do, as may be seen by con- 
 verting wages in India in 1873 and 1885 (^*) into gold at 
 the then current price of sovereigns. Silver has not 
 fallen here because something else has risen in value. 
 Its own value, estimated in Indian labour throughout the 
 country generally, does nbt appear to have appreciably 
 altered since 1873. Whether it has or not does not affect 
 the argument. I am explaining how its value must- be 
 measured ; not measuring it just now. The quantity of 
 Indian labour it will purchase or command is the real 
 value of Re. i ; and fluctuations in the wages-level, not 
 price-\e.vA, shew the fluctuations in the real value of our 
 currency. The wages-level is our measure of value. 
 
38 The Relativity of Value. 
 
 Yes, value is relative — relative to us ; and " The 
 Wealth of Nations " will never be refuted by any mere 
 new-fangled definition of value which leaves us out of 
 account, or which classes us along with goods and chat- 
 tels, beasts of burden, " things " and " commodities." 
 
 True, if half a dozen bodies in empty space were to 
 all fall together and we, the spectators, fell too at the 
 same rate, we could never know it. But what if we did 
 not fall too ? 
 
CHAPTER IX. 
 
 THE POSSIBILITY OF A GENERAL RISE OR FALL OF 
 VALUES AND ITS BEARING ON THE POSSIBILITY OF 
 A MEASURE OF VALUE. 
 
 The whole argument turns on the truth or falsehood of 
 John Stuart Mill's celebrated paradox — there cannot be 
 a general rise or fall of values. It is a contradiction in 
 terms, it is said, to maintain there can be. If all things 
 were to rise or fall, nothing would have risen or fallen ; 
 for value means simply the ratio in which things exchange 
 for each other. 
 
 People never will believe it, because it is not true. 
 It is one of those curious word-puzzles like Zeno's demon- 
 stration of the impossibility of motion. Motion, argued 
 Zeno, is impossible, because, before a moving body can 
 reach the end, it must reach the middle point, but this 
 middle point then becomes the end, and the same 
 objection applies to it ; since in order to reach it, the 
 object in motion must traverse another middle point ; 
 and so on ad infinitum — space being infinitely divisible. 
 Achilles runs ten times faster than the tortoise, yet will 
 never overtake him if the tortoise has the start ; for, 
 supposing them to be at first separated by an interval 
 of a thousand feet, when Achilles has run these thousand 
 feet, the tortoise will have run a hundred ; and when 
 Achilles has run these hundred, the tortoise will have 
 got ten, and so on for ever. Achilles will never catch 
 the tortoise. Because it would take us infinite time 
 
40 Can there be a General rise or fall of Values ? 
 
 mentally to subdivide a finite space to infinity; it would 
 take Achilles all eternity to traverse that finite space ; a 
 mental process is compared with a physical one. Even 
 Sir William Hamilton could not see this weak point in 
 the argument, but Mill did ; and it is a mystery why he 
 ever tried to palm off on us a fallacy not half so res- 
 pectable as Zeno's. 
 
 Granting his definition of value as commodity- value 
 only, granting that labour is a commodity, Mill is, of 
 course, right. Then there cannot be a general rise or 
 fall of values, or if there can, we can never know it; 
 that is, there can be no measure of value. But Mill's 
 definition of value is wrong. Most of the money ex- 
 pended in the world annually is expended in the direct 
 purchase of the labour of human beings. The quantity 
 of labour it will purchase is its value in relation to 
 that labour. The mere quantity of other things it will 
 purchase is not its real value ; for these other things 
 may be cheapened, or the reverse, to any extent. They 
 may not be worth as much as, or may be worth more 
 than, formerly. Their value in relation to labour, their 
 cost of acquisition by labour, which is always their pur- 
 chasing power over labour, their real value, is ever 
 fluctuating, yet always ascertainable. So is the real 
 value of money itself 
 
 According to Mill, when we see a lot of horses run- 
 ning a race,, we can only know that some run faster 
 than the rest ; according to Adam Smith and, I be- 
 lieve, Professor Cairnes, we can also know how fast all the 
 horses run. We may select one wherewith to compare 
 the speed of the others ; but if we have a watch, we 
 can tell how fast he runs. We have that watch. 
 
Can there be a General rise or fall of Values ? 41 
 
 According to Mill, we may yet be able to earn an 
 ounce of gold before breakfast, and a correspondingly 
 increased quantity of everything else, and never know 
 we are any better off : " values and prices would not be 
 affected in the least, " but our incomes would. This 
 is the whole thing in a nutshell. 
 
 The following brilliant passage from Mill's own work 
 is not only a refutation of his doctrine of the impossi- 
 bility of a general rise or fall of values, it clearly indi- 
 cates that the measure of value of the precious metals is 
 and can only be the rate of wages — the wages- or in- 
 come- level. It is, besides, intensely interesting, because 
 it shews so clearly the utter inutility of the statistician's 
 price-\&vA as a measure of the value of gold or silver. 
 
 " The permanent values of all things which are 
 neither under a natural nor under an artificial monopoly 
 depend ... on their cost of productions^') But the in- 
 creasing power which mankind are constantly acquir- 
 ing over nature increases more and more the efficiency 
 of human exertion, or in other words, diminishes cost of 
 production. All inventions by which a greater quantity 
 of any commodity can be produced with the same labour, 
 or the same quantity with less labour, or which abridge 
 the process, so that the capital employed need not be 
 advanced for so long a time, lessen the cost of produc- 
 tion of the commodity. As, however, value is relative : 
 if inventions and improvements in production were made 
 in all commodities and all in the same degree, there 
 would be no alteration in values. Things would con- 
 tinue to exchange for each other at the same rates as 
 before; and mankind would obtain a greater quantity 
 of all things in return for their labour and abstinence, 
 
42 Can there be a General rise or fall of Values ? 
 
 without having that greater abundance measured and 
 declared (as it is when it affects only one thing) by the 
 diminished exchange value of the commodity. 
 
 " As for prices, they would be affected or not, ac- 
 cording as the improvements in production did or did 
 not extend to the precious metals. If the materials of 
 money were an exception to the general diminution of 
 cost of production, the value of all other things would fall 
 in relation to money, that is, there would be a fall of 
 general prices throughout the world. But if money, like 
 other things, were obtained in greater abundance and 
 cheapness, prices would be no more affected than values 
 would ; and there would be no visible sign in the state 
 of the markets of any of the changes which had taken 
 place, except that there would be (if people continued 
 to labour as much as before) a greater quantity of all 
 sorts of commodities circulated at the same prices by a 
 greater quantity of money'' 
 
 Perfectly true ; but mark : a greater quantity of com- 
 modities circulated by a greater quantity of money 
 would result in everybody's getting m,ore money as well 
 as more of other things. Prices would remain station- 
 ary, but wages would rise. There would be no sign in 
 the state of prices in Covent Garden market of the 
 changes that had taken place, but in the labour market 
 there most decidedly would be a striking sign. The 
 purchasing power of £\ sterling in relation to commo- 
 dities would be unaltered ; but in relation to labour, 
 its purchasing power would have fallen. Money in the 
 labour market would have depreciated, fallen in value. 
 Its very utility would be seriously diminished ; it would 
 be worth less, because more easy of acquisition ; because 
 
 i i 
 
Can there be a General rise or fall of Values ? 43 
 
 of its having been cheapened. The only question left 
 is, can we measure the extent of its fall ? Not by the 
 prices of commodities certainly, for they too have been 
 off our supposition equally cheapened. I say we could 
 by the rate of wages. (^') 
 
 A greater number of oranges and a greater number 
 of nuts divided among the same number of boys results 
 in each boy getting a greater number of oranges and 
 nuts. There may be 6 nuts to i orange now as formerly. 
 Will anyone maintain that we could not tell how many 
 extra oranges fell to the lot of each boy on the ground 
 that the ratio 6 to i remained constant ? We could not 
 solve the question by comparing the number of nuts 
 with the number of oranges ; we could by dividing 
 the number of oranges by the number of boys, or better 
 still by observing how many oranges each boy has now, 
 and comparing the number with the number each boy 
 got'formerly. 
 
 Mill's political economy leaves the boys, the labourers, 
 us, out of account ; at least as regards this question. It 
 is interesting to know the relation of nuts to oranges ; 
 but the main point is the relation of oranges to the 
 boys. 
 
 In England during the 50 years preceding 1884 wages 
 rose, as Mr. Giffen has shewn,(i^) more than 100 per 
 cent ; while prices (after having risen at one time, ac- 
 cording to the Economist,(^^) 72 per cent.) were as nearly 
 as possible the same in 1884 as half a century ago. 
 Here we have a remarkable depreciation of gold in one 
 sense — in the sense of real or labour-value ; and neither 
 depreciation nor appreciation in the sense of exchange 
 or commodity-value. A given weight of gold would 
 
44 Can there be a General rise or fall of Values ? 
 
 purchase or command twice the quantity of labour in 
 1840 as compared with 1880, yet it would purchase only 
 the same quantity of things in general. Note also that . 
 the previously referred to "fall of general prices through- 
 out the world " would not be accompanied by a fall 
 of wages. Estimated in labour, money would be no 
 more costly than before. The greater aggregate pro- 
 duct of industry would be of the same total money- 
 value. The price of each article would be less, but the 
 number of articles would be more. The wages-fund 
 would not be diminished by one farthing. The inven- 
 tion of the spinning-jenny did not diminish the revenue 
 through a falling off of the income-tax returns. Some 
 people seem to think that the fact that we get 50 
 times as many steel pens for a sovereign as we for- 
 merly did, renders it desirable or necessary that we 
 should have 50 times as many sovereigns too, to keep 
 up the price of pens ; otherwise incomes as well as 
 prices will fall. Nothing of the kind. Cheap commodi- 
 ties do not mean dear gold, neither do dear commodities 
 mean cheap gold. 
 
 Let us only use the words dear and cheap as synony- 
 mous with high and low value — the two ideas were . 
 quite indistinguishable in Adam Smith's mind — and 
 there will be no more mystery or difficulty about cur- 
 rency matters. "At all times and places that is dear 
 which it is difficult to come at, or which it costs much 
 labour to acquire ; and that cheap which is to be had easily 
 or with very little labour!' I have quoted this before ; 
 I may quote it again ; for it goes to the very root of the 
 matter. 
 
 The fall of gold prices from 1874-83, in England, is 
 
Can there be a General rise or fall of Values ? 45 
 
 commonly spoken of as an appreciation of gold, a rise 
 in its value, and a scarcity of the metal is always 
 implied in the word appreciation. I prefer to call it 
 a depreciation of commodities. A fall in the price of pig- 
 iron and tea is not sufficient to demonstrate a scarcity 
 of gold in the face of the fact that wages did not fall(^°) ; 
 that in order to acquire possession of ;^i sterling no 
 more than the former number of hours' work had to be 
 expended. The cost of acquisition of gold estimated 
 in labour had not increased, the cost of acquisition 
 of other things similarly estimated had decreased. In 
 a very real sense the value of gold had undergone no 
 alteration ; its labour-cost remained the same. Com- 
 modities fell in value because their labour-cost had 
 been diminished. 
 
 The same number of oranges and a greater number 
 of nuts divided among the same number of boys, results 
 in each boy getting the same number of oranges as 
 before. The increased number of nuts does not justify 
 the boys' grumbling about having less oranges. They 
 have the same number. We can prove this by actual 
 observation or by dividing the number of oranges by 
 the number of boys. They have more nuts, not less 
 oranges. 
 
 There is a sense in which boys' oranges and nuts may 
 be classed together a.s fruit ; just as rupees, sovereigns, 
 things in general and labourers may be called commo- 
 dities. I strongly insist upon the utility of distinguish- 
 ing between labour and — well, if you will — other commo- 
 dities, because labour is the measure of value. 
 
CHAPTER X. 
 
 ADAM SMITH ON LABOUR AS THE MEASURE OF VALUE. 
 
 It may have occurred to the reader that it seems amus- 
 ingly daring and presumptuous for one obscure indivi- 
 dual to attempt to regulate the incomes of about a third 
 of the human race. / attempt nothing of the kind ; 
 though nothing would deter me from the task if it 
 were necessary. " What man dare, I dare ; " and I say, 
 let economical fools rush in where bimetallic and mono- 
 metallic angels fear to tread. They can do no harm 
 at all events. The existing confusion cannot be made 
 worse confounded. But it is not necessary that I should 
 presume to do the thing : for it has been done, so far 
 as verified abstract reasoning can do it : was done by 
 Adam Smith a hundred years ago. All the merit I 
 claim is that of calling attention. to, and of interpreting, 
 what was said by one of the olden time who understood 
 these matters much better than we do. 
 
 Herbert Spencer tells us that early ideas are not 
 generally true ideas — a remark which forcibly applies 
 to men's notions on currency matters ; to Anglo-Indian 
 ideas on the silver question, for instance, during the 
 early part of the discussion, extending over about 13 
 years. But if we go farther back, to the silver question 
 of the 1 8th century, the case is different. The early 
 ideas of political economists on a measure of value at 
 all events were truer than those of latter days. The 
 
Adam Smith on a Measure of Value. 47 
 
 problem, how to obviate the depreciation of silver was 
 then understood. (^^) 
 
 Of course " what everybody said " then, as now, was 
 ridiculously wrong. People imagined in those days, just 
 as Anglo-Indians do to-day, that money was synony- 
 mous with wealth (I do not think, however, the notion 
 that the Roman Empire fell because of a scarcity of 
 money would have been tol^ated) ; and that the pre- 
 cious metals were standards of value for all time, just as 
 Indian bimetallists do. In order to eradicate these two 
 preposterous notions, Adam Sm'ith wrote his " Wealth 
 of Nations. " The first named delusion gave him appa- 
 rently some trouble ; the latter none at all. 
 
 This is what our great grandfathers were told about 
 the measure of value : — 
 
 " Every man is rich or poor according to the degree in 
 which he can afford to enjoy the necessaries, convenien- 
 cies, and amusements of life. But after the division of 
 labour has once thoroughly taken place, it is but a very 
 small part of these with which a man's own labour 
 can supply him. The far greater part of them he must 
 derive from the labour of other people, and he must be 
 rich or poor according to the quantity of that labour 
 which he can command or which he can afford to pur- 
 chase. . . . What everything really costs to the man who 
 wants to acquire it is the toil and trouble of acquiring it. 
 What everything is really worth to the man who has 
 acquired it, and who wants to dispose of it or exchange 
 it for something else, is the toil and trouble which it 
 can save to himself, and which it can impose on other 
 people. What is bought with money or with goods is 
 purchased by labour, as much as what we acquire by 
 
48 Adam Smith on a Measure of Value. 
 
 the toil of our own body. That money or those goods 
 indeed save us this toil. . . . Labour was the first price, tJte 
 original purchase money, that was paid for all things. 
 It was not by gold or silver but by labour that all the 
 wealth of the world was originally purchased ; and its 
 value to those who possess it and who wish to exchange it 
 for some new productions is precisely equal to the quantity 
 of labour which it can enable them to purchase or com- 
 mand. . . . Labour, therefore, it appears evidently, is the 
 only universal, as well as the only accurate m.easure of 
 value, or the only standard by which we can compare the 
 values of different commodities at all times and in all 
 places!' 
 
 Once admit these almost undeniable truths, and how 
 absurdly easy a task it is to render impossible for all 
 time the unjust gains and losses that have hitherto 
 resulted from alterations in the value of the precious 
 metals ! All that is necessary is to ascertain by careful 
 statistics the fluctuations in the value of gold and silver 
 in relation to labour. 
 
 The average " toil and trouble " necessary to get pos- 
 session of Re. I (its cost of acquisition by the people), as 
 well as the " toil and trouble " Re. i " will impose on " 
 people in general (its purchasing power over labour), its 
 real value and cost at any time and place ; both these 
 are represented by the average rates of wages for the 
 time being ; by the prevailing wages-level. And fluctu- 
 ations in the average money remuneration of industry 
 of all kinds are the measure of the value of our cur- 
 rent coins of the realm. 
 
 Adam Smith continues : — 
 
 " Gold and silver .... like every other commodity, 
 
Adam Smith on a Measure of Value. 49 
 
 vary in their value, are sometimes cheaper and some- 
 times dearer, sometimes of easier and sometimes of more 
 difficult purchase. The quantity of labour which any 
 particular quantity of them can purchase or command, 
 or the quantity of other goods which it will exchange 
 for, depends always upon the fertility or barrenness of 
 the mines which happen to be known about the time 
 when such exchanges are made. 
 
 " The discovery of the abundant mines of America 
 reduced in the sixteenth century the value of gold and 
 silver in Europe to about a third of what it had been 
 before. As it cost less labour to bring those metals 
 from the mine to the market, so when they were brought 
 thither, they could purchase or command less labour ; and 
 this revolution in their value, though perhaps the greatest, 
 is by no means the only one of which history gives some 
 account. But, as a measure of quantity, such as the 
 natural foot, fathom or handful, which is continually 
 varying in its own quantity, can never be an accurate 
 measure of the quantity of other things ; so a commodity 
 which is itself continually varying in its own value can 
 never be an accurate measure of the value of other 
 commodities." 
 
 But in Adam Smith's time, although the science of 
 political arithmetic had sprung into existence ; statistics, 
 in our sense of the word, were never dreamt of ; the 
 materials for the construction of a wages-level were 
 wanting. 
 
 A substitute, therefore, wasprovided: "Labour," insisted 
 
 Adam Smith, "and not any particular commodity or 
 
 set of commodities, is the real measure both of silver 
 
 [and gold] and of all commodities" Nevertheless, there 
 
 P., G. & s. D 
 
50 Adam, Smith on a Measure of Value. 
 
 is one commodity, corn, the (then) subsistence of the 
 labourer, which very nearly answered the purpose of a 
 measure of value. " The current prices of labour at dis- 
 tant times and places can scarce ever be known with 
 any degree of exactness. Those of corn, though they 
 have in few places been regularly recorded, are in gen- 
 eral better known, and have been more frequently taken 
 notice of by historians and other writers. We must 
 generally, therefore, content ourselves with them, not 
 as being always exactly in the same proportion as 
 the current prices of labour, but as being the nearest 
 approximation which can commonly be had to that 
 proportion.'' 
 
 (For the purpose of " looking back " and ascertain- 
 ing how much richer or poorer certain people are than 
 they ought to be, any substitute for what we evidently 
 require, accurate statistics as to the rates of wages 
 " will serve ; " but for " looking forward, " and prevent- 
 ing similar losses and gains in future, we surely can 
 now* get what we know we want.) 
 
 " Equal quantities of labour will at distant times be 
 purchased more nearly with equal quantities of corn, 
 the subsistence of the labourer, than with equal quanti- 
 ties of gold or silver, or perhaps of any other commo- 
 dity. Equal quantities of corn, therefore, will at distant 
 times be more nearly of the same real value, or enable 
 the possessor to purchase or command more nearly the 
 same quantity of the labour of other people." 
 
 The following, printed in gold (or silver), ought to be 
 hung on the wall of the office of our Finance Minister 
 
 Statisticians appear to be looking round for something to do. 
 
Adam Smith on a Measure of Value. 51 
 
 (Remember these words were written before the Bengal 
 land-revenue was fixed for all eternity.) 
 
 " When a landed estate is sold with a reservation of 
 a perpetual rent, if it is intended that this rent should 
 always be of the same value, it is of importance to the 
 family in whose favour it is reserved that it should not 
 consist of a particular sum of money. . . . The rents 
 which have been reserved in corn have preserved their 
 value much better than those which have been reserved 
 in money. . . . By the 1 8th of Elizabeth it was enacted, 
 that a third of the rent of all college leases should be 
 reserved in corn, to be paid either in kind, or according 
 to the current prices at the nearest public market. The 
 money arising from this corn rent, though originally but 
 a third of the whole, is in the present times . . . common- 
 ly near double of what arises from the other two-thirds. 
 The old money rents of colleges must . . . have sunk to 
 a fourth part of their ancient value ;" and this has arisen 
 " altogether from the degradation in the value of silver^ 
 
 It was the boast of Augustus that he found Rome of 
 brick and left it of marble. When we took possession 
 of this country, we found an ail-but perfect measure of 
 value in actual use — taxes were then paid in kind, 
 in com — for which we proceeded to substitute silver, of 
 all the fluctuating things we could think of And we 
 wonder that India is a bankrupt nation.* 
 
 Corn, however, although it would prove for the present 
 an excellent substitute for silver in India (for permanent 
 settlements and so forth) as we shall see hereafter, is 
 after all only a substitute for the wages-level, and for 
 
 * See chapter on " Corn as a Measure of Value " for India. 
 
52 Adam Smith on a Measure of Value. 
 
 countries rapidly advancing in civilization a most in- 
 accurate one.(^'') 
 
 Evety political economist feels perfectly confident of 
 victory, when opposing the views of other political econ- 
 omists, if he can only quote Adam Smith's opinion 
 in support of his views. Ought I not, therefore, to feel 
 confident ? 
 
CHAPTER XL 
 
 LABOUR OCCASIONALLY USED AS THE MEASURE OF 
 VALUE : THE DETERMINING CAUSE AND REGULATOR 
 OF VALUE. 
 
 Those who object to Adam Smith's doctrine that labour 
 is the measure of all things will probably be surprised 
 to hear that it is the standard of value we occasionally 
 use. We say gold is of low value in England and dear 
 in continental countries ; very cheap in America, and of 
 very low value in Australia — why ? Not because of the 
 high prices that prevail in England, America and Aus- 
 tralia, for prices are remarkably low in the last named 
 country ; and we know, at least we have been authori- 
 tatively told by Professor Cairnes, that England would 
 still enjoy the advantage of cheap gold if other things 
 were equally cheap. The high rate of wages is the proof 
 of cheap gold in England according to this eminent 
 economist. That is to say, he makes a rough guess at 
 the wages-level. " The last of the economists," in spite 
 of Mill's teachings, thus agrees with the first.(^^) And 
 we do sometimes measure the value of gold by the 
 labour test at different times. We say gold fell in value 
 in Australia in 1852 to one-fifth of its value in 1849, 
 because wages rose from \s. a day to 20s. If prices had 
 not risen in the least, if what gold buys had increased 
 in abundance as rapidly as gold itself, we should still say 
 that gold depreciated to the extent declared by the rate 
 of wages. 
 
54 Labour the Regulator of Value. 
 
 " All things are full of labour : man cannot utter it." 
 Cost of production, estimated in labour, is almost the 
 sole determining cause of the actual value of everything 
 that is bought and sold, except perhaps a few things at 
 a monopoly value, such as old china, rare statues, &c. If 
 we say cost of acquisition {i. e., the labour-cost of the 
 things given in exchange), the principle becomes uni- 
 versal and a mere truism. Reduce the labour-cost of 
 producing or getting a thing, and its exchange value 
 falls. Ifonetolah of gold exchanges for 21 tolahs of 
 silver, it is because the one metal requires for its pro- 
 duction or acquisition the expenditure of 21 times as 
 much labour as the other. The market value temporarily 
 varies with supply and demand, but the ratio in which all 
 commodities exchange for each other gravitates towardg 
 their normal value or labour-cost. As Ricardo says : 
 
 " In estimating the exchange value of stockings, for 
 example, we shall find that their value comparatively with 
 other things, depends on the total quantity of labour 
 necessary to manufacture them and bring them to the 
 market. First, there is the labour necessary to cultivate 
 the land on which the raw cotton is grown ; secondly, 
 the labour of conveying the cotton to the country where 
 the stockings are to be manufactured, which includes a 
 portion of the labour bestowed in building the ship in 
 which it is conveyed, and which is charged in the freight 
 of the goods; thirdly, the labour of the spinner and 
 weaver ; fourthly, a portion of the labour of the engineer, 
 smith and carpenter, who erected the buildings and 
 machinery by the help of which they are made ; fifthly, 
 the labour of the retail dealer and of many others, 
 whom it is unnecessary further to particularize. The 
 
Labour the Regulator of Value. 55 
 
 aggregate sum of these various kinds of labour deter- 
 mines the quantity of other things for which these stock- 
 ings will exchange, while the same consideration of the 
 various quantities of labour which have been bestowed 
 on those other things will equally govern the portion of 
 them which will be given for the stockings." 
 
 He says in another place : " Suppose two men employ 
 one hundred men each for a year in the construction 
 of two machines, and another man employs the same 
 number of men in cultivating corn ; each of the machines 
 at the end of the year will be of the same value as the 
 corn, for they will each be produced by the same quan- 
 tity of labour." 
 
 It is not pretended, of course, that labour is the sole 
 cause of value. If the thing produced possessed no 
 utility, no amount of labour expended on its production 
 would give it any value ; and, as Professor Jevons acutely 
 observed, labour once expended has no influence on the 
 future value of anything. Bygones are bygones. But 
 when production is a continuous process, the utility 
 of a thing being given, the labour required to produce 
 more of it is, if not the cause, the determining circum- 
 stance of its value. Now, what I contend for is, that the 
 measure and determining cause of value at the same 
 time and place, and which is half unconsciously and occa- 
 siopally used as a measure of value of gold and silver 
 at different places and times, ought to be consciously, 
 deliberately, and scientifically adopted as our standard 
 of value at successive periods. The quantity of labour 
 necessary to produce commodities or to acquire them, 
 i. e., to produce the things given in exchange for them, 
 determines and measures both their exchange-value or 
 
56 Labour the Regulator of Value. 
 
 value inter se, and their real or labour-value. When we 
 have explained why one mountain is 15,000 feet above 
 the level of the sea, and why another is 10,000 feet above 
 that level, we have explained also why one mountain 
 is half as high again as the other. Their respective 
 heights above the sea-level implies their relative heights ; 
 and it is a mere truism to say that the quantity of labour 
 necessary to acquire a thing determines the purchasing 
 power of that thing over that labour. Whatever quan- 
 tity of my labour has to be devoted to the acquition 
 of Re. I, Re. i will necessarily purchase or command 
 that quantity of my labour ; neither more nor less. 
 
CHAPTER XII. 
 
 JOHN STUART MILL ON A MEASURE OF VALUE. 
 
 I CONFESS I am very much concerned at having my great 
 teacher, John Stuart Mill, as an opponent on this question ; 
 for he taught me to think on these matters, but he 
 taught me to think independently. And I know that in 
 so doing, I am only fulfilling his own injunctions laid 
 down in " Liberty" Did he not tell us that we who are 
 " nothing if not critical" ought, each and all, to take up 
 the thankless office of " devil's advocate," and hammer 
 away at anything and everything we felt inclined to 
 oppose, because the holders of orthodox opinions, were 
 it not for us, would have to perform the same task them- 
 selves, and would not, could not, do it so well as we ? 
 I am not afraid of the displeasure of his disciples ; 
 neither do I' fear that the general reader will deny 
 that when two such teachers as Adam Smith and his 
 renowned interpreter differ from each other, students 
 must decide for themselves which is right. The world 
 cannot afford to leave such a problem unsolved. Not 
 that I love my great master less, but that I love truth 
 more. 
 
 It seems to me that Mill pronounced the problem an 
 insoluble one without even glancing at it. The battle 
 of Leipsic was lost through a fit of indigestion. 
 
 The subject is simply yawned through, not grappled 
 with. Let the reader judge for himself. 
 
5 8 John Stuart Mill on a Measure of Value. 
 
 This is what we are told : — The whole discussion is a 
 nuisance : its very existence lays political economy open 
 to the charge of logomachy : yet it is necessary to touch 
 upon the subject if only to show how little there is to 
 be said on it. 
 
 A measure of value means something by comparison 
 with which we may ascertain the value of anything 
 else. But two things are necessary to constitute value 
 independently of the third thing which is to measure 
 it. We may therefore define a measure of value to be 
 something by comparing with which any two other things, 
 we may infer their value in relation to one another. Now 
 any commodity will answer this purpose — money or 
 anything else — at the same time and place. We say 
 one thing is worth ;£2 and another ;^3, and it is then 
 known without express statement that one is worth 
 two-thirds of the other. 
 
 But you want a measure of value for different times 
 and places. Well, any commodity will answer this pur- 
 pose too, if you only get tlie same data. If wheat is now 
 40J. the quarter, and a fat sheep the same ; and if, in the 
 time of Henry the Second, wheat was ■zos. and a sheep 
 \os., we know at once that the value of a sheep esti-; 
 mated in wheat is twice as great as it was then. 
 
 What appears to be desired, however, is some means 
 of ascertaining the value of a commodity by merely com- 
 paring it with the m.easure, without referring it specially 
 to any other given commodity. From the mere fact 
 that wheat is now 40J. the quarter, and was formerly 
 20J., you wish to be able to pronounce whether wheat 
 has varied in value not relatively to sheep but to things 
 in general (!). 
 
John Stuart Mill on a Measure of Value. 59 
 
 Now this is impossible. You may compare what a 
 quarter of wheat, for instance, would purchase at a 
 former period, of every marketable article taken sepa- 
 rately, with what a similar quarter will purchase now 
 It would be difficult to say whether it had risen or fallen, 
 in value. How much more impossible when we only 
 know how it has varied with reference to the measure ? 
 To enable the money price of a thing at two different 
 periods to measure the quantity of things in general 
 which it will exchange for, the same sum of money must 
 correspond at both periods to the same quantity of things 
 in general, that is, money must always have the same 
 exchange value ; the same general purchasing power. 
 Now, not only is this not true of money or of any other 
 commodity, but we cannot even suppose any state of cir- 
 cumstances in which it would be true. 
 
 A measure of exchange value is, therefore, declared 
 impossible. Note the reasons : First, the general pur- 
 chasing power of' money itself (and of every other 
 commodity) is subject to variation ; which is just what 
 we assert : therefore arises the necessity for ascertaining 
 how much it varies ; secondly, it is manifestly impos- 
 sible, by merely comparing the commodity selected or 
 invented as the measure with any other commodity, the 
 one to be measured, to decide how much the latter has 
 risen in value in relation to other commodities ; which 
 no one ever disputed. We cannot and we do not ex- 
 pect to be able, simply by referring wheat to our mea- 
 sure of value, to decide whether it has risen or fallen in 
 value in relation to pig-iron or 20 or 200 other things 
 without also comparing them with the standard. 
 
 What if anyone were to maintain that the man in the 
 
6o John Stuart Mill on a Measure of Value. 
 
 moon can never ascertain the position of Jupiter's satel- 
 lites in relation to the moon by merely taking observa- 
 tions of the position of Jupiter himself? Something 
 very similar is what Mill accuses his predecessors of 
 trying to do ; or, what if anyone were to assert that 
 the whole problem of Jupiter's position and that of his 
 satellites in relation to the moon is insoluble, because 
 Jupiter will not stand still while we are taking observa- 
 tions, or before or after we have done so ? 
 
 I insist that the problem is soluble, because we have 
 a science of astronomy which has ascertained Jupiter's 
 orbit to a nicety. And I insist that (even) a measure of 
 exchange- or commodity- value (if that were what we 
 wanted) is attainable, because we have a science of statis- 
 tics. We are furnished with any amount of more or 
 less reliable estimates of the commodity - value of gold 
 and silver at different periods. However faulty some of 
 us think our price -levels as at present constructed are, 
 we can (if we know how) ascertain the ratio of prices 
 prevailing now to those that prevailed or that may pre- 
 vail at any other period, past or to come. 
 
 But a measure of commodity-value is not enough — 
 not what we want. We want to know the real value of 
 things ; their value in relation to our labour. As that 
 is dear which it is difficult to come at and which costs 
 us much labour to acquire, and that cheap, which is to 
 be had easily or with little labour, we want to know how 
 much dearer or cheaper our measure of value pro tem. 
 is at one period as compared with another. Surely our 
 statisticians can solve this simple problem for us ? 
 
 Having ascertained the fluctuations in the value of the 
 precious metals in relation to the standard, whatever it 
 
John Stuart Mill on a Measure of Value. 6 1 
 
 may be, we can, if we choose, by noting the prices of 
 any commodity at different periods an«l making allow- 
 ance for the ascertained fluctuations (if any) in gold or 
 silver, find out how much that commodity has varied in 
 its own value, i. e., in relation to the standard. 
 
 There is no impossibility about any problem that has 
 to do with the position of the planets and their satel- 
 lites in relation to the sun, the centre of our system ; 
 neither is there any difficulty about any problem that 
 deals with the value of commodities in general in their 
 relation to human labour. Man is not the centre of the 
 universe, of course ; but an insignificant biped ; but he 
 is the centre of political economy, and the alpha and 
 omega of the production of wealth. 
 
 Perhaps I am mistaken as to the synonymousness of 
 cheapness and low value, and of dearness and high 
 value ; perhaps Adam Smith and myself are in error in 
 imagining that our labour is the " price " we all pay for 
 what we require. If so, let the matter be argued out. 
 Did Mill condescend to reply to Adam Smith ? Again 
 the reader must judge for himself. This is what he says : 
 " Adam Smith fancied that there were two commo- 
 dities (!) peculiarly fitted to serve as a measure of value : 
 corn and labour. Of corn, he said, that although its 
 value fluctuates much from year to year, it does not vary 
 greatly from century to century." This is said to be an 
 error ; so it was. It is interesting to note, however, that 
 Professor Cairnes decides the controversy in Adam 
 Smith's favour. (But the fact is, recent events have proved 
 that both Mill and Cairnes were wrong about corn in 
 England), and that the price of corn was only in Adam 
 Smith's idea a sort of substitute for the rate of wages. (^) 
 
62 John Stuart Mill on a Measure of Value. 
 
 Mill continues : " With respect to labour, the language 
 of Adam Smith is not uniform. He sometimes speaks 
 of it as a good measure only for short periods, saying 
 that the value of labour (or wages) (!) does not vary very 
 much from year to year, though it does from generation 
 to generation." 
 
 Now listen to Adam Smith : " Equal quantities of 
 labour, at all times and places, may be said to be of equal 
 value to the labourer. In his ordinary state of health, 
 strength, and spirits ; in the ordinary degree of his skill 
 and dexterity, he, must always lay down the same 
 portion of his ease, his liberty, and his happiness. The 
 price which he pays must always be the same, whatever 
 may be the quantity of goods which he receives in 
 return for it. Of these, indeed, it may sometimes 
 purchase a greater and sometimes a smaller quantity ; 
 but it is their value which varies, not that of the 
 labour which purchases them." What, again, could 
 be more positive than the statement that — " By the 
 quantities of labour [paid for commodities] we can, 
 with the greatest accuracy, estimate [their real value] 
 both from century to century and from year to 
 year " ? 
 
 In conclusion. Mill says: "The. idea of a measure 
 of value must not be confounded with the idea of 
 the regulator or determining principle of value. When 
 it is said by Ricardo and others, that the value of a 
 thing is regulated by quantity of labour, they do 
 not mean the quantity of labour for which the thing 
 will exchange, but the quantity required for producing 
 it. This, they mean to affirm, determines its value, 
 causes it to be of the value it is, and of no other. But 
 
John Stuart Mill on a Measure of Value. 63 
 
 when Adam Smith and Malthus say that labour is a (!) 
 measure of value, they do not mean the labour by 
 which the thing was or can be made, but the quan- 
 tity of labour which it will exchange for or purchase ; 
 in other words, the value of the thing estimated in 
 labour. And they do not mean that this regulates the 
 general exchange value of the thing, or has any effect 
 in determining what that value shall be, but only (!) 
 ascertains what it is, and whether and how much it 
 varies from time to time and from place to place. To 
 confound these two ideas would be much the same 
 thing as to overlook the distinction between the ther- 
 mometer and the fire." 
 
 Really I am beginning to think, I have got a spurious 
 edition of " The Wealth of Nations!' Adam Smith did 
 not mean that labour regulates as well as measures 
 the value of things ! Then, why did he say that gold 
 and silver fell in value after the discovery of the Amer- 
 ican mines, because it cost less labour to bring them to 
 the market ? Note also the following : — 
 
 " If among a nation of hunters ... it usually costs 
 twice the labour to kill a beaver which it does to kill 
 a deer, one beaver should naturally exchange for or 
 be worth two deer. It is natural* that what is usually 
 the produce of two days' or two hours' labour, should 
 be worth double of what is usually the produce of one 
 day's or one hour's labour." 
 
 What Ricardo and others meant by the regulator of 
 value, and what Adam Smith and Malthus meant by 
 the measure of value are indistinguishable in thought, 
 
 * It could not be otherwise, without a standing miracle. 
 
64 John Stuart Mill on a Measure of Value. 
 
 as the two states of consciousness called up by the regu- 
 lator and the measure merge into one in spite of all 
 attempts to keep them separate. Whatever regulates 
 the length of a thing, determines that it shall be of 
 that length and no other, may be used for finding out of 
 what length it is. The thermometer we use for ensuring 
 that our hot bath shall be of a temperature of 120° 
 and neither more nor less, is also used for ascertaining 
 how hot the water is. A lathe which is used for giving 
 a certain shape, roundness, to a bar of metal may be 
 used for discovering whether any bar of metal is round. 
 
 And it seems to me that the quantity of labour people 
 have to devote to the acquisition of ;^i sterling or 
 Re. I determines the value of these coins and measures 
 it too. 
 
 The fact is that Mill's objections to a measure of value 
 are not stated in his chapter bearing that title, but are 
 founded on his (certainly misleading) definition of labour 
 as a commodity, and of value as commodity- or ex- 
 change- value only. Were his definitions correct, there 
 could be nothing to prevent things drifting upwards or 
 downwards — there either could be no general rise or fall 
 in values, or if such did occur, it would be immeasurable. 
 But they are not correct ; they misrepresent the facts, 
 as has been already shewn. 
 
 Fortunately, the problems of political economy ad- 
 mit of being dealt with from Mill's standpoint, as well 
 as from Adam Smith's. Mill's conclusions are not in the 
 least invalidated by his faulty definitions. By means 
 of the word cost, expressing the facility with which all 
 things, money included, are obtainable (their real value 
 according to Adam Smith) the imperfections in his 
 
John Stuart Mill on a Measure of Value. 65 
 
 definition of value are (awkwardly) remedied. First 
 principles, such as we are discussing, do not bear to the 
 science of political economy the relation of foundations 
 to an edifice, but (I am using Mill's own words) of roots 
 to a tree, which may perform their office equally well 
 though they be never dug down to and exposed to light. 
 Mill still remains our great authority on political econ- 
 omy, and his splendid theory of international values 
 (the foundation of " The Indian Tribute ") is quite un- 
 affected by his not having given another theory its due 
 consideration. But although Mill's erroneous definitions 
 of value and commodities did not lead him into false 
 conclusions, it has certainly mislead other people. If 
 the value of ;^i sterling means only the quantity of 
 other things it will buy, those other things (their prices) 
 are the measure of its value. This is the erroneous 
 notion lying at the root of the /Wc^-level theory. 
 
 r., G. & s. 
 
CHAPTER XIII. 
 
 OBJECTIONS CONSIDERED. 
 
 If all labour were at all times remunerated at the same 
 rate, and the rate of wages rose and fell in all parts of 
 the world or of any country simultaneously, there would 
 be no difficulty whatever in measuring the value of 
 money by labour. Nor could the justice or expediency 
 of the thing then be denied. When almost everybody 
 — those engaged in the production, distribution, and 
 exchange of wealth — got more money, why should 
 those engaged in the necessary duty of protecting in- 
 dustry not receive more also ? When everybody was 
 compelled to be content with less, why should Govern- 
 ment servants alone receive as much as usual ? Especi- 
 ally when the prevailing rate of remuneration of industry 
 is, ex hypothesis known. 
 
 Some socialists think the world ought to have been 
 arranged in this way ; for the present, things are arrang- 
 ed very differently. All labour is not of the same 
 kind, and rates of wages differ at different places. But 
 is there an insurmountable difficulty here ? 
 
 The Bay of Bengal is not in all places of the same 
 depth, yet we profess to be able to tell how deep it is 
 on the average over any given area. 
 
 Some people, however, have no faith in averages. To 
 them the fact that at one period wages ranged from 
 Rs. 4 to Rs. 20, and at another from Rs. i6 to Rs. 80, 
 
Objections Considered. 67 
 
 has no meaning because of the variety of wages. If 
 every workman received the same pay, the fact of a 
 general rise or fall would be evident, but the " average 
 rate of wages " is meaningless ; so they say. Those who 
 talk thus are, I imagine, an insignificant minority.(^'') 
 
 But the fluctuations in the rates of wages are, it is 
 said, a difficulty. Yet we are told that Jakko is 8,048 
 feet above the level of the sea. Did the sea one fine 
 day assume a dead level in order to permit these hyper- 
 scrupulous people to measure the height of the sur- 
 rounding mountains ? 
 
 The fact that there are different kinds of work is 
 quite irrelevant to the question. There are different 
 kinds of commodities too, yet we have our price-levels. 
 We do not, in constructing our price-levels, compare the 
 price of cheese in Cheshire now with the price of leather 
 a century ago in New Jersy. The prices of the same 
 kind and quality of commodities are compared with 
 those of that kind and that quality, at the present and 
 at former periods, and at the same place. This is pre- 
 cisely what must be done with labour. Fifty or five 
 hundred employments may be selected as the standard. 
 The average money remuneration of these employ- 
 ments in any area at any period compared with that of 
 these very employments in that area at any ' other 
 period, will shew how much money has risen or fallen 
 in value in relation to these employments with absolute 
 accuracy. 
 
 Every objecton that can be urged against the wages- 
 level can be urged with greater force against the price- 
 level too. As to how many employments, muscular and 
 intellectual, should be selected as the basis of our 
 
68 Objections Considered. 
 
 calculations ; this is a mere matter of detail. Fixed 
 salaries must, of course, be excluded ; their fixedness 
 is confessedly a blunder. The problem is how to 
 allow them to expand, or to compel them to contract, 
 with those of the community at large. 
 
 The greater the number of employments selected, 
 so long as they are representative employments, 
 the better. But any one representative,' typical 
 industry in any district would generally answer the 
 purpose sufficiently well. Not always, however. When 
 you measure the depth of a river at one place and 
 compare it with its former depth at that place, you have 
 to take into account the possibility of an alteration 
 having occurred in the bed of the river. (And the 
 truth is, that the great revolution in the value of silver 
 in relation to gold that has taken place of late years, 
 THE VERY ORIGIN AND MAINSPRING OF THE PRESENT 
 DISCUSSION, has been caused by an event precisely 
 analogous to this. When labour in any department of 
 industry becomes more efficient than labour in other 
 departments, wages in that department rise ; when the 
 labour of any country becomes more efficient than labour 
 of other countries, wages in that country rise, at the ex- 
 pense of the wages in other countries. Any cause which 
 is equivalent or tantamount to an increased efficiency of 
 labour has the same effect. Frugality here admirably 
 second industry, The intense love of accumulation 
 characteristic of English employers, and which prompts 
 them to invest their savings in building railways for us, 
 who never save and invest but only hoard and spend, is 
 in effect equivalent to an increased efficiency of Eng- 
 lish industry. In consequence of the tribute English 
 
Objections Considered. 69 
 
 capital levies on us, English wages estimated in our 
 goods or in our money, silver, rise. Gold wages in 
 England having remained stationary, the ratio of 
 exchange of silver for gold falls in obedience to a 
 law of arithmetic, as I have shewn in " The Indian 
 Tribute!") 
 
 These alterations in depth of the stream or reservoirs 
 of the precious metals must never be lost sight of 
 even in the same country ; though in this case compe- 
 tition speedily brings wages and incomes to their usual 
 uniform level ; an increase of the quantity of money in 
 circulation soon spreads itself over all industries in an 
 equal degree. The differences that exist after the 
 general depreciation or appreciation being as nearly as 
 possible those that existed before. 
 
 Speaking generally : What we want to know is the 
 ratio that may subsist between the average earnings 
 of the people now and their earnings at any past or 
 future time — the wages-level at different periods. Fluc- 
 tuations in the wages-level prove beyond all dispute 
 a falsification of the so-called standard of value — money. 
 
 I am perfectly well aware that Adam Smith begged 
 the whole question (if there is one) by postulating the 
 existence of an unvarying standard by means of which 
 the precious metals are shewn to be subject to fluc- 
 tuations in value. He assumes, as we have seen, that 
 labour never varies in its own nature. " Equal quan- 
 tities of labour, at all times and places, may be said 
 to be of equal value* to the labourer" Again, " labour 
 alone never varying in its own nature, is alone the 
 
 * This is, of course, a figurative expression. 
 
"JO Objections Considered. 
 
 ultimate and real standard by which the value of all 
 commodities can at all times and places be estimated 
 and compared." 
 
 It is open, however, to anyone to maintain that 12 
 hours' work of a shipwright engaged in building Noak's 
 Ark, was something widely and essentially different 
 from 12 hours' work of a shipwright engaged at the 
 same kind of work in constructing the Great Eastern- 
 Adam Smith and myself assume that they were in all 
 probability pretty much the same thing. 
 
 Having " timed " a race, one may get startled by some 
 bystander adducing astronomical reasons for believing 
 that the " mean solar second " is not an unvarying unit 
 of time. 
 
 Adam Smith's and my own standard measure of value 
 is, it may be candidly admitted, only as invariable in 
 its own nature as human nature itself Whether it 
 ought to be otherwise ; whether it ought itself to be 
 compared from time to time with the labour of certain 
 imaginary and less inconstant, fickle, and volatile in- 
 habitants of the planet Saturn or of elsewhere, are ques- 
 tions I leave to the ingenuity of others. 
 
CHAPTER XIV. 
 
 DOES THE THEORY ADMIT OF PRACTICAL 
 APPLICATION? 
 
 It seems to me that an accurate statistical account of 
 wages and incomes in England and India, published 
 annually or oftener, would simply close the discussion 
 of the currency question for ever. At all events, to 
 argue the matter on the lowest ground, it would be 
 intensely interesting. Suppose, for instance, that the 
 wages-level in England demonstrates beyond a doubt 
 that the average remuneration of industry of all kinds 
 in that country steadily decreases throughout the next 
 decade or so, and that the incomes of national creditors 
 alone survive the otherwise universal fall of incomes 
 through the scarcity of gold, would it not interest us 
 in India to know exactly how many millions sterling 
 during that time had been paid by us for our Home- 
 charges more than we intended to pay ? — to what extent 
 our creditors had grown rich in their sleep at our 
 expense ? And we might ascertain by comparing the 
 wages -level with the price- level how much of the 
 apparent appreciation of gold was due to the cheapening 
 of commodities, and how much to the contractien of 
 the currency ; for incomes do not fall when commo- 
 dities become cheap, but do when money becomes 
 scarce — at least commercial incomes do, and all other 
 incomes ought to. 
 
72 Practical Application of the Theory. 
 
 And with regard to India, would it not amuse the 
 fixed-salaried Indian official to know that the wages- 
 level over the whole country during the next decade 
 had been rising ? That (roughly speaking) everybody's 
 income but his own had been increasing ? How much 
 he had lost through accepting a fixed salary of a 
 given weight of a commodity that day by day grows 
 more abundant and of less value : how much less labour 
 is necessary upon the average to acquire possession of 
 Re. I : what portion of his time and energy had been 
 lost through his having to devote the same number of 
 hours' work as before to the earning of Rs. 500 ; while 
 other people had found it possible to obtain that sum by 
 the expenditure of considerably less labour ? It would 
 be both amusing and instructive to know how different 
 things might have been ; — what the " fixed " land-reve- 
 nue would have amounted to if a fixed proportion of 
 the products of the labour of the cultivator had been 
 demanded by the tax-collector, instead of a dimiriish- 
 ing proportion ; how long the income-tax might have 
 been deferred had this been done ; how the deficit 
 might have been a surplus ; and how easy it would have 
 been for the Government to allow the salaries of its 
 servants to increase in nominal amount (their real value 
 remaining unaltered) as the quantity of silver and 
 Government notes (without reserve) had increased. 
 
 After a few years of statistical study of this sort, the 
 Indian official might (though I am not sanguine) come 
 to the conclusion that he is not living in the best of all 
 possible worlds. 
 
 How can I impress the eternal justice of this great 
 yet simple truth upon the reader's mind ? Sovereigns 
 
Practical Application of the Theory. 73 
 
 (they say) have become scarce, and have therefore risen 
 in value in relation to labour and commodities in Eng- 
 land. Suppose they had risen in value through some 
 other cause altogether — because (say) a finer quality of 
 gold had been used for coinage during the last two years 
 only ; and that the old coins of the old quality had 
 remained in circulation ; both coins being legal tender 
 for what the market says they are worth. New sovereigns 
 command each 5 days' ordinary English labour, old 
 sovereigns purchasing only 4 days' work as before. In 
 which coins would everybody pay the interest of a debt 
 contracted before the "currency juggle"? 
 
 In the old coins I am sure ; because they are of 
 ;^e old value. If debts were paid in the more costly 
 coins, everybody would pay less of them. The old coins 
 alone would remain in circulation unless creditors agreed 
 to accept fewer sovereigns of the new quality in dis- 
 charge of their debtors' liabilities. I commend this 
 illustration to the serious consideration of both national 
 debtors and creditors. If statistics demonstrate that 
 what is now called a sovereign is of more real value 
 than it formerly was, why do not debtors offer and 
 creditors accept a correspondingly reduced number of 
 pounds sterling as interest for borrowed money ? 
 
 Put the case in another way. It has been suggested 
 that we counteract the depreciation of silver by putting 
 more silver into the rupee. What if we counteracted 
 the appreciation of gold by putting less gold into the 
 sovereign — regulating the weight of the sovereign from 
 time to time by Mr. Giffen's wages-level ; an absolute 
 demonstration of the (ail-but) universal fall of incomes 
 throughout the country ? The light coins purchase the 
 
74 Practical Application of the Theory. 
 
 same number of hours' work as the heavy coins did 
 formerly ; the old coins nevertheless remaining in circu- 
 lation legal tender for their market value. It actually 
 was suggested in 1820 that the sovereign should be 
 made by weight equal in value to 14J. ; those (people 
 said, I know not how truly) were appreciation days too. 
 Who would pay the interest of an old debt in heavy 
 sovereigns ? I might ; but I would take good care to 
 pay less of them. I should measure the heavy ones by 
 the light ; because the light ones would be in every 
 sense of the same value to my creditors as the heavy 
 ones were at the time the debt was contracted. They 
 would purchase the same number of hours' work. 
 
 Now, what need is there to interfere with the currency 
 at all ? Why not reduce the nominal amount of our 
 debts and India's directly by consulting the unerring 
 index of the real value of gold furnished by the inevi- 
 table wages-level ? 
 
 As regards India : Re. i in the beginning of the century 
 was worth as much as, or more than, Rs. 3 at the present 
 time.(*) Suppose that, instead of dividing a bar of silver 
 into pieces weighing one tolah each, we had increased the 
 weight of the current standard coin from time to time 
 to i^, 2, 2^ tolahs, and so on, as the wages-level de- 
 clared the money earnings of the people to have increased; 
 taking care that the standard coin in which the revenue 
 was paid always represented the same number of hours' 
 work of (say) an agricultural labourer. It might have been 
 done, and the justice of doing it never would or could 
 have been denied. The salaries of officials would have 
 been all along paid in the heavy coins, and so would the 
 incomes of all creditors. But it would never answer to 
 
Practical Application of the Theory. 75 
 
 call the heavy coins by the wrong name, " Re. i," for 
 they would vanish if not legal tender for more than the 
 small ones. We do not call half-a-crown a two-shilling 
 piece : there is therefore no motive for getting rid of half- 
 crowns, The heavy Indian coins, the current standard 
 of value for the land-tax, might have been called by 
 their proper names Re. I-I2as., Rs. 2-4as., as the case 
 may be, and rupees might be coined too ; for it would 
 matter but little to the Government whether it re- 
 ceived two rupees or one two-rupee piece. The people 
 would have understood the raison d'itre of the big 
 coins and might have grumbled — and paid. As things 
 happened they did not grumble and did not pay. The 
 sensation of having one's taxes lightened spontaneously, 
 because one rupee's worth of one's time is continually 
 losing its meaning must be delightful. It cannot be 
 said that the people would never have known what 
 taxes were really due ; they would have known before 
 long that the tax due was a certain fixed number 
 of days' work, roughly, very roughly, represented by 
 a fixed quantity of the produce of the soil ; and 
 more accurately by a quantity of silver as nearly as 
 possible of the same real value as a smaller quan- 
 tity was at the time of the " permanent (or 30 years) 
 settlement." I need ■ hardly point out that the neces- 
 sity for striking a number of large silver coins may 
 be well doubted. What the land-tax should consist 
 of is a certain weight of silver, the precise weight 
 to be determined by the ascertained ' average earnings 
 of the people — by the wages-level for the time being 
 — the measure of value. The number of coins into 
 which a pound of silver is divided is a small matter. 
 
76 Practical Application of the Theory. 
 
 The utility of the policy I am objecting to is open 
 to the gravest doubt. If, by making the agricultural 
 classes of India a very little better off, we were doing 
 anything less questionable than slightly increasing the 
 number of Indian agriculturalists ; if the condition 
 of the people could be permanently ameliorated by 
 lightening taxation, something might be said in favour 
 of doing so. But it is not in our power to do anything 
 worth doing by such maudlin philanthropy. We are 
 dealing with a population which has enormous, indefi- 
 nite power of expansion ; a population the increase 
 of which, as all observers agree, is absolutely unchecked 
 by prudential restraint and encouraged by religion — 
 " prompted to its " ruin " by heaven and hell." To 
 lighten the taxation of a people under these conditions, 
 is as shortsighted and useless as the removal of Hyde 
 Park railings a few inches outwards to leave room for 
 a rather bigger London crowd. 
 
 If the average gold or silver earnings of the indivi- 
 duals composing any community remain unchanged 
 for a century, it would be a most positive proof that 
 so far as that community was concerned, during that 
 century, the precious metals had not appreciated or 
 depreciated, not become scarce or over plentiful, not 
 altered in real value, not altered in value in relation to 
 human labour, however great may have been the rise or 
 fall of the prices- of commodities in general during that 
 time. On the other hand, if the average money remu- 
 neration of industry fluctuated during the century ; if 
 statistics absolutely proved that the wages-level at dif- 
 ferent quinquennial periods rose and fell according to the 
 following index-numbers loo, 103, 105, 109,115,125, 
 
78 Practical Application of the Theory. 
 
 he receives or pays shall vary indefinitely in real value 
 according to mere chance or human caprice (as it always 
 does now) when the real value of money (the cost of 
 acquisition estimated in labour) is known. 
 
 Let an experiment be made. Let the Statistical 
 Society hang a dial on the wall of the Royal Exchange, 
 shewing the fluctuations in the purchasing power of 
 gold in England in relation to labour, and I venture to 
 predict that debts extending over long periods will be 
 contracted, the interest of which will fluctuate according 
 to that. Our price - levels are nearly valueless ; for 
 everyone knows that a fall in the price of tea from 6j. 
 per ft. to \s. 6(5?., has nothing to do with a scarcity of 
 sovereigns. The wages-level would fix all fixed pay- 
 ments as so many day^ work, not so many falsified coins. 
 
 I know well enough that these views of mine will be 
 criticised as " too theoretical." But other people, be- 
 sides myself, indulge in a little theory now and then. 
 Those, for instance, who advocate closing the Indian 
 mints, and those also who grumble at the English Bank 
 Restriction Act, and who advocate the issue of additional 
 paper money. Those people, I suppose, have the idea 
 ^hat rupees in India are becoming too plentiful, and that 
 sovereigns in England are becoming scarce. Such 
 must be their " theory " or their quite practical schemes 
 are either meaningless or immoral. 
 
 Now, closing the mints might be carried too far. The 
 rise of wages and prices which is the (imaginary ?)(") evil 
 complained of, would be checked; the process now, accord- 
 ing to the theory, going on might be reversed, or might 
 not. We have no standard of value now ; we should 
 have none then ; the drifting I complain of would go on 
 
Practical Application of the Theory. 79 
 
 still. But some one man or body of men might decide 
 upon how many rupees, or if any rupees, ought to be coin- 
 ed ? Undoubtedly. But what " theory " would guide his or 
 their momentous decisions ? His or their opinions would 
 then be our " standard " of value. The price-level of com- 
 modites in general might be taken as a guide by which 
 to regulate the operations of the mint; that, or the wages- 
 level, must he ; but the one is neither more nor less the- 
 oretical than the other. Theory must in such cases pre- 
 cede practice. I am only asking the reader to decide 
 between the wages-level theory, the price-level theory, 
 and no theory at all, or the " drifting " theory. Whether 
 a rupee, the value of which is regulated by the decisions 
 of a board of Indian officials on fixed salaries, would be 
 preferable to a rupee, the value of which is not regulated 
 at all, may be doubted. Theoretically, it would not. 
 
 A sovereign " regulated " by Cobbett's theory, designed 
 for the purpose of defrauding creditors, would soon have 
 been worth no more than a crown. 
 
CHAPTER XV. 
 CORN AS A MEASURE OF VALUE FOR INDIA. 
 
 Although the real value of the precious metals can 
 only be ascertained correctly by the rate of wages, we 
 could infer, in India, with more or less accuracy, the 
 fluctuations in the wages-level, if it were necessary, by 
 observations as to the average prices of the food-grains, 
 forming the subsistence of labour. The difficulty in 
 doing so with more than approximate correctness arises 
 from the fact that the term " subsistence " may (might I 
 not boldly say will ?) get to mean more and more in 
 each successive decade. 
 
 According to Adam Smith : " The nature of things 
 has stamped upon corn a real value which cannot 
 be altered by merely altering its money - price. No 
 bounty upon exportation, no monopoly of the home- 
 market, can raise that value. The freest competition 
 cannot lower it. Through the world in general that 
 value is equal to the quantity of labour which it can 
 maintain, and in every particular place it is equal to 
 the quantity of labour which it can maintain in the 
 way, whether liberal, moderate or scanty, in which labour 
 is commonly maintained in that place. Woollen or 
 linen cloth are not the regulating commodities by which 
 the real value of all other commodities must be finally 
 measured and determined : corn is. The real value of. 
 every other commodity is finally measured and deter- 
 
Corn as a Measure of Value. 8i 
 
 mined by the proportion which its average money-price 
 bears to the average money-price of corn. The real 
 value of corn does not vary with those variations in its 
 average money-price which sometimes occur from one 
 century to another. It is the real value of silver which 
 varies with them!' 
 
 At the time these, words were written, corn was no 
 doubt the subsistence of labour and had been so for 
 untold centuries. But times have changed ; in England 
 at any rate.(^'') There men do not live by bread alone : 
 that I know. English workmen probably spend more 
 in beer, and I really cannot see why other people should 
 write leading articles about their drinking champagne 
 (though it was a sin to order beefsteaks for their terriers). 
 Their standard of comfortable existence has immensely 
 improved since the last century, and is likely to improve 
 still more as time goes on, They may " people down " 
 to a bare subsistence diet again some day, but I fancy 
 events are likely to move in the opposite direction. 
 
 It would be a grave error to infer that gold has 
 become scarce or appreciated in England from the fact 
 that corn just now is cheaper than it was in 1786. The 
 error is sometimes committed — was lately committed 
 by the Edinburgh Reviete) — but no amount of authority 
 can make it respectable. Wages in England — the measure 
 of the value of gold -r- have probably trebled since the 
 end of the last century.(^^) The cheapness of corn in 
 England is due, as everyone knows, to its depreciation 
 which has been brought about by general improvements 
 in production, by "tapping" corn-producing districts, for- 
 merly inaccessible, by means of railways, steamships, the 
 Suez Canal, by the repeal of the Corn Laws, and by the 
 P., G. & s. F 
 
82 Corn as a Measure of Value. 
 
 Indian Tribute. So that the real value of gold in Eng- 
 land can only be ascertained by direct observations of 
 money-wages in that country. 
 
 With regard to silver in India, however, the case is 
 entirely different. 
 
 Ricardo argued that there must be everywhere a mini- 
 mum rate of wages : either the lowest with which it 
 is physically possible to keep up the population, or the 
 lowest with which the people will choose to do so. To 
 this minimum, he asserts, the general rate of wages 
 always tends : they can never be much lower beyond the 
 length of time required for a diminished rate of in- 
 crease to make itself felt, and can never long continue 
 higher. The conclusion he draws from this is, that wages 
 in the long run rise and fall with the price of food. 
 This doctrine applied to England of the present day 
 requires a very considerable amount of qualification 
 (rather it does not apply at all) ; for India unfortunately 
 it requires none ; for India's swarthy millions seem 
 bent on demonstrating the correctness of Ricardo's 
 abstract reasoning in which, as a rule, there are no flaws. 
 In Orissa, for instance, wages paid in kind remained 
 unaltered, while wages paid in money rose " by more 
 than one-third " from 1850 to 1870, by which Dr. Hunter 
 means that they almost doubled— were 33 per cent, (or 
 more) less in 1 850 than at the latter date.(') In some 
 districts they quite doubled. In fact, the whole of the 
 evidence shews that in India money-wages do respond 
 pretty accurately to the average price of food-grains. 
 Ask any cooly or servant why his wages are so high as 
 compared with the rate of pay usual 25 years ago, and he 
 will tell you that it is simply owing to the price of " ata." 
 
Corn as a Measure of Value. 83 
 
 So long as this state of things continues — and it has 
 continued for an astonishing number of centuries — corn 
 might in India be used as a measure of value. Such 
 is the opinion of no less an authority, than our own 
 Dr. Hunter, whose opinion I am proud of being able 
 to quote. 
 
 After having shewn on what he believes to be irre- 
 fragable evidence (and if he does not know, who does ?), 
 that the purchasing power of silver in India has fallen 
 during the last five hundred years(*) to one-seventh (at 
 the very least ; one-eighth or even one-twelfth is hinted 
 at as probably more correct as regards Orissa) of what 
 it was in the thirteenth century, and having shewn that 
 this decline was still, in 1870, going on unchecked, he 
 says : 
 
 " During this brief period (1850-70) silver has lost 
 more than a third of its purchasing power, whether ex- 
 pressed in wages or in the staple food of the people. 
 Indeed, one District Officer reports to me that the price 
 of food has doubled within 12 years. The public 
 revenues have been depreciated to at least one-third 
 of their former purchasing power, whether expressed in 
 wages or grain. I have already shown that the value of 
 silver, as estimated in the popular or cowrie currency,(^) 
 has fallen 30 per cent, since 1804, even calculated at 
 the rate of exchange which Government then arbitrarily 
 fixed in its favour. If computed according to the 
 actual rate of exchange then current, it has depreciated 
 by one half Had our first administrators contented 
 themselves with taking payment in silver at the current 
 rate of cowrie exchange, the Orissa Land-Tax would 
 now have been double what it is at present. But had they 
 
84 Corn as a Measure of Value. 
 
 resolved to collect it at a grain-valuation according to 
 Akbar's wise policy, it would now be more than double; 
 for the prices of food have rather more than doubled ' 
 since 1804. The system of paying the land-tax by a 
 grain-valuation appears to me to be the best means of 
 giving stability to the Indian revenues. In Orissa, it 
 would have enabled us to reduce the salt duty to the 
 easy Madras rate ; IT WOULD HAVE SAVED THE NECES- 
 SITY OF AN INCOME-TAX ALTOGETHER ; and by shorter 
 leases, it would now yield as large an income as the 
 total we extract by a variety of vexatious burdens. 
 
 " The experience of the last few years shows that 
 the fall in the value of silver still continues. Every 
 -morning the Government of India wakes up poorer than 
 when it went to bed the night before. A lakh of rupees 
 in 1850 represented a great deal more in actual pur- 
 chasing power than a lakh of rupees in i860 ; and a 
 lakh of rupees in 1 860 represented a great deal more 
 than it did in 1870. Apart, therefore, from the cost of 
 increased efficiency in the administration, the English in 
 India must inevitably go on increasing the miscella- 
 neous public burdens so obnoxious to the people, as 
 long as the land - tax is calculated in silver. The one 
 remedy is a grain-valuation, either struck annually or 
 revised at intervals of about five years. ...... 
 
 Until this necessity is realized and acted upon, every 
 few years will bring a fresh set of financial embarrass- 
 ments. Under the present system, without adding a 
 single judge, or magistrate or officer of any sort to the 
 Civil List ; without granting one of the administrative 
 improvements which India's rapid advance in civilization 
 suggests ; without undertaking any of the rural public 
 
Com as a Measure of Value. 85 
 
 works which a tropical country so urgently requires ; 
 without allowing a rupee for bringing our material of 
 war up to the modern European standard, the Indian 
 Government will find at the end of each ten years the 
 revenue which sufficed at the beginning of the decade, 
 altogether insufficient at the close of it!' 
 
 In a former part of the same work (his " Orissa ") 
 Dr. Hunter says : " Orissa contributes scarcely anything 
 to the general expense of Government. It does not 
 pay its share of interest on the public debt ; it contri- 
 butes nothing to the cost of defending the Empire ; 
 and hardly does more than support the charges of the 
 local administration. Under the native dynasty, the 
 same revenue sufficed to support an administration 
 infinitely more minute, and, as regards its higher offi- 
 cials, infinitely higher paid. None of the English 
 governing body in Orissa ever hopes to make a fortune ; 
 under the Hindu princes Government employ was syno- 
 nymous with assured opulence. Sixteen great ministers 
 regulated the kingdom, with seventy-two deputies 
 and thirty-six separate departments of State. Under 
 the English, the revenue of Orissa with difficulty main- 
 tains seven hundred sepoys." Again: "As estimated in 
 the staple food of the country, the value of silver in 
 Orissa has fallen to ^th of its purchasing power. 
 Wages were regulated then as now by the price of rice, 
 and in fact were mostly paid in grain. The Gangetic 
 dynasty of Orissa (1132 — 1532 A. D.) with a revenue 
 nominally the same as our own were, therefore, as re- 
 gards the home products of the country and their 
 ability to keep up armies and pompous retinues, eight 
 times richer than we are." 
 
86 Corn as a Measure of Value. 
 
 Comment would be superfluous (rather I have com- 
 mented by italicizing). Whether we infer the real value 
 of silver and gold from the average price of the staple food 
 of the people or by direct statistics of wages is a matter 
 of no consequence in India at present. Corn, however, 
 will only remain an accurate measure of value so long 
 as the people are content to live on corn alone or chiefly. 
 It is tolerably clear from the above extracts that in 
 Dr. Hunter's opinion, as in that of Adam Smith, the 
 real measure of the value of silver and gold is labour; 
 and I hope Dr. Hunter will not think I allude to him 
 when I accuse Anglo - Indians of never having read 
 " The Wealth of Nations:' 
 
 In a country like India where the " standard of com- 
 fort " is about as wretchedly low as it possibly can be — 
 have we not our " hungry residue of 40 millions " always 
 with us ? — the food-grains of each province might an- 
 swer sufficiently well as a measure of value. But in 
 England the wages-level is absolutely without a rival. 
 As we have already seen, the price-level of commo- 
 dities in general or of corn in particular, is positively 
 no index of the real value of the precious metals in 
 that country.(^^) 
 
CHAPTER XVI. 
 
 THE WAGES-LEVEL AS THE MEASURE OF VALUE ETER- 
 NALLY JUST BOTH TO DEBTORS AND CREDITORS. 
 
 Even yet, perhaps, the importance of the sharp line of 
 distinction I have drawn between the labour-value ofi 
 gold and silver and their exchange- or commodity- value 
 may not be quite understood. The following considera- 
 tions ought to render it quite evident that the distinction 
 is by no means an insignificant one. 
 
 I take for granted, for the sake of argument, that wages 
 and profits at home are irrecoverably falling, and that 
 this is an infallible sign that the English currency is at 
 last contracting ; that gold is appreciating — not only in 
 relation to commodities but in relation to labour. If 
 the general diminution of the share of gold or its 
 substitutes (and they are many) that falls to the lot of 
 each Englishman is not a proof positive of the scarcity 
 of money, what is or could be ? 
 
 I take for granted also that India will never consent 
 to have her Home-charges doubled or trebled through 
 this cause during the next half century, and that some- 
 thing must, therefore, ere long be done. 
 
 We shall have to cut down the nominal amount of 
 our gold debt, and some extremely good reason will 
 have to be given for our doing so. The repudiation 
 of one farthing is out of the question. 
 
88 The Justice of the Proposed Scheme. 
 
 I say that the only argument our creditors will listen 
 to is one based on the broad fact that in Englande very- 
 body's income but theirs is gradually diminishing : tJie 
 proof — the wages-level. 
 
 To no other arguments will they listen. 
 
 We may point to the rate of exchange, and they 
 would simply laugh. Silver and the merchandise from 
 silver-using countries, they would say, have fallen ; gold 
 has not risen. 
 
 We may appeal to the state of prices (even of corn), 
 and they would reply that they had fallen through thej 
 extended use of electricity as a motive power in place 
 of steam, the use of petroleum for fuel, cheapened pro- 
 duction of Bessemer steel, cheaper ships, cheaper freight, 
 greater tonnage, and growing tributes, and we should 
 be silenced. 
 
 To an argument based merely on a general fall of 
 prices, our English creditors might reply as follows : 
 " Why," they might ask, " should our incomes alone be 
 reduced, while everyone else's, there is reason to believe, 
 has risen ? The real value of gold, the quantity of labour 
 it will command, has fallen. We quite admit that when 
 there is a general fall of prices, profits, wages, rents, and 
 all other incomes, the interest of national debts should 
 fall too : these phenomena would demonstrate a rise in 
 the real value of gold ; a fall in the price of calico does 
 nothing of the kind. True, we can buy more calico with 
 £i sterling than we could a few years ago, but so can 
 everybody else, and the extra calico is not worth so 
 much as it used to be. Why should not we share in 
 the general increase of prosperity which our capital and 
 our inventions have largely brought about ? " 
 
The Justice of the Proposed Scheme. 89 
 
 And unless we could convince them that wages had 
 fallen (of course profits and commercial incomes then fall 
 too ; English Trade Unionists will take care of that) 
 they would certainly be justified in insisting on having 
 what was written in the bond — or perhaps more. 
 
 Put the theory to the test in another way : I, a capi- 
 talist (we both live in England), lend you, a manufac- 
 turer, £\fX)0 for an indefinite period for the purpose of 
 carrying on and extending your business. We have 
 both distinct ideas as to the fluctuations that are con- 
 tinually going on in the value of gold and of commodities 
 as well. We both admit that a fixed number of sove- 
 reigns as interest for money borrowed for long periods 
 has proved a miserable failure, and, as an experiment, I 
 insist that the interest you pay shall rise and fall with 
 the rate of wages of your and other work-people. 
 Mark what happens : An immense improvement in 
 production is made after a few years which extends to 
 all branches of industry, including those devoted to the 
 importation of the precious metals — exactly similar to 
 that which did occur in England from about the middle 
 of the present century ; though compressed, as it were, 
 into a shorter period. All kinds of wealth are doubled 
 in quantity : and the money in circulation is doubled 
 top. We have already seen that in such an event there 
 would be no alteration of prices. But everyone gets 
 double quantity of everything and double the quantity 
 of money. Wages have doubled and so have profits. 
 The profits of my capital in your possession has 
 doubled. Analyse your profits in this way : your remu- 
 neration for risking your capital has doubled ; your 
 remuneration for superintendence has doubled ; your 
 
go The Justice of the Proposed Scheme. 
 
 remuneration for abstinence (for saving and not con- 
 suming your capital) has doubled ; your remuneration 
 for my abstinence (for my capital in your possession) 
 has doubled too. That extra profit, at least, belongs to 
 me ; and on the terms of the loan T get it. 
 
 Quite otherwise would it have been, had the terms of 
 the loan been that the interest was to rise and fall with 
 every rise and fall of prices. Prices have not on our 
 supposition risen at all — remember a similar case has 
 actually happened— and the result would have been 
 that your extra profits on the use of my capital, brought 
 about by the accumulated knowledge and experiments 
 of the whole world, which I have done as much to pro- 
 mote as you, all flow into your pocket instead of into 
 mine — their righteous destination. 
 
 Had the improvements in production not extended 
 to the acquisition of the precious metals, prices would 
 ha.ve fallen; but that would have been no reason whatever 
 for your reducing the interest you pay for the use of my 
 money. 
 
 If, however, the improvements had been confined to 
 the importation and production of gold, then and then 
 only would it be a just and satisfactory arrangement that 
 my interest should fluctuate with prices ; yet not more 
 just or satisfactory than the arrangement we had agreed 
 upon. 
 
 When the money in circulation increases in abundance 
 (faster than population), wages and profits rise. They do 
 not fall when prices fall through cheapened production. 
 They do fall when money becomes scarce. In every con- 
 ceivable case of alteration in the values of the precious, 
 metals and of commodities, a rate of interest for borrowed 
 
The Justice of the Proposed Scheme. 91 
 
 capital, which fluctuates with the wages-level, would for 
 ever mete out even-handed justice to both debtors and cre- 
 ditors. Debtors would pay according to their means (for 
 their incomes would rise when the money remuneration 
 of all industry rose), and creditors would be paid accord- 
 ing to their deserts. The interest paid would always 
 continue to be exactly what both parties intend should 
 be paid ; for it would always purchase or command the 
 same quantity of labour. Now all things are made by 
 labour, and without labour is not anything made that is 
 made. The interest of a -debt regulated by the wages- 
 level would not, it is true, always buy the same quantity 
 of the things produced by labour ; for this quantity 
 would vary with the efficiency of labour itself. Creditors 
 would thus, under the new regime, share in the results of 
 improvements, or the reverse, in the arts of prod uction .' 
 and it is, I think, pre-eminently just and proper that they 
 should do so. 
 
 Therefore, I say, let perpetual interest and all pay- 
 ments for long periods be calculated according to the 
 statisticians' wages- or income- level, and not according 
 to average prices. 
 
 It is undoubtedly unfair that debtors should have their 
 debts increased through a rise in the value of the com- 
 modity with which they are paid ; and the correspond- 
 ing gains of creditors are equally repugnant to our 
 notions of strict justice. But it is quite as unfair to 
 creditors that their debtors should reap all the benefit 
 that results from every general increase in the efficiency 
 of human labour ; of every improvement in the arts of 
 production, as they would do if prices were adopted 
 as the measure of value. 
 
g2 The Justice of the Proposed Scheme. 
 
 Need I point out the application of the foregoing 
 considerations to the case of fixed salaries in India ? 
 Suppose it turns out that prices here do not rise at all 
 when silver becomes cheap ; that the supply of com- 
 modities keeps pace with the influx of silver ; and that 
 you officials, so far as the purchasing power of your 
 incomes goes in the market of commodities, are no worse 
 off than you are now, will you be content with being 
 no worse off? 
 
 You ought to be much better off (if you will excuse 
 me for saying so) ; other people will be ; not a fixed share 
 of the good things of life, but a growing share is what 
 you are entitled to during a period of growing general 
 prosperity. Rupees increase in number ; so may com- 
 modities in abundance ; suppose in an equal degree. 
 There is a greater abundance of all things, money includ- 
 ed. You alone are content with, a fixed amount of what 
 everyone else in the country is receiving more ! 
 
CHAPTER XVII. 
 
 THE WAGES - LEVEL AS THE MEASURE OF VALUE 
 INEVITABLE. 
 
 Let Indian officials for a moment consider how posi- 
 tively inevitable the wages level as the measure of 
 value really is. 
 
 Things cannot be allowed to take their natural course. 
 You will be ruined. Your eyes are already fixed on the 
 shady side of \s. 2d. — Is. S}id.* has been already attained 
 and Council drafts suspended for a time for fear of 
 ts. /^yid. (I here assume that we are dealing with a 
 real and general depreciation of silver.) Your salaries 
 must be readjusted, and so must the land-revenue ac- 
 cording to some new standard of value or according 
 to none — the admission of the necessity for readjust- 
 ment is a proof, if any were needed, of the failure of 
 silver at all events. 
 
 What is to be the new standard of value? The 
 guesses of your able Finance Minister, the author of 
 the income-tax, and of I know not how many fixed 
 settlements ? 
 
 You cannot adopt gold as your standard. The 
 threatened gold famine (assuming what you all say 
 to be true) appears inevitable. The history of 
 the first 50 years of the present century, we will 
 
 * Now IS. 4ij(^i 
 
94 Wages-level as the Measure of Value Inevitable. 
 
 suppose, are about to be repeated.* The adoption of 
 appreciating gold as your standard would turn the 
 tables in favour of your own interests and against 
 those of the tax-payer with somewhat too much of a 
 vengeance ; and would wantonly increase the numbers 
 of " the hungry residue of 40 millions " for your bene- 
 fit. A gold standard with a gold coinage would im- 
 mensely aggravate matters. With or without gold 
 coins your salaries must in future be regulated by 
 reference to the remuneration of labour in the country 
 of your adoption, estimated in gold ; if it be substituted 
 for silver in India. If, judged by the wages-test, gold 
 does appreciate in future, your salaries must be cut 
 down and your revenues reduced. You would not be 
 permitted to retain your present incomes (converted into 
 gold) if the money remuneration of labour through- 
 out the country were generally reduced. People have 
 no objection to your growing poorer through the depre- 
 ciation of silver ; but they will never allow you to 
 grow richer through the appreciation of gold. The 
 former process is your affair ; the latter theirs. And 
 no matter how you tinker with the silver currency, you 
 must come round to the wages-level as your measure of 
 value at last. Suppose you obviate the threatened 
 depreciation of silver in India by closing the mints ; 
 how scarce are you going to allow rupees to become ? 
 What means have you to ascertain when to reopen the 
 mints ? Rupees might become too scarce and dear ; — you 
 could only know this by reference to the state of wages. 
 
 * Whatever may or may not have happened to gold in England, it is 
 beyond all dispute getting more difficult for us in India to " come at," (') 
 
Wages-level as the Measure of Value Inevitable. 95 
 
 Or suppose you make rupees bigger {and get these 
 rupees into circulation) : how much more silver are you 
 going to put into the rupee ? You would be robbing 
 the cultivator and enriching yourselves if you make 
 them too big, for prices and wages would then fall. 
 The number of rupees ordinarily earned per mensem 
 must then, as always, be your guide. 
 
 Or bimetallism may be adopted by the nations (some 
 generations hence) : appreciation may (and certainly 
 would) result from the change to anyextent. Your only 
 test whether such did occur would be the wages-level. 
 
 All schemes for putting an end to the present un- 
 certain, drifting state of things will be just or unjust 
 according as the number of days' work you extract 
 from the cultivator in payment of his taxes increases 
 or decreases or remains stationary. The extent of the 
 injustice inflicted upon you by the continuance of the 
 present state of things is measurable only by the 
 diminished number of hours' work your fixed salary now 
 commands ; and the gains of the cultivator at your 
 expense are measurable only by the lessened number of 
 days' work necessary for him to provide for the demands 
 of the tax-collector.* 
 
 Let it not be thought that I am an advocate of retros- 
 pective measures tending to impoverish the cultivator, 
 were it proved that he has been growing rich {he or the 
 landlord or both) at the expense of the fixed salaried 
 portion of the community, in order to restore to the official 
 
 * I wrote this, as the reader cannot fail to notice, before I discovered 
 the vera causa of the fall of exchange. " 'Twill serve," nevertheless, for 
 the future. 
 
g6 Wages-level as the Measure of Value Inevitable. 
 
 what he may have lost through the fixity of his salary 
 and his contempt for the Gospel according to Adam 
 Smith. Such an idea cannot be entertained for one 
 moment. What I insist upon is that we can mould the 
 future as we like. We can render it a matter of indiffer- 
 ence whether we keep on the sunny side of is. 2d. or 
 not, so far as the mere cheapening of silver is con- 
 cerned. We can ensure that the distribution of the world's 
 wealth shall take place equitably — as if the fiction that 
 gold and silver ate standards of value were a fact. 
 We can ensure that no future fluctuations in the value 
 of the precious metals — no alterations in the mere 
 mechanism by means of which wealth is distributed — 
 shall, to any appreciable extent, affect the distribution 
 of wealth itself. 
 
 Something must be done and by us. I mean with 
 regard to national debts. It will not do to " leave the 
 future to take care of itself." We are the creators of 
 the future. Our successors will pay as interest of 
 money we borrow whatever we bind them to pay. If, 
 on the one hand, £i sterling, half a century hence, may 
 probably mean twice the quantity of labour, it means 
 now ; and if, on the other hand, we can ensure that our 
 national debts shall fluctuate in nominal amount, and 
 that a given debt shall in future never mean more or 
 less than the quantity of labour it now means, ought 
 we not to do the thing and do it quickly and discontinue 
 borrowing until it is done ? Does anyone ask. What's 
 posterity to us or we to posterity that we should weep for 
 it ? How do we like the spontaneous growth of our own 
 Home-dharges ? The fact is, future generations of men 
 will simply marvel at our dense stupidity in this matter. 
 
CHAPTER XVIII. 
 
 THE EQUITABLE DISTRIBUTION OF THE PRECIOUS ME- 
 TALS, IN ACCORDANCE WITH THEIR REAL VALUE 
 AS DECLARED BY THE WAGES-LEVEL, ALL THAT IS 
 NEEDED IN ORDER TO OBVIATE THE EVIL EFFECTS 
 OF THEIR SCARCITY OR SUPERABUNDANCE. 
 
 Many people, however, have the idea that the equitable 
 distribution of gold and silver is not enough. Gold- 
 using countries, they imagine, are absolutely losing — what 
 I know not — through the increasing purchasing power, 
 the growing value, of gold. 
 
 And silver-using countries are also losing through the 
 diminishing value of silver ! Or is it vice versd ? I 
 declare I do not know which ; because what one sees 
 published, and what one hears daily, is so contradictory. 
 
 If England is being ruined by dear gold, it seems to 
 follow that India must be getting on prosperously 
 through cheap silver (if indeed it is cheap). If England 
 is getting rich on dear gold, India must be becoming 
 impoverished by cheap silver. Both countries cannot 
 well lose from precisely opposite causes. 
 
 The plain truth is that neither the scarcity and dear- 
 ness of gold, nor the abundance and cheapness of silver, 
 can or do affect in the slightest degree the ordinary 
 commercial transactions of any country ; neither its 
 domestic nor foreign trade is affected in the least. The 
 world's affairs would go on just the same as they are 
 going on now, were only a soth part of our present 
 v., G. & S. G 
 
98 The Sufficiency of the Proposed Remedy. 
 
 money in existence ; so it would with 50 times as much as 
 we now have.(^) " There cannot, in short, be intrinsi- 
 cally a more insignificant thing in the economy of 
 society than money, except in the character of a contri- 
 vance for sparing time and labour. It is a machine for 
 doing quickly and commodiously, what would be done, 
 though less quickly and commodiously, without it : 
 and like many other kinds of machinery, it only exerts 
 a distinct and independent influence of its own when 
 it gets out of order." (Mill.) The Edinburgh Review 
 says this " theory " was " born in a closet." I regret I. 
 do not know the name of the Scotch establishment cor- 
 responding to our Bethlehem Hospital. 
 
 Remember, I am not here speaking of a fall of Eng- 
 lish prices caused by any of the thousand circumstances 
 which bring about periods of "bad trade;" but only of 
 low prices, profits and wages, the result of a scarcity of 
 gold. And as regards silver, I refer only to its deprecia- 
 tion in India that may arise hereafter through a sheer 
 superabundance of the metal, the proof of the existence 
 of which will be high wages, profits and prices — of all 
 articles which may not happen to be cheapened simul- 
 taneously with silver. 
 
 I quite admit that India loses " by exchange " when 
 her merchandise falls in English value and drags her 
 currency, silver, with it, as it has done ; for her mer- 
 chandise is the coin in which she pays for her imports, 
 and her English debt. Anyone who has ever had any- 
 thing to sell, knows that he loses when what he has to 
 sell falls in value ; but India does not sell silver ; she 
 buys it. And what I cannot for the life of me under- 
 stand is how the foreign or domestic trade of a country 
 
The Sufficiency of the Proposed Remedy. gg 
 
 can be injured or benefited permanently by the mere 
 superabundance and cheapness of its circulating medium. 
 England loses through low prices of her exports when 
 these result from her manufacturers having made what 
 people do not want and cannot- afford to buy, as they 
 are always doing. (English manufacturers cou/d supply 
 half the solar system with cotton goods and steel rails ; 
 but they are not wanted just now. Till they are wanted, 
 would it not be wise on English manufacturers' part to 
 devote their energies to the production of what they 
 themselves and their own work-people want, instead of 
 piling up stocks of cotton goods and steel rails and steel 
 ships of which the world has already enough, and 
 wofully complaining about a scarcity of gold and d?z^er- 
 production, when it is only misdirected production ?) 
 
 England indeed ^ains when gold becomes scarce at 
 the expense of those nations who have undertaken to 
 pay her fixed amounts of gold for all time to come ; 
 and the fixed salaried English official gains under the 
 same circumstances (at the expense of the tax-paying 
 community of course), because £i sterling will com- 
 mand more of other people's services than before. 
 
 So with India. India loses precisely what England 
 gains by virtue of the stupid contract India has en- 
 tered into — to pay annually as interest for money 
 borrowed a stated weight of a metal which ex hypothesi 
 has got dearer and costs more of the labour of her 
 people to acquire. And Indian officials, when the 
 country is deluged with cheap silver, of which they 
 only get the usual quantity (no matter what it is worth), 
 lose, because their salaries enable them to command 
 less than heretofore of other people's labour ; — leaving 
 
100 The Sufficiency of the Proposed Remedy. 
 
 those other people more leisure for other matters or 
 for being idle. The loss by exchange through the 
 depreciation of silver only (the value of gold meanwhile 
 being stationary) admits of no remedy, simply because 
 there is no such loss. Theoretical this assertion must be 
 for the present ; for there is as yet no superabundance 
 of silver to complain of ; so I cannot appeal to the facts 
 of the case. The assertion I oppose is also theoretical 
 for the same reason ; and has the further disadvantage 
 of being untrue. 
 
 While silver is depreciating, a trifling loss or gain there 
 may be : but it would take longer to explain which it 
 is than things would take to right themselves. 
 
 Abolish the " fixedness " of official salaries and all 
 other money contracts ; and cease international borrow- 
 ing ; and all will be well whatever may happen at 
 Ballarat or Nevada. 
 
NOTES. 
 
 (1.) Facts and Figures relating to tlie Currency Question : 
 the Lesson they teach. 
 
 Before " the drain of silver to the East " began, some four or five 
 hundred years ago, one anna and four pies, or at most two ^annas, were 
 worth in India as much as Re. I is at the present day. The earliest re- 
 corded ratio of gold to silver in this country seems to be I to lo* (though 
 I to 8 is occasionally mentioned as having at one time prevailed) ; the 
 latest, I to 22 : gold, therefore, must have heavily fallen in value too — 
 concurrently with, though less than, silver. In what some people im- 
 agine to be ante-depreciation times and especially during those very 70 
 years when the double-standard of France was actively engaged in main- 
 taining the ratio of i of gold to I5J^ of silver, silver in this country 
 depreciated to a terrific extent ; Re. I having in these few decades 
 dwindled down to some indefinite aliquot part of 8 ans. Gold in India 
 during these 70 years must, of course, have depreciated also ; otherwise 
 its ratio to silver would have been altered from I to 14 (the ratio at the 
 end of the last century) to I to more than 28 ; instead of I to 16 or 17, 
 as was actually the case. At one time, in 1859, its fall must have been 
 noticeably rapid, for the Indian Government then, most unwisely, I 
 think, refused to accept the now coveted but then depreciating metal 
 in payment of taxes. When " everybody says " silver commenced falling 
 in India it really commenced to remain stationary in value ; and has 
 remained ever since — this was only a dozen years or so ago — as stable a 
 standard of value as we can well wish for. One tolah of gold having 
 during the last 15 years risen in silver-price from Rs. 16 or thereabouts to 
 Rs. 22 (Indian wages meanwhile estimated in rupees being as nearly as 
 possible stationary), the appreciation of gold in relation to Indian labour 
 of late years is undeniable. It is strange, yet true, that its appreciation 
 here affords no sort of presumption that it has also appreciated in England. 
 
 In England both gold and silver appear to have steadily depreciated 
 during the 17th and i8th centuries ; in the 70 years following the dis- 
 
 * Since writing the above, I have discovered that in B.C. 517, the Indian 
 alio of gold to silver was i to 4. 
 
102 Notes. 
 
 covery of the American mines (1570-1640) their fall was of unprecedented 
 rapidity — two-thirds and more of their value having been annihilated 
 at one fell swoop. But silver fell, as usual, more than gold ; the ancient 
 ratio of l to " 10 01 12 " having been altered to I to 14 or 15. What 
 happened to gold in England during the first 50 years of the present 
 century, I have not succeeded in ascertaining with anything like certainty. 
 It is said that ;^3 in 1849 were worth as much as £,% in 1809. Measured 
 by prices this appears to have been the case ; but commodities are not the 
 standard by which we ought to measure the value of money ; labour is '■ 
 and from the incidental glimpses one occasionally gets of the course o» 
 English wages during the early part of the century, it seems doubtful 
 whether the real value of gold in England — its purchasing power over 
 labour — rose at all except, of course, during intervals of severe depres- 
 sion of trade. The best authorities are agreed that, for the first 30 years 
 of the century, money wages were rising in England ; certainly real wages 
 were ; since then, from about 1835 to 1873 or 4, the evidence is com- 
 plete that gold depreciated " by leaps and bounds ; " wages having per- 
 haps more than doubled, taking the reduced hours of labour and other 
 matters into consideration. From 1870-4 to 1880-4, the value of gold 
 in relation to labour in the gold-using country evidently remained about 
 as stable as silver has done in India in relation to Indian labour. Just 
 now wages at home are doubtless exhibiting a downward tendency ; but 
 the absurdity of comparing a period of extreme inflation, such as 1872-3, 
 with one of extreme stagnation, such as 1886, is almost too apparent to 
 need insisting on. It would have been a mistake on Canute's part to have 
 inferred from one of the usual temporary recessions of the waves, as 
 they beat on the shore, that the tide was not rising. Neither can any use- 
 ful conclusion be arrived at from a comparison of wages in certain in- 
 dustries which are undoubtedly decaying with wages in those same 
 employments during a period when they were enjoying quite unexampled 
 prosperity. It should be borne in mind that the direction of industry at 
 home is continually shifting. Agriculture, for instance, so far as wheat 
 cultivation there is concerned, is simply ruined {because, as I have else- 
 where shewn, wages have not fallen while prices have. Had wages fallen 
 as well as prices, wheat might be cultivated with the same real profit as 
 before). The wheat growers' occupation is gone, or going. But other occupa- 
 tions remain. Labour, capital, raw materials, and a little more ingenuity 
 are all the English people want. They could always find employment 
 in producing something that they or other people are in want of, even if 
 they were to get their bread for nothing. But while these changes of 
 occupation are taking place, wages in the decaying industries usually 
 
Notes. 103 
 
 sink to an abnormally low level. Nevertheless, and notwithstanding ex- 
 ceptional instances of falling wages, against which it would not be diffi- 
 cult probably to set off instances of quite an opposite kind, I am quite 
 unable to detect any evidence — remember, I am writing at some distance 
 from home — to the effect that the general wages- or income- level in Eng- 
 land in 1880-4 was lower than in 1870-4 ; but I have come across several 
 distinct and most convincing proofs that it was not. The people of Eng- 
 land as a whole in the latter period evidently received as their incomes 
 not only as much but slightly more gold than they did at the former ; and 
 we may be quite sure that English workmen, and workers of all kinds, 
 got their fair share of the gold in circulation : in return for its price, their 
 labour : generally, it has been discovered, they get somewhat more. The 
 English cost of acquisition al £,\ sterling in 1880-4 5 *e quantity of English 
 labour it would purchase or command, was no greater than in 1870-4. Sil- 
 ver, however, had fallen in real value during this decade in England. Sta- 
 tionary gold incomes and falling silver mean that the white metal is be- 
 coming " easier to come at. " Yet silver has not been cheapened of late 
 to any appreciable extent in India ; in a few large provinces, indeed, there 
 are indications that the reverse has to some slight extent happened. And 
 gold has risen in value in India but not in England ! 
 
 Such, briefly, and stated broadly, are the facts — so far at least as they 
 happen to have fallen in my way — relating to gold and silver in England 
 and in India. Possibly, nay probably, — even certainly — a history of 
 wages during the last 20 years in other countries would reveal a very dif- 
 ferent result. For instance, silver in an European or other country using 
 (only) that metal for its currency, — a country fairly prosperous in condition 
 and unburdened with a foreign debt ; if any such there be ; — silver in 
 such a country has almost to a certainty depreciated in relation to labour, 
 i.e., wages and incomes have probably risen to the full extent that silver 
 has fallen in relation to gold, which in India they have not done. I am 
 not just now aware of the existence of any such country : there might 
 have been many ; but they closed their mints against silver at a certain 
 critical juncture. But the silver question in Mexico and China might be 
 studied with interest — and profit. 
 
 On the other hand, those gold-using countries which have been indulg- 
 ing in such costly luxuries as standing armies and monster ironclads, 
 maintained and built respectively out of English gold ; and which have not 
 only in return promised to pay an annual tribute to English capitalists, as 
 Turkey and sundry South American countries did, but which have regularly 
 j)aid that tribute as Russia appears to have done — in such countries the 
 appreciation of gold is in all likelihood something more than a mere 
 
I04 Notes. 
 
 theory invented to account for what is already (in the case of England) 
 sufficiently explained— the fall of mere prices. To deny the scarcity of 
 gold, said the Delegate from Russia, at one of the Paris Conferences, is 
 " like denying daylight." No doubt : in Russia. Russian bonds in 
 London mean the appreciation of gold in the country that pays their in- 
 terest. This is as it should be ; political economy would be a perfect fail- 
 ure if it were otherwise. We were informed the other day too that gold 
 is appreciating in Egypt ! Just as if any sensible man ever expected gold 
 to do anything else but appreciate in Egypt. The appreciation of gold 
 in Egypt and the depreciation of silver (Indian money) in London are 
 simply the inevitable effects of the " Tributes " levied by English capital 
 on Egypt and India. The United States, too, with all their wealth, are not 
 insensible to the weight of English investments. The interest of 
 ;^ 1 50,000,000 ought not to sit very heavily on a country of such boundless 
 resources ; yet money is scarcer in the States and more plentiful at home 
 than, but for the necessity for paying that interest, it would be. American 
 wages, if I mistake not, are, owing to this and of course to other causes 
 (due allowance being made for paper money inflation), decidedly lower 
 than they were before the civil war. The marvel to me is that men who 
 are called economists are surprised at finding a scarcity of gold making 
 itself felt in countries which have burdened themselves with heavy obli- 
 gations to other countries. Look where I will, traces of this huge dis- 
 turbing element in the world's monetary affairs — international borrowing — 
 are plainly visible. ' 
 
 Providence is evidently not on the side of big batallions just now ; but 
 on that of the holders of foreign bonds. The Roman legions never levied 
 such a tribute on Rome's subject provinces as our little island home is at 
 present exacting from an unwary world.* Mill explained the thing- in 
 half a page — and so well that when the two countries, the tribute-paying 
 and the tribute-receiving, have the same metallic currency, he really left 
 little to be said. What remained to be said about the eminently peculiar case 
 of India, a, or rather the, silver-using country, at a time when most 
 other countries have ceased coining the metal in any large quantity, I have 
 tried to say in my work on " The Indian Tribute and the Loss by 
 Exchange : " in which work I have pretty well exhausted my stock of 
 illustrations in shewing how the Indian Home-charges drag down the 
 Indian, in relation to the English, currency — yet I will try the effect of 
 one more. 
 
 * For England receives and the (economically speaking) tributary countries 
 pay more than was bargained for. 
 
Notes. loS 
 
 What if India were not only the silver-using country but the copper- 
 producing country of the world ; and that our Home-charges contracted 
 in gold were paid in copper — our sole article of export (say) ? Silver, let 
 us suppose, is wanted in London for the one purpose of buying . copper 
 from India. Would not the Indian tribute of so many millions of tons of 
 copper, for which England has not to pay, somewhat depress the 
 Enghsh copper market ? And would not a 25 per cent, fall in the London 
 price of copper (which it requires no effort of imagination to suppose to 
 result from such large and gratuitous imports of the metal) inevitably be 
 identical with a 25 per cent, fall in the price of silver too, with which the 
 depreciated copper is purchased ? The EngUsh merchant who imports 
 copper from India under these circumstances could, if he liked, 
 import the equivalent of the metal in Indian silver instead. Every 
 depreciation, or cheapening, or fall in gold price of copper would reduce 
 the English cost of acquisition of Indian silver, the price of which neces- 
 sarily and as a matter of fact— at least bullion merchants say so — rules 
 the market. One rupee has fallen in English value, because one rupee's 
 worth of what rupees buy has fallen in value. English sovereigns have 
 risen in value in India because every fall in gold-price of our exports 
 means that we have to give more for them. If English gold were bought 
 with Indian copper {ex hypothesi our one article of export) a 25 per cent, 
 fall in the gold-price of copper would mean that we have to pay 33^ per 
 cent, more than before for ;^i sterling ; therefore 33^ per cent, more of 
 the equivalent of the copper in Indian money would have to be given 
 too— namely, Rs. 13 4 ans.* or thereabouts instead of Rs. 10. 
 
 Perhaps the reader cannot see it : (hundreds of quite ordinary indivi- 
 duals, 1 find, can : ) if he cannot, let him read, mark, learn, and inwardly 
 digest " The Indian Tribute.'"^ 
 
 My object in these notes is not to argue the whole mighty question 
 over again, but simply to prove that the state of things for which we have 
 to find an immediate remedy is not the state of things to remedy which 
 " Gold and Silver Weighed in the Balance " was intended. Not a. general 
 depreciation of silver nor a general appreciation of gold ; neither of these 
 phenomena has occurredjust lately in India and in England; but some- 
 thing infinitely more difficult to grapple with — the depreciation of silver 
 in England and the appreciation of gold here— the very reverse, of coursCt 
 of what " everybody says," once more : both these phenomena being the 
 immediate results of the depreciation of the exports of the tribute-paying 
 
 * Now Rs. 14 3 ans. 
 
 t See the Preface to the present work. 
 
lo6 Notes. 
 
 country in the country which receives them (not silver) as a tribute— as 
 interest for borrowed money, et cetera. The " depreciation of silver " is 
 not a myth, Mr. Molesworth, and need not be put in " inverted commas ; " 
 neither, Mr. Mulhall, has India more gold than she knows " what 
 to do with." (She knows too well how to hoard it. What else can she 
 do with it ? Her rulers, Sir Auckland Colvin's predecessors, refused to 
 allow it to circulate at its market value. ) Both the rise of one metal and 
 the fall of the other are to us in India unpleasant realities ; only it 
 is necessary to give the two phenomena a " local habitation " and — 
 another name : the depreciation of Indian commodities in pur chief market. 
 Had there been merely a general scarcity or abundance of either or both 
 metals, India's loss (and England's gain) by exchange (except, indeed? 
 on the interest of her gold debt) would be non-existent. Neither nations 
 nor individuals can lose anything worth having through the growing 
 abundance and cheapness of what they are desirous of purchasing (and 
 have the option of refusing) ; neither can they lose by the enhanced value, 
 through general scarcity, of a metal they want for purposes of ostentation 
 only. A light gold nose-ring, for instance, would, it seems to me, answer 
 every purpose subserved by a heavy one ; gold is wanted not for the sake 
 of its weight but its value : a certain weight of the yellow metal may cost 
 us more to acquire ; but what matters, if it costs everyone else more too ? 
 If it is worth more all the world over when bought ? The ugly fact is 
 it costs us, and, roughly speaking, only us, more labour to get at ; and is 
 really worth no more in England than when it cost us less. (Had there 
 been an ail-but universal fall of incomes as well as prices at home ; were 
 it true that 15^. are really worth to our families and our creditors as much 
 as 20J. used to be, our private remittances, and our public ones too for 
 that matter, might be justly, and with the clearest of consciences, nomi- 
 nally reduced. * And silver is only cheap to those who do not want it. 
 The appreciation of gold in India is only a symptom of our narrowing 
 means t of purchasing goods from gold-using cbuntries, and the deprecia- 
 tion of silver in these countries only and not here also, is, properly un- 
 derstood, a symptom of the appallingly heavy losses we suffer on 
 our transactions with these countries — losses " by exchange, " which are 
 
 * To which may be added that whatever appreciates English gold appre- 
 ciates Indian gold too. We do not lose because our hoarded (150) millions of 
 the precious metal become worth twice as much as when we bought them. 
 
 1 1 mean relatively to what they ought to be : and would be but for the loss 
 by exchange. 
 
Notes. 107 
 
 mAy possible if what we sell (which is not silver) has fallen in value in the 
 estimation of our customers, as it has done because we virtually give them 
 so much gratis.) 
 
 I am aware that most of these propositions are positively startling. 
 They — and especially what I have said with regard to the " localiza!- 
 tion " of the rise and fall in the value of the two metals of late years — 
 will, I hope, be hotly contested by every bimetallist in the two hemis- 
 pheres. If successfully so much the better — for " Gold and Silver 
 Weighed in the Balance." If it can be shewn that after all gold has, 
 during the last decade or two, appreciated in England to any discover- 
 able extent ; and if it should turn out that silver in India has con- 
 siderably fallen in value, what I have written will serve to demon- 
 strate, most interestingly I hope, how the gains and losses that have 
 resulted from this appreciation and depreciation might have been 
 prevented ; and how similar gains and losses might be prevented 
 in future. As the evidence stands now, I find, after mature reflection, 
 that the most serious objection that can possibly be conceived against 
 what I have suggested as to measuring gold and silver by labour is 
 that wages-levels, even if we had them, would latterly have been of 
 no earthly use. Measuring the sun's distance by means of the Transit 
 of Venus would have lost half its interest, had it turned out that that 
 distance had already been previously measured by less elaborate means 
 with sufficient accuracy. And it would certainly have been more 
 satisfactory to me to have been able to point out that the absurd 
 fiction that £1 sterling and Re. I are standards of value for all time 
 had only recently cost England a great many millions sterling and 
 India <i great many millions more, than to have to announce that in 
 their respective countries these precious coins have latterly fulfilled 
 all that can be reasonably expected of them ; and that no cunningly 
 devised method of ensuring perfect stability of value of gold or silver 
 or both in England and in India can possibly succeed in averting the 
 penalty which the nature of things has attached to the economical 
 sin of international borrowing — money which there is not the remot- 
 est intention of ever repaying. It is this penalty we in India are 
 suflfering from, not the inconvenience, or the reverse, of having too much 
 silver or too little gold ; and it is something — I think a great deal — to have 
 detected, by means of " weighing gold and silver in the balance," what is 
 really wrong. But the facts, as I have said, will be vehemently disputed : 
 Ijence the necessity for publishing the statistics in these notes. 
 
 There are other reasons for asking the reader for once to overcome 
 his aversion (if he has any) to the careful study of dry facts. 
 
io8 Notes. 
 
 Bimetallists, I fear (not for myself but for them), will not only 
 dispute the accuracy of my assertion as to the nature of the divergence 
 of the rupee from 2s. ; they will not admit that I am right when I 
 maintain that the double-standard, although a convenient and even 
 eminently desirable kind of universal currency, is utterly delusive as 
 a means of obviating the fluctuations in the value of our so-called 
 " standards " of value ; seeing that both metals, even when their relative 
 value has remained tolerably stable, have from the beginning done 
 little else than depreciate concurrently. Two growing boys would 
 answer the purpose of a standard of length but a very little better 
 {if any) than one ; especially if the method of making the taller of 
 the two boys the standard were hit upon. Neither would the more 
 rapidly melting of two blocks of ice serve better than a single melting 
 block for a pound avoirdupois. Of two depreciating metals the one 
 that has depreciated more than the other would, under a bimetallic 
 regime, be at all times the real standard. Now both our standards 
 have from time immemorial been always or very nearly always falling 
 in value ; and creditors have consequently always or very nearly 
 always been unconsciously defrauded. Bimetallists will never admit 
 this, unless compelled to do so by sheer force of a goodly array of 
 figures. It seems to me that the strange delusion that the precious 
 metals singly or combined into " one commodity of two different 
 strengths" are always going to remain stable in value for all time to 
 come has lasted a sufficiently large number of generations ; and must 
 come to grief the moment the really relevant facts of the case become 
 known. It is useless to assert that facts are suificiently well known 
 already. They are not ; if they are, they are systematically suppressed 
 or ignored. Perhaps it would be more correct to say that recent 
 writers on currency matters have not yet discovered which set of 
 facts are relevant and which are not. 
 
 It will be found, I think, that the only interpretation these statistics 
 admit of is that either the Indian Tribute, or some other equally potent 
 and (to me) inconceivable circumstance, arrested (about 1873) the 
 depreciation of silver that had been going on in India since the Eastern 
 trade was opened, and caused it to depreciate in England — a process 
 which, to say the least, is very likely to be inverted when that tribute is 
 materially reduced ; as it is to be devoutly hoped it soon will be. (If the 
 Home-charges were cut down by one-half, there is not, and never has been, 
 a shadow of a doubt that our imports of silver would very largely in- 
 crease. Our " standard " of value would fall ; wages would be doubled 
 within 20 years, and all debts and fixed salaries cut down to an interesting 
 
Notes. 109 
 
 fraction. Let it not be said then that ' ' Gold and Silver Weighed in the 
 Balance,^' which was designed for a state of things of this sort, is alto- 
 gether a failure. ) It will be found too that the substitution of gold for 
 silver in Germany and elsewhere has as yet done no more than check the 
 depreciation of gold that was taking place at the time the substitution 
 was made. It seems to me that the ingenuity of the reader will be 
 severely and fruitlessly exercised in the attempt to invent any other expla- 
 nation of the facts (at any rate prior to 1884) than the one here suggested. 
 However, he has my fullest, freest permission to try. I have changed my 
 opinions on these matters too many times to dread having to change them 
 once more ; and I hate Pilatism (" what I have written I have written ") 
 from the very bottom of my soul. 
 
 I have already remarked, parenthetically, that the time may soon come 
 when the depreciation of silver in India will have to be dealt with, for it 
 will depreciate here with a vengeance if " The Indian Tribute "has any 
 influence on those who are responsible for the depreciation of silver and 
 our merchandise in London. And there are two other contingencies that 
 must be reckoned with. During the next revival of trade in Europe and 
 America it is more than probable, at least it is possible, the Bland Act 
 may be repealed ; in which case silver will depreciate here, as well 
 as elsewhere, through superabundance, as hitherto it most certainly has 
 not done ; and it is also possible (though I am still in doubts about the 
 probability of the thing) that Mr. Giffen's prophecies about the coming 
 gold famine may be sooner or later fulfilled. For these three contingen- 
 cies it behoves us to be fully prepared. Can any other, any better, mea- 
 sure of the value of gold and silver than the wages-level be suggested ? 
 
 " Sufficient to the day is the evil thereof" no doubt : yet we are also 
 taught to remember certain things " when the evil days come not ; " and 
 depend upon it this is the wisest course. For when the evil days I predict 
 do come, the evil will be irremediable — so far forth as it is an accom- 
 plished fact. 
 
 I cannot too often or too strongly insist we have not to deal with the 
 past but the ■ future. What has been lost through the depreciation of 
 silver is lost irretrievably ; and what has been gained through the appre- 
 ciation of gold is not likely to be restored to its rightful owners. There 
 can be no " great day of national atonement for bygone wrongs :" so the 
 very utility of ascertaining their precise extent may be questioned. But 
 with the future it is different. The very fact that we can ascertain how 
 much has been lost and gained, through the vitiation of what we fancy are 
 our " standards" of value, implies that we can, if we like, render those 
 losses and gains a matter of impossibility in all .time to come. My argu- 
 
I lo Notes. 
 
 ment, so far as the subject dealt with in these pages is concerned, is quite 
 independent of what has happened to our " standards" of late years. £\ 
 sterling and Re. I may have remained perfectly stable in value in 
 their respective countries for fifty years : still, if they are not likely to 
 remain stable for the next fifty days, the best means of obviating the effects 
 of their possible and probable falsification is, to say the least, an interest- 
 ing problem for all who have sovereigns and rupees to receive and pay. 
 " Gold and Silver Weighed in the Balance " is an appeal to statisticians for 
 statistics of the right sort, instead of statistics of the wrong sort — for 
 wages- or income- levels instead of price-levels. 
 
 I make no attempt to. weave these notes into a continuous argument : 
 they are notes merely : most of them are referred to in the text. Yet, with 
 the exception of a few of a miscellaneous nature (not that they are irrele- 
 vant or unimportant) at the end of the volume, they may be advan- 
 tageously read and very carefully studied as a separate chapter. 
 
 (2,) The Relative Value of Silver to Gold in India from the 
 Thirteenth to the end of the Eighteenth Century. 
 
 " For ascertaining the ratio of gold to silver in Orissa in the twelfth 
 century, no materials exist. General Cunningham, however, informs rae 
 that in the thirteenth century, under Jalal-ud-din and Ala-ud-din, the 
 porportion in Hindustan was I of gold to ID of silver. Under Akbar, in 
 the sixteenth century, the official ratio at the mint was i to 9^4. In the 
 seventeenth century it again returned to i to 10, and as the East India 
 Company poured in its yearly freights of silver, the proportion gradually 
 rose to I to 14. Sir James Steuart speaks of this as the ratio ' hitherto 
 adopted.' In 1766 the ratio fixed by Government was 2462 '88 grains of 
 pure silver to 14972 grains of pure gold, or I of gold to i6"4S °f silver. 
 In 1769 the. Bengal authorities readjusted it at 281472 grains of silver to 
 i90"o86 grains of pure gold, or i of gold to I4'8 of sUver. Both these 
 ratios were, however, severely criticised by Sir James Steuart {1772), and 
 Adam Smith estimates the proportion in India (1784) at I to 15. But in 
 parts of Asia, which were not affected by the enormous importation of 
 silver from Europe during the sixteenth, seventeenth, and eighteenth cen- 
 turies, the ratio of gold to silver remained more stationary. ' In the mid- 
 dle of the last century, the value in Japan was i to 8, while in China and 
 the greater part of the other markets of India, ten, or at most twelve, 
 ounces of silver will purchase an ounce of gold.' ( Wealth of Nations, 1784.)" 
 —{From Dr. Hunter's " Orissa.") 
 
Notes. 1 1 1 
 
 (3.) The Relative Value of Silver to Gold in Europe from 
 before the Discovery of the American Minea to the 
 end of the Eighteenth Century. 
 
 " Before the discovery of the mines of America, the value of fine gold 
 to fine silver was regulated in the different mints of Europe between 
 the proportions of one to ten and one to twelve ; that is, an ounce of fine 
 gold was supposed to be worth from ten to twelve ounces of fine silver. 
 About the middle of the last century (17th) it came to be regulated 
 
 between the proportions of one to fourteen and one to fifteen 
 
 Gold rose in nominal value, or in the quantity of silver which was 
 given for it. Both metals sunk in their real value or the quantity of 
 labour which they could purchase ; but silver sunk more than gold." — 
 (Adam Smith.) 
 
 (4.) The Depreciation of Silver in India from the begin- 
 ning of the Fourteenth Century to the year 1870. 
 
 " 1 have already shown that the great influx of silver which European 
 trade poured into India, so decreased the value of that metal that it sunk 
 from l-ioth the value of gold in the twelfth century to I-I4th or l-lSth 
 six hundred years later. But even this decrease would not explain the 
 affluence of the Hindu rulers of Orissa as compared with the poverty of 
 the English. It is when we consider the value of silver as expressed, 
 not in gold but in food, that the explanation becomes clear. Nothing like 
 a regular record of prices under the Gangetic Dynasty (i 132-1532) exists. 
 But fortunately the maximum price of food during the great famines, 
 which in almost each generation decimated Orissa, have come down to us, 
 with the proportion which those prices bore to the ordinary rates. In 
 the famine at the beginning of the fourteenth century, unhusked paddy 
 rose to 60 times its average rate and sold from six and eight pence to 
 nine shillings per hundredweight. In the next century, under King 
 Kapilendra (1452-1479), paddy rose to 62% times the ordinary price 
 and fetched from 6s. iiyid. to gs. iid. per hundredweight. Stirling, one 
 of our first commissioners in Orissa, obtained an ancient paper showing the 
 exact rates under the Gangetic Dynasty. According to it, unhusked paddy 
 sold from just under a penny to l^d. per hundredweight ; husked rice 
 at 2j^rf. to 3d. per hundredweight, and cotton at 2s. i}id. to 3^. o}ld. per 
 hundredweight. 
 
 " From the above calculations we cannot take the price of paddy under 
 the Gangetic Line (1132-1532) at above i^<f. per hundredweight. It 
 
112 Notes. 
 
 was probably less. Paddy now costs on the field in Orissa a shilling 
 per hundredweight, or at least eight times its ancient price. An almost 
 equal depreciation in the value of silver has gone on in other parts of 
 India. Thus in Upper Hindustan, under Ala-ud-din (1303-1315), the 
 official fixed rate of barley was a little under six pence per hundredweight, 
 and of peas four pence half-penny a hundredweight. In the latter part 
 of the century, under Firoz Shah (1351-1388), the price of barley 
 remained exactly the same, viz., six pence per hundredweight. But no 
 sooner did the tide of European trade set in than the value of silver fell, 
 and at the time of Akbar (1556-1605) the price of barley rose to 
 <jyid. per hundredweight. The price of barley in the same localities is 
 now on an average about 3J. dd. per hundredweight retail, or seven times 
 what it was throughout the fourteenth century. 
 
 "We may, therefore, fairly assume that as estimated in the staple 
 food of the country, the value of silver in Orissa has fallen to J^th 
 of its purchasing power. Wages were regulated then as now by the 
 price of rice, and in fact were mostly paid in grain." — (Hunter's 
 "Orissa.") 
 
 It is noteworthy of remark that Dr. Hunter is of opinion that he has 
 considerably under-estimated the depreciation of silver in India in the 
 above calculations ; that the metal has actually fallen to •j'jth not %ih of 
 its former value. 
 
 " In the famine, at the beginning of the fourteenth century, paddy rose 
 to 120 kdhans per bharan." Now "the paddy bharan contains nominally 
 about S%, but practically 9 cwt. A kahan is 1,280 cowries, and 
 4 kahans, or 5,120 cowries, were taken as the official rate of exchange per 
 rupee when we first obtained Orissa (1803). Afterwards this rate was 
 complained of, on the ground that a. rupee cost 6 or 7 kahans instead 
 of 4 ; and this formed one of the alleged causes of the Khurda rebellion 
 in 1817 ....... 120 kahans per bharan of 9 cwt. would be 6s. Sd, 
 
 per cwt. at the rate of 4 kahans or 5,120 cowries per rupee .... On 
 
 the other hand, if we take the lower or present rate of exchange at 3,584 
 cowries per rupee, 120 kahans per bharan will equal 9J. 6d. per cwt." 
 (The present low rate, 3,584 cowries per rupee, is due, Dr. Hunter shews, 
 to the fall in the value of silver which has rapidly gone on since we 
 obtained Orissa.) " If we take the exchange at the alleged old rate of 
 6 kahans or 7j68o cowries to the rupee, which I believe to be nearer the 
 truth, the price would be reduced to 4?. 6d. per cwt." So that the above 
 prices of rice in former times would be " a full third less " than stated; 
 "and the depreciation in the value of silver would be about one-twelfth 
 instead of one-eighth of its former purchasing power." 
 
Notes. 
 
 "3 
 
 (5.) The Depreciation of Silver in India as measured by 
 the popular Cowrie Ourrenoy. 
 
 Dr. Hunter possesses what to me is an unaccountable faith in the 
 stabihty of cowries as a measure of the value of silver. The obvious 
 reply to an argument based on the apparen* superabundance of silver in 
 relation to cowries is, of course, that there is nothing in the nature of 
 things to prevent cowries from becoming scarce ; unless indeed it could be 
 established that it has always been customary to pay so many cowries for 
 so many days' work. Rice, as a measure of value, in a province where it 
 is almost the sole subsistence of the labourer, and where the term sub- 
 sistence always has meant little more or less than a certain number 
 of seers of rice per mensem, is quite unexceptionable,* so long as such a 
 miserably low standard of comfort obtains. We see why rice will always 
 purchase the same quantity of labour, i. n., why it is always in a country 
 like India on the average of the same real value ; I confess I cannot see 
 why the real value of cowries should not vary indefinitely. Still, the follow- 
 ing argument is a forcible one, because the fall of silver measured by 
 cowries is identical with the fall as measured by the subsistence of labour. 
 
 " From time immemorial, Orissa, like some other parts of India, has 
 used a local currency of cowries. When the province passed into our 
 hands in 1803, the public accounts were kept and the revenue was paid 
 in these little shells. In granting liberal leases to the landholders, 
 however, we stipulated that they should henceforth pay their land-tax 
 in silver, and fixed the rate of exchange at S,I20 cowries to the rupee. 
 For many years after our accession the proprietors bitterly complained that 
 the rupee was worth much more than this rate, and that in order to make 
 up their revenue in silver, they had to pay the village banker from 6,400 
 to 7,680 cowries per rupee. This was alleged as one of the causes of the 
 Khurda rebellion in 1817; and although the hardships may have been 
 exaggerated, the common rate seems to have been from 6,000 to 7,000 
 cowries per rupee. But during the last seventy years the value of silver'- 
 has steadily declined, and a rupee now only purchases 3,584 of these little 
 shells. In 1804 the official exchange was 5, 120, and the practical rate of 
 exchange from 6,460 to 7,680." — (Hunter's " Orissa.") 
 
 (6.) The Depreciation of Silver in India during the first 
 70 years of the present century. 
 '■ I have shown on what I believe to be irrefragable evidence that 
 the purchasing power of silver in India has' fallen during the last five 
 
 * Jtrwar for the whole of India is a better one. 
 P., G. & S. H 
 
1 14 Notes. 
 
 hundred years to one-seventh of what it was in the thirteenth century. 
 I propose, very briefly, to prove that this decline, at least in Orissa, 
 is still (1870) going on, that it has proceeded at a rapid rate during the 
 present century, and that at the present moment it continues unchecked. 
 
 "The period of anarchy* which preceded our accession in Orissa in 
 1803, has left few memorials behind it. But I have brought together, 
 from the archives of theiadjoining district of Ganjam, a series of papers 
 which illustrate the state of prices a hundred years ago. My materials 
 commence with the year 1778, and they show the average price of unhusked 
 rice, except in years of famine, to have been about &/. a hundredweight, 
 and the price of husked rice \s. i,%d. In Orissa the cost was always 
 about one-third less, and indeed Ganjam imported a large portion of its 
 rice supply from Puri and Cuttack. This would show the price of paddy 
 in Orissa to have been under ()d. a hundredweight ; and when we obtain- 
 ed the province in 1803, (>d. a hundredweight was considered rather a 
 high price. A shilling per hundredweight is now reckoned a cheap rate 
 for paddy bought on the field at harvest time. In 1771 a bullock sold for 
 loj., which would now cost at least 24J., and a sheep from \s. to is. ^d., 
 whose present price would be at least 4J. The whole evidence from the 
 official records shows that the average price of staple commodities 
 towards the end of the last century was less than one-half their present 
 rates. The wages of labourers bore the same proportion, and palanquin- 
 bearers cost 4^. a month who now receive %s." — (Hunter's " Orissa."") 
 
 (7.) The Depreciation of Silver in India from 1850 to 1870. 
 
 " The purchasing power of silver in Orissa has, therefore, declined 
 to one -half during the last seventy years, whether estimated in the 
 local (cowrie) currency or in the staple food of the province. The 
 depreciation has of late been accelerated by the vast amount of specie 
 expended upon the irrigation enterprises, and by the large payments in 
 silver which have been made to Orissa for rice and other products since 
 the canals opened up the sea-board. These great works practically date 
 from the year i860, and during the last twenty years, between 1850 and 
 1870, prices have risen from one-third to one-half. Thus to take the 
 town of Balasor which exhibits the rise in its extreme degree. In 1850, 
 the best unhusked paddy sold at 168 pounds per rupee ; in 1870, at 84 
 pounds, or just one-half. Fine cleaned rice was 100 pounds per rupee 
 jn 1850 ; 80 pounds in i860 ; and 40 pounds in 1870. Common rice has not 
 risen quite so much, as the cultivation has in the meanwhile extended. 
 
Notes. 115 
 
 It was reported 120 pounds per rupee in 1850; 100 pounds in i860; 
 and 70 pounds in 1870. Wheat sold at 33 pounds per rupee in 1850 ; 29 
 in i860; and 18 in 1870. 
 
 " The rate of wages has risen in proportion. In Balasor, unskilled 
 labourers earned a penny halfpenny a day in 1850; they now get from 
 twopence halfpenny to threepence. Carpenters' wages were in 1850 
 threepence a day ; they are now fivepence farthing. Smiths and bricklay- 
 ers could be had at threepence threefarthings in 1850 ; they now earn 
 sixpence. If we take the two other large cities in Orissa, Cuttack and 
 Puri, the same results appear. In Cuttack, day-labourers received 
 twopence farthing in 1850; they now obtain threepence threefarthings. 
 Smiths got fourpence halfpenny in 1850 ; they now earn sixpence. 
 Bricklayers' wages have risen more rapidly, or from twopence farthing in 
 1850 to sixpence in 1870. In Puri, the money wages are officially returned 
 at the following rates : Unskilled labourers in Puri town, fourpence a 
 day ; in the rural parts, twopence halfpenny. Their wages twelve years 
 ago were twopence halfpenny in the town, and three halfpence in the 
 country. In i860 smiths and carpenters got threepence threefarthings 
 in the town and twopence in the country ; they now get sixpence a day 
 in the town and threepence threefarthings in the country. Bricklayers, 
 who used to get fourpence halfpenny in the town, now get sevenpence 
 halfpenny. 
 
 " Within the last twenty years, therefore, the price of food in the large 
 city of Balasor has almost doubled ; and throughout the whole province, 
 so far as statistics exist, it has risen by about one-third. The rates of 
 wages have also increased by upwards of one-third during the same period. 
 That these results are due not to any altered degree of pressure of the 
 population on the land, or in the demands on the food of the province, is 
 clear from the following fact. While town wages, which are paid in money, 
 have thus risen, agricultural wages, which are paid in kind, have remain- 
 ed absolutely the same. The field labourer has always earned a lower 
 wage than unskilled workmen in the towns. In 1850 he received from 
 twelve to fifteen pounds of unhusked paddy per diem according to the 
 locality ; and at the present day he receives exactly twelve to fifteen 
 pounds according to the locality. All wages that are paid in money have 
 risen by more than one-third ; all wages that are paid in kind remain the 
 ia»2£."— (Hunter's " Orissa") 
 
ii6 
 
 Notes. 
 
 (8.) Wages in India, 1855-1885. 
 
 Wages of Postmen in India. 
 i8ss-i88s. 
 
 
 Average Monthly W 
 
 AGE. 
 
 Province. 
 
 
 
 J. A^**/ » XAl K^M-lm 
 
 1855. 
 
 1865. 
 
 J87S. 
 
 1885. 
 
 
 Rs. As. 
 
 Rs. As. 
 
 Rs. As. 
 
 Rs. As. 
 
 Bengal 
 
 7 6 
 
 8 8 
 
 9 2 
 
 II 4 
 
 Assam 
 
 5 
 
 6 
 
 10 
 
 II 10 
 
 N.-W. Provinces 
 
 S 3 
 
 7 
 
 8 4 
 
 8 7 
 
 Oudh 
 
 5 5 
 
 6 
 
 8 4 
 
 8 6 
 
 Punjab 
 
 7 S 
 
 7 S 
 
 8 I 
 
 8 14 
 
 Sind 
 
 8 
 
 9 10 
 
 9 12 
 
 12 
 
 Rajputana 
 
 3 
 
 S 
 
 8 4 
 
 9 
 
 Bombay 
 
 7 3 
 
 8 8 
 
 12 
 
 12 10 
 
 Central India ... 
 
 5 S 
 
 6 12 
 
 8 2 
 
 9 8 
 
 Nizam's Territory 
 
 6 
 
 6 
 
 8 
 
 9 
 
 Central Provinces 
 
 6 
 
 6 
 
 7 13 
 
 9 II 
 
 Madras 
 
 7 IS 
 
 7 8 
 
 8 12 
 
 10 I 
 
 I have calculated these averages from the figures published by Mr. Barbour 
 for each district, but as I have no means of ascertaining the numbers 
 of those in receipt of a given wage, anything like accuracy is out of 
 the question. They clearly enough indicate a, rise of wages from 1855 to 
 1875, and indeed since. But there is reason to think that the recent 
 rise is due more to a change in the nature of the postmen's work than 
 to other causes. 
 
 Mr. Barbour says : — 
 
 " The rates of pay of postmen have, it will be seen, increased very 
 largely ; but this increase is chiefly due to a change in the nature of their 
 
Notes. 
 
 117 
 
 work, which has become of a more responsible nature and requires greater 
 intelligence for its performance. In 1855 the postmen were only required 
 to deliver letters ; many of them could not read even the vernacular 
 language. They now pay money orders, and those drawing the higher 
 pay are expected to be able to read English as well as the vernacular 
 language. " 
 
 Wages of Postal Runners in India, i8ss — 188$. 
 
 Monthly wages. 
 
 1855 Rs. 4-05 
 
 » 4'56 
 
 i860 
 1865 
 1870 
 1875 
 1880 
 188s 
 
 4'9S 
 
 5 '20 
 
 5-14 
 5-24 
 
 S-3S 
 
 The pay of postal runners " represents the wages of the lowest class 
 of unskilled labour, and the rates given are the lowest market-rates 
 for which their services could be obtained." — (Barbour, " Theory of 
 Bimetallism. ") 
 
 Note particularly the meagreness of the rise since 1870, 
 
 (9.) 
 
 Coat of Work done by tlie Irrigation Department 
 in the Punjab, 1868—1884. 
 
 ■Description of Work. 
 
 1862. 
 
 1865, 
 
 1870. 
 
 1874. 
 
 1884. 
 
 
 Ans. 
 
 Ans. 
 
 Ans. 
 
 Ans. 
 
 Ans. 
 
 Earthwork, per 1,000 cubic feet... 
 
 42 
 
 41 
 
 50 
 
 48 
 
 39 
 
 Masonry ,, 100 ,, 
 
 236 
 
 287 
 
 299 
 
 322 
 
 323 
 
 Woodwork ,, cubic foot 
 
 24 
 
 24 
 
 41 
 
 41 
 
 23 
 
 Ironwork „ maund 
 
 176 
 
 253 
 
 312 
 
 30 s 
 
 280 
 
 Bricks „ 100 
 
 124 
 
 120 
 
 192 
 
 192 
 
 168 
 
 Lime „ 100 cubic feet 
 
 237 
 
 377 
 
 288 
 
 3«4 
 
 360 
 
 (Barbour. ) 
 
 " The figures show very fairly what the general course of wages has 
 
 been, and they are conclusive as regards a large and steady rise in the 
 
 wages of skilled labour, such as that of masons, bricklayers, carpenters, 
 
 and blacksmiths On the other hand, the rates for earth- 
 
Ii8 Notes, 
 
 work show that, away from the great centres of trade and industry, there 
 has been no very marked improvement in the wages of unskilled labour. '' 
 (Barbour, " Theory of Bimetallism.''''^ 
 
 It seems to me, however, that the figures tell quite another tale— a 
 general and considerable rise in the cost of work from 1862 to 1874 ; 
 and a downward tendency since. 
 
 (10.) Total Cost of e ach Prisoner in Pnnj ab Jails, 1858—80. 
 
 1858 
 
 1863 
 
 1864 ... 
 
 1S65 
 
 1866 
 
 1867 
 
 1868 
 
 1869 
 
 1870 
 
 1871 
 
 1875 
 
 1876 
 
 1877 
 
 1880 
 
 (Punjab Administration Report.') 
 
 Rs. . 
 
 As. 
 
 P. 
 
 3" 
 
 "4 
 
 3 
 
 37 
 
 II 
 
 6 
 
 48 
 
 9 
 
 6 
 
 SI 
 
 13 
 
 10 
 
 SO 
 
 6 
 
 2 
 
 S4 
 
 8 
 
 3 
 
 61 
 
 10 
 
 2 
 
 67 
 
 6 
 
 3 
 
 ss 
 
 4 
 
 6 
 
 48 
 
 15 
 
 7 
 
 S3 
 
 S 
 
 4 
 
 54 
 
 I 
 
 
 
 S8 
 
 8 
 
 II 
 
 60 
 
 I 
 
 S 
 
 (11.) Cost of a Prisoner's Food and Fuel in the Punjab 
 Jails. 
 
 Rs. As. P. 
 
 ("Before") 1861 900 
 
 1862-3 ... ... ... 16 o o 
 
 1880 ... ... ... 25 14 9 
 
 (Punjab Administration Report.) 
 
 (12.) Wages In tie Punjab, 1867—84. 
 
 Average Daily Wage of Skilled Labour in the Punjab. 
 
 (32 districts) 1867-84. 
 
 1867-8. 1873-4. 
 
 As. P. As. P. 
 
 General 1 highest ... 7 i 7 10 
 
 average /lowest ...50 5 i 
 
 1878-9. 
 
 1883-4. 
 
 As. P. 
 
 As. P. 
 
 8 6 
 
 9 S 
 
 5 3 
 
 S 9 
 
Notes. 119 
 
 Average Daily Wage of Unskilled Labour in the Punjab. 
 
 1867-8. 1873-4. 1878-9. 1883-4. 
 
 General I highest 
 average ) lowest 
 
 As. 
 
 P. 
 
 As. 
 
 P. 
 
 As. 
 
 P. 
 
 As. 
 
 P. 
 
 3 
 
 3 
 
 3 
 
 6 
 
 3 
 
 6 
 
 3 
 
 10 
 
 2 
 
 6 
 
 2 
 
 S 
 
 2 
 
 3 
 
 2 
 
 4 
 
 (Punjab Administration Report.) 
 
 (13.) The Rise of Wages in India as evidenced by the diffi- 
 culty of getting Recruits for the Native Army. 
 
 " Even for service in the native army, once the most favourite of all 
 employments, it is becoming difficult to obtain recruits, and one main 
 cause of the difficulty is this, that the men are better off at home, and do 
 not care so much as of yore for the military wage. ... In the early days of 
 the British rule military service was very popular. . . . The Government 
 fixed the pay of the native soldier at what was then thought a liberal, 
 perhaps a handsome, rate of wage.'' . . . But now "the conviction is 
 gaining ground that the advantages of the mihtary service are becoming 
 less and less attractive to the petty yeomanry and the better class of 
 labourers." — (Sir Richard Temple, " India in 18S0.") 
 
 "The largest and most certain increase of military expenditure will 
 be caused by the fact that the agricultural class is becoming so prosperous, 
 while wages have risen so much, that they will not take service in the 
 army under present circumstances." Of Northern India, in particular, 
 he says : "The general prosperity of the country is such that military 
 pay which was once above, has now fallen far below, the market-rate of 
 wages," i.e., the market-rate of wages has risen ; the army pay is fixed. 
 " Whereas in the old days the family holding was insufficient to maintain 
 the adult males, who were thus forced to enter the army or emigrate, 
 the agricultural position is now so greatly improved by rapid communi- 
 cation, the rise of prices, and the opening of distant markets that the 
 young Sikh finds it more profitable to assist in cultivating his father's fields 
 than to take to soldiering for which he has a natural liking and an 
 inherited aptitude." — (SirLepel Griffin, Fortnightly Review, March 1885.) 
 Sir Lepel Griffin and Sir Richard Temple do not mean that wages in 
 India have risen to any noticeable extent since 1S73. When " service 
 in the native army was the most favourite of all employments " was a 
 long time ago — " in the old days," as Sir Lepel Griffin puts it. 
 
120 
 
 Notes. 
 
 ( 14.) Wages in India, 1873—1885. 
 
 Wages of Skilled Labour in India. 
 
 (Common Mason, Carpenter, or Blacksmith), 1873 — 1885. 
 
 Province. 
 
 Average Monthly Wage. / : 
 
 
 1873- 
 
 1884. 
 
 1885. 
 
 Bengal 
 
 Bombay 
 
 Madras 
 
 Punjab 
 
 N.-W. Provinces 
 
 Oudh 
 
 Rs. As. P. 
 
 970 
 
 12 6 
 
 12 10 
 
 12 12 
 
 980 
 
 760 
 
 Rs. As. P. 
 10 I 
 22 
 12 6 
 14 10 
 8 II 
 7 IS 
 
 Rs. As. P. 
 10 
 24 6 
 
 14 I 
 
 15 14 
 8 12 
 890 
 
 Wages of Agricultural Labour in India, iS'js — i 
 
 88s. 
 
 
 Average Monthly Wage. 
 
 Province, 
 
 
 
 1873. 
 
 1884. 
 
 i88s. 
 
 
 Rs. As. P. 
 
 Rs. As. P. 
 
 Rs. As. P. 
 
 Bengal 
 
 5 7 
 
 670 
 
 640 
 
 Bombay 
 
 8 10 
 
 9 12 
 
 840 
 
 Madras 
 
 * S 
 
 460 
 
 490 
 
 Punjab 
 
 S 2 
 
 620 
 
 630 
 
 N.-W. Provinces 
 
 3 14 
 
 360 
 
 360 
 
 Oudh 
 
 380 
 
 2 14 
 
 320 
 
 Wages of Syces in India, 1 
 
 873—1885. 
 
 
 Province. 
 
 Average Monthly Wage. 
 
 
 1873- 
 
 1884. 
 
 1885. 
 
 Bengal 
 
 Bombay 
 
 Madras 
 
 Punjab .. 
 
 N.-W. Provinces 
 
 Oudh , 
 
 Rs. As. P. 
 
 4 14 
 8 12 
 
 5 II 
 S 10 
 460 
 480 
 
 Rs. As. P. 
 S 12 
 900 
 S II 
 640 
 410 
 420 
 
 Rs. As. P. 
 S 7 
 990 
 S 10 
 640 
 4 5 
 420 
 
Notes. 121 
 
 Wages of Skilled Labour in some of the Chief Districts, 18^3 — 8£. 
 
 
 Average Monthly 
 
 Wage. 
 
 District. 
 
 
 
 
 
 
 
 1873- 
 
 1884. 
 
 1885. 
 
 
 Rs. As. P. 
 
 Rs. As. P. 
 
 Rs. As. P. 
 
 Calcutta 
 
 8 12 
 
 12 
 
 15 
 
 Bombay 
 
 37 8 
 
 38 12 
 
 38 12 
 
 Madras 
 
 14 I 
 
 13 9 
 
 13 13 I 
 
 Delhi 
 
 10 
 
 n 4 
 
 13 5 
 
 Meerut 
 
 900 
 
 900 
 
 II 
 
 Wages of Agricultural Labour 
 
 in some of the 
 
 Chief Districts, 1873— 8j. 
 
 District. 
 
 Average Monthly Wage. 
 
 
 
 
 
 1873- 
 
 1884. 
 
 1885. 
 
 
 Rs. As. P. 
 
 Rs. As. P. 
 
 Rs. As. P. 
 
 Calcutta 
 
 980 
 
 12 
 
 12 
 
 Bombay 
 
 900 
 
 II 
 
 II 2 9 
 
 Madras 
 
 600 
 
 500 
 
 400 
 
 Delhi 
 
 5 10 
 
 500 
 
 5 10 
 
 Meerut 
 
 480 
 
 5 8 
 
 480 
 
 Wages of Syces in some of the Chief Districts, 1873 — 83, 
 
 District. 
 
 Average Monthly Wage. 
 
 
 
 
 
 1873. 
 
 1884. 
 
 1885. 
 
 
 Rs. As. P. 
 
 Rs. As. P. 
 
 Rs. As. P. 
 
 Calcutta 
 
 680 
 
 700 
 
 700 
 
 Bombay 
 
 II 
 
 12 8 2 
 
 12 8 
 
 Madras 
 
 580 
 
 580 
 
 4 10 2 
 
 Delhi 
 
 400 
 
 600 
 
 600 
 
 Meerut 
 
 480 
 
 480 
 
 480 
 
 (From " Prices and Wages in India, published by the Indian Gov- 
 ernment. ) 
 
122 
 
 Notes. 
 
 (15.) Prices of Exports and Imports at Calcutta and 
 Bombay, 1850—73. 
 Mere prices, and especially prices at the shipping ports, axeperse a most 
 unsatisfactory and misleading measure of the real value of money in any 
 country for reasons already fully detailed. Nevertheless, taken in conjunc- 
 tion with other evidence of depreciation, a general rise in price, both of 
 imports and exports, at Calcutta and Bombay, is not without meaning. 
 
 
 Calcutta Prices of Exports, 
 
 iSjo— 
 
 iS73- 
 
 
 
 1850. 
 
 1855- 
 
 i860. 
 
 1865. 
 
 1870. 
 
 1873 
 
 Hides 
 
 ... 100 
 
 137 
 
 268 
 
 232 
 
 244 
 
 293 
 
 Indigo 
 
 ... 100 
 
 140 
 
 196 
 
 192 
 
 254 
 
 202 
 
 Jute 
 
 ... 100 
 
 129 
 
 147 
 
 169 
 
 180 
 
 142 
 
 Lac 
 
 ... 100 
 
 93 
 
 107 
 
 86 
 
 121 
 
 79 
 
 Shellac 
 
 ... 100 
 
 109 
 
 370 
 
 391 
 
 261 
 
 543 
 
 Sugar 
 
 ... 100 
 
 81 
 
 124 
 
 128 
 
 I4S 
 
 130 
 
 Silk 
 
 ... 100 
 
 143 
 
 236 
 
 210 
 
 292 
 
 247 
 
 Linseed 
 
 ... 100 
 
 no 
 
 114 
 
 131 
 
 iSS 
 
 157 
 
 Rice 
 
 ... 100 
 
 142 
 
 221 
 
 221 
 
 168 
 
 184 
 
 Bombay Prices of Exports, 18^0—1873. 
 
 1850. 1855. i860. 1865. 1870. 1873. 
 
 Indigo 
 
 -. 100 93 
 
 107 
 
 
 
 
 
 Saltpetre . 
 
 .. 100 106 
 
 200 
 
 
 
 
 
 Linseed 
 
 ... 100 
 
 125 
 
 154 
 
 167 
 
 
 163 
 
 Cotton 
 
 ... 100 90 
 
 143 
 
 447 
 
 336 
 
 
 289 
 
 Wool 
 
 ... 100 94 
 
 122 
 
 172 
 
 102 
 
 
 165 
 
 Rice 
 
 .. 100 53 
 
 235 
 
 ... 
 
 164 
 
 
 170 
 
 Wheat 
 
 ... 100 126 
 
 161 
 
 iSjo— 
 
 258 
 ^873- 
 
 
 226 
 
 
 Calcutta Prices of Imports, 
 
 
 
 
 
 
 1850. 
 
 1873- 
 
 
 Mule Twist, No. 40 ... 
 
 
 
 100 
 
 130 
 
 
 >j 
 
 „ Turkey Red 
 
 
 
 100 
 
 117 
 
 
 >» 
 
 „ Orange Dye 
 
 
 
 100 
 
 91 
 
 
 Copper Sheathing 
 
 
 
 100 
 
 III 
 
 
 I) 
 
 Braziers' 
 
 
 
 100 
 
 "S 
 
 
 Iron 
 
 ... 
 
 
 
 100 
 
 132 
 
 
 Speltei 
 
 : 
 
 
 
 100 
 
 147 
 
 
Notes. 
 
 123 
 
 Bombay Prices of Imports, i8jo — 1S73. 
 
 Grey Shirtings 
 
 Mule Twist, No. 40 ... 
 
 „ ,, Turkey Red 
 
 ,, „ Orange Dye 
 Copper Sheathing 
 
 ,, Braziers' 
 Iron, Square, Flat, and Bolt 
 Spelter 
 Coffee, Mocha 
 
 ,, Malabar 
 Ivory, large 
 
 ,, middling 
 China Silk, Nankeen 
 
 ,, ,, Canton, I 
 
 5» ») )> 4 
 
 jj jj J) 5 
 
 (Bombay Chamber of Commerce Report, i8j6.) 
 
 850. 
 
 1873 
 
 100 
 
 121 
 
 100 
 
 141 
 
 100 
 
 122 
 
 100 
 
 134 
 
 100 
 
 103 
 
 100 
 
 lOI 
 
 100 
 
 140 
 
 100 
 
 104 
 
 100 
 
 187 
 
 100 
 
 200 
 
 100 
 
 222 
 
 100 
 
 243 
 
 100 
 
 1S6 
 
 100 
 
 197 
 
 100 
 
 244 
 
 100 
 
 102 
 
 (16.) Prices of Exports at Calcutta and Bombay, 
 1873-1886. 
 In the Frontispiece of " The Indian Tribute," I have represented the 
 course of prices of exports at Calcutta and Bombay since 1873 in the 
 form of a diagram. The following are the index-numbers : 
 
 1873 January ... ... ... ... 1900 
 
 1999 
 181S • 
 
 1737 
 1752 
 2028 
 2019 
 1979 
 2039 
 1831 
 1767 
 1678 
 1841 
 1640 
 1797 
 
 1874 
 
 J 
 
 1875 ,. 
 
 1876 „ 
 
 1876 July 
 
 1877 January 
 
 187S „ 
 
 1879 
 
 
 1880 
 
 
 1881 
 
 
 1882 
 
 
 1883 
 
 
 1884 
 
 
 188s 
 
 
 i886 
 
 
124 Notes. 
 
 The index-numbers are based on the prices of Wheat, Rice, Tea, 
 Cotton, Indigo, Silk, Jute, Hides, Saltpetre, Linseed, Poppyseed, Rape- 
 seed and Castor Oil, as published in the Chambers of Commerce Reports. 
 
 (For prices of Imports, see Appendix E of " The Indian Tribute.'" 
 These also have fallen in ?-«/««-price — fortunately for India.) 
 
 It would be a great and stupid blunder to infer from the fall of prices of 
 Indian exports a scarcity of rupees. (See note 17 and the Appendices 
 shewing prices of food-grains from 1873 to 1885, for the whole country.) 
 
 (17.) Why Indian Prices have fallen at the Shipping 
 Ports. 
 
 " The charge for grain on the East Indian Railway has fallen between 
 Delhi and Howrah, 964 miles, from '161 pies per maund per mile in 
 December 1879 to "107 pies, a reduction of 33^ per cent; between 
 Cawnpore and Howrah, 684 miles, from '177 pies to •149 pies, being nearly 
 16 per cent., and from Jabalpur to Howrah, 783 miles, from "169 pies 
 to "147 pies, or 13 per cent. Grain transported to Calcutta from the 
 Oudh and Rohilkhund Railway costs for freight '150 pies instead of '167 
 pies, a reduction of 10 per cent. From Cawnpore to Bombay, 960 miles, 
 the freight has fallen from '208 pies to '162 pies, a reduction of 22^ per 
 cent. , and from Delhi to Bombay, 890 miles, the rate has been reduced 
 since May 1883 by 2 per cent, for wheat, and by 4>^ per cent, for other 
 grain and seeds, the present rates being •145 pies and '148 pies, respectively. 
 From Delhi to Karachi, 1,160 miles, the charge has fallen from '172 pies 
 in July 1882 to '146 pies, a reduction of 15 per cent. From Jabalpur to 
 Bombay, 616 miles, the charge has fallen from "203 pies to "185 pies, a 
 reduction of about 9 per cent. 
 
 " The large reductions in [railway] freight must have made an appreci- 
 able difference to the producer, who is able to sell so much more cheaply 
 to the exporter without receiving a smaller return." — (J. E. O'Conor, 
 Gazette of India, July 24th, 1886.) 
 
 (18.) Wages in England and Scotland in the 17th and 18th 
 Centuries. 
 " In the last (17th) century, the most usual day-wages of common 
 labour through the greater part of Scotland were sixpence in summer and 
 fivepence in winter. Three shillings a week, the same price very nearly, 
 still (1775) continues to be paid in some parts of the Highlands and 
 Western Islands. Through the greater part of the low country the most 
 
Notes. 125 
 
 usual wages of common labour are now eightpence a day; tenpence, 
 sometimes a shilling, about Edinburgh, in the counties which border upon 
 England, probably on account of that neighbourhood, and in a few other 
 places where there has lately been a considerable rise in the demand for 
 labour, about Glasgow, Carron, Ayrshire, &c. 
 
 " In England, the improvements of agriculture, manufactures and 
 commerce, began much earlier than in Scotland. ... In the last 
 century (17th) the wages of labour were higher in England than in 
 Scotland. They have risen, too, considerably since that time, though, 
 on account of the greater variety of wages paid there in different places, 
 it is more difficult to ascertain how much. In 1614, the pay of a foot- 
 soldier was the same as in the present times (I77S), eightpence a day. 
 When it was first established, it would naturally be regulated by the 
 usual wages of common labourers, the rank of people from which foot- 
 soldiers are commonly drawn. 
 
 " Eighteenpence a day may be reckoned the common price of labour 
 in London and its neighbourhood. At a few miles distance it falls to 
 fourteen and fifteenpence. Tenpence may be reckoned its price in 
 Edinburgh and its neighbourhood. At a few miles distance it falls to 
 eightpence, the usual price of common labour through the greater part 
 of the low country of Scotland. 
 
 " Lord Chief Justice Hales, who wrote in the time of Charles II, 
 computes the necessary expense of a labourer's family, consisting of six 
 persons, the father and mother, two children able to do something, and 
 two not able, at ten shillings a week, or twenty-six pounds a year. If 
 they cannot earn this by their labour, they must make it up, he supposes, 
 either by begging or stealing. He appears to have enquired very care- 
 fully into the subject. In 1688, Mr. Gregory King, whose skill in 
 political arithmetic is so much extolled by Dr. Davenant, computed the 
 ordinary income of labourers and oiit-servants to be fifteen pounds a year 
 to a. family, which he supposed to consist, one with another, of three 
 and a half persons. His calculation, therefore, though different in appear- 
 ance, corresponds very nearly at bottom with that of Judge Hales. Both 
 suppose the weekly expense of such families to be about twentypence a 
 head. Both the pecuniary income and expense of such families have 
 increased considerably since that time through the greater part of the 
 kingdom." — (Adam Smith.) 
 
 " At the conclusion of the late war, the most expensive that Great 
 Britain ever waged, her agriculture was as flourishing, her manufacturers 
 as numerous and as fully employed, and her commerce as extensive as 
 they had ever been before. The capital, therefore, which supported all 
 
1 26 Notes. 
 
 those diflferent branches of industry, must have been equal to what it had 
 ever been before. Since the peace, agriculture has been still further 
 improved ; the rents of houses have risen in every town and village 
 in the country, a proof of the increasing wealth and revenue of the 
 people ; and the annual amount of the greater part of the old taxes, of 
 the principal branches of the excise and customs in particular, has been 
 continually increasing ; an equally clear proof of an increasing consump- 
 tion, and consequently of an increasing produce, which could alone 
 support the consumption. Great Britain seems to support with ease a 
 burden which half a century ago nobody believed her capable of support- 
 ing" — [her national debt].— (Adam Smith.) 
 
 (19.) Wages in England during tlie Nineteenth Century. 
 
 By far the most important contribution to the currency question that 
 has recently appeared is Mr. Giffen's " Further Notes on the Progress of 
 the Working Classes in the last half century," which was read before the 
 Statistical Society at the beginning of the present year. The really 
 valuable facts, however, related in the paper must be credited to Professor 
 Leone Levi. If the figures quoted from that able statistician are correct, 
 it seems to me that there is no currency " question " left. How can 
 the alleged scarcity of gold in England be maintained in the face of 
 Mr. Giffen's positive assertion that in 1836, the English workmen received 
 £ig per head as their income ; ;^38 in 1867 ; and £i^2 14J. in 1884 ? 
 The nonsensical notion that people in England give only is. Srf. for Re. I 
 because they cannot afford to give more, is irreconcilable with the fact 
 that immediately before the present depression commenced (in 1884) they 
 were in receipt of a greater number of sovereigns for a given number of 
 hours' work than they ever had before. 
 
 I make no apology for quoting The Times' report of Mr. Giffen's paper 
 at some length. It completely revolutionized my opinions on these 
 matters. Perhaps, however, some Anglo-Indian readers can reconcile 
 the belief in the appreciation of gold in England with the belief that in 
 England the metal has been cheapened — a mental gymnastic which I am 
 not going to try to perform. Neither the currency question nor any 
 other question is likely to make much progress until men learn to detect 
 when two propositions flatly contradict one another. 
 
 Mr. Giffen said : — 
 
 " A comparison with a date 50 years ago has this advantage — that we 
 do, in fact, know from Porter's ' Progress of the Nation^ that considerable 
 progress was made by the masses of the community between the beginning of 
 
Notes. 127 
 
 the century and the year 1836, when he wrote his book. Having given 
 some attention to Porter's figures, I have come to the conclusion that the 
 evidence he presents is very strong, that there was progress [I presume 
 a rise of money-wages is meant] among the masses in the first 30 or 40 
 years of the century, though nothing so decisive as what has since taken 
 place. 
 
 "Virtually, then, if we accept Porter's conclusion, we are able to assert • 
 a continuous improvement from the beginning or nearly the beginning of 
 the century to the present time — a very long period indeed in the life of a 
 nation. 
 
 " I confess that an improvement of 50 per cent, [during the last 50 
 years], apart from the shortening of the hours of labour, would, in my 
 opinion, be immense, and I should be quite satisfied with the general 
 admission of so great an improvement. All I would urge is that, while so 
 much improvement must at least be admitted, there is no small ground 
 for adopting the higher figure of 100 per cent, or thereabouts. 
 
 " Looking at the facts broadly, and granting that the artisan class on the 
 average have only improved about 50 P^r cent, or thereabouts in money- 
 wages, yet the fact that the artisan class, as a rule, are better paid in money 
 to the extent of 50 per cent, and upwards than the agricultural labourers, 
 and that the increase of population in the last 50 years has been among 
 the artisan and middle classes, the agricultural labourers having diminished 
 in numbers, would in fact imply that the average money-wages of the 
 working classes of the community, looking at them in the mass, and com- 
 paring the mass of 50 years ago with the mass of the present time, have 
 increased very nearly 100 per cent. The average was determined in Great 
 Britain 50 years ago by a mass composed in nearly equal proportions of 
 agricultural and non-agricultural labour ; in the United Kingdom it was 
 composed in nearly equal parts of non-agricultural labour in Great Britain, 
 of agricultural labour in Great Britain and of the poorly paid labour of 
 Ireland, agricultural and non-agricultural together, receiving in the aggre- 
 gate only half the rate per head of even the agricultural labour of Great 
 Britain, and only a third or less of the rate per head of the non-agricul- 
 tural labour of Great Britain. Now, the mass is composed in something 
 like the following proportions : — Non-agricultural labour in Great Bri- 
 tain, three-fourths ; agricultural labour in Great Britain, one-eighth ; 
 labour in Ireland, one-eighth. In other words, the two last classes, 
 which constituted each about one-third of the whole manual labour class 
 of the United Kingdom fifty years ago, now constitute one-eighth each, 
 and, the remaining highest paid class, which was only one-third 50 years 
 
128 Notes. 
 
 ago, is now three-fourths of the whole. Even allowing for no advance at 
 all in the average earnings per head of the latter class, such a change 
 would involve a great advance in the mass. 
 
 " A third fact on which I desire to lay some stress in a question of the 
 average improvement in money-wages, is the very great improvement 
 which has taken place in the wages of the lowest class of labour. The 
 tendency of the economic changes of the last 50 years has been to reduce 
 the proportion of this description of labour to the total mass ; its numbers 
 have diminished on account of the openings for labour in other directions; 
 but the diminution has gone along with a steady improvement in the 
 condition of the most unskilled labourers themselves .... The inference 
 from these figures as to rude labour is plain : If the rise has been so 
 great in the wages of a large class of labour at the very bottom of the 
 scale, which has itself been diminished in quantity, because the demand 
 has been more and more for skilled labour of some kind, then we 
 may be tolerably certain that the rise in skilled labour itself, man for 
 man, has not been less, while the improvement in the mass must be 
 greater for the reason already stated, i««., that the proportion of 
 skilled labour to the whole mass has increased, and that of rude labour 
 declined. 
 
 " In connexion with these facts I may also refer, without further 
 dwelling on it, to the fact mentioned in my former paper, that the number 
 of income-tax payers has increased in the last ^o years at a much greater 
 rate than the increase of population, Mr. Goschen, in his recent address 
 at Manchester on trade depression, has cited fresh figures relating to the 
 last i-o^earjow/c [1876 to 1885] entirely confirmatory of the statement, 
 which is placed altogether beyond doubt. " 
 
 While commenting on some figures of Mr. Montgomery's, Mr. Giffen 
 said : " I should like also to point out in passing that the method of arriv- 
 ing at an average which he employs is one which is somewhat dangerous 
 in an investigation of the present kind, and which ought hot to be made 
 use of without grave reserves. Thus as regards spinning, he made an 
 average of spinners, piecers, tenters, and winders and reelers separate- 
 ly ; then adds all together and divides by four, whereby he arrives at an 
 average of 63, although in three out of the four classes, the average is 
 higher than this. The average is brought down, because in the case of 
 spinners the improvement is only 36 per cent. It is possible that on 
 account of their numbers, spinners should either count in a proper average 
 as more than I to 4, or less than that. The neglect of relative numbers 
 in calculating these averages is accordingly most serious, and makes the 
 whole process incorrect." 
 
Notes. 
 
 129 
 
 Mr. GifFen continued : — 
 
 " The next set of figures to which I propose to make a brief reference 
 are those which Mr. Leone Levi published about a year ago. You will recol- 
 lect that in my former paper I referred to the desirability of a continua- 
 tion of the work which our colleague accomplished in 1867, and I may con- 
 gratulate him therefore on his having been able to do so. We have now 
 accordingly for two dates, I867 and the present time, a statement of the 
 average earnings of the working classes of the community, made up so as 
 to show the aggregate earnings of each class and of all workmen 
 together, and so as to show therefore an average per head. The period 
 covered is, of course, too short to enter into the present comparison, but 
 so far as the figures go, they are confirmatory of the general conclusion. 
 In the 17 years 1867-84, Professor Levi finds that the aggregate earnings of 
 the working classes have risen from 418 millions to £zo millions of pounds, 
 or nearly zj per cent. , the increase of the numbers being only 11 per cent. , 
 and the average per head is from £38 to £42 14s., or rather more than 
 It per cent. Allowing that probably since 1873 there has been little 
 increase in the money-wages of working men, but in some cases there has 
 been a decrease, so that the improvement since 1867 only includes 
 altogether a short period in which improvement could take place ; the fact 
 that there is nevertheless an improvement of 11 per cent, all round not 
 counting the shortening of the hours of labour, is confirmatory, as far as it 
 goes, of an enormously greater improvement in the whole period from 50 
 years ago to the present time. 
 
 " If prices have not risen as compared with what they were 50 years 
 ago, but have rather declined as I believe them to have done, the only 
 exceptions being rent and meat .... then the vast improvement which 
 I described in the conditions of the working classes has undoubtedly 
 occurred. 
 
 " I have spoken of the working classes in the economic sense, as being 
 a much larger class than the working classes as popularly understood. 
 It is expedient, I believe, with reference to many socialistic doctrines, to 
 emphasize the facts that the working classes in the larger sense do in- 
 clude many more people than the manual labour classes, that their work 
 is equally an essential contribution to the whole production of the com- 
 munity, and that in any case, the figures we have been dealing with being 
 those of income, we must not commit the mistake of supposing that there 
 is any one class which in any special sense produces that income. In the 
 working income included in the income-tax returns as forming part of the 
 income of the upper and lower middle classes not included in these returns, 
 you have such incomes as those of artists, authors, actors and actresses, 
 P., G. & S. I 
 
1 30 Notes. 
 
 singers, and many more who are as much workers as any rtiemtief of the 
 srtisan or 'labouring classes. Their incomes go to swell the large total of 
 -1,200 millions with which we are dealing. When we are speaking of the 
 working classes of the community, we should include every man who works. 
 In this sense there is certainly no doubt that it is not the capitalist who has 
 reaped most from the economic improvement of the last jo years. As the 
 result of the excessive competition (?) which the multiplication of capital 
 has produced, capitalists all round have perforce to be content with a lower 
 late of profit. Hence, while capital has increased, the income from 
 capital has not increased in proportion. The increase of earnings goes 
 exclusively or almost exclusively to the working classes. 
 
 " The contentions of my paper two years ago were, that the working 
 classes of the United Kingdom had enjoyed a great improvement in their 
 money-wages in the last 50 years, an improvement roughly estimated at 
 ^o to 100 per cent. ; that the hours of labour had been shortened in the 
 same period 20 per cent. ; that along with this improvement there had been 
 a general fall, or at any rate no increase in the prices of the principal 
 articles of general consumption, with the exception of rent and meat, 
 where the increase still left to the labourer a large margin for increased 
 miscellaneous expenditure ; that meat in particular was not an article 
 of general consumption by the masses of the community 50 years ago, as 
 it has since become ; that the condition of the masses had in fact improv- 
 ed vastly, as was shown by the diminished rate of mortality, the increas- 
 ed consumption per head of tea, sugar, and- the like articles, the exten- 
 sion of popular education, the diminution of crime and pauperism, and 
 the increase of Savings Bank deposits, as well as of other forms of 
 saving among the masses ; and that, finally, neither the amount of capital, 
 nor the return upon it, and especially not the return upon capital, had 
 increased so much as the income of the workers of the country from their 
 work. In the present paper these conclusions have been additionally 
 supported : — (i) It has been shown, in opposition to various objections 
 to the former paper, that the estimate of 50 to 100 per cent, as the 
 average improvement of the money-wages of the working classes in 50 
 years is not only not excessive but under the mark. Reasons have been 
 -urged for attaching special importance, in comparisons of money-wages 50 
 years ago and at the present time, to the instances of maximum increase, 
 where a given employment at a given place is compared with the same 
 employment at an earlier period. It has been further pointed out, on 
 a broad survey of the facts, that the composition of the people of the Uni- 
 ted Kingdom is entirely changed from what it was 50 years ago ; that 
 whereas 50 years ago one-third of the working masses were Irish pea- 
 
■Notes. 331 
 
 sants earning a doubtful 4J. a week on the average, and tlie agricultural 
 population of Great Britain constituted another third of this total, this 
 Class likewise earning muchsmallerincomes than the third class, consisting 
 of the non-agricultural workers of Great Britain ; yet now the Irish labouirerS 
 are less than one-eighth of-the total, the British agricultural labourers are 
 also one-eighth only, and the remaining three-fourths are artisans and 
 other non-agricultural workers in Great Britain who constituted 50 years ago 
 bnly about a third of the whole population. Even if the wages of the 
 difterent classes had not increased, this change in the composition of the 
 mass would itself imply an average improvement. An improvement of 
 50 per cent, in the unit of each class would imply of itself, allowing for 
 the change in the relative numbers of the classes, an average improvement 
 of nearly 100 per cent. (2) The probability of a great average im- 
 provement is further shown by the magnitude of the improvement in thS 
 case of the units of the worst paid labour, where there has been a dimi- 
 nution of numbers. In Ireland the improvement in the wages or saving^ 
 of small farmers and labourers is at least 100 per cent., the doubtful 
 average of i^. of 50 years ago having been converted into a much less 
 doubtful %s. or its equivalent at the present time. In Scotland and 
 Wales the average improvement in agricultural labour has equally been 
 about 100 per cent., from gj. in the former case to \%s., and from "js. 6ct. in 
 the latter to lt,s. In England the changes are not quite so extreme, but' 
 from 8j. to 13J. and from ioj. to 16s. are not uncommon figures, fully 
 justifying Sir James Caird's conclusion, which I quoted in my former 
 paper, as to there having been an improvement of 60 per cent. (3) The 
 worst paid labour in Great Britain of a non-agricultural kind has equally 
 undergone improvement. In the metropolis and the leading manufactur- 
 ing towns the rise ranges from l^s. to 25J. or about yo per cent., but in 
 other parts of the country, as in Glasgow, there are cases of an advance of 
 joo per cent., the improvement in wages generally appearing to be 
 greater in places like Glasgow than in the leading towns of England^ 
 (4) There has also been a great increase in the number of income-tax 
 assessments, implying an improvement of the artisan and other classes 
 just below the income-tax limit. (5) There has been a simultaneous 
 improvement in France, Germany and other countries. The improve- 
 ment in the United Kingdom is not an isolated fact. (6) There is 
 accordingly nothing to be astonished at in an average improvement in 
 the money-wages of working classes in the last 50 years amounting 
 to 700 per cent. When the facts are considered, such an improvement is 
 antecedently probable. (7) The condition of the masses 50 years ago 
 was in truth deplorable, as is shown by numerous extracts from the 
 
132 Notes. 
 
 writings of Thomas Carlyle, Lord Beaconsfield, Mrs. Gaskell, and Mr, 
 Thornton, and by references to numerous Blue-books. Even the manu- 
 facturing operatives in England, the most advanced class of all, were liable to 
 frequent and great privations through the complete suspension of work, and 
 had at times to live on very ' short commons. ' (8) .... A table in 
 Mr. Porter's ' Progress of the Nation^ which was quoted by an objector to 
 prove that 50 per cent, of the agricultural classes of England had meat 
 as a regular portion of their diet half-a-century ago, is found to show when 
 the data are referred to, that much fewer than 50 per cent, had bacon 
 as an occasional portion of their diet ; and that there is hardly once 
 mention of any other meat as a portion of the agricultural labourers' diet 
 among the statements from which the table is compiled. (9) Finally, 
 it is shown in a comparison of incomes in the aggregate that while the 
 total income of the country 50 years ago was about 500 millions only, of 
 which two-fifths were derived from agriculture, the present income, on 
 the authority of Mr. Dudley Baxter and Mr. Leone Levi, may be placed 
 at about 1,270 millions, of which only one-sixth is from agriculture. At 
 the same time the agricultural labourer is better off, because, while his 
 numbers have diminished, the net income from agriculture and his share 
 of that income have both increased. Further, the working masses of 
 Great Britain have more than doubled their number in the interval, simul- 
 taneously with a vast diminution in Ireland, whose aggregate income 
 remains much the same, though with a diminished number to share it. 
 Hence the increase of income in the 50 years has been mainly among 
 the higher-paid classes, and the final result is that whereas Jo years ago the 
 working masses of the United Kingdom, amounting to nine millions, 
 earned in all iji millions or£igper head, the working masses now amount- 
 ing to aver 1$ millions, earn about /j'o milliom or nearly £43 per head, 
 an increase of much mxire than 100 per cent, (10) When the increase of 
 earnings from labour and capital is compared, it is found that the increase 
 from capital is from 190 to 400 millions only, or about 100 per cent ; the 
 increase from [of?] the working [portion] of the upper and middle classes 
 is from 154 to 320 millions or about 100 per cent., and the increase of the 
 income of the manual labour classes is from 171 to 550 millions or over 
 200 per cent. In amount the increase due to capital is about 210 
 millions ; to labour of the upper and middle classes 166 millions ; and 
 to labour of the manual labour classes 379 millions — a total increase of 
 755 millions. The general conclusion from all the facts isj that what has 
 happened to the working classes in the last 50 years is not so much wha,t 
 may properly be called an improvement as a revolution of the most remark- 
 able description. The new possibilities implied in the changes which in 
 
Notes. 133 
 
 50 years have substituted for millions of people in the United Kingdom, 
 who were constantly on the brink of starvation, and who suffered untold 
 privation, new millions of artisans and fairly well paid labourers, ought 
 indeed to excite the hopes of philanthropists and public men. From 
 being a dependent class without future or hope, the masses of the 
 working men have, in fact, got into a position from which they may 
 effectually advance to almost any degree of civilization. 
 
 " In conclusion, let me point out that in the near future there is a 
 very serious difficulty impending ; the difficulty, in fact, is already upon us. 
 Since I wrote two years ago prices have further declined, which would seem 
 to give working men even a greater advantage than they had then. But 
 this decline is due to causes, as I believe, which necessarily involve a fall 
 of wages and profits. Wages and profits must to some extent be adjusted 
 to the changed prices. Hence in the present paper the present time I 
 have spoken of has been rather that of too jisa^-j- ago [!] when my former 
 paper was written than the actual present. If I were to take account 
 of the most recent changes in prices, I should also have to take account 
 of the most recent changes of wages, which are all in a state of tran- 
 sition. What I have to suggest to all concerned is that the fall of prices, 
 considering the length to which it has gone, is a phenomenon which work- 
 ing men should carefully study in their own interest, and that they should 
 be prepared to some extent for a reduction in money-wages. What con- 
 cerns them is not ' money ' wages, but ' real ' wages. It is quite possible 
 that in a period when money-wages are falling along with all other 
 money values, their real condition may improve, because the fall in money- 
 wages is less than the fall in the money-prices of the principal com- 
 modities which they consume." 
 
 In reply to this last paragraph I venture to transpose Mr. Giffen's 
 introductory remarks : — • 
 
 "The danger of short periods," he said, " in such discussions is obvious. 
 There are so many complicated causes affecting human affairs, and there 
 is so much oscillation and fluctuation in them, that if short periods only 
 \two years for instance] are taken into account, what is in fact an eddy in 
 the main stream of events may be mistaken for the main stream itself. 
 We see this mistake made in some of the fair trade discussions now going 
 on : a decline in the value of our exports at present being spoken of as if it 
 were a permanent decline ; whereas in our own country ever since we had 
 such records, and in every country that has had them, there have been 
 from time to time in particular years declines in aggregate value of a far 
 more marked character than anything we are now witnessing ; these 
 
134 Notes. 
 
 ftuctuatioJiS', however, bfeing quite consistent with steady progress from 
 f)eriod, to period. " 
 
 Nothing could excel the neatness of this reply of Mr. Giffen the statis- 
 tician, to Mr. Giffen the prophet. In 1884 the English people received 
 II per cent, more gold than they did in 1867 ; gold therefore had not 
 become scarce prior to 1884. I submit that 18 months or so is a 
 " dangerously short period' " to found an argument upon as to the! future 
 scarcity of.gold. . . 
 
 " There has been no marked increase in the rates of wages since 1873, 
 and there are now (1885) in all directions reports of strikes and lower 
 wages." (Giffen, Contemporary Review, ']-ans\?&^.) 
 
 Wages.have fallen before to-day, as no one knows better than Mr. Giffen ; 
 and have soon afterwards gone up with a bound. I gather from 
 Mr, Giffen's writings that prior to 1884, there was no marked fall of wages 
 in England, and this is sufficient. Had there been a very trifling fall, 
 Mr. Giffen would have mentioned it in confirmation of his early and some- 
 what rash prophecies on the subject of the impending gold famine. My 
 argument is that before a couple of years ago, not even an infinitesimal 
 fraction of the divergence of the rupee from is. was due to a scarcity of 
 gold in England ; that certainly it was not due to the superabundance 0^ 
 silver in India, and that therefore there is another cause at work which 
 has hitherto been left out of account. 
 
 " More of some descriptions of goods may probably be purchased for a 
 less amount of gold than formerly, while at the same time wages are 
 generally higher." (G. L. L., Economist, October 1883.) 
 
 "^I employ about 300 men in the west of England, mostly skilled 
 workmen. . . ■ The money-wages rate in ray business has increased 
 more than 100 per cent, in the last 50 years. This increase has been 
 largely owing in my opinion arid' that of the workmen to the use of 
 improved machinery." (" Employer :" in The Times, February 3, 1886.) 
 
 The foilowing figures were published in the Economists report of 
 Mr. Giffen's first paper (1883) on the progress of the working classes 
 during the last half century. 
 
Note^, 
 
 I3S 
 
 Q 
 («; 
 o 
 
 id 
 
 < 
 
 a 
 
 
 ■8 
 
 ■ Ph 
 
 ■ -'.■} 
 
 «i/iO>nrot-»o Omo "V» n 
 ■SJ-00 in\0 fO\0 QO 10 li^ c^ « w 1000 in vo 
 
 M MM... 
 
 
 ■1 
 
 s 
 < 
 
 •xi 00 Q.vo OOOOi-a-ODOQOO OT,0\" 
 
 
 Wages at 
 
 present time 
 
 per week. 
 
 'xa ooovoOooo\ooooooo^ \oi\o 
 
 •^ COISf«3«M««rONNrOclNi-i«i-ii- 
 
 
 Wages 50 
 years ago 
 per week. 
 
 .^ OOOOOOOoooO'OOOOmCMn 
 
 Tj- Tl: -^ »/^ ^ rj-vb M \o t^ w^ c^ t^vO'OO t^ ^ 
 
 0; Nl-l«l-l«iHMNMM«MM 
 
 
 8 
 S 
 
 Manchester 
 
 Glasgow 
 
 Manchester 
 
 Glasgow' 
 
 Mainchester 
 
 Glasgow. 
 
 Manchester 
 
 Staffordshire 
 
 Huddersfield 
 
 f) - ... 
 Bradford 
 
 S3 
 
 3> ... 
 
 
 J 
 
 n 
 C 
 
 G 
 
 t 
 
 i 
 
 ■ ' 
 
 Carpenters 
 Bricklayers 
 Masons ..i 
 
 3J ... 
 
 Spinners 
 
 iMihers ; 
 
 Pattern weavers 
 
 Wool scourers 
 
 Miile spinners 
 
 Weavers ... 
 
 Warpers and WeaveM 
 
 Winders and Reelers 
 
 ■Weavers ■(men) 
 
 Reeling suid Warping 
 
 Spinning (children) 
 
 
136 Notes. 
 
 (20.) Wages in England, 1866—79. 
 
 
 
 
 Increase 
 
 
 1866. 
 
 1879- 
 
 per cent 
 
 
 s. d. 
 
 s. d. 
 
 
 Men, under 20 
 
 7 6 
 
 8 
 
 b% 
 
 ,, 20 and upwards 
 
 19 6 
 
 21 9 
 
 e% 
 
 Women, under 20 
 
 8 
 
 9 
 
 12 
 
 „ 20 and upwards 
 
 11 
 
 13 8 
 
 24 
 
 (Professor Leone Levi, 
 
 Economist, 
 
 nth January 1879.) 
 
 (21.) Weekly Wages in Lancashire, 1850—83. 
 
 Increase on 185CX 
 1850. i860. 1870. 1877. 1S83. 
 
 Separately. Together. 
 
 Mill A. 
 
 s. 
 
 d. S. 
 
 d. s. d. s. d. s. d. 
 
 
 
 Weavers 
 
 Winders 
 Mill B. 
 Weavers 
 
 ... 9 
 ... 8 
 
 ... 8 
 
 6^ IS 
 3 10 
 
 2 14 
 
 1 13 10 18 6 16 
 9 II 17 12 
 
 9 15 6 16 15 
 
 67 AX] 
 
 4SK%i 
 83K%\ 
 
 S7'A% 
 6S% 
 
 Winders 
 
 ... 8 
 
 6 9 
 
 <3 II 6 14 12 6 
 
 47>^%j 
 
 "Mill C. 
 Mill D. 
 Mill E. 
 
 Taking 
 
 weavers 
 
 3> 
 
 and winders together 
 )j j> >i 
 
 ... 
 
 S6X% 
 84^% 
 63^% 
 
 These figures shew the wages earned per week of 60 hours up to 1874, 
 and of $6}i hours since. (G. Lord, President, Manchester Chamber 
 of Commerce : Economist, 29th September 1883.) 
 
 (22.) Assessed Amount of Profits from Trade and Occupa- 
 tions in the United Kingdom, 1866—84. 
 
 Amount assessed under 
 Schedule D of the In- 
 come-tax, per head 
 of population, 
 
 £ 
 
 1865-9 5"4S 
 
 i8fo— 4 6-59 
 
 187s— 9 7-83 
 
 1880-4 7"6t> 
 
Notes. 
 
 137 
 
 " It should be observed, moreover, that in consequence of an increase 
 in the limit of exemption made in 1875-6 from ;^i5o to £200, as much as 
 ;^20,ooo,ooo were removed from the assessment." — (Leone Levi, Introduc- 
 tion to the Pears' Prize Essays on " The Depression of Trade. ") 
 
 (S3.) 
 
 Total Trade of the United Kingdom per head of 
 population, 1865—84. 
 
 1865—9 
 1870—4 
 1875-9 
 1880—4 
 
 £ 
 
 s. 
 
 d. 
 
 17 
 
 I 
 
 4 
 
 20 
 
 
 
 9 
 
 .. ... 18 
 
 19 
 
 
 
 20 
 
 
 
 8 
 
 (Leone Levi.) 
 
 (24.) Amounts cleared at the London Bankers' Clearing 
 House, 1870—3 and 1880-3. 
 
 {In millions of pounds sterling.) 
 
 
 Total amount 
 
 on fortnightly 
 
 Amount cleared 
 
 on r^nncnle 
 
 
 cleared. 
 
 Stock-exchange 
 settling-days. 
 
 settling-days. 
 
 1870 ... 
 
 3914 
 
 635 
 
 163 
 
 I87I ... 
 
 4286 
 
 806 
 
 211 
 
 1872 ... 
 
 5916 
 
 1016 
 
 247 
 
 1873 - 
 
 6071 
 
 1038 
 
 250 
 
 1880 ... 
 
 5794 
 
 1 152 
 
 255 
 
 I88I ... 
 
 6357 
 
 1383 
 
 279 
 
 1882 ... 
 
 6221 
 
 1229 
 
 27s 
 
 1883 ... 
 
 5929 
 
 1059 
 
 25s 
 
 
 
 (Statistical Abstract. ) 
 
 (25.) Amounts received and paid by the United Kingdom 
 Post Office Savings Banks ; also Capital invested, 
 1870—3 and 1880—3. 
 
 
 Received. 
 
 Paid. 
 
 Capital. 
 
 1870 ... 
 
 ■•■ ;^6, 333,082 
 
 ;^4,758,i87 
 
 ;f 15,099, 104 
 
 1871 ... 
 
 - ;^7,04I,367 
 
 ;^S. "5.467 
 
 ;£■! 7,025,004 
 
 1872 ... 
 
 ... .^8,129,995 
 
 ;^S.836,66o 
 
 ;^i9,3i8,339 
 
 1873 ... 
 
 - ;£'8,433.59i 
 
 ;^6,s84,i8i 
 
 ;^2i,i67,749 
 
138 Notes. 
 
 Received. Paid. Capital. 
 
 rSSo ... 
 
 •• ;^I 1,079, 
 
 137 
 
 ;^9, 346,634 
 
 ;f33,744,637 
 
 1881 ... 
 
 ... ;£'I2,694, 
 
 ,146 
 
 ;^lo 
 
 ,244,287 
 
 ;^36, 194,496 
 
 1882 ... 
 
 - ;fl3,7l2. 
 
 .859 
 
 ;^io 
 
 ,869,534 
 
 ;£'39,037,82i 
 
 1883 ... 
 
 - ;^I4,S3I> 
 
 .158 
 
 ;^ll 
 
 ,800,171 
 
 ;^4i,768,8o8 
 
 
 
 
 
 (Statistical Abstract. ) 
 
 (26.) Amounts received and paid by the Trustees, Savings 
 Banks of the United Kingdom ; also Capital invested. 
 
 Received. Paid. Capital. 
 
 1870 £7,571,667 ;^8,i67,783 ;^37,958,S49 
 
 >87i ;^8,o38,o22 /8,rso,si3 ;,f38,8i9,663 
 
 1872 ;^8,s62,97i ;^8,386,i84 ;f39,679,88o 
 
 >873 ;^8,788,38s ;^9,o7i,244 ;^40,soo,i35 
 
 '880 ;^9,oo8,3is ;^io,o76,ss7 {^'^lllt[^l* 
 
 >88i ;^9,227,8i6 i:io,2io,640 {f^;J^6;493* 
 
 1882 ;^9,640,S44 ;^io,327,794 { f '^iisgiyis • 
 
 1883 ;^9,S92,038 ;^io.388,7io { lll;^^?;^^^ . 
 
 (Statistical Abstract.) 
 
 (27.) Passenger Traffic on English Railways, 1873 
 and 1883. 
 
 Length of line Number of passengers 
 opened. conveyed. 
 
 1873 ... ... ... 11,369 401,465,086 
 
 1883 ... ... ... 13,202 612,401,758 
 
 (Statistical Abstract. ) 
 
 * Interest credited ; formerly included in capital. 
 
Notes. 1 39 
 
 (28.) Quantities of principal imported and excisable 
 articles retained for Home Consumption, per 
 head of population of the United Kingdom. 
 
 Bacon and Haihs ;.. 
 
 Butter 
 
 Cheese 
 
 Currants and Raisins 
 
 Eggs 
 
 Potatoes ... ... 
 
 Rice 
 
 Cocoa 
 Coffee 
 
 Wheat 
 
 Sugar 
 
 Tea 
 
 Tobacco ... 
 
 Wine 
 
 Spirits 
 
 
 1873. 
 
 1883. 
 
 lbs. 
 
 9 '07 
 
 10-96 
 
 j> 
 
 4-39 
 
 7-i8 
 
 S3 
 
 4-69 
 
 s-si 
 
 >» 
 
 4-29 
 
 4-47 
 
 no. 
 
 20-56 
 
 26-40 
 
 lbs." 
 
 26-17 
 
 16-17 
 
 ») 
 
 "•37 
 
 12-45 
 
 »> 
 
 0-26 
 
 0-36 
 
 ij 
 
 0-99 
 
 0-89 
 
 )) 
 
 17079 
 
 250-77 
 
 »s 
 
 43 '96 
 
 61-87 
 
 )) 
 
 4-II 
 
 4-80 
 
 7» 
 
 1-41 
 
 1-42 
 
 gals 
 
 . 0-56 
 
 0-40 
 
 jj 
 
 0-32 
 
 0-23 
 
 (Statistical Abstract, ) 
 
 (29.) Is England compelled to attract Gold by raising 
 the rate of discount ? 
 
 M. Emile de Laveleye, in an article on " The Economic Crisis and its 
 Causes " in the Contemporary Review, May 1886, makes the following 
 damaging admission : " England alone, who rules the world by her com^ 
 mercial power, succeeds in attracting sufficient gold by raising the rate <rf 
 discount" Then England has sufficient gold ; and the fall in the rate of 
 exchange between rupees and sovereigns is not caused by a scarcity of 
 sovereigns. It is difficult to see what a scarcity of gold francs, marks,, 
 eagles, roubles or dollars has to do with the matter. During the greater 
 part of the present year the Bank rate has been 2 per cent. ; and I find 
 M, Laveleye trying, and most miserably failing, to explain why it is 
 so low. According to M. Laveleye, England is actually exporting more 
 gold than she imports. Evidently she has more than she " know® 
 what to do. with " just now. Why should the Bank rate be raised ? AniJ 
 the rate" has Ttot been raised, above the average of late. j 
 
4¥ 
 
 „ } 
 
 3^ 
 
 3) 
 
 2% 
 
 )9 
 
 27A 
 
 >> 
 
 zH 
 
 1) 
 
 ^H 
 
 »» 
 
 2^ 
 
 " 1 
 
 3'A 
 
 „ (Average, 
 
 4H 
 
 ., ( 3-484- 
 
 3A 
 
 „ 1 
 
 
 (Statistical Abstract.) 
 
 140 Notes. 
 
 Average Minimum Rate of Interest charged by the Bank of England. 
 
 1870 3>^ per cent.^ 
 
 1871 2% „ I Average, 
 
 1872 4J^ >. I 37i8- 
 
 1873 
 
 1874 
 
 I87S 
 
 1876 
 
 1877 
 
 1878 
 
 1879 
 
 1880 
 
 1881 
 
 1882 
 
 1883 
 
 [M, Cernuschi, the demi-god of Anglo-Indian bimetallists, goes a 
 great deal farther than M. Laveleye. Not only, according to this emi- 
 nent frenchman, has England sufficient gold ; but France, Germany, and 
 the United States have also quite as much as they want — more than they 
 had in 1871 ; and consequently more than they ever had before. " The 
 fact is," he says (Economist, April 24, 1886), " that the monetary morbus 
 by which the world is afflicted is not famine, nor yet contraction. It is 
 a malady which never raged before. It has no name . . . Then [we know 
 when] the price of the merchandise gold experienced a rise in India 
 And the merchandise silver became depreciated in England : " just as I 
 have been at such pains to prove. It is quite consoling to find that the 
 leader of one's opponents is on one's own side after all. But why did 
 the " merchandise " silver experience a fall in England ? Calling silver 
 " merchandise " explains nothing. Call it dross, dirt, filthy lucre, any- 
 thing ; silver under any other name will buy as much and more of Indian 
 merchandise as it would in 1873 ; every tolah of it is still (whatever 
 opprobrious name may be fastened on it) Indian money. Why then has 
 silver fallen in England in relation to gold , of which, as M. Cernuschi 
 tells us truly, there is no scarcity ? Why, except that what silver buys, 
 though greater in quantity, is less in English value than of old ? What 
 better " name " for the " monetary morbus " could be invented than that 
 I have suggested — the depreciation of the exports of tributary India in 
 her chief market : a depreciation which accounts for the rise " experienc- 
 ed " by the " merchandise " gold in India too ? 
 
Notes. 141 
 
 M, Cernuschi makes no attempt to explain the rise of gold in India 
 or the fall of silver in England ; but I am grateful for his having thrown, 
 the weight of his great name into the right scale : he has, at the last 
 moment, correctly stated the facts ; though his astonished disciples will 
 not admit it. Instead of accounting for the fall of silver, M. Cernuschi 
 tries to account for the fall in the value of our merchandise in the London 
 market. Indian wheat, he thinks, is so cheap because silver is so cheap. 
 The idea seems to be that a superabundance of cheap Indian money 
 in our customers' hands results in a glut of Indian commodities in their 
 possession. Quite true ; but most of that money is not silver but paper— 
 representing the " tribute money." 
 
 
 Silver and Council Bills. 
 
 
 
 [r___ 
 
 Silver sent to 
 
 Bills drawn 
 by Indian 
 Council. 
 
 Imports of 
 Silver into 
 
 Price of Silver 
 
 year. 
 
 the East. 
 
 United King- 
 dom. 
 
 per oz. 
 
 
 W'- 
 
 3 oooo's omitted.) 
 
 
 
 1867 
 
 064 
 
 S61 
 
 
 802 
 
 60^. 
 
 1868 
 
 "63 
 
 414 
 
 
 771 
 
 60 
 
 1869 
 
 236 
 
 370 
 
 
 673 
 
 60-rV 
 
 1870 
 
 158 
 
 698 
 
 
 1065 
 
 60t'^ 
 
 1871 
 
 371 
 
 844 
 
 
 1652 
 
 60K 
 
 1872 
 
 ■S6S 
 
 1031 
 
 
 1 1 14 
 
 60tV 
 
 1873 
 
 250 
 
 1394 
 
 
 1 2 JO 
 
 S9X 
 
 1874 
 
 709 
 
 1328 
 
 
 1180 
 
 58A 
 
 187s 
 
 371 
 
 1084 
 
 
 950 
 
 %(>n 
 
 1876 
 
 1091 
 
 IIS" 
 
 
 1356 
 
 52H 
 
 1877 
 
 1700 
 
 864 
 
 
 2162 
 
 sm 
 
 1878 
 
 584 
 
 1398 
 
 
 1 145 
 
 52tV 
 
 1879 
 
 703 
 
 1470 
 
 
 1052 
 
 51X 
 
 1880 
 
 613 
 
 1548 
 
 
 673 
 
 52X 
 
 188I 
 
 429 
 
 1627 
 
 
 690 
 
 SI+* 
 
 1882 
 
 642 
 
 1205 
 
 
 924 
 
 Si>^ 
 
 1883 
 
 712 
 
 1890 
 
 
 947 
 
 50tV 
 
 1884 
 
 841 
 
 1696 
 
 
 954 
 
 Soii 
 
 1885 
 
 801 
 
 1 102 
 
 
 938 
 
 48/1 
 
 (Economist, Feb. 20, 1886.) 
 
142 
 
 Notes. 
 
 Fronl which ft appears that (even if we were to adinit that all the silver 
 sent to the East came to India) from 1870 to 1885 our English customers 
 purchased ;^io5,400,ooo's worth of our goods by means of silver, or 
 about ;f 6,000,000's worth annually, which is not more but less than they 
 have been accustomed to buy from us with silver ; whereas in the same 
 period they flooded the English markets with no less than ;^207,300,ooo's 
 worth of our goods purchased by means of Council Bills, which we' Indian 
 tax-payers cash for them, and which cost England nothing.] 
 
 (30.) Corn as a Measure of Value in Dugland. 
 
 The following is an eloquent reply to Adam Smith's suggestion to 
 measure the value of all things by -com. Money wages in England have 
 at all events quintupled since the discovery of the American mines. 
 _Price of Wheat in England — 1202-1886, 
 
 
 
 Average 
 
 price 
 
 
 Average price 
 
 
 
 per quarter. 1 
 
 
 per quarter. 
 
 
 
 £, 
 
 s. 
 
 d. 
 
 
 £ 
 
 0. d. 
 
 \'2a2- 
 
 t286 
 
 2 
 
 19 
 
 iX 
 
 1793 
 
 2 
 
 9 3 
 
 12S7- 
 
 1338 . 
 
 I 
 
 18 
 
 8 
 
 1794 
 
 2 
 
 12 3 
 
 1339- 
 
 [416 
 
 I 
 
 s 
 
 9J^ 
 
 1 795 
 
 3 
 
 IS 2 
 
 1423-1451 
 
 I 
 
 I 
 
 3M 
 
 1796 
 
 3 
 
 18 7 
 
 I4S3-I497 
 
 
 
 14 
 
 I 
 
 1797 
 
 2 
 
 13 9 
 
 1499 
 
 1560 
 
 
 
 10 
 
 oA 
 
 1798 
 
 2 
 
 II 10 
 
 1561- 
 
 1601 
 
 2 
 
 7 
 
 lYi 
 
 1799 
 
 3 
 
 9 
 
 IS9S- 
 
 1636 . 
 
 2 
 
 10 
 
 
 
 1800 
 
 5 
 
 13 10 
 
 1637- 
 
 1700 
 
 2 
 
 II 
 
 oVi 
 
 1801 
 
 S 
 
 19 6 
 
 1701- 
 
 1764 
 
 2 
 
 
 
 9^ 
 
 1802 
 
 3 
 
 9 10 
 
 1780 
 
 
 I 
 
 16 
 
 
 
 1803 
 
 2 
 
 18 10 
 
 1781 
 
 
 2 
 
 
 
 6 
 
 1804 
 
 3 
 
 2 3 
 
 1782 
 
 
 2 
 
 9 
 
 3 
 
 1805 
 
 4 
 
 9 9 
 
 1783 
 
 
 2 
 
 14 
 
 3 
 
 1806 
 
 3 
 
 19 I 
 
 1784 
 
 
 2 
 
 10 
 
 4 
 
 1807 
 
 3 
 
 >5 4 
 
 178S 
 
 
 2 
 
 3 
 
 I 
 
 1808 
 
 4 
 
 I 4 
 
 1786 
 
 
 2 
 
 
 
 
 
 1809 
 
 4 
 
 17 4 
 
 1787 
 
 
 2 
 
 2 
 
 5 
 
 1810 
 
 - S 
 
 6 5 
 
 1788 
 
 
 2 
 
 6 
 
 4 
 
 1811 
 
 4 
 
 IS 3 
 
 1789 
 
 
 2 
 
 12 
 
 9 
 
 1812 
 
 6 
 
 6 6 
 
 1790 
 
 
 2 
 
 14 
 
 9 
 
 1813 
 
 S 
 
 9 9 
 
 1791 
 
 
 2 
 
 8 
 
 7 
 
 1814 
 
 3 
 
 14 4 
 
 1792 
 
 
 2 
 
 
 
 3 
 
 1815 
 
 3 
 
 5 7 
 
Notes. 
 
 Price of Wheat in England— 1202-18 
 
 Average price 
 
 per quarter. 
 
 £ s. d. 
 
 j8i6 ... 3 i8 6 1852 
 
 1817 ... 4 16 u 1853 
 
 1818 ... 4 63 1854 
 
 1819 ... 3 14 6 1855 
 .1820 ... 3 7 10 1856 
 
 1821 ... 2 16 I 1857 
 
 1822 ... 2 4 7 1858 
 
 1823 ... 2 13 4 1859 
 
 1824 ... 3 3 II i860 
 
 1825 ... 3 8 6 1861 
 
 1826 ... 2 18 8 1862 
 
 1827 ... 2 18 6 1863 
 
 1828 ..•3 o -s 1864 
 
 1829 ... 3 63 1865 
 
 1830 — . 3 4 3 "866 
 1S31 ... 3 6.4 1867 
 
 1832 .... 2 18 8 1868 
 
 1833 ... 2 12 II 1869 
 
 1834 ... 2 62 1870 
 .1835 ... 1 19 4 1871 
 
 1836 ... 2 8 6 1872 
 
 1837 ... 2 15 10 1873 
 
 1838 - 3 4 7 '874 
 
 1839 ... 3 10 8 1875 
 
 1840 ... 364 1876 
 
 1841 ... 3 4 4 1877 
 
 1842 ... 2 17 3 1878 
 
 1843 ... 2 10 I 1879 
 
 1844 ... 2 II 3 . 1880 
 
 1845 ... 2 10 10 1881 
 
 1846 ... 2 14 8 1882 
 
 1847 ... 3 99 1883 
 
 1848 ... 2 10 6 1884 
 
 1849 ... 2 4 3 1885' 
 
 1850 ... 2 09 i886 
 
 1851 ... I 18 6 
 
 143 
 
 ii.— (contd.) 
 
 Average price 
 per quarter. 
 
 £ s. d. 
 
 2 
 
 o 
 
 13 
 12 
 
 14 
 
 9 
 16 
 
 4 
 
 3 
 13 
 IS 
 IS 
 
 4 
 
 o 
 
 I 
 
 9 
 
 4 
 
 3 
 
 8 
 
 6 
 16 
 17 
 18 
 
 IS 
 
 S . 
 
 6 
 16 
 
 6 
 , 3 
 
 4 
 
 S 
 
 5 
 
 I 
 
 17 
 13 
 
 10 
 
 3^ 
 3 
 5 
 8 
 .2 
 
 4 
 2 
 
 9 
 
 3 
 4 
 S 
 9 
 
 2 
 10 
 II 
 
 s 
 
 9 
 
 2 
 10 
 
 8 
 o 
 
 2 
 2 
 9 
 5 
 
 IQ 
 
 4 
 4 
 1 
 
 7 
 8 
 
 3 
 o? 
 
 (From Adam Smith and The Economist.) 
 
144 
 
 Notes. 
 
 (31.) Prices in England during the present Century. 
 
 I publish the following more for the purpose of shewing that I am 
 familiar with the course of prices at home than because they have any 
 bearing on the present argument. The figures, with which we have been 
 bored so incessantly, have a great deal more to do with the value of gold 
 in all the rest of the world than with its real value in England ; for 
 most of the commodities, the prices of which are examined, are imports 
 and not English-made goods. A mere smattering of the theory of in- 
 ternational trade would have convinced the assiduous compilers of index- 
 numbers that their figures represent so much labour in vain. 
 
 Prices in England from lygg to i84g. — According to Professor Jevons 
 (quoted by Mr. W. Fowler, M.P., Contemporary Revievi, August 1885) 
 " the average ratio of prices to prices of the year 1849 " was as 
 follows : — 
 
 1799 
 1809 
 1819 
 1829 
 1839 
 1849 
 
 202 
 245 
 
 175 
 124 
 144 
 100 
 
 Between 1809 and 1830 prices fell 48 per cent.; from 1805-9 to 1829-33, 
 43 per cent. . . . The value of money had risen 60 per cent., or |ths, from 
 1809 to 1849 ; that is to say, ;^3 at the latter period equalled ;^S at the 
 former. — {^Edinburgh Review, Jan. i885, on " The Scarcity of Gold") 
 
 Unless my memory fails me, wages in 1849 were higher than they were 
 at the end of the last century. The fall of prices was no more than 
 what was to be expected from the long peace and the altogether unex- 
 ampled improvements in machinery and locomotion. Corn, I notice, was 
 44J. yl. per quarter in 1849, and \os. in 1786. War and paper money 
 sufficiently explain the high prices that prevailed at the beginning of the 
 century. 
 
 Prices in England from 1831 to iSjo. — The following is the course of 
 prices in England during this period according to Mr. William Newmarch 
 (quoted by Mr. Barbour, " Theory of Bimetallism " ) : — 
 
 1831-33 
 1836-40 
 
 1841-4S 
 1846-50 
 
 114 
 124 
 107 
 100 
 
Notes. 145 
 
 From 1851 to 1877, according to the same authority — 
 
 1851 & 1853 ... ... ... ... 112 
 
 From 1857 to 1859 ... ... ... ... 125 
 
 „ i860 „ 1864 ... ... ... ... 141 
 
 „ 1865 „ 1869 ... ... ... ... 138 
 
 „ 1870 „ 1874 ... ... ... ... 128 
 
 „ 1875 „ 1877 ... ... ... ... I2S 
 
 Why did not Mr. Barbour also quote what follows ? 
 
 English Prices, tS^i-iSjj : Gold Supply and War. 
 Price of— 1831-45. 1870-77. 
 
 Cotton ... ... ... 151 127 
 
 Silk, flax, wool ... ... ... 130 127 
 
 Coflfee, sugar, tea ... ... ... 135 115 
 
 Wheat ... ... ... 106 97 
 
 Oils, timber, tallow, leather ... ... 115 120 
 
 Copper, lead, tin, iron ... ... 108 117 
 
 " Allowing for the almost constant prevalence of wars on the largest 
 scale in all parts of the world during the period 1853 to 1877, and the 
 almost total absence of war of any kind during the period 1831 to 1845, 
 the apparent rise of 10 per cent, in general prices may be fully account- 
 ed for by reasons of interrupted supply and enlarged demand of the 
 commodities themselves. . . . Prior to 1849 the annual supplies of 
 
 gold available for all the purposes of coinage, bullion reserves and com- 
 merce, had been about four millions sterling — an amount barely sufficient 
 to meet the wear and tear of the gold coins in circulation. In 1850 the 
 supply was raised to 9 millions ; in 1851 to 14 millions ; in 1852 to 27 
 millions ; and in 1856 to 32 millions — a revolution far surpassing any 
 economical change within record. . . . There has been a gradual decline 
 
 to a supply of about 21 millions for about the last 16 years, say, 1861-77 ; 
 that is to say, the pre-discovery supply of four millions per annum 
 has been raised to a post-discovery supply for the 10 years, 1851-60, 
 to about 28 millions ; and for the following i6 years, 1861-76, to about 21 
 millions per annum."— (Newmarch, Economist, March 8th, 1879.) 
 So little has gold supply to do with prices. 
 
 " Between the years 1493 and 1544 the production of gold and silver 
 rose to .... 10 or 12 times the previous production, and yet prices rose 
 
 very slightly, owing to a concourse of circumstances having increased 
 the demand for cash : first, the substitution of payments in money for 
 
 payments in kind, &c The same phenomena were observable 
 
 after 1850." — (Laveleye.) 
 
 P., G. & S. K 
 
146 
 
 Notes. 
 
 Might not the substitution of payments in kind or by cheque for pay- 
 ments in money obviate any amount of falling off of gold supply ? 
 The " Economisfs" Price-level. 
 
 Year. 
 
 
 Total 
 Index No. 
 
 Year. 
 
 
 Total 
 Index No 
 
 1845-50 
 
 2200 
 
 1876, Jany. 
 
 1st 271 1 
 
 1857, July 1st 2996 
 
 1877 
 
 )9 
 
 2723 
 
 1858, Jany. 
 
 1st 2612 
 
 1878 
 
 ») 
 
 2529 
 
 1866 
 
 
 3564 
 
 1879 
 
 J) 
 
 2202 
 
 1867 
 
 
 3024 
 
 1880 
 
 )) 
 
 2538 
 
 1870 
 
 
 2689 
 
 1881 
 
 »» 
 
 2376 
 
 1871 
 
 
 2590 
 
 1882 
 
 )» 
 
 2435 
 
 1872 
 
 
 2835 
 
 1883 
 
 J> 
 
 2342 
 
 1873 
 
 
 2947 
 
 1884 
 
 3» 
 
 2221 
 
 1874 
 
 
 2891 
 
 1885 
 
 J» 
 
 2098 
 
 1875 
 
 
 2778 
 
 1886 
 
 S) 
 
 2023 
 
 All this merely shews how much better off English people now are 
 than they were 35 years ago. Remember they earn, and get, twice as 
 many sovereigns as they did in 1845 (see note 19), and each sovereign 
 goes as far as or farther in the purchase of commodities than it did in those 
 days. Both gold and the Economist's "22 chief articles of commerce" 
 are more than twice as cheap as they were in our fathers' time : this is the 
 whole story. The time will come when men will marvel at the extreme 
 simplicity of those who quote the above index-numbers for the purpose 
 of proving the " appreciation " or scarcity of sovereigns. 
 
 Unfortunately, the fall of prices at home since 1873 is not quite universal. 
 Even at this distance I notice the following : — 
 
 Prices of some English Commodities, not Imports from India, 
 in i8y3 and 1882. 
 
 Exports. 
 
 Horses, each ;^ 
 Firearms, ,, s. 
 Gunpowder, lb., d. 
 Beer, brl., s. 
 Butter, cwt., ». 
 Herrings, brl., s. 
 Leather, cwt., £ 
 Linen and Jute manuf. — 
 
 White or plain, yd., d. 
 
 Printed, yd., d. 
 
 1873- 
 
 1882. 
 
 62-95 
 
 63-25 
 
 29-13 
 
 28-21 
 
 638 
 
 6-03 
 
 83-15 
 
 85-49 
 
 118-14 
 
 138-89 
 
 28-38 
 
 29-92 
 
 9-00 
 
 8-74 
 
 7-62 
 
 6-89 
 
 7 '63 
 
 8-11 
 
Notes. 
 
 H7 
 
 ExFOVi.rs— (Continued), 1873. 18S2. 
 
 Silk piecegoods, yd., s. ... ... 3-54 ^-^y 
 
 Spirits, Brtsh., gal., s. ... ... 2'5o 5-87 
 
 Cheese, cwt., s. ... ... ... 86-30 84'i5 
 
 Imports. 
 
 Oxen, each £ 
 Calves, „ £ 
 Sheep, ,, s. 
 Bacon, cwt., s. 
 Hams, ,, 9, 
 Beef, ,, s. 
 Bones, ton, £ 
 Brimstone, cwt., s. 
 Bristles, lb., d. 
 Butter, cwt., £ 
 Caoutchouc, cwt., £ ... 
 Cheese, ,, £ ... 
 
 Cocoa, lb., d. 
 Maize, cwt., s. 
 Fish, cwt., s. 
 Currants, cwt., s. 
 Raisins, ,, 3. 
 Hops, „ £ 
 Lard, ,, ». 
 Leather, lb., d. 
 Meat, fresh, cwt., £ ... 
 
 ,, preserved, cwt., £ 
 Turpentine, ton, £ 
 Potatoes, cwt., s. 
 Seal Skins, each, s. 
 Brandy, gal., s. 
 Other spirits, gal. , s. ... 
 Tallow and Stearine, cwt. , s. 
 Elephants' Teeth, cwt., s. 
 Cigars, lb. , s. 
 Woollen Rags, ton, £ 
 Berlin Wool, lb., d. ... 
 Woollen Yarn, lb., d. 
 Yeast, dried, cwt., £ ... 
 
 ... 20-25 
 
 4-95 
 
 ... 42-83 
 
 ... 40-88 
 
 ... 54-68 
 
 ... 39-90 
 
 6-76 
 
 6-59 
 
 - 39'iS 
 
 5-44 
 
 11-09 
 
 2-99 
 
 7 '43 
 
 7-06 
 
 ... 27-94 
 
 - 25-73 
 
 - 35-26 
 
 4-91 
 
 - 44-37 
 ... 17-58 
 
 2-71 
 2-8i 
 
 - 35-87 
 ... s-65 
 
 9-75 
 
 7-33 
 
 ... 3-48 
 
 41-28 
 
 - 37-85 
 ... 13-76 
 ... 18-87 
 ... 43-68 
 
 27-27 
 
 2-54 
 
 (Statistical 
 
 21-25 
 
 4-69 
 
 45-51 
 
 53-04 
 
 55 -56 
 
 51-57 
 
 6-88 
 
 6-19 
 
 38-63 
 
 5-23 
 
 15-16 
 
 2 -So 
 
 7-51 
 
 7-1S 
 
 33-56 
 
 26-72 
 
 37-45 
 
 9-27 
 
 55-95 
 
 16-82 
 
 3-35 
 3-02 
 
 35-75 
 
 6-67 
 
 20-58 
 
 9-02 
 
 3 '73 
 
 40-35 
 
 48-93 
 
 14-21 
 
 21-88 
 
 42-53 
 
 29-89 
 
 2-67 
 
 Abstract.) 
 
148 ^ Notes. 
 
 Now there is no ^// here at all ; whereas our goods are 36 per cent, 
 lower in London price than they were in 1873. The scarcity of gold 
 theory does not explain all the facts. Why, it may be asked, have I 
 selected 1882 ? Simply because it would be silly to select 1886. Com- 
 pare prices at the latter date with prices in 1876 or 1866, and some useful 
 conclusion may be arrived at ; but periods of inflation can only be usefully 
 compared with periods of inflation. 
 
 (32.) Why the Prices of Commodities in general are no 
 index of the real value of Gold and Silver 1 
 
 " Although the purchasing power of cash has fallen to less than one- 
 fourth of what it was in the Middle Ages, or, in other words, although 
 prices are now four times what they were, the price of cloth and linen has 
 not increased, because, thanks to the invention of machinery, the cost 
 of production of these articles has considerably diminished." — (Emile de 
 Laveleye, Contemporary Review, May 1886.) 
 
 "It is the natural efiect of improvement ... to diminish gradually 
 the real [labour] price of almost all manufactures. ... A better 
 movement of a watch, than about the middle of the last century (17th), 
 could have been bought for twenty pounds, may now perhaps be had 
 for twenty shillings." — (Adam Smith.) 
 
 Speaking of " those useful plants and animals, which, in uncultivated 
 countries, nature produces in such profuse abundance, that they are of 
 little or no value, and which, as cultivation advances, are therefore forced 
 to give place to some more profitable produce," Adam Smith said 
 that the rise in their money - price " has been the effect not of any 
 degradation in the value of silver, but of a rise in their real price. They 
 have become worth, not only a greater quantity of silver, but a greater 
 quantity of labour and subsistence, than before. As it costs a greater 
 quantity of labour and subsistence to bring them to market, so when they 
 are brought thither, they represent or are equivalent to a greater 
 quantity." 
 
 The " subsistence of labour, " even in Adam Smith's time, evidently 
 meant a great deal more than dry bread ; and now it means a great deal 
 more still. May it continue to expand in meaning indefinitely ! 
 
 " The real recompense of labour, the real quantity of the necessaries 
 and conveniencies of life which it can procure to the labourer has 
 during the course of the present century (l8th), increased perhaps in a 
 still greater proportion than its money-price. Not only has grain become 
 somewhat cheaper, but many other things, from which the industrious 
 
Notes. 149 
 
 poor derive an agreeable and wholesome variety of food, have become 
 a great deal cheaper. Potatoes, for example, do not at present (1775) 
 through the greater part of the kingdom cost half the price which they 
 used to do thirty or forty years ago. The same thing may be said of 
 turnips, carrots, cabbages, things which were formerly never raised 
 except by the spade, but which are now commonly raised by the 
 plough. All sort of garden stuff too has become cheaper. . . . The 
 great improvements in the coarser manufactures of both linen and 
 woollen cloth furnish the labourers with cheaper and better clothing : and 
 those in the manufactures of the coarser metals, with cheaper and better 
 instruments of trade, as well as with many agreeable and convenient 
 pieces of household furniture. Soap, salt, candles, leather, and fermented 
 liquors have indeed become a great deal dearer ; chiefly from the taxes 
 which have been laid upon them. The quantity of these, however, which 
 the labouring poor are under the necessity of consuming, is so very small, 
 that the increase in their price does not compensate the diminution in 
 that of so many other things. The common complaint (!) that luxury 
 extends itself even(!) to the lowest ranks of the people, and that the 
 labouring poor will not now be contented with the same food, clothing, 
 and lodging which satisfied them in former times, may convince us that 
 it is not the money-price of labour only, but its real recompense, which 
 has augmented." — (Adam Smith.) 
 
 (33.) The Gold-price of Gold. 
 
 Since writing the chapter on " Measuring a thing by itself," through 
 which I at one time intended to run my pen, I have on two or three occa- 
 sions heard the same stupid fallacy boldly stated. Only the other day I 
 was told that "after all this talk about the depreciation of silver, there 
 are still 16 annas to the rupee 1 " So there are 24 inches in a two-foot 
 rule, although the rule may have expanded during the rains. And a cer- 
 tain '■ C. J. M." a few weeks ago wrote in a newspaper to the effect that 
 the silver-price of gold in India had risen considerably, but the silver-price 
 of silver had not ; thus plainly shewing, so " C. J. M." thought, that there 
 is still an intense demand for gold here, but not for silver. But the most 
 delicious contribution to this branch of the subject comes from M. I.ave- 
 leye, a noted bimetallist. 
 
 He says : — " As regards the use of the precious metals in art, there is 
 one very important phenomenon which has not yet attracted notice, and 
 which proves to how great an extent money differs from other merchan- 
 dise. In the case of other goods when production diminishes and con- 
 
1 50 Notes. 
 
 sumption augments, a rise in prices prevents a too great increase in 
 demand. For money metals this is not the case, because trade can 
 always obtain the metal from the monetary stock at the fixed mint value 
 by melting the coin. The very last kilogram of gold in France may be 
 procured by any jeweller for 3,100 francs, and everywhere else in the 
 same way. ... If even the gold mines were entirely to cease to produce, 
 an ounce of gold could still be had for £t, 17J. loYzd. The whole mone- 
 tary stock is like a mine from which gold can be extracted at the value 
 fixed by the mint by simply melting down sovereigns." 
 
 M. Laveleye therefore fears the " consumption " of gold will go on 
 unchecked. Need I criticise this sage and hitherto unnoticed observa- 
 tion? What if gold were to become t/ery scarce, so that ;^3 17J. lo^rf. 
 required for its acquisition four years' labour of an orimxcy— jeweller ? 
 What more stringent check on the consumption of gold could M. Laveleye 
 desire? Has nobody translated the Wealth of Nations ivAo — Belgian? 
 
 (34.) The United States' " Tribute." 
 
 " The present condition of the external trade of the United States is 
 (1874) essentially abnormal and temporary. If that country is to continue 
 to discharge her liabilities, the relation that at present obtains between 
 exports and imports in her external trade must be inverted. Her exports 
 must once again, as previous to i860, be made to exceed her imports, and 
 this by an amount greater than the excess of that former time in proportion 
 as her financial obligations to foreign countries have in the interval increas- 
 ed. This, it seems to me, is a result which may be predicted with the utmost 
 confidence. The end may be reached either by an extension of exportation 
 or by a curtailment of importation, or by combining both these processes, 
 but by one means or other reached it will be. It is simply the condition 
 of her remaining a solvent nation. ... To establish .... an excess 
 of exports over imports in the trade of the United States, in lieu of the 
 balance the other way which now exists, prices there must be lowered in 
 relation to prices [incomes ?] in Europe. This may be accomplished 
 partly by an advance in prices here not shared by the United States, as 
 in fact has already happened in the case of some important commodities ; 
 but it is probable that the end will be reached mainly through a decline of 
 prices [and incomes] on the other side. . . . Free trader or protectionist, 
 therefore, an excess of exports over imports in her foreign trade, suffi- 
 cient in amount to discharge her international liabilities, is a condition 
 she cannot evade." — ( Cairnes' "Some Leading Principles of Political 
 Economy," p. 444, etseq.) 
 
Notes. 1 5 1 
 
 This was written in 1874. Note how the prediction was fulfilled : — 
 
 The Import and Export Trade of the United States. 
 
 (ooo's omitted.) 
 
 
 Imports. 
 
 Exports. 
 
 1873 
 
 £, 133,778 
 
 £. 105,215 
 
 1874 
 
 ,, 118,200 
 
 „ 118,632 
 
 1875 
 
 „ 111,043 
 
 „ 104,017 
 
 1876 
 
 „ 95,988 
 
 „ 109,496 
 
 1877 
 
 „ 94,026 
 
 „ 122,848 
 
 1878 
 
 „ 91,052 
 
 „ 141,814 
 
 1879 
 
 „ 92,870 
 
 „ 145,488 
 
 i88o 
 
 „ 139,157 
 
 „ 171,655 
 
 1881 
 
 „ 133,889 
 
 „ 184,151 
 
 1882 
 
 „ 150,967 
 
 „ 152,758 
 
 1883 
 
 „ 150,663 
 
 „ 167,546 
 
 1884 
 
 „ 139,104 
 
 „ 157,034 
 
 (Barbour. ) 
 
 Indian Imports and Exports present, of course, similar features. 
 Aggregate value of Indian Imports and Exports. 
 Imports. Exports. 
 
 Rs. Rs. 
 
 1859-60 1 
 
 1 
 
 
 to , 
 
 \ 37,35,51,050 
 
 33.32,65,870 
 
 1861-62 J 
 
 1 
 
 
 1883-84 ■] 
 
 1 
 
 
 to 
 
 69,62,41,917 
 
 86,46,14,474 
 
 1885-86 ] 
 
 1 
 
 
 (35.) Does the rate of Exchange determine the Gold-price 
 of Silver, or the price of Silver the rate of Exchange ? 
 
 So long ago as 1876 the Economist quoted the business axiom, " the 
 price of Council bills rules the price of silver, not the price of silver the 
 price of bills." It is the same to-day — the opinion of amateur political 
 economists to the contrary notwithstanding. 
 
 " The Eastern exchanges have again advanced. . . . This continuous 
 rise, in the Indian rates more especially , has led the bullion brokers to raise 
 the price of bar silver to 46^1/. per ounce." — {The Times, i8th January 
 1886.) 
 
1 52 Notes. 
 
 "The Indian exchanges are easier again .... and the price of bar 
 silver has receded .... there being, however, scarcely any business and 
 no supplies." — [The Times, 22nd January 1886.) 
 
 "The Indian exchanges being easier .... holders of bar silver were 
 unable to get the price paid yesterday."— (7%e Times, 22nd February 
 1886.) 
 
 " The Indian exchanges were somewhat higher .... z-s\A,cimsequently, 
 the whole of the combined remittances ex Patagonia, Maskeleyne and 
 Moselle found buyers on Indian account at 46|^rf. per ounce." — {The 
 Times, loth March 1886.) 
 
 " Recent supplies of silver have been below the average, but its price has 
 fallen very heavily owing to the collapse of the Eastern exchanges and the 
 low rates which the Indian Council have accepted for their drafts .... 
 It is impossible to make any forecast of the market, but as there are now 
 no Indian buyers at ^%d. , a further fall may be expected should the 
 Indian Council accept to-morrow tenders based on the present rate of 
 exchange."— (7%e Times, 19th May 1886.) 
 
 ' ' Silver is somewhat cheaper than it was at this time last year, but it 
 is deserving of remark that the Indian Government have placed more than 
 double the amount of bills upon the market than they did up to this time 
 last year." — {^Economist, 27th October 1883.) 
 
 Hence the glut of our commodities in the English market (for these 
 bills serve our customers instead of silver) ; hence the fall in their 
 English value and gold-price ; hence the fall in value and gold-price of 
 their equivalent in Indian money — silver. 
 
 (36.) Cost of Production. 
 The current doctrine of cost of production as enunciated by Mill has 
 been severely criticized and (I think) thoroughly refuted by Professor 
 Cairnes. Mill and others look at production exclusively from the capi- 
 talists' point of view. The producer is " the capitalist who makes the 
 advances," who pays wages. " The point of view is shifted," as Cairnes 
 points out, " from the ground of human interests to the partial and limited 
 standpoint of the capitalist employer." The true doctrine is that "cost 
 means sacrifice, and cannot, without risk of hopelessly confusing ideas, be 
 identified with anything that is not sacrifice." ' ' To the labourer wages 
 are reward, not cost." The proper signification of the phrase " cost 
 of production" is "cost as measured in number of days'' labour and ab- 
 stinence." The current doctrine that cost means wages, leads to the 
 conclusion that the depreciation of gold is impossible. " In a paper 
 
Nates. 153 
 
 read some years ago before the Dublin Statistical Society, it was argued 
 by Dr. Hancock that the cost of producing gold had not been reduced by 
 the gold discoveries ;" — " that the wages and profits of the producers of 
 gold had increased as much as the labour and abstinence required for the 
 production of a given quantity of gold had diminished, leaving thus . . ■ 
 the cost of production unchanged," and of course its value unchanged 
 too. Tooke and Newmarch ("Jlistory of Prices") appear to have argued 
 in the same way. Something must be wrong with a theory which leads to 
 the absurd conclusion that gold and silver can never depreciate or appre- 
 ciate, no matter how much or how little toil and trouble may be required 
 for their acquisition. 
 
 It is strange (yet inevitable) that, in working out the theory of interna- 
 tional trade. Mill abandons his doctrine of cost and adopts the true view ; 
 indeed, as Cairnes points out, the phenomena of international trade cannot 
 possibly be dealt with from any other standpoint. 
 
 Replying to the capitalist's comical complaint that the disadvantage of 
 having to pay high wages " neutralizes the advantages we derive from our 
 great facilities in the proximity of our iron-mines to our coal-beds, 
 Cairnes says: "Dear labour meutralizing the advantages of our coal- 
 beds and iron-mines ! As well speak of the large fees reaped by a 
 successful barrister as neutralizing the advantage of his skill ; for not 
 more certainly are the large fees the consequence of the barrister's legal 
 skill, than the high wages of our artisans are the consequences of the 
 industrial advantages under which they work .... The whole problem 
 of industry is looked at exclusively from the capitalists' point of view. 
 The advantages we derive from our coal-beds and iron-mines are the 
 advantages which capitalists derive from them. ' British trade ' means 
 capitalists' profits ; and as the only cost taken account of in production 
 is the capitalists' cost, so naturally the capitalists' remuneration is the 
 only remuneration thought worth alluding to. Hence high wages are 
 represented as neutralizing advantages, as if nothing were gain which did 
 not come to the capitalists' maw ; and the liberal remuneration of the 
 working people is deplored as a national calamity because it sets limits 
 to the capitalists' share in the produce of their joint exertions. ' Dear 
 labour,' says Mr. Brassey, ' is now the great obstacle to the extension 
 of British trade.' It does not occur to him that high profits are an 
 obstacle in precisely the same sense. If British labourers and capitalists 
 will only consent to accept a lower scale of remuneration for their 
 services, they may have the satisfaction of indefinitely extending British 
 trade, and achieving the great goal of commercial ambition by under- 
 selling all the nations of the earth. Each, however, halts, and would 
 
1 54 Notes. 
 
 prefer that the other should take the initiative in the patriotic sacrifice, 
 desiring, like the French soldiers at the battle of Fontenoy, to give his 
 opponent the honour of firing first." 
 
 (37.) The General Rate of Wages. 
 "A general rate of wages is neither more nor less easy to conceive, 
 neither more nor less absurd, than general prices. I think I krunv what 
 I mean when I say that prices and wages in the United States measured 
 in greenbacks have risen generally as compared with prices and wages 
 measured in gold ; that the average rate is higher in the one case than 
 in the other ; and I do not think I should be very wide of the mark if I 
 attributed this difference to the different proportions in which purchasing 
 power measured in gold, and purchasing power measured in greenbacks, 
 stand related to commodities and labour. " — (Cairnes. ) 
 
 (38.) Money not Synonymous witU Wealth. 
 " In the course of a century or two, it is possible that new mines 
 (of gold and silver) may be discovered more fertile than any that have 
 ever been known ; and it is just equally possible that the most 
 fertile mine then known may be more barren than any that was wrought 
 before the discovery of the mines of America. Whether the one or the 
 other of those two events may happen to take place, is of very little 
 importance to the real wealth and prosperity of the world, to the real 
 value of the annual produce of the land and labour of mankind. Its 
 nominal value, the quantity of gold and silver by which this annual 
 produce could be expressed or represented, would no doubt be very 
 different ; but its real value, the real quantity of labour which it could 
 purchase or command, would be precisely the same. A shilling might, 
 in the one case, represent no more labour than a penny does at present, 
 and a penny, in the other, might represent as much as a shilling does now. 
 But in the one case, he who had a shilling in his pocket would be no 
 richer than he who has a penny at present ; and in the other, he who 
 had a penny would be just as rich as he who has a shilling now. The 
 cheapness and abundance of gold and silver plate would be the sole 
 advantage which the world could derive from the one event ; and 
 the dearness and scarcity of those trifling superfluities, the only inconve- 
 niency it could suffer from the other. " — (Adam Smith. ) Individuals, how- 
 ever, stupid individuals, who accept fiied salaries and promise to pay 
 fixed interest, might gain or lose, while the changes referred to are taking 
 place. 
 
Notes. 1 5 5 
 
 " The increase of the quantity of gold and silver in Europe, and the 
 increase of its manufactures and agriculture, are two events which, 
 though they have happened nearly about the same time, yet have arisen 
 from very different causes and have scarce any -natural connection with 
 one another. The one has arisen from a mere accident, in which neither 
 prudence nor policy either had or could have any share : the other from the 
 fall of the feudal system, and from the establishment of a government 
 which afforded to industry the only encouragement which it requires, some 
 tolerable security that it shall enjoy the fruits of its own labour. Poland, 
 where the feudal system still continues to take place, is at this day 
 as beggarly a country as it was before the discovery of America. The 
 money-price of corn, however, has risen ; the real value of the precious 
 metals has fallen in Poland, in the same manner as in other parts of 
 Europe. Their quantity, therefore, must have increased there as in other 
 places, and nearly in the same proportion to the annual produce of its 
 land and labour. This increase of the quantity of those metals, however, 
 has not, it seems, increased that annual produce ; has neither improved 
 the manufactures and agriculture of the country, nor mended the circum- 
 stances of its inhabitants. Spain and Portugal, the countries which 
 possess the mines, are, after Poland, perhaps the two most beggarly 
 countries in Europe. . . . Though the feudal system has been 
 abolished in Spain and Portugal, it has not been succeeded by a much 
 better." — (Adam Smith. ) How refreshing to read this grand old book 
 after turning over the pages of a modern Scotch Review, or listening to a 
 Simla Lecture on the fall of the Roman Empire ! 
 
 (39.) Adam Smith, on Fixed Salaries. 
 " The same quantity of silver, it may perhaps be said, will, in the 
 present times (1775), even according to the account which has been here 
 given, purchase a much smaller quantity of several sorts of provisions than 
 it would have done during some part of the last century, and to ascertain 
 whether this change be owing to a rise in the value of those goods, or to 
 a fall in the value of silver, is only to establish a vain and useless distinc- 
 tion, which can be of no sort of service to the man who has only a cer- 
 tain quantity of silver to go to market with, or a certain fixed revenue in 
 money. I certainly do not pretend that the knowledge of this distinction 
 will enable him to buy cheaper. It may not, however, upon that account 
 be altogether useless. " It may be of some use ' ' to the public, in regu- 
 lating the pecuniary reward of some of its itiferior servants. If this rise 
 in the price of some sorts of provisions be owing to a fall in the value 
 
IS6 Notes. 
 
 of silver, their pecuniary reward, provided it was not too large before, 
 OUGHT CERTAINLY TO BE AUGMENTED IN PROPORTION TO THE EXTENT 
 OF THIS FALL. If it is not augmented, their real recompense will evi- 
 dently be so much diminished. But if this rise of price is owing to the 
 increased value [of the provisions themselves] in consequence of the 
 improved fertility of the land (?) which produces such provisions, it be- 
 comes a much nicer matter to judge, either in what proportion any 
 pecuniary reward ought to be augmented, or whether it ought to be 
 augmented at all." 
 
 Were official salaries regulated according to prices, during a famine 
 salaries would rise considerably ; that is to say, when other people receive 
 as their incomes or wages much less than usual, the official would receive 
 much more. Salaries which fluctuate with the wages-level, as most people's 
 do, would be open to no such objection — nor indeed to any at all. 
 
APPENDICES. 
 
 Diagrams of Prices of Food-grains in India. 
 The facts revealed by the annexed diagrams of prices of food-grains in 
 India are, of course, perfectly familiar to Indian statisticians, that is to say, 
 to the officials of the Finance Department and the Compilers of Adminis- 
 tration Reports. In fact, the diagrams themselves are all purloined 
 (with permission) from Mr. J. E. O'Conor's* "Prices and Wages in India" 
 with the exception of the first, which is from the official report on the 
 administration of the Punjab. But everybody, even in India, does not 
 read Government reports and official pamphlets ; while in England, and 
 especially in Scotland, the ignorance that prevails on the subject of Indian 
 prices is of the densest. In thejanuvy (i886)inumber of the Edinburgh 
 Review, for instance, we were treated to an incidental disquisition on 
 the scarcity of silver in India, based on the fall in the prices of saltpetre, 
 cotton, and something else at the shipping ports some years ago, and on 
 what the Bombay Chamber of Commerce said about the price of the 
 people's food in 1877 ! — no other information being available. In these 
 days when Under-Secretaries of State for India talk of the silver question 
 as " quite too difficult for an amateur ; " when Secretaries of State for India 
 pronounce it " a dark and apparently unfathomable mystery ; " when 
 ex-Viceroys dubiously talk to Manchester audiences about the purchasing 
 power of the rupee in India, as if all the essential facts of the case were 
 not perfectly well known ; when Presidents of the Chambers of Com- 
 merce relate certain isolated facts about prices, as if until quite lately they 
 were unknown even to business-men, and make a muddle of the subject 
 generally ; when The Times advocates closing the Indian mints for the pur- 
 pose, I suppose, of reducing ovLt^rvces, and wages, and when bimetallists all 
 the world over are striving their hardest to bring about the same result 
 in a different way, every scrap- of information relating to this subject 
 cannot well be published too often. Even statistical experts will do well 
 to refresh their memories by glancing over the facts once more ; they 
 appear to have learnt the lesson they teach none too thoroughly. 
 
 * Mr. O'Conor, I need hardly say, must not be held responsible for the 
 correctness of the diagrams, or. for the conclusions I have drawn from, them. 
 
I $8 Appendices. 
 
 Note, first, that the prices of food-grains confirm the statistics previous- 
 ly given as to wages. There has been no perceptible rise since 1873. 
 Prices of the people's food and of horses' food (see Appendix B) are as 
 nearly as possible on the same level as they were 1 3 years ago. 
 
 Secondly, neither have prices of food-grains fallen. The low prices of 
 our exports at Bombay and Calcutta is evidently not the result of the 
 contraction of the currency, but of the expansion of our railway system. 
 
 Thirdly, the fluctuations in prices of food - grains — the very low 
 prices in 1876 and the very high prices in 1878-80 — were evidently largely 
 the result of superabundant harvests on the one hand and scarcity on 
 the other ; though the very limited imports of silver in 1875-76 (16 
 millions of rupees) and the extraordinary imports of the metal in 1877-8 
 (147 millions of rupees) must also have had some share in bringing about 
 the observed result. The Russo-Turkish war, too, by raising prices at 
 the shipping ports, must not be left out of account. 
 
 Fourthly, it can hardly be doubted that had our largely increased 
 exports of late years been paid for in bullion instead of Council bills 
 (see Appendix A in "The Indian Tribute''''), prices since 1880 (say) ai»«/i!^ 
 have maintained the high level they then reached. 
 
 Fifthly, this conclusion is strengthened by a glance at the Punjab 
 diagram which starts from 1857. Note the rise of prices from that date 
 to 1873. What strange cause, other than the Indian Tribute, arrested the 
 exceedingly rapid depreciation that was going on during this period ? 
 Wages, remember, rose at this time, as well as prices of food : they 
 always do in India. 
 
 Lastly, these diagrams throw some light on the perplexing problem — 
 why was this everlasting silver question not disposed of years ago ? There 
 has been no lack of talent on the part of some of those who have dealt 
 with it, but an abundant lack of agreement as to what ought to be done 
 or ought not to be done, and as to the reasons for doing it, or for doing 
 nothing. "My Lords" of the Treasury, the Government of India, 
 M. Cernuschi, and others are still engaged in their triangular duel ; gold 
 has appreciated and silver has depreciated ; silver has not depreciated, 
 the whole result is owing to a scarcity of gold ; there is no scarcity of 
 gold : this is what we still hear daily. Whence this non-agreement ? 
 The answer is, that until very recently the facts were extremely perplexing ; 
 and so far as the alleged scarcity of gold was concerned, imperfectly known. 
 It was not till the present year that I was aware (others might have 
 been more fortunate — if so, the more shame for them) that the wages-level 
 in England rose from ^£38 in 1867 to £sfl 14^. in 1884 — which fact 
 simply rules out the scarcity of gold theory of the fall of silver. And 
 
Appendices. 159 
 
 in the next place, the facts about silver in India when I first came to the 
 country, in 1880, were maliciously deceptive. Again, look at the Punjab 
 diagram. How was I to know — how were other dwellers in the 
 Punjab to know — that the very high prices that then prevailed, and the 
 incessant complaints about increased cost of living, were going to be 
 transient only ? My Indian uncle used to pay his syces Rs. 2 per mensem 
 in 1840; I paid mine Rs. 8. Re. i in 1857 was worth as much as Rs. 3 
 in 1880, in the Punjab at any rate. How could I and others escape 
 from the conclusion that rupees had fallen in value because there were 
 so many more of them ? How eminently natural was my belief that all that 
 was really needed was the equitable distribution of the extra rupees that 
 depreciation sent us ! It was only by degrees the truth could dawn upon 
 me or anybody else. Prices since 1880 have been steadily falling, and 
 now all over the country have attained their 1873 level ; and wages 
 are very nearly what they were then, i.e., the rupee stands at its 1873 
 value in India. But until the last year or two this fact could not 
 be known or even suspected, because it did not exist. 
 
 I frankly confess that it was not until I had once written the accom- 
 panying essay that the truth about the fall of silver in relation to 
 gold flashed upon me. I had always been familiar with the truth that 
 money is necessarily of lower value in a tribute-receiving than in a 
 tribute-paying country ; but the effect of a Rowing tribute when the two 
 countries have difierent currencies had escaped my notice — and that of 
 other people too, I find. Consequently, I have had to remodel my views 
 somewhat : " ' Twere well if others followed my example. " 
 
Apj)endioc/A- 
 
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 DIAGRAM shttYutg ih^pric^ of Gram from 1873 k?188S 
 
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 DIAGRAM skewing the' proc^ of Wfui^afrom, 18 73 ix/ 188s 
 tn Bomhax/j JV W P OudJv, Punjai, CeniraL Provinces 
 
 nhay St, Stnc/k, 14- 
 
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 N ^ t^ * «5 
 
 Cb 05 23 (*3 Co QD 50 
 
 k;, N^ f^ .:5; k^. 
 
 
Appenciia>D. 
 
 DIAGRAM shavmff ^h&jjrice- (f Rue/ from 1873 toJS8^. 
 vnySe-iigaL^ BritisTvJBurma-, Ass-am/, CetitraLFrovuices Sc Madras. 
 
AppendtocB 
 
 DIAGRAM sh&4nn^iJv& Pj-iet' cf Barlei, ^■on2.2873ioJ386. 
 
 !c t- ff A 9 S ~£i io * S 
 
Appendix>F. 
 
 irv&?/ni<fj/. ^ W.Proi 'incex, OuAh, Puj'jal,; Catlml Prnvuuxe &:Madras. 
 
DIAGRAM shewing di^j^ri-c^ of Bcuurcufronv 1^75 MS8S. 
 
AppertdicoH. 
 
 DIAGRAM sh^H^uuf theprir-e of Arhax (JBomha^.^N'W.P. 
 Jiai^e- (BengalJ IC^Ra^v (Madras) frorrv 18 73 la 18 en. 
 
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