Blackwood's Edinburgh Magazine, Volume 69, No. 423, January 1851

by Various

When nature communicated this vast impulse to human activity, and placed these mighty instruments in the hands of men, she was not unmindful of the extended field for industry which their enlarged numbers and increased energies would require. The plain of the Mississippi, the garden of the world, containing a million of square miles, or six times the area of France, was thrown open to their enterprise. Steam power propelled a thousand vessels through the thick network of natural arteries which in every direction penetrate its vast and fertile plains. In 1790, five thousand Anglo-Saxons were settled in this magnificent wilderness; now their numbers exceed eight millions. Australia has opened its vast prairies, New Zealand its fertile vales, to European enterprise. The boundless plains of Central Russia and Southern Siberia, afforded inexhaustible resources to the rapidly increasing Muscovite population; and an empire which already possesses in Europe and Asia sixty-six million inhabitants, can without apprehension contemplate a continuance of its present rate of increase for centuries to come. The Andes even have been passed; the Rocky Mountains surmounted; and on the reverse of their gigantic piles new states, peopled by the Anglo-Saxon race, are arising, and increasing with unheard-of rapidity, in regions rivalling Italy in the variety and riches of their productions, and exceeding it tenfold in the magnitude of their extent. Proportionate to the wants and necessities of mankind, in an age of such intellectual and physical activity, has been the hitherto untrodden fields which the beneficence of nature has laid open to their industry.

These advantages, however, great and unbounded as they are, have been, till very recently, counterbalanced, and perhaps more than counterbalanced, by the serious decrease which, for the greater part of the period that has elapsed since the peace of 1815, has been going on, from the effect of human violence or folly, in the circulating medium of the globe. The South American revolution at once almost destroyed the working of the mines of Mexico and Peru: the annual produce of those mines sank from £10,000,000, to which, according to Humboldt, it had risen prior to 1810, to less than £3,000,000. The diminution in the supply of the precious metals for the use of the globe, from the effects of this most calamitous revolution, which Great Britain did so much to promote, was, during the thirty years which elapsed from 1810 to 1840, certainly not less than £150,000,000 sterling. Contemporaneous with this immense reduction, took place the great contraction of the paper currency of Great Britain, the commercial heart of the globe, which was reduced by the bill of 1819 from £60,000,000, which it had reached in 1814, to little more than £30,000,000, its average since that time. These two great causes of decrease, operating simultaneously during a period of general peace, unbroken industry, great increase in population both in Europe and America, and a vast addition to the transactions and mercantile dealings of men in every part of the world, produced that universal and unlooked-for decline of prices which has been everywhere felt as so discouraging to industry, and nowhere so much so as in the highly taxed and deeply indebted realm of Great Britain. It was the exact converse of the general and long-continued prosperity which the progressive rise of prices consequent on the discovery of the South American mines produced during the sixteenth and seventeenth centuries. It was apparently the commencement of a long and disastrous period of rise in the value of money, and fall in the price of every species of produce, similar to that which, in the first four centuries of the Christian era, crushed the industry and paralysed the strength of the Roman Empire, and at length prostrated the dominion of the legions before the arms of an untutored and barbarous enemy.

It is now ascertained, therefore, by the only sure guide in political science—experience—that if no addition to the circulating medium of the globe had been made at a time when so immense an increment was going forward in the numbers and transactions of the most active part of mankind, consequences the most disastrous to human industry and happiness must have taken place. If—when the United States, with their population of 25,000,000 doubling every twenty-five years, and Russia, with its population of 66,000,000 doubling every forty years, and Great Britain, with its population of 29,000,000 doubling in about the same time, and its exports and imports tripling in thirty years, were in a state of full and undiminished activity—there had been no addition made to the circulating medium of the globe, it is difficult to estimate the amount of embarrassment and distress which must have become all but universal. If the circulating medium of the earth had remained stationary, or gone on receiving only its wonted annual increment, when so prodigious an addition was going forward in the numbers and transactions of men, a universal and progressive fall of prices must have ensued. The remuneration of industry must have been halved—the weight of debts and taxes doubled. The fatal increase in the value and power of riches, so truly felt and loudly complained of in the declining days of the Roman empire, would have been everywhere experienced. A money famine would have been universally felt; and, paradoxical as it may appear, dear-bought experience has now taught us that such a famine is attended with more disastrous, because more widely spread and irremovable, consequences, than even a shortcoming in the supply of food for the use of man. The latter may be removed by increased rural activity and a good harvest in a single year. But the former is susceptible of no such remedy. On the contrary, the augmented activity which it brings on, from the general and pinching suffering with which it is attended, only tends to aggravate the common distress, because it multiplies the transactions in which money as a medium of exchange is indispensable, and consequently makes its scarcity in proportion to the existing demand be more severely felt.

To this must be added another and most important cause, which operated since the peace of 1815 in withdrawing the precious metals from the globe, arising from the very scarcity of these metals themselves. The addition which their enhanced value made to the riches of the affluent was so great, that it led to a rapid and most important increase in the consumption of gold and silver in articles of luxury. Gold and silver plate, jewels, and other ornaments set in gold, became general among the richer classes, and to an extent unprecedented since the fall of the Roman empire. Gilding was employed so much in furniture, the frames of pictures, the roofs of rooms, carriages, and other articles of state or show, as to withdraw a considerable part of that the most precious of the precious metals from the monetary circulation. The scarcer gold and silver became, the more was this direction of a large portion of it increased, because the richer did the fortunate few who possessed amassed capital become from the daily decline in the price of all other articles of merchandise. This effect was most conspicuous in ancient Rome in its latter days, where, while the legions dwindled into cohorts from the impossibility of finding funds to pay them in large numbers, and the fields of Italy became desolate from the impossibility of obtaining a remunerating price for their produce, the gold and silver vases, statues, and ornaments amassed in the hands of the wealthy patricians in Rome, Constantinople, Alexandria, and the other great cities of the empire, so prodigiously increased, that, with the currency, which formed but a small part of its amount, their value is estimated by Gibbon at the almost incredible amount of £350,000,000 sterling of our money.

Bills of exchange and paper money, which have become known and general only in modern Europe, might have gone far to mitigate these disastrous consequences in particular states, or even, if conducted with prudence and regulated by wisdom, might in some places have altogether prevented them. But as paper currency is a new element of surpassing power and efficacy, but recently introduced into common use among men, the principles on which it should be regulated are far from being generally understood. Even if understood, it requires for its due regulation a combination of wisdom and self-denial that can rarely be looked for among the rulers of mankind. The fundamental principles on which its due regulation must be rested—that of being based on certain and available property of some kind, and of being capable of extension in proportion to the increase in the numbers and transactions of men, and the abstraction of the precious metals forming the medium of international circulation, and yet duly restrained and over-issue prevented—were successively overlooked by the greatest and most enlightened nations of the world. Issued in unbounded profusion in France during the fervour of the Revolution and the terrors of European invasion, with no real basis of available property on which to rest, the assignats produced, simultaneously with the prodigious armaments which saved the country, an unheard-of confusion among the transactions and obligations of men, and destroyed in a few years the whole capital of that great country, the accumulated savings of centuries of industry. Contracted with equal rapidity from the influence of the opposite set of interests in Great Britain after the peace, the paper circulation of the British Empire was rendered the instrument of destruction of property as great, and misery as widespread and universal, among its inhabitants, as the assignats or confiscations of the Convention. Adopted with heedless eagerness, and without any adequate safeguards, at one time in America, and checked at another with precipitate and imprudent severity, four-fifths of the wealth of the United States were in a few years swept away by the fearful oscillation of prices consequent on these violent changes. And although wisdom and prudence could easily have devised a system of paper currency which, entirely based upon available property of some kind, and therefore perfectly secure, was yet capable of expansion in proportion to the increase of the numbers and transactions of men, and the temporary abstraction of the precious metals from a particular country by the mutations of commerce or the necessities of war, yet it was evident that no such wise and patriotic system was to be anticipated, till a vast amount of general suffering had enlightened the majority of men on the subject. Least of all could it be hoped for in Great Britain, where the increase and weight of the moneyed interests, and the consequent determination to enhance the value of money, without any regard to its effects on the remuneration of industry, had become such, that no other interest in the State, nor even all other interests allied, were able to make head against it.

The future destinies of mankind, and of this country in particular, seemed, therefore, to be involved in clouds and darkness; nor did any means appear to be within the bounds of possibility by which the difficulties which beset or awaited industry could be obviated. The greater the efforts made by industry, it was plain the greater would be the distress in which it would be involved; because an increase in the transactions of men required an augmentation in the circulating medium by which they were to be conducted; and an addition to the produce of labour, while the currency was fixed or declining, only rendered its remuneration less. The whole object of statesmen and legislators, both in Great Britain and America, had come to be to cheapen everything, and raise the value of money by contracting its amount—augmenting instead of relieving the general distress arising from the inadequacy of the existing circulating medium for the enlarged wants and numbers of men. The evil seemed to be beyond the reach of human remedy; for in the only country in which a remedy could be effectually applied, the moneyed interests had become so powerful, that Government was set chiefly on measures which, for the sake of private profit, most grievously aggravated it. But Providence is wiser than man: Nature is seldom awanting in the end to those who are suffering from the faults of others. A few bands of American squatters wandered into Texas—a war of aggression on the part of the United States succeeded to make good the settlement—a serious contest took place with Mexico—the Anglo-Saxon race asserted their wonted superiority over the Castilian—California was wrested from them—and by the ultimate effects of that conquest some of the greatest evils inflicted by human selfishness or folly were alleviated, and the destinies of the world were changed!

It is a striking proof how much the fortunes of men are in their own hands, and how vain are the choicest gifts of nature if not seconded by the vigour and industry of those for whom they are intended, that the rich auriferous veins, the discovery of which has been attended with such important effects, and is destined to avert so many evils arising from the absurd legislation or selfish desires of men in recent times, had been for three hundred years in the possession of the Spaniards, but they had never found them out! The gold was there, under their feet, in such quantities that its excavation, as will immediately appear, is adequate to double the annual supply of the precious metals for the use of man over the whole world; but they never took the trouble to turn it up! It was so near the surface, and so accessible, being mixed with the alluvial sand and gravel of the country, that it was first discovered in the cutting a common mill-course through a garden, and has since been obtained almost entirely by common labourers digging holes not deeper than ordinary graves through the level surface of the alluvial deposit of the mountains. They had never attempted agricultural operations, nor thought of an improvement which would have led to its detection. The Spaniards, as all the world knows, and as their history in every age has demonstrated, were passionately desirous of gold; and from the days of Columbus they had been familiar with a tradition or report among the native Indians, that there existed beyond the mountains in the far west a country in which gold was as plentiful as the sand on the seashore, and was to be had simply for the trouble of taking it. It was all true it was there, mixed in large quantities with the alluvial deposit of the mountains; yet during three hundred years that they held the country, they never found it out! A single ditch in any part of the flat region, which is above three hundred miles long and forty or fifty broad, would have revealed the treasure, but they never took the trouble to cut it. Before the Anglo-Saxons had been there three months, they had discovered the riches lying below their feet. Such is the difference of races! It is easy to see to which is destined the sceptre of the globe.

It is impossible as yet to say with positive certainty what is the amount of gold which may be obtained for a long period from this auriferous region; but it is already evident that it will be very great—much greater than was at first anticipated. The following extract, from the great and able Free-Trade organ, the Times, of Nov. 19, 1850, will show what amount has been realised and exported from San Francisco last year, and what may be anticipated in the next:—

"Some estimates have lately been formed of the shipments of gold received in Europe from California to the present time, which, we believe, may be regarded as tolerably accurate, and according to which the amount is about £3,300,000. On the other side, up to the end of September, the receipts at the two mints of the United States had been about 31,000,000 dols., or £6,200,000. Since that time we have had advices of farther arrivals at New York and New Orleans amounting to £500,000. An aggregate is consequently formed of exactly £10,000,000. To this must be added, in order to estimate the total production, not only the amounts which have found their way to China, Manilla, Australia, Oregon, the Sandwich Islands, the States of Spanish America, &c., but also the total which has been retained in California for the purposes of currency. The population in that country now ranges somewhere between 200,000 and 300,000, and although a considerable amount of silver dollars have been imported, the bulk of the circulation is believed still to be in the form of gold-dust or of gold tokens. If the 250,000 persons possess, on an average, £10 a-piece, we have a sum of £2,500,000; and, looking at the expense of a week's maintenance in the country, as well as the large quantities constantly in transit, as well as the reserves, which, as was shown by the last advices, the various deposit-houses are compelled to retain to meet sudden runs, it is probable that this is under the real total. Taking all points into consideration, it may, therefore, be assumed that the whole which has been raised is equal to at least £13,000,000 sterling. Of this production, according to recent official returns from the United States, nearly four-fifths have taken place during the present year. Of 25,966,817 dols. received in the United States Mint at Philadelphia, up to the end of September last, only 44,177 dols. had arrived in 1848, and 5,481,430 dols. in 1849, while the quantity in 1850 had been 20,441,210 dols. The same proportions would probably prevail with regard to the sums distributed to other places; and we are, therefore, led to the supposition that the export this year has already actually reached upwards of £10,000,000, although the results of two additional months have yet to be known. It will be observed, consequently, that the unexpected feature which has hitherto attended the progress of this new region—namely, that almost all the accounts from it, although deemed exaggerations at first, have proved ultimately to have been understatements—is still presented. At the commencement of 1850 the most sanguine expectations that were formed in any direction fixed its probable yield at £10,000,000; and not only has this been exceeded, but each quarter of the year has thus far shown an increase of nearly half upon the amount gathered in the preceding one. Thus the receipts at Philadelphia, for the first three months, were 4,370,714 dols., while they were 6,920,496 dols. for the second, and again 9,250,000 dols. for the third. This rate of augmentation coincides with the influx of population, and, as the emigration to the country is certain to be continued until the remuneration it affords for labour is brought to a level with the advantages offered elsewhere, there is no reason, so long as we are without accounts of an apparent limit to the field of operations, to anticipate anything else than a steady continuance of an improving ratio. So far from a limit having yet been found, each fresh exploration seems to develope new and more favourable localities, and an extended discovery of dry diggings lately alleged to have been made, together with the steps in progress elsewhere to crush the mountain ore by machinery, appears to hold out the prospect that, even with the approach of winter, there will scarcely be a suspension of the prevailing activity."—Times, Nov. 19, 1850.

By the last accounts there was no less than a million sterling exported from California in six days. This amount of gold, great as it is, however, is by no means the whole of the supply which has been obtained. It is the regular measured amount only—what entered the custom-house books, and was exported in the entered traders. But who can estimate the amount which in those vast and desolate regions has been amassed by individuals, and made its way out of the country in their private possession, or secretly in shipments of which no account was kept? It is incalculable: like the plunder amassed during the sack of a capital or province, it may be guessed at, but cannot be ascertained with anything approaching to accuracy. Probably the amount thus acquired, but not entering any public records, may equal all that is ascertained from the custom-house books. But call it only a half, or fifty per cent, it will follow that last year the amount raised was upwards of £15,000,000, and this year (1851) may be expected to reach £17,000,000 or £18,000,000! If so, it will nearly double the annual supply of the precious metals for the use of the globe, which at present, from all sources, is between £16,000,000 and £17,000,000. It may with confidence be anticipated, that how secretly soever great part of this treasure may be smuggled or conveyed out of California, none, or at least very little of it, will be lost. It will all be carefully preserved, and sooner or later find its way into the circulation of the world, or be manufactured into the gold ornaments and vessels which minister to its luxury or magnificence. Nothing more is required to show the prodigious influence of this great change; beyond all question it will, in its ultimate effects, alter the face of the globe.