We have printed the word scarcity in italics, because that is the point of alarm. 'If,' say the alarmists, 'gold, which has been in all the world's annals scarce, is to become plentiful, one of the conditions of its fitness for coin is annihilated.' To this we reply: Scarcity is a relative term. Actual scarcity of a commodity may exist, to all practical purposes, in the midst of an abundance of that commodity; because scarcity is occasioned by two very different causes—namely, limited supply and excessive demand.
An amount of gold coin which would be very large for a small community, might be very insignificant for the use of a great and populous nation. In August 1789, the bullion in the Bank of England amounted only to L.8,645,860; but we think that was a larger sum for the Bank to possess, in relation to the population and trade of England at that period, than L.22,000,000 now.
In 1801, the population of Great Britain numbered about from ten to eleven millions; in 1851, nearly twenty millions. Whatever quantity of money, therefore, was necessary for the former period, a very much larger, perhaps a double quantity—supposing an equal degree of prosperity to exist—would be requisite in the latter.
This necessity for a larger amount of coin is obvious when regarded only in relation to the increase of population. If population continues at its present rate of increase, a much larger amount of coin than we possess now, even with our L.22,000,000 of bullion in the Bank, will be required to keep pace with its wants. But this is not the only view of the question. The population of 1851, it must be granted, required a larger amount of coin than that of 1801, or of any former period in our history, supposing each period to possess an equal amount of prosperity. But how stand the facts on this question of prosperity? If it should appear that, while more gold is discovered, more iron, more tin, more copper, more of every other mineral is also found; that more wool and cotton are produced, more corn is grown, more ships built, more houses built, more towns raised, more countries inhabited, and last, not least, that railways begin to intersect every country, old and new, and in combination with steam-ships on the ocean, to facilitate the communication among them all—then it would appear that they required a larger amount in proportion to the population; and that if prosperity continues on the increase, so constantly progressive will be the necessity for more coin, that scarcity will be a term applicable to gold, in all probability, for a long period of time.
The fact is, that the increase of commodities has been, in many instances, far greater than the increase of population. In 1740, the total quantity of iron made in Great Britain was 17,350 tons; in the following hundred years, this quantity increased considerably more than a hundredfold, being estimated at the later period at above 2,000,000 tons. In 1801, the Cornish tin-mines produced 2328 tons of metal; it took only thirty years to double their annual amount. The same is more than true of the copper-mines of Cornwall, which produced in 1801, 5267 tons; and after thirty years, 11,224 tons. In 1828, the quantity of sheep's wool imported from Australia was 1,574,186 lbs.; in 1850, it was 39,018,228 lbs. In 1801, the coals shipped from Newcastle were 1,331,870 tons; in fifty years more than double—namely, 2,977,385 tons. These are only a few examples gleaned from many of a similar description, and to them we will only add the fact, of a kind totally new in the world's annals, that a sum approaching to a moiety of the national debt is now invested in railways in England alone—namely, upwards of L.350,000,000.
By a late police report, it appears that 60,000 houses have been added to the metropolis of England in the last ten years. These would alone form a large city, requiring much gold and silver for money and luxury; and in this question of gold, the requisitions of luxury must not be forgotten; they form an important item, and are commensurate with the necessity for coin.
'When,' said Adam Smith, 'the wealth of any country increases, when the annual produce of its labour becomes gradually greater and greater, a quantity of coin becomes necessary, in order to circulate a greater quantity of commodities; and the people as they can afford it, as they have more commodities to give for it, will naturally purchase a greater and greater quantity of plate. The quantity of their coin will increase from necessity, the quantity of their plate from vanity and ostentation, or from the same reason that the quantity of fine statues, pictures, and of every other luxury and curiosity, is likely to increase among them. But as statuaries and painters are not likely to be worse rewarded in times of wealth and prosperity than in times of poverty and depression, so gold and silver are not likely to be worse paid for.'
It may, indeed, be predicted with tolerable certainty, that the qualities of 'beauty and utility' possessed by gold will be for a long time guarantees for its 'scarcity' whatever be its abundance. Its fine colour and brilliancy are not its only beauties. No metal is so ductile, so malleable, so indestructible by fire or chemical tests. It does not rust, it scarcely tarnishes, and it admits of the most exquisite workmanship. India alone would absorb the results of many years' digging; and when direct steam communication commences between it and Australia, gold will begin to flow into that great country, with its hundred million of people, in one continued stream, to supply their insatiable desire for it. They habitually invest their savings in gold ornaments, which they wear on their persons; and at this day, it is not uncommon to see the wife of a native under-secretary, whose salary and property altogether do not amount to much more than L.300 a year, wearing gold in this manner to the value of L.500. The treasure of this kind possessed by the rich natives is probably extraordinary; and so great is their desire to accumulate it, that it is impossible to keep up a gold-currency in the country: the coin is immediately melted down, and made into ornaments.
But whatever amount of gold is absolutely required at present as a circulating medium, and whatever amount is likely to be absorbed by the requirements of luxury, an amount far greater is likely to be needed to keep pace with the increasing prospects of prosperity in this country. Now that the restrictions on trade are nearly all removed, Britain may become the centre of the world's commerce: situated as she is in a temperate climate, between the Old and the New World, her harbours never closed by ice, there is nothing to limit the extent of her markets, nothing to check the development of her resources, nor the division of her labour. The extraordinary impetus given to emigration by the discovery of the gold-fields, has already begun to create new and great countries; and every emigrant that leaves our shores becomes a source of wealth and strength to the mother-country, which has cast off the fetters that so long restrained its enterprise, and is open to trade with all the world; while the discovery of rich coal-mines in most parts of the globe, favours the communication by steam-power between both hemispheres, and almost from pole to pole; and while we hear of new discoveries that may make the air a motive power instead of steam, and thus render railway transit possible in arid deserts; and while the electric telegraph not only connects us with the continent of Europe, but is about to cross the Atlantic. With all these powers at command, men will not long be confined to the narrow boundaries in which they are at present congregated; and in comparison with future improvements in every branch of industry, the present time may come to be regarded as one when they were bunglers in industrial art, and mere scratchers of the soil instead of cultivators.
And not the least important among the elements of national prosperity, will be found an abundance of the circulating medium. ''Tis certain,' says Hume, 'that since the discovery of the mines in America, industry has increased in all the nations of Europe, except in the possessors of those mines; and this may justly be ascribed, amongst other reasons, to the increase of gold and silver. Accordingly, we find that in every kingdom into which money begins to flow in greater abundance than formerly, everything takes a new face—labour and industry gain life; the merchant becomes more enterprising; the manufacturer more diligent and skilful; and even the farmer follows his plough with greater alacrity and attention.'