Assuming, therefore, that, at a medium, 20 per cent. or th part of the precious metals annually made use of in the arts is obtained from the fusion of old plate, we shall have, by deducting this proportion from the 6,050,000l. applied to the arts in Europe and America, 4,840,000l. as the total annual appropriation of the new gold and silver dug from the mines to such purposes, leaving about 4,200,000l. a year to be manufactured into coin, and exported to India, Australia, &c.

It is not much more easy to determine the consumption of the precious metals when manufactured into coin, than when in plate. Jacob has entered into some curious details (vol. ii. c. 28.) to determine the abrasion or loss of coins from wear, which he estimates at th part a year for gold, and th part for silver coins. This, however, does not give the total wear and tear of the coins. To determine the latter, the quantities lost by fire, shipwrecks, and other accidents must be taken into account. The loss from these sources can only be guessed at; but adding it to the loss by abrasion, perhaps we shall not be far wrong in estimating the whole at 1 per cent. And if we estimate the value of the entire metallic currency of Europe and the U. States at 160 millions sterling, 1,600,000l. a year will, on this hypothesis, be required to maintain it at its present level.

It is singular that, in estimating the consumption of gold and silver, Jacob should not have made the slightest allusion to the practice which has uniformly prevailed in all countries harassed by intestine commotions, or exposed to foreign invasion, of burying treasure in the earth. Of the hoards so deposited, a very considerable proportion has been altogether lost; and there can be no doubt that this has been one of the principal means by which the stock of the precious metals has been kept down to its present level. Every one is aware that, during the middle ages, treasure trove, or money dug from the ground by chance finders, belonged to the Crown, and formed no inconsiderable part of the royal revenue of this and other countries. The practice has always prevailed to a very great extent in the East. (Bernier, Voyage de Mogol, Amst. 1710, tome i. p. 209.; Scrafton on the Government of Hindostan, p. 16, &c.) But it is not confined to that quarter. Wherever property is insecure, it is invariably resorted to. Mr. Wakefield tells us that it used to be common in Ireland. (Account of Ireland, vol. i. p. 593.); and we believe it is still pretty prevalent in that country. It has always been acted on to a considerable extent in Russia and France; and in the latter, during the revolutionary anarchy, immense sums were buried, of which it is abundantly certain a large proportion will never be resuscitated. The wars and convulsions by which Europe was desolated for more than 20 years extended the practice to all parts of the Continent; withdrawing, in this way, from circulation a very considerable part of the increased produce of the mines. (Storch, Economie Politique, tome i. p. 221. Paris, 1823.) And no doubt considerable sums are still disposed of in this way.

3. Exportation of the Precious Metals to the East. It must be well known to all our readers, that from the remotest æra down to a comparatively late period bullion formed one of the principal and most advantageous articles of export to the East. Humboldt estimated that, of the entire produce of the American mines at the beginning of this century, amounting, as already seen, to 43,500,000 dollars, no less than 25,500,000 were sent to Asia, 17,500,000 by the Cape of Good Hope, 4,000,000 by the Levant, and 4,000,000 through the Russian frontier. - (Nouvelle Espagne, iii. 443.) Latterly, however, this immense drain has been very much diminished, and in 1832 and 1833 it actually began to set in an opposite direction. (See antè, p. 206. for an account of the exports and imports of bullion from and into India from 1814-15 to 1839-40.) In so far, however, as respects India, the drain has since recovered its old direction; the excess of the imports of bullion into that country over the exports having amounted during the 3 years ending with 1839-40 to above 2,000,000l. a year. —(See ubi supra. ) We believe, however, that the great import of bullion into India has been a good deal influenced by the peculiar state of the Indian trade, and that the probability is that it will decline. (See ubi supra.) There has latterly, also, been a very considerable increase in the exportation of bullion from China. We do not now allude to the remittances on account of the payments stipulated in the late treaty, but to the shipments of bullion that were previously made in the ordinary course of trade. These amounted, in 1838, after deducting the imports, to 8,223,341 dollars, or 1,644,6681, partly shipped for Europe, but principally for India. (See an'è, p. 235.) A considerable part of this large export consists of native silver, of which there are mines in several provinces. China has also mines of gold; and in some late years her exports of that metal have been rather extensive; she is, however, an importer as well as an exporter of gold, having for a lengthened period drawn considerable supplies of that metal from Borneo, Celebes, and the Malay peninsula. A few years ago, the efflux of bullion from Russia to China, by way of Kiachta, which had continued for a lengthened period, wholly ceased. - (Jacob, ii. 320.) But since bullion began to increase so

rapidly in Russia, it is most probable that it is again exported by this route. Indeed, the Russian official accounts of the trade of the empire for 1841 (TABLE XI. p. 51.) admit that the value of the imports from, exceeds the value of the exports to, China.

4. Influence of the Productiveness of the Mines on Prices.-It has been customary in this country to ascribe almost the whole fall that has taken place in the price of most commodities since the peace, to the diminished supply of bullion from the mines, which existed down to a recent period. But we doubt whether this circumstance was not fully counterbalanced by others, and whether it had any influence in the way now mentioned. The great diminution of the drain to the East, even admitting that Humboldt over-rated its amount, would of itself have gone far to countervail the decreased productiveness of the mines; and in addition to this, the greater security and tranquillity enjoyed on the Continent since the peace, has not only checked that burying of money, formerly so prevalent, but has caused the bringing to light of a good many of the subterranean hoards. The institution of savings banks, now so common every where, has also, no doubt, tended to prevent hoarding, and to bring a good deal of coin into circulation, that would otherwise be locked up. These circumstances, coupled with others that might be mentioned, such as the cessation of the demand for military chests, the greater employment of bills in mercantile transactions, &c., afford good grounds for doubting whether the quantitity of the precious metals applicable to the purposes of circulation was not about as great in 1825 and 1830 as in 1809 or 1810, when the American mines were at the acme of their productiveness. No doubt, however, had the produce of the mines continued stationary at their reduced rate, there could hardly have failed to be, in the end, a material rise in the value of bullion. But instead of continuing stationary, or falling off, there has latterly been a very rapid increase in the produce of the mines; and there is no longer any ground for apprehending a rise in the value of the precious metals, but the reverse. The augmentation, as we have seen, has been principally in gold; and should its production continue to increase for a few years more, in any thing like the ratio it has done during the last half dozen years, its value will necessarily sink; and were it to sink to any considerable extent, the circumstance would exercise a powerful and, we believe, a salutary influence over the condition of this and such other countries as have adopted gold for the standard of their currency. These, however, are prospective and contingent results which may never be realised, and on which it would be wrong to lay any considerable stress.

We believe that the increase in the supply of bullion has continued for too short a time, and been too limited, to have hitherto had any sensible influence over prices; but, however this may be, we have no hesitation in affirming that there is not, without any exception whatever, a single commodity that has fallen in price since 1814, the fall of which may not be satisfactorily accounted for without reference to the diminished supply of bullion from 1810 to 1837. - (See antè, p. 80.) Multiplied proofs of what is now stated will be found in various articles throughout this work. And we have little doubt that those who investigate this matter with any degree of care, will agree with us in thinking, that were the influence of the former decreased productiveness of the mines on prices estimated at from 3 to 5 per cent., it would be very decidedly beyond the mark. Its influence was, in fact, hardly perceptible.

5. Probable future Supply of Gold and Silver. — Little can be added under this head, to what has previously been stated. On the whole, however, we should think that there are not merely probable but good grounds on which to anticipate a large future increase of the annual produce of the mines and washings in most parts of the world. The late increase of the latter in Russia has been quite extraordinary; and if it should go on for any considerable period, it would have a powerful influence over the value of gold, and would not only sink it as compared with silver, but as compared with all other things not produced with the same increased facilities. It is reasonable, also, to suppose that the produce of the South American mines should be gradually increased. The anarchy which has so long disgraced and desolated the country cannot continue for ever; and means have lately been taken for reducing the price of quicksilver, the high cost of which has latterly contributed more, perhaps, than any thing else to paralyse the efforts of the miners.

PREMIUM See INSURANCE.

PRICES. By the price of a commodity is meant its value estimated in money, or simply, the quantity of money for which it will exchange. The price of a commodity rises when it fetches more, and falls when it fetches less money.

1. Price of freely produced Commodities. — The exchangeable value of commodities--that is, their power of exchanging for or buying other commodities — depends, at any given period, partly on the comparative facility of their production, and partly on the relation of the supply and demand. If any 2 or more commodities respectively required the same outlay of capital and labour to bring them to market, and if the supply of cach were adjusted exactly according to the effectual demand - that is, were they all in

sufficient abundance, and no more, to supply the wants of those able and willing to pay the outlay upon them, and the ordinary rate of profit at the time-they would each fetch the same price, or exchange for the same quantity of any other commodity. But if any single commodity should happen to require less or more capital and labour for its production, while the quantity required to produce the others continued stationary, its value, as compared with them, would, in the first case, fall, and in the second, rise; and, supposing the cost of its production not to vary, its value might be increased by a falling off in the supply, or by an increase of demand, and conversely.

But it is of importance to bear in mind that all variations of price arising from any disproportion in the supply and demand of such commodities as may be freely produced in indefinite quantities, are temporary only; while those that are occasioned by changes in the cost of their production are permanent, at least as much so as the cause in which they originate. A general mourning occasions a transient rise in the price of black cloth: but supposing that the fashion of wearing black were to continue, its price would not permanently vary; for those who previously manufactured blue and brown cloths, &c would henceforth manufacture only black cloth; and the supply being in this way increased to the same extent as the demand, the price would settle at its old level. Hence the importance of distinguishing between a variation of price originating in a change of fashion or other accidental circumstance - such, for example, as a deficient harvest -and a variation occasioned by some change in the cost of production. In the former case, prices will, at no distant period, revert to their old level; in the latter, the variation will be lasting.

When the price of a freely produced commodity rises or falls, such variation may evidently be occasioned either by something affecting its value, or by something affecting the value of money. But when the generality of commodities rise or fall, the fair presumption is that the change is not in them, but in the money with which they are compared. This conclusion does not, however, apply in all cases; and we believe that most part of that fall in the price of commodities, which has taken place since the peace, and which has been so generally ascribed to a rise in the value of money, occasioned by a decline in the productiveness of the mines, has been caused by the increased productiveness of industry, arising from the abolition of oppressive restraints on commerce, the opening of new and more abundant sources of supply, and the discovery of new means and improved methods of production. (See PRECIOUS METALS.)

2. Price of monopolised Commodities. - Exclusive, however, of the commodities now alluded to, there is a considerable class, whose producers or holders enjoy either an absolute or a partial monopoly of the supply. When such is the case, prices depend entirely or principally on the proportion between the supply and demand, and are not liable to be influenced, or only in a secondary degree, by changes in the cost of production. Antique statues and gems; the pictures of the great masters; wines of a peculiar flavour, produced in small quantities, in particular situations; and a few other articles; exist under what may be called absolute monopolies ;- their supply cannot be increased; and their price must, therefore, depend entirely on the competition of those who may wish to buy them, without being in the slightest degree influenced by the cost of their production. Monopolies are sometimes established by law; as when the power to supply the market with a particular article is made over to one individual or society of individuals, without any limitation of the price at which it may be sold; which, of course, enables those possessed of the monopoly to exact the highest price for it that the competition of the buyers will afford, though such price may exceed the cost of production in any conceivable degree. Monopolies of this sort used to be common in England, particularly in the reign of Elizabeth: but they were finally abolished by the famous act of the 21 Jac. 1. c. 3. an act which, by establishing the freedom of competition in all businesses carried on at home, has been productive of the greatest advantage. (See MONOPOLY.)

The corn laws establish a partial monopoly of the supply of Great Britain with corn in favour of the agriculturists; but, as competition is carried to as great an extent in agriculture as in any other business, this monopoly does not enable them to obtain a higher price for their produce than is sufficient to pay the expenses of its production, though, owing to the peculiar circumstances under which this country is placed, this price is higher than the price in the surrounding countries. Hence it results that the monopoly is injurious to the public, without being of any advantage to those engaged in the business of agriculture. Neither, indeed, can it be truly said to be advantageous to the landlords. (See antè, p. 404.)

The rights conveyed by patents sometimes establish a valuable monopoly; for they enable the inventors of improved methods of production to maintain, during the continuance of the patent, the price of the article at a levei which may be much higher than is required to afford them the ordinary rate of profit. This advantage, however, by stimulating invention, and exciting to new discoveries, of which it is the natural and appropriate reward, instead of being injurious, is beneficial to the public. (See PATENTS.)

SY

There are also partial monopolies, depending upon situation, connection, fashion, & These, and other inappreciable circumstances, sometimes occasion a difference of 30 per cent. or more in the price of the same article in shops not very distant from each other. Generally speaking, the supply of monopolised commodities is less liable to vary than the supply of those which are freely produced; and their prices are commonly more steady. But there are various exceptions to this rule, and of these the corn monopoly is one. The great variations in the harvests of particular countries, and their average equality throughout the world, exposes a nation which shuts foreign corn out of its ports to destructive vicissitudes of price, from which it would enjoy a comparative exemption were the ports open. (See antè, p. 401.) Sometimes the expiration of a monopoly-a patent, for example-has occasioned a sudden and extraordinary increase of supply, and consequent fall of price; entailing, of course, a serious loss on the holders of large stocks of goods produced under the monopoly.

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3. New Sources of Supply. The effects on prices produced by the opening of new markets, or new sources of supply, are familiar to every one. The fall that has taken place in the price of pepper, and of most sorts of commodities brought from the East, since the opening of the trade in 1814, is a conspicuous proof of what is now stated. 4. Influence of War on Prices.-The effect of war in obstructing the ordinary channels of commercial intercourse, and occasioning extreme fluctuations in the supply and price of commodities, is well known. In this respect, however, the latter part of the late war is, perhaps, entitled to a pre-eminence. We had then to deal with an enemy who had extended his sway over most part of the Continent; and who endeavoured, by every means in his power, to shut us out of the Continental markets. Mr. Tooke has given, in his elaborate and valuable work on High and Low Prices, a variety of details which strikingly illustrate the effect that the regulations then adopted by the belligerent powers had on prices. Among the means," says Mr. Tooke, “devised by the ingenuity and enterprise of adventurers to elude or overcome the obstacles presented by the decrees of the enemy, one in particular, which was resorted to on an extensive scale, deserves mention, as illustrating in a striking manner the degree in which those obstacles were calculated to increase the cost to the consumer. Several vessels laden with sugar, coffee, tobacco, cotton twist, and other valuable commodities, were despatched from England, at very high rates of freight and insurance, to Salonica, where the goods were landed, and thence conveyed on mules and horses through Servia and Hungary to Vienna, for the purpose of being distributed over Germany, and, possibly, into France. Thus it might happen that the inhabitants of that part of the Continent most contiguous to this country could not receive their supplies from us, without an expense of conveyance equivalent to what it would be, if they were removed to the distance of a sea voyage twice round the globe, but not subject to fiscal and political regulations." And in consequence of these, and other causes of the same sort, Mr. Tooke mentions that the price of sugar in France, and other parts of the Continent, during the latter years of the war, was as high as 5s. and 6s. a pound; that coffee rose to 78., indigo to 188., and so on.

But the sums charged for freight and insurance were the most extraordinary. Mr. Tooke states, that he has known instances in which the licence, freight, and other charges on account of a vessel of about 100 tons burden, making a voyage from Calais to London and back, have amounted to the almost incredible sum of 50,000l.! A ship, of which the whole cost and outfit did not amount to 4,000l., earned during the latter period of the war, a gross freight of 80,0007. on a voyage from Bordeaux to London and back! The freight of indigo from London to the Continent does not at present exceed 1d. a pound; whereas it amounted, at the period referred to, to about 4s. 6d. — (High and Low Prices, 2d ed. p. 212.)

5. Influence of Taxes on Prices. It is unnecessary to dilate on a topic so familiar to every one. When a tax is laid on a commodity, its price necessarily rises in a corresponding proportion; for otherwise the producers would not obtain the ordinary rate of profit, and would, of course, withdraw from the business. The rise in the price of several of the articles in the annexed table is principally to be ascribed to the increase

of taxation.

These statements will probably suffice to give our readers a general idea of the principles which determine the value of commodities. To go deeper into the subject would involve us in discussions that belong to political economy, and are among the most intricate in that science. The influence of speculation on prices must not, however, be passed over in a work of this sort.

6. Influence of Speculation on Prices. It very rarely happens that either the actual supply of any species of produce in extensive demand, or the intensity of that demand, can be exactly measured. Every transaction in which an individual buys produce in order to sell it again, is, in fact, a speculation. The buyer anticipates that the demand for the article he has purchased will be such, at some future period, either more or less

Jistant, that he will be able to dispose of it with a profit; and the success of the speculation depends, it is evident, on the skill with which he has estimated the circumstances that must determine the future price of the commodity. It follows, therefore, that in all highly commercial countries, where merchants are possessed of large capitals, and where they are left to be guided in the use of them by their own discretion and foresight, the prices of commodities will frequently be very much influenced, not merely by the actual occurrence of changes in the accustomed relation of the supply and demand, but by the anticipation of such changes. It is the business of the merchant to acquaint himself with every circumstance affecting the particular description of commodities in which he deals. He endeavours to obtain, by means of an extensive correspondence, the earliest and most authentic information with respect to every thing that may affect their supply or demand, or the cost of their production; and if he learned that the supply of an article had failed, or that, owing to changes of fashion, or to the opening of new channels of commerce, the demand for it had been increased, he would most likely be disposed to become a buyer, in anticipation of profiting by the rise of price, which, under the circumstances of the case, could hardly fail of taking place; or, if he were a holder of the article, he would refuse to part with it, unless for a higher price than he would previously have accepted. If the intelligence received by the merchant had been of a contrary description,- if, for example, he had learned that the article was now produced with greater facility, or that there was a falling off in the demand for it, caused by a change of fashion, or by the shutting up of some of the markets to which it had previously been admitted, he would have acted differently: in this case he would have anticipated a fall of prices, and would either have declined purchasing the article, except at a reduced rate, or have endeavoured to get rid of it, supposing him to be a holder, by offering it at a lower price. In consequence of these operations, the prices of commodities, in different places and periods, are brought comparatively near to equality. All abrupt transitions, from scarcity to abundance, and from abundance to scarcity, are avoided; an excess in one case is made to balance a deficiency in another, and the supply is distributed with a degree of steadiness and regularity that could hardly have been deemed attainable.

It is obvious, from what has now been stated, that those who indiscriminately condemn all sorts of speculative engagements, have never reflected on the circumstances incident to the prosecution of every undertaking. In truth and reality, they are all speculations. Their undertakers must look forward to periods more or less distant; and their success depends entirely on the sagacity with which they have estimated the probability of certain events occurring, and the influence which they have ascribed to them. Speculation is, therefore, really only another name for foresight; and though fortunes have sometimes been made by a lucky hit, the character of a successful speculator is, in the vast majority of instances, due to him only who has skilfully devised the means of effecting the end he had in view, and who has outstripped his competitors in the judgment with which he has looked into futurity, and appreciated the operation of causes producing distant effects. Even in the securest businesses, such as agriculture and manufactures, there is, and must be, a great deal of speculation. An unlooked for change of season frequently disappoints the apparently reasonable expectations of those who undertake the former; while the equally capricious variations of fashion have to be encountered by those engaged in the latter; and each is, besides, liable to be affected by legislative enactments, by new discoveries in the arts, and by an endless variety of circumstances which it is always very difficult, and sometimes quite impossible, to foresee. On the whole, indeed, the gains of the undertakers are so adjusted, that those who carry them on obtain, at an average, the common and ordinary rate of profit. But the inequality in the gains of individuals is most commonly very great: and while the superior tact, industry, or good fortune of some enable thein to realise large fortunes; the want of discernment the less vigilant attention, or the bad fortune of others, frequently reduces them from the situation of capitalists to that of labourers.

The great cotton speculation of 1825 took its rise partly and chiefly from a supposed deficiency in the supply of cotton, partly from an idea that there was a greatly increased demand for raw cotton in this country and the Continent, and partly from a belief that the stocks on hand were unusually low. Now it is obvious that the success of those who embarked in this speculation depended entirely on two circumstances; viz. first, that they were right in the fundamental supposition on which the whole speculation rested, that the supply of cotton was no longer commensurate with the demand; and second, that their competition did not raise the price so high as to diminish the consumption by the manufacturers in too great a degree to enable them to take off the quantity to be actually brought to market. If the merchants had been well founded in their suppositions, and if their competition had not raised the price of cotton too high, the speculation would certainly have been successful. But, instead of being well founded, the hypothesis on which the whole thing rested was perfectly visionary. There was no deficiency in the supply of cotton, but, on the contrary, a great super