in England, and the classes with fixed incomes are especially concerned in both.

Persons with stationary incomes in this country, are, as it were, between several fires. They suffer from high prices, whether they spring from abundance of gold, from natural dearth of commodities, or from the increase of population and wealth. They suffer along with other classes, and the prosperity of other classes is a calamity to them. The main resources they had to look to on the discovery of the new gold mines were reforms in the laws relating to land in their own country on the one hand, augmenting and cheapening the produce of land, and industrial and economical progress in other countries on the other, assigning to these the principal share of the new treasure. Of all parts of Europe, England is that in which the fall in the value of money, measured in commodities-I do not say measured in labour-ought to have been least sensible, on account of the nature of its imports, the natural cheapening of manufactures, the improvements in husbandry which legislation might have indirectly effected, the example which all the rest. of the civilized world had set with respect to land laws, and the immense demand for the treasure from the new mines which peace, liberty, industry, and trade might have opened up in other countries to circulate a vast increase of produce at much higher pecuniary value than remoteness and poverty have hitherto allowed them to bear. The new area in Europe, not to speak of Asia, which civilization would open for the employment of new money is enormous. The inequalities in the local prices of Germany, the rise in its most progressive localities, the comparatively low prices in its backward localities, point to one of the chief outlets to which people here, with fixed incomes, might have reasonably looked for the absorption of the new gold. Low as prices still are in many places in Germany, they are lower over great districts of Austria, and yet lower over the greater part of Russia, two countries, moreover, where inconvertible paper currencies resist the circulation of the precious metals.

As matters stand, the increase of money in England has far outstripped the increase of some of the most important commo

dities. And when one reflects that the money comes from a new world of peace and liberty, in which production never flags, while the demand for it in Europe is limited by the policy of an old military world, and the supply of commodities by the law of an old feudal world, the prospect before those with whom money does not increase with house rent and the price of food, seems the reverse of encouraging.

XXIII.

PRICES IN ENGLAND IN 1873.

(Fortnightly Review, June 1, 1873.)

THE movement of prices in England is a less simple matter than the reasoning of some eminent economists indicates. The advance in the cost of living is considerably greater than appears from their calculations, and the new gold is but one of the causes acting on prices. An attempt has been made to measure the effect of the gold by comparing the average prices of a number of important commodities during the period since the new mines were discovered, with the average prices of a previous period. Mr. Jevons, who adds rare mathematical powers to high economic attainments, has adopted this method; but in inquiries of this kind, the truth is seldom reached until several methods have been tried, and probable truth only, not mathematical precision, is attainable. The method of averages. fails in several ways. It does not show the real movement of prices or the real depreciation of money; the tables omit some of the chief elements of the cost of living; the prices compared are wholesale prices, while the purchasing power of an income depends on retail prices; and, by ascribing the whole rise of prices to the new gold, this method conceals the material fact that the gold is only one of a plurality of causes lately tending

to raise them.

A comparison of the average prices of successive periods of years may be useful to indicate the total profit and loss on transactions in the periods compared, but is delusive as a criterion of the change in the value of money. Suppose that in the first decade after the discovery of the new mines prices had risen twenty per cent., and in the second decade had fallen

back to their old level, money at the end of the twenty years would be of the same value as at the beginning, yet the average prices of the whole twenty years would show a depreciation of twenty-five per cent. Suppose, on the other hand, that prices had risen steadily during both decades so as to range fifty per cent. higher at their close, the real fall in the purchasing power of money would be fifty per cent., yet an average would show a fall only of twenty-five, that is to say, only half the real fall. Take, as exemplifying the second supposition, the movement of prices in the sixteenth century, after the discovery of the American mines. Prices rose continuously in some parts of Europe until money had sunk to a third of its former value; here an average, including the lower prices of the earlier years of the movement, would far under-estimate the real depreciation. So in England now, if the cost of living to large classes be much greater than during most of the years since the new gold mines were opened, the average prices of the whole period afford no measure of the real diminution in the purchasing power of fixed incomes. If house rent, the wages of servants, indoor and outdoor, animal food of all kinds, coal, washing, many articles of clothing, horses and horse-keep, cost now in the aggregate, by a succession of rises, one half more than they did a generation ago, a householder would be a good deal out in his reckoning were he to measure the present and future purchasing power, say of a thousand a-year, by the average prices of the past twenty-five years. The averages referred to, moreover, omit some of the chief items in the cost of living. No account, for example, is taken of the great rise in house rent and wages in recent years, nor of the additional charges which retailers make to consumers, partly to cover higher wages, shop-rents, and other items in the cost of their own business. The recent prices of many important articles, e.g., butchers' meat, have risen far more than prices in the wholesale market. The actual increase in the cost of living to large classes, therefore, far exceeds the advance shown in tables which Mr. Jevons and the Economist have published. The living of the poorest class (of women especially), who pay no wages, rarely eat animal food, and whose chief expenditure is

on bread, sugar, and tea, may, notwithstanding the rise of coal, cost no more than formerly; but where the scale of expenditure ascends to servants, meat and butter every day, and a tolerable house, the change for the worse in the purchasing power of fixed incomes makes itself more heavily felt than any statistics show.

Free trade created in this country a demand for a larger currency, but the chief cause which has prevented a ruinous rise of prices in England is that other parts of the world have absorbed the bulk of the gold and silver sent into circulation. Take a single fact. In the twenty-two years, 1850-1871, inclusive, the imports of gold and silver into British India amounted to £235,000,000; the amount exported was only £27,000,000, and the mints of the three Presidencies coined upwards of £145,000,000. In that period, therefore, India alone absorbed £208,000,000's worth of gold and silver for currency and other purposes; that is to say, an equivalent to two-fifths of the addition made to the stock of the precious metals by the new gold mines in the twenty-two years. What probability is there that the development of Indian trade will be such in the next twenty-two years as to absorb £208,000,000 more ?* The question forms part of a larger one; what chance is there that, for the future, the progress of the rest of the world in means of locomotion, production, and trade will be such as to divert from England all but a small fraction of the new treasure the mines may yield?

The international and local distribution of the precious metals in the last twenty years has followed, in the main, the path of the industrial and commercial development abroad. Steamers, railways, the rise of manufactures, the growth of trade, internal and external, have caused a prodigious increase in the demand of foreign countries for money to carry on their increased business, and represent the rise in both the quantity and the market value of their productions. The same change in the distribution of money has taken place over a great part

* Sir Richard Temple's able financial statement for 1873-4, shows that in 1872-3 the influx of treasure had almost ceased. The Mints of Calcutta and Bombay were in a state of inaction.