Manufactures and Commerce

London, Sept. 5, 1859

Having considered, in a former letter[a], the movement in the population of the Kingdom, we turn now to the movement of production. In the following tabular statements the exports are given for every year since 1844, while the figures relating to imports begin with the year 1854, an anomaly due to the circumstance that the computed real value of imports was not officially ascertained before 1854:

From the first table it will be. seen that exports, and consequently production had more than doubled in the period from 1844 to 1857, while population, as may be proved from the figures quoted in my former letter, had, during the same interval, hardly increased by 18 per cent. A curious answer this to the doctrine of Parson Malthus, the sinecurist. Table A moreover illustrates a law of production which might be proved with mathematical nicety, by comparing the returns of British exports since 1797. The law is this: That if, by over-production and over-speculation, a crisis has been brought about, still the productive powers of the nation and the faculty of absorption on the market of the world, have, in the mean time, so much expanded, that they will only temporarily recede from the highest point reached, and that after some oscillations spreading over some years, the scale of production which marked the highest point of prosperity in one period of the commercial cycle, becomes the starting point of the subsequent period. Thus the year 1845 marks the summit of productive power developed during the commercial cycle of 1837 to 1847. In 1846 the reaction begins; there is a catastrophe in 1847, the consequences of which but fully manifest themselves in 1848, when the magnitude of exports falls even, below 1844. In 1849, however, there takes place not only a recovery, but the figures of 1845, the year of highest prosperity during the last cycle, are already outstripped by three millions, and this year marks now the level to which exports will never again sink during the new cycle. The highest point is again reached in 1857, the year of the crisis, whose agonies are registered in the diminished exports of 1858. But already, in 1859, the summit of the period 1847-1857 has been converted into the starting point of a new commercial cycle—a point to which the productive powers are not likely again to recede.

By comparing tables A and B, it will be found that British exports do considerably fall below British imports, and that this disproportion is growing as regularly as the magnitude of the exports. Now, this phenomenon has been interpreted by some English writers as if the unhappy Britishers were running into debt with other nations, or selling cheap and buying dear, thus making a present to the outer world of part of their industry. The simple fact is, that Great Britain receives, in the shape of imports from other nations, some returns for no equivalent whatever, as is the case in the Indian tributes raised under different forms, and other returns for the interest on capital lent out at former periods. The growing disproportion between British imports and exports, therefore, does only prove that England, in regard to the markets of the world, develops its function as money-lender still more rapidly than its function as manufacturer and merchant.

Of the articles of import, there are four which claim some attention, viz.: bullion, corn, cotton, and wool. On former occasions, the movements in the British imports and exports of bullion have been explained in the N.-Y. Tribune, which, at the time of the last commercial crisis, proved, from official figures, that the amount of Bank of England notes in circulation had rather diminished than increased since the new gold fields came into play[d]. We shall, therefore, not recur to this subject, but limit ourselves to stating a fact not yet, as far as we know, noticed by English writers. The amount of the metallic coin circulating in a nation may be fairly inferred from the operations of the national mint. In order, then, to ascertain the movement of the metallic currency in Great Britain during the operation of the Californian and Australian diggings, we give the following table, showing the amount of metal coined at the royal mint:

We shall compare the totals, since the silver and copper coins must be regarded as mere tokens replacing the gold coin, so that for the consideration of the general movement of the metallic currency, it becomes quite indifferent, whether the gold coin has been circulated itself or whether its fractional parts were represented by metallic marks.

The fifteen years over which the above tabular statement expands, may be divided into two almost equal periods, the one of which precedes the operation on Great Britain of the new gold countries while the other is characterized by the rapid influx of gold from new sources. The first period we date from 1844 to 1850, the second we date from 1851 to 1858; the year 1851 being remarkable for the beginning agency of the New South Wales and Victoria diggings, as well as for the immense development of the California gold supply, which from £ 11,700 in 1848, £1,600,000 in 1849, £5,000,000 in 1850, had swollen to £8,250,300 in 1851. By summing up the totals of metal coined in the period of 1844 to 1850 on the one hand, and in the period of 1851 to 1858 on the other, and then calculating the yearly average in each period, it will be found, that the yearly average coinage during the former seven years amounted to £3,643,144, while, for the latter eight years, it reached the sum of £7,137,782[e]. The metallic currency of Great Britain, consequently, has almost increased by 100 per cent during the period falling into the operation of the new gold supplies. This would certainly prove the influence California and Australia exercised on the development of internal British commerce, but it would be quite incorrect to conclude that the metallic circulation was directly increased by the influx of new gold. The contrary is shown by comparing the single years of the two periods, before and after the gold discoveries. In 1854, for instance, the coinage falls below that of 1845 and 1846, and in 1858 it sinks far below the level of 1844. The mass of gold entering the circulation in the shape of coin was, therefore, not 'determined by the import of gold bullion; but of the gold imports, a greater part was, on an average absorbed into the inner circulation during the second epoch, because commercial and industrial pursuits had generally expanded; an expansion, how-ever, which to a great extent may be traced to the working of the new gold countries.

Notes