CHAPTER IX.

THE GOLD DISCOVERIES IN CALIFORNIA AND

AUSTRALIA.

Want of Metallic Currencies.-Discovery of Silver Mines in Peru.-Discovery of Gold in California.-Discovery of Gold in Australia -Effect of Gold Discoveries upon the Value of Gold.-Buoyancy of Trade.--Progress of California and Australia.

Two important and joyful events marked the entrance of the second half of the nineteenth century. They were the International Exhibition of 1851 and the discoveries of gold in California and Australia. The new discovery of gold was indeed especially important when we consider how many interests were thereby affected, and how vast and permanent has been the influence which it exercised. It was needful, moreover, to replenish the coffers of the bankers of Europe. The immense development of trade seemed especially to require a corresponding increase of currencies. The coinage in many countries was reduced to very small proportions. Everywhere, either paper or mixed metals were taking the place of gold and silver, whilst the large emigration which followed the famine in Ireland led to a great abstraction of currency from Europe. On every account the discovery of gold mines could not fail to exercise a most wholesome influence.

The history of the precious metals may be divided under three distinct epochs. The first, from the earliest times to the discovery of the American mines in the sixteenth century; the second,' from that discovery to the finding of gold in California and Australia in 1848; and the third, from that period to the present time. Of the quantity of gold and silver in existence or circulation at the first epoch we have but slender information. The sacred writings tell us that Solomon was immensely rich, that silver was abundant in Jerusalem, and that in one year the King received from Hiram 300 talents of gold, equal to 1,800,000l. It is known that in Assyria there were large masses of gold, and that Darius received in tribute from Persia as much as 3,250,000l. In Greece, the wealth of Croesus was estimated at 3,000,000l., and that of Pytheus at as large a sum. At Rome, Tiberius, it is said, left a legacy of 22,000,000l., and Augustus obtained by testamentary dispositions as much as 32,000,000l. But these instances of large wealth give us no certain

clue for ascertaining the quantity of precious metals in existence in the ancient world, nor do they show how far gold and silver were used as money. It is well known that gold and silver mines were found in different countries, notably in Persia, the shores of the Indus, and South Africa, and that in course of time they were discovered in Etruria, Hungary, Spain, and the islands in the Mediterranean, though doubtless the coveted treasure found its way, often by conquest and often by fraud, into the hands of the strongest and most adventurous. The Jews amassed great wealth in Egypt, and brought it with them to Judæa. The Phoenicians traded with the Jews, and they carried it into Greece. Darius, when he invaded Jerusalem, took great spoils to Persia, and when Persia was in turn invaded, the same was carried to Rome, Rome becoming eventually the centre where the precious metals were distributed all over the world. In any case the consumption of the precious metals increased rapidly. It was easy to preserve gold when it was poured into earthen vessels and kept in solid masses, but when it began to be divided into small coin and put into circulation, the wear and tear became enormous, the loss by friction and abrasion was greater, to say nothing of the amount expended in golden utensils and ornaments, in clothing and carriages. Great, indeed, must the consumption and waste of gold have been when it is estimated, that out of 350,000,000l. supposed to have been in existence at the commencement of the Christian era, only 34,000,000l. remained at the time of the discovery of the American mines.

Three hundred years and more have already elapsed since Europe was startled with the news of the discovery of silver mines in the mountain of Potocchi, or Potosi, in Peru. An Indian pursuing some deer was climbing a steep rock. Laying hold of a bush, its roots loosened from the earth, and brought to view the existence of silver. Time after time he resorted to it, and long he kept the source of his altered fortunes involved in the deepest mystery. At last, however, he communicated the result to a friend. They quarrelled, and the news spread like wild-fire in the neighbourhood. A crowd of miners was attracted by the report, and the issue was the foundation of the largest town in all Peru, and, what is more, the opening of a vein of wealth which for centuries replenished the treasuries of the civilised world. How far the large importation of gold produced a depreciation of the value of precious metals relatively to other products it is by no means easy to distinguish. At first the natural effect was counteracted by the fact that whilst the overflow of gold was not so rapid or sudden as was apprehended, the discovery of the route to India by the Cape of Good Hope caused a considerable decline of prices. A long time in fact elapsed before the effect of these discoveries was felt in distant

quarters. Adam Smith considered that it took sixty or seventy years before any sensible difference was shown in England. In France, it is said, it took fifty years before the change was complete, and when it came it did not last very long. The great enlargement of the field of industry, the augmented cost of producing silver, the altered state of society, increasing wealth, and the accession of large states to the European family, speedily caused the demand to increase faster than the supply. After the great discovery of American mines no fact of any importance occurred in relation to gold and silver till 1774, when the gold regions of the Oural Mountains were discovered, and it was not till 1810 that their riches were fully developed, nor did they prove very productive.'

Considerable additions to the stock of the precious metals were made by the working of the Mexican, Chilian, and Peruvian mines. It has been calculated, that taking into account the gold found by the Spaniards among the natives in America and brought to Europe in the first instance, the gold and silver raised from the American mines between 1492 and 1803, less the quantity of both metals supposed to be remaining in America in 1803, and the quantity supposed to have been sent elsewhere than to Europe, a total of 1,200,000,000l. was received from America into Europe up to 1803. After that came more discoveries in other parts in North and South America, and, again, other 360,000,000l. were estimated to have come into Europe from the same quarter up to 1848, making a total of 1,800,000,000l. There is some reason to believe that there was rather a redundancy of gold at the beginning

Several calculations have been made of the quantity of gold and silver supposed to have passed from America to Europe from the discovery of the former country to the present time. Baron Humboldt gave some account of the production of gold and silver in America in his political essay on the kingdom of New Spain. M. Rainal, in his work on the East and West Indies, hazarded some calculations on the subject. M. St. Clair Dupont published a work, De la Production des Metaux Précieux au Mexico, in 1843. There are some consular reports on the subject in 1830 and 1843. Mr. J. T. Danson gave a general statement in the Journal of the Statistical Society, vol. xiv. p. 11, and recently the Economist had some voluminous estimates. According to Mr. Danson, the quantity of gold and silver probably sent to Europe, in the period from 1492 to the end of 1803, was 1,122,997,4751., and from 1804 to 1848, 360,597,5457.: total, 1,483,577,0207. According to the later account in the Economist, there were at the time of Christ 2,245,562 kilos of gold and 62,630,123 kilos of silver, value 865,600,0007. From that time to the year 1492 there were extracted in Asia, Africa, and Europe, 6,123,711 kilos of gold and 13,682,107 kilos of silver, value 938,359,000l. From 1492 to 1810, including for the first time the produce of the American mines, the quantity was 3,856,487 kilos of gold and 137,096,830 kilos of silver, value 1,625,925,0007. From 1810 to 1848 the quantity obtained was 1,133,704 kilos of gold and 21,953,337 kilos of silver, value 355,409,000l. From 1848 to 1851, California included, the quantity extracted was 339,835 kilos of gold' and 3,063,411 kilos of silver, value 92,123,000l.; and from 1851 to 1865, which included both California and Australia, the quantity given was 1,615,654 kilos of gold and 4,054,362 kilos of silver, value 254,981,000l., making a total up to 1865 of 2,035,293,000l. of gold and 2,072,104,000l. of silver. Total, 17,379,000l.

of the century, but the wonder is, that with all these immense additions, no more than 560,000,000l. was supposed to exist in Europe and America when California and Australia were added to the gold-supplying countries of the world.

A discovery, as important, however, as that of either the Mexican or the Russian mines was made much more recently. In 1847 a Captain Sutter, who had long been settled in California, contracted with a Mr. Marshall for the erection of a sawmill on the Americanos, a few miles from his fort. The tail-race being too narrow for the water to run off freely, the mill wheel was taken out, so that the whole body of water in the dam might rush through and widen the race, to save the trouble of digging it out. A great body of earth was thus carried away by the torrent, and the next morning, whilst Mr. Marshall was surveying the works, he observed some shining yellow spangles or spots where the water had laid bare the bank. At first he would not take the trouble to stoop for them, but his eye being caught by a particle of superior magnitude, he picked it up, and found that it had all the appearance of pure gold. He then collected some twenty or thirty pieces, and imagining these might be fragments of some treasures buried by the Indians, he examined the neighbouring soil, and found it more or less auriferous. In joyful excitement he hurried off to Captain Sutter, and having commenced a search together, they satisfied themselves that the soil was teeming with gold. For a time they prosecuted their search quite secretly, but a Kentuckian employed in the mill guessed the causes of their unusual movements. He followed their steps and imitated their action, and though the captain tried to convince the Kentuckian and other workmen that what they took for gold was some worthless mineral, the general cry of Oro, oro,' was raised, and the Californian mines were fully discovered.

Only a few years later, in another far corner of the earth, the colony of Australia, other gold mines were discovered. Long before the discovery of gold was publicly announced in Victoria pieces of the metal had been found by shepherds and others, to say nothing of Sir Roderick Murchison's clear prognostications that gold would be found there. Licenses to dig were first issued on September 1, 1851, and forthwith the half of the population of the colony gave up their pursuits for the race after gold. Lawyers forsook the courts, merchants their counting-houses, clerks their desks; and artisans and labourers fled precipitately from houses but half built and foundations but

2 The first discovery of gold in Australia was really made by Count Strelezsky in 1839, he having mentioned it at the time to some friends and to the governor of the colony. It was again discovered by the Rev. B. Clarke in 1841. But public attention was not attracted to the subject until the existence of extensive gold fields throughout Australia was announced by Mr. E. H. Hargreaves in 1851.

partly dug. Even clergymen were drawn to the exciting scene, and not in every case did they confine themselves to their calling. The wages of labour under such circumstances increased enormously. Provisions of all kinds rose in equal proportion, and altogether a state of matters arose of quite an unprecedented character. The result of these great discoveries may easily be shown. Comparing 1846 with 1852, the two years immediately preceding and following the events before and after the first discoveries, the production of gold and silver stood thus:

Here is a gigantic increase, first in the total amount, from 12,500,000l. to 38,500,000l., and second in that of gold alone from 6,000,000l. to 30,000,000l. And how different is the proportion between gold and silver. In the seventeenth century gold stood to silver as 1 to 60. In the eighteenth century the relation was 1 lb. of gold to 30 lb. of silver. At the commencement of the nineteenth century this proportion was 1 to 45. But since the Californian and Australian mines were discovered the production of gold to silver was as 1 to 5.3

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3 The relative value of gold and silver has, of course, varied in proportion to the altered production. During the reign of Ferdinand and Isabella, viz., from 1474 to 1516, the relative value between gold and silver in Spain was as 1 to 109; in the year 1537, and during the reign of Charles V., the relative value was fixed at 1 to 10371; during the reign of Philip II. it was established as 1 to ; during the reign of Philip III., as 1 to 133; during the reign of Charles II. as 1 to 15; and finally, on July 17, 1779, the relative value of the two metals was fixed as 1 to 16. In the year 1641 Louis XIII. of France issued an edict which regulated the proportion between gold and silver at the French mints, and this proportion was established at 1 to 134, with the view to conform in this respect to the regulations of other countries, where the proportions were as follows: in Germany as 1 to 12, in England as 1 to 13, in the Netherlands as 1 to 12, and in Spain as 1 to 13. These regulations lasted about a century, when it became again necessary to alter them, and accordingly in the year 1724 an edict was issued by which the proportion between gold and silver at the French mint was fixed as 1 to 14. At the time of this last edict the mint regulations of England established the proportions between gold and silver as 1 to about 153, and they remained at the same footing till the new coinage. In 1780 the relative value between gold and silver was at Amsterdam as 1 to 14.885; in France as 1 to 14.581; in Spain as 1 to 15-636; at Venice as 1 to 14-779; at Genoa as 1 to 14.915; at Leghorn as 1 to 14-510; in England as 1 to 15:189, and at Hamburg as 1 to 14-171. In the standard of British coinage at