From The Economist, 8 Nov. THE EXCHANGES WITH THE EAST. a double standard, as in France, any abstraction of silver, provided it be obtained in THE TRADE OF INDIA AND CHINA WITH ENGLAND exchange for gold, leaves bankers still as able AND ITS DEPENDENCIES. to fulfil all their engagements as before, and THERE are some questions, so wide in their the only inconvenience therefore which France bearings, so extensive in their ramifications, can suffer from such an exchange would be so complicated and refined in their details, to the small retail every-day trade by the that it is only by long and patient investiga- withdrawal of small coin. It is not the tion and discussion that their true character want of silver which has placed the Bank of and extent can be appreciated and rendered France in a state of peril; gold would anso familiar as to be correctly associated with swer every purpose of that establishment as passing events. The derangement of the well as silver; but it is the want of bullion, monetary affairs of Europe, the large influx of gold and silver collectively, both being of gold continued year after year, its scarcity equally available for the fulfilment of its nevertheless in all the great banking reserves, obligations. Whatever inconveniences, then, the continued abstraction of silver and its are attributable to the double standard in shipment to the East in annually increasing France, and they are many, it is not to that quantities, are all questions which to their cause that the recent pressure in Paris can own inherent importance is superadded the be attributed. very serious consideration that the causes which are producing such results are rather of a permanent than a temporary or accidental character. No doubt much of the disorganization on the continent of Europe has been caused by the great demand for silver for the East, especially in those countries where silver is the sole standard of value, and where alone therefore it forms the final basis of all credits, including the varied obligations of bankers, both as their measure and as the medium of their discharge. The first fund that suffers when there is a foreign drain of the precious metals is necessarily the reserves which are ordinarily held by banks as a means of meeting such obligations:-a necessity hence immediately arises for bankers to curtail their accommodation on the one hand, and to convert some of their interest-bearing securities, in order to keep up their reserves, on the other hand. This leads immediately to a rise in the rate of interest and a fall in the price of securities. The effect so produced is clearly greatest in those countries where silver, being the metal in demand, is the sole legal tender, and not, as has been erroneously believed, in those where the false principle of a double standard exists. That system has many inconveniences, but at least it has not this one. Where silver is the sole legal tender, as in Holland, Hamburg, and a part of Germany, the abstraction of that metal to an inconvenient extent leaves bankers without the means of paying their obligations in the only way in which they can be paid; but where there is That the large exportation of silver to the East has had an intimate connection with the monetary derangement in Europe there can be no doubt, and especially so in the countries to which we have referred; and that the large production of gold in Australia and California has indirectly in part led to that exportation of silver, and in even a greater degree afforded facilities for it, by rendering it possible to spare so much silver in those countries which have the double standard, there can be as little doubt. But we may be certain that no question about the new production of gold, or of a double standard in certain countries, would lead to a continued export of the precious metals, either silver or gold, to India and China, if there were not a continual and increasing balance in favor of the East, due from the West; and for the obvious reason that, except by such balance in the trading transactions of the two parts of the world, India and China, the latter in particular, would have no means of paying for silver. We may, therefore, regard it as a principle which cannot be questioned, that the precious metals will not continue to flow from any country, where they are not produced, to another, unless there be an adverse balance in the trading connections of the two countries to be rectified. At the same time nothing is more true as regards any country than that an adverse exchange cannot be permanent;-in other words, that no country can continue to import more than it exports ;· -or in still more homely words, that no country can buy the productions of another beyond the extent to 47,000,000 lbs. to 91,000,000 lbs., and of silk which its own surplus productions will pay from 17,000 bales to 50,000 bales. for them. So far, then, as regards the whole trade of a country, there cannot be a permanent adverse balance;-but there may be such as regards a particular trade. Of late years there has no doubt been an enormous increase in the importations of all foreign produce-corn, cotton, coffee, sugar, silk, tea, and indeed of every article; but at the same time our aggregate exports have increased at en equal rate. The value of our exports only ten years ago barely exceeded fifty millions: in the present year it will nearly approach one hundred and twenty millions. While, however, our aggregate exports must at least be sufficient to pay for our aggregate imports; yet this rule, so applicable to our entire trade, is not applicable to our trade with each country. With regard to the trade of one country, there may be a large balance against us; with regard to that of another, there may be a large balance in our favor, the latter being rendered available for discharging the former through the medium of bills of exchange, negotiated in the great centres of the money transactions of the world. We wish to show in what way these adjustments through the foreign exchanges are now operating upon the trade of China and the East, and especially with reference to the gold-producing countries, and the consequences which they are necessarily producing in respect to the distribution of the precious metals. We also referred in the same article to the large increase in the exports of tea from China to the United States, all of which were paid for by means of bills drawn upon London against credits established in this country for the cotton, rice, tobacco, gold, and other articles of American produce sent to this market. The tea exported from China to the United States in 1849 was 18,000,000 lbs; in the year ending June, 1856, it was 40,000,000 lbs. But in addition to this large item of trade to be provided for in the exchange operations between China and India and England, there is another branch of business which of late has been increasing very much, without any corresponding or adequate increase of exports from Europe to meet itwe allude to the large exports from India, China, Ceylon, and Singapore, of indigo, seeds, rice, oil, coffee, and tea, shipped direct to France and Germany, over and above the exports to Great Britain, but all of which are paid for by drafts upon London, or at least which equally affect the exchanges. Again, there are large shipments from China direct to California and the West Coast of America, which are paid for by the credits obtained in this country on account of the gold imported from that quarter. And lastly, there is a striking example of the operations which we are describing in the trade of Australia. To the five Australian colonies the official value of all our exports in 1855 was £6,945,In a former article we showed by reference 000. The official value of the produce, other to the statistics of the trade of this country, than gold, chiefly of wool imported, was of India and China, that a large balance, in- £4,500,000; but besides that produce, the creasing annually, existed against Europe. quantity of gold exported from Victoria and For example, in 1855, while the official value New South Wales was of the value of of our exports to China, was only £1,300,000, £11,500,000, making the entire value of the the official value of our imports was £8,746,- bullion and other produce imported £16,000,000; again, the official value of our exports 000. Now, if we even allow a large profit to India in 1855 was £10,353,000, while the upon our exports, and a liberal margin for official value of our imports was £12,668,- freight and expenses, still the balance due to 000, and while large sums were transmitted in order to construct the railways undertaken chiefly with British capital, but which were perhaps more than balanced by the remittances for the home expenditure of the East India Company. So far as regarded the trade of China, our exports had been stationary for many years, while the exports of tea from China to this country had increased from Australia could not upon the transactions of the year as between those colonies and this country be much less than £7,000,000. But then, let it be observed, that while nearly the whole of the produce of Australia, including the gold, comes to this country, a large portion of the articles necessary for the consumption of the colonies is imported from other countries; and amongst other things, very large quantities of tea, coffee, sugar, and rice are imported from China, India, Ceylon, and other contiguous markets, and are paid for by bills drawn upon London against the balance which we have seen is established in London in favor of Australia by the large shipments of gold. In point of fact, the gold sent direct from Melbourne to London has to provide not only for the British manufactures required in Victoria, but also for the tea, sugar, rice, flour, and other articles imported from other countries. Thus, then, altogether independent of the direct trade between this country and the East, London has to sustain and provide for the payment, -1. of the tea and other articles shipped from China to the United States; 2. for the exports of tea, indigo, oil, seeds, rice, etc., direct to the continent of Europe from China, India, and other contiguous places; and 3. for the shipments of tea, sugar, and coffee from those regions to Australia ;—as a means of paying in part for the various articles imported from those countries to this. there is still a very large margin of amount The Why the exports from this and other countries have not increased to India, and especially to China, in the same proportion as to other producing countries, and so as to bear some closer relation to the increase of imports therefrom, we will not stop now to inquire; but that they have not done so is certain. In 1852 the value of the exports of British manufactures to China was rather over £2,000,000; in 1855 it was barely reduction in the tea duty which will shortly £1,300,000. And besides those from Eng- take place, but also in consequence of the land, the imports into China are confined growing demand in the other markets supchiefly to opium and cotton from India and plied by our intervention. 2. An increased rice from the Straits. It is, therefore, certain import of other commodities from foreign that, taking the trades of China and India countries, which in the present state of China, together, there is a large excess of exports is not likely to take place. Thus it is just over imports which must be adjusted in some in proportion as imports of silver into India way. Now let us for a moment consider and China are large enough to absorb the what the effect of this large balance is upon margin of bills in the market not required the exchanges, and then we will understand for the import trade, that the motive for in what manner the shipment of silver becomes a necessary consequence. The amount of bills to be drawn in China upon London -first, for the greatly extended direct exports of tea and silk; next, for the tea and other exports to the United States; then for the exports to Continental Europe; and lastly, for the large exports to Australia-is so great, that after providing means of remitting for the opium and cotton of India, and for the manufactures exported from this conntry, sending it becomes greater or less. Let there be a cessation or a great reduction in the exports of silver, the effect will be a further rise in the exchange, a larger profit upon silver, and a repetition of the shipments at a greater rate, and even though at a higher price than before; the only effect of which would be, that the tea and silk of China and the produce of India would cost a little more when converted into sterling money, unless the rise in the exchange should be compen sated by a fall in the price on the spot. | tive value of the two metals. Hitherto the What is to limit this absorption of silver, no large supplies furnished by the change of the one can at present pretend to say. To what silver standard into a gold one in the United extent will three hundred millions of people, States, and the gradual displacement of silver in a state of chronic civil wars and insurrec- by gold in France and in other parts of Eution, which does not however appear to inter- rope, have aided the supplies of silver from fere with their means of production, hoard the mines, in order to furnish the monthly silver, it is impossible to say. How far India, shipments to the East, amounting to about with a population little less than two hundred one million sterling. Those extra sources millions, advancing in productive industry every year, but of habits so simple and inexpensive that their wants are chiefly supplied at home, will continue to accumulate wealth and absorb silver, is a speculation which it is impossible to solve. India, and especially China, are beyond the influence of those banking operations which in Europe settle all these difficulties. Here, when wealth accumulates in private hands, it is invested in public securities bearing interest, and thus the precious metals, which under similar circumstances would be hoarded in the East, are in Europe set free for active service in commerce. are, however, rapidly being exhausted, and before long the demand for the East must depend almost solely upon the importations from the mines. These may be somewhat stimulated by the high price; but unless a great change should take place in the demand, the production will be inadequate to meet it, a considerable increase of price must necessarily follow, and great difficulties may be experienced, not only in our trade with the East, but likewise by those European countries who still adhere solely to a silver standard From The Economist, 18 Oct. TELEGRAPHS AND PROGRESS.-THE CAUSE. AMONGST the striking events of the time are many testimonies to the general progress. Last week the Congress at Brussels was referred to as exemplifying the advance towards the establishment of free trade, and of one rule and one measure, both in politics and in civil life, throughout the civilized world. This week we have to notice that the actual accomplishment of a great work of this kind has been celebrated in the metropolis. Professor Morse, an American gentleman, the author of a system of telegraphic communication in use in every part of the United States, and according to the chairman of the party, Mr. Cooke, the best and the simplest system yet invented for certain countries, was honored by a public entertaiment. His system extends into Canada, and has been introduced throughout Europe. By it Newfoundland is to be connected with the United States and is to be connected with Ireland. It will then be diffused alike over Europe and America, connecting both. But all this teaches us how impossible it is, even were it desirable, to retain the gold which is so largely imported in this country. If gold were in demand in the East, a great portion of that which now comes to this country would go direct to China and India both from Australia and North America. Gold, however, is not in demand, but silver is, and the latter only can be used to correct the exchanges. That portion of our imported gold, then, is sent here, indirectly for the purpose of being converted into silver for the East, in order to satisfy the claims of China and India upon Australia and America. The enormous stock of silver which existed in France has been exchanged to a great extent for gold, and has assisted materially in the operation described. All the silver from the mines, except that required for manufacturing purposes, has been taken for the same purpose. Wherever in any part of Europe a spare stock of silver was found, it has been absorbed :-in every case where it has been practicable to substitute gold for silver it has been done. If, however, this state of things is to continue and at present there is no The telegraph has come rapidly into use reason why it should not-if gold is continued commercially-telegraphic communication of to be imported in such large quantities, and a rude kind for political purposes is an old the demand for silver for the East remains as contrivance in conjunction with railways. great, it is obvious that a very considerable When it became possible to transmit goods change must ere long take place in the rela- and passengers more swiftly than the wind blows, it became indispensable to have a still now a wealthy merchant of Moscow, and more rapid means to announce their coming. still possibly a serf-at a dinner given by him Heralds, messengers, letters, or even portents to the deputation of peasants and merchants have in all ages of the world prepared men on the occasion of the Czar's coronation, for the arrival of events as well as merchan- made a speech which is an example to be dise. The previous discoveries of Volta, quoted and remembered. It has been hapGalvani, Davy, Oersted, Faraday, and others, pily published and noticed in all the daily prepared the way for Wheatstone, Morse, journals, the publication being a proof of the Cook, Brett, and other skilful magnetic or union of the nations under one rule, so that galvanic electricians, and the lightning flash for us it is only necessary to say that Basil was by their labors organized into a univer- Kokoreff advocates eloquently, but with sal herald, at every man's command, who moderation, free trade and free exchange of travels far swifter than the locomotive. The thought, and encourages his countrymen to electric circuit, which may be carried round imitate, if not to rival, Paris and London in the globe, seems independent of space and all the facilities of commerce. "It will then time; and the produce of a noble art, like happen," he concluded, "that we shall see the imponderable power from which it derives here in Moscow, the centre of the internal its name, suggests a new philosophy. Tele- commerce of Russia, as well as in the other graphs and railroads united, the products of cities and ports of the empire, representatives ages of observation and continually advancing of the principal commercial houses of Europe. skill, are now common to all the civilized We shall then be able to learn every day world, and where not yet introduced, men here in Moscow, and at a fixed hour, the of all classes are desirous to have them. progress of business in Paris, London, and Sovereigns are even entering into eager com- other places, and be able, when we are aspetition like traders, and are exposing their sembled as now, with the glass in our hands, countries to disasters from their too eager to learn by telegraph the health of our childesire to possess them. The dinner given to dren who may be placed in foreign countries Professor Morse, therefore, was in the world's in Russian houses of commerce. history the celebration of the union of all review in mind all the pregnant consequences the families of man under the dominion of which must infallibly result to nations from one science and one art, made visible in steam their union, by means of commerce-a union locomotives and electric wires. based on common interests-I cannot refrain from proposing to you, gentlemen, to drink at once and unanimously the following toast, To European commerce, to foreign merchants, our elder brethren in industry, and to my honorable colleagues the merchants of Russia.'" So that the rail and the telegraph are reducing Russia, so lately at war with us, under the one rule, and making her as intimately a part of the great commercial system as are England and the United States. No nation is shut out from this union, and there seems no chance, as there is no dread, of its being dissolved. Dr. O'Shaughnessy is bringing within it the whole of India, and General Chesney and his associates are extending it through Turkey to Persia, though in this direction there is apparently a chance of its being delayed by a ridiculous political contest with Persia. In another direction it is welcomed, and the Czar is profiting by the restored peace to bring all his wide dominions under the common rule. He is seconded by his subjects. His boyards transformed into nobles, and his bankers a part of the moneyed system of Europe, cannot escape the contagious influence of a successful example-more enthralling than any witches' charm-and they are now more ready to adopt the arts of America and England than they were the fashions of the French Court in the last century. Even the Mujiks are infected. A certain Basil Kokoreff, whose name must be mentioned with honor-formerly a peasant, When I Willinghood is a word lately brought into use to express the efficacy of the exertions which spring from inclination. It is as applicable in politics as in church matters, to which it is generally limited, and the willinghood of sovereigns and people to imitate and adopt what is useful and good, produces effects that, in comparison with the past, are truly wonderful. About twenty centuries elapsed from the time when the Romans first drove their roads from the imperial city to the extremities of Italy and "furthest Gaul ” to the time, less than a century ago, when |