—FROM THE HISTORY OF MONEY CIRCULATION] 

We have seen from the last report of the Bank of France* that 
its bullion reserve had reached the low point of about thirty 
millions of dollars, having diminished twenty-five per cent within 
the previous month alone.’ If this drain were to go on, the Bank 
would be run dry by the end of the year, and cash payments 
would cease. To prevent this extreme danger, two measures have 
been employed. On the one hand, the melting of silver for export 
is to be hindered by the Police, and on the other, the Bank of 
France has determined to double, at an enormous sacrifice, its 
bullion reserve by contracting for a supply of six millions sterling 
with the Messrs. Rothschild. That is to say, that in order to make 
up its deficiency of gold, the Bank augments still further the 
disproportion between the prices at which it buys gold on the one 
hand, and sells it on the other. On account of this contract 
£50,000 in gold were taken out of the Bank of England on the 
llth, and £40,000 on the 13th of October, and the Asia, which 
arrived here yesterday, brings advices of a still further draught of 
above half a million. Consequently, a general apprehension 
prevailed at London that the Bank of England would again put on 
the screw by raising its rate of discount in order to protect its own 
stock from emigrating to France. Preparatory to this the Bank has 
now refused to make advances on all descriptions of Government 
securities except Exchequer bills. 

1856”, Le Moniteur universel, No. 284, October 10, 1856.— Ed. 

Now, all the gold the Bank of France may succeed in drawing 
into its coffers will escape from them quite as fast as it flows 
in—partly in payment of foreign debts, for settling the balance of 
trade—partly by being abstracted into the interior of France, to 
supply the place of silver disappearing from circulation, the 
hoarding of which naturally keeps pace with the increasing 
violence of the crisis; and lastly, for the supply of the enormous 
industrial enterprises started in the last three or four years. For 
instance, the great railway companies, which reckoned, for the 
continuation of their works and the payment of their dividends 
and bonuses, on the emission of new loans, which have now 
become impossible, are making the most desperate attempts to fill 
the vacuum in their exchequers. Thus the Western Railway of 
France is in need of sixty millions of francs; the Eastern wants 
twenty-four; the Northern thirty; the Mediterranean twenty; the 
Orleans forty, and so on. It is estimated that the total sum wanted 
by all the different railway companies amounts to three hundred 
millions. Bonaparte, who had flattered himself that he had put 
down politics by setting up gambling, is now eager to withdraw 
attention from the money -market by all sorts of political questions: 
Neapolitan questions, Danubian questions, Bessarabian questions, 
new Congress of Paris questions,’ but all in vain. Not only 
France, but all Europe, is fully convinced that the fate of what is 
called the Bonaparte dynasty, as well as the present state of 
European society, is suspended on the issue of the commercial 
crisis of which Paris seems now to be witnessing the beginning. 

As we have already stated,* the first occasion for the outbreak of 
the crisis was afforded by the sudden enhancement of the price of 
silver as compared with gold. This enhancement— notwithstanding 
the immense production of gold in California and Australia — 
can only be accounted for by the still increasing drain of silver 
from the Western World to Asia, and especially to India and 
China. Since the beginning of the seventeenth century, Asia, and 
especially China and India, have never ceased to exercise an 
important influence on the bullion markets of Europe and 
America. Silver serving as the only medium of exchange in those 
Eastern countries, the treasure with which Spanish America 
inundated Europe, was partially drained through the channel of 
the Oriental trade, and the import of silver from America into 
Europe was checked by its export from Europe to Asia. 
Simultaneously, indeed, there took place an export of gold from 

Asia to Europe; but, setting aside the supplies furnished by the 
Ural Mountains from 1840 to 1850, it was on too small a scale to 
produce sensible results. 

The circulation of silver between Asia and the West had, of 
course, its alternate periods of ebb and flow, depending on the 
fluctuations of the balance of trade. On the whole, however, three 
broadly-marked epochs may be distinguished in the history of this 
world-wide movement—the first epoch beginning with the seven- 
teenth century, and ending about 1830; the second extending 
from 1831 to 1848; and the last from 1849 to the present time. In 
the first epoch, the silver exportation to Asia was generally 
increasing; in the second epoch the stream was abating, till at last 
an opposite current set in, and, for the first time, Asia poured 
back into Europe part of the treasures it had absorbed for almost 
two centuries and a half; in the third epoch, still in its ascending 
phase, the screw is again turned, and the absorption of silver by 
Asia is proceeding on a scale hitherto without precedent. 

In earlier times, after the discovery of the silver of America,’ 
and even after the foundation of the Portuguese dominion in 
India, the export of silver from Europe to Asia was hardly 
perceptible. Larger masses of that metal were wanted when, in the 
beginning of the seventeenth century, the Dutch, and in its later 
period the British, extended their trade with Eastern Asia, but 
especially since the rapid growth of the consumption of tea in 
England during the eighteenth century—the English remittances 
for Chinese tea consisting almost exclusively of silver. In the latter 
part of the eighteenth century the efflux of silver from Europe to 
Eastern Asia had already assumed such ample proportions as to 
absorb an important part of the silver imported from America. 
There had also already begun a direct export from America to 
Asia, although, on the whole, limited to the amount shipped by 
the Mexican Acapulco fleets to the Philippine Islands. This 
absorption of silver by Asia became, in the first thirty years of the 
nineteenth century, the more sensible in Europe, as, on account of 
the revolutions that had broken out in the Spanish colonies, the 
American supply decreased from upward of forty millions of 
dollars in 1800, to less than twenty millions in 1829. On the other 
hand, the silver shipped to Asia from the United States 
quadrupled from 1796 to 1825, while, after the year 1809, not 
only Mexico but also Brazil, Chili and Peru began, although on a 

smaller scale, to export silver directly to the east of Asia. The 
excess of silver imported from Europe into India and China over 
the gold thence exported amounted to more than thirty millions 
sterling from 1811 till 1822. 

A great change took place during the epoch which begins with 
the year 1831. The East India Company had been forced not only 
to resign its monopoly of the trade between Europe and _ its 
Oriental empire, but also, with the exception of its Indo-Chinese 
monopolies, had been completely broken up as a commercial 
concern.'” The East Indian trade being thus abandoned to private 
enterprise, the export of British manufactures to India began by 
far to surpass the import of Indian raw produce into Great 
Britain. The balance of trade thus turned more and more 
decidedly in favor of Europe, and consequently the export of 
silver to Asia rapidly fell off. Every check that British trade 
encountered in the other markets of the world began now to be 
compensated by its new expansion in Asia. If the commercial 
convulsion of 1825 had already led to an increase of British 
exports to India, a far mightier impulse was given to them by the 
Anglo-American crisis of 1836, while in 1847 the British crisis 
even derived its characteristic features from over-trading to India 
and other parts of Asia. 

The exports to Asia, which in 1697 had hardly reached one 
fifty-second part of the total of British exports, amounted in 1822 
to about one-fourteenth; in 1830 to about one-ninth, and in 1842 
to more than one-fifth. As long as only India and the Western 
portion of Asia were affected by this economical change, the 
efflux of silver from Europe to Asia slackened, but did not cease, 
and still less give place to a reflux from Asia to Europe. Such a 
decisive turn was not imparted to the metallic circulation until 
English philanthropy had imposed a regular opium trade upon 
China, blown down by the cannon’s mouth the Chinese wall, and 
forcibly thrown open the Celestial Empire to intercourse with the 
profane world. Thus drained of its silver on its Indian frontier, 
China was inundated on its Pacific coast by the manufactures of 
England and America. Hence it happened that in 1842, for the 
first time in the annals of modern commerce, great shipments of 
silver were actually effected from Asia to Europe. 

This total revulsion in the circulation between Asia and the West 
proved, however, of short duration.. A powerful and progressive 
reaction set in with 1849. As China had turned the tide in the first 
and second epoch, so China again turned it in the third. The 
Chinese rebellion not only checked the opium trade with India, 

but also put a stop to the purchase of foreign manufactures, the 
Chinese insisting upon payment in silver, and betaking themselves 
to that popular contrivance of Oriental economists in times of 
political and social convulsion—hoarding. The excess of Chinese 
exports over imports has been greatly augmented by the late 
failure of the European silk crops. According to the reports of 
Mr. Robertson,’ the British Consul at Shanghae, the export of tea 
from China within the last ten years has increased some sixty-three 
per cent, and that of silk two hundred and eighteen per cent, while 
the import of manufactures has decreased sixty-six per cent. He 
estimates the average annual balance of silver imported from all 
parts of the world at £5,580,000 more than it was ten years ago. The 
following are the precise figures of the movement of Chinese exports 
and imports during the period dating from 1849 to 1856, each year 
concluding with the 30th of June”: 

Exports of tea. 

To Gt. Br’n and Ireland. Ibs. To the United Ibs. 
States. 
(BAO ves sSees ie eed etch cielo reesaet 47,242,000 18,072,000 
EOD 9 VS isks ansseeceecse tends adesemacs ted 86,509,000 31,515,000 
VS5 Ooi date catiot cbs heats bate Melee Ronee tes 91,035,000 40,246,000 
“Silk. 
To Gt. Br’n and Ireland. Ibs. To France. Bales. 
V849 co s5s oss echo des coaaeees sales ewes eteieaed ss 17,228 
L855: vate fteradventeet haves cuhiawsetoteciaetutess 51,486 
LSD0 edetoticecidicreeit ok ccandteondd dete 50,489 1856.2. 8.08) eck: 6,458 
Real value of exports from China to Great Britain in 1855 ...... £8,746,000 
Real value of exports from China to the United States in 
[So Durceii owt ese atest il eee Maen a ence wesc daa 2,500,000 
"otal: voici csuetedeacha belaveeesides ees eee So as ee eee ened £11,246,000 
Deduct 20 per cent for freight and Charges .........:::cccssecseteseees 2,249,200 
Total due to China o00....cccccccccceccceccceceneceeeccuseueeeaeees £8,996,800 

No. 685, October 11, 1856.— Ed. 

Imports. 

Manufactures from England in 1852 ........ccceeeccceseeeeeeneeeennees £2,503,000 
Manufactures from England in 1855 o.....eeeeceeeceeteeeeeenneeeees 1,000,000 
Manufactures from England in 1856 .........:cccceeeeseceeeteeeeeeneeeees 1,277,000 
Opium and Cotton from India 1n 1853 .o....ccecceeseeeesseeeesnees 3,830,000 
Opium and Cotton from India in 1855 o.... ccc eee eeeeneeeeees 3,306,000 
Opium and Cotton from India im 1856 .0......eceeeeetterteeeeeetees 3,284,000 

Total value of imports in 1855 were £4,306,000 
Balance due to China in 1855 o.....ccccccecccsccccccesscecnensececeseseeeeeaeeeees 4,690,000 
Value of Chinese exports to India in 1855 .......cccececceeeesteeceeeennnetes 1,000,000 

Total balance due to China from all parts of the world 
(EBSD) celeit evs eectes asd guetta ssanb esdeat oaussee panna pakanliaiem a cera Renee £5,690,000 

This drain of silver from Europe to Asia on account of China is 
increased by the special drain to India, produced of late years by 
the balance of trade having turned against Europe, as will be seen 
from the following table: 

British imports from India in 1856 .0...... cece eesceetsceseeeeseeeeneeees £14,578,000 
Deduct £3,000,000 for remittances of the 

Eastdndia COM pany 5.qsicitomaattrniius neh emaasiaiiesdeneee bis eases 3,000,000 

‘POtal UMM POrts scssisna-assasvaneasiiaasanstinedicagteivetaneian es £11.578,000 

Indian imports from Britain ..........cccecesecesseeeseeseseensseesseeeeaeeeens 8,927,000 

Balance in favor of India .0.......ccccccceecceeseeeccuseeneeees £2,651,000 

Now, up to the year 1825 gold was a legal tender in India, when 
a measure was passed for an exclusively silver standard. As some 
years later, gold commanded a premium over silver in the 
commercial markets, the East India Company declared its readi- 
ness to receive it in payments to the Government. After the 
discoveries of gold in Australia, however, the Company, as 
apprehensive of a depreciation of gold as the Dutch Government, 
and not at all pleased with the prospect of receiving in gold and 
paying in silver, suddenly returned to the exclusive silver standard 
of 1825. Thus the necessity of paying the balance due to India in 
silver was rendered paramount, and an enormous demand for 
that metal was created in that country. The price of silver, 
compared with gold, increasing henceforth more rapidly in India 
than in Europe, British merchants found it profitable to export 
silver to India as a speculation, taking in return Indian raw 
produce, and thus giving another stimulus to Indian exports. 
Altogether, silver to the amount of twenty-one millions sterling 

was exported from Southampton alone, from 1848 to 1855, beside 
a very large amount from the Mediterranean ports; and it is 
calculated that in the present year ten millions have been taken 
from Southampton to the East. 

To judge from these changes in the Indian trade and the 
character of the Chinese revolution, it cannot be expected that the 
drain of silver to Asia will come to a speedy conclusion. It is, then, 
no rash opinion that this Chinese revolution is destined to exercise 
a far greater influence upon Europe than all the Russian wars, 
Italian manifestoes '* and secret societies of that Continent. 

Written on about October 17, 1856 Reproduced from the New-York