Asia's Demand for Precious Metals

Among the many errors which distort men's opinions on the so-called
"silver question" is the belief that the gold supply of the present and
near future need be considered merely as it may affect Europe and America.
Asia and Africa are in most men's minds entirely excluded from the
calculations. The popular belief in the United States may be briefly
stated thus: Asia is and is long to be the land of stagnation. Asiatics
are unprogressive and will remain so. In contact with the higher
civilization of Europe the yellow and brown races are likely to fade away
as did the Maori and the American Indian; or if they continue to increase,
their trade and government will be conducted chiefly by Europeans.

One finds this belief expressed in many standard works. "The helpless
apathy of Asiatics" is a favorite phrase of Macaulay. "Man is but a weed
in those vast regions," says DeQuincey. "In Asia there are no questions,
only affirmations," says another philosopher. And no amount of experience
seems to shake the popular faith in this notion that what Asia was she is
always to be. And yet enough has occurred within the memory of men still
middle-aged to dissipate it. Only a few years ago Americans looked upon
Russia as an inert mass, semi-barbarous in large part; and when Kennan
pictured the horrors of Siberia most readers thought the condition only
such as might be expected from such a government and such people as they
believed the Russians to be. But Russia is to-day one of the world's
greatest powers, with 120,000,000 of people, building the two longest
railways in the world, developing the Siberian and Transcaspian region
with a rapidity only exceeded in our own far West, and drawing gold from
this country and western Europe at a rate that threatens the stability of
our financial system.

It is only forty-one years since our Commodore Perry astonished the world
by securing admission to Japan and proving to the western people that it
was at least worthy of their notice, yet that empire has undergone a most
beneficent revolution in which the Daimios or local lords consented to a
self-sacrifice without a parallel in history, has been the victor in a
great war, has adopted the best features of the western civilization while
sacrificing none of its own, and is advancing in material development with
a rapidity rarely equalled and perhaps never excelled. Five years ago the
first complete census showed thirty-six cotton factories with 377,970
spindles; three years later the number of factories had doubled and that
of the spindles had much more than quadrupled, and there is every
indication that next year's tabulation will show a still more rapid
increase. In 1894 there were 17,000 people employed in that industry.

Hon. Robert P. Porter, who has recently returned from Japan, after making
a thorough study of her progress and resources, tells us that while her
export of textiles of all kinds in 1885 was worth but $511,990, they were
in 1895 worth $22,177,626, the estimate of both years in silver dollars.
Similarly in the same years the exports of raw silks increased from
$14,473,396 to $50,928,440, of grain and provisions from $4,514,843 to
$12,723,771, of matches from $60,565 to $4,672,861, of porcelain, curios,
and sundries from $2,786,876 to $11,624,701, and several other articles in
the like proportion, while the commerce for 1895 showed an increase of
$30,000,000 over 1894, reaching a total of exports and imports of
$296,000,000, or about $7.50 per capita.

The government granted 2,250,000 yen as a bounty to the first iron works,
begun in 1892, and already the products of those iron works in hand-made
articles are underselling American products on our Pacific coast. In five
years, prior to those covered by Mr. Porter's figures above, Japan's
exports rose from 34,800,000 to 68,400,000 yen, and her imports from
27,000,000 yen to 64,000,000 yen. Nor does there appear any reason to
doubt the confident statement of British experts that development for the
coming years will go on much more rapidly. Politics in the empire already
turns upon fiscal and economic questions; of two bills urged in the
Imperial Parliament by the progressists, one decrees the nationalization
of all railways not yet owned by the state, and the other asks for an
appropriation of 50,000,000 yen for the building of a new railroad. While
this is going through the press it is announced that Japan has established
two new steamship lines, one running from Yokohama to our own Pacific
coast, and the other from Yokohama to Marseilles, stopping at Shanghai,
Hong Kong, Singapore, and Columbo.

The western mind has long looked upon China as given over to hopeless
inertia and stagnation, but China has awakened at last. In one year the
importation of illuminating oil rose 50 per cent., of window glass 58 per
cent., of matches 23 per cent., and needles 20 per cent. In six years the
tonnage of vessels discharging in Chinese ports rose by one-third. While
these lines are going through the press Li Hung Chang is in Europe
negotiating for a loan of 400,000,000 francs to be expended in internal
improvements, and he gives the weight of his very high authority to the
statement that China is no longer opposed to the introduction of railways.

Consul-General Jernigan reports to the Department of State that the
prospectus of a new industry is now before the public at his station,
Shanghai. It is called the Shanghai Oil Mill Company, and purposes to
manufacture oil from cotton seed. It is the logical result of the cotton
mills at Shanghai, and the consequent stimulus given to the cultivation of
cotton in China. Since 1890 there have been forty-five new manufacturing
plants established in Shanghai. They are all in successful operation,
especially the cotton factories, in which large capital is invested. He

"The area suitable for cultivation of cotton in China is almost as
limitless as the supply of labor, and labor being very cheap,
there can be no doubt that China will soon be one of the great
cotton-producing countries of the world, and that this product,
produced and manufactured in China, will command serious
consideration in all calculations with reference to the cotton
market. It will not be safe to discount the cotton of China
because it now grades low, for it is certain to improve. At
present it is estimated there are 3,000,000 tons of cotton seed,
equal to 90,000,000 gallons of oil, now yearly lost to commerce
which would find a ready market. The company will start with a
capital of 250,000 Mexican dollars. One company has already
ordered its machinery from the United States."

The population of the Chinese Empire is estimated at 400,000,000, but Li
Hung Chang declares, and experienced western observers confirm it, that
the country with modern improvements could sustain more than twice its
present population in a very high state of comfort.

Of all the popular errors, however, the greatest is that of regarding
India as an overpopulated, stagnant, and unprogressive land. Suffice it to
say here that the population has trebled under British rule, and that the
country is abundantly able to sustain in great comfort twice its present
numbers by agriculture alone; that the extension of the railway system has
recently been rapid, and along with this has gone on a growth of
manufactures that is simply amazing. Only recently Burmah borrowed in
London $15,000,000 for railway construction, a sum that was subscribed in
that market five times over. In these vast fertile regions, which in
comparison with what they are destined to be might be called new and
undeveloped, live 290,000,000 of people, who are increasing at the rate of
something like 2,000,000 per year. And these are but a few of the facts I
might present to show that the early development of the Orient is the
great fact America must take into account, and that it is almost a
certainty that the world's greatest possible production of gold in the
future may be absorbed in the East, leaving the West to struggle with an
increasing scarcity. Indeed, Prof. Eduard Suess, the great German
authority, after giving reasons for his belief that the larger part of the
gold product is used in the arts, and that all of it will soon be, points
out that Asia will soon, in all probability, absorb almost the entire
silver product, and that we shall then have a "crisis" indeed.

In my travels through India and the Orient generally I took notice of her
enormous capacity to export wheat. As a result, I predicted that the
export, then but fairly begun, would soon menace our supremacy in the
British market. I began at the same time to study the social and
industrial condition of Russia, and was soon satisfied that she was in the
dawn of a great day. I predicted the eastern extension of her enterprises,
and increased political influence, especially with China, and the
consequent absorption of western gold and capital generally. It appears
from the latest summary of the United States Bureau of Statistics that
Russia had, on the first of January, 1892, $324,828,300 in gold in her
banks, and on the last of last May $424,193,700. If she carries out her
present policy, this is less than half of the amount she will require. On
a strictly gold basis we must allow her at least $10 per capita, which
would make for the empire $1,200,000,000. But if we greatly reduce the per
capita, in view of the undeveloped condition of her subjects, the amount
still to be required will be enormous. During the same four years and five
months the Bank of France has increased its holdings of gold from
$260,888,299 to $391,519,658; the Austrian-Hungarian Bank from $26,634,400
to $133,006,312, and the Bank of England from $109,342,800 to
$232,791,709, while the Banks of Germany, Belgium, Spain, Italy, and the
Netherlands have also increased their holdings some $30,000,000. Thus we
see that in these few years the leading nations have added nearly
$500,000,000 to their previous hoards of gold, which shows too plainly
that they are looking forward to a gold famine. How much more will Asia
demand? In my opinion, India, notwithstanding British rule and influence
there, has developed less rapidly than China will when she once comes into
as intimate contact with western nations as has India, for the rigid
system of caste which prevails in India and which does not exist in China
has been and will be the cause of greater immobility. It is not possible
to say how long it will operate as an impediment to a high industrial
development, but from the lessons taught in other countries where race and
religion create similar castes, we may believe in its long continuance. I
take pleasure at this point in referring to the late able work of Prof.
Charles H. Pierson, of Oxford, who passed twenty years in the Orient. In
his "National Life and Character" he points out that China in 1844 had
doubled her population in eighty years, and there since has been a great
increase; that Russia has doubled since 1849, very largely by natural
increase, the Russian peasant being the most prolific of human beings; and
the Hindoos, who had doubled in eighty years, have recently gained
20,000,000 in ten years.

Professor Pierson also points out the great error of assuming that the
black and yellow races will fade away before the white, and shows it to be
far more likely that with the increased security afforded by British and
Russian rule they will increase so rapidly as to industrially force the
white race back to the higher latitudes of the north temperate zone.
Industrial commonwealths will not dispense with great armies--at least not
for a long time--but China has passed the militant age, and reached the
purely industrial. It may be said that work is a pleasure to the Chinese,
as active sports are to Western people. Continuous toil is looked upon as
a matter of course. To them it does not seem a hardship that men should
work. As a measure of the possibilities of the Orient, consider what has
been done in the western world within half a century, where the population
is much less than one-half of that of the far East. Over four hundred
thousand miles of railroad have been constructed, together with a vast,
almost incalculable system of telegraphs, to say nothing of the great
cities and common roads, or the enormous mass of productive machinery,
which has even outrun the increase of population.

In round numbers, some forty thousand millions in capital have been
absorbed in railroads alone. Add the amount absorbed in telegraphs,
telephones, steamships, and electric plants, and a thousand and one
appliances of civilization, and the total is beyond comprehension. And all
these things have yet to be created and adopted in the Oriental countries.
How rapidly the development may go on there, and what an enormous mass of
capital will be absorbed, is clearly indicated by what has been done in a
very few recent years. And so far we have left Africa entirely out of the
account, a country with a vast population and richly dowered with natural
resources and with a capacity for rapid development.

Possibly the Orientals will not suddenly become progressive to the degree
here anticipated, though Russia's eastern march has fairly rivalled our
western march; and it must be borne in mind that to develop the appliances
of western civilization we had all the experiments to make, all the crude
preliminary work to do in creating the system, which the Orient will
receive from us in its present perfected form, and be able to go on
without any mistakes, and thus enable them to adopt within a very brief
time that which we gave the labors of several generations to discover,
develop, and apply.

How enormous, then, will be their absorption of western capital and gold.

Is it still maintained that the Orientals lack the capacity for such
development? Then look at their achievements in every country to which
they have emigrated, and especially in this. Their progress here in the
industrial arts, even while they were but a handful, was so rapid that the
government was called on to restrict them. Even now the papers contain
alarming statements to the effect that Japan is invading our markets with
those specialties in the making of which we, but a little while ago,
considered ourselves superior to all the rest of the world. And no tariff
is high enough to keep them out. It is observed by all travellers in China
and other Oriental countries that there exists in as great a degree as in
the West a desire for indulgence in those things classed as mere luxuries
which, in all nations, absorb so great a share of its total wealth. Every
one who travels through the eastern countries marvels at the extraordinary
richness and delicacy of those things adopted by them for ornamentation,
luxury, and convenience. And they are of such a character as, far more
than in the western world, involves the consumption of the precious
metals. Along with the national desire to adopt that which is useful and
ornamental, a highly mimetic nature prompts them to seize upon and adapt
with singular readiness that which is brought to their notice as being
useful and constituting a salient feature of western civilization.

To sum it all up, we have in Asia somewhere near 800,000,000 of people,
who are certainly increasing by 10,000,000 a year, probably many more, and
these people pressed on by Russia on the north and west, by Great Britain
and France on the south, as well as by the wonderful energy of the
Japanese on the east. How much gold will all these people absorb in the
future? And it should not be forgotten that not only is the present
population to be supplied, but an increase of population is to be allowed
for, which at ten dollars per capita would alone absorb the entire annual
gold production
above the amount used in the arts. If any one thinks this
forecast fanciful, I only ask him to consider what has been done in the
last thirty years, and then make his estimate. For what the possible
absorption of the precious metals by the Asiatic people may be, we need
only to refer to what has been done by India. By reason of the development
of her industries and resources caused by her intercourse with western
nations she has imported in net excess of exports, from the years 1835 to
1893, $750,000,000 of gold and $1,750,000,000 of silver, or about
one-seventh of the entire world's output of gold and about one-half of the
world's output of silver during that time. Professor Shaw is authority for
the statement that her demand for the precious metals is yet unabated and
great as ever. When we remember that the average population of India
during this time was only about 200,000,000, and that there are about
three times as many people yet in Asia who have even greater latent powers
to absorb the precious metals, one can form some feeble estimate of what
an exhaustive drain upon the gold and silver supply of the world will
ensue when these nations awaken and develop their resources and energies
through the stimulating influences of western ideas and example.

Having considered the possible momentous absorption of the precious metals
by the Asiatics, it may be well to consider what Europe itself is likely
soon to do in the same line. England, France, and Germany are the three
most substantial and commercial nations of Europe, and their experience
may be taken as an index. We find that these three use on an average
$16.40 per capita of gold. To give the same to the rest of Europe,
including Russia and Turkey, will require, in addition to their present
stock, $3,780,000,000 in gold, or nearly as much as the entire world's
present stock of gold coin.

If the example of France and the Netherlands--two of the soundest and most
conservative nations in the world--be similarly taken as an index to the
probable use of silver, it appears that these two nations average $12.50
per capita. To supply the rest of Europe to the same extent will require
an addition of $3,563,000,000 to her present stock of silver, or about
three-fourths as much as the present coined silver of the world. In view
of these facts, is not the real question, not whether there is gold
enough, but whether there is both gold and silver enough for the future
monetary requirements of the world? Does it not seem that the nations are
soon to be confronted with this dilemma: that the product of the precious
metals must be greatly increased--and is that possible?--or that for the
want of gold and silver there must be a serious check to the progress of

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