China and the West

Thomas Robert. Principles of political economy [ID D17228].
.From all the accounts we have of the Chinese settlers in different parts of the East, it appears that the labouring classes in China, are remarkable for their industry and energy, and even for their skill in making those domestic articles where superior machinery is not required. We cannot therefore justly say that Chinese labour, independent of machinery, or other particular advantages, is not as effective as our own. Yet we well know that the money price of labour is extremely low in China, and this is obviously owing to the small amount of exports compared with the population, and the prodigious extent of territory, including a large part of Tartary, over with the precious metals which are imported into China will be necessarily spread, so as to throw the greates imaginable obstacles in the way of a fall in their value ; the consequence of which naturally is, that they have fallen comparatively but little in value since the discovery of the American mines ; and the elementary cost of producing a pound of silver, the quantity of Chinese labour, profits, rent, & c. which must be worked up in the commodities exported to purchase it, are very much greater than in Europe. Under these circumstances it would surely be most preposterous to measure the value of Chinese labour in China by money, instead of measuring the money by the labour.
Yet, still it is perfectly true, that a Chinese commodity carried to Hamburgh would be sold at its China money price, with the addition of the freight, insurance, profits, &c. of the last voyage ; and an English merchant purchasing Hamburgh and Chinese goods, would unquestionably estimate their relative values by their cost in money, without the least reference to the very different quantities of labour which had been employed in obtaining them ; or if he chanced to hear something about the greater quantity of Chinese labour employed on the articles from China, for which he had paid the same price as for the Hamburgh goods, he would be inclined, and not very unnaturally, to estimate the value of Chinese labour very low. It is most justly observed by Adam Smith, that the merchant, in all his transactions, has only to consider money prices.
To a merchant, therefore, living in London and purchasing goods at Hamburgh, Chinese labour, if estimated at all, would necessarily be estimated at a low value. But he would fall into a gross error if he were to infer that it was therefore low in China. When the value of money, or of any other article in China is spoken of, it would imply a gross perversion of language to suppose that the person speaking meant the value of Chinese money, Chinese goods, or Chinese labour in Hamburgh or London. The expression in China, cannot mean in Hamburgh, or in London. What alone can be correctly meant by the value of money, or of any other commodity in China is, the estimation in which such money is held in China, determined at all times by the state of the supply compared with the demand, and ordinarily by the elementary costs of its production in China, or what comes to the same thing, the value of money in China, is its power of purchasing in China, arising from intrinsic causes. And as it is obvious, that the quantity of Chinese labour which a pound of silver will command, must measure its power of purchasing in China, arising from intrinsic causes ; it follows, that the value of money or of any other commodity in China, is measured by the quantity of Chinese labour which a given portion of it will command.
It is thought by some persons, that the cheap food and small quantity of it which is supposed to be earned by the Chinese labourer, must imply a low value of labour ; but if things are in their natural state, what it really implies, is, that this food, however low in value it may appear to us, is of high value in China. The great demanders of the commonest sort of food in all countries are the labouring classes ; and if a labourer in ordinary employment, and working with ordinary energy and skill, can, on an average, only obtain a comparatively small quantity of such food, it is a proof that its permanent supply compared with the demand is very scanty, and on the common principle of supply and demand, it must be of high value there…
In China, the legal interest of money is said to be three per cent. per month. But it is impossible to suppose, when we consider the state of China, so far as it is known to us, that capital employed on the land can yield profits to this amount ; or, indeed, that it can be employed in any steady and well-known trade with such a return… It is probable that, with the exception of occasional speculations, the money which is borrowed at the high rates of interest noticed in China and India, is borrowed in both countries, rather with a view to expenditure, the payment of debts, or some pressing necessity, than with a view to regular profits… It is probable however, as in the case of China and India, that profits would not be excessively high. This would depend indeed mainly upon the supply of capital in manufactures and commerce ; if capital were scarce, compared with the demand for the products of these kinds of industry, profits would certainly be high ; and all that can be said safely is, that we cannot infer that they were very high, from the very high rates of interest occasionally mentioned…