“In other words, silver, the money metal of that continent, was sent to Asia instead of commodities, not because commodity-prices had risen in the country which produced them (England), but because prices had fallen, as a result of over-imports in the country which imported them; and this despite the fact that the silver was received by England from France and had to be paid for partly in gold. According to the Currency Theory, prices should have fallen in England and risen in India and China as a result of such imports.” (p 552)
According to Overstone, “money should be "dear" because capital is "scarce."” (p 552). But, Marx quotes the testimony of an old Liverpool merchant, to demonstrate that the abundance or scarcity of “capital”, here commodities, used as inputs, does not determine their prices, nor the profit that can be obtained from its employment.
Wylie testified that cotton spinning was the most profitable business in 1845, with very large rates and masses of profits being made. There was a large stock of cotton and the price was less than £0.02 per pound. The cost price of the produced yarn was around £0.035 per pound, and sold at around £0.045 per pound. He went on to say that in 1844, the stock of cotton was around 627 thousand bales, with a price of approximately £0.025 per pound. The highly profitable period of cotton spinning had ended at the start of 1846. In 1848, Wylie continued, the stock of cotton was only half what it was in 1844 (in other words this 'capital' had become more scarce). Yet, in 1848, the price of the cotton had fallen to around £0.02 per pound.
Moreover, at the end of 1847, the price of yarn had fallen to around £0.03 per pound.
“... yarn was sold at the purchase price of the cotton from which it had been spun.” (p 552)
In other words, the rate and mass of profit fell considerably. Yet, in 1844, the rate of interest was 3%, but, by the end of 1847, it had risen to 9%.
“The prices of cotton were depressed far below the price which corresponded to the state of supply by the complete stoppage of sales and the panic with its ensuing high rate of interest. As a result, there was an enormous decrease in imports in 1848, on the one hand, and, on the other, a decrease in production in America; hence a new rise in cotton prices in 1849. According to Overstone, the commodities were too dear because there was too much money in the country.” (p 553)
Wylie, giving the view of the industrialists, and merchants affected by the Bank Act, as opposed to the bankers that were behind it, says,
"These principles seemed to me to be of a nature that would give an artificial high value to money and an artificial and ruinously low value to all commodities and produce."
"As bills at four months, which is the regular course of drafts, from manufacturing towns on merchants and bankers for the purchase of goods going to the United States, could not be discounted except at great sacrifices, the execution of orders was checked to a great extent, until after the Government Letter of October 25 (suspension of the Bank Act), when those four months' bills became discountable" (2097).
"2102. Last October [1847] there was scarcely an American buyer purchasing goods here who did not at once curtail his orders as much as he possibly could; and when our advices of the dearness of money reached America, all fresh orders ceased." — "2134. Corn and sugar were special. The corn market was affected by the prospects of the harvest, and sugar was affected by the immense stocks and imports." — "2463. Of our indebtedness to America ... much was liquidated by forced sales of consigned goods, and I fear that much was cancelled by the failures here." — "2196. If I recollect rightly, 70 per cent was paid on our Stock Exchange in October 1847.” (p 553)
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