Cornell University Library HG 529.W22 ‘lil mT Nn iit New York State College of Agriculture At Cornell University Ithaca, N. Y. — Library BIMEYALLISM ayo MONOMEYALLISM INTERVIEW WITH THE MOST REV. DR. WALSH, . Archbishop of Dublin. WITH INTRODUCTION BY JAMES CROSBY. me LIBRARY | JAN. 20. 1946 - pert. OF AGRIC. ECON ARCHBISHOP WALSH ON BIMETALLISM 44 Wevecict hy A MASTERLY TREATISE ON THE’ igus FOR FREE SILVER. INTRODUCTION. The pamphlet on “Bimetallism and Monometallism” by the Most Rev. Dr. Walsh, Archbishop of Dublin, Ireland, is undoubtedly the strongest and clear- est exposition of bimetallism that has yet appeared in the English language. It has received the hearty endorsement of many eminent economists, states- men and philanthropists in every part of the civilized world. Many of our most enthusiastic advocates of bimet- allism owe their conversion to a care- ful study of this book. In no other single book are all the arguments for and against free silver so clearly pre- sented and dissected as they are here. The Archbishop is a skilled logician and rhetorican and succeeds in making this abstruse subject so simple that any one with ordinary intelligence can master it. This treatise has exerted a great influence upon thought in this country. It has been circulated in ev- ery town and city and the farmers have had their eyes opened by a pe- rusal of tts luminous pages. It has had much to do in the wonderful pro- gress made by the silver ¢ause in the past two years. In the great political campaign which we have now entered one of the great parties has declared for the maintenance of the single gold stand- ard or monometallism; while the other great party has declared for the re- monetization of silver at the ratio of 16 to 1, or bimetallism. This ig the problem to be settled by the great po- litical battle we have now begun, viz., which shall tt be: Bimetallism or Mono. metallism? From indications it now seems that the bimetallists by a vigor- ous campaign can achieve a splendid victory. This is to be a campaign of reason. The people are hungry for lit- erature on the silver question. When victory shall have been achieved it will be found that this little pamphlet will have done much in bringing about the devoutly-to-be-wished eonsummation. Archbishop Walsh writes for the purpose of showing the relation which bimetallism bears to the Irish land question. His analysis applies to this country just as forcibly as it does ia Ireland. The American reader must remember that the same arguments which prove that the Irish tenant farmer is robbed by the maintenance of the single gold standard, apply with the same force to every man who is a producer and to every country where the gold standard is maintained. The maintenance of monometallism pro- dueées the same evil results In every country which adheres to it. Nothing can prevent the impoverishment of the producers and the enrichment of the bondholders and money lenders +0 long as we are foolish enough to de- ‘stroy one-half of our primary money. We now have the gold standard in this country. Prices are low; labor ts idle, and poverty exists all over this land - y% of ours: whichis capaiie, of, _siipporting in comfort maty times ‘fits present pop- ulation. To all wh dpe: dis datisfied with ‘present conditions. an ate is extended to tend: what; Archbishop Walsh § 8 to saKe Evety }ine in this treatisé ae been Cscrptinized by tne advocases ‘ot the atipie: standard, but after four’ seays\ | ehke ulation, not one error has been shown nor a single ar- gument refuted. The leading propositions demonstrat- ed in the treatige are these: There is not enough gold with which to do the business of the world. In every coun- try where the gold standard is main- tained a greater demand for gold exists than can be supplied. This results in {ncreasing the value of gold. When gold appreciates in value it means that more products must be given for a cer- tain amount of gold. This results in enriching all those whose incomes are fixed, and in ruining those whose ex- penditures are fixed. This deplorable condition of things will exist so long as the single standard is maintained. There is a simple remedy for the social evils which threaten to destroy civiliza- tion itself. The remedy is to adopt the system advocated by bimetallists the world over—remonetize silver by coin- ing it free and unlimited at the ratio of 16 to 1. Not to do this is to invite absolute ruin to the producing classes. This can be done as soon as the peo- ple wish it. At the end of the decade January 1, 1890, the rea] estate mortgage indebt- edness in the United States, amounted to $6,019,679,985 represented by 4,777,- 689 mortgages. The interest upon this enormous sum amounts annually to $397,442,792. This interest must be paid in gold. Owing to the great de- mands made upon gold and the dis- criminations of governments in its fa- vor, its value is continually increasing. This means that, measured by pro- ducts, it takes more and more to pay this sum yearly to the mortgage hold- ers. This cannot be done successfully. Financial ruin must result sooner or 3 BIMETALLISM ‘AND MONOMETALLISM. - later. This is the reason why all prop- erty in the country is gravitating into the hands of the owners of gold and the producers are becoming tramps. ‘We pay annually to English bondhold- ers in the shape of interest and rent over $150,000,000. It is clear: ly to the interest of the English bond. holdér that this money be very valu- able. This is why the English shylockg are in favor of the gold standard, They want a standard that is scarce and is continually appreciating in value. They have it in the gold stand- ard. Is it any wonder that English and Eastern bondholders contribute money freely to the campaign commit. tee of the Republicans? Is it any won- der that the producers of the country are uniting under the banner unfurled by the Democracy at Chicago? It is about time, indeed, that the producers cast off the chains which bind them. The remedy is to increase the primary money of the country by coining silver at the ratio of 16 to 1. This will bring gold down to its natural value; furnish enough money to do the business of the country and start the wheels of industry once more. : Archbishop Walsh’s treatise proves the necessity for bimetallism and the possibility of establishing and. main- taining it. The very fact that Arch- bishop Walsh wrote this treatise brands as falsifiers those who assert that the advocates of free silver are anarchists and repudiationists. Bimet- allists repudiate dishonesty. The gold standard results in robbing the masses and in enriching the classes. All hon- est people should, therefore, repudiate it. We want neither a fifty-cent nor a 200-cent dollar, but a 100 cent dollar, good all over the world. The treatise also proves conclusively that the free silver agitation is not kept up by the silver barons and their paid hirelings only. No one will be so lost to shame as to accuse the learned and saintly Archbishop of Dublin as being either an anarchist or an advocate of dishon- esty. Nor will he be accused of be- BIMETALLISM AND ing in the employ of the silver barons. His Grace sees the misery which the maintenance of the gold standard has brought upon the producers of the world; he sees the remedy and bravely proclaims it. All honor to him for his honesty and courage. The treatise is written, as the reader Fei: MONOMBETALLISM 5 will observe, in the form of an inter- view. The interview first appeared in the Freeman's Journal and National Press ef Dublin. The present edition hag numerous additons which bring out the thought more clearly than was done ip the original interview. JAMES CROSBY. Question.—The connection, your Grace, be- tween bimetallism and the Irish land ques- tion does not seem very close. Angwer.—Yet nothing could be closer. The adoption of bimetallism, or of some equiva- lent remedy, if there be an equivalent rem- edy, is, I am convinced, a matter of impera- tive necessity; that is, if the agricultural tenants of Ireland—and I do not at all limit this to Ireland—are to be saved from other- wise inevitable ruin. This is transparently obvious to every one who has mastered even the elementary facts and principles of the case. But it is dis- heartening to find that, notwithstanding all this, no intecest seems to be taken in this grave question by many of the leaders of Irish opinion. If things go on as they are, even the ex- cellent land purchase scheme which is as- sociated with the name of Lord Ashbourne may become, before many years are Ovgr, a source of widespread disaster to the tenants who have purchased under it. Question.—But no one seems to be aware that any such danger is ahead? Answer.—On the contrary, it is thoroughly well known to every bimetallist. The monometallists also—at all events very many of them, and, amongst these, some of the more prominent champions of their cause—fully recognize the truth of it. But as there is some difference of opinion about it amongst monometallists, and as it certain- ly is not involved in any of the distinctive principles of their theory, I prefer to reserve for a little what I have to say about the sup- port, the strong support, which even the very gloomlest view of the prospects of our Irish ‘farmers recelves from the monomet- allist side. : The great point of difference between bi- metallists and monometallists in such ‘a case as this, is, that the monometallists have no practical remedy to propose, whilst the pbimetallists have. The principle of the mon- ometallists seems to be the old laissez-faire principle—that things must become a great deal worse before they can be any better. At all events they have no practical remedy to propose. ‘The bimetallista have. But, unhappily, the bimetallists cannot get any one in Ireland to Usten to them. So far as I can see, the case, in this aspect of it, is all but hopeless. i By those who know nothing about this question—and, of course, they’ are the great majority—bimetallism is set down as a sort of craze, a craze harmless only in the sense that, as is foolishly thought, a dispute about systems of currency can have no bearing upon any practical affair of life. This is a very common view. What possible chance, then, is there of stirring up public opinion upon the question? Efforts in that direction have already been made. They are fruitless, How many people in Ireland know, for in- stance, that an admirable little pamphlet hag . been published upon this question by one of the ablest of our Irish members of Parlia- ment, Mr, Knox, the member for Cavan? Question.—Mr. Knox, then, recognizes that there is a connection between bimetallism and the Irish land question? Answer.—Of course he does, To every one who knows anything even of the elements of this question, the connection between bimet- allism and the Irish land question is so ob- vious that the fact of its not being grasped by every man of Intelligence is almply inex- plicable. _ The subject of Mr. Knox’s pamphl the Irish land question as atfecton. - i difficulties that result from our monetary system no longer standing upon a bimetallic footing. “As probably every one in Ireland,” he says, “except the gombeen (money ender) man, {s a loser by the present monetary sys- tem, it seems strange that so little atten- tion has been called to the Irish aspects of the bimetallic controversy,” What those aspects are, Mr. Knox puts very plainly. Here is how he states the case: i ‘ “We have a tenantry owning a sort of half property in the soil, and their general rela- tions with their landlords are such that a re- adjustment (of rent) by agreement seems im- possible, “To meet this difficulty, two steps have been taken by the state. In the first place, rents are fixed by the land commisssion for the term of fifteen years. In the second place, money is lent to the tenants by the state for the purchase of their holdings, on terms which usually give a material redue- tion of annual payment, but make that an- nual payment of a fixed quantity for fifty years, * * *® “The tenant under a ‘Judicial term’ fi that, though his rent is nominally 4 ft quantity for fifteen years, it is really rising.’ That is to say, the rent is rising, in the sense -that, year after year, it is becoming more and more difficult for the tenant to pay 6 BIMBTALLISM AND MONOMPTALLISM. - that fixed rent out of the product of his in- dustry. Then, as to those who have purchased under the Ashbourne purchase act, Mr. Knox continues: ‘Ihe purchaser under the Ash- bourne act may not have felt the pressure as yet; but as the years go on * * * he will find it increasingly difficult to pay the ganre sum as heretofore to the state.” *Question.—Is not the subject of bimetal- lism an exceedingly obscure one? Answer.—Not at all. There-ia, no doubt, even amongst eminent financial authorities, a difference of opinion whether the bimetal- Hest view as to the direction in which a rem- edy for the existing general depression should be sought for, is the true view of the case or not. But bimetalligm is in no sense an obscure subject. There is no difficulty what- ever in understanding it—no difficulty in un- derstanding what it ts in itself, or how it bears upon the Irish land question. (The Archbishop then, in compilance with a request that he would indicate at least the general outlines of the subject, remarked that it was a subject impossible to deal with in any way that could be called brief. He then continued.) : ; Bimetallism embraces, no doubt, some points that may be omitted in a merely sum- mary exposition of it—especially in a state ment of those aspects of it that have special reference to the Irish land question. “But in any case a good geal must remain to be said. As for the Irish farmers, It is to be re membered that the way they come Into con- sideration in the matter fs this: Our farm- ers, many of them, are ‘placed wader an ob- ligation to pay, annually, a fixed amount of money—“‘fixed,’”’ that is to say, in the sense that the amount they have to pay, year after year, 1s specified in pounds, shillings and pence. There are three classes of our Irish farmers lying under such an obligation. In the first place, some have, as ordinary leaseholders, to pay, for longer or shorter periods, a sum 6o fixed. Othérs have to pay a fixed sum for fifteen years, as “judicial” tenants under the arrangements of the land act of 1881. Others—as ‘tenant-purchasers under one or other of the Irish land purchase acts—have ito pay, for forty-nine years, a fixed sum to the government. Now, in the present condition of our cur- rency laws, any obligation of paying a fixed amount of money for a prolonged term of years may bring with it financial ruin to the unfortunate tenant who has undeftaken that obligation, or upon whom it has been imposed by law. Indeed I may say that, under the operation of the present monometallic system of cur- rency, any such obligation must, in the course of time, bring with it, if not finan- cial ruin, at all events most serious finan- clal embarrassment. The reason is obvious. The conditions of the case are such that, not- withstanding the so-called “fixing”? of the amount to be paid each year, the payment of ~ the amount thus “fixed” in pounds, shillings and pence, really represents a burden grow- ing heavier and heavier from year to year. This is bow the tenants’ case etands, in view, at all events, of the bimetalllsts—to say nothing, for the present, about the extent to which, upon this particular point, the views of the bimetallists are shared by some leading upholders of monometallism. As for the bimetallists, it is important to remem- ber, especially upon a point such as this, that one of the leading champions of bimetallism, is Mr. Balfour, our late chief secretary for Ireland. With Mr. Balfour, then, as with all bimet- allists, 1t 1s a cardinal principle that, as a direct result of the present monetary system of England and of other leading commercial European countries, every one who is under an obligation to make a yearly or other pe riodic payment of a “fixed” amount—as, for instance, a ‘judicial’ tenant under the land act of 1881, or an Irish tenant-purchaser under the Ashbourne act of 1885 or any sub- sequent enactment—is thereby placed under a burdex which necessarily grows heavier from year to year. All this, the bimetallists make good in proof. But, quite apart from the proofs which they bring forward, can any one al- lege thet even the mere authority of 60 many men of eminence in financial, science as are to be found in the ranks of the Dbi- metallists ought not to count for a good deal? It surely should suffice, at the very least, to show that any one—any tenant, for instance —will have only himself to blame for what- ever disaster may befall him, if he disre- gards the clear and impressive warning given him by Mr. Balfour and other bimet- allists, and takes upon himself an obliga- tion to pay yearly, for forty-nine years, or even for fifteen years, a “‘fixed’’ amount of money—that is to say, an amount specified in pounds, shillings .and pence—without making full allowance in his ealculations for the risk, the existence of which they put so plainly before him, the risk he runs of finding himself, as years go on, overloaded, and, in the end, crushed, by the weight of an ever-increasing burden. The bimetallists may be right or they may be wrong. But, at all events, if they are right, then it is undisputably plain that the Irish tenants who have the misfortune to have their rents ‘“‘fixed’’ for terms ef fifteen years, under the land act of 1881—and, much more so, the Irish tenant-purchasers, who have the misfortune to find themselves sad- dled with the obligation of making annual payments ‘fixed’ for forty-nine years—are simply sipping down an inclined plane, with bankruptcy awaiting them at the bottom of it. ” It is only quite recently that I came to know something of the gravity of the present state of affairs. Now that I have become aware of it, I feel bound, as a matter of pub- lic duty, to do what I can to bring it to the knowledge of those whom it most concerns. BIMDTALLISM AND In connection with all this, I would again call attention to the fact that, in such a case, Mr. Balfour's authority must be recognized ws of exceptional weight. Surely the ten- ants, and those who advocate or represent the tenants’ views, ought to insist that this point, which is brought out so forcibly by My. Balfour and others, shall be taken into accouat as an Important element In the fixing of fair rents for terms of yeirs, and—as a matter of still higher importance—in the fixing ef terms of purchase involving the obligation of fixed annual payments for still longer perlods. ‘The point, ag I have already stated it, is that, so long as our monetary system remaing what it bs, every one who is placed under an obligation to make yearly payments of a fixed amount of money, Is thereby placed under a burden which is growing heavier from year to year. : If this point be Insisted upon, as assuredly it ought to be, by the tenante and by thelr representatives and advocates, how can the landlords, ot those who advecate and repre- sent the views of the landlords, take It upon themselves to eay that the bimetallista are not to be listened to in the case? Their ideal statesman, our late chief secretary, they must be reminded, is a pronounced and thor- oughgoing bimetallist. From this polnt of view, Mr. Balfour's emphatic and unquall- fied declarations are of momentous import- ance. Then, if anything more is wished for than the mere authority of the bimetallists—more even than the mere authority of Mr. Balfuor bimself—let me point out how their conclu- sion is reached. I happen to have here a statement which I wrote, for another purpose, some time ago, and which I can give to you. It Is a stae- ment of a few elementary facts and prin- ciples of political economy—facts and prin- ciples that underlie every explanation of the currency question. The points set out in It are purely elementary matters. They re- quire, I think, no explanation, as tHey cer- tainly require no proof. They are these: First—Money forms our common medium of exchange. At first, commerce, such as it was, had to be carried on by a system of pure barter—the system in which, for in- stance, 6o many sheep were given in éx- change for so many cows, so much corn for so much wool, add so on. ‘Then, as clv- ization progressed, this system af pure par- ter waa displaced by the employment of a common medium of exchange, available in all cases of selling and buying. Great dl- versity existed among various tribes and peoples in the choice of the particular me- dium employed. In some places, sking were used; in some, leather; in some, corn; in some, cattle Then came a higher stage of development, when metals, such as iron, tin, lead and copper, were employed. But now, with practical universality, all other ma- terials for standard money have given place to gold and sliver. -posed upon the substance; that 1s all; the, , value, MONOMDTALLISM. 7 Second—Money, as regards its primary function, ig shnply a commodity, selected. first by custom, and (often, but not always) confirmed by law, as an intermediary in transactions-a something for which, In a civilized community, any other thing can be sold, and with which any other thing can be bought, In other words, a particular, commodity is selected to perform the function of a common measure of value; put it is, and remains, a commodity. Gol | remaing gold, silver remains silver, while they perform this function of money; and. they remain subject to exactly the same laws! of exchange as before. A new use igs im- substance Itself is unchanged.” : Third—By the ‘‘value”’ of money, we are to understand its “exchange value,” or, in other words, its purchasing power; that is to say, the power which the p@Bxesslon of money gives to those who possess it, to go into an open market, and obtain, in ex- change for their money, the things that are on sale there, Fourth—The metals, gold and silver, like all other marketable commodities, are Hable to fluctuations in value; their value being controlled, like that of all other commodities, by the law of supply and demand. This means that if gold and silver are to be had in abundance, a smaller quantity of other commodities—as, for instance, less corn, less hay, less butter—will havé to be given in ex- change for a definite quantity of gold and sil- ver. On the other hand, if gold and silver are not so easily to be had, then, a larger quantity of other commodities—more corn, for instance, more hay, more butter—will have to be parted with, to obtain in ex- chauge for them the same quantity of these metals. Fifth—“It is now universally admitted in works of political economy that any such thing ag a commodity with absolute stabil- ity of value 1s unattainable.” : Sixth—“The most !mportant characteristle of a good monetary standard {s, that it should preserve comparative stability of The principal reason why, of the multitude of commodities that have been used for the material of money at different times, gold and silver have survived as the fittest, is because thelr great durability ren- der the total stock extremely large com- pared with the annual suppjy, and thus elim- inates one element of instability of value.” Seventh—Another special advantage of gold and silver for monetary purposes is that both the weight and the pumty of coins made from them may easily be ascertained. ‘At first, after gold and silver were generally adopted, the risk of being defrauded by in- ferior quality or adulteration was left entire- ly to the receivers of the metals; in fact, gold and ellver circulated between the inhab- {tanta of the country simply as merchandise. * * © Very early, however, it began to be recognized that there would be great con- venience if pieces of the metal were certl- fied by authority to be of certain weights and fineness; and, accorditigly, coinage has al- iways been one of the first Industrial fute-- tions that governments have underta@ken.”” ' Highth—Coinage is only a process of brand- ing or stamping, and nothing else. The pro- cess of minting certifies two things: first, that the coin is of a certain weight of gold or silver, as the case may be; and, secondly, that the gold or silver of which the coin is composed is of a certain specified degree of purity:. But minting—the minting, for in- stance, of gold Into a sovereign—adds nothing to the piece of metal that is coffied. Ninth—It is not, however, to be supposed that the commodity, gold, or the commodity, silver, does not ‘derive a special value from the fact of its being constituted a standard. mohetary metal. ‘Law singles out gold or silver or both, to be used as money, and gives them special functions which it confers on no other commodity. \In virtue of this se- lection, the.demand for these metals is great- ly increased, and, as they. are only of limited production, their value is increased accord- ingly.” Tenth—A sovereign is a minted coin con- sisting of a certain specified welght of gold, of a certain specified fineness. The weight of a sovereign when issued from the mint is the 160-623rd part of an ounce, or 123-27447 grains, of standard gola. Eleventh—A fluctuation in the value of gold involves a fluctuation in the value of the sovereign. This, of course, does not mean that the sovereign can ever become worth more or less than twenty shillings. That would be a contradiction in terms. For, ‘a shilling” means merely the twentleth part of the value of a sovereign. When we say, then, that the value of a sovereign may fluctuate, what we mean is, that the sovereign, as a medium of ex- ‘ change, will sometimes have a greater, some- times a lesser, “exchange value’ or purchas- ing power. The reason of the lability to fluctuation in the purchasing power of the sovereign Is plain. When gold rises in value, a larger quantity of any other commodity—say, of corn, of hay, of butter, or of cloth—will have~ to be given in exchange for any given quan- tity of gold, such, for example, as the quan- tity contained in a sovereign. On the other hand, when gold falls in value, a smaller quantity of any other commodity—say, of corn, of hay, or of cloth—will suffice to ob- tain in exchange for it any given quanilty of gold, ‘such as that contained in a sovereign. Twelfth—It is an obvious inference, that our gold coinage, however useful as a me- dium of exchange, does not furnish us with a standard of yalue, fixed and unalterable, It does not furnish us, for example, witn such a standard as the yard fs of length, or as the potind Troy js of, weight. Thirteenth—The popular notion, then, of the soverelgn, or pound sterling, constltut- ing a fixed standard of. value, is merely a popular delusion. BIMETALLISM AND MONOMETALLISM. . The sole foundation for that delusion man- ifestly is, that; in these countries, the val- ues of all commodities are commonly stated In terms of the pound sterling, In other words, {n pounds, shillings and pence—‘g shilling’? meaning the twentieth part of a pound, and ‘fa penny,’’ the twelfth part of that again, The natural result of this meth- od of expressing the values of commodities other than gold, is that, when priceg rise or fall, the impression is conveyed to a super- ficlal observer that it is the value of all other things that changes, the value of the sover- eign remaining fixed. , Fourteenth—In Great Britain—and the same ig true of Ireland, and of many other countries—gold being the one standard metal, all prices are stated in terms of the sovereign, or of parts of the Sovereign, So that, for instance, if, at any time, a certain quantity of corn sells for £100 5s, 10d., this means that this quantity of corn representa, in exchange-value, 100 sovereigns, with the fourth part (5s.) of the value of a soverelgn, and the sixth part (10d.) of that again. But in countries, such as India, where sil- ver is the one standard metal, all prices are stated in reference to the rupee—a standard silver coin which may be compared, roughly, with our two-shilling piece. Prices stated in terms of a standard gold coin, as they are stated in England and Ire- land in terms‘of the sovereign, are spoken of as “gold prices.”” Prices stated in terms of a standard silver coin, as they are stated in India in terms of the rupee, are spoken of as “silver prices.’’ Fifteenth—The price of things estimated in gold—their “gold price’—may change, whilst their price estimated in silver—thetr “silver price’’-—remaing unaltered.’ This will occur if the value or Purchasing power of gold goes up or down, while the value or purchasing power of silver remains unaltered. Suppose, for instance, that gold {gs in any way scarce in relation ta the demand upon it. Then in any country where gold is the standard metal of the currency, those who wish to obtain a certain quantity of gold whether in coin or in bullion, will have to give a larger quantity of other commodities In exchange for it, or—to put the matter In another light ~those who have only a definite quantity of commodities to part with will -re- ceive less gold in return for them. In other words, there is a fall In “gold prices.” Suppose, on the contrary, that gold is abun- dant in relation to the demand upon it, Then those who wish to obtain a certain quantity of gold, whether in coin or in dullion, will not have to give so large a quantity of other commodities to obtain the quantity of gold they require, or--to put the matter, as before, {n another light—those who have a definite quantity of other commodities to dispose of BIMPTALLISM AND will obtain more gold in return for them. In other words, there ia a rise in “eold prices.” If, in efther case, there is no change in ‘the value of silver, then the prices of commod- ities, stated in silver—their “silver prices,” as the technical phrase is—will remain un- changed, Similarly, of course, the “silver price’? of things may change, while their ‘‘gold price” remains unaltered. Question.—Is this common ground, so far, between monometallists and bimetallists? Aiswer.—Yes,° But now we reach the point at which monometallists and bimetal- lists begin to differ. Take it in this way. A country may arrange its system of standard money upon elther of two bases: it may take only one of the precious metals as its stand- ard of value—” Question.—_This is monometallism, when only one metal is taken as the standard? Answer.—Yes; no matter whether the metal selected is gold or silver. India, for instance, is a “silver’? monomet- allic country: the standard there is a rupee— a silver coin, which, as I have already said, may be compared, roughly, with our florin or two-shilling piece. - England, on the other hand, is a “gold” monometallic country, the standard coin being the sovereign. As to the-silver coir of the English currency, every one knows that, though they are current in a certain limited quantity, they are not “legal tender’ in payment of debts for any amount beyond 40s. The 'silver coins, then, of the Euglish mint are merely what are termed “token coins’’—the value of the silver in twenty of our shilling-pieces being altogether short of the value of the gold in a sovereign. Question.—How, then, is the standard of value taken in bimetallism? ‘ Answer.—Bimetallism, as some writers ex- press it, is the: monetary system in which the two precious metals, gold and silver, are taken as standards. That, however, is a misleading way of putting the case. The word bimetallism in- deed is an unfortunate one to have been chosen. It gives prominence to the idea of duality, and so leads many half-informed peo- ple to think that bimetallism, as distinct from monometallism, aims at-having two standards of value, instead of one. Now, this is not at all the case, In the bi- metallist system there are not two standards of value; there is but one, One of the es- sential requirements of a standard, whether of value, or of length, or of weight, or of anything else, is that it should be one. The word bimetallism, then, as I have said, is, in one respect, an unfortunate one to have been chosen. It gives rise to an unhappy notion that the bimetallists favor some sort of shift- ing or alternative system of standards. But MONOMETALLISM. 8 this is not so. The very opposite is the fact. Unity of standard and stability of standard— in so far as stability in this matter of a standard of value is within the reach of at- tainment—these are the very fundamental points of bimetallism. Question.—Does not monometallism also provide in the most effective possible way, at all events for the unity of the standard? Answer.—No. A little further on we shall deal with the important point of stability In the standard of value. But take first this matter of unity of standard. Does monomet- allism secure: unity? Nothing of the kind. What have we, as the result of the present preponderance of monometallism in so many’ countries? Simply division and confusion. _In one set of countries, such as England and Ireland, gold is the standard metal. In another set of countries, such as India, the standard is sflver. When a “silver’’ country, comes to trade with a “gold’’ country, such as England, see what happens. Gold and ail- ver are two independent commodities. In the markets of the world, each, from the op- eration of the law of supply and demand, is subject to its own independent fluctuations in value. There is nothing to keep the rela- tive values of the two at a fixed ratio to ona another. So, the “gold price’’ of silver, or, in other words, the “silver price’ of gold, 1s constantly changing. Take the last nineteen or twenty years, for instance. The “gold price’ of silver per ounce has ranged from 5s. 0d. down to 3s. 8d. This necessarily has affected the fela- tive value of gold and silver coins. The In- dian rupee, then, which formerly counted as a two-shilling piece—ten rupees having been, roughly, the equivalent in value of a sov- ereign—came tumbling down in value, until, ag measured by the sovereign, it was worth only is. 3d. or 1s. 4d. In other words, a person in India, who, for any purpose, had to make a remittance of £50 to Mngland, would some years ago have found 500 rupees sufficient, but of late years he might have to send 800. Question.—This change, then, has resulted from a fall in the value of silver? Answer.—It could have happened as the re- sult elther of a fall in the value of silver, or of a rise in the value of gold. So far as the facts I have as yet stated are concerned, the change in the relative values of the sovereign and the rupee may have come either from one cause or from the other. We shall afterwards deal with the cause of the change. I am now merely call- ing attention to the fact that, as things are, we have, under the domination of so-called monometallism, not one common standard of value, but two distinct standards—gold, in England, for instance, and silver in India— each metal’ being Hable to fluctuation in value, and the fluctuatioug in’ one belog 10 wholly independent of the fluctuations in the other. Plainly there is nothing in the na- ture of things to hinder gold from fluctuat- ing im value whilst the value of silver re- mains unchanged; nothing to hinder silver from fluctuating in value whilst the value of gold remains unchanged; and, in fine, noth- ing to hinder both gold and silver from fluc- tuating In value at the same time, and fluc- tuating very notably, and in opposite direc- tions. This is what we are exposed to in the pres- ent monometallic system. It in no sense re- sults in unity. It results in duality and di- vergence. Now, on the contrary, the aim of the bi- metallists—instead of being, ag is sometimes incorrectly supposed, to set up a duality of standards—ig to bring about a common stand- ard of value, as far as possible everywhere, in “gold’? countries and ‘silver’? countries alike. What bimetallists conténd for, in the first place, is that the unity which is one of the first requisites in a monetary standard haa not been attained in our present monometal- He system. Furthermore, they contend that it can be brought about only by the adop- tion of the system they advocate, which is, to make the standard of value—if possible everywhere, but, at all events, over the largest possible area amongst the commer- ‘eial nations of the world—consist, not of one or of the other of the two precious metals, gold or silver, but of a combination of the two, linked together. Question.—How can two metals be linked together, so as to form, combined, one standard of value? Answer.—That is easily shown. Here, for instance, is how they were combined in the system which was in operation in France down to 1873— Question.—_Down to 1873? Then pimetal- lism is not a mere untried theory? Answer.—So far from being untried, bi- metallism was at one time in operation in several Puropean countries, and this contin- ued for many years. But, for convenience, we may take the system as it was in opera- tion in France from 180% to 1873. Bimetal- lism was established there in 1803 by Napo- leon. At that time, the English currency system also was bimetallist. Bimetallism had been established {n England in 1717, on the recommendation of Sir Isaac Newton, then master of the English mint. It was not abandoned by England until 1816. But, speaking of France, here is how bimetallism worked in that country down to 1873. From 1803 to 1873, the French mint was open for the unrestricted coinage, whether of gold or of silver, elther metal being accepted for coinage in the ratio of 1514 to 1—for instance, 15% ounces of silver or 1 ounce of gold was coined into an equal sum of money. In 1865, the same arrangement was adopt- BIMETALLISM AND MONOMETALLISM. ed by the other countries of the group known as the Latin Union—Belgium, Switzerland, Italy, Greece. Down to 1878, then, any one, in any part of the world, who had either gold or silver dullion to dispose of, could have taken it to the mint of any of those countries and have it made into coin. Here are the three points of the bimetal- Nc system as it was carried out in those countries. First, any given quantity of gold bullion was always exchangeable at the mints for its weights in gold colns; and any given quantity of silver bullion was likewise exchangeable for its welght in silver coins. Secondly, the coins given out in return for any weight of standard gold bullion, were of 15144 times the value of those given out in return for the same weight of silver bullion, Thirdly, all those coins, whether of silver or of gold, were “legal tender,” within the country, for the discharge of all debts, to any amount. It can hardly be necessary to polnt out that when the two metals are thus taken Into the standard currency, the fixing of a ratio of value between them—that is, be- tween the mint value of a given weight of one and the mint value of the same weight of the other—is a matter of absolute neces- sity. Bxcept at a fixed ratio of value between ‘them, the two metals could not be kept in circulation in a country as money. That is admitted on all hands. If no check were kept upon the tendencies to divergence be- tween the respective values of gold and sil- ver—the value of each being left to be deter- mined merely by the chances of supply and demand in the markets of the world—com- merce would be rendered practically impos- sible.. For it would be open to debtors to discharge their obligations in one or in the . other according as one or the other was, for the time, proportionately lessjin value. That would be utterly subversive $f the certainty which is an essential basis of all commer- clal transactions. Questlon.—_Whilst the French and other mints were open for the unlimited coinage of gold and silver, the English mint was not open for the colnage of silver to the same extent? Answer.—No; nor for many years before 1873. _England had abandoned bimetallism In 1816, when Lord Liverpool made what every bimetallist must consider the deplor- able mistake of substituting a gold mono- metallic system for the bimetallic system which has been maintained in England ever since Its adoption, on the recommehdation of Sir Isaac Newton, a hundred years be- fore. Since then, silver has been coined in Eng- land in limited quantities only. It is not a legal tender for gums over 40. | BIMPTALLISM AND Question.—_What are the practical disad- vantages of monometallism? Answer.—The first and most obvious ob- jection against a monometallic system of cur- rency ig that it leaves the standard of value open in the most unguarded way to the op- eration of every influence that tends to de- prive it of stability. Ina monometallic sys- tem, the standard coin, whether it be of gold or of silver, is necessarily exposed to fluctuations in value which may be very con- siderable, and may easily lead to most se- rious, and even disastrous, results. We have already seen that the value of a standard gold or silver coin is simply the value of the metal of which it {s composed. Now, the value of each of the precious met- als, as of any other commodity, is open to wide fluctuations. ‘The value of either of them, like the value of any other commod- ity, is determined merely by the run of the market, the relation between supply and de- mand: Now, monometallism, as even the most ex- treme monometallist must admit, does noth- ing to exclude this liability to fluctuation, or even to diminish it, Take, for instance, the English gold monometallist currency. Gold, and consequently the soverelgn—that 1s to say, the weight of gold contained in a sov- ereign—is Mable to fluctuations in value, just as corn is, or cotton, or cloth, Ev the most extreme monometallist will allow that monometallism does nothing even to check that liability to fluctuation. Then there is a second point,. the fuller ex- planation of which may be reserved for a Uttle furthe” on. Monometallism, as we have it in Gréat Britain and Ireland, in Germany, and in so many ‘other countries, tends fo raise the value of gold, thereby favoring the interests of all capitalists, the interests of all those who have command of gold—money-lenders and the like—favoring all such persons at the expense of the general community, and favoring also the interests of all who have a élaim to receive a fixed money payment from others, favoring these at the expense of their unfortunate debtors. . oe -Question.—But in England, for instance, where bimetallism was abandoned in the early part of this century, no harm seems to have come of the change—at all events, until recently? Answer.—No, and for a.very excellent rea- gou. For, although the change from bimet- allism to monometallism was made in Eng- land so far back as 1816, England did not then feel the effects of the change—nor in- deed were they felt anywhere—for many years afterwards. They were not, in fact, felt until 1873, when, consequent upon the abandonment by Germany, and otber countries, of their for- mer silver standard of currency, and their adoption of a gold standard, France~and, MONOMETALIISM. il with France, the other countries of the Latin Union—followed the example which England had set fifty-seven years before, and closed their mints to the free coinage of silver, thus destroying the link between the two metals, and breaking down the very foundations ot, the bimetallic system.» Until 1873, the existence of bimetallism over the large area in which it was stil maintained, practically saved the whole com- mercial world from feeling the effects of monometallism. So long as the mints of so many countries were kept open on bimetallist penctples, everything went on almost as be- ‘ore. Question.—But how could the maintenance” of bimetallism in France and those other countries have affected the relative value of silver and gold elsewhere? How could it have affected their relative value, for instance, in England? Answer.—In this way. Those who had; for example, silver bullion to dispose of—say,’ in England—would not part with elghteen or twenty ounces of it for an ounce of gold, when by sending’ it to a public mint, in France, for instance, they could get ag yal- uable an equivalent for 15% ounces, Of course there was some little expense in the transmission from London to Parts,’ This, and other incidents of the case, varied’ slightly from time to time. Henca’ the maintenance of the bimetallic system in France and other couhtries did not, and could not, keep the values of gold and sil- ver, throughout the commercial world, at an absolutely fixed ratio to one another.’ But the fluctuations in their relative value were so slight that the ratio of their values was practically fixed at 15% to 1. During all those years, the oscillations in the relative value of the two metals from the French legal ratio of 15% to.1 were so slight that, as a rule, they did not: pass 15% to 1, on one side, or 15% to 4, on the other. Thus the fluctuations of value in the monetary standard, not only in the coup - tries of the Latin Union, but elsewhere throughout the whole commercial world, were reduced to a minimum. But in, 1878 came the disastrous change. The safety; valve that had been kept open by the act; ion of the French and other mints was then screwed down. So the results of mon: ometallism at once began to make them- selves seriously “felt all round, and no where more seriously than in Ireland. Question.—But what difference could it make, except, perhaps, in the way of in- ternational trade between gold-using and silver-using countries?’ Answer.—Bven if it affected nothing else, the results might be disastrous. See how it has affected the state of trade between Bngland on the one hand, and India and the other silver-using countries of the Hast, on the other, 1 BIMETALLISM AND Take, for example, the great cotton man- ufacturing industry of Lancashire. Look- ing into this matter in detail a few days ago, I came across the following figures: From February to August, 1890, the rupee, which, as measured by the soverelgn, used to count practically as a two-shilling coin, but had then fallen’to 1s. 5d:, went up again in value to 1s. 94. Then, from Aug- ust, 1890, to February, 1891, it fell from 1s. Od. again to 1s. 5d. In March Jast, the ex- change value of the rupee dropped so low as ls. 2%d.; and this was a fall of 234 per cent within three days! As the case, then, was put by one of the speakers at the recent meeting in Man- chester at which Mr, Balfour spoke, the rup- ture of the link which, until 1873 had kept the proportionate values of gold and silver uncltanged, ~has resulted in such violent and continuous oscillations in the rate of exchanage between England and the East that is to say, between the standard gold coin of England and the standard silver coin of India, the sovereign and the rupee— as to reduce the cotton export trade of Manchester “almost to a game of chance, © ¢ * a gamble in allver, rather than an investment in cottons.’ And Sir David Barbour, in his tnanclal Statement for India, for 1891-92, says the same thing, almost in the same words:— “Trade between England and India was reduced to mere gambling, the fluctuations in exchange being so great as to more than counterbalance the effect of the other ele- ments which the trader has to take into consideration. i “Tt has even been sald, with some truth, that at one time !t would have been better for the merchant to dismiss his establish- ment, and confine himself to speculations {mn silver; his expenses would have been leas, and bis chances of profit quite as good as in his legitimate business.’’ But this’1s not all. The merchant In In- @ia who has to pay in rupees cannot afford to go on, year after year, paying more and more rupees for the ‘same quantity of goods, ; For, we must remember, the present state of things is the result of a rise in the Value of gold rather than of a fall In the value of silver. Prices, measured by a sil- ver standard of value—as they are meas- ured in India and the other countries of the Bast—have remained, we may say, un- ehanged. In India, the rupee has under- gone practically no loss of purchaslng power. Whilst the Indian merchant, then—if he continues to buy his goods in England— has to pay 14 or 15 rupees instead of 10, for every pound’s worth, he cannot raise the price to his retail consumers in India. So @hat, unless the manufacturer in England @aa reduce bis prices, and reduce them so MONOMBTALLISM. as to cover by the reduction the notable fall that has occurred in the Yalue of the silver rupee as measured by the sovereign —which, of course, he cannot do without a heavy sacrifice of profits, perhaps éven with- out a rulnous loss—the Eastern merchant must give up buying In the English market. Now this is what is actually going on from day to day. Trade with the East is rapidly leaving England. Take, for in- stance, these facts, stated In the speech of Mr. J. A. Beith at the Manchester meet- ing, from which I have already quoted: “Not only has our Eastern trade been re- tarded, but the practical refusal to take payments in the money of the East excep at an enormous discount, has diverted thq channels of trade; and silver-using coun- tries such as China have felt themselves compelled to go past Manchester, and to trade with silver-using countries, “Now the figures on this question are ab: solutely appalling. “For ten years before this change came (in 1873), Indian mills were in existence, and were working vigorously, and making progress in India; but during the whole of that ten years they were practically able five million pounds per annum. * © & “In 1874, the total exports of yarn from the Indian mills to China and Japan amounted to only 1,000.000 pounds, It waa only in 1875, and when silver had fallen 3d. per ounce, that the 1,000,000 pounds of ex- ports, which it had taken. Indian mills nearly ten y@ars to get up to, at once ex- panded, as if in obedience to the wave of an enchanter’s ; wand, into 5,000,000 pounds. : “In 1880 there was a further fall of 54. per ounce, and, consequently, a further ad- vantage to the silver of India and China, as compared with England accepting only gold payments, and so then, the @ mil- lions of exports from India became twenty- five millions. “In 1885, anther fall took place, and the twenty-five millions became seventy-five millions. In 1889, there was a further fall of 5d. in silver, and the seventy-five mil- lions became one hundred and twenty-seven millions. In 1891 there was atill a further fall, and the,one hundred and twenty-seven milions of exports of yarn from India to China became one hundred and sixty-five millions; so that, {in seventeen years, through the operation of this cause chiefly, one million pounds of yarn exports per ans num had risen to one hundred and alxty- five millions pounds per annum. ® ® “This means that India ts how sending six times as much as the United Kingdom sends to China and Japan, and twice ag much as the United Kingdom sendg to I» dia, China and Japan together!§ yy BIMBTALLISM AND Question.—Then it would seem that Eng- Jand‘s loss is India’s gain. Answer.—Unfortunately the loss is not even compensated for in that way. In say- ing this, I do not mean merely that the change in the current of trade brings profit rather to a small section of English and na- tive capitalists who have invested in In- @ian, mills, than to the general population of the country. That indeed is true. But, as regards Indian Interests, there is a far more serious aspect of the case. For, it must always be borne in mind that India has contracted heavy debts, the {interest on which has to be paid in gold. Whatever profits, then, an increased activi- ty of trade may have brought to India, these are more than absorbed in providing for the loss.which India has to bear on the remittances of cash—that is to say, from In- @ia'a having to pay more and more rupees for the gold she has to send to England and elsewhere, In payment of Interest. In the Report of the Gold and Silver Com- mission of 1888, the extent of the addition- al demand thus made upon the Indian gov- ernment, that is, In other words, upon the taxpayers of India, is made very plain by the statement that the extra charge re- sulting from a fall of even 1d. In the ex- ‘change—from the rupee being worth 1s. 5d. instead of is. 6d.—amounts to the enor- mous sum of 11,000,000 of rupees for the year. Question.—That commission, then, invest gated the question of bimetallism? Answer.—It was, I may say, eppointed for that purpose. The commission was com- posed of twelve members, They drew up a singularly Interesting report setting forth all the accepted facts of the case, and set- ting forth, also, very fully, the arguments and counter-arguments of monometallists ‘and bimetalliste on the various facts ad- ‘@uced. That is the first part of the report. It represents the unanimous view of the commission, It was signed by the twelve members. Then come two supplementary reports, one eigned by the monometollist members of the commission, the other by the bimet- allista, But the first portion of the re- .port, signed unanimously by all twelve, might be quoted in support of almost ev- erything I have stated to you 50 far, As to the point we are here dealing with, 1 take the following from that section of ‘the report which was drawn up by the six monometaliist members of the commission.: “There cannot be two opinions as to the very sérious effect which the continued fall in the gold price. of silver has bad on the finances of the government of India. Unless expenditure is diminished, every additional fall in the value of the rupee fenders additional taxation necessary. if s Gacit ls to Da avoided, © * & MONOMETALLISM. iMG 13 “We are fully impressed with a sense of ; the difficulties which surround ‘the - Indian government, and of the serious questions to which any proposed additional tax must give rise. “Jt is not only the embarrassment which has already been caused to the government of India that has to be borne in mind, but the impossibility of foreseeing to what extent those embarrassments may be in- creased, and their difficulty augmented, by a further depression.” All this was written in October, 1888. Then see how things have been going since then. On the 31st of last March, the fol- lowing telegram, from ita Calcutta corre- spondent, appeared in the Times : “The continued and unprecedented fall in exchange is causing universal consterna- tion, and threatens to paralyze all trade, “Much indignation is expressed at the apparent @pathy of the home government.” A few days afterwards, the Times had the following in a leading article: “The unprecedented fall in the rupee fs causing great concern to all connected with India, On Friday, our correspondent tele- graphed that the feeling in Calcutta wa of ‘universal consternation.’ ‘The evil threatens,’ he says, ‘to paralyze all trades, and much {indignation Is expressed at the apparent. apathy of the home government.’ “That the position 1g very serious, and in some respects disastrous, 1s beyond dis- pute. * * © “The government of India finds Itself gaddied with a currency that 19 the sport sg CLUS nee over which it has no con- rol. : “The effect has been to increase the bur- den of Its public debt, im sterling, by 60 per cent. during the past twenty-elght years, quite apart from new horrowings} to reduce large numbers of {ts servants to pecuniary distress; and to affect grain prices {n a way which seems, to some ob; servers, to intensify every local failure of the crops, and to threaten the poore classes with a chronic artificial scarcity of food.” i All this makes it very plain what a ser- fous error it would be to suppose that the loss in which the fluctuation in the relative value of the rupee and sovereign has re- sulted In Lancashire has been made up for by a gain to India. i Then, besides all this, there has been, for India, another serious drawback. resulting from the present currency arrangements, As a result of the existing state of confu- ‘sion, 1t hag become Impossible for India to obtain the loans that are absolutely necessary for the development of the re sources of the country. { Here is a clear statement on this points “The total mileage of railways in Indig fa only 16,096 miles, many of the lines be 14 BIMETALLISM AND {ng only for strategic purposes and prac- tically useless for trade; and the constant ery, for years past, of British merchants, and of those best acquainted with India’s requirement%, has been for great railway extengions. But the Indian government, whilst under successive viceroys recogniz- ing these needs, has had to proceed with the work on the smallest possible scale. “The explanation is very simple. It is because the Indian government has to bor- row the cost of construction in gold, and the interest on her debt has to be pald in gold, whilst, on the other hand, the reve- nue of India is raised in silver. “A fallin exchange, therefore, means that a larger amount of silver has to be raised to pay the interest on the gold debt. “To take an extreme case. Suppose a loan of £10,000,000 for an Indian railway had been raised when the rupee was at 2s. That would represent 100 millions of ru- pees; and, at 4 per cent. interest, the In- dian government would have to pay the bondholders 4,000,000 of rupees per annum. “With the rupee at about its present val- ue, however—say 1s, 4d.—the government would have to raise and pay 6,000,000 ru- pees per annum as intérest, an extra bur- den of 50 per cent. on the material pros- perity of India.” Last March the Times’had a rather inter- esting article on this aspect of the case:— “Powerful interests in England,’ it said, “demand a more rapid development of railway communication in India, * * * On the other hand, the government wisely hesitates to impose on the Indian ex- chequer the responsibility for gold loans or obligations, which it will have to dils- charge in a silver currency of vanishing value. * * * a “The truth is that railway development * * * like the development of every other branch of Indian enterprise, is now await- Ang some settlemenet as to the future of the rupee. The currency difficulty under- ‘Mes the whole situation.” In the work from which I quoted a few moments ago there is a@ very pertinent re- mark about this railway difficulty :— “At the present rate of exchange (be- tween the rupee and the sovereign; as com- ‘pared witn the old rate of 2s., or ten rupees to a sovereign), the loss to the Indian gov- ernment in remitting (to England) inter- est on loans, ete., is estimated at about 80,- 000,000 of rupees per annum. Now those 80,000,000 of rupees, if they could be saved, would construct, under ordinary conditions, about 1,500 miles of railways per annum, without adding one penny to India’s pres- ent burden in either capital or interest, * * * “Every mile of railway constructed there facilitates India’s exports, and corre- spondingly makes a new or a better market for English goods, and, by facilitating food - transports, enables us more effectively to MONOMETALLISM, provide against the horrors of ever-recur- ring famines.” A similar difficulty, it seems, exists in China. It {s now not so much ‘Celestial’ prejudice, as exchange difficulties, that stop the making of railways in that country Not long since the Chinese government en- deavored to raise a loan for railway pur- poses. But they would anly raise it in sil- ver, and have it payable both as to capital and interest in silver. European financiers, under the present monetary arrangements ef the commercial world, would not enter- tain the transaction. India, of course, is loudly clamoring for the removal of the difficulty in the only way it can really be removed, that is, by a revival of the former bimetallic currency arrangements which were departed from in 1873. ‘ But account has to be taken of the dogged resistance that indubitably will be offered to any such measure of reform, by the eap- italists, the moneyowners and money- lenders of the world. It is their interest to prop up the present system of currency. That system, no doubt, in countless ways, grinds the faces of the poor. But what matter? It is all to the profit of the owners and holders of gold. So the owners and holders of gold will hold on by it to the death. It is little wonder,-then, that in view of the tremendous opposition sure to be of- fered by all such persons, the re-establish- ment of bimetallism should have come to be looked upon as an almost Utopian idea. “ But then, what other remedy for the un- deniable and unquestionable ‘evil of the pres- ent state of affairs is to be looked for? Apart from the re-establishment of pbi- metallism, the only other practical policy that has been proposed—and {ft has been preposed only as a remedy for the special evils arising out of the difficulty about ex- change between gold-using and silver-using countries, such as England and Indla—ts the adoption of a gold standard for Indla. From a belief very generally entertained that the British government is too far com- mitted to monometallism to, leave any great likelihood of its tmmediatély ‘retracing its steps, the adoption of a gold standard for India has been suggested. But the adoption of a gold standard for India is a policy which even the Times— strongly monometallist as its Present finan- cial tendency is—shrinks from advocating “Tt is an alternative,” Says the Times, “fraught with. financial difficulties, and with derangements to the existing basis of Indian commerce and manufactures, which any government may well shrink from en- countering.’ * Question.—But would it not seem a useful thing to bring about a unity of monetary standard at all events between India and England? ; : Answer.—Yes; but how ‘can it be done ex. cept through thé restoration of bimetal BIMHTALLISM AND Nam? As for the adoption of a gold stan-_ Gard for India, the result would bé disaster all around. This reference to the prospect of the adoption by India of a gold mono- metallist currency, brings us to the con- sideration of another grave result ef our present monometallist system —one of the very gravest results of it—a result far more widely extended, and far moré calamitous in its influence, than any of those which we have, so far, been considering. It has to be borne {9 mind that money has to serve, ‘not merely as a medium of exchange in the purchase of commodities, but also as a measure and record of the extent of obligations {n the case of all deferred payments, that is to say, of pay- ments extending ever long perlods—such, for instance, as the yearly payments of rent or of the interest on a mortgage. It can hardly need to be pointed out that, so long as contracts toto which time en- ters as an element are expressed in terms of money, it is of the utmost importance that the monetary standard should, as far as possible, be stable in value. Absolute stability of value is, as we have seen, un- attainable. But, in its absence, compara- tive stability ts to be looked for, as one of the first requisites in a monetary standard. As Mr. Barclay puts it, “the value of money might vary without much incon- venience if all transactions were imme- diate exchanges {n which money simply prevented a resort to ‘barter. But, as we know, the whole structure of trade {s based on credit and time contracts; and, in view of this, the medium of exchange, which is also a standard of value, cannot vary without sertous injury either upon debtor er creditor.” Stability of value, then, in eo far ag it is attainable, 1s an all-important element of money. Now it is in this point espectally that our present monometallist system of currency is open to most serious objection. Gold, as the result of a varlety of causes, 1s steadily and seriously increasing in value. And not merely does monometallism provide no check upon this increase, but the increase itself is, in great part, the re- sult of the changes that have been made in 80 many countries, in the direction’ of monometallism, within the last twenty years. ‘The chief source of the notable rise that have taken place in the value of gold is the. heavy additional demand which, from var- fous causes, has fallen upon gold during these later years. One of those disturb- ing causes, for instance, was the closing of the French and other European mints in 1878 against the unrestricted coinage of silver. Another was the adoption, about the same time, of a gold standard of cur- rency in Germany and in several other countries, which, until then, had retained a allver standard. All this led to an enor- mous extra demand upon gold, and conse- quently to a very notable increase in the value of gold. — ai MONOMBETALLISM. 15 The necessary result of this increase in value ig that our present monetary stan- dard of value has become an altogether misleading standard. As gold began stgad- lly to go up in value, every existing ébli- gation to pay a fixed amount of pounds, shillings, and pence, became more and mora burdensome than before. This, then, told heavily against all debt- ors, and gave an undue advantage to all creditors, + As I have alsewhere made special. refer- ence to the disastrous results of the change in the case of our Irish farmers, I ought not to omit to state that, from another side, the landlords’ interests have been affected at least as seriously as those of the ten- ants, No class in the community has suf- fered more disastrously from the change - than the owners of land charged with mortgages, as, unfortunately, the greater part ef the land of Ireland is charged to an oppressively burdensome extent. But, within certain limits, this source of difficulty exists, not only in Ireland, but in England also. “The landlords,’ says Mr. Samuel Smith, “who borrowed four hundred millions on thelr property, agreeing to pay, let us say, sixteen millions_a year interest at 4 per cent., supposing that it represented one- fourth. of their rents, now find, owing to the fall of prices, that it represents one- third, or even in some cases one-half, of their rents.” Then, manufacturera and traders, too, have suffered, and suffered heavily, ‘The factory-owner,”’ continues Mr. Smith, ‘‘the mine-owner, the ship-owner, who thought it safe twenty years ago to borrow half the value of his plant In order to find capi- tal for his business, now finds that the mortgagee is the virtual owner. Nearly all the profits go to pay the mortgagee’s claim, and in many cases he has fore- closed and sold up the unhappy borrower, rulned, through no fault of his own, but solely through the extraordinary sinking of prices. * * © “As a matter of fact, I believe that if the fixed capital engaged in trade in Eng- land could be valued to-day at its real selling price, it. would be found that it would do little more than pay the mort- gages and debts upon it.” i The following passage from the same writer is also well worth quoting. It brings out, very plainly, another of the ways in which Monometallism has worked mischief, by the depressing influence which the increase in the value of gold has exer- cised upon trade: ; “Trade is very greatly and injuriously af- fected by a sudden alteration in the stan- dard of value, especially when the altera- tion is, as now, towards increased value, “It arises In this way: Trade ts largely carried on by borrowed capital, or, in other words, by the use of credit in some shape or other; the vast banking deposits are 16 mostly lent to traders; a very great deal of the invested capital of this country is lent upon mortgage of trading property, such as ships, factorles, warehouses, &c. “A prudent tradér usually considers it safe to trade considerably beyond his float- ing capital, and to borrow, say, 50 per cent. on the security of his plant or fixed capital. Now the constant decline of prices, the lagt few years, has virtually swept away his own portion of the capital, and only left him enough to pay the loans and mofrt- gages. “For instance, a ship or a factory bulit at a cost of £20,000, of which £10,000 was bor- rowed, Js now worth only £12,000, or 40 per cent. less; and so the mortgage repre- sents five-sixths of the value instead of one-half, the trader’s interest having sunk to £2,000 in place of £10,000. Probably, if trade is unprofitable, he fails to pay the in- terest, and-the mortgage is foreclosed; the property is forced off at just sufficient to cover the loan, and. he is ruined. “T have no doubt that this process exactly describes the condition of vast numbers of the traders of this country and of other countries having a gold standard. “A great portion of the commercial capital of the country has passed into the hands of the mortgagees and bondholders, who have nelther tolled nor spun. The discouragement this state of things produces is intense, After {t has gone on for several years, a kind of hopelessness oppresses the commercial community, all enterprise comes to a stand- still, many works are closed, labor is thrown out of employment and great distress is felt both among laborers and the humbler middle class. Indeed, it strikes higher than this; for multitudes of people who once, were prosperous traders have now become depend- ing on charity. I know many such myself.” Then the case of the national debts and va- rioug local and other debts of the various nations of the world furnish another instance of the evil resulting to the general communi- ty from a rise in the value of gold. As to the national debt of England, Mr. 8. Dana Horton in his valuable work, “The Bilver Pound,” calculates, on the basis of figures collected by eminent statisticians, that “the national debt, regarded as u prin- cipal sum, has increased its weight upon the ehoulders of the British taxpayer between 1875 and 1885 by nearly 200 millions ster- ling, an amount nearly equalling the Franco- German war fine.” And we have to remember that, as regards especially national debts, the national cred- {tors are represented mainly by the capital- ist and money-owning classes, whilst the principal representatives of the national debtors are those who labor in the fields, the factories or the mines, Questian.—_In this way, then, the Irish farmers, too, have suffered? Answer.—Yes; that is, those farmers who have rents fixed under leases, or rents ju- diclally fixed for fifteen years, or those who BIMETALLISM AND MONOMBTALLISM. +~,__ are under any such obligation of making fixed payments from year to year. The case of the tenant-purchasers under any of the land purchase acts is one of special hard- ship. . In their case, the obligation of the an- nual payments extends over, not merely fif- teen, but forty-nine years, Here ig where the difficulty comes in. Is all such cases, the farmer is under the obl! gation of paying, year after year, an amoun} specified in pounds, shillings and pence. But then this rent, cr other annual payment? which he has to make, though {t is.thus speci fied in amount, is really increasing, that is te say, becoming more burdensome from year to year. To bring the matter to a point, {t comes te this, that, year after year, more corn, mor¢ hay, more cattle, have to be sold by the far- mer to enable him to get the gold which Is required to meet that annual payment, : But, of course, if he has not more corn, more hay, or more cattle, to sell, he cannot, out of what he has to sell, get enough to en- able him to make that payment. And, plainly, the longer the term for which his ‘fixed’? annual payment has to be made, the more disastrous must the results be te him. : Question.—Then the foreign competition, of which we -hear so much, js not the sole cause of the ruinous fall in agricultural prices? Answer.—No. Its, no doubt, one element in the case, But, as everything goes to show, the main cause of the ruinous fall in agricul- tural, as in other prices, {s the continuous increase in the value of gold—the “apprecia- tion of gold,’’ as\that increase in value is called in the jargon of the political econo- mists. Now, thia brings us to the point in Mr, Balfour’s Manchester epeech, to which 1 would specially direct attention. - Money, said Mr, Balfour, has to serve, not merely as a medium of exchange, but also ag “a fair and permanent record of obligations extending over Jong periods of time.” In this, which he rightly called a “great and fundamental requirement,” our existing cur- Tency, as he declared with emphasis, “totally and lamentably fatls."” To make good this statement, Mr. Balfour pointed out that the gold monetary standard of Great Britain and Ireland has, in some fifteen or sixteen years, gone up in value no less than 80 or 35 per cent.; and he went on to say that, of its further progressive ‘“appre- elation,” or rise in value, “no man living can prophesy the limits,” Again, he spoke of the Increase in value of our present mono- metallist gold standard of value, as pro- sressing “steadily, continuously, indefinite _ ly.” As to the result of all munity generally, Mr, himself as follows: ‘If you will show me a ¢ é ystem whi gives * * * asholute permanence, : J a take It Ip preference to any other, But of all this upon the com- Balfour expressed BIMETALLISM AND conceivable systems of currency, that system is assuredly the worst which gives you a standard steadily, continuously, indefinitely appreciating, and which, by that very fact, throws a burden upon every man of enter- prise, upon every man who desires to pro- ‘ mote the agricultural or the industrial re- sources of the country, and benefits no hu- man being whatever but the owner of fixed debts in gold.” But this was nothing new. Mr. Balfour's views were on record, years before, Thero ig a higbiy important statement from him, and from five other members of the royal commission, the gold and silver commission, of 1887. In the special report drawn up by the six bimetallist members of that commission—in- eluding Mr. Balfour and Mr. Chaplin, two members of the late cabinet—a distinct ref- erence is made to the question of rents. Speaking of “leases for long terms of years, annuities, pensions, and other similar charges,’ they say that ‘‘with every rise in the value of gold, the weight of this bur- den upon the industry of the ¢ountry in- creases."’ What a prospect this fs for Irish tenants with “Judicial” rents ‘fixed’? for fifteen years, or for Irish tenant-purchasers, with their annual payments to the government “fixed"’ for the next forty-nine years! Ag I am speaking of Mr. Balfour, it may be interesting to note that his Irish land pur- chase act contains a very efficient, if some- what elaborate, provision for the protection of the state against loss, in the event, by no means unilikely, of the purchasing tenant breaking down in his payments before the forty-nine years are out. ‘ In the seheme embodied in Mr. Balfour's purchase act, the purchasing tenant has to -begin by paying at an extra rate for a num- ber of years, so as to build up a substantial guarantee-fund for the state. No wonder, indeed, that Mr. Balfour, bi- metallist as he 1s, should haye clearly seen the necessity for some such provision, By most people it seems to have been looked upon as a mere superfluity of complication, Mr. Balfour, however, was In a position to see, what of. course, the general public were wholly unaware of, that a payment which a purchasing tenant may now be in a position to make—or which he may be in a position to make for the next few years—may be alto- gether beyond his reach in probably ten or twelve years to come. Putting on the screw -for the first few years, then, is good policy. If ft ig not good for the tenant, it is good for the state. Whatever may befall the unfor- tunate tenant-purchaser, the state at all events is somewhat safeguarded. It has a -petter chance of gettlog back the money It has advanced. As for the tenant-purchaser, he probably -thinks that, after the extra pressure of the first few years, he may look forward to easy times for the rest of his life. He Nttle knows . what is before him.’ If things go on as they MONOMETALLISM. 17. are, it will be harder for him, ten or tweive years hence, to pay £40 a year, than it would be for him to pay £50 a year now.. But of all this he knows nothing. How could he? His only Idea is that a pound is always a pound, a sovereign always a sov- erelgn, So, in the belief that the yearly pay- ment, when It is reduced to £40, will be well within his reach, Ae puts hia head into the halter. ; But we must be fair. No one can say that Mr. Balfour used his general knowledge of the financial situation to entrap the tenants unawares. He did nothing of the kind. If they did not know what was before them, they cannot blame Mr. Balfour for it. He never concealed his views. He did not fail to give them plain warning of' the conse- quences of entering into prolonged obliga- tions for the payment of fixed amounts. ‘What he said quite reeently at the meeting in Manchester is, perhaps, in one sense, Some- what more explicit, but {t fs not in any way different in sense or substance from what he had said, years before, in the most for- mal and public way, in the report of the gold and silver commission of 1888, I have thought It {mportant to call atten- tion to the published statements of Mr. Bal- four’s views on this matter. His position as a prominent politician, especially in view of his recent official connection with Ireland, makes them of special interest. But they are in no way different from those ex- pressed by many otherga who have written or spoken on the subject. , Mr, Samuel Smith, for instance, in an es- say on “The Sufferings Caused by the Ap- preclation of the Gold Standard,” calls spe- celal attention to the increasing burden thrown upon agricultural tenants by the maintenance of the present monometallie system. He speaks more especially of the Irish tenants, in view of the fact that so many of them are in the embarrassing position of having rents judicially fixed for fifteen years. This aspect of the case is brought owt forcibly also by the Belgian economist, Emile de Laveleye: “This consideration,” he says, “especially affects Ireland * * * “Tf you can let tenants hold their land for nothing, it would be all right; but if they have to pay a fair rental either to landlords or to the government, or to purchase at a fair price, they must then sell produce so as to procure the amount requsite for purchase or for fair rent. 7 ‘If the price of this produce ts very low, and is falling still lower, then the tenants will be incapable of raising. the required sum, and it will be necessary to evict them ¢ * # or to cancel their debts. ““The-supply of gold being wholly insuf- ficlent, a-fall in prices must ensue; hence the ruin of Irish cultivators, in spite of home rule.” : So far, then, for the chief source of the evils of our present monometallist system, and the wide field throughout which the. 18 BIMBTALLISM AND calamitous influence makes itself felt. It remains only to point out in what way bi- Metallism provides a safeguard against these manifold evils— Question.—But, first, as to the fundamental fact, the rise in the value of gold. What do the monometallists say as to the existence of an extra demand for gold, and a consequent rise in its value? Answer.—That, no doubt, is a point of much importance, especially in view of the disastrous bearing of the present currency eystem upon Irish farmers. For a long time, the truth of the proposi- tlon so emphatically proclaimed by the bi- metallists—that the pressure upom the exist- ing supply of gold was fecreasing, and that gold, consequently, was increasing in value —was disputed by monometallists. If, indeed. the monometallists, at the out- set, were committed to anything, they were committed to this, that there was no serious alfiiculty aboyt gold—that 1s, in other words, that there was no embarrassing extra de- mand upon gold in relation to the existing supply of it—and that, consequently, tho present general fall in prices should be ascribed, not to a change in the value of the metal which forms our only standard of value, but to an indefinite number of other causes, happening, somehow, all of them, to work together in the same direction. Silver, they said, was going down in value. Other commodities, generally, were golng down in value. But gold, they maintained, was prac- tieally steady. Now, however, there are not many intel- ligent monometallists who would care to identify themselves with the maintenance of such statements, No bimetgallist, indeed, has written more conclusively in refutation of the old mono- metallist view upon this fundamental point than Mr. Giffen, the well-known chief of the statistical department of the Board of Trade, MONOMBPTALLISM., were to occur, there were sufficient facts in the diminished supply of gold, and in the ip- creased demands upon gold, to account for the increase in ita purchasing power. Then, in his paper of 1888, he went an to say: “If the test of prophecy be the event, there was never surely a better forecast. The fall of prices in such a general way as to amount to what is known as a rise jm the purchasing power of gold, 1s generally—t might almost say universajly—admitted. * * * “Measured by any commodity, or group of commodities, usually taken as the measure for such a purpose, gold 1g undoubtedly pos- sessed of more purchasing power than was the case fifteen or twenty years ago, and this high purchasing power has been con- tinued over a long enough period to allow for all minor oscillations.” In-the same paper, Mr. Giffen deals very fully with the evideace of all this, furnished by the statistics of the fall in prices of the leading commodities. The comparison is worked out by a well-known method, that of “Index-numbers.”’ An “Index-number” is a device to enable an average to be struck of the prices of a great number-of articles. There are several sets of such numbers, worked out by statisticians, and brought up to date each year. The Beonomist news paper_gives a set based upon the wholesale prices of twenty-two of the principal articles In the London market. An eminent statis- ticlan, Mr. A. Sauerbeck, has worked out a set upon a far broader basis, forty-five ar- ticles being included. Here is a table showing the almost con- tinuous fall in the wholesale prices of com- modities, as represented by the forty-five principal commodities comprised in Mr, Sauerbeck’s computation. I give the index- pambers of Mr. Sauerbeck’s table, from 1874 probably the most determined and uncom- 187! promising champion of monometallism ia England. In a statistical paper of exceptional in- terest, read by Mr. Giffen before the Royal Statistical society in London, in 1888, he not merely accepted, but proclaimed with ™marked emphasis, the proposition that gold had notably gone up in purchasing power; that the increase was continuing, and was Ukely to comtinue; and that this increase in the purchasing power of gold gives the true explanation of the fall in the price of com- modities generally. Mr. Giffen, indeed, in that paper, was not gatisfied with dealing with the etate of things as they were then found to exist. He claimed, and apparently not without justice, that a prediction of his in this matter had come true. / In a former paper, read in 1879, he had, he eaid, pointed out the likelihood that a rise in the purchasing power of gold would soon be- come evident, and he had sald that, If this In the report of the gold and silver com- missien of 1888, Mr. Sauerbeck’s index-num- bers are given in an ingenious arrangement, the average of the numbers for a continuoas period of ten years being given from year to year. The following is a section of the table, commencing with a period of ten years which has for its middje point the beginning of the year 1874: 1869-78, average of the 10. yearly numbers, 99 1870-79 “ a“ ae 97 1871-80 “ “ “ 96 1872-81 &“ “a 05 1873-82 “ 4“ i as 1 93 1874-88 eo ye 790 1875-84 “Woeg @ dha dy - 87 BIMETALLISM AND 1876-85 oid “ce és 85 1877-86 ee “ ‘“ 82 1878-87 ae “ “ 79 This may be a convenient place to men- tion that Mr. Sauerbeck has worked out also the yearly index-numbers of the price of sil- ver. These numbers are instructive “under two aspects. Iirst, they show the remark- able steadiness in the gold price of silver so long as the bimetallie system of the Latin Union was in operation, as contrasted with the notable fall that has since taken place. Secondly, they bring into marked prominence the wonderful similarity between the fall in the gold price of commodities in general, and the fall in the gold price of silver. ‘To bring out this second point, it ts enough to tabulate the respective index-numbers for the years from 1874 to 1892. But to bring. out the first point, it is mecessary to take two periods, one preceding, the other following, the year of the disastrous change. The following table, then, sets forth, by means of Mr. Sauerbeck’s index-numbers, the striking contrast between the relative value of gold and silver In the years preceding, and’ in the years following, 1873: Yearly Yearly Years Index- Index- Years from 1873 | numbers || numbers | from' 1873 back to '54.| of Silver || of Silver | on—to ’92. 1873 97.4 97.4 1873 1872 99.2 95.8 1874 1871 99.7 93.3 1875 1870 99.6 86.7 1876 1869 99.6 90.2 1877 1868 99.6 86.4 1878 1867 99.7 84.2 1879 1866 + - 100.5 85.9 1880 1865 100.3 85.0 1881 1864 100.9 84.9 1882 1863 101.1 83.1 1883 1862 » 100.9 83.3 1884 1861 99.9 79.9 1885 1860 101.4 74.6 1886 1859 102.0 73.3 1887 1858 101.0 70.4 1888 1857 101.5 70.2 1889 71856 101.0 78.4 | 1890 1855 100.7 | 74.1 1891 si 1854 101.1 65.4 1892 Taking, then, the two equal periods of dingteen years, one preceding 1873, the other subsequent to that year, we find that in the former period, during which the bimetallic system of the Latin Union was jn operation, the extreme range of the gold price of silver lay ‘between 102.0 and 99.2; whilst, through- out the period following the abandonment of that system in 1878, there has been a per- sistent fall, the index-numbers rauging down through the nineties, the eighties, and the seventies, and reaching at length to the “low figure of 65.4. The contrast betwen the practical stability of the gold price of silver during the period preceding 1878, and its utter instability since then, may be exhibited in perhaps a still mcore striking form by indicating, for each year, the difference by which the index-num- ber of the price of silver for the year ex- ceeded, or fell short of, 100, “MONOMETALLISM. ° - 19 This {s shown in the following table: | 19 yrs. preceding '73: | 19 yrs. following ‘73. Difference || Wifference between between the yearly_|| the yearly Years.) Index-num-|| Index-uum- | Years. ber of ever ber of Silver and and 100. 1872 _ oe — 4.2 1874 1871 — 03 — 67 1875 1870 — 04 — 13.3 1876 1869 — 04 — 98 1877 1868 . — 04 — 13.6 1878 1867 — 0.3 — 15.8 1879 1866 -|- 0.5 —i41 1880 1865 « -|- 0.3 — 15.0 1881 1864 -|- 0.9 — 15.1 1882 1863 -|- LAL — 16.9 1883 1862'- -|- 0.9 — 16.7 1884 1861 — 01 — 21.1 1885 1860. -|- 14 — 25.4. 1886 1859: -|- 2.0 — 26.7, 1887 1858 -|- 10 — 29.6 1888 1857 +|- 1.3. — 29.8 1889 1856: -|- 1.0 — 21.6 1890 1855 -|- 0.7 — 25.9 1891 1854 -|- 1.1 — 34.6 1892 Then the wonderful similarity—allowance being made for the jnevitable slight diverg- ence in detail—between the fall in the gold price of silver and the fall in the gold price of commodities in general, ia shown in the following table. This table gives, in parallel ation for the years 1874-92, (1) the index-numbers for the forty-five commodities comprised in Mr. Sauerbeck’s computation, and (2) the index- numbers of silver for the same years: ey Index-number of Years. 45 Principal Index-number of 5 Commodities. ilver, 1874 102 95.8 1875 96 93.3 1876 95 86.7 1877 94 90.2 1878 87 86.4 1879 83 84.2 1880 88 85.9 1881 83 85.0 1882 84 84,9 1883 82. 83.1 1884 1% 83.38 | 1885 GQ 79.9 1886 69 74.8 1887 63 < 13.3 1888 70 70.4 ane T2 70.2 18 72 78.4 1891 72 Th 1892 68 65.4 It is sufficient to note that, in one case, the index-numbers show a fall from, 102 to 68, and, in the other, a fall from 95 to 65. What more striking evidence could be looked for, that the fall, all round, is the result, not of causes affecting merely the prices of com- modities on the one hand, nor of causes af- fecting merely the price of silyer on the other, but of the one cause that influences both alike; that is to say, a progressive in- crease of value in the standard, gold, in ref- erence’ to-which prices, whether of commod- {ties or of silver, are stated? « Returning to Mr, Giffen’s paper, I should not omit to remark that he puts very plainly 20 BIMETALLISM AND the inevitable effects of the fall in prices— or, in other words, the inevitable effects of the rise in the purchasing power of gold— which {fs thus disclosed. “It 1s obvious,’ he says, “beyond all ques- tion, that these effects may be important. *® ¢ © The weight of all permanent bur- dens ig increased as compared with what would have been the case if there had been no appreciation. ( “People In paying annuities, or old debts, have to give sovereigns—which each repre- sent a greater quantity of the results of hu- man energy, than it would have represented if there had been no appreciation, * * * “The debtora pay more than they would otherwise pay, end the creditors receive more, * * © Appreciation”’— that is, in other words, an Increase in the value, or purchasing power, of the standard coln—‘‘is a most eerious matter to those who have debts to pay.” Mr. Giffen then went on to speculate as to the future. “I am,’’ he said, “bound to say that all the evidence seems to me to point to a continuance of the appreciation. * * ® It 1s impossible to suppose that the move- ment (for the adoption of a gold standard ‘of currency) will not extend to other countries, © ® ® All these facts point to a continued pressure on gold. * * © The better probability seems to be that the In- crease of the purchasing power of gold will continue from the present time.” Here, in fact, we have, in another form, the statement made by Mr. Balfour in his recent speech in Manchester. Mr. Balfour epoke of our present gold standard of value as having gone up if value “no less than 30 or 35 per cent. in some fifteen or sixteen years;’’ and again he says of it that it still is “steadily, continuously and indefinitely” inereasing in value, so that “‘no man living” ean “prophecy the Hmits’? to which the in- crease may not extend. It is true that, about a year after the pub- lication of the important paper from which I have been quoting, Mr. Giffen—taken aback, the bimetallists say, by discovering the extent to which his statistical paper had strengthened their hands In the currency con- troversy—wrote a paper In The Nineteenth Century in a diametrically opposite sense. But no one seems to have taken that paper serlously. Mr. Giffen, so far from giving any reasons for his astounding change of front, did not even write as if he was aware that he was making any change of front at all. Ho simply struck out in a diametrically opposite direction, ignoring all that he had aaid in his statistical paper, all the facts and figures that he had marshalled in that paper with auch fogical force. Mr. Giffen's paper in The Nineteenth Cen- tury was not a statistical paper in any sense, Te wea simply @ disquisilion on the currency MONOMETALLISM. question on grounds of abstract political economy. Now Mr. Giffen 1a a statistician, and not a political economist. In his paper, then, In The Nineteenth Century, he pro pounds, as might have beea expected, some sensationally novel views. He does not even seem to have been aware of their novelty. Professor Nicholson showed up all thia, in triumphant fashion, in the next number of The Nineteenth Century, and, so far as I know, Mn Giffen has never even attempted to reply. “His expedition Into the realms of political economy has ended, tn fact, in a lamentable collapse. But, whatever fate may befal) Mr. Giffen's philosophical ventures, his statistical paper of 1888, on the appreciation, or Increase in purchasing power, of gold, and the disastrous effect of this Increase upon all who have debts to pay, holds its ground, I understand that he-has omitted that paper from a vol- ume of his essays collected for re-publication. It would be much more to the point if he were to endeavor to neutralize the effect of it—in the supposition that he Is in a position to do so—by pointing out any error he had discovered in it, elther in his statement of the statistics of the case, or in his inferences from them, So long as that paper stands unrefuted by Mr. Giffen himself, he must submit to be claimed as @ prominent witness to the facts upon which bimetallism fs based. Mr. Giffen, in his statistical paper of 1888, refers exultingly, as I have mentioned, to a Previous paper written by him nine years before. An interesting point connected with that earlier paper of his is the important reference made to it by Mr. Goschen in @ convincing address, delivered before the In- stitute of Bankers in 1883, ‘Mr. Goschen, I should observe, ts not in any sense of the word a bimefallist; that is, he has not as yet in any way declared him- self in favor of bimetallism. He seems in- deed to have some hesitation in taking sides, one way or the other. But nothing could be more explicit than his statements as to the increase in the purchasing power of gold, and nothing could be more lucid than bis ac- count of the causes that have led to that in- crease, In his address delivered in 1888, he went into this matter In full detail. He showed how, in the years from 1873 to 1883, whilst the annual supply of gold had fallen off to a most notable extent, the demands upon the existing stock of gold in the world, ew pecially from the substitution of a gold cur rency for a silver currency in Germany and other countries, had enormously increased. The facts dealt with by Mr. Goschen ia that address are very clearly summed u by Mr, Samuel Smith ia the interesting nae from which I have eo often quoted, ‘ i,MZbe geld preduction® &: aay, Maphiel. BIMETALLISM AND MONOMITALLISML mp for some years exceeded thirty millions an- hually, bas fallen to nineteen millions a year} and the best continental authorities, such as Boetbeer and Laveleye, reckon that more than half that amount is consumed !n the arts. It may, therefore, be reckoned that, since 1873, only some ten millions of gold, on the average, has been available for currency Purposes, “But Germany, during that perlod, has in- troduced a gold currency of eighty, millions; the United States * * * has. uséd up 100 millions; and Italy has drawn some twenty millions for a sim{lar purpose. So that 200 millions have been withdrawn for these spe- cial purposes, whereas the whole supply of new gold for colnmage has not exceeded, in that time, 130 millions. The balance must have been drawn out of existing stocks, Besides, a steady drain of some four millions @ year has gone to India, further depleting the stock in Europe..* * * “While trade and population constantly grow, and demand more metallic currency, there is a steadily diminishing quantity to meet It, “If we put the present production of gold at nineteen millions a year, and the require- ments of the arts at eight to ten millions a year, while the ordinary Indian demand fs four millions, there is only left five to seveo millions a year for new coinage, for Kurope, America and the British colonies. “It will seem to subsequent ages the height of folly that, just at this period, when gold was running short, the chief states of the world decided to close their mints against ailver, and cut off, so to speak, one-half the foney supply of the world from performing is proper function, * * © “Had the world continued to use both metals as freely as before, the painful crisis we have passed through would have been much mitigated. But, by a suicidal policy, ellver was cut off at the very time when it was most needed, and a double burden chrown upon gold just when it wag only able to bear half its former burden. : “Ag Bismarck ‘has well said, fwo men were atruggling to lie under a blanket only big enough for one.’ It would be a grave omission here not to quote Mr. Goschen’s further remarks as to the inevitable further increase in the value of gold—the result of not merely a continu- ance of the present exhausting demand upon gold, but of a growth in that demand, Mr, Goschen’s treatment of this aspect of the case ig all the more valuable from Its forestaliing a difficulty which {gs not at all tnlikely to occur to those who enter upon the examination of the currency question without Pelng very fully informed upon the nature @f nancial operations as they are carried @ot On an extensive gcale in the great money markets of the world. “Ig it be Le aays Mr. Goschen, “that @egulation continually {ncreasea and that £1 there is a certain increase In wealth, an ad ditional amount of circylation will be neces- gary {n order to meet the increased demand, unless there are compensating counter eco nomies by the extension of the check sy® tem and other methods. “Now, on the one hand, you undoubtedly have increased population. Going back thirty years, you may sea you have an ad+ dition to the population of 50 per cent., in- eluding not only the gold-using countries of the old world, but new countries, euch as Australia, where the population increases fast, You also have an increase of wealth, Then, again, you require more gold for more transactions, * © © es “Mr, Giffen, in an article * * ® printed in the Journal of the Statistical Society for March, 1879, expresses the opinion that the United Kingdom was thoroughly ‘well banked’ even twenty years ago, and that there have been no new devices invented during the last twenty years which have much economized the use of gold in the United Kingdom. We have already,’ I be- lieve, reduced the use of gold in this country almost to a minimum; and I am confirmed in this view by the statement that the total circulation of gold in England increased, according to the estimate of the authorities of the Bank of England, from £103,000,000 to £124,000,000 between 1870 and 1880. “This would mean—and it is a most sig- nificant fact—that in this country, which is so ‘well banked,’ to use Mr. Giffen’s phrase, £20,000,000 more circulation was nevertheless required in 1880 than Jn 1870. ‘What a pull must those £20,000,000 have been on the total supply of gold, after, or concurrently with, those other demands to which I have called your attention. “Ag regards England, then, I do not see that there has been any economy in the usa of gold to counterbalance the increasing de- mand of the population, nor are we aware that in France or Germany, or elsewhere, the economies have been guch as to counter- balance the increasing demand for gold.” Question.—All this, then, must have bad a very notable effect upon prices? ‘ Answer.—That was the main topic of Mr. Goschen’s address. : In that address, he makes good by, every. possible line of argument that gold has‘risen, ‘that it ig rising, and that, {n all probabllity, it will continue to rise, in value. He ex- plains, moreover, that this increase in the value of gold ds the true explanation of the “fall In prices,” which had become unmis- takably evident even at the time of the de livery of his address, in 1883. ‘ After working out all this in detail, Mr. -Goschen adds the curiously significant re mark that “‘some writers have appeared to show something approaching to irritation at the view that the situation of gold should havo largely influenced prices.” “I scarce- ty" he says, “snow why, unless through the apprehension that the bimetaliists may yillise the sxgumas! ee may yu 29 BIMPTALINSM AND This, written six years beforehand, forms an instructive commentary on Mr. Giffen’s odd change of front. : E And’ then Mr. Goschen adds: “I must re- peat that, to my mind, the connection be- tween the additional demand for ‘gold and the position of prices, seems as sound in principle as I believe it to be sustained by facts.” Well, no doubt, it is a very natural appre- hension, that bimetallists should utilize an argument, the basis of which is so emphat- Jeally certified as‘not merely ‘sustained by facts,” but also as “sound in principle,’ by one of the most eminent practical financiers in England. I have already mentioned the proposal that has been made in view of the terribly serious difficulties resulting from the difference of standards between England and India. It has Deen suggested, as a means of getting over all these difficulties, that the Indian currency should be re-constituted on the basis of a gold standard.’ But this, from the further demand it would make upon the existing stock of gold in the world, would necessarily lead to a further rise in the value of gold, and would thereby most seriously aggravate the evils of the present situation throughout the commercial world. As Mr. Goschen forcibly expressed it at the Paris conference of 1878: “If other states were to carry on a propaganda in favor of a gold standard and of the demon- etization -of silver, the Indian government would be obliged to reconsider its position, and might be forced by ‘events to take meas- ures similar to those taken elsewhere. In that case the scramble to get rid of silver might provoke one of the greatest crises ever undergone by commerce.’* So far, then, for the tendency of gold, in the present monetary arrangements of the commercial world, to increase in value. Now, as to the remedy which bimetallists propose. This, as we have seen, is, to put silver into the standard currency concurrent- ly with gold—by opening the mints ‘for, the unlimited coinage of the two metals at a. fixed ratio of value, and making both the gold and silver coinage “legal tetider” to any amount, Their, main point is that the introduction of silver in this way into the standard coin- age would check the tendency of standard money to “‘appreciate,” or increase in value, It manifestly would tend to check that tend- ency by broadening the base on which the monetary system stands. Statisticlans tell us that the quantity of coined gold in the world amounts to about £800,000,000 sterling, and the quantity of eoined silver to about £700,000,000. The precise figures, in such a case as this, are not ‘of very great consequence. For we may take it, at all events, that the amounts are something about; those mentioned. Plainly, the causes that tend to affect the value of elther of the two precious metals would have MONOMETALLISM. a far less disturbing effect upon a standard of value composed of the two metals, con- jointly, to the value of 1,500 millions ster- ling, than it would have upon a currency of only half the amount. Then, furthermore, it is to be remembered, that this enlarged currency would consist, not of. oné metal, but two. It is, no doubt, possible that the tenden- cies of the two metals to fluctuate in value may coincide in direction and in degree, But. it ls in the highest degree improbable that this will always, or even frequently, ovcur.’ Whilst the value of one metal, under the op- eration of the law of supply and demand, tends to go up, the tendency of the other !s quite as likely to be downward. Or, Jf both tend to move in the same directéon,. all the probabilities are that their respective tend- encies will differ-in degree, and the difter- ence is by no means unlikely to be a very notable one. So each will serve, at all events in some degree, to counteract the other. Professor Jevons—though he was not a bi- metallist—gives an admirable example of the effect produced by the introduction of a sec- ond metal into the standard currency, In ehecking the tendency to fluctuations in value. He gives the example of two reservoirs of water, each subject to independent varia- tlons of supply and demand. In the absence of any connecting pipe, the level .of the water in each reservoir will be subject to its own fluctuations only. But if we open a connection, the water in both will assume a certain. mean level, and the effects of any excessive supply or demand will be distrib- uted, over the whole area of both reservoirs, _ “The mass of the metals,’’ he says, “gold and silver, circulating dn Western Europe in late years, is.exactly represented by. the - water in these reservoirs, and the coanect- ing pipe is the law of the Seventh Germinal, an XI. (the law establishing bimetallism in France in 1803), which enables one metal to take the place of the other as an unlimited legal tender.’” ‘Mr. Samuel Smith gives another illustra- tion, He takes the case of a kite, If the currency consists of gold only, then we have a kite without a tail, blown hither and thither by every wind. If we have a com- bination-of gold and silver, Hnked together in a monetary system at a fixed ratlo of value, then we have a kite with a heavy tail attached to it and steadying it. . Question.—But 1s it really possible at this time of day, by any state regulation, to-fix the price of silver? ‘Will not the price of silver, like the price of anything else, find its level In the market in spite of artificial restriction, under the law of supply and de- mand? Answer,—That is the stock fallacy of the monometallists—I mean the monometallists of the oldey but now rapidly dwindling, school. Of course, supply and demand will regy- late all prices—the price of silver or gold, ‘ BIMETALLISM AND MONOMETALLISM. as well as of everything else. But this pre - cisely ts the reason why bimetalism fs an effective means of keeping gold and ailver at a fixed ratio of value in the bullion markets of the world. : Legislation cannot directly give value to a thing, but it can do so indirectly. For it can set up a demand which is one of the factors of vajue. The opening of a sufficient number of mints for what practically amounts to the purchase of silver at a certain price relative to gold, establishes a constant demand for silver at that price. So long as bimetallism was upheld in the French and other mints, the ratlo was kept steady. It was kept steady, too, not in contreven- tion of the law of supply and demand, but precisely because of the operation of that law. The state arrangement for the unre stricted coinage of both metals in thase mintg at the fixed ratlo of 15% of ailvar to 1 of gold, wae, in fact, the maluspring of the Porkog of the law of supply and demand in the ca: Tho arrangement that was fn operation In the various mints canstltuted a permanent demand for each of the two precious metals at that fixed ratio between the mint values - of the two. Those who had silver anywhere to dispose of would not part with eighteen or twenty ounces ef it for an ounce of gold, when by sending their silver to a publuc mint they could get as good a price dor 15% ounces. Then, moreover, bimetallists call attention to a serles of undoubtedly striking facts in connection with all this. During a long period preceding 1873, al- most every kind of disturbance that could by any pobsibility have interfered with the relative vaine of gold and allver occurred in the monetary world. Still, throughout it all, the relative value ef the two stood practi- cally unchanged. / “Tne ratio of 15% to 1," saya Mr. Samuel Smith, “existed during a long period, when sliver was annually produced to three or four times the value of gold, and during an- other long period when gold was annually produced to three or four times the value of silver. « “Jt was equally unaffected by the great in- crease in the cost of producing silver during the civil wars in South America, which closed the richest silver mines, and by the extraordinary decrease in the cost of pro- ducing gold, when the rich mines of Aus- tralia and California were first discovered. “Jt was equally unaffected by the entire cessation of the great Hastern demand for eilver which happened once or twice In the earlier part of the century, or by the extra- ordinary demand which set in during the time of the cotton famine. “Neither was it affected by the vast dis- placements of specie that occurred in many countries—such as the United States of America, Ital7, Austria, ete.—caused by war, or national bankruptcy, when inconvertible paper expelled metallic money, “It may be asserted, in brief, that every possible convulsion occurred in the mone- tary world during the first three-quarters of this century, and yet the tle between gold and_silver was not broken. “So long as the French mint was open to coin either of them to an unlimited extent, and as full tegal tender, it mattered not whether the yleld of gold was two millions B year, or thirty millions; whether the yleld of sliver was six, or sixteen miljjons; whether the miners in Australia were extracting gold at a cost of £1 per ounce, or the miners in Nevada were producing silver at 1s. 64, per ounce.” ; Between 1845 and 1870, the stock of gold money in the world, eccording to trust- worthy estimates, increased by nearly 90 per cent. whilst the quantity of sliver money in the world increased by only 10 per cent. But sthl, under the natural operation of the bimetallic system of France and other coun- tries, the relative value of gold and silver stood practically unchanged. ‘ Question.—That, as we know by experiance, ig no longer the case? : Answer.—Unfortunately for many interests, it ia not. The royal commission of 1887 gives a table which showa that the annual average vprice of silver on the London mar ket, from 1833 to 1872, never was lower than 4s. 10%d. per ounce, and never was highex than 5s. 2%d.—showing a variation only of d. The same table shows how different the case hag been since 18738. Between 1873 and 1887 the price mnged from 4s. 119d. down “to 8s, 6d.—showing a variation of 1s. 5%4d., as against an extreme variation of only 4d, in the former period. i oe Question.—But what about the monometal- list members of the commission? Did they admit that the relative values of gold and silver can be fixed by state regulations? ‘Answer.—Certainly. In the earlier stages of the controversy about bimetallism, the question whether the relative value of gold and silver could be so fixed was looked upon as one of the great test queations between monometallists and bimetallists. Monometallists tried to make out that the relative value of gold and silver was kept steady down to 1873—not by the state ar rangement then in force in France and the other countries of the Latin Union—but by a whole complicated series of dinudependent causes, all happening to work In the right direction to bring about this happy result." But, as Mr. Samuel Smith has pointedly expressed it, these attempted explanations of the monometallists remind one of nothing go much as the bopeless attempts of the an- cient astronomers to explain the movementa of the heavenly bodies on the theory that the earth was the center of the universe. . . Phat day, however, ia past. Leading mon- ometallists have long since found themselv eq forced to acknowledge that on this vital point the bimetalllsts were right. Here, for instance, are two important pas | i | BIMBTALLISM ‘AND ‘@ges from the report of the royal commis eion. | I take the first from that portion of the re- port which is aligned unanimously by the ¢welve members of the commission, mono- metallists and bimetallists alike. | After setting forth a number of figures II- tustrative.of the notable unsteadiness of the price of silver in recent years—the unstead- {ness, that Is to say, of the gold price of sil- ver, or, in other words, of the relative value of the two metals—the report continues as follows: “Phe explanation commonly offered of those constant variations in the silver market is, that the rise or depression of the price of ellver depends upon the briskness or slack- ness of the demand, for the purpose of remit- tance to silver-using countries, and that the price 1g largely affected by the amount of the bills sold from time to time by the sec- retary of state for India. * * * ' “But these causes were, as far as can be geen, operating prior to 1873, as well as sub- sequent to that date, and yet the silver mar- ket did not display the sensitiveness to those influences, day by day, and month to month, which it now does. “These considerations seem to sdggest the existence of some steadying influence in for- mer periods, which has now been removed, - and which has left the silver market subject to the free influence of causes, the full effect of which was previously kept in check.” Then, in reference to the bimetallic ar- rangement malntained in France and thé other countries mentioned, the commissioners go on to say: “The question therefore forces itself upon us: Is there any circumstance, calculated to effect the relation of silver to gold, which distinguishes the latter period from ‘the, ear- ler? “Now, undoubtedly, the date which a the dividing line between an epoch of ap- proximate fixity in the relative value of gold and silver, and one of marked instability, is the year when the bimetallle system which had previously been in force in the Latin Union ceased to be in full operation, and we are irresistibly led to the conclusion that the operation of that system, established as it was in countries the population and com- merce of which were considerable, exerted a material influence upon the relative value of the two metals. “So long as that system was in force we think that, notwithstanding the changes in the production and use of the precious met- ala, it kept the market price of silver approx- imately steady at the ratio of 15% tol, * © Not satisfied with all this, the commis- eloners go - to refute the chief arguments relied upon by leading opponents of bimet- allism in support of their view, that the ex- istence of that legal ratio in the etates of the Latin Union could not operate so as to keep the price of silver steady in the Lon- don and other markets, Here is how they put its MONOMBETALLISM. “Nor does it appear to us as, @ priori, un- reasonable to suppose that the existence in the Latin Union of a bimetallic system with a ratio of 15% to 1 fixed between the two metals, should have been capable of keeping the market price of silver steady at ae imately that ratio. “The view that it could only affect thé market price to the extent to which there was a demand for it for currency purposes in the Latin Union, or to which it was actu- ally taken to the mints of those countries, {s, we think, fallacious. “The fact that the owner of silver could, in the last resort, take it to those mints, and have it converted into coin which would purchase commodities at the ratio. of 1514 of silver to 1 of gold, would, in our opinion, be likely to affect the price of silver inthe market generally, whoever the purchaser, and for whatever country it was destined. It would enable the seller to stand out for a price approximating to the legal ratio, and would tend to keep the market steady at about that point.” The commissioners then proceed to dis- pose of another argument that had been pressed upon them: “Tt has been argued that during the ear- lier of the two periods which we have been contrasting (the periods preceding and fol- lowing the date of the change made In 1873), the conditions which existed from time to time were favorable to the maintenance of the legal ratio. * * © “But we do not think this affords an ade- quate solution of the problem, without tak- ing into account the existence of the bimetal- lic system. It may be true that the circum- etances referred to were contttions which helped to make the bimetallic system oper- ative. But, as we have observed before, cir- cumstances and conditions of a like nature have been more or less operative both before and since 1873, and yet the effect on the relative value of the two metals has been very different.’’ I have quoted all this from that portion of the report which, as I have sald, represents the unanimous view of the twelve members of the roya! commission, monometallists and bDimetallists alfke. Then in the special report drawn up by the six monometallist members of that commis- sion, the following important passage occurs. It is signed, without qualification or reserve, by four out of the six: “We think that, on any conditions fairly to be contemplated in the future, so far ag we can forecast them from the experience of the past, a stable ratio might be main- tained if the nations we have alluded to (the United Kingdom, Germany, the United States, and the Latin Union) were to accept and strictly adhere to bimetallism at the sug- gested ratio. “‘We think that if, in all these countries, gold and silver could be freely coined, and thus become exchangeable against commod- ities at the fixed rates, “the market value of . BIMETALLISM AND MONOMETAULISM. ailver as measured by gold would conform to that ratlo, and not vary to any material ex- tent. “We need not enter upon a detailed ex- planation of our reasons for entertaining this view, since they will be gathered from ‘what we have already stated © * * and will be seen to result, jn our Judgment, as well from a prior! reasoning, as from the ex» perience of the last half century.” It would seem, indeed, impossible to matn- tain any other view. Two of the six monometallist members of the commission di not wish to endorse this particular portion of the report drawn up .by thelr monometallist colleagues. But they eannot be sald to have dissented very etrong- ly from it. Im the note appended by them to the report, they merely express a “‘doubt’’ upon the matter. Practically, then, we may take it that the point {s no longer open to serious controversy. Mr. Giffen, indeed, the eminent official statistician of the Board of Trade, has been eartied away by the ardor of bis monomet- allism into misrepresenting, to a very serious extent, thé action of the two commissioners in question. He says they “‘dissented’’ from thig part of the report, and expressed their “eonviction’’ that such a ratio could not be maintained permanently, As a matter of fact, however, the words of the note appended by the two commissioners in question are merely these; ‘We doubt whether any given ratio could be permanent- ly maintained.’’ This may be a convenient place to Inter- pose a remark or two upon the attitude taken up towards bimetallism and bimetal- lists by Mr. Giffen. Mr. Giffen’s volume upon the subject 1s, from first to last, a continuous indictment of bimetallism and of those who have written im advocacy of it—a good deal of the Indict- ment being expressed In language that would be of unquestionable appropriateness if applied to a number of lunatics and to their crazy hallucinations, That I may aot seem to be overstating this matter, I ought, perhaps, to give a few illus- trations of the style In which the views and the arguments of even leading exponents of himetallism, men of Buropean reputation, such as Wmile de Laveleye and others, are freely spoken of by Mr. Giffen: “The whole character of thelr arguments is essentially tainted and unsound.” “M. de Laveleye intervened and set forth the or- dinary ideas of the currency faddist.” “The pimetallist argument is tatnted, and this ac- counts very much, I believe, for the ex- treme disgust and dislike, * * © the de- testation of men of sense.” “If, economists like Mr. Bagehot can Has be brought to overcome their disgust at the arguments for bimetallism, so as to turn aside even to dis- cuss it, they are surely not without excuse. Mathematiclans do not stop to argué with aquarers of the circle, or with reasoners that ‘the earth is flat.’ “The extravagance and intemperance of idea among bimetallists re- garding money and currency, this extrava- gance and intemperance being characteristia of the currency faddist.’’ ‘Sismondl is ob. viously no authority on this question, not* having studied it at all; * © © guch as he ig, However, Sismondi is still the leading au. thority, so far as I know, for the einip eas view.” “That folly.” 5 With Mr, Giffen, the impossibility of con- trolling, by means of a legal ratio, the rela- tive value of gold and_silver, is an estab- shed scientific truth, As might be expected, then, from the pas- sages I have just quoted from his writings, be uses somewhat strong language in refer- ence to the action of the members of the royal commission upon this important point, His indignation, of course, is directed with special energy against those members of the commission whd, as monometallists, were specially charged with the defense of the monometallst position at all points, but who, nevertheless, expressed their full concur- rence in the view of thelr bimetallist col- leagues, that the old notion of the impossl-, bility of fixing the relative value of gold and silver had to be abandoned as untenable, Be pronounces, in fact, against them a sentence of excommunication from the mon- ometallist body. He describes them as “the so-called monometallic section” of the com- mission, which section he says “should per- haps be preferably called the non-bimetallia section.” Then we have such expressions as, “the remarkable aberration of the gold and silver commission;’” the views of inconvertible paper faddists, endorsed, but ‘accidentally, by royal commissioners;’’ the “‘persistence’’ of the royal commissioners in “‘error;’’ over- looking ‘“‘what was staring them in. the face,’’ and so on. He complains of {t, too, as “a scandal of the first magnitude,” that “men of light and leading in other respects should have talked seriously, even if only for a moment, of any euch thing as the possibility of a fixed price between gold and silver." It seems that some of the members of the. royal commlis- sion resented, very naturally indeed, the use of such a phrase, ‘‘a scandal of the first magnitude,” as applied to what they had done. Then, by way, as it were, of mending matters, Mr. Giffen, in republishing his paper in which the offensive expression occurs, has added a/foot-note pointing out that “it ls ob- vious that in the passage there is no refer- ence to the royal commission or its mem- bers.” Now, undoubtedly, the thing so roundly denounced by Mr. Giffen as “a scandal of the first magnitude’ was the very thing that was done by those monometallist mem- bers of the royal commission. His point, then, seems to be that, inasmuch as only “men of light and leading’’ were referred to in his criticism, no one, except perhaps the royal commissioners themselyes, could sup- pose there wag any reference to them ip the BIMPTALLISM AND «a Insulting obseryatié. At all events, as to the obfidxtous race, Mr, Giffen refused to withdraw it or to modify ft, - Byt the question of the possibility of malin- taining an approximately steady ratio of values between the two precious metals is mot to be decided by mete vehemence of language, The report of the royal commis- elon points out, with manifest truth, that it is a question practically decided by “the ex perience of the last half céhtury.” ° It seems impossible, for instance, evade the force of the following facta First, from 1803 to 1873, whilst the hi- metallist arrangements ef France were in force, the market prices of gold and sil- ver, each year, kept so close to the French currency value of 15% to 1, that they never osefilated so far even as 16 to 1 on the one ‘side, or 15 to 1 on the other. : But then, tn the year 1874, the year after the change in the French system, the mar- ket ratio at once rose to over 16 to 1. In 1876, 1877 and 1878, it was over 17 to 1. From 1879 to 1884, it was over 18 to 1. In 1885, it was over 19 to 1. Then, with certain fluctuations, It stil) kept on rising. On the 24th of September of the present year (1892), the latest date or which I have seen a return, it was bout 24 to 1. : Question.—The former steadiness, then, was the result of the arrangements in op- eration at the French and other mints? + Answer.—Yes; that is to say, it was the result ef the demand set up for each of the two metals at the relative value of 15% to 1. But there is a point of great impor- tance to be mentioned here. It may be -use- ful to mention it, to guard against a pos- sible misconception. What was fixed by the action of France and the other countries of the Latin Union was the ratio of the values of gold and sil- ver, compared one with another. Fixing the relative value of the two met- als, that Is, the ratio between the values of the two parts out of which the whole monetary stock of the world is made up, is quite a different thing from fixing the value of money, that ts to say, the purchasing power of money as regards commodities. It ts quite consistent with the mainte- nance of a fixed proportion of value be- tween the two métals which go to make up the metallle currency, that the value of the currency itself, taken as a whole, should be liable to fluctuations. I have al- ready mentioned that the maintenance of an absolutely invarlablé standard of value whether consisting of one-metal, or of two metals Iinked together In a fixed ratio of value to one another—is a matter of practical impossibility. The value of money, that {a9 to say, the value of the whole stock of coined metal, must, like the value of everything else that is marketable, be regulated by the law of supply and de- “mand, | But whilst the parehusing power of the to MONOMBTALLISM. : whole stock of the world may so vary, the relative value of the two portions of it, that portion of it which is in gold, and that portion of it which is In silver, may be kept steady, so that, although the number, whether of sovereigns or of ru- pees, required for purchasing a given quan- tity of other marketable goods, may some- times be greater and sometimes less, the same number of sovereigns shall always practically be worth the same number of rupees, That is the first advantage se- cured by a bimetallist system. Then there is another polnt. Although an alsolutely invariable standard of value 1s practically unattainable by legislation, it 1s plain that a much higher degree of steadiness of- value in the monetary stan- dard may be attained by making that stan- dard consist of two metals, gold and ail- ver, confointly, than if it consisted of either of those metals alona Obviously the combination of the twé metals makes up a currency far less Ifable to be affect- ed by. whatever fluctuations may occur, than any currency eomposed of one or the other metal alone. In that way, tbe bimetallic system of France and of the other countries of the Latin Union, secured for these countries —and Indirectly for the rest of the com- mercial world—not merely a fixed ratio of. value ag between gold and silver, but also in large measure, a monetary standard as free from fluctuations in value as ts prac- tically possible of attainment. Let us look back to Professor Jevons’ il- lustration, the two reservoirs with the connecting pipe between them. When there is a difference between the total in- flow and the total outflow—taking both reservoirs tnto account—no possible free- dom of connection ‘between the réservoir can hinder the common level from being af- fected by that difference. But the effect of the connection between the two is to. keep the fluctuations of the common’ level in both reservoirs as free from fluctuations as is consistent with the continuance of an inflow and of an outflow, both constant- ly varying. Question.In that way, then, bimeta)- lism checks the tendency to variation in the value of the monetary standard? Answer.—Yes; it checks that tendency; but we must remember that it only checks it. The check which it applies Is, indeed, a very notable, a very substantial one. But the tendency to variation In value eannot be altogether eliminated. Here is how Mr. Samuel Smith explains this point: “What the law cannot fix, Is the pur- chasing power of the precious metals in relatién to other commodities, “Suppose, for argument sake, that the joint production of gold and silver, which is now about 83,000,000 annually, were te become 100,000,000, we should a rap id rise In money prices In other words a - BIMETALLISM AND diminution in the purchasing power of money. “But what the lgw can do, is to prevent fluctuations in value as between gold and silver, by making them both legal tender at a definite ratio. * * © “Ag. stability of value is one of the most necessary qualities of money, * * * it is better to confine fluctuations to the mass of gold and silver combined, than let each metal fluctuate separately. “Gold alone has varied within this cen- tury from an annual production. of £3,000,- 000 to £30,000,000, or tenfold.’ But gold and silver combined have only varied from about £10,000,000 to £40,000,000, or four- fold—hence the joint metal forms a more stable mass than gold alone.” It is here that Mr. Smith brings in the comparison I have already mentioned: “It Is,” he says, “like a kite with a heavy tail to it, which prevents the kite from sway- ing to and fro; whereas gold alone is a kite without a tail which obeys every gust more readily.’’ Question.—Everyone, of course, recog- nizes the importance of stability in the standard of value? Answer.—The importance of it Is some- times overlooked by monometallists. In view of this aspect of the case, some news- paper disquisitions an the currency ques- tion are amusing. Here, for instance, Is a characteristic ‘specimen: “If two sovereigns at the present value of gold have the same purchasing power which three soverelgns used to have, the obvious result is that two sovereigns will serve as well aa three. “Thus by natural causes there comes an economy of gold to the precise extent to which there exists a need for It. “The balance is self-adjusting.” That, of course, weuld be perfectly true if money were merely a medium of ex- change, to be employed in buying and sell- ing, the trangactions moreover being for immediate cash. But money, as we have already seen, has another and most im- portant function. It forms—to use Mr. Bajfour’s expressive words—the “record of obligations extending over long periods of time.” It ts In view of this importaat function of money—a function which the writer of the curious disquisition I have just quoted, would seem never to have heard of—that stability of value, in so far as it {a attain- able; 1s one of the first requirements of a mozetary stapdard. Questien.—Then what do the monometal- lists say to all this? Wheir position in reference to the practi- eal aspects of the case is indeed not easy to define. I have already pointed out how they have been driven back from oné line of defense te another. So far as I have been able to make out, there are not many of them now who do not admit, to the full, the existence of the evils I have spoken of, and who do not admit. moreover, that mn charging a percentage of net r MONOMETALMLISM. 27 those evils are mainly, if not exclusively, the result of an increase in the value of gold. But then, as regards the remedy for it all, their position seems to be that of men who will merely sit by, with folded arms, and do nothing. ; Mr. Giffen, indeed, at the end of the sta- tistical paper from which I have quoted his explicit and emphatic statement as to the notable and still increasing rise in the value of gold, suggested a remedy for at all events one set of the evils that result from the present state of affairs—those that are involved in the unfitness of our gold standard as a measure of obligatioha in the case of payments extending over long periods, such as a term of yeara. The suggestion was that, instead of working on the basis of any metallic standard— whether consisting of one metal or of two —recourse should be had to the device known as a “tabular” standard of value. Mr. Giffen, indeed, seems to have given up as hopeless the ‘possibility of canstruct- ing any satisfactory or equitable system on the basis of specifying, in money, the amounts of payments to be made. Here is how he stated his view: “Is there anything to be done by gov- ernments (to provide against the effects of the appreciation of gold), is a ea which will naturally arise * * * “The only suggestion I would ake is ot a statistical ki “All these difficulties seem to me to sug- gest the expediency of further scientific study, * * * of the theory and practice of index numbers, which supply a means of providing for deferred payments by syb- etituting a different currency for monéy, as is done by the corn averages for titha, and by corn rents generally. “If we cannot invent a money that will be stable over generations, may it not be possible to devise a substitute by which the deferred payments will themgelves ehange with the changing value measured by some other standard? * * * “This last suggestion can hardly be ex- peeted to be a very popular one at present, while, as yet, index numbers are hardly known to the publie. It is remote enough from any practical issue. 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