Cornell 
 HG 941. S3 
 
 The silver question in its social aspect 
 
 3 1924 014 049 609 
 
Cornell University 
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 tine Cornell University Library. 
 
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THE SILVER QUESTION 
 IN ITS SOCIAL ASPECT. 
 
 an 3Enq[ut(K into tl)« 35ici^ttna ISeprediStoti of KvaVc, anU 
 Xf)t 3Pit£!ent .33o:Sition ol tlje 33i=ra«tantc Controtier5». 
 
 BY 
 
 HERMANN SCHMIDT. 
 
 Honlfon : 
 EFFINGHAM WILSON, KOYAL EXCHANGK 
 
 1886. 
 
LONDON; 
 
 PRINTED BY MILL1NQT0N BROTHERS, 
 
 25 A 27, ST. JOHN STREET. 
 
 WEST SMlTHFlELD. 
 
"3a! hjcnn ju ©ol field Suna fein gefett^ * 
 
 Sum ©tt6er^©i)lb, bann igt e§ l^eitere aCett."/^ 
 Goethe — JPolust. 
 
 CHANGES and alterations of the most piizzling 
 character have taken place during the last few 
 years in the commerce of the world. To all appear- 
 ances the causes which produced these changes are 
 still at work. We are witnessing a revolution in 
 prices ; a decrease in the opportunities of profit ; a 
 decline in the average rate of discount; a rise in all 
 securities of the better class, which bear a fixed interest ; 
 a disinclination on the part of capital to embark in 
 productive enterprise ; a conseq[uent reduction in the 
 chances of employment — entailing misery and suffering 
 on numbers of once prosperous and wealth-producing 
 citizens. Men of science are closely watching these 
 perplexing phenomena ; statesmen are anxiously follow- 
 ing a development which, to the State, means loss of 
 revenue and reduced resources; a Royal Commission 
 has been enquiring into the origin of a depression 
 unusually wide and unusually prolonged. 
 
 The living generation is not unfamiliar with times of 
 difiiculties and with crises. But the economic position of 
 
The Silver Question 
 
 to-day is, in many and important respects, undoubtedly 
 different from the cyclical periods of collapse with 
 which the last forty years have made business men 
 acquainted. . Those periods were always of limited 
 duration, but there seems to be no end to the present 
 languor ; - those depressions extended, generally, only to 
 one or two countries, — where speculation had been 
 carried to excess, — the present covers Europe, America, 
 India, China, Australia, and has not been preceded by 
 any extensive speculation; formerly, a good harvest 
 went far to remedy the distress ; now, good harvests 
 seem to aggravate the eviL All the hackneyed ex- 
 planations of political economy, the theories of action 
 and reaction, of ebbing and flowing, of flux and reflux, 
 fail to apply to-day. 
 
 But, though to the living generation the spectacle 
 presented by the contemporary economic condition of 
 the world is novel, it would be a mistake to represent 
 the situation as unprecedented. On the contrary, if 
 we turn to history, we find periods extending over 
 many years bearing a close resemblance to our own 
 times, periods in which business was unprofitable, 
 commerce dwindling, and prices falling; periods in 
 which the wheels of civilization were either at rest, or 
 moving backwards. These were the periods of con- 
 tracted currencies. Thoughtful students • and writers 
 of history have maintained that there is a distinct 
 connection between the rise and fall of enterprise and 
 
In its Social Aspect. 
 
 civilization and the rise and fall of the circulation 
 of the precious metal^.^ The question to he determined 
 is — How far the present distemper of trade is attribu- 
 table to currency disturbances, and whether it is within 
 our power to find and apply a remedy which will 
 bring stability to prices, breathe new life into torpid 
 commerce, and convert stagnation into activity. 
 
 The first fact to be noted is that simultaneously with 
 
 1 " The two greatest events that have oconrred in the history of 
 mankind have been directly bronght abont by a successive contraction 
 and ex'gansion of the circnlating medinm of society. The fall of the 
 Boman Empire, so long ascribed in ignorance to slavery, heathenism, 
 and moral corrnption, was, in reality, brought abont by a decrease ' 
 in the gold and silver mines of Spain and Greece. Columbus led 
 the way in the career of renovation ; when he spread his sails across 
 the Atlanlio he bore mankind and its fortunes in his barque. The 
 annual supply of the precious metals for the use of the globe was 
 tripled. The weight of debt and taxes insensibly wore off under 
 the influence of that prodigious increase." — Mison, 
 
 " Your Commission asks if similar circumstances ever occurred 
 before. Yes; they occurred after a similar failure of the Koman 
 mines, an event which precipitated the disruption of the Western 
 Empire and was followed by the tremendous consequences so ably 
 depicted in Sir Archibald Alison's Essoa/s; they occurred after 
 the dismemberment of Charlemagne's empire, an event which ooca- 
 sioned the secret hoarding of the vast quantities of gold and silver 
 which that monarch had captured in Saxony and Hungary, and had 
 made into money ; and they occurred again during the eighteenth 
 century, when the plunder of America and the Orient was quite 
 over, and the metaUio product of Spanish America, although it 
 continually increased under the cruel stimulus of the lash, yet 
 , failed to increase fast enough to supply a rapidly-growing Europe 
 with the materials for money. In the latter instance the evil effects 
 of diminishing moneys manifested themselves in every country of 
 the world."' — Letter of Aleasamde'r Del Mwr to Earl of Iddesleigh, 25th 
 May, 1886. 
 
6 The Silver Question 
 
 the commencement of the decline in prices great 
 changes were made in the currencies of some of the 
 leading states of the world. 
 
 In 1872 Germany demonetized silver/ and adopted 
 the gold standard, and soon later legislation hostile to 
 silver was passed in the United States of America, the 
 States of the Latin Union, Holland, Sweden, Norway, 
 Denmark, and other countries. What we contend is, 
 that there is a connection between this legislation and 
 the present depression of trade. But this contention 
 has to be proved and, in order to do so, we shall have 
 to devote a great part of our work to an exposition of the 
 evil and injurious efEects of the demonetization of silver. 
 
 From the beginning of this century to the year 1872 
 the world, as a whole, was bi-metallic. Some 
 countries had adopted the single gold standard, others 
 the single silver st9,ndard, a third class — the States 
 comprising the Latin Monetary Union — the double 
 standard, on the basis of 1:15^. A- ready means was 
 thus provided for exchanging one metal for the other, 
 and a fixed and stable relation was established between 
 the two metals.^ 
 
 1 When the single gold standard was adopted by Germany it was 
 recommended by nearly all authorities on money and finance who 
 attributed the mercantile superiority of Englaitd to her standard 
 and thought that to adopt this standard was a sure way to commer- 
 cial greatness. 
 
 2 go long as the French Mints were open to the free coinage oif 
 both gold and silver the exchange between London and Calcutta 
 
In its Social Aspect. 
 
 When, subsequent to 1872, Germany brought her 
 silver to market the Latin Union at first limited, and 
 then suspended, the coinage of that metal. By this 
 means the link that connected gold and silver was 
 snapped. Thenceforward the ratio between these two 
 metals fluctuated according to the accidents of the 
 market. As silver had lost the markets formerly 
 provided for it by the ever open mints of Continental 
 Europe, and as Germany and other countries came in as 
 buyers of gold, the result was a fall in the price of 
 silver. 
 
 When this phenomenon first occurred it attracted 
 considerable attention and, in 1876, a Royal Commis- 
 sion examined into it in England. Its advice was to 
 do nothing, and to allow things to settle themselves. 
 Years have rolled on, and what at first was a compara- 
 tively localized difiiculty, affecting only the silver 
 market and its immediate connections, has since 
 developed into a disturbance of world-wide extent, 
 affecting the relations between man and man, wherever 
 they are beyond those of mere savages; felt alike by 
 the farmers of England, by the peasants of Russia, by 
 
 was virtaally as fixed as if it had been based upon one standard 
 oiily. The "flnotnations of this exchange were limited by the two 
 "specie or bnllion points," as are at present the flnotnations of the 
 ezcha^ige, say, between London and Melbonrne. Hr. B. GiSen 
 misinterpreted these oscillations of the silver ezchninges between 
 the specie points and the consequent variations of the prloe of bar 
 silver by citing them as a proof that the French ratio was not 
 always effective. 
 
8' The Silver Question 
 
 the wheat growers in Manitoba, by the cotton planters 
 in South Carolina, and by the squatters in Australia ; 
 disorganizing the Budgets from the Ganges^ to the 
 Nile.^ The words written by William Jacob in 1830, 
 on the universal fall in prices then happening, seem 
 indeed again applicable to-day : 
 
 " There must be some general cause producing such 
 extensive effects, which are thus felt alike where tax- 
 ation is high or low ; under despotic and free government ; 
 and whether the land is cultivated by slaves, by serfs, 
 by hired labourers, or by proprietors." 
 
 For a long time it was strenuously denied that this 
 " general cause, producing such extensive effects," 
 could be the demonetization of silver. The connection 
 between this demonetization and the general fall in 
 prices was not admitted, and all kind of alternative 
 theories were put forward to account for the latter. 
 
 The extension of postal and telegraphic communica- 
 tion ; the cheapening of freight by land aud sea ; the 
 shortening of the distances to be traversed, consequent 
 on the construction of new railways and canals ; 
 the substitution of steam for sailing power ; the exter- 
 mination of middle men and interinediate agencies ; 
 these and other explanations were given for the lower 
 prices. There can be no doubt that these forces have 
 
 1 Sir A. Colvin's Indian Financial Statement for 1886-87. 
 
 ' Mr. Edgar Vincent's Report on the Finances of Egypt, 1885-86. 
 
In its Social Aspect. 
 
 worked to somewhat cheapen commodities — ^though it 
 is overlooked that if general they ought, in justice, 
 to have tended to similarly cheapen also the production 
 and cost price of gold and silver. A certain fall in 
 prices may, however, we grant, be ascribable to the 
 above influences. But the continuance and the extent 
 of the decline in prices have been so marked and so 
 general, that the insufficiency of the above causes to 
 produce such results is now being gradually admitted, 
 and the connection between the currency question and 
 the increased purchasing power of gold is doubted less 
 and less. Nor do we think that this connection is 
 difficult of demonstration, as the following exposition 
 will prove. This exposition will — ^in our opinion — 
 have the additional advantage of demonstrating that 
 there are, practically, no assignable limits to the present 
 decline in prices, and that the popular belief that in 
 certain instances the lowest possible level has already 
 been reached is, like so much else, a popular delusion. 
 
 The commercial relations affected by a fall in the 
 value of silver are those between the Eastern and the 
 Western world. That trade which, from time im- 
 memorial, has been the " world- trade," the possession of 
 which was usually synonymous with empire, is the very 
 one that has been upset by the changed relation of gold 
 to silver. The speculative element introduced into this 
 trade, by the ever varying exchanges, has so often been 
 dwelt upon that we will not enlarge upon it here ; nor 
 
10 The Silver Question 
 
 do we intend to lay too much stress on the fact that 
 lower exchanges act for a time like a protective bamer 
 against the imports into silver countries, and like a 
 bounty paid on the exports from these countries. The 
 point which, in this connection, is of most importance 
 and which must be specially emphasized, is the 
 influence of the silver countries on the general level of 
 prices in the gold countries. 
 
 The relations which here come to the front are those 
 between England and India. India has been developed 
 and protected by English capital for many years past, 
 and for these services she owes a yearly payment to 
 England which, to a very large extent, has to be made 
 on the gold basis. As silver has fallen, the burden of 
 these payments has increased, and India has had to 
 augment her exports to re-establish the balance. The 
 larger offers of her produce resulting from this cause, 
 tpgether with the possibility of obtaining it for less 
 gold, owing to the lower price of silver, brought about 
 the first fall in the prices of the g6ld countries, which 
 took place in the quotations of the produce of the East. 
 As exchange continued to fall India had to still further 
 increase her exports and, taught by necessity, she began 
 more and more to turn her attention to the cultivation 
 and production of articles which, hitherto, had been 
 chiefly supplied by gold countries, her exports of which 
 would therefore enjoy to the full the benefit of the 
 lower price of silver, i.e., wheat, cotton, hides, etc. 
 
In its Social Aspect. 11 
 
 The larger exports of raw cotton affected principally 
 the interests of the United States of America, but the 
 larger exports of wheat produced important results in 
 Europe — for they mark the origin and beginning of 
 the general decline of the prices of agricultural produce 
 in the West. In vain have continental states en- 
 deavoured to neutralize this fall by re-enacting corn 
 laws ; the fall in the price of silver has, hitherto, 
 invariably outrun the agricultural imposts. European 
 farmers, finding wheat unprofitable, began, to grow 
 other produce with the result of extending further the 
 fall of prices : the greater cultivation of beet-root in 
 Austria and Germany, for instance, producing the 
 collapse in the sugar market ; the greater attention of 
 farmers to dairy produce bringing down its prices. 
 
 We ha^e, thus far, only considered the influence of 
 the silver-using East as a producer and exporter on the 
 prices in the gold countries. Its influence, however, 
 as a consumer and importer is not less potent. The 
 purchasing power of silver, in the East, not having 
 materially altered, all the articles which are manu- 
 factured in gold countries for export to the silver 
 countries had to decline in price with the fall of the 
 rupee and the dollar. We are, for instance, inclined to 
 attribute the fall in raw cotton more to the fact that 
 cotton goods are so largely consumed in the East that 
 their price is, to a great extent, dictated by the silver 
 countries than to the other fact that India's raw cotton 
 
12 The Silver Question 
 
 can now compete at lower gold prices with that of the 
 United States and Egypt owing to the lower exchange. 
 Being in this manner attacked from two sides, the 
 stability of prices in the gold countries has given way 
 all round. " The fall extended to, and successively em- 
 braced, wider and wider areas according to the law of 
 precession of prices."^ This is not the place to follow 
 this precession in detail, but we may remark that, in 
 consequence of the great fall of agricultural produce, 
 both rent and land have receded in price and that, 
 following the ramification of this precession still 
 further, the general fall in prices rendered it impossible 
 for some countries — ^recently, for instance, Roumania 
 and the Argentine Republic — to keep their currency at 
 par with gold, thus plunging these countries into the 
 abyss of inconvertible paper money, and lowering, in its 
 turn, for a time the gold value of their exports. As an 
 example, we may mention the case of wool, which was 
 one of the articles that resisted longest the fall in 
 prices, but which was brought down when the River 
 Plate countries suspended specie payments.^ This 
 
 1 Because this precession has not always been as regular as 
 clockwork, M. F. Leroy Beanlien denies the coanection between the 
 fall in prices and the silver question. (Revuje des deum monies. 
 Mm, 1886.) With the same argnments the inflnence of increased 
 issues of inconrertible paper on prices has always been denied by 
 inflationists. 
 
 2 More recently there has been some recovery from the lowest 
 prices reached, simultaneously with a decline of the premium on 
 gold at Buenos Ay res. 
 
In its Social Aspect. 13 
 
 event again reacted most unfavourably on the prosperity 
 of gold mono-metallic Australia. 
 
 We thus find, all the world over, a close and demon- 
 strable connection between the demonetization of silver 
 and the fall in gold prices. But the fall m gold prices 
 is the appreciation of gold. This appreciation is, 
 therefore, primarily not so much a cause as an effect,^ 
 it is the result of the fall in silver, and simply the 
 phenomenon of a general fall in prices which the fall 
 in silver brings about, stated inversely. 
 
 This exposition establishes the fact which we wish 
 specially to emphasize, that a rise in the purchasing 
 power of gold can take place without any reference to 
 the abundance or the scarcity of that metal. Very able 
 writers, such as Professors de Laveleye and J. S. 
 Nicholson, as well as Mr. Moreton Frewen, have laid 
 great stress on what is known as the " Quantitats- 
 Theorie," and on the present scarcity of gold. With 
 them we think that the arguments based on gold 
 scarcity have great weightj and we, also, think that 
 those gentlemen have largely succeeded in proving a 
 real scarcity. For, consequent on the demonetization 
 of silver, a much larger demand has arisen for gold 
 which, coupled with a decreasing production, is now 
 accelerating the downward movement of silver and, 
 
 1 Mr. Harvey expressed tbe same opinion : " I agree that the 
 appreciation of gold is more an effect than a cause of low 
 prices."— JbwnaZ of Institute of Bankers, Sutlb, 1886. 
 
14 The Silver Question 
 
 consequently, of prices in general. The " QuantitatS- 
 Theorie," therefore, enters after all into this question, 
 jiot in a direct, but in an indirect manner.^ And it is 
 certain to do so much more, should the course of events 
 force one or more oth^r nations to melt down part of 
 their over-valued legal tender silver coins, still in 
 circulation, and sell them for gold., It is then that the 
 question of gold scarcity will, indeed, become the all- 
 iniportant factor in this controversy. We think, how- 
 ever, it is better and facilitates a thorough understand- 
 ing of the question before us, if we always bear in 
 mind that the depreciation of silver will account for the 
 appreciation of gold without reference to the circulating 
 quantity of the latter metal.^ This circumstance 
 is very instructive. It will teach us that those leaders 
 of opinion are far from grasping the subject who think 
 that they have demolished the bi-metallic argument 
 because it assumes " that the principal cause of the 
 fall in values since 1873 is scarcity of gold,"* and 
 because they fancy they are able to show that this gold 
 scarcity does not exist. It will teach us that we should 
 
 ' Dr. Otto Arendt, in his Wahrv/ngsstreit comes to the same con. 
 olnsion, though he uses the term " indirect " in a slightly different 
 sense from that in which it is nsed here. 
 
 2 The following remarks of Mr. Gernnsohi express this idea in its 
 extreme ; " If by an enchanter's wand all the silver francs, all the 
 silver marks, all the silver dollars, were converted into gold francs, 
 gold marks, gold dollars, the European and American prices would 
 remain unchanged." — Letter to Maonomisi, 24th April, 1886. 
 
 « See letter of Mr. W. Fowler to Times, 18th of August, 1886. 
 
In its Social Aspect. 15 
 
 be trusting to uncertain guides indeed if we attempted 
 to apply to a world-wide calamity such local remedies as 
 the issue of £1 notes.^ It will teach us that the real 
 remedy, whatever it be, must be a cure, not only for the 
 scarcity of gold, but, above all, for the depreciation of 
 silver; must in fact re-establish the dislocated par be- 
 tween gold and silver. 
 
 This explanation will, we are convinced, sufficiently 
 prove the fact that the general level of gold prices 
 depends upon the price of silver. As already admitted, 
 other causes may be responsible for part of the fall in 
 prices that has taken place, but the depreciation of 
 silver remains the general and the chief cause .^ From 
 this it follows that as long as silver has not arrived at 
 its lowest possible price, as long as there is room or 
 margin for a further fall of that metal, there cannot be 
 any finality in the general fall of prices. " With each 
 fresh tumble of silver a lower deep must be reached."^ 
 
 This is a conclusion of the gravest importance for 
 practical business men which will satisfactorily explain 
 some otherwise unaccountable events. During the 
 
 1 Proposed by Mr. Ch. Gairdner. — Jownal of Institute of Bankers, 
 March, 1886. 
 
 2 Mr. D. Barbour in his able TTieory of Bi-metaXUsm arrives at the 
 conclasion that if the appreciation of gold, pins depreciation of 
 silver, amonnts to 19 %, the more probable sapposition is that gold 
 prices have been kept down by 9f % and silver prices kept higher 
 by 9i %. If our demonstration is correct nearly the whole of that 
 19 % wonld be appreciation of gold. 
 
 sffeio Tori Chronicle, 29th May, 1886. 
 
1,6 The Silver Question 
 
 last ten years it has often been asserted that a certain 
 article had "touched bottom," since it sold already 
 below c6st price. By-and-bye this article was sold at 
 a fresh reduction of 5 or 10 per cent. What had hap- 
 pened? Silver had experienced a further decline, 
 some raw material could be imported from the East at 
 lower prices owing to lower exchanges, and the former 
 calculations no longer applied. There was therefore 
 room for the market to go down, and it did so. The 
 .apostles of the classic political economy, the devotees of 
 cheapness, were afforded an opportunity of pointing to 
 anothei; instance of reduced cost of production, to a 
 fresh triumph of civilization over the forces of nature ! 
 
 This exposition shows the utter fallacy of expecting a 
 sound and lasting improvement in trade before the fall 
 in silver is arrested. Till this is finally done the trade 
 of the world in general, and of England in particular, 
 must and will decline. Even the opening up of new 
 markets, so often preached as a panacea, would, as 
 Professor Nicholson has poinded out,^ give no relief, 
 unless, which is not likely, they bring new supplies' of 
 gold, for extension of commerce would mean increased 
 demand on bullion and a further fall in prices. 
 
 This is, no doubt, a very, unpalatable and disagree- 
 able truth to those self-proclaimed economists who, not 
 distinguishing between low prices and low cost of pro. 
 duction, between a fall in money prices, and a fall in 
 J The Silver Question, 1886. 
 
In its Social Aspect. 17 
 
 real prices, praise the present as a time of " cheapness 
 and of plenty." Alas!. their so called cheapness is 
 nothing but dearness of gold, and their plenty^ where 
 it is real, testifies only to the reduced capacity of the 
 masses at large to command and consume the com- 
 modities which, when produced, were intended for the 
 benefit of the whole human race. 
 
 Having thus traced the connection between the 
 demonetization of silver and the fall in prices we now 
 approach the question, whether such a fall in prices is 
 really an evil. ' Some have denied and others doubted 
 this. The argument of those who can see no harm in 
 the appreciation of gold is as follows : 
 
 " If two sovereigns at the present value of gold have 
 the same purchasing power which three sovereigns 
 used to have, the obvious result is that two sovereigns 
 will serve just as well as three used to serve. 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." ^ 
 
 If money were nothing but a counter for effecting 
 exchanges this view would be correct, but as it is the 
 standard .in which all monetary obligations are con- 
 tracted, such reasoning is inadmissible. It is this stan- 
 dard function of money which we have ever to keep in 
 
 I Times, 12th March, 1886. 
 
18 The Silver Question 
 
 view when considering the demonetization of silver and 
 the evils which it has wrought. 
 
 Indeed it is here that we touch the most important 
 point in the whole currency controversy, the very 
 kernel of this " Silver Question." Our opponents know 
 this very well, for " if money possessed really no other 
 qualifications than that of a railroad, or a steam ship, 
 or a bill of exchange, if it simply exchanged one com- 
 modity for another, the creditor class in this or other 
 countries would never make Rome howl with its de- 
 nunciations of silver." Nor does the importance of this 
 standard function of money decrease with the progress 
 of civilization. On the contrary, the greater the 
 development of a country the more important will be 
 this function, the more numerous the monetary rela- 
 tions of the citizens. It is through this close connec- 
 tion between silver and the stability of the gold 
 standard that the silver question becomes of such 
 paramount interest to all gold countries, where, indeed, 
 it is one of the greatest and most influential of social 
 factors.^ 
 
 Viewed thus as a question affecting the living organ- 
 ism of society the appreciation of gold means an altera- 
 
 ' The champions of the old mercantile theory who endeavonred 
 to prevent the^ export and encouraged the import of the precious 
 metals, have often been langhed at since the days of Adam Smith. 
 However, if their object was to keep the supply of money constant 
 and prevent a distnrbanoe in the standard they were, perhaps, 
 wiser than some of their critics. 
 
In its Social Aspect. 1^ 
 
 tion in the standard of value. The first, the foremost 
 requisite of every - standard — stability — disappears.^ 
 A standard that has confessedly altered 25 to 30 "/„ in 
 the course of a decade is really a standard no longer. 
 Though not possessed of an ounce of full legal tender 
 silver, England finds thus her standard engulfed in the 
 silver difficulty. This is why the price of silver is of 
 ■such enormous importance to England. And our 
 readers will now be able to appraise at their true value 
 the ability, the knowledge, the perception, and the 
 scientific competence of those leaders of public opinion 
 who boldly declare that England, having a gold stan- 
 dard, need not care what becomes of silver. 
 
 The evils resulting from an appreciating standard are 
 ubiquitous and too numerous to be depicted in detail, 
 but we will glance at the most prominent of them, 
 sufficiently to bear out our contention, that to all gold 
 countries the silver question is at bottom a social 
 question.^ 
 
 * All who admit that there is not enough gold in the world to 
 entirely do away with silyer desire the standard to remain stable. 
 Por, if stability were of no consequenoe, any qnantity of gold wonld 
 do, all that is required would be a corresponding fall in prices. 
 In that sense it is perfectly, true that money, like water, will 
 always find its own level. 
 
 ^ Not only in England but on the Continent the opponents of bi- 
 metallism overlook this point. They think they are safe firom the 
 effects of the silver difficulty if they accumulate sufficient gold. 
 This error explains why in Germany the gold mono-metallists 
 speak of the " relatively very satisfactory position of Germany in 
 the currency question." 
 
20 The Silver Question 
 
 The effect of an appreciating Btandard upon trade' 
 is immediate. 
 
 Merchants who find that in consequence of a gradual 
 decline of prices their ventures result in losses will pre- 
 ;fer restricting business or retiring from it altogether to 
 continuing such trading. Manufacturers who are un- 
 able to obtain for the finished article a price that will 
 leave a margin of profit, or even repay cost of pro- 
 duction, will after a period of unequal struggle close 
 theirmills. Small traders who find stock continually 
 declining in value will keep as little of it on hand 
 as possible. Everywhere the money losses will disse- 
 minate a feeling of disappointment and discouragement 
 which it would be useless to attempt to combat with 
 the philosophic reflection that though as expressed in 
 money the capital has diminished, it remains, in truth, 
 as large as ever or nearly so because the purchasing 
 power of money has increased. 
 
 That a good deal of the depression of trade is 
 ascribable to these causes cannot be doubted. Nor can 
 it be questioned that if of late socialistic difiiculties- 
 have come again more to the front the reason must be 
 looked for in the diminished opportunity of the em- 
 ployment of labour consequent on the decline of general 
 activity. And if it hap also become less, easy for 
 statesmen to maintain friendly relations between the 
 different nations the same facts must partly be held 
 responsible, for the history of the world proves nothing' 
 
In its Social Aspect. "21 
 
 more than that race hostilities grow with commercial 
 or industrial depression. 
 
 The effect of an appreciating standard on contracts 
 is scarcely less immediate than that on trade, and 
 certainly not less important ; for " in a highly civilized 
 modem society all the production and all the distribu- 
 tion of wealth depend on a complicated and vast series 
 of contracts which are all expressed in terms of money." 
 The tendency of the alteration which those contracts 
 undergo through the appreciation of gold will be to 
 -benefit the economically strong at the expense of the 
 economically weak ; the economically idle at the expense 
 of the economically busy ; in short to favor the creditor 
 at the expense of the debtor. No doubt the lower rate 
 of interest which in times of depressed state of trade 
 generally prevails will allow some of the debtors to 
 rectify to a partial extent this injustice, but the in- 
 justice itself will remain. But if the weight of debt 
 becomes heavier it is equivalent to a real increase in 
 the fixed charges. Thus under an appreciating standard 
 not only individuals but also governments suffer, the 
 latter through the decrease in the yield of such imposts 
 as income tax and probate and legacy duties, as well 
 as through the influence of a general depression on 
 customs, and excise. Government expenditure is, on 
 the other hand, difficult to curtail, a reduction of official 
 salaries which justice demands is not easily affected, 
 and only few countries are in a position to lower their 
 
22 The Silver Question 
 
 debt charges by " conversions." ^ Throughout all these- 
 changes, people with fixed incomes enjoy unjust benefits. 
 If the charge of " unearned increment " is to find a 
 place in political economy it is here that it should be- 
 preferred, it is against the capitalists, the owners of the 
 mobilized wealth, that it should be levelled. 
 
 There would be a redeeming feature in these social 
 changes if thereby the working men had also obtained 
 any economic advantages. Unfortunately, however, they 
 have not. To suppose, like Mr. Hansard,^ that this has 
 been the case implies a misconception of the whole 
 phenomenon.* Depressed trade reduces the opportu^ 
 
 ^ As an instaoce that in spite of reducing the amount of debt and 
 loirering the rate of interest payable on the remainder, the debt 
 charge measured by its demand on labor may increase, we may 
 cite the case of United States of America. According to Mr. Moreton 
 Frewen the United States have from 1865 to 1886 reduced their 
 debt from over £500,000,000 to less than £300,000,000. But while 
 in 1865 18 million bales of cotton or 25 million tons of bar iron 
 would have wiped out the total debt, it would take to-day 32 
 million bales of cotton or 35 million tons of bar iron to pay off 
 what remains, i.e., little more than half of the original amount. 
 The effective increase which must have taken place during the last 
 15 years in the debt charge of states which like Bnssia, Austria, 
 France, Hungary, Australia have largely augmented the total debt, 
 must seriously interfere with the prosperity of these countries. 
 
 ^It will be a distinct advantage if the present appreciation 
 caused by the low level of prices continues and wages or incomes 
 remaim, the sa/me. — "Essay on prices of some commodities during the 
 decade 1874 to 1883," .T^oiimaJ of Institute rf Bankers, January, 1885. 
 
 ' In America, and elsewhere, the gold advocates have adopted 
 the tactics of pleading against silver in the interest of the working 
 man. This touching taking-to-heart of the welfare of the labourers 
 by those who, as a class, have ever been oblivious of their interests 
 
In its Social Aspect. 23 
 
 nities of employment with the inevitable result, sooner 
 or later of lowering wages.^ The action of Trades 
 "Unions may for a time obscure this issue, but it cannot 
 prevent it, for even where they are able to keep up the 
 nominal scale of remuneration of labor, they cannot 
 guarantee continuous employment on these terms. Mr. 
 Giffen has shown a clearer perception of this part of 
 the question than Mr. Hansard ; he perceived the inevit- 
 able drift of events and concluded his essay, " Further 
 Notes on the Progress of the Working Classes," ^ with 
 a warning to them, " that they should be prepared to 
 some extent for a reduction in money wages." 
 
 The greatest, and let me add, perhaps, the most 
 innocent sufferers, however, through an appreciating 
 standard are the landed interests. With the competi- 
 tion of silver using countries in the wheat markets,^ 
 
 has, however, not had the desired effect. Senator Teller said 
 in United States Congress ; " This pretence of interest in the wages 
 of the labouring man is not only weak, deceiving no one, but it is 
 false." — Speech, 19th January, 1886. 
 
 ' There is little donbt that this is already happening. On 17th 
 April, 1886 the Economist sums np the situation as follows : " The 
 yield of the income tax is diminishing, the working classes are less 
 fully employed than before, and are earning less when employed, 
 and pauperism, notwithstanding all that trade societies are doing 
 to support their idle members, is increasing. 
 
 ^ Jowmal of StatisUcal Society, March, 1886. 
 
 ^ The question whether Indian wheat exports will be stopped if 
 exchange should rise again is frequently put, but difficult to answer. 
 It is quite possible that to a large extent this export might continue, 
 although in its infancy it was greatly assisted if not called into 
 being by the fall in exehange. Bu6, and that is the great point 
 
24 The Silver Question 
 
 and the consequent fall in prices of agricultural produce 
 all round, farmers cannot make both ends meet, and 
 the result is a fall in rents and in the value of land.^ 
 After the ruin of the farmers, if the current of events 
 be not reversed, will come that of the landlords. 
 Translated into their language the triumph of gold 
 mono-metallism means " No Rent." 
 
 Of course it -would be contrary to the spirit of the 
 age, at least in England, to say a word in defence not 
 only of landlords but of landlordism. Little indeed is 
 thought of the injustice of any social development if 
 land be the suffering party. But we may liere remark 
 that as popular a writer as J. S. Mill looks upon a rise 
 in rents as indicative of the progressive state of society,^ 
 and that so impartial an authority as J. Locke con- 
 sidered falling rents a sign of decay.* And it is the 
 banishment of silver that is producing the present fall 
 of rents in England. 
 
 which interests agricnltnrists, even should wheat continne to come 
 After exchange has risen, it conld do so only at higher gold prices. 
 
 ^ Sir James -Caird reckons the total loss last year (1885) to the 
 landed interest in England in spendable income at more than 
 ^10,000,000. (Committee on Depression of Trade.) The net assess- 
 ment of landed property for- 1884-85 show a deoline of £5,000,000 
 against those of 1879-80. Capitalizing this at thirty years' purchase, 
 we have a total depreciation in the capital value of land of 
 dei50,000,000.— JBconomist, 21st November, 1885. 
 
 " Princiiples of PoUUcal Economy, ir., 3. 
 
 8 "An infallible sign of yonr decay of wealth is the falling of 
 rents, and the raising of them would be worth the nation's care."— • 
 Value of Money. 
 
In its Social Aspect. 25 
 
 On the continent where landed interests do not enjoy 
 such unpopularity as in this country, the government 
 having observed the destruction with which " land " 
 is menaced, decided to come to its aid. Being still too 
 deeply committed to the " battle of the standards " and 
 as yet, therefore, imable to apply the remedy — the re- 
 habilitation of silver — ^they have reintroduced the 
 duties on agricultural produce, a proceeding which is 
 perfectly logical and which for a time at least brings, 
 if not cure, at all events relief.^ 
 
 The gold standard has thus become the principal and 
 the most powerful cause of that revival of protection- 
 ism^ which has so much surprised a world which thought 
 that the years of Cobden Club propaganda would 
 have shown better results. But continental statesmen 
 know very well why they have come to the rescue of 
 their agriculture. For not only doefe agriculture still 
 represent the largest industry of their different countries, 
 it is also considered to be of great political importance 
 as furnishing a constant supply of healthy and strong 
 
 ' In England, agricnltnral depression is often looked npon as a 
 visitation of Providence, against wliioli hnman wisdom availetk not. 
 Thns, in a leading article of 11th of January, 1886, the Staiidwrd 
 says : " Country gentlemen who are sn&ering from no fault of their 
 own, but from one of those dispensations of nature which no wisdom 
 can avoid." 
 
 ^ Mr. Giffin, when looking around for the moat effective weapon 
 against bi-metallism, boldly declared it to be " Protection." — (On 
 some Bi-metallic Fallacies.) Our readers are able to appreciate the 
 appropriateness of such an expression. Even the Economist could 
 not swallow that piU. 
 
26 The Silver Question 
 
 specimeBS of humanity, and of developing among 
 large classes of society that feeling of true conservatism 
 which forms an invaluable counterpoise to the restless 
 population of the great towns, so often rerwm Twvarum 
 cupidi. 
 
 But the social influences of an appreciating standard 
 embrace even wider areas than those considered so far. 
 According to Mr. ParnelP the whole Irish Question i» 
 at bottom a question of the value of agricultural 
 produce. According to Herr von KardorfE^ the anti- 
 Semitic movement in Germany is to a large extent the 
 expression of the antagonism of the Teuton landlord 
 to the Jewish mortgagee, whose mortgage is seen to 
 be constantly increasing in value and increasing to the 
 detriment and at the expense of the mortgagor. 
 Similar considerations account for the strong parti- 
 sanship of the capitalist classes, the owners of the 
 mobilized wealth, in Europe and still more in America 
 —where this question is better undersbood — for the 
 gold standard. They explain the favour with which 
 this standard is on the whole regarded by the bourses 
 and the stock exchanges, the markets for this mobilized 
 wealth. 
 
 But not only the capitalist classes are in favor of 
 the gold standard, the revolutionary leaders* are so too, 
 
 1 Speeoli in House of Commons, February, 1886. 
 
 ^ Speech in Beiohstag, 6th March, 1885. 
 
 'The most intelligent and far-seeing leader of Social Democracy 
 
In its Social Aspect. 27 
 
 though for different reasons. As the latter live on dis- 
 content, they naturally oppose everything which, like 
 the rehabilitation of silver, will improve the social 
 condition of the masses and increase the general con- 
 tentment. 
 
 To sum up : the evils produced in gold countries by 
 the demonetization of silver are social ; a violent and 
 gratuituous subversion of the historic relation of class 
 to class,^ a silent but powerful revolution, a wholesale 
 confiscation of the property of the industrious for the 
 benefit of the non-industrious, a sure ultimate deteriora- 
 tion of the position of the working classes, a re-opening 
 of the disputes between debtors and creditors which all 
 through history "have been the chief topics of demago- 
 gic and socialistic agitation. 
 
 How the different classes of society are affected by 
 these changes we need not here discuss. What we have 
 stated suffices, we think, to establish the immense social 
 and political importance of this Silver Question. But it 
 is perhaps worthy of remark that among the sufferers 
 from this disturbance are the custodians of capital — the 
 bankers.^ A low rate of interest consequent on declining^ 
 
 in Germany, Herr Bebel, spoke last year, in the diet of Saxony, 
 against bi-metallism. 
 
 1 " Money is related to equity or to the maintenance of equitable 
 relations between capital and labour." — A. Del Mar, Money in civili~ 
 
 ^ No doubt there are other classes than the bondholders who 
 benefit by the greater purchasing power of gold. The Economist 
 
28 The Silver Question 
 
 trade is a feature of the situation, for holders of money 
 are anxious to lend, but not to hv/y.. Through this 
 cause even the capitalists will eventually be losers and 
 sufferers.^ The far-seeing capitalist, therefore, who 
 knows that ultimately his prosperity 'depends upon the 
 general prosperity of the country, has no reason to 
 champion an appreciating standard,^ no reason to uphold 
 an economic condition which, instead of presenting the 
 characteristics of prosperous times, high wages, and high 
 interest, shows the very opposite features : low interest 
 and low wages.* 
 
 It may probably be thought that if the fall in silver 
 is such a misfortune to the gold countries it must by con- 
 trast be an advantage to the silver using countries. There 
 are not wanting advocates who maintain this view, and 
 it must be admitted that, owing to the fall in exchange, 
 the silver countries have nearly entirely escaped the 
 principal evil from which the gold countries are suffering 
 
 (loth of April, 1886,) mentions as such the brewers. Aooording 
 to the Chairman, of the National Discount Co., (speech, 20th January, 
 1886,) " The low rate of money, which had been so adverse to the 
 banking interests, is not unprofitable to bill brokers." 
 
 ' Alison maintains that the contraction of currency which attended 
 the resumption , of specie payments by Bank of England, in 1821 
 caused as much loss to money capitalists by lowering the rate of 
 interest as to producers by lowering the prioe of commodities. 
 
 2 The traditional policy of the Eothsohilds has been in favour of 
 the double standard. 
 
 '"A low rate of interest is a symptom of a great accumulation 
 of capital ; but it is, also, a sympton of a low rate of profits and of 
 an aAvwncemewt to a stationary state." — D. Rica/rdo, On Protection to 
 AgriouXture. 
 
In its Social Aspect. 2^ 
 
 — that of an appreciating standard. Silver prices have 
 remained fairly steady. It must be further admitted 
 that, under the stimulating influence of cheap silver, thes, 
 export and import trade of the silver using countries has 
 developed or at least been spared that retrogression 
 which exists in the gold countries. 
 
 Let us take the case of India. Though the prices of 
 Indian produce in Europe have fallen, India continues to 
 receive for them nearly the same number of rupees as 
 before. Owing to the fall in exchange she has thus been 
 spared that fall in prices which is the bane of the gold 
 countries.^ Moreover under the influence of the low 
 exchange, mills and manufactures are being established 
 in India which compete under advantageous conditions 
 with those of the gold countries and add to the national 
 wealth. For it is clear that an exchange of Is. 6d. 
 per rupee instead of the former 2s. means ceteris 
 paribus not only an import duty 2.5 "/q on all goods from 
 gold countries, but also an export bonus of 33 "!„ on all 
 goods sent to gold countries. However, as a matter of 
 fact, neither such a restriction of the imports nor such 
 a stimulus to the exports has for any length of time 
 actually occurred, for the equilibrium has always been 
 quickly re-established by a readjustment of prices, a re- 
 adjustment which, as we have shown above, took the form 
 
 1 " If then it is asked what effect exchange has had on trade the 
 answer is, that it has saved the trade of India, ia the face of the 
 low prices ruling in Saropean markets, from disaster." — Minute of 
 Mr. J. E. O'Conor, Simla, 13th Jnly, 1886. 
 
30 The Silver Question 
 
 •of a fall in the gold prices.^ From this it is clear that 
 if under such circumstances the advantage of the Indian 
 exporter and the Indian manufacturer, over their Euro- 
 pean or American competitors is to continue, the 
 exchange will have to keep continually falling, a pro- 
 cess which by its very nature cannot go on indefinitely. 
 
 But though so long as we confine our enquiry into 
 the effect of the silver depreciation on India to purely 
 commercial considerations, as we have done so far, it 
 may appear doubtful whether on balance India gains or 
 loses by that depreciation, we fear that there will be no 
 longer a doubt on this question as soon as we extend our 
 survey a little further. 
 
 India has contracted large gold obligations both on 
 government and private account, the burden of which in- 
 creases as silver falls. Whatever profits greater activity 
 of trade and increased , industry may have brought 
 to India, they are, unquestionably, being more than 
 absorbed in providing for the loss by the fall of exchange 
 on the gold remittances. As it is the Indian govern- 
 ment on which a great part of this loss falls, the causes 
 of these currency disturbances have been minutely in- 
 vestigated by the Indian ofiicials, and as a consequence 
 we find that next to the American Statesmen those of 
 India are to-day best informed on the silver question. 
 
 ' It can fearlessly be asserted that few economists hare foreseen 
 BQoh a resalt. What was generally expected was a re.establiehment 
 of the equilibrium by a rise in silver prices. 
 
In its Social Aspect. 31 
 
 Another drawback of the present situation in India 
 ■consists in the fact that the fall in exchange severely 
 impedes the influx of British capital into that country.^ 
 It is known that the Anglo-Indian banks have " brought 
 home" their sterling deposits and that they are at 
 present trying to do the same for their capital. This 
 explains the continuance of high rate of interest in Bom- 
 bay and Calcutta, whilst money money goes a-begging 
 in Lombard Street. 
 
 This circumstance is not without political significance. 
 Should the peace of India ever be endangered by a 
 serious foe and the government of that country be under 
 the necessity of raising a large loan it could do so only 
 in Europe and in gold. That under the present con- 
 ditions a large increase in the gold liabilities of India 
 would simply be financial ruin is evident after the 
 ■experience of the course of exchange during the last few 
 years. We touch here undoubtedly the weakest joint 
 in the armour of England's great dependency, an 
 armour which so many sacrifices have been made to 
 perfect. 
 
 We have entered more minutely into this question of 
 Indian exchange because the subject is somewhat com- 
 
 1 << When the Port Commissioners of Calcutta attempted to raise a 
 loan of 75 lakhs of rnpees, in September, 1885, guaranteed by the 
 Government of India, the total amonnt of tenders was only B40,200, 
 and no portion of this insignificant amount was offered at par,"-— 
 Despitch of Government of India, 2nd February, 1886. This loan 
 carried 5 % interest. 
 
32 The Silver Question 
 
 plicated and not always correctly understood. On broad 
 grounds, however, the question, whether the Inters 
 national depreciation of the currency of a country is a> 
 benefit to that country or not, need not be discussed at 
 length, for the answer admits of no doubt. Such a de- 
 preciation must be an evil or else the countries with the 
 most depreciated currencies would be economically the" 
 most prosperous and financially the soundest in the 
 world, and nothing more propitious could happen to 
 India than the fall of the rupee to the value of 6d. or, 
 still better, to that of the cowrie shell. * 
 
 But there is for India still greater danger a-head. K 
 in the West the crusade against silver goes on success- 
 fully much longer, it is only a question of time when 
 silver will be entirely discarded by Europe and America. 
 India's currency would then no longerhave International 
 value and India would be again relegated to the position 
 in which she found herself before 1766 with her copper 
 standard, and from which .she was rescued by the wisdom 
 of English administrators. It is the clear duty of Indian 
 Statesmen to prevent such a consummation.^ To negleclj 
 
 1 Bather than allow this to pass the Indian Government wonld 
 have to close the mints to the free coinage of silver, and coin the ne. 
 cessary money itself. Such a measnre, it is true, would not establish 
 any link between the Indian and the Western currencies, bnt it 
 would allow the Government some control over its standard of value. 
 Austria and Russia have adopted this policy. By its large sales of 
 exchange the Indian Government would have special advantages in 
 controlling its currency. There are objections to such a stop, based 
 on the commercial relations of India to China, but in a great emer» 
 
In its Social Aspect. 33 
 
 this duty either through carelessness or through an 
 ignorant adherence to English mono-naetallic theories 
 would be to perpetrate a cruel wrong on the people of 
 India; a wrong which would assuredly one day be 
 followed by historic retribution. 
 
 Not only the gold countries, then, but also the silver 
 countries suffer from the demonetization of silver. To 
 gold countries it has brought the appreciation of the 
 standard, which the Continent endeavours to counteract 
 by protective duties, through which in free-trading 
 England the boundary line of cultivation is receding,, 
 and by which in America the whole farming interest of 
 the South and the West is summoned to the banners of 
 the silver party .^ In silver countries it has embar- 
 rassed and threatens to ruin the National Finances. 
 Throughout the world it is unsettling contracts and 
 disturbing the social relations of humanity. 
 
 Before leaving this part of our subject it would, we 
 
 gency they -would hare to be set aeido. — The proposal to introduce 
 a gold standard into India oonld be supported as giving that country 
 an International money, but it would be open to all the objections 
 based on the commercial relations of India with China, and the 
 other silver countries. Moreover, a gold valuation would subject 
 India to all the misfortunes of an appreciating standard, and to all 
 the social evils of a general fall in prices, — a fall which the demand 
 of gold for India would intensify to a fearful degree. If the fear of 
 bi-metallism should drive bur opponents to accept this policy as a 
 remedy, they must indeed be in emtremis. 
 
 ' In the division of the Morrison resolution in the House of Bepre- 
 sentatives, before its adjournment in August, 1886, out of fifty seven 
 Western Republicans fifty one voted on the silver side, joining the 
 forty one Western Democrats who voted solid. 
 
34 The Silver Question 
 
 think, be desirable to inquire how far the above state- 
 ments tally with the text books of political economy. 
 As the phenpmenon of the silver depreciation had not 
 occurred when most of these books were written, we are 
 not surprised that this subject is not specially com- 
 mented on by them. They treat, however, of the some- 
 what analagous case of depreciated paper currencies. 
 According to them a depreciated currency will not affect 
 the International commerce of a country, because prices 
 in that country would rise in the same proportion as the 
 currency depreciates. This statement leaves the highly 
 important factor of the International indebtedness of 
 such a country entirely out of consideration and must 
 therefore be declared incomplete. As to the case 
 which we have been considering there is no doubt that 
 nothing of the kind described above has happened. 
 Prices in* the silver countries have admittedly not risen, 
 and the equilibrium of trade has therefore not been re- 
 established in the manner which the text books lead us 
 to anticipate. But we even doubt whether conditions 
 such as would produce a. rise in prices eiist in the silver 
 countries. The imports of silver for instance into India 
 between 1871 and 1885, in spite of the lower quotations 
 for that metal in London, were less than those between 
 1856 and 1870.^ The coinage of silver in India during 
 the former was also smaller than during the latter years. 
 The totals, it is true, are still large ; but in this con- 
 
 1 Net imports of silver, 1856-70 £147,350,000; 1871-85, £81,002,000 
 Coinage „ „ £130,120,000; „ £82,411,000 
 
In its Social Aspect. 35 
 
 nection the wide extent of India must be borne in mind 
 as well as the prevailing Eastern habits of hoarding the 
 precious metals. 
 
 We thus find the text books at fault . all around, 
 utterly unable to satisfactorily interpret the existing 
 state of affairs, or to explain how a currency can be 
 internationally depreciated, and yet retain its purchas- 
 ing power at home unimpared. We think, therefore, 
 we are justified if under these circumstances we do not 
 attach much importance to the fact that these ponderous 
 authorities are at variance with us. But the duty of 
 carefully examining the objections raised against our 
 theory of gold appreciation remains, a duty whic}^ we 
 now propose to perform. 
 
 The first objection to our theory is not against the 
 fact of gold appreciation but against the importance 
 which we have attributed to it as regards a country such 
 as England. It is admitted by our opponents that 
 other nations, both with a gold and with a silver stan- 
 dard, may suffer through the demonetization of silver, 
 but it is denied that such can be the case with England, 
 because she is a creditor nation and therefore benefits 
 rather than loses by the appreciation of gold. This view 
 was expressed years ago in the columns of the leading 
 city paper and was lately repeated in all seriousness by 
 an ex-cabinet minister.^ That there is an advantage 
 accruing to a nation by the appreciation of gold from 
 
 ' 1 Speech of Mr. Sha-w-Lefevre, Joxirnal Institute of Bankers, Jaue, 
 1886. 
 
36 The Silver Question 
 
 its foreign gold investments cannot be denied, but it 
 must be of very doubtful value, for the causes -whicli 
 make gold-debts more valuable render also the debtor 
 less able to pay, and if repudiation should ever become 
 popular it would be by the knowledge that the creditor 
 deliberately secures unjust advantages and it would be 
 by arguments such as the above. But our foregoing 
 exposition has already disclosed the utter inadequacy of 
 the above reason for deeming the appreciation of 
 gold an advantage, cynically selfish though this reason 
 be. If, as we contend, the evil consequences of an 
 appreciating standard are loss of trade and social dis- 
 organization inflicted on all classes alike, they are of 
 such importance that any gain on the foreign gold in- 
 Testments, pocketed as it is by a single class, counts as 
 nothing in comparison. 
 
 The second objection to the theory of gold apprecia- 
 tion calls that appreciation itself into question. The 
 fall in prices is admitted, but the appreciation of the 
 standard is denied, apparently without perceiving the 
 fact that the two are identical. The objection is put 
 in the form of the following question : " How can gold 
 be appreciated when money remains cheap 1" Now 
 this objection sounds very plausible, but all the same it 
 rests upon a fallacy, a fallacy so frequent that J. S. 
 Mill actually quotes it as an illustration of the fallacies 
 of confusion.^ The confusion is that of the two meanings 
 ' SyaUm of Logic, ii., 7. 
 
In its Social Aspect. 37 
 
 of " money " : Currency and capital seeking investment. 
 As to the question whether a low rate of interest must 
 be accompanied by a low purchasing power of money, 
 the same author answers it by saying^ that " the rate of 
 interest bears no necessary relation to the quantity or value 
 of the money in circulation." Another authority^ 
 expresses the same idea as follows : — " The fall or rise of 
 interest making neither more nor less land, money or 
 any sort of commodity, alters not at all the value of 
 money in reference to commodities" i.e., its purchasing 
 power. As for the influence of the increased purchasing 
 power of money on interest, if it has any effect at all, it 
 should be towards lower rates. A change from a greater 
 to a less quantity of money makes the money in the 
 hands of lenders more valuable, the tendency of the rate 
 of interest will therefore be towards a fall. This is 
 what is happening now.* This tendency is accentuated 
 by the general desire, existing in falling markets, to 
 lend money rather than to invest it productively.* It 
 is counteracted from time to time by scares about the 
 insufficiency of the gold reserves in the banks. To 
 
 ' Principles of Political Economy, iii., 13. 
 
 * J. Looke, Value of Money. 
 
 ' The Directors of the Deutsche Bank, in their Beport for 1885, very 
 tersely describe the situation : " Owing to the universal decline in 
 prices, less money has been required in connection with the purchase 
 and distribution of raw material and manufactured goods, but the 
 surplus capital arising from this state of affairs has failed to find 
 other commercial employment." 
 
 * The less gold there is the more it will appear superabundant, 
 for the less there is the less it is required." — Prof, is Laveleye. 
 
38 The Silver Question 
 
 these preoccupations we owe certain spasms • of dear 
 money, the curious spectacle of high bank rates and but 
 few bills offered for discount. During the last few 
 years we have on several occasions witnessed that the 
 Bank of England put up its rate and then itself created 
 a demand for money by borrowing in the market on 
 consols. The machinery destined to check overtradings 
 was in these instances set in motion, in the absence of 
 almost any trade demand, in order to protect the gold-. 
 
 In this connection we may inquire into the value of 
 the statement which is sometimes made in refutation of 
 the theory of gold scarcity that the reserves of the great 
 National banks show on the whole no decline of strength. 
 As an argument in this controversy this statement carries 
 no weight. The smaller demand for trade purposes has 
 caused some of the gold which used to circulate to return 
 to the vaults of the banks, but this gain of these 
 institutions represents only loss of the circulation. 
 Moreover we must not overlook the fact that outside of 
 England a considerable part of the reserves of State 
 banks consists of legal tender silver valued at the former 
 high prices and therefore of but doubtful efficacy in 
 cases of emergency. 
 
 But the most serious objection to the theory of gold 
 appreciation is that hard money is really no longer the 
 important factor it used to be in the economics of trade 
 and in determining prices, because trade is more and 
 more carried on by substitutes for money, — the bank 
 
In its Social Aspect. 39 
 
 note and the cheque. It must be observed that this 
 objection is entirely based upon the " Quantitats 
 Theorie." The argument is that even admitting an 
 actual scarcity of gold there need be no appreciation of 
 that metal if the credit system had become more 
 perfected, whilst our contention is that even were there 
 no scarcity of gold, its appreciation would follow 
 through the fall in silver. This objection does not 
 therefore touch our case at all and might consequently 
 be dismissed without any more remark. But we will 
 go further in meeting our opponents. We will express 
 the opinion that even if the fall of silver did not 
 influence at present the purchasing power of gold 
 money, the theory of our opponents is untenable. We 
 admit that credit to a certain extent fulfils the functions 
 of money. But we do not admit their further argu- 
 ments. A formula of political economy runs as follows : 
 " Prices vary ceteris J9(iri6?ts inversely to the quantity 
 of money multiplied by its rapidity of circulation." ' 
 If this rapidity could be increased with every decrease 
 in the quantity of money, if every withdrawal of hard 
 cash could be at once replaced by " representative " 
 money, our opponents would be right. But credit is a 
 plant of slow and tend«r growth. There are real limits to 
 an expansion of credit, limits which vary with the state 
 of trade and the degree of commercial development of a 
 country, but which for the time being, cannot ,J^,^- 
 1 Consult Joha Locke, J. 8. Mill, and others. 
 
40 The Silver Question 
 
 ceeded to any considerable extent. The reduction of 
 cash therefore lessens the actual total money even under 
 the credit system. In fact under this system the actual 
 money is lessened to a greater extent than where no 
 credit exists, because it is reduced not only by the real 
 specie withdrawals, but also by the re-calling of the 
 representative money which was based on tjiat specie.^ 
 There is no doubt that if silver had remained money, 
 the circulation of the world would have had the benefit, 
 not only of the silver itself, but also of the credit money 
 which would have been built upon that silver. 
 
 The returns of the bankers' clearing house in London 
 are a proof that the representative money was not aug- 
 mented when gold became scarcer.^ , There is no percep- 
 tible increase in these figures during the last twelve 
 
 ' A comparison between the effect of gold arrivals or withdrawals 
 oti the money markets of London and I'aris will illustrate this. In 
 London, where the credit system is highly perfected, £5,000,000 gold 
 more or less in the bank reserve will make a difference of 2 to 4 "/„ in 
 the bank rate ; in Paris the same amoant has someticnes not even 
 produced \ "/j change. 
 
 2 In 1869 the 'Economist stated that a yearly production of gold of 
 £30,000,000 was scarcely sufficient to cope with the growing transao. 
 tions of commerce. Since that time silver has been extensively 
 demonetized, and the gold production has fallen to £16-17,000,000. 
 According to Professors Soetbeer and de Laveleye there is now a 
 surplus of only about £1,000,000 in the yearly gold budget of the 
 world, after allow^ing for consumption in arts and absorption by the 
 East. This £1,000,000 has to perform the duty which seventeen years 
 ago, according to the Economist, required £30,000,000 for a smaller 
 area. 
 
In its Social Aspect. 41 
 
 years.^ Business men have evidently been too prudent 
 to extend tlie superstruqture of credit while the base 
 was shrinking and though there can be little doubt that 
 during this period commercial transactions have in- 
 creased, the adjustment had to be brought about by a 
 reduction, in prices. Everywhere the same spectacle ! 
 
 But our opponents have not contented themselves 
 xith objections to our theory. They have put forth an 
 explanation of their own of the present economic con- 
 dition. We will now proceed to an examination of this 
 alternative theory, persuaded that if we could prove its 
 insufficiency and hoUowness, we shall enlist converts to 
 our own creed. 
 
 The facts which according to the mono-metallists 
 account entirely for the lower prices, have already been 
 alluded to. Better communications, quicker transit 
 by land and water, saving of the use of capital by 
 means of telegrams and otherwise, diminution of stocks. 
 In fact the fall in prices is represented to be a fall "due 
 to the ingenuity and energy of man."^ Nobody will 
 deny that those influences tend to lower real prices. But 
 as they are universal they ought, as we said, to tend to 
 lower the prices of the precious metals, i.e., of money, and 
 
 ' Total amonnt cleared : 
 
 1874 £5,937,000,000 1883 £5,929,000,000 
 
 1875 £5,686,000,000 1884 £5,799,000,000 
 
 1876 £4,963,000,000 , 1885 £5,518,000,000 
 
 3 Mr. W. Fowler's speech, Jowrnal Institute of Bcmkers, Jnne, 1886 j 
 and also bis letter to Times, 16th August, 1886. 
 
42 The Silver Question 
 
 thereby in a rough manner, re-establish the equilibrium 
 , by restoring the old level of prices. This they have 
 admittedly not done. Moreover the above-mentioned 
 influences were all at work during the years 1850 and 
 1875, at work probably in a proportionately greater 
 degree than during the last twelve years, and still they 
 did not then produce a general fall in prices ! 
 
 Repulsed on this ground our opponents retire behind 
 the general assertion that what we are suffering from 
 is : " general overproduction," to which some add over- 
 population. What the great teacher of economic 
 orthodoxy, J. S. Mill, declared to be " a theory essen- 
 tially self-contradictory,"^ is gravely put forward as a 
 cause and an explanation. We have never seen any 
 figures of the increase in stock, which seem to us in 
 the least sufficient to account for the fall in prices that 
 has taken place, but we will not examine this matter 
 in detail. A broader statement of this theory will 
 suffice to show its indefensibility. We are asked by 
 such authorities as Mr. Hansard^ and Mr. Fowler,* 
 to believe that because the fruits of the earth have 
 multiplied, because science has increased the power 
 of man over nature, of mind over matter, thousands 
 of our fellow men are prevented from earning enough 
 to keep body and soul ' together. We are asked 
 
 ' PrinevpUs of Political Economy, Hi., 14. 
 ^Journal Institute of Bankers, January, 1885. 
 8 Jomrnal Institide of Bankers, January, 1886, 
 
In its Social Aspect. 43 
 
 to believe that part of the people are in -want, 
 because there is more wheat and more meat to consume, 
 and that they are suffering from cold, because the pro- 
 duction of coal has increased. Where the argument 
 of overpopulation is added, the assertions become still 
 more wonderful. For there we are invited to think 
 that the remedy against this "too much of everything"^ 
 would be a decrease of population, i.e., a reduction of 
 the number of consumers. We refuse, to believe any 
 such doctrines. To do so would, in our opinion, involve 
 the acknowledgment that what the world calls pro- 
 gress and civilization is a gross illusion ; that the 
 whole system of our capitalistic production has hope- 
 lessly broken down, and that if mankind is to be saved 
 it must be on some new economic principles. Already 
 do the socialists declare their readiness to take over the 
 inheritance of a bankrupt soteiety,^ and certainly if we 
 adopted the theory of our opponents we should have 
 great difficulty in proving our economic solvency. 
 
 Our readers have now before them not only our own 
 case, but also the objections raised against ,it as well as 
 the alternative theory of the mono-metallists, and we 
 hope we have succeeded in showing that their objections 
 are not valid, and that the competing theory, as their 
 own authority states, is " self-contradictory." 
 
 1 Economist, 21st February, 1885. 
 
 2 « A system of society, which piles up riches for the few at the 
 cost of overwork, misery, and uncertainty for the many." — Hyndman, 
 Nineteenth Century, 1885. 
 
44 The Silver Question 
 
 We therefore think ourselves justified in assuming 
 our contentions to be, proved. We are suffering from a 
 crisis of low prices, but low prices which do not, looked 
 upon as a whole, indicate real cheapness, which do not 
 therefore promote increased consumption and thus 
 bring about their own remedy, but low prices which 
 are simply the expression of an increased and ever 
 increasing purchasing power of gold. There is no want 
 of production, there is no want of would be consumers, 
 but the latter lack the means of getting command over 
 the former. The wheels of commerce are revolving 
 with slackened velocity owing to the disturbing element 
 of an appreciating standard. Hence the helpless state 
 into which trade has fallen, the absence of any tangible 
 improvement, after years of watching and waiting ! 
 
 The theory of gold appreciation consequent on the 
 demonetization of silver being thus capable of exact 
 demonstration has found numerous and able champions. 
 Prominent among these are Mr. Goschen and Mr. 
 Giffen. As these two gentlemen have so far declined 
 to plead for the only remedy which to us seems logical 
 and efficacious, we will now briefly examine the 
 positions which they have taken up. 
 
 Mr. Goschen^ admits, so far as we understand him, all 
 the more important of our contentions. He looks 
 upon the difficulties, however, as only passing. After a 
 period of transition, the painful process of reduction of 
 prices will come to an end, and things will adjust 
 > Journal of Institute of Bankers, May, 1883, 
 
In, its Social Aspect. 45 
 
 themselves on a new basis. Mr. Goschen is without 
 doubt right. The only question is when this new level 
 will be reached. Such a period of transition has in 
 former epochs of our history lasted several hundred years. 
 If we remember that, hitherto, Germany alone has 
 sold silver, that, if the anti-silver crusade continues^ 
 other nations will have to follow her example, and that 
 the silver of France, Holland and the United States ^ 
 wiU then come on the market, when we try to estimate 
 the period that must elapse before such operations can 
 be carried through, and to picture the economic up- 
 heavals which must result from them — ^upheavals which 
 would include the hcmkruptcy of the Indicm Govern- 
 ment — it is clear that we are only at the beginning and 
 not at the end of our difSculties.^ We therefore can 
 with absolute safety venture on the prophecy, that the 
 
 1 To whioli list the name of India may, perhaps, have to be added. 
 The following remarks of Mr. Goschen prove that he foresees what 
 calamities such events would produce, bnt nnless he is prepared to 
 more boldly face the difficulties, his warnings will not be heeded : 
 " A campaign against silver would be extremely dangerous even for 
 countries with a gold standard." Again : "If other States were to 
 carry on a propaganda in favor of a gold standard and the demone- 
 tization of silver, the Indian Uovernment would be obliged to 
 reconsider its position, and might be forced to take measures similar 
 to those taken elsewhere. In that case a scramble to get rid of 
 silver might produce one of the greatest crises ever undergone by 
 commerce." 
 
 " Those who advocate to let silver alone till it has reached its 
 "natural price " would do well to consider that every further legal 
 demonetization of silver lowers this "natural price," which, in fact, 
 only exists in the brains of some theorists. 
 
46 The Silver Question 
 
 present generation will not live to see Mr. Goscben's 
 readjusted commercial equilibrium. It will, however, 
 be small consolation to the living generation of pro- 
 ductive toilers to know that after they have come to 
 grief and passed away in despair their successors will 
 one day find a new and secure basis for trade, and 
 Mr. Goschen must pardon them if they decline to await 
 patiently their doom because statesmen find inaction 
 safer and easier to advise than action. 
 
 Mr. R. Giffen has also come prominently before the 
 public with his remarks upon the currency question, to 
 which he has contributed some very valuable statistical 
 data, showing the extent of the appreciation of gold. 
 He appears to have somewhat modified his position 
 towards the silver question once or twice, but he has never 
 doubted the great influence of the demonetization of 
 silver on the value of gold, and in one of his latest 
 utterances, he is still distinctly of the opinion that 
 " the recent course of prices, is the result in part of the 
 diminished production of, and the increased extra- 
 ordinary demand upon, the supply of gold."^ But 
 after going thus far Mr. Giffen stops. He looks upon 
 the whole phenomenon §s a most interesting one to 
 study, a very proper one to explain, but one of which 
 people with fixed incomes have no cause to complain, 
 and to which mankind in general would do well to 
 submit as it does to a thunderstorm or an earthquake. 
 ' Essays in Finance, 1886. 
 
In its Social Aspect. 47 
 
 There are, however, economists who will not yield 
 without an effort at resistance, to this ever growing 
 monetary diflficulty, although, as the cause is not always 
 correctly understood, the remedy proposed by them is 
 not always the right one. Some propose to revive 
 England's prosperity by altering her fiscal policy, by 
 advocating the abandonment of free trade in favor of 
 fair trade or protection. They overlook the fact that 
 the depression we sufEer from is, like its cause, world, 
 wide and that though a duty on corn would somewhat 
 improve the condition of agriculture, it would do so 
 only temporarily, i.e., as long as the fall in the price 
 of silver has not outstripped the duty. Others hope to 
 revive commerce by opening up new markets^, trading 
 which, as we said above, unless it brought new supplies 
 of gold, would increase the demand on bullion and, 
 therefore, still further depress prices. Others advocate 
 the issue of £1 notes^ as likely to reduce the pressure 
 on gold, a palliative which could act only locally and 
 which might render the English note issue less secure 
 by increasing the superstructure of credit without in- 
 creasing the foundation, and which, moreover, would 
 not touch the root of the evil, the price of silver. 
 Others venture to go further and advocate the issue 
 of £1 notes against silver bullion^ at market prices, a 
 policy which would expose England to difficulties 
 
 ' Mr. Ch. Gairdner, I. c. 
 
 2 Lord Grey, letters to Times, February, 1886. 
 
48 The Silver Qvestion 
 
 similar to those experienced in the United States 
 through the operation of the Bland Act. 
 
 But there is a school undoubtedly growing in in- 
 fluence and importance as the economic distress and 
 suffering of the world increase which having, as they 
 are convinced, discovered the source of the suffering 
 which commerce has undergone these last 12 years, are 
 prepared boldly to face the difficulty. Persuaded that 
 the social and commercial disturbances through which 
 we are passing and the still greater disturbances with 
 which we are threatened are the consequences of the 
 law of man and not of a law of nature, they demand of 
 legislation to restore what legislation has disturbed. 
 They demand the rehabilitation of silver. 
 
 This could of course be accomplished by going back 
 to the condition of things existing prior to 1872, by 
 inducing Germany to adopt silver mono-metallism, and 
 France the double standard, but people acquainted 
 with the condition of contemporary politics know this 
 to be an impossible demand. To day, if silver is to be 
 rehabilitated by European powers, it can only be done 
 by an international agreement which would open the 
 mints of all the important states to the free coinage of 
 both gold and silver at a fixed ratio. No half-hearted 
 measures with all their attendant evils ; no limited 
 coinage like that under the Bland Bill ; no issuing of 
 " grey notes " at ever varying market prices, full and 
 complete admission of silver as a legal tender; such is 
 
In its Social Aspect. 49 
 
 the aim and the demand of the bi-metallists. By this 
 means the former equilibrium of commerce will be 
 brought back, the dislocated par between gold and 
 silver will be leetoied, the fall in prices, so far as it is a 
 result of the decline in the value of silver, will be 
 arrested and the ultimate cause of the present economic 
 crisis will be reached. The greatest and most impor- 
 tant branch of the world's commerce, the exchange 
 of the productions of the East and of the West, would 
 again be placed on a firm footing, and while Europe and 
 America would enjoy the benefit of stable prices, the 
 people and the government of India would be freed 
 from their greatest financial, and therefore potentially 
 political danger,* the loss on exchange. The night- 
 mare of our opponents, the alleged overproduction, 
 would disappear as if by magic, not by artificially 
 curtailing the supplies but in the only satisfactory 
 manner, by the increase of consumption, by the restored 
 ability of the masses to absorb what is or ought to be 
 produced, not for the benefit of the favored few, but 
 to the advantage of the great body of the people. 
 
 Bi-metallism is not, — ^as the reader who has followed 
 our reasoning will understand — sl specious device, 
 to make the world happy by issuing more money; 
 
 1 « Oar financial position is affected from day to day by the con- 
 tinnons fall in the valne of exchange. This state of affairs wonid be 
 an eyil of the greatest magnitade in any conntry in the world, in a 
 country BDch as India, it is pregnant with danger" — Despatch of 
 Qovemmeni of Jndta, 2nd February, 1886. 
 
 D 
 
50 The Silver Question 
 
 it is a means to prevent the economic condition of the 
 world from being disturbed by a wanton interference 
 with monetary laws. Bi-metallists know very well 
 that in one sense there exists always enough money ; 
 ' that money, like water, will ever find its own level ; 
 but they reckon up the economic cost of lowering that 
 level so as to be able to do without silver, and wish to 
 preserve the world by timely measures from the dangers 
 and the suffering attending such an operation. 
 
 It is not so long ago since bi-metallists were regarded 
 in Englajid as people with whom to argue was condescen- 
 sion. Newspapers jealous of their economic reputation 
 would refuse to open their columns to statements from 
 such sources.^ The new doctrine could not be found in 
 any of the classic text books of political economy, 
 written mpstly before this currency difficulty arose ; it 
 was therefore not acceptable to that great majority of 
 so-called thinkers who prefer to adopt the conclusions 
 of others to investigating themselves how far these con- 
 clusions are still applicable iinder the changed conditions 
 of economic life. But suffering is a grand teacher, and 
 bi-metallism is now becoming so strong that it is met 
 no longer with contempt but by arguments, which we 
 hold we can do no better than detail and carefully 
 
 ' Of the Metropolitan Press only the Bullionisi has from the first 
 «inbraoed the people's canse in this question. More recently the 
 World, too, has foaght with ability and intelligence for a principle 
 which a larger but less sensible world will hare to accept sooner or 
 later. 
 
In its Social Asjpecf. 51 
 
 ■examine. Here is a list of the objections, which the 
 more enlightened of our opponents have raised against 
 Tis, and which are supposed to dispose of the claim of 
 bi-metallism to be a scientific and practical solution of 
 ■our difficulties. 
 
 The first is a preliminary objecton raised by Mr. Gif- 
 fen " that it does not come within the functions of a 
 government to settle such questions as are intended to 
 be settled by international bi-metallism." ^ The answer 
 to this objection is complete and very simple. Not 
 •only have nearly all thinkers of mankind, from the time 
 of Aristotle down to our own day, maintained that goveru- 
 taents should possess a- supreme control over money and 
 currency, not only have governments exercised these 
 powers, nay, if philosophers and history were as much 
 against us, as they are unquestionably in our favor, we 
 «hould still' claim this very authority as belonging to 
 the state, for the state must have the right of inter- 
 ference wherever the well-being of its citizens is in . 
 question. This right has on previous occasions been 
 ■exercised by Parliament in England, and whether it is 
 to be again so exercised is simply a question " of mone- 
 tary expediency." ^ The point will become clear beyond 
 a doubt by assuming an extreme case. Supposing that 
 
 1 On some hi-metalUe fallacies. — Journal of Institute of Bwnkers, 
 June, 1886. 
 
 2 Even the Economist was therefore obliged to admit that it was 
 *' unable to say that Mr. Giffen succeeded in proving this part of his. 
 case." — 22ud May, 1886. 
 
52 The Silver Question 
 
 instead of an' appreciation of gold of 25 or 35 "/q we' 
 had experienced a depreciation of that metal, and 
 a very great depreciation. Supposing that from 
 some cause or other gold had become exceedingly- 
 abundant, and 1000 sovereigns had fallen to the value of 
 1000 pence. Would the officials receiving their sala- 
 ries on the old scale then come before the public and 
 declare that on principles of metaphysics government i& 
 not to interfere I 
 
 An objection that goes to the very root of this, 
 question is that bi-metallism would alter the legal 
 definition of the Pound Sterling. The answer to the- 
 old historic and familiar question " What is apoiund? " 
 would have to be modified. This is quite true. But 
 the answer to this question has varied frequently and 
 considerably in English history, and the present reply 
 that a pound is 123"274 grains gold 11/12 fine has 
 been the law of the land for barely three genera- 
 .tions. England has been in turn bi-metallic, silver mono- 
 metallic and gold mono-metallic. Moreover, although 
 ever since 1816 the answer to the above question has 
 nominally remained the same, it is proved beyond cavil 
 that, as a matter of fact, during the last 12 years the mean- 
 ing of this answer has been considerably altered, for the 
 events above referred to have had the effect of virtually 
 making the sovereign heavier than it was. The real 
 question for parliament is which is preferable ; to alter 
 the words of the statute so as to make them conform to 
 
In its Social Aspect. 53 
 
 the actual facts of life, or to ignore these facts, to 
 take one's stand on strict legality, and let the world 
 take care of itself on the old maxim: Fiat justAtia 
 pereat mv/ndus. We think there can be but little 
 <ioubt as to the answer to be given to this question. 
 For statesmen exist to make and to remake laws as the 
 everchanging conditions of human existence require. 
 
 But it is said that it would be monstrous folly to 
 change a standard to which England owes some of the 
 most prosperous periods of her history. This is the old 
 fallacy of post hoc, ergo propter hoc, as Lord Beaconsfield 
 perceived already when he said : " It is the greatest 
 xielusion in the world to attribute the commercial pre- 
 ponderance and prosperity of England to our having a 
 gold standard." ^ The fact is the British Empire pros- 
 pered under the quixotic system of having two different 
 standards so long as France was good enough to be the 
 reservoir which kept them at a steady level.^ Since 
 France has ceased to perform this function England's 
 prosperity has declined, her manufacturers are suffering, 
 and her trade has ceased to expand. Clearly the time 
 has arrived for English statesmen to think of securing 
 by their own action those benefits for their country 
 which it formerly enjoyed through the bi-metallic 
 system of the Latin Union. 
 
 ' Speech at Glasgow, November 6th, 1873. 
 
 - Moreover, during some of the most prosperoiis periods of her 
 history England was bi-metallic. 
 
64 The Silver Question 
 
 Another objection ■which is based on principles of 
 strict legality is that bi-metallism would be a " breach 
 of faith," " Payments which have been stipulated for 
 in gold cannot be allowed to be made in silver." The 
 question is whether repayments under the present ever- 
 appreciating standard are not in truth a greater in- 
 justice to the debtor than repayments under the bi- • 
 metallic system would be to the creditor. In support of 
 an affirmative answer to this question it could be 
 urged that up to 1873 the English standard, though 
 nominally gold mono-metallic, was in effect " vicariously 
 bi-metallic."^ But we think the whole objection would 
 have little practical significance were once bi-metallism 
 introduced, because whatever be the ratio adopted 
 between gold and silver, the two metals would be at 
 par, and there would be no difference in the value of 
 the coins of the same denomination whether of one 
 metal or the other. 
 
 Another objection frequently raised against bi-metal- 
 lism, is that it would be a new form of inflation. It is 
 alleged that what bi-metallists aim at is simply more 
 money, that consequently the difference between their 
 system and inflation is only one of degree not of kind. 
 But bi-metallists merely want to prevent the entire and 
 complete destruction of the existing level of prices with 
 
 ' Through France. As to the manner in which one country can 
 heBtow upon another the adyantageB of bi'metallism, see D. Bar- 
 bour : Theory of Bi-metalUsm, xii. 
 
In its Social Aspect. 55 
 
 its train of untold misery. The total abandonment of 
 silver would be an immense monetary and social revolu, 
 tion needlessly brought about by some interested or 
 foolish theorists. Against this danger bi-metallism 
 provides a preserving and conservative policy. We 
 •frankly admit that such a policy would be accompanied 
 by a rise in the prices of some commodities from the 
 present low level, but wherever such is the case it would 
 only be a part-restoration of previous quotations. Such 
 a result is so totally different from inflation, that it is 
 difficult always to believe in the bona fide ignorance of 
 those who make the above charge. 
 
 But even the admission that some prices would again 
 be raised if silver were rehabilitated is fastened upon 
 by our opponents as an argument against bi-metallism. 
 For is it not clear that producers would thereby be 
 robbed of the cheapness of some raw materials en- 
 joyed at present ! Would the labourer not be deprived of 
 his cheap loaf % As to the labouring classes we have 
 already discussed the question of their prosperity under 
 the present economic conditions, and commented also 
 on the peculiarity of this zeal for their well-being ex- 
 hibited by the capitalistic mono-metallists, and we are 
 quite prepared to take their own answer to the question 
 of which is preferable, prosperity andihigher prices, or 
 cheap bread and no worki^ But as to destroying the 
 
 ' We believe in higli prices of labor as being not only a proof, but 
 a canae of prosperity. Onr opponents worship low prices and labor 
 
56 The Silver Question. 
 
 cheapness of raw materials it is evident that bi-metal- 
 lism could not do that where the cheapness is " real," 
 is the result of the " ingenuity of man." It would, 
 however, do so where cheapness is only apparent, 
 where it is merely the expression of the appreciation of 
 gold. But this, instead of being an evil, we look upon 
 as a blessing. Moreover, it is a fact well known to 
 those who have studied the history of prices,^ that 
 there is always less fear of a rise in prices through an 
 increase of currency, than of a fall in prices through a 
 contraction of money, because an augmented circulation 
 is always accompanied by a growth of trade which 
 quickly absorbs the new supplies of money. 
 
 We now come to the objection which is supposed to 
 be the reductio ad ahsv/rdum of bi-metallism. If the 
 addition of silver (so it runs) to gold as money is pro- 
 ductive of all the advantages here set forth, the further 
 addition of copper and iron, etc., should, on the same 
 grounds,, increase still further the general weal of 
 humanity.^ Bi-metallism is therefore reproached with 
 
 80 cheap that working people jnst earn enough to pay interest to 
 money lenders and taxes to Government. A one-sided creditor 
 poHoy has more than once in history produced unpleasant results, 
 when the quiet of Statesmen was interrupted by the trumpet call of 
 revolution. 
 
 ' Tooke and Newmarch, Eistory of Prices. 
 
 2 " What bi-metallists claim is practically protection for silver in 
 the principal markets of the world; and if for silver, why not for 
 copper and pig-iron P " — Speech of Mr. Harvey, Journal Institute of 
 Bcmkers, June, 1886. 
 
In its Social Aspect. 57 
 
 demanding either too Trmch or else not enough. We will 
 not linger to expose tHe fallacy of such reasoning. In 
 claiming the rehabilitation of silver, we ask for a return 
 to a former social status, a status on which most of our 
 social relations are based, and which it would cause 
 untold misery to totally destroy. What we advo- 
 cate is a policy of true conservatism. If our recom- 
 mendations went beyond what is here proposed, we 
 should plead for as great a social revolution — though in 
 the opposite direction — as that which the demonetiza- 
 tion of silver will bring about. None of our argu- 
 ments for bi-metallism would apply to a system of 
 currency which embraces more than what has been 
 money ever since'the dawn of history — silver and gold. 
 
 A very short-sighted objection 'is that silver is too 
 heavy for a standard metal. For many transactions of 
 daily life silver is better suited than gold. As to the 
 larger banking transactions they are carried on by 
 cheques or notes, and gold would be practically as in- 
 convenient for them as silver.^ The daily transactions 
 of Lombard Street can only be got through with " re- 
 presentative " money. 
 
 A favourite theory of mono-metallists is that gold is 
 
 1 « The only objection to the nse of silver as the standard is its 
 bulk, which renders it nnfit for the large payments required in a 
 wealthy country, bnt this objection is entirely removed by the 
 enbstitnting of a paper money as the general oironlating medium of 
 the country." — D. Bicardo, Proposals for cm economical and secure 
 ewrrency. 
 
58 The Silver Question 
 
 ty nature the standard of rich and silver that of poor 
 nations. It is difficult to see how on this theory the 
 general introduction of bi-metallism can be objected to. 
 For under the double standard the precious metals 
 would have free scope to distribute themselves in the 
 most automatic manner to the needs of the different 
 nations. For all that, as Mr. Barbour correctly says, 
 the above theory of first and second class nations, is 
 absurd. For what should happen if all nations became 
 equally rich ? And who will decide whether a nation 
 be rich or poor ? 
 
 The objection to silver as money, that it is less 
 suited because less stable in value though often heard, 
 reposes on a complete want of a comprehension of facts. 
 Measured in the only«correct manner, i.e., by its purchas- 
 ing power, silver has been more stable than gold ever 
 since its so-called depreciation began. As to the Lon- 
 don market price of silver, though it has varied largely 
 it has only done so in exact proportion to the Bombay 
 or Calcutta market price of gold. 
 
 It is further objected that the rise in the price of 
 silver consequent on the introduction of bi-metallism, 
 would give such a stimulus to its production, that the 
 world would soon be inundated with the white metal, 
 and that consequently prices would rise enorm6usly. 
 This purely theoretical reasoning assumes that the 
 production of the precious metals is subject to the same 
 economic laws as the productions of other commodities. 
 
In its Social Aspect. 59 
 
 This is, however, not the case. The production of the 
 precious metals depends more or less on chance. 
 Besides, the gambling spirit of man is so large a factor 
 in gold and silver mining that it is carried on without 
 much reference to the value of the product.^ The history 
 of the last 12 years proves the correctness of this view. 
 During this period silver has heavily declined in price^ 
 while gold has appreciated. If our opponents were right 
 the production of silver should have decreased, that of gold 
 Piugmented. The very reverse has happened. There 
 may, of course, be here and there a silver mine which 
 will be shut up should the price of silver fall much 
 more, but it would be a very long time before the total 
 production was thereby affected. Moreover in many 
 mines silver is a bye-product. The same causes, how- 
 ever, that prevent the fall in the price of silver, from 
 producing a decrease in its production, will prevent its 
 rise from being followed by any material increase. 
 
 The objection diametrically opposed to the last is that 
 of Mr. Giffen. Mr. Giffen is not afraid of too great a 
 rise in prices. His objection is that "assuming the 
 bi-metallio scheme to be successful, gold and silver 
 being equalized, the future course of prices will be regu- 
 lated by the aggregate annual production not of the one 
 
 1 « Even in California, the richest of all gold countries, gold was 
 ■ produced, on the average, at a loss ; in Nevada, the richest of silver 
 countries, silver was produced, on an average, at a loss." — A. 
 Del Mar, Money in Civilization, 
 
60 The Silver Question 
 
 metal but of the two. The proportion of that annual 
 production to the stocks of the two metals in use, would, 
 however, be much the same as the proportion of the 
 production of the one metal to the stock of that metal 
 only. The future course of prices would therefore be 
 much the same, whether bi-metallism be adopted or 
 not." ^ The same reasoning underlies Mr. GifEen's third 
 point in his essay on " Some bi-metallic fallacies," and 
 in the discussion on that paper particular stress was laid 
 on this argument by Professor Marshall who, however, 
 qualified it by adding " except so far as the bi-metallists 
 have reasons for knowing that the silver mines will 
 yield their produce more steadily than the gold mines."^ 
 Now, as a matter of fact, bi-metallists have reasons for 
 anticipating a more steady yield of the silver, than of 
 ' the gold mines, for history teaches this to have been the 
 case in the past, and Professor Siiss^ proves that it will 
 be so in the future, and it is difficult to understand why 
 mono-metallists have not been able to get hold of the 
 same facts. As to the above objection itself, it is, as we 
 said, the exact opposite to that we have just considered, 
 and we might fairly leave these two classes of opponents 
 to settle this difference between themselves. We will not, 
 however, shield ourselves behind such technicalities but 
 will examine this statement on its merits. Undoubtedly 
 
 ' Easmjs in Finance, 1886. 
 
 " Jowmal of InsUtiite of Bcmkers, June, 1886. 
 
 3 Die ZuTcwnft des Goldes, Vienna, 1877. 
 
In its Social Aspect. 61 
 
 it affords us one consolation, inasmuch as it admits bi- 
 metallism to be of some good,^ though it contends that 
 this good would only be temporary. But even this last 
 contention reposes on an error which our readers will prob- 
 ably have already perceived. Like one of the objections 
 against the theory of gold appreciation that we have 
 already examined, it rests entirely upon the QucmUtdts- 
 Theorie and takes no account of the influence of the 
 present depreciation of silver or the prices in the gold 
 countries. But what we are suffering from, we again 
 repeat, is not so much the insufficiency of gold, as the 
 fall in the value of silver which, as we have shown, is 
 unsettling trade and contracts all the world over. Bi- 
 metallism would remedy this fall, and remedy it once 
 for all, and constitute, therefore, a real and permanent 
 cure against a general fall in prices such as the present 
 generation has witnessed. The hair-splitting specula- 
 tions of Mr. Giffen and Professor Marshall may therefore 
 be summarily dismissed. 
 
 The last objection against bi-metallism which we pro- 
 pose to consider, is the one most frequently raised. It 
 is to be found not only in popular authors, such as J. S, 
 Mill,^ but also in the writings of exact thinkers such as 
 J. Locke* and K. Marx.* This objection is that "it is 
 
 ' 1 " The question then is not whether bi-metallism would do some 
 good : that is granted." — Speech of Professor Marshall, I. c. 
 
 2 Principles of Political Economy, iii., 10. 
 
 8 Considerations of the lowering of interest. 
 
 * Las Kwpital, I., 3. 
 
62 The Silver Question 
 
 impossible to have two measures of value." ^ But it is 
 overlooked that under a bi-metallic system there would 
 only be one measure of value, viz. : gold and silver held 
 together in a fixed ratio. In favour of our opponents 
 it is asserted, that the money of a bi-metallic country 
 never really consists of both metals, but of one only, the 
 *' least valuable," that instead of there being a " double " 
 there is therefore in fact only an " alternative " standard. 
 To this we reply that though the circulation of a bi- 
 metallic coiintry may vary between gold and silver, the 
 standard remains invariable. This important distinc- 
 tion between standard and circulation will remove the 
 misconceptidns, and disposes of the objection. 
 
 We have so far vindicated the correctness of the bi- 
 metallic principles in an indirect way, by refuting the 
 arguments brought forward against it. There is, how- 
 ever, one point in connexion with bi-metallism, for 
 which indirect proof does not sufiice and which must be 
 faced in the most direct way possible. This is the 
 question : Can a ratio of exchange be fixed between 
 gold and silver by legislative enactments ? or to put it 
 differently : Is it possible to keep gold and silver at 
 par at the legal ratio by simply opening the mints to 
 the free coinage of both metals over a sufficiently large 
 
 1 In the Physics and Metaphysics of Money of E. Qibbons, this ob. 
 jection takes the following neat form : " The double standard is as 
 much of a eoleoism as a double single, it implies that one and one 
 do not make two, and that things which are not equal to the same 
 may be equal to one another." Comment is unnecessary. 
 
In its Social Aspect. 63 
 
 area ] Upon the answer to this question depends the 
 decision whether ultimately bi-metallism forms a scien- 
 tific solution of the currency question or not. Here is, 
 as Professor Nicholson says, the central point around 
 which " the battle of the standard " most hotly rages. 
 
 History tells us that the ratio between gold and silver 
 has fluctuated a good deal. Superficial students have 
 from these facts drawn the conclusion that it would be 
 impossible to fix such a ratio by law. But a closer study 
 of history reveals the fact that the fluctuations which 
 occurred in the ratio were the result of the legislative 
 enactments of the nation, which for the time being con- 
 trolled the principal supplies of the two metals. At 
 whatever ratio such a nation coined silver and gold, 
 that ratio became the basis of the relative value of 
 these metals.^ Countries of less economic power had 
 either to conform to that ratio or to submit to see that 
 metal which they undervalued, and which in the open 
 market would therefore command a higher price and be 
 called the "dearer metal," disappear from circula- 
 
 ' Mr. A. Del Mar, in his letter to Lord Iddesleigh, has pointed ont 
 that the ratio between the two metals has always been fized for the 
 advantage of the nation fixing it, that when gold was the greater 
 prodncit of such a nation it raised the value of gold, and when silver 
 became its greater prodnct it raised the value of silver. Thus the 
 more plentiful metal produced or controlled by the nation altering 
 the ratio was always the metal that was raised in value. Political 
 Economy tries to disseminate the doctrine that the ratio is govern- 
 ed by the relative quantities of metal produced, while, de facta, it ia 
 rather governed by the opposite principle. 
 
64 The Silver Question 
 
 tion, in accordance with what is known as the " Gresham 
 law." 
 
 It will be noticed that in thus speaking of the causes 
 of the relative value of gold and silver, we have con- 
 sidered neither the cost of production nor the com- 
 mercial demand for consumption in the arts, &c. The 
 reason for this is that in determining the value of the 
 precious metals -the mint demand is the all powerful 
 factor. No doubt these metals would possess a certain, 
 possibly a high, value even if none were coined, but the 
 constant demand induced by the fact that the mints 
 are open to coin any quantity into legal tender forms 
 after all the main feature that decides their value. 
 " The artificial value of gold and silver is much greater 
 than the real."^ This is why by the control of the 
 former we can control the price, and why by determin- 
 ing the ratio between the artificial value of gold and 
 silver (i.e. the ratio at which the mints are open) we are 
 able to fix practically the relative value of gold and 
 silver. 
 
 It is necessary to point out here that bi-metallism 
 does not attempt to actually fix the value of gold and 
 silver, it does not even attempt to fix the relative values 
 of these metals, all it does is to create a demand for 
 these metals at the legal ratio. Bi-metallism is not, 
 
 1 " Mankind having consented to put an imagvimni value upon gold 
 and silver, have made them the common pledges." — J. Locke, Com. 
 si^rations on the lowering of interest. 
 
In its Social Asjpect. 65 
 
 therefore, opposed to the laws of supply and demand, 
 nor does it in any way interfere with them; on the con-, 
 trary it is based upon those laws.^ Of course it is clear 
 that tl^e greater the number of the mints open to the 
 free coinage of gold and silver, the greater will be the 
 demand for these metals at the legal ratio, the greater 
 therefore the minuteness with which this ratio will be 
 maintained. But should by any chance the market 
 prices of the two metals deviate from the fixed legal 
 ratio there will at once arise an increased demand for the 
 cheaper metal which will continue till the legal and the 
 market ratio are again identical. Through this " com. 
 pensatory action," bi-metallism secures in an automatic 
 manner the constant equilibrium between the two metals, 
 at the legal rates. 
 
 We therefore find that law can fix a ratio between 
 gold and silver, and can under certain conditions strictly 
 maintain this ratio. Of course there is a limit to the 
 ohoice of the ratio, and this limit finds its scientific 
 expression in the following formula : " The relation of 
 value of the two metals both being money, must be 
 between the relations of value they would have to one 
 another, if each were exclusively money."^ What these 
 
 ' " It is a mistake to sappose that the bi-metalUsts yriah to see a 
 lanr passed which shall fix the market price of gold and silver. 
 Under the bi-metallio system the State simply undertakes to coin 
 both gold and silver freely if brought to it." — ^D. Barbonr, Theory 
 of Bi-metalUsm, VIII. 
 
 2 On the above formula depends the answer to the question •srhich , 
 
 E 
 
66 The Silver Question 
 
 limits really are we do not profess to know nor do we 
 think it profitable to speculate concerning them. As 
 the monetary value of gold and silver largely exceeds 
 their commercial value, it is quite clear that these limits 
 are very wide and that not only the present ratio of. 
 1:22 but also the old ratio of 1:15| falls within them. 
 
 It is asserted, however, by our opponents that what- 
 ever be the ratio adopted it is possible that should 
 the silver mines become very rich and the gold mines 
 exhausted, the two metals could not be kept in circula, 
 tion together though the ratio might be maintained. 
 Gold would practically disappear. Everybody will 
 grant that with the present stock of gold in the world 
 there is exceedingly small probability of such a con- 
 tingency happening. Still if asked whether such an event 
 is absolutely beyond the range of possibility, we should 
 reply in the negative. But in spite of the apparent 
 far-sightedness of this objection, we cannot congratulate 
 those, who, like Professor Marshall^ have raised it, on 
 their perspicacity. For if gold should ever become so 
 scarce, that under a bi-metallic system it would dis- 
 appear, the countries that do not possess a bi-metallic 
 
 is often regarded as a reductio ad absitrditm of bi-metalliBm, whether 
 a ratio of 1:1 oonld be established by law. That snch a ratio is 
 practioally not desirable, beoanse it wonld prodnoe in an opposite 
 direction the evils of a dislocated par of exchange between Dast and 
 West, the intelligent reader need not be told. 
 
 1 " We think that gold will practioally go out." — Journal of InsU- 
 tuite of Banlcers, June, 1886. 
 
In its Social Aspect. 67 
 
 standard but adhere to the single gold valuation would 
 be in a sorry plight indeed. They would undergo a 
 social revolution in comparison to which the wildest 
 schemes of confiscation proposed by the most fanatic 
 section of the socialistic and nihilistic party fade into 
 utter insignificance. Even the most distant .chance of 
 such an occurrence would make bi-metallism a veritable 
 saviour of society, a measure on which, to speak the 
 language of the learned professor, a difference of opinion 
 "as to quantity of its effects " would no longer be possible. 
 The condition of society would then be such that the 
 following words of the American legislators would but 
 understate the case.^ " Should the world come to the 
 gold unit as the sole legal tender, that metal might 
 become so valuable as compared with other commodities 
 and so scarce in proportion to the enormous demands 
 made upon it, that the money barons of this and other 
 countries controlling a few hundred millions of gold, 
 might control the destines of nations and absolutely 
 dominate the welfare of mankind." 
 I But besides the theoretical demonstration that it 
 would be possible to keep the ratio between gold and 
 silver constant by law we have actual historic experience 
 ef legislation having thus controlled the market price. 
 From the beginning of this century to the year 1872 
 the bi-metallic standard of France and the countries of 
 
 1 Minority Report of the Committee on Coinage, Weights and Measures 
 —BouSe of Representatives, Washington, February, 1886. 
 
68 The Silver Question 
 
 the Latin Union kfept the ratio of gold and silver at 
 1:15^. As these countries were surrounded by both 
 silver and gold mono-metallic nations the demands for 
 remittances one way or the other from time to time- 
 slightly altered this proportion. The exchange between 
 gold and silver consequently fluctuated between the two 
 "specie points " just as does the exchange between. 
 London and Melbourne.. But to draw, as Mr. Giffen. 
 has done,^ from these fluctuations the conclusion that 
 France failed to maintain the ratio,- is as logical as it 
 would be to say that a sovereign ceases to be a sovereign 
 when cheques in London are quoted in Melbourne at S^q, 
 premium. As a matter of fact during all these years 
 France under most difficult circumstances maintained 
 the ratio, not alone for herself but for the whole world. 
 Mr. p. Barbour shows this clearly enough, and we will 
 conclude this part of our subject with his remark:: 
 " To contend in face of the facts, stated that the legal 
 ratio fixed under the bi-metallic system between gold, 
 and silver when used as money will not control and 
 regulate the market price of the two metals is simply to- 
 abandon reason, argument and experience, and take 
 refuge in assertion."^ 
 
 We have finished our main task. We have demon- 
 strated the connexion between the fall in silver and the 
 appreciation of gold and the commercial and social dis- 
 turbances, which are the characteristics of our times. 
 
 ' On some 'bi-metallic fallacies. Point 2. — Jov/rnal of InsUtute vf 
 Banlcers, June, 1886. 
 
 2 Theory of Bimetallism, XIH. 
 
In its Social Aspect. 69 
 
 We have shown that the policy of waiting on events 
 pursued hitherto will never bring about a settlement and 
 that if things are- allowed to drift in the future as they 
 have done in the past the state of trade and the condition 
 of the people must go from bad to worse, though a tem- 
 porary recovery of silver may afford passing relief and 
 kindle false hopes.^ We have pointed out that for silver 
 ithere exists no fixed " natural price " and that to found 
 a policy on the expectation that such could be reached 
 is like hunting a shadow. We have also endeavoured 
 to prove that there is a remedy for the abnormal con- 
 dition into which we have fallen, that the reinstatement 
 and rehabilitation of silver by the establishment of a 
 bi-metallic system of money would afford the much 
 desired relief once and for all, and that such a system is 
 possible. 
 
 But we must not yet lay down our pen. In a case 
 like ours it is not sufficient to propound a theory and to 
 establish its scientifie claims. As practical men of 
 business we have to examine into the means of carrying 
 the theory into practice, and into the chances of such a 
 consummation being reached. With this two-fold in- 
 vestigation will conclude our remarks. 
 
 1 The recovery ia the quotation of silver whioh took place on the 
 announcement of [the appointment of a Boyal Commission "To enquire 
 •into the recent changes in the relative yalues of the precious metals " ' 
 is a remarkable proof that the price of silver depends not on cost of 
 production or q:ny of the other causes alleged by mono-metallists, but 
 -on legislation, and on hopes and fears of legislation. Should the 
 Eoyal Commission disappoint such hopes or fears, the price of silver 
 vould probably again resume its doyrnward march. 
 
70 The Silver Question 
 
 We have seen above that the larger the area over 
 which bi-metallism is established the more certain will 
 be the maintenance of the legal ratio. The most zealous, 
 the most enlightened champions of bi-metallism advbcate 
 therefore the establishment by international treaty of a 
 great Bi-metallic Union of which all the principal Euro^ 
 pean Powers as well as the United States of America 
 would form part. With the mints of all these countries 
 open to the free coinage of both silver and gold at the 
 same ratio it is admitted even by the nestor of gold 
 mono-metallism, Prof essor Soetbeer^^ that it would be im- 
 possible for the market prices of the precious metals to 
 deviate from their mint prices. 
 
 There can be no doubt that such a union would be the 
 best and the most satisfactory solution of the silver diffi- 
 culty and of that whole group of questions which 
 cluster around it. Its establishment therefore should 
 be the ultimate aim of the exertions of all bi-metallists 
 some of whom, like Mr. Cemuschi, and the late Mr. E. 
 Seyd, by their constant efEorts in this direction may lay 
 claim to the title of true philanthropists. 
 
 Unfortunately this most comprehensive solution of our 
 
 troubles is probably the most difficult to bring about, for 
 
 the fact that it presupposes an international agreement 
 
 ' " If all commercial states, without exception, in law and practice 
 adopt and maintain the bl-metallic standard at one ratio for their 
 entire coinage, with unconditional freedom of coinage of both 
 worlds, it cannot he denied that in such a case, for the present, and 
 probably for a long period to come, a permanent and stable relation, 
 between gold and silver will be secnred." — Letter to Neue Freie- 
 Presae of Vienna, 10th October, 1876. 
 
In its Social Aspect. 71 
 
 opens to our opponents quite a new vista of objections, 
 o£ which they have availed themselves to the full. If 
 the whole truth could be known it would probably be 
 seen that it is to their objections against such an agree- 
 ment that they largely owe the success which so far has 
 attended their obstructive efforts. The soundness of 
 the bi-metallic theory is conceded, the power of the law 
 to keep gold and silver at par at the legal ratio by 
 simply operating through the ordinary laws of supply 
 and demand is admitted, but it is objected that the State 
 should never enter into an international treaty about th6 
 standard, because it must not bargain away its absolute 
 freedom in the exercise of one of its most vital sovereign 
 rights, that of money. Moreover treaties have been 
 broken before and may be broken again, and it is sar- 
 castically asked whether in such a case a country should 
 enforce the bi-metallic stipulations at the point of the 
 sword. The difficulties that have arisen in connexion 
 with the Latin Monetary Union are cited as a lesson and 
 a warning.^ 
 
 'It is with arguments of the above kind that the German govern- 
 ment have BO far resisted the demands of the German bi.metallists. 
 In his celebrated speech of the 22nd January, 1886, Herr von 
 Scholz, Prnssian Minister of Finance, ^fter a confused reference to 
 the legal tender silver of France, Germany and Holland, strongly 
 accentuated the difficulties of an international bi-metallic agree, 
 ment in an age of national armies when war was not yet abolished. 
 He warned Ms hearers against infusing by treaty blood into their 
 economic body which could fulfil the functions of blood only under 
 certain condition, and which might remain in that body an obata. 
 cle, and not help, to its growth when these conditions ceased to 
 exist, i,e., after the treaty was torn. 
 
72 The Silver Question 
 
 These objections sound well, and look statesmen-like 
 and patriotic^ but for all that we think we shall be able 
 to show that they are shallow and inadequate, A really 
 national currency, absolute and true monetary indepen- 
 dence, exists only in those countries that have a numerary 
 system, i.e., among modem States only in those with an 
 inconvertible paper money ; States scarcely to be regarded 
 as models of finance. All other countries, among them 
 the economically strongest, possess a commodity money 
 and therefore depend for their supplies on the existing 
 stocks and the production of that commodity of which 
 their money consists. The larger the existing quantity 
 of that money commodity the less will be the chance of 
 financial disturbance through the action of the currency, 
 and this is a reason for preferring the double standard 
 to one consisting of either metal only, apart from all 
 the social considerations upon which we have laid so 
 much stress. 
 
 But whatever be the money commodity adopted, 
 every country that possesses a commodity money 
 depends as to the value of that money upon what 
 happens to that commodity anywhere in the world. 
 To speak under these circumstances about the absolute 
 freedom enjoyed by a government with regard to its 
 standard is absurd. The demonetization, for instance, 
 of silver by Germany took place without England 
 or any other country having been consulted. Still 
 it is beyond doubt that no event of recent times 
 
In its Social Aspect. 73 
 
 has had so important a bearing on the domestic history 
 and the economic development of England or so revo- 
 lutionary an effect on the Imperial relations of .England 
 and India as this legislation. And where is the mone- 
 tary independence, the monetary autonomy of England 
 and India to-day ? Monetary independence indeed ! 
 People who are satisfied with words may think it exists ; 
 people who believe only in facts, know that it does not. 
 We all remember the fluctuations of silver and Indian 
 Exchange when the fate of the Bland Act was being 
 discussed in America, how the currency of the Indian 
 Empire went up and down as newspaper correspondents 
 expressed this or that view of the chances of suspension 
 or noil-suspension of an American act of congress. And 
 though it was nominally only the Indian currency that 
 fluctuated, the reader who has followed us so far will 
 know that in reality the stability of Englaiid's boasted 
 standard was just as much affected.^ 
 
 But if every state with a commodity money, i.e., with 
 a sound currency, as we call it, is at present de facto only 
 enjoying a nominal control over its money, an inter- 
 national agreement which though tying the hands of a 
 country would at the same time render the currency 
 
 ' Should the Bland Bill really be repealed, the monetary anton- 
 omy (!) of England and India will be demonstrated in the most 
 perfect manner possible. But the faith of the mono-metallists in 
 their own theories is so great that we are quite prepared to believe 
 that even the most violent monetary upheavals in London would not 
 induce them to stir in this question convinced, as they apparently 
 are, that such events are inseparable from true "independence." 
 
74 The Silver Question 
 
 more secure from the disturbances caused by the action 
 of other countries, seems to us to enlarge rather than 
 contract the sovereign rights of a government. We are 
 therefore distinctly of the opinion that if an inter- 
 national agreement on the ratio of gold and silver iS 
 being concluded it would be far better for the British 
 Empire to participate, and have a voice, in the delibera- 
 tion than to remain outside and let others decide the 
 fate of the two metals which form the basis of her two 
 separate standards. 
 
 Of course such a treaty coxild be broken. Nobody will 
 deny this possibility. But our opponents have, so far, 
 never given any tangible reason for such a step, though 
 with most of them reasons are as plentiful as black- 
 berries. Nor can a satisfactory motive be suggested. 
 So long as both metals kept at par everybody would 
 be satisfied and no inducement would exist to bring back 
 again the present difficulties which experience has shown 
 fall on all alike and which no nation can so control as to 
 contrive its own safe escape. And as long as no violation 
 of the treaty occurred both metals must keep at par* 
 Should war break out governments would be sufficiently 
 occupied with ensuring the maintenance of specie pay- 
 ments to think of discarding one of the metals. 
 
 As to the case of the Latin Union, instead of being 
 analogous, as alleged, it is rather a contrast to the 
 proposed Bi-metallic Union. The Latin Union pro- 
 vided for the coinage of identical pieces of money in 
 
In its Social Aspect. 75 
 
 different countries with legal tender power throughout 
 the Union.^ All the difficulties that arose proceeded from 
 this cause. No such dispute could arise under the 
 proposed bi-metallic agreement, which extends only to 
 the standard while each state would remain free to coin 
 its own money which would have no legal tender power 
 beyond the country of its origin. 
 
 But though it is, as we see, easy enough to refute all the 
 arguments which are brought forward against an Inter- 
 national Bi-metallic agreement, we fear that a dispassion- 
 ate survey of the situation does not encourage the hope of 
 such an agreement being established in the near future.. 
 France while accumulating and jealously guarding an 
 ever increasing stock of gold is apathetic. The German 
 government, endeavouring to imitate the action of France 
 by also striving to get command over as much gold as 
 possible and overlooking the internal social disorders, per- 
 suade themselves that as regards the currency qiiestion 
 Germany is "in a relatively most favourable position"^ 
 and can affijrd to look on. In England the preponderance 
 of official opinion is undoubtedly still under the influence 
 of the gold mono-metallic teaching. Under these cir- 
 cumstances the enlightened statesmen and financiers of 
 India remain preachers in the desert ! 
 
 1 Similar stipulations of the Vienna Mint Convention caused 
 like difficulties between Austria and Germany, in consequence of 
 ■which, the latter country, when demonetizing silver, had to recog- 
 nise its responsibility for the Austrian pieces of one and two 
 Thalers coined under that convention prior to 1867. 
 
 2 Speech of Finance Minister von Soholz in the Prussian Landtag^ 
 22nd January, 1886. 
 
76 The Silver Question 
 
 Failing the international agreement, there is another 
 ohance for bi-metallism , which so far had not much 
 actuality, but which, should the fall of silver become 
 more pronounced, is likely to come to the front, viz., an 
 Anglo-Indian double standard. The objections against 
 treaties with foreign powers would not apply to such an 
 agreement. Moreover, it is well-known that an inter- 
 national treaty has only a chance of being adopted 
 ■either on the French basis of 1:15^ or in the American 
 ratio of 1:16. Anglo-Indian bi-metallism on the other 
 liand could be established without any reference to these 
 historic relations and at a ratio nearer the present 
 market price of silver, say at 1:18 or 1:20. This would 
 be a recommendation of the scheme with those theorists 
 who are still in the thraldom of the notion of "natural 
 price." But it would also be supported by many business 
 men practically connected with the trade with the East. 
 For if there is one thing that many Anglo-Indian mer- 
 ■chants fear almost as much as the fall of the rupee to 1/-, 
 it is its rise to the old 2/-, which would happen should 
 the 1:15^ ratio be stored with or without England. 
 
 We think these fears exaggerated. We concede 
 that part of the trade and manufactures which have 
 been built up in India during the last ten years 
 under the shadow of the low exchange might again 
 perish if exchange rises much, but we also believe 
 it will be but a small part. For, as we have previously 
 shown, the chief effect of the fall in exchange was the 
 
In its Social Aspect. 77 
 
 fall in gold prices, the appreciation of gold, and there- 
 fore the chief effect of rise in exchange would be the' 
 restoration of gold prices, the fall of the purchasing 
 power of gold to its former level.^ But whether the- 
 above fears are well grounded or not, they exist, and so- 
 far as they exercise any influence it will, when the day 
 of action arrives, be in favor of a ratio more advan- 
 tageous to gold than 1:15^ or even 1:16. And the day 
 of action may be nearer than is generally supposed. 
 , In these days when the words ' 'Imperial Federation' ' are 
 assuming so large an influence ; when the desire to weld 
 the different component parts of the British Empiue 
 more closelj^ together is making rapid advance, it can* 
 not but strike thoughtful observers that there could be 
 no greater barrier between England and her greatest 
 dependency than the depreciation of silver, a barrier 
 which is continually rising as silver falls in price. On 
 the other hand nothing could, next to a common 
 language, form a better means of cementing the union 
 of all the subjects of the British crown, than a common 
 standard of money .^ To doubt that commercially the 
 
 1 " The conclasion frhich is indicated from a oonsideration of all 
 facts is that an increase in the rate of exchange would be accom. 
 panied by a corresponding rise in gold prices and no restriction of 
 the Indian export trade would result from a recovery in the rate 
 of exchange."— Kimitte of Mr. J.'E. C Conor, Simla, 13th July, 1886. 
 
 2 After Prince Bismark had by the sword created the German 
 Empire, one of his first steps of economic reform, to consolidate the 
 new structure, was to propose a common standard. This is how 
 statesmen understand "Federation," 
 
78 The Silver Question 
 
 first gold nation and the greatest silver country on earth 
 «ould dictate to the world to-day the ratio of gold and 
 silver would be to question the mercantile preponder- 
 ance of Great Britain. The chances for such an agree. 
 ment are therefore perhaps less remote than would at 
 first appear. The Indian administrators have already 
 emancipated themselves from the baneful influence of a 
 few mistaken sentences of J. S. Mill. And it would be 
 a libel on English statesmen to despair of their being 
 roused in time to a clear perception of the danger 
 ahead ; to say that they would be unequal to the task of 
 putting an end to that monstrous anomaly of two different 
 standards under one crown without a connecting link be- 
 tween them ; and]to assume that they would be unable to 
 prevent the greatest empire of modern history from going 
 a-wreck on the same rock on which the greatest Empire 
 of the Old World went to pieces — the rock of monetary 
 disorganization. 
 
 But even if England and India should fail to act, 
 there is a hope of seeing the currency question settled in 
 a manner which will frustrate the efforts of the capital- 
 ist classes to forge the golden chains wherewith to hold 
 labor in bondage, and which will spare the world the 
 dismal spectacle of the violent social upheavals otherwise 
 unavoidable. We base this hope on the consideration 
 of the influence — an influence which would be decisive 
 in the " battle of the standards " — ^likely to be exercised 
 by a nation with whom we have occupied ourselves thus 
 far but cursorily, viz., the United States of America. 
 
In its Social Aspect. 79 
 
 As the largest produce exporting country in the 
 world the United States, have a paramount interest in 
 the stability of prices. The disorganization of the 
 world's markets consequent on the fall of silver, though, 
 as we have seen, felt all over the globe, is felt nowhere 
 so severely as in America. Cheap silver enables and 
 obliges India to compete at low prices, not only in the 
 wheat markets, but in those for cotton, hides, linseed, 
 and even wool, and the losses sustained by America 
 through this competition are enormous.^ As a conse- 
 quence the farming industries of the States are suffering 
 acutely, and through them the whole economic body of 
 the nation. 
 
 Against these losses America is unable to protect her 
 farmers, as do France and Germany, by corn duties, for 
 she is a food exporting country. Against these losses, 
 moreover, no compensating benefit can be named in 
 America, sijch as the import of cheap bread which in 
 Englaiid some economists persuade themselves is a 
 sufficient set-off against the crying evils of gold appre- 
 ciation. Nor can these losses be ascribed to defective 
 laws of real property, as they often are in Europe, 
 where demagogues tell the people that agricultural 
 distress is owing to "landlords" and to "rent." In 
 
 'In a memorial to the United States Senate, by the Hon. J. P. 
 Jones, the money loss to the United States on wheat and cotton, 
 from Sept., 1885, to March, 1886, through competition of cheap silver 
 is estimated at $125,000,000 to 150,000,000, and the loss of railway 
 traffic thereby caused at $15,000,000 to 17,000,000. , 
 
80 The Silver Question 
 
 America the evil is seen, if not understood, in all its 
 nakedness, and the connexion between the price of silver 
 and the prosperity of the country is widely recognized.^ 
 
 American statesmen and legislators have therefore 
 never really been misled by the clamour of the gold 
 mono-metallists. The financial history of their country- 
 has supplied them with too many practical lessons not ta 
 make them proof against the declarations of mere 
 theorists. Of course there exists in the United States a 
 gold party consisting principally of the National Bank- 
 ing interests and the foreign mercantile community in 
 New York and the stock .exchange connexions in the 
 East ; but though that party has command over large 
 means and greatly influences the Eastern press, it ha& 
 never yet succeeded in imposing its views on Congress, 
 
 Consequently when that party desired to change the 
 metallic standard of the country from gold and silver to 
 gold only, it was surreptitiously^ done, not by passing a 
 
 1 When we drew attention in the " Future of Silver " {Jowmal 
 Institute 0/ Bankers, April, 1885,) to the fact that the Bland Bill is- 
 X)f vital importance to the farmers of the United States, the Hoonomisii 
 (2l8t March, 1885,) in a captions article remarked : " that it is 
 worthy of note that this is not understood where it is most neces- 
 sary, namely, by the Americans themselves." A legion of newspaper 
 articles, as well as numberless speeches of representative men in 
 America during the last year testify to a full comprehension of this- 
 question by the Americans. 
 
 2 "The act when passed was not real except bj title." " The ancient, 
 money of the country was unintentionally legislated out of existence." 
 — Be^goH of the United States Monetary Commission, 1876. 
 
 General Grant, who signed the law, did not know that silver 
 was demone'tized. As late as the 14th January, 1875, he recommends 
 the establishment of new mints, l^ecause the existing facilities would 
 not suffice " to coin the silver necessary to transact the business of 
 the country." 
 
In its Social Aspect. 81 
 
 special law for demonetizing silver as in Germany, but 
 by making use of the. codification of the Mint laws in 
 1873 to insert an alteration forbidding the further 
 coinage of the silver dollar.^ When the people under^ 
 stood what had been done they demanded the reinstate- 
 ment of silver. Numerous bills were brought in for the 
 free coinage of that metal. As a result of a double 
 amendment, an Act was finally passed on 28th February, 
 1878, providing for the limited coinage of the white 
 metal. This act, known as the " Bland Bill," had to be 
 carried over the veto of the President. 
 
 Unscientific, -crude, and provisional as the Act is, it is 
 still a grand achievement. It is the American declara- 
 tion of independence of thought against the tyranny of 
 European monetary theories and the monstrous and 
 unjust doctrine of the English school of gold mono- 
 metallism. It marks the beginning of a powerful 
 reaction in America, of a struggle between the people 
 and the confederated monopolists, the masses and the 
 " vested wrongs " of those two powers which are the 
 creation and the legacy of the great civil war, that of 
 the National banks and that of the bondholders. This 
 struggle is still going on and forms to-day perhaps the 
 most prominent feature of American politics. 
 
 Ever since the Bland Bill was passed, the united gold- 
 
 ' This did not aSect the legal tender functions of the silver dollars 
 already coined. 
 
 F 
 
82 The Silver Question 
 
 press of England^ and America have ' worked hard to 
 obtain its repeal ; but despite the large funds at the 
 disposal of this agitation, the attempt has so far failed. 
 Every means has been tried to obtain the desired object. 
 The opponents of silver have posed as the champions of 
 financial honesty, and have proclaimed that dollar 
 which up to 1873 was the country's standard coin to be 
 a " dishonest dollar." They have declared that to pay 
 debts with this dollar is an "act of repudiation," "a 
 flagrant breach of public faith."^ They boycotted thas 
 dollar so that it had to remain in the Treasury and then, 
 under the plaudits of the gold press of Europe, called it 
 " useless money." They have constituted themselves 
 the advocates of the working man professing no other 
 object than to insure the payment of his wages in dollars 
 worth not less than 100 cents. They have secured the 
 assistance of consecutive presidents and secretaries of 
 the Treasury. But all in vain. The people distrusted 
 this new f angled zeal of bankers and officials for 
 their welfare. They knew that the executive was hostile 
 to silver. Under capable leaders who fight the silver 
 battle in congress bravely and well, they gather to- 
 gether and are now determined to demonstrate that in 
 the end they will be stronger than Treasury officials, 
 
 ' Nearly the whole English press is on the side of the American 
 gold party. This adds considerably to the popularity of the silver 
 men, who now are not only the champions of the rights of the 
 people but of a National American policy, 
 
 2 Econonvist, 24ith July, 1886. 
 
In its Social Aspect. 83 
 
 bankers, bank conventions and. clearing houses. They 
 are resolved to no longer assist other countries by the 
 cheap export of one of their own productions — silver — to 
 undersell the remainder of America's productions in the 
 markets of the world, for though India might continue to 
 export as much wheat, cotton, &c., after silver is rein- 
 stated, as she does now, she could do so only at higher 
 gold prices. 
 
 The real strength of the silver party may be gleaned 
 from the estimate of their opponents, from the fact that 
 •even those who wish to destroy the Bland Act find it 
 politic to sail under the bi-metallic flag, and to propose 
 its repeal, not'in the interests of mono-metallism, but in 
 that of bi-metallism.i The cessation of the future 
 coinage of silver is recommended because bi-metallism 
 can only triumph by adopting heroic measures; only' 
 when the panic and the cataclysm certain to follow the 
 
 I "International Union now. seems hopeless while we continue to 
 mitigate the diffonltios of other nations by taking off the market 
 half the product of our mines, which is nearly half the product of 
 the world. Is it not worth while to try the results of an altered 
 situation after so many years of failures ? Is it not worth while to 
 see what can be done when the United States shall hare put an end 
 by stopping the ooinagre, to the charge that they are moved by 
 selfish interests and trying to market their silver ? " — D. Manning's 
 Report, 7th December, 1885. Again : " The only road to bi-melallism 
 is by way of suspension and unconditional suspension. There is only 
 one way, and one only, by which silver can be restored to its old 
 ratio and vaine, namely, an international concert upon a common 
 ratio with open mints to both metals at that ratio." — D. Manning's 
 Reply to questions add/ressed in Bland resolutions, Washington, 2nd 
 March, 1876. 
 
84 The Silver Question 
 
 suspension of the Bland^ Abt, ;lias taughtEngland a severe 
 lesson and has forced her, for the sake of India, tO' 
 abandon her present anti-silver attitude.^ Whether 
 these recommendations are sincere or not we do not 
 profefe to know ; for us suffices the significant fact that 
 such tactics are being adopted. 
 
 But in spite of all, the repeal of the Bland Act has 
 not been carried, and as the discussion on this question 
 extends, the people begin to understand more and more' 
 the whole bearing of this controversy and the result is an^ 
 ever growing influence of the silver party. Relying: 
 only on these general considerations and without pre- 
 tending to any special information we ventured ta 
 predict^ the defeat of the agitation against the Bland 
 Act at a time when papers like the " Times," ^ the- 
 " Economist,"* and the "Statist,"* were informed that 
 
 1 « There is no need for onr taking the position of a snppliant for 
 favors. We can force action by simply suspending coinage." — Sew 
 Yorlc Chronicle, 14th August, 1886. 
 
 2 " The Future of Silver." — Jomrnal Institute of Bankers, April, 1885. 
 
 s " That the further coinage of silver will cease must be looked 
 upon as more than probable. That the Treasury will go on coining 
 silver money for which it can find no use is perhaps more than the 
 most hopeful of silver men can expect." — Times, 18th March, 1886. 
 
 * " The Americans are much too practical a people to endure long 
 the operation of so pernicious a measure." — Economist, 7th March, 
 1885. Again : " For our own part we are inclined to believe that 
 the silver coinage will be arrested." — Economist, 12th December, 1885. 
 
 6 " We have good reason to believe that the course which we have 
 steadily indicated of late aslikely to be followed by the United States- 
 Congress in dealing with Bland Act will in fact be followed. We 
 are assured by those most competent to form an opinion that the 
 Icmhing interests in the United States coinciding with the views and' 
 
In its Social Aspect. 85 
 
 this act was doomed.^ The silver question is a peoples' 
 question, though it may never become a popular 
 one; it is a question between debtors and creditors, 
 a question of the masses versus certain classes. It 
 is the "war of the millions" — millions of people 
 against millions of money. This point once thoroughly 
 understood, there is little fear indeed, that in Modem 
 democracies^ the verdict will be given in favor of the 
 limited number of the possessors of the mobilized wealth 
 and against the interests of the toiling millions.^ 
 
 But the Bland Act is essentially a provisional mea- 
 sure. When it was passed, it was no doubt hoped in 
 more than one quarter, that Europe would follow the 
 
 plans of the Government and of inflaential members of the Demo- 
 cratic Party are now qnite certain to prevail. In other words, it 
 may be considered almost as good as settled that the Bland Act will 
 be repealed." — Statist, 10th October, 1885. "We are inclined to 
 think that it will be practicable " (i.e., suspension of the silver 
 coinage). — Statist, 12th December, 1885. 
 
 1 The " World," however, almost alone correctly estimated the 
 position of parties in the States, and predicted that the Bland Bill 
 will not fall. 
 
 2 The enlightened advocates of mono-metallism fully perceive this 
 danger, and are afraid. " On a question of determining the ratio, 
 think of going to the constituencies !" — Speech of Mr. Sa/rvey, JoumoU 
 
 ■ of Institute of Bankers, June, 1886. 
 
 ^ In Germany, at the time the standard was changed, the people 
 did not understand the point at issue. The old liabilities were 
 converted at the rate of 1 :15i, which Mr. Bamberger, the Parliamen- 
 tary leader of the gold mono-metallists, declared fair, (speech in 
 Eeichstag, llih November, 1871,) " because it is the average relation 
 of the century to which gold and silver have always returned after 
 disturbances." After the debts were so converted, Mr. Bamberger 
 wrote his Beichsgold, and said that the fall in silver was an elemental 
 and necessary fact of historic evolution. 
 
86 The Silver Question 
 
 example of the United States. This hope was disap- 
 pointed. The new gold fashion was still too fresh to be 
 changed quickly, and no doubt the fact that, in spite of 
 this act, 'silver continued to fall, had also a deterring 
 effect. There will be no difficulty in carrying out the 
 Bland Act as it stands, and continuing the limited coin- 
 age of silver, for some years to come.^ But the time 
 must arrive when the present provisional enactments with 
 regard to silver will have to be replaced by something 
 ■more permanent and systematic. The question which is 
 already casting its shadow before will then be, whether 
 to abandon the present policy of giving silver a lift, or 
 w-hether America in the full consciousness of her im- 
 mense economic and financial strength will open her 
 mints alone and unaided to the free coinage of silver 
 and demonstrate to the whole world the fallacy of the- 
 mono-metallic doctrine by the success which is certain 
 to attend such an experiment. 
 
 The counsellors who, in and out of Congress, advise 
 the United States to follow this latter policy are 
 growing in number and influence every day. They pro- 
 claim that the free coinage of silver is the logical outcome 
 of the present position. They urge America " to show 
 
 1 The provision attached last session (1886) to the Civil Appropri- 
 ation Bill anthorizing and reqniring the issne of one, two, and five 
 dollar silver certificates is a means of making the silver dollars, now 
 idle in the Treasury, available, facilitating thus the working of the 
 Bland Act. The silver dollars are a legal tender at their "nominal 
 valne for all debts and daes pnblio and private," the silver dollar 
 certificates are only " reoeivable for customs, taxes, and all pabli& 
 dnes." Bat that saffices. 
 
In its Social Aspect. 87 
 
 a manly example as one of the greatest and most powerful 
 nations on the face of the earth, and to teach the errins 
 commercial and industrial sister nations the right path 
 to reach a sound metallic currency." They maintain — 
 and there can be no doubt with perfect justification — 
 that with their large productions of the precious metals, 
 the United States are to-day strong enough by them- 
 selves to control the ratio of gold and silver, and to 
 dictate it to the world as did France previous to 1872, 
 Spain after 1546, and Portugal after 1688. The bold- 
 ness of such a step, which might deter other nations, 
 seems to have a positive charm for the Americans.^ 
 " Our fathers " says a Congressional report^ " when they 
 adopted a constitutional standard of value based on gold 
 and silver, when they gave free and unlimited coinage 
 to both metals, never entertained the thought of asking 
 the concurrence of other nations." And what, it is 
 asserted, the small group of states that declared their 
 independence 100 years ago were not obliged to do, the 
 powerful continent of to-day with its teeming millions 
 need not do at the present time. America possesses 
 statesmen of bold action and great foresight who have 
 
 1 " I do oontinually hear men in this country declaiming in one 
 breath about the tottering thrones of Europe and the grandeur of 
 liberty regulated by law here, and in the next insisting that oar 
 monetary system must conform to that of the great European powers. 
 This will not do." — Speech in the United States Senate of Hon. 
 T. M. Bowen, 8th March, 1886. 
 
 2 Minority Beport of Committee on Coinage, Weights wnd Measures, 
 Washington, February, 1886. 
 
88 The Silver Question 
 
 thoroughly mastered all the bearings of this silver ques- 
 tion and are quite prepared to countenance the free 
 coinage of silver in the United States without reference 
 to the legislation of Europe. By thus raising the price 
 of silver, by thus " intercepting the cheap supply of the 
 munitions of commercial war," the United States of 
 America would put an end to Indian competition at the 
 present low level of prices, and the American continent, 
 prosperous again, would attract anew in large numbers 
 fresh settlers from Europe. 
 
 Already in 1879 Mr. Bland said in Congress : " Mr. 
 Chairman, it is not to our interest for England or Ger- 
 many to unite with us on this silver question. I main- 
 tain that so far as Germany and other countries are 
 demonetizing silver and banishing that metal from their 
 shores thus far are they driving their people also away. 
 I maintain further than in so far this government re- 
 monetizes silver and thereby revives business here we 
 draw to our shores the people of Germany and Great 
 Britain." 
 
 The free coinage of silver in the United States would 
 undoubtedly benefit the whole world, but the American 
 statesmen will unquestionably know how to arrange mat- 
 ters in such a way, as to secure to their own country the 
 lion's share of the advantages. It would be well for 
 English statesmen to bear this in mind. The thought 
 must seriously damp the joy which these devotees of 
 inactivity — which in this question has ever been the reverse 
 
In its Social Aspect. 89 
 
 of masterly — might otherwise experience at the prospect 
 of this question being settled by somebody else without 
 any expense of brain and nerve power of their own. A 
 bi-metallic America with a large stock of silver on hand 
 would have advantages for trading with the East not 
 enjoyed by England so long as she maintains the single 
 gold standard, for England would have to buy silver at 
 a premium. This advantage expressed in percentage may 
 not be large, but it would tell in an age used to look after 
 small differences. America might use this opportunity 
 in order to obtain a share and probably an increasing 
 share in the trade with the far East. Owning as she 
 does a splendid continent, bathed by two mighty oceans, 
 whose climate has every varying change, whose rivers 
 flow through fertile valleys, peopled by an enterprising 
 and energetic race, free from most of the political fears 
 which overhang Europe, America only requires a con- 
 trolling position in the Eastern trade to become the 
 paramount power in the world, and to make New York 
 the Empire city not of a nation but of the universe. 
 The question which in this country becomes more urgent 
 every day is : Will England allow her to acquire those 
 advantages through the supineness of those who are 
 called upon to watch over her destiny 1 
 
 We are, however, not here concerned with the question 
 of who will eventually benefit most by the reinstatement 
 of silver. Our enquiry extends simply into the chances 
 of bi-metallism. Believing, as we do, that the final 
 
90 The Silver Question 
 
 victory of the gold party would be followed by un- 
 speakable misery, that it would upset commerce, that it 
 would destroy the social fabric built up with so much 
 care, and so far the only intelligible base of all further 
 economic development, that it would therefore arrest 
 the evolution of the human race, we are glad to find 
 that our survey of the situation leads us to the con- 
 clusion that the victory of bi-metallism in the United 
 States is but a question of a short time. 
 
 Whether this expectation will be realized or not, 
 events must show. Nor would the success or non. 
 success of the forecast here attempted ia any way add 
 to, or detract from, any value which our remarks in -the 
 principal and less ambitious portion of this treatise may 
 possess, the aim of which has been to establish, beyond 
 doubt and cavil, the connexion between the Silver 
 Question and our Social Future. 
 
 In an evil hour for humanity the idea of extending 
 the single gold standard to the whole world was con- 
 ceived. Since the day when Germany took the first step 
 towards the realization of this idea down to this time, 
 humanity has had to fight a continuous battle against 
 the evils resulting from this attempt. We have so far 
 escaped the great collapse that more than once threat- 
 ened to crown years of losses and retrogression. But 
 he would be a bold man indeed who dared to predict 
 that this collapse is definitely averted. The elements of 
 financial danger are all around us. Nearly all staies 
 
In its Social Aspect. 9 J 
 
 except England temporize "witli that danger by count- 
 ing some of their silver as gold, and in England the- 
 gold circulation and the gold reserve of the Bank have 
 alike declined. 
 
 In the course of this struggle for the single gold 
 standard, the rolea of the mono-metallists and the bi- 
 metallists have completely changed. The former are- 
 now really fighting for the establishment of a dual 
 system of money which would divide the commercial 
 world into two hostile camps. The latter endeavour 
 to establish a system of the same monetary standard 
 for the whole universe. They are, therefore, to-day 
 the real representatives of monetary cosmopolitanism, 
 the true champions of aworld-money.^ 
 
 Bi-metalUsm does not claim to be a panacea for all 
 the evils that man is heir to. It is no magic wand with 
 which to conjure up 'bountiful harvests or with which to 
 ensure absolute certainty of business success. It is no 
 guarantee against over-speculation or commercial crises. 
 But it will give back stability of value to the moneys of 
 
 1 " As the matter etands at present it seems to me that those who 
 are called bi-metallists are really mono-metallists. They try to- 
 marry the yellow and the white metal, to combine the two, and thns 
 to create a basis broad enough to carry on the ever increasing 
 commerce of the world, and to fonnd npon it a stable system of 
 prices and a firm superstrncture of credit. Those on the other hand, 
 who are called mono-metallists are really bi-metallists. They want 
 to divorce silver from gold and cut the world into two parts with 
 no common measure of value between them." — -Speech, JowmaV 
 Institute of Scmkers, December, 1885. 
 
"92 The Silver Question 
 
 the world, to the sovereign of the English as much as to 
 the rupee of the Hindoo, and it will save the innumer- 
 able social relations of life which are based on monetary- 
 considerations from great and ever increasing disturb- 
 ance. 
 
 There is no justification for the assertion that the in- 
 troduction of bi-metallism would violently disturb exist- 
 ing trade relations. Certain, precautions which will at 
 •once suggest themselves to men of business, and into 
 which we need not enter here, would adequately sale- 
 guard all legitimate interests. 
 
 But even a temporary interference with trade, con- 
 iined as it would be to a single instance and within as- 
 signable limits, must be deemed a small price indeed to 
 pay for the cessation of the present constant fluctuations 
 between gold and silver and for the creation of a stable 
 international money that will suflSce to serve the needs 
 -of humanity for generations to come. 
 
 We are living in an age of no ordinary diflSculties. 
 New and pressing social questions are coming to the 
 front and peremptorily demand a hearing. To answer 
 them satisfactorily we require the loyal co-operation of 
 all conservative elements of society. Such times allow 
 no longer of hesitancy, procrastination and timidity ; 
 they demand courage and decision; they call for positive 
 and constructive statesmenship. More than all, they 
 impose upon our rulers the paramount duty of speedily 
 putting an end to the depreciation of silver, which 
 
In its Social Aspect. 93^ 
 
 cancer-like is eating away the vital parts of our social 
 organism ; which by a silent revolution undermines the 
 economic power and the political influence of those 
 classes that have ever been the loyal supporters of the: 
 government and the crown ; while, at the same time, as 
 the ultimate cause of bad trade and scant employment,. 
 it is the most active agent of popular discontent, a con- 
 stantly threatening danger to the whole structure of 
 society, and the mainspring of that social insurrection 
 the distant thunder of which is already audible in all 
 the great centres of civilization. 
 
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