Cornell University Library HG 942.J82 The standard of value. 3 1924 013 775 584 1&tbrat« B Cornell University fj Library The original of tliis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013775584 THE STANDARD OF VALUE. THE STANDARD OF VALUE. BY WILLIAM LEIGHTON JORDAN, F.R.G.S. itontion: DAVID BOGUE, 3, ST. MARTIN'S PLACE, TRAFALGAR SQUARE, W.C. 1882. LONDON : PRINTED BY WILLIAM CLOWES AND SONS, LIMITED, STAMFORD STREET AND CHARING CROSS. PREFACE. In commenting on the First Edition of the following Paper on " Lord Liverpool's Oversight " a few days ago, a London reviewer alludes to it as a "defunct controversy." If, however, the reviewer will look a little more closely at the book, he will find that it not only is not the defunct controversy he supposes, but that it is the discussion of a question which was never dreamt of in the philosophy of William Cobbett, Sir Robert Peel, or John Stuart Mill ; and that it is not only a " living question," but what the Lord Mayor of London has recently, at a public meeting at the Mansion House, declared to be " a question which he thought there could be no denying was the most important of the present age."* • The Times, nth March, 1882. See footnote on page 78. CONTENTS. PART I. PACE Lord Liverpool's Oversight and its Con- sequences I PART II. The Double Standard and the National Debt .. .. .. .. 33 PART III. The Pound Sterling : its History and Character 75 APPENDIX. Replies in Discussion and other Articles .. 97 LORD LIVERPOOL'S OVERSIGHT AND ITS CONSEQUENCES. A Paper read before the English Literary Society of Buenos Ayres on the 14th of June, 1882, in support of the following resolution : — " The restoration of the Double Standard of Value which was discarded in 1873, is desirable." LORD LIVERPOOL'S OVERSIGHT ITS CONSEQUENCES. I. A Letter addressed to King George III. by the first Earl of Liverpool was the prevailing influence which induced Parliament to abolish the silver standard and to make the gold sovereign the sole representative of the Pound Sterling ; and the present mint regulations, which were established by Sir Robert Peel's Act in 1816, are in exact conformity with the principles advocated by Lord Liverpool in that letter. My present object is to point out what I will rather call an oversight than a mistake made by the Earl of Liverpool ; and also the very pernicious effects which it has recently begun to produce throughout the British Empire, and to a lesser extent throughout the civilised world. To illustrate the oversight in question I will quote from Lord Liverpool's letter an extract, in which his principal argument is clearly stated. B 2 4 THE STANDARD OF VALUE. Lord Liverpool says : — ", Coins must bear a due proportion to the wealth and commerce of every country in which they are current. In former times it was found necessary gradually to introduce into the currency of this kingdom, silver coins of a greater weight and value, in proportion as the wealth and commerce of it advanced. Thus pennies, half-pennies, or mailles, and farthings, were at first the only silver coins in currency. Groats and half-groats were afterwards introduced, and in subsequent periods, first shillings or testoons, and afterwards crowns and half-crowns were coined, and for the same reason brought into currency. In like manner, when the commerce of the kingdom had increased to a certain extent, coins made of gold were first struck at the English mint, and introduced into circulation. It was natural, that gold coins, as of less bulk, and of greater value, should be so introduced, and should become legal tender, equally with our silver coins ; and, in proportion as our commerce continued to augment, that they should gradually take the place of the silver coins ; and at length, when our trade had attained the very great degree of extent and splendour at which it has arrived in the course of the last fifty years, that they should become the principal measure of property and instru- ment of commerce, and leave to the silver coins the function of being employed only in the smaller and inferior branches of it." LORD LIVERPOOL'S OVERSIGHT. 5 The oversight which Lord Liverpool seems to have made is that he does not appear to have perceived the intrinsic and very important difference between the character of a change by which silver shillings are coined to displace silver pennies, or silver crowns to displace silver shillings, and that by which gold sovereigns are coined to displace silver shillings or crowns. By the changes from silver pennies to silver crowns the value of the silver of which the coins are made is not affected, and therefore the value of the standard unit remains unaltered. But though the abolition of silver pennies and their substitution by larger silver coins does not affect the value of the standard unit, the effect of a change in the coinage is very different when it is decreed that the silver coins (except a small amount issued at a fanpy valuation) are to be abolished and substituted by gold coins. In the latter case the demand thus created for gold to supply the circulation which would otherwise be supplied by silver gives gold a higher value than it would otherwise have ; and, therefore, the decree which substitutes gold coins for silver coins raises the value of the standard unit. This principle, apparently overlooked by Lord Liverpool, I do not suppose anybody, whose attention has once been directed to it, can fail to perceive to be true in theory, however slight its practical effects 6 THE STANDARD OF VALUE. might be. And before endeavouring to show to what extent it may reasonably be estimated that the value of the standard unit has practically been raised by the abolition of the silver standard, I beg to draw your attention to a special reason why any change in the standard of value ought at that time to have been strictly avoided. II. For the above purpose I cannot do better than refer to the conversation which took place between the representatives of the International Congress for the simplification of coinage which met in Paris in 1866, and Mr. Goschen, then Chancellor of Her Majesty's Exchequer. It was suggested by the above-mentioned Congress that the weight of the English sovereign should be reduced sufficiently to make twenty shillings exactly equal to twenty-five francs. This would be so slight a reduction that the suggested new sovereign would still be heavier than many of the sovereigns which, though worn by ten or twelve years of use, are never- theless not so much worn as to cease to be of full legal tender weight. Notwithstanding the very slight amount of the suggested change, Mr. Goschen, representing Her Majesty's Government, replied that the reduction in the weight of the sovereign would constitute a breach THE RIGHT HON. G. J. GOSCHEN. 7 of faith with the national creditor, or holders of the National Debt, and that, therefore, it could not be for a moment entertained. I take the liberty of expressing my perfect sym- pathy with Mr. Goschen in his zeal for maintaining strict faith with the national creditor, and paying to him every farthing to which he is equitably entitled by the terms of the national loan. But the same National Debt which caused Mr. Goschen so zealously to refuse to allow of the slightest change in the standard of value, existed when the law was enacted which substituted gold for silver coins and thus changed the standard of value. The simplest dictates of common sense tell us that if the slightest reduction of the standard of value con- stitutes a breach of faith with the national creditor which ought to be strictly avoided ; then it ought, with the same zeal, to be maintained that the slightest enhancement of the standard of value constitutes a breach of faith with the national debtor which should have been just as strictly avoided. I now beg your attention whilst I endeavour to estimate how much the abolition of the silver standard has raised the value of the standard unit, thus increas- ing the value and the burden of the National Debt whilst leaving its nominal amount unaltered. THE STANDARD OF VALUE. III. The gold sovereign is at present worth about 15 per cent, more than the market value of the silver pound in which the debt could be discharged but for the adoption of Lord Liverpool's system. Thus the National Debt of 750,000,000/. is equivalent to what would be the value of a debt of 862,500,000/. if the interest or capital could be discharged in silver of the relative value which actually rules in the market. It must not however be immediately inferred from these facts that Lord Liverpool's system has made so great a real increase in the burden of the debt as 1 12,500,000/. ; thus giving so large a bonus as that to the bondholders ; for a part of the present difference between the value of the gold, and that of the silver pound might be due to a fall in the value of the silver pound also caused by that system. To arrive at a just estimate of the extent to which the value of our standard unit, and consequently the value of the National Debt, has been increased by the adoption of Lord Liverpool's views, it is obviously useless to enter on the vexed question as to how much of the relative difference of 1 5 per cent, between the silver and the gold pound sterling would imme- diately disappear if Lord Liverpool's system were abrogated. All that is requisite is merely to estimate THE EDINBURGH REVIEW. 9 how much the absolute value of gold has been en- hanced by that system. For this purpose I now ask your careful attention in the first place to the following extract from the Edinburgh Review for April 1879. The reviewer says : — " In this country, and generally, it has been taken for granted that there has been of late years an absolute depreciation of silver, and that gold is simply maintaining its old value. ... A very different con- clusion, however, was arrived at by the commission appointed in 1876 by the Congress of the United States. They maintained that there had been no depreciation of silver, and that the difference between the values of the two precious metals was owing to a rise in the value of gold. " They reported as follows : — .... 'In order to ascertain whether silver has fallen or gold risen since 1873, not relatively to each other, but relatively to all other things, a comparison must be made between general prices in gold and silver respectively, then and now. Such a comparison would show that the purchasing power of gold has increased since then in all countries, and that the purchasing power of silver has decreased in none.' " Startling as this statement appeared at the time, there were even then many facts which tended to support the conclusion arrived at by the American Commission. ... To say the least, silver had not 10 THE STANDARD OF VALUE. fallen in value in India. And it is equally manifest that there had been a considerable diminution in the value of silver compared with gold. . . . There had been no depreciation of silver in India, but an ap- preciation of gold. And this is the view of the matter at present maintained by the Government of India. " The American Commission maintained that this state of matters was universal — in their own words : 'that the purchasing power of gold has increased since 1873 in all countries, and that the purchasing power of silver has decreased in none.' " To the views so clearly expressed throughout the article in the Edinburgh Review from which I have quoted, I will add a short piece of evidence as a practical indication of a rise in the value of gold in England. According to the Board of Trade returns the total value of British and Irish produce exported in 1872 was 256,250,000/. sterling, and in 1880 223,060,000/. But the Economist of 19th November last gives the relative value of the exports for those two years, if calculated at the same prices, as 220,490,000/. in 1872, and 258,520,000/. in 1880. This shows that there was an increase of 17 per cent, in the quantities exported, though there was an apparent fall of 13 per cent, in the total value exported. This shows a fall of 26 per cent, in the average MONEY VALUE OF EXPORTS. ii prices of the exports ; which is equivalent to a relative rise of 35 per cent, in the value of the pound sterling by which the value of those exports is measured. It seems almost self-evident that this change in nominal value must be in a great degree due to a rise in the absolute value of the pound sterling rather than to such a wholesale fall in the absolute value of the articles exported ; and almost forces on us the conclusion, suggested by the evidence I have ex- tracted from the Edinburgh Review, that though gold has risen only 15 per cent, in relation to silver, its rise in absolute value is greater. This conclusion can be corroborated in a very simple manner ; for as it is notorious that the closing of the mints against silver has prevented a very large increase of silver coins from being effected, it is evident that the refusal to allow silver the same un- limited coinage as gold, has not only caused a relative rise of 1 5 per cent, in the value of gold as compared with silver, but has, at the same time, indisputably given a higher average value to gold and silver coins than they would otherwise have, and almost certainly caused an absolute rise in that average value, by pre- venting the supply of coin from being equal to the increased requirements for it. Taking this latter effect into consideration in con- junction with the previous evidence, it seems indis- putable that Lord Liverpool's system has had the practical effect of raising the absolute value of the 12 THE STANDARD OF VALUE. pound sterling at least i S per cent., and perhaps even to the extent of 20 per cent, or more. It thus appears that 15 or 20 per cent, higher taxation is required to meet the interest on the National Debt than would be required if Lord Liver- pool's system had not been established. That system changed the standard of value under which the money was borrowed, and has made it requisite for the debtor to pay 1 5 or 20 per cent, more than the value due under the original compact : the change of the standard of value being equivalent to an increase of the National Debt which, as above shown, m'ay reasonably be estimated at not much less than 1 50,000,000/. sterling. How can any thoughtful man fail to perceive the injustice of such a system and the national loss it inflicts ? IV. With a view to remedy the acknowledged evils of the present position. Her Majesty's Government now offer to bind themselves,, by agreement with other nations, to keep the Indian mint open for the unlimited coinage of silver if a number of the principal States will bind themselves to keep their rnints open for the unlimited coinage of both silver and gold. This is really tantamount to a declaration to the effect that Her Majesty's Government will passively leave it to other Governments to decide whether those HER MAJESTY'S GOVERNMENT. 13 other Governments will or will not remedy the in- justice done to ourselves by our own Parliament For though the practical establishment of bimetallism at the former ratio by any nation would practically remedy that injustice, and the rejection of gold coins for silver coins by other nations, might even make the gold pound sterling less valuable than the silver pound, the unlimited coinage of silver by the Indian mint (in the absence of such action by other nations) cannot have any effect on the absolute value of the gold sovereign, but must tend to increase the differ- ence between the relative value of the gold sovereign and the silver rupee. The peculiarity of the position is unique. The British Parliament first create an immense amount of debt under a certain standard of value ; then, in a perfectly arbitrary manner, they change that standard of value. This change brings about an obvious and serious injustice to the British nation to the benefit of the British bondholder, and acknowledged embarrass- ment and heavy loss to the Indian Government. A restoration of the standard of value under which the debt was contracted forms an obvious remedy for these evils ; and, under these circumstances, Her Majesty's Government declare themselves prepared, by Indian legislation, to assist such legislation by foreign powers as may bring about a practical restoration of that standard of value, but they will not themselves legis- late for its legal restoration in England. 14 THE STANDARD OF VALUE. The reason for this peculiar course seems to be a prevailing opinion that the restoration of the former equilibrium is more requisite for the benefit of India and some foreign nations than for that of Great Britain. This opinion results from a misunderstanding of the actual situation. The Indian Government requires an increased amount of revenue, because a part of their expendi- ture is payable in the pounds sterling which have been raised in value, and the Indian nation have therefore that extra burden laid on them. But their currency has not suffered the important change in value which the English currency has experienced ; and though the extra amount to be raised by taxes causes great embarrassment to the Government it is not so great as to form a great national calamity. In this India suffers in the same manner as England suffers by having to pay an increased value of interest on the National Debt in consequence of the increased value of the pound sterling. But, besides this, England has been involved in disasters by which India has not been touched ; for the rise in the value of the English currency has not only created confusion by altering the value of all contracts, but has also disorganised trade and indus- tries of all descriptions, so that it is not India but Great Britain that has been the chief sufferer from the repudiation of silver. It is asserted by many that the bad harvests MONEY VALUE OF LAND. ij experienced recently are the cause of the fall in the value of land, but the recent legislation for Ireland sufficiently proves that that is not practically accepted by Parliament as the cause. And, is it more likely that tenants have, in a wholesale manner, contracted to pay 1 5 to 30 per cent, more rental than their lands are worth, than that the value of their contracts has been increased by the increase of the value of the pound sterling indicated by the evidence already referred to ? Is it not more reasonable %o regard the difficulties experienced by tenants in paying their rents as further evidence of the increased value of the pound sterling ? The simple reason for making only gold coins full legal tender in England is clearly given in the extract I have given from Lord Liverpool's work. But what are such considerations worth when weighed against those to which I have just alluded 1 Or what, indeed, are any considerations based on commercial convenience worth when weighed against the rights of the national debtor ? i6 THE STANDARD OF VALUE. V. Lord Liverpool's oversight in not perceiving that the abolition of the silver standard changes the value of the gold standard is made strikingly apparent by the fact that, throughout his long letter, he only once alludes to the question of the National Debt, and that when he makes this allusion he does so for the purpose of pointing out that the bondholders have no reason- able ground for objecting to the change from th? double to the single standard. His Lordship does not appear to have noticed that though the national creditor had no reason to object to the change, seeing that it deprived him of no right which he previously possessed ; the national debtor,' on the other hand, had good reason to object, seeing that it deprived him of the right to pay in silver ; and if it were not that the debtors were too ignorant to understand the value of the right of which Lord Liverpool proposed to deprive them, they would doubtless have made their voices heard in such a manner as to prevent the perpetration of the injustice. The glaringly one-sided character of Lord Liver- pool's arguments on this point makes it almost appear that though he was writing just after the close of the great war with France, he had not learned the lesson taught by the scenes of anarchy in which the French nation had been involved in consequence of their LORD LIVERPOOL^ OVERSIGHT. 17 nobility having persistently acted as if they consi- dered that no injustice could be done to the labouring classes, seeing that they had no right to be injured. His Lordship was very careful to point out that his proposed measures could not injure the national creditor ; and, having decided this point, he does not seem to have thought it worth his while for a moment to consider whether those measures would or would not injure the national debtor. His arguments on this point are those of a special pleader for the enhance- ment of the value of the bondholder's property, and not those of a statesman endeavouring to mete out impartial justice between the nation, which had just been so heavily burdened with debt, and the nation's creditors, whose loans had brought a desperate war to a successful conclusion. Those loans, which formed nearly three-fourths of the whole debt, had been issued at an average price of about 60 per cent. — that is to say, the nation acknow- ledged an amount of debt about 66 per cent, greater than the, amount of capital received ; and besides this the money was received in paper, which was then depreciated to an extent variously estimated at dif- ferent times at from 10 to 30 per cent. ; and, indeed, at one time estimated by some as depreciated to the extent of 50 per cent. Neither the extent of this depreciation, nor the price at which the loans were issued, directly concerns my present argument. I allude to these points merely to c 1 8 THE STANDARD OF VALUE. show that if, at the close of the war, specie payments had been resumed under the same standard of value which existed before the war commenced, the bond- holder would have been very handsomely rewarded for his patriotism. To the profit made on his depre- ciated paper he was fairly entitled, because at the commencement of the war specie payments were not abolished, but merely suspended, it being understood that the paper notes would be redeemed at par in case of a successful termination of the war. And to the profit made on the price of issue he was fairly entitled also, seeing that it formed an explicit con- dition of the loan. But these enormous profits he would equitably have obtained by a return to specie payments under the standard of value which existed when those specie payments were suspended. The resumption of specie payments under the sole gold standard instead of the double standard, changed the debt of 850,000,000 pounds sterling into a debt of the same number of gold sovereigns, which are worth 15 per cent. more than the silver pound sterling, and, as before shown, at least 15 per cent., and perhaps 20 per cent., more than the pound sterling would be worth if specie payments had been resumed under the previously existing double standard. LORD LIVERPOOVS OVERSIGHT. 19 VI. The same oversight which kept Lord Liverpool from perceiving that the abolition of the silver standard was an alteration of the standard of value which practically enhanced the value of the pound sterling, is apparent throughout the historical portion of his letter, notwith- standing that we find in one of his paragraphs such well judged statements as the following (p. 151). His Lordship says : — " Frorn the time when gold coins were introduced into currency .... the pound sterling in tale repre- sented a certain quantity or weight of standard gold, in like manner as it represented a certain quantity or weight of standard silver And from that time the gold and silver coins were in fact, as well as by law, equally the measure of property." But his Lordship afterwards goes on to say : — " It sometimes happened, however, that both gold and silver coins were, by various causes, alternately driven, in a great degree, out of circulation ; and one of them remained in currency, and became in fact the principal measure of property." Thus Lord Liverpool says, the gold coins having been driven out of circulation : — " From the year 1663 the silver coins became in fact the only principal measure of property." And, in 1805, he says : — " The gold coins are now become, in the practice C 2 20 THE STANDARD OF VALUE. and opinion of the people, the principal measure of property." His Lordship really does not seem to have perceived that though at one of those epochs chiefly silver, and at the other chiefly gold was in circulation in England, the two metals were nevertheless at all times jointly the measure of property, both by law and in fact ; for debtors could suit themselves as to which metal they reserved for their home debts, and which they ex- ported for their foreign debts. The one metal rather than the other being kept in circulation in England, instead of being exported, depended on the changes of the relative value arbitrarily given to the metals at the respective mints. The " measure of property " was not affected by these changes of the relative value of the two metals at the respective mints, but remained the same double standard measure, though the chang- ing prices and charges at the different mints made any given mint sometimes the best market ,for gold, and at other times the best market for silver. If every mint had been either only a gold mint or only a silver mint, then in some countries gold alone, and in other countries silver alone, would practically have been the measure of property, instead of the two metals jointly being the measure of property in all countries. For these reasons also, notwithstanding that the double standard was abolished by law in England in i8i6, gold and silver nevertheless continued in fact to LORD LIVERPOOL'S OVERSIGHT. 21 be jointly the measure of property ; because, though the English mint coined only gold, the holder of silver could always get the equivalent of the silver pound sterling in the gold pound sterling as long as the French mint was an open and unlimited market for silver at that relative value. This continued to be the case until the French mint was closed against silver in the year 1873 ; and then, for the first time, gold and silver became two separate measures of property, and gold alone, instead of gold and silver jointly, became practically, as well as by law, the principal measure of property in England ; and this sudden alteration of the measure of property almost immediately brought about a fall in the money value of land, and also, as before shown, of the aggregate of the money value of our exports ; whilst at the same time fixed amounts in money, such as land rents and the National Debt, were enhanced in value. As Lord Liverpool did not understand that though at one of the epochs alluded to by him silver was chiefly in circulation, and at the other gold, the two metals were nevertheless at both epochs jointly the " measure of property," he therefore overlooked the fact that the abolition of the silver pound would naturally tend to enhance the value of the gold pound. THE STANDARD OF VALUE. VII. It was because the members of the Paris Conference of 1866 did not understand the nature of the over- sight made by Lord Liverpool that they began the propaganda for the general repudiation of silver, and the extension of the gold standard to all countries* And the German Government soon afterwards re- moved the question from the domain of theory, by initiating the practical application of the views advocated by the Paris Conference. The late Mr. Ernest Seyd and perhaps not more than half a dozen other bimetallists stood at first alone as opponents of the course advocated by the Paris Conference, regarding which I remarked when I had the honour of addressing you on this subject, two years ago : — " No such gigantic, bold, and mischievous injustice has ever before been attempted in the history of the world." I am glad to say that there is not now the vestige of a chance of the attempt to perpetrate that injustice being continued. For the victory of the bimetallists on that point has been complete, and the course advocated by the Paris Conference has now no defender. The repudiators of silver are completely defeated as regards the question of any further repudiation, and the question now at issue is as to whether silver is to be restored to the position it held before the first act of repudiation was effected by POSITION OF THE FRENCH MINT. 23 the British Parliament, under the advice of Lord Liverpool. The rapid and complete collapse of the repudiators, on what is really the main point, has brought about an all important change in the practical position of the question, which does not appear to have been as yet clearly recognised by either party. For it was the prospect of further attempts to repudiate silver that caused the French mint to be closed against it. But now that that prospect has vanished, the French mint might at any moment resolve to abandon any further attempt to restore the recent rate between silver and gold, and reopen for the unlimited coinage of silver, in exactly the same coins as are at present current, sharing with the holders of French gold coin enough of the profit on its recoinage, at a new ratio in respect to silver, to pay the cost of recoinage. Creditors on all current contracts would have the legal right to insist on payment in silver rather than in gold at the new rate of issue ; but on all subsequent contracts both gold and silver, ■ at the new rate of issue, would be equally legal tender. This would not deprive either debtors or creditors of any right they at present possess. And the consequent fall of the French currency in the foreign exchanges, which would follow the recoinage of gold, and which would be no loss to the country in general, would merely constitute a return to the intrinsic values represented 24 THE STANDARD OF VALUE. by the quotations of exchange before the gold coins became enhanced in value by the closing of the mint against silver. The premium virtually, though in the greater part insidiously, paid by England and Ger- many in the determination to have gold rather than silver in their circulation, is the true though indirect source of the profit which the French mint can now obtain on the recoinage of gold. As regards purely theoretical principles, the course I have suggested for the French mint would not intrinsically differ from what has occurred over and over again, on a smaller scale, in the practical working of the double standard; and, by that course, the double standard of gold and silver would again practi- cally become the measure of value in all countries, though some might continue to have the gold, and others the silver standard, established by law. That France, and other recently bimetallic countries, will be forced to some such course as that just in- dicated if the question should be allowed to drift much longer, I have no doubt. For, though it seems to me quite possible that France might be able to restore the old ratio without the assistance of Eng- land, there is no sufficient reason why that country should run the risk of failure in the attempt to do so. And one important reason why England should take the initiative in such a manner as to prevent a new rate between gold and silver from being permanently established, is to be found in the fact that 1858 grains LORD SHERBROKE. 25 of standard silver are legal tender for each pound sterling of the National Debt, under the terms on which that debt was contracted, whereas such a new ratio would make the gold sovereign, which is now the only representative of the pound sterling, worth permanently much more than 2000 grains of standard silver. In this manner a gordian knot would in- sidiously be formed in our national finances, and would become an increasing source of contention. It is not yet too late to prevent the binding of such a knot. But if once the recoinage should be under- taken by France, then international commerce will be just as well served by the double standard under the new ratio of gold and silver, but our own finances in England will be involved in a mess, of which it is impossible to foresee the issue. VIII. Financial history shows that the double standard originated in, and established itself by the slow and unperceived process of natural selection, which will also reinforce it, notwithstanding the temporary dis- turbance to which it has been subjected by the tampering of Lord Liverpool and his followers. Prominent in the ranks of that party stands Lord Sherbroke, who, in a recent number of the Nine- teenth Century Review, candidly tells us that he 26 THE STANDARD OF VALUE. does not know what bimetallism is. But Lord Sher- broke forgets that, some years ago, when he was Mr. Lowe and Chancellor of the Exchequer, he told us that, in advocating the double standard, we did not say what we meant, and that what we really meant to advocate was an alternative standard. Thus, some years ago Lord Sherbroke not only professed to understand what bimetallists want, but professed to understand it better than we do ourselves. The fact is, however, that Lord Sherbroke confuses alternations of gold and silver currency with alterna- tions of the standard of value. Lord Sherbroke, like Lord Liverpool, not understanding that all alterna- tions of currency before 1873 took place under the same double standard of value, as I have endeavoured to make apparent in this paper. The term Double Standard is the natural and most correct expression that can be used for our purpose. And, though an Alternative Standard is a theoretical possibility, that is not what bimetallists want. What we want is the double standard of value which practi- cally existed from time almost immemorial up to the year 1873. Necessity will re-establish that standard at a ratio inconvenient to us if we do not re-establish it at the ratio which was disturbed in 1873. And we merely want Parliament to re-establish by law at a convenient ratio, the standard which will otherwise restore itself, in spite of us, at an inconvenient ratio. MR. H. R. GRENFELL. rj IX. Among the recent accessions to the cause of bi- metallism is Mr. Grenfell, the Governor of the Bank of England, who from the position of an opponent has become the leader of the bimetallist party in England. Mr. Grenfell has evidently been led over by practical considerations of commercial conveni- ence, for he has not yet completely grasped the subject from a purely theoretical point of view. On this account it is that Mr. Grenfell uses such a term as " money of the mind " in attempting to define a standard of value which is really a question of hard cash supported by very matter-of-fact laws, whose action is not influenced by our mental fancies or imaginary valuations. On this account also Mr. Grenfell says that "to recognise the standard of value in international ex- change is more important than to regard it in its relation to interior currency : " as if it were possible to have an international standard which was not also the standard of the interior currency of each of the nations included under the term international. A little reflection will I am sure induce Mr. Grenfell to admit, that the double standard of gold and silver cannot be maintained by any nation without becoming also the standard of value of the interior currency of all nations who have either a gold or a silver currency, 28 THE STANDARD OF VALUE. whether those nations may be conscious of the fact or not ; and the double standard becomes the inter- national standard simply because it is the standard of value in the interior currency of each nation. They have an international standard because they all have the same standard practically though not by law. On this same principle also, if, before the repudia- tion of silver, platinum had been made unlimited legal tender by any nation retaining also either gold or silver in its circulation, then, not only the inter- national standard, but also the standard of the interior currency of each nation would be a treble standard dependent on the combined value of gold, silver, and platinum, and not on that of any one of those metals alone. The paramount objection to the legal estab- lishment of a platinum standard in England is the fact that such a law would constitute a breach of faith with the national creditor exactly similar to the breach of faith with the national debtor which was caused by the parliamentary repudiation of the silver standard in 1816. Mr. Grenfell repeats his mistake by saying that " within a country where gold is the only measure of value, the fixity, though not absolute, is as great as can be had ; but the question is how to obtain the greatest fixity in international transactions." For in this assertion Mr. Grenfell not only ignores the ac- knowledged truth that a double standard has greater fixity of value than either a gold or a silver standard, MR. H. R. GRENFELL. 29 but also again overlooks the fact that an international standard is also of necessity, the interior standard of each nation. Such a change of ratio in the double standard as might cause no perceptible change of its value might nevertheless cause great change in the standards of those countries that had only the gold or only the silver standard established by law. But no change in the international standard can be effected without at the same time changing the value of all the interior standards ; and therefore if an international standard exist at all, it will of necessity have at least as much fixity of value as the legal standard of the interior currency of any individual nation. It follows from this that a double standard country may retain the fixity of its standard whilst causing sudden and enormous changes in all monometallic standards by changes of ratio made requisite for the maintenance of its own standard. Thus monometallic countries are subject to an influence of foreign legis- lation which they cannot themselves exert abroad. And the greatest fixity of value in an interior currency is to be obtained by admitting into the circulation whatever metal may be unlimited legal tender in any other country, thus making the international standard both by law and in fact the interior standard. If all nations but one were monometallic, and each with a different metal, then the one country could make a profit by keeping its mint open for the 30 THE STANDARD OF VALUE. coinage of all those metals at changing ratios, and thus establish an international standard which would also be its own standard, and might retain a con- stant fixity of value whilst all other countries had their standards subjected to constant fluctuations of value. Mr. Grenfell of course clearly understands the great error made by the Paris Conference of 1866 in advo- cating the repudiation of silver. But he does not appear to have recognised the fact that if each in- dividual nation be free to choose whatever metal it imagines to be best for its interior standard, then an international standard will of necessity in the course of time grow out of, and confoi^m itself to those individual arrangements. It is a hopeless task to endeavour to make indivi- dual nations conform themselves to any international ^ standard artificially invented, though an enlightened self-interest must gradually lead each one to conform ■ itself to whatever international standard may gradu- ally establish itself by force of circumstances. For this reason the Paris Conference of 1 866 ought to have been satisfied with the practical simplification ■of coinage, which they could have achieved at the ratio of 1 5i to I between silver and gold ; and, for the purpose of making that ratio absolute, they ought to have advocated the legal extension of the double standard, by showing it to be for the self-interest of individual nations to make their legal standard j FREE COINAGE. 31 conform itself to the standard which had established itself in practice. Instead of this, they made the mistake of endeavouring to induce individual nations to submit to the manifest inconvenience of changing the metal in their circulation for the sake of an asserted international benefit. Not only is international legislation unnecessary for the purpose of establishing an international standard, but, judged by the abstract principles of free trade, such legislation would be a practical evil in many respects. One evil effect is to be found in the fact that it would almost necessarily be based on an agree- ment making it obligatory for each nation to continue the extravagant system of free as well as unlimited coinage, though there has ceased to be any sufficient reason for giving a bounty on gold and silver mining, in the shape of free coinage, rather than a bounty on iron mining, in the shape of free fabrication of useful instruments of that material. Gold and silver would flow to the mint quite fast enough without any such bounty. Many, even among professed bimetallists, consider that the restoration of the silver standard by the British Parliament at the recent ratio of 15^ to i, would be tantamount to the exclusion of gold coin from England. The effect of such a measure is, how- 32 THE STANDARD OF VALUE. ever, a purely practical question, to be judged by the condition of the currencies and the interests of other nations ; and it still remains as clear to me as when I last addressed you that, if England moves in the matter before the French mint undertakes to issue gold and silver at a new ratio, we may, even without any international treaty on the subject, make Mr. Seyd's 4^. coin, containing 350*305 grains of silver, as well as the gold sovereign, unlimited legal tender, in full assurance of the action of such a measure being supported by the French and American mints for their own convenience. But, whatever may be our opinion on this point, I beg to impress on you the fact that the existence of our National Debt makes the coining of silver a question of right and justice, against which the ques- tion as to the comparative convenience of a gold or a silver standard ought not for one moment to be weighed in the balance. And, in conclusion, I humbly express the opinion, which is . shared in by all who advocate bimetallism, to the effect that our wealth and prosperity are not in any manner due, as many sup- pose, to the establishment of our gold standard of value, but have rather been achieved in spite of the establishment of that standard. We are, indeed, con- vinced that that wealth and prosperity would be greater than it now is if the " ancient standard of the realm " had not been tampered with in the manner advocated by Lord Liverpool. THE DOUBLE STANDARD AND THE NATIONAL DEBT. A Paper read before the English Literary Society of Buenos Ayres on the 28th of July, 1880, in support of the following propositions: — "/. That the general adoption of Bimetallism is desirable and practicable. " II. That duty and expediency both urgently require the re- adoption by England [with or without the joint action of other nations) of the principle of Bimetallism which was abolished by the British Parliament in 1816 in favour of the gold standard." D THE DOUBLE STANDARD THE NATIONAL DEBT. In the paper I have prepared for reading this evening I have preferred to run the risk of being tedious rather than the risk of not being understood ; and therefore it may perhaps appear, as I read, that the same ideas recur too often. If so, I must ask you to excuse such repetitions, on the ground that ideas, when not at first understood, may be so when repeated in a different combination of words. In the paper * read before you on the 26th of May, Mr. Barclay pointed out : — First, that, " Prior to 1874, bimetallism was practi- cally in force for all the purposes of international com- merce. Individual nations had different standards ; but, owing to the uniform relative value of the two metals, silver and gold throughout the world formed practically one mass of metallic money, and the par * ' Bimetallism ' : a paper read before the English Literary Society, Buenos Ayres, by Robert Barclay, Esq., of Manchester. Published by the Author, at the request of the Society, and edited by the President, William Leighton Jordan, F.R.G.S. D 2 36 THE STANDARD OF VALUE. of exchange between a gold country and a silver country, was for all practical purposes a fixed value, Varying almost as little as if all the nations of the world had one metal alone as the standard of value." Though in one group of States, including England, only gold, and in another group, including Germany, only silver was legal tender ; nevertheless, as a third group, including France, accepted either gold or silver indiscriminately as offered for coinage at the rate of 15^ lbs. of silver to i lb. of gold, the relative value of the two metals in any country could not vary from that rate beyond the percentage requisite to cover the cost of sending one or the other metal to the French mint for coinage. Secondly, that, " In the year 1 867, a number of currency reformers met in Paris with the idea of dis- cussing some system of universal currency by which the coins of all nations might be harmonised. These reformers, however, found that a serious obstacle to the realisation of their schemes existed in the dif- ferent standards of value which the leading nations had adopted, and from that time there began a propaganda in favour of gold monometallism. The English system was regarded as the best, and English commercial prosperity was supposed to have resulted largely from her monetary system." * * The following interesting extract from a speech delivered in 1873 by the Right Honourable Benjamin Disraeli, now Lord Beaconsfield, appears in Mr. Ernest Seyd's work on ' The Decline of Prosperity.' " I attribute the great monetary disturbance that has occurred, and THE LATE EARL OF BEACONSFIELD. 37 Thirdly, that the foregoing suggestion was not acted on until the year 1872, when Germany commenced to change from the silver to the gold standard. An unusual demand was thus created for gold ; whilst at the same time the supply of silver from the coins discarded by Germany and thus thrown on the market was further increased by an unusually large supply from the mines. This combination of disturb- ing causes led the French authorities to fear that the action of the French mint would not be sufficient to sustain the established rate between silver and gold, which might, notwithstanding their action, be altered to a rate of 20 or 30 to i. And therefore, seeing that, under their then existing regulations, all the gold absorbed by Germany would practically be withdrawn from France and other bimetallic States in exchange for an equivalent quantity of silver at the rate of I5|. to I, the French authorities refused to receive silver for coinage and accepted only gold. Thus the action of both France and Germany created an unusual demand for gold, whilst at the same time the one threw silver on the market, and the other closed a source of consumption previously existing for it. is now to a certain degree acting very injuriously to trade — I attribute it to the great changes which the Governments in Europe are making with reference to their standards of value. ... I think that any country which has a gold standard of value should, to use a celebrated expression, think once, twice, and thrice, before it gives it up. But it is the greatest delusion in the world to attribute the commercial pre- ponderance and prosperity of England to our having a gold standard." 38 THE STANDARD OF VALUE. The market price of silver soon fell rapidly from the former par rate of (tod. per oz. ; and it then became evident, even to those who had not previously perceived the fact, that (to use Mr. Barclay's words) : "The bimetallic system of France with its free coinage of silver for all comers had linked gold and silver together not for France only but for the world, until the fear of an inundation of silver from Germany made her close her mint. Her bimetallic system gave way, after bearing many a strain, under a pressure it was never intended to bear." It is a disputed point among financiers whether, if France had kept her bimetallic law in action, instead of prudently suspending the coinage of silver, the unusually large supply which was thrown on the market would not all have been absorbed without any disturbance of the relative value of silver and gold. It seems to me that Mr. Barclay underestimates, or certainly does not overestimate, the controlling power of the French bimetallic law. For reasons which I shall presently give, I cannot myself doubt that if the latter law had been kept in force its influence would have been more than sufficient to sustain the equili- brium between silver and gold notwithstanding the tendency of the new German law to enhance the value of gold and depreciate the value of silver. The French mint might have coined double the amount of silver which could possibly have been sent there by SILVER REJECTED AT THE FRENCH MINT. 39 Germany, without causing any disastrous incon- venience in France. And as regards the danger of the equilibrium being disturbed by the new supplies of silver : the fact is that during the twenty- two years from 1848 to 1870, with free coinage for silver, there were 60 million £ coined all over the world, so that at that rate, if the whole supply offered for coinage were taken to the French mint only, and were not able to pass from France into the circulation of other countries, even so it would take one hundred years, even under such practically impossible conditions, for the supply of silver to displace the gold circulation in France. The real danger to France lay in the fact that the adoption of the gold standard by Germany was only a first step in favour of the universal adoption of gold monometallism ; and on other nations with silver standards following the lead of Germany, then the combined influence would have been more than could be counteracted by France. Silver would then have depreciated after having taken the place of the gold circulation in France, just as it actually did depreciate on the French mint being closed against it ; and therefore it seems to me that the French authorities showed sound judgment in suspending the action of their bimetallic law. The idea that France with 260 million £ of gold and 70 million £ of silver circulation could not have withstood the sole influence of Germany in discarding 40 THE STANDARD OF VALUE. at the most 60 million £ of silver, and able to absorb at the most 100 million £ of gold, seems to me to be a mistake. These are, however, mere matters of opinion which I express for the purpose of illustrating the subject. What is not doubted by any one is the fact that if England and Germany had in 1867 adopted the same bimetallic system as France, there would never have been any danger of the derangement in the relative value of silver and gold which has occurred. This being so, it is then evident that if all the principal commercial nations adopted the French bimetallic law, the relative value of gold and silver would be maintained at the rate of i S|- to i without any practical risk of derangement. I will not dwell further on Mr. Barclay's arguments for the purpose of showing the practicability of bi- metallism if generally adopted. Its desirability is roughly, but concisely, stated by Mr. Barclay in the following words : — " If silver were everywhere effectually demonetised, this would reduce the metallic money in the world to £^. 133 in England has arbitrarily confiscated at least 20,000,000/. sterling from the pockets of the labouring classes in England and paid it to the bondholders as a bonus beyond the value of the interest due to them, is a comparatively trivial part of the mischief done by the attempted repudiation of silver. The great evil has been the stoppage of trade and the check to the production of wealth caused by the disorganisation of the currency. The English law of 18 16 did not begin to have the practical effect of enhancing the value of gold until 1873, and then it not only steadily swept away the margin for profit on each commercial transaction, but, by breaking down prices, checked manufactures and industries of all descriptions. Wherever the natural difficulties for the creation of wealth may be greatest, or the population may be most thriftless or indolent, that strain on the currency must soonest become unbearable, and none, who appreciate the importance of the enhancement of the value of gold caused by the demonetisation of silver, can think it unreasonable to assume that if the prosperity of the world had not been artificially checked in 1873, Parliament would not have been called on to repudiate rights acquired by purchase in Ireland. Newton in England and Bonaparte in France gave practical evidence of having realised the fact that the law must acknowledge or adapt itself to rights which become rights by the slow process of natural selection. Gold and silver have grown into the position they hold as 134 THE STANDARD OF VALUE. circulating medium by that process, and if the law by which Parliament in 1816 repudiated the rights of the holders of silver continues to be sustained and be not counteracted by the legislation of other countries, then Parliament will find itself gradually hurried from one act of repudiation to another until all rights of property are swept away. The attempted demonetisation of silver is a blow at the acquired rights of property which is felt all over the world, and seems to me to be the most dangerous disaster that civilisation has encountered in its growth since, with the gradual strengthening of those rights, mankind slowly emerged from barbarism. I will not however go further on this subject beyond the object for which I commenced this article, which was to prevent the risk of the pamphlet I published last year appearing as a plagiarism, or, at best, a mere extension of Mr. Barclay's footnote, which has with some others been attached to Mr. Barclay's paper since the publication of mine, and which is, in reality, Mr. Barclay's acceptance of an argument which he strenuously opposed in Buenos Ayres. REPLIES IN DISCUSSION THE PAMPHLET ON THE POUND STERLING ITS HISTORY AND CHARACTER. REPLIES IN DISCUSSION OF THE PAMPHLET ON THE POUND STERLING: ITS HISTORY AND CHARACTER. To the Editor of the HERALD. Although I not long ago resolved not again to enter into discussion with any anonymous writer, the chivalrous tone in which your correspondent has attacked my pamphlet on the above subject, induces me to offer some remarks on his criticisms. Your correspondent says : " It is evident, by the whole statistics given, that the National Loan was made at times when more than ordinary inducements were held out to the lender in order to secure the means of prosecuting the great objects of State." I wish first to point out that in this statement your correspondent has opened a new question, which I had not touched, or alluded to in any of my writings. I have merely accepted the fact of the debt having amounted to 850,000,000/. in 18 16. My arguments have nothing to do with the question as to whether the terms on which it had been raised were easy or hard on the debtor, but are intended merely to point out or explain the injustice committed 138 THE STANDARD OF VALUE. by Parliament in changing that debt of 850,000,000 pounds sterling into a debt of 850,000,000 gold sovereigns. I have argued that if Lord Liverpool and his colleagues had properly understood the importance of the distinction between those two amounts they never would have advocated such a change, and that the only valid excuse to be made for the Parliament of 1 8 16 is that they made the change "by mistake." Lex dederunt sed non lex dixerunt. Secondly. Your correspondent's argument that : " Parliament, or the people, borrow from the people, and this people have a right to pay themselves in silver, but the people, or Parliament, which is the same thing, say they must pay themselves in gold," though serving as a prelude to a plausible disquisi- tion, is really superficial ; for the interests in question are really distinct, the nation being the borrower and individuals the lenders of the money. And it also ignores the fact that the vast majority of the labour- ing population, who are the tax-payers, and not bond- holders, were not represented in Parliament in 18 16. They did not know what Parliament was doing. I have endeavoured to show that, if the law of 18 16 be not quickly annulled, the action of foreign legisla- tion may create such conflicting interests between debtor and creditor, as may make the question quite unmanageable in Parliament, and ultimately compel the labouring classes to take the matter into their own hands in a manly manner unless they pusillanimously THE IRISH LAND COURT. 139 flock in rapidly increasing numbers into the alms- houses and workhouses, to meet a destiny of whole- sale starvation as soon as the increase of those esta- blishments becomes too great to be supported by the wealth of the country. OUR MODERN HELIOGABALI. To the Editor of the Herald, Between six and seven years ago the London Board of the late Mercantile Bank instructed their Envoy Plenipotentiary in Buenos Ayres to make me under- stand that " the Board wanted a manager to obey their orders, and not a dictator to tell them what they must do," though any Board of Directors not be- wildered by the difficulties of a situation with which the then ruling majority of its members were quite incompetent to grapple, would clearly have under- stood that the '' musts " to which they objected did not mean that "to suit my own purposes," I com- manded them to allow the course I indicated to be adopted, but merely that it appeared to me (in a better position than they to judge) that the non- adoption of that course must of necessity be ruinous to the interests of the shareholders of the Bank. So also, when I and some other advocates of bimetallism say that England must re-adopt the silver standard, we do not mean to assert that it is absolutely im- possible for the restoration of that standard to be prevented, but merely that any such legislation as 140 THE STANDARD OF VALUE. may make its restoration unnecessary will be exces- sively disastrous to the country in other respects ; and, as you did me the honour of giving prominence to the paper I read before the Literary Society in which I expressed the opinion that Parliament must restore the silver standard, I ask you to allow me to protect myself in your columns, by the clear enunciation of the above saving clause, from the risk of a misunder- standing similar to that above alluded to. I ask you to publish this rider to the opinion already published, because I perceive by the English papers received by the last mail that Parliament has actually commenced a course of legislation which, if systematically per- sisted in, may render the re-adoption of bimetallism in England not only quite unnecessary but even perhaps as mischievous as its abolition actually has been. The value of the gold pound sterling is'now nearly 20 per cent, more than that of the silver pound which was nominally abolished in 1816 and practically abolished in 1873 ; and the new Land Court just established by Act of Parliament in Ireland has, according to the Times oi the 4th ult.,* authorised a reduction of even more than 20 per cent, on one of the contracts between landlord and tenant which has been brought before them. Of course if all written con- tracts are to be revised in this manner, allowing debtors, by special Act of Parliament, to pay in gold 20 per cent, less than the amount of pounds sterling they have contracted to pay, they will naturally be even better * November 1881. THE IRISH LAND COURT. 141 pleased than if compelled to adhere to their contracts but allowed to pay in the silver pound in which they are equitably entitled to pay every contract signed before 1874. By the systematic pursuance of the course in- augurated by the Irish Land Court, Parliament may certainly get rid of the necessity for restoring the silver standard, but that course appears at present to involve a task in comparison with which all the recorded labours of Hercules shrink into insigni- ficance ; and which might have been avoided, even without re-adopting the silver standard, by the simpler course of authorising all debtors on contracts dated before 1874 to pay in gold the equivalent of the silver pound instead of the full gold pound. This would have done quickly and thoroughly what the Land Court appears bent on doing laboriously ; and by such a course Parliament might have avoided the dangerous precedent of arbitrary interference with individual contracts. The mere restoration of the silver standard in 1881 could not perhaps have been quick enough in its action to save the lives of the Irish landlords, but it does not appear that it would even now be too late to save the just rights of owners of property, including the bondholders, in England. It must be borne in mind that every contract revised in the manner effected by the new Land Court makes it more difficult than before to arrange an equitable adjustment between the national debtor and the national creditor ; and also that it is quite 142 THE STANDARD OF VALUE. ridiculous to suppose that the people who would neither submit to King Charles's claim to levy Ship Money, nor to King George's Tea Tax, are likely to continue to submit to be swindled to the extent of about 20 per cent, every year by a parcel of bond- holders. M'Culloch refers to the change of the standard of value brought about by increasing the value of the current coins as " a method of swindling first practised in the worst times of the Roman Empire." The Emperor Heliogabalus, being legally entitled to a fixed amount of money for certain taxes, increased the value of that income by raising the value of the coins at the national expense. His and all other perform- ances in that line have however, as far as I have been able to ascertain, been quite trivial compared to the manner in which the equivalent of 120,000,000/. sterling of debt has been placed on the British tax- payer, since 1 873, by the change of our silver debt into a gold debt ; and though Heliogabalus ventured so far as to order heavier coins to be made, so as to increase the value of his income, he never ventured on so barefaced a proceeding as to pay in silver what was borrowed in gold, or to claim in gold what was due in silver. The latter modification of his " method of swindling " is an audacious novelty, which seems to have been specially reserved for the display of the originality of the genius, or the folly, of Lord Liver- pool ; and if our modern Heliogabali, who now have the value of their incomes increased by Lord Liver- HELIOGABALUS. 143 pool's Heliogabalian Act, endeavour to continue to induce Parliament to require money borrowed pay- able in silver to be paid in gold, then the debtors will before long induce Parliament to declare that, in ac- cordance with precedent, that same money, borrowed payable in silver, may, by way of a change, be paid in copper or in paper ; and therefore, notwithstanding the manner in which the action of the new Land Court practically defends for a time the present posi- tion of the bondholders, it would be wise on their part to accept, whilst they can, the restoration of the silver standard. THE GOLD " CRAZE." To the Editor of the HERALD. The article from a New York paper, under the -head of "The Silver Craze," which has appeared in your columns to-day, reminds me of the celebrated French lawyer, who spoke splendidly, but forgot in his speech the sheep which were the object of his suit, until, at length, his client cried out in despair, " Revenons d nos moutons " ; so please allow me to recall attention to the origin of this question. Until quite recently all holders of either gold or silver could please themselves as to whether they held it in the shape of coin or otherwise. Under this con- dition of affairs, a group of financiers suddenly, for reasons into which I need not enter, got into their heads the idea that it was desirable to deprive holders 144 THE STANDARD OF VALVE. of silver of that privilege and to make gold alone the standard of value. The propaganda (commenced in 1866) for the general adoption of the gold standard resulted in the holders of silver finding themselves deprived (in the year 1 873) of the right of having it coined ; and the price of silver then quickly fell from 6od.. per oz. to ^2d. In order to check the mischief done by the rapid change in the relative value of silver and gold, the mints of several nations were successively opened for the coinage of limited amounts of silver, and under this condition of affairs the price has recovered to 51a?. These measures are, however, merely palliative, and it is gross misrepresentation to endeavour to make it appear that bimetallists fancied it possible for the former par of about 60.3?. per oz. to be restored by any suchvmeasures. Silver and gold had a relative value of 1 5^ to I when the law left it entirely to the holders of those metals to decide what quantity of either metal should be coined at that ratio, and what quantity should be used for other purposes. But now that the law has taken upon itself to decide what quantity of silver may be coined, whilst the holders of gold still retain their former right, there is naturally an increased demand for gold, for it has an extra value in con- sequence of being the only metal which commands the right of being coined. Up to the year 1873 it shared this value, or right, with silver ; but it now has the value of which silver has been deprived. It is perfectly absurd to suppose that "bimetallists THE GOLD "CRAZE." 145 ever imagined that the present palliatives could restore the former value of silver in relation to gold. The restoration of that value can only be attained by the law ceasing to meddle, in the way of attempting to decide what quantity of either metal is to be coined. Bimetallists merely protest against the propaganda initiated by those who, to suit their own purposes, have taken a special fancy to gold. We have no special fancy for silver, but contend that it ought to be left to the holders of gold and silver to decide, as formerly, what to have coined and what to use other- wise; and, therefore, if the term "craze" is to be brought into the discussion of this question, an article on the subject might much more appropriately be headed " The Gold Craze " than " The Silver Craze." It would be ridiculous to expect that people could do otherwise than continue to prefer to have gold rather than silver as long as gold commands the right of coinage and silver does not ; and in accusing us of such expectations our opponents merely give a new indication of the manner in which some of them allow themselves to be guided by fancy for lack of reason. But at,the bottom of the whole question there lies the fact that the closing of the mints against silver en- hances the value of the large National Debts which now exist. The money-lenders, as a rule, understand this well enough, but the labouring classes, who pay the yearly interest, do not yet understand it. The issue is a very practical one, and not a "craze" on either side. L 146 THE STANDARD OF VALUE. THE ARGENTINE REPUBLIC IN THE SILVER QUESTION. " I do not rhyme to that dull elf, Who cannot image to himself, That all through Flodden's dismal night, Wilton was foremost in the fight." I do not write this article for those who either cannot or will not understand the cause of the present separation of the gold and the silver standards of value, which, until recently, combined to form a double standard. I propose merely to point out to those who alreidy understand the practical action of such a separation the manner in which the foreign loans of this country have been aifected by it, and also the course of legisla- tion which is best suited to the interests of the country, from a financial point of view. For this purpose a very few words will suffice for the initiated, though, for others, it might necessitate a long dissertation, embracing, perhaps, even the alpha- bet of finance. The Argentine Republic owed in London, in the year 1873, more than ten millions sterling, and the collapse of the double standard, which occurred in that year, has practically added a value of two millions sterling- to that debt, by making a present debt of 10,000,000/. equal to the value of a debt of 12,000,000/. in 1873. FOREIGN DEBTS IN LONDON. 147 The Argentine Government have actually paid in London, during the past nine years, very much more than a value of 1,000,000/. in the excess of the value of interest caused by the change from the double standard to the gold standard. And they are this year paying a value of 120,000/. more than would be required from them if the double standard had been sustained. The change of the standard of value is now causing a yearly transfer of wealth from the Argentine Republic to the money-lenders in London equivalent to the value of 120,000/. This change of the standard tells against the Argentine Republic and in favour of the money-lenders in London, just exactly in the same manner as it tells against each individual tax- payer in England to the benefit of those same money- lenders, which latter are now getting out of the people of England an extra value of more than 4,000,000/. every year by the action of the change of the standard of value. The London money-lenders are the only individuals who profit by the change of the standard, whilst the overwhelming majority of the people of England, and more especially the labouring classes, are mulcted for their benefit just in the same manner as each foreign nation with a sterling loan is mulcted. Shakespeare has given us a pretty parallel to the present position of affairs in his tale of the Merchant of Venice. L 2 148 THE STANDARD OF VALUE. Shylock induced Antonio to sign the contract for the pound of flesh, not, as he assured the latter, for the sake of any advantage which Shylock could himself obtain from such a contract, but merely as a " merry jest"; in fact, just to please Shylock's fancy; but, when the bond came due, then the fancy became a stern purpose. So, also Lord Liverpool, the great special pleader for the interests of the money-lenders, induced Parlia- ment to abolish the silver standard, not, as he assured them, for the purpose of giving any individual any pecuniary advantage, but merely because he fancied it nicer and more convenient to have only one metal for unlimited legal tender. But now that the Act of Parliament, which was obtained under the plea of its being merely a measure of convenience in the money market, and not in any manner advantaging the money-lenders, has, neverthe- less, had the practical effect of giving an extra 20 per cent, to the money-lenders, they claim a technical right to that extra 20 per cent, as boldly as Shylock claimed his pound of flesh. I take the liberty of warning them to pause and consider well their position. Let them consider well the bitter consequences which Shylock of Venice suffered, and then they may, perhaps, have understand- ing to perceive, looming in a not very distant future, still greater calamities in store for them, if they do not, in time, renounce their claim to the pound of flesh. FOREIGN DEBTS IN LONDON. 149 The very Act under which they claim their 20 per cent, will be, as with the Shylock of Venice, the perfect, though, at the same time, the only justification of the course by which the debtors will regain their freedom if that Act is not quickly renounced. Let the Shylocks of London remember that Parlia- ment closed the mint against silver to satisfy what was said to be their convenience, and not for the purpose of giving them 20 per cent, more of the property of their debtors. To attempt to justify the appropriation of this 20 per cent, by that Act of Parliament makes that Act as great a breach of faith as that by which Shylock obtained his legal right to the pound of flesh. " Lex dederunt sed non lex dixerunt," must now be recorded against that Act ; and, as it now gives to the money- lenders an advantage which it was expressly urged that it was not intended to give, it ought, therefore, to be at once frankly renounced, thus leaving the mint open for the coining of silver as freely as for the coin- ing of gold. In presence of a consideration of this character, to argue about the comparative convenience of a gold or a silver circulation, is childish prattle ; it is worse than Nero's fiddling whilst Rome was burning. Whilst, under existing conditions, the English mint remains closed against silver, it is manifestly disad- vantageous for the Argentine Republic, or for any nation with a large debt contracted in London, to ISO THE STANDARD OF VALUE. endeavour to maintain a gold circulation ; for every ounce of gold they absorb in their own circulation enhances the value of the gold debt due in London. It is rather for the interest of such nations to encourage the circulation of silver only ; so as to restore the former par value of the two metals and thus prevent the gold debt in London from becoming permanently enhanced in value above the double standard value under which the money was borrowed. It should be kept in view that, as the silver standard cannot be abolished in the manner advocated by the Paris Conference of 1866, the double standard must, therefore, of necessity, sooner or later restore itself; and that the lower the relative value of silver may be in the restoration of that standard, the greater will be the permanent loss to the Argentine Republic on its foreign loans. It is easy to see in what respects the attempt to establish a gold circulation in this country must be pernicious under existing circumstances ; whilst those same circumstances beset the idea of establishing a silver standard with practical difficulties which do not enter into the problem involved in the establishment of a gold circulation. These are not, however, insurmountable, and the interests of the country require that they should be fairly faced. LONDON: PRINTED BY WILLIAM CLOWES AND SONS, LIMITED, STAMFORD STREET AND CHARING CROSS. LIST OF OTHER PUBLICATIONS. THE ELEMENTS : An Investigation of the Forces which deter- mine the Position and Movements of the Ocean and Atmosphere. Vol. I. London : Longmans and Co., 1866. Vol. IL, Idem, 1867. VIS-INERTIiE : A Treatise on the Action of Vis-Inertia in the Ocean ; with remarks on the Abstract Nature of the Forces of Vis-Inertiae and Gravitation and a new Theory of the Tides. London : Longmans and Co., 1868. SUPPLEMENT TO VIS-INERTIjE. Buenos Ayres, 1870. SECOND SUPPLEMENT TO VIS-INERTI.ffi. Buenos Ayres, 1870. THIRD SUPPLEMENT TO VIS-INERTI.S;. Buenos Ayres, 1871. REMARKS ON RECENT OCEANIC EXPLORATIONS by the British Government, and the supposed Discovery of the Law of Oceanic Circulation by Dr. W. B. Carpenter, F.R.S. Buenos Ayres, 1871. THE OCEAN : Its Tides and Currents and their Causes. London : Longmans and Co., 1873. ^^ ^^°> ^''li '^ plates, price 21s., cloth. The latter is a Revised Edition of the greater part of the preceding publications. PROJECT FOR THE NATIONALISATION OF THE PROVINCIAL BANK OF BUENOS AYRES. The Standard, October 4, 1872. THE ARGENTINE REPUBLIC : An Historical and Descrip- tive Sketch. In the Ninth Edition of the Encyclopaedia Britannica, 1874. Published separately, 1878. A. and C. Black, Edinburgh, or David Bogue, London. REPLIES TO CRITICS. London : David Bogue, 1876. In 8vo, price IS. 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AN EXPLANATION OF THE SECULAR ACCELERA- TION OF THE MOON'S MOTION : The Cause of the Retrograde Motion of some of the Comets, the Obliquity of the Ecliptic, and a Proper Motion of the Sun. Buenos Ayres, 1879. In 8vo. Price, 10 dollars currency. THE ELEMENTS OF ASTRONOMY : An Essay read before the English Literary Society on the 20th of August, 1879. Price, 10 dollars currency. AN ANSWER TO THE PRESIDENT OF THE ARGEN- TINE SCIENTIFIC SOCIETY : on Vis-Inertise. Buenos Ayres, 19th September, 1879. Price, 5 dollars currency. HOW LITTLE WE KNOW, AND HOW WE KNOW IT: Anniversary Address on the opening of the Fifth Session of the English Literary Society, Buenos Ayres, 26th April, 1880. Price, 5 dollars currency. LETTERS ON SCIENCE : June 187910 June 1880. Including: The Circulation of the Surface of Jupiter. Comets. Stellar Movements. Vis-Inertise. Correspondence with Mr. E. L. Needham. Price, 10 dollars currency. SKIRMISHES IN THE VANGUARD OF SCIENCE, from August, 1880, to February, 1881. Including : Copernicus versus The Royal Astronomical Society. The Nebular Hypothesis. Huxley on the Laws of Motion. Is Force Inherent in Matter ? Scientific Honour. "Already." The Gravitation Theory of Heat. Price, 10 dollars currency. AMENITIES OF SCIENCE, LITERATURE, AND BANKING. Contents: Oceanic Circulation. Lubbock versus Carpenter. Sneaking in Science. A Letter Addressed to the Directors to the River Plate Trust, Loan, and Agency Company, Limited.