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 http://www.archive.org/details/cu31924030187185 
 
"G405 .ii^-O "n.ver,„y library 
 
 ^''"etaHism. 
 
Precident White 
 
Bimetallism. 
 
 BY 
 
 PROF. WILLIAM a SUMNER, 
 
 YALE COLLEGE. 
 
 Article No. Eighteen 
 
 FROM THE 
 
 PRINCETON REVIEW. 
 
 PRICE, FIVE CENTS. 
 
THE 
 
 PRINCETON REVIEW 
 
 For NOVEMBER, 1879. 
 
 PROFESSOR HUXLEY'S EXPOSITION OF HUME'S PHILOSOPHY. 
 President PORTER, D.D., LL.D., Yale College. 
 
 UNIVERSITY QUESTIONS IN ENGLAND. GOLDWIN SMITH, D.C.L., 
 Toronto. »i 
 
 PROFESSOR TYNDALL UPON THE OR.'GIN OF THE COSMOS. 
 MARK HOPKINS, Ex-President of Williams College. 
 
 COMPARATIVE VIEW OF AMERICAN PROGRESS. ROBERT P. 
 PORTER, Esq., Chicago. 
 
 THE A PRIORI NOVUM ORGANUM OF CHRISTIANITY. LYMAN H. 
 ATWATER, D.D,, LL.D., Princeton College. <: 
 
 BIMETALLISM. Prof. WILLIAM G. SUMNER, Yale College. 
 
 POINTS OF CONTACT BETWEEN SCIENCE AND REVELATION. 
 Principal J. W. DAWSON, D.C.L., F.R.S., Montreal. 
 
 HERBERT SPENCER'S "DATA OF ETHICS." President McCOSH, D.D., 
 LL.D., Princeton College. 
 
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 a number, postage paid. The proprietor respectfully solicits your subscription, 
 and desires your influence in extending its circulation. 
 
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 PRINCETON REVIEW, 
 NEW YORK. 
 
BIMETALLISM. 
 
 IT has been made a ground of reproach against the pro- 
 fessional economists that they have not exerted themselves 
 sufiF.oiently to expose the fallacies of bimetallism, but have been 
 contented to pass it by in contempt. Especial point has been 
 given to this reproacn by the observation that a great many 
 persons have only resisted bimetallism by a kind of sound 
 instinct. This instinct does not furnish rational ground for con- 
 viction, and many such persons have therefore either wavered 
 or been disturbed in their allegiance to sound doctrine. It 
 belongs to the scientific economists, it is said, to show, upon 
 •due analysis of the question, wherein the fallacy lies, and to 
 give rational grounds for sound doctrine. 
 
 It is not worth while to mention the reasons or the excuses 
 for the neglect to which this complaint refers. If an econorhist 
 should undertake to expose and combat all the fallacies which 
 gain more or less acceptance, he would not have time for any- 
 thing else. In the present instance there are more narrow and 
 peculiar difficulties. If one attempts to refute the whole silver 
 doctrine in all its forms, one must demonstrate a sweeping and 
 general negative. If one attempts to select and refute a single 
 form of the error, he will find that no writer on that side of the 
 subject has stated his opinions and doctrines in a form upon 
 which issues can be joined, and a scientific discussion carried on 
 "with any prospect of satisfactory results. He will be compelled 
 to argue both sides at once, to put the adversary's case in shape 
 for him before discussing it, and, if he attempts this, he is sure 
 to be entangled in endless charges of misrepresentation and mis- 
 apprehension. For instance, one writer adopted the term " con- 
 current circulation," and gave it frequent and current use to 
 
BIMETALLISM. 547- 
 
 express his doctrine and aim. I thought the term well chosen 
 to express the writer's idea as I understood it, and it seemed to 
 me that here was an idea so clear and precise that we could 
 join issue upon it, make an analysis, undertake verification, and 
 so refute or demonstrate, which is what I understand by discus- 
 sion, and not the heaping together of statistics, historical facts, 
 and authorities. In a later publication, however, the same 
 writer says : " The concurrent use of the two metals, side by 
 side, in the same market is a matter wholly of indifference." 
 We have then this proposition : The bimetallists want a con- 
 current circulation, but it is matter of indifference whether it be 
 concurrent. There is here, then, no proposition to discuss, but 
 only an illustration of the vague and loose thinking upon which 
 the whole notion of the bimetallists is constructed.' 
 
 I. What I propose now to treat is bimetallism as it is popu- 
 larly, however vaguely, believed in in the United States, as it is 
 partially adopted in our legislation, and as it was expressed in 
 the Act under which the Silver Commission was sent to Paris. 
 The appearance of the Report of this Commission" furnishes 
 the occasion and the means for examining this notion. 
 
 It was provided in the Act known as the Silver Bill that the 
 President should invite the governments of other nations to join 
 in a conference " to adopt a common ratio between gold and 
 silver, for the purpose of establishing internationally the use of 
 bimetallic money, and securing a fixity of the relative value 
 between those metals." The legislators who enacted this as- 
 sumed and believed that there was no impossibility, in the 
 nature of things, in uniting two metals in the circulation at a 
 fixed ratio of value ; they believed that, this plan being debarred 
 by no natural impossibility or absurdity, its expediency could 
 be resolved upon in a conference, and that the means by which 
 it could be realized was an international agreement of the chief 
 commercial nations. I understand that these opinions are held 
 more or less distinctly by all those who are popularly called silver 
 men amongst us. I take issue upon both the points involved. 
 
 ' Mr. Horton uses the term "concurrent circulation" constantly in his essay 
 appended to the Report mentioned below. 
 
 * Senate Executive Document No. 58, Forty-fifth Congress, Third Sessioa. 
 References to " Report" refer to this document. 
 
548 THE PRINCETON REVIEW. 
 
 I. The first raises a scientific question : Is the notion that 
 two metals can be joined in the coinage at a fixed ratio, by any 
 human device or artifice whatever, true in science ? I answer, 
 No ; it is just as false as the proposition, A perpetual motion is 
 possible, would be in mechanics. This is certainly the first 
 issue to be settled in regard to the silver controversy as between 
 educated men ; but the bimetallists have always slurred it over. 
 At Paris, Count Rusconi did indeed recognize the primary 
 importance of this question in the first session, but much con- 
 tempt was expressed for the " academic" question, and there 
 was great eagerness to be " practical " and to go on to the 
 "practical" question. This is, indeed, the course of the "prac- 
 tical men," so called. They are impatient of the dogmatism of 
 the professors, who say a perpetual motion is impossible, and 
 insist on going on to consider the great practical advantages 
 which would accrue if a perpetual motion were possible, and 
 then, because they think they see such advantages, they go to 
 work to construct the machine. The answer is, that if a per- 
 petual motion, or a bimetallic circulation, were possible, this- 
 would not be the same world it is now. It might be a better 
 one, but surely any practical man, in the correct sense of the 
 word, will inquire whether there is any insuperable obstacle, in 
 the nature of things, to the object he wishes to accomplish, 
 before wasting his time upon it. If this is not so, what we call 
 education is a pure waste of time. I had supposed that it was 
 understood and agreed, amongst educated men, that the chief 
 end of studying the sciences was to acquire that training by 
 virtue of which we recognize the relations of man to nature, and 
 the limits of human action. 
 
 The inference to be drawn from the importance and true po- 
 sition of the scientific question is not that that question ought 
 to have been discussed in the Conference. Far from it. That 
 was no place for such a discussion. The inference is that the 
 Conference was ab initio an absurd and senseless undertaking. 
 The requisite antecedents of any joint action of nations are, (i) 
 that all scientific questions involved shall have been maturel)r 
 discussed by scientific men until a substantial unanimity of 
 conviction has been reached as to what is true ; (2) that these 
 convictions shall have been dogmatically taught in books and 
 
BIMETALLISM. 549 
 
 ■periodicals until they have become interwoven w^ith the stock 
 of convictions and faiths of the mass of civiHzed men ; (3) that 
 general opinions as to what it is expedient to do should, by- 
 necessary inference, have come to be held by all civilized men. 
 When these conditions are fulfilled it is, of course, found that, 
 for almost all cases, private contract, custom, or the independent 
 legislation of individual states, concurring because proceeding 
 from commonly accepted principles, answers all the purpose. 
 The field for international conventions has therefore hitherto 
 been restricted to postal conventions (common regulations for 
 conducting a form of business Which is monopolized by govern- 
 xnents, but in which they act like the managers of any other 
 business), or conventions on points of international law (in which 
 the aim is to do justice to humanitarian sentiments wnich have 
 become universal). The difficulty of these latter conventions, 
 even, is instructive for the nature and limits of international con- 
 ventions, and the history of the Latin Union, as an isolated 
 effort towards international action for other purposes, is certain- 
 ly a warning and not an encouraging precedent. When, how- 
 ever, the action proposed involves scientific truth, and yet all 
 the necessary conditions precedent are passed over unfulfilled, 
 the proceeding is devoid of sense. It could only have the form 
 of sense if the object were to supersede scientific discussion by 
 action and force — the fallacy of the ecclesiastical councils. The 
 scientific question belongs where I now undertake it : in the 
 forum of academic discussion. 
 
 We have then one issue joined ; I propose to show that a 
 "bimetallic circulation is as absurd and impossible as perpetual 
 motion, so that a convention of the whole human race could 
 not realize it. 
 
 2. The second assumption in the Act above quoted relates not 
 to a scientific truth, but to a point of expediency and practica- 
 bility. It is assumed that an international coinage union, combin- 
 ing and binding the members to a certain programme of action, 
 is a practicable scheme, and needs only a certain degree of con- 
 sultation to be realized. I shall maintain that such a coinage 
 union is absolutely impracticable. The bearing of this is not 
 directly upon bimetallism, for that is disposed of when it is 
 shown to be absurd, but the coinage union is an element in the 
 
550 THE PRINCETON REVIEW. 
 
 scheme properly known as the alternate or alternative standard. 
 These two schemes, when tested and weighed from the scientific 
 standpoint, are of totally different character and value, as I shall 
 show further on. The question about the alternate standard is a 
 question of expediency and practicability in the main, although 
 it also involves considerations of rights and justice. The differ- 
 ence is that between a perpetual-motion machine and an ordi- 
 nary machine invented to meet a certain purpose. As to the 
 latter, the questions may be raised whether it will work so as to 
 do what it is made to do, whether it will pay, whether it is dan- 
 gerous, etc., but if one or all of these questions were decided 
 adversely to the machine, it would still not be an abomination 
 in mechanics like a pretended perpetual motion. The parallel 
 holds in the case before us. The alternate standard is inex- 
 pedient for a variety of reasons, and it is impracticable because 
 it involves the necessity of an international coinage union, pre- 
 scribing regulations and dictating action to its members, ' and 
 such a union is impracticable. Still the alternate standard in- 
 volves no scientific absurdity. I therefore join issue, secondly, 
 on the question of the practicability of the coinage union. 
 
 II. Before entering upon the subject-matter, a word of expla- 
 nation is necessary on a certain point. If a monometallist means 
 a man who urges that all nations ought to use gold money, I 
 know of no such person in the world. It is one great error of 
 the bimetallists that they assume to know and judge what money 
 all the world ought to use. No one can reach any such judgment, 
 on the one side or the other, who uses correct processes in the 
 investigation of economic truth. Every nation ought to use just 
 that money which, in its own judgment, its interests and con- 
 venience dictate. The economist has to note what course na- 
 tions pursue under this motive, to study the consequences, in- 
 terpret the phenomena, and deduce the inferences which are 
 presented to him by the facts themselves. For myself, there- 
 fore, I have always repudiated the name Monometallist as a sec- 
 tarian name, which no scientific economist would be willing to 
 bear. 
 
 III. The historical facts bearing on bimetallism and kindred 
 topics have been collected with great zeal during the last few 
 years, but they have rarely been interpreted with the simple 
 
BIMETALLISM. 
 
 551 
 
 fidelity and loyalty just described. Let us recapitulate as 
 briefly as possible, in their chronological order, the facts which 
 are here of importance. 
 
 A. The attempt to use two metals together has been kept up 
 from the earliest use of money to the present time, and has con- 
 stituted a problem in money. It was deemed necessary to use 
 two metals, but no means has ever been devised for using two 
 which has not failed, besides producing confusion, loss, injustice, 
 and commercial distress. In 171 7, still essaying to solve the 
 same problem, the English guinea was rated at 21 silver shillings. 
 It was not worth that amount, and so became the cheaper me- 
 dium, and the standard of prices and credits. The good silver 
 coins were melted, and those which remained were clipped so as 
 to be worth less than ^ oi 2. guinea. After the clipping once 
 began, it went on from worse to worse, as always under the 
 same circumstances, but the need for " change" kept the silver 
 coins afloat. After the middle of the century the depreciation 
 became so great that it led to a clipping of the gold coins also. 
 In 1773 silver coins were made legal tender for no sums over 
 ;^25, by weight, at ^s. 2d. per oz. In 1785 France adopted the 
 ratio of i to 15^ in a reformation of the coinage, as another 
 attempt to hit the true ratio and keep the two metals in circu- 
 lation. In 1803 the same ratio was ratified. The French law 
 of 1 785-1 803 was therefore no new or special solution of the 
 coinage problem, but only another attempt such as those 
 which had been made before. Under the operation of this 
 law, France used silver as a standard until the middle of 
 the century. In 1816 a new coinage system was adopted 
 in England which really accepted and put into a system 
 the state of things which had grown up by custom during the 
 last century — single gold standard, with silver subsidiary depre- 
 ciated coins, limited in amount, and limited legal tender. It was 
 from a study of the phenomena produced during the previous 
 century by the operation of the laws of trade upon the legal 
 system that the English statesmen were led to this system. 
 The law, therefore, followed custom and the -laws of trade, and 
 did not attempt to coerce them. The sovereign now became a 
 money of moneys, i.e., other moneys and currencies were common 
 denominators of value within certain local limits. When a sec- 
 
552 THE PRINCETON REVIEW. 
 
 •ond common denominator was wanted to connect the operations 
 of these local areas with each other, the sovereign met the need. 
 That Enghsh money and EngHsh commerce thus mutually sus- 
 tained each other was only an illustration of the principle that 
 good institutions support prosperity and prosperity supports the 
 utihty of good institutions. The connection between them is 
 organic, not mechanical. In 1834 the United States passed a 
 new law for a coinage of two metals, but purposely rated the 
 metals so as to get gold. In 1853, having obtained a gold stand- 
 ard by the operation of the law of 1834, they reduced all the 
 silver coins except the dollar to a subsidiary condition, and intro- 
 duced the English system. In 1853-4, by the fall in gold, France, 
 under the operation of her law, became a gold country. She 
 was burdened with the expense of the change from silver to 
 1 gold, but this was regarded as a slight price to pay for a change 
 which was opportune to her interests. In 1865 the Latin Union 
 was formed. The nations composing it adopted the French 
 law, and became like France, by the operation of that law, gold 
 countries. . In 1867 an International Monetary Conference was 
 held, at which it was proposed to establish, by agreement, what 
 existed in fact — the use of gold as a standard amongst the fta- 
 tions represented. After the formation of the North German 
 Confederation in 1867, an event which to a certain extent met 
 the German aspirations for political unity and national standing, 
 it was felt that one of the greatest obstacles to the realization of 
 the further hopes of commercial and industrial greatness lay in 
 the currency of the country. The standard was silver. The 
 coins were cumbersome. The small coin was, much of it, base 
 billon. The bank-note currency also required reformation. 
 After the war of 1870 and the formation of the empire, all the 
 motives for a currency reform were increased in force, and when 
 such reform was undertaken, all the considerations which had 
 weight dictated that it should be carried through to the adoption 
 of the gold standard. The Scandinavian nations followed the 
 example of Germany. In 1873 the United States codified and 
 simplified their coinage laws according to the existing laws and 
 customs of the country, and according to what would best serve 
 the interests of the country when specie payments should be 
 resumed. They struck the silver dollar from the Hst of coins 
 
BIMETALLISM. 55$ 
 
 which the mint was permitted to coin, on which list it had stood 
 as an idle and unused permission, and brought the United- 
 States to the simple gold standard with subsidiary silver. In 
 1873 silver began to fall by important steps. The operation 
 of the French law would now have taken away gold and given 
 silver to the Latin Union. The movement in this direction, 
 however, was far differently welcomed from the contrary move- 
 ment of 1853. The Latin Union refused to give up a gold cur- 
 rency and take silver, and undergo the loss of sustaining silver 
 besides. It closed its mints against silver, and the " double 
 standard " ceased to be. 
 
 1. Any one now who reviews this series of historical facts,, 
 not in order to interpret them by some ulterior design assumed 
 to have existed," but for just what they are, will see that there 
 was no ulterior design, no set purpose, no agreement or combi- 
 nation, but that each nation acted as its own interests dictated, 
 and that the concord of action and general tendency towards the 
 adoption of gold on the part of all the great commercial nations, 
 substantially in the order of their commercial importance, consti- 
 tutes one of those great historical movements which are not to. 
 be criticised or corrected, but which impose upon the student 
 the convictions which he is to adopt. 
 
 2. It is plain from a correct statement of the facts that the 
 action of Germany in demonetizing silver was by no means arbi- 
 trary. It had the fullest motives and occasion in the state of 
 that nation, and its interest and convenience.'' 
 
 3. The action of the Scandinavian nations was not arbitrary 
 or destitute of motive. The movement towards gold was now sO' 
 far advanced that the small nations were forced to join it in self- 
 defence. The last to join it would be loaded with the discarded 
 silver, and would have to endure a large part of the total loss 
 upon it. This is only an illustration of the rapid impulse with 
 which such movements finally complete themselves, when the 
 forces have acquired momentum. 
 
 4. The action of the United States in 1873 was guided by 
 
 ' Mr. Horton (Report, p. 240). Mr. Horton speaks (p. 745) of the " partisans^ 
 of gold and persecutors of silver." 
 
 'The argument of Gen. Walker before the Conference was based upon the- 
 assertion that Germany's action was arbitrary. See Report, p. 74. 
 
554 "^HE PRll^CETON REVIEW. 
 
 previous legislation, custom, fact, convenience, and the interests 
 of the country, as they then appeared, and, so far as any evi- 
 dence has ever been brought forward, by nothing else. 
 
 B. We come now to the latest incident in this historical devel- 
 opment — a case of action which was indeed arbitrary and desti- 
 tute of motive. The United States were in currency trouble of 
 their own, serious enough and difficult enough, in itself consid- 
 ered, but they enjoyed, from the suspension of specie payments, 
 one incidental advantage. They had no part or lot in the silver 
 difficulty.' They had no stock of silver on which to suffer loss. 
 Their laws were in proper shape to secure resumption on the 
 best system of coinage yet devised. They had time before them. 
 They could wait for developments and take advantage of any 
 state of affairs which might arise, without taking any speculative 
 risks at all. Mr. Horton thinks the United States had a great 
 interest because the demonetization of silver made resumption 
 harder. Resumption on silver would have been easier than re- 
 sumption on gold, just as resumption would have been easier if 
 the gold dollar had been reduced ten per cent in weight, and 
 not otherwise. In this state of things, then, the United States 
 wilfully plunged into the silver difficulty, and, moreover, came 
 forward to tell those who were in silver difficulty how to get out, 
 and volunteered to lead the way. All the other nations repre- 
 sented at the Conference had an interest in the silver problem, 
 but all refused to act, with the possible exception of Italy. 
 The United States had no interest, but nevertheless took ac- 
 tion. As a consequence, this nation now has thirty million 
 dollars of capital invested in silver, which is lying idle and can- 
 not be disposed of without loss. This sum and a large amount 
 in trade dollars have been retained at home as a new element 
 of disorder in our currency, instead of following their natural 
 course to the East. If the advocates of free coinage for silver 
 had had their way, we should also have received thirty or forty 
 millions in silver instead of the same amount in gold received 
 this Fall. Mr. Horton is of opinion that this was a noble ac- 
 
 ' I suppose it is necessary to say that the interest of American silver producers 
 was no interest of the United States. The iron producers were in worse trouble 
 than the silver producers, but no one proposed that the nation should expend cani- 
 tal to "bull" iron. 
 
BIMETALLISM. SSJ 
 
 tion, on the part of the United States on behalf of mankind 
 in general, which has rarely been paralleled. It was, in fact, a. 
 piece of national Quixotism which has no parallel in history. 
 The same writer quotes this action as an exception or offset to 
 the uniform tendency of the historical events above cited, but 
 its arbitrary and unfounded character rob it of any force for 
 such a deduction. 
 
 IV. It is impossible that I should, within the limits of the 
 present article, review and criticise the points raised at the Con- 
 ference. Two or three of the chief of them here demand brief 
 attention. 
 
 I. The American delegates began by slandering the legisla- 
 lation of their country, and it was left for a foreigner to show (i) 
 that the historical facts about the legislation of 1873 were incor- 
 rectly stated by the American delegates, and (2) that the United 
 States are a constitutional country, not ruled by plebiscites, and 
 that we cannot plead ignorance on the part of "the people'' 
 against legislation constitutionally adopted. Gen. Walker en- 
 deavored to sustain the allegations of his colleague by saying that 
 he, although a professor of political economy, engaged, at the 
 time, in lecturing on money,- did not know what was going on. 
 It does not appear that this argument elicited any reply. Per- 
 haps it was thought that its force all lay in the recoil, and some 
 wonder may have been excited whether all American economists 
 would have been obliged to say the same. The fact is that the 
 Act of 1873 so simply enacted the existing la\f and facts that no 
 one attributed any importance to it. 
 
 2. The chief reasons adduced for the action proposed by the 
 United States were vague and undefined terrors of consequences 
 from the historical movement we have described. It was alleged 
 that half the money in the world has been cancelled. This as- 
 sertion has no foundation in fact. The amount demonetized is- 
 just exactly what has been demonetized, viz., the amount of 
 silver held by Germany and the Scandinavian States, and to this 
 there have been important offsets. In the first place, there has 
 been the production of gold since 1873, which, according to 
 Soetbeer's calculations,' must have averaged one hundred and 
 
 ^ Edelmetall-Production {Petennann's Mittheilungen, Erg. Heft^o, 57, p. 112). 
 
5S6 THE PRINCETON REVIEW. 
 
 twenty million dollars per annum. In the second place, all the 
 silver five-franc pieces in existence have been added to the stock 
 of " money." Before the fall in silver they were worth more than 
 gold and were merchandise. Since they fell to an equality with 
 gold (below it in value; held equal by limitation'), they have 
 been available as money. It would be very diiificult to show 
 that, comparing 1879 with 1873, there has been any contraction 
 whatever of the metallic money of Europe and the United 
 States. The expansions and contractions of paper money in 
 Europe and North and South America, within twenty years, 
 have had far greater influence on credit and prices the world 
 over than the changes connected with silver. 
 
 3. The fear was also expressed that the adoption of gold 
 would destroy the par of exchange with silver countries, and it was 
 urged that the bimetallic system would furnish a " normal " par. 
 What is the "par" of exchange? Exchange is a ratio between 
 two quantities. How can the ratio between two quantities be 
 "destroyed" so long as the quantities exist? The par of ex- 
 change is an entirely imaginary mean-line between fluctuations 
 which are constant, and it has no importance except for the 
 academic explanation of phenomena. We can make a " normal ' 
 par any minute; $4.44=;^! is as good a par as any. The sov- 
 ereign and the dollar may then each of them be gold, silver, or 
 anything else ; their values will have a ratio to each other, and 
 may be stated in percentages of $4.44. 
 
 V. I proposed, however, to examine the bimetallic notion in 
 its essence, and to proceed with that task it is necessary to con- 
 sider the relation of legislation to value." For the exposition of 
 the bimetallic fallacy, as well as a number of others which are 
 now widely held and even taught, it is necessary to show that 
 legislation cannot affect value at all. If it could, the text-books 
 of political economy are very faulty in their analysis of value, 
 since no one of them specifies legislation amongst the forces by^ 
 which value is controlled. 
 
 ' The Bank of France in September charged one tenth of one per cent premium 
 on gold over silver. — Economist, Sept. 6, p., 1026. 
 
 '■" "Let me dwell upon the fundamental error which suggests the measure which 
 has been proposed. That error is the belief that it appertains to governments to. 
 call value into existence." (Mr. Pirmez. Report, p. 121.) 
 
BIMETALLISM. 557 
 
 1. The value of a thing is controlled by supply and demand 
 and by nothing else. Supply and demand are natural forces and 
 act under natural laws. By this we mean that supply and de- 
 mand spring into action from the presence, in certain relations 
 to each other, of certain natural facts. The natural facts, in this 
 case, are (i) a society of men having certain needs, and (2) mate- 
 rial goods fit to satisfy those needs. The needs of the men for 
 the goods do not exist because the men so choose, but because 
 they are men. The goods are not supply for the needs because 
 the men so decide, but by virtue of natural qualities. Supply 
 and demand are therefore complementary parts of a force which 
 is natural in the same sense that any physical force is natural. 
 This force must arise when its natural conditions exist ; it can- 
 not arise unless they exist ; when it arises it acts under natural 
 law — that is, produces a regular succession of phenomena in a 
 determined sequence — and the statement of the law in human 
 language must be made by describing the conditions of equi- 
 librium between the complementary parts, since it is by their 
 equilibrium that the supply performs its function, and the 
 needs receive satisfaction, and the economic force is merged 
 in the vital force of man. The action of man on natural forces 
 is restricted to dividing, combining, and diverting them. He 
 ■can neither create nor destroy them. The forces may be di- 
 vided, but the sum of the effects must always be perfectly pro- 
 portioned to the force, neither less nor more. If any portion 
 of the force is missing in the effect, our task is not complete 
 until we have followed it, ascertained its incidence and effect, 
 and united it to the rest. 
 
 2. Gold has its own conditions of supply and demand, and 
 silver has its own conditions of supply and demand, and they 
 are both independent of each other. Those conditions are facts 
 in regard to the actual existence of the metals within the reach 
 of man on the one side, and the increasing, decreasing, or chang- 
 ing needs of the human race, as it lives its hfe on earth, upon the 
 other. Legislation can affect these conditions in no respect 
 whatever. It cannot increase or decrease the amount of the 
 metals within the reach of man, or his willingness to labor to 
 produce them according to the profit of such production. It 
 cannot make men want what they do not want, or cease to want 
 
558 THE PRINCETON REVIEW. 
 
 what they do want. Economic phenomena are due to economic 
 forces, and one of the first lessons the student has to learn is not 
 to rest from his analysis until he has reduced economic phe- 
 nomena to economic forces and laws. 
 
 One might as well tell a physiologist that his science is false 
 because no man ever existed whose organs were all perfectly 
 normal in their functions, as to contradict an economist because 
 no man ever acted from purely economic motives. Indeed the 
 absurdity is far greater in the latter case, since the economist 
 deals with societies, not individuals ; so that not onjy is the in- 
 ference unfounded, but the fact alleged is untrue of societies. 
 One might as well object against a physiologist, when he states 
 physiological laws, that moral forces (or, rather, more or less 
 immoral forces, for that is what we mean) affect the bodily func- 
 tions, as to interpose the objection against economic laws that 
 immoral forces affect economic phenomena. The fact in both 
 cases is undeniable ; the inference — that these external interfer- 
 ences alter natural forces and laws, and therefore ought to be 
 taken into account in the statement of scientific principles — is 
 equally unfounded in both. One might as well tell a physiolo- 
 gist that a knife thrust into an organ alters physiological forces 
 and laws, as to tell an economist that legislation controls the laws 
 of value. It is because the physiological laws are not altered 
 that the victim dies. The hygiene, pathology, and therapeutics 
 of society are mixed with its physiology in our text-books, but 
 the scientific distinctions must be maintained intact if we would 
 reason correctly. Value belongs to the physiology of society, 
 legislation almost always to its pathology. Legislation creates 
 the conditions of disease, leads to distorted organs, disordered 
 functions, deceptive phenomena (§ 4 below), and taxes the saga- 
 city and clear-headedness of the student to find again the normal 
 forces in their distorted action ; but we have to guard ourselves 
 well against the delusion that it changes forces or laws. To 
 adopt that delusion is to lose perception of the difference be- 
 tween social health and social disease. We are struggling here 
 for the introduction into political economy of universal canons 
 of science which are recognized in all other departments which 
 enjoy authority and are making real progress. 
 
 3. One chief cause of the notion amongst us that legislation 
 
 V 
 
BIMETALLISM. 559 
 
 can regulate the value of money is, no doubt, the provision in 
 the Constitution of the United States that Congress shall have 
 power so to do. Why was it not also provided, in connection 
 with the cognate power " to fix the standard of weights and 
 measures," that Congress might regulate the length and weight 
 of things? Here is a table. It is so long. How long? Just 
 the quantity of extension in one dimension which it has as a 
 physical fact. If you were here, you would see it. As you are 
 not, I have recourse to ratios to other extensions which you do 
 know. It has the same length as the distance from a man's 
 nose to the end of his middle finger. The Congress of the 
 United States, however, has provided an arbitrary standard of 
 length, now grown familiar by use, and if I write that this table 
 is a yard long, it will be a far more convenient and accurate 
 designation, because it will refer to a more accurate length, 
 equally familiar. If Congress had adopted a standard yard as 
 long as what we now call a foot, that would have become 
 familiar, I should then have written three yards instead of one, 
 and the knowledge conveyed would have been the same. Now 
 how large a Congressional majority would it take to make this 
 table one thousandth of an inch longer or shorter than it actu- 
 ally is ? The parallel with the case of money is complete. The 
 Constitution of the United States could not confer powers which 
 nature has never given to mankind. Congress cannot regulate 
 the value of money until it can make a man give for a gold 
 dollar one grain of wheat more than supply and demand force 
 him to give, or yield a gold dollar for one grain less than supply 
 and demand will give him for it. To regulate the value of money 
 is to fix prices, and Congress has never tried that since it has 
 existed. Congress can determine how heavy a piece of metal 
 of a certain fineness shall be the standard of value, just as it 
 determines how long a bar shall be the standard of length ; but 
 it cannot regulate the value of a coin any more than it can 
 regulate a physical object to make it longer or shorter than it is. 
 4. The cases of apparent interference with supply and de- 
 noand by individuals, combinations, and governments are all 
 vases of monopoly, which is only a special case of supply and 
 demand. An artificial monopoly is possible whenever the sup- 
 ply is capable of comprehension and limitation, and the ma- 
 
560 THE PRINCETON REVIEW. 
 
 nipulation of a monopoly consists in so limiting the supply and 
 adjusting it to the demand as to make the market take some 
 amount at some price. If the monopolist wants to sell more, 
 he must yield on his price. If he wants a higher price, he 
 must be content to sell less. It would be a great mistake, how- 
 •ever, to say that a monopolist controls value. It is just because 
 he does not control value that he makes anything. There is 
 still a true point of equilibrium which supply and demand would ' 
 reach, if free, and it is out of the margin between that point and 
 the point at which the monopolist fixes the market price that 
 his gains, as monopolist, come. There is no other scientific ex- 
 planation of those gains. A " corner" is a modified case of 
 monopoly, in which the first action is exerted upon the demand. 
 All offered is bought at a price above what any other buyer will 
 pay. This operation, however, is only preliminary to the forma- 
 tion of a monopoly, and a monopoly sale. It would be sense- 
 Jess unless there was a demand foreseen, which would, for some 
 reason, be so strong as to ensure the monopolists a sale at a 
 price above what they pay. What the monopolist does, then, 
 in either case, is to fix the ratio at which the exchange actually 
 takes place at a different ratio from that which value would es- 
 tablish. He thereby transfers other men's goods to himself 
 without giving any equivalent, and it is precisely because value 
 gives us a second point of comparison that we are able to say 
 that the action of the monopolist is unjust and oppressive, and 
 that monopolies are justly odious. 
 
 5. The apparent cases of legislative interference with value 
 are cases in point. Subsidiary coins are a case of monopoly, 
 and the problem of their management is to limit the supply to 
 the demand of the community for said coins at their nominal 
 value. Paper money is a case of monopoly. The problem of 
 its value, which has troubled so many writers, is to hold the 
 supply at or below the demand of the community for money to 
 do its business with at par with coin. If the supply of paper 
 dollars is made to exceed the number of gold dollars which 
 the country would need, they will no longer hold a value equal 
 to the value of a gold dollar each. The tariff is a case of mo- 
 nopoly. The protected producers can get the market price plus 
 the tariff, only by selling less than the community would take 
 
BIMETALLISM. S6l 
 
 at the market price. If they increase the supply, they may run 
 down the price in the home market below the price in the 
 world's market. Hence paper money transfers property from 
 its just possessors to the issuers of the paper, without equiva- 
 lent, and tariffs transfer property from the unprotected owners 
 to the protected producers without an equivalent. The extent 
 to which this takes place depends on the manipulation of the 
 monopoly ; the effect of legislation is limited to the creation of 
 the opportunity for a monopoly. 
 
 6. Legal-tender laws, when they are what they ought to be, 
 simply enactments of what is the universal custom and under- 
 standing, are rarely if ever called into action at all. It seems to 
 be forgotten that this is their original and only proper character, 
 and whenever such laws are proposed or referred to, laws are 
 always meant which involve some coercion, or distortiom of the 
 terms of a contract. Legal-tender laws of this character do not 
 alter truth, justice, or value. They only transfer property. A 
 legal-tender law does not make 90 paid = 100 due a true equa- 
 tion. The only true equation is 90 paid +10 retained = icxd due. 
 Legal-tender laws alter the line between mine and thine so that 
 something which was on one side is now on the other, but they 
 do not affect the validity of the venerable distinction. The 
 legal-tender law simply provides that the courts which admin- 
 ister justice under the Constitution and laws of the country in 
 question shall not listen, in certain cases, to the plea of the citi- 
 zen who complains of injustice ; in other words, it withdraws 
 the protection of the courts of justice, in certain cases, from 
 citizens who complain of injustice. Some decisions even seem 
 to go so far as to interpret the law so that A may demand B's 
 property and discharge B's claim with an arbitrary allowance 
 to which B never consented. In all cases it is because the 
 forces of nature act in perfect fidelity to their laws that we 
 can see and define the injustice of this legislation. It is be- 
 cause the legislation has not affected the law of value that 
 we can have another state of things in mind as right and just, 
 and can often measure the degree to which legislation has 
 transferred the products of one man's labor and economy to 
 another man's use and enjoyment. It would be difificult indeed 
 to prove that the value of a man's property or his right to it 
 
S62 THE PRINCETON REVIEW. 
 
 was affected by stealing it from him. Value is one form of 
 truth, and truth is not affected by majorities. The notion that 
 legislation affects value must therefore be positively condemned 
 as the root-error of a dozen mischievous fallacies. Legislation 
 transfers property, and that is all it ever does. 
 
 7. It is necessary to notice also the law which governs all 
 combinations. If a single individual undertakes, for instance, to 
 establish a corner, he may be reasonably sure of his own will, 
 intention, and plan, and may carry it out if he does not lose his 
 head and prove inconsistent with himself — which indeed some- 
 times occurs. If he finds it necessary to associate another with 
 himself, there arises the need of selecting a congenial comrade 
 and of securing consent, co-operation, loyalty, and good faith, 
 between two separate wills. The difficulty of such combination 
 is not double that of an individual operation ; it may be twenty- 
 fold greater. If three, five, ten, twenty persons must be com- 
 bined, the difficulty advances in a tremendous ratio until it 
 becomes a practical impossibility. Hence the manipulation of 
 a corner or a monopoly does not gain force or become easier 
 as the task is widened and the number of participants is 
 increased, but the force decreases in an enormous ratio to the 
 extension of the party, and the practical chances of success, 
 diminish in an equally rapid ratio to the number of participants. 
 
 VI. Having elucidated these points, which, by the way, show 
 the need, in economic discussions, of firm grasp of elementary 
 notions and principles, we may, in a brief space, bring them tO' 
 bear on the thesis with which we started. 
 
 I. Inasmuch as gold and silver have independent conditions 
 of supply and demand in natural facts, their relative value 
 may remain the same through a long period, or one or the 
 other may grow dearer, and the fluctuations may be rare or fre- 
 quent, wide or narrow, sudden or gradual, in all possible com- 
 binations and sequences. It has been proposed to form an 
 international union, to establish a fixed ratio for the mints of 
 all members of the union, and to make either metal legal tender. 
 By this plan it is proposed to change from one metal to the 
 other as fluctuations take place, and it is expected that the 
 fluctuations will be limited in their range, but it is not expected 
 that a concurrent circulation will be produced, or that the whole: 
 
BIMETALLISM. 563 
 
 stock of both metals will be brought to act on credit and prices. 
 Reserving for the present the question of the practicability of 
 the coinage union, it may be admitted that, under some circum- 
 stances, the fluctuations would be limited, but they would be 
 more frequent and sudden, and the system would be at the sport 
 of chance, as the Latin Union was. These, however, are minor 
 difficulties. The legal-tender law, by which all this is to be ac- 
 complished, would simply, as above shown, transfer property. 
 The gain, if any, would be a gain to some at the expense of 
 others. In plain language, the project is one 'for uniting the 
 debtor classes of all civilized nations in a " corner" on the falling 
 metal. Such a project has no parallel save in some of the wild- 
 est plans of the International Society. The profits of the corner 
 would come out of the creditor class and the holders of the rising 
 metal. It would be establishing on a world-wide scale, and by 
 force of law, an injustice by which some men would throw the 
 risks and loss of their business on other men, who already have 
 the risks and losses of their own business to carry. For instance, 
 some Liverpool merchants interested in the South American and 
 East Indian trade have suffered loss by the fall in silver. They 
 are eager for the " double standard " to save them from their 
 losses, and no doubt it would do so, but only by throwing those 
 losses on the whole creditor class of England. Now, the creditor 
 class of England is scattered, unorganized, and unknown, but it 
 is safe to say that it has its own troubles from business and 
 investments, and is suffering from loss of dividends, failure of 
 banks, fall in prices, fall in rents, fire, shipwreck, and all the other 
 chances and accidents of life. The advocates of the " alternate 
 standard " have contented themselves with dilating upon the 
 effect of their scheme in narrowing the fluctuations of the 
 market rate of the metals, without reflecting that no such effect 
 could be attained without an expenditure of force, at somebody's 
 expense, elsewhere. 
 
 2. But the coinage union is a practical impossibility. France, 
 a country with a free mint for both metals, standing between 
 Germany, a silver country, and England, a gold country, was 
 able to work a compensatory action between them. There is an 
 obvious fallacy, however, in reasoning that the same action would 
 go on, on a larger scale and with greater efficiency, if the difTer- 
 
564 THE PRINCETON REVIEW. 
 
 entiation upon which the interaction depended were obliterated 
 in a coinage union having a uniform system. 
 
 There is a further fallacy, and a far more serious one from a 
 scientific point of view, in supposing that the coinage union, if 
 extended, would gain proportionate increments of force to re- 
 strain fluctuations until they were reduced to a minimum or to 
 nothing. The law above stated here comes into operation, by 
 virtue of which a combination becomes not stronger, but 
 weaker, as it is extended, and the attempt of all nations to form 
 a corner upon the falling metal would dissipate itself like a 
 corner which united all the buyers — that is, it would become 
 simply identical with demand as we ordinarily use the term. 
 Instead, therefore, of marching towards a realization of bimetal- 
 lism or a concurrent circulation, the coinage union would work 
 towards the simple free play of natural forces, in which each 
 metal would obey its own conditions of supply and demand. 
 Nor is this all. The coinage union is either unnecessary, or else 
 it is needed in order to impose a set line of action and to enforce 
 co-operation where voluntary co-operation would not be given. 
 How can any one believe that sovereign nations will enter into 
 any such combination, or that, if they did enter into it, they 
 would stay in and obey mandates which conflicted with their 
 interest and will ? We are not left to speculation as to the prob- 
 ability that they would so act. We have two facts to which 
 to refer: (i) When the fall in silver took place, the Latin Union 
 would have been disrupted by the secession of Belgium and 
 Switzerland if the coinage of silver had not been suspended. 
 (2) The commissioners of the Latin Union, at their last 
 meeting, agreed that Italy should withdraw her small notes 
 to make room for the return of her small coin with which 
 the other states, especially France, were burdened. I do not 
 understand that Italy has refused to do this, but the remon- 
 strances which were made in the Italian Parliament against this 
 dictation as to what Italy should do with her own currency 
 were just what must be expected in such a case, and they show 
 that an international coinage union would prove a rope of sand 
 so soon as the attempt was made to make it efficient at all. An 
 international coinage union, therefore, to accomplish a definite 
 and set purpose in turning back a movement which all recognize. 
 
BIMETALLISM. 565, 
 
 whether they deplore it or not, is an absolutely impracticable 
 scheme. 
 
 3. I have never seen any argument for the feasibility of 
 bimetallism, or a concurrent circulation, in which the whole of 
 both metals would act on prices and credit, except the facile 
 inference that the coinage union as it grew larger would or 
 might restrain fluctuations more and more, to a minimum or to 
 nothing. As I have broken down every assumption here in- 
 volved, the inference falls to the ground. It appears that this 
 reasoning follows neither a true relation of facts nor any logical 
 sequence. The coinage union as it grew larger and larger would 
 grow less and less effective, and when it was complete it would 
 have no effect at all. The notion of a concurrent circulation is 
 therefore entirely baseless — snatched from the air. So long as 
 the natural conditions of supply and demand of gold and silver 
 remained the same, whether for a longer or shorter period, so 
 long the forces would remain the same, and the effects would 
 remain the same. So soon, whether sooner or later, as the con- 
 ditions varied, the forces would vary, and the proportionate ef- 
 fects would vary. To secure a concurrent circulation, then, at 
 a fixed ratio, it is necessary to suppress the effects, which can 
 only be done by suppressing the forces, so that a concurrent cir- 
 culation could never be realized until we could extinguish econo- 
 mic forces by human agency. But we can no more extinguish 
 a force than we can create one, so that this scheme is in econo- 
 mics what perpetual motion is in mechanics. Every analysis 
 that is attempted of the idea will only issue in new proof that it 
 is an absurdity which cannot be thought, and it is no longer 
 strange that its advocates have never been able to state their 
 notion in intelligible language. It must remain vague, shadowy, 
 and popular, stated at best in symbols, metaphors, and analogies, 
 to exist at all.' 
 
 VII. If the amount of space which would be required were 
 not out of all proportion to the results for our purpose, I should 
 
 ' ■■ As for the desire which has been expressed that the hope be left open that 
 some day a fixed relation may be established between gold and silver and an 
 international value given to them, the English delegate (Mr. Goschen) declared 
 that, in his view, it was impossible to realize this, impossible to maintain it in 
 theory, and that it was contrary to the principles of science.'' (Report, p. 166.) 
 37 
 
566 THE PRINCETON REVIEW. 
 
 like to analyze some of the analogies which have been em- 
 ployed in this discussion. Some of them deserve to be put into 
 the text-books on logic as classical examples of the mischief of 
 reasoning by analogy. An analogy proves nothing whatever. 
 It only serves to state a theorem in a form to be more easily 
 apprehended. The theorem, then, needs to be proven by its 
 appropriate demonstration. After showing the mischievous 
 character of the notions imported into this discussion by the 
 analogies of tubs of water joined by a tube, and horses driven 
 in span, I should not have advanced the discussion in which I 
 am engaged. The bimetallist says : A concurrent circulation 
 seems to me like driving two horses in span. I answer : To me 
 it seems like yoking the sun and moon together to facilitate the 
 reckoning of time by men by making the lunar month a simple 
 fraction of the solar year. Nothing is accomplished by these 
 statements towards testing the truth of either opinion. I 
 therefore pass by all the analogies which have been offered by 
 the bimetallists with the simple remark that they are all un- 
 true and misleading. 
 
 The advocates of the goloid dollar, who think they can give 
 greater fixity to the ratio of the metals by mixing them in the 
 same coin, advocate a more grotesque absurdity, but not a 
 greater one, than the other advocates of a " concurrent circula- 
 tion." 
 
 VIII. We must infer, then, that gold and silver will both be 
 used as components in the world's money, by the adoption by 
 some nations of one and by other nations of the other, as their 
 convenience and interest dictate. The United States, by its 
 legislation so far, has put itself on the way to become one of 
 the silver countries. It is not a dogmatic judgment ; it is infer- 
 ence from observation ^ of the course adopted by nations, that 
 gold is more convenient for the purpose of the leading commer- 
 cial nations, and silver for those which are yet behind.' The 
 United States is one of those whose interests require the use 
 -of gold, and the way back over the path we are now treading 
 will have to be won by trouble, loss, and inconvenience. Our 
 -children, instead of admiring our Quixotic devotion to mankind 
 
 ' Feer-Herzog. Report, p. 60. 
 
BIMETALLISM. 567 
 
 in general, will ask us how we could ever commit the folly of 
 plunging into a difficulty which everybody else was trying ta 
 escape, and from which our children will have to extricate them- 
 selves at heavy expense. I am far from denying that the change 
 from silver to gold is attended by loss and inconvenience, but I 
 do not know of any step of social or economic advance which has 
 ever been made without temporary loss and inconvenience both 
 to capital and labor, and the United States were not exposed to 
 any of this loss at all. Mr. Seyd has just published a book, 
 " The Decline of Prosperity, and its Insidious Cause," in which, 
 as the title indicates, he takes a very lugubrious view of things, 
 and ascribes the mischief to the demonetization of silver. This 
 fear that prosperity was declining has come up every fifteen or 
 twenty years for a century or two, especially in England, and 
 yet prosperity and civilization advance. In 1872 coal and meat 
 were dear, and the newspapers were filled with essays about the 
 sufferings of the people on fixed incomes. Then the woes of 
 the agricultural laborers came up, and the farmers were rep- 
 resented as selfish men, gorged with wealth and prosperity. 
 Now meat is too cheap, the turn has come to the landowners, 
 and the farmers are the objects of public concern. Such 
 changes are the inevitable effects of the continual changes in 
 the conditions of industry and the relations of commerce. It 
 is from and by means of such changes that the prosperity of 
 mankind advances. Every great improvement involves changes 
 and readjustments. They are not welcome, but they are un- 
 avoidable. It is not at all improbable that the number and 
 variety of the great improvements of the last twenty years, fol- 
 lowing so rapidly on each other, crossing and combining with 
 each other, necessitating quick and complicated adjustments, 
 may go for a great deal in the present reaction. It is very 
 probable that the next twenty-five years are to see massive 
 migrations of population, and great transfers of capital, from the 
 old to the new countries, which will not be made until suffering 
 has enforced them. It is probable that the value and rent of 
 land will decline in the old countries and rise in the new. It is 
 possible that social, economic, and political changes are to be 
 accomplished such as we cannot yet guess at. It is certain to 
 
5 68 1HE PRINCETON REVIEW. 
 
 my mind, however, that those years are to be years of unprece- 
 dented prosperity. 
 
 The fall in silver has its share in the temporary disorder, loss, 
 and suffering ; but the use of the single gold standard will be one 
 of the strongest supports of the new prosperity. If this were 
 not so, it would be idle to lament over a movement which comes 
 along in the natural evolution of things. To try to stem that 
 movement and turn it back to the old system of repeated em- 
 pirical struggles for a bimetallic circulation, it would be neces- 
 sary for us to be sure of three things : (i) that we understand 
 present phenomena thoroughly,' (2) that we can foresee the 
 results of the movement towards gold, if it goes on, and (3) 
 that we are sure of the working of the gigantic experiment in- 
 volved in the attempt to secure bimetallism, or the alternate 
 standard, by a coinage union. These conditions are absolutely 
 unfulfilled. On the contrary, it seems that international bank- 
 ing is just at the point where its further development, and the 
 transfer of capital from old to new countries, above alluded 
 to, require an international standard of value amongst the great 
 commercial nations such as gold alone can supply. The de- 
 velopment of international banking, in its turn, will economize 
 the use of gold, and thus again defeat the fears of those who 
 think there is not gold enough. The movement, therefore, 
 bears all the marks of a true organic development, in which 
 all the parts contribute to and support each other in advance- 
 ment to a higher stage. It also seems to me that the fall in 
 silver is precisely adapted to favor those extensions of com- 
 merce and civilization which lie in the near future. South 
 America is still in the lowest stage of economic development, 
 and will find silver its best money for a long time to come. Asia 
 is scarcely yet upon a monetary system, except where Euro- 
 peans have penetrated, and can use nothing but silver to advan- 
 tage for an indefinite future. Africa is an almost untouched 
 continent, which, within fifty years, will probably come into new 
 
 • The authorities are by no means agreed as to the causes of the fall of silver. 
 This question came up at Paris, and Mr. Feer-Herzog maintained that the key to 
 the phenomenon lay in the state of the East Indian exchanges. (Report, p. 58.) 
 This is the view which I took before the U. S. Silver Committee in 1876, but I 
 have never seen any other confirmation of it. 
 
BIME TA LLISM. 569 
 
 relations to the civilized world. Silver is the only suitable me- 
 dium for this extension of commerce. As far, then, as we can 
 foresee, the cheapening of the tool of exchange by which these 
 extensions of trade and civilization must be carried on will only 
 facilitate them ; and if bimetallism were not an absurdity, and 
 the alternate standard either an injustice or a delusion, and if 
 either of them were practicable, the adoption of either would 
 now be the grandest mistake the civilized world could commit. 
 I attribute no weight to these prognostications of mine. It is 
 contrary to my opinion of sound procedure in such matters to 
 make them at all. I should consider it the most vicious pro- 
 cedure to make such prognostications the basis of argument 
 that any nation or that all civilized nations " ought" to use the 
 single gold standard. The economic development of human 
 society must go on its way and work out its results, and the hu- 
 man race must make the best of them. The race, however, does 
 not make mistakes, and so long as, in all its parts, it obeys the 
 dictates of its interests, it will push on a true evolution which 
 cannot but serve to enhance the prosperity of the race as a 
 whole. It is only when nations allow their action to be dic- 
 tated by speculations about the future of civilization and hu- 
 manity that they may wreck the natural development. It is 
 because these terrors about the future, and prophecies of disas- 
 ter, have been introduced to play so great a rdle on the other 
 side of this question that I venture to set against them the 
 best speculations I can make as to the probable course of 
 affairs. 
 
 Postscript. — After the above was in type my attention 
 was called, by an editorial in the New York Tribune, to a recan- 
 tation by Mr. Gibbs of the opinions maintained by him at the 
 Conference at Paris. The plan of my article was to make an 
 independent discussion, and not to examine the literature of bi- 
 metallism beyond the Report of the Monetary Commission. 
 When, however, a journal which has sustained a uniformly 
 sound and strong position on monetary questions referred to 
 Mr. Gibbs' pamphlet in the terms used by the Tribune, it 
 seemed that here perhaps a bimetallist might at last be found 
 
57© THE PRINCETON REVIEW. 
 
 who had some clear ideas, and could state them so as to bear 
 examination. I therefore hastened to secure a copy of Mr. 
 Gibbs' pamphlet," and also a copy of his letter to Cernuschi an- 
 nouncing his conversion, and Cernuschi's reply to the same.' 
 My hopes of finding something in these pamphlets solid enough 
 to bear examination for purposes of discussion are all disap- 
 pointed. 
 
 Mr. Gibbs has simply gone over to the bimetallic fallacy, 
 and accepted it in its grossest and crudest form. He has pro- 
 duced no new arguments for it and refuted no objections against 
 it. Incidentally he has shown that the ex-Governor of the Bank 
 of England holds, in regard to money, all the fallacies which 
 constitute the premises of our soft-money men ; and if he does 
 not agree with them in their conclusions, it is only because he is 
 less logical and consistent. This, however, might be said of all 
 bimetallists. The Tribune s estimate of this pamphlet adds the 
 greatest possible weight to the motive for my article as stated 
 in the first paragraph thereof. I am therefore led to counteract 
 that estimate by amplifying one or two points which I had 
 passed over briefly, and by inserting one or two which I had 
 judged better to omit, in order to show the real significance and 
 value of what Mr. Gibbs has contributed to this controversy. 
 
 I. Mr. Gibbs' conversion to bimetalHsm is due to observa- 
 tion of the losses incurred in Indian finances and Indian trade. 
 He assumes that these losses are due to the fall in silver, and he 
 attributes the fall in silver to demonetization. Hence he ar- 
 gues : Remonetize ; that will restore silver ; that will stop the 
 losses. It is a pity that the matter is not so simple. I con- 
 sider it an error to attribute the losses in the India trade 
 to the fall in silver. The fall in silver is not a cause, but 
 a consequence. The financial relations between England and 
 India after 1870 took such shape that the " tribute," as it is 
 called, had to be paid by an excess of exports over imports of 
 India. This could only be accomplished by a fall in prices in 
 India. Nevertheless Europe desired to continue to sell silver 
 to India, while the relation just mentioned would have led 
 
 ' Silver and Gold," by Henry H. Gibbs, London, 1879. 
 
 ' Bimetallism in England and Abroad," by Henri Cernuschi, London, 1879.. 
 
BIMETALLISM. 571 
 
 India to desist from buying it. Instead of a. fallin prices (silver 
 remaining stable) there therefore has occurred the exactly equiv- 
 alent phenomenon of a fall in silver without any rise in prices. 
 In countries which have a depreciated paper currency prices rise 
 as the medium falls, and so the foreign trade quickly adjusts itself. 
 If prices had risen in India there would have been no trouble ; 
 but the forces which would have forced a fall in prices if silver 
 had held firm have prevented a rise in prices while forcing a 
 fall in the medium. A crisis in the Indian exchanges was 
 therefore inevitable in some form or other. Instead of taking 
 place through prices, it has taken place through the medium — 
 silver — and the fall in silver is a consequence and not a cause. 
 This relation of facts accounts for the fall in silver, and nothing 
 else does. The silver thrown on the market by demoneti- 
 zation ayid by a somewhat increased production (which has 
 been greatly exaggerated) by no means account for the fall. 
 The increased supply fell on a weak market, and had accessory 
 influence, but it does not suffice to account for the principal 
 effect. It follows that it is a great error for those who 
 suffer from losses in the India trade to ascribe their troubles to 
 the fall in silver, and that their troubles cannot be cured by any 
 currency devices. While India has so much interest to pay in 
 England on borrowed capital, to which she has not yet grown 
 up, and while she has to pay in England for an expensive govern- 
 ment, to which also she has not yet grown up, she will be a 
 worse country to sell in and a better one to buy in than for- 
 merly. However, if English merchants and bankers interested 
 in the India trade could sell their silver to somebody for the old 
 price, it is obvious that they could save themselves from the 
 effect of these changed circumstances in the relations of the two 
 countries. 
 
 2. This last observation leads me to amplify what I have said 
 under VI., i. I have shown there that the alternate standard 
 would only transfer risks and losses from those to whom they 
 belong to somebody else. A fortiori bimetallism, if it were 
 practicable, would throw all risks and losses, all the time, on the 
 creditor classes. Gibbs and Cernuschi seem to be entirely blind 
 to this character in their propositions, and they do not see that 
 whatever they gain for some must either be won out of others 
 
572 THE PRINCETON REVIEW. 
 
 or out of nothing, as I have shown in my main argument. To 
 show this more fully, let us observe the difference for different 
 classes between the significance of a fall in gold and the signifi- 
 cance of a fall in silver. The effect of a fall in gold (rise in 
 prices) would fall on annuitants, pensioners, owners of bonds, 
 etc., beneficiaries of trusts and life assurances, salaried and pro- 
 fessional men, wage-receivers, and, generally, on all who have 
 either temporarily or permanently fixed incomes. These are 
 the persons whom I designate as the creditor classes. A fall in 
 silver, as things stood in 1873, affected producers, exchangers, 
 and bankers in certain great lines of business. A fall in gold 
 would therefore affect a large number of small, weak, and scat- 
 tered recipients of money incomes, belonging to different classes 
 and having no co-operation or even acquaintance with each 
 other. A fall in silver affects great " interests," each of which 
 is marked by very strong cohesion of its parts within itself, and 
 all of which are capable of sudden and easy combination. The 
 former have little power or chance to defend themselves ; the 
 latter are powerful and influential in speech, writing, and legis- 
 lation. The former never attract public attention ; the latter fill 
 the pubhc eye and are thought of whenever money, capital, trade, 
 or industry are thought of. The losses of the latter make up ap- 
 palling figures in the statistics of bankruptcy. The losses of the 
 former figure in no statistics, since they consist in privation, mis- 
 ery, disease, and earlier death for those affected directly and for 
 their dependants. The losses to producers, exchangers, and bank- 
 ers are what govern the opinions of Mr. Seyd, and now, too, 
 have converted Mr. Gibbs. It is indeed cause for great re- 
 gret that such losses should occur, and if there were any means 
 of averting the loss altogether, the matter would bear a very 
 different aspect. But there is no such means. There is noth- 
 ing possible but an alternative, either to leave the losses where 
 they fall by the circumstances of the case, or to throw them on 
 somebody else ; and nothing is proposed in these monetary 
 schemes save to throw the losses on those who would have suf- 
 fered if the fall had been in gold instead of in silver. Now when 
 gold has fallen (prices have risen), notably in 1 870-1 873, the 
 classes who were affected had to make the best of it without 
 aid from those interested in silver, and so the prooosition that 
 
BIMETALLISM. 573, 
 
 England shall now adopt bimetallism, when stripped of all dis- 
 guises, is simply another case of the old abuse whereby a few 
 strong, well-organized interests, acting through currency legisla- 
 tion, play at " heads I win, tails you lose" with the large, scat- 
 tered, unorganized mass of the nation. English statesmen may 
 possibly upset the monetary basis on which all relations of prop- 
 erty and credit in England rest, in order to alleviate a temporary 
 strain on some branches of foreign trade, and on the finances 
 of India; but those who have to rely on American newspapers 
 for their information and impressions of what is likely to be 
 done in this matter in Europe will do well to nourish an active 
 incredulousness. Those Americans who have to rely on the 
 Hon. W. D. Kelly's reports of interviews between himself and 
 Bismarck for judgments as to the probable course of Germany 
 will do well to allow for other elements in the report than the 
 probable power of Mr. Kelly to inspire the Prince with expan- 
 sive and familiar confidence. Mr. Kelly is a man of enthusias- 
 tic imagination, and it appears probable that he and Mr. George 
 Walker are just the kind of men to excite the well-known pro- 
 pensity of the German Chancellor to befool people by an osten- 
 tatious and effusive frankness while laughing at them in his 
 sleeve. A great deal has been said about the zeal, dogmatism, 
 and fanaticism of the advocates of the single universal gold 
 standard. I do not know who these persons are, nor what they 
 have done. The only persons who, in regard to this monetary 
 question, have organized a sect, adopted a creed, undertaken a 
 propaganda, and sent out missionaries, so far as I know, are the 
 bimetallists. It is charitable to believe that they do not see the 
 political and social significance of their propositions, but that 
 statesmen will not see this long before action is adopted is very 
 improbable. 
 
 Now Mr. Gibbs has just found out that the trade between 
 India and England is barter. He is astonished and alarmed at 
 this. He thinks this kind of trade uncivilized and attended by 
 loss to England. He attributes the evil to English gold mono- 
 metallism, and thinks that the evil effects have been counter- 
 acted until recent years by the French law. If it be true, how- 
 ever, as Mr. Gibbs and the other bimetallists argue, that France 
 has done this service by her law, now to gold-using Englishmen 
 
574 "^^^ PRINCETON REVIEW. 
 
 and now to silver-using Germans, then France, through her 
 creditor class, has borne burdens and losses which belonged to 
 other people. Such being the case, we could see why English- 
 men and Germans should want the French law to continue, but 
 we should also see why Frenchmen, so soon as they understood 
 it, would certainly want it to stop ; and, if universal bimetallism 
 could be or should be established, the next question would be. 
 What class, under the new system, is to take the place formerly 
 filled by the French creditor class and bear the burdens formerly 
 borne by them ? 
 
 Such is the inference from Mr. Gibbs' premisses, but the 
 premisses are false. Trade with India is barter, but so is all 
 trade, and foreign trade most plainly. The trade for silver has 
 involved inconveniences which will exist until all the world uses 
 a single and universal standard of value. This inconvenience 
 has been paid for, as all other hindrances and difficulties of trade 
 are paid for, in prices. The French mint law has had nothing 
 to do with it. Finally, the French creditors have lost whenever 
 the ratio of the metals has varied so as to change the metal of 
 the French coinage. This loss, however, has been borne once 
 for all ; it has not continued after prices have been readjusted ; 
 and has not therefore been constant under the operation of the 
 double standard. 
 
 Cernuschi, in his reply to Gibbs, gives far more gross expres- 
 sion to the same fallacy about the operation of the French law 
 to prevent losses ; for he attaches it not to English traders, 
 but to all metal producers. "At the time of the French 15!^, 
 the position of the producers of gold and silver was this : all 
 their produce had by law an unfailing and insatiable customer 
 — the mint. No price to haggle about, no competition possible." 
 A customer by law ! The mint a customer ! ? In some large 
 establishments, as a check on salesmen, one person is stationed 
 at a counter to weigh, measure, and count all goods for which 
 the salesmen have made bargains with the customers. It would 
 be as sensible to call this person the " unfailing and insatiable 
 customer" for all the goods sold in the establishment as toxall 
 the mint a customer for gold and silver. This gross error, how- 
 ever, is the cloak which covers the fallacy and the injustice of 
 bimetallism. The law does provide a customer, but it is not the 
 
BIMETALLISM. ^J^ 
 
 mint. It is the creditor class as above defined. There is " no 
 price to haggle about and no competition to fear" because the 
 law has delivered the victim over helpless, all the more helpless- 
 because he is ignorant, the law having concealed the transaction 
 under mysteries of coinage and money. This, however, is the 
 most direct condemnation of the law itself, as well in an economic 
 as a social or political point of view. It is a fallacy to think the 
 mint law has secured the producers of the metals against loss 
 and haggling and competition — -that is, against all the inevitable 
 annoyances of industry without hurting anybody else ; and it is 
 an injustice to take the annoyances from one industry only to 
 spread them over others. I do not like to say anything which 
 may appear arrogant and unbecoming, but I feel justified in 
 protesting, in the name of all that scholars and scientific men 
 respect, that a man who calls the mint an " unfailing and insa- 
 tiable customer" does not deserve respectful treatment in the 
 arena of scientific discussion. 
 
 Mr. Gibbs sees that bimetallism involves depreciation, but he 
 thinks the evils of it are in this case more nominal than real. 
 The only distinction which men generally make between nomi- 
 nal evils and real evils is that my evils are real and yours are 
 nominal; but that is not a valid distinction which science or jus- 
 tice can recognize. Mr. Gibbs seems to think the evils of de- 
 preciation nominal because they would be widely scattered and 
 much concealed, as I have shown above. All evils, however, are 
 real to those who suffer them. If they come from nature, like 
 blight, drought, storms, inundations, and other calamities, they 
 must be borne as philosophically as possible. If they are in- 
 flicted by legislation, or are transferred by legislation, nothing 
 can justify or belittle them. Mr. Gibbs wants silver remone- 
 tized, not at its present market value, but at the point where it 
 will be when the bimetallic system shall have operated on it. 
 He has not comprehended the full problem which he has to 
 solve. It is this : (i) If in England, for instance, silver is rated 
 at its present market value, all the silver now in England loses 
 20 per cent of i1;s present value. (2) If silver is rated at the 
 point to which the bimetallic system will bring it up, no one but 
 Cernuschi knows where that will be. If a guess is made, and 
 silver is rated above the market, no debtor will want it, and so 
 
576 THE PRINCETON REVIEW. 
 
 the bimetallic system will never begin. (3) If silver is rated at 
 the market to begin with, and if the mint ratio is advanced as- 
 the market ratio advances (assuming that bimetallism would 
 work), then continual recoinage, with heavy expense and endless 
 confusion, will result. I hope that it is plain, then, that the bi- 
 metallists of every grade and description are either trying to 
 transfer losses from one group of men to another, or else trying 
 to make something out of nothing. 
 
 3. It also seems desirable to notice another error of bi- 
 metallism which I had passed over ; that is the notion that 
 demand due to a fall in price raises price. This doctrine is 
 essential to the bimetallic theory, and it has been carelessly 
 conceded by some who are not bimetallists. I passed over it in 
 the body of my article because it is the fallacy of that extreme 
 form of bimetallism in which it is believed that the coinage 
 union will lock the two metals so tight together that they will 
 never separate from the legal ratio any more, because there will 
 be no one to whom to sell the rising metal. Every bimetallist 
 would be driven to this doctrine if he followed out his notions 
 consistently ; but the bimetallists repudiate it generally when it 
 is ascribed to them. Mr. Gibbs, however, explicitly accepts this 
 notion, and assumes that the bimetallic union would lock the 
 two metals permanently together as such an undoubted fact 
 that it is his chief reliance for refuting objections. Demand due 
 to a fall in price tends to sustain price at the lower level, but not to 
 raise price, since such demand ceases when the price rises. If 
 we have a bimetallic circulation at 15^ to i, debtors do not 
 want silver at or below 15^ to i, but only below. Their demand 
 will only act on it so long as it stays below ; therefore their 
 demand never can lift it again to 15^ to i. But meanwhile their 
 demand is acting to sustain it only by absorbing any new supply 
 through real purchases. So long, therefore, as there is a new supply, 
 the price must remain below iS^to i, and that new supply must 
 be absorbed. But this is destroying the bimetallic and concur- 
 rent circulation just so far as it goes on. The bimetallists seem 
 to think that, if silver fell, the debtors of the world would all 
 pounce upon it so unanimously and immediately that it would 
 not fall. This is absurd in the statement, and it is absurd in 
 every detail of fact. New silver does not rain down in an equal 
 
BIMETAZLISM. 577 
 
 deposit over the earth. It comes into human society at certain 
 points. Hence the world-wide demand cannot be concentrated 
 on it. Any demand which does act on it can do so only by real 
 transactions under price fluctuations. This fallacy, therefore, 
 reminds us again of perpetual motion, wherein it is believed 
 that we can get effect out of a force without action, reaction, 
 and " escapement." 
 
 4. To meet another point somewhat more explicitly than I 
 have done it above, let me say that if any nation which now 
 uses gold finds that its interests are not served thereby, and 
 thinks that silver would serve them better, it has only to make 
 the experiment on its own risk and responsibility. If it suc- 
 ceeds, others will imitate it, and the inferences now made from 
 the past action of nations will have to be modified. So far the 
 nations have always acted as if they knew they were about to 
 commit folly and incur loss whenever they have taken up any 
 projects about silver, and they have insisted on first joining 
 hands so as to all go into the evil together. We wait, then, for 
 the first nation to give up gold and take silver because it thinks 
 silver will serve its interest and convenience better. Mr. Gibbs 
 is as anxious lest England should become a silver nation as any 
 •"gold monometallist" possibly could be. 
 
 5. If, then, we are asked which nations will take gold and 
 which silver, and why any should take silver, and, if none take 
 silver, where gold enough is to come from, we answer : (i) That 
 it is not possible or necessary to tell a priori who will take silver 
 and who gold. (2) All would prefer gold, and the world will 
 probably ultimately come to use only a single universal standard 
 of value, just as it probably will come to use single and uni- 
 versal standards of weights and measures. This, however, is only 
 an anticipation which it must be left to time and the develop- 
 ment of civilization to realize. At present it has no importance. 
 If it is a correct anticipation it is fruitless ; if it is an incorrect 
 anticipation it is harmless. (3) If it is said that "there is 
 not gold enough," that assertion is senseless unless we add : 
 " to sustain prices and credits at their present level." If, 
 then, there is not enough, in this sense, the nations will com- 
 pete for gold until those to whom its advantages are worth 
 most get it, because they give most (goods) for it. Others will 
 
578 THE PRINCETON REVIEW. 
 
 drop out of the competition for gold and take silver when- 
 ever its comparative cheapness more than counterbalances its 
 inferior utility. So then, if there is not enough gold, we will 
 use silver, and those will take some silver who think it for their 
 interest, all things considered, so to do. 
 
 William G. Sumner. 
 October 25, 1879, 
 
The follmving articles are published from the office of the 
 PRINCETON REVIEW, 37 Park Rmv, New York, 
 and can be obtained from all Newsdealers at Five Cents each : 
 
 I. LOCAL GOVERNMENT: AT HOME AND ABROAD, July, '79^ 
 ROBERT P. PORTER, Esq., Chiago^ 
 
 a. THE PULPIT AND POPULAR SKEPTICISM, . . Mar., '79. 
 Rev. PHILLIPS BROOKS, D.D., Boston. 
 
 3. THE RIGHTS AND DUTIES OF SCIENCE, . . . Nov.,. '7a 
 
 Principal DAWSON, F.R;S., D.C.L., McGill Univanity, Monirul. 
 
 4. FORCE, LAW, AND DESIGN MAT. '79. 
 
 President PORTER, D.D., LL.D., Yale College. 
 
 5. AMERICAN ART : ITS PROGRESS AND PROSPECTS, Ma», '78. 
 
 JOHN F. WEIR, N.A., School of Fine Arts, Yale College. 
 
 6. FINAL CAUSE: M. JANET AND PROF. NEWCOMB, . Mar., '79. 
 
 President McCOSH, D.D., LL.D., Princeton College. 
 
 7. ENGLAND AND HER COLONIES May, '78. 
 
 JAMES ANTHONY FROUDE, D.C.L., London. 
 
 ' 8. CLASSICS AND COLLEGES July, '78. 
 
 Prof. B. L. GILDERSLEEVE, LL.D., Johns Hopkins University. 
 
 9. THE ANGLO-CATHOLIC MOVEMENT Sept.. '78. 
 
 The Right Rev. the LORD BISHOP OF GLOUCISTER AND BRISTOL. 
 
 ic. MAN'S PLACE IN NATURE Nov., '78. 
 
 Prof. JOSEPH LE CONTE, LL.D., University of California. 
 
 II. THE AIM OF POETRY, Sept., '78. 
 
 Principal SHAIRP, D.C.L., University of St. Andrews. 
 
 la. THE IDEA OF CAUSE May, '79. 
 
 Prof. FRANCIS BOWEN, Harvard Collere. 
 
 13. MUSIC AND WORSHIP, ........ July, '79. 
 
 President POTTER, D.D., LL.D., Union Callage. 
 
 t4. NATIONAL MORALITY Nov.. '78. 
 
 EDWARD A. FREEMAN, D.C.L., LL.D., England. 
 
 15. THE EUROPEAN EQUILIBRIUM. ..... Nov., '78. 
 
 THEODORE D. WOOLSEY, D.D., LL.D., Ex-President ot Yala Collage. 
 
 16. CHRISTIANITY IN THE UNITED STATES. . . Sept., '79 
 
 PHILIP SCHAFF. D.D., LL.D.. Union TheoL Seminary. 
 
 17. POINTS OF CONTACT BETWEEN SCIENCE AND 
 
 REVELATION, Nov., '79. 
 
 Principal DAWSON, D.C.L., F.R.S., Montreal. 
 
 18. BIMETALLISM Nov., '79. 
 
 Prof. WILLIAM G. SUMNER, Yale College. 
 
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