THE EFFECT OF A 
 
 BI-METALLIC UNION 
 
 ON THE 
 
 Currencies of the Different Countries. 
 
 By A. J. WARNER, 
 
 AUTHOR OF THE APPRECIATION OF MONEY, THE REGULATION OF 
 CURRENCY', ETC. 
 
 “For the value of money in general, is the quantity of all the 
 money in the world, in proportion to all the trade: but the value 
 of money in any one country, is the present quantity of the current 
 money in that country, in proportion to the present trnde .” — John 
 Locke. 
 
 Times Steam Printing Establishment, Marietta, 0. 
 
S ^,V\ 
 
The Monetary Conference. 
 
 The importance of the subject itself, as well as the character of 
 much of the speculation that is indulged in as to the probable result 
 of the Monetary Conference now in session in Paris, and the effect 
 its action will likely have on the future of silver has been the occa¬ 
 sion for the examination ot the question presented in these pages. 
 
 No doubt the action of the-Conference, whatever it may be, will 
 materially influence the future of silver, and, indirectly, the future 
 of gold as well. The importance^therefore, of the decision of this 
 Conference is not likely to be over-estimated. 
 
 The practical questions which at this time arise, are— 
 
 1. What would be the effect of a Bi-metallic Union, including 
 England and Germany, on silver and on the currencies of the dif¬ 
 ferent countries? 
 
 2. What would be the result of a Union without England and 
 Germany? 
 
 3. What will be the probable course of silver if no Union is 
 formed and no international agreement is reached? 
 
 In the first place it is assumed as admitted that a Union of a 
 sufficient number of commercial nations on a given ratio—whether 
 that ratio be 16 or 15|, or some other within certain limits, does 
 not matter—will hold the two metals at par, at that ratio. Cer¬ 
 tainly no one who understands the principles upon which bi¬ 
 metallism rests, will question this. 
 
 What then would be the effect of a Union, including Germany 
 and England, the different countries composing which engage to 
 make silver as well as gold full legal-tender and to maintain open 
 mints f6r the free coinage of both metals, at the European ratio 
 of 15£? 
 
2 
 
 The ratio of 154 is taken, for if any international ratio is agreed 
 upon it will, for abundant reasons, be this ratio.* 
 
 But little reflection is needed, however, to show that such a change 
 in the money systems of so many countries as a Bi metallic Union 
 would involve must modify to some extent, for a tim-3 at least, the 
 current of the metals, and in some degree afi'ect the scale of valu¬ 
 ation in all countries. 
 
 The nature and extent of the changes in the currencies of the 
 several countries, and in the value of their money that will take 
 place as the result of such a Union, are the great practical questions 
 now before the Conference. It will help to comprehend what the 
 effect of the adoption of international bi-metallism would be, if we 
 group the different countries into classes according to their present 
 money systems: 
 
 Class l—Countries with the gold standard as modified by con¬ 
 vertible 'paper and subsidiary silver, as England (embracing the 
 United Kingdom), Germany, Scaudinavia, Portugal, &c. 
 
 Class 2—Countries with the gold standard as modified by con¬ 
 vertible paper , silver under limited coinage and subsidiary silver, 
 as the United States, France, and the other States of the Latin 
 Union. 
 
 Class 3—Countries with the silver standard, as India and China, 
 or silver supplemented by inconvertible paper, as Austria. 
 
 Class 4—Countries without a metallic circulation, but with a 
 paper valuation, approximating more or less closely to gold as the 
 metallic standard, as in Russia and Turkey, or to a silver stand.- 
 ard, as in some of the South American States. 
 
 But it should be understood,when we speak of the gold standard,or 
 the silver standard, that there is, in fact, no such thing as a purely 
 gold valuation in any country, or a purely silver valuation. The 
 real standard, or scale of valuation, in any country, is its effective 
 money, volume. Thus, while in England the standard of their 
 money is gold, the gold itself has a reduced value because of the use 
 
 Xote— *These questions have been elsewhere discussed by the writer and the reasons 
 for the conclusions stated are not, therefore, repeated here; the object of this paper being 
 to show the effect of a Bi-metallic Union on the money of the different countries. 
 
3 
 
 of paper as money; and the real valuation is her whole effective money 
 volume, consisting of gold, convertible bank notes and subsidiary 
 silver. The true valuation in India is the actual volume of silver 
 appropriated to monetary use; and in the United States the effect¬ 
 ive volume of gold, silver, bank notes and greenbacks. 
 
 Again, the use of paper* and silver in France and in the United 
 States, as part of the money of these countries, determines in no 
 small degree the quantit}’ of gold that goes to England, or silver 
 that goes to India or to China. Let either of these countries 
 abandon silver altogether and a new distribution of gold would 
 take place. 
 
 But passing these questions bv, a little inspection will show 
 that, while the composition of the currencies of the States in 
 classes 1 and 2 differ, the standard is the same: That is, gold sup¬ 
 plemented, in some by paper equivalents only, and in others by paper 
 and silver under limited coinage. But in each the gold, paper, and 
 silver have equal value, and the actual standard of valuation is, 
 therefore, the same. When, however, the money system of the 
 States in classes 1 and 2 is compared with that of class 3, a differ¬ 
 ence in the scale is met with. In the two first the standard is 
 gold, modified by paper, or by silver pnder limited coinage, or by 
 both. In the third class it is silver. The difference between these 
 two planes, or levels of prices, on the ratio of 15£ between gold and 
 silver, is now about 15 per cent. 
 
 The States of class 4, with paper valuations, while they remain so, 
 will not be directly affected by a bi-metallic union, and may, there 
 fore, be left out of present calculations. 
 
 Suppose now the proposed bi-metallic union to be formed, with 
 England and Germany included, on the ratio of 15£ of silver to one 
 of gold, what will follow? First, the difference between the level 
 of prices in States with a gold, or modified gold, standard, and 
 States with the silver standard, must disappear as all come under 
 
 Note—* “Every emission of a paper currency in any country drives out a portion of 
 its coin, and augments the total amount of the currency of the world, in the same manner 
 that an additional quantity of gold and*silver from the mines would do it; and hence an 
 emission of paper money any where must augment the currency every where after time 
 has been afforded for its distribution .”—Condy Roquet. 
 
4 
 
 a common gold and silver valuation. That is, the valuation in all 
 would become bi-metallic, instead of in some gold, or gold supple¬ 
 mented with silver, and in others silver. 
 
 This change to a bi-metallic level could take place only (1) bv a 
 decline of, say, 15 per cent, in the value of money in States with the 
 gold, or modified gold standard (classes 1 and 2); or, (2) by a rise 
 of 15 per cent, in States with the silver standard; or, (3) by a de* 
 cline in part on one side and a rise in part on the other. This in¬ 
 deed is what would, undoubtedly, take place. But a decline in the 
 value of money in the countries having now the modified gold 
 standard, would be caused only by an increase in the quantity, or 
 volume, of money, in each State. This increase would be made by 
 accessions of silver, through international trade, proportional to 
 the circumstances of each. If the decline from the present modified 
 gold level to the bi-metallic level would be, say, 7 or 8 per cent, 
 then, other things remaining the same, an increase of 7 or 8 per 
 Cent, in the volume might be expected, although the change in value 
 is usually more rapid than change of volume, while the change is 
 going on. 
 
 But on the above supposition, England would receive an acces¬ 
 sion of, say $35,000,000 to $40,000,000; Germany $25,000,000 to 
 $30,000,000; France 865,000,000 to $70,000,000; the United States 
 $40,000,000 to $50,000,000, and other States in like proportion.— 
 But where is this $175,000,000 to $200,000,000 of silver to come 
 from? The silver States can not give up this amount, for, long be¬ 
 fore this sum was subtracted from their currency the change from 
 the level of the silver standard to the bi-metallic standard would 
 have been reached by the appreciation of their money. Indeed, it 
 seems to be the law, as stated above, that when changes in volume 
 are taking place, that variations in value run much above or below 
 the limits marked by changes of volume.* Especially is this true 
 
 Note—* “A real (scarcity of money is always accompanied by an artificial scarcity 
 which aggravates the effects of the former. If, for instance, a million of dollars in coin 
 be exported, so n6 to produce an outcry about scarcity of monev, timid people and specu¬ 
 lation will withhold another million from circulation; the former because they are afraid 
 to lend it, and the latter because they expect to profit bv forcing down the prices of prop¬ 
 erty and commodities to a still lower point, the eflect of which would be to diminish the 
 demand for the exportation of coin by reducing the prices of commodities.”— Condv 
 Jiaoiut. * 
 
6 
 
 when money is drawn from circulation. Instead then, of acces¬ 
 sions to the currencies of the States of classes 1 and 2—that is, 
 States under a modified gold valuation—of $175,000,000 to $200,- 
 000,000 of silver, the shifting of a much less sum would doubtless 
 suffice to bring all to a common level. But some accession there 
 mustbe, and probably not less than from $125,000,000 to $150,- 
 000,000. 
 
 But the sources of such increase in the curren cies of gold stand¬ 
 ard countries as there must be to bring about the change from 
 this level to that of bi-metallism, must be mainly looked for else¬ 
 where than from the present circulation of silver-using States.— 
 Nevertheless, that these States would give up some share of their 
 silver in the transition upward to the bi-metallic level must be ex¬ 
 pected. For where there is international trade, money will go from 
 where it is cheap to where it is dear—from where it will buy less 
 to where it will huy more. The chief source, however, would doubt¬ 
 less be from present stocks of bullion, from hoards and from new 
 productions of the mines, which would for a time be absorbed by 
 the States making the change from the gold to the bi-metallic scale. 
 This change of currency level does not,however,involve exchanging 
 gold for silver between any countries; nor would the accessions by 
 one country be in gold and by another in silver, but the change from 
 mono-metallism to bi metallism would be made—on the supposition 
 that Germaay and England are included in the Union—by each 
 State absorbing silver to an amount equal to its proportion of the 
 increase which the change from its present gold, or modified gold 
 valuation, to a bi-metallic valuation, would require, and that would 
 be the full extent of the effect of the change. 
 
 A writer in the London Times , of Slay 7th, reasons that under a 
 change from the present English money system to the bi-metallic 
 system, England would have to give up some $40,000,000 of her 
 gold, in consequence of the depreciation this metal would undergo. 
 But her gold would be depreciated only because of accessions to 
 her money volume, and only in the same proportion as in other gold 
 countries. In other words, the currency of England would undergo 
 
6 
 
 a depreciation to the extent that it3 volume was increased by ac¬ 
 cessions of silver, but gold would not in consequence flow out of 
 the country, beqause a like depreciation in gold would take place in 
 every other country. But as in the change from bi-metallism to 
 gold (as supplemented by silver under limited coinage) in parts of 
 Europe and the United States since 1872, the currency of England 
 as well as that of the Continent, has been appreciated to the extent 
 that the whole volume has been kept down by the partial exclusion 
 of silver, so now the change would be back to the former scale, by 
 the re-admission of silver to full monetary use. 
 
 The reasoning of the Times' correspondent referred to, is, there¬ 
 fore clearly efroneous. England and Germany, as well as the rest 
 of Europe, and the United Scates, would experience some acces¬ 
 sions to their metallic circulation, attended no doubt with slight 
 depreciation of gold, and thus of the metallic circulation as a whole, 
 while a corresponding rise of silver, and hence of the money scale, in 
 exclusively silver countries would take place. But this depreciation 
 might be quickly taken up by increased industrial activity, and in 
 some countries doubtless would be. 
 
 But, second, what would be the effect of a union between the 
 United States, France, and the other States of the Latin Union, 
 with, perhaps, Holland, Portugal, Spain, Austria and India, but 
 without England and Germany? Such a Union doubtless could be 
 formed, while one with England and Germany included seems 
 doubtful. It is important then to carefully consider and well un¬ 
 derstand the results that would be likely to flow from such a Union. 
 In the first place, it would be necessary to know whether England 
 and Germany—especially Germany—would maintain respectively 
 the present status quo , or whether Germany, after such a Union 
 was formed, would proceed to sell her 500,000,000 marks (about 
 $120,000,000) which Baron Thielmann estimates she has remaining 
 of her old silver thalers; or whether she would re-coin it, adjusting 
 it to her new system, in the ratio of 15£ to her gold coins. 
 
 On the supposition that England and Germany would maintain 
 the existing status quo , in the two countries respectively, then, the 
 
question is; what would be the effect ou the currencies of the dif¬ 
 ferent countries, of a Union without Eugland and Germany? The 
 answer is, the transition from the present modified gold standard 
 of all states of classes 1 and 2, to the bi-metallic level, would be 
 exactly the same, whether England and Germany joiued the Union 
 or not. Accessions to the metallic currency of all of the States 
 now exclusively gold, or gold supplemented by silver under limited 
 coinage, would take place, with, probably some slight depletion of 
 the volume of silver in exclusively silver countries exactly the same 
 as though all the conqtries joined the Union. The process, how¬ 
 ever, would be quite different in the latter case. 
 
 As soon as the mints of the countries forming the Union were 
 opened to the free coinage of legal-tender silver, accessions would 
 be made Jirst to the currencies of these countries alone; but their 
 money volume by this process, after a time, would become redundant 
 as compared with the volume of England and Germany. Either gold 
 or silver would then begin to flow over to these countries, and as 
 silver would not be admitted, the overflow would be of gold. But 
 England and Germany would take no more , but probably less, un¬ 
 der these conditions, than they would if they belonged to the Union, 
 for the Union receiving first the whole accessions would doubtless 
 absorb more and pass over less than would fall to the other States 
 if they were in the Union; only in this case their accessions would 
 be in gold instead of iu silver. The operation would then be as 
 follow r s: 
 
 Instead then of England receiving an accession of, say,$35,000,000 
 or 840,000,000 of silver,Germany 825,000.000,France $70,000,000, the 
 the United States $40,000,000, and so on, as in a Union of all, Eng¬ 
 land and Germany would gain together, perhaps, sixty or seventy 
 millions, in gold , and altogether the gold mono-metallic States 
 might gain, say $80,000,000 to $100,000,000of gold; while the Uni¬ 
 ted States, France and other States of the bi-metallic Union, in¬ 
 stead of the single operation of gaining silver, would gain an in¬ 
 creased supply of silver, and lose, as a secondary operation, some 
 gold; but surely not more than 8100,000,000 of gold altogether,would 
 
be surrendered by the bi-metallic States, for this is a9 large a share 
 of the total metallic increase,which would follow the transition to bi¬ 
 metallism, as the gold mono-metallic States would receive as their 
 distributive share, or as they could absorb without a redundancy 
 that would be followed in turn by adverse balances and a restoration 
 of the proper equilibrium. Nor would there be in this case, any 
 more than in the other, a surrender of gold for silver by some 
 States, or a change of silver for gold by others. 
 
 If. however, Germany should reserve the right to demonetize and 
 sell her 500,000,000 marks of old silver thalers, which are now a 
 legal-tender, and should, after a Union was formed, proceed to do 
 so, that would alter the conditions of the problem to that extent, 
 and so much more silver would have to be taken on, and so much 
 more gold given up, by bi-metallic states. 
 
 On the other hand, if the limit of legal-tender for subsidiary sil¬ 
 ver should be raised in gold countries and its coinage increased, 
 or the volume of their paper currency enlarged, then their ab¬ 
 sorption of gold would be correspondingly lessened. Again, if 
 States now on a paper valuation, as Italy and Austria, should re¬ 
 sume specie payment with bi-metallism as the basis, these States 
 would absorb a considerable part of the metals that otherwise 
 would form accessions to the currencies of metallic money States, 
 Or, again, it would be within the power of France and the United 
 States, by simply reducing their paper issues, to absorb all the 
 silver that would flew to them as bi-metallic countries, without giv¬ 
 ing up any of their gold. 
 
 To sum up the whole question, then: The utmost that the gold, 
 mono-metallic countries could gain under a bi-metallic Union, 
 without England and Germany, if the present status quo of these 
 countries respectively is maintained, would be from 60 to 80 mil¬ 
 lions of gold,—certainly not a hundred millions under the most 
 favorable conditions for them; and even with Germany free to de¬ 
 monetize the rest of her full-tender silver, two hundred or two 
 hundred and twenty millions would be the maximum quantity of 
 gold that would need to be given up by the bi-metallic States, 
 
0 
 
 while their accessions would be greatly more than that in silver. 
 On the other baud, every new demand for the metals to take the 
 place of paper, or for other purposes, would lesseu this proportion. 
 Germany, however, would undoubtedly engage to maintain, and 
 probably to recoin, her present stock of silver thalers, and, per¬ 
 haps, to enlarge somewhat her legal-tender siher coinage. If 
 E igland, too, in addition to maintaining open mints and the single 
 silver standard in India, would engage to raise the legal-tender 
 limit and enlarge her volume of subsidiary silver, the task of main¬ 
 taining the parity of gold and silver, by the Union would be to 
 that extent lightened. 
 
 But, at this point, an important question arises; who would be 
 the gainers by such a Union? The first impression, and that which 
 at this time prevails throughout the public press is, that England 
 and Germany would be the gainers, and that the States forming 
 the Union would be losers. But this is a hasty conclusion. The 
 country which discovers and opens new mines of the precious 
 metals, whether gold or silver, is not considered a loser. The new 
 metal first goes to swell the currency of the country possessing 
 the mines, and gives new impetus to its industries. This to a 
 country like the United States or France, which has highly or¬ 
 ganized industries, is of immense cousequence. But when the 
 currency of such a country becomes redundant by additions from 
 its mines the excess flows to other countries. If bi-metallic, the 
 overflow may be of its gold or its silver. But the advantage of 
 such accessions would be primarily to the country possessing the 
 mines and secondarily , only, to others. 
 
 Precisely similar results would follow to and between such a bi¬ 
 metallic Union as is supposed to be formed between the Uuited 
 States, France, and other States ot Europe, with England and Ger¬ 
 many standing outside. The benefits, primarily , would fall to the 
 States composing thg Union, and secondarily only to England and 
 Germany. 
 
 It only remains to consider a very stupid proposition which is 
 understood to have had its first emanation from Washington, and 
 
10 
 
 has since gone the rounds of the press of this country; and that is, 
 if the Conference fails, to immediately stop the coinage of silver in 
 the United States, and thereby drain Europe of its gold! 
 
 In the first place, suppose we could drain Europe of its gold, 
 who would be benefited? Would Europe be likely to buy more 
 of our products, drained of its gold, thau now? It is a market 
 for our products that we want more than we want, under pres¬ 
 ent circumstances, more of the gold of Europe. We produce 
 thirty to forty millions of gold each year, and the time will 
 soon come when we will want to part with some portion of this 
 product of our mines for something that will do us more good. 
 We can not goon forever absorbing 30 or 40 millions* of gold into 
 our currency annually. It is not desirable that we should; and 
 much less would it be a gain, even were it possible, to buy all the 
 gold of Europe. This is the old mercantile theory of wealth le 
 vived. 
 
 But, pray, how will the closing of our mints against silver draw 
 gold in such abundance here? It would be worth something to 
 get at the modus operandi of such a movement. We now coin 
 twenty-four or twenty-five millions of silver annually. Suppose 
 we do stop that, and suppose—which would not necessarily fol¬ 
 low—that gold to this amount would flow in to take the place of 
 the silver. That would bring us $25,000,000 in a year. But, sup 
 pose, as we are likely to do—and in fact as we are now doing, any 
 way—that new bank notes to the amount of twenty-five millions a 
 year are put out, would not the space now occupied by silver be 
 taken up by bank notes, so that no vacuum would be left, to be 
 filled up by gold? Indeed, if bank notes continue to increase as 
 they have since Congress adjourned, it will not be long till the 
 movement of gold will be from us, whatever action may be taken 
 as to silver. The sale abroad of American securities, or the pay¬ 
 ment of such securities, will, of course, modify, and for a time may 
 reverse, the current that otherwise would se£ in. 
 
 Or, again, suppose the Secretary of the Treasury should pay out 
 
 Note. —* Of course the gold consumed in the arts is to be deducted. 
 
11 
 
 of the store of $150,000,000 of idle gold now in the Treasury, on 
 our already matured debt, twenty-five, fifty, or seventy-five millions 
 —as he may with perfect safety do, and ought for the public good to 
 do—then gold might begin to move the other way, and not to our 
 detriment, in that case, either. There is one way', however, by 
 which Europe could be compelled to give up some part of her gold, 
 and that is by reducing our paper volume, say from $700,000,000 to 
 three or four hundred millions; but would we gain by it? Evidently 
 not, nor will we gain by demonetizing silver again, or by stopping 
 its coinage. It would be a very rational move, however, to declare 
 our volume of paper, as it now stands, large enough, and put a limit 
 not higher than 8700,000,000, to which volume our paper money has 
 already, nearly, if not quite, attained. What folly to become fright 
 ened at $90,000,000 of silver with $700,000,000 of paper and 2,200 
 National Banks active in putting out more! Let the issue of 
 paper cease, but let the coinage of the metals go on. No country 
 eau long have too much metallic money; when that becomes excess¬ 
 ive it takes wings of itself and flies away. 
 
 Indeed, the question is debatable, if not demonstrable, that the 
 United States alone could uphold the parity of gold and silver, on 
 her present ratio, and that she would be greatly the gainer in doing 
 so, but it is not proposed to enter upon this phase of the subject 
 here. 
 
 There is, however, one consideration connected with the proposed 
 suspension of silver coinage in the United States that should be 
 kept in view, and that is, that India, in such an event, would prob¬ 
 ably be constrained to close her mints, or at any' rate to limit the 
 coinage of silver, in order to protect herself from further deprecia¬ 
 tion of her currency as compared with that of Europe. The sepa¬ 
 ration between the metals would then be greatly widened. Gold 
 would be appreciated as compared both with silver and with com¬ 
 modities; silver would fall. By what process would they ever be 
 brought together again? Europe and the United States would then 
 be doomed to become mono-metallic, save, perhaps, to the extent that 
 silver is already held as coined money. 
 
12 
 
 The future supply would then be limited to the waning produc¬ 
 tion of gold. Would the United States, under such conditions 
 draw gold from Europe? Under such conditions the metallic part 
 of its money volume would almost certainly be reduced, and the fall 
 would be marked by an outflow of gold—not by an inflow. And 
 then, behind all this, lies the greater question of the consequences 
 to the different countries ot the world, and to mankind of a 
 money that is constantly undergoing appreciation;* and especially 
 burdened as the world now is with its forty thousand millions of 
 debt, the weight of which would be increased with every increase 
 in the value of money. 
 
 Uote _* See Appreciation of Money, by the author, 187i