Eb mm 4vlP%^ . *■' Si ^.jL At'- . t */ SIR ISAAC NEWTON England’s Prohibitive Tariff upon Silver Money. AN OPEN LETTER TO PROF. W. STANLEY JEVONS, L.L.D. (EDINB.), M.A. (LOND.), F.R.S., PROFESSOR OF POLITICAL ECONOMY IN UNIVERSITY COLLEGE, LONDON, ETC., ETC. S. DANA HORTON, M. A., Counselor at Law, author of “Silver and Gold and their Relation to the Problem of Re¬ sumption “ The Monetary Situation and other Papers “ Contributions to the Study of Monetary Policy,” etc.; late Delegate, of the United States to the International Monetary Conference of 1878. CINCINNATI: ROBERT CLARKE & CO. 1881. SIR ISAAC NEWTON England’s Prohibitive Tariff upon Silver Money. AN OPEN LETTER TO PROF. W. STANLEY JEVONS, L.L.D. (EDINB.), M.A. (LOND.), F.R.S., PROFESSOR OF POLITICAL ECONOMY IN UNIVERSITY COLLEGE, LONDON, ETC., ETC. BY S. DANA HORTON, M. A.. Counselor at Law , author of “Silver and Gold and their Relation to the Problem of Re¬ sumption ; ” “ The Monetary Situation and other Papers; ” “ Contributions to the Study of Monetary Policy," etc.; late Delegate of the United States to the International Monetary Conference of 1S78. CINCINNATI: ROBERT CLARKE & CO. 1881. m Nm TA 9 ^ I s . SIR ISAAC NEWTON AND England's Prohibitive Tariff upon Silver Money. In an article 1 in a late number of the Contemporary Review , Professor W. S. Jevons raises in curiously interesting form the question of the nationality of Political Economy. What was the first important Treatise on Economics, and of what country was its author native ? The analysis given by Prof. Jevons of the Jbssai sur la na¬ ture cle commerce en general , a work purporting to be a transla¬ tion from the English, but which was first printed, so far as known, in French, in 1755, ostensibly in London, but pre¬ sumably in Paris, appears fully to justify the learned writer in his ascription of the primacy in economics to it and to its author. Accepting, therefore, as correct the judgment that this treatise is the veritable “ cradle of Economics,” speculation follows with zest’the query whether this cradle was framed by some great Frenchman who, beside veiling his authorship through other pretenses, effectively sheltered himself under another’s name, or whether its author was an Irishman, one of the family of the Cantillons of Ballehague in the County of Kerry, who lived in Paris as a merchant, and was mur¬ dered in London in 1734. At what time, indeed, could such a question excite greater interest than now, when Young 1 “ Richard C'antillon and the Nationality of Political Economy.” By Professor W. Stanley Jevons, Contemporary Iteview, London, January, 1881. (3) 4 Sir Isaac Newton and England's Exclusion of Silver. Ireland” is awakening to a due appreciation of so distin¬ guished an intellectual ancestor. In seeking lately the amusement of following to its matter the attractive title of this article, I was not a little surprised to find myself, among others, called upon by name, and, so to speak, confronted with Richard Cantillon (whom I will as¬ sume, on Prof. Jevons’ authority, to have been the author of the Essai ), certain passages of his work bearing upon Eng¬ land’s monetary policy, being by the author of the article recommended to our attention. It is a long way from the bauks of the Thames to those of the Ohio. I recall accepting an analogous challenge some years since from that distinguished monetary statesman, the late Mr. Feer-Herzog, of Switzerland, but it was to an oral debate across the Council Board of the International Mone¬ tary Conference in Paris; and it was to preclude the further necessity of such divergences of view, arising as they usually do from the current misconceptions of the facts of England’s Monetary History, that I caused to be printed in the Docu¬ ment of that Conference 2 3 what might serve as a partial Doc¬ umentary History of English Monetary Policy. This contri¬ bution to monetary literature not having, however, availed to attract or to arrest the attention of Prof. Jevons, it may perhaps be fairly said of his challenge, in favor of'answering it, that vires acquirit eundo. I may add that if this view-be shared by Dr. Van den Berg, President of the National Bank of Java, we may also look for a rejoinder to Prof. Jevons from the re¬ gion of the Spice Islands, he being, like myself, cited to the question, as being, I suppose, in the eyes of the author of the article, another licresiarch in partibus infidelium. 2 Document of the International Monetary Conference of 1878. Wash¬ ington, 1S79, 918 pp. This, like other public documents, was printed by the Government for gratuitous distribution. The edition was 14.000, and copies are, I believe, still to be had (by mail) on application to the De- par iment of State, Washington, D. C. Sir Isaac Newton and England’s Exclusion of Silver. 5 Curiously enough, it is in my power to dispense with an examination of those portions of the “cradle of Economics” so kindly commended to me by Prof. Jevons, and that, fin the ground that they have been known to me for some years. In my reading, preparatory to printing in 18/6, a Treatise on {Sil¬ ver and Gold, 3 1 had occasion to read the writings 4 of a younger contemporary of Cantillon in Germany, John Philip Grau- mann, who was in his time the Privy Councillor in matters monetary of Frederick the Great. Iti his Letters on Money, dealing with the Monetary System of England, Graumann translates in full the entire body of passages relating to Money, which Prof. Jevons reproduces in his article. “ The English author,” says Graumann, “ of the Essai sur la nature 8 Silver and Gold and their Relation to the Problem of Resumption, Cincinnati, Robert Clarke & Co. In order to preclude any misunderstanding concerning the point of view from which 1 approach the question raised by Prof. Jevons, I may state here that the practical conclusions set forth in the closing chapter of this Treatise (in holding which I was then, so far as I knew, in a minority of one), were that while it was to the interest of Europe and of Asia, but notably of England, that Silver be established as money by con¬ current action of the nations, and while it was likewise to the interest of the United States that this be done, the true policy for the latter country was actively to promote the establishment of a Bi-metallic Union, but to refuse to coin any Silver at all until it should be formed : thus leaving Europe to feel the full consequences of its persecution of Silver. This policy was substantially adopted by the United States in 1878, by the much misunderstood Allison Bill, the substitute for the “ Bland Bill,’’ which was passed over Mr. Haves’ veto. That in the then temper of Congress such a solution of the question was reached is chiefly due to the statesmanship of Mr. Allison (Senator from Iowa), who, aware of the strength of the party of Free Coinage of Silver, and of the danger, as well as the likelihood, of their carrying the day, foiled and disarmed them through a limitation of the proposed coinage of Silver (thus deferring for years the danger of a too great accumulation of Silver Coin), and, at the same time, by instituting the Monetary Con¬ ference of 1878, committed the country to an active propaganda of scien¬ tific Bi-metallism in other nations. 4 Johann Philip Graumann, Gesammlete Briefe von dem Gelde, von dem Wechsel und dessen Cours, von der Proportion zwischen Gold und Silber, etc. Berlin, Voss, 1762. 6 Sir Isaac Newton and England's Exclusion of Silver . de commerce cn general takes a different view from Newton,” concerning points which I shall set forth at the close of this paper; and in order to explain the situation in full, he re¬ produces withal, in German, Newton’s entire report. Else¬ where, Graumann again refers to the Essai, apparently ascribing to the work, whose claims Prof. Jevons puts forward so convincingly, an importance approaching that which was accorded to it by the French economists of that day. I have the pleasure, therefore, while disclaiming any indebtedness to the article on the score of information upon Newton or Can- tilloirs expressions about Money, at least of adding my stone to the cairn which its writer builds to the framer of the cradle of Political Economy. I may further add here, as being pos¬ sibly a matter of interest, that an error of date in the Essai , which Prof. Jevons finds it difficult to explain— namely, 1728 given as the year of the fixation of the ratio, instead of 1717—occurs also in one of Sir James Steuart’s Monetary Papers, and, if my memory serves me rightly, in some other English author, whose name I do not recall. I have never been able to find any explanation of it. The point which Prof. Jevons commends to our attention is the alleged enunciation, not only on the part of the author of the Essai, but also (through inference deduced from Cantillon’s statements), as coming from the mouth of no less a personage than Sir Isaac Newton, speaking withal ex cathedra, not only as Master of the Mint, but as Monetary Counselor of the British Parliament, of what Prof. Jevons calls “ a distinct disclaimer of Bi-metallism.” We see then that the Gold Standard is challenging Bi-met¬ allism to a new field: the Battle of the Standards is for a mo¬ ment to be removed from the dusty arena of the prejudices and interests of to-day, and to be rehearsed in ghostly armor on the shadowy plains of history. The motive and effects of England’s Monetary Legislation of 1717-18; the views of Sir Isaac Newton and England's Exclusion of Silver. 7 Newton in 1717, and of Cantillon before 1734, these arc, if a perversion of the Virgilian phrase can bo endured, t lie “arms and the men we sing.” In accepting this invitation to learn well the lessons which this space in the history of monetary action and of monetary opinion may have to teach, and as a part of my effort to re¬ cite these lessons, it is but simple duty to historic truth that I request my opponent to accept from me a protest against, or a correction of, a use of words on his part which, without some corrective, can hardly fail to be misleading to many of those under whose notice it may come. I refer to his trans¬ ferring the word “ Bi-metallism ” from its habitat in the con¬ troversies of to-day to those of a century and a half ago. It is improbable that Prof. Jevons’ readers can be fully aware, as he must be, that “ Bi-metallism ” is an “ ism ” of to-day : the intellectual product of a few men, all of whom, except Louis Wolowski, who died in 1876, are now. living. And yet, such being the case, it is only by a metaphor which to them may well be misleading, that a thinker of a hundred and fifty years ago .can be said either to have entertained or to have disclaimed Bi-metallism. Failing in this knowledge, the reader is in fact encouraged, by this anachronistic locution, to ignore the scope of the questions at issue in the controversies of to-da} r . But apart from this caution, it is probably unwise to expect of the general reader a sufficient familiarity with these con¬ troversies to enable him to keep in tlieir true perspective the historical issues to which Prof. Jevons has called our atten¬ tion : and hence I may fruitfully serve his convenience by a prefatory outline of their practical drift, special regard being had to their relation to English monetary policy. Bi-metallism stands to-day for a body of doctrine (which, of course, I shall make no effort to present here), which seeks to displace doctrines which, up to within a few years, held the 8 Sir Isaac Newton and England's Exclusion of Silver. allegiance of all economists, enshrined as they were in the monetary chapters of the standard works of economic science It is also a convenient name for a monetary policy based upon this doctrine, which seeks to replace the monetary pol icy for which the opposing doctrines are responsible. And it is precisely the monetary system, distinctively and historically known as the English System, that is to say the system which has been known as such to this and to the pre¬ ceding generation, having been in force since 1816, which is being displaced as the exemplar of monetary policy. This present English System, therefore, and the doctrines of its apologists are, in fact, on trial, so to speak, in an Interna¬ tional Court of Monetary Opinion. The point at issue is of course, not the often alleged confusion of numbers in the calculation of pounds, shillings, and pence, compared with the simplicity of the decimal system; nor any scheme of unification of the weights of coins in different nations. These matters are insignificant. It relates merely to the chief characteristic of the English System, namely, that under it Gold is, by law, a favorite, Silver an outlaw: the one being by force of statutes full legal tender, and freely coinable gratis to the full capacity of the mints; the other legal tender only up to 21, and not coinable at all except to the extent of a trivial supply of light-weight Tokens. It is, therefore, the Single Gold Standard, this Prohibitive Tariff against Silver Money, which is the corpus delicti: and England’s experience of it is naturally the chief source of historical in¬ formation about it. It is openly charged, with abundant documents of proof and justification, 5 that the Single Gold Standard was in its day a 5 1 may be permitted to refer to a chapter on “The Example of Eng¬ land ” in my “ Silver and Gold,” to debate between the late Mr. Feer-IJer- zog and myself, at the International Monetary Conference of 1878 and to a senes of papers, in my “Contributions to the Study of Monetary Pol¬ icy, in the Document of the Monetary Conference of 1878. i Sir Isaac Newton and England's Exclusion of Silver. 9 revolutionary innovation, which, in the transition period of its establishment in England, 1798-1830, did England more harm than good: That the docfrinal basis which was then its motive, and afterward held to be its justification, was demonstrably un¬ sound : That the measure of practical success which from 1830 to 1875 has attended the working of the Gold Standard in England, is due, not to any intrinsic merit of the innovation, nor to any notable foresight of its founders, nor to any con¬ temporaneous appreciation of the forces which were the con¬ trolling conditions of this measure of success, but was due to circumstances independent of England’s control, and which were by their nature adventitious and temporary: That the unsound theories which found their realization in this system were, in the expansion of economic literature, forced to an artificial growth of dogma, in the warmth with which professors of science accepted as a model the monetary system of the nation, which led the advance in wealth, in manufactures, and in foreign trade : That these dogmas, having, through the earnest agitation of monetary reformers, attained consecration in 18G7, at the hands of an International Monetary Conference, as establish¬ ing a goal for national and international legislation, and hav¬ ing, in 1871-3, with the general approval of scientific opin¬ ion, obtained the adherence of the German Empire to the Single Gold Standard (a measure which compelled other na¬ tions to close their mints to Silver, thus laying an embargo upon a part of the world’s circulation), became thus respon¬ sible for serious evils which were felt and have left their traces throughout the world; the practical result of the application of these dogmas on a large scale being not merely those em- barassments incident to an abrupt divergence in the relative market ratios of Silver and Gold, which show themlves in 10 Sir Isaac Nation and England's Exclusion of Silver. national regulation of Coinage and Legal Tender, but an ap¬ preciable portion of the evils of the years that have followed 1873, of the disturbance in the investments, production, and exchanges of the world, which is the natural concomitant of a general dislocation of the money prices of property. It is against these dogmas, and against this policy, that Bi¬ metallism is a reaction. Such being the scope of the issues at stake in “ Bi-niet- allim,” such the relation of the English Monetary System to them, the brevity of Prof. Jevons’ appeal to English Mone¬ tary History in defense of the Single Gold Standard recalls the brevity of the title, or of the table of contents of a book: it need by no means imply a proportional unimportance in the points he presents, so far at least as concerns readers to whom precedents have binding force. To such friends of the existing order of things in England the alleged discovery set forth by Prof. Jevons that Bi-metallism was as antipathetic to Sir Isaac Newton and to the author of the Cradle of Econ¬ omics as to Lord Liverpool, may well give that comfortable sense of reinforcement which accompanies the enlargement of the historic background of one’s views. Of itself of course the point is of little moment. If the doctrine of Bi-metallists be true, it is adamant: it will turn the edge of the sturdy falchion of a Newton or a Cantillon as well as of the latten sword of a Liverpool. It is only as an encouragement to the defenders of the Gold Standard to per¬ sist in its defense, as an excuse to its supporters for refusing to reconsider the grounds of their faith, that such arguments as these become worthy of refutation. We now come to the words of Cantillon and of his com¬ mentator. The following selected passages will sufficiently set forth the occasion of our inquiry. Prof. Jevons quotes from Cantillon as follows: Sir Isaac Newton and England’s Exclusion of Silve?'. 11 “It is the market price which decides the proportion of the value of gold to that of silver. On this is based the proportion which we give to pieces of gold and silver money. If the market price varies considerably, it is necessary to alter the proportion of the coins. If we neglect to do this, the circulation is thrown into confusion and disorder, and people will take the pieces of one or other metal at a higher price than that fixed by the Mint. An infinite number of examples of this are to be found in antiquity, but we have a quite recent one in England in the laws made for the Tower of London. The ounce of silver, eleven ounces fine, is there worth five shillings and two pence sterling; since the proportion of gold to silver (which has been fixed in imitation of Spain as 1 to lf>) is fallen to 1 to 15 or 1 to 141, the ounce of silver sold at five shillings and sixpence, while the gold guinea continued to have currency always at 21s. 6 d. That caused people to carry away from England all the silver crowns, shillings and sixpences which were not worn by circulation. Silver money became so scarce in 1728 (mil sept cent, vingt huit), because there re¬ mained only the most worn pieces, that people were obliged to change a guinea at aloss of nearly five per cent. The embarrassment and confusion which that produced in commerce and the circulation, obliged the Treasury to request the celebrated Sir Isaac Newton, Master of the Mint at the Tower, to make a report on the means which he believed to be the most suitable for remedying this disorder. “There was nothing so easy to do; it was only necessary to follow in the fabrication of silver coins at the Mint the market price of silver. In place of the proportion of gold to silver, which had for a long time been according to the laws and rules of the Mint at the Tower as 1 to 15|, it was only necessary to make the silver pieces lighter in the proportion of the market price, which had fallen below that of 1 to 15, and to go be¬ yond the variation which the gold of Brazil annually causes in the pro¬ portion of the two metals. They might have established the money on the footing of 1 to 141, as was done in 1725 in France, and as it will be necessary to do in England itself sooner or later.” “ Here," says Prof. Jevons, “is a distinct prophecy of that which was car¬ ried into effect in 1815 at Lord Liverpool’s recommendation, and which is still, and probably always will be, the fundamental point in the regulation of our metallic money. Cantillon goes on to explain that Newton took the opposite course, and Parliament followed his advice—namely, in diminishing the nominal value of the gold piece. This, he allows, equally adjusts the relative values of the pieces to the market price, but it is, not¬ withstanding, a less natural and advantageous method. lie pointed out to Newton that by this measure England incurred aloss of £110,741 upon every £5,000,000 of capital which it owed to foreigners, and Newton’s re¬ ply is giveu thus (p. 377): ‘ Monsieur Newton m’a dit pour reponse a cette objection, que suivant les loix fondamentales du Koiaume, l’argent blanc etait la vraie et seule monnoie, et que comme telle, il ne la falloit pas alterer.’ After giving some other refined arguments, Cantillon finally delivers his opinion against the double standard, saying (p. 380): 12 Sir Isaac Newton and England's Exclusion of Silver. “'ll n’y a que le prix da Marche qui puisse trouver la proportion de la valeur de l’or a l’argent, de meme que toutes les proportions des valeurs. La reduction de M. Newton de la guinee a vingt-un schellings n’a ete eal- culee que pour empecher qu’on n’enlevat les especes d’argent foibles et usees qui restent dans la circulation; elle n’etoit pas calculee pour fixer' dans les monnaies d’or et d’argent la veritable proportion de leur prix, je veux dire par leur veritable proportion, celle qui est fixee par les prix du Marche. Ce prix est toujours la pierre de touche dans ces matieres; les variations en sont assez lentes, pour donner le terns de regler les mon- noies et empecher les desordres dans la circulation. ’ “ If 1 read this remarkable passage aright,” says Prof. Jevons, “ it notonly reaffirms Cantillon’s opinion that it is futile to attempt to fix the propor¬ tion of gold and silver perpetually, but that Newton had himself no idea of attempting the impossibility. His.reduction of the guinea was only ‘calculated’ to prevent the removal of the worn pieces which still re¬ mained in circulation—that is, to effect a matter of immediate practical importance. The bi-metallists having quoted Newton as on their side, Mr. Inglis Palgrave and other English economists have been anxious to know the real motives of Newton, which are not easy to gather from his official report. But in these remarks of Cantillon we actually seem to have the statement of an acquaintance of Newton, and a master of cur¬ rency and finance, that he had discussed the subject with Newton, and that Newton’s intention was ‘ not to fix in gold and silver moneys the veritable proportion of their price.’ ’’ It is of this passage that Prof. Jevons says : “ I take this to be a distinct disclaimer of Bi-metallism.” The reader will observe that if we merely repeat the words here translated from Cantillon, the question we are to examine takes the form, Was it intended by Newton and by the legis¬ lators of 1717 “ to fix in Gold and Silver Moneys the veritable proportion of their price?” but that if we follow Prof. Jevons to a preceding sentence, in which he alludes to a pas¬ sage of Cantillon which he qualifies as “remarkable,” we must elevate this legislative fixation of which we are speak¬ ing from the ordinary lot of mortality to an immortality to which Parliamentary measures have seldom aspired: we must add to our question as first stated, the word “perpetu¬ ally,” and thus find ourselves inquiring, at the request of Prof. Jevons, whether it was intended in 1717 “ to fix ycryelu- Sir Isaac Newton and England's Exclusion of Silver. 13 ally in Gold and Silver Moneys the veritable proportion of their price.” Prof. Jevons says that, “ if he reads this remakable passage aright, it not only reaffirms Cantillon s opinion that it was futile to attempt this, but that Xewton himself had no idea of attempting the impossibility.” There is something here which is quite remarkable, but it does not come from Cantillon nor from Newton; it comes from Prof. Jevons. Whence this idea of perpetuity? Who originated this notion of the eternity of a fixation made by law; this solution of the problem of perpetual motion de¬ creed by a monetary statute ? Is it possible that Prof. Jevons lias heard of any one who seriously thought he had solved this problem? If so, let me ask who is he; what is his origin; nay, what is the nationality of this abnormal product of the evolution of political economy? Is he an Irishman, or is he a Frenchman, or an Englishman ? American he is not. As an original promoter of Bi-metallic Union in the country which proposed it to Christendom, I must smilingly but firmly reject for my countrymen the distinction of having sought immortality or perpetuity in that particular direction. I may, therefore, be permitted to say that if Prof. Jevons will look about him for the head which this cap will lit, and upon ascertaining either that there is or there is not such a person in existence, will announce the fact to the world, he will add to the obligations Under which he has already laid the student of Money. In the meantime, we can safely here de¬ cline further to entertain the question of perpetuity. Eliminating, therefore, tlfis idea, which must have received expression from Prof. Jevons eiilier through an oversight or through a misconception of the views of his opponents, which is not entirely without precedent, 6 we see before us 6 Apropos of the supposed universality of the fixed ratio proposed by 14 Sir Isaac Newton and England’s Exclusion of Silver. the question as it must have occurred in fact to the leg. islators of 1717, and we accordingly inquire, Was it New¬ ton’s idea that to fix the guinea as the lawful equivalent of twenty-one silver shillings was to make the English ratio conform to the “veritable,” that is to say, the cor¬ rect and actual ratio between the metals in the bullion mar- Bi metallists, and without reference to perpetuity in time, I may mention “a dictum which rejoices in the undiscriminating support of some distin¬ guished men. 'll is impossible to establish an unalterable ratio between the two metals.' A dispassionate consideration will, 1 think, show that this dictum is likewise true to a slight extent, and untrue to a very great extent. And this modicum of truth, like the skin of the Dead Sea Apple, is on the out¬ side, and, intercepting the glance, deceives the unwary eye. Does not this dictum stand, in fact, upon the same levei with the doctrine, 'it is impossi¬ ble for a ?nan to draw a line absolutely straight;' or is it not, in truth, parallel with the denial of the possibility that the world can show two things which are exactly alike. “ Undoubtedly, if the civilized nations were to join in coinage of both metals at one ratio, a small proportion of the total of exchanges of the metals might still be made at a different ratio. Human free will is not likely to abdicate its privileges in favor of a Coinage Treaty. Of course, a single exchange made anywhere in the world, at a ratio above or below that fixed by the supposed Treaty of Christendom, would make the de¬ sired break in the uniformity. When the strain is from one end to the other, the strength of a chain is that of its weakest link. Of course, no matter where the break is in the line, if there be a break the line is not absolutely straight. If two objects be in ever so slight degree dissimilar, their identity disappears. So it is true that it is impossible to establish in permanance and universally a fixed ratio between the metals, as it is true that no one can draw a line absolutely straight or show two things that are exactly alike. “ But at the same time this so-called impossibility of a fixed ratio be tween the two metals is as unworthy to support a statesman in denying the possibility or desirability of a successful establishment of a fixed ratio, as the impossibility of making any thing straight, or of making two things alike, is unworthy to prevent the construction of machinery and works of engineering. Machinery and engineering works all de¬ mand, for their perfection, straight linos and identity between different parts. At the same time, substantial straightness, substantial identity, will suffice. In practice, the infinitely small can be neglected by the en¬ gineer and mechanician; why not by the statesman, why not by the economist?" From "The Position of Law in the Doctrine of Money." Document of the Monetary Conference of 1878. t Sir Isaac Newton ami England's Exclusion of Silver. 15 ket. The nature of the case, we may add, suggests an altor- ternative or analogous question : Was it, in Newton’s opinion, probable, that the ratio represented by this fixation of the guinea at twenty-one shillings would, on an average, during the series of years next following 1717, diverge but slightly from the market rates of exchange of the two metals. It will be well, in considering the question, briefly to sur¬ vey the monetary problem of which this fixation of the legal value of the guinea, as a debt-paying coin, was intended to be, for the time, a solution. The standard Unit of Coinage in English law was the pound sterling of twenty silver shillings. The weight of the shil¬ ling had last been fixed in the forty-third year of the reign of Queen Elizabeth. The Gold coins struck in the mints were from time made current at a valuation referring to the Silver Unit; as the equivalent, that is to say, of so and so many shillings. The guinea, the gold coin with which the Legislator of 1717 had chiefly to do, had been originally coined as a 20 shilling piece. It had however, in time, owing to events which we need not now enter upon, come to be current as the equivalent of 21 shillings and 6 pence. In 1717, therefore, the legal ratio of England was not far from 15£ to one. This valuation was an erroneous one: as legal tender, Gold was by this valuation made worth 15J times its weight in Silver coin, whereas, in fact, in the world’s markets the metal Gold was worth less than 15 times its weight in Silver. Un¬ der the statutes regulating the mints, any person could have either metal coined at the expense of the State, Hence it became more profitable, in England, for owners of bullion to have Gold, than to have Silver, coined; and those who had payments to make in England were naturally led to purchase Gold, rather than Silver bullion, to be taken to the mint. Gold was becoming more plenty, Silver was disappearing. 16 Sir Isaac Newton and England's Exclusion of Silver. Upon this, in the winter of 1717-18, the Commons and the Lords, went severally into “ Grand Committee on the State of the Nation,” to consider the scarcity of Silver specie, the exportation of Silver, and the importation of Gold ; while in the Commons it was resolved “that an humble address be presented to His Majesty, That he will be graciously pleased to give directions, that the Representations made by the offi¬ cers of the Mint to the Lords Commissioners of the Trea¬ sury, in relation to the Gold and Silver Coins of this King¬ dom may be laid before this House.” These consisted of letters of Sir Isaac Newton, then Mas¬ ter of the Mint, to the Lords of the Treasury, written, as he says, in obedience to an “ order of reference, of August 12th, that I should lay before your Lordships a State of the Gold and Silver Coins of this Kingdom, in weight and fineness, and the value of Gold in proportion to Silver, with my observa¬ tions and opinions; and what method maybe best for pre¬ venting the melting down of the Silver Coin.” The outcome of the debate was an Address of the Com¬ mons, and a Proclamation of the King, to the effect, as.prayed ■ for, that no one should, on pain of proper penalty, give or re¬ ceive a guinea for more than 21 shillings; while, in the Lords, a resolution was passed, that “ no alteration should be made in the standard of the Gold and Silver Coins of this Kingdom in fineness, weight, or denomination.” The reader will note that this did not preclude a future change in the valuation of the guinea, for the guinea had, properly speaking, no de¬ nomination, the money of account being the pound sterling of 20 silver shillings The law of legal tender being, at that date, still embraced inter jura majestatis, the Proclamation above mentioned established the guinea as the lawful equivalent of 21 silver shillings, without prejudice, of course, to a further use of prerogative in subsequently altering its valuation ; Sil¬ ver remaining, of course, to use the forcible expression of Sir Isaac JSewton and England's Exclusion of Silver. 17 Newton, as reported by Cantillon, “according to the funda¬ mental laws of the realm, the sole true money.” So Ions:, however, as the law, so made, remained in force the gold coins were to remain a lawful means of payment, at the rate of 21 shillings to the guinea. The practical result at the time, therefore, was the Silver and Gold Standard (or what is now unfortunately called the “Double” Standard), at 15.21 to 1, the equation, 15.21 weights of silver == 1 weight of gold, being the equivalence of the value of the metals when a guinea is held equal to 21 silver shillings, of the “ standard of Elizabeth.” The working of this fixation was not, however, such as to entitle the measure to be regarded as successful. The guinea was not worth 21 shillings in the metal market in 1717, nor did it, indeed, at any time, reach that price till the close of the century, when events which I will not now enter upon, 7 raised Gold to an equivalence, in the market, with 15.21 times its weight in Silver. The situation, therefore,which Parliament deplored, and sought to remedy in 1717,prevailed throughout the century. The “ standard of Elizabeth ” was debased, 8 by the acceptance, throughout England, of a Pound Sterling that was not worth 20 shillings in the sole true money of the Kingdom; and this cheaper pound sterling remained the chief money in use until after surrendering its function, for a 7 1 have set forth some researches on this subject in a paper on the Rise of the Silver Price of Gold, between 1770 and 1830, in the Document of the Monetary Conference of 1878. 8 “ It is absurd to say that the standard of Queen Elizabeth has not been debased by enacting that the English Unit shall be acquitted with 113 grains of fine Gold, as it would be to affirm that it would not be debased fromwhat it is at present by enacting that a pound of butter should every¬ where be received in payment for a pound sterling, although the pound sterling should continue to consist of 3 ounces, 17 pennyweights, and 10 grains of standard Silver, according to the statute of 43 Elizabeth. I be¬ lieve in this case most debtors would pay in butter.” * * * [Sir James Steuart. Principles of Political Economy, 1773.] 2 18 Sir Isaac Newton and England's Exclusion of Silcer. time, to paper bank-notes, and after rising to more than equivalence (see preceding note) with the true pound ster¬ ling, it finally replaced, in 1816, under the guidance of the first Lord Liverpool and of his successors, its heavier, aiul now, under the altered state of demand, less valuable prede¬ cessor, and became, by force of a new law, the “ sole true money of the Kingdom.” We can now restate our questions even more clearly. What importance is to be attributed to Cantillon’s state¬ ment that the fixation of 1717, which he calls Newton's re¬ duction of the guinea, was not calculated “ to fix, between the Gold and Silver Moneys, the veritable proportion of their price,” but that the measure was merely “ calculated to pre¬ vent the removal of the worn pieces which still remained in circulation ?” It is evidently nothing more than the obvious remark which any one versed in money who knew the facts, would naturally make. So far as Newton is concerned, this statement is substan¬ tially a mere reproduction of what Newton had written in his Report about the proposition to fix the guinea at 2ls. The guinea, he says, by the course of trade and exchange between nation and nation in all Europe is worth between 20s. 5 d. and 20s. 8 \d.: if the guinea were lowered to 20s. 6d. or 20s. 8 d. there would be no temptation to export Silver from England; if it were only lowered to 21s. the temptation to export or melt down the silver coin would be diminished and time would be given to see what further reduction would be necessary. After such a statement as this what could Newton himself have said in 1727 or earlier, about the market prices of recent years and the legal ratio of 1717, except to deny that Parlia¬ ment had meant to fix the guinea at its market price as it then stood: and after having said to Parliament, alarmed as it was 19 I $( r i sa ac Newton and England?s Exclusion of Silver. about the exportation and scarcity of Silver, that if they wished to prevent this exportation (the preventing of which implied of course that Silver would come to the mints to be coined and hence that the stock of silver coin would be re¬ plenished and kept full) they must lower the guinea to 20s. 6d. or 20 s. 8 d., what more natural than to state the well-known fact that the reduction to 21s. had only the effect of keeping the worn coins at home? Had he not already suggested in his Report that a reduction to 21s. would be a mere expe¬ rimental halting ground from which it would be seen what further reduction would be necessary ? So far therefore from possessing either the novelty, or the importance, or the doctrinal meaning which Prof. Jevons ascribes to them, these passages of Cantillon, characterizing this measure, which Prof. Jevons takes to be a “distinct dis¬ claimer of Bi-metallism,” are entirely innocent of such claims to attention and, indeed, are observations which must occur so naturally to any one discussing the subject as to be en¬ tirely insignificant. With this it would seem that the mandate which I have accepted to examine the alleged “ distinct disclaimer of Bi¬ metallism ” on the part of Newton and of Cantillon is fulfilled. Having proceeded thus far, however, the reader may per¬ haps be desirous of looking further, and of inquiring more closely into other utterances of Newton and of Cantillon. The object of Newton’s Report has already been mentioned. The end of the whole matter he states as follows : “ So then, by the course of trade and exchange between nation and nation in all Europe, fine gold is to fine silver as 14£ or 15 to one; and a guinea, at the same rate, is worth between 20s. 5 d. and 20s. 8 k/., except in extraordinary cases, as when a Plate fleet is just arrived in Spain, or ships are lading here for the East Indies, which cases I do not here con¬ sider: And it appears by experience, as well as by reason, that silver flows from those places, where its value is lowest in proportion to gold, as from Spain to all Europe, and from all Europe to the East Indies, China, and Japan; and that gold is most plentiful in those places, in 20 Sir Isaac JSewton and England’s Exclusion oj Silver. which its value is highest in proportion to silver, as in Spain and En- gland. “ It is the demand for exportation which hath raised the price of ex portable silver about 2d. or 3c?. in the ounce above that of silver in coin and hath thereby created a temptation to export, or melt down, the silver coin, rather than give 2d. or 3 d. more for foreign silver; and the demand for exportation arises from the higher price of silver in other places than in England in proportion to gold; that is, from the higher price of gold in England than in the other places in proportion to silver; and there¬ fore may be diminished, by lowering the value of gold in proportion to silver: If gold in England, or silver in East India, could be brought down so low as to bear the same proportion to one another in both places there would be here no greater demand for silver, than for gold to be ex¬ ported to India; and if gold were lowered only so as to have the same proportion to the silver money in England which it hath to silver in the rest of Europe, there would be no temptation to export silver rather than gold to any other part of Europe: And to compass this last, there seems nothing more requisite than to take off about 10 /. or \2d. from the guinea- so that gold may bear the same proportion to the silver money in En¬ gland, which it ought to do by the course of trade and exchange in Eu¬ rope; but if only 6 d. were taken off at present, it would diminish the temptation to export, or melt down, the silver coin ; and, by the effects would show hereafter, better than can appear at present, what further re¬ duction would be most convenient for the public.'’ In another part of the Report he says: "If things be let alone till silver money be a little scarcer, the gold will fall of itself; for people are already backward to give silver for gold, and will, in a little time, refuse, to make payments in silver without a premium, as they do in Spain; and this premium will be an abatement in the value of the gold; and so the question is, Whether gold shall be lowered by the government, or let alone till it falls of itself, by the want of silver money. It may be said, that there are great quantities of silver in plate; and if the plate were coined, there would be no want of silver money : But I reckon, that silver is safer from exportation in the form oT plate than in the form of money, because of the greater value of the silver and fashion together; and therefore I am not for coining the plate, till the temptation to export the silver money, which is a profit of 2d. or 3d. an ounce, be diminished; for as often as men are necessitated to send away money for answering debts abroad, there will be a temptation to send away silver rather than gold, because of the profit, which is almost four per cent.; and, for the same reason, foreigners will choose to send hither their gold rather than their silver." The reader will not have failed to note how remote from doctrinal speculation or dogmatic statement, how eminently r Sir Isaac Newton and England's Exclusion of Silver. 21 practical are these utterances, how clear the information they impart. He will also observe that they are entirely “ non¬ committal they show a dispassionate examination of various lines of action possible for the personages to whom they were addressed, and withal a politic abstinence from advocacy of any of them not unnatural in a Master of the Mint, already 75 years old, and whose reputation did not depend upon fur¬ ther achievements in the way of monetary statesmanship. Three courses of action are briefly considered : the one that the guinea be reduced to 205. 6c/., or 20s. 8 d. ; the second, that it be reduced to 2 Is.; the third, that nothing be done for the present, in the hope that Silver will circulate at a pre¬ mium. As for the second alternative, the measure actually adopted afterward, Newton does it simple justice as a half-way meas¬ ure: he says, with his so.und sense, if you fix the guinea at 21 shillings, you will be abl£ to judge by the effects what fur¬ ther reduction will be expedient. This latter remark of Newton’s brings clearly to our eyes what was then and later in the century the main motive for disturbing the law as it stood : namely, the desire to keep up the circulation of Silver. Not merely does Newton recognize that it will be necessary for Parliament to interfere again ere long in regulating the valuation of the guinea, but he expects a further reduction of its legal value. It is plain in fact that the permanence of the fixation of 1717—for “ guinea” is still the name for 21 shillings in Eng¬ land—was in no sense in Newton’s plan. Dying, as he did, at the age of 85, in 1727, he is necessarily entirely free from responsibility for, or complicity with, the laches of Parliament throughout the century that followed, in failing to cure the ills of England’s monetary situation by a further reduction of the guinea. 22 Sir Isaac- Newton and England’s Exclusion of Silver. It is mere justice to the fame of the Director of the great Recoinage of 1696, to point out that his own recorded state- ments relieve him of this charge. As for the third alternative, that England should recur to the Gold-token policy, of which she had already some ex¬ perience, and which had caused the monetary disorders of Spain and Portugal, that she should leave things as they were till people should come to treat the Gold and Silver coins, not as one money of two kinds, but as two different sorts of money, and so put Gold at a discount or Silver at a premium: it is equally contrary to Newton’s principles to propose this hap-hazard policy in permanence. Politic it might seem to him to present his views of what might hap¬ pen if Parliament did nothing to relieve the situation : but at his age and with his character he was the last man in England to assist in this permanent debasement of the English standard. There remains the first alternative, a reduction of the guinea to 205. 6d. or 20s. 8 d. This would have meant substantial adoption of the French ratio: a fixation which, as I have elsewhere shown, 9 secured to that country for more than fifty years that acknowledged desideratum of monetary policy, a concurrent and full circulation of Silver and Gold. We here approach distinctly “bi-metallic ground.” While I distinctly share with some writers of the last century, with Nicholas Magens and Sir James Steuart, and with Cantillon, to whom, by the way, I may appeal, upon the pe¬ destal where Prof. Jevons has placed him, the opinion that a measure of further reduction like this ought to have been adopted, either directly in 1717 or later (in the latter case making the reduction of the guinea by steps rather than by a 9 In a paper on “ The concurrent circulation of the two metals in France under the ratios of 14$ and of 15J,” in the Document of the Monetary Conference of 1878. Sir Isaac JSeioton and England’s Exclusion of Silver. 23 single fall); it seems but natural to accord to Newton the credit of an equal perception of its propriety. It is obviously so entirely in keeping with the views expressed in his report, so completely in consonance with his conscience in maintain¬ ing the standard of Elizabeth, that I have felt justified in ac¬ cording this honor to his name: though, of course, of abso¬ lute advocacy, of unequivocal adhesion on his part, we have no record. As for the significance of Newton’s attitude toward this matter of the concurrent use by the nations of Silver and Gold, I can best point its moral by suggesting to the thought¬ ful reader, if a quotation from myself be allowable, 10 the ques¬ tion whether the great desideratum of all Monetary Policy, stability of value, security in exchange, which was the goal which the United States set before Europe in calling the Con¬ ference of 1878, might not, in some fruitful measure, have been attained long ago, and preserved for after generations, had England, by adopting in full the advice of Newton, at¬ tained a close approximation to unity with France, then at 14f, in 1717 ; or had France obeyed the guide which the mar¬ ket rate subsequently afforded her, and adopted the ratio of 15 ; or again, had not the United States, in 1834-7, passed by the counsel of her soundest advisers, and neglected to adopt the ratio of 15.62. Three separate times, one might say, the world has stum¬ bled upon the treasure of unity of ratio, yet has never recog¬ nized it nor possessed itself of it. England had her opportunity in 1717 ; France in 1785 and 1803; the United States between 1834 and 1837. Has anything been gained by the failure to improve them? Is it not indeed a melancholy fact that the mere numerical fit¬ ness for use of round numbers as compared with fractions : the 10 Introduction to “ Contributions to the Study of Monetary Policy,” in the Document of the Monetary Conference of 1878. 24 Sir Isaac Newton and England's Exclusion oj Silver. superiority of 21 over 204 due to mere convenience, which obviously not only caused the selection of the number 21, but aided materially in securing its retention in the valuation of the guinea, concealed a fatal facility tor checking the tide of monetary progress to which Newton was ready to give sway. Of course as far as Bi-metallism is concerned, to recur to the locution used by Prof. Jevons, and against which we have protested, it is plain that one may quote Newton just as one quotes Aristotle, Julius Paulus or Copernicus or Locke, or the sound writers of the last century. Living as they did, be it remembered, at a time when the amount of silver in the hands of man was many times greater in comparison with the gold than it is now, and before Lord Liverpool had inaugurated his movement toward balancing the pyramid of monetary circulation upon its apex : before the rise of that scholastic excrescence of the Laissez-faire theory in economic science which denies to laws of coinage and legal tender any agency in creating demand for com¬ modities used as money, the concurrent existence of the two kinds of money was taken for granted. No one proposed to demonetize either of them. True, there were ‘‘mono-metallists” in these earlier days before Lord Liver¬ pool, if we use a locution which, after the foregoing explana¬ tion, is harmless, but they were sane mpno-metallists, so sane that they were substantially bi-metallists. Their sole metal, Silver, of which the Single Standard was to be made, was at the base, not at the apex, of the pyramid of the world’s circulation and of its valuations: it was the heavier metal in the first place, and its serving as the standard true money to be hoarded and kept comparatively stationary, was entirely compatible with an active circulation of the lighter metal as a trade coin, an international means of ex¬ change in the form of ducat, pistole and the like. Moreover, Silver, as I have said, was overwhelmingly the more abuud- Sir Isaac Newton and England's Exclusion of Silver. 25 ant metal, the outpouring of the gold treasures of Brazil and Siberia, California and Australia being still a thing of the future. In fact, seeing that in the countries where Gold was full le0. [Sent by Mail, Prepaid, on receipt of Price.] To practical men it is obvious that the restoration of a specie basis—meaning as it does the insertion under the country’s busi¬ ness of a new foundation in the place of the old ono—is a task that calls for statesmanship. It is likewise plain, that to make Resumption a “complete suc¬ cess”—in other words, to effect this change of base without dis¬ turbing the colossal superstructure of business and property which rests upon it—is a maneuver which demands in statesmen a rare degree both of knowledge and of skill. Every one is interested in the result. There is even more than prosperity at stake. Financial failure will embarrass, while financial successes will firmly establish the reforms, both in the North and in the South, which have been inaugurated by the Administration upon which the duty of Resumption has fallen. The watchfulness of intelligent criticism on the part of the thinking public is, of course, the best guarantee that such knowl¬ edge and skill will be forthcoming. It is the object of this book to serve the cause of successful Re¬ sumption, by supplying weapons and ammunition for such criticism. To this end it seeks to present the logical structure of its sub jects in the full light of Continental, as well as of English and American, opinion concerning them: to apprise the reader of the whole range, both of facts, and of existing argument on points of controversy, in addition to presenting and demonstrating the wri¬ ter's proposed solution of the “Problem of Resumption.” Differing thus in scope, both from the Special Reports of the various Monetary Commissions (Swedish, Belgian, French, En<*. lish, etc.), ancl from didactic Treatises or controversial Essays, la those who do not read such works, this book may serve in their place; while to those who do read them, it may serve as a guide and commentary. Presented (in November. 187G) to the Monetary Commission of Congress, as a printed deposition upon the chief questions of which it was hoped the Commission would present an unanimous solution, its interest is enhanced by the manifold discord of opinions sub¬ sequently embodied in the Report of that Commission. After an outline of the state of controversy, full statements are given from the best authorities as to the amount on band, production, con¬ sumption. ancl distribution of the precious metals. The armament of the battle of the Standards is then reviewed, in the form of points of a brief, for both Plaintiff and Defendant, in the great causes of Gold vs. Silver, the Single vs. the Double Standard, etc. A chapter is then devoted to the ultimate tests, and to plans suggested for correcting the fluctuations, of the value of Metallic Money, ancl for avoiding the establishment of any material Standard. Alter a statement of the situation in the United States, follows an analysis of the Moral Questions involved in the choice of methods of Resumption—the duty of the Government to the public creditor, and its duty to the people. In this connection, an original analysis and classifi¬ cation is given of the Functions of Money. With this foundation, the work approaches the groat Monetary Move¬ ment of the time toward the adoption of the Single Gold Standard, with an examination of its inception as an outcome of the Legislation of Eng¬ land in the period of Restriction ancl Resumption of Specie Pavment (171)7-1821). The chapter devoted to the Example of England is worthy of thought¬ ful study. It is a condensation of facts and arguments of peculiar in¬ terest, attainable, so far as we know, in no other form: presenting, in¬ deed. some historical facts of great moment which hitherto have been ignored in the Literature of Money. The prevailing arguments for the Single Gold Standard are then ex¬ haustively analyzed in the light of facts and of the Theory of Money. The past and future of Monetary Treaties are then discussed, and the distinction drawn between Treaties for mutual currency of certain coins and Treaties, the effect of which is to prevent fluctuations of the. ratio of Gold ancl Silver. To make a full presentation of this subject, the writer analyzes the opposing arguments of Dr. Bamberger, a leading champion of Demonetization in the German Parliament. A chapter on the “Conditions of Successful Resumption” sums up the various practical conclusions which the writer conceives to have been es¬ tablished. In the Appendix follows a series of analytical discussions of a number of questions which demand detailed and separate consideration; and a list is given, for the convenience of the student, of the most notable works upon Silver and Gold in the literature of the different nations. L * J CRITICAL. NCTICES.I i % *] 'j J [From the Chicago Tribune.'] “One of the most comprehensive and acute discussions of this subject to be found anywhere.” [From the Norik American Review. —An Article on “Currency Quacks and the Silver Bill.”] “It is safer to cite only from the small minority of the economists, namely from the most active and impassioned of European Bi-metallists, Henry Cernuschi, and the most acute and learned of them all, S. Dana Horton, of Ohio.” [ From the Same. —An Article on “The Silver Question.”] K. . . “ A monument of usefulness. A few extracts from this young but eminent writer on the subject will show how correct and far seeing a thinker he is. . . . His opinion is worthy of the highest considera¬ tion.” [From the Sacramento Daily Union.] “ In a modest volume of 190 pages, Mr. Horton has condensed the most closely reasoned treatise on the currency question that has been published in this country. . . . He brings to the task a prodigality of instances and a lucidity of statement, alike valuable and captivating. “ As at once, a hand-book of the question, and a sale guide through the labyrinth of conflicting opinions and warring schools, it certainly has no equal at the present time.” [ From “ By-metallism and the Money Question in the United States.” By Professor Erwin Nasse, of Bonn.] [Beside Wolowski and Cernuschi 1 “ we specially mention, in addition to Ernest Seyd—who is well known in Germany—the Belgian. De Lnveleye. and the American, Dana Horton. Their views have passed into the Re¬ port of the Majority of the Parliamentary Commission which the Con¬ gress of the United States appointed, August 15, 1876, for the investiga¬ tion of the Question of the Standards.” [From the National Quarterly Review.] K-. . . “An important contribution to the subject, and particularly apropos in the present agitated condition of the legislative and com¬ mercial mind; and we hope the volume will be widely read, to the etui that proper legislation on the subject may be sustained by an educated public opinion.” [From Ilarpef s Magazine.] “ He . . . disposes of some, current and popular heresies, some¬ times in a single paragraph, or even in a single trenchant sentence.” [From the Cincinnati Gazette.] “The volume, in short, deserves the attention and respect of all inter¬ ested in economical topics, however much they may differ in opinion from the author.” [From the Boston Advertiser.'] “ It is an argument in outline, unadorned and little filled in with de¬ tail, but vigorous and strong. . . 1 he work is a mine of informa¬ tion for all, on both sides of the controversy.” [From the London Saturday Review.] “ To those who are interested in the question, whether in its abstract or its immediate bearings, the treatise is well worth attentive perusal.” “On the whole his views are sound, both in policy and morality." [From the New York Evening Post .J “An essay upon the subject of money, by an earnest and thoughtful investigator.” [From the Bankers’ Magazine.] “The book may be expected to be read with equal interest, by men of very opposite opinions on the mono-metallic controversy.” [From the Westminister Review, Ijondon.] “A work of considerable general interest and a contribution of value to the discussion of the subject in its largest aspects. . . . The book is an extremely interesting one from every point of view’.” [From the Ijondon Economist .—A Letter on “The Silver Question,” by “X.” “I dissent from the arguments and illustrations of the very able and remarkable book of Mr. Lana Ilorton.” [From the Independent.] “ He reasons very closely, and is clearly an original student of the sub¬ ject, and one who does not content himself with following in beaten paths.” [From the New York Nation.] “This is a thoroughly scientific discussion of the silver question, and one which will possess a lasting value after the immediate issue in hand shall have passed away.” [From a Paper on “ The Silver Question, by Prof. IT. Stanley Jevons.] “But even taking these returns, Mr. .S. Dana Horton, in his ingenious w’ork on ‘Silver and Gold,’ comes to the conclusion,” etc., etc. [From the Nationalcekonomisk Tiddschrift, rf Copenhagen.] “The author, who seems to be thoroughly informed, also, in the litera¬ ture of foreign countries, particularly in English, French, and German, gives, first, a thorough statistical statement of monetary conditions; thereupon analyzes the various monetary systems and monetary theories; examines the subjects of coin and paper in England at the close of the last and at the commencement of this century; discusses the questions of monetary treaties, the unit of coinage,” etc., etc.- [From the Boston Evening Traveler.] “ A remarkable work.” [From the Chicago Post.] . . . “ He has made an encyclopedia of opinion upon the subject of his book, and has ably stated and defended his own views.” CONTENTS CHAPTER I. Introductory 13 CHAPTER II. The Stock on Hand, and Annual Supply op the Precious Metals. 19 Popular impressions in reference to supply of Money—Present and future—Opinion of Soetbcer as to rule of statistics of Money—Estimates of Chevalier and Soetbeer of total production up to 1848—Estimates of Tooke - Newmarch, Seyd, Xeller, Chevalier—Annual product at different periods—Annual product siuce the Gold Discoveries—Annual con¬ sumption—Metallic circulation in Western World—Amount exported to Asia—Estimate of total stock now in the hands of man—Annual loss. CHAPTER III. The Arguments for the various Standards briefly STATED.-. 29 The argument for the Gold Standard—Answer for Silver—Bi-metallic Money, or Double Legal Tender—Answer for the Siugle Standard—Reply for Bi-metallic Money— Garuier’s System, or Bi-metallic Money with variable ratio—Other suggestions. CHAPTER IV. The Standard of Desiderata and Standards of Value.. 36 Money as a commodity—Assignment of Functions of Money to various commodities— Rents payablo in kind—Option with tho payer—Measures of the value of Money—Stan¬ dard of Desiderata—Lowe’s Reference Table of Vaiuo—Its publication in Germany and tho United States—Ritter Von Jakob’s translation and explanatory essays—Importance of Lowe’s theory—Objections suggested by Lowe—Objections of Von Jakob—M. Manne¬ quin’s argument for Gold monometalism—Revision of contracts—The scaling of debts— Equity of demand for steadiness of value of Money—Real Money a commodity—False Money a debt—M. Mannequin’s Court of Revision—Standard of Desiderata—Multiple Legal Tender and the argument from metrology. (ix) CONTENTS. CHAPTER V. The Situation in the United States. d m . 44 Statement of tlio Public Debt—State, Mninclp il, and Railroad Bonds—Amount of Paper (’ . rency—Amount of Specie in the Country—Prices in 1809, 1800. “* CHAPTER VI. Moral Questions involved in the Monetary Policy_ 1. The Bonds of the Government, and the Greenbacks regarded as a Debt. Wliat was Lawful Money or tlio United States in the years 18G2-G5—The Paper Money as a meansof payment of tlio Bonds—The Act of 18G9—Payment in Coin, and the agita¬ tion in favor of the Gold Standard—Payment in Silver before 187:1—The nature of a Money Contract—Commodity »». Purchasing Power—Delivery of the specific commodity necessary—Reservation implied in Sovereignty of State—Alteration of Monetury Sys- terns—Notice to contracting parties -Fluctuations of Purchasing P- wer of Gold aud Sib ver—Historical position of Silver—Coinage Acts of 187.1-1—Estoppel by removal of Legal Tender character—Restoration of the sta/ii* ij'io u—Treaties for Bi-Metallic Money—Bamberger’s argument for Unity of Metal—The Mathematician and the Economist—The future of Gold-Monometallism—International Union and Bi-Metallic Money. • CHAPTER XI. The Conditions oe Successful Resumption of Specie Payments by the United States. ]47 The meaning of “Successful” Resumption stated—General Conclusions established by this Treatise—Necessity of a steady par between Gold and Silver—Dangers to America of the continuance, in Europe, of the Policy of Demonetization—The True Policy of the United States. APPENDIX. A. The Theory of Money— A Personal Explanation—Postscript to the Second Edition. 153 B. Bi-metallism and the Standard of Desiderata.55 C. Of Merchandise-money, Paper-money, and Credit—. 157 D. The Fall of Silver vs. The Rise of Gold—Price and Pcr- chasino Power of Demonetized Metal and of Legal Tender... 159 E. Valorimetre, Evaluateuk, and Instrument of Valuation. 161 F. Fungibility, Freedom of Trade, and Demonetization. 163 G. Aristotle, Locke, and Newton on Money. 168 H. Extremes of Opinion concerning the Influence of Law upon the Value of Commodities used as Money—The Laissez-faire Theory and I wan Possoschkow. 169 I. A late Utterance of Professor Soetbeer, and Queries suggested BY IT. 174 J. Senator Jones on an International Standard Convention. 178 K. The Present State of Debate. . . 179 L. The Silver Bill in Congress. 183 M. A Partial List of Works treating of the Questions discussed in this Essay. 188 N. Errata. 195 THE MONETARY SITUATION AN ADDRESS DELIVERED BY REQUEST OF THE AMERICAN SOCIAL SCIENCE ASSOCIATION AT ITS MEETING IN CINCINNATI, MAY 21, 1878. By S. DANA HOBTON, Author ef “Silver and Gold, and their Relation to the Problem of Resumption.” WITH AN APPENDIX CONTAINING KXTRACTS FROM THE FOLLOWING PAPERS BY THE SAME AUTHOR: THE PRUSSIAN ANTI-SILVER THEORY, AND ITS ORIGIN IN AN HISTORICAL ERROR. GENERAL RESTORATION OF SILVER A CONDITION PRECEDENT TO SUCCESS¬ FUL CANCELLATION OF PAPER MONEY. A VINDICATION OF THE PRACTICABILITY OF BI-METALLIC UNION. CONTENTS. introductory. 1. The Incompleteness of Monetary Science . 5 2 . The Importance of the Subject, “ Money.” . (1 3 . That Mona/ is an Institution, not of one Nation, but of the Work! . 7 4 . That Nations can mal;c Mistakes . 8 5 . The True Test of Public Measures . . 9 PART I. THE SITUATION IN THE UNITED STATES. Our Monetary Past. 11 The attitude of the United States in the presence of European De- monitization of Silver. 13 What European Demonetization meant to the United States. 14 The Limits of the Injurious effects of European Demonetization. 15 The subsequent attitude of the United States. IS The Allison Bill.*. 22 [ 10 ] PART II. BIMETALLISM VERSUS DEMONETIZATION. PAGE. The Example of England and of Germany. 23 . The Causation of the Value of the Precious Metals. 31 The Concurrent Circulation of Gold and Silver. 32 The Heaviness of Silver. 35 The Prospect of an Increased Production of Gold. 35 The Rise of Prices since the great Gold Discoveries. 35 The Policy of Checking a Gradual Rise of Average Prices. 33 The Banking Advantages Attributed to the Gold Standard. 41 The Plan that one Country shall take Gold and another Silver. 42 Conclusion. 44 APPENDIX. EXTRACTS FROM THE FOLLOWING PAPERS: A. The Prussian Anti-Silver Theory and its Origin in an Historical Error... 47 B. European Restoration of Silver, a Condition Precedent to Success¬ ful Cancellation of Paper Money. 50 C. A Vindication of the Practicability of Bi-Metallic Union. 57 [ 11 ] DOCUMENT OF THE MONETARY CONFERENCE OF 1878. INTERNATIONAL MONETARY CONFERENCE HELD IN COMPLIANCE WITH TnE INVITATION EXTENDED TO CERTAIN GOVERNMENTS OF EUROPE BY TIIE GOV¬ ERNMENT OF THE UNITED STATES, IN PURSUANCE OF THE SECOND SECTION OF THE ACT OF CON¬ GRESS OF FEBRUARY 28. 1878, IN PARIS, IN AUGUST, 1878, UNDER THE AUSPICES OF THE MINISTRY OF FOREIGN AFFAIRS OF THE REPUBLIC OF FRANCE. PROCEEDINGS AND EXHIBITS, FOLLOWED BY THE REPORT OF THE AMERICAN COMMISSION AND AN APPENDIX CONTAINING CORRESPONDENCE SUBMITTED TO THE DEPARTMENT OF ST»TE BY MR. FENTON. AND HISTORICAL MATERIAL FOR TIIE STUDY OF MONETARY POLICY CONTRIBUTED BY MR. HORTOX. Senate Executive Document No. 58, Forty-fifth Congress, Third Session. Washington Government Printing Office, 1879. CONTENTS. page. Proceedings of the Conference of 1878.« 1-192 List of members of the Conference. 195-199 Report of the United States Commission. 201-216 Correspondence presented by Mr. Fenton. 219-234 Historical Material for, and Contributions to, the Study of Monetary Policy, selected and presented by Mr. Hor¬ ton. 235-878 Introductory. 239 France. 247-306 The ratio of loi in France. 249 The recoinage of 1785. De Calonne. 254 Statement of the recoinage of the Gold Coins. 256 The monetary commission of 1790, De Fortbonnais and Desro tours..—.. 268 [12] Historical Material Contributed fey Mr. Horton—Continued. PAGE The Coinage system proposed by Mirabeau... 297 Report of M. Gaudin, 1803.. 3 Q 0 Conclusions. 306 England. 307-413 Statutes establishing free and gratuitous Coinage of Gold and Silver, 1666-1768. 309 The debate and legislation of 1717, and the advice of Newton. 315 Extract from the writings of Sir James Steuart, illustrat¬ ing the monetary situation of England, 1759-1773. 303 Measures for maintaining the Coin at standard weight, 1774. 329 The amount of Silver coined in England in the eigh¬ teenth century. 337 The aim of England’s monetary legislation, 1773-1799. 339 Prohibition of the Coinage of Silver (Statutes), 1798-99... 345 The Bullion Report of 1810, and the Silver question; In¬ troductory. 351 Extracts from the report. 334 The statute ef 1816, which completed the Gold Standard. 373 The effects of resumption in Gold by contraction of paper issues, 1818, 1822. 379 Extract from a speech of Hon. It. Lowe, August 6 , 3869. 381 Extract from a report of the Association of the Chambers of Commerce of the United Ivingdom, 1870. 383 The rise in the. value of Gold in England. 385 Extract from an article by Prof. J. Thorold Rogers. 387 Extract from a paper on the recent fall of prices of com¬ modities, by Robert Giffen. 389 Extract from return East India Silver; the limitation of the Coinage of rupees in India. 409 The United States. 415-697 Statutes, Resolutions, and Reports concerning Metallic Money, 1775-1789. 417 Extracts from the Journal of the Continental Congress, 1775-1776. 417 Report of Committee to ascertain the value of the seve¬ ral species of Gold and Silver current in the Colonies, and their proportion to Spanish milled dollars, 1776. 421 Extracts from Journal of Congress, 1777-1782; Resolution concerning rates of money exchange; prisoners’ sup¬ plies; state of the finances; rates of foreign coins. 423 Coinage scheme proposed by Robert Morris, January 15, 1782. 425 Report of committee of Congress thereon. 432 [ M] Historical Material Contributed by Mr. Horton—Continued. page. W Ordinance proposed for the valuation of foreign coins by ’ Robert Morris, with reports ami resolutions thereon, 1782-1785. 433 Mr. Jefferson's notes on the establishment of a Money -Unit and of a Coinage for the United States, with re¬ port of Grand Committee thereon.. 4.37 Abstract of the Coinage Systems proposed by Samuel Osgood and Arthur Livingston, the Board of Treasury, in their report of April 8, 1786. and resolution of Con¬ gress thereon, etc. 449 Ordinance for the establishment of a Mint, October 16, 1786. 452 Report of Alexander Hamilton on the establishment of a Mint. April, 28, 1791. 454 Extract from Report upon Weights and Measures, by John Quincy Adams, 1821. 1ST Discussions preliminary to the alteration of the ratio. 502-697 Memorandum of a report of a Committee of the House (Mr. Lowndes) on the expediency of amending tho coinage laws, January, 26. 1.819. 502 Report of William H. Crawford, the Secretary of the Treasury, on the Currency, February 12, 1820. 502 Report of the Committee on the Currency on the expedi¬ ency of increasing the relative value of Gold, February 2, 1821. 554 Report of S. D. Ingham, the Secretary of the Treasury, respecting the relative value of Gold and Silver, May 4, 1830. 558 Extracts from the reports of Mr. C. P. White, from the se¬ lect Committee of the House on Coins, etc., 1831-1832.. 673 Extract from a report, of Samuel Moore, Director of the Mint, on relative value of Gold and Silver. 678 Memorial to Congress of sundry banks of New York, 1834. 679 Motives for the adoption of the ratio of 16, 1834-1837. 685 Mr. Benton on the revival of the Gold Currency. 691 Miscellaneous Papers. 699-735 The Rise of the SilvCr-price of Gold between 1770 and 1830, and its causes. 701 Free Coinage and Gratuitous Coinage in France and Eng¬ land. 711 The concurrent circulation of the two metals in France, ratios of 14f and 15J. 715 Monetary propositions of Sir Jamas Steuart. 719 [ 14 ] Historical Material Contributed by Mr. Horton—Continued. PAGE The theory of Monometalism in 1802; extracts from the second Report of Citizen Berenger. 723 The German commercial convention. 727 The sale of Silver and the stock on hand in Germany. 729 The Anti-Silver Legislation of European States. 733 A Partial List of Modern Publications on the Subject of Money. 737-773 The Position of Law in the Doctrine of Money. (Note).. 74 ] Monetary Union. 775-801 A List of Monetary Treaties; Treaties for Interchangeable Currency. 777 The Origin of the Monetary Union, called “Latin”; Re¬ port of the French Minister of Finance, of 18th April, I860. 781 The Treaty constituting the Latin Union, December 23, I 860 . 787 Extract from the report of the Committee on Coinage, Weights, and Measures, by -Jno. A. Kasson, 1866. 791 The invitations of France to the United States to accede to the Latin Union, and to take part in the Conference of 1867. 795 Proceedings of the International Monetary Conference of 1867. 803-878