Columbia elnitm-sup in tliftfup of Ilf in Pork LIBRARY THE SELIGMAN LIBRARY OF ECONOMICS PURCHASED BY THE UNIVERSITY 1 9 2 9 INTERNATIONAL BIMETALLISM, BY EMILE DE LAVELEYE. “ More counsel, with more money.” Timon of Athens, iv. 3. “ Had all men but a single creed, Faithful to God, and just in deed; One weight, one measure, corn, and gold, ’Twcre better for all an hundredfold.” The Landgrave Philip of Hesse, 1CHJ0. ‘‘The intrinsick Value of Silver” [or of Gold], “ considered as Money, is that Estimate which common consent has placed upon it.”— John Locke. PRICE SIXPENCE. BIRMINGHAM: PRINTED BY MAKTIN BILLING, 80N, AND CO„ LIVERY STREET. PUBLISHED BY COKNISn BROTHERS, NEW STREET. * * pay in gold or silver, and this right cannot be token away without disturbing the relation of debtors and creditors, to the prejudice of debtors, to the extent of perhaps one-half, certainly of one-third. To increase all debts at a blow, (brusquement ,) is a measure so violent, so revolutionary, that I cannot believe that the government will propose it, or that the Chambers will vote it.”— Emile dc Laveleye. “ Silver will gradually take the place of this currency, and, further, will become the standard of values, which will be hoarded in a small way. * * * I confess to a desire to see a limited hoarding of money. But I want to see a hoarding of something that is a standard of value the world over. Silver ■is this." [Six months after he had signed the law discrediting it.]— President Grant , October 3,1S73. “ They (the United States) have been in the use of the two metals from the time the Government was organised. It is no new system which they propose to establish; it is the old system—that under which they have long lived and prospered—to which they are returning. From 1792 to the day (February 12th, 1873) when, by a sort of inadvertence, the silver standard was suppressed, not a merchant, not a banker, not a manufacturer, not an establishment nor an interest of any kind, could bo cited as having raised any objection to the simultaneous use of the two metals.”— Report of Monetary Conference, p. 21, 1878. “ To annul the use of either of the metals as money is to abridge the quantity of circulating medium, and is liable to all the objections which arise from a comparison of the benefits of a full with the evils of a scanty circulation .”—A lexaiuler Hamilton. “ I concur with you that the unit must stand on both metals.”— Thomas Jefferson. “ Most people are aware that previous to 1819 our circulation was a paper one, but few are aware that previous to the suspension of cash payments (1797) it was Bimetallic, and not measured by a gold standard. Of this fact it must be supposed that Sir R. Peel was not conscious when he made his famous speech on the resumption of cash payments in 1819. He said— ‘ Every consideration of sound policy, and every obligation of strict justice, should induce us to restore the ancient and permanent standard of value.’ Now this is precisely what he did not do, but what the Bimetallists are now advising ; we wish for a return to the ancient standard of the realm with the rest of the nations of the earth.”—“ What is a Pound?" by II. II. Grenfell, Governor of Rank of England, in “ Nineteenth Centura." June 1881 . J “ Of all the great effects produced upon human society by the discovery of America, there were probably none so marked as those brought about by the great influx of the precious metals from the New World to the Old. European industry had been declining under the decreasing stock of the 8 conviction and sure and varied arguments which his great learn¬ ing supplied him with. I could not resist the force of his precious metals, and an appreciating standard of values ; human ingenuity grew dull under the paralysing influences of declining profits, and capital absorbed nearly all that should have been divided between it and labour. But an increase in the precious metals, in Buch quantity as to check this tendency, operated as a new motive-power to the machinery of commerce. Production was stimulated by finding the advantages of a change in the standard on its side. Instead of being repressed by having to pay more than it had stipulated for the use of capital, it was stimulated by paying less. Capital, too, was benefited, for new demands were created for it by the new uses which a general movement in industrial pursuits had developed ; so that if it lost a little by a change in the standard, it gained much more in the greater demand for its use, which added to its capacity for reproduc¬ tion, and to its real value. The mischief would be great, indeed, if all the world were to adopt but one of the precious metals as the standard of value. To adopt gold alone would diminish the specie currency more than one-half ; and the reduction the other way, should silver be taken as the only standard, would be large enough to prove highly disastrous to the human race.”— Mr. It. M. T. Hunter. “ Professor Jevons altogether denies that the world has suffered any very serious evil from the appreciation of gold or depreciation of silver during the hist few years, or that there is any serious evil to be apprehended from the nations of the world choosing silver or gold for their standard as they please. He also points out what we have often observed ourselves— that while Governments may agree to adopt bimetallism, it is impossible to say what the result would be.”— Times, April 23,1881. “ America has been taking at least twenty millions sterling per annum off the gold markets of the world. That is to say, America alone has required the whole of the annual production in order to permit her to accumulate what she required for her new currency.”— Daily Ac ns, Oct. IS, 1881. “ A fall in the value of the precious metals, caused by the greater facility of their production, or by the discovery of new sources of supply, depends in no degree on the theories of philosophers, or the decisions of statesmen or legislators, but is the result of circumstances beyond human control; and although, like a fall of rain after a long course of dry weather, it may be prejudicial to certain classes, it is beneficial to an incomparably greater number, including all who are engaged in industrial pursuits, and is, speaking generally, of great public or national advantage.”— Bncyclo- pcedia Britannica, 1859. *• There were in operation many causes besides over-production, ivhich was sometimes the cause and sometimes the cousequence of depression. People had not too many clothes, but they had no money to buy them.”— Mr. Mun- della — Times, March 3rd, 1879. 9 reasoning and of liis proofs. I remained faithful, nevertheless, to the idea of a universal monetary union, drawn up by M. de “ In short^ the supply of gold has fallen off to a greater extent than trade and production have done. No doubt there was one world-wide cause which underlies the whole matter, viz., that the limits of the consuming power had been reached in 1873. As Lord Derby lias reminded his Lanca¬ shire hearers, however many stockings might be produced in the mills, every man has only two legs. And he might have added, that however much people may desire to have more stockings, or any other commodity, there is a bottom to every man’s pocket. The world has not yet re-found the purse of Fortunatus.”— Edinburgh Re/view, p. 454,1879. “If the coinage of silver was suppressed in France, less would come here, as it would no longer be attracted by the facility which commerce now has of converting it into money. It is this power of converting the bullion into money which attracts silver to France, and causes it to remain, even when the price is for the moment too high to admit of its being coined. “ The circulation of silver serves as a reserve, when, by reason of the failure of the harvests, it is necessary to buy corn in countries in which, as in Russia, the current money is silver. If that metal should be reduced to merchandise in France, as it is in England, commerce would have less facility in procuring it, and the reserve of it in the country would disap¬ pear.”— The French Enron Rothschild. “ 1 attribute the monetary disturbance that has occurred—and is now, to a certain degree, acting very injuriously to trade—I attribute it to the great changes which the Governments in Europe are making with reference to their standards of value. Our gold standard is not the cause of our com¬ mercial prosperity, but the consequence of our commercial prosperity. It is quite evident we must prepare ourselves for great convulsions in the money market, not occasioned by speculation or any old cause which has been alleged, but by a new cause with which we are not sufficiently acquainted, and the consequences of which are very embarrassing; and no one would be able to form an adequate idea of the monetary arrangements of the times in which he lives if he omits from his consideration the important subject to which I have called your attention.”— Mr. Disraeli — Glasgow , Nov., 1873. “ Should an inattentive reader ask in objection, * Why then the present depressed state of trade, when our stock of gold is as large as ever ? ’—we would remind him, not merely that the annual supply of gold has greatly declined, but of the still more important point, that money (as we have carefully stated), although a most potent auxiliary of trade, is not the primary or creative force. To use our own words—it gives wings to trade ; but trade can only exist in so far as there is the power to produce, and the means and desire to consume. In proportion as these are wanting, trade declines—a dead bird still has its wings, but it cannot fly ."—“Gold and its Effects on Trade," Edinburgh Review , April, 1879. “But despite these advantages, there is no doubt but prices, profits, and wages are falling in very many industries which have hitherto been pros¬ perous. We will attempt to enumerate the principal causes which have 10 Parieu, but I pursued it henceforth in the way which alone appears to me able to lead to the general adoption of the essen¬ tial principles of the French system. Recent events seem to effected this result; some of them are local, some are shared with other countries. The first cause in importance, the most general, and in all probability the most enduring, is the rapid rise in the economical value of gold. “While the area of civilisation is widening, and therefore the demand for an adequate currency is being extended, the most populous State of Europe has abandoned a silver for a gold currency, and has had as a fruit of its successful war with France an exceptional power of attracting gold to itself—with singular success indeed, but to the incredible misfortune of its people.”— Professor Thorold Royers—Report of Monetary Conference, p. 388,1878. f “it was in 1792 that the first coinage law was passed, and by this law the ratio between the two metals was fixed at 1 to 15. (In 1785, France had this ratio, and then altered it to 1 to 15£.) At this epoch neither France nor her monetary allies of to-day had yet established the relation of 1 to 15£. In 1834-7, the ratio had been changed to 1 to 15'98, or, to use a common expression, 1 to 1<>; this was maintained until 1873. Notwithstanding these varying phases of our monetary history, the silver dollar lias never been touched; the gold coins have been changed, but the silver dollar has remained such as it was in the first days of the Republic.”— Report of Monetary Conference,p. 21,1878, “ That as long as the French law was in operation, only unimportant fluctuations arose in the relation of the two metals, whatever the pro¬ ductions of the one or the other. . . . That if the French law alone attained this result it becomes evident— a fortiori —that when there is a bimetallic treaty between France, England, and the United States, the relation would be fixed with such solidity, that it would become unshak¬ able.”— Count Rusconi, Italian Delegate, Monetary Conference,p. 207. “ Though England had a gold standard, she had great interest in the maintenance of silver as currency. She had moreover a more definite and l. ss compromised position for the discussion of this question than other countries, for she had borne the depreciation of silver in India without trying to shut her doors against it. She had done more than any other country to maintain silver [always excepting that in 1810 she was the first to discredit it]. The Latin union had shut their doors against it; Holland had half shut hers. While others, afraid of a further depreciation, had taken definite and restrictive measures, England had allowed silver to take its natural course, and for five years had borne the burdens resulting there¬ from. The Indian government had suffered a great loss ; the merchants had suffered from fluctuations in value; and public functionaries had suf¬ fered from the depreciation; but England had given proof of her faith in gold and silver, by waiting to see whether it would not recover its former value."— Mr. Gosehen—Monetary Conference, p. 213. 11 liavo brought, to thu opinion of YVolowski, a confirmation so decisive, that ono sees many economists amongst the most learned and distinguished of Europe and America subscribe to his theories, completed by M. Cernuschi. In proportion as the teaching becomes more clear and more irresistable, the adhesions and conversions become more numerous and important. There exists to-day in political economy, two schools, the historical or “ realistic ” school, which employs from preference the inductive “ The action of Government, therefore, gives money its value ; and if all Governments agree, they can, at least, go so far in determining the value of money as to fix the ratio of value between igold and silver money. It is unnecessary to go back farther than the reigns of Charles II. and James II. At that time silver had for centuries been the money of account and the standard of value. In the early years of William III.’s reign the .silver coins had become clipped and defective to the extent of nearly half their weight; prices at home and exchanges abroad were thrown into confusion ; the evil became insufferable; and at last, under the guidance of Montagu and by the advice of Locke, the old silver coinage was called in and good silver coins were issued, at a loss to the nation of about £3,000,000. Lord Liverpool says— “The high rate of the gold coins to which the people then voluntarily submitted can only be ascribed to the preference which at that time began to be given to the use of gold coins in all payments, at least of considerable amount. It is evident that during the late re-coinage the common people had become accustomed to the use of the gold coins, and the reason which induced them still to prefer them was, perhaps, the convenience of making large payments in coins of that metal. This change from what had been the case in the reign of Charles II. was probably owing to the great increase in the commerce of the country, and to an augmentation in the price of every commodity, so that payments in general required coins made of the most valuable metals. The fact certainly is that from this period the gold coins began to take the ascendancy, and to become the more usual instrument of commerce and measure of property, in preference to the silver coins. In the reign of King William, when the silver coins were so very deficient, Mr. Locke had said—‘It is no wonder if the prices and value of things be con¬ founded and uncertain when the measure itself is lost.’ To restore this measure the public had expended £2,700,000. But notwithstanding so great an expense, this measure of property in the lapse of a very few years was a second time lost, and had again no existence, unless it had passed into the gold coin.’ “In this state of things the Government of George I., on the advice of Sir Isaac Newton, determined to fix by law the value of the gold guinea, wishing apparently to prevent the exportation of the silver coin. They did not, however, reduce it from 21s.6d., the then current value, to 20s.Gd., the actual value, but only to 21s„ leaving it still above the market value of the coin in silver .”—Letter in “ Timex,'" May 22nd, 1881. 12 method, and the orthodox or rational school, which makes use principally of the deductive method. The inductive school examines the facts stated by history and statistics, and it endeavours to gather from them rules applicable to the administration of economical interests. The deductive school studies the nature of man, and infers abso¬ lute and universal laws, which it calls “natural laws.” The first will say that political economy is a “science greedy of facts;” the second will affirm that the pi*inciples of it are evident. The one lost in the thousand complications of industrial and commercial life does not always arrive at ideas sufficiently exact, the other, on the contrary, from the weight of its abstract axioms, promulgates dogmas to which experience brings too frequent contradictions. The rational school employs the process of reasoning of-the 18th century, and of the French Revolution; the historical school those which Savigny and his successors have applied to the study of the law. These oppositions of course are only met with, amongst different economists, with very varied shades of opinion, reduced sometimes to simple tendencies. How¬ ever, if it is necessary to cite some representatives of the two schools, I will name, for the deductive school, Ricardo and Tracy, and for the historical school, Roscher and Adolf Wagner. On the subject of money the theories of the two schools are dis¬ tinguished clearly. The historical school will say, nature has endowed two metals with all the monetary qualities. All the manuals of political economy, in enumerating the special properties which have made silver and gold be adopted as money, make no distinction between the two precious metals. History teaches us that, in spite of very imperfect regulations, civilised people have always simultaneously employed them. In wishing to modify suddenly, according to the abstract theories, situations which are the result of the slow evolution of centuries, profound and disastrous disturbances are inflicted on society. Let us then consecrate by legislation this natural and historical fact, and constitute one bimetallic money. The rational school will say : It is as contrary to reason to employ two metals for measure values, as in political organisation to have two rooms. A people having only one will, must elect only one representative body to manifest it. To work the exchanges one metal suffices; it is necessary then at any price to exclude the other. The historical deed fact has been an error. Legislature has exceeded its powers. 13 Money is a merchandise. The value of merchandise is ruled by the action of supply and demand, not by arbitrary laws. Gold and silver are merchandise, then the law can only fix between these two metals a corresponding value. If the legislature com¬ mits this fault, commerce will not obey. It will always take away from circulation the most sought-after metal, so as only to leave there the least-valued metal, whether gold or silver. Other writers, as Adam Smith for example, make use of the two methods in turn. In order to decide which of the two arguments is right concerning the monetary system, it is necessary to go back even to the first idea of money. Antiquity has left us two definitions equally profound, the one due to Aristotle, the wisest of philosophers, the other to Paulus, the most discerning of lawyers. These are the words in which Aristotle defines money in the admirable book which ought to be the breviary of the statesman and the politician: “ Necessity introduced money. It was agreed to give and to receive in exchanges a material which, useful by itself, was easily handled in the habitual customs of life; it was of iron, for example, of silver or other similar substance, of which they determined first tho size and the weight, and then, in order to do away with the inconvenience of continual measuring, they marked it with a particular impression—the sign of its value. But money by itself is only a frivolity, a futility; it is only valuable by law and not by nature, since a chango of agreement amongst those who make use of it can completely depreciate it, and render it quite useless to satisfy any of our wants.” Aristotle gives elsewhere for root to the word numisma —money, the word noinos —law. The lawyer Paulus, going back to the origin of money, expresses himself pretty much as Aristotle: “ The origin of sale and purchase is found in barter.” Money was unknown, and they had no words to distinguish “merchandise ” and “ the price,” but every¬ one following the wants of the moment and of the circumstances exchanged that which was useless to him for that which was useful to him, for it often happens that one person has in excess that which another wants. But, as it did not always happen that you possessed exactly that which I desired to have, and that reciprocally I could offer that which you would except, a material was chosen of which the legal and perpetual value obviated the difficulties of exchange, by equality and quantity. This substance, marked with an official stamp, derived its use and its power of pay- 14 menfc not from its substance but from its quantity. Since then the two things exchanged are no more called “merchandise,” but one of them only, the other is called “the price.” The whole theory of money is summed up in this passage with an accuracy of expression and a profoundness of light that one cannot sufficiently admire. The language of the jurists it must be confessed is more exact than that of the economists. It is the result of a long and continual elaboration, which goes back at least to the law of the Twelve Tables, whilst ours only dates from one century and ought to explain the intricacies often badly distinguished from the reality. Thus, according to Aristotle, money is a public institution; it derives its value, not from nature, but from law. It is the use that is made of the precious metals (of little use by themselves) that makes the value of them. What proves it is, that if they are removed by agreement from this usage, that value disappears almost entirely. We find here, indicated by Aristotle, the cause of the monetary disorder from which civilised people at this moment suffer. Germany has demonetised silver* The other States have been * “ Prince Bismarck has made two remarks on this subject, which, being the expression of the actual truth, settles the question. Speaking in 1879 to Mr. Kelly, an American Congress-man, of the German monetary reform of 1873, he said—* We listened in this matter to an eminent economist, and we now see that we have only put plain water into our soup boiler.’ ” 11 Recently, in the Reichstag, he thus summed up his opinion—‘ Gold has become like too-scanty a blanket, which everyone struggles for, and which makes people squabble.’ ”— Emile de Lavelcye —“ The Battle of the Standards," 1881 (London, P. S. King). “ Upon this one point all authorities on the subject are agreed, to wit, that the large increase in the supply of gold has given a universal impetus to trade, commerce, and industry, and to general social development and progress.”— Ernest Seyd, 186S. Mr, Ricardo said—“ The question was not deserving half an hour’s con¬ sideration of the house. The difficulty was only that of raising the currency three per cent, in value, and who can doubt that even in those states in which the currency is entirely metallic it often suffered a variation equal to this without inconvenience to the public.”— May 24tli, 1819. Shortly before Mr. Ricardo died in 1823, he said to the late Sir William Heygate—“ Ay, Heygate, you and the few others who opposed jus on the cash payments have proved right. I said the difference only at most would be only five per cent., and you said that at the least it would be twenty-five per cent.” 15 obliged to reject from their mints that metal, which becoming again simple merchandise, has lost a part of its value which its employ, ment as money gavo to it. Panins takes up the idea of Aristotle, but ho completes it by a fact which throws a light on the whole subject. Law chose a material as a medium of exchange—it marked it with an official print—it warranted the weight of it and the standard of a permanent value ; but its power of acquisition depends not on its substance, but on its quantity. That word alone explains all the so complicated phenomenons of the variation of prices. If money increases in quantity, prices rise; if it diminishes in quantity, prices lower.* The monetary This is stated on the authority of the late Alderman Heygate. Tt is a pity that Mr. Ricardo did not publish this as some atonement for the tremen¬ dous mischief he then, past doubt, occasioned.—See Doublcday's Financial History of Sir Robert Peel's Life , vol, 1, p. 245. “ But my friend (Mr. A. Baring) must take the present market price of silver, and not the old mint price, for the standard. The market price is now 4s. lid., the mint price , when silver was a legal tender , was 5s. 2d. If my lion, friend should take the mint price for the standard of value, he would depreciate the standard ; if he should take the market price, he will not adhere to the ancient standard.”— Sir Robert Peel, April 22nd, 1833. “ I have always contended that on the adoption of a gold and silver standard, it must be so regulated as not to lower the general value of the pound sterling.”— Alex. Baring , April 22nd, 1833. So far this year the fluctuations in the value of silver have had a most disastrous effect. The value of the tael lias sunk to the lowest point known in the history of the trade, and a revival which promised work and wages for Lancashire was checked and trade disorganised. Each day’s trade is a mere gambling transaction, fluctuations in the price of produce being equalled in the fluctuation of the price of the metals for which it is exchanged, and the merchant finds all his calculations upset by the unfavourable prico of silver, and a ruinous loss is made, when he was fully justified in expecting a fair margin of profit.”— The Shanghai Correspondent of the “ Times," June 1,1879. * “The value of money is in the inverse ratio of its quantity ; the supply of commodities remaining the same,— Increase the quantity of money, prices rise. Decrease the quantity of money, prices fall. On the other hand, the quantity of money remaining the same,— Increase the quantity of commodities, prices fall. Decrease the quantity of commodities, prices rise. Thus a decrease of the quantity of money produces the same effect on the price of a commodity as an increase, of tlte quantity of the commodity itself; if com be that commodity, an addition to the value of money, such 16 unit, the franc for example, purchases so many more things when it is scarce, and so many less when it is abundant, although the substance, which is five grammes of silver, remains the same. The law can determine what shall be the instrument of exchange, as the diminution of its quantity occasions, insures as effectually a fall in the price of corn, as the opening of the ports and free importation; in which of the two cases prices would fall lowest, is a simple question of proportion between the increased supply of corn and the decreased quantity of money.”— Sir James Graham's Com and Currency. “It is in the shadow of a shrinking volume of money that disorders, social and political, gender and fester, that communism organizes, that riots threaten and destroy, that labour starves, that capitalists conspire and workmen combine, and that the revenues of government are dissipated in the employment of labourers, or in the maintenance of increased standing armies to overawe them.”— Emile dc Lavcleye —“ The Battle of the Standards," page 55,1881. “In 1815 a new policy was adopted, and 80s. was established as the price at which foreign corn might be admitted. An important change occurred in 1819, which really affected the price of corn. The attempt to keep up the prices of corn at 80s. entirely failed ; for the right honourable baronet, in 1819, introduced a change in the currency, and restored the standard of value. It is remarkable to observe the effect during the five years before and five years after 1820. In 1816, the price was 78s.; in 1817, 96s.; in 1818, 86s.; in 1819, 74s.; and in 1820, 67s.; thus, even in 1820, a great difference in the price had been produced; but the average of the five years was 80s. 9d. per quarter. What was the case in the five years following 1820? In 1821, the price was 56s.; in 1822, 44s.; in 1823, 52s.; in 1824, 63s.; and in 1825, 68s., giving an average of 57s. 3d., instead of the former average of 80s. 9d. That average from 1820 to 1825 does not much differ from the average from 1830 to 1840. It was not therefore any alteration in the corn laws that had produced the alteration of price, but the alteration in the monetary system.”— Lord John Russell's Speech on the Corn Laws, 1843, “ Diminishing money and falling prices are not only oppressive upon debtors, of whom, in modern times, states are the greatest, but they cause stagnation in business, reduced production, and enforced idleness. Falling markets annihilate profits, and as it is only the expectation of gain which stimulates the investment of capital in operations, inadequate employment is found for labour, and those who are employed can only be so upon the condition of diminished wages. An increasing amount of money, and con¬ sequently augmenting prices, are attended by results precisely the contrary. Production is stimulated by the profits resulting from advancing prices; labour is consequently in demand and better paid, and the general activity and buoyancy insure to capital a wider demand and higher remuneration.” —The American Review, 1876, 17 bat it cannot fix tlie amount of tilings it will purchase, for that will depend upon the number of monetary units which appear in Richard Cobden, Esq., before the Parliamentary Committee on Banks of Issue, in 1840, makes the following impressive statement : “ I could adduce a fact derived from my own experience, that would illustrate the heavy losses to which manufacturers were exposed in their operations, by those fluctuations (in 1837) in the value of money. I am a calico printer ; I purchase the cloth, which is my raw material, in the market; and have usually in warehouse three or four months’ supply of material. I must necessarily proceed in my operations, whatever change there may be—whether a rise or a fall in the market. I employ 600 hands; and those hands must be employed. 1 have fixed machinery and capital, which must also be kept going ; and, therefore, whatever the prospects of a rise or fall in prices may be, I am constantly obliged to be purchasing the material, and contracting for the material on which 1 operate. In 1837, I lost by my stock in hand, £20,000, as compared with the stock-taking in 1835, 1836, and 1838; the average of those three years, when compared with 1837, shows that I lost £20,000 by my business in 1837; and what I wish to add is, that the whole of this loss arose from the depreciation in the value of my stock. My business was as prosperous ; we stood as high as printers as we did previously ; our business since that has been as good, and there was no other cause for the losses I then sustained but the depreciation of the value of the articles in warehouse in my hands. What I wish particularly to show is, the defenceless condition in which we manufacturers are placed, and how completely we are at the mercy of these unnatural fluctuations. Although I was aware that the losses were coming, it was impossible I could do otherwise than proceed onward—with the certainty of suffering a loss on the stock ; to stop the work of GOO hands, and to fail to supply our custom¬ ers would have been altogether ruinous : that is a fact drawn from my own experience. I wish to point to another example of a most striking kind, showing the effect of these fluctuations on merchants. I hold in my hand a list of 36 articles, which were imported in 1837, by the house of Butter- worth and Brookes, of Manchester, a house very well known ; Mr. Brookes is now Borough-reeve of Manchester. Here is a list of 36 articles imported in the year 1837, in the regular way of business, and opposite to each article there is the rate of loss upon it as it arrived, and as it was sold. The average loss is 37 J per cent, on those 36 articles, and they were imported from Canton, Trieste, Bombay, Bahia, Alexandria, Lima, and in fact all the intermediate places almost. This, I presume, is a fair guide, to show the losses which other merchants incurred on similar articles.”— Tract for the Times. “One of the most wonderful events in the history of the world happened, and that was the discovery of gold in California. In 1852, 36 millions of gold were poured into Europe, and when your lordships recollect that the business of the world until that time was carried on by an amount of gold which, I believe, never reached six millions a year, you can the market to purchase goods. An American economist, Dana Horton, in an essay, “ Money and the Law,” which I have tried t other material change, gold had risen sixteen percent, in purchasing power, and he would have at once concluded that it was a gross injustice that debtors should have to pay sixteen per cent, more than they bargained for. Under these circumstances he would have seen that silver was for the time comparatively stationary in purchasing power, or rather appreciated, he would have escaped entertaining the fallacy of the depreciation of silver, and thus he would never have spoken of gold as the best standard, nor written a voluminous report, as Mr. Gosclien has done, to prove the existence of the non-existent.— J. Rarr Robertson—"Bimetallism and the Finances of India," page 213, 1881. “ In a paper entitled Du Caractere de la Orisc er.onomique actuellc. M. George de Laveleye brings out in strong relief this inertia of capital : ‘The characteristic sign of the crisis raging all over the world since 1873 is an enormous abundance of money which everywhere remains unemployed, occasions a rise in public funds, and a fall in the interest of money, and is at the disposal of business or investments which hitherto do not offer themselves.’ The cause of this fact, according to the author, must be sought in the narrowing of the field of employment. By forty years’ investments Europe has been thoroughly equipped for labour; factories, railways, canals, bridges, have been constructed; what is there left to do for the neiv capital created by savings? The yield of investments will therefore fall from 4 to 3 for unquestionable securities, from 5 to 4£ or 4 for probable securities, from 8 to 0 for industrial enterprises, from Ju to 8 for speculations. I think that this remark, partially corroborated by M. Paul Leroy-Beaulieu, is w r ell founded, but it is not sufficient to explain the intensity and universality of the present crisis, w-hich is felt even in India and America. In the United States the field of employment was certainly not lacking, yet there was a crisis. Since our gold has been flowing thither a marvellous activity has reappeared.”— Emile de Laveleye — "The Rattle of the Standards,” page 55,1881. “ The more money there is in the country, the cheaper the use of it will be, and the better the bargain for the poor man, who must work or trade with other people’s capital. High interest—usury, people used to call it—has been in all ages one of the standing grievances of the poor ; and high interest when generally prevalent, and not due to any special insecurity in the invest¬ ment, means only that capital is scarce, that people have not been accumula¬ ting ; with more money, you are making industrial employment—which depends on cheap capital—more abundant for the artisan and the labourer.” —Lord Derby — Liverpool, January 17th, 1880. “Can wc believe that English commerce and the English people will long endure a regime like this, when they shall come to understand the suffering it has inflicted upon them ? Before long they will rise up and say to the professors of the science of deductive economy : Carlyle and Buskin have called your science narrow and false—the dismal science. Wc now- see that they w-ere right. In 18IG, in imposing upon us the aristocratic and exclusive system of Lord Liverpool, you compelled the English people to pay their creditors in % 40 gold—the rare metal, the dear metal—instead of in silver, the metal estab¬ lished—one might almost say consecrated—by history. You have violated our right, acknowledged by the law of the realm, for our national pound— the pound of our forefathers, the pound of Elizabeth and of Newton—was a silver pound. The pounds of our flesh, which Shylock takes from us, and the drops of our sweat, which we must let fall to help fill his money-bags, will go on • increasing without end, until we shall be reduced to slavery and misery. You let loose upon the world the crisis of 1816 to 1830, when you shut out silver from England, and now you have brought on the crisis of 1873- 1880, by driving out silver from Germany. You are mining our Indian Empire, which tells you so in a voice loud enough for you to hear. You are disorganizing our commerce, and you are killing our industries. The merchants of Liverpool, of London, of Glasgow, of Birmingham, of Manchester, and of all Lancashire, proclaim this fact.”— L’Independance Beige, April 26,1881. “ As long as the French bimetallism was in action, these sudden varia¬ tions in the value of silver were impossible. The price of silver could not depart from the par of GOJ pence established by the 15J, further than the divergence representing the cost of transporting the silver to Paris and coining it there.”— L'Independwnce Beige, April 26, 1881. “ Until within a short time past, the excellence of the English monetary system was a dogma—an article of the economic creed. Happy the people who could reach the gold standard; they were the elect of the commercial world. M. Henri Gibbs, in his admirable pamphlet, The Double Standard, has shown, with the clearness of mathematical evidence, that the system of the exclusive gold standard had worked an injury to England herself and to the world, and had been able to sustain itself only by deriving support from French bimetallism. v M. Lana Horton, one of the delegates of the United States to the Monetary Conference at Paris, in Ills book, Silver and Gold, a work replete with profound insight and filled with curious facts, has proved the following propositions : First—England, by the substitution in 1816 of the gold for the silver standard, aggravated the condition of all debtors, and of the whole English nation, as taxpayers, by unjustly favouring creditors and fundholders. Second—By bringing about this change at a time when the production of the precious metals had considerably diminished, England precipitated throughout the entire world an acute crisis of monetary contraction and of fall in prices, from which she herself suffered more, perhaps, than the other nations.”— L'Indcpendancc Beige, April 26, 1881. M. Mees, the eminent director of the Netherlands Bank, said, at the Monetary Conference of 1878 : If it is asserted that universal bimetallism is a utopia, I reply that universal monometallism is .an impossibility.”— VIndependance Beige, Mag 2,1881. 41 “ How can the scarcity of gold produce crises ? To explain this, we need only epitomise what Messrs. R. Giffen and Ernest Seyd have said on the subject of the crisis of 1874-80, which they both attribute to the demonetisation of silver. All economists agree that if the quantity of coin is diminished, prices will be lowered. During the last few years the usual influx of coin has been markedly reduced by three causes : (1) Less gold has been produced. (2) More gold has been required. (3) And silver, everywhere under a ban, has not been able, as it was formerly, to serve as an auxiliary to gold. The consequence has been an average fall in prices, which I have shown to amount to 24 per cent., says Mr. Giffen, so that prices have fallen, according to him, below those of 1850. The consequences are clear; they have been necessarily expressed by bankruptcy, as is proved by the increasing number of failures from 1873 to 1880. While the price of products is falling, it is clear that commerce, industry, and agri¬ culture must suffer and advance towards ruin. In reality salaries, fixed interests, taxes, and all fixed charges remain the same, and the means of meeting them diminishes every day.”— L'Independanee Beige, Mag 2, 1881. M. Pirmez said at the Conference of 1878 : “ Destroy all the silver, and the gold which will remain will be worth as much as the two metals together were before.”— L'IiuUpendancc Beige, May 2,1881. “ Mr. R. Giffen, at the conclusion of an essay on the recent crisis, read before the Statistical Society of London, in March, 1879, expressed himself thus: ‘ It would be a real calamity for the business world if another demand for gold were to be produced like that which has been recently made by Germany and the United States ; even a very much smaller demand would be a very serious affair, of which the consequences would be very speedily felt.’ Now let us listen to what Mr. Soetbeer says ( DeuJischrift, $o., Jahr- biicher fur National-oehommie, July 15, 1880, p. 12'). Speaking of mono¬ metallism, as it is generally adopted, he says : ‘ This solution of the monetary question would be, in theory, doubtless the best; but the impossibilitj' of its realisation is so evident, that in studying it from a practical point of view, it is useless to stop to discuss a measure which would result in a deprecia¬ tion of silver and a lowering of prices to an incalculable amount.’”— L'Independanee Beige, May 2, 1881. “ The value of money has been settled, by general consent, to express our wants and our property, as letters were invented to express our ideas ; and both these institutions, by giving a more active energy to the powers and passions of human nature, have contributed to multiply the objects they were designed to represent."— Gibbon's Decline and Fall of the Roman Umpire, chapter 9. “The quantities of gold and silver procurable will prove no more than sufficient to meet the exigencies of an enormously increased population, and an augmenting commerce and industry. Providence seems to have originally adjusted the relative values of the precious metals, and the fact that their relations have remained the same for ages will survive all theories.— Sir Roderick Murchison. 42 “ * No reason can be more urgent in inducing a nation to alter its money standard, than the fact that other nations have introduced changes in their monetary systems which threaten injury or destruction to the prosperity of their neighbours.’ So wrote, in the year 1761, a Privy Councillor for Finance of Frederick the Great of Prussia. In those days, silver being, according to this authority, an important product of German mines, ‘ the interests of Germany demanded that she should further with the greatest zeal the raising of the price of Silver.’ ”*— Page 13. “ If, therefore, M. Mannequin's position be correct—if, in a word, gold be the keel, the ballast, or unalterable seat of the centre of gravity, and controller of movements of the entire bulk of the precious metals—our conclusion seems justified that it was undesirable to shift gold bodily to one side. A still further question may be suggested. Had the coinage laws of the United States and France fixed a higher value upon gold, so that gold, instead of silver, had been in 1815-20 the cheaper legal tender in these countries, would it have been possible for England to resume specie pay¬ ment in gold ? Again, would it have been possible for England to resume in gold had the Holy Alliance signallised its triumph over the aspirations of Europe by the adoption of the sa ro-cajsarean metal within the domain of its police ? The questions answer themselves. It is evident at a glance that the Acts of 1816 and 1819 existed by favour of the silver law of Germano- Austrian countries and the bimetallic law of France and of the United States. It is to the acts of omission and commission of Continental and Ameri¬ can Legislation that the English sovereign owes its creation and its power. Explanatory Note. —As I can point to no distinguished authority in support of the views set forth in this chapter, it occurs to me to add these words of explanation, in answer to a possible objection, ‘ If this be true, why have we not heard of it before ? ’ It is a strange fact, but there is no broad and impartial history of the period of restriction and resumption in existence. A library has been written about it, but there is a controversial tone in even the most sober * Money was regarded by the Romans as sacred, and was coined in their temples at the cost of the State. And such is still the fact with those nations that understand their interest and the nature of commerce and of money, and withal regard the rules of equity as a duty. Money is a part of the general law of nations, and it is therefore neces¬ sary that a Prince, in establishing? their true value, put [the money of his State] into a correct relation to the coins of other States, if his subjects are to deal with them without loss. Alterations of money have at all times carried great disorder in States, and have been most injurious to the common weal. 43 productions from Tooke's History of Prices to Levi’s History of British Commerce. The mi era neccssitas of war is wont to assert itself wherever science seeks to establish its principles through political triumph, and the irre¬ pressible conflict between paper and metal, which raged so fiercely in the days of restriction, has never yet been entirely set at rest. Now, the resumption of specie payments was the pride and the glory of . the economists. - as they were called par excellence; and science, [turned politics, was intolerant of criticism. While the main question was unde¬ cided the Procrustes bed, ‘he that is not for us is against us,’ was set in use for thinkers, and the truth that was arrayed against the form of the measure was sacrificed for the truth that inhered in its substance.* The attack of the opponents of resumption upon the new coinnge system led to its defence by Peel, and in the then undeveloped state of monetary theory, gold monometalism was permitted to become identified with what was sound in the doctrine of resumption. It was mainly to this companionship that the gold standard was in¬ debted for its dignity. Tt was allied in men’s minds with the resolve of the leading men of England that the paper issued in the time of war must be paid in full in time of peace, and that in future bank-notes must for ever be convertible into coin ; and so, by a not unnatural confusion of thought, Englishmen came to regard the yellow and light pound sterling coin of the Regency as something more ‘honest’ and more ‘English’ than the heavier white coins which had made a pound sterling in the time of Elizabeth. Of course, when the contest of resumption was over, the harm was done : the redistribution of wealth had taken place, and later still the new tide of prosperity swept the field. What was done could not be undone. The new distributees of wealth were acquiring vested rights. A counter-revolution of the value of money, while injuring the interests of all, was not likely to bring compensation to those who had lost before. Hence, as far as the adoption of gold was concerned, no failure of sup¬ ply supervening, there was no strong reason why by-gones should not be by-gones, and the agitation for the restoration of silver was lost sight of in the then more absorbing problem of banking policy. Meantime the auri sacra fames held uninterrupted sway 1 There is a naivete in the attachment which seems to be felt for the yellow coin, in the presence of Avhich I feel that what I have said of the English (gold) sovereign would seem in some quarters like lese majesty, and awaken horror as of one who had ‘imagined the death of the king.’ 0 sancta shnplicitas ! It may have been wise policy to make the yellow metal sole unlimited legal tender for the period of resumption ; but neither in the reasons given at the time, nor in the argument of gold monometallists of to-day, if ] have read them aright, can be found adequate material for assurance of this wisdom. If the upheaval of the value of gold, which threatens England to-day for the first time since 181G, and the alarms for the future of the British Empire in India, should lead Englishmen to study the bearing of these questions with a view to the interests of the whole people, which rule Eng¬ land to-day as they did not in 181G, it will, I believe, become apparent to the liberal mind that the demonetization of silver is perhaps the only relic *So in like measure to-day in Germany, coinage reform has become, to the detriment of science, a fertile source of ‘ mutual excommunication,’ and the United States has been assailed with the same danger. 44 of the ideas peculiar to Lord Liverpool’s administration, which the tide of reform has permitted still to cumber English ground.”— Page 98. “ Since the dawn of commerce it has been a prerogative of the incorpo¬ rated will of political society to control and limit the ratio between the metals used as money. In classic Greece it was numbered first among the subjects of the ‘ Economy of a King,’ to know 1 what coin should be raised or lowered in price, and when.’ An inscription in Egypt is said to tell of an edict of the sixteenth cen¬ tury B. C., fixing the rates at 1 to 13J. Livv tells of a treaty of the Romans with the ^Etolians, fixing upon, payments in gold and silver at the relation of 1 to 10. And so the line of laws proceeds till we see Germany, in 1871, announcing a new coinage of gold, at the ratio of 1 to 15£ of the existing Silver Coinage.”— Page 116. “ Every commodity has two uses : one peculiar to it, the other less peculiar to it. As, for example, a shoe is primarily made to be worn, but still may also be exchanged for something else. In fact, however, shoes are constantly worn, and they are but rarely exchanged for other things. So of most commodities: they are, in general, used for purposes peculiar to them. Tt is evident that this use of being exchanged for some¬ thing else is not peculiar to any one commodity, but is shared by all com¬ modities. But for what are gold and silver used 1 For what are they ‘ made,’ in the sense of being mined and purified ? Are they made or chiefly used for uses peculiar to gold and silver—for gilding, or for jewellery, or plate, or what not ? Or are they made and chiefly used for this purpose which they share with all other commodities—namely, to be exchanged ? Plainly the latter. They are therefore different in this from all other commodities : that their chief use is not their primary use, as individual commodities, but their secondary use, which they share with all other commodities.”— Page 117. " And yet, even had the anticipations of an increased annual product of gold been realised (as they have not been), the change, tending, as it must, to increase the value of gold, as well as to diminish the value of silver, meant that millions who had sown should not reap, and that many should reap who had not sown; while, in the main, it meant, in the Western World, profit to creditors at the expense of debtors; profit to Europe at the expense of the United States ; profit to specie-paying, at the expense of non-specie-paying nations.”— Page 14. “ The course of instruction has been a severe one ; a myriad of lives have been blasted through the fluctuations of values and paralysis of indus¬ try of the past few years, in producing which monetary legislation has been so important a factor ; but for the enduring generations, of course, the gain will be great, if only the lesson be comprehended.”— Page 14. “ For it was not without clear warning and prophecy of evil that this movement was entered upon ;* and the present hope for united action in a common interest rests less upon faith in equity than upon the chance that the self-interest of the various nations may be awakened to a sense of personal danger.”— -S'. Dana Horton — “Silver and Gold and their relation to the Problem of Resumption," p. 15.1877 (Cincinnati. Clarke & Co.) * Notably by Cernuschi, De Laveleye, and Seyd, then among the hon¬ oured living, and chiefly to Wolowski, among the honoured dead.