Bimetallism Abroad

Many monometallists start with the assumption that what they call the
"silver craze" is a mere fad, temporary and local; that the advocates of
bimetallism are confined chiefly to the United States, and to the western
part of it, and that, if they are thoroughly defeated at the November
election, the discussion will be at an end.

"Mistaken souls that dream of heaven."

They do not realize that, although it has not taken the same popular form,
the discussion is quite as serious in monometallic Germany and England,
and in the latter country opinion has so far advanced that both parties
agree on the enormous enhancement in the value of gold. There is now
scarcely a difference of opinion in England on this point, but there is as
to the effect. British monometallists assert that as England is a great
creditor nation, the world owing her, as estimated, $12,000,000,000, every
advance in the purchasing power of money is greatly to her advantage. In
Mr. Gladstone's last public speech on the subject he stated that fact with
great frankness, claiming that it was to England's interest that money
should remain as now in purchasing power, and that if she should abandon
the gold basis, because gold is worth far more than it was a few years
ago, the world might applaud her generosity, but it would sneer at her

The bimetallists of England, on the other hand, assert that the enormous
losses of traders owing to the dislocation of the par with silver-using
countries, of manufacturers by reason of the rapidly increasing
competition of the same countries, of home debtors and of many other
classes, and especially the loss to agriculture, far outweigh any gain
made by the creditors as such.

The national debts of Europe now amount in round numbers to some
$22,000,000,000. Including all other countries, the total of national
debts exceeds $26,000,000,000, and the growth for many years averaged
$500,000,000 per year. The local public debts of England and Canada are
set at $1,735,000,000. According to the best authorities, the mortgage
indebtedness of the principal European nations is as follows:

For Great Britain and Ireland........ $8,000,000,000
For Germany.......................... 8,500,000,000
For France........................... 3,850,000,000
For Russia........................... 3,250,000,000
For Austria.......................... 1,500,000,000
For Italy............................ 2,675,000,000
And for all other European countries. 3,050,000,000

A total of nearly $31,000,000,000.

Hon. Samuel Smith, M. P., places the mortgages of England at something
over $2,000,000,000, which is more than half the value of the landed
property, and those of Scotland and Ireland (the latter one of the worst
mortgaged countries in the world) make up the grand total given above.

A highly suggestive fact is that, as experience develops the enormous
evils of the monometallic system, the number of conversions among
prominent men to bimetallism steadily increases, and they become more
outspoken and radical in their views.

At the Paris Monetary Conference of 1867, Mr. Mees, President of the Bank
of the Netherlands, protested against a single gold standard and foretold
literally what has followed. Two years later Baron Alphonse de Rothschild
said: "As a sequel we should have to demonetize silver completely. That
would be to destroy an enormous part of the world's capital; that would be

At the conference of 1878, Mr. Henry Hucks Gibbs, director and former
governor of the Bank of England, was an advocate of the single gold
standard; but a few years' experience so completely changed his views that
he said: "Mr. Goschen and I were together in the conference in Paris; both
of us were sturdy defenders of gold monometallism; but I have changed my
mind. I do not say Mr. Goschen has changed his mind, but he has somewhat
modified it."

In the Paris Conference of 1878, Mr. Goschen said: "If other states were
to carry on a propaganda in favor of a gold standard and of the
demonetization of silver, the Indian Government would be obliged to
reconsider its position, and might be forced by events to take measures
similar to those taken elsewhere. In that case the scramble to get rid of
silver might provoke one of the gravest crises ever undergone by

As it is the fashion of our monometallists to sneer at the possibility of
bimetallism, it may be well to quote here the report of the Royal
Commission on gold and silver, made in 1888. This commission was composed
of six monometallists and six bimetallists, but they assented unanimously
to this proposition:

"SECTION 107. We think that in any conditions fairly to be
contemplated in the future, so far as we can forecast them from
the experience of the past, a stable ratio might be maintained if
the nations we have alluded to (herein), the United Kingdom, the
United States, and the Latin Union, were to accept and strictly
adhere to bimetallism at the suggested ratio. We think that if in
all these countries gold and silver could be freely coined and
thus become exchangeable against commodities at the fixed ratio,
the market value of silver as measured by gold would conform to
that ratio and not vary to any considerable extent."

Mr. Leonard H. Courtney, one of the monometallist members of that
commission who signed the report, has since become an avowed bimetallist,
as have many other prominent Englishmen. Among them may be mentioned
Professor Alfred Marshall and Professor Sidgwick, of Cambridge University;
Professor Nicholson of Edinburgh; Professor H. S. Foxwell, Professor of
Political Economy in University College, London; Professor E. G. Gonner,
of Liverpool; Professor J. E. Munro, of Kings College, London; and many

Mr. Courtney says, in his article in the _Nineteenth Century_, April,
1893: "Is it true that gold is this stable standard? I was one of the six
members of the Gold and Silver Commission who could not see their way
clear to recommend bimetallism, and reported: 'When we look at the
character and power of the fall in the price of commodities, we think that
the sounder view is that the greater part of the fall has resulted from
causes touching the commodities rather than from an appreciation or
increase in value of the standard,' In the same paragraph we had said: 'We
are far from denying that there may have been, and probably has been, some

appreciation in gold
, though we may hold it impossible to determine its
extent.'" Now, then, he goes on to say: "Let me make a confession. I
hesitated a little about this paragraph. I thought there was perhaps more
in the suggestion of an appreciation of gold than my colleagues believed;
but while I thus doubted it, I did not dissent. I am now satisfied that
there has been an appreciation of gold greater than I anticipated when I
signed the report, and I should not be able to concur in that same
paragraph again. We have been passing through a period of an appreciation
of gold, and no one can tell how long it will last. This is a serious
matter. The pressure of all debts, private and public, has increased. The
situation is serious. It is a dream to suppose that gold is stable in
value. It is no more stable than silver. It has undergone a considerable
appreciation in recent years, and industry and commerce have been more
hampered by this movement than they would have been had silver been our
standard. Every step taken towards the further demonetization of silver
must tend to the enhancement of the value of gold. It is true that much
inconvenience is involved in the use of gold as a standard in some
countries, and of silver as a standard in others, with no link to check
their divergent relations; but the advantage of having the same monetary
standard throughout the world would be counterbalanced if we made gold
that universal basis and tied all the fortunes of the nations to it."

The bimetallic sentiment in England is not confined to the mere theorist
and doctrinaire or statesman, but is advocated by some of the ablest
journalists in the kingdom. Thus, the _Statist_, which undoubtedly ranks
in that country as the highest authority in financial and economic
matters, is quite as pronounced as Mr. Balfour and others in its views
upon the effect the demonetization of silver has had upon the value of
gold. In its issue of July 1, 1893, it says: "The new policy is likely to
intensify the appreciation of gold. One consequence of the further
appreciation of gold will be to intensify the agricultural depression all
over Europe. Most of the charges upon land having been fixed heretofore,
they will weigh more and more heavily upon land-owners as gold rises in
value. So, again, rents will become more onerous, and it will be found by
and by that the settlement of the last few years was only provisional, and
that a further reduction will become necessary. Also it is evident that
the burden of debt, not only upon individuals, but upon governments, will
be much increased. Everywhere the burden of debt will necessitate
increased taxation, and so will weigh very heavily upon the general

Hon. Robert Giffen, the well-known chief of the statistical department of
the Board of Trade, London, was long known as the most determined and
uncompromising monometallist in England. In 1888 he read a paper before
the Royal Statistical Society, in which he showed that gold had notably
gone up in purchasing power; that the increase was continuous and likely
to continue, and that this was the true explanation of the fall in the
prices of commodities.

In a former paper read in 1879 he had predicted the rise in the purchasing
power of gold, and in his paper of 1888 he said: "If the test of prophecy
be the effect, there was never surely a better forecast. The fall of
prices in such a general way as to amount to what is known as rise in
purchasing power of gold is, I might almost say, universally admitted.
Measured by any commodity or group of commodities usually taken as the
measure for such a purpose, gold is undoubtedly possessed of more
purchasing power than was the case fifteen or twenty years ago, and this
high purchasing power has been continued over a long enough period to
allow for all minor oscillations."

In 1871, when the discussion may be said to have begun, the French
economist Ernest Seyd pointed out very plainly that the adoption of the
gold standard by Europe and the United States would lead to the
destruction of the monetary equilibrium hitherto existing, and then added
this singular prophecy: "The strong doctrinarianism existing in England as
regards the gold valuation is so blind that when the time of depression
sets in the economic authorities of that country will refuse to listen to
the cause here foreshadowed. Every possible attempt will be made to prove
that the decline of commerce is due to all sorts of causes and
irreconcilable matters. The workman and his strikes will be the first
convenient target; then speculating and over-trading will have their turn;
many other allegations will be made, totally irrelevant to the real issue,
but satisfactory to the moralizing tendency of financial writers."

How literally has that been fulfilled in our sight. At this very time, the
monometallists of the United States are pointing to all sorts of causes
and irreconcilable matters to explain the ruinous fall in prices. They not
only allege all the causes here assigned, but many more peculiar to this
country; and, after the fashion of all who oppose any reform in the
interests of producing labor, they particularly and even savagely
deprecate agitation.

By the way, does not every clear-headed American, know that any system
that cannot stand agitation is totally unfitted to this country?
Agitation, investigation, public discussion in the papers and on the
stump, are the very life-blood of our institutions. And if our finances
were as they should be, the more thoroughly they were discussed, the more
warmly would the system be approved, and the more would investigation be

Hon. G. J. Goschen, former Chancellor of the Exchequer, pointed out as
early as 1883 that the enormous increase in the demand for gold consequent
upon the demonetization of silver was liable to create great evil. After
elaborating this subject, and saying that the fall in prices had already
produced serious evils, he added: "Some writers have appeared to show
something approaching to irritation at the view of the situation that gold
should have largely influenced prices. I scarcely know why, unless through
the apprehension that the bimetallists may utilize the argument." A little
later he said: "I must repeat that to my mind the connection between the
additional demand for gold and the fall of prices seems as sound in
principle as I believe it to be sustained by facts."

We might multiply at length quotations to show that opinion is unanimous
in England, regardless of party, to the effect that there has been a great
increase in the purchasing power of gold. As to the effect of this Mr.
Giffen says: "The weight of all permanent burdens is increased.... Our
people, in paying annuities or old debts, have to give sovereigns, which
each represent a greater quantity of the results of human energy. The
debtors pay more than they would otherwise, and the creditors receive
more. It is a most serious matter to those who have debts to pay."

Mr. S. Dana Horton says that on the basis of prices "The national debt,
regarded as a principal sum, has increased its weight upon the shoulders
of the British taxpayer between 1875 and 1885 by nearly two hundred
millions sterling, an amount nearly equal to the Franco-German war fine."

This gives us the explanation of the fact that the consols on which the
interest was reduced by Mr. Goschen, when Chancellor of the Exchequer, to
2-3/4 per cent., are now selling at a much higher premium than formerly;
the smaller amount of money paid in interest will purchase a very much
larger amount of commodities than the former larger interest did.

The matter is very clearly set forth by Hon. Samuel Smith, M. P.: "If the
question of protection is to be introduced into the discussion, then it
will be found to tell more forcibly against our opponents. What do they
seek for, but the protection of gold as against silver? They wish, as far
as lies in their power, to boycott silver and throw the world upon gold
alone, even though such a course should change the value of gold. In
trying to boycott silver, they are giving protection to the wealthy
capital class, just as truly as the old corn laws did to the landed owners
of this country. The only difference is that the amounts involved are much
larger and the protected class much richer and the confiscation of the
fruits of the toiler much greater than under the old system of the corn
laws. When the masses of this country awake as those of America have
awakened to the magnitude of this question, they will brush away this idle
talk that we are trying to restore protection." If Mr. Smith were in
Congress instead of Parliament, what a howl there would be about him as an

It being now the unanimous opinion of English statesmen and financiers
that gold has greatly appreciated, and that such enhancement has already
wrought great evil, the important question arises, Will this process
continue? In the speech already quoted Mr. Giffen says: "I am bound to say
that all the evidence seems to me to point to a continuance of the
appreciation. It is impossible to suppose that the movement will not
extend to other countries. All these facts point to a continued pressure
on gold. The better probability seems to be, that the increase of the
purchasing power of gold will continue from the present time."

The Right Hon. A. J. Balfour, now the head of the British Cabinet, in a
speech delivered at Manchester, October 27, 1892, said: "We want two
things of our currency. We require that it shall be a convenient medium of
exchange between different countries, and we require of it that it shall
be a fair and permanent record of obligation over long periods of time. In
both of these great and fundamental requirements of a currency, our
existing currency totally and lamentably fails." After showing that within
fifteen years the money of Great Britain and Ireland had advanced in
purchasing power no less than 30 or 35 per cent., he went on to say that
of its further progressive appreciation "No living man can prophesy the
limit." A little later he spoke of it as progressing "steadily,
continuously, indefinitely," and closed his remarks on that subject in
these words: "If you will show me a system which gives absolute
permanence, I will take it in preference to any other. But of all
conceivable systems of currency, that system is assuredly the worst which
gives you a standard steadily, continuously, indefinitely appreciating,
and which by that very fact throws a burden on every man of enterprise,
upon every man who desires to promote the agricultural or industrial
resources of the country, and benefits no human being whatever but the
owner of fixed debts in gold."

In his work "The Bimetallic Question" Hon. Samuel Smith, M. P., presents
as an evidence of the hardships due to the increasing purchasing power of
money these facts: "The English landlords who borrowed 400,000,000 on
their property, agreeing to pay, let us say, 16,000,000 a year, interest
at 4 per cent., supposing that it represented one-quarter of their rents,
now find, owing to the fall of prices, that it represents one-third, or
even in some cases one-half of their rent.... The factory owner, the mine
owner, the ship owner, who thought it safe twenty years ago to borrow half
the value of his plant in order to find capital for his business, now
finds that the mortgagee is the virtual owner. Nearly all the profits go
to pay the mortgagee's claim, and in many cases he has foreclosed, and
sold out the unhappy borrower, ruined through no fault of his own, but
through the extraordinary sinking of prices. As a matter of fact, I
believe that if all the fixed capital engaged in trade in England could be
valued to-day at its real selling price, it would be found that it would
do little more than pay the mortgages and debts upon it. Trade is very
greatly and injuriously affected by sudden alterations in the standard of
value, especially when the alteration is, as now, towards increased
values. It arises in this way: trade is largely carried on by borrowed
capital, or, in other words, by the use of credit in some shape or other;
the vast banking deposits are mainly loaned to traders; a very great deal
of the invested capital of this country is lent upon mortgages upon
trading property such as ships, factories, and warehouses. A prudent
trader usually considers it safe to draw considerably beyond his floating
capital, and to borrow say 50 per cent. upon his plant or a fixed capital.
Now, the constant decline in prices within the last few years has
virtually swept away his own portion of the capital, and only left him
enough to pay the loans and mortgages. For instance, a ship or a factory
built at a cost of twenty thousand pounds, of which ten thousand were
borrowed, is now worth only twelve thousand pounds, or 40 per cent. less;
and so the mortgage represents five-sixths of the value instead of
one-half, the trader's interest having sunk to two thousand pounds in
place of ten thousand. Probably, if trade is unprofitable, he fails to pay
the interest and the mortgage is foreclosed; the property is forced off at
just sufficient to cover the loan and he is ruined. I have no doubt that
this exactly describes the condition that confronts numbers of traders in
this country and other countries having the gold standard. A great portion
of the commercial capital of the country has passed into the hands of the
mortgagees and bondholders who have neither toiled or spun. The
discouragement this state of things produces is intense. After it has gone
on for several years, a kind of hopelessness oppresses the commercial
community, all enterprise comes to a standstill, many works are closed,
labor is thrown out of employment, and great distress is felt, both among
laborers and the humbler middle class. Indeed, it strikes higher than
this; for multitudes of people who were once prosperous traders have now
become dependent on charity. I know many such myself."

How fitly that describes the condition of the United States to-day. This
was written some years ago, and so rapid has been the subsequent decline
in prices that it almost equals the decline he had estimated for the
fifteen or twenty years preceding the date of his work. And the end is not

In his comments upon Mr. Goschen's address, delivered in 1883, wherein he
pointed out that in the decade from 1873 to 1883 the annual supply of gold
had decreased in a marked degree, and concurrent with this there was a
marked increase in the demands upon the world's stock of gold, which was
intensified by the substitution of gold for silver as money in Germany and
other countries, Mr. Smith makes the following observations:

gold production
, which for some years exceeded 30,000,000
annually, has fallen to 19,000,000 a year; and the best
continental authorities, such as Soetbeer and Laveleye, reckon
that more than half that amount is consumed in the arts.

"It may, therefore, be reckoned that since 1873 only some
10,000,000 on the average has been available for currency

"But Germany during that period has introduced a gold currency of
80,000,000, the United States has used up 100,000,000, and Italy
has drawn some 20,000,000 for a similar purpose.

"So that 200,000,000 have been drawn for these special purposes,
whereas the whole supply of new gold for coinage has not exceeded
in that time 130,000,000.

"The balance must have been drawn out of existing stocks. Besides,
a steady drain of some 4,000,000 a year has gone to India, further
depleting stock in Europe.

"While trade and population constantly grow and demand more
metallic currency, there is a steadily diminishing quantity to
meet it. If you put the present product of gold at 19,000,000 a
year, and the requirements of the arts at 8,000,000 or 10,000,000
a year, while the India demand is 4,000,000, there is only left
5,000,000 to 7,000,000 a year for Europe, America, and the British

"It will seem to subsequent ages the height of folly that just at
this period, when gold was running short, the chief states of the
world decided to close their mints against silver, and cut off, so
to speak, one-half the money supply of the world from performing
its proper functions.

"Had the world continued to use both metals as freely as before,
the painful crisis we have passed through would have been much
mitigated. But by a suicidal policy silver was cut off at the very
time it was most needed, and a double burden thrown upon gold just
when it was able to bear only half of its former burden.

"As Bismarck has well said, two men were struggling to lie under a
blanket only big enough for one."

Bad as have been the effects of monometallism in England, they have been
far worse in Ireland; and dark as is the future of the former, it is light
itself compared with that evidently in store for the latter. Those
familiar with Irish affairs know that after a long agitation several acts
have been passed to enlarge the rights of tenants and to secure them a
larger share of what they produce. The Act of 1881 reduced the rents and
fixed the amount to be paid at a specific annual sum in money for a long
term of years; and the subsequent Ashbourne Act (so called from Lord
Ashbourne, who introduced it) gave tenants a chance to buy and pay for
lands in fixed yearly installments for forty-nine years. The intent was to
create a peasant ownership somewhat like that of France. It was the end of
a long fight, and was supposed to be a great victory and the inauguration
of a very great reform.

Scarcely, however, was the great victory won and the great reform
inaugurated when it became evident that, owing to the demonetization of
silver and increased purchasing power of gold, the tenants were, in
reality, bound to much heavier payments than before. Whatever may have
been the intent, the tenant, who bound himself to pay a fixed annual sum
as rent for a long term of years, found himself bound to deliver a much
larger share of produce; and the purchaser under the Ashbourne Act found
that what looked so easy in figures soon became impossible in fact, as the
prices of his produce fell so rapidly that each successive payment became
more oppressive until it finally became impossible. Thus it looks now as
if by the appreciation of gold all that was gained for the tenant is more
than lost, and that in the future his condition may be worse than in the
worst days of rack-renting. In recent years this has become plain to those
who have the good of Ireland at heart; they have taken the alarm, and are
outspoken on the threatening evils. Among these is the Most Reverend Dr.
Walsh, Archbishop of Dublin. In a recent interview he says, referring to
the rise in the value of gold:

"All this is indisputable; it is now fully in the public view; yet
not even an attempt is being made in Parliament, or even out of
it, to bring about an equitable readjustment of the conditions
which are proving so disastrous in other nations, conditions too
that are imposed under the provisions of statutes enacted as
measures of protection for the tenants. The Irish Land Acts of
1881, 1885, and 1891 have, nevertheless--as a result of the
increased and increasing value of our present unbalanced and
consequently untrustworthy monetary standard of value--become
fruitful sources of difficulty, and may very soon become fruitful
sources of disaster, to those for whose benefit they were

Again, referring to the importance of some remedy, possibly that which
bimetallism might provide, he says:

"The adoption of bimetallism or of some equivalent remedy, if
there be any equivalent remedy, is, I am convinced, a matter of
imperative necessity; that is, if the agricultural tenants of
Ireland--and I do not limit this to Ireland--are to be saved from
otherwise irretrievable ruin. If things go on as they are, even
the excellent land purchase scheme, which is associated with the
name of Lord Ashbourne, may become, before many years are over, a
source of widespread disaster to the tenants who have purchased
under it."

Again, in view of the steady and dangerous increase in the burdens of the
obligations entered into under either of the acts referred to, by reason
of the continued enhancement in the price of gold, he says:

"The bimetallists may be right or they may be wrong; but, at all
events, if they are right, then it is noticeably plain that the
Irish tenants who have the misfortune to have their rents fixed
for terms of ten or fifteen years under the Act of 1881, and in
much the same way the Irish tenant purchasers who have the
misfortune to have found themselves saddled with the obligation of
making annual payments fixed for forty-nine years, are simply
sliding down an inclined plane with bankruptcy awaiting them at
the bottom of it."

And again:

"The point, as I have already stated it, is that so long as our
monetary system remains what it is, every one who is placed under
an obligation to make yearly payments of a fixed amount of money
is thereby placed under a burden which is growing heavier from
year to year."

In discussing the question of variability in the purchasing power of gold,
he says:

"The reason of the liability to fluctuation in the purchasing
power of the sovereign is plain: When gold rises in value a larger
quantity of any other commodity, say of corn, of meat, of butter,
or of cloth, will have to be given in exchange for any given
quantity of gold, such, for example, as the quantity contained in
a sovereign. On the other hand, when gold falls in value a smaller
quantity of any other commodity, say of corn, of meat, of butter,
or of cloth, will suffice to obtain in exchange any given quantity
of gold, such as that which is contained in the sovereign. It is
an obvious inference that our gold coinage, however useful as a
medium of exchange, does not furnish us with a standard of value
fixed and unalterable. It does not furnish us, for example, with
such a standard as the yard is of length or as the pound troy is
of weight. The popular notion that the pound sterling constitutes
a fixed standard of value is merely a popular delusion. The sole
foundation for that delusion manifestly is that in these countries
the values of all commodities are commonly stated in terms of a
pound sterling; in other words, in pounds, shillings, and pence; a
shilling being a twentieth part of the pound, and a penny the
twelfth part of that again.

"The natural result of this method of enhancing the value of
commodities other than gold is that when prices rise or fall the
impression is conveyed to a superficial observer that it is the
value of other things that changes, the value of the sovereign
remaining fixed."

Under this head he says again:

"The price of things estimated in gold--their gold price--may
change, whilst their price estimated in silver--their silver
price--remains unaltered. This will occur if the value or
purchasing power of gold goes up or down, while the value or
purchasing power of silver remains unaltered. Suppose, for
instance, that gold is in any way scarce in relation to the
demands upon it. Then, in any country where gold is the standard
metal of the currency, those who wish to obtain, a certain
quantity of gold, whether in coin or in bullion, will have to give
a larger quantity of other commodities in exchange for it; or, to
put the matter in another light, those who have only a definite
commodity to part with will receive less gold in return for that;
in other words, there is a fall in gold prices. Suppose, on the
contrary, that gold is abundant in relation to the demands upon
it, then those who wish to obtain a certain quantity of gold,
whether in currency or in bullion, will not have to give so large
a quantity of other commodities to obtain the quantity of gold
they require; or, to put the matter as before in another light,
those who have a definite quantity of other commodities to dispose
of will obtain more gold in return for them; in other words, there
is a rise in gold prices. If in either case there is no change in
the value of silver, then the price of commodities stated in
silver, that is, their silver price, will remain unchanged."

In referring to the very prevalent notion, especially among the uneducated
classes, that the gold unit of measure of value does not vary, he says:

"As for the tenant purchaser, he probably thinks that after the
extra pressure of the first few years he may look forward to easy
times for the rest of his life. He little knows what is before
him. If things go on as they are, it will be harder for him, ten
or fifteen years hence, to pay forty pounds a year than it would
be to pay fifty pounds a year now; but of all this he knows
nothing--how could he? His only idea is that a pound is always a
pound, and a sovereign is always a sovereign; so, in the belief
that the yearly payment, when it is reduced to forty pounds, will
be well within his reach, he puts his head into the halter."

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