THE ASSAULT ON THE STANDARD.

By J. HERBERT TRITTON, Esq.

[Read at the London Institution, on Wednesday, May 15th, 1895.]

THE attempt to speak on a subject which has for centuries afforded matter for keenest debate is always difficult, but there are times when a student of the wisdom and the mistakes of past ages, as well as of the economical changes now on every hand in progress, of which he has been an observer for over thirty years, may, when called upon, speak out.

While coinage and currency questions must be considered from every point of view, the historical, the theoretical, and the actual, the coinage laws and currency system of a great nation ought not to be lightly handled, nor to be subjected to the caprice of uninstructed popular or political partisanship.

It is the fashion to sneer at Lombard Street in this connection, but it would appear that if one thing is more certain than another, supposing the possibility of Bimetallism-it is that, if established, there would ensue large and continuous movements of capital from nation to nation, from East to West, which could only bring large profit to the community of Bankers and money dealers.

In his graphic picture, Vol. III., Ch. 21, more often referred to than read, I fear, MACAULAY, after describing the misery and confusion throughout the country owing to the bad state of the coinage in 1696, shrewdly observes: "In the midst of the public distress one class prospered greatly-the Bankers.' So it would be again. The opposition of Lombard Street to Bimetallism is not tainted with self-interest. Neither are we unable to look further than the confines of the Clearing House, as is also alleged. It is our business to know something of every man's business, and a Banker does not handle millions of bills of exchange drawn from all parts of the world, without gaining a much larger insight into the business of the world than many foreign merchants and exchange houses would consider probable, possible, or even, it may be, desirable. We have not, then, in considering the subject, to stumble through an unknown country. The historical facts can be readily enough ascertained with patience, the theories-many of them mutually destructive-can be mastered, and the actual circumstances of the day are more open to us than to any other class. The upholders of the existing monetary system of this country have for years past been continuously challenged to show cause why it should not be changed in favour of a Dual Standard. This is euphemistically called "The rehabilitation of the White Metal."

See Appendix, page 388.

This challenge has to some extent passed unheeded, at any rate it has not excited that amount of attention which its authors claim for it, with the not unnatural consequence that, after exhausting their arguments and declaiming against the inertness, the supineness, even the stupidity, of the supporters of the existing gold standard, our friends the Bimetallists have of late apparently come to believe that their platform is unassailable, and that all must bow to their requirements or take the consequences. These they are never tired of painting in the most dismal colours possible. Here and there men of no little weight, both in this country and elsewhere, have broken the silence with well-timed remarks, but, unquestionably, the weight of paper, ink and oratory is not on our side.

Platform oratory has seized on an analogy (dear to the hearts of professors and theorists), the analogy of two reservoirs containing water at different levels, a pipe connecting them being the Bimetallic link. As water seeks its level, so, we are gravely told, will money. This illustration was first used, I believe, in the year 1870, at a sitting of the Imperial French Monetary Commission, by M. LOUVET, Minister of Agriculture and Commerce, and afterwards adopted by Professor JEVONS. The law referred to would not act in the case of gaseous matter, nor in the case of water under unequal pressure, nor yet, it may confidently be affirmed, in the case of money, except in the way of retardation. How the "link," i.e., the ratio has acted in altering levels is shown later on.

Seriously, however, it would seem that no answer other than the gradual development of monetary events, and the consistent attitude of the chief nations of Europe towards this question, has been needed.

At the International Conference held in 1892, which raised the hopes of Bimetallists so high, no nation, not even America, put forward any scheme for International Bimetallism, and its advocates returned crest-fallen. In this same year Austria-Hungary established her metallic currency on a single basis, that of gold. In 1894 Germany summoned a special Monetary Conference of her own, which scouted the idea of Bimetallism, and declared that she at any rate had no reason to regret the establishment of her single gold standard. Turn to current events in America, and note how the gigantic speculation in silver in which the United States had the hardihood to embark in 1878, was collapsing in 1892, and has since utterly broken down. The inevitable result of every "corner" has followed, and silver fell to less than 28d. per ounce in the early part of 1895—a ratio, say, of 33 to 1.

Our answer, then, has been, and is to a large extent still, an appeal to facts as they are occurring before our eyes, which appear to us to render year by year the case more hopeless for the Bimetallists.

It is somewhat difficult to get a clear conception of what Bimetallism really means.

The great majority of men and women who are advocating it will reply to a query as to what they understand by it something of this sort:

"Why, of course, the principal countries are to unite, and fix "the price of silver, just as we now fix the price of gold, and so "silver will be re-monetized again by international agreement, "and gold and silver will become a Bimetallic Standard."

England does not fix the price of gold in the sense used, and has not done so since 1717, when gold was last valued in this country in terms of silver. Would that everyone who handles this subject could master the elementary truth that the English Mint price of £3 17s. 10 d. per ounce (or £3 17s. 9d. at the Bank of England, the three half-pence constituting a sort of "despatch money") is gold valued in terms of gold, and implies absolutely nothing else than that a given weight of gold 11ths fine shall be coined into a prescribed number of sovereigns: 40 lbs. Troy of gold into 1869 sovereigns. The "value" of gold in respect of all other commodities or substances is absolutely untouched by the Mint price, and may-nay, must-vary from time to time.

When we ask Mr. GIBBS what he means by Bimetallism, or the Law of the Double Standard, he replies thus: "I am rather sorry "that I ever used the latter phrase, for it is ambiguous and of "doubtful propriety, and gives occasion to the enemy to "blaspheme." Again, "Under the law of the dual legal tender "there is no need to call both gold and silver Standards. One is "the Standard and the other is rated to it."* There is an apparent perspicacity of language here: Never mind the name. What we want is a ratio established by international agreement, with free and gratuitous coinage and unlimited legal tender of both metals.

Questions of the utmost importance, however, spring up immediately such a proposition is formulated as to what it means, and what it involves.

Is gold to be rated to silver or silver to gold? Which is to be the dominant metal? Which the subsidiary or companion metal? Is the "Standard" to be taken to be an abstract idea which may be left to take care of itself under the action and inter-action of the two metals? Are both expected to maintain under all circumstances the exact ratio prescribed by law, or are adjustments from time to time included in the programme? These and other questions encounter us at once in repelling the attack on our Standard.

In order to define as far as possible the chief points of the controversy, let me endeavour to formulate the case of the Bimetallists in the following propositions, to the substantial correctness of which no exception can, I think, be taken.

*Colloquy, rp. 88, 270.

I. They urge that there is always an unlimited demand for any possible supply of silver for coinage under a Bimetallic régime, and that there cannot be an excess. II. That the fall in silver has been mainly brought about by its demonetization.

III. That there has not been sufficient gold in the world for the demands made upon it.

IV. That the great fall in prices of the last 20 years is mainly due to these facts, and that depreciation of prices and appreciation of gold are convertible terms.

V. That were silver rated to gold (or vice versa) the agreed ratio would be maintained, and there would be thenceforward no danger of a divergence of value between the two metals, whether coined or uncoined, under any conditions fairly to be contemplated.

VI. That the history of France, 1803 to 1878, proves their contention.

VII. That the actual ratio is a matter to be agreed upon, but is a detail rather than a principle.

VIII. That the United Kingdom altered its Standard in 1816,

This

and they urge that we should revert to the Bimetallic Standard which existed (they allege) up to that date. In approaching the subject, it may be well to have before our minds a few statistics bearing on the condition of the United Kingdom during the past 25 years, and also of India. is the more necessary, as we have, during this time, passed through more than one period of bad trade-(a Royal Commission on the Depression of Trade has taken evidence, reported, and left us all as wise, or the reverse, as before)—and upon the assumption that England is, and has been, suffering severely-in fact, hastening to her ruin-the Bimetallists found a large part of their argument.

It is, of course, quite beyond doubt that large classes among us have been, and are, severely tried by the continuous and heavy fall in prices which has taken place, the cause of which is one of the main subjects of dispute between us.

Lancashire has seen of late her staple industry threatened, and the competition of cotton mills established in the East, so far as certain of her products are concerned, growing more and more effective. The process may have been somewhat fostered by falling exchanges, but it is one which under any currency system Lancashire has to face. As well attempt to keep back the advancing Atlantic tide with a broom, as stay the process of development in our great dependency by alteration of monetary laws. Agriculture, especially in the Southern and Eastern Counties of England, is terribly hard hit by the price of wheat, and were there no hope of recovery the outlook would be black indeed.

There is one class who in the early days of the controversy suffered, and made a very vigorous outcry, whose troubles have now by the very fall in gold prices been largely compensated-the AngloIndian contingent-whose income, payable in rupees, in so far as it is laid out in England, will buy here the same quantity of the necessaries of life, within a little, as it would prior to the fall. The great fall in prices here has been, in fact, to put them as they were before, or nearly so.

Let us then take note of the bearing of the Statistics in the Tables in the Appendix.

Table I. Foreign Trade of the United Kingdom, 1879-1894. Income Tax Returns, 1871-1894.

II.

Savings Banks Returns, do.

Banking Returns and

Quoted Stocks

Pauperism

do.

do.

do.

do.

do.

Table I. The increase in this country's foreign trade previous to 1879 need not be set out. Up to the years 1871-73 the increases are by leaps and bounds, prices rising rapidly as well as quantities, thence to 1884 the increase is not so marked; from 1884 to the present time there is even some apparent decline, owing to the great fall in prices, but the volume of external trade increases, it may confidently be asserted, all along.

In Table II., the increased productiveness of each 1d., under the Income Tax, Schedule D., year by year, shows that the aggregate business profits of the community have also been increasing all along. An unhappy decrease under the Agricultural Schedules only too surely confirms the tale of the landlords' and farmers' troubles.

Under Table III., we find the barometer of the prosperity of the lower classes, each year, mounting higher and higher, and this is established still more strikingly by the marked decrease in the Returns of Pauperism in Table IV.

Table III. also eloquently sets forth the growth of the cash deposited in Bankers' hands. I am aware that the Bimetallists point to this as an unsatisfactory feature, alleging that it indicates. large amounts of idle capital. As a Banker, speaking to many Bankers both in London and the country, I deny this. It is within the knowledge of us all that the average balance has decreased; the number of accounts opened year by year is far in excess of what we had thought possible, and the average balance much less than we should prefer. I do not believe that there are anywhere large sums of trade capital lying idle. The increase in the other deposits of the Bank of England is rather due to the attention paid

C