NOTES ON SOME RECENT PAMPHLETS, PAPERS, &c.

What is a Standard? An Article in the Nineteenth Century for May, 1882. By HENRY R. GRENFELL (Governor of the Bank of England).

THIS is another of those articles in which, under the form of a reply to a question, some single department of the controversy on currency matters is discussed. There is advantage in such a course. These essays form in fact, separate chapters by different minds on a large subject; and, by thus taking the points seriatim, they receive close investigation. The first of the series, "What is a Pound?" by the same author, appeared last year. "What is Money?" was asked and answered by Lord Sherbrooke last month; and now Mr. Grenfell raises a question of equal, if not greater importance in regard to a Standard. Coming so soon after Lord Sherbrooke's article, to which there is much reference, this might at first sight be regarded as a reply to it. But, though many points are controverted, the object is clearly more than this. Those, certainly, who enjoy fair fighting, real cut and thrust, and pointed repartee, will find it here, and probably few will enjoy it more than Lord Sherbrooke himself; but Mr. Grenfell evidently sees that those who uphold bi-metallic arguments must be prepared for close examination into those fundamental questions which are inseparably bound up with the subject. It is upon one of such questions that he himself now enters.

Referring at the outset to the pound sterling as the one thing which most Englishmen concur in adoring-as being, "in fact, the golden image which Nebuchadnezzar the king has set up, and which all Englishmen are bound to fall down and worship," Mr. Grenfell reviews shortly the governmental view of the question, and states six reasons-cogent ones, it must be admitted-why, at the present time, the English Government should not take any part in it. He then passes on to consider those writers-amongst whom he includes Lord Sherbrooke-who resolutely decline to treat the question seriously at all. This leads to an examination of the meaning attached by Lord Liverpool and Sir Robert Peel to the term "standard" when the former used the expression "that the standard is the principal measure of property-that is to say, the chief coin in use," from which it would appear that he, and the Bullion Committee following him, took "standard" and "chief coin in use," to be synonymous -a view which could lead to no confusion of ideas in those days,

when "a standard meant the measure of weight and fineness of a coin or ingot." The confusion, however, which writers in the present day create, by mixing up standard, legal tender, and unit of account, is strongly deprecated, and Mr. Grenfell is satisfied that "the correct use of the word 'standard,' as it is used at the recent monetary conferences, is that it shall be the principal measure of property, but not necessarily the chief coin in use." Mr. Grenfell proceeds to show that the writings of the earlier economists are well known to bimetallists, and in no way contradict them, referring, as they did, to the weight and fineness of the coins forming the currency of the country. And he cannot here resist a retort on Lord Sherbrooke, now in so stern and unyielding a mood, that on two occasious-first, in view of an international coinage, and, secondly, in order to overcome the Indian silver difficulty-he was prepared to alter the standard of value throughout Europe and India. The proposals made both by Lord Grey and Mr. Clarmont Daniell, which would sanction the use of silver in addition to gold, but only at the market price, are then discussed, and shown to be illusory. "The use of a standard," says Mr. Grenfell, " is, that if the unit of account be a pound, a dollar, a mark, a rupee, or a franc, the persons having any number of them written in books against their names may know as exactly as possible what their debt is, and what quantity of what substance will suffice to free them from it. Now, with a varying relative price between gold and silver, notwithstanding that both would be used as 'instruments of exchange between nations,' the above advantage would be lost."

This leads to a statement which must be regarded as containing the gist of the whole article

The functions of a standard, as has been said before, are not necessarily limited to its connection with coins or other instruments of circulation within a state, more especially in a country where paper transfers of all sorts are as much in use as they are here. A standard may be, if I may use the term, the test of that "money of the mind" which is founded on the certainty of ultimately receiving that which will be as available in the international exchange as paper is within the state. It appears then to me that to recognise the standard of value in the international exchange is more important than to regard it in its relation to interior currency, and that this consideration onght to induce the governments of those countries which have brought about the difficulty by their rash interference and ill-considered changes in their monetary arrangements, to think twice before they break up the present negotiations, even supposing that their continuance should involve an agreement with no other offer from England and the Indian Empire than that made last year.

I give this advice under the full conviction that the enormous international transactions of England will make her come into the agreement as soon as it shall be shown to be feasible, and, giving due weight to the old objection which would of course arise on the part of other Powers, that they do not wish to pull the chestnuts out of the fire for us.

At the risk of some repetition, it may be desirable, in the case of

an article so discursive as this, and offering battle on so many sides, to recapitulate the writer's principal arguments, which it is believed may, with justice, thus be stated:

:

When the older authorities on currency matters wrote, the question of a standard was in a very different position to that in which it is found at present. It was then almost entirely an insular question, and related chiefly to the weight and fineness of coin. Those writers in no way refute the bimetallic argument. Indeed, in Adam Smith's day this system existed as a fact, and when Lord Liverpool dealt with it, the circumstances were so different as to warrant the conclusion that his own arguments, applied to the conditions now existing, would have led him to a different result. As regards Ricardo, Mr. Grenfell asks whether, assuming his paper circulation based upon ingots of the precious metals of standard weight and fineness, to be actually in existence, monometallists would be prepared to say that, with the circulation thus confined to paper, and the principal nations of the civilized world agreeing to treat both silver and gold as money at a fixed ratio, it would be to the advantage of England to restrict its operations to one metal only? That the fixed ratio is no idle dream or impossibility has been proved by the result of the soventy years of French free mintage for both metals. Since, then, in theory, the question as to what a standard shall be composed of, is an open one, and practice shows that a double standard is possible, it behoves us to consider what the object of a standard is; and, assuming that it is that by which a debt, whether in England or elsewhere, may, at a future time, be wiped out, Mr. Grenfell regards it as more important to recognise the standard of value in international exchange than in its relation to interior currency. Not only, therefore, would it be well for those countries, which have created the present disturbance, to press their negotiations to a conclusion, although they receive no further offer from England and India than that made last year; but, in the event of other powers coming into any agreement as to a bimetallic standard, it would be the wiser course on the part of England to accept it also.

In general terms, these appear to be the views Mr. Grenfell has urged; and, though the paper is written with that vivacity of which he is master, and which, perhaps, is almost a necessity in a magazine article, if it is to attract readers, they are evidently not stated without consideration and a sense of responsibility. The question raised is important, and it is quite clear that no conclusion can be arrived at in regard to bimetallism until it shall have been duly weighed.