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Now there is no doubt that gold has risen in value some forty or fifty per cent. compared with silver and with the articles from the prices of which index numbers are commonly deduced, and that these articles are fairly representative of what may be vaguely described as "wholesale commodities." We may accept Professor Foxwell's statement that " two sovereigns will buy to-day the same amount of wholesale commodities which it would have required three sovereigns to buy" in the period 1853-77. But this by no means binds us to accept the assertion, which he appears to regard as the same thing in other words, that "gold has increased in purchasing power some fifty per cent., not to take account of what some (!) think the exceptionally high prices of 1873." There is no reason to believe that a fall of 333 per cent. in the price of those articles of commerce which happen to be commonly bought and sold in large quantities in central markets implies an equal fall in the price of articles in general. The improvements which have been effected in the last twenty years have reduced the effort necessary to put wholesale articles upon the market far more than the efforts necessary to convert those wholesale articles into commodities fit for consumption, and to produce other commodities which never pass through the wholesale-market stage at all. It is a good deal easier, for example, to supply the " marginal" or most costly quarter of wheat to Liverpool, or the marginal stone of flour to London, than it was twenty years ago; but it is little, if at all, easier to convert the flour into bread and place it upon the consumer's table. Yet the latter process is just as important as the former, and costs the consumer more. The consequence is that "wholesale commodities" have had a tendency to fall in value compared with retail or consumable commodities; and, if gold has only appre ciated fifty per cent. in regard to forty-five or even a hundred wholesale articles (combined either simply or according to their relative "importance" in the eyes of Mr. Palgrave), it cannot have appreciated as much as fifty per cent. in regard to commodities in general. Whether there has actually been a fall of prices, and, if so, what has been its extent, will never

become a matter of exact demonstration. Of one thing I feel sure, namely, that Professor Foxwell will get few housewives to admit that £2 will now go as far as £3 did twenty years ago, and I very much doubt whether he himself would regard a £200-a-year fellowship to-day as equal to one of £300 a year in 1873. Personally, I am inclined to think that there has been some appreciation of gold, though not nearly so much as the bimetallists would have us believe, and that this appreciation is likely to continue.

If we admit the existence of an evil, we are bound to consider the remedies proposed for it, whether we regard it as great or small; and so, if we agree with the bimetallists in thinking that appreciation of gold is an evil, and that it will probably occur in the future, we must inquire whether their scheme for preventing or checking it will be successful in doing so. The " meaning of bimetallism" is that the standards of value, the pound sterling, the dollar, the franc, the mark, and the rest, are to be a certain quantity of gold or a certain quantity of silver. The "great commercial nations" are to agree to turn any amount of either gold or silver which may be offered them for the purpose, into legal tender currency at a certain ratio fixed once for all. If, for example, the ratio of twentyfive to one is chosen, the British mint will be obliged to give a pound sterling not only for every 123-27 grains of gold brought to it, but also for every 3081-86 grains of silver brought to it. This pound sterling will no longer be a gold sovereign only, but either a gold sovereign or certain silver coins weighing 3081 grains, or a little over seven ounces avoirdupois. A Bank of England five-pound note will no longer be a promise to pay on demand five sovereigns, but a promise to pay, as the Bank chooses, either five sovereigns, or say twenty new crown-pieces, weighing rather more than thirtyfive of our present crown-pieces.

It is supposed that if this system be adopted, the relative value of gold and silver will remain steadily at the ratio fixed; and the all-important question is, will it do so?

This is, indeed, as Professor Foxwell observed, "a delicate

point," and it is unfortunate that he had not time to deal with it fully.1

"The essence of the answer is," he says, "that when two commodities are made capable of serving the same use, their values are not independent; and this is a general law of wide application, by no means confined to the case of the monetary metals. The whole system of the fixed ratio depends upon the ingenious theory of substitution, so clearly explained by Jevons. Where we have two commodities which may be used indifferently in what is their main use, then there will be a fixed relation between their market values; for if the value of either tends to depart from that relation, there will be a substitution of one commodity for the other, and the relation will be restored. Let me take as an example beef and mutton, and let me suppose that it is indifferent to the consumer which he consumes, and that they both sell at tenpence per pound. Then, whatever the variations in the supply of beef and mutton, though the price paid for each may change, it will remain the same for both. If beef should become scarce, its price might rise to eleven-pence; but the price of mutton must rise equally; otherwise, on our hypothesis, consumers would cease to use beef, and would take to mutton."

Similarly, he argues, if silver is made legal tender at the ratio of twenty to one, one ounce of gold and twenty of silver will always have the same value. "All competent economists," he adds, accept this theory.

Political economy, we are sometimes told, is a hypothetical science, and we are warned against accepting what is only hypothetically true as absolutely true. Here, at any rate, the warning appears to be needed. IF it were indifferent to the consumers of beef and mutton whether they had beef always, or mutton always, or sometimes beef and sometimes mutton, the prices of beef and mutton would necessarily be identical and could not diverge, since no one would give tenpence for beef when he could get mutton for ninepence, or vice verså. When it became easier, for some reason or other, to produce

"But how, it will be asked, can a fixed ratio be maintained between the market values of two independent commodities? Is there not something uncommercial, contrary to economic law, in the very notion? This is a delicate point, and one I cannot fully deal with in the time left me," p. 310.

more mutton than to maintain the existing supply of beef, the extra supply of mutton would be produced, and the supply of beef would proportionately diminish, without the prices of beef and mutton diverging. Even if it became easier to feed the whole population entirely on mutton, there would be no divergence of price; though beef would no longer be produced for profit, any beef which was produced by accident or for experiment would still sell at the same price as the mutton. Similarly, IF it were indifferent to those who use gold and silver whether they used one ounce of gold or twenty ounces of silver, one ounce of gold and twenty ounces of silver would always be of the same value. When it became easier, for some reason or other, to increase the supply of silver than to maintain the supply of gold, more silver and less gold would be produced; but still an ounce of gold and twenty ounces of silver would remain of the same value. Even if it became easier to substitute silver for the whole of the gold-supply, the values would not diverge. Nay, more, they would not even diverge if, after the supply of gold had been stopped, the whole existing stock of gold was gradually worn and wasted away, since even when there was no gold above ground, it could always be said that an ounce of gold would be worth twenty ounces of silver, if it were above ground.

But unfortunately, just as the consumers of beef and mutton are not indifferent which they eat, so the users of gold and silver are not indifferent which they use, and they would not be made indifferent by the establishment of a fixed ratio.

As regards the non-monetary uses of the metals this is obvious. Evidently no amount of international agreement can make an ounce of gold as useful for the construction of spoons as twenty ounces of silver, nor make twenty ounces of silver as useful for filling decayed teeth as an ounce of gold. In many cases-as, for example, in the manufacture of watch-chains and bracelets -an ounce of silver can be substituted for an ounce of gold, but there is no indifference: the substitution will not be made without an inducement. Consequently, as long as the fixed ratio endures, no variation in the relative supply of gold and

silver will bring about a substitution of the one metal for the other for non-monetary purposes. In case of any variation in the relative supplies, the fixed ratio must be maintained, if maintained at all, by the substitution of gold money for silver money or of silver money for gold money.

Now, it is notorious that the ordinary private person is not in the least indifferent whether he has gold money or silver money. Our present silver money is legal tender up to £2, but it seldom passes in payment of sums over 10s. Most of us in ordinary circumstances are quite content if we possess about seven shillings in silver, and consider more than nine shillings rather a nuisance. Much more should we do so if we had, instead of our present overvalued coinage of silver, one 50, 60, or 70 per cent. heavier. There is no reason to suppose that a liking for the most convenient medium of exchange is an English peculiarity; and, consequently, as long as the fixed ratio of bimetallism endures, no variation in the relative supply of gold and silver will bring about a substitution of the one metal for the other in the currency which is commonly passing from hand to hand. So long as an ounce of gold exchanges for 25 oz. of silver, people will insist on having their cash divided between gold and silver in that proportion which they find most convenient. The bimetallist banker who represented to his customers that, as very little gold and a great deal of silver was being coined, they must accept forty crown-pieces equal in weight and bulk to seventy of our present crown-pieces, in payment of a cheque for £10, drawn to "Self" would not long retain his business. Professor Foxwell, unlike some bimetallists, acknowledges this, and attempts to meet the objection.

"Let me reassure you," he remarks, "by saying that there is no necessity and no intention to disturb the customary circulations of Europe. . . . The exact form of the commercial circulation in every country is largely a matter of custom, in regard to which sudden change is neither easy nor desirable."

Custom has, I think, a good deal less to do with it than Professor Foxwell supposes, and convenience a good deal more, but that is neither here nor there; the important point is that

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