In a very intelligent article published in a late number of an influential magazine—the Political Science Quarterly—there is the significant statement, apparently derived from the best sources, that in the year 1879-'80, one-half of all the mortgages in the State of Indiana were foreclosed.
It were better for society that property should at once be confiscated than that the great masses of the people in every community should have to struggle through years of painful and exhausting effort in the face of constantly falling prices and then in a large percentage of cases to lose their property at last. But this can not be avoided so long as we attempt to keep up what is called the gold standard. It is a necessary consequence of the gold standard that we shall have the scale of prices that obtains in gold standard countries If the presence of gold in this country is to destroy our people, who doubts that it should go? If its presence is to result in the destruction of equity and justice, who doubts that it should go?
Nearly every witness who testified before the secret committee of the House of Commons in 1857 agreed that gold could only be held by paralysing the business of the country. It is estimated by witnesses who testified before that committee, that in the panic of 1847, in Great Britain, the property of the country, by reason of the measures rendered necessary to maintain the single gold standard, was depreciated $1,500,000,000. I commend that report to the careful and serious perusal of the advocates of the single gold standard in this country.
Among the witnesses before the committee were John Stuart Mill, Lord Overstone, and many other men distinguished in the world of letters and finance. I am informed by the Librarian of Congress that there is but one copy of the work in the United States. It would be well worth while for Congress to order a number of copies of it printed, for there is no work with which I am acquainted that contains so much practical information as to the working of the single gold standard. According to the testimony taken before that committee, the experience of Great Britain since 1819 shows that gold alone, even when re-enforced by paper money convertible exclusively into gold, instead of being a beneficent instrument of valuation, has proved a cruel instrument of injustice.
A brief consideration of the causes which affect the movement of gold will not be out of place in this connection.
RATIONALE OF THE MOVEMENT OF GOLD.
Why is it that gold leaves country and goes to another? For one reason only—the advantage of its owner. Whenever he can make a profit by sending it out, the gold goes; and the period when that profit can be made is indicated when the prices of goods that are internationally dealt in are either rising in the country which it leaves or falling in the country to which it goes. It is only to pay for importable goods that gold ever leaves the country in which the owner resides. Being an international money, and receivable everywhere at its full face value, gold loses nothing by transfer; hence it is sent wherever it will for the time being have the greatest purchasing power.
Whenever the general range of prices in this country of commodities internationally dealt in becomes than higher than the general range of the same commodities abroad, it is manifest that then gold can used to advantage by purchasing those articles abroad and selling them here. If the gold that goes out goes from stock that has been hoarded here, the outflow has no immediate or direct effect upon prices in this country, although, by increasing or "inflating" the volume of money abroad it assists in raising prices there, and thus tends to secure for our exported products a better price in the foreign market. But if the gold goes from the amount that is in active circulation here, and if the void created by this outflow is not filled with other forms of money, such as silver, or paper, it results in a reduction of the volume of money in actual use in this country, while at the same time increasing the volume of money abroad.
This increase in the foreign money stock causes a rise of prices abroad, while the corresponding reduction of our currency causes a proportionate fall of prices here, hence there is a constant tendency to an equilibrium of prices of all articles of international commerce.
No outflow of gold would follow a rise of prices here except in so far as that rise affected articles internationally dealt in. No rise of prices of such articles as we do not import would tend in any way to drive out gold. If, for example, raw cotton should increase in price in this country, that fact would not tend to drive out gold, because we do not import raw cotton. But should the prices of articles of manufactured cotton rise here above what those same articles could be bought for in any foreign country our merchants would send abroad for them, provided that, after paying the freight charges and customs dues, they could make a profit on them.