IS AN INTERNATIONAL AGREEMENT NECESSARY?
If that could be done by a nation with a population of 25,000,000 to 35,000,000, what difficulty could be experienced by a nation of 65,000,000 in accomplishing the same result? Yet we are told that international agreement is necessary to restore silver to its ancient right as a full-money metal. Those who suggest such an agreement forget that while this nation is a borrower of money, the first and principal nation to demonetize silver is the greatest money lender known to history. Is it for a moment to be supposed that the shrewd English creditor classes will enter into any agreement which will deprive them of the spoils of so delicate and ingenious a system of usury; a system not only not banned by law, but, on the contrary, having the special approval and protection of statutes, and the active support and approval of all the complaisant moralists, philosophers, and financiers of the age?
While they are dilligently gathering in the proceeds of this operation a diversion is kept up for the occupation and amusement of dilettant financiers and economists, by invoking a discussion of the ratio that should be maintained between the metals. The ratio is the pretext on which conference after conference has been called.
The advocates of the single gold standard contend that hostile legislation had no influence in effecting the separation of the metals, and that the reversal of that legislation can not and will not restore them to a parity unless the principal commercial nations of the western world join in the work of rehabilitation. As illustrating the force of law on the relation of the metals I will read a suggestive paragraph from the report of the Royal Commission of England (1886), Part I, section 192:
Now, undoubtedly, the date which forms the dividing line between an epoch of approximate fixity in the relative value of gold and silver, and one of marked instability, is the year when the bimetallic system which had previously been in force in the Latin Union ceased to be in full operation, and we are irresistibly led to the conclusion that the operation of that system, established as it was in countries the population and commerce of which were considerable, exerted a material influence upon the relative value of the two metals.
So long as that system was in force we think that, notwithstanding the changes in the production and use of the precious metals, it kept the market price of silver approximately steady at the ratio fixed by law between them, namely, 15½ to 1. Nor does it appear to us a priori unreasonable to suppose that the existence in the Latin Union of a bimetallic system with a ratio of 15½ to 1 fixed between the two metals should have been capable of keeping the market price of silver steady at approximately that ratio.
The paragraph quoted ascribes the effect thus produced to the bimetallic treaty of the Latin Union, a combination of Italy, Belgium, Switzerland, and France, entered into in 1865 for the purpose of maintaining similar conditions of coinage. But it will be observed that, so far as the ratio was concerned, precisely the same effect had been produced by France alone during the sixty-two years from the passage of its law of 1803 to 1865.
Not only did the French law keep the metals together at a time when the larger annual yield was of silver, but it kept them together when the larger annual yield was of gold. Had not that law been in operation during the '50's, when a flood of gold poured from the mines of California and Australia, gold would have fallen, as in early times it more than once fell, to the ratio of 1 to 10, at which but 10 ounces of silver (instead of 15½) would buy an ounce of gold. Thus the law of one country alone, a country then of not one-half the present population of the United States, held the metals together, so that to whatever extent gold fell in relation to commodities from 1848 to 1865, by reason of the large output of the mines, silver fell to the same extent, notwithstanding the enormous decrease in its production relatively to gold during that period.
What is claimed for law in this connection is not that it directly controls the relative values of gold and silver any more than of anything else, but that on the slightest separation of the metals there instantly arises, under the law of the double standard, a demand for the cheaper metal, while the demand for the dearer one is suspended. In this way the double standard accommodates itself to the law of supply and demand, which is admitted to be the governing factor in the determination of value. It is not contended that a small or insignificant country could keep the metals together, but all experience goes to show that a great nation like the United States would have no difficulty whatever in doing so.
So thoroughly are the advantages of the gold standard to the creditor classes recognized in England that the English Commissioners, who, for form's sake, have been sent to the several monetary conferences held on the continent, have never been invested by their Government with any power whatever. And it is but a few weeks since the House of Commons overwhelmingly voted down a proposition made in good faith by Mr. Samuel Smith, looking to the calling of a new conference, which was supported by petitions to Parliament signed by 60,000 persons not merely as individuals, but as representing large organizations of the toilers of England.