If Not Silver, What?

by John W. Bookwalter

“Section 107. We think that in any conditions fairly to be contemplated in the future, so far as we can forecast them from the experience of the past, a stable ratio might be maintained if the nations we have alluded to (herein), the United Kingdom, the United States, and the Latin Union, were to accept and strictly adhere to bimetallism at the suggested ratio. We think that if in all these countries gold and silver could be freely coined and thus become exchangeable against commodities at the fixed ratio, the market value of silver as measured by gold would conform to that ratio and not vary to any considerable extent.”

Mr. Leonard H. Courtney, one of the monometallist members of that commission who signed the report, has since become an avowed bimetallist, as have many other prominent Englishmen. Among them may be mentioned Professor Alfred Marshall and Professor Sidgwick, of Cambridge University; Professor Nicholson of Edinburgh; Professor H. S. Foxwell, Professor of Political Economy in University College, London; Professor E. G. Gonner, of Liverpool; Professor J. E. Munro, of Kings College, London; and many others.

Mr. Courtney says, in his article in the Nineteenth Century, April, 1893: “Is it true that gold is this stable standard? I was one of the six members of the Gold and Silver Commission who could not see their way clear to recommend bimetallism, and reported: ‘When we look at the character and power of the fall in the price of commodities, we think that the sounder view is that the greater part of the fall has resulted from causes touching the commodities rather than from an appreciation or increase in value of the standard,’ In the same paragraph we had said: ‘We are far from denying that there may have been, and probably has been, some appreciation in gold, though we may hold it impossible to determine its extent.’” Now, then, he goes on to say: “Let me make a confession. I hesitated a little about this paragraph. I thought there was perhaps more in the suggestion of an appreciation of gold than my colleagues believed; but while I thus doubted it, I did not dissent. I am now satisfied that there has been an appreciation of gold greater than I anticipated when I signed the report, and I should not be able to concur in that same paragraph again. We have been passing through a period of an appreciation of gold, and no one can tell how long it will last. This is a serious matter. The pressure of all debts, private and public, has increased. The situation is serious. It is a dream to suppose that gold is stable in value. It is no more stable than silver. It has undergone a considerable appreciation in recent years, and industry and commerce have been more hampered by this movement than they would have been had silver been our standard. Every step taken towards the further demonetization of silver must tend to the enhancement of the value of gold. It is true that much inconvenience is involved in the use of gold as a standard in some countries, and of silver as a standard in others, with no link to check their divergent relations; but the advantage of having the same monetary standard throughout the world would be counterbalanced if we made gold that universal basis and tied all the fortunes of the nations to it.”

The bimetallic sentiment in England is not confined to the mere theorist and doctrinaire or statesman, but is advocated by some of the ablest journalists in the kingdom. Thus, the Statist, which undoubtedly ranks in that country as the highest authority in financial and economic matters, is quite as pronounced as Mr. Balfour and others in its views upon the effect the demonetization of silver has had upon the value of gold. In its issue of July 1, 1893, it says: “The new policy is likely to intensify the appreciation of gold. One consequence of the further appreciation of gold will be to intensify the agricultural depression all over Europe. Most of the charges upon land having been fixed heretofore, they will weigh more and more heavily upon land-owners as gold rises in value. So, again, rents will become more onerous, and it will be found by and by that the settlement of the last few years was only provisional, and that a further reduction will become necessary. Also it is evident that the burden of debt, not only upon individuals, but upon governments, will be much increased. Everywhere the burden of debt will necessitate increased taxation, and so will weigh very heavily upon the general population.”

Hon. Robert Giffen, the well-known chief of the statistical department of the Board of Trade, London, was long known as the most determined and uncompromising monometallist in England. In 1888 he read a paper before the Royal Statistical Society, in which he showed that gold had notably gone up in purchasing power; that the increase was continuous and likely to continue, and that this was the true explanation of the fall in the prices of commodities.

In a former paper read in 1879 he had predicted the rise in the purchasing power of gold, and in his paper of 1888 he said: “If the test of prophecy be the effect, there was never surely a better forecast. The fall of prices in such a general way as to amount to what is known as rise in purchasing power of gold is, I might almost say, universally admitted. Measured by any commodity or group of commodities usually taken as the measure for such a purpose, gold is undoubtedly possessed of more purchasing power than was the case fifteen or twenty years ago, and this high purchasing power has been continued over a long enough period to allow for all minor oscillations.”

In 1871, when the discussion may be said to have begun, the French economist Ernest Seyd pointed out very plainly that the adoption of the gold standard by Europe and the United States would lead to the destruction of the monetary equilibrium hitherto existing, and then added this singular prophecy: “The strong doctrinarianism existing in England as regards the gold valuation is so blind that when the time of depression sets in the economic authorities of that country will refuse to listen to the cause here foreshadowed. Every possible attempt will be made to prove that the decline of commerce is due to all sorts of causes and irreconcilable matters. The workman and his strikes will be the first convenient target; then speculating and over-trading will have their turn; many other allegations will be made, totally irrelevant to the real issue, but satisfactory to the moralizing tendency of financial writers.”

How literally has that been fulfilled in our sight. At this very time, the monometallists of the United States are pointing to all sorts of causes and irreconcilable matters to explain the ruinous fall in prices. They not only allege all the causes here assigned, but many more peculiar to this country; and, after the fashion of all who oppose any reform in the interests of producing labor, they particularly and even savagely deprecate agitation.

By the way, does not every clear-headed American, know that any system that cannot stand agitation is totally unfitted to this country? Agitation, investigation, public discussion in the papers and on the stump, are the very life-blood of our institutions. And if our finances were as they should be, the more thoroughly they were discussed, the more warmly would the system be approved, and the more would investigation be invited.

Hon. G. J. Goschen, former Chancellor of the Exchequer, pointed out as early as 1883 that the enormous increase in the demand for gold consequent upon the demonetization of silver was liable to create great evil. After elaborating this subject, and saying that the fall in prices had already produced serious evils, he added: “Some writers have appeared to show something approaching to irritation at the view of the situation that gold should have largely influenced prices. I scarcely know why, unless through the apprehension that the bimetallists may utilize the argument.” A little later he said: “I must repeat that to my mind the connection between the additional demand for gold and the fall of prices seems as sound in principle as I believe it to be sustained by facts.”