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“dence taken conclusively shews that the fall in the "price of silver is due to the following causes :
“(1) To the discovery of new silver mines of great 66 richness in the State of Nevada.
(2) To the introduction of a gold currency into Germany in place of the previous silver currency. “ This operation commenced at the end of 1871.
" (3) To the decreased demand for silver for export to India.
(4) That the Scandinavian governments have also “substituted gold for silver in their currency.
“(5) That the Latin union, comprising France, Belgium, Switzerland, Italy and Greece, have since 1847 “limited the amount of silver to be coined yearly in “ the mints of each member of the union, suspending “the privilege formerly accorded to all holders of silver “bullion of claiming to have that bullion turned into “coin without restriction.
“(6) That Holland has also passed a temporary act prohibiting, except on account of the government, the coining of silver, and authorizing the coining of gold.”
“ It will be observed that two sets of causes have been “simultaneously in operation. The increased produc“tion of the newly-discovered mines and the surplus “ thrown on the market by Germany, have affected the “supply. At the same time the decreased amounts “ required for India and the decreased purchases of sil“ver by the members of the Latin union, have affected “ the demand. A serious fall in the price of silver was " therefore inevitable.”
“It is, however, an important and remarkable fact, to “ which it may be convenient to call attention at once, “that though the increased production of silver in the
“ United States is a fact beyond question, no increase “ of imports of silver from the United States to Great 6 Britain has taken place since the year 1873, when the “average price of silver was still 597d. per ounce. “Indeed the annount of the imports of silver into Great “Britain from the United States for the year 1875, viz.: “ £3,092,000, is the smallest since the year 1869. In “the same way, though the new currency laws of Ger“ many affected a vast silver coinage, the sales of silver
actually made up to the 26th of April in the present year do not appear to have exceeded £6,000,000 dis“ tributed over several years.
Your committee, in “pointing to these circumstances, are far from saying “ that the impression produced on the minds of the “dealers in silver was not justified by the causes in “ operation."
It will be seen that of the “six causes enumerated by the committee as operating to depreciate the value of silver, four are really the same thing, viz. : the movement in Europe by Germany, leading the Scandinavian States, to demonetize silver. The decreased demand for silver for export to India seems to be rather one of the results of the original decline caused by the demonetization, than an independent cause. The discovery of new mines in Nevada, mentioned by the committee as the first cause, is acknowledged to be only a source of apprehension, but not yet of any increased supply of silver.
It is admitted, even by those who have at times advocated an exclusive gold standard,* that it is impos
* Probably, if there were gold enough for all the world, it would be best that there should be only a single standard of value throughout the world, and that one - gold. But this is impossible. Some have doubted whether there is gold enough even for the nations which now intend to use it; and there certainly is not enough for all the world.-London Economist.
sible for all nations to have the exclusive gold standard. The unavoidable result, therefore, of the adoption of the exclusive gold standard by a few of the leading nations possessing the financial preponderance of the world is to compel the remaining nations to practically adopt silver alone. But at the same time the demonetization of silver by a few leading commercial nations depreciates the metallic. currency and the money obligations of the nations using silver as a standard of values. This disorganizes international trade and is a direct blow at all international relations.* The divergence in the respective values of the two metals is the measure of the divergence of national interests. The tendency of all this is to diminish the intercourse of nations and remand the world to the old narrow ideas of the necessary antagonism of the people of different countries.
The original establishment by law, in Great Britain, t France and the United States, that the legal values of
* The London Economist described the effects on the East India trade of the decline in the value of silver, in the first two months of 1876, as follows, viz.:
The consequence of the low value of silver is that the rate of exchange (in Calcutta) is now 1s. 9d. 1far. per rupee (or less), the lowest or almost the lowest ever known. And this operates as a direct discouragement to ship goods to India. These goods are paid for in rupees, and when the merchant wants to bring home those rupees to England he finds that they do not go so far as they used to do. He has to pay much more for every £1,000 bill on England, and this extra cost destroys or diminishes his profit.
If new silver should still continue to come into market the same process must go on. The first step must be incessantly repeated. The value of the rupee must fall as against sterling money; instead of being 18. 9d. it may fall to 1s. 6.
The Indian revenue is received in silver, and, therefore, the less far silver goes in buying, the poorer will the Indian government be. And this is of more instant importance to the Indian government than almost any other, because its foreign payments exceed those of most governments, and those payments are made in gold. It has to pay interest in gold on a very large debt in England, to pay home salaries, maintain home dépôts, and buy English goods and stores all in gold; and the less valuable silver is in comparison with gold, the less effectual for these necessary purposes will the Indian revenue be.
+ Abrogated in Great Britain by the law of 1816.
gold and silver should be as 1 of gold to 154 of silver, was the result of nearly two hundred years' observation of the following facts, viz., that the intrinsic value of each metal as a commodity, aside from its uses as currency or money, was continually fluctuating in accordance with the increase or decrease of its production, but that this increase or decrease of production, and consequent increase or decrease of value, was never the same in both metals at the same time. The experience was that when the production of gold had diminished, that of silver had either remained stationary or increased, and vice versa. There was no theory to show that this should necessarily be the case, but such was and had been the fact for over two hundred years. In order to prevent wide fluctuations in the standard of values, it was sought to establish a bond between the values of the two metals, so that the diminishing value of the one might be checked by either the stationary or the increasing value of the other. Experience had shown that the average commercial value of silver had been as 151 of silver to 1 of gold, and that though either one might temporarily change in value so as to change this relative value, it would certainly come back to it sooner or later if both metals were equally used as money. As previously remarked, the values of both metals is to a very large extent fictitious; there is no other use, than as money, that would warrant more than one-fourth the present values of either gold or silver. The depreciation of 29 in the 100 of the value of silver (or the increase of 41 per cent in the value of gold, whichever one may choose to call it) which took place from October, 1874, to July, 1876, mainly as the result of the demonetization of silver by Germany, proves it.
It was, therefore, to prevent fluctuations in the standard of values that the two metals were, so to speak, “yoked together” by the legal establishment of their values as permanent at 154 to 1. It was believed, and experience has proven, that if both metals were equally used as money, this relative valuation was the point from which there would be the least departure. During the discussions of this subject in Congress (1875–6) there seemed to be a disposition on the part even of the advocates of the double standard to change the relative legal values of gold and silver by the coinage of a larger silver “dollar,” as compared with the gold “dollar.” But any departure from the standard of 154 to 1 is the same in principle — only less in degree — as the complete demonetization of either of the metals.* To meddle once with a rule established by the experience of centuries, only makes the necessity of meddling again at some future time.
The following table is from the annual report for 1875 of the United States Commissioner of Mining Statistics :
* The law of April, 1792, provided that the ratio of gold to silver in all coins current as money in the United States "shall be as "fifleen to one," and for 40 years the silver dollar of the United States was of that proportional value. But by the reduction in weight of the gold coins the ratio was increased to 16 to 1. The subsequent laws regulating the values of coins had changed this to 15.988 to 1 in 1837, which continued to be the ratio until the coinage of the trade dollar under the law of February, 1873, made it 16.27 to 1.