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 THE SILVER QUESTION, 
 
 Injury to British Trade and 
 Manufactures. 
 
 THE PAPER 
 
 BY 
 
 GEOEGE JAMIESON, Esq. 
 
 {H.B.M's Consul- General at Shangltai, China')^ 
 
 Which iWon the Bimetallic Prize offered by Sir Henry 
 M. Meysey-Thompson in 1894 ; 
 
 together with 
 TWOJiOTHER PAPERS ON THE SAME SUBJECT 
 
 BY 
 
 THOMAS HOLYOAKE BOX 
 
 (YOKOHAMA) ; 
 AND 
 
 DAVID OCTAVIUS CROAL 
 
 (LONDON), 
 ALSO 
 
 A PREFACE AND SEQUEL 
 BY 
 
 Sir HENEY M. MEYSEY-THOMPSON, Bart., MP. 
 
 1895. 
 LONDON : EFFINGHAM WILSON, Royal Exchange, E.G. 
 
 PRICE SIXPENCE.
 
 PREFACE 
 
 BY 
 
 SIR HENRY MEYSEY-THOMPSON,
 
 PREFACE 
 By Sir Henry Meysey-Thompson. 
 
 In introducing to the public the following excellent papers 
 on the subject of the injury done to the trade and manufac- 
 tures of England by the divergence in value between gold 
 and silver, I will say only a very few words in explanation 
 of my reasons for offering a prize. 
 
 Fifteen years ago I had come to the conclusion that if the 
 value of gold, as measured by silver and commodities, were 
 to continue to rise, the inevitable consequence must be the 
 banishment of all our great manufacturing industries from 
 England, to find a home in the silver-using countries of the 
 East and elsewhere. 
 
 This theory I and others proclaimed from the housetops, 
 but we found that we might as well have been crying in the 
 wilderness ; no one would listen to us. Yet the theory is 
 very simple, and seemed to us quite conclusive. 
 
 What is the question ? It is one simply and solely of 
 locality. The manufactures of the world will certainly be 
 carried on somewhere : where is that somewhere to be ? 
 
 Now, we have all to make up our minds : 
 
 (1) Do we luish that the home and principal seat of the 
 great manufacturing industries of the world — the cotton, 
 woollen, worsted, linen, jute, iron and steel, machinery, 
 leather, clothing, pottery, glass, and many others, including 
 all our existing agricultural industries — should continue to 
 be in the United Kingdom, as hitherto, and that they should 
 be carried on by English, Scotch, Irish, and Welsh workmen ; 
 or do we ivish to see them banished to the soil of India, China, 
 Japan, and Mexico, and carried on by Indian, Mexican, 
 Chinese, and Japanese workmen ? 
 
 (2) Is it certain that our present monometallic policy must 
 drive these industries away from the soil of the Unite
 
 II. 
 
 Kingdom, and cause them to be carried on, instead, on the 
 soil of India, China, Japan, and Mexico. 
 
 Let us compare England and China in the year 1869, and 
 again in 1 894, to take a round quarter-century of time. Let 
 us suppose that an independent capitalist, resident, say, in 
 America, and caring nothing either for England or China, 
 were hesitating in which country to set up a manufactory. 
 Let us suppose that he made inquiry as to the cost of labour 
 in the two countries, and that he was told the amount of 
 labour required to make a given quantity of cloth would 
 cost him one sovereign in England, or 4 ounces of silver in 
 China, he would say : " The value of silver is 5s. per oz. : 
 4 ounces of silver cost £1 : my sovereign would purchase the 
 same amount of labour either in England or China. I 
 prefer England." 
 
 Now let us look at 1 894. Gold wages have certainly not 
 fallen in England ; we have conclusive evidence that silver 
 wages have not risen in China ; therefore, if the same man 
 inquired now, he would still be told that the labour required 
 to make a given amount of cloth would cost him one 
 sovereign in England, or 4 ounces of silver in China. He 
 would say : *' Silver has fallen from 5s. to less than 2s. 6d. 
 per oz. ; therefore, for lialf-a-sovereign I can buy 4 ounces of 
 silver, and, as far as the cost of labour is concerned, I can 
 now get as much cloth made in China for half-a-sovereign as 
 I can get made in England for a sovereign. I prefer China." 
 
 The public would not stop to listen ; but " dogged does 
 it." We hammered away, making a convert here and there, 
 until now even Sir William Harcourt admits that the pro- 
 fessors of Political Economy are on our side. During the 
 last two years, I have had information sent me from many 
 parts of the world, that the manufacturing and agricultural 
 industries in silver-using countries are advancing by leaps
 
 Ul. 
 
 and bounds ; while in England and other gold-using coun- 
 tries they are mostly stagnant and declining. 
 
 Now, I said to myself, we have no longer to rely on theory ; 
 we have hard practical facts to point to. Someone should put 
 these facts in a way in which our great industrial population 
 can understand them. Let them once grasp the fact that 
 employment is slipping from their hands into those of 
 Chinese and Japanese, and the thing is done. 
 
 The hour has come : can we find the Man ? It was in 
 order to find the Man that I offered my prize. I hope that 
 the readers of these Essays will agree that in Mr. Jamieson, 
 H.B.M.'s Consul-General for China, excellently supported as 
 he is by Mr. Croal and Mr. Box, the man is found.
 
 CONDITIONS OF THE PRIZE. 
 
 Sir Henry Meysey-Thompson oiers a Bimetallic prize of 
 a silver cup or silver plate value £25, and £25 in sovereigns, 
 for the paper which points out most clearly and plainly : — 
 
 (1) The [great loss and injury which is being inflicted on 
 the producers of this country by the extraordinary rise in 
 the value of gold as compared with that of silver during the 
 last twenty years, consequent on changes in the laws regu- 
 lating the use of gold and silver as money in various 
 countries. 
 
 (2) The immense temptation and inducement which this 
 rise in the value of gold holds out to capitalists in silver- 
 using countries, to develop their coal mines, and to erect 
 machinery for the purpose of supplying themselves and 
 other silver-using countries with the manufactured articles 
 which this country has for long been in the habit of supplying 
 them with. 
 
 (a) When the result of this rise in the value of gold has 
 been a rise in the silver price of our manufactures. 
 
 (h) When the result has been a fall in the gold price of 
 them. 
 
 (3) That in the competitive manufacturing industries of 
 the world this divererence of value between gold and silver 
 must inevitably lead to the substitution of the cheap labour 
 of silver-using countries for the more highly paid labour of 
 gold-using ones, a substitution which is already rapidly 
 taking place, and which, unless some international agree- 
 ment is come to at once, must lead to the ruin of manj^ of 
 our industries, and the throwing out of employment of tens 
 of thousands of our workmen.
 
 V. 
 
 All the papers must be in English, and either printed or 
 type-written, and be sent in before the 30th September, 
 1894, to Sir Henry Meysey-Thompson, M.P., Kirby Hall, 
 York. 
 
 No paper must exceed in length twelve pages of the 
 ** Nineteenth Century Review." 
 
 The right is reserved to Sir Henry and to the Bimetallic 
 League to publish or reprint all or any part of the article 
 which wins the prize in any form they please, without any 
 further payment to the author of it.
 
 BIMETALLIC PRIZE COMPETITION 
 
 Paper submitted by 
 
 GEO. JAMIESON, H.B.M. Consul-General, 
 Shanghai, China. 
 
 WINNER OF THE PRIZE. 
 
 Viewing the world as a whole, the observed facts during 
 the past twenty years may be stated as follows : 
 
 (1) Prices (wholesale) of nearly all commodities have 
 fallen in gold-using countries. This fall coincided roughly, 
 step by step, with the fall in the gold value of silver up to 
 the end of 1892. Since that date silver has fallen more 
 rapidly than commodities, but the latter appear to be still 
 falling.* 
 
 (2) Wages, rents, and taxes in gold-using countries have 
 not varied, or have varied only within narrow limits, due to 
 temporary and local causes. Agricultural rents should, 
 perhaps, be excepted ; but these are subject only to periodical 
 revision. 
 
 (3) Retail prices (into which wages, rent, and taxes enter 
 largely) have not fallen to the same extent as wholesale 
 prices, in many cases they have not fallen at all. 
 
 (4) Prices (wholesale) of all commodities in silver-using 
 countries have remained approximately steady during the 
 
 *Index No. 18()2, Silver 65-4. Commodities 68. 
 
 Sauerbeck's Tables, Ap. 189-1 .. 46-8, „ 63
 
 period, and this whether the articles were produced in the 
 country itself, or imported. In the case of articles imported 
 from gold-using countries, however, there has been, since 
 the middle of 1893, a rise in silver prices, corresponding to 
 the divergence between silver and commodities noted in 
 No. 1. 
 
 (5) Wages, rent, and taxes have not varied in silver-using 
 countries, or have varied only within narrow limits, and from 
 causes unconnected with the relation of gold to silver. 
 
 (6) Retail prices in those countries have not varied, except 
 in the case of articles purchased retail in gold-using countries, 
 which have risen in proportion to the rise in gold. 
 
 In so far as these propositions refer to facts observable 
 in England, it is unnecessary to offer any remark with regard 
 to prices and wages in silver-using countries, especially the 
 Asiatic countries, which are by far of the greatest importance 
 to us, I would refer to the following publications : 
 
 "Prices and Wages in India." Statistical Department, 
 Calcutta, 1893. 
 
 " Prices of Commodities in China." Consular Reports. 
 Miscellaneous Series, No. 305, 1893. 
 
 The various statistical publications of the Chinese and 
 Japanese Governments. It is impossible in this short paper 
 to do more than indicate the data. 
 
 The first question is, in what way and to what extent have 
 producers in England suffered loss by the demonetization of 
 silver ? 
 
 The loss to producers is the lowered value of their pro- 
 duce, while wages, rents and all outgoings remain the same 
 as before.
 
 3 
 
 What, then, are the causes which have contributed to 
 lower the prices of commodities in England and other gold- 
 using countries, specially of agricultural produce ? 
 
 Any alteration of prices must be due to causes affecting 
 the demand, or to causes affecting the supply, or to changes 
 in the currency itself. 
 
 It will readily be admitted that there is no falling off in 
 demand. The world generally, is growing in wealth and 
 population, and so far as demand alone is concerned prices 
 should be rising. The cause or causes must therefore be 
 sought in the other two elements. 
 
 The causes are, I would submit, the following, and I 
 enumerate them in what I consider the order of importance 
 as affecting agricultural produce, beginning with the one 
 which has the least effect. 
 
 (1) The first is cheap ocean freights, and a lessening of 
 cost of production, through improvements in machinery, 
 new chemical discoveries, and other scientific advances. 
 
 (2) The appreciation of gold, consequent upon the demone- 
 tization of silver. 
 
 (3) An enlarged area of supply consequent on the relative 
 cheapness of silver to gold. As silver prices in Asiatic 
 countries have not risen, the produce of those countries can 
 be laid down in England at almost Asiatic prices. 
 
 I shall briefly remark on each of these in order. 
 
 (1°) Low^ered cost of transport and production. This 
 cause is often put forward as being the principal element in 
 the case, and it is necessary to notice it, as it has doubtless 
 had some effect. But it may be pointed out, that this cause, 
 or set of causes, rather, had been in operation long before 
 1873, and did not prevent a great rise of prices between 
 1850 and 1873. Had these been the only agents working 
 for a fall, all other things being equal, though in some 
 commodities the fall might have been considerable, it is very
 
 improbable that prices all over would have been reduced 
 more than a few points, possibly 3 to 5 per cent. 
 
 (2°) The appreciation of gold. 
 
 It will readily be admitted that if gold were the only 
 currency in the world, a sudden augmentation or diminution 
 of the mass, by, say, one half, would raise or lower prices in 
 nearly the same proportion. Now when gold and silver 
 circulated side by side, at a fixed ratio maintained by the 
 open Mints of ^the Latin Union, the metallic medium may 
 be deemed to have been, for all practical purposes, 
 either all gold or all silver. For example, suppose 
 there are x oz. of gold in circulation, as currency in 
 the world, and y oz. of silver, and that one oz. of gold 
 exchanges for sixteen ounces of silver; then the metallic 
 
 medium, in terms of gold, would be \x +~) ounces, and 
 
 in silver, would be (16i» + ^) ounces. The two terms would 
 be perfectly interchangeable, and the world might be said in 
 effect to be monometallic. Prices in gold would adjust 
 
 themselves in relation to the mass \^-^-\a)i ^^^ prices in 
 
 silver in relation to the mass (16jj i/), and how much was 
 a;, and how much was y, would be perfectly immaterial. 
 Relatively to one another the volume of either might vary 
 indefinitely, without having any effect upon prices, which 
 would vary only in relation to the mass of the two. 
 
 Such in efiect was the state of the world up to 1873. The 
 value of the whole of x was then, as we know, approximately 
 equal to the whole of y ; but that was quite accidental, and 
 had not always been so. 
 
 By the breaking of the Bimetallic link, the silver-using 
 and the gold-using portions of the world parted company. 
 In the gold-using portion, prices began to adjust themselves 
 in relation to the mass cc, and in the silver-using portion in
 
 relation to the mass y, or, to speak more correctly, in relation 
 to that mass of %j which, for the time being, entered into 
 their currency. 
 
 Now, had the two halves of the world been approximately 
 equal in wealth, population, and extent of commerce, the 
 adjustment might have been effected without any great dis- 
 turbance of prices. One would have parted with its gold, 
 and the other with its silver, as a fair exchange, and no 
 harm would have been done to anybody. 
 
 As a matter of fact, however, the two halves were very 
 unequal, the gold-using half being immensely superior ; and, 
 moreover, this half was owner of a great part of the 
 floating silver, and of the silver-producing mines. Anxious 
 as gold countries might be to get rid of their surplus 
 silver, they would not part with it for nothing ; 
 and ready and anxious as silver-using countries might 
 be to get silver, they could only get it for value of some 
 sort, either by way of loans, or in settlement of the annual 
 balance of trade. This is a process that takes time. Silver- 
 using countries for the most part are making additions to 
 their stock of silver, year by year ; but they are absorbing 
 it only slowly. Consequently prices in those countries con- 
 form themselves, not to the whole mass of y in the world, 
 but only to that part of it which has found its way into 
 their circulation. 
 
 I may remark here in passing that this seems to explain 
 quite satisfactorily how it is that prices and wages have 
 risen so little in those countries, contrary to what was 
 generally expected. In India, where the additions to the 
 currency have been considerable, there has been some rise 
 in the price of food and wages, particularly in those classes 
 of skilled labour which the new industries have called into 
 existence. So in Japan the same thing may be observed in 
 a smaller degree. In China, on the contrary, there has been
 
 no import of silver to speak of, and no change whatever in 
 prices and wages. Nor is there likely to be any material 
 change in this respect, whatever the relative value of gold 
 and silver may be ; though, of course, the lower silver goes, 
 the easier in a way w^ill it be for China and the other silver 
 countries named to get it. 
 
 In gold-using countries, on the other hand, which have 
 voluntarily restricted their circulation to gold, inasmuch as 
 the mass x is manifestly insufficient to carry the commerce 
 and industries formerly borne by x plus a considerable 
 portion of y, prices, of course, have fallen. The quantity 
 X has to be spread over a greater area, and as the annual 
 additions are only sufficient to repair waste, and to meet the 
 increased demand due to the natural growth of trade, the 
 value necessarily appreciates. 
 
 What the exact percentage due to this cause may be I 
 do not venture to attempt to estimate. Whatever it 
 may be, it ought to affect all commodities alike, and also, 
 though more slowly, wages. 
 
 \, (3'-') The other cause which I have named, has been and 
 continues to be the principal factor in cheapening the prices 
 of produce, especially produce of the cereal class. 
 
 A very few words will suffice to make this clear. In the 
 years preceding 1873, when the rupee was at 2s. nearly, the 
 price of Indian wheat in Bombay was approximately 10s. 
 per cwt., and the Gazette price of English wheat in London 
 was about 54s. per quarter, equal 12s. 4d. per cwt. Allowing 
 for quality and costs of transport, these prices may be deemed 
 equivalents. When the rupee exchange fell to Is. 6d., Indian 
 wheat, the silver price of which in Bombay has with tem- 
 porary fluctuations, remained constant,* would cost in Bom- 
 bay about 7s. per cwt, and could be laid down in London for 
 
 * Official quotation. Wheat No. 1, soft, per candy 1873 R.Si 8 
 „ „ „ „ 1893 R.32 11 1 
 
 Prices and Wtit/cs in India.
 
 something like 83. 6tl. All the other sources of supply 
 remained open as before, the supply for the time being was- 
 greater than the demand, and consequently the price fell to the 
 level of the lowest market. Again the exchange value of the 
 rupee falls to, say, Is. Id. Indian wheat can now be laid 
 down in London at nearly half the sterling price of 1873 
 (costs of transport having also in the meantime been greatly 
 reduced), and conpequently the price of wheat all over falls 
 to a corresponding point. 
 
 This is a fair illustration of what has been going all over 
 the world. We draw our supplies from all countries wher- 
 ever they can be procured most cheaply. By each successive 
 drop in the gold value of silver, a greater and greater amount 
 of pi-oduce has been admitted from India and other silver 
 countries, and always at a cheaper rate. Had the rupee 
 retained its old value, of 2s., it is perfectly certain that no 
 wheat could be imported from India at present rates. There 
 is no reason to suppose that the rupee price in Bombay 
 would have been materially different from what it has been. 
 Had the gold value of the rupee not fallen, the area of grain 
 supply would never have widened as it has done, demand 
 and supply would have been more evenly balanced, and the 
 variations in price would have been confined within small 
 limits. 
 
 The same reasoning that applies to grain applies to every 
 other article that can be supplied freely from silver-standard 
 countries. The silver prices in those countries have, as the 
 experience of twenty years has shown us, remained approxi- 
 mately steady, and necessarily the gold price has fallen. In no 
 article, however, has the correspondence between the price 
 of silver and the price of the article been so complete as in 
 o-rain. In 1873, when the price of silver was GOd., wheat 
 stood at 54s. To day silver is 28^d. and wheat 24s., being
 
 -a drop in the one case of 52-5 per cent., and in the other of 
 55*6 per cent. 
 
 It is simply the old law of supply and demand. Increase 
 the area of supply, and you have, for the time being, the 
 supply outrunning the demand. With an excessive supply 
 the cost of production in the cheapest area must determine 
 the price of the whole. So loug as Indian wheat can be laid 
 -down at 23s. a quarter it is impossible for English farmers 
 to get a higher price, qualitj^ for quality. India, by itself 
 of course, could not provide enough wheat to supply the 
 whole English demand, but that is not the point. All the 
 other sources, whence England drew her supplies before the 
 fall in silver, still continue to send wheat forward, and it is 
 the cheap rate at which the excess supply from India and 
 other silver countries is offered, that governs the market 
 The lower silver goes the cheaper and cheaper does this 
 excess supply become. And there is no help for it, until 
 either silver begins to rise again, or until some portions of 
 the earth are thrown out of wheat cultivation, and the demand 
 again overtakes the supply. 
 
 But it may be said, granting that the cheapening of 
 produce is hard on the agriculturist, it must be a very good 
 thing for the country at large, especially for the manufac- 
 turing portion, who get the same wages, and therefore can 
 live so much better. This seeming prosperity, however, can 
 be but short lived, for — 
 
 11. The rise in the value of gold holds out an immense 
 temptation to the capitalists of silver countries to develop 
 their coal mines, and to erect machinery for the purpose of 
 supplying themselves and other silver countries with the 
 manufactured articles which this country has long been in 
 the habit of supplying them with. 
 
 The inducement to this lies in the fact that wages in all 
 silver-using countries, formerly cheap, have now, by the
 
 fall in silver, become fifty per cent, cheaper, relatively to gold 
 wa^es, or, to put it in a different form, that wages in gold- . 
 using countries have, through the appreciation of gold, become 
 100 per cent, dearer than they were relatively to silver wages. 
 
 Prices of commodities regulate themselves automatically, 
 ^nd from day to day. Given an equilibrium of prices at 
 any moment between a silver-using and a gold-using 
 country, any subsequent fall in silver must have one or 
 other of two results : either the gold price must fall, or 
 the silver price must rise. The exchangeable value of any 
 article is, within a certain limit, representing costs of 
 transport, necessarily the same all the world over. A bale 
 ■of cotton, for example, has the same exchangeable value 
 in Liverpool, Bombay, or New Orleans, allowing for a certain 
 fixed margin, representing costs of transport, merchants' pro- 
 fit and duty, if any. In bulky articles this margin is of 
 ■course considerable, but that does not affect the principle. 
 Whenever the a. tide, for any reason, becomes cheaper in one 
 place than in another, there is a profit in exporting it. A 
 flow sets in from the cheaper to the dearer, until the ordinary 
 •equilibrium is restored. 
 
 With wages, however, it is different. The price of a day's 
 labour in Bombay bears no relation to the price in Liverpool, 
 ■even assuming the quality to be equal. If, indeed, we could 
 import a cargo of coolies as easily as we import a bale or 
 cargo of cotton, the adjustment would be rapid. But the 
 standard of wages in any country is regulated on very 
 different principles. The law of supply and demand, which 
 governs wages, is not international, like the law for com- 
 modities, but national or even provincial. And in England 
 where the rights of labour are so well guarucl by trade- 
 unionism, and a sympathetic legislature, even the law of 
 supply and demand has not free scope. An employer of 
 
 labour must pay the recognised wages or close his mill. 
 
 c2
 
 10 
 
 Adjustments in the direction of a fall, can only be brought 
 about b}^ concerted action, and usually after a strike or lock- 
 out, or other painful and expensive process. 
 
 Let us see now, how these principles work out in our trade 
 with silver using countries, say China, to take a familiar 
 example. 
 
 The result of a fall in silver must be, as I have said, that 
 either the silver price in China must rise, or the gold price 
 in England must fall, or else it must be partly the one and 
 partly the other. An English merchant who ships cotton 
 manufactures to China, can only do so on terms that pay in 
 the long run. If the buying price in Manchester keeps 
 firm, he must get such a higher silver price in China, as will 
 counteract the fall in exchange. If silver falls ten per cent, 
 he must demand a ten per cent, higher silver rate, other 
 things being equal ; if the Manchester market falls ten per 
 cent., he will be able to sell at the old silver rate, or if the 
 Manchester market falls 5 per cent., he will be content with 
 a 5 per cent. rise. 
 
 The observed course of prices, during the twenty years up 
 to the end of 1892, has been that gold prices have fallen, and 
 silver prices have remained steady. Since the beginning of 
 1893, however, there has been a change. The Manchester 
 price has been steadier, and consequently the silver price 
 has risen. The following table compiled from the published 
 market reports in Shanghai, shows the variations in silver 
 prices of Manchester goods for the last fourteen years. The 
 prices of 1882 are taken as 100. 
 
 1882 
 
 100 
 
 98 
 
 1889 
 1890 
 1891 
 1892 
 1893 
 1893 
 1891 
 
 
 .. 100 
 
 1883 
 
 
 . . 95 
 
 1884 
 
 99 
 
 
 ,.. 97 
 
 1885 
 
 99 
 
 
 .. 99 
 
 1886 .. .. 
 
 1887 
 
 1888 
 
 99 
 
 103 
 
 108 
 
 June 
 
 Dec 
 
 -June 
 
 ... 115 
 ,.. 139 
 
 ,.. 138
 
 11 
 
 The rise, as will 1)3 seen, was as much as 38 per cent. 
 Possibly this will not be maintained, but undoubtedly a 
 very considerable rise, which looks like being permanent, 
 has been established. 
 
 Let us consider, firstly, the effects when the gold price 
 falls, and by consequence the silver price is steady. 
 
 Suppose two cotton mills working, the one in England, 
 and the other in Japan or China, and competing with one 
 another for the sale of their productions, and contrast the 
 position of the two in 1873 and in 1893, Let ns assume 
 that in 1873 they were competing on even terms, that is, 
 that each realised to the owners the same profit. In 1894 
 each employs the same amount of labour as it did in 1873, 
 which the English pays for in gold at the old rates, and the 
 Japanese in silver also at the old rates. The Japanese mill- 
 owner still pays for his men, as he used to, 18 to 20 cents a 
 day, and for his women 8 to 10 cents a day. In 1873 that 
 meant 9d, to lOd. per day for men, and 4d. to 5d. for women. 
 Now, it means just one-half, that is, 4d. to 5d. and 2d. to 
 2id. Multiply this over 2,000 mill hands, and see what 
 the saving will be on labour alone. But this is not all. The 
 same advantage accrues on the coal bill. Japanese coals cost 
 them, say, M to $5 a ton, which meant 16s. to 20s, They 
 still can be got at 884 to 385 a ton, but that now only means 
 8s, to 10s. The same thing applies to rent, wages, taxes, 
 and all fixed charges whatsoever. They are all payable 
 in silver, and have nowise varied with the rise in gold. Only 
 in the single item of raw material is the old equality 
 maintained. Both are free to buy that wherever they can 
 find it cheapest on the world's market, the only advantage 
 being proximity to the best source of supply and, conse- 
 quently, economy of transport. 
 
 Now, so long as the gold price went on falling, and the 
 silver price consequently kept steady, there was no great
 
 12 
 
 manifest advantage resulting to the Japanese manufacture!- 
 from a fall in exchange. He continued to get the same 
 prices for his products, and his outlay was the same, year by 
 year, both being in silver. Any improvement he could effect 
 by economy of management or by getting his raw material 
 cheaper, would be so much extra profit, otherwise his 
 position was unaffected. In any case exchange fluctuations 
 would not trouble him. 
 
 The English manufacturer on the other hand, has to meet 
 the same fixed expenditure from ever decreasing returns. He 
 is able to buy his raw material cheaper, owing to the 
 general fall in commodities, but his wages bill, his rent, his 
 interest on borrowed capital, his rates and taxes, have all ta 
 be met as before. His profits begin to dwindle, it is only by 
 the greatest economy of management that he can keep open 
 at all. The best mills only manage to pay a fair profit, the 
 worst struggle to the verge of bankruptcy, always hoping 
 for a turn of the tide, and finally are forced to close. 
 
 Suppose, in the second place, that the silver price rises, 
 and, as a consequence, the gold price remains steady. 
 
 The gold manufacturer is, for the time being, in an easier 
 position. His retiirus do not fall off, and, though his ex- 
 penses are the same, he is in a position to profit by any 
 economy of manufacture or management. 
 
 But the silver manu.facturer is, so to speak, on clover. All 
 his working expenses are on the. old scale, and he is thus a 
 clear gainer by the extra price he gets for his products. If 
 silver prices have risen, say, 10 per cent., his profits will be 
 increased by just 10 per cent, on his turnover. The natural 
 result of this will be to attract more capital, more mills will 
 be built, and the output will increase. Competition will 
 lower prices, and^the gold manufacturer will again be driven 
 into a corner.
 
 13 
 
 Whatever happens, the mannfacturer in the silver standard 
 country, has a great advantage, and simply for this reason, 
 that he can obtain his labour at half the cost relatively to 
 gold wages, which he formerly paid. And this advantage 
 must remain to him (unless silver can in the meantime be 
 brought back to something like its old value) until either 
 wages in gold countries have fallen 50 per cent., or till they 
 have risen 100 per cent, in silver-using countries, or till some 
 common meeting ground has been found between the two 
 In other words, the old equilibrium will not be restored until 
 the standard of living and comfort, amongst the working 
 classes in England, has greatly fallen, or till the standard in 
 silver-using countries has greatly risen. 
 
 There is only one item that militates against the manu- 
 facturer in silver countries, and that is the enhanced cost oi' 
 his new machinery. It so happens that at present all, or 
 nearly all, manufacturing machinery has to be procured from 
 England or Europe, and the lower silver goes the more of it 
 do Eastern manufacturers require to purchase this portion of 
 their plant. As to this, I would only make two remarks. 
 In the first place the gold price of machinery has itself 
 greatly fallen with the general fall in prices. In the second 
 place, the dearer machinery is the better will it pay silver 
 capitalists to make that too in their own country. 
 
 In the foregoing discussion, the form of industry specially 
 in view was the manufacture of textiles, but it will be ap- 
 parent that the same argument applies to the making of 
 machinery, and, indeed, of almost every article which we 
 have been in the habit of supplying silver countries with. 
 In all industries where rough mechanical labour forms a 
 principal ingredient, there is an obvious advantage. The 
 building and repairing of ships might be quoted as an in- 
 stance, and it is worthy of note that at the last annual 
 meeting of one of our steamboat companies, the chairman
 
 14 
 
 informed his shareholders that a large saving had been effected 
 by having their ships docked in the East instead of in England. 
 
 The same stimulus is given to open coal mines, and to 
 develop the natural resources of those countries. If native 
 and foreign coal, twenty years ago, sold at about equivalent 
 rates, the former would be to-day some 50 per cent, cheaper, 
 simply through currency changes. And as a matter of fact, 
 it is now well known that the whole trade of the East is 
 supplied by Japanese and Chinese coal. The former, indeed, 
 is being sent to San Francisco and Bombay, and the time 
 may not be far distant when it will be sent through the Canal 
 and even to England itself, 
 
 III. The result of all this must be that in the competitive 
 manufacturing industries of the world the divergence of 
 value between gold and silver will inevitably lead to a 
 gradual transfer of the seat of all the great manufactures 
 from gold-using to silver-using countries, and, if England 
 persists in excluding herself from the benefits of an abundant 
 supply of the international media of exchange, to the ruin 
 of our national industries. 
 
 As competitors with one another for the sale of their 
 products on the world's market, the nations that can for 
 any reason produce most cheaply are bound to win in the 
 long run. Hitherto we have been able to do this from a 
 combination of causes. Cheap iron, cheap coal, scientific 
 improvements in machinery, skilled workmen, and economy 
 in the combination of labour, have for a long time enabled 
 us to maintain an industrial supremacy, and yet to pay our 
 workmen higher wages than were paid in any other country. 
 And had this currency trouble never arisen, there is not the 
 least doubt but that we should easily have held our own. 
 
 But the momentous economic change implied in the 
 divergence of the old value of gold and silver by as much 
 .as 50 per cent., has entirely altered the conditions.
 
 15 
 
 Coal is not auy longer relatively cheap in England, nor is 
 iron. Labour is 100 per cent, dearer in relation to silver 
 wages than it was. We have no monopoly of scientific 
 machinery. Oriental nations can buy the best that is pro- 
 duced, and they can engage skilled workmen to teach the 
 natives how to beat us at our own trade. 
 
 And though I have insisted on the element of wages as 
 being, as I believe it is, the most important factor in the 
 case, it is not the only advantage that silver-using countries 
 have. Kents, taxes, rates and all fixed obligations whatever, 
 are light and easily discharged, whereas in gold countries 
 they are heavy, and tend to become heavier with every 
 further appreciation of the metal. 
 
 The consequence of all this is what might be expected, 
 while old-established industries in England are in many cases 
 barely paying expenses, new and rival industries in the far 
 East are springing up broadcast, and, in spite of inexperience 
 and extravagance of management, are paying handsome 
 returns to their owners. 
 
 In the report of the Yokohama Chamber of Commerce, 
 dated May 5, 1894, the following statistics are given. 
 
 The first spinning mill in Japan was erected in 1863 with 
 5,456 spindles. 
 
 At end of 1883 there were 16 mills with 43,700 spindles. 
 1888 „ 24 „ 88,140 „ 
 
 1892 „ 39 „ 403,314 „ 
 
 1893 „ 46 „ about 600,000 „ 
 The same report adds, as till more rapid increase is ex- 
 pected in the near future, large orders, it is known, have 
 been placed for more machinery, some for yarns of the finer 
 qualities. 
 
 In the Consular Report on trade at Kobe, for 1892, a return 
 is given of the dividends paid during the preceding 12 
 months by 21 mills in Osaka, the average dividend was
 
 IG 
 
 18 per ceut. the highest being 28 per cent, and the lowest 
 8 per cent. The dividends for 1893 as reported from time 
 to time, in the Japan newspapers, appear to have been equally 
 good or better. According to a recent number of the Japan 
 Gazette, eleven mills whose names are given, paid an average 
 dividend of 16 per cent, for the first six months of 1894, as 
 compared with 12 per cent, for the corresponding period 
 of 1893. 
 
 Compare this with the account of the cotton trade in Eng- 
 land, as given in the Economist of February 17, of this year. 
 I cannot afford room to quote passages, but, briefly, the balance- 
 sheets of 93 spinning companies in Oldham show a net total 
 loss of £72,768 in 1893, against a like net loss of £104,664 
 in 1892, At the end of 1890 only eight of these companies 
 had adverse balances, and these amounted to only £8,412 ; 
 at the close of 1891, 49 companies had adverse balances, 
 amounting to £142,767 ; and at the close of 1893, 63 com- 
 panies had realised a total loss of £366,800 on their working 
 account. 
 
 Surely there is something seriously alarming in these 
 figures. Have our manufacturers, with all their accumulated 
 wealth of experience, become so effete that they allow them- 
 selves to be beaten at their own trade by amateur spinners in 
 Japan ? Or is it not that there is some enormous difference 
 in the economic conditions of the two countries, which 
 enables the Eastern manufacturer to win without effort, while 
 the Western is struggling his hardest to get even a place in 
 the race. 
 
 It has not unfrequently been said, that it is some consola- 
 tion to us, in the midst of all our depression of trade, to find 
 that other countries, such as Germany and the United States,. 
 are in an equally bad condition. But I would venture to 
 suggest that this exactly emphasises the present contention,, 
 vi/i. : that the countries that are suffering by reason of the
 
 17 
 
 all in silver, are the gold standard countries, and those that 
 are reaping the benefit are the silver countries. 
 
 It India is pointed to as a silver country, that is in an 
 embarrassed condition, I would reply that the whole of her 
 trouble comes from the fact of her owing a large foreign 
 debt in gold, which is quite accidental. Had her debt been 
 payable in silver, as it might have been, and but for her re- 
 lation to England probably would have been, she would now 
 be in an excellent position. Taxation, in that case, would 
 have been light ; trade and manufactures would have been 
 increasing, as they are, and all circumstances would have 
 been favourable to the rapid accumulation of wealth, 
 
 China, which has long lagged behind in the industrial 
 race, is also waking up to the situation. At the present 
 moment three large factories are being erected at the port 
 from which I write, covering many acres of ground, and 
 before another year is out, two or three hundred thousand 
 spindles will be at work. That the ordinary Chinese coolie 
 can be readily converted into an efficient mill hand has been 
 abundantly proved. His patient endurance of labour is 
 well known, as also his frugal habits. The present rate of 
 wages, with which he is well content, may be put, in English 
 money, at from 3d. to 5d. per day. The supply of labour is 
 so enormous, and the extent of the country is so vast, that 
 many years must elapse before there can be any material 
 rise in wages. 
 
 But it may be urged, granting that India and other 
 Eastern nations can make their own coarser and commoner 
 yarns and cloths, the competition is after all confined to these 
 grades, and they cannot touch us in the finer qualities. It 
 is no doubt true, that hitherto the competition has been 
 mainly in the class of goods mentioned, but there is no 
 reason whatever why it should be confined to that. If there 
 is any force at all in the argument adduced, it extends to all
 
 18 
 
 industrial operations whatever. The only reason why- 
 Eastern mills have hitherto devoted themselves to the lower 
 counts of spinnings is that native cotton is most suited for 
 this quality, and that the greatest profit was to be made in 
 this branch of the industry. But there is no reason why 
 American and Egyptian cotton should not be imported 
 when required, as it is imported into England. 
 No doubt a good many years will elapse before 
 these Eastern mills can oust us from the position we now 
 occupy as manufacturers of the medium and finer fabrics. 
 But that things are tending that way, there can be no doubt. 
 Mr. O'Conor, Assistant Secretary to the Government of India, 
 in his Review of the Trade for 1892-3, says : — 
 
 " The influences that affected the market for yarns, affected 
 also the market for piece goods, which continue to exhibit a 
 non-progressive character. The trade in unbleached goods 
 is smaller than it has been since 1883, and in neither white 
 nor coloured goods is any advance apparent for many years. 
 It must be inferred that, as suggested in the Review of Trade 
 for 1890-1, imported piece goods are gradually being super- 
 seded by local manufactures." 
 
 And again, page 36. 
 
 " There is no doubt, looking at the course of trade over a 
 •series of years, the competition of Indian mills is telling on 
 the import of Manchester goods. The mills are gradually 
 beginning to make the medium class of goods, which form 
 the bulk of the imports, and they are also beginning to bleach 
 and dye their goods." 
 
 The process described by Mr. O'Conor, will be hastened by 
 the development of yarn spinning, in the far East. The 
 principal outlet for Bombay yarns has been China and Japan. 
 As these markets are closed to them, as they will be in a few 
 years ])j the progress of local mills, the Bombay mill owners 
 must devote themselves more and more to the medium and
 
 19 
 
 finer kinds of cloth, which in turn will oust the Manchester 
 products. 
 
 But the object of this paper is not to show the rate of speed 
 at which these changes may be expected to arrive, but to 
 show the tendency and drift of things, as the inevitable con- 
 sequence of the monetary disturbance. There are, of course, 
 other elements that count, and which may for a period 
 postpone the catastrophe, or mitigate its effects. Intelligence, 
 organization, abundant supply of capital may enable a 
 manufacturer to hold his own, or even to succeed against 
 economic advantages favouring his competitor. England has 
 all these on her side, and doubtless will make a good fight 
 for it. 
 
 But our manufacturers are fighting against odds. They 
 are handicapped in the race, and many changes and adjust- 
 ments are inevitable. Many forms of industry will have to 
 be abandoned altogether, and though new forms may take their 
 place, much capital will be lost, and much suffering entailed. 
 
 But why should our people be handicapped ? What 
 national advantage can be shown at all commensurate to the 
 great evils that are evident ? It has, unfortunately, become 
 ingrained in the English mind, that gold monometallism is 
 inseparable from our national prosperity. But should we 
 not have prospered all the same up to 1873 had we been 
 Bimetallic as France was ? We should have enjoyed all the 
 advantages of a fixed par of exchange none the less, by being 
 ourselves a party to the League. And has the nation 
 prospered so much since 1873 that we are justified in 
 glorying in monometallism ? Some individuals have 
 prospered, no doubt. All those who have a realized capital 
 in gold have benefited. But for the bulk of the nation, for 
 the industries which are the life and &oul of the country, the 
 change has been almost an unmixed evil. 
 
 GEO. JAMIESON.
 
 THE RISE IN THE VALUE OF 
 
 GOLD. 
 
 THOMAS HOLYOAKE BOX, 
 Yokohama.
 
 THE E[SE I^ THE VALUE OF G3LD. 
 
 BY 
 
 THOMA.S HOLYOAKE BOX. 
 
 (I) The great loss and injury wliicli is b^Ing inflicted on 
 tli3 British prodiicars b/ the extraordinary rise in the value 
 of gold as compared with that of silver daring the last twenty 
 years, consequent on changes in the laws regulating the use 
 of gold and silver as money ia various countries. 
 
 There is nothing which has caused so much injury to 
 British producers of to-day comparable to the rise in the 
 value ot gold compared to sih^er; but the injury alreadv 
 inflicted, although very considerable, is insignificant to what 
 it will be unless some speedy means are found to alter the 
 currency system of the world. The mighty dollar — the silver 
 dollar I mean— is becoming almighty by its cheapness com- 
 pared to gold, and unless its evil influence on British 
 industries is thoroughly understood by the working classes, 
 and its power promptly crippled, it will soon bring about 
 the greatest commercial revolution the world has ever 
 known. 
 
 The East, with its teeming millions, has, by far-seeing 
 minds, been looked to as the future great and permanent 
 market for British goods, consequently it is most necessary 
 that every Englishman should know what changes are taking 
 place, and which owe their existence entirely to cheap silver.
 
 24 
 
 When a fixed ratio existed between gold and silver the 
 silver dollar was worth about 4s. 2d., and the rupee 2s. Id., now 
 the former is worth only 2s., and the latter Is., or less than one- 
 half of their original value in gold, with a tendency still to 
 decline. Considering that the silver value of food and labour 
 in the East has varied little within the last twenty years, and 
 especially in the interior where the teeming millions live, it 
 will be readily understood that the extraordinary rise in the 
 silver price of gold has greatly diminished, and impeded the 
 consumption of British made goods and considerably reduced 
 their gold prices. The conservatism of the Oriental is pro- 
 verbial, and it takes a great deal to make him change. But 
 he loves money, and consequently feels the more keenly the 
 great advance in the prices of British made goods in his own 
 silver currency during the last twenty years. 
 
 The value of money in the East is considerable in its 
 ipurchasing powers, so far as native products are concerned, 
 -and out of all proportion to what it is in England. An 
 Oriental can buy all the necessaries of life for a few cents per 
 day, and therefore knows and realises the value of money far 
 more than an Englishman does. He counts the cost of 
 everything, not only to the cent but to the tenth part of a 
 cent. A cent is now worth less thaii an English farthi ug 
 and there is a coin in everyday use all over the East 
 one-tenth of a cent. only. This great purchasing power 
 in general of money in the East must always be kept in 
 mind, in order to properly understand the influence the great 
 rise in the silver-price of gold has on the Oriental when 
 purchasing foreign goods. To buy such goods always means 
 the spending of a lot of money, and he only buys them as 
 luxuries or as absolute necessities according to their nature 
 English goods were the first introduced into the East, and 
 they acquired a wide reputation. The Oriental once 
 satisfied with an article always uses it if he can get it at a
 
 reasonable price. You may show him another, and it may 
 be a better one ; but he knows the okl make, and will have it 
 again and again in spite of all persuasion to the contrary. 
 This is why so many well-known brands hold their own 
 against new goods. 
 
 In order to explain the more clearl}^ the changes which 
 have and still are taking place, I will nse the dollar as a 
 unit. We will put it down as being worth, roughly, 4s., or 
 five dollars to the pound. 
 
 As long as silver remained at a fixed ratio with gold, it 
 was comparatively easy to do business in the East. If prices 
 rose in gold they would naturally rise in silver ; and if the 
 Oriental could not afford to buy, he knew why, and was con- 
 tent to wait till prices came down again ; but when silver 
 began to fall in its ratio to gold, the silver price, or selling 
 price in the East, of British made goods began to rise without 
 any visible reason to the Oriental. For a time he was be- 
 wildered. To him a dollar was a dollar, and he could not 
 see why an article which still only cost 4s. should be worth 
 more than a dollar in silver. It was useless to try to ex- 
 plain it. He could not and would not understand, and rather 
 than pay more he would do without the goods. Indeed, it is 
 a well-known fact that for a considerable time merchants were 
 obliged to forego their profits in order to dispose of their 
 goods. The English manufacturer was continually advised 
 of this, but he would not bring down his prices, and eventually 
 the merchant had to demand more silver. Then the 
 Oriental began to look about for cheaper goods. He did not 
 like it at all. It was against his nature to change : he had used 
 English goods for a long time and had got accustomed to them ■ 
 but he could not pay the increased price in his silver money, 
 so he bought continental goods instead. The Eno-lish 
 manufacturer was duly informed of this, but he usually 
 replied that the Oriental would soon find out his mistake • 
 
 D 2
 
 26 
 
 tliat the ontiaeatal goods were rubbish, and if once tried 
 would never be bought again. It was the English manu- 
 facturer who had to find out his mistake ; for the Oriental, 
 once having the continental goods, made them suit his 
 purpose, ani continued to bay them because of their 
 cheapness. 
 
 There is little doubt that the rise in the value of gold 
 compared with silver has been the main cause of the great 
 growth of the continental trade with the East, and that the 
 German and Belgian iron and steel industries in particular 
 owe most of their success to it, for once having got a footing 
 in the market they were ever ready to undersell the British 
 merchant in order to keep their trade. 
 
 But silver still continued to fall, and although prices in 
 Europe fell too, their gold price did not fall in proportion to 
 the fall in the gold value of silver, and the Oriental was 
 again perplexed. He found the continental goods, even, too 
 dear for his small means ; but in the meantime he had 
 studied the vexed problem of the fluctuations in the relative 
 value of gold and silver. Food and labour cost him about 
 the same as they had done, but British and continental 
 goods were continually getting dearer in silver through the 
 decline in its value as compared with that of gold, and 
 seemed likely to continue doing so. If he could only 
 manufacture similar goods himself, he could make plenty of 
 money out of it, and that was what he wanted most. Pressed 
 by necessity, and the bright prospects, he commenced, very 
 clandestinely of course, Oriental fashion. It would not do 
 to let anyone know ; it must be kept a profound secret. 
 They must not be known as his make, or they would not 
 sell. They must have a foreign appearance, and be palmed 
 otf as foreign made ; so he started with such as were sold by 
 the label or wrapper. Wonderful imitations they were — 
 the wnippers I mean — but the goods themselves positive
 
 27 
 
 rubbish. The primitive way in which they were produced, 
 and the inferior materials of which they were made, could 
 not make them otherwise ; but in their foreign dress they 
 sold, and the whole interior districts were soon Hooded with 
 them. Of course they were all British imitations, such as 
 Bass's Beer, Guinness's Stout, Exshaw's Brandy, and even 
 Pears' Soap, and they could all be bought in a dozen different 
 makes, but with labels apparently perfectly genuine, and in 
 some cases actually put up in the original bottles and 
 wrappers. His intention, of course, was only to impose on 
 his own countrymen, for the Oriental living in the interiors 
 with no knowledge of European writing, deceived 
 by the appearance of the label, would be quite satisfied with 
 the quality of the goods. Bub by degrees they reached the 
 seaports and got into European hands. In India steps were 
 soon taken to punish the guilty, and in China the squeeze of 
 the mandarin greatly reduced the profits. But in Japan 
 there was no redress, there being no protection for foreign 
 patents and trade marks ; the Governments declined to inter- 
 fere, and when diplomatic stress was brought to bear on 
 them they openly encouraged it, declaring that foreigners 
 had no right to complain ; that the goods would not sell 
 without foreign labels, and to stop the use of such labels 
 would be to destroy the industries of Japan. Thus was 
 inflicted upon British producers the greatest blow ever 
 aimed at their trade in the far East. For a time the con- 
 fusion was great, and the complaints severe, but, encouraged 
 by success and supported by the Government, the 
 Japanese set to work to improve the quality and appear- 
 ance of their productions. ]\Iachinery was imported, and 
 the best European skill obtained. Weaving, at which they 
 were already adepty, has been greatly improved and 
 adapted to European styles, and silks and cotton goods 
 are largely exported to all parts of the world. Large
 
 28 
 
 breweries have been built, which supply excellent beer 
 in cjuantities not onh' sufficient to supply the demand 
 of the country, but shipped largely to China and the Straits 
 Settlements. Dockyards have been made where the largest 
 ships can be built and repaired, and iron foundries and engine 
 shops under European supervision turn out the best of work. 
 A scheme is also on foot to erect large iron and steel works, 
 subsidised by the Government, where plates, rails, &c., can 
 be produced for shipbuilding and railway purposes, and so 
 great has been the improvement in the quality of household 
 requisites that European ladies who, five or six years ago 
 would have spurned anything Japanese made, now do most 
 of their shopping in the native stores, while merchants, who 
 for years have imported only British products and manufac- 
 tures, are seeking customers all over the world for the new 
 goods being made in Japan. 
 
 The assistance rendered by the Japanese Government to 
 native manufactures and producers, not only in declining to 
 interfere with their using foreign patents and trade-marks, 
 but in many instances subsidising and fostering their indus- 
 tries, has made Japan the foremost manufacturing nation of 
 the East. But its power to compete in the markets of the 
 world is solely due to the cheapness of the price of silver as 
 compared with that of gold. Those goods which had to be 
 clothed in a foreign dress in order to command a sale, have 
 been improved, and b}^ the use of machinery and the aid of 
 foreign help and experience till they can now hold their own 
 in their native costume. But it is to the cheapness of the 
 value of silver, as compared with that of gold, that they owe 
 their power to compete in the markets of the world. 
 
 (2) The immense temptation and inducement which this 
 ffise in the value of gold holds cut to capitalists in silver-
 
 29 
 
 using counti'ies to develop their coal mines and to erect 
 machinery for the purpose of supplying themselves and other 
 silver-using countries with the manufactured articles which 
 Great Britain has so long been in the habit of supplying 
 them with. 
 
 There is an ever-growing demand for coal in the East, 
 and especially by the British steamship companies trading 
 there. Although it exists within easy reach of most of the 
 ports it could not be got at a profit, and there was little 
 inducement to get it while a fixed ratio existed between 
 gold and silver which kept up the gold value of the silver 
 dollar. The Japanese Government tried the experiment^ 
 and spent large sums of money m opening mines; 
 but they gave up the enterprise, and sold the concerns 
 to private companies at a great sacrifice to avoid further 
 loss. The gold value of the silver dollar was then worth 
 about 4s. Cardiff coal was used all over the East with 
 an occasional cargo from Australia. Its cost, with freight, 
 was about 40s. per ton laid down at the ports, or $10 
 per ton in silver. But, ten years ago, the value of the dollar 
 had fallen to 3s. 4d. in gold, which raised the price of coal 
 to 812 per ton in silver, although still costing only 
 403. per ton in gold. The Japanese coal, however, could be 
 got for less than SIO, and a few cargo steamers com- 
 menced to use it. It was mostly surface coal, and of inferior 
 quality, but as most of the freight between the Eastern ports 
 
 s earned in silver, this rise of $2 per ton in the silver 
 price of Cardiff coal, with no corresponding rise in the rate 
 of freights to meet it, was a serious matter with the steam- 
 ship companies, and they began to consider the necessity of 
 using cheaper coal. The increased demand for Japanese 
 coal made its production remunerative, and capitalists were 
 
 ready to invest their capital in order to develop an industry
 
 30 
 
 which offered such inclucementp. As the lise in the value 
 of gold continued so did the price of Cardiff coal increase, 
 while, by the aid of machinery, and an improved system of 
 mining, the Japanese coal gob cheaper. Some of the finest 
 plant in the world has been laid down in Japan, the 
 lower seams worked, and good quality coal found 
 little inferior to Welsh or English, liailways have been 
 built to convey it to convenient ports, and mines opened all 
 over the country. The result is that, while the silver-price 
 of Cardiff coal has increased to Sib and S16 per Ion in spite 
 of its reduced cost in gold Japanese coal of very good 
 quality can be bought at S3 per ton, and even less. 
 Consequently the British coal trade in the East has 
 practically ceased, and the millions of tons it would have 
 supplied annually had silver remained at a fixed ratio with 
 gold, are now procured from Japan, for all steamers trading 
 to the East use that fuel east of the Suez Canal. 
 
 And what has been done in the coal trade is being 
 attempted, and so far very successfully, with manufactured 
 goods, although the progress is much slower. In the former 
 case the demand was on the spot, and those who bought it 
 were well acquainted with the advantages offered, while in 
 the latter markets have to be found, goods sent out and 
 tried, and numerous changes and alterations made to suit 
 the varied wantr. But the progress is nevertheless rapid, 
 and the success so encouraging that capitalists are eager to 
 invest their money in industries of almost every kind. 
 Twenty years ago any connection with trade was considered 
 degrading in the eyes of the Japanese, and no respectable 
 person would have anything to do with it. The very lowest 
 only were in it, and they were looked on as beings contaminated 
 by some loathsome disease. To-day it is the " El Dorado " 
 of the highest and most intelligent. "What can have brought 
 about the change, except the profits already derived, and.
 
 31 
 
 now eagerly sought for in the manufacture of goods which 
 hitherto had been purchas'^d from Great Britain and the 
 Continent. 
 
 A comparison of the relative values of gold and silver 
 twenty years ago with those of to-day will the better enable 
 us to understand the positions of the producers of Great 
 Britain and Japan at the present time. The original value 
 of £1 sterling was about $5 in silver, the value at the present 
 time of £1 sterling is about SIO in silver, so that if British 
 goods cost the same to produce now as they did twenty years 
 ago ihey would be worth just double the amount in silver. 
 
 The original value of the dollar was 4s,, or say S5 to the 
 pound sterling, now the value of the dollar is only 2s., or say 
 iSlO to the pound sterling, so that supposing it costs the 
 same to produce goods in the East now as it did twenty years 
 ago, they can be sold for half the amount in gold. 
 
 The result is that goods produced in gold-using countries 
 have become double their price in silver, and those produced 
 in silver-using countries reduced to half their price in gold. 
 The effect requires no explanation. It is argued that the 
 cheap produce from the East, such as sugar, rice, grain, tea 
 &c., enables the British producer to live cheaper, and 
 consequently produce cheaper. This is good so far as it goes, 
 but it cannot possibly go far enough to enable him to compete 
 with the cheap Eastern labour. If he could produce at half 
 the gold price he did twenty years ago he would still be only 
 on a level with the Oriental. The fact is that goods produced 
 in gold-using countries are dear in silver-using countries and 
 are the less in demand, while those produced in silver-using 
 countries are cheap in gold-using countries, and their con- 
 sumption is continually increasing. The result is that in the 
 former trade is declining and unprofitable, with plenty of 
 cheap money lying idle ; in the latter, trade is plentiful and 
 profitable, capital scarce and dividends large.
 
 32 
 
 It will be seen that the result of this rise in the value of 
 gold has almost invariably meant a rise in the silver value of 
 British manufactures. I know of no British industry which 
 has been able to so economise in its methods of production 
 as to be able to regularly supply its goods to Eastern countries 
 at fixed silver prices. If such should exist, I can positively 
 assert that no rival enterprise has been started against it 
 unless possibly it may be something specially required for 
 Government use, which would be difficult to get in times of 
 war, and is made at a greater cost than it could be imported 
 to insure its possession at all times. 
 
 (3) That in the competitive manufacturing industries of 
 the world the divergence of value between gold and silver 
 must inevitably lead to the substitution of the cheap labour 
 of silver-using countries for the more highly paid labour of 
 gold-using ones — a substitution which is already taking 
 place, and, unless some international agreement be come to 
 at once, must lead to the ruin of many British industries, 
 and the throwing out of employment of tens of thousands 
 of workpeople. 
 
 If one man were as good as another, under the same 
 conditions and in the same field, the one who could do the 
 work cheapest would generally get the most of it to do. 
 Such is Nature's law, and, unless impeded, soon works out its 
 own end, just as water finds its own level. The invention ot 
 steam and its application of machinery gave the British pro- 
 ducer an advantage, and he was not slow to turn it to good 
 account and build up for himself the first position among the 
 manufacturing countries of the world. Cobden tried by his 
 system of free trade to permanently secure to the British 
 nation this position. If other countries would follow suit, so
 
 33 
 
 much the better, for the cheaper British goods could be sold 
 so much greater would be the demand for them, while cheap 
 produce was the very thing she wanted to enable her to 
 cheapen her production. Nothing could have been better ; 
 but other countries would not take the bait. They could not 
 compete successfully with British goods ; so after England 
 had adopted free trade, instead of following suit as Cobden 
 had expected they would, they turned round and increased 
 their duties in order to protect and foster their industries. 
 This was not an unmixed blessing to them, for it raised the 
 prices of their imports without in any w^ay diminishing those 
 of their exports. It, however, seriously hampered British 
 trade and considerably diminished the growth of it. 
 
 But in the East the results are entirely different. There 
 are no duties of serious consideration, and they could not 
 be increased at will; in fact, there were no industries to 
 protect, and consequently no necessity to increase them. 
 The great thing was to get British goods as cheap as they 
 could. But the continual rise in the value of gold, as 
 compared with that of silver, has changed everything. 
 British goods got so dear in their silver value that the 
 Oriental was forced to make for himself, and the decline 
 in the value of the w^hite metal has so helped him in his 
 work that he can not only make sufficient for himself but is 
 able to export them to advantage. The rise in the value of 
 gold has doubled the silver price of British goods in the 
 East, and has made their use almost prohibitive, while the 
 fall in the value of silver has brought down by over a half 
 the gold price of Oriental goods in gold-using countries, and 
 is continually increasing the demand for them. The 
 conditions are so unequal that it seems impossible to continue 
 the struggle long. It is like handicapping the champion by 
 giving to his opponent half the distance of the race. 
 
 The impossibility of the European competing with the
 
 34 
 
 Oriental in the open field has been proved in America. 
 The Chinese there by their low wages so monopolised 
 labour that they had to be excluded from the country 
 or the European workmen would have starved or been driven 
 out. But the European countries are not threatened 
 with the labourer himself (as the Americans were, where he 
 knew the price of European labour, and could learn, under- 
 stand, how much he should get himself), but with the 
 products of that labour done at Oriental wages. Besides, it 
 would be easy enoiigh to refuse to employ an Oriental to do 
 your work while it is difficult to decline to buy goods made 
 by him, especially as they improve in cjuality and get cheaper 
 in price. The temptation to buy them becomes all the 
 greater as the money earned by the British workmen get 
 less. He is the more prone to do so, and declines to buy his 
 own made but dearer goods. Protective countries are better 
 off. They can impose increased duties on Oriental goods, 
 and so stop them from flooding their markets. But England 
 with her free trade has no defence, and the brunt of the 
 burden will fall upon her workmen. The evil is getting 
 greater. Every farthing in the increase of the price of gold 
 as compared with that of silver makes British goods 1 per 
 cent, dearer in the East, while every farthing decrease in the 
 price of silver makes Oriental goods 1 per cent, cheaper 
 in gold-using countries. These new industries are growing 
 very rapidly in Japan, and what is being done there can and 
 will be done in China, India, and other places. Once M'ell 
 established the Oriental will hold on to them in spite of all 
 opposition, and unless some speedy remedy is found to alter 
 the currency system of the world their products will be 
 spread broadcast all over the world to the ruin of British 
 industries and untold disaster to thousands and thousands 
 of workmen. THOMAS HOLYOAKE BOX. 
 
 Yokohama, Auijad 21, 1894.
 
 35 
 
 P.S. — Since writing this paper a new Treaty has been 
 published, made between Great Britain and Japan, by which 
 the latter country will be allowed to increase its duties on 
 British products to the extent of 10 per cent., after five years 
 from the date of the Treaty. This will be a farther blow to 
 British commerce and the workino; man.
 
 THE FALL IN SILVER 
 
 AND ITS 
 
 EFFECT ON BRITISH TRADE. 
 
 BY 
 
 DAVID OCTAYIUS CROAL, 
 L X D X .
 
 THE FALL IN SILVER AXD ITS EFFECT OX 
 BRITISH TRADE. 
 
 BY 
 
 DAVID OCTAVIUS CROAL. 
 
 In the later days of September this year a gentleman of 
 some authority as a financial writer suggested to a mercantile 
 audience interested in Eastern trade that in supportino* a 
 reform of the monetary standard they were on the wrono- 
 tack. " Instead of reasoning," he remarked, " from currency 
 to commerce, which in nine cases out of ten became mere 
 metaphysics, let them reason from commerce to currency 
 which would be business." The challenge was daring and 
 hardly judicious, coming as it did from a supporter of the 
 existing monetary status. As a rule, the advocates of the 
 existing system prefer to avoid the commercial side of 
 the cjuestion — for reasons that are obvious. They content 
 themselves with the argument, or rather the assumption, that 
 British interests must suffer through a change in standards 
 because the value of our capital invested abroad, and the 
 return obtained from it, must be depreciated. The com- 
 mercial side of the picture they studiously neglect. Ifc is 
 highly desirable that we should obtain the biggest possible 
 return from our foreign investments — provided we do not 
 break our debtors by making honest fulfilment of their 
 obligations too onerous ; but it is equally desirable, indeed
 
 40 
 
 more so, that the capital actively employed in industry 
 should not be permitted to become less remunerative 
 through the change in monetary conditions that has been 
 going on during the past quarter of a century. It is the 
 purpose of this paper to inquire whether the dislocation 
 of monetary standards can be proved to have been 
 detrimental to British industry and trade ; and, if that 
 be established, to discover to what extent our interests 
 have suffered, aod how far losses already sustained may 
 be irremediable. It need hardly be said that, enormous 
 as is our stake as a creditor country, it is of less importance 
 than our industrial and commercial interests. Capital in- 
 vested in home or foreign funds is passive, whereas money 
 employed in manufactures is reproductive, creating work and 
 wages, furnishing freight to railways and steamboats, and 
 generally bringing prosperity in its train. If then, in de- 
 termining whether or not a change in monetary policy should 
 be made, we had to choose between slightly infringing on 
 the interests of funded capital or sacrificing those of our 
 industrial organism, there could be little doubt in which 
 direction the scale should turn. 
 
 Keference has been made to the neglect of the trade 
 aspect of the monetary problem by the single standard 
 men, but the reformers must also bear some share of 
 responsibility for refraining from placing this side of 
 the question before the public. It is true tbat the 
 Lancashire movement in favour of Bimetallism is inspired 
 by a bitter experience of the evils which the dislocation of 
 the world's standards has brought on the cotton industry. 
 Lancashire has been convinced by the resistless logic of the 
 emptying pocket, but the inert mass of public opinion must 
 be stirred by the presentation of clear and tangible proofs 
 of the injury that has already been done to the national 
 trade by the fall in silver. Five-sixths of the intelligent
 
 41 
 
 population of the country do not understand the simple 
 principles which account for the detrimental influence of 
 falling and irregular exchanges on our foreign trade. Yet 
 these principles have less in common with abstruse economical 
 science than with every-day common sense. It stands to 
 reason that if in India a rupee, in China a tael, in Mexico 
 and Central and South America a dollar, to-day buys as 
 much rice or wheat, or other necessity, as in time past 
 the natives of these countries will expect these coins to 
 buy as much cloth or similar goods, and will resent havincj- 
 to pay more for them. Moreover, as in these countries 
 wages remain virtually unchanged, the inhabitants are 
 actually not in possession of greater wealth to spend on si-.ch 
 articles. It follows equally that if an importer of foreign 
 goods into such countries can nowadays only realise about 
 half as much as formerly for the rupee, the tael, or the dollar 
 in the currency in which he calculates, and in which the cost 
 of producing the goods is paid, he must either abandon the 
 business, submit to have his profits pruned to vanishino- 
 point, or take steps to secure a complete re-adjustment of 
 the terms on which the goods are made and sold. 
 
 Since the fall in silver began over twenty years ac^o, the- 
 gold-basis manufacturer, dealing with silver countries, has- 
 been trying hard to adopt the last alternative as a means of 
 avoiding the second and postponing the tirst, with a won- 
 derful degree of success. Circumstances have helped him up 
 to a certain point. Money has become less valuable, and so he 
 has been able to borrow capital at rathereasier rates. Communi- 
 cation and transit are more rapid and less expensive. Machinerv 
 has been improved and the potentialities of cheaper produc- 
 tions have consequently been increased. All these factors have 
 combined to make it possibls up to a certain point to brino- 
 prices of manufactured goods within reach of the purchasino- 
 power of silver-using consumers. So long as the decline in 
 
 e2
 
 42 
 
 silver was gradual the gold-basis manufacturer suffered only 
 moderately, his enterprise and resolution enabling him to 
 recoup himself by economies in production, by modifying his 
 views of fair profits, and by reducing his standard of living. 
 But when, through the action of some Governments and the 
 inaction of others, silver began to fall by pence where before 
 it had fallen by fractions, the limit of readjustment was 
 reached. It cannot be denied that the position of the 
 cotton industry — which has the biggest and most direct 
 stake in our trada with silver countries — is exceedingly 
 precarious. The situation and the attitude of the Lancashire 
 manufacturer were clearly set forth by Mr. William Taylor, 
 of Blackburn, at the recent Bimetallic Conference in 
 London. " The difliculty that presented itself," he said, 
 " was this — that si fall in the exchange from Is. 3d. to 
 Is. Hd. caused a loss of Gd. per piece of cloth worth 
 OS. Who had to lose the Gd. ? The fight for the 6d. 
 went on until it was adjusted, and in his experience it always 
 ended in the manufacturer getting the worst of it. Why ? 
 Because the buyer could wait and the manufacturer could 
 not, except by stopping his mill, thereby throwing his work- 
 people out of employment. Before he would do that, he would 
 submit to considerable loss, in the hope that trade might 
 soon improve." Having thus stated generally how the fall 
 in silver tends to injure our great industries, it will be well 
 to endeavour to give concrete examples from actual ex- 
 perience, and to show to what extent our interests have 
 already suffered. 
 
 It is to China that we must look for the most cogent ex- 
 ample of the injury done to British trade by the fall in silver. 
 It is the custom of those who preach the in'allibilit}' of the 
 single gold standard to explain the decline in the profitable 
 character of our commerce with silver countries by reference 
 t3 the improved means of transit and communication, and
 
 43 
 
 other social and economic changes, that have been pro- 
 ceeding coincidently with the depreciation of silver. But in 
 China there has been no appreciable alteration in social 
 habits or economic conditions during the last quarter of a 
 century. That is one reason why China affords so suitable 
 a ground for working out the point under discussion. But 
 there is an even stronger reason. Thanks t3 the well directed 
 diligence of Mr. Jaraieson, British Consul at Shanghai, it 
 has been proved, as effectually as precise and careful figures 
 can prove anything, that the purchasing price of silver in 
 relation to commodities of native origin has hardly varied 
 within the last tw^enty years. This is a matter of first-rate 
 importance to the present inquiry. It establishes that the 
 Chinese find that the tael of silver purchases to-day practically 
 the same quantity of native produce as it has always done in 
 their experience. Thus, nothing has occurred to reconcile 
 them to an alteration in the price of the few staples of foreign 
 manufacture which they use freely. It implies that if the 
 foreign producer desires to retain Chinese custom he must 
 endeavour to bring his goods iuto the market at or abouc the 
 same figure as he did before silver fell. The Chinaman 
 expects to-day as much for the tael as he did twenty years- 
 ago, but the tael he paid then was worth 6s. Sd. to the seller, 
 Avhereas it is now worth less than half that amount in gold. 
 
 As a matter of fact, until very recently indeed, the silver 
 price of foreign commodities tended to decline in China. A 
 piece of gTey shirtings wdiich in 1870-4 brought l*4b 
 Haikwan taels, in 1892 brought only TOl, so that the 
 producer had not only to face the fall in the exchange value 
 of the money received for his goods, but had to be satisfied 
 with a reduced sum in the depreciated currency. Consul 
 Jamieson, whose information is drawn from " Chamber of 
 Commerce price lists and other contemporaneous market 
 reports," points out that until last year the Manchester
 
 44 
 
 prices of cotton goods such as are most used in China fell 
 almost 2^ari jmsstr with the decline in silver. " An ordinary 
 piece of shirtings," he writes, "which in 1872-4 cost from 
 lOs. to 10s. 6d. in Manchester, is now invoiced out at Gs. 
 to 6s. 2d." From figures of actual sales at Shanghai 
 he shows that medium shirtings selling at lv2 Shanghai 
 taels in 1888, sold at 1"70 in January last year. Shortly 
 afterwards prices began to rise, the idea being that Lancashire 
 merchants were stimulated to raise their lists by the steadier 
 value of the rupee. By December the same shirtings had 
 risen to 2*12 taels, and the result is apparent in the 
 diminished purchases of cotton pieces in China last year. 
 From the British Consular reports from sixteen of the 
 principal treaty ports 1 find that the imports of white and 
 ;grey shirtings and T. cloths fell from 16,459,174 pieces in 
 1892 to 11,124,585 in 1 893. These figures do not cover the 
 entire trade of China, and Mr. Kopsch, Statistical Secretary 
 of the Imperial Maritime Customs, gives the diminution in 
 these three leading articles as 3,175,000 pieces. Mr. Kopsch's 
 statistics exclude imports from silver-using countries, and so 
 we may take them as fairly representing the loss sustained by 
 gold-basis manufacturers in China in a single year. That loss 
 is sensational enough, and it seems to show beyond doubt 
 that if English manufacturers desire to maintain their trade 
 with China at its old magnitude in point of bulk they 
 must be content with a smaller return in point of money. 
 Directly they attempt to obtain better prices down drops the 
 •quantity of goods sold. To all appearance the attempt to 
 force up prices has failed, if we are to judge by the values 
 in the Board of Trade returns for the first half of this year. 
 In the six months China took from us 254,954,100 yards of 
 cotton piece goods of all descriptions, of a total value of 
 £2,357,753 which works out at an average of 2'21 pence 
 per yard. In the corresponding half of 1893 a similar
 
 45 
 
 calculation gives the average value at 2-50 pence per yard. 
 The difference of ronghl}' a farthing per yard was equivalent 
 on the 255 million yards to over £205,570. It would be a 
 mistake to lay much stress on figures obtained by lumping 
 together all classes of cotton pieces in this way, 1>ut, making 
 all due allowance for the rough and ready method, the result 
 is certainly a striking illustration of the sacrifices which a 
 leading industry has to undergo in maintaining its hold in 
 Chinese markets. 
 
 But it may be asked, is it certain that the contraction in 
 the importation of European, chiefly English, goods into 
 China is due to the fall in exchange ? In reply, I will cite 
 the evidence of a number of our Consuls whose reports are 
 virtually unanimous. But, first, it may be well to quote a 
 pointed passage from the 1893 report of Mr. Kopsch, of the 
 Imperial Chinese Customs, of whose figures I have already 
 made use. Mr. Kopsch writes: "To the observer in the 
 East it seems inexplicable that the gold-currency countries, 
 while striving to extend their trade, should resolutely ignore 
 the fact, so clearly demonstrated by the decline in the demand 
 for piece goods, that to the millions in China the tael or 
 ounce of silver is still a tael of undiminished purchasing 
 power, whether the sterling value be Gs. or 3s., and that so 
 soon as the discredited tael fails to buy the same quantity of 
 foreign goods as heretofore the consumer ceases to be a 
 customer, and will supply his own wants by manufacturing 
 textiles from home-grown materials.'' To the point raised in 
 the lastclausel shall return later, meantime it is enoughto say 
 that Mr. Kopsch speaks with authority. Consul Warren, of 
 Hankow, attriljutes the '• sudden collapse"' of cotton imports 
 almost entirely to " the steady fall in exchange, native 
 dealers refusing to give the higher prices which importers 
 were obliged to ask." Consul Allen testifies from Chefoo 
 that the English manufacturer "cannot afford to sell at the
 
 4G 
 
 rate m silver which used to pay him a profit, and the Chinese 
 customer cannot afford to buy as much as he did, and so 
 trade must diminish." Consul Mansfield of Foochow opines 
 that "the fall in silver will, if it continues, speedily handicap 
 Manchester out of the market." Such quotations might be 
 multiplied indefinitely, for each Consul reiterates the same 
 opinion in some shape or form. Many of them refer to the 
 extent to which native and Japanese competition is ousting 
 English goods, but that is a department of the inquiry which 
 will be dealt with separately. The opinion of trained observers 
 on the spot — men who have no interest in misrepresenting 
 facts and tendencies, and whose reports are made to a Govern- 
 ment whicli has little desire to be put in possession of such un- 
 palatable truths — is unanimously that British goods are losing 
 ground in China solely because of the fall in exchange. But, 
 it may be triumphantly asked by a single standard critic, 
 how comes it that in the first six months of 1894, the exports 
 of cotton piece goods to China, were greater tiian in the first 
 half of 18"J3 ? That is a troublesome question to deal witi:. 
 If 1 reply that the comparison is affected by the strike in 
 Lancashire, early in 1893, the critic would claim that the 
 same fact vitiated any conclusions I might draw from a 
 decrease in 1893 as compared with 1892. So it would if I 
 were arguing solely from these figures, and not in the light 
 of disinterested expert testimony from China. And at best 
 the critic would score little, for the larger exports simply 
 illustrate the determination of our manufacturers to hold the 
 field as long as they can, even at a loss. I have shown by 
 calculations, based on the Board of Trade figures, that the 
 value of these exports has fallen though the quantities have 
 increa-ecl, a clear proof that the trade is less profitable — in 
 other words, that our manufacturers are suffering losses. 
 
 In all other silver countiies, British manufacturers are 
 nu=!eting the same obstacles as in China. In Japan there was
 
 47 
 
 ad33r3i^3of £1,302,92) ia ths valiu of B.-itish im^Dorbs ia 
 1831 ; in 1892 the decrease was £225,103, and the separate 
 reports of the various Consuls show that in 1893 the same 
 tendency was visible. At the same time the imports of the 
 country in general increased, all the growth being in goods 
 from other silver countries. Mr. Spring Rice, of the Tokio 
 Legation, points out that in 1892 Eoglish manufacturers 
 received the same return in sterling for 118 yards of piece 
 goods as they did for 108 yards in 1890, a very appreciable 
 loss. Consul Troup, of Yokohama, writing in May last, says, 
 '•Since the further fall in exchange, which has taken place 
 since the close of last year, the import trade in manufactures 
 has been stagnant, and to what extent the Japanese consumer 
 will be prepared to rise to the advanced dollar price of im- 
 ports is not yet evident. To say the least, the trade in 
 imports seems likely to suffer great restrictions, and, in the 
 case of articles which come into competition with home 
 Japanese manufactures, probable extinction." At several of 
 the Japanese ports the arrivals of English cotton cloths 
 have dwindled to nothing. Similar reports come from Corea, 
 in which our trade interest is now quite microscopic, though 
 it was of some value before the fall in silver shut us out of 
 the market. From other Eastern countries we receive the 
 same story, lleporting on the trade of the Straits Settle- 
 ments in 1892, the Governor referred to the reduction in the 
 imports of cotton pieces, and of European goods generally, as 
 due to the decline in exchange. Our Consuls in Siam 
 repeat the tale. Acting-Consul Joly, at Macao, attributes the 
 decrease in imports from England to the fall in silver. The 
 people in Macao are poor and must have cheap goods, and 
 ours are beyond their pocket. Hence they have turned first 
 to cheap German stuffs and still more to Japanese niiiuufac- 
 tures. 
 
 Leavinor Asia for Central and South America we encounter
 
 48 
 
 precisely similar evidence. TTnfortunately, the statistics of 
 imports are not so^careful, trustworthy, or up to date as those 
 in China, but our Consuls do their best to make up for 
 the shortcomings of native officials. From Mexico, 
 Mr. Lional Garden some time ago sent an exhaustive 
 report on the eftecb of the fall in silver, in which he 
 dwelt on the increasing cost of foreign goods in the native 
 currency, giving elaborate tables which showed how the 
 purchasing power of the population is curtailed at each fall 
 in the value of the dollar. Consul Chapman, at Vera Cruz, 
 testifies to the decline of British trade, and expresses a belief 
 that it must go on diminishing unless some change speedily 
 takes place in the monetary conditions. He illustrates how 
 importing houses, wdiile obtaining bigger prices in silver, 
 suffered " an actual loss when the profit has to be accounted 
 for in gold." In Costa Rica we find the dollar value of 
 English goods rising while the sterling yield is diminishing. 
 From Guatemala and Venezuela our Consuls send similar wails 
 over the decay of British trade, and in fact the experience is 
 universal in countries on a silver basis, countries many of 
 them only half developed and partially exploited — the very 
 markets in which we should have expected our coinmercial 
 dealings to expand as years went on, but for this in- 
 superable obstacle of exchange, which is a greater bar 
 to trade than the most comprehensive and onerous tariffs, 
 for it knows no free list. A glance through the figures 
 of our exports to silver countries in the last ten years, as 
 given in the SfatiMical Ahdract of the United Kingdom just 
 published, will show to the most casual observer how 
 infinitely more profitable our trade with them was in 1890 
 and 1891, the two most recent years of high silver, than in 
 any immediately before or after. 
 
 That British manufacturers and exporters are not only 
 losing money from the fall in silver, but .nre actually losing
 
 49 
 
 established markets, seeins undeniable in the light of the 
 figures already cited. It falls now to examine how far we 
 are being supplanted in sih^er-using countries ; in other words, 
 how far our loss of trade is likely to be permanent. It is 
 well known that the cotton spinning and weaving industries 
 of Bombay were brought into existence and fostered by the 
 fall in silver. Wages were paid in silver, and thus the cost 
 of production was so much smaller that Bombay yarn 
 became a dangerous competitor with the Lancashire article 
 in all Eastern markets. To-day, in turn, the Bombay manu- 
 facturers find serious rivals in the cotton mills of Japan 
 and China. It does not form part of the present inquiry 
 to consider the effect on Bombay of the separation effected 
 in June, 1893, between the value of the rupee and that of 
 silver ; but there is abundant evidence, both in the Indian 
 trade and navigation returns, and in the reports from China, 
 that the change was inimical to trade between the two. 
 " The dislocation in exchange," writes Mr. Kopsch in his 
 valuable report on the Chinese trade of last year, " brought 
 about by according a fictitious value to the rupee, and 
 closing the Indian Mints to the coinage of silver, has 
 resulted, as predicted, in a very serious falling off in the 
 entire trade from India to China." This is germane to the 
 particular subject now under review, for it illustrates how 
 immediate is the effect on commerce of a breach between the 
 monetary standards of two countries. Japan has been the 
 first of far Eastern countries to see that with silver-paid 
 labour it is easy to compete with the products of Western 
 industry. Consul Enslie, of Hiogo, remarks : " One phase 
 of English industries with regard to the far East, inevitable 
 but intensely interesting, and of the most vital importance 
 is, that for some years past, the importers of the manu- 
 factured articles and those of the manufacturing machinerj^ 
 have been competing, side by side, much to the steadily
 
 50 
 
 increasing detriment of the former. This reference is, of 
 course, meant to apply to cotton 3\irn and cotton spinning 
 machinery." 
 
 Our Consul at Yokohama notes the same phenomenon of 
 English machinery arriving to enable the Japanese to 
 compete with English cottons and other articles. Consul 
 Enslie shows that in 1883 Japan's imports of raw cotton were 
 only 2,808,348 lb. whereas in 1893 they were 154,412,368 lb. 
 Mr. De Bunsen, Secretary to the British Legation in 
 Tokio, in reporting on Japanese trade of 1892 drew the 
 attention of the Foreign Secretary to " the alteration which 
 has taken place in the trade of Japan in the last few years, 
 owing to the progress of Japanese industries. The imports 
 of raw material are increasing at the expense of the imports 
 of manufactured goods. While the sterling value of the im- 
 ports has increased 19 per cent, since 1887, the value of 
 the import of cotton yarn and piece goods has decreased 
 17 per cent., the value of the import of woollen goods 
 is stationary. On the other hand, Japan imported last year 
 eleven times the quantity of raw cotton imported in 1887, 
 and since the same year her export of fabrics manufactured 
 in Japan has increased nearly four hundred per cent. In 
 the far East, Japan has now become a competitor with 
 England in certain lines of cotton goods." The competition 
 of Japanese goods has also, according to the same authority, 
 reacted on the imports of woollens which are decreasing. 
 In the 1892 Consular Report from Hiogo particulars were 
 given of twenty-one cotton mills, only three of which paid 
 dividends of less than 12 per cent, (none below 8 per cent.), 
 while ten of them paid over 20 per cent. The 1893 report 
 shows that two of the mills which only paid 8 and 9 per 
 cent, in 1892, had improved their profits to 10 and 12| per 
 cent, respectively. Nor do the Japanese confine their rivalry 
 with Europeans to cotton, much of which goes to China to
 
 51 
 
 cumpetewith us. Theyhave successfully introduced the manu- 
 facture of beer, gunpowder, saddlery, cement, matches, 
 printing paper, soap, bricks and leather, besides minor sun- 
 dries, with the result that imports of these articles from 
 Europe have practically died out. And they are supplying 
 goods of these classes to all the neighbouring silver countries. 
 The latest Consular Reports also indicate that Japan will 
 soon be independent of foreign iron and sugar. Not only 
 that, but it is mentioned by our Consul, at Ningpo, that the 
 machinery used for cleaning and ginning raw cotton there 
 is supplied by the Japanese. From Macao we learn that 
 cheap Japanese imitations of European goods of all sorts 
 flood the bazaars. 
 
 Even sleepy, unenterprising China has awakened to the 
 fact that she can successfully and profitably make her own 
 cotton yarn and cloth. The building of mills has been kept 
 back through the extreme caution of the Chinese. They fear 
 that a recovery in silver might rob them of their advantage 
 in the native market, and might enable later competitors 
 to buy European machinery more cheaply, and so cut the 
 pioneers out. The lowness of exchange has thus helped us by 
 retarding Chinese investments in machinery. But in 1892 two 
 mills were in full operation in Shanghai, one confining itself to 
 the manufacture of yarn, the other both spinning and weaving. 
 The first employed 1 5,000 spiudles and turned out 2,000,000 lb. 
 of yarn in 1892, the second employed 25,000 spindles and 
 550 looms, producing in 1892 a million pounds of yarn and four 
 million yards of drills and sheetings. This mill was burned 
 in October, 1893, but rebuilding was begun at once, and the 
 new machinery includes 100,000 spindles and 1,500 looms. 
 Other three mills are in course of construction, and by the 
 end of this year Shanghai is expected to have 150,000 
 spindles running. In April, 1893, a mill of 700 looms was 
 opened at Hankow, and a spinning mill is being erected, the
 
 52 
 
 machineiy having alrea:ly arrived from Eaglancl. Particu- 
 lars of the output of the factory are not obtainable. But 
 our Consuls at various ports note a striking increase in the 
 arrivals of native cloth, most notable in 1892, for the 
 burning of the Shanghai mill made a big difference last year. 
 At Ningpo a cotton mill opened in 1892 earned an acknow- 
 ledged profit of S^10,(J00 last year, and our Consul thinks 
 this is greatly understated. A spinning mill is now 
 nearing completion at Ningpo. Even at Chungking, right 
 in the interior, a project is on foot for the establish- 
 ment of a cotton mill, and the capital had been largely 
 subscribed at the date of the latest Consular Report. Like 
 the Japanese, the Chinese have also turned their attention to 
 the manufacture of Portland cement, and a well-equipped 
 mill has been for several years at work near Tientsin, with 
 which it is connected by railway, and a factory in the same 
 own supplies local requirements in the way of matches, 
 which formerly were imported. These straws show which 
 way the wind is blowing, and it has set in a direction that 
 bodes no good to English manufacturers but much permanent 
 injury. 
 
 Mexico is doing precisely the same as Japan and China. 
 At Orizaba, in the State of Vera Cruz, " will be found some 
 of the finest English-made machinery ; and cotton prints are 
 now turned out as good as, if not superior to, the imported 
 article. The production of these mills has been affected by 
 the great difference in exchange ; sales have increased con- 
 siderably during the last three years, whilst profits have been 
 very fair. Some of the shares of cotton factories in Mexico 
 are at from GO to 80 per cent, premium." So writes our 
 Consul at Vera Cruz, and lie further points out that though at 
 first these mills used imported raw cotton almost 
 exclusively, " the fall in silver has caused more attention to 
 be given to this article, and the factories at Orizaba are now
 
 53 
 
 using home-grown cotton as much as possible." A jute 
 factory is on the point of being opened at Orizaba. The 
 Mexican Financier of a recent date, in announcins: the 
 inauguration of a new factory, remarked : " Just as Europe 
 is forcing the Orientals to manufacture for themselves by the 
 anti-silver policy now favoured there, so here on this con- 
 tinent the silver-using countries are being forced to make 
 everything possible for themselves. What do we see in 
 Mexico to-day, but a well-marked movement in the direction 
 of a home supply of many articles of prime necessity — in 
 paper, textiles, soap, iron goods, &c. The combination of 
 Governments and great bankers against silver is certain, 
 ultimately, if persisted in, greatly to injure the business 
 of the manufacturers of Europe. The silver standard 
 nations will keep more of their money at home." It is 
 needless to multiply examples further, for no one with 
 the slighest regard for facts can deny that new industries, 
 fostered by the bonus which a depreciated currency 
 gives to home manufacturers, are springing up in all the 
 silver countries. In the meantime they are only partially 
 satisfying the needs of their own compatriots, but before 
 long they will not only be able to supply their own native 
 markets but those of their neighbours. Quite a new inter- 
 change trade is springing up between the silver countries. 
 The cultivation of raw cotton is making great strides in 
 China, much of it being shipped to Japan, whence some re- 
 turns in the shape of piece goods. Japan is not only 
 sending cottons and sundries of all sorts to the silver peoples 
 in far Eastern seas, but it is supplying machinery and im- 
 plements to some portions of China, and to Corea, as our Con- 
 sular Reports show. We have seen how profitable are the cotton 
 factories of Japan, of China and of Mexico — their dividends 
 high ; their shares at substantial premiums. Compare this 
 with the unhappy state of cotton companies in Lancashire.
 
 54 
 
 I have referred to a dozen reports issued in one day at the 
 (md of June showing the position of as many spinning com- 
 panies in and near Oldham. Of these ten showed an adverse 
 balance, and only two were able to pay dividends. This is 
 unfortunately a fair representation of the state of the cotton 
 industry in Lancashire — an industry giving employment to 
 hundreds of thousands of people, and fvirnishing a very large 
 proportion of our entire foreign trade. 
 
 Many attempts are made to prove that the contraction of 
 our trade with silver countries, and the extension of manu- 
 factures there, have little or nothing to do with the 
 depreciation in silver. A few months ago Dr. Giffen, of the 
 Board of Trade, compiled a report on the progress of the 
 foreign trade of the United Kingdom in recent years. There 
 he showed that in 1884-5 goods from this country constituted 
 25 per cent, of the whole imports of China, whereas in 
 1890-1-2 our proportion fell to 21 per cent. In the case of 
 Japan the fall was from 45 to 34 per cent. It was agreeable 
 to discover that we had not lost ground to our European 
 competitors in these markets, but there were other features 
 less welcome. " It should be remarked," wrote Dr. Giffen, 
 "that the chief increase in the relative proportion of the imports 
 into Japan has gone to the Corea, to India, and to other 
 minor countries which are geographically much nearer than 
 ourselves." This explanation struck Dr, Giffen as so happy 
 and forcible that he repeated it. But it may fairly be asked 
 if these other countries have in the last seven years become 
 geographically nearer Japan than they were before ? If 
 there has been a change in the distribution of Eastern trade, 
 we should surely look for an explanation to those conditions 
 which have altered and not to those which are immutable. 
 It is childish to assume that Eastern peoples have only 
 awakened within the last few years to the consciousness that 
 they are nearer one another than to Europe. What they have
 
 55 
 
 become alive to is the existence of the barrier of exchange 
 between them and Europe. If Dr. Giffen's ingenuous principle 
 were carried to its legitimate conclusion, it would follow that 
 the reduction in trade between India and Japan during the last 
 fifteen months was due to an enlargement of the geographical 
 distance between them, and not to the creation of a new mone- 
 tary standard in India. The immediate shrinkage in Indian 
 exports to China and Japan which followed the monetary- 
 change of June, 1893 — to which the Indian trade returns and 
 the Consular Reports from the far East bear concurrent testi- 
 mony — affords unequivocal proof that commerce is more 
 rapidly and seriously influenced by exchange than by tarifls 
 or " geographical " situation. Yet while our industries are 
 languishing and our exports contracting, the official statisti- 
 cians entertain us with the shibboleths of an effete and 
 exploded school of economic thought. It is no pleasure to 
 any one to dwell on the decay of British commerce with any 
 portion of the globe, but it is a duty to recognise facts, how- 
 ever hard, to endeavour to ascertain the causes, and if 
 possible to prescribe a remedy. So long as we are content to 
 accept the fallacy that geography and distance are the 
 determining factors in the distribution of trade between 
 nations we shall have to go on deploring the steady decadence 
 of our commercial pre-eminence, perhaps even of our 
 industrial existence. 
 
 The scheme of this paper requires that the disastrous effect 
 on our trade of the fall in silver should be examined 
 from two points of view : (a) when there has been, through 
 the appreciation of gold, a rise in the silver puce of our 
 goods ; and (h) when there has been a fall in the gold price 
 of them. It is rather difficult to maintain the distinction 
 between the two sets of circumstances ; but examples of both 
 have been given in the course of this paper. I have pro- 
 duced evidence from Chinese reports and statistics to show
 
 56 
 
 that when in 1893 Lancashire exporters endeavoured to 
 raise their price lists, the consumption of their manufactures 
 at once declined. The evidence from Mexico is to precisely 
 the same effect. The Board of Trade returns for the first 
 six months of the present year confirm the view of our 
 Consuls. In the first six months of 1892 the average value 
 of cotton piece goods, shipped to Mexico, was 2-65 pence 
 per yard, and the exports were fairly large. In 1893 the 
 average value rose fractionally to 2'67 pence per yard, and 
 there was a decrease of three million yards in the shipments 
 to Mexico. In the first half of this year the average value 
 per yard at export had fallen to 2*50 pence, and the shipments 
 rose 2^ million yards. Thus, whenever the gold price was 
 raised, and consequently the silver equivalent, there was a 
 sharp decline in our cotton piece goods trade with Mexico ; 
 whenever Lancashire conceded lower prices a recovery took 
 place. I have already given the result of similar calculations in 
 the case of China. The same characteristic may be observed in 
 our shipments of cotton yarn. In the first half of 1892 the 
 value of yarn sent to Bombay was 9*89 pence per pound. A 
 year later it rose to 10*50 pence, and the shipments were less 
 than half. This year the price has fallen again to 9'61 pence, 
 and a considerable recovery occurred in the volume of 
 trade, though the 1892 level was not attained. In the case 
 of the Straits Settlements precisely the same thing occurred. 
 In 1893 the price rose to 11*15 pence from 10*59 pence 
 in 1892, and the shipments of yarn fell to less than half 
 of the former volume. This year the average price has 
 fallen again to 9*42 pence per pound and the exports have 
 exceeded the 1892 figure. These are merely representa- 
 tive instances, the selection of them being distributed 
 over India, the Straits, China and Mexico to show the 
 universality of the experience. If a diminished volume 
 of exports coincident with an advance in price and an
 
 57 
 
 improvement in shipments concurrent with a fall in price 
 do not indicate the direct operation of cause and effect, it 
 would be hard to discover what else they do illustrate. It 
 seems clearly demonstrated that a rise in the silver price of 
 English goods in silver countries at once reduces the con- 
 sumption and stimulates the efforts of their populations to 
 provide similar manufactures for themselves. A reduction 
 in the gold price, made in order to secure our hold on 
 markets slipping from our grasp, means an enormous 
 diminution in the remunerative character of our trade. I 
 have already pointed out that had the piece goods shipped 
 to China in the first six months of this year been invoiced 
 at the prices current in the same period of 1893, the result 
 would have been an increase in the sterling return of 
 £265,000, or over 11 per cent, on goods valued for export 
 at £2,357,750. The argument from commerce to currency 
 which the Bimetallists are challenged to take up does not 
 tell in favour of the maintenance of the existing monetary 
 standards. 
 
 ]So attempt has been made in this paper to run through the 
 whole gamut of British trade and industry so as to show 
 to what extent individual manufacturing interests have been 
 injured through the fall in silver. What is true of the 
 cotton trade is true of all others, though as our exports of 
 miscellaneous, goods to silver countries are too small to be 
 separately specified in Board of Trade returns, or other 
 authoritative publications, it is not so easy to detect and 
 exhibit the restrictive influence on our outward commerce of 
 falling exchanges. We have seen that Japan is supplying 
 hardware as well as textiles to herself and her neighbours. 
 Japanese coal competes, even on the Pacific coast of South 
 America, not only with coal from Cardiff but with shipments 
 from New South Wales. The Indian coalfields have been 
 
 f2
 
 58 
 
 developed to such an extent that "Welsh fuel has almo&t dis- 
 appeared from Calcutta. No doubt the construction of 
 railways has helped towards this, but if the Indian coal were 
 not dug by miners paid in silver it could not even now be 
 laid down in Calcutta on terms to compete with Cardifi, due" 
 allowance being made for the superior steam-raising qualities 
 of the latter which enables it to command a better price 
 than the indigenous product. In the train of coal, manu- 
 facturing industries are always to be found. Consul Enslie, 
 of Tokio, gives interesting particulars regarding the experi- 
 mental production of iron in Japan, and hints that the 
 country, which now imports much iron, may become self- 
 supporting in that respect. When the Eastern markets for 
 coal, iron, and cotton, are being gradually filched from us, 
 not so much by the superior enterprise of our rivals, but by 
 the insidious influence of a monetary revolution, it behoves 
 us to reconsider our position. It may be said that English 
 investors must not be made to suffer because Lancashire and 
 Yorkshire desire to maintain their profits. But profits have 
 already almost disappeared from the cotton spinning and 
 weaving industries, and the wages fund is being trenched 
 upon. There is no difference of opinion between operatives 
 and employers in Lancashire as to the impossibility of 
 improving wages, and it is doubtful if they can even 
 be maintained at their present level. The country has 
 already experienced what a starving Lancashire means, and 
 memory must be short indeed if the recollection of the 
 cotton famine has died out. No one in those days would 
 have ventured to say that the woe of Lancashire was not a 
 national question. The loss inflicted on our trade by the 
 fall in silver is not confined to the County Palatine, but even 
 if it were, the urgent necessity for action could not be gain- 
 said. Governments have admitted that the sufferings of
 
 59 
 
 officials from the fall in the rupee demanded redress ; can 
 they remain much longer deaf to the appeal of a shrinking 
 commerce, or indifferent to the threatening ruin of industries 
 that employ millions of British capital and bring bread to 
 thousands of British mouths ? 
 
 DAVID OOTAVIUS CROAL.
 
 SEQUEL 
 
 BY 
 
 Sir Henry Meysey-Thompson
 
 SEQUEL 
 
 BY 
 
 SIR HENRY MEYSEY-THOMPSON. 
 
 Now, having read these papers, I hope we have all made up 
 our minds — 
 
 (1) That we do wish the home and principal seat of the 
 great manufacturing industries of the world — the cotton, 
 woollen, worsted, linen, jute, iron and steel, machinery, 
 glass, pottery, leather, clothing, and many others — should 
 continue to be in the United Kingdom, as hitherto, and that 
 they should be carried on by English, Scotch, Irish, and Welsh 
 workmen ; and we do not wish to see them banished to the 
 soil of India, China, Japan, and Mexico, and carried on by 
 Indian, Chinese, Japanese, and Mexican workmen.- 
 
 (2) That, at this present actual moment, work is being 
 done by Indian, Chinese, Japanese, and Mexican workmen, 
 which would have been at this present actual moment in the 
 hands of English, Scotch, Irish, and Welsh workmen, if the 
 divergence of value between silver and gold had not taken 
 place, or if the English Government did not obstinately 
 oppose any reform of the present monetary laws. 
 
 (3) That it is certain that our present monometallic policy 
 must tend to drive these industries away from the soil of 
 the United Kingdom, and cause them to be carried on, 
 instead, on the soil of India, China, and Japan.
 
 64 
 
 Now, as the banishment of these manufacturing industries 
 would be a tremendous loss to England and other gold-using 
 countries, let us see if we can find any advantage which 
 they gain by the present system sufficient to compensate 
 them for this loss. 
 
 Let us take first the case of the other gold-using countries 
 of Europe, which are mostly what are called debtor-countries. 
 It seems to me that they are almost entirely losers by the 
 present monetary system, and that the attitude of these 
 countries towards the question would seem absolutely in- 
 comprehensible to any one who lost sight of the fact that 
 the interests of peoples and of Governments are not always 
 identical. 
 
 Here you have States owing large sums of money in the 
 form of National Debts, on which interest has to be paid 
 annually in gold. Every producer in the country has to lay 
 aside every year a certain portion of what he produces, in 
 order to pay his share of the interest on the debt. How 
 much of his produce he has to lay aside depends upon price, 
 that is to say, on whether gold is plentiful and cheap, or 
 scarce and dear. If plentiful and cheap, he has to give 
 little produce ; if scarce and dear, he has to give a great 
 deal. 
 
 Now if these countries had had, instead of paying gold 
 to their creditors, to pay an annual tribute of so many tons 
 of lead to one country, let us suppose England, the situation 
 would then have been grasped at once. Everyone would 
 have seen at once that the proportion of his produce which 
 he would have to give annually to buy his share of the lead 
 would depend on whether lead was plentiful and cheap, or 
 scarce and dear, and the supply of lead in the world would 
 have become at once a source of interest to every taxpayer. 
 Governments would have been urged to offer rewards for the
 
 65 
 
 discovery of new sources of lead-supply, and to give sub- 
 ventions to lead-miners. Anyone who discovered a substitute 
 for the use of lead would be looked upon as a public bene- 
 factor, while anyone wbo wasted lead unnecessarily would be 
 looked upon as an enemy to his country. 
 
 Yet, though abundance or scarcity of the metal in question 
 has exactly the same effect on the producer, whether the 
 tribute has to be paid in lead or gold, what has been the 
 most surprising attitude of debtor-Governments towards this 
 question ? 
 
 Not only have they done nothing to encourage an increase 
 in the supply of gold, but they have, themselves, gone into 
 the market and, setting up a gold standard and coinage, 
 raised the price of gold against themselves and their own 
 subjects, by making that scarcer and dearer which was 
 already scarce and dear enough. 
 
 You will say " this was the work of madmen " ; and so it 
 would have been if it had been done by the people themselves; 
 it was not, however, done by the people but by the Govern- 
 ments. The Governments were in a difficult position. The 
 interest on their debts had to be paid in gold. They 
 received their revenue in silver or paper, and they had 
 to pay every year more silver and more paper in order 
 to buy the same amount in gold. What was to be 
 done ? Increase the taxes ? No ; increase of taxation 
 breeds discontent. Discontent turns out Governments, 
 and self - preservation is the first law of nature. If a 
 man had to pay ten florins or ten francs or ten thalers 
 where he paid eight before, he could not help knowing that 
 his taxes were increased ; but if he still continued to pay 
 eight florins or eight francs or eight thalers on a gold-basis, 
 he thought he was paying the same amount, although his 
 real loss, measured by the sacrifice of produce he had to
 
 66 
 
 make, was very likely much greater than the difference 
 between eight and ten. 
 
 Probably he had to sacrifice twelve pounds of wool or twelve 
 quarters of wheat or twelve tons of iron or lead or tin where 
 he had only to sacrifice eight before. But the fall in the 
 price of produce was not ascribed to the Government — 
 though the burden of taxation, or in other words the 
 sacrifice of produce by the taxpayer, was really increased by 
 50 per cent. 
 
 What the taxpayers abroad actually did was to call on 
 their Governments for heavy protective duties, which were 
 accordingly imposed and still exist, causing great inj ury and 
 loss to manufacturers in England. It is difficult to blame 
 the Governments, as they were in a very difficult position, and 
 we must never forget that it has been the action of England, 
 and England alone, which has prevented an international 
 agreement being come to which would have put an end to all 
 these difficulties. Personally, I think foreign Governments 
 are most to blame for not having had the pluck to form an 
 international agreement for the use of silver and gold among 
 themselves together with the United States of America, 
 leaving out England altogether. However that may be, I 
 cannot help thinking that the divergence of value between 
 silver and gold has been almost an unmixed evil to all gold- 
 using countries outside England. 
 
 Now let us take the case of England and try to find some 
 compensating advantages for the loss of employment to her 
 manufacturers and workmen. You may naturally say, what 
 other countries lost England must have gained. England 
 is on the balance a creditor-country. If other countries have 
 had to pay more produce to liquidate the annual interest on 
 their gold debt, England must have received more. 
 
 But what is England — or the United Kingdom, if you 
 prefer it ? A foreign State has to paj^ interest on a national
 
 67 
 
 debt which affects the whole body of taxpayers. The State 
 in England has no national investments abroad — receives no 
 interest from abroad. The State has no property, nothing 
 but debtSj and veiy large debts, too ; and in consequence of the 
 scarcity of gold everyone in England who has to pay a portion 
 of the annual interest on the National Debt has to sacrifice 
 a great deal more of his produce than he used to do. 
 
 You may say gold is not scarce because there is a great 
 deal in the Bank of England ; and, no doubt, if you want to 
 borrow somebody else's gold on good security you can 
 borrow it very easily at a low rate of interest. But try and 
 get some gold for your own by selling a field, or a house, or a 
 few quarters of corn, or some lead, or tin, or iron, or some 
 cotton or linen or jute goods, and you will soon find out 
 whether gold is cheap and plentiful or not. 
 
 It is evident it is not the State that gains by the fall in 
 the value of produce. Who is it, then, you mean when you 
 talk of England gaining? You mean certain individual 
 lenders of money resident in this country. And have they 
 gained ? On the whole, I should doubt it. So many Grovern- 
 ments municipalities and individuals in foreign countries 
 have either gone bankrupt, repudiated or reduced the in- 
 terest on their debts, and so many more seem likely to do so 
 if the fall in silver continues, that I should doubt if the 
 general body of individual lenders of money in this country 
 has really benefited by the divergence in value between 
 gold and silver, and the consequent fall of prices. 
 
 We may admit at once that those who are receiving their 
 interest in full are benefiting very largely, and in a way 
 they never expected when they lent the money ; every 100 
 sovereigns they receive in interest now commanding double 
 as much wheat, wool, tea, silver, iron, lead, tin, and many 
 other things as it did formerly.
 
 68 
 
 Then there is another class who at any rate think they 
 benefit by the present state of things, and that is the class 
 of London bankers and financiers. They say that the fact that 
 London is the only market in the world where gold can always 
 be obtained in large quantities and with ease, is an advantage 
 to them, and has helped to make London the financial centre 
 of the world. It is possible that they are right, and that the 
 present system enriches lenders of, and dealers in, money. 
 On the other hand, this very fact of our stock of gold being 
 open at all times to attack from any quarter is a very great 
 disadvantage to the producing classes of this country who 
 are all borrowers of money, because a sudden demand for 
 gold from any quarter of the world may send up suddenly 
 the rate of discount, though there may be nothing in the 
 state of affairs in England to cause or warrant a rise. 
 
 Now 1 do not myself believe that London could remain 
 the financial centre of the world if she lost her manufactures, 
 and, consequently, a large portion of her trade ; but do we 
 wish to see our producers disappear from this country, even 
 if it were to become the paradise of individual lenders of 
 money and financiers of various nationalities ? 
 
 Now I can fancy I hear someone object " but England 
 would always produce something. Even if our cottons, and 
 woollens, and linens, and most of our other manufactures are 
 banished, we shall still produce something. They will send 
 us all these things from abroad, and we shall have to send 
 them something in return." 
 
 But, my friend, that is exactly where you make a mistake ; 
 and one of the very matters which I think we ought to keep 
 most prominently before us in discussing this matter, is the 
 restriction of our exports, owing to the indebtedness of certain 
 foreign individuals and Governments to individual lenders 
 of money in this country, and the very serious way in which
 
 69 
 
 the rise in the value of gold has increased and aggravated 
 this restriction. 
 
 In the very short space I have at my disposal I can only 
 indicate the limits within which this restriction works. If 
 no one ever lent any money to any foreign individual or 
 Government, and no long credit were given in international 
 trade, it is evident that the imports and exports (including 
 the precious metals) would exactly balance one another.* 
 
 But from the first occasion on which an individual in this 
 country lent £100 to someone abroad, something in the way 
 of cash or produce (and we know practically that all interest 
 from abroad is paid in produce) had to be sent to England 
 in satisfaction of the interest on the debt, and for this 
 nothing in the shape of export goes out in return. 
 
 This has gone on until the income, drawn by individual 
 lenders of money from foreign Governments, companies, 
 and individuals, or sent here as a return on capital invested 
 abroad, amounts, it is estimated, to about 100 millions 
 sterling annually, and of course in return for this hundred 
 millions' worth of imports no exports go out. 
 
 The limit of this restriction on our exports would, of 
 course, be reached, if individual lenders of money resident in 
 England (or, of course, individuals associated as companies) 
 could get every other nation of the world so deeply into 
 their debt, that all the inhabitants of those countries would 
 have to work as their serfs, sending to England annually, 
 in satisfaction of the interest on their debts, everything they 
 could produce beyond the bare necessaries of life. There 
 could then be no exports from England ; because if all other 
 nations had to send all their surplus produce to England in 
 
 * Of course there would always be payments to private individuals, or 
 companies, for personal services, shipping, freights, &c., abroad ; and sums 
 of money would be carried from one country to another by emigrants and 
 immigrants ; but these payments would tend to balance one another, and 
 would not interfere with the general principle.
 
 70 
 
 satisfaction of their debt, they could send nothing in 
 exchange for our exports. This is, of course, the extreme 
 limit that could be reached in theory, and will never be 
 reached in practice. But every fall in the gold-price of 
 commodities carries us nearer and nearer to it. 
 
 The price of some of our great staple articles of import, 
 such as wheat, wool, iron, lead and tin have fallen more than 
 one-half during the last twenty years ; consequently, double 
 the amount of them has to be sent to satisfy the interest due 
 to individual lenders of money in this country ; that is, 
 double the amount of the products of other countries come 
 into this country without any exports going out in exchange 
 for them. 
 
 Of course, if gold rises still more in value, and these 
 commodities fall another one-half, then, four times as much 
 of the surplus products of other countries will be at the disposal 
 of individual lenders of money, and the restriction of our 
 exports will be increased fourfold. 
 
 The more that silver and other produce fall in value the more 
 commodities produced by cheap labour abroad will be thrown 
 upon our markets in competition with our home-industries, 
 and be sent here merely as interest upon debts, for which 
 nothing whatever is exported in return. 
 
 Besides, what we want is as many industries as possible 
 established here on the soil of England. Foreign trade is 
 good, bv(t it is good because it is trade, not because it is 
 foreign. Home trade is much better. What does foreign 
 trade mean ? It means one set of producers living in 
 England, another set of producers living abroad, and these 
 two sets of producers exchanging their products. What 
 does home trade mean ? It means two sets of producers, 
 both living in England and exchanging their products. If 
 there were a manufactory of silk established at Calais, and ex- 
 changing the finished silk exclusively with England, that would
 
 71 
 
 be good. But it would be better if an English capitalist 
 purchased the business, transported tlie machinery to Dover, 
 and set up an English mannfactory, with English workmen 
 there instead. 
 
 " Why," you may say, " would it be better, supposing the 
 price of the finished silk remained the same ? The silk 
 would then exchange for exactly the same amount of com- 
 modities produced in England as before." That is true of 
 the produCjU, but how about the producers ? 
 
 Every one employed by the factory, in the first case, 
 would be living in France, living in French houses, wearing 
 French clothes, eating French food, using French railways 
 and French banks, paying French taxes, and fighting French 
 battles in time of war. 
 
 In the second case, every one employed in the factory 
 would be living in England, in English houses, wearing 
 English clothes, eating English food, using English railways 
 and English banks, paying English taxes, and fighting for 
 England in time of war. 
 
 Is there no advantage in having both sets of producers 
 living in England, even in the cases where for what we 
 import we export something in exchange ? 
 
 To hear some people talk one is driven to the conclusion 
 that their wish and aim for the future of the United King- 
 dom is that it shoTild become as quickly as possible a country 
 where no wheat is grown, no barley and no oats ; where no 
 sheep are shorn and no cattle fattened (I suppose they would 
 keep a few cows to supply milk and a few hens to lay fresh 
 eggs for the families of capitalists); where no cotton, no linen, 
 worsteds or woollens would be manufactured ; where all 
 mines and all industries of iron and steel would be closed 
 and idle ; — a country where no one could afford to live except
 
 72 
 
 individual lenders of money to other countries and their 
 servants, everything they wanted in the way of commodities 
 being sent them cheaper from abroad than it could be pro- 
 duced in this country, and sent not in return for exports but 
 in satisfaction of the interest on their debts. 
 
 If this is the ideal of the English working man he has 
 nothing to do but to sit still and allow our present monetary 
 system to continue, and he will have the satisffiction of 
 feeling that his inaction is helping to bring it to pass, with- 
 out even the trouble of using his vote. 
 
 If his sons and his grandsons in a few years' time abuse 
 him for having allowed employments and manufactories to 
 be banished from England, which, if he had exerted himself to 
 use his vote, might easily have been retained, he will at any 
 rate have the satisfaction of feeling that he has avoided the 
 risk of giving himself a headache by studying dry subjects 
 too deeply. 
 
 And now I will say to anyone who has followed me thus 
 far, that I hope my giving this prize has fulfilled one of its 
 objects, that is to say, to induce him to take an interest in 
 the subject ; and I hope he will not leave it until he has 
 thoroughly made up his mind how employment in England 
 is likely to be affected by the fact that 100 ounces of silver 
 will now buy as much labour in China as it did prior to 1873. 
 
 That during the fifty years before 1873 it took £25 to buy 
 100 ounces of silver. 
 
 That in 1895 it takes little over £11 to buy 100 ounces of 
 silver. 
 
 That in consequence of this, labour in a cotton mill in the 
 East now costs less than half as much in English sovereigns 
 as it did for fifty years before 1873, and if the reader is con- 
 vinced, as I am, that a continued fall in the price of silver
 
 73 
 
 means the banishment of the great manufacturing industries 
 of the world from the soil of the United Kingdom to the soil 
 of India, China, Japan and Mexico, to be carried on by 
 Indian, Chinese, Japanese and Mexican workmen instead 
 of the workmen of England, Ireland, Scotland and Wales, 
 then I hope he will recognise his obligation, as a genuine 
 lover of his country, to do all in his power to promote a speedy 
 reform of the present most unsatisfactory monetary conditions 
 of the world. 
 
 H. M. MEYSEY-THOMPSON. 
 
 g2
 
 THE IRON TKADE AISD THE FALL IN THE 
 VALUE OF SILVER. 
 
 The Consular report of Mr. Hall, H.B.M.'s Consul at Hako- 
 date, Yezo (one of the Japanese islands), has just been 
 issued as a Parliamentary paper, and the following extract 
 from it may be of interest to English manufacturers, es- 
 pecially those engaged in the iron and steel industries : — 
 " In conclusion , the broad fact revealed by the statistics is 
 that whilst the industry and home trade of the island is 
 prospering apace, the foreiga trade is declining. The cause 
 of such a phenomenon is usually more difficult to ascertain 
 than the fact itself; but in the present instance a concrete 
 case may serve to indicate in what direction the cause is to 
 be looked for. Seven years ago, w^hen this port was supplied 
 with water- works, some 1,500 tons of iron pipes were im- 
 ported from England at a cost of £4 4s., then equal to 28 
 dollars a ton. This year, owing to the rapid growth of the 
 town, a second parallel line of pipes is required ; and if 
 ordered from England the cost would be £4, equal to 40 
 dollars, a ton, the value of silver as against commodities in 
 this country having in the interval remained virtually the 
 same. No wonder that the native manufacture of iron pipes 
 is beiag pushed on amain. And this is an example of what 
 is going on all along the line of imports from England and 
 the West. The chasm between the two masses of the world's 
 currency, created by the West's recent expulsion of silver, 
 is acting as a subtle, automatic protective tariff to the silver 
 using countries of the East, checking, on the one side, the 
 growth of trade, and changing, on the other, the natural 
 economic course of industries. The apprehension that gold 
 money would be driven out of use if linked along with silver
 
 75 
 
 as legal tender is alleged as the main reason for the tolera- 
 tion of this block in the channel of the world's business. 
 The question is doubtless a complicated one, on which only 
 experts and competent intellects are entitled to be heard. 
 Sir Isaac Newton, when Master of the Mint, had occasion 
 to consider it ; and it is on record that he believed that the 
 apprehended evil could be obviated by the expedient of 
 establishing a par of exchange between the two metals the 
 same for all countries."
 
 LONDON : 
 PRINTED BY THE ARGUS PRINTING COMPANY, LTD., TUDOR STREET, E.G.
 
 m 
 
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