Th 
 
THE MONETARY SITUATION in 1897. 
 
THE MONETARY SITUATION 
 
 IN 1897 
 
 BY 
 
 G-. Iwï. BOXSSKV^AXM. 
 
 Translated from the Dutch. 
 
 Ln ynuule oeuvre (accomplie par Ja niu- 
 narchie en France) c'est le remplacement 
 des murailles qui se'pareni par les ckemins 
 qui rapprochent et imissent. La civilisation 
 moderne est un aplanissement. 
 
 G. HANOTAUX. 
 Hist, ilii Cardinal dc Richelieu. 
 
 V. 
 
 J 
 
 Honbon 
 
 MACMILLAN AND CO., Limited 
 
 NEW YORK: THE MACMILLAN COMPANY 
 
 1897 
 
 .4/1 rights reserved 
 
^\^%1 
 
 313>l03aJS 
 
 Printed by J. H. de Bussy. Amsterdam. 
 
CONTENTS. 
 
 Page. 
 
 The Presidential Election in the United States in 1896 1 
 
 The Situation in Europe 49 
 
 Bimetallism 32 
 
 115517 
 
THE PRESIDENTIAL ELECTION IN THE 
 UNITED STATES IN 1896. 
 
 In November of last year a great danger was averted from 
 the commercial community. 
 
 If William J. Bryan and not McKinley had been elected 
 President of the United States a commercial and financial 
 crisis would assuredly have followed of such magnitude, so 
 disastrous and far-reaching in its consequences, as has never 
 been experienced before. 
 
 This opinion was shared by the commercial centres of 
 America and Europe alike. The excitement and anxiety pre- 
 vaihng everywhere before the result of the election was known, 
 furnish an undeniable proof of this. With very few exceptions 
 the daily press and a great number of periodicals also gave 
 expression to the fears that were universally entertained. 
 
 AVe may ask, however, if these fears were not exaggerated. 
 
 Would the reopening of the Mint of the United States to 
 the fj-ee coinage of silver at the old ratio of 1 to 16 have 
 indeed been such a dangerous experiment? For, as a matter 
 of fact, this was the paramount issue in Bryan's platform, 
 the issue on which the whole campaign turned and which 
 caused such universal indignation abroad. 
 
 The subject is, in itself, of sufficient importance, to submit 
 it, even now that the Presidential Election is a thing of the 
 past, to a careful examination. We have besides, another reason 
 for doing so, which we will state hereafter. 
 
A few weeks before the election there appeared in Tlie 
 Times ^) a letter from Messrs Close Brothers & C"^ of Chicago, 
 originally addressed to their London house. In this letter 
 they admitted that in case Bryan should l)e elected great 
 uneasiness would prevail, followed by a depression in business, 
 but at the same time they argued that the actual influence 
 on the state of affairs would be felt to a less degree than 
 the public seemed to anticipate. The Economist ~) opposed 
 this argument, and in a letter to the Editor of the same 
 paper ^) Messrs Close Brothers & C". brought forward other 
 arguments in support of their views. 
 
 We will make this controversy the starting point of our 
 investigations. 
 
 The views of Messrs Close Brothers & C^ on the subject 
 may be summarized as follows. They claim that even if 
 Bryan were elected "no actual changes in the legal status of 
 the currency could occur for some time after the election". 
 In the meantime, it is true, there would naturally be a rush 
 on the Treasury for the gold deposited there. Now, assuming, 
 they wrote, that the Treasury paid out this gold as long as 
 the supply would last, and that this gold (with as much as 
 possible of the metal in circulation) could be withdrawn from cir- 
 culation so that later on advantage might be taken of the premium 
 which, in the opinion of everybody, would result from the re- 
 opening of the mint to the free coinage of silver, at the ratio of 1 
 to 16, then the immediate result of this measure would be a 
 contraction of the currency and consequent faUing off in the 
 prices of commodities. This falling off in prices would, in its 
 turn, cause a considerable increase in the export of all sorts 
 of commodities. Of course, payment would be required for 
 
 >) The Tinvs, 14»" Oct. 1896. 
 
 3) The Economist, l?'" Oct. ]896. 
 
 ») The. Economist, ?'»• Nov. 1896. 
 
these goods and as America would discontinue buying European 
 goods, no other payment would he possible except in gold. 
 Fresh imports of gold into the United States would inevitably 
 follow and in this case there would be, in all likelihood, an 
 end to the withdrawal of this money from circulation. Conse- 
 quently, before long the first result of the fears of the effects 
 of Bryan's election would no longer be felt. 
 
 And as to the subsequent results, viz. those that would make 
 themselves felt when the changes in the legal status of the 
 currency should have been brought about, it was the opinion 
 of Messrs Close Brothers & C^. that no more gold would be 
 withdrawn from circulation than could conveniently be replaced 
 by silver. At present, they said, there was 600 million dollars 
 of gold in circulation, and it would take years and years before 
 silver to this amount could find its way to America. And so 
 long as this had not occurred to the fuU extent of this amount, 
 America would continue exchanging gold for silver at the 
 ratio of 1 to 16, and a premium on gold would be out of the 
 question. They further added that much was said about a 
 probable return of American securities into the United States in 
 case Bryax should be elected, but as a matter of fact, this had 
 happened already some time before, and on a large scale too, 
 and it was far from improbable that a reaction would follow 
 in the event of a new order of things becoming an accom- 
 phshed fact. 
 
 Now all these arguments are based on three hypotheses 
 unsupported by proofs and of which it will not be difficult 
 to show the fallacy. 
 
 These hypotheses are: 
 
 In the first place, that the 600 milhon dollars of gold money 
 that are said to be in the United States, are really all used 
 in the circulation; 
 
 Secondly that a premium on gold would result in an export 
 
of commodities which could be counterbalanced only by fresh 
 imports of gold ; 
 
 And thirdly that the re-opening of the Mint in the United 
 States to the free coinage of Silver at the ratio of 1 to 16 
 would cause a rise in the gold-price of silver to the par of 
 said ratio. 
 
 Granted that the quantity of gold money in the United States 
 really amounts to 600 milhon dollars — although the correct- 
 ness of this estimate is called in question by many and The 
 Economist also refused to admit it — it is however a fact 
 that of this amount only a very small portion is actually in 
 circulation. Strictly speaking it is only in California that 
 gold is used as a real circulating medium. And the question 
 arises if in this State people would not eventually continue 
 making their payments in gold just as they did before when 
 the United States were under the regime of a paper currency. 
 But setting this aside, in addition to California, gold is to be 
 found only in the Treasury, in the banks and with a certain 
 number of private individuals ; in the latter case, however, it 
 is as a kind of reserve rather than as part of their cash. 
 
 "Now, the first question is this : Would the Treasury in the 
 event of Bryan having been elected, have continued redeeming 
 the different State- and Treasury-certificates in gold ? If not, 
 the Treasury might have retained the gold, even if this metal 
 had gone to a premium, to cover the paper still in circulation, 
 paying out silver only if paper was offered for redemption. 
 In this manner, at any rate, the banks might have acted. 
 And consequently, so far at least, a contraction of the 
 currency would not have occured. Private individuals would 
 probably have retained their hoards, but this would not have 
 affected the position. Contraction of the currency would 
 have occurred only in case private individuals could have 
 obtained gold money and ])Ut it aside as fresh hoards. It cannot 
 
be denied however that many people would have had a strong 
 desire to do so, and this circumstance alone would indubitably 
 have been sufficient to cause gold to go to a premium at once. 
 
 But let it be granted that, whether the quantity had been 
 large or small, at all events a certain amount of gold would 
 have been withdrawm from circulation. Now^ assuming that 
 this amount had been sufficiently large to bring about, by itself, a 
 falling off in the prices of merchandise, this could only have 
 occurred if this withdrawal had caused a stringent money-market. 
 But this stringency could not have been counteracted by supplies 
 of gold when there was a premium on gold, which would have 
 prevented every body from paying it out at its par-value. 
 The currency would thus be reduced to the following singular 
 position: There would be a depreciation of the value at which 
 it was maintained before, owing to prospects of silver coinage 
 at the ratio of 1 to 16, and at the same time it would 
 experience a temporary appreciation in consequence of the 
 withdrawal of a certain amount of gold money from circulation, 
 which would have brought about an artificial scarcity in this 
 circulating medium, a scarcity which neither a fresh supply 
 of silver could have met (because the re-opening of the Mint 
 to the coinage of silver had not yet taken place), nor a 
 fresh supply of gold, because this metal had appreciated 
 even more than the circulating medium. The escape from 
 this singular condition of things, which would assuredly have 
 caused a more or less grave crisis in the money-market, would 
 probably have been the issue by the banks of Clearing-house- 
 certificates, or some similar expedient, by which the scarcity 
 of the circulating medium might have been met. 
 
 So far we have left one factor out of consideration in our argu- 
 ments viz: the return of American securities from Europe. Surely, 
 the assertion of Messrs Close Brothers & C^., that the movement 
 would have come to a termination at Bryan's election, is 
 
6 
 
 utterly groundless. For let us see what would have happened. 
 So long as the currency in the united States was maintained 
 at its gold-par, every claim on this country could be realized 
 at the exchange of $ 4.87 or thereabouts per pound sterling, 
 but the dollar in the United States being made a silver dollar 
 at the ratio of 16 to 1, about § 10 would have to be paid in 
 New-York, at the present gold-price of silver, for one pound sterling. 
 It is obvious that in consequence, any one having a claim 
 on the United States — and all holders of American securities 
 and all sorts and conditions of people in Europe having lent 
 money to America would belong to this category — would 
 have hastened to realize that claim, if redeemable at once, 
 or at any rate have sold it so long as this could have been 
 done on not too unfavourable conditions. A sale, then, would 
 inevitably have ensued of American securities for European account 
 to an extent heretofore not experienced, and this, together 
 with the realization of other claims, would have caused in 
 Europe a great supply of bills on the United States and on 
 the other hand, a demand for bills in this country on Europe. 
 In other words the balance of payment in the United States 
 would have become unfavourable to a degree. And in this 
 condition of affairs no change would have taken place unless 
 in the United States the rates of exchange on England, and, as a 
 necessary accompaniment, the premium on gold had risen so high 
 as to render further operations impossible, or if there had been 
 a great fall in American securities, together with the inability 
 on the part of American debtors to meet their engagements. 
 It is of course difficult to conceive what turn matters 
 would have taken with these influences brought to bear on 
 them. But it will be admitted that the fear in America itself 
 and in all tlic European countries having commercial relations 
 with the United States, of a disastrous crisis as the immediate 
 result of Bryan's election, was fully warranted. 
 
So much for the first two hypotheses that formed the basis 
 of the arguments of Messrs Close Brothers & C", and their 
 anticipations of what would occur, should the legal status of 
 the currency in the United States he changed. 
 
 Let us now examine the third part of their contention viz : 
 that the re-opening of the Mint in the United States to the 
 free coinage of silver at the ratio of 1 to 16 would cause the 
 gold-price of silver to rise to the parity of that ratio. 
 
 It seems to me that their arguments on this pomt are fal- 
 lacious in every respect. 
 
 They argue as follows: In the circulation in the United 
 States 600 milhon dollars of gold money would have to be 
 replaced by an equal amount of silver money. There is at 
 present no unused stock of silver. To obtain this 600 milhon 
 dollars of silver money the United States would therefor have 
 to depend entirely upon the future production of this metal. 
 This production they estimate at 250 million dollars annually, 
 aUowing for an increase that will result from an enhancement 
 in the gold-price of the metal. After deducting 50 mil- 
 lion dollars annually used in the arts there would be 200 
 milhons left for coinage purposes. Assuming that one half of 
 this amount would be at the disposal of the United States, 
 it would take at least six years to replace the 600 million dollars 
 of gold. But at the same time the annual growth of the population 
 and the accompanying necessity of an increase of the currency 
 ought to be taken into account. Hence an additional amount 
 of 50 million dollars would be required and taking this into 
 consideration twelve years would be needed to replace all the 
 gold, and only after the lapse of that time would the demand 
 for silver caused by a change in the legal status of the cur- 
 rency in the United States be no longer sufficient to maintain 
 the ratio of 1 to 16, that is, supposing that in other coun- 
 tries the condition of things had remained the same. It is 
 
8 
 
 however more probable that under the influence of this change 
 a new demand for silver would have sprung up in other 
 countries also, and that, in the first place, British India would 
 soon have re-opened its Mint to the free coinage of silver, 
 in which case a permanent maintenance of the ratio of 1 to 
 16 might be counted upon. 
 
 Now, in the first place, objections may be raised to the 
 contention that a demand would be created in the united 
 States for 600 million dollars of new silver currency. This 
 is obvious from what has been said already concerning the 600 
 milhon dollars gold, that would have to be replaced by this 
 new silver money. 
 
 In the second place the amount of silver used annually in 
 the arts has been rather over-estimated, luit we shall leave 
 this out of consideration. 
 
 Serious doubts however may be entertained as to the cor- 
 rectness of the estimate according to which, in the event of 
 an enhancement in the gold price of silver — supposing that only 
 in the United States the currency should be changed and 
 that bimetalUsm should not be adopted by the other nations 
 as well — there would be, outside the United States, an annual 
 employment for silver for coining purposes to the amount 
 of 100 million dollars. 
 
 It will not be generally admitted either, that in case of a 
 rise in the gold-price of silver, the production would not increase 
 to more than 250 million dollars, as is supposed. 
 
 And surely, given such a condition of things, countries with 
 the limping standard would be very likely to melt down a more 
 or less considerable part of their silver and put it on the market. 
 
 However, let us assume for the sake of argument, that the 
 anticipations of Messrs Close Brothers & Co, with regard to 
 all the points under discussion, were realized, even then their 
 calculations would be utterlv wrong. 
 
Their argument that in consequence of a change in the 
 legal status of the currency in the United States the gold in 
 that country would not go to a premium, and that the ratio 
 of the metals would be brought to 1 to 16, would imply a 
 rise in the gold-price of silver to about 59 d, i. e., double the 
 present price. But to render this possible not only the silver 
 still to be produced would have to bring this price, but aU 
 the silver at present in circulation as standard coin — token 
 money, so far as it were not melted down, being left out of 
 consideration — would also have to rise in the same proportion in 
 value. Now, this amount is estimated at 2000 million dollars. 
 This includes the silver money circulating in British India, it 
 being assumed that England were to repeal the law of 
 1893 concerning the Indian currency. Should England not do 
 so, the situation would become more unfavourable still, for 
 then all the British Indian silver would come to the market 
 at as low a rat.e as 43 d. We will therefore, adhere to the 
 sum of 2000 milhon dollars. The contention of Messrs Close 
 Brothers & Co wiU then amount to this: that in replacing 600 
 million dollars of gold by silver, which moreover in their 
 opinion it would take 12 years to accomplish, the value of these 
 2000 million dollars of silver would be doubled. 
 
 Can anything be more absurd ? 
 
 But what would have been the course of events then? 
 
 Again I hold that it is utterly impossible to say, with any 
 degree of certainty, what would have taken place, except that 
 in the first place the change in the legal status of the cur- 
 rency in the United States above referred to could not have 
 doubled the gold-price of silver nor indeed have caused a rise in 
 this price at ah approaching this, and secondly that, in conse- 
 quence, the difference between the ratio of American gold money 
 and silver money and the present ratio would chiefly have ma- 
 nifested itself in a more or less considerable premium on gold. 
 
10 
 
 Again if under the influence of that change the general gold- 
 price of silver had risen, the effect of this would have heen 
 in the silver countries a falling off in the prices of commo- 
 dities, and besides a decrease in the imports, and perhaps 
 exports of this metal. At the same time, of course, the prices 
 of all commodities in the United States would have had to 
 undergo an equally great change — rise in the dollar-price. 
 And this twofold change in prices would perforce have affected 
 the whole commercial community, bringing in its train fluctua- 
 tions without end. 
 
 It was then indeed not without good reasons that fears were 
 entertained by the whole commercial world of the consequences 
 of Bryan's election, and that as much anxiety and uneasiness 
 was felt about what would happen in the interim between 
 Bryan's election and the moment at which his platform 
 should be carried into effect, as about the later effects them- 
 selves. A disatrous financial crisis would have resulted from 
 this election, pubhc credit would have been shaken to its 
 very foundation, and the whole commercial machinery would 
 have been thrown out of gear. 
 
 The danger, however, has been averted, but for how long? 
 As soon as the result of the election was definitely known 
 to Bryan he sent, on Nov. 5tli, the following memorable 
 telegram to McKinley: 
 
 "Senator Jones has just informed me that the returns indi- 
 cate your election and I hasten to extend my congratulations. 
 We have submitted the issue to the American people and 
 their will is law." 
 
 And to whatever pitch the political passions had been 
 roused in the campaign, however widely the two parties dif- 
 fered on the point at issue, there was no opposition to the 
 verdict of f]\o. nation, no disturbances of any kind. It must 
 
11 
 
 not be supposed, however, that Beyax or the three parties 
 whose candidate he was, while submitting to the popular ver- 
 dict, relinquished all intention of further fight. 
 "No question is ever settled 
 Until it is settled right." 
 
 AVith these words, borrowed from the poetical effusion of 
 one of his female admirers, who was inspired by this sentiment 
 to which he gave utterance in his Baltimore speech, Bryan 
 concludes his very interesting book "The First Battle"', in 
 which he gives a detailed account of the Campaign of 1896. 
 
 It is his unalterable conviction that the question involved 
 in this contest has not been "settled right". He intimates his 
 intention of continuing to discuss and elucidate it, and he 
 exhorts all his partisans to act in the same spirit, admonishing 
 them to organize themselves better and to find the means of 
 being universally heard and understood. He feels confident 
 that in the end the principles advocated by him will triumph. 
 
 This confidence is shared by many others. We have been 
 told by friends fahy competent to judge of the situation, more 
 especially by Americans who voted this time for McKinley, 
 that if the situation against which the campaign was directed 
 by Bryan and his partisans does not undergo a thorough 
 change before the termination of the new President's term of 
 office, Bryan's platform will be sure to triumph in the year 1900. 
 
 As a matter of fact Bryan's vote fell but very httle 
 short of the number that would have secured his victory. The 
 returns show that the electoral vote cast for McKinley was 
 271, the popular vote being 7.107.822, and for Bryan respecti- 
 vely 176 and 6.511.073. One glance at these figures will show 
 that, in proportion, the plurality of the electoral votes is far in excess 
 of that of the popular votes. Besides in many of the States that 
 voted for Mc. Kinley, his majority was so small that a change 
 of 14001 votes distributed in five States would have given 
 
12 
 
 Bryan a majority of three. It is also worthy of notice that of 
 the popular vote McKinley had a plurality of 596749 which is 
 less than the plurality given by the three States, Pennsylvania, 
 New- York and Massachusetts. 
 
 When we stated in the opening lines of these pages that 
 we had a special reason for examining what would have been 
 the consequences of Bryan's return, we had in view the 
 possibihty, or according to others, the probabiUty, that four 
 years hence the Bryan ticket will win, unless in the meantime 
 the causes be removed that gave birth to his party. It will, 
 besides, not be devoid of interest to institute inquiries as to 
 what formed the nucleus of the recent campaign. 
 
 Bryan was the candidate of the majority of the Democrats, 
 the Populists and the Silver party ; McKinley of the majority 
 of the Republican party. It must not escape our notice that 
 on the occasion of the election, there occurred a split in the two 
 political parties hitherto existing in the United States. This 
 breach was not fortuitous but sprang from the paramount 
 issue of the contest : adoption in the United States of free 
 silver coinage at the old legal ratio with gold of IG to 1, or 
 maintenance of the dollar at its parity with gold and conti- 
 nuance of the currency policy followed under the Presidency 
 of Cleveland, unless a bimetallic currency could be obtained 
 as the result of international agreement. 
 
 The adoption of the free coinage of silver formed part of 
 the platform of the Populists party and was the whole plat- 
 form of the Silver party. The Democratic party were not at 
 one on this head. In pursuance of a call issued by the 
 Bimetallic Democratic National Committee, the leading silver 
 Democrats met in Chicago on June 30^^, for the purpose of 
 deciding upon the course to be pursued in the National Con- 
 vention. Here the platform was drawn up that would be recom- 
 
13 
 
 mended in the name of their section of the Democratic party. 
 In this platform the currency question was declared to be the 
 paramount issue, and its settlement was desired by a resolu- 
 tion on the part of the Government in favour of the free 
 coinage of both silver and gold at the rate of 16 tot 1, 
 independently of the co-operation of other nations. At the 
 National Convention of the party held on July 9^'^ in Chicago 
 this platform was adopted with a majority of 326; 628 voting 
 for the adoption and 302 against and hereupon Beyan was 
 nominated candidate for the Presidency with a majority of 
 652; five other candidates obtained 116 votes and 162 mem- 
 bers abstained from voting. The Popuhsts and the Silver party 
 then resolved to nominate Bryan as their candidate also. 
 
 Since 1890, when he was nominated for Congress in Nebraska, 
 Beyan had taken an active part in the contest about the 
 currency question in Congress and elsewhere. 
 
 The Nebraska platform adopted by the Nominating Convention 
 contained the following silver plank written by himself: "We 
 demand the free coinage of silver on equal terms with gold 
 and denounce the effort of the Republican party to serve the 
 interests of Wall street as against the rights of the people". 
 
 Beyan has ever since he formulated this demand, held the 
 same views as. those set forth in it. His unremitting zeal in 
 the cause of free coinage has ever been a protest against the 
 abolition of the double standard, which was decided upon in 
 1873. He has always held that it was this measure which 
 enhanced the value of the currency and would continue enhancing 
 it, and also that it could not but be detrimental to the people 
 whose interests were diametrically opposed to those of the 
 capitalists. From the very outset he has suspected the capi- 
 talists — Wall Street — of being actuated, in their fight 
 against free silver coinage, by interested motives, and their 
 advocacy of bimetalUsm as the result ot international agree- 
 
14 
 
 ment and their opposition to the adoption of the double 
 standard by the United States, independently of othernations, 
 he has always mistrusted. 
 
 When then the majoritry of the Democratic party resolved 
 to stand by him and declared currency reform the paramount 
 issue of their platform, this rendered him eminently fit to form 
 a personal link between the Democratic party on one side and 
 the Populists and Silver party on the other. 
 
 This will also account for the fierceness of the fight in w^hich 
 he engaged not only against the advocates of the single gold 
 standard, but also against trusts and other syndicates of the 
 capitalist classes, against the existing banking-system and 
 the management of railway-companies. 
 
 On the other hand the attitude of the popular candidate ot 
 all the advocates of free silver, will afford an explanation of 
 the unusually bitter spirit in which his "Wall street" oppo- 
 nents waged war on him, and of the fact that on their part 
 no means were left untried to prevent his victory, even that 
 of innuendo. 
 
 It is admitted on all hands that Bryan's opponents had a 
 much larger sum of money at their command than his own 
 party and that this money was lavishly spent during the 
 campaign; the sum at the disposal of the RejDublican party 
 amounting to £ 2,000.000, and of the Democratic party to only 
 £ 100.000 ^). It has also been averred that this money has 
 not alwaj^s been applied in a fair manner; that it has, for 
 instance, been used to colonize doubtful districts with anti- 
 Bryan voters; but where is the country to be found w^here 
 these and similar manoeuvres are not resorted to at election 
 times but a victory is gained by sheer conviction of the other 
 party? We may add that in his book Bhyan does not charge 
 
 ') The National Review. Dee. 18%. 
 
15 
 
 his opponents with any of these malpractices. He only allu- 
 des to various cases of intimidation of voters. He quotes 
 instances of orders being placed with manufacturers and of 
 mortgages on farms being extended at a low rate of interest 
 conditional upon McKinley's success at the polls, and also 
 of warning being given to farmers to pay off the mortgages 
 in case Bryan should be elected. 
 
 It may be asked however if what was called intimidation 
 by Bryan, who expected from a triumph of his party a rapid 
 growth of industries and agriculture, was not perfectly legiti- 
 mate when viewed in another Kght, as his opponents anticipated 
 such widely diiferent results. On the other hand it can 
 scarcely be denied that innuendo was a favourite weapon of 
 Bryan's opponents. It is impossible to arrive at another 
 conclusion considering how Bryan's views were misrepresented, 
 and such misrepresentations were only too apt to mislead public 
 opinion in America and on this side of the Atlantic as well. 
 
 Like most members of the Democratic party Bry^an is an 
 advocate of the autonomy ot the different States and strongly 
 opposed to any interference in their constitutional power on the 
 part of the Federal government, but he has been represented as a 
 man without any regard for law, even as an anarchist. This 
 was due in no httle measure to his denunciation of the decision 
 of the Supreme Court by which the income-tax imposed under 
 Cleveland was declared inconstitutional. But although there 
 is in the Constitution of the United States an article according 
 to the letter of which there is a show of legality for this 
 decision, it cannot be denied that considerable violence was 
 done to the spirit 'of the article. We may add that during 
 the civil war an income-tax was levied for years similar to 
 the above. Moreover, neither Bry^an nor the Democratic party 
 ever recommended unconstitutional agitation against this inter- 
 pretation of the law. 
 
16 
 
 The paragraph in the Democratic platform wherein the decision 
 of the Supreme Court is attacked, runs as follows: 
 
 "Until the money question is settled we are opposed to 
 any agitation for farther changes in our tariff laws, except 
 such as are necessary to meet the deficit in revenue caused 
 by the adverse decision of the Supreme Court on the income-tax. 
 But for this decision by the Supreme Court there would be 
 no deficit in the revenue under the law passed by a Democratic 
 Congress in strict pursuance of the uniform decisions of that 
 court for nearly one hundred years, that court having in that 
 decision sustained Constitutional objections to its enactment 
 which had previously been overruled by the ablest judges who 
 have ever sat on that bench. We declare that it is the duty 
 of Congress to use all the Constitutional power which remains 
 after that decision, or which may come from its reversal by the 
 court as it may hereafter be constituted, so that the burdens 
 of taxation may be equally and impartially laid, to the end 
 that wealth may bear its due proportion of the expense 
 of the Government". 
 
 It was to be expected that when the election was over light 
 would be thrown upon this controversy when no longer obscured 
 by party feeling. And indeed, not long after McKinley was 
 elected, no less a person than Mr. Leonard Courtney, the famous 
 pubUcist and statesman, gave his version of the Campaign, diffe- 
 ring altogether from that circulated, while the contest was 
 raging,, in America and elsewhere. ^) 
 
 Among the means used — or rather abused — by the 
 Republican party in opposing Bryan, was also a frequent 
 allusion to the vigorous support and untiring co-operation of 
 Altgeld, the well-known Governor of Illinois. This point has 
 
 ') R*. H"». L. Courtney. Recent rre.sidential Eleition, in Tlu Nuuticnth 
 C'eniury, Jatiuary IS'J". 
 
17 
 
 been discussed at length in the National Review ^) by Francis 
 F. Browne, editor of the Dial^ one of the best hterary papers 
 in the United States, who had not hitherto taken any active 
 part in the contest himself. In this paper Mr. Browne lodges 
 an indignant protest against the unscrupulous manner in 
 which Bryan's political actions are misrepresented by the 
 Republican party and the charge brought forward against him 
 of belonging to the Anarchist party, and he quotes some 
 remarkable instances of libellous attacks on Bryan. One news- 
 paper, for example, contained an account of an interview with 
 Most, the noted New York anarchist, in , which the latter was 
 represented as having referred to Altgeld as his intimate friend 
 and fellow-worker. By the whole anti-BRYAN press this inter- 
 view was printed and commented upon, in order to show the 
 public what kind of people Altgeld and his friend Bryan were. 
 But a letter sent by Most to one of the papers, denying 
 that he had ever seen Altgeld and saying that their princi- 
 ples and practices had nothing in common, was simply ignored 
 by the other papers. 
 
 The charge, too, leveUed against the money plank of the 
 Bryan platform in which he and his supporters were said to 
 wish for „dishonest money", has been impugned by many 
 authorities and also Mr. Courtney, in the article above referred 
 to, adduced many weighty arguments to refute it. 
 
 We fully concur with these writers, although at the time 
 we had serious misgivings as to the consequences of a victory 
 of this part of Bryan's platform, misgivings which Mr. Courtney 
 does not appear to have shared. But whatever charges may 
 have been laid at the door of Bryan's party, their money 
 plank was not dishonest, their intentions not dishonourable. 
 It is our opinion, however, that a victory of their platform 
 
 ') Fr. r. Browne, Altgeld in Illinois, in The National Review, Dee.'erl896. 
 
 2 
 
18 
 
 would either not have answered at all the expectations that 
 were entertained or only to a very limited extent. 
 
 The following are the paragraphs relating to the currency 
 question and other points more or less connected ^vlth it, 
 occurring in the Platforms of the three parties by which 
 Bryan was nominated candidate. 
 
 Platfoem of the Democratic Party. 
 
 "Recognizing that the money question is paramount to all 
 others at this time, we invite attention to the fact that the 
 Federal Constitution named silver and gold together as the 
 money metals of the United States, and that the first coinage 
 law passed by Congress under the Constitution made the 
 silver dollar the monetary unit and admitted gold to free 
 coinage at a ratio based upon the silver- dollar unit." 
 
 "We declare that the act of 1873 demonetizing silver ^^ith- 
 out the knowledge or approval of the American people has 
 resulted in the appreciation of gold and a corresponding fall in 
 the prices of commodities produced by the people; a heavy 
 increase in the burden of taxation and of all debts, public 
 and private; the enrichment of the money-lending class at 
 home and abroad ; the prostration of industry and impoverish- 
 ment of the people." 
 
 "We are unalterably opposed to monometallism which has 
 locked fast the prosperity of an industrial people in the para- 
 lysis of hard times. Gold monometaUisra is a British policy, 
 and its adoption has brought other nations into financial servi- 
 tude to London. It is not only un-American, but anti-Ameri- 
 can, and it can he fastened on the United States only by the 
 stifiing of that spirit and love of liberty which ]>roclaimed 
 our political independence in 1776 and won it in the war of 
 the Revolution." 
 
19 
 
 "We demand the free and unlimited coinage of both silver 
 and gold at the present legal ratio of 16 to 1 without waiting 
 for the aid or consent of any other nation. We demand that 
 the standard silver dollar shall be full legal tender, equally 
 with gold, for all debts, public and private, and we favor such 
 legislation as will prevent for the future the demonetization 
 of any kind of legal-tender money by private contract." 
 
 In addition to the above it was further demanded that the 
 option of redeeming the obligations of the united States in 
 either silver coin or gold coin should not be surrendered to 
 the holders of such obhgations; 
 
 that in time of peace no interest-bearing bonds of the United 
 States should be issued and that a stop should be put to the 
 trafficking with banking syndicates, which, in exchange for 
 bonds and at an enormous profit to themselves, supply the 
 Federal Treasury with gold to maintain the poKcy of gold 
 monometallism ; 
 
 that Congress alone should have the power to com and 
 issue money, and that this power should not be delegated 
 to banks; 
 
 that tariff duties should be levied for purposes of revenue 
 only, such duties to be so adjusted as not to discriminate 
 between class or section; 
 
 that the Mc Kinley law should not be restored which , 
 enacted under the false plea of protection to home industry, 
 proved a prolific breeder of trusts and monopohes, enriched 
 the few at the expense of the many, restricted trade and 
 deprived the producers of the great American staples of access 
 to their natural markets; 
 
 that until the money question was settled there should be 
 no agitation for further changes in the tariff" laws, except 
 such as are necessary to meet the deficit in revenue caused 
 by the adverse decision of the Supreme Court on the income- 
 
20 
 
 tax; and finally, as we stated already before, that all legal 
 expedients should be used to restore this law. 
 
 Silver Party Platform. 
 
 "The paramount issue at this time in the United States is 
 indisputably the money question. It is between the gold 
 standard, gold bonds and bank currency on the one side, and 
 the bimetallic standard, no bonds and government currency on 
 the other. On this issue we declare ourselves to be in favor 
 of a distinctly American financial system. We are unalterably 
 opposed to the single gold standard and demand the immediate 
 return to the constitutional standard of gold and silver by the 
 restoration by this Government, independently of any foreign 
 power, of the unrestricted coinage of both gold and silver into 
 standard money, at the ratio of 16 to 1, and upon terms of 
 exact equality, as they existed prior to 1873 ; the silver coin 
 to be a full legal tender equally with gold for all debts and 
 dues, pubhc and private, and we favor such legislation as will 
 prevent for the future the demonetization of an}^ kind of 
 legal tender money by private contract." 
 
 "We hold that the power to control and regulate a paper 
 currency is inseparable from the power to coin money, and 
 hence that all currency intended to circulate as money should 
 be issued and its volume controlled by the general Government 
 only, and should be legal tender." 
 
 The issue of interest-bearing bonds in time of peace is then 
 condemned and also the pohcy of increasing the National Debt 
 in order to maintain the gold standard by borrowing gold, and 
 it is demanded that the payment of all coin-obligations of the 
 United States, in either gold or silver coin, shall be at the 
 option of the Government. 
 
 In the following paragraphs the demonetization of silver in 
 1878 is r^fHrred to as the cause of the increase in the demand 
 
21 
 
 for gold and consequent enhancement of the purchasing power 
 of this metal, and further the consequences of the attempts 
 to maintain the gold standard and the constitutional character 
 of the double standard are enlarged upon. 
 
 One more paragraph we will quote verbatim, exemplifying as it 
 does the position of this party with regard to the money question. 
 
 "In the effort to maintain the gold standard the country 
 has within the past tw^o years, in a time of profound peace 
 and plenty, been loaded down with S 262.000.000 of additional 
 interest bearing debt under such circumstances as to allow a 
 syndicate of native and foreign bankers to reahze a net profit 
 of millions on a single deal. It stands confessed that the 
 gold standard can only be upheld by so depleting our paper 
 currency as to force the prices of our products below the 
 European and even below the Asiatic level, to enable us to 
 ^ell in foreign markets, thus aggravating the very evils of which 
 our people so bitterly complain, degrading American labor and 
 striking at the foundation of our civilization itself. The 
 advocates of the gold standard persistently claim that the 
 cause of our distress is overproduction — that we have pro- 
 duced so much that it has made us poor — which imphes 
 that the true remedy is to close the factory, abandon the 
 farm and throw a multitude of people out of employment, 
 a doctrine that leaves us unnerved and disheartened and 
 absolutely without hope for the future. We affirm it to be 
 unquestioned that there can be no such economic paradox as 
 overproduction aiid at the same time tens of thousands of 
 our fellow citizens remaining half clothed and half fed, and 
 who are piteously clamoring for the common necessities of life." 
 
 People's Party Platform. 
 
 The opening paragraphs run as follows: 
 
 "We recognize that through the connivance of the present 
 
•?'2 
 
 and preceding administrations the country has reached a crisis 
 in its national life as predicted in our declarations four years 
 ago, and that prompt and patriotic action is the supreme 
 duty of the hour. We realize that while we have political 
 uidependence our financial and industrial independence is yet 
 to be attained, by restoring to our country the constitutional 
 control and exercise of the functions necessary to a people's 
 government, which functions have been basely surrendered by 
 our public servants to corporate monopolies. The influence 
 of European money changers has been more potent in shaping 
 legislation than the voice of the American people. Executive 
 power and patronage have been used to corrupt our Legisla- 
 tures and defeat the will of the people, and plutocracy has 
 been enthroned upon the ruins of democracy. To restore the 
 Government intended by the fathers and for the welfare and 
 prosperity of this and future generations, we demand the 
 establishment of an economic and financial system which shall 
 make us masters of our own affairs, and independent of 
 European control by the adoption of the following declaration 
 of principles." 
 
 They then demand : 
 
 1. A national money, safe and sound, issued by the general 
 Government only. 
 
 2. The free and unrestricted coinage of silver and gold at 
 the present legal ratio of 16 to 1, without waiting for 
 the consent of foreign nations. 
 
 3. That the volume of circulating medium be speedily 
 increased to an amount sufficient to meet the demands 
 of business and population, and to restore the just level 
 of prices of labour and production. 
 
 4. Xo further increase of the interest-bearing debt, and that 
 no more bonds be issued except by specific act of Congress. 
 
 5. Such legislation as will prevent the demonetization of the 
 
23 
 
 lawful money of the United States by private contract. 
 
 6. That the Government, in payment of its obligations, shall 
 use its option as to the kind of lawful money in which 
 they are to be paid. 
 
 7. A graduated income-tax, the recent decision of the 
 Supreme Cour^; relative to the income tax being regarded 
 as a misrepresentation of the Constitution and an invasion 
 of the rightful powers of Congress over the subject of 
 taxation. 
 
 8. That postal savings banks be estabhshed by the Go- 
 vernment. 
 
 A few more demands are then formulated which, although 
 they have no direct bearing upon the money question, may 
 find a place here to characterize the platform of the party viz : 
 
 that the Government should own and operate the railroads 
 to the end that all may be accorded the same treatment in 
 transportation, and the tyranny and pohtical power exercised 
 by the great railroad companies may be destroyed ; 
 
 that the telegraph, like the post-office system, should be 
 owned and operated by the Government in the interest of the 
 people ; 
 
 that bona fide settlers on all public lands be granted free 
 homes as provided in the national homestead law. 
 
 A few demands now follow of a purely political nature and 
 the platform winds up as follows: 
 
 "While the foregoing propositions constitute the platform 
 upon which our party stands, and for the vindication of which 
 its organization will be maintained, we recognize that the 
 great and pressing issue of the pending campaign upon which 
 the Presidential election will turn is the financial question, 
 and upon this great and specific issue between the parties we 
 cordially invite the aid and co-operation of all organizations 
 and citizens agreeing with us upon this vital question." 
 
24 
 
 These platforms, and in particular that of the People's 
 party, breathe a spirit of great bitterness, ^vhich is still more 
 fully evinced in the speeches of the party leaders ; some of the 
 demands moreover bear unmistakable witness to a singular 
 confusion of ideas on the part of those who formulated them. 
 But at the same time we must not forget that there is but 
 too good reason for the spirit of dissatisfaction that has pre- 
 valed in the united States for some time past and to which 
 perhaps many misconceptiones and errors are due. 
 
 The growth of wealth in the United States, it is almost 
 needless to say, has been unparallelled in this century, and 
 has continued without a check, until now. But the economic 
 history of the United States in recent times is distinguished 
 from that of earher days, in that latterly wealth has been 
 much less equally distributed and that on one side enormous 
 fortunes have been made, whilst on the other side people 
 have been impoverished to a degree hitherto unknown. Time 
 was when scarcity of work was an almost unheard-of thing, 
 and anyone willing to work could find employment; in agri- 
 culture especially anyone possessmg the necessary skill, could 
 make a decent living. Of late years, however, the number of 
 unemployed in the United States has been quite as great 
 as in any country of Europe. 
 
 In an article in the National Review i) treating of the present 
 situation in America, the condition of the poor is described 
 as most wretched during the past winter. In Chicago alone 
 there were 50.000 persons actually in danger of starving. And 
 these persons were not the floating population but mostly 
 people who had never appealed to public charity before ; there 
 were numbers of skilled workmen, industrious, law-abiding 
 and of temperate habits unable to get work. And this distress 
 
 *) Tlic month 'in Amrr'icci. in Tho Xatioiial Krvicw, ^Farcli 1SU7. 
 
25 
 
 prevailed not only in Chicago but also in the other large cities 
 of the United States. According to the author the country is 
 going through the "settling down" process and the distress 
 is due to the general depression of the last few years, from 
 which agriculture has suffered most. 
 
 For this general depression the falhng off in the prices of 
 commodities and the present monetary system have been 
 blamed, and certainly not without good reason. 
 
 On former occasions I have, in expounding my views on the 
 monetary question, more than once discussed the connection 
 between a fall in prices and commercial and industrial depres- 
 sions, and therefor I need not enter into an exposition of 
 my views again. These views are shared by others, but among 
 those who have written in a similar spirit there are many 
 who are not altogether free from bias and exaggeration. It 
 cannot be denied, however, that there is much truth, for 
 example, in what has been so tersely put by Bryan: "The 
 gold standard means dearer money; dearer money means 
 cheaper property; cheaper property means harder times; har- 
 der times means more people out of work ; more people out 
 of work means more people destitute; more people destitute 
 means more people desperate; more people desperate means 
 more crime." ^) 
 
 There is, moreover, another point which we must not lose 
 sight of when dealing with this subject. It is a common 
 error to ascribe the falling off in the prices of agricultural 
 products in Europe exclusivehj to a change in the value, or 
 purchasing power, of money. The fallacy of this argument 
 has been repeatedly shown by others and myself The fact 
 is, that several new countries were opened up and that their 
 corn was brought within the reach of the European consumer, 
 
 ') Minneapolis Speech. 
 
26 
 
 and this circumstance, together with the increased production 
 of corn in those parts consequent upon greater facilities of 
 transport, have contributed much towards a dechne in the 
 prices of European agricultural products. This caused a change 
 in the economic conditions — of which agriculture is such an 
 miportant factor — of Europe; besides the advantages which 
 the people derived from a greater suppl}^ of this first neces- 
 sities of life, there were also drawbacks, which exercised their 
 depressing influence on production generally. In America, 
 however, and especially in the large corn-growing districts in 
 the West, a condition of things obtains altogether different. 
 There prices were never influenced by an increase in the 
 population not commensurate to the area suitable for agricul- 
 tural purposes ; there every extension of roads and canals and 
 cheaper cost of carriage was so much profit, whilst to a 
 European land-owner it meant a fall in the prices of his pro- 
 ducts and consequent loss. We see, then, that whereas the 
 agricultural interests in Europe were affected by these specific 
 influences, they were not in America. 
 
 In regard however to the increase in the purchasing power 
 of money and the immediate results of this increase, the 
 farmers in America were as much affected by it as the far- 
 mers in Europe and even more so, because the land in America 
 is owned by the farmer more generally than in Europe, and 
 besides is often encumbered with mortgages. 
 
 Again, the detrimental influences of the increase in the 
 purchasing power of money have become much graver and more 
 widely felt in the United States than in the natural course 
 of events they would have been, owing to the injudicious 
 measures taken by the Government to neutralize them. The 
 silver purchases effected by the Government under the Bland 
 and the Sherman Bill diminished the general aiijtreciation of 
 gold, silver or paper being to that ninnuiit siibsiitnt.Ml to t:oM 
 
27 
 
 coin, but in America itself these purchases resulted in mis- 
 trust in the currency regulations, which, scarcely noticeable at 
 the outset, grew in intensity until it developed into a general 
 lack of confidence in the whole monetary system. And it was to 
 this discredit, combined with the appreciation of gold, that 
 the depression in commerce, industry and agriculture must 
 be attributed. 
 
 Moreover there has been another cause operating fatally on 
 the production and commercial activity, viz. the constantly 
 increasing apphcation of the system of protection. 
 
 It is a fact that wherever recourse has been had to protec- 
 tion in order to throw up a barrier against a general fall in 
 prices, the effects upon the prosperity of a country have always 
 been the reverse of what was anticipated. If endeavours had 
 been directed towards utilizing the decrease in the cost of 
 production to bring about a more general distribution of the 
 fruits of that production, and to promote production itself by 
 the development of international trade, the general fall in 
 prices might have been turned to good account, and an in- 
 creased supply being attended with an increased demand, the 
 evil effects of this decline would have brought their own 
 remedy with them. Instead of this, foreign trade was hampered 
 and obstacles were put in the way of increasing the production 
 as well as the distribution of the products. 
 
 Nowhere have the results of this erroneous economic policy 
 been felt so keenly as in America. In the platform of the 
 Silver party the Government are blamed for forcing the prices 
 of American products below the level of other countries, but 
 how can American staples find their way to other countries, 
 if the American prices are not lower than theirs? The evil 
 hes in the high duties levied by the united States, which renders 
 it impossible for other nations to exchange their products for 
 American products on any other than very onerous conditions. 
 
28 
 
 Added to this the protective duties in the United States 
 have given birth to a prodigious inequahty among the various 
 American producers. 
 
 In the Democratic Platform it was stated "that the value 
 of the home market to the American farmers and artisans 
 is greatly reduced by a vicious monetary system which depresses 
 the prices of their products below the cost of production, and 
 thus deprives them of the means of purchasing the products 
 of our home manufactories". But the monetary system has 
 nothing to do with this state of things. For if this system 
 were changed, if the value or purchasing power of gold dimi- 
 nished, the effect would be a rise in the prices of both agri- 
 cultural and manufactory-products. The reason why the farmer 
 is prevented from exchanging his products on favourable terms 
 for factory-products, is because the prices of the latter, thanks 
 to the system of protection, have been made to rise artificially. 
 For Protection means interests injured on one side and favoured 
 on the other. In this case agricultural interests are injured because 
 agricultural products, being the principal commodities produced 
 by the country for exportation, were excluded from the tariff; 
 manufacturing interests are favoured because factory products 
 could not be made in the country in sufficient quantity and 
 were included in the tariff, in consequence of which prices 
 were forced up. 
 
 It is to be regretted that the Democratic party, whose 
 anti-protection ]iropensities are well-known, has not made a 
 special study of the detrimental influence of protection on the 
 prosperity of a country. Its spokesmen, and in the first place 
 Bryan, have protested energetically against trusts and corpora- 
 tions, denouncing them as the result of a system of government 
 which has sacrificed the interests of the many to the interests of 
 a few, especially the large financiers, but they have concentrated 
 all their forces ujton an attack on the gold standard which 
 
29 
 
 in their view, was the embodiment of that odions system. 
 If they had made the tariff question the paramount issue of 
 the contest and fought the battle on the same field on which, 
 at the outset, the Republican party under McKinley seemed 
 wilhng to engage in the fight; and if they had made the 
 chief planks of their platform free trade with a tariff exclusively 
 imposed for revenue purposes, bimetallism, and income tax, in 
 opposition to the policy of the Government which they denounced, 
 their position would have been much stronger. 
 
 We are of opinion that on this ground the fight should be 
 continued, but it is also our opinion that the notions of many 
 on the monetary question need rectifying. 
 
 As we stated before, some of the demands formulated by 
 the three parties that nominated Bryan as their candidate, 
 bespeak a singular confusion of ideas. In making that state- 
 ment we had chiefly in view the paragraphs in their plat- 
 forms relating to paper money. We admit however that the 
 present state of affairs must be held responsible for many of 
 these erroneous notions. 
 
 The three parties were unanimous in denouncing the issu- 
 ance by banks of notes intended to circulate as money, 
 and in claiming for the Government the exclusive right to 
 issue them. In making this declaration the Silver party stated 
 as their opinion that the power to control and regulate a 
 paper currency is inseparable from the power to coin money, 
 and hence that all currency intended to circulate as money 
 should be issued and its volume controlled by the general 
 government only ; and in the Platform of the People's party 
 it was demanded besides that the volume of circulating- 
 medium be speedily increased to an amount sufficient to meet 
 the demands of business and population, and to restore the 
 just level of prices of labor and production. 
 
30 
 
 Against the arguments underlying these demands we op- 
 pose the following principles : 
 
 The right to coin money belongs to the Government, hut 
 its object is no other than to ensure the uniformity in the 
 coins and their equal weights of fine metal. 
 
 It is with the Legislature — whose object it is to prevent un- 
 certainty in the interpretation of contracts — that rests the 
 power to decide what metal shall be used for the coinage, 
 what money shall be legal tender. 
 
 It is, however, not the fact of having heen coined that gives 
 its value to the metal used as legal tender, but the coins 
 owe their value only to that of the metal itself. 
 
 Only with respect to subsidiary coin the position is some- 
 what different. Subsidiary coin is minted by the government 
 of the same metal as the standard coin or any other metal, 
 and a higher nominal value is assigned to it, as legal tender, 
 than its metallic value, in order that the business demands 
 for this subsidiary coin may be met. The quantity of this 
 coin must not be too small, the Government may see to this 
 by increasing the coinage if necessary. Neither should it be 
 too large; the law must guard against this by making all 
 this coin redeemable in standard coin. 
 
 However to determine the amount of standard coin does not 
 come within the province of the Government. It must leave this to 
 the free action of the laws of supply and demand. It is only 
 indirectly that Legislation can have any influence on this subject, 
 viz. by its decision with respect to the metal or the metals to be 
 used as legal tender coin, and by the organisation of the 
 banking system, especially in regard to the right to issue 
 notes to bearer. The issue of these notes should be allowed 
 only on condition that they be always convertible in legal 
 tender coin, and such restrictive regulations should be imposed 
 on the banks as would be necessary to ensure this. 
 
31 
 
 A banknote, however, is nothing but a credit document; 
 it is a promissory note, issued by a private institution and 
 which, as a fiduciary circulating medium, replaces metalUc 
 money in the circulation. This fiduciary circulation will only 
 then best answer the purpose for which it was intended, when 
 it possesses a certain elasticity which will enable it to 
 accomodate itself to the momentary needs of credit. 
 
 It is upon the Government that devolves the care for an 
 efficient organization of the banking system, and more especi- 
 ally with regard to this credit document which is intended 
 to be used by all classes of the community. 
 
 But the State must never interfere itself in the credit 
 system and strictly avoid replacing the banknotes by its own 
 promissory notes, which may be more or less like banknotes 
 in form, but are essentially different from this kind of paper. 
 
 It will be seen that these principles do not at all tally 
 with those that form the basis of the demands of the three 
 American parties above referred to. 
 
 The actual situation of the United States with respect to 
 the points now under consideration is as follows; the bank- 
 notes in that country are not private credit documents but 
 notes to bearer, issued by banks against interest-bearing bonds 
 of the State, the principal if not the only security being these 
 bonds, and of which the payment is guaranteed by the 
 Government. 
 
 The Government has not limited its own power to coin 
 money to the coining of the standard-metal, but has also used 
 a metal that is no longer legal standard metal and yet has 
 not been reduced to the condition of doing duty as subsidiary 
 coin onh'. 
 
 The Government has bought silver and issued notes for the 
 amount, the payment being guaranteed in gold. 
 
 Besides this silver money which is neither good standard 
 
32 
 
 - uin uur subsidiary coin, and besides these notes which are 
 covered by silver but redeemable in gold, the Government 
 has also maintained as legal tender in the circulation another 
 kind of notes v^hich are nothing but paper-money. 
 
 The cause of all this lies in the fact that, when it was 
 decided to adopt the single gold standard, the significance of 
 this step was not duly considered; more and more the in- 
 judiciousness of this decision has become manifest, audits preju- 
 dicial consequences have only been prevented through the 
 theories not having been carried into practice. 
 
 It is not surprising then that the people, at a loss to under- 
 stand this chaotic condition of things which defies ah sound 
 principles, have come forward with the most absurd demands. 
 
 But to return to Bryan and at the same time to the contest 
 over the monetary reforms. I shall confine myself chiefly to 
 the part which Bkyan took in this controversy; in the first 
 place as it was the very principles advocated by him already 
 before his nomination that induced the three parties to choose 
 him as their candidate for the Presidency, and secondly because 
 after his nomination the contest between him and the Repu- 
 bhcan party chiefly turned upon these principles. 
 
 In accepting his nomination by the People's party Bryan 
 did not endorse all the views of that party. A letter accepting 
 his nomination throws much light on the position taken by 
 him. In it he fully appreciated the breadth of patriotism 
 which had actuated the members of the People's party who, 
 in order to consolidate the sentiments of bimetahism, had 
 been willing to go outside of party lines and support as their 
 candidate one already nominated by the Democratic party and 
 also by the Silver party. In a time like this, he wrote, it 
 behooves us to lay aside all differences and to co-operate that 
 our strength may be united. But there is not a word in this letter 
 
33 
 
 about the specific doctrines and demands of the party. As 
 regards the Silver party they simply accepted the candidates 
 of the Democratic Party and supported them. 
 
 Bryan's views of bimetallism are in the main correct. 
 
 On Aug. 16^^^ 1893 he made a lengthy speech in the House 
 of Representatives against the Unconditional repeal of the 
 Sherman law. He declared himself against this repeal' because 
 he saw in it a step in the direction of the maintenance of the 
 single gold standard, and he was opposed to this because, as 
 the gold standard gained ground, the value of money would 
 increase out of proportion to other commodities. Not the gold 
 standard, he claimed, should be adopted but bimetallism. 
 
 From the defence of his theories then put forward it appears 
 that they are entirely based on the laws of supply and demand. 
 "We are told, he said, that the Government cannot create 
 value, but those who speak thus misunderstand us. What we 
 assert is simply this : the value of the precious metals depends 
 on the use that is made of them. And in the same speech 
 he explains how a fixed ratio of value between gold and silver 
 can be estabhshed by a law regulating the use of these metals. 
 
 In the first of his campaign speeches he again lays great 
 stress on this point. "The best-known law of commerce", he 
 said on that occasion, "is the law of supply and demand. 
 We recognize this law and build our argument upon it. We 
 apply this law to money when we say that a reduction in 
 the volume of money will raise the purchasing power of the 
 dollar; we also apply the law of supply and demand to silver 
 when we say that a new demand for silver created by law 
 will raise the price of silver bullion." And pursuing this train 
 of reasoning, pointing out that there is bub a small stock of 
 gold and silver, and that the production of these metals is 
 hmited, he demonstrated that legislation can also determine 
 the ratio between these metals. "International bimetalhsts". 
 
34 
 
 he said, "believe that several nations, by entering into an 
 agreement to coin at a fixed ratio all the gold and silver 
 presented, can maintain the bullion value of the metals at 
 the mint ratio. When a mint price is thus estabhshed it 
 regulates the bulhon price, because any person desiring coin 
 may have the bullion converted into coin at that price, and 
 any person desiring bulHon can secure it by melting the coin". ^) 
 
 In this same speech he also argues that, under a bimetallic 
 system, society is interested in having the option exercised 
 by the debtor. If the creditor had this right to choose the 
 metal, and one of the metals were dearer, he would of course 
 require payment in that metal, and make it dearer still, thus 
 drawing the two metals further apart. But if the option 
 were exercised by the debtor, he would, of course, pay in the 
 cheaper of the two metals, in consequence of which the demand 
 for this metal would increase and the equilibrium be restored, 
 or in his own words : "When the debtor has the option, the 
 metals are held together approximately at the ratio fixed by 
 law, provided the demand created is sufficient to absorb all of 
 both metals presented at the mint." (To the words printed in 
 italics I shall revert hereafter.) 
 
 Bryan also refers to another point bearing on the subject 
 viz. the relation between the value of the precious metals 
 and the cost of their production. People make a mistake, he 
 said, when they think that a decrease in the cost of the 
 production of silver will be a hindrance to the maintenance 
 of the fixed ratio of silver with gold, for the precious metals 
 cannot be obtained in unlimited (juantities. The precious 
 metals are not produced but found. As a matter of fact the 
 cost of production does not determine the valueof the precious 
 metals, except as it may affect the su]ii»ly, Init when both 
 
 *) Madison S<|iuire Garden Speech. 
 
35 
 
 are demanded at a price exceeding the cost of production of 
 all that is offered the cost of production need not be considered. 
 
 Again and again Bryan has asserted that the law of supply 
 and demand underhes the whole theory of bimetallism, "What is 
 the principle that underlies the whole money question, he asks. 
 It is that the law^ of supply and demand apphes to money as 
 it does to everything else. Increase the amount of money more 
 rapidly than the demand for money increases, and you lower 
 the value of a dollar; decrease the quantity of money while 
 the demand for it increases, and you increase the value of 
 a dollar". ^) And in another place he says: "The first great 
 principle is that the value of the dollar depends upon the 
 number of dollars. Dollars can be made dear or cheap by 
 changing the quantity of them." 2) 
 
 These theories Bryan has always advocated. According to 
 hmi it is beyond question that the demonetization of silver 
 in the seventies has led to an enhancement in the purchasing 
 power of money wherever the gold standard has been adopted. 
 He contends that in this increased purchasing power of 
 money there Ues a great economic evil. He considers this situa- 
 tion all the more alarming because, when this demonetization 
 of silver is not discontinued, the purchasing power of gold 
 win keep increasing and the evil will grow more serious. It 
 is only by changing the law regulating the coinage of money 
 that this evil can be remedied. Legislation has the right to 
 change this law, because the condition of things which it is 
 desn-ed that shall be changed was brought about by legislation 
 also. And if the Government should change this law they 
 would act in a perfectly legitimate manner; justice would not 
 be violated if it abandoned the course hitherto pursued, on the 
 contrary it would be unjust to continue it. 
 
 ') Madalin Speech. 
 ") Minneapolis Speech. 
 
36 
 
 It would take us too long to enter into further details in 
 regard to Bryan's exposition of his views. Only with respect 
 to a few statements made by him on different occasions we 
 venture to ofter some remarks, which may not be devoid of 
 interest. 
 
 In the first place we shall refer to what he said in proof 
 of his argument that it is in the interest of the public to put 
 a stop to a further increase in the purchasing power of money, 
 or in other words, to the farther encroachment of the gold 
 standard. In his long Madison Square Garden speech from 
 which we had already occasion to quote before, he discussed 
 this point at length, in reply to arguments brought forward 
 by his opponents. It was in this speech that he endeavoured 
 to explain the standpoint occupied by him and to give a 
 full exposition of his views. It was this speech also which 
 disappointed his audience so much because it was read 
 and not improvised. But, as he said himself, he preferred 
 i-eading this speech from manuscript to an extemporaneous 
 speech, as he was afraid he would be carried away by his 
 own words. 
 
 His principal contentions, then, in regard to the above point 
 were as follows. The farmers are opposed to the gold standard 
 because they have felt its prejudicial effect. They sell at 
 wholesale prices and buy at retail-prices, and they have found 
 that the former have declined more than the latter. Moreover, 
 the fixed charges and taxes they have to pay, have not fallen 
 and their debts have been doubled. The wage earners, too, 
 have been injured by the gold standard. They know that 
 while a gold standard raises the purchasing power of the 
 dollar it also makes it more difficult to obtain possession 
 of the dollar; they know that employment is less permanent, 
 loss of work more probable. Now let it be remembered, he 
 further says, that the farmers and wage-earners constitute a 
 
37 
 
 large majority of the population. Our opponents will tell 
 us that the interests of the numerous holders of fire and life 
 insurance pohcies should also be considered. But they know 
 that the premiums received are in excess of the sums the 
 companies have to pay and that it is only the interests of 
 their shareholders about which these companies are concerned. 
 Besides, much solicitude has been expressed for the depositors 
 in Savings banks ; but those depositors are fully aware, that 
 under a gold standard there is increasing danger that they will 
 lose their deposits, and they still further know that if the gold 
 standard is to continue indefinitely they may be compelled to 
 withdraw their deposits in order to pay living expenses. As 
 regards merchants and manufecturers, they make their profits 
 from the people to whom they sell their goods ; if these people 
 do not thrive it is impossible for them to prosper in the long 
 run. Holders of stock of railroads and other industrial enter- 
 prises depend, for their profits, on the success of these enter- 
 prises, and as these must needs suffer under the influence of 
 the increasing purchasing power of gold, those who hold the 
 stock will suffer in consequence. Fixed salaries of persons 
 engaged in business occupations depend on business conditions, 
 and even the salaries of government officials will not remain 
 the same when the prosperity of the tax-payer declines. The 
 salaries in the professional classes too, are influenced by the 
 prosperity of the producing classes. 
 
 Bryan has always emphatically denied the charge made against 
 him, that his opposition to the gold standard was strictly speaking 
 tantamount to an advocacy of a circulating medium that was 
 depreciated and would continue depreciating. He vindicated 
 the rights of the masses against those of the moneyed classes, 
 a contrast which he did not fail to emphasize whenever he 
 had a chance, and in doing so he served the cause of justice. 
 And the weapon of his opponents who said that above all 
 
38 
 
 they wished to have an "honest dollar" he turned against 
 themselves. 
 
 In his speech against the repeal of the Sherman law he 
 had said already: "An honest dollar is a dollar absolutely 
 stable in relation to all other things." And again in his 
 Madison Square Garden speech: "What is the test of honesty 
 in money? It must certainly be found in the purchasing 
 power of the dollar. An absolutely honest dollar would not 
 vary in its general purchasing power .... A dollar which 
 increases in purchasing power is just as dishonest as a dollar 
 which decreases in purchasing power." And continuing to 
 discuss this point he arrives at the conclusion that bimetallism 
 is the best guarantee for the stability ofthe purchasing power 
 of money. 
 
 On another occasion referring again to this question he was 
 asked how he could make such assertions in view of the fact 
 that silver could be bought at 65 cents per oz, making the 
 price of a dollar 50 cents. The answer, he said, is quite 
 simple; now the price of silver is 65 cents per oz. because 
 it cannot be coined, but this will change as soon as silver 
 may be coined again. 
 
 After giving an account of this speech in The First Battle 
 Bryan tells the following good story: "Two men were 
 discussing the silver question in a car, when some one 
 asked the silver advocate," Do you think it is right to 
 pass a law which will enable a man to buy my silver at 50 
 cents and coin it into 100 cents and make the difference?" 
 The silver advocate replied, "Under free coinage any person 
 owning 4121/2 grains of standard silver can have it coined 
 into one dollar without charge for mintage. That being the 
 case, is there any one in this car who, under free coinage, 
 woultl sell that much silver for less than 100 cents and let 
 the i.urchaser make the profit?" There was silence for a 
 
39 
 
 moment, and then some one answered, "I would." The reply 
 came from a young man who was sitting hy his mother, 
 and she protected him from further inquiry by saying, 
 "Never mind him: he is an idiot, I am just taking him to 
 the asylum." 
 
 Bryax was fully convinced that if only the Mint of the 
 United States were re-opened to the free coinage of silver at 
 the old ratio of 16 to 1, the parity between gold and silver 
 would soon be restored to that ratio. "I am firmly covinced 
 that by opening our mints to the free and unlimited coinage 
 at the present ratio we can create a demand for silver which 
 will keep the price of bulhon at $ 1.29 per ounce, measured 
 by gold," these were the words he used in his Madison Square 
 Garden speech and on many subsequent occasions he has given 
 utterance to the same sentiments. 
 
 Hence he considered it also quite superfluous for the United 
 States to act in concert with other countries in order to 
 restore bimetaUism. Besides he was of opinion that all steps 
 in that direction would result in nothing. Already before the 
 campaign he had said in the House of Representatives that 
 the example of the United States might perhaps induce Europe 
 to follow suit, but that united action would be of little or 
 no avail. ^) 
 
 In many of his campaign speeches he alluded to the fact 
 that for the last twenty years the advocates of the restora- 
 tion of silver in the United States have in vain been waiting 
 for the co-operation of Europe, and on one occasion he said: 
 "The Platform says that the Republican Party pledges itself 
 to secure international bimetallism as soon as possible, but 
 that, until that can be secured, we must maintain the gold 
 standard. "What does that mean? It means that bimetalhsm 
 
 ') Speech in International Bimetallism. Feb. 1895. 
 
40 
 
 is better than a gold standard, but that we cannot have that 
 better thing until the leading commercial nations of Europe 
 shall consent to its adoption. Does it say that we must bear 
 the affliction of a gold standard for a year? No it does not 
 hmit it to a year. For four years? No, it does not hmit it 
 to four years. How long? According to the Re])ublican 
 Platform we must bear the affliction of a gold standard for 
 ever, if foreign nations insist upon it." ^) 
 
 The United States, Bryax held, should not put up with 
 this and act independently of other nations. 
 
 Besides, according to Bryan, it is the influence of the capi- 
 taUst classes standing up for their specific interests which 
 is mainly responsible for the refusal of the Government to 
 adopt bimetalhsm. In the United States it is from Wall 
 Street that the opposition to the free coinage of silver comes, 
 whilst in Europe, especially in England and Germany, the 
 opposition to international Itiniutallism is even stronger. 
 
 Finally it was Bryan's belief that the honour of the nation 
 would be at stake if the United States allowed its decision 
 on this point to depend upon the co-operation of foreign 
 nations. All along he has ]iut forward these theories. As 
 early as 1893 he said in the House of Representatives : "This 
 Congress cannot more surely win the approval of a grateful 
 people than by declaring 'that this nation, the grandest which 
 the world has ever seen, has the right and the ability to 
 legislate for its own people on every subject, regardless of 
 the wishes, the entreaties, or the threats of foreign powers." 2) 
 In the Democratic National Convention of June 10*'' 1896 
 the chairman expressed a similar sentiment. "No nation can call 
 itself independent that cannot establish a financial system of 
 its own", and in his speech concluding debate on tlu' Chicago 
 
 ') Milwaukee Speech. 
 
 -) Siiooch against "Uucondiliuiial l{oi>L'al." 
 
41 
 
 Platform, Bryan said: "Is'o private character, however pure, 
 no personal popularity, however great, can protect from the 
 avenging wrath of an indignant people a man who will declare 
 that he i.s in favor of fastening the gold standard upon this 
 country, or who is willing to surrender the right of self- 
 government and place the legislative control of our affairs in 
 the hands of foreign potentates and powers-'. And again in 
 his Madison Square Garden Speech: "For a people like ours, 
 West with natural resources of surpassing richness, to proclaim 
 themselves impotent to frame a financial system suited to 
 their own needs is humiliating beyond the power of language 
 to describe", and to his audience in Boston he said: "I want 
 to ask you, whether we are an independent nation or 
 whether we have again become the subject of a foreign 
 power?" 
 
 So much for Bryan. Now let us see what was the position 
 taken by the other party. 
 
 The money plank of the Platform of the Republican party 
 was as fohows: 
 
 "The Republican party is unreservedly for sound money. It 
 caused the enactment of the law providing for the resump- 
 tion of specie payments in 1879; since then every dollar has 
 been as good as gold." 
 
 "We are unalterably opposed to every measure calculated 
 to debase our currency or impair the credit of our country. 
 We are, therefore, opposed to the free coinage of silver except 
 by international agreement with the leading commercial nations 
 of the world, which we pledge ourselves to promote, and until 
 such agreement can be obtained the existing gold standard 
 must be preserved. Ail our silver and paper currency must be 
 maintained at parity with gold, and we favor all measures 
 designed to maintain inviolablv the obligations of the United 
 
42 
 
 States and all our money, whether coin or paper, at the 
 present standard, the standard of the most enlightened nations 
 of the earth." 
 
 This platform Avas adopted by a vote of ten to one after 
 the paragraph submitted as a substitute by Senator Teller, 
 who advanced in support of this substitute that the platform 
 of the majority did not guarantee the adoption of bimetalhsm, 
 had been voted down by the same vote. The paragraph sub- 
 mitted by him ran as follows : "The Republican party autho- 
 rizes the use of both gold and silver as an equal standard 
 money, and pledges its power to secure the free and unlimited 
 coinage of gold and silver at our mints at the ratio of IG parts 
 of silver to 1 of gold.' 
 
 In the letter in which McKinley accepts his nomination by 
 the Repubhcan party, he wrote, among other things, that the 
 mere declaration of the Democratic party and its allies to 
 inaugurate the free coinage of silver by independent action on 
 the part of the United States at the ratio of 16 to 1, was a 
 menace to the financial and industrial interests of the country 
 and had created universal alarm. "The character of the mone3''," 
 he said, "which shall measure our values and exchanges, and 
 settle our balances with one another, and with the nations of 
 the world, is of such primary importance, and so far-reaching in its 
 consequences, as to call for the most painstaking investigation, 
 and, in the end, a sober and unprejudicedjudgment at the polls." 
 He does not beheve in the beneficial results of the free coinage of 
 silver. The adoption of the double standard would not be secured 
 by it, but great instability of all values would ensue and the 
 end would be the adoption of the single silver standard. 
 Independent action on the part of the United States could 
 never bring about the adoption of bimetallism. So long as 
 no international agreement could bo entered into the United 
 States should maintain the gold standard. But he added : 
 
43 
 
 „The Republican party has declared in favor of an internatio- 
 nal agreement, and if elected President, it will he my duty 
 to employ all proper means to promote it." 
 
 Mr. HoBART, too, wrote in his letter accepting his nomina- 
 tion as the candidate for the Vice-Presidency of the Republi- 
 can party : „The Republican partij will gladly assist m 
 promoting a double standard, whenever it can be secured by 
 agreement and co-operation among the nations." 
 
 Let us now consider the paragraph on the money question 
 submitted by the minority of the Democratic party as a sub- 
 stitute for the money plank of the majority. It ran as follows : 
 „Until international co-operation among leading nations for 
 the coinage of silver can be secured we favor the rigid main- 
 tenance of the existing gold standard as essential to the pre- 
 servation of our national credit, the redemption of our pubhc 
 pledges, and the keeping inviolate of our country's honor. We 
 insist that all our paper and silver currency shall be kept 
 absolutely at a parity with gold. The Democratic party is 
 the party of hard money and is opposed to legal tender paper 
 money as a part of our permanent financial system, and we 
 therefore favor the gradual retirement and cancellation of all 
 United States notes and Treasury notes, under such legisla- 
 tive provisions as will prevent undue contraction, "We demand 
 that the national credit shall be resolutely maintained at all 
 times and under all circumstances". 
 
 In view of all these contentions it can scarcely be denied 
 that in the contest over the monetary system in the United 
 States there are bimetallists on either side. 
 
 Though I do not concur with Bryan in many of his 
 theories, I should be afraid of doing him an injustice if I 
 were to withhold from him the name of bimetallist. I stated 
 above that his theories on the money question are absolutely 
 correct according to the doctrines of bimetallism, and I do 
 
44 
 
 not see any reason why I sliould douljt the sincerety of his 
 conviction that the ends he had in view could l)e attained 
 only by following the way indicated by him. 
 
 But the Democrats who separated themselves from the 
 majority, the Republicans and in particular Mc. Kinley have 
 no less a title to our belief when they declare themselves to 
 be honest advocates of bimetallism provided it be established 
 by international agreement and co-operation. 
 
 On the occasion of his inauguration as President of the 
 United States, McKinley delivered an adress in which he 
 said that the question of international bimetallism would 
 have early and earnest attention. My constant endeavor, he 
 added, will be to secure it by co-operation with other great 
 commercial powers. A few days later the Washington cur- 
 respondent of Tlie Times reported that he had had a 
 long conversation with the President, from which it ap- 
 peared that MoKiKLEY is very much in earnest about 
 bimetallism and has very strong views about his duty on 
 that subject. Says the correspondent: "He recognizes expressly 
 his obhgation to carry out the platform of his party. What 
 he said in his inaugural address was brief but deeply consi- 
 dered. The subject takes larger proportions in his own mind 
 than it did in that Address." In a leading article oi' The Times 
 of March 15*^\ this telegraphic communication of its corres- 
 pondent is commented upon and doubts are expressed as to 
 whether the President was serious when he gave utterance 
 to these sentiments. The article winds uj • with these words : 
 "President McKinley may find it politic and expedient to 
 humour his bimetallic supporters by a show of real for their 
 contention," which, in our opinion, is nothing but a gratuitous 
 insult to the President. 
 
 It must be added that a man must be purblind not to see 
 that international bimetallism would he n godsend for the 
 
45 
 
 United States, which would help the countr}' out of the diffi- 
 culties into which the money system has got it. 
 
 The money circulating in the United States amounted 
 recently to : 
 
 in millions of dollars. 
 
 in Gold or notes, covered hy gold 555 
 
 „ Silver and United States notes of divers kinds, not 
 
 covered by gold 790 
 
 „ banknotes 221 
 
 Total 1566 
 
 Now if from having had a limping standard, the country 
 were really to adopt the single gold standard, and according 
 to the absoluteh^ correct principles of the minority of the 
 Democratic party, would put an end to the circulation of 
 government notes, which is contrary to a sound currency 
 system, the stock of gold would have to be increased by 
 500 million dollars. This calculation is further based upon 
 the supposition that an amount of nearly 300 million in 
 silver token or subsidiary money could remain in circu- 
 lation, which is an overestimate rather than an underestimate, 
 and that the present banknotes would remain in circulation 
 or to the full amount would be displaced by a better bank- 
 note. The drawbacks of such a currency reform would be 
 many, not only with respect to America, but also to Europe. 
 No wonder, then, that a radical bimetallic reform of the 
 currency system would meet with universal approval in the 
 United States. 
 
 The two parties contending for this reform are, however, 
 distinguished in that the Bryanites seem only to be afraid of 
 the harm that will result from the increase in the purchasing 
 power of gold should not silver be coined on equal terms with 
 gold, whereas the other side, fully aware of the impossibihty 
 
46 
 
 of a satisfactory rehabilitation of silver by the United States 
 alone, dread more than anything else, that the re-opening of 
 the Mint to the free coinage of silver would bring the country 
 to the silver standard, and shrink from the losses which 
 this would involve. The Bryanites I'egard the stability of 
 the value of money exclusively in its relation to other 
 commodities, the other party in its relation to the money 
 in other countries. 
 
 After what I have written above regarding the possible result 
 of a victor}' of Bryan's party, I need not agam repeat 
 my contention that Bryan was mistaken when he expected 
 that the United States alone, by re-opening its Mint to 
 the coinage of silver at the ratio of IG to 1, could have 
 estabhshed the parity between gold and silver at that ratio. 
 I may add that a re-establishment of that ratio, suppose it 
 were desired, would entail great difficulties, but this is a sub- 
 ject which need not have our attention here. 
 
 But be this as it may, the re-estabhshment of the old gold- 
 price of silver by the United States alone, I repeat, is an 
 impossibility. Bryan was quite right in his arguments quoted 
 above, that, when under a bimetallic system the option be- 
 tween the two metals rests with the debtor, the metals are 
 held together approximately at the ratio fixed by law, provided 
 the demand created is sufficient to absorb all of both metals 
 presented at the Mint. But he erred in supposing that the 
 re-opening of the Mint of the United States alone to the 
 coinage of silver could create such a demand. 
 
 There was, moreover, another fundamental error which often 
 led Bryan's judgment astray, viz. his misapprehension of the 
 international character of bimetalUsm. As early as 1891 
 Mc KiNLEY rightly remarked — and in his letter accepting Reiai- 
 blican ISTomination he referred to this statement again — ,.The 
 double standard implies equality at a ratio (in different coun- 
 
47 
 
 tries that is), and that equaUty can only be estabhshed by 
 the concurrent law of nations." And although what Bryan 
 said about the expediency of independent action on the part 
 of the United States may have sounded very beautiful, ap- 
 plied to the question at issue it was radically wrong. He 
 may have produced a fine oratorical effect upon enthusiastic 
 crowds, at bottom his speeches on this point were empty 
 words. 
 
 He was also wrong when, as he did on some few occasions, he 
 asserted that he was not recommending a new experiment. True, 
 prior to 1873 the United States had the double standard, but 
 actually gold and silver were used alternately for the very 
 reason that the legal ratio bad been established independently 
 of other countries, where different systems obtained. Besides 
 matters have greatly changed since 1873 ; what could be done 
 then in one country as France, would no longer be possible 
 now. Henceforth bimetallism wiU have to be international, 
 or it will not be able to exist at all; to deny this would 
 be to betray gross ignorance of the present position of 
 affairs. 
 
 Credit is due to Bryan for his persistent recurrence to the 
 significance of the increase in the purchasing power of money, 
 and for directing the attention of the pubhc to the danger 
 that lies in the encroachment of the gold standard. We dare 
 not pronounce an opinion as to whether McKinley and the 
 whole Republican party are sufficiently ahve to the great 
 importance of this side of the question. 
 
 From a practical point of view, however, the question, 
 "what may we expect from America in the future," is much 
 more important than the question whether the views of Bryan 
 and his party on the financial question, or those of McKinley 
 and his supporters are the more correct. 
 
48 
 
 The danger that menaced the whole commercial world last 
 year has been averted, but for how long? 
 
 It will be well not to lose sight of the fact that Bryan advo- 
 cated the rights of the large masses of the people — or at least 
 such of their rights as they set most value on and keenly feel 
 the importance of; whereas McKinley figured as the champion 
 of the rights of the classes that take precedence from a social 
 and financial point of view, but not numerically. And although 
 there may be those who consider this distinction of interests sub- 
 stantially wrong and who beheve that the many are benefited 
 indirectly by the prosperity of the few, yet it should be borne 
 in mind that there is such a thing as class-hatred which in 
 the appreciation of these general rights and interests plays an 
 important part and which is apt to obscure the eyes of those 
 who think their interests are being injured. 
 
 And again it must be remembered that when 6.500.000 
 peoytle voted for the independent re-opening of the Mint of the 
 United States to the free coinage of silver, recommended by 
 Bryan, and 7.000.000 voted against it, it was only the adop- 
 tion of bimetallism by the united States alone, not interna- 
 tional bimetallism, that was condemned, and that this was the 
 first Presidential election in which the contest turned entirely 
 upon the money question. 
 
 Bryan relates in "The First Battle" how Senator Gorman, 
 who presided at a meeting in Baltimore represented a conside- 
 rable number of Democrats, who, believing in international 
 bimetallism, allied themselves with the independent bimetallists 
 when they despaired of securing an international agreement. 
 Xow, if the Republican party fails to fulfil its pledge, or it 
 through want of co-operation on the part of Europe it cannot 
 carry out the money plank of its Platform, how great will 
 the number of those deserters be four years hence? 
 
THE SITUATION IN EUROPE. 
 
 American affairs liave occupied us a long time and for good 
 reasons. For not only is the position of aff"airs in tlie United 
 States worthy of careful consideration, but it is also of the 
 utmost importance in relation to interests purely European. 
 
 Opinions as to the necessity of a change in the existing 
 currency system in the United States are undivided. And even 
 if Europe were to abandon the United States to its fate and 
 refuses to co-operate in such a settlement as can only result 
 from an international agreement, it could not escape the 
 influence of what happens there. If the United States adopted 
 the single gold standard and reformed its currency system on 
 that basis, there would of necessity ensue a great demand for 
 gold on the part of that country, and the effect of such a 
 move would be widely felt on this side of the Atlantic. If, on 
 the other hand, Bryan's views triumphed, Europe would again 
 be brought face to face with the danger by which it was 
 threatened in the autumn of 1896. 
 
 The question arises, therefore, if under the circumstances 
 it would not be the best thing for Europe to lend the United 
 States a helping hand in coming to an international bimetahic 
 agreement. 
 
 Or would it be possible to find a less thorough method to 
 solve this problem? Some people in England, and perhaps in 
 France too, seem to be of the opinion that a bimetallic 
 agreement could be entered into by the United States and 
 
50 
 
 France alone, provided England were willing to re-open the 
 Indian Mints to silver. 
 
 Such a union, however, between these two countries, would 
 mean a mint-ratio for the two metals of 1 to löVs- But would 
 such an agreement serve the commercial interests of Europe 
 and especially of England, better than a truly international 
 bimetallic arrangement and the adoption of a fixed ratio by 
 mutual agreement? This is, to say the least of it, very doubtful. 
 
 Before, however, answering this question, we must consider 
 another. It may be asked, namely, if this union of the united 
 States and France with the exclusion of other nations would 
 be able to restore the parity between the two metals to the 
 old ratio. It is obvious that the chances would be greater 
 than if the United States were to act independently, provided, 
 however, that there should be as little objection in France as 
 there is with the partisans of silver in America, to surrender 
 gold in exchange for silver, which would perhaps be inevitable, 
 the union being concluded between these two countries only 
 instead of being really international. 
 
 But it is so utterly improbable that there will ever be a 
 majority in France, either with the Government or in com- 
 mercial circles, favouring a reform of the money system on 
 such lines, that we need not for a moment entertain serious 
 thoughts of the question being adjusted that way. 
 
 There is, therefore, no other choice left for Europe tlian to 
 give ear to the pressing solicitations of the United States and 
 the numerous advocates of the system on this side of the 
 Atlantic, and be converted to international bimetallism. 
 
 Again, it is not only in consideration of the dangers by 
 which Europe is threatened owing to the condition of affairs 
 prevailing in America, that this step should be taken. Even if 
 the United States were not concerned in it, this would be 
 absolutely necessary. The necessity of this .step is caused by 
 
51 
 
 the general monetary situation of the commercial world taken 
 as a whole, as well as by the monetary situation of the Euro- 
 pean countries, and non-European countries individually. To 
 prove this assertion we beg to give a summary review of the 
 existing state of affairs. 
 
 The damage to commercial interests caused by a change in the 
 monetary system as it existed formerly, has been twofold. In 
 the first place the natural relations in commerce and industries 
 have been disturbed, and in the second place the purchasing 
 power of gold has increased and that of silver decreased. 
 
 Before I proceed let me add that when in these pages, I have 
 occasion to refer to the monetary system as it existed formerly, 
 I mean, of course, the period in which the equiUbrium of the 
 ratio of the two metals in France and afterwards in the coun- 
 tries of the Latin Union was pretty nearly maintained by the 
 double standard. I do not wish it to be understood, however, 
 that the then existing state of affairs was perfect. True, in 
 that period France and the Latin Union succeeded, by their 
 currency system, in securing the stabihty of the ratio of the 
 two metals and in preventing any considerable deviation from 
 that ratio. Theoretically, however, this stability of the ratio 
 was not guaranteed by the double standard system having 
 been adopted only over a comparatively small area, and there 
 were, occasionally, trifling deviations. To deny this is, in my 
 opinion, an error frequently committed by bimetallists, who 
 thus furnish monometallists with a weapon which the latter 
 have not been slow to use. It is a weapon, however, which 
 ought not to have been used in the fight against bimetallism. 
 No one wishes to see the condition of things that obtained 
 prior to 1870 repeated. We only allude to that condition to 
 indicate the way in which the evils clmging to the present 
 state of things can be remedied, if only due care be taken to 
 
52 
 
 steer clear of the dangers that beset the situation then, and 
 under which, in the end, it broke down when circumstances 
 had changed. 
 
 The disturbance of previous commercial and industrial 
 relations is due to the circumstance that gold and silver, no 
 longer linked together and consequently no longer enjoying 
 an almost stable ratio, have ceased to be one measure of 
 value in gold-using as well as m silver-using countries. The 
 approximate par of exchange between these countries having 
 been lost, their import and export trades were modified, and 
 the fluctuations of exchange were in themselves a hindrance 
 to the regular course of business. 
 
 The unequal fitness of different countries to produce similar 
 commodities is the basis of all foreign trade. The situation 
 of a country, its climate, the character of its people, the 
 degree of their civilisation, abundance or scarcity of capital, 
 are all factors whereon the production depends. And under 
 the influence of the greater facilities and diminishing cost of 
 transportation, there is a tendency in modern commerce to 
 bring all these factors more into play, in order to increase 
 production everywhere as much as possible. At a given 
 moment, however, all foreign trade depends solely on the 
 relative prices of the products concerned, in the diflTerent 
 countries between which it is carried on. Besides, this trade 
 never comprises all the products of a country ; hence they 
 are to be divided into two categories, viz. products which 
 are affected directly by the prices they command abroad, 
 and those that escape this direct influence and are only 
 effected indirectly in so far as the reaction is felt on prices 
 generally. In regard to this, the prices of wages etc. are 
 similarly c-ircumstanced as those of the commodities in which 
 no trade is carried on with foreign countries. 
 
 Furthermore it must be rememltored, as regards the commo- 
 
53 
 
 dities which are the object of the foreign trade, that their 
 price, either in the exporting or in the importing country, is 
 the expression of their value in terms of the metal used there 
 as standard metal. Now so long as the ratio of the two metals 
 was pretty stable it was of no consequence whether in one 
 country this metal was gold and in another silver, but the 
 situation was altered altogether when the stability of this 
 ratio was broken. 
 
 Now, for example, every fall in the gold-price of silver in 
 England could not but be attended with a corresponding fall 
 in the rate of exchange on British India. What did this involve? 
 In the first place a change in the commercial movement, for 
 this fall in the rate of exchange did not in itself cause a like 
 change in the prices of the merchandise in the two countries. 
 Goods not hitherto exported from India to England were now 
 exported, or those that hitherto found their way from India 
 to England in small quantities only, were now exported in 
 large quantities. On the contrary, the imports from England into 
 India ceased to expand or seriously diminished, whilst by a greater 
 export of silver the equiUbrium of the balance of ° trade was 
 restored. This, however, was only the immediate result. The 
 change in the commercial movement could not fail to cause 
 either a rise in the prices of commodities affected by this change 
 in India or a fall in England. As we all know, the result has 
 been a fall in prices in England. And it is in this way, namely 
 through a general fall of the prices in the countries with a 
 gold standard that, at least till 1892, the fall of the gold-price 
 of silver has operated. 
 
 But how was it, that this and no other was the result, and 
 what were the effects upon the economic conditions in the 
 gold-using and in the silver-using countries'? 
 
 With respect to the silver-using countries matters took the 
 following course. The imports of silver increased, but although 
 
54 
 
 the increase was considerable as compared with the normal 
 imports of the metal, yet the total amount of the monetary 
 circulation in those countries was but httle affected by it. 
 
 In consequence these imports could exercise but little influence 
 upon the local prices created by the relation between all the 
 silver used as money and all other commodities. Moreover, this 
 influence was often only transient. For the increase in the import 
 of bulUon became a stimulus to increased commercial activity 
 at home, and home production growing larger in consequence, 
 the relation between bulhon and all other commodities and 
 labour could not be permanently affected. To no small degree 
 this seems to have been in Eastern countries the immediate 
 result of the fall in the gold-price of silver, which will explain 
 the favorable economic conditions of these countries in spite 
 of the direct losses, as in the case of British India, resulting 
 from the increased burden of gold-debts contracted abroad. 
 
 When under such circumstances the foreign trade of a country 
 undergoes a change, it must be attributed to the fact that the 
 terms of interchange of commodities in such a country are 
 improving. 
 
 Let it be remembered, however, that it was not the breaking 
 of the stability of the rates of exchange with Europe that 
 proved to be of advantage to the silver countries in the first 
 period after the coinage reforms of the seventies. The export 
 trade may have derived some momentary profits from these 
 fluctuations, but these profits were counterbalanced by losses 
 of other people, and the so-called bounty which the fall of the 
 English rate of exchange on India, for example, procured for 
 the exporters there, could not from the nature of the thing, 
 be the cause of lasting advantage, as erelong this fall in the 
 rate of exchange had to be taken into account in determining 
 the prices commanded by Indian articles on the European markets 
 
 The great advantage to the silver-using countries has been 
 
'O'ö 
 
 the circumstance that the diminished cost of production which 
 occurred simultaneously Avith the falling off in the gold-price 
 of silver — the result of improved machinery, extension of 
 railroads and lower freights - did not coincide there with an 
 increased purchasing power of money, but with a larger available 
 quantity of circulating medium, which was what these coun- 
 tries needed most, whilst a scarcity of it would have impeded 
 commerce and industries. And the course of events in the gold 
 countries has differed from that in the silver countries in that, 
 on the contrary, in the former, the general economic develop- 
 ment of recent times has been handicapped during the last 
 twent3^-five years by the increase in the purchasing power 
 of money. 
 
 This economic development which dates from before the 
 fifties, but was then checked by the insufficient production 
 of the precious metals, reached its highest pitch in the third 
 quarter of this century when there was a considerable increase 
 in their production. During the last twentj'-five years, however, 
 the position of affairs has been as follows. The economic 
 development has been advancing, it is true, even more than 
 before, and consequently the cost of production, both of natural 
 and of factory-made products, decreased sensibly, and the 
 production of the two precious metals increased again con- 
 siderably, but the two metals were no longer hnked together 
 and the coinage reforms of the seventies reduced the gold 
 countries more or less to the condition that obtained prior to 
 1850 as far as the influx of the standard-metal was concerned. 
 In the silver countries, on the other hand, the development 
 of the production and the growth of general prosperity were 
 not impeded by this. 
 
 Does it follow, however, that every increase in the circulating 
 medium, the precious metals, is a boon? Not at all, I think. 
 
 Economists of great authority and reputation have expressed 
 
56 
 
 the 0])inion, which I unhesitatingly endorse, that if money is so 
 abundant as to diminish its purchasing power, it becomes as 
 detrimental in its effects as a scarcity which enhances that pur- 
 chasing power. They argue that whereas the interests of one class 
 would benefit by a diminution of the purchasing power of money, 
 the interests of another, no less vital, would suffer, and that 
 a change in the purchasing power of money would bring about 
 a depression in one branch of trade while infusing new life 
 into another. Ought we therefore to regret, that when the 
 population increases and the general production is augmented, 
 the circulating medium experiences a corresponding extension? 
 And when, under such circumstances, the production of precious 
 metals also increases, would a reform of the currency system 
 be deemed desirable as a counterpoise to the general increase 
 in the circulating medium? We should be loth to admit it. 
 For under such circumstances certainly, there would be ine- 
 quality in the benefits derived from the increased production 
 jand some parties would enjoy an unearned increment. More- 
 over, and in the first and foremost place, the development 
 of the production itself would then be clogged. For the 
 peculiar position of a man who participates in the great work 
 of production, be it in agriculture, industry or commerce, is 
 this: his transactions are, strictly speaking, time trtinsactions 
 and when, during the process of the work of production 
 undertaken by him, the purchasing power of money, i. e., the 
 value of money, increases as compared with the value of all 
 other commondities, he will sustain losses. ^) 
 
 It is this circumstance which, as has been asserted before 
 
 ') Compare in tlie author's „The Monetary Question", published by 
 Macmillan & Co., 185)1, p. 99 v.v. 8oe also: F. A. Walker. International 
 Bimetallism, p. 273 v.v. and Prof. Marshall. Principles of Economics. 
 VI .1. 1. Book VII. Ch. VII. Note on the purchasing: i>o\ver of money in 
 relatiun to the real rate of interest. 
 
0/ 
 
 on more than one occasion, explains why the spirit of enter- 
 prise during the last five and twenty years has been so much 
 less energetic than during the foregoing quarter of the century ; 
 relatively less, at least; why depressions in industry have 
 been so often the order of the day, and why general production 
 has not made such great strides as might have been expected 
 from the increased resources and facilities in production. 
 
 I shall refrain from adding to this brief summary of the course 
 of events during the last twenty-five years in the gold and silver 
 countries, arguments in proof of my assertion that there 
 has actually been an increase in the purchasing power of the 
 circulating medium during that period in the gold-using coun- 
 tries. As it is not my intention to deal afresh with the whole 
 subject of the monetary question, I beg to refer the reader to 
 what has been written on this subject by others and myself 
 on former occasions. There is one detail, however, which, in 
 view of the actual situation, may not be passed over in silence, 
 viz. the increase in the production of gold during the last few 
 years and its influence upon the condition of aftairs. I shall 
 presently make this a subject of special discussion, and the 
 figures to which I shall call the attention of the reader, will 
 furnish the proofs that this is no reason for us to be recon- 
 ciled to the idea of an encroachment of the single gold 
 standard. 
 
 Our review of the present monetary system is not complete 
 yet. In the first place it may not pass unnoticed here that 
 though for a long time the monetary unity between gold and 
 silver countries was severed, and there was an increase in the 
 purchasing power of the circulating medium in the gold coun- 
 tries against little or no decrease in the purchasing power of 
 the circulating medium in the silver countries, yet with respect 
 to the latter phenomenon there has been a change of late 
 vears. It cannot be denied that there has been since 1893 a 
 
58 
 
 fall in the value of silver, not only in relation to gold but 
 also in relation to all other commodities. 
 
 This is clearly seen, for instance, in the fluctuations of the 
 prices in Japan, although there may also have been other 
 causes operating in the same direction in this country. The 
 evil caused by the disunion of the two metals seems thus to 
 become complete. 
 
 But this is not all that makes the actual situation so pre- 
 carious. There is, besides, the circumstance that the commercial 
 world is still in a period of transition from the condition of 
 affairs that prevailed prior to 1870, a period that cannot 
 possibly last much longer. 
 
 The adoption of the gold standard in the seventies led to 
 a division of the commercial world into gold countries and 
 silver countries. I have shown above what were the imme- 
 diate results of this measure but omitted one, viz. that in 
 the countries which adopted the gold standard a satisfactory 
 settlement of affairs has not been arrived at yet — a subject 
 with which we shall deal later. However, the situation, im- 
 perfect though it was, permitted the money in those countries 
 to be maintained at its gold value, and although the diver- 
 gence in the ratio uf the two metals gradually became more 
 considerable the inconveniences caused by this were faced, 
 albeit at the cost of many sacrifices. But the situation, thus 
 evolved, — we use this term on purpose, for no one had 
 foreseen, much less desired this course of events — , had no 
 intrinsic strength and was destined to undergo further changes. 
 
 The first cause of disturbance of the situation in its 
 initial stage arose almost simultaneously in two countries; in 
 British India, a silver country, because the English Government 
 desired to protect the trade of British India and at the same 
 time that of England itself with this colony, from the losses 
 arising from an increasing decline in the gold-price of silver; 
 
59 
 
 and in the United States, a gold country, because there it had 
 been found expedient to put an end to the measures that had 
 been taken previously in order to check the increasing divergence 
 in the ratio of the two metals, but which now proved a source 
 of danger to the maintenance of the gold standard. In conse- 
 (luence the situation became graver still. 
 
 Again, quite recently, the situation underwent a further 
 change. Two countries, Austria and Russia, still had the double 
 standard, but only in theory, because practically they were 
 under the regime of paper-money. This wretched regime they 
 wished to abandon and they were in a position to do so, owing 
 to their improved finances and economic condition. In conse- 
 quence of the turn matters had taken they were now com- 
 pelled to decide which standard they should adopt. As their 
 trade was chiefly carried on with Europe this could only be 
 the gold standard, and owing to the pecuhar relation between 
 their paper money and the two metals, the adoption of this 
 standard could be effected with comparative ease. Austria was 
 the first to come to a decision, but had failed to take before- 
 hand measures to carry this decision into effect, and conse- 
 quently the reform has up to this date not yet been completed. 
 Russia, however, had been making preparations for a long time, 
 still she too has not yet brought the reform to a conclusion. 
 
 However, although consequently the situation is no longer 
 what it was immediately after the seventies and the encroach- 
 ment of the gold standard has continued without cessation, 
 it had not yet come to pass that a silver country has adopted 
 the gold standard. For British India has only been reduced 
 to a state of transition and is still, as a matter of fact, a 
 silver country rather than a gold country. 
 
 But the intelligence has now reached us that Japan wishes 
 to adopt the gold standard, and if this prove true the history 
 of monetary reforms will assume a new phase, for this occur- 
 
60 
 
 rence would invitably lead to the imiversal exclusion of silver 
 as standard money. 
 
 It is difficult to foresee what will be all the results of this, 
 but this much is certain: the scramble for gold is sure to be 
 resumed with renewed vigour. 
 
 And however much the production of gold may have increased 
 of late years, nobody will maintain that the stock of gold 
 and the production of the metal are so large that the prospect 
 of the universal demonetization of silver need not give us 
 serious anxiety. As we said before, we will, presently, return 
 to this subject and investigate the true position of affairs. 
 
 The fear entertained by us that we are on the eve of a 
 universal exclusion of silver as a standard coin will, however, 
 be esteemed by many as merely imaginary. The very fact 
 that the present stock of gold and the production of this metal 
 are insufficient to bring to completion the great monetary reform 
 commenced hi the seventies, will be deemed an insurmountable 
 obstacle. It cannot be denied that this may prove to be the 
 case, but let us see what this would mean. 
 
 There would be a further divergence in the ratio of the 
 two metals, greater than before, and the effects of this 
 divergence would be: enhanced increase in the purchasing 
 power of gold, continued decrease in that of silver, and continual 
 fiuctuations of the rates of exchange between the gold coun- 
 tries on one side and on the other side those countries which 
 would still have provisionally retained their silver standard 
 and those that have a paper or other circulating medium 
 influenced somewhat by the gold-price of silver — British 
 India for example — and this would not be endured much 
 longer. It is evident that in the United States for instance, 
 thi' fight between the two parties would become fiercer 
 than ever. 
 
 An alarming prospect, indeed ! 
 
Öl 
 
 Besides, should the movement in favour of the adoption of 
 the gold standard call into life a counter movement in favour 
 of the return of one or more countries to the silver standard, 
 what will he result of the contest ? It is difficult to foretell, 
 but surely the uncertainty prevailing in the meanwhile will 
 be great. 
 
 If this is in store for us in the near future, the commercial 
 world may be prepared for a new period of depression, worse 
 than has been experienced during the last five and twenty years, 
 and the consequences, although difficult to foresee in all 
 their details, will, undoubtedly, be terribly disastrous. 
 
 I chose as a motto for my book the words with which M. 
 IIanotaux, the present minister of foreign affairs in France, 
 in his remarkable history of Cardinal de Richelieu, shows the 
 important part that has been played by Monarchy in France. 
 Its work, he says, has been the displacement of walls, which 
 keep apart, by roads, which bring together and unite, and he 
 adds : „modern civihzation is a levelling." 
 
 I apply these words to what ought to have been the work 
 of the great evolution of commerce and industry in the 19th 
 century. 
 
 It has furnished mankind with the means of rendering human 
 labour a hundredfold more productive ; all the treasures hidden 
 in the wombs of earth have been brought within the reach of 
 man ; distances have been annihilated and countries hitherto 
 inaccessible have been opened up ; the East and West have 
 been united and all that the earth brings forth has been placed 
 at the disposal of man. This evolution was predestined to pave 
 the way for civilization and enable it to advance with giant's 
 strides. It ought to have levelled material and social inequahties 
 in a manner hitherto unknown ; it ought to have broken down 
 the last barriers between nations and laid level with the ground 
 
62 
 
 all the obstacles that have hitherto held the different classes 
 of society apart. 
 
 But during the last five and twenty years this evolution 
 has had to contend against a demon power, which has been | 
 
 sapping its work ;ind which has prevented it from exercising 
 its civilizing influence. This demon power has assumed two 
 shapes and its name is Protection and Monetary Dualism. 
 
 Civilization makes railroads and steam-ship Hnes; through 
 its influence neither mountains nor oceans would be able to 
 keep nations apart, and all the treasures of the soil, all the 
 products of human industry could be exchanged for each other, 
 were it not for this antagonistic demon power, which mocks 
 its efforts. When natural barriers have been removed this demon 
 power raises artificial ones in the form of tariffs. Civilization 
 would make the whole world one field of commercial enterprise ; 
 the demon power thrusts the commercial world back to the 
 days of barbarism, when trade was hampered through the 
 lack of a general circulating medium. Whereas civihzation 
 would expand production beyond all bounds and bring the 
 fruits of co-operation between capital and labour within the 
 reach of every one, this demon power has found the means 
 of depriving the circulating medium of its stability, thus clog- 
 ging and circumscribing production. Civilization would materi- 
 ally increase general prosperity and thus promote happiness 
 and peace ; bring together the poor and the rich ; but this 
 antagonistic demon power has found in Protection and Monetary 
 Dualism the means of enriching the few at the expense of the 
 many and of thus fostering class-hatred. 
 
 How can these two enemies of civilization be confounded? 
 
 It may be left to individual nations, or some nations acting 
 in concert to combat Protection; monetary Dualism can be 
 combated successfully only by extensive international co-ope- 
 ration. It is only an international agreement, uniting all the 
 
63 
 
 principal commercial nations in the world, that will restore 
 to us one universal circulating medium, one universal standard. 
 
 But should this result be attained, should this one universal 
 standard be restored, the chances are that at the same time 
 a severe blow would be dealt to the cause of protection. For the 
 revival of protection in our days is to a great measure due 
 to the universal decline in prices in the gold countries, where 
 it was resorted to as a means of counteracting this dechne, 
 but there will be no longer any need to resort to it when 
 the increase in the purchasing power of gold is checked. 
 
 That no wrong construction may be put on my words I beg 
 to repeat what I said with regard to American affairs 
 on a previous occasion viz: that, in my opinion, the applica- 
 tion of the system of protection as a means of counteracting 
 an increase in the purchasing power of gold is nevertheless a 
 most wretched expedient, for the evil which it is intended to 
 counteract, is not removed by it but its prejudicial effects are 
 rather aggravated. 
 
 We will now proceed to deal with the monetary situation 
 of the different countries, individuahy, which will afford an- 
 other reason why bimetalUsm should be adopted. 
 
 Let us in the first place devote our attention to those coun- 
 tries which adopted the gold standard in the seventies We 
 have already observed, in passing, that in none of these coun- 
 tries the monetary system has been satisfactorily adjusted yet : 
 neither in France, nor in any other country belonging to the 
 Latin Union ; not in the Netherlands, not even in Germany, 
 although we admit that the situation there is not so bad as 
 elsewhere. The Scandinavian countries alone may be considered 
 a favourable exception, but their importance is too little to 
 exercise any appreciable influence on the general situation. 
 
 The weak point in the situation of these countries is the large 
 
()1 
 
 sum of silver token money in circulation there, such a circulation 
 being contrary to the fundamental pi"inci]>le upon which a good 
 monetary system is based. 
 
 According to this principle the real medium of exchange is 
 the metal which is used as money. Money does not derive 
 its value from the mintage of the metal, but from the value 
 of the unminted metal. 
 
 All writers of authority agree on this head. 
 
 Yet, it may be said, the theory does not go unchallenged 
 altogether. As to this we assent, and we even recognize that 
 there is perhaps no other subject on which such different 
 opinions have been expressed, none that has given birth to so 
 many Utopian and fantastic theories as this. So it was in 
 the time of Law, so it is now. The present time especially 
 is prolific of new chimerical theories as to what money is or 
 should be. Again, it may be asked, is then the theory advan- 
 ced by us supported by practice? We confess that this is 
 neither the case. Yet it does not follow that our theory is 
 wrong; only, instead of using the term "money", we ought 
 to have been more correct and used the term "good money". 
 To our definition might be applied what Walker says of those 
 writers who deny that government paper is money:" these 
 writers make the mistake of saying that government paper 
 is not money, when they really mean to say that it is bad 
 money". For brevity's sake, however, we shall continue using 
 the term "money", when we mean „good money". 
 
 I further request that the charge of doctrinarianism be not 
 laid to my door when I insist that money should derive its 
 value from the metal used as coin. Where this is not the 
 case money does not satisfy the requirements of stability of 
 value which a good circulating medium should possess. There 
 is a twofold necessity for this stability of value: there should 
 exist clearness and fixity of relation between the money of a 
 
65 
 
 country and that used in other countries, and also, at least as 
 much as possible, fixity of value as compared to all other 
 commodities. It stands to reason that the stability in regard 
 to foreign money can be sustained only when the value ot 
 the money depends on the material of which it is made, 
 and not when it depends on the divergent opinions of 
 different legislative powers as to the amount of money that 
 should be issued. 
 
 History teaches us what becomes of the stabihty of a 
 circulating medium when this medium has no intrinsic value 
 and when the amount issued is made to depend on the ever- 
 varying decisions of a legislative power. To know to what 
 abuse this has led we need only call to mind the French 
 assignats, although we admit, that in this case, the abuse 
 was carried to the extreme. 
 
 Let us adduce, however, two more circumstances in proof 
 of our assertion that a system according to which the value 
 of a circulating medium is not determined by the value of the 
 metal of which it is made but by the wisdow of the legis- 
 lator, must needs be deficient, even when we consider the 
 stabihty of this circulating medium exclusively in regard to 
 the requirements of home trade. In the first place the con- 
 troversy that raged in England at the beginning of this century 
 as to whether gold had risen in value or banknotes had gone 
 down; and in the second place the conflicting opinions pre- 
 vaihng at present as to whether gold has risen or silver 
 has dechned and to what extent. These facts clearly show 
 how difficult it is to form a correct opmion on such a question 
 and to settle it properly. 
 
 It is true that, when it is gold and silver that are used 
 as circulating medium, and not inconvertible paper money or 
 a coin to which a nominal value has been assigned independent 
 of its metallic value, even then the value of the circulating 
 
 5 
 
66 
 
 medium is not absolutely stable, because the value of the two 
 metals in relation to other commodities is subject to fluctua- 
 tions, trifling though they may be. But at any rate the 
 stability has been secured with respect to the circulating 
 medium used in other countries, provided these countries use 
 the same metal or metals for their circulating medium; in 
 the second place it will be possible to make at least some 
 calculations as to the chances of fluctuations, but these cal- 
 culations cannot be made when the value is determined by 
 some decree of a legislative powder that may be changed at 
 any time and influenced by various circumstances. 
 
 But then it will be said that these arguments, valid though 
 they may be in themselves and much as they may be cal- 
 culated to subvert the absurd theories advanced by some that 
 the value of money does not depend on the metal used, will 
 not apply to the so-called token money v^hich is in circulation 
 at present in the countries that have the gold standard. 
 
 It will be averred that, although token money isafuhlegal 
 tender (which circumstance constitutes the difference between 
 this kind of money and subsidiary coin), yet it is not standard 
 coin but derives its value from that of the standard coin for 
 the very reason that although a general circulating medium 
 it circulates only to a limited amount, which amount cannot 
 be increased by minting. 
 
 Very true. But the question arises at once, how is the 
 value of this token money guaranteed at its gold parity ? Is there, 
 in the countries with the limping standard, any legal obhgation 
 on the part of the government to redeem in gold the token 
 money, in case of emergency? None whatever. And, in tact, 
 if there were such a legal obhgation, if token money were in 
 this respect of the nature of a note which the State guai'an- 
 tees to redeem in gold, it would be more simple and advan- 
 tageous to melt down this money and replace the amount by 
 
67 
 
 similar notes. But such is not the case. There are, at best, 
 some laws or decrees in which the legislator intimates his 
 intention of maintaining token money at its gold parity 
 and of, eventually, taking the necessary measures for this. 
 In the Netherlands, for example, these is the law of 
 1884 which provides that, in case of need, such a measure 
 shall be carried into effect at once for a certain amount. 
 Besides, the co-operation of the banks of issue may be relied 
 on in preventing the depreciation of token money and in the 
 countries in which this money is used the banks have always 
 been found ready to extend their help, though there may be 
 some difference in the modus operandi of some of the banks, 
 as, for instance, the Bank of France and the Bank of the 
 Netherlands. The latter, as is well known, has always pre- 
 vented the foreign rates of exchange from rising, no matter 
 how little, above the gold parity ; the Bank of France, on the 
 other hand, appears to have less objection to a small premium 
 on gold than to an increase in the discount, necessary to 
 prevent this premium. There is no legal guarantee, however, 
 that this situation will be maintained and there might even 
 be cases, although they may not be very probable just now, 
 in which this would be impossible, under the present regime. 
 France, the other countries of the Latin Union, the Nether- 
 lands and Germany have put up with this regime as a tem- 
 porary inconvenience, and indeed, the best thing that can be 
 done under the circumstances is to assume an attitude of 
 expectation, but it will be admitted that, in the long run, 
 such a condition of things cannot be tolerated. Therefore all 
 these countries should unite their efforts to come to an inter- 
 national bimetallic agreement as soon as possible, even though 
 it should be at the cost of some sacrifices. Besides, these 
 sacrifices would at all events not have to be so great as when 
 these countries, independently of each other, were to reform 
 
Ü8 
 
 their monetary h^ystems while maintaining the gold standard. 
 
 Moreover the maintenance of the token money would 
 he attended with another danger, that of surreptitious 
 coinage, and although this may have been practised hitherto 
 on a small scale only, yet it cannot be denied that this may 
 be otherwise in future. Now this would entail great losses 
 and besides the discovery of the fraudulent introduction of 
 such coin into circulation would i»lace the country in a very 
 awkward position. 
 
 After what I said on this subject in the first chapter of this 
 book I need not again demonstrate that in the United States 
 the situation is not a whit better than in the European countries 
 above referred to. If anything, the situation is graver and 
 more complicated still. But then the desirability of the 
 adoption of bimetallism is admitted there on all hands. 
 
 We turn now to other countries. 
 
 Austria and Russia are preparing to take their position again 
 among the nations that make their payments in specie and 
 to adopt the gold standard. We will not discuss here the 
 (luestion whether these countries have already succeeded, or 
 Avill succeed, in furnishing themselves with the amount of gold 
 necessary for this purpose. Certain it is however that owing 
 to the enormous debts they have contracted abroad and the 
 instability of their balance of trade, they will meet with serious 
 difficulties if they wish to continue their specie-payments in 
 gold. Besides it must be remembered that in both countries 
 the stock of gold, or part of it at least, will have to be kept 
 as a reserve in case of war. With regard to this it may be 
 observed that Russia would not begin redeeming the whole 
 amount of outstanding notes, but would leave 4(>o millions 
 worth of new notes uncovered by gold. Further the two 
 countries would put in circulation, l)y the side of the gold 
 standard coin, a considerable amount of silver coin. R.ussia. 
 
\ ^•• 
 
 69 
 
 is now coining new silver roubles in large quantities and 
 although a maximum quantity has been fixed yet it remains 
 to be seen if this maximum will not be exceeded afterwards. 
 
 Italy, which forms part of the Latin Union has only for a 
 short time been making its payments in specie, but is not in 
 a position to continue doing so. 
 
 Portugal, Spain and Greece have the gold standard, but 
 only in name; in reality they are under the regime of silver 
 and paper, or paper only. 
 
 In South- America, Brazil as w^ell as the Argentine Repubhc 
 are under the regime of paper-money. 
 
 Let it be said here with regard to these countries, that it 
 would be a mistake to blame the general monetary situation 
 alone for their deplorable monetary situation, which is, in 
 the main, due to financial mismanagement. However it cannot 
 be denied that the general monetary situation and the fall in 
 prices in Europe, resulting, in part at least, from it, and the 
 scramble for gold have greatly added bo the difficulties that 
 beset these countries. Neither can it be denied that this 
 general monetary situation would be no small obstacle in the 
 way of these countries in case they should wish to reform 
 their money system, assuming they were in a position to do 
 so. For the adoption of the gold standard would be attended 
 with many difficulties, and it would avail them but little to 
 make sacrifices in order to adopt the silver standard, for the 
 stability of the rates of exchange with respect to the principal 
 commercial nations of Europe and the United States would 
 not be secured hj this. 
 
 With regard to the silver countries in the East the question 
 arises: Will Japan really adopt the gold standard, and if 
 so will not very probably China fohow its example? If 
 this happens, it will be because these countries will have 
 been compelled to take this step, interested as they are in 
 
70 
 
 the stability of the rate of exchange with Europe. But in 
 those countries, where the wages are so low, gold can never 
 be used as a general circulating medium, neither is this pos- 
 sible in the other countries in the East and it may be deemed 
 superfluous to enter into iletails on this subject. Yet, when 
 once the movement in these countries is set on foot, it will 
 have to run its course as in Europe, but the gold standard 
 will be nothing but a sham there, for a long time at least, 
 and either silver, under a thin veneer of gold, will continue 
 to be the circulating medium, in the wretched form of token 
 money, or paper will be used, and thus a situation will be 
 created both precarious and dangerous. 
 
 One country has not been considered yet, a country that 
 should have been considered in the first and foremost place, 
 viz. Engeland. The actual monetary situation of this country 
 is, no doubt, sound, at least as far as the United Kingdom 
 itself is concerned, save for the circumstance that the metaUic 
 value of its subsidiary coin is much too smah. But in Greater 
 Britain this is far from being the case. In the United King- 
 dom and some of its colonies there is gold, in others silver, 
 and in one of the largest, in British India, a colony which is 
 of paramount importance in regard to the trade of England 
 and even of the whole world, there prevails a condition of 
 things more wretched and uncertain than can be imagined, 
 worse than can be found anywhere else; a condition of things 
 that is contrary to the principles ot an efficient monetary system. 
 In British India neither gold nor silver is the real circu- 
 lating medium; the real circulating medium there is a silver 
 coin that derives an artificial nominal value from the closing 
 of the Mints. This value it would be impossible to calculate, 
 for although the coinage of silver, or at least the free coinage, 
 has been discontinued, yet there is nothing to prevent the 
 amount of rupees now circulating from being swelled by a 
 
71 
 
 fresh supply or old rupees withdrawn from circulation on 
 previous occasions. Besides, when there is a scarcity of cir- 
 culating medium, which should tend to enhance its value, the 
 Government has the right to meet this scarcit}^ by the issue 
 of paper without metahic cover, of which right it availed 
 itself in December of last year when an amount of 20 miUions 
 of rupees of this paper was issued. ^) 
 
 We see, then, in whatever direction we look, nothing but 
 confusion and uncertainty in the monetary situation of every 
 country, whilst the general condition of things prevent nations 
 from effecting thorough reforms in their monetary systems 
 independently of each other. 
 
 We will now proceed to deal with the situation in regard 
 to the stock of gold and the amount of this metal produced. 
 
 Of late years the production of gold has increased conside- 
 rably. The average annual production was : 
 
 in the years ounces fine value in pd. st. 
 
 1831 - 1840 . . 652.291 2.696.800 
 
 1841 - 1850 1.760.502 7.278.600 
 
 which increased as follows: 
 
 1851-1855 6.410.324 26.502.600 
 
 1856-1860 6.486.262 26.816.000 
 
 fell off again to 
 
 1881-1885 4.794.755 19.828.200 
 
 the most unfavourable year being 
 
 1883 4.614.588 19.078.400 
 
 ') Cf. F. C. Harrison „The Indian Paper Currency" in The Economic 
 Journal, ]March 1897. 
 
72 
 
 Since 1885, however, there has l)een an improvement and 
 the production rose to: 
 
 1891 6.320 194 26.130.000 
 
 1892 7.102.180 29.368.000 
 
 1893 7.608.787 31.457.720 
 
 1894 8.737.788 36.125.220 
 
 1895 9.652.003 39.900.980 
 
 1896 10.164.497 42.019.600 i) 
 
 From these figures it will be seen that the production of 
 last year exceeds by more than 50 per cent that of the fifties. 
 
 Before all, however, it will be well to understand the rela- 
 tive significance of these figures. 
 
 According to the well-known Returns of the Director of the 
 Mint of the United States, the total volume of gold coin in 
 the principal countries of the world, amounted on January P^ 
 1895 to: 
 
 $4,086,800,000 = £840-000.000; 
 
 If we add to this £ 50.000.000, being the increase of 1895 
 and 1896, we get a total of £ 890.000.000 on January l^t i897. 
 Against this total we find the production of 1896 at: 
 
 ounces 10.164.497 = $ 210.098.000 
 or reduced to kilograms and pounds sterling: 
 
 316,100 Kilograms = £ 42.019.600. 
 
 In order to get the amount available for minting purposes 
 we must however deduct from this sum the amount used 
 annually in industry. Soetbeer estimated this amount at 
 lOO.OOO kilograms (3.125.000 oz. troy) in 1891, which estimate 
 we shall adopt here: 
 
 ») These figures have been taken from the Jieports uf the Director of the 
 Mint of the United States, except those of the hist two years, which have 
 been repriiitcil from tlie Clironiclo ; tliose of 1S<)() are api>roxiniato. $5 = £l. 
 
Kilos P. St. 
 
 316,000 42,019,600 
 
 less 100,000 13,656,690 
 
 remainclBr . . 216,000 28,363,000 
 
 which is 3~/io percent of £ 890.000.000. 
 
 However, the amount deducted for industrial purposes does 
 not include the gold exported to the East, which was esti- 
 mated in 1891 by Soetbeer at an average of 20.000 kilos a 
 3'ear, but of which it would be difficult to form a correct 
 average estimate at present. 
 
 A comparison of the following figures is not devoid of inte- 
 rest. According to the calculations of Soetbeer, continued of 
 late by Professor Lexis i) the volume of gold coin has increased 
 since 1850 in civilized countries as follow^s: 
 
 millions of pd. st. increase per decade 
 
 1850-1860 from 167 ^ to 395^ = 136 per cent. 
 1860-1870 „ 3952 „ 535s = sby^o „ 
 1870-1880 ,, 5358 „ 638=^ == 19 ,, „ 
 
 1885-1895 „ 6682 ^. 800 = 20 „ „ 
 
 Now, assuming that the annual production availai)le for 
 these countries continues at the rate of £ 25.000.000 per 
 annum the total £ 890.000.000 will rise from 1897-1907 to 
 £ 1.140.000.000, that is an increase of 28 per cent. 
 
 It will be seen that this figure is much low^er than the 
 enormous increase in the period 1850-1870, which permitted 
 the displacement on a large scale of silver by gold in the 
 circulation of money in Europe and also rendered possible the 
 monetary reforms of the seventies. But the difference is not 
 so great between it and the iu crease of recent years which, 
 ow^ing to the great demands for this metal in this period, has 
 been insufficient to prevent an appreciation of gold. 
 It would be difficult, however, to fonn an exact estimate of 
 
 1) ]n Conrad'p Jalirhiicher, 188G. 
 
74 
 
 the production <»t' gold that would be required, in addition to 
 the gold now circulating, and taking into account the annual 
 increase in the population and a normal development of com- 
 mercial activity, to ensure, as much as this is possible, the 
 stability of the value of the metal. But we do not think the 
 conjecture too hazardous that the present production is suffi- 
 cient to secure this stability, without leaving room, however, 
 for any considerable fresh displacement of silver by gold in 
 the general circulation of money. 
 
 To one more figure we beg to direct the attention of the 
 reader. The total amount of money circulating in the United 
 States increased between 1873 to 1892 from S 752 million to 
 S 1601 million, i. e. an annual average of $ -12,473,000 = 
 &. 8,728,000. ^) Now, if the population and the commercial 
 activity in the United States continue increasing at a propor- 
 tionate rate and silver token money and paper are withdrawn 
 from circulation, one third of the present net gold production 
 will be absorbed by that country alone. 
 
 To ascertain the influence of the gold production in recent 
 times on the circulation of money in the gold countries, we 
 will now apply another method and see how matters stand 
 with the principal banks of issue in Europe. 
 
 Gold monometallists are repeatedly pointing out the great 
 
 increase in the stock of gold of these institutions and this 
 
 increase we will not deny. Yet in 1896 there was a decrease 
 
 in the stock of gold in the Bank of England of £ 10,810,000 
 
 (of which £ 8,100,000 was exported to foreign countries and 
 
 £ 2,710,000 went to swell the home circulation) 
 
 in that of the Bank of France of .... £ 1.920.000 
 
 „ „ „ the German Imperial Bank ot . . . „ 1.977.800 
 
 „ „ „ National Bank of Belgium of ..... 3H.0S0 
 
 „ „ „ Bank of th(^ N.-therlands „ 950.000 
 
 ') Statistical Abstract of the rnited States. XIX, j). :i7 1897. 
 
75 
 
 Not too much importance, however, should he attached to 
 such a movement, extending as it does over only one year. 
 
 We will now proceed to investigate the position of the 
 principal banks of issue in Europe at the close of December 1896. 
 
 If, as some writers assert, there is really in the vaults or 
 these banks an accumulation of surplus gold, this should appear 
 from the figures representing their position. 
 
 The following is a hst of these gold stocks of the different 
 banks at the close of the last year: 
 
 Stock of gold coin 
 
 and bullion, reduced 
 
 to Pounds Sterling. 
 
 Banks of England, Scotland and Ireland . 43.150.000 
 
 Bank of France ■. 75.892.000 
 
 German Imperial Bank 26.569.000 
 
 Bank of the Netherlands 2.625.000 
 
 Belgian Bank 3.426.000 
 
 Swiss Banks 3.481.000 
 
 Banks of the Scandinavian countries. . . 6.300.000 
 
 Total £161.443.000 
 
 Bank of Italy, Bank of Naples and Bank 
 of Sicily, together .... £ 17.557.000 
 Bank of Spain „ 8.528.000 ^e 085 000 
 
 Banks of Roumania, Servia and Bulgaria. 2.755.000 
 
 Banks of Portugal and Greece 1.126.000 
 
 Bank of Austria-Hungary . . £ 30.295.000 
 
 Bank of Russia „91.837.000 iooiqooOO 
 
 Total £313.541.0001) 
 
 ') The above figures have been taken from the official returns of the 
 banks, The Economist and V Economiste Europeen. 
 
76 
 
 A very high total indeed ; but let us proceed to an exami- 
 nation of the details. 
 
 The situation in Austria and Russia we shall deal with 
 separatel}^ and return to it presently. 
 
 As the gold in the banks of Italy and Spain is not even 
 sufficient to permit specie-payment, at least in gold, it may be 
 left entirel}' out of consideration here. 
 
 The Banks of Portugal and of Greece are in a worse 
 predicament still. 
 
 The position of the Banks of Roumania, Servia and Bulgaria 
 is more favourable, at least of the first two, however the 
 stock of gold, either considered by itself or as cover of the 
 liabihties, is not of much importance. 
 
 In the Bank of .Denmark the cover of the liabilities is very 
 favourable (75 per cent) and in the Banks of Sweden and of 
 Norway satisfactory at least ; yet in these countries the stock 
 of gold is in itself small rather than large. 
 
 In the Swiss banks the total metallic covering for notes, ex- 
 clusive of other liabihties, is about 50 per cent, so it cannot be 
 said that there is an abundance of gold in that country either. 
 
 It is well-known that the position of the Bank of the 
 Netherlands is excellent, but this is not owing to its super- 
 abundance of gold. This is also the case, and even more so, 
 of the Bank of Belgium, the great strength of which lies in 
 the enormous amount of foreign bills which it holds. 
 
 We will now discuss the situation in England, France and 
 Germany, the only countries, strictly speaking, that need be 
 considered when dealing with the general situation, because 
 of their large stocks or gold. 
 
 On the 31^' of December of last year the position of the 
 Bank of France and of the German Imperial Bank was as 
 fcdlows : 
 
77 
 Bank of France. 
 
 Liabilities: Notes in circulation . £ 158. 520. 000 
 
 Balance Govt a/C „ 11.160.000 
 
 Private A/C 22.520.000 
 
 Total ... £ 187.200.000 
 against which there was a cover of: 
 
 in Gold £ 76.560.000 
 
 „ Silver .. 49.120.000 
 
 Total. . . £ 125.680.000 = 671^ per cent 
 or gold alone ., 76.560.000 = 40^0 „ „ 
 
 Geeman Imperial Bank. 
 
 Liabilities: Notes in circulation £ 62.850.000 
 
 Balance A/C „ 22.150.000 
 
 Total £ 85.000.000 
 
 and a cover of 
 
 in Gold and Silver together £ 40.228.800 = 47.30 per cent 
 
 or Gold alone „ 26.569.350 = 31.24 „ 
 
 It cannot be denied that the position of both these institu- 
 tions was quite satisfactory, and that of the French bank 
 very strong even ; yet with both the stock of silver was an 
 indispensable factor in the total metal cover. And although 
 the stock of gold in these banks may appear, at first sight, 
 enormously large, yet when we consider the liabilities and 
 the peculiar character of the silver cover, the situation will 
 not appear so exceptionally favourable and a superabundance 
 of gold is out of the question altogether. 
 
 The position of the Bank of England on the 30"^ Dec. 1896, 
 stated according to the methods used on the continent, was 
 as follows: 
 
78 
 
 Liabilities: Notes in circulation £ 26.660.000 
 
 Balance Gov*. A/C „ 8.380.000 
 
 Private „ „ 46.350.000 
 
 Total £ 81,390.000 
 
 Cover in coin and bullion: £ 34.150.000 = 42 per cent. 
 
 As the volume of coin and bullion was almost exclusively 
 composed of gold, we find a satisfactory gold cover here, almost 
 equivalent to that of France, but no silver cover besides as 
 in this country. 
 
 It is needless to say that, if we wish to form an estimate 
 of the strength of the gold cover of the habilities of the 
 Bank of England, it is not sufficient to consider only the 
 accounts of the Bank itself, for its stock of gold, together 
 with the volume of gold in the other banks, is in reahty the 
 metallic cover of the sum total of the liabilities of all the EngUsh 
 banks, which, at the close of December 1896, amounted to : 
 Sum total of deposits in all the banks .... £ 800.000.000 
 
 Bank of England notes in circulation „ 26.660.000 
 
 Notes of private Enghsh banks, and of the banks 
 
 of Scotland and of Ireland „ 1 5.300.000 
 
 Total .... £ 841.960.000 
 Cover in coin and bullion: 
 
 Bank of England £ 34.150.000 
 
 Banks of Scotland and of Ireland . „ 9.000.000 
 
 Other banks, say „15.000.000 
 
 Total. ... £ 58.1 50.000 = 6 7,0 per cent. 
 
 Even if we add to the stock of coin and bullion of the Bank 
 of England £ 34.150.000 
 
 the whole amount of money circulating in the 
 
 United Kingdom, which is estimated at. ,> 100.000.000 
 
 the total .... £ 134.150.000 
 
 would be only K» jter cent of the aggregate liabilities. 
 
79 
 
 Indeed, although the gold cover of the Bank of England 
 and the other banks of the United Kingdom is no longer so 
 alarmingly small as in 1891 when M. Goschen, as will be 
 remembered, raised his voice against it, yet when speaking of 
 countries in which there is an abundance of gold, England 
 may be mentioned only in the very last place. 
 
 But to return to Russia and Austria. 
 
 We do not think that any one will withhold from the 
 present minister of finances in Russia, M. de Witte, or his 
 predecessors, M. de Bunge and M. de Wischnegradsky, the 
 praise of having done everything in their power to adopt the 
 measures necessary for the resumption of specie-payment and 
 the accumulation of the volume of gold required for this pur- 
 pose, while adopting the gold standard. We do not agree with 
 those critics who deny to M. de Witte the right to fix the 
 value of the credit-rouble at two thirds of the old gold rouble ; 
 the credit-rouble was a silver rather than a gold rouble and 
 Russia had as much right as Austria to adhere to the momen- 
 tary gold value of the notes issued by the State. However, 
 we should consider it a mistake on the part of said minister, 
 not to give full metal cover to the new notes but to issue 
 them for a certain amount against a debt of the State, which 
 is said to be his intention. 
 
 Be this as it may, it is a fact that the Government has 
 succeeded in raising the total stock of gold in the Bank and 
 the Treasury, which in 1881 amounted to only 291,112,000 
 gold roubles = 436,668,000 new roubles, to 1,199,200,000 new 
 roubles on Dec. 8^^ 1896, an amount which even exceeds by 
 a trifle that of the outstanding credit-roubles, so that if this 
 whole stock of gold could be applied to the redemption of the 
 notes, it would be secured to the full amount. The position will 
 be different, when a certain part of this gold stock - it is said 
 400,000,000 roubles - is set aside as a reserve for the Treasury, 
 
80 
 
 although there need be no fear, in whatever manner the mat- 
 ter may he arranged, that the whole amount of notes or any 
 considerable part of it will be presented at once for redemption. 
 Needless to say, however, that the safe-keeping of this stock of 
 gold will, in the long run, present more difficulty for Russia than 
 did the control of the paper money circulation. At any rate, 
 nobody will assert, that this stock of gold, 1.199.200.000 new 
 roubles = fr. 8.189.872.000 = £ 126.482.000 is in excess of 
 the amount required by Russia to maintain the gold standard ; 
 we may rather expect the country to go on absorbing gold. 
 
 Financial reforms in Austria have not yet reached the same 
 stage as in Russia. Of the 312 million florins (£ 31.200 000) which 
 Austria and Hungary had to pay to the Bank, about one half 
 remains to be paid and it will be necessary to contract loans 
 abroad in order to raise part of that sum. But even when the 
 matter has been settled so far, the stock of gold in the Bank, 
 inclusive of the proceeds of the realisation of its foreign bills, 
 will have risen to no more than 500.000.000 florins (£ 50.000 000) 
 = one milliard crowns, whereas the total of the circulating 
 medium in Austria-Hungary is estimated at about the double of 
 that sum, and the most competent judges hesitate to admit 
 that this stock of gold w<»uld enable the country to resume 
 its specie-payments, or to mahitain them when resumed. ^) 
 
 The conclusion at which we arrive with respect to Russia 
 and Austria-Hungary is as follows: both countries have been 
 enabled by the general coarse of events to take measures 
 ]»reparatory to the resumption of specie-payment while adopting 
 the gold standard. The utmost however they may expect is 
 
 ') Cf. Gntacliten iibiT die Fortfuhrung <ler Valuta Reform in Oesterreich. 
 Gesummelt und heniusgegeben von dor Gesellschaft oesterreichischer Volk- 
 wirthe in AVien; Wien LSiKi; and Dr. Fr. Klein wachtku. Die Entwiekelung 
 des Geld- und AVahrnngswesens in Oeyterreieh-Ungarn nnter der Kegierung 
 des Kaisers Franz .Joseph I, Cernowitz 1S96. 
 
81 
 
 to be placed in the same position as the other countries on 
 the continent of I- urope, viz. they will have the gold standard 
 hut not, beside the subsidiary coin, only gold coin. That 
 Russia is minting large quantities of new silver coin is a fact 
 to which we alluded already. 
 
 From our review of the position of the banks it has ap- 
 peared that nowhere in Europe there is a superabundance of 
 gold, and we need not refer again to the United States after 
 what we said on the subject in the first chapter of this treatise. 
 
 In conclusion, with regard to the recent increase in the 
 gold stock of Europe — inclusive of Russia and Austria — 
 we must not lose sight of the following two facts : 
 
 1". From 1889 to 1895 inclusive the United States has 
 contributed towards this increase to an amount of 243 million 
 dollars (£ 48.600.000), but it has only been under the influence 
 of the silverpurchases under the Sherman Bill and the conse- 
 quent derangement of the monetary situation in the country, 
 that the United States commenced to export gold, for between 
 1880 and 1888 the imports of gold into the United States 
 exceeded the exports by 219 million dollars (£43.800.000), 
 although the home production of gold, during this period, 
 amounted to 297 million dollars (£59.400.000). 
 
 2''. Even exclusive of this gold export from America, the 
 enhancement in the stock of gold in the European countries 
 with the gold standard is not only owing to an increase in 
 the production, but other countries as the Argentine Republic, 
 Brasil, Portugal and Spain, have also contributed towards it 
 for a considerable amount in consequence of the cessation of 
 their specie-payments. This is clearly shown by an examination 
 of the gold movement in the London market during the years 
 1889-1896. 
 
BIMETALLISM. 
 
 We will now endeavour, after the foregoing investigation of 
 the monetary situation in the principal countries of the world, 
 to summarize the conclusions at which we have arrived. 
 
 In the United States there is a fierce struggle between two 
 parties, both advocates of bimetallism, but one of which is 
 desirous, above all, to adopt a monetary system conformable 
 to that of the principal countries of Europe, and to maintain 
 the gold standard so long as bimetallism cannot be established 
 by international agreement, whilst the othur is so averse to 
 the gold standard that it tries to reinstate the free coinage 
 of silver, regardless of the consequences. Besides there prevails 
 a condition of things that cannot possibly last much longer. 
 A refusal on the part of Europe to join the United States 
 in adopting bimetallism will surely result in a great demand 
 for gold in the latter country, or a sudden de])arture from the 
 line of conduct pursued during the last twenty-five years, by 
 an act that would not constitute a reform, but a revolution 
 in the monetary situation, an act that would deprive exchange 
 and trade of their basis. 
 
 Ill Europe there is an ever-spreading tendency in favour 
 of the adoption of the gold standard. This tendency is not 
 confined to Europe alone but thieatens to extend also to 
 the countries of the East; Japan is ah-eady on the point of 
 adopting the gold standard. 
 
 Yet, evMi ill \ho richest and greatest ot the European coun- 
 
83 
 
 tries the monetary situation is at variance with the principles 
 embraced at the outset and is not only itself beset with 
 dangers, but may at any time jeopardize the results already 
 obtained. 
 
 Besides, the displacement of the two metals by gold alone 
 as standard coin, so far as accompKshed, has been rendered 
 possible not exclusively by the increased production of the 
 privileged metal, but also because in the struggle for gold 
 some countries, less rich than others, have wholly or partly 
 succumbed and their fall has enabled the other countries to 
 realize their projects. 
 
 With respect to the general production, the commercial 
 movement and the distribution of wealth, we have just gone 
 through a period of twenty-five years distinguished from the 
 foregoing period by numerous disturbances in the development 
 of general prosperity, by many and varied depressions, the 
 direct outcome of changes in the monetary situation previously 
 obtaining, whilst the immediate future threatens to extend 
 and aggravate the evils already produced, when the same hne 
 of action is followed. 
 
 According to bimetallists the only remedy for this wretched 
 state of affairs consists in the restoration of silver to its old 
 position by the side of gold, by an international adoption of 
 the double standard, when the two metals will be linked to- 
 gether so as to form one universal circulating medium and 
 one universal measure of value. 
 
 Theoretically it cannot be doubted that if this could be 
 brought to pass, the result would answer the expectations, 
 and, to quote our motto again, the great work of civilization 
 of the nineteenth century w^ould be accomplished, nations 
 would be brought together and the products of the whole 
 world placed within reach of all. 
 
 In theory, we say, but in practice? 
 
84 
 
 The struggle between bimetallists and monometallists has 
 already lasted a long time but has been productive of at 
 least one good result, viz. that we need not waste any more 
 words in refuting the arguments of those who fail to see that 
 the term measure, when applied to money, conveys a meaning 
 altogether different frDUi that of the same term when applied 
 to length etc. or in showing the fallacy of the deduction to 
 which this confusion of ideas has led. Neither need we pay 
 any heed to those who seem to believe that bimetalHsts 
 attribute to the State the ])ower to decree a fixed ratio ot 
 the two metals. BimetalHsts have never advocated such an 
 economic heresy; on the contrary, founding their theories on 
 economic laws that are universally admitted, they have 
 demonstrated that, when governments decree that the two 
 metals shall be used together as standard money and 
 adopt a fixed mint-ratio for this purpose — and nobody will 
 deny that this is and should be one of their prerogatives — 
 a fixed ratio of the metals will result therefrom. 
 
 More serious, however, is another objection raised to the 
 theories advanced by bimetallists. There are those who say 
 that the transition from the use of the two precious metals 
 to that of gold alone as a standard coin is one of the many 
 evolutions in the history of commerce that have 'occurred 
 in the course of time; that in consequence of the enormous 
 increase in the production of the precious metals in this 
 century both can no longer be maintained as circulating medium 
 proper; and that silver, having played its r»Me, will henceforth 
 be used only as subsidiary coin, by the side of gold as 
 exclusive standard coin. 
 
 The answer to this objection is apparent; in fact, the 
 objection has no solid t'uiiiKlation ; on the contrary, it rests 
 upon a misconception of the actual situation and is contradicted 
 bv two facts. 
 
85 
 
 In the first place in tlie countries witli tlie limping standard 
 — the United States, Germany, France, the Netherlands etc. — 
 the total volume of specie and bullion consisted in 1895 of: 
 £ 488.860.000 Gold 
 „ 79.580.000 Silver subsidiary coin 
 and „ 275.860.000 Silver coin 
 the last being legal tender to any amount, whence it follows 
 that in the countries, officially under the regime of the gold 
 standard, 36 per cent of the legal tender coin consisted in reality 
 of silver coin, not taking into account the subsidiary coin. 
 
 In the second place, in the commercial world, taken as a 
 whole, silver coin has recently occupied as important a position 
 as gold. (£ 817,360,000 dollars gold and £ 814,100,000 dollars 
 silver), i) 
 
 Now, as far as the latter point is concerned, it is true 
 that in the last twenty-five years the two metals have not 
 been equally distributed, inasmuch as the silver countries 
 have absorbed a larger quantity of bullion than the gold 
 countries. It is equallj^ true that the cause of this has been, 
 on the one hand the great increase in the production of 
 silver and on the other, the closing of the European Mints 
 to the coinage of silver and that the result has been a change 
 in the ratio of the two metals from that existing prior to 
 the seventies. But at the same time it cannot be denied 
 that the stability of the circulating medium in relation to 
 all other commodities has been much greater in the silver 
 countries than in the gold countries. 
 
 The conclusion at which we arrive, after a careful exami- 
 nation of the present situation, is directly opposed to the 
 objections of our adversaries. We contend that silver has 
 
 ') According to the well-known reports of the Director of the Mint in 
 the United States on the distribution of money in the principal countries 
 of the world. We have used the returns for 1895. (§ 5 =: £ 1.) 
 
m 
 
 not played its role as a circulating medium; we contend that 
 if unfortunately the two metals are no longer linked together 
 by a fixed ratio as they were formerly, silver has continued 
 to satisfy, much more than gold, one of the principal require- 
 ments of an efficient money metal, viz. stability of value, and 
 that the only remedy for the evils besetting the monetary 
 situation ot all nations is bimetaUism. 
 
 And if so many men of great reputation and authority, in 
 the first place the leaders of the Enghsh Bimetalhc League, 
 are not discouraged by opposition in their campaign in favour 
 of bimetallism, it is because they are profoundly convinced that 
 the cause they advocate is just; a conviction born of sincere 
 and scientific investigation, the result of which they are constantly 
 comparing with their own observations of the events of the day. 
 
 But, unfortunately, they are still confronted with almost 
 insurmountable obstacles. 
 
 There is, in the first place England, averse to joining an 
 international bimetallic agreement. 
 
 This opposition is based, first, on the contention that 
 the adoption of bimetallism by England will be injurious 
 to her interests and that she can only benefit by the main- 
 tenance of the gold standard owing to the heavy claims she 
 has on foreign countries. Those who argue in that way, con- 
 cede that the purchasing power of gold has increased and 
 may continue to increase as the result of an adherence to the 
 gold standard, but at the same time they maintain that this 
 is an advantage to England which they are unwilling to forego. 
 Among those who use this argument there are some eminent 
 statesmen, yet we can scarcely believe them to be in earnest when 
 advancing this reasoning ; for they must know that, whereas 
 one class will be benefited by the maintenance of the gold 
 standard another will lose thereby. Furthermore, although 
 there may be some truth in it, yet it would be rather inequit- 
 
87 
 
 able. Il cannot be denied that upon the government devolves 
 the duty of determining what shall be legal tender, or 
 that in view of the economic significance of the choice of a 
 circulation medium it is a matter of primary importance that 
 this circulating medium shall have the greatest possible stability 
 of value. Would it not be a gross injustice then, a flagrant 
 abuse of power, to maintain a circulating medium the stability 
 of value of which is admitted to be insufficient, solely for the 
 sake of a few who derive profit from it? 
 
 Another objection raised in England is that the government, 
 if it could no longer determine the circulating medium indepen- 
 dently of other nations, would lose one of its prerogatives. 
 Now, this is exactly the same argument as that of which 
 Bryan availed himself to influence the popular vote, but 
 whether used in America or England, it is equally false. The 
 value of the circulating medium is that of the metal out of which 
 it is coined, and this value does not depend on what a certain 
 country may legislate respecting it, but on the general use 
 that is made of this metal as circulating medium. Besides 
 as the choice of a standard coin is so important in regard to 
 the relations between one country and another, it should not 
 be made by one country alone but in concert with others. 
 Hence no better decision can be taken with respect to the 
 circulating medium than that resulting from international 
 agreement, and the country which refuses to participate in 
 such an agreement will not preserve its independence in 
 regard to its monetary system, but will be dependent on the 
 decision of other nations. 
 
 A third objection, also specially English, rests on fiction, 
 properly speaking. One pound sterling is said to be 123 — 27447 
 grains of standard-gold. But, it may be asked, suppose depo- 
 sitors wished to realize their claims amounting to £ 800,000,000 
 in gold, whence would all this metal have to come? The 
 
88 
 
 fact is, one pound sterling has always had the same valut- 
 as 123-27447 grains of standard-gold; and it will continue to 
 have this value, even if England were to adopt bimetallism. 
 
 Finally it is objected, and great weight is attached to this 
 objection, that England owes her commercial position to the- 
 gold standard, but altliough this has been repeated so often 
 as almost to become an aphorism, yet there is no ground for 
 this assertion, i) 
 
 As a matter of fact the commercial supremacy of England 
 does not date from the adoption of the gold standard by that 
 country, which did not take place till the beginning of this 
 century and the immediate result of which was a period of 
 great depression in trade. II was estabhshed much earlier. 
 The country owes it to its natural resources, its geographical 
 situation and the energy of the population ; to its enormous 
 trade and the vigorous growth of its industries; in no small 
 degree to its great wealth of capital thereby accumulated, in conse- 
 quence of which the English have become the bankers and money- 
 lenders of the whole world, and last not least, especially in the 
 latter half of this century, to its adoption of free-trade. Moreover. 
 in regard to the monetary question it must be admitted 
 that England, more than any other country, would be benefited 
 by international bimetallism, because this and nothing else 
 will secure the stabihty of foreign exchanges, which is so 
 essential to English bankers, whose business relations extend 
 over the whole world. 
 
 But although there is no ground for the objections raised 
 by England, it is but too true that they are shared by 
 a great many people, and as long as the opposition in that 
 country to an international bimetalhc agreement continues so 
 strong it renders it impossible. I therefore feel inclined 
 
 -) Cf. Lord Aldkniiam. TIr' Empire an.l tin.' CloUl Staudanl in tlie 
 National Review, October 1890. 
 
to ask if the co-operation of England is really indispensable 
 for such an agreement. 
 
 For my part, I do not think that the fact of England 
 standing aloof from a bimetallic arrangement would be an 
 insurmountable obstacle, provided other nations made common 
 cause, though at the same time I wih not deny that if with 
 the co-operation of England success would be secured at once, 
 without it, it wih be rather doubtful. 
 
 There are two reasons for this; in the first place because 
 of the preponderance of England as a commercial nation and 
 the unique position which London occupies as a bulhon market, 
 and, secondly, because, in case England should hold off, the prin- 
 cipal commercial nations would not all have the same standard, 
 and such countries as would be prevented, for the moment, 
 from joining a bimetalhc agreement, those under the regime 
 of paper money, for instance, would afterwards have to make 
 their choice and to side with one party or the other. 
 
 But, it WÜ1 be said, England "blocking the way" is not the 
 only obstacle; the numerous monetary conferences which have 
 been held have led to no results ; why then pursue the chimera 
 of international bimetalhsm any longer when, to mention only 
 one point, it will never be possible to agree on the ratio of value? 
 
 It is my behef that people who reason thus have lost courage 
 too soon. 
 
 We should be the last to recommend another monetary 
 conference on the same hues as those that met on former 
 occasions, not because they have not been useful, far from 
 it; they have unquestionably thrown much hght upon the 
 matter, but we may now consider the question sufficiently 
 elucidated and we expect no further results from other inter- 
 national academical debates in which only the same ground 
 would be gone over again and again. We want something 
 more practical now. 
 
00 
 
 What is required now is a conference composed of delegates 
 from the principal countries of Europe and from the United 
 States, who should be instructed by their respective govern- 
 ments to draw up plans for an international agreement, \Nithout, 
 however, binding in any way the governments they represent; 
 the only object being to enable the delegates to give expression 
 to their views as to the conditions on which such an agreement 
 could be arrived at. 
 
 Of course only such delegates should be sent as are avowed 
 advocates of bimetaUism; their business should be to discuss, 
 not the desirability of the adoption of the system, but the 
 possibility of applymg it. At the same they should be government- 
 delegates, because they should have to take part in the debates 
 not only for the purpose of discussing the desirability of the 
 adoption of a certain system, but rather the practicability of 
 such a system in view of its adoption by their respective 
 governments. Therefore, while receiving only limited instructions, 
 it would be necessary for them to enjoy the confidence of their 
 governments and represent them officially, to a certain extent 
 at least. 
 
 In this manner, we think, we should at least get a basis 
 to work upon ; the details of the agreement might be arranged 
 afterwards by diplomatic action, and in this way a definite 
 solution of the question might be ultimately attained. 
 
 It would be out of place here to enter into details as to 
 what should be the programme of such a conference; the 
 following, however, will show how useful such a conference 
 might be. 
 
 One of the motives by which England is actuated in op- 
 ] losing an international bimetallic convention is an aversion 
 to the introduction of silver standard coin into the home 
 circulation. At the Monetary Conference, held at Brussels, 
 the English delegate Sir W. H. Houlpsworth directed 
 
91 
 
 attention to a proposal made by Huskissox, which, according 
 to him, might be the basis of a system by which England 
 would be enabled to join a bimetallic union without chan- 
 ging her home circulation. A similar proposal was afterwards 
 made by the great Duke of Wellmgton. Besides it has been 
 repeatedly pointed out that such a result might be attained 
 if the rupee were admitted, subject to certain conditions, to 
 the circulating medium used in England. Now, a conference 
 conducted on the lines laid down by us, might examine whether 
 by such an expedient it could be rendered easier for England 
 to join an international convention, without losing sight of 
 the primary object of such a convention. 
 
 We will now say a few words on the question of the ratio 
 of value. It vv^ill be remembered how in 1895 there arose a 
 controversy on this question, in consequence of some letters 
 inserted by Lord Farrar in The Times^ under the heading 
 "Wanted a Ratio." The noble lord, however, opened the 
 discussion at a point which should have been its conclusion. 
 The thing that was wanted then, as it is wanted now, was 
 not in the first place "a ratio" but the wihingness to come 
 to an agreement on some ratio. The question as to what 
 this ratio will be cannot be brought up for discussion so long 
 as no decision has been taken yet in favour of such an 
 agreement. 
 
 There are several reasons for this ; in the first place be- 
 cause the ratio will in some degree depend on the circumstances 
 of the moment, and secondly because this decision will have 
 to be more or less of the nature of a compromise, for not 
 only general interests will have to be considered but also the 
 special interests of the several countries concerned. 
 
 Now, a conference as proposed by us would afford ample 
 opportunity for discussing this side of the question and of 
 proposing measures to settle this point. 
 
92 
 
 In the meantime, however, all those who are interested in 
 the subject will no doubt give it their serious attention. 
 
 Weighty arguments will undoubtedly be brought forward 
 against a return to the old legal ratio of I5V2 to 1. For 
 though there is a very considerable quantity of silver coin in 
 circulation, the nominal value of which is maintained at that 
 ratio, yet the present ratio of value between the two metals 
 has deviated from it to such an extent that a return to the 
 old ratio would be attended with great difficulties. Besides, 
 it would not be fair. To be sure, the falhng off in the gold 
 price of silver has caused heavy losses, but these losses are 
 for the greater part irreparable, and since this falling off, so 
 many financial engagements have been entered into on the 
 basis of ratios other than ISVo to 1, that it would be most 
 unjust not to take this into account. 
 
 On the other hand arguments no less weighty will be put 
 forward against a contingent establishment of the legal ratio 
 on the basis of the present gold price of silver. 
 
 In his Madison Square Garden Speech while advocating the 
 maintenance of the old American ratio of 16 to 1, Bryan 
 asked what would happen supposing, for example, this ratio 
 were raised by international agreement to 82 to 1, and pointed 
 out how detrimental would be the consequences of such a 
 measure. We believe that no one would over propose such 
 a measure. For of the 4000 million dollars of silver money, at 
 present in circulation, according to the estimateof the Director 
 of the Mint of the United States, about one half is found in 
 the silver countries; the other half in countries with the gold 
 or the limping standard at the ratio of löVa to 1. If all this 
 silver money were melted down and re-minted, say at the ratio 
 of 31 to 1, the result would be a contraction of the present 
 currency that might be estimated at 1000 million dollars, and 
 this would eventuiiti' in a considerable incrcasi' in the pur- 
 
93 
 
 chasing power of money, a very singular manner, indeed, of 
 inaugurating a general monetary reform one of the principal 
 objects of which should be the prevention of such an increase. 
 
 On the other hand these same figures show that a return 
 to the old ratio would entail an increase in the circulation 
 equally considerable, and under the circumstances this would 
 be no less undesirable. 
 
 As I said before, the best thing to be done will be to wait 
 till the time arrives for dealing with the ratio of value, and 
 then it will have to be considered seriously what may be the 
 results of a decision on this head. 
 
 Of course, among other things, regard may be paid to 
 the probable influence of this decision on the present produc- 
 tion of the two metals and besides, as has been rightly 
 observed by Professor Lexis in his essay on the monetary 
 question recently pubhshed, to the influence which the ratio 
 to be adopted is hkely to exercise on the future distribution 
 of these metals in the circulation of the different countries, i) 
 
 With regard to this point it is to be observed, that the 
 consummation to be wished for would be the restoration of 
 silver to its old position in the general circulation of money 
 by the side of gold ; and therefore care should be taken that 
 no situation be created that might lead to one of the two 
 metals being superseded by the other. Let us suppose that, 
 at a given moment, the ratio of 20 to 1 were decided upon, 
 the question then arises what influence would the present 
 production, after the lapse of a certain time, exercise on the 
 general distribution of the two metals? We observe, in 
 passing, that according to a provisional estimate of the pro- 
 duction in 1896, it amounted to 161 million oz. of silver and 
 10 million oz. of gold ; i. e., sixteen times as much silver as 
 
 1) Cf. Prof. W. Lexis. The Present Monetary Situation; in the Economic 
 Studies, pubhshed by the American Economic Association, I. No. 4. 
 
94 
 
 gold, which shows that there is nothing abnormal in a ratio 
 of 16 to 1 between gold and silver. However we must, of 
 course, not attach too much weight to the returns tor one 
 year only and our calculations should be based on more 
 elaborate data; but the only object we had in view when 
 directing attention to these figures was to show where lies 
 the gist of the question and not to discourse on it at large. 
 
 It is not our wish to pronounce an opinion here as to what 
 the ratio of value to be adopted could or sliould be ; we repeat 
 that, at the present moment, we consider all discussions on 
 this subject as premature. In laying down the foregoing 
 observations our only object has been to point out some 
 questions that will be a matter for debate when the time 
 shall have arrived for their discussion, and to illustrate our 
 contention that the etablishment of a ratio of value is still 
 an open question. 
 
 It is to be hoped that when the question uf the ratio of 
 value shall be brought up for discussion, none of the parties 
 who will have to partake in it will be so prejudiced by their 
 own preconceived opmions on the subject as to render a prac- 
 tical decision impossible. We consider this to be an absolute 
 condition for securing the success of any debate on an inter- 
 national agreement. 
 
 But whether, for the solution of the monetary question, a 
 conference such as we have suggested is held, or whether some 
 other measures are adopted which may seem more practical, 
 a profound deliberation on the question by the chief com- 
 mercial countries and an attempt to solve it by the adoption 
 of the only efficacious remedy — international bimetalhsm — 
 is a most urgent necessity. Time presses, delay may be 
 dangerous. 
 
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