If Not Silver, What? Part 3

Consider the following facts, which I have condensed from Mulhall: In 1800 the total yearly international commerce of the world was estimated at $1,510,000,000. Forty years later it had only increased 90 per cent., amounting in 1840 to $2,865,000,000, and in that year there were in all the world but 4,315 miles of railroad and no electric telegraph. The total horse-power of all the steams.h.i.+ps of the world was but 330,000, and the carrying power of all the s.h.i.+pping but 10,482,000 tons. To-day the international commerce of the world is almost $20,000,000,000, and increasing at the rate of $1,000,000,000 per year; there are in the world over 400,000 miles of railway and a very much greater mileage of magnetic telegraph, including 14 intercontinental cables; the ocean tonnage of Great Britain alone is very much greater than was that of the whole world in 1840; and tremendous as this increase of international trade has been, it is the merest trifle compared with the increase of the internal trade in several of the greater nations.

What then has caused the "great depreciation"? Nothing has caused it.

There has been but a trifling depreciation indeed. It is as clearly proved as anything unseen can be that if the nations had left silver and gold as they were in 1870, both would have gained materially in value, that is, in the power to command commodities, because of the vastly greater relative increase of the latter; but by demonetization all the increase has been concentrated in gold, leaving silver almost exactly as it was. At present, however, I devote myself to the question whether there has been such an increase in the production as would normally cheapen it. On this point we have evidence to convince any unbiased mind, for the relative production of silver and gold has in former ages varied very much more than in the last twenty-three years, and the variation has extended over much longer periods, without causing more than the most trifling divergences in value.

And the explanation is simple: the two metals received equal recognition at the mint and in legal tender laws; the greatly increased use of the cheaper maintained its value in coinage, while disuse of the dearer tended equally to check its appreciation. In this sense government can "create value" by creating a use.

From 1660 to 1700, for instance, the production of silver averaged in value much more than twice that of gold, and in quant.i.ty some thirty-three times as much; yet all those years, the highest mint ratio was 15.20 to 1 and the lowest 14.81--a variation in money value of but .39 or 2.6 per cent. From 1701 to 1760 inclusive, the proportion of gold produced gradually rose from a little over a third to 40 per cent. in values, yet the money ratio remained remarkably constant, the highest being 15.52 of silver to 1 of gold and the lowest 14.14. In other words, for sixty years there were produced on an average about 28 ounces of silver to 1 of gold, yet the widest variation of their money values in all those years was less than 9 per cent. In the face of such facts as these, we are asked to believe that while an average of over 30 ounces to 1 created an average variation of less than 6 per cent., and a greatest variation of less than 9 per cent., a production of some 20 ounces to 1 since 1882 has created a variation of 100 per cent. And that the variation began nine years before the value production of silver exceeded that of gold! It is an affront to our common sense.

[Ill.u.s.tration: The above diagram shows the relative annual production of gold and silver from 1493 to 1870, and also average ratio of values of the two metals.]

I should say, at this point, that my figures are taken from the latest, and in my opinion the most scholarly work in favor of monometallism, "The History of Currency," by Prof. W. A. Shaw, Fellow of the Royal Historical and Royal Statistical Societies. As the ratio between silver and gold varied considerably in the different marts of Europe, I follow his plan (which is Soetbeer's) of taking it as it stood at any particular time in the city which might then be called the greatest commercial centre, whether Venice, Hamburg, Antwerp, or London. His history comprises the entire period from 1252 to 1894. It is only fair that I should also give his explanation of the stability of the metals, which is extremely interesting.

He begins his second chapter with the statement that the discovery of America was "the monetary salvation and resurrection of the Old World"; that it was a time of unexampled increase in the precious metals and equally unexampled rise of prices, but there was also "feverish instability and want of equilibrium in the monetary systems of Europe." He shows how the first great import was of gold, which began to affect prices in 1520; how this was followed by a very much greater increase in silver, and how, while prices were rising so rapidly as to stimulate trade and incidentally do damage by causing great fluctuations, yet there must have been some great regulator preventing the evil which we should _a priori_ have expected. He finds it in the fact that Antwerp had taken the place of Venice and Florence, and conducted a great trade with the far East. His language is: "The centre of European exchanges--Antwerp in the sixteenth century as London to-day--has always performed one supremest function, that of regulating the flow of metals from the New World by means of exporting the overplus to the East. The drain of silver to the East, discernible from the very birth of European commerce, has been the salvation of Europe, and in providing for it Antwerp acted as the safety-valve of the sixteenth century system as London has done since. The importance of the change of the centre of gravity and exchange from Venice to Antwerp, therefore, lies in this fact. Under the old system of overland and limited trade, Venice could only provide for such puny exchange and flow as the mediaeval system of Europe demanded; she would have been unable to cope with such a flood of inflowing metal as the sixteenth century witnessed, and Europe would have been overwhelmed."

Professor Shaw argues that without the Eastern safety-valve Europe would have been ruined by an excess of the precious metals, that India furnished the needed reservoir--did she not take gold as well as silver?--and that Venice was so far limited to an overland trade that she could not have performed the function Antwerp did. Later he sets forth the current monometallist position that the nations are now as one in trade and the interchange of the precious metals, and therefore even the partial equilibrium of the sixteenth and seventeenth centuries could not be maintained. Let us, then, bring the figures down to the present, and it will be found, I think, that the farther down we come the weaker does the monometallist contention appear.

The improved, more extended, and more intimate intercourse of the nations brought about by the introduction of steam, electricity, and other agencies tends to minimize the fluctuations of the two metals, and indicates that the divergences of the metals in mediaeval times was due rather to the want of speedy, easy, and certain intercourse and communication of the nations than to an innate commercial tendency of the two metals to diverge. Had the same intimate and speedy commercial relation existed between the nations of the world in those times as now exists, the equalizing tendencies of trade would evidently have prevented not only the ratio of divergence to which the metals attained at different periods, but would have prevented a difference of ratio existing between the different nations at the same period of time.

From 1761 to 1800, inclusive, the relative production of gold decreased steadily, until it was but 23.4 per cent. of the total value, to 76.6 per cent. of silver. In other words, there were for many of the later years over 50 ounces of silver produced to 1 of gold, and yet the ratio stood long at 15.68 to 1. This is almost exactly the ratio fixed by Hamilton and Jefferson, fixed because of its long-continued maintenance in European markets. During these forty years the production of silver in proportion to gold was never for even one year as low as the highest proportion of any year since 1873, and yet the money value only varied from 14.42 to 15.72, or a fraction over 8 per cent. In the face of such figures as these, the change in relative production since 1873 seems too trifling to be taken into account, especially since in that year and some time after the value production of gold at 16 to 1 was much the greater, nor was it till 1883 that the world's silver product exceeded that of gold.

In 1800-10 the annual production of gold was $12,069,000 and of silver almost exactly $39,000,000, or some 50 ounces to 1; yet the highest ratio was 16.08, and the lowest 15.26. This relative production changed very slowly, and in 1831-40 of the total in values produced 34.5 per cent. was gold and 65.5 per cent. silver.

That is, there were, for ten years, about thirty times as many ounces of silver mined as of gold, and during these years the change in the ratio was so minute that it can only be calculated in small fractions of 1 per cent. In 1841-50, for the first time since the middle of the sixteenth century, we find the production of gold the greater, that metal being 52.1 per cent. of the total product, and silver but 47.9 per cent. During the decade the lowest value ratio of silver to gold was 15.70, and the highest 15.93, a variation of only 1.4 per cent. Then California and Australia poured out their wonderful golden flood, and all the world was changed. In 1851-55 the gold yield was 77.6 per cent. of the total, and the silver yield 22.4, and for the next five years the change was but .2 of 1 per cent. In other words, during those ten years the average annual yield of silver was less than 5 ounces to 1 of gold; so if the "overproduction theory" laid down by the _Times_ were correct, gold should have lost--well, at least 70 per cent. of its value in silver. The actual variation was from a ratio of 15.98 to one of 15.46, or a relative depreciation of gold of considerably less than 3 per cent. Now, it is alleged by many who have made a study of prices during that period, that in actual value gold depreciated 25 per cent.; so it is plain that it carried down silver with it, and the only logical explanation is that the mints were equally open to both.

We have seen that in all the century and a half when the mines were pouring forth silver at the rate of from 20 ounces to 1 of gold up to 55 ounces to 1, the greatest variation in their value was less than 9 per cent., and in the twenty years when the silver production was to that of gold as less than 5 ounces to 1, the value of gold produced being more than three times that of silver, their money value varied less than 3 per cent., and yet we are coolly asked to believe that since 1873 silver is to be rated among variable commodities like potatoes, the size of the crop each year determining the value. Monometallists have had much to say about the relative cheapness of gold during those years, and have laid much stress upon the fact that it was an era of great prosperity and rapid development, with rise of wages and the prices of farm produce. In this argument they admit three things: that we have a moral and const.i.tutional right to use the cheaper metal at any time; that we did use gold for all those years simply because it was easier to pay debts with it, that is, it was cheaper, and that the use of the cheaper metal aided greatly in making prosperity. That is all that any bimetallist claims. As the entire burden was not then thrown upon silver, we claim that it should not now be thrown upon gold, doubling or trebling the rate of its advancing value; and as the privilege to use the cheaper metal then checked the advance of the dearer and enhanced prosperity, we insist that the system of that time shall be restored.

The subsequent figures are equally convincing. In 1861-65 the gold products were 72.1 per cent. of the total, the silver 27.9 per cent., the variation in ratio from 15.26 to 15.44. In 1866-70 the production stood 69.4 to 30.6, the variation in ratio 15.43 to 15.60. In 1871-75 production was still 58.5 to 41.5, but the variation in coin value was from 15.57 to 16.62. That something had happened quite aside in its effects from relative production was evident, but the people did not find out what it was till late in 1875. At the time the demonetization act was pa.s.sed, the ratio was still 15.55 to 1, and one of the reasons given for the act of February 12,1873, was that the silver dollar was worth $1.03 in gold; yet before the close of that year, and before it was known that there was to be any great increase in the product of silver, its relative value ran down till it was below that of gold. Can any one doubt the cause? Surely not if he observes the additional fact that the relative decline of silver continued despite the greater value production of gold, and that 1882, ten years after demonetization, was actually the first year since 1849 in which the world's production of silver exceeded that of gold. What one hundred and ninety years of continuous and often enormous relative overproduction of silver had not done, ten years of demonetization had accomplished, and that while the relative supply of gold was still the greater. Is it possible to miss the real cause? Is there in Euclid a demonstration more conclusive?

[Ill.u.s.tration: The above diagram shows the relative annual production of gold and silver from 1870 to 1893, and ratio of values.]

Monometallists have exhausted the resources of verbal gymnastics to make these figures fit their theories. Determined not to admit that demonetization was the cause, they have given so many explanations that, expressed in the briefest words, they would cover many pages like this.

The first was that the opening of the "Big Bonanza" on the Comstock lode had given notice that silver was coming in a flood; but that was only for popular use in this country. Scientific men knew that to be a rare find indeed, not likely to occur again for centuries. The next explanation was that China and India, so long the reservoir into which the surplus flowed, had ceased to absorb it; and the next, demonetization of silver by Germany and her throwing her old silver on the market. And with this the people began to get at the true reason--the general demonetization by so many nations.

The following table gives the annual production of gold and silver from the discovery of America to and including the year 1892; and the highest and lowest ratio of silver to gold from 1681 to and including the year in which silver ceased to be in this country primary money:

YEARS. GOLD. SILVER. RATIO.

1493-1520........ $3,855,000 $1,953,000 1521-1544........ 4,759,000 3,749,000 1545-1560........ 5,657,000 12,950,000 1561-1580........ 4,546,000 12,447,000 1581-1600........ 4,905,000 17,409,000 1601-1620........ 5,662,000 17,538,000 1621-1640........ 5,516,000 16,358,000 1641-1660........ 5,829,000 15,223,000 1661-1680........ 6,154,000 14,006,000 1681-1700........ 7,154,000 14,209,000 14.81-15.20 1701-1720........ 8,520,000 14,779,000 15.04-15.52 1721-1740........ 12,681,000 17,921,000 14.81-15.41 1741-1760........ 16,356,000 22,158,000 14.14-15.26 1761-1780........ 13,761,000 27,128,000 14.52-15.27 1781-1800........ 11,823,000 36,534,000 14.42-15.74 1801-1810........ 11,815,000 37,161,000 15.26-16.08 1811-1820........ 7,606,000 22,474,000 15.04-16.25 1821-1830........ 9,448,000 19,141,000 15.70-15.95 1831-1840........ 13,484,000 24,788,000 15.62-15.93 1841-1850........ 36,393,000 32,434,000 15.70-15.93 1851-1855........ 131,268,000 36,827,000 15.33-15.59 1856-1860........ 136,946,000 37,611,000 15.19-15.38 1861-1865........ 131,728,000 45,764,000 15.26-15.44 1866-1870........ 127,537,000 55,652,000 15.43-15.60 1871-1872........ 113,431,000 81,849,000 15.57-15.65 1873............. 96,200,000 81,800,000 1874............. 90,750,000 71,500,000 1875............. 97,500,000 80,500,000 1876............. 103,700,000 87,600,000 1877............. 114,000,000 81,000,000 1878............. 119,000,000 95,000,000 1879............. 109,000,000 96,000,000 1880............. 106,500,000 96,700,000 1881............. 103,000,000 102,000,000 1882............. 102,000,000 111,800,000 1883............. 95,400,000 115,300,000 1884............. 101,700,000 105,500,000 1885............. 108,400,000 118,500,000 1886............. 106,000,000 120,600,000 1887............. 105,000,000 124,366,000 1888............. 109,900,000 142,107,000 1889............. 118,800,000 162,690,000 1890............. 118,848,700 172,234,500 1891............. 126,183,500 186,446,880 1892............. 138,861,000 196,458,800

Thus we see that, for twenty-seven years after the discovery of America, the gold production was double that of silver; for the next eighty years the production of silver was considerably more than double that of gold; for the next one hundred years the production of silver was more than 2-1/2 times that of gold, and for the next century and a half, to wit, from 1701 to 1850, inclusive, despite the fact of the tremendous gain of gold in the last few years, the production of silver fell but little short of twice that of gold. And yet, the variations in coin value were of the trifling character previously stated. When taken by shorter periods, the argument is still more startling. Thus in 1801-20 the production was almost exactly 4 of silver to 1 of gold; for the next twenty years a minute fraction less than 2 of silver to 1 of gold; for the next twenty 2-1/2 of gold for 1 of silver; and for the next twenty nearly 2 of gold for 1 of silver, while during these awful years since 1873, in which there has been so much said about the "flood of silver," its production has never once been twice that of gold, and for the entire period has exceeded it by the merest trifle. Is it any wonder that Dr. Eduard Suess, the great German authority on the metals, and Professor of Geology at the University of Vienna, concluded his recent work with these strong statements:

"Present legislative inst.i.tutions are at variance with the conditions established by nature. Even now agriculture and in part industry in Europe are sorely at a disadvantage against silver countries such as India and Mexico. The advantage of this situation accrues in England to the holders of interest-bearing notes, the productive value of which increases with the growing scarcity of gold.... As soon as the figure 23.75 shall have been reached, all gold obligations will have increased in value one-half; but nothing prevents that figure from rising to 31. [It has since risen even above that.] ... You say a regulation cannot be international, but you overlook how long the ratio of 1 to 15-1/2 was upheld and worked beneficently. We wish, say the London bankers, to receive our interest in gold and not in depreciated silver; but silver would not be depreciated the moment an agreement went into effect. Why, you ask, shall we cast such profit into the hands of the owners of silver mines? Remember that you are now casting the same profit into the hands of the owners of gold mines and was.h.i.+ngs. No man would lose by rehabilitation, and the whole world would be richer.... Europe is laboring under a grave delusion. The economy of the world cannot be arbitrarily carried on in the hope that somewhere a new California, and at the same time a new Australia, will be found whose alluvial lands will give relief for a decade. ... The question is no longer whether silver will again become a full value coinage metal over the whole earth, but what are to be the trials through which Europe is to reach that point."

At this point it seems to me well to present the figures of relative production for the last century in a more compact shape, with a view to bringing out the contrast:

Silver produced 1792-1850............ $1,690,217,000 Gold produced........................ 848,186,000 Excess of silver production.......... 842,031,000

Gold produced 1850-73................ $2,724,825,000 Silver produced...................... 1,150,025,000 Excess of gold....................... 1,574,800,000

Gold produced 1873-92, inclusive..... $2,060,897,000 Silver produced...................... 2,264,419,000 Excess of silver..................... 203,522,000

Gold produced 1850-92, inclusive..... $4,785,722,000 Silver produced...................... 3,414,444,000 Excess of gold....................... 1,371,278,000

Gold produced 1792-1892, inclusive... $5,633,908,000 Silver produced...................... 5,104,961,000 Excess of gold....................... 528,947,000

Thus are we confronted with the truly startling paradox that during all the century and a half when the production of silver was nearly twice that of gold, and the two centuries back of that when it was more than twice, the variation in coinage value never rose to 9 per cent., and for many years at a time corresponded with the ratio set by the mint; but at the end of a century during which the gold production was half a billion greater than that of silver, and at the end of half a century when it was nearly a billion and a half greater, the really scarcer metal has declined in terms of the other nearly one-half! And all this, the monometallist tells us, because there has been an excess of silver produced amounting to less than a quarter of a billion in twenty-three years. Belief in such a proposition would indeed be a triumph of faith over figures. And to add to the trial of our faith, we find, on bringing the figures down to the close of the year 1895--and we cannot bring them later on account of official slowness--the amounts of silver and gold in the world, as presented in values at our ratio, are almost exactly equal, the greatest divergence claimed by the most extreme monometallist being 16-3/10 ounces of silver to one of gold!

I do not indulge the hope that the figures herein presented will affect the opinion of any p.r.o.nounced monometallist. There seems to be a mysterious power in gold which blinds the eyes to deductions from statistics and experience; the internal conviction of the monometallist that gold stands still while everything else changes in value resists all logic. In this country, that is. In England, where it has not become a political question, and no one is interested in denying the facts, monometallists almost universally concede the appreciation of gold and defend monometallism on that ground. It is to the laboring producers of the United States, still open to conviction, that I present these figures, which to me seem absolutely conclusive.

IS BIMETALLISM PRACTICABLE?

Can this great nation coin silver and gold on the same terms, at the ratio of 16 to 1, and maintain a substantial parity?

This question, like all others in political economy, may he argued theoretically or on the basis of actual experience. The monometallists say that one metal or the other always has been and always will be the cheaper at any ratio; that if both be freely coined, the dearer will be more valuable as bullion than as money, and will therefore go out of use. They say that, in spite of all devices to the contrary, we must have monometallism any how, and always on the basis of the cheaper metal.

The bimetallist replies that such is, in truth, the natural tendency; but when the dearer metal is thrown out of use as money it thereby becomes cheaper, and as the cheaper metal must take its place, a vastly greater demand for it is created, and so it becomes dearer; thus an alternating action keeps the two near a parity, provided that the ratio corresponds nearly with the relative amounts of the two metals in the world's stock.

They claim that the world has thus a far less fluctuating standard of value than it ever can have with one metal alone.

The monometallist rejoins that this is "all theory." This brings both parties to the test of experience, and by common consent the experience of France in the seventy years from 1803 to 1873 is taken as the best practical test. At first view, it would seem as if the matter could easily be settled, as the time is so recent that there could be no great obscuration of the history; but on inquiry a determination of the real facts is found to be no such simple matter, and as the disturbance of natural law by war and other causes was almost constant, both sides find enough in the facts to make a basis for their respective contentions. Let us then consider this history.

Napoleon Bonaparte became First Consul and practically ruler of France in 1799, and at once addressed himself, with his usual energy, to the task of establis.h.i.+ng a stable monetary system. He found that in 1785 Calonne had established the ratio of 15-1/2 of silver to 1 of gold, and that it had worked reasonably well. He accepted it, therefore, as justified by experience, and his Finance Minister carried through the Council of State an act for the free coinage of both metals at that ratio. For seventy years this law stood practically unchanged, and it is speaking with great moderation to say that in those seventy years there occurred more disturbance of every kind unfavorable to the maintenance of a ratio than in any other seventy years in monetary history. France was twice conquered, her soil overrun, and her capital held by the enemy. She four times changed her form of government. Once she was subjected to the payment of enormous war expenditures, and again not only to the payment of still greater expenditures but to a fine exceeding in amount the largest sum of gold ever held in the United States. During a large part of this time the world's production of silver was in excess of that of gold to an extent very much greater than it has been in recent years, and then, after a very brief interval of something like equal production, there was a sudden and tremendous increase in the production of gold until it exceeded that of silver more than 3 to 1 in value. During these years, also, several of the neighboring nations, including seventy million people, demonetized gold and threw the whole burden of sustaining its equality on the continent of Europe upon France, and during another portion of the time there were monetary disturbances so far-reaching that they shook the foundations of credit in every civilized country in the world. And yet, through all these convulsions, France for seventy years maintained a substantial parity, by welding the two metals together for monetary purposes.

The contrasted figures are simply amazing. In the decade of 1811-20 there were produced 47 ounces of silver to 1 of gold, and yet the market ratio outside of France never stood higher than 16.25 to 1. In the decade of 1821-30 the production was 32 ounces to 1 and the average ratio 15-80/100 to 1. In 1831-40 the production was 29 ounces to 1 and the average ratio 15-75/100 to 1. In 1841-50 the production was 14-9/10 ounces to 1 and the average ratio 15-83/100 to 1. The demonstration is as complete as that of any proposition in Euclid. In spite of the enormous overproduction of silver, the maintenance of the mint ratio in France held the two so nearly together that in three years out of four the difference in other countries only amounted to the cost of transporting the silver to the French Mint and of coinage.

[Ill.u.s.tration: The above diagram shows the relative annual production of gold and silver during the bimetallic period in France. The ratio given is the commercial ratio, that of the mint being 15.50 to 1. Note the marvellous steadiness of the commercial ratio and contrast it with the enormous fluctuation in the relative annual production of the two metals during this period.]

To this should also be added the fact that French coins would have a slightly less value in other countries than the coins of those countries, but it is not easy to estimate the sentimental difference this would make.

From the enactment of the law of 1803 to the limitation of the coinage in 1875 France coined 5,100,000,000 francs of silver and 7,600,000,000 francs of gold, or $1,020,000,000 of silver and $1,520,000,000 of gold, very nearly, or 40 per cent. of the total amount of silver and 33 per cent. of the total amount of gold produced in the world during those years.

It is further to be noted that, whether gold or silver was the dearer metal at the ratio of 15-1/2 to 1 at any given time, France at that time had more of gold and silver per capita than any country in the world, and that, despite the enormous inflow of the cheaper metal, she held the dearer and absorbed what now seems an astonis.h.i.+ng amount of the cheaper.

Thus, in 1822 the imports of silver into France exceeded the exports by 125,000,000 francs, and in 1831 the amount had risen to 181,000,000 francs, and then it fell off and did not reach the latter sum again until 1848.

On the other hand, in the eight years 1853-60 there was a net import into France of gold to the value of 3,082,000,000 francs, or $616,000,000; and in the same years a net export of silver to the value of 1,465,000,000 francs, or $293,000,000. Thus in the short s.p.a.ce of eight years France had made monetary, or, rather, metallic transfers amounting to $909,000,000, and that without a quiver of her financial system, and scarcely a perceptible trace of the effects of that financial storm which swept America, England, and Central Europe with such destructive fury in 1857-8.

It further appears that, despite the enormous import of gold, the subsequent export was comparatively small, and thus, such was the wonderful absorbing power of the nation under the free coinage law of 1803, that France came out of each successive financial storm with an increased stock of the precious metals, and more than once has the Bank of England been compelled to apply to France for the specie to arrest a destructive panic growing out of an insufficient amount of coined money upon a safe basis and an overissue of supplemental or faith money.

By the year 1860 it was supposed that the danger of the world being "flooded with gold" was substantially over; and during that decade France not only sustained the double standard single-handed and alone, but did it against the tremendous pressure due to the demonetization of gold in Austria, Germany, and other countries. It is not possible to say with certainty how far gold would have cheapened, or, to speak in the current language, how high the ratio of silver would have become, had France during the decade abandoned her bimetallic system; but it is certain that the disproportion would have been enormous, undoubtedly very much greater than the present disproportion in the market between silver and gold, resulting from the demonetization of silver. M. Chevalier gave it as his opinion that the ratio would sink at least as low as 8 to 1, that is, that gold would be worth but half what it was rated at in relation to silver in the American coinage, and this he believed would certainly happen, despite the power and willingness of France to maintain the old ratio. He did not venture to say how low the ratio would sink if France abandoned her policy, but he evidently looked forward to a time when gold would be practically too cheap for money.

Years afterward, in writing as a philosopher rather than an advocate, he took more rational ground, and compared the action of France to that of a parachute which r.e.t.a.r.ded the fall of gold. The maximum effect of the enormous gold inflation of 1848-65 was to create a disturbance of less than five per cent. in value of the metals in countries outside of France.

During all the years that the law of 1803 was in practical force the variations as shown by a diagram seemed but trifling, despite the enormous over-production of silver for many years and of gold for many other years, and yet, immediately after 1873, although ten years were yet to elapse before the world was to produce silver in excess of gold, almost instantly the diagram shows the downward trend of silver far, far in excess of any previous experience.

How was it through all these years with the industrial and financial condition of France? It would indeed be little to the purpose to prove that she had maintained the metals at a parity by free coinage, if, in the meantime, her people had suffered loss. Monometallists tell us that not only is bimetallism impossible, but that the attempt to maintain it is in every way hurtful, in fact, disastrous. They point us to the fact that England is the clearing house of the world; that those whose currency is not a.s.similated to that of England are subjected to enormous losses in the exchange, resulting from fluctuations; that by attempting bimetallism a nation puts itself in the second or third rank, and that the results are in every way bad. Well, all those conditions applied to France. She, like the United States, may be considered as regarding England in the light of the world's clearing house, and her currency may be said to have fluctuated, as they declare ours would, with bimetallism. What, then, have been the general results to France? What effect has it had upon her commercial, social, and industrial development? On this point let us return thanks that the testimony is universal. No other nation in the world has made such stupendous progress in the general improvement of her people as France has made since 1803. No civilized country probably had sunk to such depths of popular misery as had France at the beginning of her revolution, and we can hardly believe that the subsequent fourteen years of war and internal turmoil had greatly improved her condition when the policy of 1803 was adopted.

[Ill.u.s.tration: The above diagram shows the course of the commercial ratio of the values of gold and silver during the bimetallic period of France.

The upper dotted line (A) shows the extreme high limit of ratio, and the lower dotted line (C) the extreme low limit reached from the years 1803 to 1873. The central line (B) is the mint ratio of 15.50 to 1 fixed by the French Government in 1803. The variable line (D) is the commercial ratio of the values of the two metals during that period. Note the slight variation in this ratio from 1803 to 1873, during which time the bimetallic action of the French law was operative, and then contrast it with the sudden and swift descent of the ratio after the demonetization of silver by the various nations in 1873 and 1875.]

Bimetallism and a rigid adherence to a specie basis were two of the means adopted by Bonaparte to restore France, and during all his wars, with their terrible expenses, he never once departed from the specie standard.