of, which would naturally show itself even more in wages than in prices—if it be said that a negative proof is valueless, and that quotations habitually given on a gold basis might not unnaturally show little variation by comparison with gold-it is clear that no such criticism will apply to changes in the direction of the gold changes but exceeding them in amount, to appreciation of wages relatively to gold while gold is itself appreciating. And yet nothing can be clearer to the eye than that that very thing is what wages have done since the return of peace to our land. And just that have wages done in Europe at the same time-starting at a lower point, bringing up at a lower point, but following the same general rate of increase. Manifestly the just measure of wages, in the period here covered, has not been silver. If it be desirable on any ac count to preserve a constancy in the compensation of labor, to provide that the sum which represents so many days' work at one date, shall not represent fewer days' work at a later date, on that account is silver inferior as a standard. Its claims can be upheld only by proving the total unfitness of human labor as a measure of value, and that has not been done.

THE GOLD STANDARD INEVITABLE.

If the labor-standard is faulty, as here applied in testing the gold and silver standards, it is faulty by its too great tendency to indicate depreciation. This results from the fact that the labor performed in a given trade to-day, whatever pains we take to pick out trades of the same name and as nearly as possible identical, is not precisely the same thing as the labor performed in it twenty years ago. It is different because its application is different. In many lines, furnished with more effective tools, guided by better educated minds, its product is greater and there is more to pay it with for that reason; and the rise of wages in these lines brings about a general advance, though the intrinsic quality of the labor may be unchanged. On this account the true measure, supposing that measure determined by a regard for intrinsic quality and not extrinsic application of labor, would be one by which wages as here treated should somewhat increase. If the commodity-standard is faulty, on the other hand, it is faulty by its too great tendency to indicate appreciation. The value of a commodity which can be supplied by the hundred-weight becomes a very different thing when the same plant, force, enterprise and capital can supply that commodity by the ton. Though its usevalue remains unaltered, the depreciation of its exchange-value is a real phenomenon, and must not be neglected in testing a proposed standard. And since there is no valua ble that has not a wide range of other valuables for which it is capable of serving in one way or another as a substitute, the cheapening of one of them, by newly devised economies in production or distribution, brings about the cheapening of a whole group. On this account the true measure, supposing that measure determined by articles for which not only the demand but the facilities for supply remain steady, would be one by which prices as here recorded should somewhat decrease. In fine, the best standard of value would be one whose changes were intermediate between those of wages and those of prices. Silver has represented prices well, though in its very latest plunges it is beginning to outstrip the general run of articles in the downward course, while it diverges widely and hopelessly from wages. Gold, by the same evidence, is rising a little with respect to prices, as there is good reason to believe the accepted standard ought, and at the same time falling with respect to wages, as there is equally good reason to believe it ought. This appears to be a thorough and impartial statement of the facts of the case, so far as these data suffice to furnish them. The champions of silver are entitled to fair treatment, of which even their predilection for the cumbrous name of bi-metallist, and their infliction of an even more cumbrous name on those unable to see as they, should not deprive them.

There is a satisfaction in the conclusion that, however we may account for it, the measure of values generally accepted among enlightened nations so happily combines the qualities that the true measure ought to possess, and this is ample compensation for the trouble taken in collecting and setting forth the evidence on which that conclusion is based. Nevertheless, it should be distinctly borne in mind throughout this inquiry that the question just considered—whether gold does or does not meet the conditions of stability is one that, however interesting it may be from the point of view of the

1 This conclusion, notwithstanding the extended use made of the Senate Report in reaching it, is not shaken by the severe criticisms to which that Report has laid itself open. The most important of these criticisms are, (1) that retail and not wholesale prices are the true index of increased or reduced cost of living, and that the former have failen relatively less or risen relatively higher since 1860 than the latter; (2) that it enormously overstates the rise in wages by its total omission of such important occupations as farm laborers, and by its fallacious methods of averaging figures in the occupations it includes. The first criticism couuts in favor of the gold and against the silver reckoning. The second has the opposite tendency; but agricultural labor and the humbler kinds of work not sufficiently weighted in Prof. Falkner's treatment, although their wages have not risen to so high an excess over 1860 as he would have us believe, are yet better and not worse paid, by the gold standard, than at that date.

student or the philanthropist, has no necessary bearing on the practical questionwhether gold is or is not destined to become, or rather to remain, the universally recognized standard among peoples whose recognition is a matter of any significance. If a careful examination of the question of stability had showed gold to be as inferior to silver as due attention to the course of wages has proved it superior-as inferior, let it be admitted, as a consideration of prices only, since 1866, would show it-the conclusion would remain yet unshaken, that the future belongs to gold. Better to understand how this may be, let us consider an illustration from another branch of economics. About a century ago, the power-loom and spinning-jenny came into use, also the improved steam engine. The united effect of these was, as has been often explained, to make certain production, particularly that of cloth, more profitable when done in large quantities, and thus to establish the factory system, breaking up, for purpose of general use, the older method of home production-production in small quantities, at places wide apart. Watt and Hargreaves were followed by inventors only less well known, all working to the same end: to build up, aggrandize and consolidate the factory, to enlarge and condense the town. The results of the change, in amount of cloth produced per human producing unit, have been mighty, but its effects on the minds, manners and morals of the workers are open to grave question. Are men better for being packed in such close masses, so reduced to appendages of the machines they run? How do the smoke, filth and bad air of huge factories and the towns where they necessarily aggregate, compare in healthfulness with sky and field and home? These questions have often been asked, and made a serious impeachment of the factory system. But another question has always arisen, which has remorselessly swept all these aside : even if the abolition of factories should be proved desirable on all these counts, is it practically possible? In face of that inevitable, inexorable question every humanitarian or philosopher is driven from the discussion-unless it be Mr. Ruskin. In simple truth, the social force which has been set at work in building and driving these factories has grown too strong to be controlled by any social force which discussion can set at work to fight them. Something of the same sort exists in the case now under consideration. Gold has supplanted silver as a standard throughout the countries which make any large use of money, because economy has compelled it; and that compulsive force has by this time grown too strong to be counteracted or controlled by any question we may raise of its superiority or inferiority to silver in carrying out the demands of ideal justice. It is not contended that things ought to be thus, so much as that they are thus.

A DOUBLE STANDARD A SYSTEM OF "PUTS."

No treatment of monetary standards can have any claim to completeness if it neglect to make respectful mention of the system of "puts," and to inquire how far the introduction of puts is an aid to the just performance of contracts, or an improvement to the general financial scheme. The put, it is almost superfluous to explain, is a bargain which binds one side and leaves the other free. Doe gives a put by agreeing to pay at such a time such a sum for such a quantity of some article-generally a speculative stock-provided Roe chooses to sell. Roe, who holds the put, is himself under no obligation. This practically amounts to a bet on the price of the stock, in which if Doe loses he forfeits the difference between the named price and the market price, be that much or little; while Roe's forfeit is in any case the consideration of his option, which is usually cash paid to Doe. The point of chief importance for present purposes is that the option is not obtained by Roe for nothing. Whatever is worth having must as a general rule be paid for, and no one expects to have a put given him gratis.

As applied to the monetary standard, the put system allows a pecuniary contract to be discharged by an option between two metallic expressions of value at a predetermined ratio; that is it involves a species of bet on the relative market price of the two metals. If the advocates of puts in monetary contracts were content to have them permitted for those desiring to enter into agreements of that kind, there might be none to take the field against them; but when it is seen that their object is something more comprehensive, to connect this form of speculation universally with every contract involving a future payment of money, whatever may be the intention or disposition of the contracting parties-then it is not unreasonable to enter a protest. This protest need not leave out of view the fact that all contracts for future payments involve a speculative element inseparable from such uncertainty as may attach to the constancy of the standard of payment, nor the fact that the option which it is proposed to allow, to one of the parties only, is expected to make the contract more equitable and even between them; it need only speak of this law-imposed put as a needless complication of something that ought to be as plain and easy as possible, and as a piece of unvarnished paternalism. It might also point out that such an imposition is no favor whatever, in the long run, even to the class it is especially devised for the purpose of favoring; for, just as other puts are sold and not given, so these, if there is anything in them of value to the possessor, can only be

had by his paying the cost. The payment will probably take the shape of higher interest charge-that being the general accompaniment of all forms of uncertainty that a loan will be fully repaid-or else it will be what comes to practically the same thing, a shortening of the supply and greater difficulty in the obtaining of loanable capital. One of the alternative standards of value, indeed, is quite as likely to grow cheaper by unforeseen as by expected causes, and the prudent lender will always guard himself against every risk, in the terms on which he grants his loan; so that the borrower, who is put at additional charge for insurance, in the shape of higher interest, against that very cheapening of the alternative metal which is expected to delight all borrowers, must, in case no such cheapening comes to pass, be only a loser by the option allowed him.

When the market price of either metal, the debtor holding an option between two, goes below the designated ratio, that metal becomes the standard of values. While this state of things lasts, the other metal is not in any real sense the standard, but that standard will be something that rises and falls with all fluctuations of the cheaper metal, so long as none of those fluctuations carries its price above the ratio fixed. In the changes since 1873, therefore, if the law had decreed gold, or fifteen and one-half or sixteen times its weight in silver, impartially, to be the standard of deferred payments, the facts of business would have been in all respects as if silver alone had been made the standard, with no option at all. This is not doubted, but associated with it is an interesting question, as to which the widest diversity of opinion exists. If silver had been made the standard money, in the countries for which these diagrams of prices were made, would its value relatively to other articles, and gold especially, have taken a course anything like that it did take? The advocates of a nominally alternative standard, or of puts in monetary contracts, or, if they prefer, bi-metallists, maintain with great energy that the relation of silver to gold, at least, would have been in that case very different. They appeal to the course of the two metals from 1850 to 1857, shown in its relation to prices on the chart. The unparalleled increase of the gold supply which then occurred had no further effect on the ratio than to bring down the gold value from about 15.8 to about 15.3, a difference just perceptible at the extreme left of the chart, even the highest quoted price of silver at any time in London, 62§, yet. giving a commercial ratio a little above 15. Such an insensibility is without precedent, even in the history of money metals. Ascribing it to the legislation of a fixed ratio by France, it is easy to argue that if that country had held as firmly to its coinage system after 1873, the commercial ratio of gold to silver could in like manner have been kept steady. We might have seen a phenomenon like that shown in these diagrams from. 1850 to 1857, a sharp rise in prices, indicating a greatly diminished purchasing power in money of both kinds, but no significant change in the ratio of the metals to each other. There seems to be no good reason for denying any part of this claim, except the reason alleged for the steadiness of gold after the California discoveries. If the laws. had held the two metals to a fixed ratio as legal tender, and if those laws had been carried out, there could have been no such change, and all the inconveniences we have suffered therefrom could have had no existence. Very similarly, we might say, if the factory system were abolished by a statute, and if that statute were obeyed, the evils of that system would not exist. The two propositions are equally undeniable, and about equally practical.

PRACTICABILITY OF BIMETALLISM.

There is no lack of able essays and treatises in advocacy of the monetary system known as bi-metallism. Mr. E. T Peters a few years ago insisted strongly on three points, among others: that restricting the monetary use of either metal was, in effect, restricting the supply of money, and throwing too much work on what remained; that any ratio of value legally established (say 15% to 1) would necessarily become that of marginal cost of production; and that international agreement was essential to successful bimetallism. Earnest and eloquent have been its partisans in more than one country of Europe. Some of the pleas in its favor have swollen to the dimensions of volumes. But it seems sufficient to take a recently published pamphlet, Bi-metallism, a Tract for the Times, by Francis A. Walker," as an epitome of the entire argument. Certainly nothing could be fairer than General Walker's opening:

"Three successive questions are involved in the problem of bimetallism. First, is it economically desirable, and this in a high degree? Second, is it economically practicable--that is, if the system were set up, would it work successfully under the normal operation of the principle of self interest, without any help from philanthropy or public spirit or patriotism ? Third, is it politically and diplomatically possible--that is, can the consent and co-operation of a sufficient number of nations be secured to set up and sustain the system, if indeed it be economically practicable?"

General Walker's second question is admirably stated, but his discussion of it gives no satisfactory answer. To summarize in a few sentences:

"Law cannot affect values, much less control them, except as it sets some economic force in motion. This was exactly what France did by the law of 1803, which established the bimetallic system. This system accomplished its purpose to a degree which is truly marvelous when one considers the tremendous power of the forces by which it was unexpectedly assailed. As before stated, in 1803 about three dollars' worth of silver was being produced for every dollar's worth of gold. In 1809 began that long series of revolutions and rebellions in Mexico and Spanish South America which destroyed the mining industry of those countries, so that silver production fell off with trightful rapidity. Then gold was discovered in the Ural Mountains and in the auriferous sands of Siberia. In 1848 came the discovery of the marvelous gold fields of California and only three years later of Australia. Within twelve years the stock of gold in the hands of civilized men was literally doubled! The part which the French system played during the seventy years covered by this narrative, especially during the gold deluge, has bee acknowledged in the fullest manner by gold monometallists of the highest authority. [Quotations from Jevons and Bagehot follow.] In all the crises that have arisen, at epochs so diverse, în circumstances so different, one sees the Bank of France less distressed than the Bank of England. We may affirm without rashness that the French monetary system is not without influence in the result [M. Denormandie ] The three great purposes of bimetallism are as we have stated them: first, the establishment of an approximate par of exchange between gold-using and silver-using countries; second, a higher degree of stability in the money. mass compounded of the two metals than would be attainable under monometallism; third, to prevent the disastrous results which might otherwise follow the depreciation or appreciation of one of the metals through its increasing abundance or scarcity. So long as France secured these great benefits to mankind no one but the French had the right to object

.

to this alternation of gold and silver in their currency; but they did not do so."

To understand rightly the circumstances under which the French coinage of 1803 was enacted, we ought to have under our eyes Dr. Soetbeer's table of the mean goldto-silver commercial ratio for each year. This ratio, for the greater part of the last century, was under 15. It was slightly over that figure in 1748 and in 1790, between which years there is but one break in the run of 14's which denote the whole-number part of the ratio. Professor Laughlin has testified to the exactness with which the ratio was fixed at 15, when this country first began coining in 1792. By 1803, 15 had come to express the same thing as exactly. The ratio still increased for a while, irregularly; a few 16's appear in the table from 1808 to 1813. Is any doubt entertained in any reasoning mind that this important relative increase in the value of gold from 1790 to 1813, was due to the fact adduced by General Walker, that at that time "about three dollars' worth of silver was being produced for every dollar's worth of gold?" And if rising production and falling price were cause and effect, was not the cessation of the effect due to the cessation of the cause, when the disturbances in Spanish America began in 1809? If silver production had kept to the figure it reached in the first years of the century, it appears altogether probable that this depre ciation would have continued, that the French bimetallic system would before long have collapsed as totally and hopelessly as our own first bimetallic system, and that the French surrender of 1874 would have come when ours came in 1834. From that fate the French system was saved by the diminished silver production, which thus proved, instead of a force that "assailed " it, really the force that sustained it. The fall in the price of gold in 1850, happening as it did when the coinage of France had become almost exclusively silver and her bank reserve was eleven-twelfths in that metal, when gold had disappeared from general circulation and commanded a premium at the Exchange, gave her bimetallism a new lease of life. But for a few years only; its failure was practically acknowledged when the country consented to use debased metal, coined on government account and redeemed by the government, for her small-change silver; so that its subsequent abandonment (under the name of suspension) was natural enough.

It is interesting to note that the forces which assailed the French system with such "tremendous power," but which were successfully resis ed, were all of them forces that tended to arrest the downward movement of silver. In the presence of a force that bastened that movement, bi-metallism succumbed without a struggle. With the nature of the force that thus brought it low, we need not long detain ourselves. General Walker hotly insists that it was silver demonetization, and not silver production, which caused this tremendous effect;" but the reconciliation of this view with that of "the tremendous power of the forces," etc., quoted above, and with his admission that supply as well as demand affects all prices, may be left to him. He hurls his wrath against the Germans as chief sinners in this demonetization" movement, not even once alluding to our own Mint Act of 1873 as the crime of the age." The fall of silver was certainly co incident with these demonetizations, and may, perhaps, have started immediately from them, but even so we may ascribe it to increased production without any misgivings, just as we might ascribe the fail of an unsafe building to its unsafety, even though we saw it pulled down by the building inspector. Whether it was German

or American breath that overturned this house of cards, need not greatly concern us. Since law cannot affect values, much less control them, except as it sets some economic force in motion," the "tremendous effect" of demonetization laws has been explained by their cutting down the monetary demand for silver; but this supposed force did not exist. More silver was coined in 1876 to 1880, according to Dr. Soetbeer's tables, than in any preceding five-year period. The amount has since diminished, but is

still higher than before 1866. Whatever the reason for the decline was, however, that reason was and has remained sufficient for France. Monetary theorists, the world over, may ascribe to that country what power they please, over commercial ratics, but its own rulers are under no delusions.

Yet it is not absurd to credit France with having shown some power over the relative value of gold and silver, in resisting and alleviating its changes, down to the opening of the Comstock era in 1870. Some slight power it may have shown, perhaps, even though the claim now and then made by people imperfectly acquainted with the facts, that between 1803 and 1873 it maintained for the whole world the ratio of 15 to 1" is inadmissible. 1 But since it is at best a matter of conjecture how far the falling off in silver production after 1809 would have lowered the gold ratio, how far the subsequent recovery would have increased it, how far the California and Australia discoveries would have lowered it again, and how far the reduced yield from these rich stores, accompanied by a steadily increasing silver yield, would have restored it-effects all plainly traceable in the ratio as it is-how much more strongly traceable they would have been if France had left the metals to their fate, it is impossible to tell with any approach to certainty what the exact influence of France was. The violent changes in the ratio since France gave up her bimetallism are not a sufficient answer; for if those changes have been uprecedented in their rapidity and extent, the increased silver output since the Comstock discovery has been equally unprecedented. It is true that there had been unprecedented gold discoveries just before, which were prevented, by France or by some cause, from lowering the ratio below 15; but this brings us to a point that seems to have escaped the analysis of bimetallistic authors, namely, the difference in the kind of demand filled by gold and by silver in this nineteenth century. For very small payments, silver is of course indispensable; but that is a demand soon satisfied. For large payments there is a preference for gold, which increases with the size of the payment to be made; so that, on account solely of superior convenience, there is a higher gold-ratio in countries where business is done on a wholesale scale and payments are large, and also an increasing ratic in the same countries as business operations grow wider. The dif ference in demand grows stronger with higher civilization, for differentiation of function is a distinctive mark of evolution. In view of this increasing preference for gold, a cause whose efficiency cannot be doubted, we have a reasonable explanation of the surprising insensibility shown by this ratio to the gold discoveries in 1848, and its marked sensibility to those of silver about 1870. This examination of facts is worth the making, because it enables us to account in a perfectly consistent and probable way for every phase of the gold-to-silver ratio that the century has seen, without crediting the French monetary system with any decisive share in producing or controlling them. So far as positive proof exists, we have as good reason for denying as for asserting that system's influence. The part played by France may have been nothing, or something, or anything short of everything; we cannot demonstrate, but only estimate; and even General Walker's "gold monometallists of the highest authority do not commit anybody but themselves. A combination of nations might perhaps have more power than France alone to fix a ratio, but it would also include more elements of weakness: national jealousies and rivalries, which would lead some to shirk a work of this kind, whose benefits were to be common to all, while the cost would have to fall on each separately-would lead others to suspect their partners of shirking-and so on, until the agreement fell asunder by its own weight. The conclusion to be drawn, since the best evidence offered to prove international bimetallism economically practicable is the example of France since 1803, is that the proof is not sustained.

"

A few words on the alleged benefits of bi-metallic coinage. That of a "par of ex

1 Yet that claim is repeated by the "bi-metallist members of the German Silver Commission," whose declaration "is regarded by President Andrews as one of the most telling and weighty summaries of the case for bi-metallism that has ever been made." These Commissioners also discover an "increased power of competition" in cheap-money countries: "In proportion as their silver or paper loses in power to buy gold, these countries enjoy in effect a high export premium"-as though receiv ing less return for their productive labor gave them a real advantage. The declaration further declares: The attempt to refer this lowering in the general level of prices [since 1873] to other causes, lying outside the coinage system, for instance to cheapening and improvement in means of communi cation, to the perfecting of processes and machines for the production of goods, etc., must be considered a failure, for the reason that the same causes were present in the same strength during the twenty-year period before 1873"--which they were not. The development of the Bessemer process belongs almost altogether to the later period. Average freight rates per ton-mile on seven important railways were 1.89 cents in 1872 and but 0.75 cents in 1892. (See Senate Report. page 615) The fact that" wages have increased in price is without weight, because wages rise with the elevation of the standard of life in the different classes of the population "--which they do, just as the boy grows larger when he comes to wear larger clothes. The conclusion appears to be that " a stable ratio might be maintained IF the nations we have alluded to [Great Britain, the United States, Germany and the Latin Union] were to accept and strictly adhere to bi-metallism at the suggested ratio." Doubtless. (Translation by Pres. E. B. Andrews in Review of Reviews for September, 1894.