change between gold-using and silver using countries" is real, and of no slight impor tance. It is of just the same nature as that of a steady price of cotton, from the recent loss of which some parts of our country have so greatly suffered. If bi-metallism is economically practicable, we might doubtless expect this benefit from it; if not, we shall be compelled to reconcile ourselves to fluctuating silver, as we have reconciled ourselves to fluctuating cotton. "To prevent the disastrous results which might otherwise follow the depreciation or appreciation of one of the metals," is what this device would do for us most imperfectly. A scarcity of one metal or a greater abundance of the other, it would tend to check by throwing the office of currency on the second, of course. If this happened to be followed by an opposite state of things, the remedy would apply itself automatically; but how if it were followed by more of the same state of things, if the scarcer metal grew still scarcer, or the plentier one more plentiful? The remedy would then have been already applied, and would be no longer available. There is no reason why things should take the first course rather than the second, though General Walker's claim that his system would result in establishing an alternating circulation," is evidently founded on some conception that they would. To the claim of greater stability, that "with bi-metallism, shocks in trade come less often," the example of France is again brought for support. Unquestionably that country has had fewer and less serious financial disturbances than this country, or than England. But when we remember that the French do business more for cash and less for credit than we do, and that they are exceptionally particular to keep a strong cash reserve-for the Bank of France has held, steadily for the last twenty years, more gold alone than the Bank of England (most of the time more gold than all the banks of issue in the United Kingdom together), to say nothing of its equal hoard of silver-it is quite needless to look beyond these facts to account for their immunity. CONCLUSION. It only remains to sum up, in one paragraph, the results of an inquiry whose close relation to vital public interests is hardly sufficient to make it enlivening or entertaining; and then to see to what practical conclusions they lead. A monetary standard is constant when the same amount of money does the same work; as nearly as possible supplies the same want and compensates the same effort. These ends should both be attained if practicable; if not, neither should be exclusively preferred. The selection of centuries of civilization having fixed upon silver and gold as expressions of values to be taken as constant, the inquiry is, which of the two more nearly meets these ends, or whether a combination of the two would be better than either. The answer appears to be that by the ideally best standard the prices of average merchandise ought to have been slightly dimin ishing and the wages of labor to have been slightly increasing within the last twenty years, a requirement more satisfactorily met by gold; and that any attempt to work the two metals on equal terms into a composite whole is, in this era of telegraphs, railways and ocean greyhounds," of very doubtful practicability and of very doubtful merit if its practicability were assured. The alleged scarcity of gold and "diminishing money supply" seem little more than a myth. The most important conclusion suggested is the needlessness of active interference in the matter by the governing power. Allowing entire freedom of contracts in money; construing the terms of such contracts in all doubtful cases according to prevalent usage, and enforcing them accordingly; granting to the people all needed facilities for immediate decision as to values in metallic form, by marks certifying to weight and fineness-this being the true function of coinage; when the government has done these, it has done its part. The usurped power of passing "legal tender" acts should be surrendered, and legal definitions of value should cover only contracts made by the government itself. Were this course followed, men might treat as money anything they agreed so to treat, accepting the government's stamp as evidence that their agreement was kept, and not fearing or hoping that any meddlesome enactment would step in to declare that, though one metal was agreed on, the agreement might be completely discharged by paying 151⁄2 times its weight of some other. If the result of this policy should be a victory for the economic forces now working to bring all nations to a gold unit in practical business, the standard to which we should thus be brought, as amply shown above, is no bad one. If the contracting parties preferred silver, however, they might make their agreement in terms of silver, and have it so enforced; or, if they decided on giving the debtor an option to pay one metal or "put" another, and so declared, the law might help them in that also. But it would not infer the put unless the contract explicitly provided for it. The question of the ideal standard would remain as now, interesting and altogether suitable for scientific inquirers, but active business would never have occasion to wait for their verdict upon it. In a total abandonment by the government of its power to declare a legal tender for private debts, is to be found the true practical solution of this problem, a Stable Monetary Standard. REFORM CLUB, SOUND CURRENCY COMMITTEE, Sound Currency Literature, which will be supplied by this Committee on receipt of price noted. NOTE. This supply bureau has no connection with gratuitous supply of literature, written application for which should be made to Calvin Tomkins, Secretary, at this office; but is intended simply as an accommodation to our friends. The prices named are not materially different from those at which the literature in question can be purchased in any quarter where it is kept on sale. The only advantage we offer is in keeping in stock a larger assortment than dealers in most localities see fit to handle. No orders will be filled except those paid for in advance. Please remit with each order proper amount to New York Exchange. BALDWIN, W. W.-The Gold Standard. 1895, 24 pp.. Paper, .... CUNTZ, J. H.-Plain Words about Silver Money. 39 pp. Paper...... 8vo, 110 pp....... *FRASER, JNO. A., AND SERGEL, CHARLES H. 12mo, 218 pp. (Illus). Paper...... JACKSON, C. C.-Has Gold Appreciated? 1894-38 pp ...... *LANDON, MELVILLE D.-Eli Perkins on Money-Gold or Silver? 1895. 115 pp. (Illus.) Paper..... $0.15 .25 .75 .15 .15 .15 1895, .15 .25 .15 .50 .25 .25 .15 ... .25 .25 .25 LEIGHTON, GEO. E.-Why we Oppose the Free Coinage of Silver.. ..... TAUSSIG, F. W.-The Silver Situation in the U. S., 1893, 12mo., cloth, 133 pp. ....... *WHEELER, EVERETT P.—Real Bi-metallism. 1895. 12mo. 86 pp. (Illus.). ......... *WHITE, HORACE-Coin's Financial Fool. (Illus.) 1895, 112 pp. *WISNER, EDWARD-Cash vs. Coin. (Illus.) 1895, 121 pp. Paper.. Wm. L. Trenholm. (32 pp.). (Reprint of Adam Smith's discussion-first published in 1776.) SOUND CURRENCY. Sound Currency is a semi-monthly publication devoted to setting forth accurate and timely information upon currency questions. It is intended to cultivate sound thinking among the people upon the absorbing issue of currency reform. Vol. I., published in 1891, is now out of print. The Subscription price per year is $1; in clubs of 10 or more, 50 cents; and in clubs of 25 or more, 40 cents. The numbers of Vol. II. so far published in 1895, are: 1. NATIONAL AND STATE BANKS, Horace White. (16 pp.). 2. CANADIAN BANK-NOTE CURRENCY, L. Carroll Root. (16 pp.). 3. BIMETALLISM IN HISTORY, Henry Loomis Nelson. (16 pp.). 4. THE WORLD'S CURRENCIES, Richard P. Rothwell (24 pp.). 5. NEW YORK BANK CURRENCY, L. Carroll Root. (24 pp.). 6. THE CURRENCY FAMINE OF 1893, John De Witt Warner. (20 pp.)..... 7. THE PEOPLE'S MONEY, 8. SCOTCH BANK CURRENCY. (12 pp.). . . . Per No. Per 100. Per 1,000. $0.05 $2.00 $10.00 .05 2.00 10.00 .05 2.00 10.00 .05 3.00 15.00 .05 3.00 15.00 9. OUR PAPER CURRENCY, Fred Perry Powers. (16 pp.). 13. NEW ENGLAND BANK CURRENCY, L. Carroll Root. (32 pp.).... 14. THE BULLION REPORT, Parliament Committee, 1810. (32 pp.).. 15. A STABLE MONETARY STANDARD, Henry Farquhar. (20 pp.).... 16. "FREE COINAGE” DISSECTED, John De Witt Warner. (16 pp.).. 17. U.S. COINAGE AND CURRENCY LAWS. (48 pp.).. 18. "BIMETALLISM" IN FRANCE, W. A. Shaw. (12 pp.)... 19. QUALITY OF MONEY AND WAGES, Frank L. McVey. (16 pp.).... .05 2.00 10.00 You are invited to co-operate in the campaign of education upon currency reform by subscribing to SOUND CURRENCY. In order to facilitate your co-operation the Committee will, if desired, address and mail to 100 or more names which may be submitted, the above publications at the rates indicated; so that parties wishing to circulate Sound Currency literature among their friends may either receive the matter in bulk and re-distribute it or have it sent directly by the Committee to the addresses furnished. Special rates for quantities of our publications will be made to local organizations that desire to distribute them, to book dealers intending to sell them, and to educators requiring them for class-room uses. CALVIN TOMKINS, Secretary, SOUND CURRENCY COMMITTEE, REFORM CLUB, 52 William Street, New York City. SOUND CURRENCY. PUBLISHED SEMI-MONTHLY BY THE SOUND CURRENCY COMMITTEE OF THE REFORM CLUB. ENTERED AS SECOND-CLASS MATTER AT THE NEW YORK, N. Y., POST-OFFICE. Publication Office, No. 52 William St., New York City. Vol. II., No. 22. NEW YORK, OCTOBER 15, 1895. (SUBSCRIPTION, $1.00. SINGLE COPIES, 5 CENTS. Each number contains a special discussion of some Sound Currency question. "One of the most important questions the people have now to consider is whether they can afford to adhere longer to a system which periodically augments the public debt for the purpose of securing gold to be exchanged for notes, which, when redeemed, are not retirea and cancelled, but are reissued and put in circulation to be over and over again presented for redemption. * * * * * Gold can be procured only by sales of bonds or by voluntary exchanges of gold coin for other forms of currency by the banks, and it is scarcely necessary to say that these voluntary exchanges are most difficult to make at the very times when gold is most needed. When bonds are sold in our market, experience has shown that a large part of the gold to pay for them is taken from the Treasury reserve, in the first instance, or withdrawn within a short time after the bonds have been paid for and delivered."-Sec. JOHN G. CARLISLE, Boston, October 12, 1895. FOREIGN EXCHANGES AND GOLD MOVEMENT IN 1894 AND 1895. WORTHINGTON C. FORD. UNUSUAL FINANCIAL FEATURES... CONDITIONS IN EUROPE... THE NATIONAL SCRAMBLE FOR GOLD.. THE INFLUX AND EFFLUX OF GOLD IN THE BANK OF ENGLAND.. 422 423 423 426 427 427 THE REAL CAUSE OF THE TROUBLE IN THE UNITED STATES... 428 INDEBTEDNESS TO FOREIGNERS.... EFFECT OF THE WITHDRAWAL OF INVESTMENTS. CONTINUED DRAIN ON THE RESERVE.. RECOURSE TO THE SALE OF BONDS.... THE BOND SYNDICATE... RATE OF EXCHANGE AND INFLUENCE OF SYNDICATE.. THE CONTRACT AND WORK OF THE SYNDICATE. THE PROBLEM NOT YET SOLVED... LOCATION OF CURRENCY INFLATION. TREASURY RESERVE.... THE NEEDS OF THE TREASURY. 428 429 429 430 430 431 432 434 434 435 436 FOREIGN EXCHANGES AND GOLD MOVEMENT IN 1894 AND 1895.* An examination of foreign exchange rates for a series of years will show a periodicity in the variations, with answering movements of gold. Properly speaking, the import and export of gold have been free only since 1879, as a fluctuating premium on the metal prior to resumption was a disturbing factor. Resumption came at a time when a series of deficient crops in Europe had created an unusually heavy demand for American breadstuffs, and this food was paid for in gold. In no two years before or since have the imports of gold been so large as they were in 1880 and 1881, when the net imports were $77,119,371 and $97,466,127 respectively; and in no two years were the total exports of gold so small, $3,639,025 in 1880, and $2,565,132 in 1881. Such an unusual situation should be thrown out in making a general average as readily as that due to suspended specie payments; and the regular fluctuations of exchange did not begin till 1882. Some reaction from these heavy imports of gold was inevitable; and for two years the inflow of gold was only $9,000,000 greater than the outflow. The imports of 1885 almost exactly balanced the exports of 1884. It is, therefore, with 1886 that a consideration of the notable variations in movement against the United States may be studied in detail. Beginning with 1886, it will be seen from the diagram, as a rule, the rate of exchange between New York and London has been above par in the summer months -May, June and July, -and below par toward the end of the year,-November and December-or January of the succeeding year. Gold was exported in the summer and imported in the winter. In 1890 there were signs of irregularity in this course; and in no year since have the rates of exchange resumed an even tenor. Further, the rate has been more uniformly against the United States, and given occasion to quite as exceptionally heavy an export of gold as were the imports of 1880 and 1881. The movement since 1886 has been as follows: Gold Coin and Bullion Imports and Exports. This export has not been due to causes as easily explained as were the imports of 1880-'81, and it has led to a crisis which must go into history as one of the important turning points in the financial experience of the United States. Some study of these causes, however imperfect, may lead to a better understanding of what is needed to prevent a recurrence. UNUSUAL FINANCIAL FEATURES. The twelve months ending June 30, 1895, have presented financial features of so unusual a nature as to approach the sensational. Twice in that time has the national government been brought to a crisis in the management of its finances, and twice have the great money centres been on the verge of a panic, by the side of which that of 1873 would have seemed insignificant. The consequences of 1873 were normal, temporary, and only demanded a few years of caution and saving to cure and make good the loss. The consequences of a precipitate realization of a silver basis for all transactions would have approached permanency, and required an incalculable amount of economy and intense suffering to have restored reasonable prosperity. At one time it was a question of *Part of this article appeared in the Yale Review, August, 1895, and is here reproduced by permission of that magazine. |