BIMETALLISM.

Press, Volume LII, Issue 9155, 12 July 1895, Page 3

BIMETALLISM.

TO TUB IDrXOR OF THE'PRESS. Sis, —1 do not think that a difference of opinion between Mr Little and myself is of public importance. But as I am endeavouring to further what I believe is a most urgently needed reform in our monetary laws, I must be pardoned for asking for a little further accommodation from you. I must thank Mr Liittle for quoting so fully the remarks that I made in my Dunedin address as to the " cause" of the great fall in prices, but it surprises mc that Mr Little can still believe that bimetallisms, including my unimportant self, do not include increased production, decreased cost of production, reduction of freights, &c, as valid reasons for a fall in prices. It seems that we do not agree as to the meaning of the word " cause." I am not going to indulge in an elaborate definition ; but in my address at Dunedin I treated the term, "cause"in the way in which it is generally understood by scientists and logicians. When bimetallists say that the fall in prices since 1873 has been caused by the reduction of tuU world's full-powered money, they mean that this reduction, that is the demonetisation of silver, was the effective or decisive cause of the fall. They never have denied, so far as I know, that if the quantity of goods to be sold is increased, oilier things heing equal, prices will fall. That is, a denial obviously absurd and untenable ; and that is the ridiculous belief that Mr Gould and I refused to accept when you, sir, applauded by Mr Little, attempted to,, fasten it upon bimeuliists. Oar position i»

briefly this :—During the period of high | and rising pries, 1850-1573, all the in- ' flueuce? which you claim should lower prices were actively at work, and yet prices rose 15 to 20 per ceut. all round. During the period of low and falling prices, 1373-1895, these influences wero all still at work, but as proved by statistics which I have quoted till lam tired of them, these influences wero nothing like so powerful as they had been in 1850-1873, and yet prices have fallen 40 per cent. Comparing these two periods, we find that the only commercial and financial condition in which they differ is that in the second o; low priced period there was a vast reduc tion in tho amount of the world's legal tender money. Therefore, we urge that the fall in prices has resulted directly and most! largely from the demonetisation of silver. I This oxclusiou of silver is, I say, the potent ] aud effective cause—in other words, if it had not been for the demonetisation of silver prices would not have fallen so far or so fast as they have fallen since 1373. But, I repeat, this is by no means the same tiling as saying that an increase iv iho supply of commodities, for instance, does not reduce prices. 0;)ly wa throw upon monoaietallUts the responsibility of telliug us, if an increased supply of goods does always reduce prices, why this reduction did not come about 1850-1573, wheu prices were steadily rising in the face of an increase in the rate of production about twice as rapid as we have seen since. I will venture upon a simple illustration of what I mean. A man crosses a muddy road and finds that his feet are wet, and he asks himself the "cause" of this inconvenieuco. It is true that the rainfall is a primary cause, aud the slope of the road is another cause, and pools of water lying abou f . are another cause. But we will suppose that the man has often crossed before tho same road at the same poiut iv similarly wet weather, but has never bofore wet his feet. Would he not, tliercforo, look further for the real "cause" of his misfortune ? And if he discovers a hole iv his boot which was never there before, would he not be justiiie:l in referring to that as the " cause " for the fact that his feet were wet? By so doing he would not deny that the rainfall aud the pools, and for that matter tho law of gravity aud the principles of hydrostatics, were in some sort ot" way ultimately answerable for his wet feet. Bat he would mean what most people would mean if they used the word " cause " in such circumstances, that without tho hole in his boot his feet would have baen dry. Iv just tho same way, while bimotallists do not ignore tho tendency of other parallel influences in the direction of low prices, they speak of the demonetization of silver as the "causo" of low prices, because it is the final or effective causo without which the results which we are now experiencing would not have come about. You will not be ablo to allow mo space for the rest of Mr Little's letter. Tho *' appreciation "of gold, about which he is so sceptical, means only the fall in the gold prices of goods, such as wheat aud wool. I suppose that Mr Little does not mean that wheat and wool have not fallen ; but I am puzzled to imagine how he can then deny the rise in the value of gold, which the wool and wheat have to procure for us. All monometallists, especially Giffen. admit this appreciation ; ali monometallists of English and European eminence admit that it is a result of the contraction of the currency. As to the quantitative theory of money, 1 was positively alarmed to find Mr Little asserting that J. S. Mill doe 3 not support it. These are Mill's words—l do not quote from memory—" That an increase in tho volume of money raises prices, aud a diminution lowers them, is tho most elementary proposition in the theory of currency, and without it we should have no clue to any of tho others." What does Mr Little mean by citing Mill on his side ? Again, says Mr Little, silver is less stable than gold. How is it then that silver prices have not fallen in the East for over twenty years? Why do all economists from Adam Smith and Ricardo down to Walker and Nicholson insist that Bilver is so much more stable than gold, that if the world is to have a mono-metallic currency, it should be silver rather than gold ? With your leave I pause lor a roply before attempting to answer more of Mr Little's questions.— Yours, &c, J. P. Grossjunh. 9th July, 1895.