THE OTAGO DAILY TIMES TUESDAY, MARCH 12, 1895

Otago Daily Times, Issue 10305, 12 March 1895, Page 2

THE OTAGO DAILY TIMES TUESDAY, MARCH 12, 1895

"The Crime of 1873"—a father melodramatic title—is the term under which some American financiers have described the action of Germany and the Latin Union in demonetising silver in 1873. We have endeavoured to show in a previous article that prices depend upon a ratio between supply and demand—that is, between the amount of commodities offered for sale and the amount of money with which they can be purchased, constituting the effective demand of the world. We have shown that from 1850 to 1873 an increase on the side or supply of commodities did not check the general rise in prices; while since 1873 a less proportionate increase in the supply of goods has been accompanied by a general fall in prices. We will now examine the ratio on the other side, so as to show what changes have taken place since 1873 in the demand for goods through a reduction of the total amount of full-powered money available for their purchase. Most people have very erroneous opinions about* the ace and sbanding of bimetallism. Until 1873 the commerce of the world had, generally speaking, been always carried on upon a bimetallic basis—that is, gold and silver had been accepted indifferently as full legal tender. In England, monometallism-^-the acceptance of the gold standard only—dates from 1816; but, as we will show later, ths bimetallism of France really gave a gold and silver basis to the world's commerce till 1873. Sir G-.

MoLESWOBTn lias shown that the ancient world was bimetallic from 300 or 400 years b.c. It is true

that all European rulers and Governments have at various times played tricks with their currency, by debasing and altering the coinage; but their interference with the fixed legal ratio between gold and silver coins always resulted in a way that they could not understand. Whenever the silver coinage was debfiflpd rplafcivnlv tn fVm ™v

the gold coins would disappear from circulation; for gold would always be exported from England, for example, to some other countries where it would be more valuable, as it would be worth more silver; and the silver in England would be kept to pay debts, as that would be the cheapest way of paying them since each silver coin was allowed to pass current for more thaii it was actually worth. This expulsion of the more valuable by the depreciated metal is generally stated as an economic principle under tho name of Gkesham's law, after the famous founder, of the Royal Exchange in the. sixteenth century, as he was %} first English authority to explain this result of the debasement Si coinage. We have no wish to be over technical, and, after all, Gbbsham's law is only a statement of the fact that men always pay their debts in the coin that they get most easily. However, this principle has really had a very great influence on the course of the world's financial history. Its connection with English bimotallism came about in this way: When gold and silver are allowed to circulate together it is, of course, necessary that they should be coined at a fixed ratio— that is, the number of ounces of Bilver exchangeable for loz of gold must be fixed by law. Ijfow it happened that after a long series of experimental change's, debasements and recoveries, the ratiio in England at the end of 'the'eighteenth century was 15*23 to I—that is, 15 l-soz of silver -would exchange for loz of gold;—-but in Holland at the same time 14 2-soz only of silver could be exchanged for loz of gold; and in fact there was no trade centre in Europe except Prance where silver was rated so low to gold as in England. What was the necessary result? Silver could be sold for more gold in Holland than in England, and silver was, therefore, constantly exported to the Continent. Sir Isaac Newton, master of the mint* and the philosopher Locke had tried before to check this export of silver by altering the coinage ratio of silver to gold. But they had left silver still cheaper in England than it was on the Continent in terms of gold; and so the drain of silver -went on till England had practically only one metal —gold—in circulation. Thus ■when in 1816, after the great wars ■were over, it became necessary to consider England's monetary position, it seemed to the financial experts of the day that silver was not in any -way necessary to the currency of England, as it was always being driven out of circulation. Hence Lord Livebtooli's famous Act was- passed, and England in 1816 became monometallic—that is, England from that time regarded gold as her standard of value, and gold only as her medium of exchange beyond nominal amounts. The history of commerce does not always interest the general reader, but it is of importance that we should understand the reasons that teaused England to adopt a polity which, it is asserted, has lea to most modern financial disasters. England choae to adopt the gold standard only because her silver was being constantly driven out of circulation. And this •was possible only because of ,ihte difference be'tweeh, the English and Continental Ratios of gold to j silver — that is, if gold had been uniformly rated to silver.- at a .fixed figure throughout Europe^, England would never have become monometallic • Now the object of. bimetallists is to fix the coinage ratio of gold to silver at one lev.el among all the great commercial nations. And if this had been done before 1816, England would have had no reason and no excuse for becoming monometallic afc all. It is fashionable to talk of English monometallism as if it were of great antiquity, and as if it. were the .outcome of some elaborate financial policy, but we thus see that it was the accidental result 6i a mistake in monetary theor.r. However, England was not really able to get rid ,pf bimetallism even on her own account at first. In 1803 France had decided to £oin and circulate gold and silver together at a fixed ratio of IS| to 1. ifow gold and silver were always interchangeable at that ratio in f ari^. and thus all the gold and silver in England and elsewhere could always "be used to their full value by transmission to France. Thus the world of commerce really remained bimetallic so long as there was this channel open by means of which silver ■was always at a fixed ratio convertible into gold. And this state of things continued till after the Franco-German war. The new German nation, had then to consider, its nnari'cial position. When we learn that at that time there were in circulation in Germany, 17 kinds of gold coin, 66 kinds of silver coin, and 46 kinds of notes, we have to admit that there was great need of some change in the way of uniformity. In 1867 a monetary conference at Paris had urged that all the great nations should adopt a uniform gold standard, on the utterly fallacious ground that gold was better suited to rich and powerful nations. The rulers of the new German Empire remembered this, and openly declared that England's commercial prosperity was to be attributed to her single gold standard. So that Germany decided in 1873 to get rid of her silver and to coin gold alone as full legal tender, and so follow in the track of England. Still all might have yet been well if it had not been for the course taken by France. In 1865 France with .Belgium, Italy, Switzerland, and Greece had formed the Latin Union, within which silver could be coined and could circulate to any amount. This agreement helped still further to extend the advantages of the French bimetallism to the commercial world. But France had to pay her enormous war indemnity to Germany, and found that the cast-off silver of Germany was pouring in to take the place of her gold. This she resented as a wrong added to the disgrace she had already sustained. And on this purely sentimental argument, the mints of France were closed to the further- coinage of silver. There was, therefore, no longer any open market in the world where gold and silver were exchangeable at a fixed coinage ratio—silver, that is, became for the purposes of commerce small change only, and the demand for money became a demand for gold alone. And in this same year (1873) America found that it had lost its right to silver coinage as well. Mr urn, Mac, late head of the Statistical department, asserts in his financial works that the name of the dollar was fraudulently and secretly omitted from the list of coins legalised by the President's signature; and this statement has never been authoritatively contra-

in the long series of changes taken, not on a careful weighing of the evidence, but in ignorance and error. But the result was in each case the same. Since 1873 silver has not been "money" in. the,! full commercial sense of the word at all.

We have now shown that monometallism is the result of a series of accidents and mistakes, and that, aaft matter of history, bimetallism is tho original and traditional basis of. international om ~ merce; and we, will nb\V refer briefly to the effcGo '6"J! these changes culminating in Ist3 upon the demand which we are to compare with the greatly increased supply of commodities within the last 20 years. In 187.3 the silver coinage of the world was worth about the same as the gold coinage— about .£850,000,000. When silver was demonetised, therefore, ©vei' £800,000,000 of specie, with all its enormous possibilities of credit, was lost to the world—that is, the world's demand for commodities was to that extent lessened. And this in itself would surely be sufficient to adeountj on the quantity theory of prices, for a great and general fall in the prices of Commodities, But there is yet another • point to be considered. As all these nations throw aside silver they began to compete for gold alone. Twenty^flve years ago there were about 40 millions of people using the gold standard'; now there are over SOO millions using it. There is thus very little gold to gti round, as ik were, among so many'; each community has now to be content with far less gold than it had before. This is, it will be observed^ only another

way of saying that prices must be low.

And so we ai'e again led to the same conclusion as before, that the .low arid

falling prices of the last 20 odd years; have mainly b6en cattse'd by a fall in the demand—that is, in the amount of gold which can be offered in exchange for; commodities. And this is why the members of the British House of 'Commons are at present endeavouring to arrange Concerted action with Germany, France, and the United States to raise the level of prices, and so restore commercial prosperity to the world by replacing silver as iull legal tender at a fixed ratio to gold.

At the dote o? Mr Moreton Freweii's address on bimetallism ia the Choral Hall last eight a resolution was unanimously adopted declaring that in the opinion of the meeting, which was thoroughly representative cf all classes of the community, it was important that the Government of thia colony should be directly represented at the international conference which ia about to assemble. Mr Fergus, who submitted this resolution, stated that some of those who believed ia bimetallism and thj officers of the local league had addressed tbe Premier on this subject, and the reply obtained waa: " Your telegram received. The matter is now under consideration of Ministers, and I have no doubt but that It will bs favourably considered,-^. J, Stibboir, Greymouth."

The monthly meeting of the Dunedin Prohibition League was held in the Youug Women's Christian Association rooms, Moray place, last night. It was reported that the arrangements for the annual convention, to bn held in this city at Easter, are well forward, and that a large and inflaentiai gathering was expected. The Convention will ba opened by » breakfast on Friday morniDg, 12th April, and brought to a close by a public meeting iv

First Church on Monday evening, the 15th. Questions affecting the present position and future prospects and work of temperarco reform will be discussed* and plans laid down for future guidance. Mrs Janies liopl, Mrs Sparrow, Mr William Warren, and. Mr W. EarnshaV, M.H.ft., were appointed delegates to the convention. Other important business was also transacted.

An adjourned meeting of fishermen was held at Poit Chalmers on Saturday to select a delegate to proceed to WellftTgt'dn to represent to , the Government the necessity of making altera i tioim to '^Tne Sea ■ friSberies Act 1891"! suitable for the Otag'6 Harbour. The Mayer (Mr J. Watson, ■Jim.) presided. It wadecided to allow £5 to the delogate^for expenses, and a rate was struck to cover that amount. Mr Innes was electye. ag delegate, the other candidates beiDg Messrs Sullivan, Q-ash« slid Holden. A considerable discussion eiisued aS 101 what instructions Ihould \>e given to th■.!! delegate, % Sullivan submitted, 'that thari delegate should try to have the w&ole of the; restrictions with regard to weighing or moasuring done a,way with; in fact, the statutes ■ should all be absolutely repealed. This was carried nem. con. Mr Paolin's forecast at 9 o'clock last evening was as follows;—" Strong to moderate S.W. to N.W. winds; indications becoming unsettled after 16 hours." i Indignation rneetioga are being held in various portions of Southland county to protest against the new valuations for local rating, which, it is stated, show a cohsiderftble advance on previous years; whereas it is contended the valuations should be lower in \iew of the price of produce. The Hoo. T. Fergus, whilst speaking a l, the meeting held last evening under the auspices of the Bimetallic League, succeeded in perpe tratingan excellent " bull." He was addrets ing himself to the fallacy of the monometallism | argument that the cause of falling prices was over-production, and in doing 60 said it was a positive fact, if we were to take the statistics of

Mark lane, that while the production of wheat

per.capita of the wheat-eating community had g3ne down the price had also gone down. "That is nonsense," was earnestly interjected by some one who^evideDtly had imperfectly heard the statement whiiih he so sweepingly dismissed. Mi; Fergus, turning Upon the interrupter, said he quoted frbm the Mark Lane Express^ which said that production had decreased in proportion to the wheat-eating community, and he was thereupon met with the

remark that " that was a different thing." Mr

Fergus was not, however, to be convicted of having departed from his original statement.

" I said per capita," he declared;' " aud if the gentleman understands the English language" but in the roars of laughter which this indignant remark prjvokod Mr Fergus was unable to conclude his ■ sentence, the next words that were heard from him beiDg that he did not see where the joke came in. He was doubtless enlightened later on.

Mr E. A. Fitzgerald, in a letter to Mr J. J. Kinsey from Scott's House, West Coast, which

is published in the Press, states that he crossed

the range by a saddle between Baker's Saddle and the Footstool. As he expected, there was no glacier on the western side, and nothing could be easier than to build a track for a horse

to go on the saddle from Scott's. On the Hermitage side they had 20 minutes of glacier. Mr Fitzgerald and Zurbriggeu were three days, walking about 1* to 15 hours each day, between the Hermitage and Scott's, all through the Copland Valley. They had with them three small tins of Irish stew (self-cooking) and a small box of biscuits, and had no blankets. They had a bad time crossing the river, and as the scrub was very bad in the Copland Valley they arrived in rags and with scratched faces. Mr Fitzgerald intended to return via the Cook river, up the Fox Glacier, and if possible between Tasman and Lendenteldt.

Mr Trenwith, the loader of the Victorian Labour party, who is a member of the Tariff Commission, has rather astonished some of his supporters by his views on Protection. A deputation of sawmillers had been urging that no timber should be admitted except in logs, when Mr Trenwith (says the Argus) rose in his majesty and expounded the glorious truth iv a sentence which should be written in gold :

"A protective duty is justifiable when it benefits someone and injures nobody, but unjustifiable when it benefits nnn .m.»,»> «"* <■«*■•-■«

Mr Hugh Qourley, J.P., presided at the Police Court yesterday. Two first offonders convioted of drunkenness wore discharged, while Elizabeth Stce'.e, a frequent ofli nder, was fined 10s, in default 48 hours' imprisonment.

The annual summary of electric lighting in; Great Britain shown a total of 95 central sta-! tions nlr«Ml^ working, 16 6f which v^o in the London district. EigMeSii others are ", n course ol erewtioil. There arq 40 low-tanslon system^ of diatr:; Dutioni and 55 high-ten-hod, s w g Wm g ) statistically at all events (remarks the Pall Mall Gazette), a tendency in favour of high tension, as being the more economical of the tWoij A point Of (Jeneral significance is tbo number of eleotric light undertakings now in the hands of municipal authorities. There are 35 such in the list if running stations, while of tho undertakings now in hand 15 at least, and probftfoly the whole, aro being promoted by «p-iiO"'datie corporations. The Post State that Mr Hanna, late general mahagbr of the Estates Company, ban been appointed assistant-inspector of the Bank of Now Zealand, with a roving eommiseion throughout tbe colonjr.

Wo learn from the fiuustan Timeß that prior to Mr R. A Pyke'o departs from the Duustau district ho VfftS preSeftietf with a purEe of sdveragn's by a number of his friends. When the presentation was made several speakers alluded in eulogistic terms to the able manner in which Mr Pyke had edited the Dunstan Times dnring the last three yeaM.

At the annual meotttig; of St. JPaul's Mutual Improvement AeseSiiatibn, which was held in the eShoolroom last night, there was a good attendance, the Rev. J. W. A. Melville presiding. The Yen: Edwards wan ] unanimously elected a life member of the j association. Officers were chosen as follow:— I President, key. J. W. A. Melville; vice>-presi- \ dents—Rev. C.- J. Sfoall, Mr Wathen, and MiBS A. he BrUn; committee—Miss Leech; Miss tates, Mr H. Webb, and Mr W. M'Carthy:; secretary and. treasurer, Mr F. H. Nuding; assistant secretaries—MissM. Hueston and Mr Boyd; editors of magazine—Messrs W. M'Cartby and J. Webb. Besides the usual compliment to the past officers a special vote of thanks was given to Mr L. R. West for his services as secretary.

There was & good house at the Princess TheMfre last evening, when "Jeanie Deans" was again produced by Mr Albert Lucas's company. The representation was in evety way an improvement upon Saturday night's perform^ ance, and the principals especially acquitted themselves very efficiently.^ "Jeanie Deans" will be played for Ihe last time to-morrow night.

The Kennedy Company will repeat at the City Hall this evening the sensational dram * " Under the Gaslight."