International Bimetallism [pp. 422-426]

INTERNATIONAL BIMETALLISM.
as a medium of foreign exchange, which
will always be based on the commercial
parity.
Postulates 3 and 4. These practically
rest on the same basis and involve the
same error pointed out in Number I, in
assuming that "free coinage" is a demand upon the metal mass, whereas it is
evidence of an absence of demand, as
gold and silver go to the Mint only because they will command no better price
in the open market.
When the commercial and legal parities differ, however, while the difference
may stimulate the demand for the cheaper
metal for the purpose of coinage with a
view of swindling creditors, it will not
produce any effect whatever in restoring
the parity or equilibrium, for the reason
given under Postulate Number I.
The only experiment which history
affords us of a practical test of this theory
is the memorable one made by France
from 1853 to 1859, the practical result of
which was the very reverse of what is here
claimed. Prior to I853 the average price
of silver for thirty years showed that at
fifteen and one half to one that metal
was overvalued about one and three
fourths per cent, and France during that
period had practically only a single standard of silver. But in consequence of the
great demand for that metal in London
for Oriental account, its " commercial"
parity rose above fifteen and one half
and an immense drain of silver from the
Bank of France set in. To check this
and " restore the equilibrium," the Bank
went into the London market and paid
three million dollars in premiums for gold
in less than three years, which exceeded
the disparity between the metals. For
five years her coinage of gold averaged
ninety million dollars per annum, or
eighty per cent of the world's produce,
and yet gold declined over one per cent
in value under this enormous coinage.
But to cap the climax, in i859 she broke
the world's record by coining $I130,000,ooo of gold, or ten million in excess of
the entire produce of the world, and yet
the only effect was that gold fell one per
cent lower. Or in other words, silver
had advanced over two per cent under
this enormous coinage of the cheaper
metal, the controlling factor being the
rate of Oriental exchange, on the London
market; thus showing conclusively that
coinage is utterly powerless when
brought in contact with the inexorable
laws of commerce to affect or change the
parity between the metals, and this
whole theory-the quantitative theoryis without the slightest foundation ill any
known principle of economic law, and is
an utter fallacy.
I quote from Professor Andrews: Writers and thinkers of the highest ability believe that all necessary or attainable fixity of
general prices is to come from international bimetallisin. There can indeed be no doubt that
this scheme would for a long time render extraordinary service if it could only be carried into efect.
So much for the bimetallist view. To
restate the answer already given: Supposing that gold and silver are coined in
unlimited quantities, and a fixed legal
ratio is enacted between them.
(I) Is it the fixed legal ratio enacted
between the coins which governs the relative value of the metals in bullion?
(2) Or, is it the relative value of the
metals in bullion which governs the relative value of the coins?
(3) And if it be found impossible for
any single country to maintain gold and
silver coined in unlimited quantities in
simultaneous, concurrent, and indiscrirninate circulation together at a fixed legal
ratio, is it possible for any number of
countries combined to do so by an international agreement?
I unhesitatingly answer no!
However much an alleged scarcity of
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