existence and operating to aid in the creation of the wealth to pay interest on the principal. The latter represents something that has been annihilated, the loss not being felt at once, but deferred and distributed over a number of years in the taxation to pay interest. It was this which, about 1872, began to make an increasing demand for the precious metals to reimburse capitalists for the cost of the wars. Philosophers may argue that gold and silver are only measures of values, and that one dollar of gold will measure a thousand dollars' worth of commodities as well as one, but it is also true that the desire for the actual possession of anything that seems to be getting scarce imparts to it an adventitious and phenomenal value. Such was the case in 1872-3, when capitalists began to doubt the ability of the nations to pay the greatly increased load of annual interest. It was this doubt which caused the first reaction, and the reaction once started, the cause reproduced itself and acquired momentum as it progressed. The first cause of the great reaction in 1873 was the immense load of war debts, but this has unquestionably been greatly aggravated in the last two years, and more especially in 1876, by the demonetization of silver.

The conclusion, then, is that the "decline in the value of silver" is in fact almost wholly the result of an equal divergence in the values of the two metals. The diminished stock of metallic money available in Europe, resulting from the demonetization of silver, has enhanced the value of gold and diminished the value of silver. Both metals have, for centuries, been maintained at an average value as money far above their intrinsic value as commodities. Money must be not only a standard of values, but a circulating medium,

Either increased use or diminished supply may cause a rise in the value of the thing used. Hence, if the work of $4,000,000,000 of gold and silver be delegated to $2,000,000,000 of gold, the gold will rise in value and the silver will depreciate. I conclude, therefore, that the change in the relative values of the two metals is due to the demonetization of silver; and that if gold, instead of silver, had been demonetized by Great Britain and Germany, the value of gold would have fallen and that of silver would have appreciated.

In March, 1876, a select committee was appointed by the British Parliament "to consider and report upon the causes of the depreciation of the price of silver." The committee immediately began its inquiries and continued them about one month, during which they held six sessions, and called in for examination the following persons: Messrs. Henry Waterfield, Sir Hector Hay, Stewart Pixley, Robert Giffen, Frederick G. Wilkins, Patrick Campbell, Robert Wigram Crawford, Gustavus Peitsch, Samuel Seldon, William Robinson, Colonel Henry Hyde, J. T. Mackenzie, Ernest Seyd and Walter Baghot, all persons of high repute in matters of statistics relating to money and finance. The report of the committee, printed in July, made a large folio volume of two hundred pages, equal to probably fifteen hundred pages of an ordinary 12mo book, and containing an enormous mass of figures and estimates in the papers put in by the witnesses.

The substance of the information on the question under consideration was, however, summed up in the following few paragraphs on page IV of the committee's report, viz.:

"Your committee are of the opinion that the evi

"dence taken conclusively shews that the fall in the "price of silver is due to the following causes:

"(1) To the discovery of new silver mines of great "richness in the State of Nevada.

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"(2) To the introduction of a gold currency into Germany in place of the previous silver currency. "This operation commenced at the end of 1871.

"(3) To the decreased demand for silver for export "to India.

"(4) That the Scandinavian governments have also "substituted gold for silver in their currency.

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"(5) That the Latin union, comprising France, Belgium, Switzerland, Italy and Greece, have since 1847 "limited the amount of silver to be coined yearly in "the mints of each member of the union, suspending "the privilege formerly accorded to all holders of silver "bullion of claiming to have that bullion turned into "coin without restriction.

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"(6) That Holland has also passed a temporary act "prohibiting, except on account of the government, the coining of silver, and authorizing the coining of gold." "It will be observed that two sets of causes have been "simultaneously in operation. The increased produc"tion of the newly-discovered mines and the surplus "thrown on the market by Germany, have affected the supply. At the same time the decreased amounts required for India and the decreased purchases of sil"ver by the members of the Latin union, have affected "the demand. A serious fall in the price of silver was "therefore inevitable."

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"It is, however, an important and remarkable fact, to "which it may be convenient to call attention at once, "that though the increased production of silver in the

"United States is a fact beyond question, no increase "of imports of silver from the United States to Great "Britain has taken place since the year 1873, when the average price of silver was still 591d. per ounce. "Indeed the amount of the imports of silver into Great "Britain from the United States for the year 1875, viz.: £3,092,000, is the smallest since the year 1869. In "the same way, though the new currency laws of Ger"many affected a vast silver coinage, the sales of silver "actually made up to the 26th of April in the present

year do not appear to have exceeded £6,000,000 dis"tributed over several years. Your committee, in "pointing to these circumstances, are far from saying "that the impression produced on the minds of the "dealers in silver was not justified by the causes in operation."

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It will be seen that of the "six causes enumerated by the committee as operating to depreciate the value of silver, four are really the same thing, viz.: the movement in Europe by Germany, leading the Scandinavian States, to demonetize silver. The decreased demand for silver for export to India seems to be rather one of the results of the original decline caused by the demonetization, than an independent cause. The discovery of new mines in Nevada, mentioned by the committee as the first cause, is acknowledged to be only a source of apprehension, but not yet of any increased supply of silver.

It is admitted, even by those who have at times advocated an exclusive gold standard,* that it is impos

* Probably, if there were gold enough for all the world, it would be best that there should be only a single standard of value throughout the world, and that one-gold. But this is impossible. Some have doubted whether there is gold enough even for the nations which now intend to use it; and there certainly is not enough for all the world.-London Economist.

sible for all nations to have the exclusive gold standard. The unavoidable result, therefore, of the adoption of the exclusive gold standard by a few of the leading nations possessing the financial preponderance of the world is to compel the remaining nations to practically adopt silver alone. But at the same time the demonetization of silver by a few leading commercial nations depreciates the metallic currency and the money obligations of the nations using silver as a standard of values. This disorganizes international trade and is a direct blow at all international relations. The divergence in the respective values of the two metals is the measure of the divergence of national interests. The tendency of all this is to diminish the intercourse of nations and remand the world to the old narrow ideas of the necessary antagonism of the people of different countries.

The original establishment by law, in Great Britain,† France and the United States, that the legal values of

*The London Economist described the effects on the East India trade of the decline in the value of silver, in the first two months of 1876, as follows, viz.:

The consequence of the low value of silver is that the rate of exchange (in Calcutta) is now 1s. 9d. 1far. per rupee (or less), the lowest or almost the lowest ever known. And this operates as a direct discouragement to ship goods to India. These goods are paid for in rupees, and when the merchant wants to bring home those rupees to England he finds that they do not go so far as they used to do. He has to pay much more for every £1,000 bill on England, and this extra cost destroys or diminishes his profit.

If new silver should still continue to come into market the same process must go on. The first step must be incessantly repeated. The value of the rupec must fall as against sterling money; instead of being 1s. 9d. it may fall to 1s. 6d.

The Indian revenue is received in silver, and, therefore, the less far silver goes in buying, the poorer will the Indian government be. And this is of more instant importance to the Indian government than almost any other, because its foreign payments exceed those of most governments, and those payments are made in gold. It has to pay interest in gold on a very large debt in England, to pay home salaries, maintain home dépôts, and buy English goods and stores all in gold; and the less valuable silver is in comparison with gold, the less effectual for these necessary purposes will the Indian revenue be.

+ Abrogated in Great Britain by the law of 1816.