PUBLIC RECORD OFFICE
Reference :-
C.O. 882
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PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
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I shall hereafter refer. The monetary arrangements
of a country consist of three parts:
1st. The standard of value.
2nd. The coin, or its representative in paper.
3rd. The money in account.
13. (1.) With regard to the standard of value. For this purpose, either gold or silver is taken, and sometimes both; if one, it is a single standard; if both, it is a double standard. The tendency of late years has been to relinquish a double standard, and to adopt a single standard, as the most perfect. Holland had a double standard till very lately, but has confined it now to silver. France still adheres to a double standard. To make a double standard as perfect as possible, it is necessary to ascertain the precise relative value of gold and silver, and to have the coins made in that precise relation. But the day after it is fixed, a deviation may take place, and as each is a legal tender, the debtor will always pay in the cheapest metal, which will virtually become the standard and measure of all value, while the dearer coin will command a premium or agio; thus, in France the relative weights of the gold and silver coins were fixed in 1802 according to the exact intrinsic value of gold and silver at the moment. At that moment the silver contained in 20 silver francs was exactly the value of the gold which was contained in a 20-franc piece. But gold became dearer soon after; the 20-franc pieces commanded an agio, and silver continued, till lately, practically the only circulation, and was the standard or mea- sure of all value. But so soon as the recent disco- veries in California lowered the value of gold a little below the value of silver as assigned by the French law, a large gold coinage took place, and gold coin has entered largely into the circulation, displacing silver, which has been exported at a profit, com- pared with the quantity of gold it was able to purchase. A double standard thus exposes a country to a derangement in the value of its products, by a depreciation of two metals, while a single standard only exposes it to a single risk of that kind.
But
a double standard has an advantage over a single standard in the case of an appreciation of the metals, which I am not aware has ever been adverted to. As in the case of a depreciation of the metals a double standard exposes the currency to a double
chance of derangement in relation to other commo- dities expressed in money, because whichever of the two metals become cheaper, it is at once adopted by the debtor, who has the selection of the metal in which he will pay; so in the case of an appreciation of the metals the risk of derangement in relation to other commodities, as expressed in money, is only half of what it is with a single standard; because the debtor having the choice of the coin in which he will pay, if either become scarce and dear, he will adbere solely to that which has remained unchanged.
If, in England, gold becomes appreciated and silver remains stationary, gold being the single standard in which our payments can legally be made, a derangement ensues between the coin and other commodities; so, if in Holland silver becomes appreciated and gold remains stationary, silver being the single standard in which payments are made, a derangement must ensue between the coin and other commodities.
But if in France, where both gold
and silver are standards, if either one of them becomes appreciated and the other remains station- ary, no derangement will take place, because the cheapest metal, that is, the one which has remained unchanged, would continue to be used, while the other would command an agio, and, for the time, go out of use. So, while a double standard exposes a country to more frequent derangement in the relative value between the coin and other commo- dities, in the case of a depreciation in the value of the precious metals, it protects it from such frequent derangement in the event of an appreciation of the value of the precious metals. Nevertheless, while this distinction is worthy of note, the superior advantages of a single standard in many other respects are quite sufficient to give a decided prefer- ence to it. But there is nothing in a double standard which exposes it to any very serious objec- tion, provided the coins are rated to each other in the precise proportion of their intrinsic value. This remark will be found to have an important bearing upon the question under consideration, as I prooved. 14. (2.) With regard to coin. It is not abso- lutely necemary that the coin used in circulation should be of the same metal as that selected for the standard of value. But then, in that case, the coin,