India and America. Unfortunately it is pretty evident that some years must elapse before the question is definitely settled, as bimetallism, the eventual solution of the present troubles, is still on the losing side, although gaining adherents daily (especially amongst disinterested students of the question) from the ranks of the monometallists, many of them men of mark in the financial world. But though the trade of Hongkong must continue to suffer from the fluctuations of silver, there is a prospect of great prosperity for the colony if capital (and there should be lots of that forthcoming, British and Chinese) is only brought to the colony and invested in converting it into a vast Industrial hive, firstly in sharing with Japan the supplying of the Chinese market with cotton yarn and piece-goods, then starting match factories and other industries (the first in the field for the fortunes to be reaped thus in Hongkong are likely to continue to take the lion's share of the trade) for Hongkong. With a cheap dollar, it is in as good a position as China and Japan to supply the Eastern markets with manufactured goods, there being a limitless supply of cheap labour at hand, and industries started in Hongkong would enjoy all the freedom for their development which is to be found all the world over under the British flag; Hongkong is also well situated for drawing the needful supply of coal, at a minimum cost, from various sources. Macao, notwithstanding the misfortune of the silting up of her harbour, might also with a liberal and wise policy take a share in this prospect of supplying manufactured goods to China.
The effect of the present low value of silver, in relation to gold, on Europe and the United States, will be to put a stop within a few years to any export trade they may have with silver currency countries, those countries either drawing their supplies from other silver currency countries (manufactured goods probably from China—provided she gives facilities for the establishment of manufactures by machinery and security for the safety of capital invested in same—Japan, and Hongkong) or supplying their own needs. Later, they may expect to be drawing supplies of manufactured goods from these sources of cheap manufactures themselves. It is hardly probable, however, that they will remain blind to their own interests (or that those interested in booming gold will have things their own way till that happens, for there are already signs of the gathering together of the forces which will ere many years elapse effect their entire defeat) till such time that they have to turn to the East for their supply of manufactured goods, but before times have drifted thus far, some temporary, if not permanent, solution of the vexed currency question will have been arrived at; if not, the East is again destined to prevail over the West, not as formerly, however, by a resistless flow of armed men, but by the more irresistible power of commerce and civilization, for anarchy must be the lot of densely packed communities which have the means of earning their bread taken from them.
Gold gives stability to currency, but more than that is required, viz., sufficient currency for trade wants, and a more even ratio between gold and silver (the metal still forming the standard of more than half the world), bringing the cost of production in different parts equally suited for production of same commodities nearer the same level, otherwise the country with cost of production much in her favour must have the monopoly of supplying the world's wants, which as previously shown, Japan will have, at present, for manufactured goods.
The free coinage of silver should also be sanctioned by law, but not at a fixed ratio (the reasons for which I will give later on), the Government simply attesting by their stamp (all silver to be minted at Government mint) that the coins contain silver of a certain fixed weight and fineness, in order that people making use of silver in their transactions can accept them as such without having to weigh and test for themselves.
The ratio in value between two commodities cannot be fixed, but is subject to the natural law of supply and demand (gold and silver not excepted) as has been proved time and again by eminent political economists, and yet the financiers of the present day, with these proofs before them and taught amongst the first rudiments of the important science of political economy, will persist in ignoring the fact, trying to effect the impossible. No government has the right to refuse to give to its people a free and ample coinage for the carrying on of exchange transactions (trade) and if even lead and iron coins were likely to be utilized as media of exchange, it would be their duty to provide facilities for having the coins stamped with the Government impression as a guarantee of their pureness and weight, charging whatever was necessary for working expenses to those bringing in the metal for coinage, the Government having nothing to do with assuring their value in relation to other commodities (metals included) or to one another (which as a matter of fact they cannot do; the natural law of supply and demand settling that in spite of all human efforts to oppose its workings).
The attempts to fix the value ratio between the noble metals, gold and silver, is one of the great impediments to the introduction of bi-metallism. There is no reason why there should not be multi-metallism if likely to be utilized in exchange transactions by the people (but in practice, natural law being allowed free play, bi-metallism, gold and silver being the metals, would doubtless prevail and therefore freedom in the optional use of either of these metals should be facilitated and allowed by the free coinage of them by government).
The difficulties in the way of the introduction of bi-metallism might easily be surmounted if people would have the common-sense to leave the fixing of the ratio to natural laws instead of trying to become Almighty and fix it for themselves. All that is required is to stamp the coins and natural laws will settle the rest if allowed free play, the expense of stamping the coins falling, of course, in the first place, on those taking the metal to the mint; if the tokens were not in demand, the loss would fall on them also and no more of that metal would be brought for coinage till such time as it was again in demand.
The gold monometallists may well (and with justice) say in opposition to the introduction of bi-metallism at a fixed ratio that it would be unjust to make a man receive in return for a gold loan or debt repayment in silver at a fixed ratio, that ratio not representing the equivalent in value (as it could not, unless the then prevailing market rate of silver corresponded with that ratio) of the gold lent. Any arbitrary ratio must be a failure, the only true test of relative value being the prevailing market rate the metals settled by supply and demand. Bimetallists must recognize this, and give up all idea of fixing the ratio, or else give up agitating for bi-metallism, for under such condition it would be unjust to holders of gold and would result in the withdrawal of gold from circulation. The Gresham law (admitted to be sound by all eminent authorities on political economy) would at once come into operation were bi-metallism at a fixed ratio inaugurated and the metal whose market value was higher than that fixed by law, in relation to the other, would be withdrawn from circulation and the other alone be in use for currency, so that if the ratio were against gold, as would probably be the case, gold coins would disappear.
Bi-metallists, again, can with equal justice declaim against gold receiving an artificial value by having the monopoly of employment as currency, the supply of gold being deficient for the demands of trade and there being other metals, notably silver, capable of supplying the deficiency. Even gold monometallists cannot do without the use of silver for small change, but they seek to limit its use to that function only (though it is well adapted for larger transactions) and in doing so they have again to fall back on a fixed ratio.
The fact is, the folly of adopting a fixed ratio is one of the great evils of the present currency system. You may perhaps to-day succeed in fixing a ratio which is a pretty fair thing, which would work well enough were the supply of the metals to remain relatively about the same, but with the great scientific discoveries of present times (and who can say what the possibilities of the future are?) it is impossible to say how long it would remain so. One of the principal factors in settling the value of metal is the cost of its production (witness the great fall in late years in the cost of the production of aluminium, a metal destined to oust iron from many of its present uses) and any day a discovery may be made which would reduce the cost of extraction of gold or silver from...
Page 338
India and America. Unfortunately it is pretty evident that some years must elapse before the question is definitely settled,"as bimetallism, the eventual solution of the present troubles, is still the losing side, although gain- ing adherents daily (especially amongst diein- terested students of the question) from the ranks of the monometallists, ́many of them men of mark in the financial world. But though the trade of Hongkong most continue to suffer from the fluctuations of silver there is a prospect of great prosperity for the colony if capital (and there should be lots of that forthcoming, British and Chinese) is only brought to the colony and invested in converting it into
vast Industrial hive, firstly in sharing with Japan the supplying of the Chinese market" with cotton yarn and plece-goods, then starting match factories and other industries (the first In the field for the fortunes to be reaped thus in Hongkong are likely to continue to take the lion's share of the trade) for Hongkong with
■ cheap dollar is in as good a position as China and Japan to supply the Eastern markets with manufactured goods, there being limitless supply of cheap labour at hand, and industries started in Hongkong would enjoy all the freedom for their development which is to be found all the world over under the British flag; Hongkong is also well situated for drawing the needful supply of coal, at a minimum cost, from various sources. Macao, notwithstanding the misfortune of the stling up of her harbour, might also with a liberal and wise policy take a share in this pro- spect of supplying manufactured goods to Chins. The effect of the present low value of silver, la relation to gold, on Europe sad the United States, will be to put a stop within a few years to any export trade they may have with silver currency countries, those countries either draw- ing their supplies from other silver currency countries (manufactured goods probably from Ching-provided she gives facilities for the establishment of manufactures by machinery and security for the safety of capital invested in same-Japan, and Hongkong) or supplying their own needs. Later, they may expect to be draw. ing supplies of manufactured goods from these sources of cheap manufaclures themselves. It is hardly probable, however, that they will remain blind to their own interests (or that those Interested in booming gold will have things their own way til that happens, for there are already signs of the gathering together of the forces which will ere many years elapse effect their entire defeat) till such time, that they have to turn to the East for their supply of manufactured goods, but before times have drifted thus far some temporary, linata permanent, solution of the vexed currency question will have been arrived at; if not, the East is agaio destined to prevail over the West, not as formerly, how- ever, by a resistless flow armed men, but by the more irresistible power of commerce and civilization, for anarchy must be the lot of densely packed communities which bave the means of carning their bread taken from them.
Gold gives stability to currency, but more than that is required, viz, Sufficient currency for trade wants, and a more even ratio between gold and silver (the metal still forming the standard of more than half the world), bringing the cost of production in different parts equally suited for production of same commodities nearer the same level, otherwise the country with cost of produc- tion much in her favour must have the monopoly of supplying the world's wants, which as previously showa, Japan will have, at present, for manufactured goods.
The free coinage of silver should also be sanctioned by law, but not at a fixed ratio (the teasons for which I will give later on), the Govern. ment simply attesting by their stamp (all silver to be minted at Government mint) that the coins contain silver of a certain fixed weight and fiteness, in order that people making use of sliver in their transactions can accept them as such without having to weigh and test for them. selves.
The ratio in value between two commodities cannot be fixed, but is subject to the natural law of supply and demand (gold and silver not excepted) as bas been proved time and again by eminent political economists, and yet the financiers of the present day, with these proofs before them and taught amongst the first rudiments of the Important science of political economy, will persist in ignorlog
the fact, trying to effect the impossible. No government has the right to refuse to give to its people a free and ample coinage for the carrying on of exchange transactions (trade) and if even lead and iron coins were likely to be utilized as medioms of exchange it would be their duty to provide facilities for having the coins stamped with the Government impression 28 guarantee of their pureness and weight, charging whatever was necessary for working expenses to those bringing in the metal for coinage, the Government having nothing to do with assuring their value in relation to other commodities (metals included) or to one another (which as a matter of fact they cannot do; the natural law of supply and demand settling that in spite of all human efforts to oppose its workings), The attempts to fix the value ratio between the noble metals, gold and silver, is one of the great impediments to the introduction of bi-metallism. There is no reason why there should not be multi-metallism If likely to be utilized in exchange transactions by the people (but in practice, natural law being allowed free play, bi-metallism, gold and silver being the metals, would doubtless prevall and therefore freedom In the optional use of either of these metals should be facilitated and allowed by the free coinage of them by government).
The difficulties in the way of the introduction of bi-metallism might easily be surmounted if people would have the common-sense to leave the fixing of the ratio to natural laws instead of trying to become Almighty and fix it for them. selves. All that is required is to stamp the coins and natural laws will settle the rest if allowed free play, the expense of stamping the coins falling of course, in the first place, on those taking the metal to the mint; if the tokens were not in demand, the loss would fall on them also and no more of that metal would be brought for coinage till such time as it was again in demand.
The gold monometallists may well (and with justice) say in opposition to the introduction of bi-metalliam at a fixed ratio that it would be unjust to make a man recelve in return for a gold loan or debt repayment in sliver at a fixed ratio, that ratio not representing the equivalent in value (as it could not, unless the then prevail- ing market rate of silver corresponded with that ratio) of the gold lent. Any arbitrary ratio must be a failure, the only true test of relative value being the prevailing market rate the metals settled by supply and demand. Bimetalliste must recognize this, and give up all idea of fix. ing the ratio, or eise give up agitating for bi-metallism, for under such condition it would be unjust to holders of gold and would result In the withdrawal of gold from circulation. The Gresham law (admitted to be sound by all eminent authorities on political economy) would at once come into operation were bi-metallism at m fixed ratio inaugurated and the metal whose market value was higher than that fixed by law, in relation to the other, would be withdrawn from circulation and the other alone be in use for currency, so that if the ratio were against gold, as would probably be the case, gold colas would disappear.
Bi-metallists, again, 'can with equal justice declaim against gold receiving an artificial value by having the monopoly of employment as currency, the supply of gold being deficient for the demands of trade and there being other metals, notably silver, capable of supplying the deficiency. Even gold monometallists cannot do without the use of silver for small change, but they seek to Imit its use to that function only (though it is well adapted for larger transactions) and in doing so they have again to fall back on a fixed ratio.
The fact is, the folly of adopting a fixed ratio is one of the great evils of the present currency system. You may perhaps to-day succeed In fixing a ratio which is a pretty fair thing, which would work well enough were the supply of the metals to remain relatively about the same, but with the great scientific discoveries of present times (and who can say what the possibilities of the future are?) it is impossible to say how long it would remain so, One of the principal factors in settling the value of metal is the cast of its production (wliness the great fall in late years in the cost of the production of aluminium, a metal destined to oust iron from many of its present uses) and any day a dis- covery may be made which would reduce the cost of extraction of gold or silver from
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