§ MR. SAMUEL SMITH
I would ask leave to call attention to a subject of which I gave Notice some time ago in connection with the Royal Commission to inquire into the depression of trade. The Notice is as follows:—That, in view of the great depression in trade, caused in large measure by the extraordinary decline in prices, this House is of opinion that the time has arrived when Her Most Gracious Majesty be prayed to appoint a Royal Commission to inquire into the relative position of gold and silver in their use as moneys throughout the world—[Mr. WARTON: Oh, oh!]—whether the depression of trade and low prices are in any way connected with, or caused by, the appreciation of our gold standard; how far such appreciation—should it be shown to exist—results from the displacement of silver money over large areas, and whether, or how far, these evils admit of remedy.Notwithstanding the deprecatory remarks of the hon. and learned Member for Bridport (Mr. Warton), this is a subject which is attracting a great deal of attention; and there will be a great feeling of disappointment throughout commercial circles unless the Committee which the Government intend to appoint is authorized specially to inquire into it. A special reason exists for this in a Parliamentary Paper recently issued under the auspices of the Board of Trade, which has brought out very clearly that the main feature of the commercial depression is the prodigious fall of prices, as compared with 1873. According to a calculation which I have made myself the average fall of prices to 188.5 is about 37 per cent. The exports of our country this year will attain to about £220,000,000; but had they been measured by the standard of prices that prevailed in 1873 they would have reached about £350,000,000. We have had a collapse in prices and a change in the standard of value, such as has been altogether unknown since the resumption of specie payments in 1819, and this has unsettled all the relations of trade. I would point out how very seriously this change in the scale of prices and standard of value 1806 affects the various classes in the country. The commercial classes, who borrow capital very largely for reproductive use, find themselves compelled to pay interest in a standard which is very much appreciated. When the debts have to be repaid they are obliged to pay a very much larger value than they contracted for. The total amount of capital borrowed in this country represents thousands of millions sterling, and the interest probably amounts to more than £100,000,000 sterling annually. It is a very serious thing that this vast amount of borrowed capital should be made so very much heavier in consequence of the extraordinary fall of prices. We have had a discussion this evening as to the Irish Land Act. We know there are great complaints in Ireland that the rents fixed by the Judicial Commission have already become too high owing to the continuous fall of the value of produce; and it is thought by our best authorities that this fall will continue for several years to come. It is hardly necessary to point out how this will neutralize all the good effects that they expect from judicial rents in Ireland. Then our difficulties in Egypt have very largely arisen from the fact that the heavy fall of prices makes the interest of the debt much heavier than it was some 10 or 15 years ago. The Debt of Egypt has virtually increased one - fourth owing to the prodigious fall of prices. I may be asked what proof I have for the assertion that the standard of value has risen very seriously. I would refer to those Papers drawn up by the Board of Trade, which prove that since 1873 general prices have fallen 37 per cent, and I assert that no such fall could be adequately explained on any other ground except that gold has considerably risen. I have no doubt there is something in the nature of over-production; and no doubt foreign competition—especially in food—has forced down prices considerably. But there is a distinct ground for believing that gold itself has considerably risen in purchasing power. My assertion is that at least one-half of the wonderful change in the last 10 or 15 years is owing to the appreciation of our gold standard. The supply of gold has fallen off immensely in the last 10 or 20 years. During the Australian and Californian discoveries, and for some years 1807 afterwards, the annual production of gold was upwards of £30,000,000; but it is now less than £19,000,000, and it is tending to become still smaller. On the other hand, gold is being called upon to do very much more than it did 20 years ago. Twenty years ago gold did only one-half of the monetary work of the world. The trade of the world went on smoothly under the bi-metallic system. Gold and silver countries could exchange with each other at a ratio which was reliable; but now the two metals have been divorced. In place of silver being at the ratio of 15½ to I of gold, it is now at the rate of 19 to 1 of gold. This is a very serious thing to a country like England. The time is coming when, if this state of things is not resisted, we shall see a fall in wages corresponding to the fall in general prices. What I hope the House will accept when we have discussed the question, and what I trust the Royal Commission will turn its attention to, is this—that they should aim at restoring that old bi-metallic arrangement which existed more or less for two centuries prior to 1872. If they could return to that system they would confer great advantage upon the country; they would escape great social troubles, and would give a great development to trade. When our trade is languishing, as it is now, there must be something wrong; and the only remedy which I think we have in our power is to join with the United States, France, and Germany to re-establish that old system of currency which answered so remarkably well in the past. I trust that in appointing the Royal Commission which is in contemplation the Government will see their way to place upon it some experts upon monetary questions who have studied the question of bimetallism, and who will have power to make it a vital branch of the investigation. I believe that such a course would give satisfaction to the commercial classes of the country.