BI-METALLISM.

HC Deb 04 June 1889 vol 336 cc1869-923

MR. CHAPLIN (Sleaford)

submitted the following Motion, which he had upon the Paper: That this House considers that the recent divergence in the value of the precious metals is prejudicial in the highest degree to the finances and the Government of India, and that it seriously adds to the difficulties of trade between the United Kingdom and countries which possess a silver standard; it is further of opinion that the divergence has been primarily due to the monetary charges which occurred upon the Continent, and to the abandonment of the bi-metallic system which had prevailed in certain European countries prior to 1873; it has also viewed with great regret the recent and prolonged depression in trade and agriculture, and the consequent irregularity of employment for vast numbers of the population to which it believes that these changes have contributed in a material degree; and it therefore urges on Her Majesty's Government the importance of consulting the chief commercial nations, such as Germany and the United States, together with France and other countries which comprise the Latin Union, as to their readiness to join with the United Kingdom in a conference for the purpose of considering whether and how far a bi-metallic system can be re-established by international agreement in the interest of all the nations and communities concerned. The right hon. Gentleman said,—Sir, I feel that I owe an apology to the House for having undertaken to introduce this question to its notice, and more particularly at a time which I fear is equally inconvenient to many hon. Members, as it is unfortunate for the Motion now before the House. Moreover, I could have wished that it had fallen to the lot of some one among the number of those eminent financial authorities whom we are able to reckon in this House, or, at all events, to some Member of greater Parliamentary position and influence than myself. For, Sir. I have never attempted to disguise for a moment from myself, whether it be with regard to the multitude of subjects which it touches, and the number and great variety of the questions which it may effect, or to its intricate and complicated character and the difficulty of making it thoroughly understood, or to the exact and possible scope of its effects if the views of bi-metallists should prevail, that this is essentially a question which ought not to be dealt with on any light or insufficient grounds. The Motion which I have placed on the Paper refers to the Report of the Currency Commission, and I wish to correct, in the first place, a wide misapprehension which appears to prevail as to the conclusions which were arrived at by the Commissioners in their Reports, of which I may remind the House that there are three. Now, I have seen it constantly stated and sometimes in quarters which I confess not a little surprised me, that in regard to the various matters which were committed to their inquiry the Commissioners were hopelessly divided in their opinions. My right hon. Friend the Chancellor of the Exchequer, in reply to a question put to him on the 2nd of April by the hon. Member for North Kensington, fell into this error himself. He was asked by my hon. Friend whether his attention had been drawn to the declaration of the Indian Government in the Budget statement for the year, namely:— "That no solution of the currency question is possible without international agreement." And he replied as follows:— If the hon. Member means by the 'currency question' the question of bi-metallism, then it is true that no solution is possible without international agreement. But the point is whether it would be possible even with international agreement. That is a question upon which the Royal Commission is hopelessly divided. Now, Sir, I venture to say that that expression of opinion on the part of my right hon. Friend, as I will prove to the House in a moment, is an absolutely misleading and inaccurate statement. For that is precisely one of the points, and a most important point it is, upon which the Commissioners, so far from being hopelessly divided, one and all of them put their names to paragraphs in which they were absolutely unanimous in opinion. That Commission was appointed to inquire into four things in particular—firstly, as to the causes of the recent divergence in the relative value of the precious metals; secondly, into the consequences which had followed upon that divergence, and whether they were causing permanent and important evils; thirdly, if that was found to be the case, whether a remedy was possible; and, fourthly, if a remedy was possible, whether it would be expedient in the general interests to adopt it. Now, Sir, with regard to the first and third of these points, it is only necessary to turn to two or three paragraphs of the Report itself to ascertain without doubt the views of the Commissioners. I do not wish to delay the House for a moment longer than I can help, but they must forgive me if I quote three short paragraphs upon these points, for it is a matter of the first importance. With regard to the first point, the views of the Commissioners will be found in paragraphs 192 and 198 of Part I. of the Report. In paragraph 192 there occurs this passage:— Undoubtedly the date which forms the dividing line between an epoch of approximate fixity in the relative value of gold and silver and one of marked instability is the year when the bi-metallic system, which had previously been in force in the Latin Union, ceased to be in full operation; and we are irresistibly led to the conclusion that the operation of that system, established as it was in countries the population and commerce of which were considerable, exerted a material influence upon the relative value of the two metals. So long as that system was enforced we think that, notwithstanding the changes in the production and use of the precious metals, it kept the market price of silver approximately steady at the ratio fixed by law between them—namely,15½ to 1. And, again, in Section 198 they say— The action of the Latin Union in 1873 broke the link between silver and gold which had kept the price of the former, as measured by the latter, constant at about the legal ratio; and when this link was broken the silver market was open to the influence of all the factors which go to affect the price of a commodity. That paragraph was signed by all the 12 Commissioners, and it shows, I think, pretty clearly what were their views as to the causes of the divergence. What do they say as to the possibility of a remedy? It will be found in Section 107 of Part 2 of the Report. It is as. Follows— The first step towards answering the inquiry we have proposed to ourselves is to determine the subsidiary question whether a bi-metallic arrangement could create and maintain a stable ratio between silver and gold. We think that in any conditions fairly to be contemplated in the future, so far as we can forecast them from the experience of the past, a stable ratio might be maintained if the nations we have alluded to were to accept and strictly adhere to bi-metallism at the suggested ratio. We think that if in all these countries gold and silver could be freely coined, and thus become exchangeable against commodities at the fixed ratio, the market value of silver, as measured by gold, would conform to that ratio and not vary to any material extent. That paragraph again is adopted by all the Commissioners, and I am quite unable therefore to perceive the hopeless division of opinion of which the Chancellor of the Exchequer spoke. And the only modification of that view is to be found in a Memorandum at the end of Part 2, in which two of the Commissioners out of the 12, the Member for London University and Mr. Birch, expressed their doubts as to the permanent stability of any given ratio, although even they admit that it could and probably would be maintained for a very considerable time. Where the Commissioners differed, and the only respect in which they differed, so far as I know, was in this—namely, the gravity of some of the evils which were alleged, and the expediency of the remedy which we proposed. Six of the Commissioners, of whom I had the honour to be one, were of opinion that the evils in question were of a magni- tude to call for a remedy and to call for it without delay. The remaining six, upon the other hand, while admitting the existence of many of the evils, and denying none of them, and while acknowledging in those cases, even where they had doubts, that they deserved the gravest consideration, yet were of opinion that some of them had not been proved to their entire satisfaction, and consequently they were afraid of proposing the remedy which we recommend, although they acknowledged it was possible and would probably be efficacious The House, then, will perceive that on the two principal points of the inquiry, around which in the past the bi-metallic controversy has been chiefly waged, the Commissioners, so far from being hopelessly divided, have been shown to be practically unanimous in opinion. That is one misapprehension to which I was anxious to call attention at the outset, and another is this. In Section 120 of Part 2 of the Report there will be found a statement which is vouched for by the President and five other members of the Commission, as one of the reasons against the adoption of bi-metallism, to this effect—namely— That the change which we propose is tremendous, and that the novelty of our proposal in itself is sufficient to excite apprehensions which might not be without danger. Again, Sir, I venture to say, with all possible respect, that that is a statement which is eminently and entirely calculated to mislead. I affirm distinctly, and I challenge contradiction, that it is an entire mistake to suppose that there is anything whatever new in what is called bi-metallism. On the contrary, although it is perfectly true that in this country we adopted a gold standard and became mono-metallic ourselves in 1816, prior to which we were always distinctly bi-metallism or in the enjoyment of a silver standard, yet bi-metallism existed all that time upon the Continent, and we in England lived, and all the business of the world was conducted, under the full effects and advantages of a bi-metallic system, which were felt and were universal in all the commercial countries of the world for the whole of the present century, and, indeed, in one form or another for a period long before that, probably at least 200 years prior to 1873. The only novelty in our proposition, if novelty indeed it is at all, is this — that England should take the lead in asking other nations to consider whether it would be possible in the general interest to revert to such a system, with advantage to all the communities concerned; and, if that were so, that she should join with them in the endeavour to arrive at a common understanding for the purpose. Si, it appeared to me that these were two very common and prominent misapprehensions, which I should do well to clear up at the outset. And now I think, perhaps, that in order to make myself intelligible to hon. Members, some of whom, it is possible, may not have thoroughly studied this question for themselves, that I ought to preface what I have to say by a reference, however brief, to the history of this question in the past. Having done that, I will explain exactly what the bi-metallic system was, which prevail up to 1873. Thirdly, I will show the circumstances under which it came to an end, and the consequences which have followed upon its abandonment; and fourthly, I will put before the House what it is that we propose. Now, with regard to the first of those points. It will not be necessary for me, I hope, to go back further than the beginning of the present century at all events, and within the limits of that period. The history of the question is very briefly this. From as far back as 1803 up to 1873 the Mint of France, and from 1865 to 1873 the Mints of certain countries on the Continent belonging to what was known as the Latin Union, in which France also was included, were open to the free coinage of silver— that is to say, to the unlimited coinage of silver as well as to the coinage of gold. The countries which composed the Latin Union were five—namely, France, Belgium, Spain, Italy, and afterwards Greece. And their Mints were compelled by law to convert into coin all the silver and all the gold that was brought to them at a given weight and fineness. The effect of that law was to establish a fixed proportionate value, or, as is more technically termed, a fixed ratio between them; that ratio at the time being in the proportion of 151 of silver to one of gold. All the silver thus converted in coin became legal tender money, available for the discharge of debts to any amount within the limits of the several States of the Union, equally with gold, at the ratio which was fixed law. The results of that system were as follows:—In the first place, it gave to silver a position and a value as legal tender money equally with gold at the legal ratio; secondly, the ratio never varied except within the narrowest limits, but remained practically steady from the beginning of the century up till 1873; and, thirdly, although the practice of the system was limited to the five countries, the effects of the system were universal, and were felt and were enjoyed by every civilized country in the world. Indeed, as a matter of fact, as one of our witnesses pointed out to the Commission, we in England for all those years were living under bi-metallism, though we might not know it, just as surely as our forefathers lived under the laws of gravitation prior to the time of Newton, although they did not know it either. Now, that was the system which was known as bi-metallism. It existed in France, as I have shown, almost from the commencement of the present century, beginning in 1803, and it continued to prevail both in France, and the other countries I have named, from 1865 up till 1873, without cessation. Unfortunately, however, in 1873, or, to he strictly accurate, shortly before that date, some-thing happened which ultimately led to the abandonment of that system; and what is a curious and most remarkable coincidence—and I beg the House to observe it—is this: that concurrently with the disappearance of bi-metallism there set in a period of severe, prolonged, and unprecedented depression in almost every trade and industry you can mention, both here and on the Continent, and for which no human being has ever yet been able to assign any other valid or sufficient reason; and with regard to which, though I gladly admit there have been some signs of improvement lately, yet with regard to many others, and notably the cotton industry, the agricultural industry as a whole, and I fear I must add the iron industry, there has been continued depression from that period up to the present. Now, what ultimately led to its abandonment was the demonetization of silver by Germany. Germany, which had previously had a purely silver currency, determined to convert her silver currency into a gold one. A favourable opportunity was presented by the pay- ment of the enormous indemnity by France to Germany at the close of the Franco-German war, and the German policy in that respect was accordingly carried out with results which it is absolutely certain were neither foreseen nor contemplated at the time. Large quantities of the silver which had been withdrawn from circulation in pursuance of this policy in Germany were brought to the French and Belgian mints, who were bound by law to coin them. Enormous quantities of silver in consequence were coined in this way at the French and Belgian mints in the course of a single year alone. There gold was leaving them and being exported to Germany at the same time, the greater part either going directly or indirectly from France, and these two countries naturally became apprehensive lest they should be left with silver alone. A convention of the States of the Latin Union accordingly was summoned, the general result of which was that it was decided in the month of January, 1874, to limit the annual coinage of silver to a fixed amount in each of the five countries in future. The free coinage of silver, therefore, and that is the cardinal point, without which it became impossible to maintain the fixed ratio in future, was suspended at that date, and from that moment the bi-metallic system ceased to exist. Well, now, Sir, I am quite aware that that is but an imperfect description of the history of the question in the past, but it may, perhaps, be sufficient to enable hon. Members to follow me in the arguments which I desire to submit to the House. I come then to the next point, and I want the House to consider what have been the consequences of these monetary changes, and the way in which various interests have been and are being affected by them, both here and in other countries in the world. These consequences, for the purposes of this discussion, have been, in my opinion, mainly two. They led, in the first place, to a marked appreciation of gold, and in the second, to a wide divergence in the relative values of the precious metals. With the permission of the House, I will deal for a short time with each of these consequences in turn. The fact of appreciation, I think, can scarcely be denied. Indeed, it is only another name for a general fall in the prices of commodities, and that there has been such a general fall in a vast number of articles, since 1873, is a matter of fact and not of opinion. I do not mean to say that the whole fall in prices has been due, by any means, to appreciation alone. Other causes, no doubt, have contributed to that fall as well, and it is impossible for anyone to decide precisely how much of the fall is owing to the one cause and how much to the other. But that some part, and probably a large part, is the result of appreciation I hardly think can be disputed. If it is, I should have to cite a whole host of witnesses, who are great authorities in support of that contention. The very first that I should call would be the present Chancellor of the Exchequer. No one has expressed himself more emphatically or ably on that point than my right hon. Friend. Next I should take the authority of Mr. Giffen, who has maintained the same proposition; and his opinion I regard as all the more important and impartial, for I have reason to know, though I do not at all despair of him in future, that he is not converted to the bi-metallic view, at all events at present. I might also quote the high authority of Lord Beaconsfield, who, in one of the last speeches that he made in the House of Lords, I think in the year 1879, expressly adopted the theory of the appreciation of gold. He was speaking in a debate on agricultural depression, in which he attributed the depression to three causes in particular—bad harvests, foreign competition, and the appreciation of gold. "Gold," he said, after arguing the question minutely and at considerable length, "is every day appreciating in value, and as it appreciates in value the lower become prices. This, then, I think, is the third cause." Next I should cite the Report of Lord Iddesleigh's Commission on the Depression of Trade. The Majority Report of that Commission was signed by 19 out of the 24 Commissioners, and in their enumeration of the influences which had tended to produce depression they gave "a leading place," to use the language of the Report, to the fall in prices due to the appreciation of the standard of value. Finally I should come to the Report which we are engaged in discussing, in which all the Commissioners, some in a greater and some in a less degree, acknowledge the fact of the appreciation of gold. Some people, I know, maintain that the fall may be altogether accounted for by a greatly increased production of commodities in all parts of the world and by greatly increased facilities for their production. There are others, again—and that is the view of six of our colleagues on the Commission—who, while admitting that appreciation is undoubtedly a factor in the case, nevertheless attribute the chief part of the fall in prices to causes directly affecting commodities themselves. In that contention it seems to me that they are met with two formidable difficulties at once. They appear to forget that pari passu with increased production there has been a wide increase in the area of civilization and an immense addition to the population of the world; and there is certainly no proof that in proportion to the demand and to the increased population the supply of commodities to-day is greater than it ever was before. That is one difficulty, and the other is this— Are we to suppose that none of these incentives to increased production were in operation, and that if they were in operation they had no effect prior to the year 1873? I cannot find the slightest proof either that the supply of commodities generally has increased or that the cost of production has diminished at a greater rate in the 10 or 15 years which have elapsed since what is called the rupture of the bi-metallic par than was the case in other periods of like duration previous to that date On the contrary, it would seem to be absolutely certain that it was shortly after, and no doubt in consequence of the great discoveries of science, the invention of steam, of electricity, and the telegraph, that the most marked advances in production were apparent; and yet there is no record of any general or permanent fall in prices such as that which we have seen of late. I acknowledge that facilities for production are habitually increasing, and the cost of production is constantly growing less; but these are factors which have been in operation since the world began, and while their tendency is to gradually depress the prices of commodities, they are not sufficient in themselves to account for this wholly exceptional and abnormal fall in prices in gold using countries which has been apparent since 1873, and only since that time. Until then these objections which I urge against the theories which are advanced on the part of our opponents are met and fully answered, I must be permitted to argue my case upon the assumption that there has been a distinct appreciation of gold as a fact which can neither be disputed nor denied. Now, why has gold appreciated, and what is the meaning of the term? Gold has appreciated since 1873, in my humble judgment, for the simple and sufficient reason that gold has had to do, so far as the metals are concerned, a larger proportion of the work which formerly was done partly by gold and partly by silver; consequently in proportion to the work which it has had to do gold has become relatively scarce, and therefore more valuable than it was before. This is, of course, a gain and a great advantage to those who are fortunate enough to be the owners of the gold—that is to say, to men who derive their fortunes from the possession of gold or from fixed incomes, or from the funds or from investments the interest upon which is payable in gold; but it is a corresponding loss to the owners of every other kind of property and commodity in the world, and above all to the working classes of this country, for the great commodity which they have to sell and which they must exchange for gold is the labour and the toil of their families and themselves. The answer to this argument, of course, is this:—That may be quite true, but the appreciation of gold cuts both ways. If you get less for what you have to sell, so also you give less for everything you want to buy, and it comes to the same thing in the end. That, again, would be true, and the argument would be unanswerable if there were no such things as fixed charges and obligations to pay in gold already in existence, and if the prices of all commodities had fallen in the same proportion. But then we know that that is not the case; and what I want to lay stress upon, and what I want to impress upon the House is this—that however much gold may continue to appreciate, however much more value it may become than it was before, these fixed charges and obliga- tions must still be met in full, whatever it may cost the debtor to obtain the amount of appreciated gold which is necessary to meet them. Now, I ask the House to consider what an enormous burden it is that is imposed in this way upon the industries of the country when we remember that the fixed charges already in existence of one kind or another have been estimated by men who are competent to judge at no less, take them altogether, than the gigantic sum of 4,000 millions of money. I do not vouch for the accuracy of these figures myself, although I have great confidence in the general accuracy of those who are responsible for them. But in order to avoid any possible exaggeration, let me take them at one-half, which must be well within the mark; for we know that the National Debt and the Municipal Debt of the country alone are estimated at 1,000 millions, and the mortgages upon all kinds of property in the United Kingdom are put at another 1,000 millions also. Now, what does all this mean? It means that when gold appreciates, and precisely in the same proportion in which gold appreciates, so much more of the produce and the labour of the country must be given in exchange for the gold which is required to meet these obligations. The only way in which the gold can be obtained is by exchanging for it something that there is to sell, and excepting land which is unreclaimed and in a natural state, and therefore practically worthless, I know of nothing that there is to sell which is not the product of the labour of the country. Those who gain by the present state of things are the great gold capitalists of the country, whose capital is invested, not in industrial undertakings which provide employment for great numbers of people, but in fixed investments, and also the limited class who are in the enjoyment of fixed incomes or pensions, which are payable in gold. Those who suffer, on the other hand, are the workers and the producers of the country. The former class can be counted by thousands, and they are a mere fraction of the community as a whole; the latter class, upon the other hand, represent the masses and the millions of the people, and that is why I say that in a condition of society like our own the appreciation of the standard of value causes, and must always cause, grave and serious and important evils to the great majority of the community. I now pass from this subject—namely, the appreciation of gold, and I come to the second consequence which has resulted from the monetary changes—namely, the wide divergence in the relative value of silver and gold. It has taken the form of a heavy fall in the gold price of silver. Silver was valued in 1873 in the proportion of 15 of silver to 1 of gold; now it has fallen of 22. Silver, which was worth in 1873 60d. an ounce, is now, according to the latest quotations, worth only 42d. an ounce. The rupee, again, which is the coin of the realm in India, was formerly worth something very nearly approaching to 2s. Now it is worth only ls. 4d. These figures show how serious has been the fall in the gold price of silver; but silver is the subject not only of a fall in price, but also of constant fluctuations in its value as well, and by these two causes—namely, by the fall and by the constant fluctuations—a whole variety of interests are affected in a variety of ways. Now let me take the effects of the fluctuations in the value of silver first. Take that portion of our trade, for instance, which is conducted with silver-using countries. It forms a large and an important portion of the whole. What is the position of the English merchant in that case? Every transaction into which he enters is always liable to an alteration in the value of the metal in which he must be paid. Either he must take that risk or he must insure himself against it. Either alternative inflicts an additional burden or a loss on him, and to that extent his trade is hampered and is made less profitable than it was before. It must be obvious that trade between two countries, both of which use the same metal as their standard, is free from the risk and inconvenience to which trade is always liable between countries, one of which uses gold and the other silver as its standard; and one of the first effects then of this constant fluctuation is to encourage and to stimulate trade between two silver-using countries, to the prejudice and the great discouragement of trade between countries one of which, like England, uses gold, and the other of which, like India or China or Japan, uses silver. There is a very remarkable illustration of this argument to be found in some figures which are given at page 27 of the Report. They refer to the growth of the export trade in cotton yarns between India and other silver-using countries as compared with the same export trade in England during the period of the ten years which elapsed between 1877 and 1888, and what they show is this—that while in England during those ten years that particular trade has been practically stationary, in India it has increased by over 1,000 per cent, and the returns for the year 1888, which are not included in these figures, are much greater even than they were in 1887. Now, that is owing partly to the fall in the price of silver and to its exchange conditions, as well as to the constant fluctuations; but, in any case, it shows that apparently we are losing rapidly—if, indeed, we have not lost it altogether already—that portion of our trade with the East, and that, I venture to think, is a grave and important consideration which is well deserving of the attention of the House. This is all the more remarkable when we remember that it was shown in evidence before the Commission, and has never been contradicted or refuted up to now, that after allowing for all the advantages of cheap labour in India, after allowing for the saving of the cost of transport and allowing for the advantages of having the material on the spot, yet, notwithstanding all this, it was conclusively proved before our Commission that we are able to manufacture those particular goods at so much per pound cheaper than they can be manufactured in India. That evidence, moreover, was substantially confirmed by a decision of the Chamber of Commerce in Manchester itself, after a committee of that Chamber had been expressly appointed to inquire into and to sift this question to the utmost. Now, Sir, I turn to another point, and I take the case of Indian finance, which suffers both from the fall and from the fluctuations in silver as well. India, it must be remembered, owes a large debt in gold. She has to make payments annually in gold amounting altogether to 15 millions sterling. Her revenue, on the other hand, is collected in silver, part of which must be afterwards exchanged for gold in order to enable her to meet her obligations. Now, with the rupee at 1s. 4d. it takes a vastly increased number of rupees to exchange for 15 millions sterling compared with what it did when the rupee was worth 2s. The difference at present amounts to some 72,000,000 rupees a year, all of which has to be met by greatly increased taxation, which would not be needed and would not be necessary but for the fall in the value of silver which has occurred. India is taxed already to as great an extent as she ought to bear, and probably as she can bear.

MR. MACLEAN

No.

MR. CHAPLIN

I defer to the great authority of my hon. Friend, who is more conversant in Indian matters than myself, but I think I have heard authorities express an opinion that if, for any reason, it was necessary to impose any greatly increased taxation upon that country, it might not improbably lead to grave political complications which every well-wisher of the Empire would desire to see averted. But that, Sir, is not all, for the fall in silver has been hitherto progressive, and no one can say that a further fall in silver may not occur at any moment; and consequently, with the value of silver constantly changing, it is impossible for any Minister or any statesman, however experienced he may be, to forecast with anything like accuracy what revenue may be required or what number of rupees he must collect in order to meet his obligations. All his calculations may be turned upside down at any moment by some sudden and unexpected fall in the price of silver, and that is why Indian Budgets are so constantly upset by what is called a fall in the exchange, and why they suffer so severely by what is known as loss by the exchange. Many people think, and I confess I am inclined to that opinion for my own part, that unless something is done shortly to deal effectively with this question we must look forward to considerable and further falls in silver value. Look at the position in America at this moment. The Bland Act, which requires the annual coinage of a minimum amount of silver in the United States, undoubtedly exercises for the time a steadying influence upon the value of that metal. But if we in England persist, as we have done up to now, in ignoring all the difficulties which are everywhere created by the present position of the silver question, it is not impossible by any means that America may refuse to continue coining silver, and that she may think fit to suspend the Bland Act altogether. At all events, that is a matter entirely within her own discretion, and in respect to which we are absolutely at her mercy. If she elected to take that course, it is no exaggeration to say that we should be immediately confronted with something not very far removed from the bankruptcy of our Indian possessions. The rupee would go down almost certainly to a shilling, and possibly even lower than that. And as every fall of a penny in the value of a rupee makes the difference of a million sterling to the Indian Exchequer, we may find ourselves confronted any morning by the action of America, with the deficit of, it may be four, or five, or six millions sterling in the Budget of that portion of our Empire. I ask the House, Is that a condition of affairs which we ought to ignore? Is that a position in which we are justified in allowing any portion of our Empire to be situated for a single moment longer than we can help? I noticed an Amendment on the Paper standing in the name of the hon. Baronet opposite, in which he admits that the present state of things has had an injurious effect upon Indian finances, but that there is no sufficient reason why action should be taken on our part. Well, I confess that I differ with him in toto, and I can only say that I am supported in my views by some of the highest possible authorities upon this question. I should like, if the House will allow me, to read a letter which I have recently received upon this subject from Lord Dufferin, and which he has given me permission to make any use I like. I wrote to him to ask him for his opinion, and his reply, dated Rome, April 24th, 1889, is as follows:— My dear Chaplin,—In reply to your letter of April 14th, I can only say that, as Viceroy of India, my attention was continually preoccupied with the terrible difficulties affecting Indian finance, not only by the depreciation but, what was even worse, by the fluctuations, (hear, hear) "in the value of silver. This decrease of a penny in the value of silver is tantamount to the loss of a million to the Indian Exchequer. In framing our Budgets we always felt ourselves face to face with an unknown and immeasurable disturbing force, which had the power of overthrowing all our calculations, and had not my Government possessed advisers of great financial ability the results would have been most disastrous. Consequently, from an Indian point of view, I have no hesitation in saying that any means which could be devised for maintaining a steady relation between the value of gold and silver would be of the greatest benefit, not only to the Government of India, but to all classes of the Indian community; for, although I have heard it argued by some persons of financial knowledge and ability in India that the depreciation of silver has been beneficial to the export trade of the country, there can be no doubt that, even from their own point of view, the constant fluctuation in the relative value of the two metals was detrimental to commerce. The remainder of Lord Dufferin's letter is devoted to the subject of the adoption of bi-metallism in England, a portion of the question which he says he has not had time to examine with sufficient accuracy or care to justify him in expressing an opinion. Well, now, Lord Dufferin is a man, as everybody knows, of the highest possible experience and ability, and his views upon the question of Indian finance, I venture to say, are deserving of the most careful attention of the House. I trust that I shall, therefore, be pardoned for reading his letter upon this occasion. I am sorry I have been obliged to detain the House at so great a length, but I am afraid it is impossible to deal with a question like this very shortly. So far I have been dealing with the results of the divergence in the value of metals which are not denied by any one. They are described by Lord Herschell and his friends in that part of the Report which they have signed as the proved evils which were brought before them. They expressed themselves with regard to those proved evils quite as strongly as we could have done ourselves. I am very anxious that this should be clearly understood, because it affords another answer to the statements which are being so repeatedly and so erroneously made as to the wholly inconclusive character of our Report. So serious, I confess, do I regard these proved evils, that on these grounds by themselves I should be quite prepared to urge the recommendations which we make, even if they stood alone. But they do not stand by any means alone. There are other interests nearer home which are closely connected with the divergence in the value of the metals, the manufacturing and the agricultural interests of this country. I will take the cotton industry of Lancashire for one, with the millions of people whom it employs, and the wheat-growing industry of this country for another. Both of these great industries are directly affected by the fall in the exchange, because the exchange operates on all commodities which pass between gold and silver-using countries, and both cotton and wheat are included in them. Now, in order to understand the effects of the exchange two things must be borne in mind to begin with. First, that, unlike the case in England, the prices of commodities in India have not altered, but have remained practically stationary as they were before. And the second is this—that however much the rupee may have fallen in relation to gold, in relation to commodities in India it has not fallen at all. In other words, the same number of rupees will no longer exchange for the same amount of gold as formerly, but they will exchange for—that is, they will purchase—as much of any commodity or commodities in India as they ever did before. I do not deny that this has. appeared strange to myself as it has to other people. But it is a fact which was vouched for by every single witness who gave evidence before the Commission, and I believe it was the unanimous opinion of the Commissioners themselves. I should like to show in half a dozen words how the export of cotton from this country is affected. Take the ease of cotton goods which are sent from Manchester to Bombay, on which, in order to make a profit, it is necessary to realize the sum, say, of £10,000. With the rupee at 2s., £10,000 is realized by the payment of 100,000 rupees; with the rupee at, say, 1s. 6d., it takes, upon the other hand, 133,000 rupees to realize that sum. Now comes the question. Will the Indian importer give, can he afford to give, this greatly-increased price for precisely the same article as he bought before? Obviously he cannot, and we know that he cannot, because, as I have shown already, prices in India have not risen, but have remained practically the same. The English exporter, therefore, must either be content to take the old silver price—namely, 100,000 rupees, which at the present rate of exchange means only £7,500 instead of £10,000, which he got before, or he must forego his sale. In either case he undergoes a loss which must directly be traced to the fall in the value of silver. Well, now, let me take the case of wheat which is brought from India to England. It is exactly the converse of the last case. When wheat was making 40s. the quarter, and the rupee was worth 2s., the English grower, of course, got £2 for his wheat and the Indian got 20 rupees. Wheat, however, now has fallen to 30s., and the rupee has likewise fallen, let us say for the sake of argument, to 1s. 6d.—as a matter of fact it has fallen a great deal more. The English grower, therefore, is getting less by 10s. per quarter for every quarter that he sells. The Indian grower, upon the other hand, is saved from any loss by the fall in the exchange. £1 10s. in gold will still exchange with the rupee at 1s 6d. for 20 rupees, and those rupees when he gets them will buy as much of any commodity or commodities for the Indian grower as they ever bought before. He is enabled, therefore, by the fall in the exchange to take the lower price of 30s. a quarter, which presumably he could not otherwise afford, and as the export of wheat from India to Europe has reached already very large dimensions, the market price of wheat in this way is unnaturally and artificially depressed in all the gold-using countries of the world. Now, Sir, the difficulties of agriculture, and especially of the wheat growing industry are great enough, God knows, already. I put aside all questions of Protection and Free Trade. I know I am tainted in the eyes of Gentlemen opposite on those questions. I ask the House to consider this question. Is it wise? Is it statesmanlike? Is it good or sound policy on our part to view with complacency the possible ruin and destruction of two great industries such as those I have named by these purely artificial means, which are the result of nothing else but foreign legislation. Ought we to acquiesce in this state of matters for the sake of a possible increase in momentary cheapness, remembering that any further considerable fall in the value of silver may close every mill in Lancashire to-morrow, and may render it impossible to grow with profit one single quarter of the grain, which is our staple food, in this country for the future? If that is so, I confess I am totally unable to comprehend the doctrines of modern Free Trade. They seem to me to have degenerated into nothing but a cry for "cheapness at any cost," no matter how it is produced, and which I firmly believe is absolutely in contravention of all the principles and doctrines and teachings of Mr. Cobden himself. Now, what we propose is simply to revert to a system such as that which prevailed upon the Continent prior to the year 1873. But in order to do this it is necessary, in our opinion, that Germany and the United States, together with the countries of the Latin Union, should join with the United Kingdom in an agreement for the purpose, and accordingly we desire that the English Government should consult the chief commercial nations as to their readiness to join in a Conference with the United Kingdom for the purpose of considering this question. There is good reason to believe—indeed, I know —that they would not be indisposed to concur in that proposal. The main difficulty which is always held up to us is this—namely, the ratio which is to be fixed, and we are always asked what ratio it is that we propose? The answer to that question appears to be simple, and, I think, conclusive. Obviously that is a matter which can only be settled by the nations and communities who are directly concerned. I should say that the view of the bi-metallists generally is this—that almost any ratio would be better than none; but it is idle for them to lay down a hard and fast line, as a preliminary to negotiations upon a point which can only be settled by the Conference itself. The ratio, in my judgment, is one of those questions which is certain to settle itself; and long before it is enacted by any legislation the market price of silver will conform to any ratio which is fixed upon. The stock argument, the standard argument, of course against the whole of these proposals is this—that you cannot fix by law the relative value of the metals. [Sir R. FOWLER: "Hear, hear."] Well, I have shown already that the twelve Commissioners, at all events, think you can. And, further, I say this—that what I am told cannot be done has been done already, and with complete success for at least 100 years. It rests with our opponents to show what are the circumstances which render it impossible to-day which were not also in operation prior to 1873. No one has succeeded in doing this at present—I do not think they ever will—and until they do so it is useless to pursue the subject further. Now, I do not know if the House would wish me to anticipate any of the objections which are commonly raised to our proposal. If I do so, it can only be with the utmost possible brevity. We are told that this is nothing but an endeavour to raise prices. On this point I may refer hon. Members to the end of the second Report of the Commission, where will be found a memorandum signed by the great advocate of cheapness, Sir Thomas Farrer, in which he says that these monetary changes have done nothing to lower prices. If that be true, then our proposition is to do nothing to raise them. If I am asked my own opinion, I think that in the course of years by degrees the effect of the adoption of our proposition would be in a modified degree something like the effect of the gold discoveries in former years. Well! But is there any harm in that? It is undoubtedly the fact that the great discoveries of gold in those days led to an era of general prosperity, such as the world has seldom seen, and I, for one, should hail with rejoicing the return of such prosperity to-day. Cheapness, it must be remembered, may arise from either of two things—from increased facilities of production, or from a contraction of the currency. We have nothing to say, and we propose nothing whatsoever, against cheapness which arises from increased facilities of production; but cheapness which arises from a contraction of the currency we regard as an undoubted evil, for the reasons which are given at great length in our Report. I observed an article in the Economist this morning in which the writer challenges bi-metallists to answer in the course of this debate some of the objections which have been urged to their proposals. I accept the challenge, but I will only detain the House a few minutes longer. I accept it the more readily because, though bitterly opposed to us, the Economist is in that section of the Press one of the few papers that have given profitable study and attention to the subject. We are asked, "How is it that you can reconcile your theories with the fact that prices and wages are rising at the present time?" I commenced my observations by acknowledging that there were many causes which had contributed to the fall in prices in addition to the appreciation of gold, and I said it was impossible to decide how much was owing to the one cause and how much to the other. That there is a rise in prices in some cases at present, is owing to the fact that some of these causes are ceasing in their operation. But the rise in prices and in wages is by no means universal; prices and wages are in many cases no better than they were before. Then we are asked how it is that trade has increased more between England and the silver-using countries than between England and the gold-using countries? The explanation is simple and complete. The ports of all the silver-using countries are free and perfectly open to English goods, and every one knows that the ports of nearly all gold-using countries are being closed to us by heavily restrictive and sometimes prohibitory tariffs. Then it is said, "If silver gives a bounty to the producer, how is that compatible with your statement that the present state of things inflicts injury on India?" I have already pointed out that the present state of things involves an addition of £6,000,000 of taxes which would not otherwise he required; and am I to be told that it is right, wise, statesmanlike, or judicious to impose £6,000,000 of taxes on the people of India in order to bolster up two or three industries in that country? They say, "Why legislate against the Indian producer?" My answer is this: Why are we to continue to acquiesce in foreign legislation which is producing the most unfortunate effects upon a vast number of the producers of this country? If I had to choose between the interests of Lancashire in cotton spinning and the interests of Bombay, I should take Lancashire in preference. It may be a very unfortunate thing that we should do anything to interfere with the cotton industry in India. But am I to be told that it is not ten times more serious to threaten with ruin and destruction the great cotton industry of Lancashire? If it be a choice between the rajahs and ryots of India and the labourers and employers of this country, I would ask, Are we to bolster up the one to the ruin of the other? I have answered some of the objections only imperfectly, I know, for I do not wish to detain the House a single moment longer by answers to objections in anticipation, and I feel that I cannot, with anything like decency, prolong my observations, and that I have trespassed far too long upon the attention of the House. It has been exceedingly difficult to state this case with anything like brevity. Of this I am sure, and I hope the House will believe me, that I do not in any degree desire to dogmatize or force my views down the throats of others upon a question which is admitted to be of the most difficult and complicated nature. But it does so happen that it has been my fortune and my duty to pay some attention to the subject, and I became profoundly impressed with its importance. I have, therefore, tried to submit to the House some reasons which would make it in their opinion deserving of the full and careful consideration of Parliament. Upon the merits of those reasons, and of the arguments I have used to-night, it is not for myself to insist. But what I want to impress upon the House, what I ask hon. Members to remember, is the extremely moderate character of the proposals which we make. We maintain and we urge that this question deserves the fullest and most careful consideration of Parliament and the people, and, more than that, of those who alone can give effect to it—namely, the chief commercial nations of the world. The ultimate decision of this question must always, as a matter of course, rest in the hands of the House of Commons. Surely, therefore, Mr. Speaker, the proposal which I submit is not an extravagant request for a Member of the English Parliament to make. Surely it is not too much for the House of Commons to accept. I beg to move the Resolution which I have placed in your hands.

Motion made, and Question proposed, That, in the opinion of this House, the evils which have followed upon the monetary changes in 1873, can only be effectually dealt with by a Conference of the Chief Commercial Nations for the purpose of considering whether, and how far, a Bi-Metallic system can be re-established by International agreement in the interest of all the Nations and communities concerned.

* MR. S. SMITH (Flintshire)

I rise to second the Motion of my right hon. Friend. I think I may congratulate the House of Commons upon the clear, luminous, and very comprehensive manner in which the right hon. Gentleman has dealt with a very large and difficult question. I may say that I am no new convert to the doctrine of bi-metallism. As long ago as 1876 I was led to give my adhesion to what is called the bi-metallic theory. I was educated on this question by means of my connection with the cotton trade of Lancashire and as a merchant trading with India. I was brought into contact with the suffering and misery caused to large classes of people by the heavy fall in the rate of exchange and the great check given to the industries of Lancashire. I was led to see that the rupture of the bi-metallic system of France was the chief cause of all the sufferings which ensued. I propose to-night to deal with the matter mainly from the commercial and industrial point of view as a business man closely connected with the trade of Lancashire, and to show why it is desirable that we should take part with other nations to re-establish the state of things under which our commerce flourished up to the year 1873. The first proposition I lay before the House is this—that great injury was done to this country by the destruction of the old par of exchange between silver and gold. We had virtually a fixed ratio between the metals for 70 years prior to 1873, and during that long period the French Mint was open to coin either metal without limit at the ratio of 15 of silver to 1 of gold, making each legal tender to the fullest amount, and the effect was to keep that ratio between the metals fixed throughout the world, or with only infinitesimal fluctuations. During that long period the price of silver in London scarcely varied beyond 15¾ to 1 and 15¼ to 1. Yet during that period the yield of the metals fluctuated very much. At one time we had a yield of gold amounting to two millions, at another to 30 millions; at one time the yield of silver was three millions, at another 18 millions. At one time the yield of silver was three times the value of gold, at another the yield of gold was three times the value of silver. Now, it is often said the relations between the metals are decided by natural laws, and artificial laws are totally incompetent to touch them. Let me point out that during that long period we had a fixed value as between gold and silver, though we had a conjunction of circumstances that might be expected to destroy this fixed ratio. England by sending her gold or silver to the French Mint could always exchange the metals for one another at a fixed rate, and so the merchants who dealt with a silver-using country like India or China could trade with as much safety as if they were gold-using countries. We had, what I will venture to call, the inestimable benefit of identical money in the world of commerce. It mattered nothing whether the merchant sold for gold or silver; his consignments brought him the same value. Capital could flow from gold-using to silver-using countries without loss and with no fear of virtual confiscation. England was able to lend vast sums to silver-using countries with interest payable in silver without dread of loss or partial repudiation. I can hardly overstate the importance of this to a rich country like ours with superfluous capital. The silver-using countries are the poor countries, the undeveloped countries that require capital. Nature seems to have designed that the rich countries that accumulate capital should lend to the poor ones to develop their resources. A great part of British trade consisted of loans to India and other silver-using countries, which loans were spent in railway material and other products, keeping our industries at home fully employed. All this was rudely shaken by the rupture of the system in 1873, after which it became unsafe for our capitalists to invest in silver loans, and equally unsafe for silver-using countries to guarantee interest in gold. To speak metaphorically, there came to be two railway gauges instead of one, and this caused an interruption of traffic. The banks in England could no longer safely invest their funds in Calcutta, although the bank rate in Calcutta was recently 12 per cent and in London only two, because a fall of exchange might turn their profit into loss. Hence arose ac cumulation of capital at home, a great rise in interest-bearing securities, and much speculation in unsound undertakings. The difficulty of making railways in India was also greatly increased, and the flow of trade between this country and India, China, Japan, and other silver-using countries was much impeded. But the greatest evil in my judgment was the appreciation of the gold standard. Some deny this appreciation of gold, but—not to dispute about words—I will call it an increase in the purchasing power of gold; and no one can deny that this took place during the enormous fall of prices from 1873 to 1886. Since then there has been a slight recovery in the fall of prices, but the average fall as compared with 1873 is still 30 per cent; at its lowest it was fully 35 per cent. The purchasing power of gold has therefore increased since 1873 by 43 per cent which is the equivalent of a fall of 30 per cent. According to a recent pamphlet issued by the Cobden Club, between 1873 and the present year the purchasing power of gold has risen 45 per cent. This fall of prices was the cause of the intolerable depression which this country underwent between 1873 and 1886–7, the worst period since Free Trade was established. Mr. Fielden, of Manchester, has made a calculation of the losses incurred by the working classes during this period. His estimate is that the working classes lost by fall in wages and want of employment no less than £85,000,000 annually, and that in the way of cheapened produce they gained £40,000,000; so there was a net loss of £45,000,000. The great trades union societies were reduced to the verge of bankruptcy; in 1886 they had almost no funds left to meet the wants of the great number of men out of employment. Trade has improved since, no doubt; I am glad to think it has very materially improved, but I hold that but for the demonetization of silver and the corresponding appreciation of gold the crisis would have come to an end many years since, and years of suffering would have been saved to the people of this country. The right hon. Gentleman has pointed out the great loss caused to the industrial classes by the rise in the burden of fixed payments. I have paid some attention to this subject for years past, and have done my best to make an estimate of the amount of the fixed payments under which the industry of this country is carried on. I estimate that the total sum payable in this way for interest on national and local debts, railway bonds and debentures, ground rents, royalties, pensions, mortgages, life interests, and the like, is about £200,000,000 annually, representing a capital value of £5,000,000,000. All this is ultimately paid out of the produce of industry. As £100 will now purchase what previously to the great depression was purchaseable only for £143, it will be seen what an enormous advantage has been conferred on the classes who hold this class of property. The people, in fact, who have benefited are the money-lending, mortgage and bond-holding, and, in short, the non-working capitalists of the country. It takes now 40 or 50 per cent more of the produce of industry to meet these charges than it did in 1873. Dr. Giffen states: Appreciation is a most serious matter to those who have debts to pay. It prevents them gaining by the development of industry as they would otherwise gain. There may be compensations in other directions as by the lowering of the rate of interest which seems to take place as the result of appreciation, but on the whole the balance is against the debtor as compared with what it would have been if there were no appreciation. That is the opinion of Dr. Giffen as it it is stated in his unanswerable pamphlet on the appreciation of gold. It may, perhaps, be difficult to grasp this question when we deal with these immense figures. Let me take a familiar illustration. Suppose in Lancashire a man built in 1873 a mill for £50,000, of which £20,000 was his own capital, and £30,000 borrowed on mortgage. The value of the mill is now about £35,000. It has depreciated 30 per cent, but the mortgage remains the same, and so he is only worth £5,000. Tens of thousands of such cases might be cited, and many instances in which the margin has wholly disappeared, and the mortgagee has become the owner of the property. Take the case of a landowner who had in 1873 property of the value of £10,000 a year, subject to charges of £5,000, and with a net income of £5,000 a year, he finds now his gross income reduced to £7,000 a year, and his available spending money diminished from £5,000 to £2,000, because he is still liable for the £5,000 of charges, though his rents have been reduced 30 per cent. I could give a multitude of cases in which the net income has been wholly swallowed up by the fixed charges. The same process is going on in all gold-using countries. More than half the land of France and Germany now belongs to mortgagees, and probably three-quarters of the land of Ireland. I believe that one main reason for the comparative failure of the Land Act of 1881 was this appreciation of gold, and the consequent fall in agricultural prices. Half of the agrarian trouble in Ireland would have been avoided but for the demonetization of silver. To the same cause is due in great measure the difficulty of the Egyptian people in meeting the claims of the bondholders, and also the rapid spread of Socialism throughout Europe. France, Germany, and Italy have greatly increased their tariffs within the last ten years in consequence of the fall of prices and consequent depression of trade. In my belief the general effect of the demonetization of silver has been a recurrence to a more protective policy than was the case before. I believe that if there had not been this monetary dislocation in Europe we should have freer trade than we have now. All the best economists hold that it is much better for a country that the standard should be depreciated rather than appreciated. Mr. Jevons, who is a high authority on the subject, says, speaking of the effect of the yield of gold from Australia and California, and prior to 1873:— I cannot but agree that, putting out of sight individual cases of hardship, if such exist, the fall in the value of gold must have had, and I should say has already had, a most powerful beneficial effect. Now, our opponents meet us very generally by saying that we want dear prices and that the countryrequires cheap prices. I believe that the cry for cheap prices is very much exaggerated. There are ways of obtaining cheap prices which are very detrimental to a country. A reduction of prices caused by currency contraction is purely evil. During the Napoleonic wars this country contracted a Debt which has been estimated by the right hon. Gentleman the Member for Mid Lothian (Mr. Gladstone) at about one-third of the capital of the country. In 1816 we adopted the sole gold stan- dard, and the result was a prodigious fall of prices. The burden of the National Debt was practically doubled, and the prices fell 50 per cent. The effect of the fall of prices was really to confiscate a great deal of the property of the industrial classes in this country for the benefit of the financiers and fundholders. Between 1815 and 1849 great misery existed in this country, and this misery attained its maximum when prices were lowest. Then there was an entire swing of the pendulum. We had the gold discoveries in California and Australia, and for nearly 25 years, while prices kept rising, there never was a time when we had such prosperity in this country. Prices rose 40 per cent, but the average earnings of the working classes rose 75 per cent; the profits of capitalists were never so large, and 95 per cent of the population were undoubted gainers by the depreciation of the standard between 1848 and 1873, the losers being the holders of fixed investments, mortgagees, and pensionaires. For us to remonetize silver now would be to repeat in a smaller degree the effect of these gold discoveries. It is said that England is the creditor of the world. Well, it is true that England receives £100,000,000 annually of surplus imports over exports, but a large part of that surplus is payment for freight and another part is the result of industrial enterprizes in which we are interested—such as mines, railroads, tea and coffee plantations, &c., which would come all the same whether the currency was gold or paper or silver. The amount we receive for gold interest is limited, perhaps not more than £30,000,000 annually, and is partly balanced by silver interest. Among the objections urged to our views is one that there can be no appreciation of gold, because the rate of interest is so low. I am sure I shall be upheld when I say that this is one of the emptiest and hollowest of contentions. Up to 1873, when gold was flowing in in large masses, we had a much higher rate of interest than we have had since. The amount of gold production has nothing to do with the rate of interest, except that when prices are rising trade is active, and interest is al ways higher; when prices are falling interest is always low. The fact is, that if we were to close up all the gold mines in the world for a hundred years, and prices were to fall 50 per cent, I venture to say that the rate of interest in this country would be lower than ever was known before. Another of the objections made to our theory is that the great fall in prices is owing to cheap transit and other economies in production; but these economies wore in as active operation before 1873 as since.

An hon. MEMBER

Nothing like it.

* MR. S. SMITH

I venture to differ from the hon. Member. That period was one of wonderful invention and discovery when, but for the gold discoveries, prices ought to have fallen. In place of that prices rose 40 per cent between 1849 and 1873. The fall which has occurred since is equally the result of monetary causes, and has been as great in land and house property as in commodities at large. If we had been a silver-using country, should we have had any such fall at all? No; the silver - using countries have escaped it, and all the consequent depression. Then we are told there is no scarcity of gold. There never will be a scarcity of gold in the strict sense of the word, because prices will always adjust themselves; but if all the gold mines were shut for 100 years the fixed charges would constantly rise, so that the industrial classes would be completely ruined. Further, I allege, without fear of contradiction, that since 1873 we have given an immense stimulus to the competing industries of India as compared with our own. Take, for instance, the cotton trade. In India during 10 years ending 1885 the increase in cotton spindles was 105 per cent, and in looms 91 per cent. In Lancashire during the same period the increase in spindles was only 7 per cent and in looms 21 per cent, while one very large branch of the trade—namely, the supply of yarn for China and Japan has been almost wrested from Lancashire. That process is going on every day, and any one can see the reason why it is so. The reason is that these enormous burdens I have spoken about are always growing heavier in England, while they grow lighter in India. As an illustration, lot us take the case of two men, each starting a cotton mill—one in Lancashire and the other in India, and commencing about 1873. Suppose each man has a capital of £20,000, and that each mill is built at a cost of £50,000, the Lancashire man having a mortgage of £30,000 on his mill with interest at 5 per cent payable in gold, while the Indian has a similar mortgage payable in silver, and supposing they both started together, how would they stand to day? The spinner in India would have had good trade all the time and no exchange troubles, while the spinner in Lancashire would have had 12 years falling prices. He would still have to pay £1,500 annually in gold upon his mortgage, while the man in India would have the same amount payable in silver, the value of which is yearly diminishing, so that to-day the one man would be paying £1,500 sterling in gold, while the other would be paying a sum in silver equal to about £1,000 in gold. The Indian manufacturer benefits by the lightening of burdens just as the Lancashire manufacturer suffers from the increase of burdens. The property of the man in Lancashire will have depreciated 30 per cent, and his mill will, therefore, be worth only £35,000 instead of £50,000, while he still owes £30,000 on mortgage. In India the manufacturer's property remains intact. The enormous advantage which the one trader thus has over the other is the chief reason why the trade is leaving the one country and going to the other. That state of things will continue so long as the exchange difficulty remains unsettled. It is the same with the jute trade, which is leaving Scotland and going to the valley of the Ganges, and it will always be the same where a silver-using and gold-using country are competing. If during the next ten years the rupee falls to 1s., we shall see a still greater transfer of manufactures to India, because it is hopeless for our producers to compete against such enormous odds. I do not want to do injustice to India, but simply wish fair play. All we say is that we should not load the dice against ourselves. But there is another side to the account. Every decline in exchange imposes on the Indian Government the necessity of levying additional taxation. Upon the whole, when everything is put into the scales India is no gainer, while this country is a loser. Some will meet me with the further objection that our trade is fairly good on the whole. I grant that it is. They say matters have settled down. "Why should we unsettle them again?" Well, my answer is we are not yet in a safe position. If we were, there would be a good deal to be said for letting things alone; but unfortunately we are on an inclined plane, and silver is sliding down stage by stage. I can see no reason whatever why the disastrous history of the last 15 years should not be repeated in the next 15 years if the nations do not agree to cure the source of the evil by remonetizing silver. There ought to be an international arrangement with the object of re-establishing silver. One of these days America may demonetize silver, the Bland Act having only been adopted as a temporary expedient; and when she does, all the miseries of the past few years will be repeated. Austria and Russia are both talking of demonetizing silver and resuming specie payments on a gold basis, and they will do it unless we have some international arrangement to re-establish silver. In that way we shall be driven on step by step, and shall be obliged at last to give India a gold currency. If preventive steps are not taken the intolerable loss to the Indian Government from the incessant fluctuations will become so great and silver will become so totally unstable as a standard of value that there will be no alternative except to give India a gold currency; and when that happens silver will be finally doomed, and will become a degraded metal like tin or iron. You will then probably see another prodigious fall in prices in all gold-using countries, and all fixed payments will become immensely heavier than they were before. You will give an further impetus to socialism, and no one can say what the result of such a madcap policy will be in Europe. I would remind the House of a few weighty words spoken by the right hon. Gentleman the Chancellor of the Exchequer 10 years ago at the Conference at Paris In 1878 the right hon. Gentleman said— I believe that it would be a great misfortune if a propaganda against silver should succeed, and I protest against the theory according to which this metal must be excluded from the monetary system of the world. A campaign against silver would be extremely dangerous even to a country with a gold standard. These were prophetic words, and I now ask the right hon. Gentleman to prevent his predictions from coming true. At the time when those words were uttered nobody thought that the price of silver could fall as low as it is now. All the wise men said it was impossible; but why should it not fall still further during the next 10 or 20 years? The wise men now say that a fixed ratio is impossible. We reply that the ratio was fixed during the greater part of the last century at nearly 15 to 1, and during the most of this century at 15½ to 1; and can anyone believe that if the four great commercial nations were agreed on the point they would not be able to maintain a fixed ratio now? The reason why France did not prevent trifling fluctuations, say from 15¼ to l5¾ in London, was that France lay between two competing systems—gold on the one hand and silver on the other—at one time vast sums in silver being sent to France, and at another time vast amounts in gold; but had we had a Bi-metallic Union, all this would have been avoided. Some people think that if we were to adopt the bi-metallic system gold would leave this country and disappear. I believe that this is an utter delusion. The four great States that would form the Union hold six hundred millions in gold. Where is the gold to go to? Where is it wanted? No one has been able to guess where it would go to, as there is no place where it is wanted. It is held by nations in whose favour there is a large balance of trade, and there is no possibility of the poorer countries draining away their gold. Indeed it is a thing which cannot be done. I am afraid I am detaining the House too long, and I will therefore draw my remarks as speedily as possible to a close. I would only remind the House that the Royal Commissioners state, unanimously and most decidedly, that it is in the power of a combination of nations to tie together gold and silver. That opinion has been arrived at by men who have thoroughly Studied the subject, and some of whom, in the first instance, approached it with a very strong prejudice against it. They were very slow in arriving at this conclusion, and nothing but an exhaustive study of all the facts in connection with this question could have convinced them. We say that the bimetallic principle is no new thing; on the contrary, it is an old thing. It is a case of quod semper, quod ubique, quod abomnibus. We wish to go back to what has been the rule of Christendom in former ages. We do not look with complacency on brand-new currency schemes; we stand on the system which has existed from the earliest times. As to the ratio, we leave that to the Conference; it is not a question which any nation can deal with alone. We approach the matter with an open mind. For my part, I have no particular desire to go back to the old ratio; nay, I am ready to admit that it would be very difficult to do so, though I cannot forget the prodigious contracts that were made under it prior to 1873—nor, as has already been stated, that four thousand millions of the National Debts of the world were incurred on the old ratio. Moreover, I believe we should be more honest in going back to the old ratio even now than in adopting any other. I should, however, be content with some intermediate ratio; but this is entirely a matter for international agreement. We ought not to bind ourselves to any particular view of the subject, but be prepared to accept whatever ratio the Conference might determine. We are, in fact, only asking the House to vote for the principle of an international arrangement. Besides, whatever decision might be come to by a Conference would be referred for final decision to the various Parliaments concerned. In conclusion, I would say that this question is one which is surrounded with great difficulties; but the end we aim at is one of immense importance not only to this country, but to the world at large, and I feel that its consideration will well repay the time and attention of Parliament. It is a subject that cannot be burked any longer, for it is one of the burning questions of the day; and I trust it will be discussed with impartiality and with a sincere desire for truth, and not be engulfed in the muddy stream of Party politics. Thanking the House for the attention with which it has listened to my remarks, I beg to second the Resolution.

* MR. SPEAKER

I would point out to the right hon. Gentleman who has moved the Resolution that I find some difficulty in putting the whole of the right hon. Gentleman's Motion at the same time, as it contains several different propositions. I propose, therefore, to put the last paragraph which, as amended, would run as follows— That this House is of opinion that the evils due to the monetary changes which occurred upon the Continent, and to the abandonment of the bi-metallic system which had prevailed in certain European countries prior to 1873, can only be effectively dealt with in a Conference for the purpose of considering whether and how far a bi-metallic system can be re-established by international agreement in the interests of all the nations and communities concerned.

* MR. J. M. MACLEAN (Oldham)

I have now to move the Amendment which stands on the Paper in my name, and which is— Line 3, to leave out all the words after That,' in order to insert the words "the Report of the Commission on the effects of the fall in the gold price of silver, and the proposed remedies therefor, is of too inconclusive a character to warrant the Government in taking action upon it. I have taken up this question with some diffidence, and I should not have moved in the matter if I had not given very close attention to the question for a great number of years and had not had the opportunity of studying it froth both the Indian and the Lancashire points of view. The question is one that especially affects the trade of Lancashire and India, and during the last 15 years it has been my lot to speak and write a good deal on the subject of the exchange between the two countries and the effects of the depreciation of silver on the fortunes of the people of India and the people of Lancashire. The right hon. Gentleman who has introduced the Motion to the notice of the House this evening has made a speech of very great ability and earnestness, and I think that nobody who listened to the right hon. Gentleman could fail to understand why it is that he alone amongst the champions of bi-metallism has been able to secure for his theory some amount of popularity in this country. The deputation which the right hon. Gentleman introduced to the Prime Minister and to the Chancellor of the Exchequer was a most imposing one, and it had such an effect on the minds of those two Ministers that they could only murmur words of deprecation as to the great change which would take place in the currency of the country if the contention of the right hon. Gentleman were successful; in fact, the Prime Minister went so far as to say that he hoped the question would be thoroughly discussed in Parliament. That being so, I think the Government might have allowed more than four hours on a Tuesday evening just before the holidays for this discussion. However, nothing can be better than a free discussion of this question. The monometallists will now be called upon to show what they have to say in defence of their faith, and I have always been a believer in the theory of John Stuart Mill that nobody knows how to defend his own creed until it has been tested by free and thorough discussion. The right hon. Gentleman who has introduced the Motion and the hon. Member for Flintshire have both spoken of the great interests that are involved, and I am sure that when the right hon. Gentleman appeared before the Prime Minister he had gathered together a deputation representing very varied interests indeed. A more strangely assorted team were never put in harness together, and, for my own part, I wonder how long the right hon. Gentleman, with all his skill as a charioteer, will be able to drive them without upsetting the coach, because there is no doubt that the artizan of Lancashire and the great landlord have no permanent interests in common, with reference to his proposal to alter the currency of the country; they must pull in different directions. The right hon. Gentleman holds out to the landlord that he will do away to a certain extent with the competition of bounty-grown Indian wheat; the artizan, on the other hand, is to be freed to some extent from the competition of Indian mills, and he is to get much better value for the goods he sends out to India. But how is the artizan to benefit if he does get better prices for his cotton goods while he has to pay largely-increased prices for his food and for the cotton which he has to work up and manufacture? That is a difficulty which the right hon. Gentleman and his supporters have to face, and for my own part I shall be curious to discover whether the right hon. Gentleman's agitation has any permanent effect on the popular mind. There is no doubt that the right hon. Gentleman has gathered together some leading men in the trade unions of the country, and I had the curiosity to ask one of them the day after the deputation how it came to pass that many of the working men of Lancashire, apparently, are inclined to follow the right hon. Gentleman the Member for Sleaford. The person whom I asked said with the utmost candour, "We know nothing about the subject, but we were told it would benefit our trade, and therefore it would be a good thing to see if something could not be made out of it." That frank admission, in my opinion, represents the state of mind of the people in the great industrial districts of the North who meet together and pass resolutions in favour of bi-metallism The right hon. Gentleman has gone into the historical aspect of the question, into which, however, I will not attempt, at this late hour, to follow him. I will take it for granted that the ratio between gold and silver was maintained up to 1873, and I will assume that the Commissioners have unanimously come to the conclusion that the demonetization of silver on the Continent has been one of the chief causes of the great fall in the prices of commodities which has taken place in all parts of the world. I do not think, however, the contention of the hon. Member for Flintshire can be admitted for one moment that, since 1873, silver-using countries have been uniformly prosperous, while gold-using countries have been passing through a long period of depression. From 1875 to 1880, India certainly did not pass through a period of prosperity; yet, if the theory of bi-metallism be true, those were the very years in which India ought to have been experiencing the greatest benefits from the depreciation of silver, which began in the year 1873. But in those years India was visited by a famine, and there was a considerable export of gold during the five years, whereas since India has had good years there has been a very large importation of gold into that country, amounting, I may say, on the average to £3,000,000 a year. That is an illustration of the danger of attributing commercial changes entirely to the fall in silver. The decline in the prices of commodities is very largely attributable to other causes—to the great advance in the productive powers of the world; to the increased accessibility of markets where there is a sudden demand, through the opening, for instance, of the Suez Canal, which has caused a complete revolution in the trade of the East; to the improvements in the machinery of ships, which have facilitated commerce to a very large extent; to the opening out of immense productive regions in the West and North-West of America; to the influence of the development of the Indian railways, and to the telegraph, which has been brought into very much greater use than before in the transaction of commercial matters. The result is that you no sooner have a demand in a particular market, than you have supplies rushing to it from all parts of the world. Productive power has also been very largely increased during the last eighteen years, because they have been years of perfect peace. Since the Franco-German War there really has been nothing to cause any great destruction or waste of industrial energy and capacity in Europe. All these considerations should cause us to hesitate to rush to the conclusion that the depreciation of silver has been the sole cause of any evils which we may suppose to have arisen from the low prices that now prevail. In my Amendment I propose to ask the House to say that the Report of the Commissioners is of too inconclusive a character to warrant the Government in taking action upon it. The right hon. Gentleman disputed the contention that the Report of the Commissioners is inconclusive. He quoted, from Section 120, words showing that in the opinion of all the Commissioners the adoption of bi-metallism by international agreement is not impracticable. No doubt, Lord Herschel and his colleagues went a very long way, much further than one would have expected, in trying to make things pleasant for the bi-metallists. But however favourably they may have expressed themselves towards what may be called the sentiment of bi-metallism, when it came to any practical proposals they were strong enough in saying that no change in the currency system of this country should be recommended. They followed the siren of bimetallism to the very brink of a precipice, and then they suddenly pulled up, saying, "Oh! we must not take this tremendous leap in the dark." Their practical advice on the whole subject is given in these words:— Under all these circumstances, whilst fully impressed with the difficulties of the present situation, and more especially with those which affect the Government of India, we are not prepared to recommend that this country should proceed to negotiate with other nations a treaty embodying a bi-metallic arrangement. That is a very distinct statement on their part, and, when the Commission could come to no other practical conclusion than this, the House and the country would act very rashly indeed if they were not to stand by the currency system which has prevailed in this country for the last 70 years. The central doctrine of the right hon. Gentleman's faith, the foundation on which he has built the immense superstructure of the benefits that are likely to result from any change in the present condition of the currency, is this, that the purchasing power of the rupee in India has not diminished. We can all see plainly enough that the Government of India suffers a good deal from having to remit 22 millions of tens of rupees to this country in payment of £15,000,000. But according to the theory of the bi-metallists, there are very great counterbalancing advantages obtained from the present system by the natives of India. They get a very considerable bounty, it appears, upon the export of all their produce. They are gradually being enriched at the expense of the people of this country. The carriage of all traffic in wheat and seeds and cotton, and so forth, brings money to the Treasury of the Indian Government. The returns of the railways in India are very much larger than they used to be; some of the railways are actually paying 9 per cent on the whole of their capital invested, and the general state of the country is exceedingly prosperous. The right hon. Gentleman talked about the severity of taxation in India; but if the rupee is a depreciated coin, the natives who now only pay their taxation in the depreciated currency are much less heavily taxed than they used to be when the rupee was at its full value. So that there are many compensations to the Indian Government for this heavy charge that it has to pay on account of its remittances to London. The Government of India has also largely benefited by the low rate of interest. The other day the Secretary of State converted the 4 per cent loan into a 3½ per cent loan. And the most recent loan of the Government of India for £7,000,000 at only 3 per cent has been issued at a little over par. I believe that Lord Cross has saved the Government a quarter of a million sterling in interest by the conversion of the debt. And I think that if the Government of India took a little courage, and raised a very large loan, now that capital is so cheap, for the purpose of paying off its silver debt in India, it could borrow 100 millions sterling at something less than 3½ per cent. That is one of the concurrent advantages to be set against the disadvantage of the heavy remittances they have to make to this country. So that all is not loss to the Government of India through what has occurred in the depreciation of silver. Now as to the trade of India. When I first came over to England, some eight years ago, I was strongly impressed with the opinion which then prevailed very generally among Anglo-Indians that no change had taken place in the purchasing power of the rupee. In a period of prosperity of more seasonable years than we had before 1880, the rupee was exchangeable against a much larger quantity of commodities than it had been in the famine years of the previous decade, and it was perfectly natural that I and others, not taking a sufficiently wide view of the circumstances, should be inclined to attribute that result to the fall in silver which had then set in. But subsequent experience and reflection, and especially a study of the evidence given before the Royal Commission on the Currency, have convinced me that this theory of the purchasing power of the rupee being as great as ever in India cannot possibly be maintained. The right hon. Gentleman read us a letter from Lord Dufferin on the subject. Everybody recognises Lord Dufferin as the highest possible authority on the transactions of the Government of India, but I would much prefer the opinion of a few business men engaged in commerce as to conditions of trade in the country. And what do we find to be the opinion expressed by competent business men as to the present purchasing power of the rupee in India? I will quote the opinion of such a man as Mr. Bythell, who has been engaged in the trade of Bombay for the last quarter of a century. Now, Sir, there is an expression of Mr. Bythell's opinion in the report of the Manchester Chamber of Commerce on the competition between Lancashire and Bombay mills, and he used these words. He says— I maintain it is also the fact, that the fall in silver has enhanced prices to the Bombay spinner—that there has been a compensating advantage there. Everything, including wages, is much dearer to the Bombay spinner now than in 1873. The calculation to which I am referring takes no account of this, nor of the fact that, if bi-metallists bring about what they are aiming for—according to their own view—there will be an advance of prices here, and a decline of prices there. Then, Sir, there is the case of another gentleman who gave evidence before the same Committee, Mr. Cocker, a mill manager, both of Oldham and Bombay. He was speaking of the profit made by mills in Oldham, and he said that the amount of profit reckoned to be made on the capital employed was 10 per cent in Bombay. He was asked, should you consider that good at Oldham? Mr. Cocker laughed, and said— My impression is that the China market is secure for Bombay, just because special attention is paid to it. I do not think there is a plant in Lancashire laid out as it ought to be to compete with Bombay in the spinning of 20s. for China. I believe if half the skill, energy, and determination that is shown in Oldham in spinning 32s. and 54s. weft, or in 60s. twist in Bolton, was put into the spinning of 20s.—plant being set out for it—that we should easily turn Bombay out of the China market. That seems to me to be the gist of the whole matter. Bombay devotes her energies to the spinning of those particular goods for which the Bombay cotton is particularly suited, and, with the natural advantages she possesses in having at her doors the cotton and the market too, she inevitably has a striking superiority over Lancashire in the manufacture of coarser yarns. But to say that the Bombay millowner has an advantage because anyone can buy in Bombay a larger quantity of commodities than he could buy in England for the same amount of money, cost of carriage being of course always excepted, is, I believe, a perfect fallacy. Why, we may take the opinion expressed on this subject by a gentleman who bears a well known name—Mr. Edward Sassoon —one of a firm who have probably the largest dealings with Bombay of any firm in the City of London. He gave evidence before the Royal Commission. The evidence appears in the Appendix. He says— I think, myself, that to attribute the development of the export trade of India with the gold-using countries to the fall in silver is altogether a fallacy. The gold prices here respond so quickly to a fall in the value of silver to gold, that anything like a bounty is so short-lived as to be undeserving of consideration. These are the opinions of business men, and I cannot find any merchants trading with the East who support the contention of the right hon. Gentleman and of the hon. Member for Flintshire, that they are unable to calculate what their trade will be on account of the incessant fluctuations in exchange. Perhaps, however, prices of commodities in India are not an exact guide to the real purchasing power of the rupee, because they may be affected by a thousand different causes. But we will take now the wages of labour in India. Labour, in the main, is a constant quantity, and if you find that wages have gone up, then you may safely come to the conclusion that the purchasing power of the rupee has been affected in India. This morning there has been published a Blue Book giving the result of 30 years' administration in India, and which comes down to the date of February in this year. This is the latest authoritative declaration of the Government of India about the change in the prices of wages and labour in that country. They say that— The wages of skilled labour and the amount of skilled labour finding employment have increased considerably, and in some districts, more especially along railway lines, the standard of wages for unskilled labour has advanced. The price of food, however, has risen, though this increase makes little difference to agricultural labourers, who are paid in kind. Then, in the special Report from Bombay, we have mention of cheaper clothing, higher wages, and evener distribution of wealth among all classes. I will give one more instance of the abandonment by competent Indian authorities of the right hon. Gentleman's favourite idea, that the rupee will buy as much as ever it did in India. In the debate on the East Indian financial statement, the hon. Mr. Steel, a leading Calcutta merchant and a member of the Viceroy's Legislative Council, said:— I find that all over the country wages are steadily advancing, much more rapidly than the cost of living. I think that all these statements serve to show that the purchasing power of the rupee in regard to commodities and labour has diminished. It is obvious, indeed, that that must be the case. Look into what a network of difficulties the Bi-metallic Commissioners plunged themselves when they attempted to state the opposite conclusion. They say— In India, on the other hand, where, in the opinion of nearly all the witnesses whom we have examined, the purchasing power of the rupee continues unimpaired, the prices of commodities measured in silver remain practically the same. We have no evidence to show that silver has undergone any material change in relation to commodities, although it has fallen largely in relation to gold; in other words, the same number of rupees will no longer exchange for the same amount of gold as formerly, but, so far as we can judge, they will purchase as much of any commodity or commodities in India as they did before.

MR. CHAPLIN

Will my hon. Friend permit me to read a little more of this paragraph? He assures us it may be safely said there is evidence of a rise of prices in India; but there is a general agreement among the witnesses we have examined that the purchasing power of the rupee has not fallen. That is signed by all the 12 Commissioners.

* MR. MACLEAN

The right hon. Gentleman is perfectly correct in his quotation of Section 53 in the Report signed by all the Commissioners. Personally, I do not think it is correct to put the matter in the way the Commissioners do, but they do all agree in making this statement—that absolutely the purchasing power of the rupee in India in regard to commodities has not diminished. Still, the monometallists on the Commission carefully refrained from saying that relatively with gold it has not diminished, and that makes all the difference. The right hon. Gentleman does not appreciate the distinction. Let us take an illustration of this matter. The Bi-metallic Commissioners are bold enough to say that the purchasing power of the rupee relatively to gold has maintained itself, and that it is an advantage to have rupees rather than gold in the purchase of commodities in India at the present moment. It is very easy to talk in a general way about such matters; but when the Commissioners descend to particular instances you very soon find them tripping. Now, I find on page 96 of the final Report of the Royal Commission, the following illustration which they themselves offer of this theory— For example, cotton goods are sent to India, for which, in order to make a profit, the English exporter must receive a certain sum, say £10,009. With the rupee worth 2s. £10,000 is realised by the payment of 100,000 rupees. With the rupees at 1s. 6d., £133,333 are required to realise that sum Will the Indian importer give this greatly increased price for precisely the same article as he bought before? Obviously not, because prices in India, as we have seen remain the same, and the English manufacturer is in consequence obliged either to take the same silver price as formerly, viz., 100,000 rupees, which means a greatly lowered gold price, viz., £7,500, or not to sell at all; and in either case he undergoes a loss which must be traced directly to the fall in the gold price of silver. I will take that illustration. A man sends out goods worth £10,000. He sells them, according to the argument, but only gets 100,000 rupees for them. If he exchanges those 100,000 rupees into gold and brings the money back into this country, he only gets £7,500 for his goods, but if he buys commodities with those 100,000 rupees, then, according to the supposition of the Bi-metallic Commission, as laid down on page 95 of the Report in the passage I quoted before the right hon. Gentleman interrupted me, he gets £10,000 worth of commodities. He has, therefore, only to exchange the rupees into commodities and then buy gold with those commodities in order to get £10,000 instead of £7,500, so that, as things that are equal to the same thing are equal to one another, we come to the interesting conclusion, if the right hon. Gentleman's argument be correct, that £7,500 is equal to £10,000. That is the most extraordinary proposition that has ever been offered for public acceptance since Father Tom, in Maginn's famous story, proved to the Pope that black was white. I am amazed that Commissioners of such high standing should sign a Report of this nature. The truth is, that everything in India, although they talk of the rupee being the current coin of the realm, is now actually measured by the gold standard. Gold circulates everywhere in India, and I wish to point out that they import three millions of gold every year. People talk about the trade between England and China being affected to the advantage of the trade between India and China because the two latter are silver-producing countries. Does not the hon. Gentleman the Member for Flintshire know that in part payment for the Indian goods sent to China a million sterling in gold is imported into Bombay every year from Chinese ports alone? Now, Sir, this is a remarkable thing showing the unsuspected abundance of gold in that part of the world. Everywhere in India gold is exchangeable against silver or other commodities at the actual London value. You can sell a sovereign on any day in the Bombay market for about 15 rupees in silver; and although gold coins may not be current all over India, certainly weight in gold is always exchangeable against silver and other commodities. I say that this idea of the depreciation of silver being found to be an advantage to Indian exports in any way is absolutely unfounded. Now I think I have dealt sufficiently with this matter. I have not attempted to deal with the argument of the hon. Member for Flintshire about fixed charges. That is a very important argument, and in reference to that I will say I do not think that he attributes sufficient weight to the very great advantage which has been derived from the cheapness of capital and abundance of credit in this country. He talks about the burden of local taxation being much heavier than it used to be. Why, we recently witnessed the conversion of the National Debt at a lower rate of interest, and cannot our municipalities also borrow money on a lower rate of interest than they used to, and cannot the solvent landlord or the solvent borrowers get capital on easier terms? Are not all these benefits to borrowers of money the result of the fall in prices which the hon. Member deplores, and have they not proved great advantages? I will pass by that, how, ever, because it is time for me to conclude my observations. There is one matter with which I wish to deal, and that is the question of the ratio between gold and silver. We know that the essence of bi-metallism is this—that according to the bi-metallists it is possible to fix a ratio between gold and silver, which can be steadfastly maintained from year to year. If the bi-metallists had had the courage to say what the ratio should be, I should not have had so much fault to find with their report on account of its inconclusive character, because then there would have been something for the country to go upon. But they shirked the very substance of the whole controversy, for, unless we know what the fixed ratio is to be, there is absolutely no substance in their imaginations. The right hon. Gentleman the Member for the Sleaford Division, no doubt, wants to go back to the ratio of 15½ to one. He told us the other night, in the debate on Indian pensions, that, if we adopted bi-metallism, the Indian Government would save six or seven millions a year, but it cannot do that unless we have a ratio of to one. Now the hon. Member for White-chapel is the one bi-metallist on the Royal Commission, I believe, who stated what he thought should be the ratio between gold and silver, and he put it at 20 to one. What, I should like to know, in that case, would be the relief to these people suffering from the tremendous burden of fixed charges; what relief would be given to the Government of India, and who would be benefited by a change of that kind? Directly I saw that the Bi-metallic Commissioners did not attempt to fix the ratio, but had actually said in their Report that it was a matter of detail, I came to the conclusion that there was nothing whatever in this agitation that was worth talking about any longer. One of the deputation who went up to the Prime Minister used a very pretty figure of speech. He said: "We do not wish to dethrone King Gold; we only wish to restore Queen Silver to her conjugal rights." But when two people have been separated for 16 or 17 years and the estrangement has been growing deeper and deeper all that time, would it not be rather a rash proceeding to join them together in the bonds of holy matrimony once more, without even an attempt to fix the terms on which they should come together again? Yet that is the exact position of the bi-metallists at the present moment. The proposal of the right hon. gentleman really amounts to this—That we should go to foreign nations and ask them to settle for us what the price of silver shall be. I, for one, think that we have had pretty nearly enough of International Conventions to regulate the commerce of this country. We had a Convention which was to fix the price of sugar. Are we to have another International Convention which is to raise the price of silver, and of all the commodities we purchase from silver-using countries, by any amount from 10 to 50 per cent? What advantage could that possibly be to this country, which does not produce practically one ounce of silver? We have no store of silver in England. There are hundreds of millions' worth of silver coin and bullion in France and India. There is untold wealth of silver in the treasuries and the mines of America, and why should we go to these countries, which have silver of their own, and ask them to be good enough to allow us to put an artificial bounty of 30 per cent on this great mass of wealth which they possess—a bounty which will have to be paid, after all, by the British consumer? I think that is really a proposition which only requires to be stated in order that the people may thoroughly understand what bi-metallists are anxious to lead us into. The hon. Member for Flintshire referred to free ports. Well, Sir, I am in favour of free ports, and I agree that one cause of the advance of trade with silver-using countries is that then do not put such high tariffs on our trade as other countries do. But I would say that we want freedom in everything in connection with commerce. For the last 70 years we have had a system of currency which has been good enough for us. Under it we have prospered amazingly. We have had our ups and downs, but trade is now reviving and we are now enjoying a state of prosperity which probably no country ever possessed before. Why should we imperil this by submitting ourselves to engagements with foreign nations which would have the effect of raising seriously the price of food and of the raw materials of all our industries?

Amendment proposed, To leave out all the words after the word That,' in order to insert the words the Report of the Commission on the effects of the fall in the gold price of silver, and the proposed remedies therefor, is of too inconclusive a character to warrant the Government in taking action upon it.—(Mr. James Maclean.)

Question proposed, "That the words proposed to be left out stand part of the Question."

* SIR JOSEPH PEASE (Barnard Castle)

I believe it may be for the convenience of the House if I now second the Amendment which has been moved by the hon. Member for Oldham, instead of taking the course of going back to the Amendment which I myself had placed upon the Paper at the time when the right hon. Gentleman the Member for the Sleaford Division of Lincolnshire put down his Motion. At this hour I will not detain the House at the length I had intended to had I been able to take the place which I originally hoped to obtain. I have looked at the question so far as I can, with a view to collating and collecting those facts and figures that bear upon it. Now, Sir, the main question which my right hon. Friend, places before us is that we are a monometallic nation, and he says that because we are so, we have not done So well for ourselves and our people as we should have done had we had a bi-metallic standard. This raises the questions at once. Have we not been fairly prosperous? Could we have done much better than we have been doing? And what are the signs and figures which induce the right hon. Gentleman to suppose that the country has been going to the bad under the present system of finance? It is all very well to say that there is a scarcity of gold. I am one of those who doubt that, but if gold is. appreciated then the things which gold buy are depreciated. At the present moment it is difficult to draw the precise line between appreciation and depreciation as affected by the supply of the precious metals and the supply of goods in the market. I have looked carefully into this question, and I have come to the conclusion that it is, in our case, too often the largeness of the supply of goods on the market that affects the prices and brings about the depreciation. I must say I think the right hon. Gentleman took a very erroneous standard, when he fixed upon the prices of the year 1873, because that was the year of a higher inflation of prices than we had ever known before and we have ever seen since. His plan in adopting that year as his standard, reminded me very much of a story told of an old neighbour of mine in Yorkshire, who was coming home from market during the time of the war, and having sold his oats at six shilling per bushel, said he thought the prices were fair as between man and man—so it is with my hon. Friend in promulgating the theory that 1873, the year of the great inflation in prices, is to be the standard of comparison because the high prices then arrived at were fair between man and man. Because 1873 was a year of inflation of prices, it seems to be thought that we must by some means endeavour to get back to them. What is the state of the country at the present moment? In the following figures I have taken 1871, two years before the prices of 1873, and the alteration in the French standard to a gold one, and I have compared them with the figures produced for 1887 or 1888, the latest which we have officially supplied to us. Now what do I find? Our population increased between 1871 and 1888, accordingly to the Poor Law returns in England and Wales, from 22,788,000 to 28,628,000. Our indoor and outdoor paupers in 1871 numbered 1,000,000. In 1873 they had fallen to 887,000; in 1888 there was another fall to 825,000, and in 1889 there was a further decrease to 817,000. Therefore although the population increased one-fourth, pauperism has gone down one-fourth, as compared with 1871. Then we come to that useful institution, the Savings Bank. Taking the Post Office Savings Bank we find that the amount invested in 1871 was £15,000,000. In 1887 it was £49,000,000; while in the Trustee Savings Banks in 1871 the amount of capital invested was £32,000,000, and in 1887 it was £36,000,000. Again, the investments of capital in railways in the United Kingdom in 1871 amounted to £552,000,000, and in 1887 it was £845,000,000, an increase of nearly £300,000,000 of the savings of the country invested in railway companies in the United Kingdom. Then we come to the Income Tax returns. Here again we find an increase of £41,000,000 under Schedule A, which includes lands, tenements, &c., and under Schedule D, which comprises profits in trade, &c., the increase in 1887 is £57,000,000; under Schedule B, occupation, &c., the increase between 1871 and 1887 is £3,400,000, and the total annual value of property and profits assessed to Income Tax in the United Kingdom has risen £116,000,000 between 1871 and 1887. These figures, at any rate, do not show that the country has been growing worse under the present financial system. On the contrary they show growing incomes, growing savings, and growing wealth. Again the figures show that in the production of silver during recent years, there has been a very marked increase, and according to tables which have been published during the years 1881 and 1885, the annual average has been £21,000,000 sterling, as compared with an annual average of £11,900,000 in the five years ending 1870, so that according to these figures we have produced in those five years nearly £50,000,000 more silver than we produced in the five years ending in 1870. No wonder, then, that the Commissioners say in their Report— That the fall in the gold price of silver is mainly due to the depreciation of silver. They go on to say— The above are reasons for thinking that the greater part of the fall in the gold value of silver has been due to causes affecting silver rather than to causes affecting gold; and this conclusion fortifies and is fortified by the conclusion to which we have already come to, that the fall in the gold price of commodities is in the greater part due to causes which affect these commodities rather than to causes which affect gold. The right hon. Gentleman approached very boldly the question of what is to be the relative value of silver and gold, but when he came straight up to that difficult fence he turned round and left the point to be settled by the Commissioners or the representatives of the foreign countries proposed to be assembled. My hon. Friend the Member for Flintshire took the same course. The crux of the whole position rests in that what are to be the relative legal values of the two metals. In the Paper which he read before the Statistical Society, Mr. Giffen very truly said, "it would be impossible by law to control the effect of the decreasing value of silver as compared with gold." Mr. Giffen also gave a table which is so entirely contrary to what has been stated by the mover and seconder of the Resolution that I must trouble the House by referring to it for a moment. He says the ratio of silver to gold has been steadily on the decline from the year [...] to the present moment. From 1501 to 1520 it was 10.75 to 1; in 1661 to 1680 it was 15.00 to 1; in 1800 it was 15.50 to 1; and at the present time it is 22.00 to 1. No wonder, Mr. Giffen says, it would be impossible by any legislation to keep up a standard of value as compared with gold when the whole history of the silver value is against such a theory. Although the supply of gold may have fallen shorter than at one time there has been a very large annual supply. Dr. Soetbeer estimates that the value of gold in the National Treasuries and principal banks of the world was in 1882, £203,500,000; in 1883 £230,000,000; in 1884 £234,000,000, and in1885£252,000,000. Judging from the Returns there has been no fear on the part of the Directors of the Bank of England of gold running away from them. In recent years the rate of discount has been especially steady. Again more money is now paid in cheques and drafts and orders than was paid 20 years ago. Then I think my right hon. Friend (Mr. Chaplin) has forgotten what a very large factor silver is in our every-day transaction. I find that in the railway world about one-fourth of the whole wages paid is paid in silver. In the textile fabric trade I find that 50 per cent of the wages is paid in silver, and in the coal and iron trades from 16 to 20 per cent is paid in silver. But what I want more especially to point out is that there is a great fallacy in the argument as to the Manchester trade, and the Indian corn trade. It is assumed that each transaction is a separate transaction. That is not so. It is the balance of the aggregate of transactions that influences exchange, and the remittances of balances in bullion. One word or two as to the Lancashire trade about which so much has been said. I see that the cotton goods and yarns sent from Lancashire to India were of the value of £14,825,000 in 1871, while the raw cotton imported from India was of the value of £11,732,000. Lancashire, therefore, had only to draw from India about £3,000,000. In 1873 the £14,000,000 had risen to £17,000,000, while the imports of [...]raw cotton had decreased from £11,000,000 to £9,000,000. Instead, therefore, of being £3,000,000 to draw from India, Lancashire had in 1873 to draw £7,000,000. In 1887, the exports of cottons and yarns to India had, in spite of all we have heard about the Lancashire trade, risen from £14,825,000 in 1871 to £20,991,922, while the imports of raw cotton had decreased to £4,815,647. The balance against India for Lancashire alone, therefore, was £16,176,275, in the place of £3,000,000 of 1871. The balance of our trade with India is very steadily increasing under the present mode of dealing. England now sends about £13,000,000 worth more goods to India—£33,000,000 instead of £20,000,000 worth — than she did 15 years ago. At the same time, instead of money coming back from India we are always sending money to India. I come to the following conclusions, and I am sorry that time does not allow me to give my reasons at greater length. That this country has prospered under a monometallic system; that the supply of silver has been enormous and has thus depreciated its value; that there has been no scarcity of gold; that these metals are not so much required in commerce as heretofore; that the supply of the standard articles on the market has been in excess of the demand; that in addition to the enormous imports of agricultural produce the state of freights has contributed to an abnormal condition of prices. I find that last year's Return shows a loss on the main articles of agricultural produce as compared with 1873 of £9,000,000 on the quantity of beef produced at home, £12,000,000 on the quantity of mutton, and £20,000,000 on the quantity of wheat. These figures represent £1 5s. of less net profit per acre on the whole acreage in the agricultural returns. The quantity of iron produced in the world in 1871 was 12,000,000 tons, in 1873, 13,000,000 tons, in 1887 it was 21,000,000 tons; the total quantity of coal produced in the United Kingdom in 1873 was 127,000,000 tons, while in 1887 it was 162,000,000 tons; and so, independently entirely of the question of the value of the precious metals, there has been put upon everyone of these markets a vast increase above [...]the quantity in them in 1873. More than that, we overdid our shipbuilding to a very large extent, so that the freights became exceedingly low, and agricultural produce was brought into this country at abnormally low prices. It appears to me that it would be perfect madness in the present state of things to embark in any such changes as those proposed, and I think that if 12 of the cleverest men in the country cannot agree upon the question we ought not to call in our neighbours to tell us what to do. I beg to second the Amendment.

MR. W. H. SMITH

I do not propose at this late hour (12.45) to detain the House more than a very few minutes. Whether hon. Members agree with my right hon. Friend or not, I think we must all admit that the House is greatly indebted to the right hon. Member for Lincolnshire for the exceedingly lucid and able statement he has made. No Member can fail to acknowledge that it was one of the most able statements of a most intricate and difficult question ever presented to this House, in which every argument was stated with absolute fairness. The question is one of such very great importance that it is exceedingly desirable that it should be stated fully, fairly, and completely from every point of view. The view of the Government was explained the other day by the Prime Minister and the Chancellor of the Exchequer. I am bound to say for myself I could not embark rashly on such a matter without the most complete evidence that the changes proposed are received by the country as embodying in themselves conditions of absolute security for the vast transactions in which we are engaged. If there is one thing more necessary for the maintenance of the commercial fabric than another, it is a sense of security in the investments of capital and labour. Any Government that was a party to a scheme which would shake the confidence of the commercial classes in the currency would be inflicting a very serious injury on the national prosperity. With reference to the proposition that has been put forward that Government should pay off their debts otherwise than in gold, let me point out that in these cases the contract which exists between the debtor and the creditor can only be liquidated in gold, and that if the proposition were assented to the debtor would be paying back to the creditor something which was not as valuable as gold. That idea would startle very seriously all commercial classes throughout the world, for it is essential in order to insure the continuance of prosperity and the success of commercial undertakings that every contract shall be faithfully fulfilled. I must say that I am not myself satisfied with the arguments in favour of the Motion, and I believe that my right I hon. Friend does not ask or desire that change which he advocates should at once take effect. I think that all who are interested in the industries of this country, all those who are prepared to borrow money, and those who are prepared to lend money, should accept the change before we attempt to make any change in the present system. I believe that if we act hastily in this matter we may go far to transfer our trade to other countries, and, if not to destroy, at all events, to impede our present prosperity. It would seem, too, that the arguments of the Mover and Seconder of this Motion do not always agree; for my right hon. Friend the Member for Lincolnshire argued that the depreciation of silver inflicted a great loss annually upon India, and therefore was a great burden on the people of India; but the hon. Gentleman the Member for Flintshire pointed out that it was a great grievance to England, and especially to Lancashire, and that the depreciation of the rupee enabled the Indian cotton-spinners to increase the manufacturing power of that country. These arguments show how greatly involved this question is, and until, at all events, we come to an agreement among ourselves, until the commercial classes of this country come to an agreement among themselves, no Government could be rash enough to deal with this question. I only mention these things to justify us in the course we are taking when we say that we cannot undertake what we are asked to do; that we cannot accept a change which, I believe, is not proved to be necessary or advantageous to the country, and that, however right and sound in theory its principles may be, they must first of all be accepted by the people at large and be held to be safe and sound and true by the commercial classes, before we venture to accept them. I acknowledge all that my right hon. Friend has said as to the importance of the question; I admit the great dislocation of trade and the great distress, but I venture to think that still greater dislocation and distress would result on the adoption of a change which is not proved to be necessary or accepted generally by the people.

MR. W. SINCLAIR (Falkirk)

I beg to move the adjournment of the debate.

Qestion proposed, "That this debate be now adjourned."

MR. CHAPLIN

It is evident it is necessary that this question should be more fully debated than has been possible to-night, and therefore I have no objection to the adjournment of the debate. I hope, however, that it will be in the power of the right hon. Gentleman the Leader of the House to give us a day on which the question can be fully discussed.

Question put and agreed to.

Debate adjourned till Tuesday, 18th June.